<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 9, 1999
REGISTRATION NO. 333-80523
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SUSQUEHANNA MEDIA CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 4841; 4832; 7379 23-2722964
(STATE OF INCORPORATION) (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NO.)
CLASSIFICATION NUMBER)
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140 EAST MARKET STREET
YORK, PENNSYLVANIA 17401
(717) 848-5500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
CRAIG W. BREMER
SECRETARY AND GENERAL COUNSEL
140 EAST MARKET STREET
YORK, PENNSYLVANIA 17401
(717) 848-5500
(NAMES AND ADDRESSES, INCLUDING ZIP CODES, AND TELEPHONE NUMBERS,
INCLUDING AREA CODES, OF AGENTS FOR SERVICE)
IT IS RESPECTFULLY REQUESTED THAT THE COMMISSION SEND COPIES OF ALL NOTICES,
ORDERS AND COMMUNICATIONS TO:
CHARLES R. MONROE, JR.
HUNTON & WILLIAMS
BANK OF AMERICA PLAZA, SUITE 3500
101 SOUTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28211
(704) 378-4700
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
PROSPECTUS
Subject to Completion, dated September 9, 1999
$150,000,000
LOGO
OFFER TO EXCHANGE ALL OUTSTANDING
$150,000,000 8 1/2% SENIOR SUBORDINATED NOTES DUE 2009
FOR $150,000,000 8 1/2% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2009
INTEREST PAYABLE MAY 15 AND NOVEMBER 15, BEGINNING ON NOVEMBER 15, 1999
MATERIAL TERMS OF THE EXCHANGE OFFER
- - We are offering to exchange the outstanding notes described above for an equal
amount of new notes that are registered under the Securities Act of 1933.
- - The exchange offer will expire at 5:00 P.M., New York City time, on
, 1999, unless extended.
- - The terms and provisions of the exchange notes are substantially identical to
the terms of the outstanding notes.
- - We do not intend to list the exchange notes on any national securities
exchange or Nasdaq.
- - The exchange of notes should not be a taxable exchange for U.S. federal income
tax purposes.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 12 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER OR INVESTING IN THE
EXCHANGE NOTES ISSUED IN THE EXCHANGE OFFER.
We are not making this exchange offer in any state or jurisdiction where it
is not permitted.
Neither the U.S. Securities and Exchange Commission nor any other federal
or state securities commission has approved or disapproved the notes to be
distributed in the exchange offer, nor have any of these organizations
determined that this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is , 1999.
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary.......................................... 1
Risk Factors................................................ 12
Where You Can Get More Information.......................... 21
The Exchange Offer.......................................... 22
Use of Proceeds............................................. 31
Capitalization.............................................. 31
Unaudited Consolidated as Adjusted Financial Data........... 32
Selected Historical Consolidated Financial and Operating
Data...................................................... 33
Management's Discussion and Analysis of Financial Conditions
and Results of Operation.................................. 35
Business.................................................... 42
Regulation.................................................. 60
Management.................................................. 66
Beneficial Ownership of Susquehanna Media and Susquehanna
Pfaltzgraff............................................... 69
Certain Transactions........................................ 71
Description of Certain Indebtedness......................... 73
Description of the Exchange Notes........................... 75
Certain U.S. Federal Income Tax Considerations.............. 106
Plan of Distribution........................................ 109
Legal Matters............................................... 109
Experts..................................................... 109
Index to Annual Audited Consolidated Financial Statements... F-1
Index to Interim Unaudited Condensed Consolidated Financial
Statements................................................ F-21
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
It does not, however, contain all of the information that may be important to
you. Before deciding to participate in the exchange offer or invest in the
exchange notes, and in order to fully understand the exchange offer, you should
read this entire prospectus carefully, including the risk factors and financial
statements and related notes. We conduct our radio operations through our direct
subsidiary, Susquehanna Radio Corp., and our cable operations through our direct
subsidiary, Susquehanna Cable Co. Our corporate parent is Susquehanna
Pfaltzgraff Co.
SUSQUEHANNA MEDIA CO.
We are a diversified communications company with operations in radio
broadcasting and cable television. We own and operate 23 radio stations, making
us the largest privately owned radio broadcaster and the 10th largest radio
broadcaster overall in the United States based on revenues. We are also the 24th
largest cable multiple system operator in the United States, serving
approximately 186,000 subscribers.
For the year ended December 31, 1998, we had revenues and EBITDA of $223.4
million and $73.9 million, respectively, with approximately 57% of EBITDA
generated by our radio broadcast operations and 43% by our cable television
operations. We define EBITDA under "Summary Historical and Unaudited As Adjusted
Consolidated Financial and Operating Data" beginning on page 10. For the year
ended December 31, 1998, our net income was $13.9 million, our cash flows from
(used in) operating, investing and financing activities were $36.8 million,
($38.8 million) and $3.9 million, respectively, and our ratio of earnings to
fixed charges was 2.3x.
RADIO BROADCASTING
We own and operate 15 FM and 8 AM stations that serve four of the United
States' ten largest radio markets as measured by revenue (San Francisco, Dallas,
Houston and Atlanta), as well as three other significant markets (Cincinnati,
Indianapolis and York, Pennsylvania). Our radio broadcasting business focuses on
acquiring, developing and operating radio stations in the 40 largest markets in
the United States. Our radio stations offer a broad range of programming
formats, such as country, top 40, adult contemporary, oldies, rock, and sports
and talk radio, each targeted to a specific demographic audience within a
market. We believe that our large market radio presence and variety of
programming formats makes us attractive to a diverse base of local and national
advertisers and enables us to capitalize on our ratings to generate higher
market revenue share.
Our radio business strategy includes the following key elements:
- - Focus on large markets. We generate approximately 73% of our radio revenue
from the ten largest markets in the United States as measured by revenue and
more than 90% from top 40 markets, and we intend to continue focusing on large
markets. We believe that management efficiency is served by focusing on
stations that are capable of producing significant revenue.
- - Employ targeted programming and market research. We seek to maximize station
operating performance through extensive market research, innovative
programming, and distinctive marketing campaigns. We believe that,
collectively, these initiatives establish strong listener loyalty and steadily
increase audience share.
- - Emphasize sales and marketing. We place great emphasis on being familiar with
our listening audience and their lifestyle characteristics in order to match
effectively our audience's demographics with the specific target audiences of
our advertisers. This strategy enables us to:
- partner with our advertisers to reach efficiently and effectively their
targeted audiences;
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- attract more advertising revenues; and
- build audience loyalty.
- - Decentralize management. We believe that radio is primarily a local business
and that much of its success results from the efforts of regional and local
management and staff. Accordingly, we decentralize much of our operations to
regional and local managers.
- - Selectively pursue strategic acquisitions. In addition to continuing our
rapid internal growth, we intend to pursue acquisition opportunities that
would allow us to continue to compete more effectively for advertising
revenues and to increase our growth rate of revenues and cash flow. Our
acquisition strategy is selectively to acquire radio stations in our existing
markets and in new, demographically attractive, fast-growing markets.
CABLE TELEVISION
Our seven cable systems currently serve approximately 186,000 subscribers
through 16 signal receiving and transmitting facilities, or headends, in
Pennsylvania, Mississippi, Maine, Illinois and Indiana. We own, develop and
operate geographically clustered cable television systems in small and
medium-sized communities. We believe that these systems are less susceptible to
competition and subscriber turnover than urban cable television systems and
result in more predictable revenue and cash flow.
Our cable television business strategy includes the following key elements:
- - Build strategic clusters. We have pursued the development and acquisition of
cable television systems in communities that are within close proximity to our
existing systems to maximize operating efficiencies. We also interconnect
systems within a cluster with fiber optic cable, enabling the consolidation of
signal receiving and transmitting facilities.
- - Focus on customer satisfaction. To maximize customer satisfaction, we strive
to provide reliable, high-quality service offerings, superior customer service
and attractive programming choices at reasonable rates. To meet this
objective, we conduct subscriber surveys and marketing studies and implement
programs to improve the skills of our customer service and technical
employees. We believe that our customer service efforts have contributed to
our subscriber growth and position us to sell additional products and services
in the future.
- - Continue upgrade of technical facilities. We seek to provide reliable,
high-quality cable television services to our customers. To achieve this goal,
we are expanding and upgrading our cable systems to increase channel capacity,
enhance signal quality, improve technical reliability and reduce the number of
signal receiving and transmitting facilities in our existing systems. We
believe that these improvements enhance our position as the leading provider
of multi-channel television services in our markets and create additional
revenue opportunities.
- - Develop new sources of revenues. We believe that the investment we have made
in our cable systems has enabled us to generate additional revenue by
providing expanded tiers of services and additional pay-per-view services. In
addition, we are expanding new services, such as Internet access, high speed
data, and video-on-demand and other interactive services. We believe that the
new, enhanced services will attract new subscribers, increase revenue and cash
flow per subscriber, improve customer loyalty and reduce customer turnover.
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OTHER SERVICES
We also provide Internet access and enhanced services to residential and
business customers under the tradename "BlazeNet." Our services include:
- Internet access via telephone dial-up service or cable modem;
- website creation, hosting and maintenance; and
- local and wide area network design, construction and operation.
As a website host, we provide a central computer that is connected to the
internet 24 hours a day. We store all of our customers' website files on our
computer so that each website and all of its content are available to users
worldwide at all times. Our local and wide area network services enable us to
provide network services in both a limited area, such as a building or campus,
or a larger area extending beyond a single building or campus.
---------------
We are a Delaware corporation with principal executive offices located at
140 East Market Street, York, Pennsylvania 17401. Our telephone number is (717)
848-5500.
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SUMMARY OF THE EXCHANGE OFFER
THE EXCHANGE OFFER............ We are offering to exchange $1,000 principal
amount of our 8 1/2% Senior Subordinated Notes
due 2009, which have been registered under the
Securities Act, for each $1,000 principal
amount of our outstanding unregistered 8 1/2%
Senior Subordinated Notes due 2009, which were
issued by us on May 12, 1999 in a private
offering.
In order for your outstanding notes to be
exchanged, you must properly tender them prior
to the expiration of the exchange offer. All
outstanding notes that are validly tendered and
not validly withdrawn will be exchanged. We
will issue the exchange notes on or promptly
after the expiration of the exchange offer.
Outstanding notes may be tendered for exchange
in whole or in part in integral multiples of
$1,000 principal amount.
REGISTRATION RIGHTS
AGREEMENT..................... We sold the outstanding notes on May 12, 1999
to the initial purchasers of the outstanding
notes. Simultaneously with that sale we signed
a registration rights agreement with the
initial purchasers which requires us to conduct
this exchange offer.
You have the right pursuant to the registration
rights agreement to exchange your outstanding
notes for exchange notes with substantially
identical terms. This exchange offer is
intended to satisfy these rights. After the
exchange offer is complete, you will no longer
be entitled to any exchange or registration
rights with respect to your outstanding notes.
For a description of the procedures for
tendering outstanding notes, please refer to
"The Exchange Offer" on page 22.
CONSEQUENCES OF FAILURE TO
EXCHANGE YOUR OUTSTANDING
NOTES....................... If you do not exchange your outstanding notes
for exchange notes pursuant to the exchange
offer, you will continue to be subject to the
restrictions on transfer provided in the
outstanding notes and the indenture. In
general, the outstanding notes may not be
offered or sold unless registered under the
Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the
Securities Act and applicable state securities
laws. We do not currently plan to register the
outstanding notes under the Securities Act. To
the extent that outstanding notes are tendered
and accepted in the exchange offer, the trading
market for untendered and tendered but
unaccepted outstanding notes will be adversely
affected.
EXPIRATION DATE............... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 1999 unless
extended by us, in which case the term
"expiration date" shall mean the latest date
and time to which the exchange offer is
extended.
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CONDITIONS TO THE EXCHANGE
OFFER......................... The exchange offer is subject to certain
conditions that we may waive at our reasonable
discretion. The exchange offer is not
conditioned upon any minimum principal amount
of outstanding notes being tendered for
exchange. We reserve the right to terminate the
exchange offer if certain specified conditions
have not been satisfied and to waive any
condition or otherwise amend the terms of the
exchange offer in any respect.
PROCEDURES FOR TENDERING
OUTSTANDING NOTES........... If you wish to tender outstanding notes for
exchange, you must:
- complete and sign a letter of
transmittal in accordance with the
instructions contained in the letter of
transmittal; and
- forward the letter of transmittal by
mail, facsimile transmission or hand
delivery, together with any other
required documents, to the exchange
agent, either with the outstanding notes
to be tendered or in compliance with the
specified procedures for guaranteed
delivery of such outstanding notes.
Certain brokers, dealers, commercial banks,
trust companies and other nominees may also
effect tenders by book-entry transfer.
Please do not send your letter of transmittal
or certificates representing your outstanding
notes to us. Those documents should only be
sent to the exchange agent. Questions regarding
how to tender and requests for information
should be directed to the exchange agent.
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS............. If your outstanding notes are registered in the
name of a broker, dealer, commercial bank,
trust company or other nominee, we urge you to
contact such person promptly if you wish to
tender your outstanding notes pursuant to the
exchange offer.
WITHDRAWAL RIGHTS............. You may withdraw the tender of your outstanding
notes at any time prior to the expiration date
by delivering a written notice of your
withdrawal to the exchange agent in accordance
with the withdrawal procedures set forth in
this prospectus.
CONSEQUENCES OF NOT COMPLYING
WITH EXCHANGE OFFER
PROCEDURES.................. You are responsible for complying with all
exchange offer procedures. You will only
receive exchange notes in exchange for your
outstanding notes if, prior to the expiration
date, you:
- deliver to the exchange agent the letter
of transmittal, properly completed and
duly executed, along with any other
documents or signature guarantees
required by
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the letter of transmittal, as well as
certificates for the outstanding notes or
a book-entry confirmation of a book-entry
transfer of the outstanding notes into
the exchange agent's account at the
Depository Trust Company (DTC); or
- comply with the guaranteed delivery
procedures set forth in this prospectus.
Any outstanding notes you hold and do not
tender, or which you tender but which are not
accepted for exchange, will remain outstanding.
You will not have any appraisal or dissenters'
rights in connection with the exchange offer.
You should allow sufficient time to ensure that
the exchange agent receives all required
documents before the expiration of the exchange
offer. Neither we nor the exchange agent has
any duty to inform you of defects or
irregularities with respect to the tender of
your outstanding notes for exchange.
RESALES OF EXCHANGE NOTES..... We believe that you will be able to resell
exchange notes issued in the exchange offer
without compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that:
- you are acquiring the exchange notes in
the ordinary course of your business;
- you are not participating, and have no
arrangement or understanding with any
person to participate, in the
distribution of the exchange notes; and
- you are not an insider or a related
party of Susquehanna Media.
Our belief is based on interpretations by the
staff of the SEC, as set forth in no-action
letters issued to third parties unrelated to
us. If our belief is not accurate and you
transfer an exchange note without delivering a
prospectus meeting the requirements of the
Securities Act or without an exemption from
such requirements, you may incur liability
under the Securities Act. We do not and will
not assume or indemnify you against such
liability.
Each broker-dealer that receives exchange notes
for its own account in the exchange offer must
acknowledge that it will deliver a prospectus
in connection with any resale of those exchange
notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by
a broker-dealer in connection with those
resales.
EXCHANGE AGENT................ The exchange agent for the exchange offer is
Chase Manhattan Trust Company, N.A. The
address, telephone number and facsimile number
of the exchange agent are set forth in "The
Exchange Offer -- Exchange Agent" and in the
letter of transmittal.
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USE OF PROCEEDS............... We will not receive any cash proceeds from the
issuance of the exchange notes offered hereby.
We used the net proceeds from the sale of the
outstanding notes, together with borrowings
under a new senior credit facility, to repay
all outstanding indebtedness under our old
senior credit facility and to make a $116.9
million loan to Susquehanna Pfaltzgraff to fund
its employee stock ownership plan.
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES..... Your acceptance of the exchange offer and the
related exchange of your outstanding notes for
exchange notes will not be a taxable exchange
for United States federal income tax purposes.
You should not recognize any taxable gain or
loss or any interest income as a result of the
exchange.
Please refer to "The Exchange Offer" section of
this prospectus for more detailed information
concerning the exchange offer.
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SUMMARY TERMS OF THE EXCHANGE NOTES
The exchange offer relates to the exchange of up to $150 million principal
amount of exchange notes for an equal principal amount of outstanding notes. The
form and terms of the exchange notes are substantially identical to the form and
terms of the outstanding notes, except the exchange notes will be registered
under the Securities Act. Therefore, the exchange notes will not bear legends
restricting their transfer and will not be entitled to registration under the
Securities Act. The exchange notes will evidence the same debt as the
outstanding notes, which they replace, and both the outstanding notes and the
exchange notes are governed by the same indenture.
SECURITIES OFFERED............ $150 million principal amount of 8 1/2% Senior
Subordinated Exchange Notes due 2009.
ISSUER........................ Susquehanna Media Co.
MATURITY DATE................. May 15, 2009.
INTEREST PAYMENT DATES........ May 15 and November 15 of each year, beginning
on November 15, 1999.
OPTIONAL REDEMPTION........... We may redeem:
- all or part of the notes beginning on
May 15, 2004, at the redemption prices
stated in "Description of the
Notes -- Optional Redemptions," plus
accrued and unpaid interest on the notes
to be redeemed; and
- up to 35% of the notes at any time prior
to May 15, 2002 at a price of 108.50% of
their face amount, plus accrued and
unpaid interest, with the proceeds of
certain public equity offerings of our
company or our subsidiaries.
RANKING....................... The notes will be unsecured senior subordinated
obligations of Susquehanna Media. The notes
will rank behind all of our existing and future
senior debt, including indebtedness under the
new senior credit facility. The notes will
effectively rank behind any of our future
indebtedness that is secured by any of our
assets to the extent of the value of such
assets, even if such indebtedness expressly
provides that it is not senior to the notes. In
the future, we may issue debt that ranks
senior, equal or subordinate to the notes.
CHANGE OF CONTROL............. If a third party acquires control of
Susquehanna Media, you will have the right to
require us to repurchase your notes at a price
equal to 101% of the principal amount of your
notes plus accrued and unpaid interest to the
date of purchase.
ASSET SALE PROCEEDS........... In certain instances, we must use the net cash
proceeds of certain asset sales to offer to
purchase the notes at a price equal to 100% of
the principal amount of the notes plus accrued
and unpaid interest to the date of purchase.
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BASIC COVENANTS OF
INDENTURE..................... We will issue the exchange notes under an
indenture that also governs the outstanding
notes. The indenture contains covenants for
your benefit. Such covenants will, among other
things, restrict our ability to:
- incur additional debt;
- pay dividends and make distributions;
- repurchase securities;
- make certain investments;
- incur liens;
- transfer or sell assets;
- enter into transactions with insiders or
related parties;
- issue or sell stock of subsidiaries; and
- merge or consolidate.
These covenants are subject to a number of
important exceptions and qualifications that
are described under "Description of the
Exchange Notes -- Certain Covenants."
Please refer to the "Description of the
Exchange Notes" section of this prospectus for
more detailed information regarding the
exchange notes.
RISK FACTORS
You should read the "Risk Factors" section of this prospectus as well as
the other cautionary statements throughout this prospectus before making an
investment in the exchange notes or tendering your outstanding notes for
exchange notes.
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SUMMARY HISTORICAL AND UNAUDITED AS ADJUSTED
CONSOLIDATED FINANCIAL AND OPERATING DATA
We present below summary historical and as adjusted financial and operating
data. We derived the historical financial data as of and for the years ended
December 31, 1994 through December 31, 1998 from our audited consolidated
financial statements. We derived the historical financial data as of and for the
six months ended June 30, 1998 and June 30, 1999 from our unaudited consolidated
financial statements. Our audited consolidated financial statements and related
notes for the years ended December 31, 1996, 1997 and 1998 and unaudited
consolidated financial statements and related notes for the six months ended
June 30, 1998 and June 30, 1999 are included elsewhere in this offering
memorandum.
The unaudited as adjusted consolidated data presented below is based upon
our audited consolidated financial statements for the year ended December 31,
1998, after giving effect to the issuance and sale of the outstanding notes, the
closing of a new $450 million senior credit facility, the repayment of our old
senior credit facility, the prepayment of senior notes, and a $116.9 million
loan to Susquehanna Pfaltzgraff to fund its employee stock ownership plan. The
unaudited as adjusted consolidated income statement data presented below is
based on certain assumptions that we believe accurately represent the effect of
such transactions as if they had occurred on January 1, 1998, while the as
adjusted balance sheet data presented below assumes that such transactions
occurred on December 31, 1998. By including unaudited as adjusted financial
data, we do not suggest that the data indicates what our results of operations
or financial position actually would have been had the transactions described
above been completed on the assumed dates. You should read this information and
the accompanying notes in conjunction with the consolidated financial statements
and related notes and the other financial information included elsewhere in this
prospectus.
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SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------------ --------------------
AS ADJUSTED
1994 1995 1996 1997 1998 1998 1998 1999
-------- -------- -------- -------- -------- ----------- -------- ---------
(DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)
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INCOME STATEMENT DATA:
Revenues:
Radio.......................... $ 93,967 $100,556 $116,300 $131,438 $151,170 $151,170 $ 70,701 $ 82,230
Cable.......................... 45,010 48,544 55,791 65,122 70,641 70,641 34,486 39,520
Other.......................... -- -- 85 539 1,616 1,616 681 1,400
-------- -------- -------- -------- -------- -------- -------- ---------
Total revenues................... 138,977 149,100 172,176 197,099 223,427 223,427 105,868 123,150
Operating income................. 29,409 30,186 36,791 42,710 51,203 16,280 23,544 27,160
Net income....................... 9,135 9,213 21,523 16,594 13,952 10,168 5,605 6,024
OTHER DATA:
Adjusted EBITDA(1)............... 42,688 42,917 52,500 62,881 73,866 73,866 34,030 43,370
Cash flows related to:
Operating activities........... 17,729 27,828 21,711 36,347 36,843 32,769 13,432 23,221
Investing activities........... (1,669) (2,469) (81,588) (70,339) (38,842) (38,842) (24,917) (163,657)
Financing activities........... (16,060) (25,359) 60,595 33,334 3,941 32,091 13,165 139,907
Depreciation and amortization.... 12,271 11,402 14,531 19,744 22,329 22,329 10,932 13,763
Capital expenditures............. 11,113 12,899 12,073 22,610 29,592 29,592 13,432 12,788
Ratio of earnings to fixed
charges(2)..................... 2.4x 2.3x 4.1x 2.7x 2.3x 1.8x 2.0x 2.5x
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets..................... $125,582 $141,902 $238,628 $333,476 $355,141 $461,281 $351,287 $ 519,554
Total debt....................... 135,175 137,450 200,350 265,500 272,776 (5,028) 278,900 420,448
Stockholders' equity
(deficit)(3)................... (48,776) (40,814) (18,191) (2,295) 9,201 400,841 2,766 14,455
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SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------------ --------------------
AS ADJUSTED
1994 1995 1996 1997 1998 1998 1998 1999
-------- -------- -------- -------- -------- ----------- -------- ---------
(DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)
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CABLE OPERATING DATA:(4)
Homes passed..................... 173,674 182,465 215,715 211,808 214,650 239,353 216,366 241,130
Basic subscribers................ 127,972 137,885 159,871 164,186 166,917 183,978 167,616 186,333
Basic penetration(5)............. 73.7% 75.6% 74.1% 77.5% 77.8% 76.9% 77.5% 77.3%
Premium units(6)................. 72,740 68,701 71,928 72,212 65,327 69,086 71,152 72,897
Premium penetration(7)........... 56.8% 49.8% 45.0% 44.0% 39.1% 37.6% 42.3% 39.1%
Average monthly revenue per basic
subscriber(8).................. $ 29.93 $ 30.42 $ 31.81 $ 33.49 $ 35.18 -- $ 34.46 $ 36.03
</TABLE>
- ---------------
(1) We define adjusted EBITDA as net income before income taxes, extraordinary
items, interest expense, interest income, depreciation and amortization,
employee stock ownership plan expense, pension curtailment gain, minority
interest, and any gain or loss on the disposition of assets. Employee stock
ownership plan expense for the six months ended June 30, 1999 was $2.5
million.
Although adjusted EBITDA is not a measure of performance calculated in
accordance with generally accepted accounting principles, we believe that
adjusted EBITDA is a meaningful measure of performance because it is
commonly used in the radio and cable television industries to analyze and
compare radio and cable television companies on the basis of operating
performance, leverage and liquidity. In addition, our new senior credit
facility and the indenture that governs the notes contain certain covenants
in which compliance is measured by computations substantially similar to
those used in determining adjusted EBITDA. There are no legal restrictions
on the use of adjusted EBITDA, other than those contained in our new senior
credit facility and indenture. Management expects that adjusted EBITDA will
be used to satisfy working capital, debt service and capital expenditure
requirements and other commitments and contingencies. Adjusted EBITDA should
not be considered in isolation or as a substitute for or an alternative to
net income, cash flow from operating activities or other income or cash flow
data prepared in accordance with GAAP. Adjusted EBITDA should not be
considered as a measure of a company's operating performance or liquidity.
Adjusted EBITDA as presented may not be comparable to other similarly titled
measures used by other companies.
(2) The ratio of earnings to fixed charges is expressed as the ratio of income
before income taxes and extraordinary items plus fixed charges (excluding
capitalized interest) to fixed charges. Fixed charges consist of interest
expense, capitalized interest and one-third of rental expense (the portion
deemed representative of the interest factor).
(3) The 1998 as adjusted stockholders' deficit reflects the write-off of
unamortized debt issuance costs associated with the old senior credit
facility and the senior notes and the prepayment premium on the senior
notes, which total $5.5 million ($3.2 million net of income taxes).
(4) The 1998 as adjusted cable operating data gives effect to the January 29,
1999 acquisition of Hanover Cable TV.
(5) Basic penetration represents basic subscribers as a percentage of homes
passed.
(6) Premium units represents the aggregate number of individual premium services
(e.g., HBO, Cinemax, Showtime) for which customers have subscribed.
(7) Premium penetration represents premium units as a percentage of basic
subscribers.
(8) Average monthly revenue per basic subscriber represents revenues divided by
12 divided by the weighted average number of subscribers for the year.
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<PAGE> 15
RISK FACTORS
Before tendering your outstanding notes for exchange notes or investing in
the exchange notes, you should be aware that there are various risks involved in
your investment. We have discussed below the material risks that you should
consider in making your investment decision. You should consider carefully these
risk factors, together with all of the other information included in this
prospectus.
RISKS RELATING TO OUR INDEBTEDNESS AND THE NOTES
OUR SIGNIFICANT DEBT SERVICE OBLIGATIONS WILL LIMIT OUR CASH FLOW AND AFFECT HOW
WE OPERATE OUR COMPANY.
We have a significant level of debt and debt service obligations. As of
June 30, 1999, we had approximately $420.4 million of indebtedness. We also had
the ability to incur $179.7 million of additional debt under our new senior
credit facility. In addition, the indenture governing the notes allows us to
incur additional indebtedness under certain circumstances. If we add new debt to
our current debt levels, the related risks that we now face could intensify.
Our substantial indebtedness poses important consequences to you, including
the risks that:
- we will use a substantial portion of our cash flow from operations to
pay principal and interest on our debt, thereby reducing the funds
available for working capital, capital expenditures, acquisitions and
other general corporate purposes;
- our indebtedness may limit our ability to obtain additional financing
on satisfactory terms;
- insufficient cash flow from operations may force us to sell assets,
restructure or refinance our debt, or seek additional equity capital,
which we may be unable to do at all or on satisfactory terms;
- our level of indebtedness may make us more vulnerable to economic
downturns and may limit our ability to withstand competitive
pressures;
- indebtedness under the new senior credit facility bears interest at
variable rates which could create higher debt service requirements if
market interest rates increase; and
- our failure to comply with the financial and other covenants
applicable to our debt could result in an event of default, which, if
not cured or waived, could have a material adverse effect on us.
These risks may directly impact our ability to service our debt
obligations, including the notes.
BECAUSE THE NOTES WILL BE SUBORDINATED TO OUR SENIOR DEBT, WE MUST MAKE PAYMENTS
ON OUR SENIOR DEBT BEFORE YOU RECEIVE INTEREST AND PRINCIPAL PAYMENTS.
Before paying principal and interest on the notes, we must first make
payments on our existing and future senior debt, including all outstanding
amounts under our new senior credit facility. As of June 30, 1999, we had
approximately $270.4 million of senior indebtedness. In addition, we had
approximately $179.7 million of additional borrowing availability under our new
senior credit facility.
Our obligations under the new senior credit facility are secured by
substantially all of the assets (excluding real property) that we use in our
business operations and by all of our voting common stock and the voting common
stock of our direct and indirect subsidiaries. The new senior credit facility is
guaranteed by all of our direct and indirect subsidiaries. If we are unable to
repay amounts due on our secured debt, the lenders could proceed against the
collateral securing the debt and we may not have enough assets left to pay you
or other noteholders. In addition, the new senior credit
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<PAGE> 16
facility prohibits us from paying amounts due on the notes, or from purchasing,
redeeming or otherwise acquiring the notes if a default exists under our senior
debt.
None of our subsidiaries guarantees the notes. As a result, the notes are
effectively subordinated in right of payment to all debt and other liabilities
(including trade payables) of our subsidiaries, which, as of June 30, 1999, was
$31.8 million. Substantially all of our consolidated assets are held by our
subsidiaries. Any right we may have to receive assets of our subsidiaries upon
their liquidation or reorganization, and the resulting rights of the holders of
notes to participate in those assets, would be subordinated to the claims of our
subsidiaries' creditors except in certain limited circumstances.
WE DEPEND UPON OUR SUBSIDIARIES FOR THE CASH FLOW NECESSARY TO SERVICE OUR DEBT
OBLIGATIONS, INCLUDING THE NOTES.
The notes are obligations exclusively of Susquehanna Media, which is a
holding company. We conduct our business through our operating subsidiaries and
do not have any operations of our own. As a result, we are dependent upon the
ability of our subsidiaries to provide us with cash, in the form of dividends,
intercompany credits, loans or otherwise, to meet our debt service obligations,
including our obligations under the notes. These subsidiaries are separate and
distinct legal entities and have no obligations to pay any amounts due on the
notes or to make any funds available therefor. In addition, dividends, loans or
other distributions to us from our subsidiaries may be subject to contractual or
other restrictions, will depend upon the results of operations of such
subsidiaries and may be subject to other business considerations.
Not all of our subsidiaries are wholly-owned. To the extent that
subsidiaries of Susquehanna Media that are not wholly-owned declare dividends or
make other distributions to stockholders, these minority stockholders will
receive their shares of such payments, and such amounts will not be available to
pay principal or interest on the notes. The indenture governing the notes does,
however, limit the amount of dividends and other distributions that may be paid
to these minority stockholders.
OUR INDEBTEDNESS PROHIBITS US FROM ENGAGING IN ACTIVITIES THAT MAY BENEFIT US.
Our new senior credit facility and the indenture governing the notes each
contain a number of significant covenants. These covenants limit or restrict our
ability to:
- incur additional debt;
- pay dividends and make distributions;
- repurchase securities;
- make certain investments;
- incur liens;
- transfer or sell assets;
- enter into transactions with insiders or related parties;
- issue or sell stock of subsidiaries; or
- merge or consolidate.
These limitations and restrictions may adversely affect our ability to
finance our future operations or capital needs or engage in other business
activities that may be in our best interests.
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<PAGE> 17
WE MAY NOT HAVE SUFFICIENT FUNDS TO REPAY THE NOTES UPON A CHANGE OF CONTROL.
If we experience certain changes of control, you will have the right to
require us to purchase your notes at a purchase price equal to 101% of the
principal amount of your notes plus accrued and unpaid interest. Under those
circumstances, we may also be required to:
- repay our outstanding senior debt; or
- obtain our lenders' consent for our purchase of the notes.
If we cannot repay our debt or cannot obtain the required consents, we may be
unable to purchase the notes. This would be an event of default under the
indenture. Upon a change of control, we cannot guarantee that we will have
sufficient funds to make any debt payment, including purchases of the notes, as
described above. To avoid default, we would try to refinance our debt. We cannot
guarantee, however, that such refinancing, if available, would be on favorable
terms.
OUR SENIOR CREDIT FACILITY CONTAINS CROSS-DEFAULT PROVISIONS THAT MAY ENABLE
SENIOR LENDERS TO PROCEED AGAINST COLLATERAL IN THE EVENT OF A DEFAULT ON THE
NOTES.
The events that qualify under the indenture as events of default, including
a change of control, may also be events of default under our new senior credit
facility or other indebtedness. An event of default under the new senior credit
facility would permit our lenders to accelerate our indebtedness. If we cannot
repay such borrowings when due, the lenders could proceed against the collateral
securing the debt.
THE FAILURE OF A MARKET TO DEVELOP COULD AFFECT THE LIQUIDITY AND PRICE OF YOUR
EXCHANGE NOTES.
The exchange notes will be a new issue of securities for which there is no
existing trading market. We cannot assure you as to the liquidity of markets
that may develop for the exchange notes, your ability to sell the exchange notes
or the price at which you would be able to sell the exchange notes. If such
markets were to develop, the exchange notes could trade at prices that may be
lower than their principal amount or purchase price depending on many factors,
including prevailing interest rates and the markets for similar securities. In
addition, any market-making by the initial purchasers of the outstanding notes
may be limited during the exchange offer or the pendency of any resale
registration statement and may be discontinued at any time without notice. We do
not intend to apply for listing of the exchange notes on any national securities
exchange or on Nasdaq. The liquidity of, and trading market for, the exchange
notes also may be adversely affected by changes in the market for high yield
securities and by changes in our financial performance or prospects or in the
prospects for companies in our industry generally. As a result, you cannot be
sure that an active trading market will develop for the exchange notes.
RISKS RELATING TO THE COMPANY
IF WE DO NOT SUCCESSFULLY INTEGRATE FUTURE ACQUISITIONS, WE MAY NOT SUCCESSFULLY
INCREASE OUR CASH FLOW.
As part of our business strategy, we intend to acquire suitable radio
stations and cable systems. In the event that we acquire additional radio
stations and cable systems, we may have difficulty integrating the operations,
systems and management of such businesses, and unforeseen integration
difficulties may require a disproportionate amount of management's attention and
our other resources. In addition, there can be no assurance that any future
acquisitions will be as successful as recent acquisitions, and future
acquisitions may not increase our cash flow or yield other anticipated benefits.
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<PAGE> 18
"YEAR 2000" COMPUTER PROBLEMS COULD DISRUPT OUR OPERATIONS.
Many existing computer programs use only two digits to identify a year in
the computer's processing operations. These programs were designed and developed
without considering the impact of the upcoming change in the century. If not
corrected, many computer applications could fail or create erroneous results by
or at the year 2000. "Year 2000" issues affect virtually all companies and
organizations, including our company. We have established a Year 2000 Task Force
to manage an overall Year 2000 assessment, remediation, testing and contingency
planning project. The Year 2000 Task Force has developed and is implementing a
Year 2000 strategic plan. Our goal is to minimize the potential effects of the
Year 2000 problem on customers and business processes. Our internal information
technology, product delivery and support systems, as well as our key suppliers,
vendors and customers are included in the scope of the investigation.
We have not finished assessing the Year 2000 readiness of our computer
systems. As a result, there can be no assurance that all of our systems will be
Year 2000 compliant. In addition, the ability of third parties with whom we
transact business to adequately address their Year 2000 issues is outside of our
control. There can be no assurance, therefore, that the failure of such third
parties to adequately address their Year 2000 issues will not have a material
adverse effect on our business, results of operations and financial condition.
We intend, under our Year 2000 strategic plan, to develop contingency plans by
October 31, 1999 to mitigate any possible disruption in business that may result
if certain of our systems or the systems of third parties are not Year 2000
compliant. We have not yet developed completely these contingency plans.
RISKS RELATING TO THE RADIO BROADCASTING INDUSTRY
WE ARE DEPENDENT UPON ADVERTISING REVENUES TO GENERATE INCOME AND CASH FLOW.
We derive substantially all of our broadcast revenues from the sale of
advertising on our radio stations. For the years ended December 31, 1996, 1997
and 1998, 97%, 98% and 98% of our broadcast revenues, respectively, were
generated from the sale of advertising. Because advertisers generally reduce
their spending during economic downturns, we could be adversely affected by a
future national recession. In addition, because a substantial portion of our
broadcast revenues are derived from local advertisers, our ability to generate
advertising revenues in specific markets could be adversely affected by local or
regional economic downturns. We are particularly dependent on advertising
revenue from the San Francisco and Dallas markets, which generated 23.1% and
12.6%, respectively, of our total revenue in 1998.
COMPETITION FROM OTHER RADIO STATIONS AND MEDIA FORMS COULD REDUCE OUR
ADVERTISING REVENUES AND CASH FLOW.
The radio broadcasting industry is very competitive. The success of each of
our stations is dependent upon its audience ratings and share of the overall
advertising revenues within its market. Our stations compete for audiences and
advertising revenues directly with other radio stations, and some of the owners
of those competing stations have much greater financial resources than we do.
Our stations also compete with other media such as cable television, newspapers,
magazines, direct mail, compact discs, music videos, the Internet and outdoor
advertising. We cannot be sure that any of our stations can maintain or increase
its current audience ratings or market share. In addition, other stations may
change their format or programming to compete directly with our stations for
audience and advertisers, or engage in aggressive promotional campaigns. If this
happens, the ratings and advertising revenues of our stations could decrease,
the promotion and other expenses of our stations could increase, and our
stations would have lower broadcast cash flow.
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<PAGE> 19
New media technologies are also being introduced to compete with the radio
broadcasting industry. Some of these new technologies are:
- Digital audio broadcasting and satellite digital audio radio service,
which provide for the delivery of multiple new, high quality audio
programming formats to local and national audiences; and
- Streaming audio delivered through the Internet.
We cannot predict at this time the effect, if any, that any of these new
technologies may have on the radio broadcasting industry in general or our
stations in particular.
LICENSING AND OWNERSHIP RULES MAY LIMIT THE GROWTH OF OUR RADIO BROADCASTING
OPERATIONS.
The radio broadcasting industry is subject to extensive regulation by the
Federal Communications Commission under the Communications Act of 1934. FCC
approval is required for the issuance, renewal or transfer of radio broadcast
station operating licenses. We cannot operate our radio stations without FCC
licenses. The failure to renew our licenses on their expiration dates or the
inclusion of conditions or qualifications in our licenses could have a negative
impact on our business. The Communications Act and FCC rules impose specific
limits on the number of stations an entity can own in a single market. Ownership
rules may affect our acquisition strategy because they may prevent us from
acquiring additional stations in a particular market. We may also be prevented
from engaging in a swap transaction if the swap would cause us to violate these
rules.
The FCC has recently issued public notices suggesting that it may examine
and impose limits upon the advertising revenue share acquired by one entity in a
single market. It is not clear how the FCC will proceed in this area. In
addition, the Department of Justice, either directly through its administration
of the Hart-Scott-Rodino pre-merger notification requirements, or generally, has
taken an active role in reviewing acquisitions of stations in particular markets
and, in some instances, has conditioned its clearance on the parties' agreement
to limit market share to a level approved by the Department.
RISKS RELATING TO THE CABLE TELEVISION INDUSTRY
COMPETITION FROM OTHER COMMUNICATION SERVICE PROVIDERS COULD REDUCE OUR REVENUES
AND CASH FLOW.
Our cable television systems face competition from:
- alternative methods of receiving and distributing television signals,
including:
-- direct broadcast satellite, which is a satellite service of one
or more program channels that can be received on a subscriber's premises
directly using an antenna;
-- multichannel multipoint distribution systems, which use low
power microwave frequencies with increased channel capacity to transmit
video programming over the air to customers;
-- satellite master antenna television systems, which use one
central antenna to receive and deliver programming to a concentrated
group of viewers, such as in apartments, hotels or hospitals; and
-- broadcast digital television, which can deliver high definition
television pictures, digital-quality programs and CD-quality audio
programming;
- data transmission and Internet service providers; and
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<PAGE> 20
- other sources of news, information and entertainment such as newspapers,
movie theaters, live sporting events and home video products, including
videotape cassette recorders and digital video disc players.
The FCC and Congress are expected to consider proposals to enhance the
ability of direct broadcast satellite providers to gain access to additional
programming and to authorize direct broadcast satellite carriers to transmit
distant signals of the major television networks or local signals to subscribers
on a broader basis than permitted under current law. If direct broadcast
satellite providers gain permission and are able to deliver distant signals of
the major television networks or local or regional off-air signals, cable
television system operators may lose a competitive advantage over direct
broadcast satellite providers. In addition, some of the regional bell operating
companies, other telephone companies, public utility companies and other
entities are in the process of entering the cable television business. The
regional bell operating companies, other telephone companies, public utility
companies and other entities that may enter our business have significant access
to capital, and several have expressed their intention to enter the multichannel
video programming distribution business in addition to their existing voice and
data transmission businesses. Among other things, telephone companies have an
existing relationship with the households in their service areas, have
substantial financial resources, and may have an existing infrastructure capable
of delivering cable television service. Electric utilities also have the
potential to become significant competitors in the video marketplace, as many of
them already possess fiber optic transmission lines in certain of the areas they
serve. In the last year, several utilities have announced, commenced, or moved
forward with ventures involving multichannel video programming distribution.
The Communications Act and related FCC regulations contain a number of
provisions that encourage or facilitate competition to franchised cable systems.
The Cable Television Consumer Protection and Competition Act of 1992 prohibits
franchising authorities from granting exclusive cable television franchises and
from unreasonably refusing to award additional competitive franchises. It also
permits municipal authorities to operate cable television systems in their
communities without franchises. As franchises are non-exclusive, other cable
television companies can build their own systems and obtain franchises to
operate directly in competition with us. We cannot predict whether competition
from existing or future competitors or from developing and future technologies
will reduce our revenues and cash flow. Moreover, as we expand and introduce new
and enhanced services, including additional telecommunications services, we will
be subject to increased competition from other telecommunications providers.
Cable television systems operate in a very competitive business
environment, and we may compete against competitors with fewer regulatory
burdens, greater financial and personnel resources, greater brand name
recognition and long-standing relationships with regulatory authorities.
Moreover, mergers, joint ventures and alliances among franchise, wireless or
private cable television operators, regional bell operating companies and others
may result in providers capable of offering cable television and other
telecommunications services in direct competition with us.
IF OUR CABLE FRANCHISES ARE NOT RENEWED OR IF OUR FRANCHISES ENCOUNTER
COMPETITION, WE MAY EXPERIENCE A SIGNIFICANT DECLINE IN OUR REVENUES AND CASH
FLOW.
Cable television companies operate under non-exclusive franchises granted
by local authorities, which are subject to renewal and renegotiation from time
to time. Our business is dependent upon the retention and renewal of our local
franchises. The non-renewal or termination of franchises relating to a
significant portion of our subscribers could have a material adverse effect on
our revenues and cash flow. A franchise is generally granted for a fixed term
ranging from 5 to 15 years, but in many cases is terminable if the franchisee
fails to comply with the material provisions of the franchise agreement.
Franchises typically impose conditions relating to the use and operation of the
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<PAGE> 21
cable television system, including requirements relating to the payment of fees,
system bandwidth capacity, customer service requirements, franchise renewal and
termination. The Cable Communications Policy Act of 1984 provides for an orderly
franchise renewal process in which franchise renewal will not be unreasonably
withheld. If renewal is denied and the franchising authority acquires ownership
of the system or effects a transfer of the system to another person, the
operator generally is entitled to the "fair market value," but with no value
allocated to the franchise itself in a non-renewal situation, for the system
covered by such franchise. No assurances can be given that we will be able to
retain or renew our franchises or that the terms of any such renewals will be on
terms as favorable to the Company as our existing franchises.
CHANGES IN CABLE TELEVISION REGULATION COULD INCREASE OUR COSTS AND REDUCE OUR
REVENUES.
The cable television industry is subject to extensive regulation by
federal, local and, in some instances, state governmental agencies. The 1984 and
1992 Cable Acts, both of which amended the Communications Act, established a
national policy to guide the development and regulation of cable television
systems. Recently, the Communications Act was substantially amended by the
Telecommunications Act of 1996. Principal responsibility for implementing the
policies of the 1984 and 1992 Cable Acts and the 1996 Telecom Act has been
allocated between the FCC and state or local regulatory authorities. Advances in
communications technology, as well as changes in the marketplace and the
regulatory and legislative environment, are constantly occurring. It is
therefore not possible to predict the effect that ongoing or future developments
might have on the cable communications industry or on the operations of the
Company.
Federal law and regulation can increase the costs of operating our cable
systems and limit the rates we can charge. The 1992 Cable Act and the FCC's
rules implementing that act have increased the administrative and operational
expenses of cable television systems. The FCC and local or state franchise
authorities have also gained additional regulatory oversight powers under the
act. The 1984 and 1992 Cable Acts and the corresponding FCC regulations have
established, among other things:
- rate regulations;
- mandatory carriage and retransmission consent requirements that require a
cable system under certain circumstances to carry a local broadcast
station or to obtain consent to carry a local or distant broadcast
station;
- rules for franchise renewals and transfers; and
- other requirements covering a variety of operational areas such as
provisions governing advertising and certain aspects of program content,
and technical standards and customer service requirements.
For certain small cable operators, the 1996 Telecom Act eliminated rate
regulation of cable programming service tiers and, in certain circumstances,
basic services and equipment immediately after passage, and, as of March 31,
1999, deregulated rates for certain cable programming service tiers for most
multiple system operators (including us). The FCC has played a significant role
in implementing the rate deregulation provisions of the 1996 Telecom Act.
The FCC and Congress continue to be concerned that rates for programming
services are rising at a rate exceeding inflation. It is therefore possible that
notwithstanding the recent elimination of cable programming service tiers rate
regulation, Congress may enact legislation in the future to reimpose additional
rate controls on cable systems. We are currently unable to predict the ultimate
effect of the 1992 Cable Act or the 1996 Telecom Act, the ultimate outcome of
future FCC rulemaking proceedings, or of litigation challenging various aspects
of this federal legislation and the FCC's regulations implementing the
legislation.
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<PAGE> 22
State and Local Regulation can increase the costs of operating our cable
systems and limit the rates we can charge. Cable television systems generally
operate pursuant to non-exclusive franchises, permits or licenses granted by a
municipality or other state or local governmental entity. The terms and
conditions of franchises vary materially from jurisdiction to jurisdiction. A
number of states subject cable systems to the jurisdiction of centralized state
governmental agencies. No state in which we currently operate has enacted state
level regulation. We cannot predict whether any of the states in which we
currently operate will engage in such regulation in the future.
COPYRIGHT LAW CHANGES COULD INCREASE THE COSTS OF THE LICENSES WE NEED TO
OPERATE OUR CABLE SYSTEMS.
Cable systems, like ours, must obtain copyright licenses for the
programming and television signals they carry. Copyright authority for
programming on non-broadcast networks typically is obtained from the networks in
question, and copyright authority for programming originated locally by the
cable system must be obtained directly from copyright holders. The Copyright Act
of 1976 provides a blanket license for copyrighted material on television
stations whose signals a cable system retransmits. Cable operators can obtain
this license by filing semi-annual reports and paying a percentage of their
revenues as a royalty fee to the U.S. Copyright Office, which then distributes
the royalty pool to copyright holders. For larger cable systems, these payments
vary with the number and type of distant television stations the system carries.
From time to time, Congress considers proposals to alter the blanket copyright
license, some of which could make the license more costly.
IF OUR PROGRAMMING COSTS CONTINUE TO INCREASE AND WE CANNOT PASS THEM ALONG TO
OUR CUSTOMERS, OUR CASH FLOW WILL DECREASE.
Our cable programming costs are increasing. Programming has been and is
expected to continue to be our largest single expense item and accounted for
approximately 39% of the Company's total operating costs for the year ended
December 31, 1998. In recent years, the cable industry has experienced a rapid
escalation in the cost of programming, particularly sports programming. This
escalation may continue, and we may not be able to pass programming cost
increases on to our subscribers. In addition, as we add programming to our
limited and "expanded basic" tiers, we may face additional market constraints on
our ability to pass these costs on to our subscribers.
We acquire approximately 67% of our cable programming through an
affiliation agreement with a subsidiary of AT&T. We receive favorable rates on
AT&T programming because Lenfest Communications, Inc., which is currently 50%
owned by AT&T, holds minority ownership interests in Susquehanna Cable and its
principal operating subsidiaries. We estimate that the favorable programming
rates saved us at least $2.0 million in 1998. If Lenfest ceases to hold a
significant interest in Susquehanna Cable, we may no longer receive the
favorable programing rates. In such event, our programming rates will increase
faster than they would otherwise, and we may not be able to pass such increases
on to our subscribers.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements, including statements
about our acquisitions and business strategy, our expected financial position
and operating results, and our financing plans and similar matters. We have
based these forward-looking statements largely on our current expectations and
projections about future events and financial trends affecting the financial
condition of our business. These forward-looking statements are subject to
risks, uncertainties and assumptions about Susquehanna Media, including, among
other things:
- General economic and business conditions, both nationally and in our
markets.
- Our acquisition opportunities.
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- Our expectations and estimates concerning future financial performance,
financing plans and the impact of competition.
- Anticipated trends in our business, including those described in
"Management's Discussion and Analysis of Financial Condition and Results
of Operations."
- Existing and future regulations affecting our business.
- Other risk factors set forth in this "Risk Factors" section.
In addition, in those and other portions of this prospectus, the words
"believe," "may," "will," "estimate," "continue," "anticipate," "intend,"
"expect" and similar expressions, as they relate to Susquehanna Media or our
management, are intended to identify forward-looking statements. All
forward-looking statements attributable to us or to persons acting on our behalf
are expressly qualified in their entirety by this cautionary statement.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this prospectus might not transpire.
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WHERE YOU CAN GET MORE INFORMATION
This prospectus is part of a registration statement on Form S-4 that we
have filed with the SEC. This prospectus does not contain all of the information
set forth in the registration statement. For further information about us and
the exchange notes, you should refer to the registration statement. This
prospectus summarizes material provisions of contracts and other documents.
Since these summaries may not contain all of the information that you may find
important, you should review the full text of these documents. We have filed
certain of these documents as exhibits to our registration statement.
You should direct any request for information to Craig W. Bremer, our
corporate Secretary, at least 10 business days before you tender your exchange
notes in the exchange offer. Our mailing address and telephone number are:
Susquehanna Media Co.
140 East Market Street
York, Pennsylvania 17401
(717) 848-5500
As a result of the exchange offer, we will be subject to the periodic
reporting and other informational requirements of the Securities Exchange Act of
1934. In addition, under the indenture governing the outstanding notes and the
exchange notes, we have agreed that until we are subject to the reporting and
informational requirements of the Exchange Act and during any other period in
which we are not subject to those requirements, so long as the outstanding notes
or the exchange notes remain outstanding, we will distribute to the holders of
the notes, copies of the financial information that we would have been required
to file with the SEC pursuant to the Exchange Act. This financial information
shall include annual reports containing consolidated financial statements and
notes thereto, together with an opinion thereon expressed by an independent
public accounting firm, management's discussion and analysis of financial
condition and results of operations, as well as quarterly reports containing
unaudited condensed consolidated financial statements for the first three
quarters of each fiscal year. We have also agreed to furnish to holders of
outstanding notes and prospective purchasers of the exchange notes upon their
request, the information required to be delivered pursuant to Rule 144(d)(4)
under the Securities Act during any period in which we are not subject to the
reporting and informational requirements of the Exchange Act.
The registration statement, as well as such reports, exhibits and other
information filed by us with the SEC can be inspected and copied, at prescribed
rates, at the public reference facilities maintained by the Public Reference
Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Regional Offices of the SEC at 7 World Trade
Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the
SEC at 1-800-SEC-0330 for additional information about its public reference
room. Our SEC filings are also available without charge on the SEC's Internet
site at http://www.sec.gov.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the outstanding notes, we agreed to register
the exchange notes. The exchange offer is being made to satisfy this contractual
obligation.
By tendering outstanding notes in exchange for exchange notes, each holder
represents to us that:
- any exchange notes to be received by a holder are being acquired in
the ordinary course of that holder's business;
- it has no arrangement or understanding with any person to participate
in a "distribution" of exchange notes under the Securities Act;
- it is not an "affiliate" of Susquehanna Media, as defined in Rule 405
under the Securities Act, or, if it is an affiliate, that it will
comply with the registration and prospectus delivery requirements of
the Securities Act to the extent applicable;
- it has full power and authority to tender, exchange, sell, assign and
transfer the tendered outstanding notes;
- Susquehanna Media will acquire good, marketable and unencumbered title
to the tendered outstanding notes, free and clear of all liens,
restrictions, charges and encumbrances; and
- the outstanding notes tendered for exchange are not subject to any
adverse claims or proxies.
Each tendering holder also will warrant and agree that it will, upon
request, execute and deliver any additional documents that Susquehanna Media or
the exchange agent deems to be necessary or desirable to complete the exchange,
sale, assignment, and transfer of the outstanding notes tendered pursuant to the
exchange offer.
Each broker-dealer that receives exchange notes for its own account in
exchange for outstanding notes pursuant to the exchange offer, where the
outstanding notes were acquired by such broker-dealer as a result of
market-making or other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of exchange notes received in this
exchange offer.
The exchange offer is not being made to, nor will Susquehanna Media accept
tenders for exchange from, holders of outstanding notes in any jurisdiction in
which the exchange offer or the acceptance of the exchange notes would be in
violation of the securities or blue sky laws of that jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the exchange offer means any person in whose name the outstanding notes are
registered on the books of Susquehanna Media or any other person who has
obtained a properly completed bond power from the registered holder, or any
participant in DTC whose name appears on a security position listing as a holder
of outstanding notes (which, for purposes of the exchange offer, include
beneficial interests in the outstanding notes held by direct or indirect
participants in DTC and outstanding notes held in definitive form).
TERMS OF THE EXCHANGE OFFER
Susquehanna Media hereby offers, upon the terms and subject to the
conditions shown in this prospectus and in the accompanying letter of
transmittal, to exchange $1,000 principal amount of 8 1/2% Senior Subordinated
Exchange Notes due 2009 for each $1,000 principal amount of outstanding
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<PAGE> 26
8 1/2% Senior Subordinated Notes due 2009 properly tendered before the
expiration date and not properly withdrawn according to the procedures described
below. Holders may tender their outstanding notes in whole or in part in
integral multiples of $1,000 principal amount.
The form and terms of the exchange notes are the same as the form and terms
of the outstanding notes except that:
- the exchange notes have been registered under the Securities Act and
therefore are not subject to the restrictions on transfer applicable to
the outstanding notes; and
- holders of the exchange notes will not be entitled to some of the rights
of holders of the outstanding notes under the registration rights
agreement.
The exchange notes evidence the same indebtedness as the outstanding notes and
will be issued pursuant to and entitled to the benefits of the indenture that
governs the outstanding notes.
The exchange offer is not conditioned upon any minimum principal amount of
outstanding notes being tendered for exchange. Susquehanna Media reserves the
right in its sole discretion to purchase or make offers for any outstanding
notes that remain outstanding after the expiration date or, as discussed under
"-- Conditions to the Exchange Offer," to terminate the exchange offer and, to
the extent permitted by applicable law, purchase outstanding notes in the open
market, in privately negotiated transactions or otherwise. The terms of any such
purchases or offers could differ from the terms of the exchange offer. As of the
date of this prospectus, $150 million principal amount of 8 1/2% Senior
Subordinated Notes due 2009 was outstanding.
Holders of outstanding notes do not have any appraisal or dissenters'
rights in connection with the exchange offer. Outstanding notes that are not
tendered for, or are tendered but not accepted in connection with, the exchange
offer will remain outstanding. See "Summary of the Exchange
Offer -- Consequences of Not Complying with Exchange Offer Procedures."
If any tendered outstanding notes are not accepted for exchange because of
an invalid tender, the occurrence of particular other events discussed herein or
otherwise, certificates for any such unaccepted outstanding notes will be
returned, without expense, to the tendering holder thereof promptly after the
expiration date.
Holders who tender outstanding notes in connection with the exchange offer
will not be required to pay brokerage commissions or fees or, subject to the
instructions in the letter of transmittal, transfer taxes with respect to the
exchange of the outstanding notes in connection with the exchange offer.
Susquehanna Media will pay all charges and expenses, other than specified
applicable taxes. See "-- Fees and Expenses"
NEITHER SUSQUEHANNA MEDIA NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO HOLDERS OF THE OUTSTANDING NOTES AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OUTSTANDING NOTES IN THE
EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH
RECOMMENDATION. HOLDERS OF THE OUTSTANDING NOTES MUST MAKE THEIR OWN DECISION
WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER, AND, IF SO, THE AGGREGATE
AMOUNT OF OUTSTANDING NOTES TO TENDER AFTER READING THIS PROSPECTUS AND THE
LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR
FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date for the exchange offer is 5:00 p.m., New York City
time, on , 1999 unless the exchange offer is extended by
Susquehanna Media. If Susquehanna Media does extend the exchange offer, the
expiration date will be the latest date and time to which the exchange offer is
extended.
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<PAGE> 27
Susquehanna Media expressly reserves the right in its sole and absolute
discretion, subject to applicable law, at any time and from time to time:
- to delay the acceptance of the outstanding notes for exchange;
- to terminate the exchange offer, whether or not any outstanding notes
have already been accepted for exchange, if Susquehanna Media determines,
in its sole and absolute discretion, that any of the events or conditions
referred to under "-- Conditions to the Exchange Offer" has occurred or
exists or has not been satisfied with respect to the exchange offer;
- to extend the expiration date of the exchange offer and retain all
outstanding notes tendered pursuant to the exchange offer, subject,
however, to the right of holders of outstanding notes to withdraw their
tendered outstanding notes as described under "-- Withdrawal Rights;" and
- to waive any condition or otherwise amend the terms of the exchange offer
in any respect.
If the exchange offer is amended in a manner determined by Susquehanna
Media to constitute a material change, or if Susquehanna Media waives a material
condition of the exchange offer, Susquehanna Media will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered holders of the affected outstanding notes, and Susquehanna Media will
extend the exchange offer to the extent required by Rule 14e-1 under the
Exchange Act.
Any such delay in acceptance, termination, extension or amendment will be
followed promptly by oral or written notice thereof to the exchange agent for
the exchange offer (any such oral notice to be promptly confirmed in writing)
and by making a public announcement, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date. Without limiting
the manner in which Susquehanna Media may choose to make any public
announcement, and subject to applicable laws, Susquehanna Media shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a release to an appropriate news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the exchange offer,
promptly after the expiration date, Susquehanna Media will exchange, and will
issue to the exchange agent, exchange notes for outstanding notes validly
tendered and not withdrawn pursuant to the withdrawal rights described under
"-- Withdrawal Rights."
In all cases, delivery of exchange notes in exchange for outstanding notes
tendered and accepted for exchange pursuant to the exchange offer will be made
only after timely receipt by the exchange agent of:
- outstanding notes or a book-entry confirmation of a book-entry transfer
of outstanding notes into the exchange agent's account at DTC;
- the letter of transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees; and
- any other documents required by the letter of transmittal.
Accordingly, the delivery of exchange notes might not be made to all tendering
holders at the same time, and will depend upon when outstanding notes,
book-entry confirmations with respect to outstanding notes and other required
documents are received by the exchange agent.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of outstanding notes into the exchange agent's account at
DTC.
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<PAGE> 28
Subject to the terms and conditions of the exchange offer, Susquehanna
Media will be deemed to have accepted for exchange, and thereby exchanged,
outstanding notes validly tendered and not withdrawn as, if and when Susquehanna
Media gives oral or written notice to the exchange agent (any such oral notice
to be promptly confirmed in writing) of Susquehanna Media's acceptance of such
outstanding notes for exchange pursuant to the exchange offer. Susquehanna
Media's acceptance for exchange of outstanding notes tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering holder and Susquehanna Media upon the terms and subject to the
conditions of the exchange offer. The exchange agent will act as agent for
Susquehanna Media for the purpose of receiving tenders of outstanding notes,
letters of transmittal and related documents, and as agent for tendering holders
for the purpose of receiving outstanding notes, letters of transmittal and
related documents and transmitting exchange notes to holders who validly
tendered outstanding notes. Such exchange will be made promptly after the
expiration date of the exchange offer. If for any reason the acceptance for
exchange or the exchange of any outstanding notes tendered pursuant to the
exchange offer is delayed (whether before or after Susquehanna Media's
acceptance for exchange of outstanding notes), or Susquehanna Media extends the
exchange offer or is unable to accept for exchange or exchange outstanding notes
tendered pursuant to the exchange offer, then, without prejudice to Susquehanna
Media's rights set forth herein, the exchange agent may, nevertheless, on behalf
of Susquehanna Media and subject to Rule 14e-1(c) under the Exchange Act, retain
tendered outstanding notes and such outstanding notes may not be withdrawn
except to the extent tendering holders are entitled to withdrawal rights as
described under "-- Withdrawal Rights."
PROCEDURES FOR TENDERING OUTSTANDING NOTES
Valid Tender. Except as set forth below, in order for outstanding notes to
be validly tendered pursuant to the exchange offer, either:
- a properly completed and duly executed letter of transmittal (or
facsimile thereof), with any required signature guarantees and any other
required documents, must be received by the exchange agent at the address
set forth under "-- Exchange Agent" prior to the expiration date and
tendered outstanding notes must be received by the exchange agent, or
such outstanding notes must be tendered pursuant to the procedures for
book-entry transfer set forth below and a book-entry confirmation must be
received by the exchange agent, in each case prior to the expiration
date; or
- the guaranteed delivery procedures described below must be complied with.
If less than all of the outstanding notes are tendered, a tendering holder
should fill in the amount of outstanding notes being tendered in the appropriate
box on the letter of transmittal. The entire amount of outstanding notes
delivered to the exchange agent will be deemed to have been tendered unless
otherwise indicated.
If any letter of transmittal, endorsement, bond power, power of attorney,
or any other document required by the letter of transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing. Unless waived by Susquehanna Media,
evidence satisfactory to Susquehanna Media of such person's authority to so act
must also be submitted.
Any beneficial owner of outstanding notes that are held by or registered in
the name of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the exchange offer.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER. DELIVERY WILL BE DEEMED MADE ONLY
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<PAGE> 29
WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY AND PROPER
INSURANCE SHOULD BE OBTAINED. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES
SHOULD BE SENT TO SUSQUEHANNA MEDIA. HOLDERS MAY REQUEST THEIR RESPECTIVE
BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THESE
TRANSACTIONS FOR THEM.
Book-Entry Transfer. The exchange agent will request the establishment of
an account with respect to the outstanding notes at DTC for purposes of the
exchange offer within two business days after the date of this prospectus. Any
financial institution that is a participant in DTC's book-entry transfer
facility system may make a book-entry delivery of the outstanding notes by
causing DTC to transfer such outstanding notes into the exchange agent's account
at DTC in accordance with DTC's procedures for transfers. However, although
delivery of outstanding notes may be effected through book-entry transfer into
the exchange agent's account at DTC, the letter of transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other required documents, must in any case be delivered to
and received by the exchange agent at its address set forth under "-- Exchange
Agent" prior to the expiration date, or the guaranteed delivery procedure set
forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
Signature Guarantees. Certificates for outstanding notes need not be
endorsed and signature guarantees on a letter of transmittal or a notice of
withdrawal, as the case may be, are unnecessary unless:
- a certificate for outstanding notes is registered in a name other than
that of the person surrendering the certificate; or
- a registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the letter of
transmittal.
In the case of (a) or (b) above, such certificates for outstanding notes must be
duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the letter of transmittal or
the notice of withdrawal, as the case may be, guaranteed by a firm or other
entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible
guarantor institution," including (as such terms are defined and each an
"Eligible Institution"):
- a bank;
- a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer;
- a credit union;
- a national securities exchange, registered securities association or
clearing agency; or
- a savings association that is a participant in a Securities Transfer
Association,
unless surrendered on behalf of such Eligible Institution. See Instruction 1 to
the letter of transmittal.
Guaranteed Delivery. If a holder desires to tender outstanding notes
pursuant to the exchange offer and the certificates for such outstanding notes
are not immediately available or time will not permit all required documents to
reach the exchange agent before the expiration date, or the procedures for
book-entry transfer cannot be completed on a timely basis, such outstanding
notes may nevertheless be tendered, provided that all of the following
guaranteed delivery procedures are complied with:
(1) such tenders are made by or through an Eligible Institution;
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<PAGE> 30
(2) prior to the expiration date, the exchange agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form accompanying the letter of
transmittal, setting forth the name and address of the holder of
outstanding notes and the amount of outstanding notes tendered, stating
that the tender is being made thereby and guaranteeing that within three
New York Stock Exchange trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered
outstanding notes, in proper form for transfer, or a book-entry
confirmation, as the case may be, and any other documents required by the
letter of transmittal will be deposited by the Eligible Institution with
the exchange agent. The Notice of Guaranteed Delivery may be delivered by
hand, or transmitted by facsimile or mail to the exchange agent and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery; and
(3) the certificates (or book-entry confirmation) representing all
tendered outstanding notes, in proper form for transfer, together with a
properly completed and duly executed letter of transmittal, with any
required signature guarantees and any other documents required by the
Letter of Transmittal, are received by the exchange agent within three New
York Stock Exchange trading days after the date of execution of the Notice
of Guaranteed Delivery.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered outstanding notes will be determined by Susquehanna Media, in its
sole discretion, which determination shall be final and binding on all parties.
Susquehanna Media reserves the absolute right, in its sole and absolute
discretion, to reject any and all tenders it determines not to be in proper form
or the acceptance for exchange of which may, in the view of counsel to
Susquehanna Media, be unlawful. Susquehanna Media also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the exchange
offer as set forth under "-- Conditions to the Exchange Offer" or any defect or
irregularity in any tender of outstanding notes of any particular holder whether
or not similar defects or irregularities are waived in the case of other
holders.
Susquehanna Media's interpretation of the terms and conditions of the
exchange offer (including the letter of transmittal and the instructions
thereto) will be final and binding on all parties. No tender of outstanding
notes will be deemed to have been validly made until all defects or
irregularities with respect to such tender have been cured or waived. None of
Susquehanna Media, any affiliates of Susquehanna Media, the exchange agent or
any other person shall be under any duty to give any notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification.
RESALES OF EXCHANGE NOTES
Based on interpretations by the staff of the SEC, as set forth in no-action
letters issued to third parties unrelated to Susquehanna Media, Susquehanna
Media believes that holders of outstanding notes who exchange their outstanding
notes for exchange notes may offer for resale, resell and otherwise transfer
such exchange notes without compliance with the registration and prospectus
delivery provisions of the Securities Act. This would not apply, however, to any
holder that is a broker-dealer that acquired outstanding notes as a result of
market-making activities or other trading activities or directly from
Susquehanna Media for resale under an available exemption under the Securities
Act. Also, resale would only be permitted for exchange notes that are acquired
in the ordinary course of a holder's business, where such holder has no
arrangement or understanding with any person to participate in the distribution
of such exchange notes and such holder is not an "affiliate" of Susquehanna
Media. The staff of the SEC has not considered our exchange offer in the context
of a no-action letter, and there can be no assurance that the staff of the SEC
would make a
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<PAGE> 31
similar determination with respect to our exchange offer. Each broker-dealer
that receives exchange notes for its own account in exchange for outstanding
notes under the exchange offer, where such outstanding notes were acquired by
such broker-dealer as a result of market-making or other trading activities,
must acknowledge that it will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such exchange notes. See
"Plan of Distribution."
WITHDRAWAL RIGHTS
Except as otherwise provided, tenders of outstanding notes may be withdrawn
at any time prior to the expiration date of the exchange offer. In order for a
withdrawal to be effective, such withdrawal must be in writing and timely
received by the exchange agent at its address set forth under "-- Exchange
Agent" prior to the expiration date. Any such notice of withdrawal must specify
the name of the person who tendered the outstanding notes to be withdrawn, the
principal amount of outstanding notes to be withdrawn, and (if certificates for
such outstanding notes have been tendered) the name of the registered holder of
the outstanding notes as set forth on the outstanding notes, if different from
that of the person who tendered such outstanding notes. If certificates for
outstanding notes have been delivered or otherwise identified to the exchange
agent, the notice of withdrawal must specify the serial numbers on the
particular certificates for the outstanding notes to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of outstanding notes tendered for the account of
an Eligible Institution. If outstanding notes have been tendered pursuant to the
procedures for book-entry transfer set forth in "-- Procedures for Tendering
Outstanding Notes," the notice of withdrawal must specify the name and number of
the account at DTC to be credited with the withdrawal of outstanding notes and
must otherwise comply with the procedures of DTC. Withdrawals of tenders of
outstanding notes may not be rescinded. Outstanding notes properly withdrawn
will not be deemed validly tendered for purposes of the exchange offer, but may
be retendered at any subsequent time prior to the expiration date of the
exchange offer by following any of the procedures described above under
"-- Procedures for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by Susquehanna Media, in
its sole discretion, which determination shall be final and binding on all
parties. None of Susquehanna Media, any affiliates of Susquehanna Media, the
exchange agent or any other person shall be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification. Any outstanding
notes which have been tendered but which are withdrawn will be returned to the
holder promptly after withdrawal.
INTEREST ON THE EXCHANGE NOTES
Interest on the exchange notes will be payable every six months on May 15
and November 15 of each year at a rate of 8 1/2% per annum, commencing November
15, 1999. The exchange notes will mature on May 15, 2009.
CONDITIONS TO THE EXCHANGE OFFER
If any of the following conditions has occurred or exists or has not been
satisfied prior to the expiration date, Susquehanna Media will not be required
to accept for exchange any outstanding notes and will not be required to issue
exchange notes in exchange for any outstanding notes. In addition, Susquehanna
Media may, at any time and from time to time, terminate or amend the exchange
offer, whether or not any outstanding notes have already been accepted for
exchange, or may waive any conditions to or amend the exchange offer.
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<PAGE> 32
- A change in the current interpretation by the staff of the SEC that
permits resales of exchange notes as described above under "-- Resales
of Exchange Notes;"
- The institution or threat of an action or proceeding in any court or
by or before any governmental agency or body with respect to the
exchange offer that, in Susquehanna Media's judgment, would reasonably
be expected to impair the ability of Susquehanna Media to proceed with
the exchange offer;
- The adoption or enactment of any law, statute, rule or regulation
that, in Susquehanna Media's judgment, would reasonably be expected to
impair the ability of Susquehanna Media to proceed with the exchange
offer;
- Any change or development involving a prospective change in the
business or financial affairs of Susquehanna Media that Susquehanna
Media believes might materially impair its ability to proceed with the
exchange offer.
If Susquehanna Media determines in its reasonable discretion that any of
the foregoing events or conditions has occurred or exists or has not been
satisfied at any time prior to the expiration date, Susquehanna Media may,
subject to applicable law, terminate the exchange offer, whether or not any
outstanding notes have already been accepted for exchange, or may waive any such
condition or otherwise amend the terms of the exchange offer in any respect. If
such waiver or amendment constitutes a material change to the exchange offer,
Susquehanna Media will promptly disclose such waiver or amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
outstanding notes. In this case, Susquehanna Media will extend the exchange
offer to the extent required by Rule 14e-1 under the Exchange Act.
TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of outstanding notes for exchange notes pursuant to the
exchange offer will not be considered a taxable exchange for U.S. federal income
tax purposes because the exchange notes will not differ materially in kind or
extent from the outstanding notes and because the exchange will occur by
operation of the terms of the outstanding notes. Accordingly, such exchange will
have no U.S. federal income tax consequences to holders of outstanding notes. A
holder's adjusted tax basis and holding period in an exchange note will be the
same as such holder's adjusted tax basis and holding period, respectively, in
the outstanding notes exchange therefor. All references to Notes under the
heading "Certain U.S. Federal Income Tax Considerations" in this prospectus
apply equally to exchange notes as to outstanding notes.
Holders considering the exchange of outstanding notes for exchange notes
should consult their own tax advisors concerning the U.S. federal income tax
consequences in light of their particular situations, as well as any
consequences arising under state, local or foreign income tax or other tax law.
EXCHANGE AGENT
Chase Manhattan Trust Company, National Association has been appointed as
the exchange agent for the exchange offer. Delivery of the letters of
transmittal and any other required documents,
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<PAGE> 33
questions, requests for assistance, and requests for additional copies of this
prospectus or of the letter of transmittal should be directed to the exchange
agent as follows:
By Mail or By Hand (9:00 a.m. to 5:00 p.m., local time)
CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION
1650 Market Street
One Liberty Place, Suite 5210
Philadelphia, PA 19103
Attention: Joseph C. Progar
By Facsimile
(215) 972-8372
Attention: Joseph C. Progar
Confirm by telephone: (215) 988-1317
DELIVERY TO OTHER THAN THE ABOVE ADDRESSES OR FACSIMILE NUMBER WILL NOT
CONSTITUTE A VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by Susquehanna Media. The
principal solicitation is being made by mail. Additional solicitation may be
made personally or by telephone or other means by officers, directors or
employees of Susquehanna Media.
Susquehanna Media has not retained any dealer-manager or similar agent in
connection with the exchange offer and will not make any payments to brokers,
dealers or others soliciting acceptances of the exchange offer. Susquehanna
Media has agreed to pay the exchange agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith. Susquehanna Media will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this prospectus and related documents
to the beneficial owners of outstanding notes, and in handling or tendering for
their customers.
Holders who tender their outstanding notes for exchange will not be
obligated to pay any transfer taxes in connection therewith, except that if
exchange notes are to be delivered to, or are to be issued in the name of, any
person other than the registered holder of the outstanding notes tendered, or if
a transfer tax is imposed for any reason other than the exchange of outstanding
notes in connection with the exchange offer, then the amount of any such
transfer tax (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such transfer tax or exemption therefrom is not submitted with the letter of
transmittal, the amount of such transfer tax will be billed directly to such
tendering holder.
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USE OF PROCEEDS
We are making the exchange offer to satisfy our obligation under the
registration rights agreement we entered into with the initial purchasers when
we first issued the outstanding notes. We will not receive any cash proceeds
from the issuance of the exchange notes. In consideration for issuing the
exchange notes, we will receive an equal principal amount of outstanding notes.
The outstanding notes surrendered in exchange for the exchange notes will be
retired and canceled. The proceeds from the offering of the outstanding notes,
together with borrowings under our new $450 million senior credit facility, were
used to repay in full our old senior credit facility and to make a loan of
$116.9 million loan to Susquehanna Pfaltzgraff to fund its employee stock
ownership plan.
For a description of the new senior credit facility, see "Description of
Certain Indebtedness."
CAPITALIZATION
The following table sets forth our capitalization as of June 30, 1999. The
following information should be read in conjunction with the consolidated
financial statements and related notes thereto and the other financial
information contained elsewhere in this prospectus. See "Selected Historical
Consolidated Financial and Operating Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
--------------------
(IN THOUSANDS)
<S> <C>
Long-term debt, including current maturities:
New senior credit facility................................ $270,300
Senior subordinated notes................................. 150,000
Other..................................................... 148
--------
Total long-term debt.............................. 420,448
Total stockholders' equity.................................. 14,455
--------
Total capitalization.............................. $434,903
========
</TABLE>
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UNAUDITED CONSOLIDATED AS ADJUSTED FINANCIAL DATA
The following unaudited consolidated as adjusted income statement is based
upon our historical financial statements. The unaudited adjustments are based
upon available information and certain assumptions that our management believes
are reasonable. This unaudited as adjusted income statement has been prepared to
illustrate the effects of the issuance and sale of the outstanding notes, the
closing of our new $450 senior credit facility, the repayment of our old senior
credit facility, the prepayment of senior notes, and a $116.9 million loan to
Susquehanna Pfaltzgraff to fund its employee stock ownership plan (collectively,
the "Transactions") as if they had occurred on January 1, 1998. The unaudited as
adjusted income statement does not purport to be indicative of what our results
of operations would actually have been had the Transactions been completed on
January 1, 1998, or to project our results of operations for any future period.
The as adjusted financial information and the notes thereto should be read in
conjunction with our historical financial statements and the other financial
information included elsewhere in this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
-------------------------------------------------
HISTORICAL TRANSACTIONS AS ADJUSTED
---------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenues............................................ $223,427 $223,427
Operating and programming expenses.................. 72,903 72,903
Selling, general and administrative expenses........ 76,992 4,923 (1) 81,915
Depreciation and amortization....................... 22,329 22,329
-------- --------
Operating income.................................... 51,203 46,280
Interest expense, net............................... 20,506 9,112 (2) 29,618
Gain on sale of assets.............................. 1,748 1,748
Other income........................................ 334 7,011 (3) 7,345
-------- --------
Income before income taxes and minority interests... 32,779 25,755
Provision for income taxes.......................... 14,523 (2,950)(4) 11,573
-------- --------
Income before minority interests.................... 18,256 14,182
Minority interests.................................. (4,304) 290 (5) (4,014)
-------- --------
Net income.......................................... $ 13,952 $ 10,168
======== ========
</TABLE>
- ---------------
(1) Reflects increased benefit expense as a result of participation by our
employees in Susquehanna Pfaltzgraff's employee stock ownership plan.
(2) Reflects interest expense and amortization of deferred financing costs
associated with borrowings under the new senior credit facility and the
outstanding notes.
(3) Reflects interest earned on loan made to Susquehanna Pfaltzgraff ($116.9
million at 6%) to fund its employee stock ownership plan.
(4) Reflects the income tax effect of the adjustments.
(5) Reflects the minority interest effect of the adjustments, net of income
taxes.
32
<PAGE> 36
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA
Selected historical financial and operating data is set forth below. The
financial data as of and for the years ended December 31, 1994 through December
31, 1998 is derived from our audited consolidated financial statements. The
financial data as of and for the six months ended June 30, 1998 and June 30,
1999 is derived from our unaudited consolidated financial statements. Our
audited consolidated financial statements and related notes for the years ended
December 31, 1996, 1997 and 1998 and unaudited consolidated financial statements
and related notes for the six months ended June 30, 1998 and June 30, 1999 are
included elsewhere in this prospectus. You should read this information and the
accompanying notes in conjunction with the consolidated financial statements and
related notes and the other financial information included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- ---------
(DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Radio................................ $ 93,967 $100,556 $116,300 $131,438 $151,170 $ 70,701 $ 82,230
Cable................................ 45,010 48,544 55,791 65,122 70,641 34,486 39,520
Other................................ -- -- 85 539 1,616 681 1,400
-------- -------- -------- -------- -------- -------- ---------
Total revenues......................... 138,977 149,100 172,176 197,099 223,427 105,868 123,150
Operating expenses:
Operating and programming............ 43,570 50,289 57,800 65,754 72,903 39,269 44,836
Selling, general and
administrative..................... 53,727 57,223 63,054 68,891 76,992 32,123 37,391
Depreciation and amortization........ 12,271 11,402 14,531 19,744 22,329 10,932 13,763
-------- -------- -------- -------- -------- -------- ---------
Total operating expenses............... 109,568 118,914 135,385 154,389 172,224 82,324 95,990
-------- -------- -------- -------- -------- -------- ---------
Operating income....................... 29,409 30,186 36,791 42,710 51,203 23,544 27,160
Interest expense, net.................. 11,644 12,111 13,797 18,890 20,506 10,400 (12,006)
Gain (loss) on sale of assets.......... (160) (20) 21,768 9,451 1,748 -- --
Interest income from loan to parent
company.............................. -- -- -- -- -- -- 941
Pension curtailment gain............... -- -- -- -- -- -- 2,299
Other income........................... 1,008 1,329 1,177 426 334 (446) (76)
-------- -------- -------- -------- -------- -------- ---------
Income before income taxes............. 18,613 19,384 45,939 33,697 32,779 12,698 18,318
Provision for income taxes............. 7,911 8,913 20,305 14,033 14,523 5,387 7,616
-------- -------- -------- -------- -------- -------- ---------
Income before extraordinary loss....... 10,702 10,471 25,634 19,664 18,256 7,311 10,702
Loss related to early retirement of
debt................................. -- -- -- -- -- -- (3,316)
-------- -------- -------- -------- -------- -------- ---------
Income before minority interests....... 10,702 10,471 25,634 19,664 18,256 7,311 7,386
Minority interests..................... (1,567) (1,258) (4,111) (3,070) (4,304) (1,706) (1,362)
-------- -------- -------- -------- -------- -------- ---------
Net income............................. $ 9,135 $ 9,213 $ 21,523 $ 16,594 $ 13,952 $ 5,605 $ 6,024
======== ======== ======== ======== ======== ======== =========
OTHER DATA:
Adjusted EBITDA:(1)
Radio................................ $ 23,844 $ 22,997 $ 29,761 $ 34,062 $ 42,553 $ 18,985 $ 25,663
Cable................................ 19,417 20,818 23,975 29,511 31,699 15,453 17,025
Other................................ (573) (898) (1,236) (692) (386) (408) 682
-------- -------- -------- -------- -------- -------- ---------
Total adjusted EBITDA.................. 42,688 42,917 52,500 62,881 73,866 34,030 43,370
Cash flows related to:
Operating activities................. 17,729 27,828 21,711 36,347 36,843 13,432 23,222
Investing activities................. (1,669) (2,469) (81,588) (70,339) (38,842) (24,917) (163,658)
Financing activities................. (16,060) (25,359) 60,595 33,334 3,941 13,165 139,907
Capital expenditures................... 11,113 12,899 12,073 22,610 29,592 13,432 12,788
Ratio of earnings to fixed
charges(2)........................... 2.4x 2.3x 4.1x 2.7x 2.3x 2.0x 2.5x
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets........................... $125,582 $141,902 $238,628 $333,476 $355,141 $351,287 $ 519,554
Total debt............................. 135,175 137,450 200,350 265,500 272,776 278,900 420,448
Stockholders' equity (deficit)......... (48,776) (40,814) (18,191) (2,295) 9,201 2,766 14,455
</TABLE>
33
<PAGE> 37
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- ---------
(DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CABLE OPERATING DATA:
Homes passed........................... 173,674 182,465 215,715 211,808 214,650 216,366 241,130
Basic subscribers...................... 127,972 137,885 159,871 164,186 166,917 167,616 186,333
Basic penetration(3)................... 73.7% 75.6% 74.1% 77.5% 77.8% 77.5% 77.3%
Premium units(4)....................... 72,740 68,701 71,928 72,212 65,327 71,152 72,897
Premium penetration(5)................. 56.8% 49.8% 45.0% 44.0% 39.1% 42.3% 39.1%
Average monthly revenue per basic
subscriber(6)........................ $ 29.93 $ 30.42 $ 31.81 $ 33.49 $ 35.18 $ 34.46 $ 36.03
</TABLE>
- ---------------
(1) We define adjusted EBITDA as net income before income taxes, extraordinary
items, interest expense, interest income, depreciation and amortization,
employee stock ownership plan expense, pension curtailment gain, minority
interest, and any gain or loss on the disposition of assets. Employee stock
ownership plan expense for the six months ended June 30, 1999 was $2.5
million.
Although adjusted EBITDA is not a measure of performance calculated in
accordance with generally accepted accounting principles, we believe that
adjusted EBITDA is a meaningful measure of performance because it is
commonly used in the radio and cable television industries to analyze and
compare radio and cable television companies on the basis of operating
performance, leverage and liquidity. In addition, our new senior credit
facility and the indenture that governs the notes contain certain covenants
in which compliance is measured by computations substantially similar to
those used in determining adjusted EBITDA. There are no legal restrictions
on the use of adjusted EBITDA, other than those contained in our new senior
credit facility and indenture. Management expects that adjusted EBITDA will
be used to satisfy working capital, debt service and capital expenditure
requirements and other commitments and contingencies. Adjusted EBITDA should
not be considered in isolation or as a substitute for or an alternative to
net income, cash flow from operating activities or other income or cash flow
data prepared in accordance with GAAP. Adjusted EBITDA should not be
considered as a measure of a company's operating performance or liquidity.
Adjusted EBITDA as presented may not be comparable to other similarly titled
measures used by other companies.
(2) The ratio of earnings to fixed charges is expressed as the ratio of income
before income taxes and extraordinary items plus fixed charges (excluding
capitalized interest) to fixed charges. Fixed charges consist of interest
expense, capitalized interest and one-third of rental expense (the portion
deemed representative of the interest factor).
(3) Basic penetration represents basic subscribers as a percentage of homes
passed.
(4) Premium units represents the aggregate number of individual premium services
(e.g., HBO, Cinemax, Showtime) for which customers have subscribed.
(5) Premium penetration represents premium units as a percentage of basic
subscribers.
(6) Average monthly revenue per basic subscriber represents revenues divided by
12 divided by the weighted average number of subscribers for the year.
34
<PAGE> 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion and analysis should be read in conjunction with
"Selected Historical Consolidated Financial and Operating Data" and our
financial statements and the notes thereto included elsewhere in this
prospectus. Much of the discussion in this section involves forward-looking
statements. Our actual results may differ significantly from the results
suggested by these forward-looking statements.
OVERVIEW
We are a diversified communications company with operations in radio
broadcasting and cable television. We are the largest privately owned radio
broadcaster and the 10th largest radio broadcaster overall in the United States
based on revenues. We own and operate 15 FM and 8 AM stations that serve four of
the nation's ten largest radio markets (San Francisco, Dallas, Houston and
Atlanta), as well as three other significant markets (Cincinnati, Indianapolis
and York, Pennsylvania). We are also the 24th largest cable multiple system
operator in the United States with seven cable systems serving approximately
186,000 subscribers.
For the year ended December 31, 1998, we had revenues and EBITDA of $223.4
million and $73.9 million, respectively, with approximately 57% of EBITDA
generated by our radio broadcast operations and 43% by our cable television
operations. For the six months ended June 30, 1999, we had revenues and EBITDA
of $123.2 million and $43.4 million, respectively, with approximately 59% of
EBITDA generated by our radio broadcast operations and 39% by our cable
television operations. For the year ended December 31, 1998, our net income was
$13.9 million, our cash flows from (used in) operating, investing and financing
activities were $36.8 million, ($38.8 million) and $3.9 million, respectively,
and our ratio of earnings to fixed charges was 2.3x.
We also provide Internet access and enhanced services to residential and
business customers under the tradename "BlazeNet." The services include:
- Internet access via telephone dial-up service or cable modem;
- website creation, hosting and maintenance; and
- local and wide area network design, construction and operation.
Revenues. Our principal source of radio broadcasting revenue is the sale
of broadcasting time on our stations for advertising. Radio revenue is reported
net of agency commissions. Sales of advertising are affected by changes in
demand for advertising time by national and local advertisers and by advertising
rates charged by the stations. Radio station advertising rates are based on a
station's ability to attract audiences that match the demographic groups that
advertisers want to reach, the number of stations competing in a marketplace and
economic conditions. Radio stations attempt to maximize revenue by adjusting
advertising rates based upon local market conditions, by controlling inventory,
by creating demand and by increasing audience ratings. Radio stations sometimes
use barter or trade agreements to exchange merchandise or services for
advertising time with advertisers, in lieu of cash. It is our policy not to
preempt advertising paid in cash with advertising paid in trade. For the years
ended December 31, 1996, 1997 and 1998 and the six months ended June 30, 1998
and 1999, cash advertising revenue was 97%, 98%, 98%, 98% and 99% of
broadcasting revenue, respectively. Seasonal revenue fluctuations are common in
the radio broadcasting industry, due primarily to fluctuations in expenditure
levels by local and national advertisers. Our radio revenues are lowest in the
first quarter and are relatively level in the other quarters.
35
<PAGE> 39
Most of our cable revenues are derived from monthly subscriber fees for
cable television programming services and from fees incident to the provision of
such services, such as installation fees and fees for converter rentals and
rentals of remote control devices. Some revenues are derived from advertising.
Since cable is subject to regulation at the federal, state and local levels,
increases in rates charged for regulated services may be governed by the 1992
Cable Act and the 1996 Telecom Act. Cable revenues are affected by the timing of
subscriber rate increases.
Operating expenses. Radio operating expenses are comprised of employee
salaries and commissions, depreciation and amortization, programming expenses,
advertising expenses, promotion expenses and selling, general and administrative
expenses. General and administrative expenses include office administration and
other support functions that are handled on a centralized basis.
Cable operating expenses include programming expenses, employee salaries
and benefits, electricity, depreciation, amortization and selling, general and
administrative expenses for accounting and billing services, franchise fees,
office administration expenses and corporate charges.
Depreciation and amortization expense relates to the depreciation of
tangible assets used in the business and the amortization of franchise costs.
Adjusted EBITDA. Adjusted EBITDA is net income before income taxes,
extraordinary items, interest expense, interest income, depreciation and
amortization, employee stock ownership plan expense, minority interest and any
gain or loss on the disposition of assets.
RESULTS OF OPERATIONS
The following table summarizes our consolidated historical results of
operations and consolidated historical results of operations as a percentage of
revenues for the six months ended June 30, 1998 and 1999 and for the years ended
December 31, 1996, 1997 and 1998.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------------------ -------------------------------
1996 1997 1998 1998 1999
-------------- -------------- -------------- -------------- --------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Radio...................... $116.3 67.5% $131.4 66.7% $151.2 67.7% $ 70.7 66.8% $ 82.2 66.8%
Cable...................... 55.8 32.4 65.1 33.0 70.6 31.6 34.5 32.6 39.5 32.1
Other...................... 0.1 0.1 0.6 0.3 1.6 0.7 0.7 0.6 1.4 1.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total revenues............... 172.2 100.0 197.1 100.0 223.4 100.0 105.9 100.0 123.1 100.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating expenses:
Operating and
programming.............. 57.8 33.6 65.2 33.3 72.9 32.6 39.3 37.2 44.8 36.4
Selling, general and
administrative........... 63.1 36.6 68.9 35.0 77.0 34.5 32.1 30.3 37.4 30.4
Depreciation and
amortization............. 14.5 8.4 19.7 10.0 22.3 10.0 10.9 10.2 13.8 11.2
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total operating expenses..... 135.4 78.6 154.4 78.3 172.2 77.1 82.3 77.7 96.0 78.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating income............. $ 36.8 21.4% $ 42.7 21.7% $ 51.2 22.9% $ 23.6 22.3% $ 27.1 22.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Net income................... $ 21.5 12.5% $ 16.6 8.4% $ 14.0 6.3% $ 5.6 5.3% $ 6.0 4.9%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Adjusted EBITDA.............. $ 52.5 30.5% $ 62.9 31.9% $ 73.9 33.1% $ 34.0 32.1% $ 43.3 35.2%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998
Revenues. Revenues increased $17.2 million or 16% from 1998 to 1999. Radio
revenues increased $11.5 million or 16% from 1998 to 1999. Radio revenue growth
was due to higher advertising rates. Cable revenues increased $5.0 million or
15% from 1998 to 1999. Revenues from subscribers of Hanover Cable TV, which was
acquired on January 29, 1999, contributed $2.4 million or 48% of the increased
cable revenues. Rate increases on basic and expanded services were responsible
for the remaining growth.
36
<PAGE> 40
Operating and programming expenses. Operating and programming expenses
increased $5.5 million or 14% from 1998 to 1999. Higher radio
programming-related costs and promotions were responsible for $1.2 million or
22% of the increase. Cable programming costs increased $1.5 million or 27% of
the increase. Cable programming costs of Hanover Cable TV totaled $0.7 million
or 13% of the increase. Cable technical operations costs were $0.9 million
higher in 1999, which accounted for 16% of the increase.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $5.3 million or 17% from 1998 to 1999. Radio
sales commissions increased commensurately with higher revenues, $1.2 million or
23% of the increase. Employee stock ownership plan expense of $2.2 million
included in selling, general and administrative expenses was $1.5 million higher
than pension expense in 1998. Cable general and administrative costs were $1.0
million higher than in 1998, partially due to the Hanover Cable TV acquisition.
Depreciation and amortization. Depreciation and amortization increased
$2.9 million or 27% from 1998 to 1999. Cable depreciation and amortization
related to the Hanover Cable TV acquisition was $1.7 million or 59% of the
increase. Cable system rebuilds and radio facility renovations were responsible
for the balance of the increase.
Operating income. Operating income increased $3.5 million or 15% from 1998
to 1999. Revenue growth was responsible for the increase.
Net income. Net income increased $0.4 million or 7% from 1998 to 1999.
Although pretax income increased $5.6 million from 1998 to 1999, the increase
was due to a pension curtailment gain and interest income related to the loan to
our parent company. An extraordinary loss from the early retirement of long-term
debt virtually eliminated any increase in net income.
Adjusted EBITDA. Adjusted EBITDA increased $9.3 million or 27% from 1998
to 1999. Increased revenues added $5.5 million or 59% of the increase to
adjusted EBITDA. As a percentage of revenues, operating expenses excluding
depreciation and amortization decreased from 67.4% in 1998 to 66.8% in 1999. The
reduction in the percentage of expenses before depreciation and amortization to
revenues added $0.8 million (or 9% of the increase) to adjusted EBITDA.
Interest expense. Interest expense increased $1.6 million or 15% from 1998
to 1999. The increase was due to additional debt used to purchase Hanover Cable
TV and to make a loan to our parent company to fund its employee stock ownership
plan.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Revenues. Revenues increased $26.3 million, or 13%, from 1997 to 1998.
Radio revenues increased $19.7 million, or 15%, from 1997 to 1998. For stations
operated for a full year in both 1997 and 1998, revenues increased $11.9
million, or 10%, for the year. The balance of the growth was attributable to a
full year of operation for six radio stations acquired in 1997 in San Francisco,
Indianapolis, Cincinnati and Anniston, Alabama. Increased radio revenues were
due to higher advertising rates. Cable revenues increased $5.5 million, or 9%,
from 1997 to 1998. Subscriber rate increases were primarily responsible for
cable revenue growth.
Operating and programming expenses. Operating and programming expenses
increased $7.2 million or 11% between 1998 and 1999. Increased radio programming
expenditures of $1.7 million and special event spending of $1.0 million in 1998
contributed to the increase. Cable programming supplier costs increased $1.5
million during 1998.
Selling, general and administrative expenses. Selling, general and
administrative expenses for 1998 increased $8.1 million or 12% over 1997. Radio
selling, general and administrative expenses increased $5.8 million in 1998.
Approximately $3.7 million of the increase was due to increased sales
37
<PAGE> 41
commissions and salaries. Occupancy costs of our radio operations increased $0.8
million in 1998 while those of our cable operations, as a percentage of
revenues, were unchanged from 1997 to 1998.
Depreciation and amortization. Depreciation and amortization increased
$2.6 million or 13% from 1997 to 1998. Radio depreciation and amortization
expenses increased $1.7 million, primarily due to a full year's operation of
stations added in 1997. Cable depreciation and amortization expenses increased
$0.6 million due to system rebuilds.
Operating income. Operating income increased $8.5 million, or 20%, from
1997 to 1998. As a percentage of revenues, operating income increased from 22%
in 1997 to 23% in 1998. Radio operating income grew $6.4 million, or 23%, from
1997 to 1998. This increase was due to internal revenue growth from existing
stations and revenue from newer stations growing more rapidly than related
operating expenses. Cable operating income increased $1.8 million, or 12%, from
1997 to 1998. This increase was due to revenue growth generated by rate
increases.
Net income. Net income decreased $2.6 million or 15.7% from 1997 to 1998.
Despite an $8.5 million increase in operating income, interest expense increased
$1.6 million and gain on the sale of assets decreased $7.7 million. Minority
interests increased $1.3 million, primarily due to higher radio earnings.
Adjusted EBITDA. Adjusted EBITDA increased $11.0 million, or 18%, from
1997 to 1998. Adjusted EBITDA as a percentage of revenues increased from 32% in
1997 to 33% in 1998. Adjusted Radio EBITDA increased $8.5 million, or 25%, from
1997 to 1998. Adjusted Cable EBITDA increased $2.2 million, or 7%, between 1997
and 1998. Adjusted Radio EBITDA and adjusted Cable EBITDA increased for the same
reasons that operating income increased.
Interest expense. Interest expense increased $1.6 million, or 9%, between
1997 and 1998. This increase was due to the incurrence of additional debt to
acquire radio stations and fund cable system capital expenditures. Acquisitions
and capital expenditures were funded in part by cash flow from operations.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Revenues. Revenues increased $24.9 million, or 15%, from 1996 to 1997.
Radio revenues grew $15.1 million, or 13%, from 1996 to 1997. Most of this
increase was due to higher rates for advertising time. Revenues increased $6.8
million, or 6%, at stations operated for a full 12 months in both 1996 and 1997.
The remaining growth was attributable to six stations acquired in 1997 in San
Francisco, Indianapolis, Cincinnati, and Anniston, Alabama. Cable revenues
increased $9.3 million, or 17%, from 1996 to 1997. Most of cable's revenue
growth was due to a full year of revenue from Williamsport, Pennsylvania area
subscribers which were acquired during 1996.
Operating and programming expenses. Operating and programming expenses
increased $7.9 million or 14% between 1996 and 1997. Radio sports programming
and salaries increased $3.2 million in 1997, and media promotions increased by
$1.2 million. Cable programming costs increased $1.3 million due to a full
year's inclusion of subscribers in the Williamsport, Pennsylvania cable system.
Costs associated with technical operations increased $1.0 million to support the
Williamsport cable system.
Selling, general and administrative expenses. Selling, general and
administrative expenses for 1997 increased $5.8 million or 9% over 1996. Radio
selling, general and administrative expenses increased $4.1 million in 1997,
with approximately $2.1 million of the increase due to higher sales commissions
and salaries. Cable customer service and billing costs increased $1.0 million to
support additional subscribers.
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<PAGE> 42
Depreciation and amortization. Depreciation and amortization increased
$5.2 million or 36% from 1996 to 1997. Radio depreciation and amortization
expense increased $2.2 million because of new stations in 1997. Additional cable
depreciation and amortization of $2.8 million was attributable largely to the
1996 acquisition of the Williamsport cable system.
Operating income. Operating income increased $5.9 million, or 16%, from
1996 to 1997. Operating income as a percentage of sales increased from 21% in
1996 to 22% in 1997. Radio operating income increased $2.3 million, or 9%, from
1997 to 1996. This increase was due to internal revenue growth from existing
stations and revenue from acquired stations growing more rapidly than operating
expenses. Cable operating income increased $2.8 million, or 21%, from 1996 to
1997. This increase was due to revenue growth generated primarily by rate
increases and the addition of new subscribers. In addition, the Williamsport
system generated higher operating income per subscriber than the system for
which it was exchanged.
Net income. Net income decreased $4.9 million or 20% from 1996 to 1997. A
$5.9 million increase in operating income was offset by a $5.1 million higher
interest expense and $12.3 million decrease in the gain on sale of assets in
1997. Income taxes and minority interests decreased $7.4 million in 1997.
Adjusted EBITDA. Adjusted EBITDA increased $10.4 million, or 20%, from
1996 to 1997. Adjusted EBITDA as a percentage of revenues increased from 31% in
1996 to 32% in 1997. Adjusted Radio EBITDA increased $4.3 million, or 15%,
between 1996 and 1997. Adjusted Cable EBITDA increased $5.5 million, or 23%,
between 1996 and 1997. Adjusted Radio EBITDA and adjusted Cable EBITDA increased
for the same reasons that operating income increased.
Net interest expense. Net interest expense increased $5.1 million, or 37%,
between 1996 and 1997. This increase was due to the incurrence of additional
debt to acquire radio stations and the Williamsport cable system and to rebuild
the York cable system. These acquisitions and rebuild were also funded in part
from cash flow from operations.
LIQUIDITY AND CAPITAL RESOURCES
Historically, our primary sources of liquidity have been cash flow from
operations and borrowings under our senior credit facilities. Our future needs
for liquidity arise primarily from capital expenditures, potential acquisitions
of radio stations and cable systems, potential repurchases of our common stock,
and interest payable on the notes and our new senior credit facility.
Net cash provided by operating activities was $23.2 million and $13.4
million for the six months ended June 30, 1999 and 1998, respectively, and $36.8
million, $36.3 million and $21.7 million for the years ended December 31, 1998,
1997 and 1996, respectively. Our net cash provided by operating activities was
generated primarily by normal operations.
Our acquisitions of radio stations and cable systems and our capital
expenditures have historically been financed with cash flow from operations and
borrowings under our senior credit facility. Capital expenditures, excluding
acquisitions, were $12.8 million and $13.4 million for the six months ended June
30, 1999 and 1998, respectively, and $29.6 million, $22.6 million and $12.1
million for the years ended December 31, 1998, 1997 and 1996, respectively.
Capital expenditures over this period were used primarily to upgrade and
maintain our cable systems. We expect to make capital expenditures of $31.3
million in 1999, primarily to continue upgrading our current cable systems.
On May 12, 1999, we sold $150 million of 8.5% Senior Subordinated Notes due
2009 at 99.75% of their face value. Proceeds to us were $145.5 million.
39
<PAGE> 43
On May 12, 1999, we also entered into a new senior credit facility arranged
by First Union Capital Markets Corp. The new senior credit facility consists of
a $250 million revolver, a $100 million term loan A, and a $100 million term
loan B, all collateralized by a pledge of all of our material assets (excluding
real property) and voting common stock. The credit agreement governing the new
senior credit facility requires us to maintain certain financial leverage and
interest coverage ratios. See "Description of Certain Indebtedness." As of June
30, 1999, we had $179.7 million of borrowing availability under the new senior
credit facility. The refinancing of our old senior credit facility and
prepayment of senior notes resulted in the recognition of an extraordinary loss
of $3.2 million (net of income taxes) in the second quarter of 1999.
We believe that funds generated from operations and the borrowing
availability under our new senior credit facility will be sufficient to finance
our current operations, our debt service obligations, including our obligations
under the notes, cash obligations in connection with potential repurchases of
our common stock and planned capital expenditures. From time to time, we
evaluate potential acquisitions of radio stations and cable television systems.
In connection with future acquisition opportunities, we may incur additional
debt or issue additional equity or debt securities depending on market
conditions and other factors. We have no current commitments or agreements with
respect to any material acquisitions.
RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities," is effective for fiscal years
beginning after June 15, 1999. We use derivative financial instruments solely to
limit interest rate exposure on its variable rate debt. Derivative financial
instruments are not used for trading purposes. Two interest rate collar
agreements with an aggregate notional amount of $50.0 million were effective at
June 30, 1999. The agreements limit our interest rate exposure to rates between
7.5% and 8.0%, plus an applicable margin. No material expense or income has been
recognized for these derivative financial instruments.
IMPACT OF YEAR 2000 ISSUES
Many computer systems in use today were designed and developed using two
digits, rather than four, to specify the year. As a result, such systems will
recognize the year 2000 as "00." This could cause many computer applications to
fail completely or to create erroneous results unless corrective measures are
taken. We recognize the need to ensure that our operations will not be adversely
impacted by Year 2000 software failures and are in the process of preparing for
the Year 2000. We have established a Year 2000 Task Force to manage an overall
Year 2000 assessment, remediation, testing and contingency planning project. The
Year 2000 Task Force has developed and is implementing a Year 2000 strategic
plan. Our goal is to minimize the potential effects of the Year 2000 problem on
customers and business processes.
Our internal information technology, product delivery and support systems,
as well as our key suppliers, vendors and customers are included in the scope of
the investigation. We use purchased software programs and systems for a variety
of functions including accounts payable and accounts receivable accounting,
inventory control and audio delivery. We have received Year 2000 compliance
certificates from the vendors of these programs.
We have completed an inventory of our mission-critical and non-critical
systems and have found no issues of significant consequence. We have also
completed our impact assessment. The next steps are to complete:
- remediation or replacement of material non-compliant system components by
September 30, 1999; and
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- replacement of all non-compliant computers and other equipment with
embedded date chips or processors having a material impact on operations
by October 15, 1999.
Costs associated with ensuring that our existing systems are Year 2000
compliant and replacing certain existing systems are currently expected to be
approximately $840,000 of which approximately $460,000 has been incurred to
date. These cost estimates are subject to change based on further analysis, and
any change in such costs may be material. We believe that the risk of
non-compliant systems is not high and that our remediation and replacement
program will adequately address Year 2000 issues internal to us. We believe that
the Year 2000 issue will not pose significant operational problems for our
computer systems, and, therefore, will not have a material impact on our
operations. We have not, however, finished assessing the Year 2000 readiness of
our computer systems. As a result, there can be no assurance that all of our
systems will be Year 2000 compliant or that we will not be negatively affected
thereby.
The ability of third parties with whom we transact business to adequately
address their Year 2000 issues is outside of our control. There can be no
assurance, therefore, that the failure of such third parties to adequately
address their Year 2000 issues will not have a material adverse effect on our
business, results of operations and financial condition. We have mailed survey
letters to approximately 300 key third parties. To date, the third parties we
have surveyed have been responsive. To the extent necessary, however, we plan to
contact such parties by telephone to complete our survey. We are in the process
of evaluating third party replies and expect to complete our third party review
by mid-October 1999. We intend, under our Year 2000 strategic plan, to develop
contingency plans to mitigate any possible disruption in business that may
result if certain of our systems or the systems of third parties are not Year
2000 compliant. We have not yet developed completely these contingency plans. We
expect to complete our final Year 2000 implementation review by November 30,
1999.
Estimates and conclusions related to our Year 2000 compliance program
contain forward-looking statements and are based on management's best estimates
of future events.
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BUSINESS
OVERVIEW OF SUSQUEHANNA MEDIA
We are a diversified communications company with operations in radio
broadcasting and cable television. We are the largest privately owned radio
broadcaster and the 10th largest radio broadcaster overall in the United States
based on revenues. We own and operate 15 FM and 8 AM stations that serve four of
the nation's ten largest radio markets (San Francisco, Dallas, Houston and
Atlanta), as well as three other significant markets (Cincinnati, Indianapolis
and York, Pennsylvania). We are also the 24th largest cable multiple system
operator in the United States with seven cable systems serving approximately
186,000 subscribers.
For the year ended December 31, 1998, we had revenues and EBITDA of $223.4
million and $73.9 million, respectively, with approximately 57% of EBITDA
generated by our radio broadcast operations and 43% by our cable television
operations. For the year ended December 31, 1998, our net income was $13.9
million, and our cash flows from (used in) operating, investing and financing
activities were $36.8 million, ($38.8 million) and $3.9 million, respectively,
and our ratio of earnings to fixed charges was 2.3x.
We also provide Internet access and enhanced services to residential and
business customers under the tradename "BlazeNet." The services include (i)
Internet access via telephone dial-up service or cable modem, (ii) website
creation, hosting and maintenance, and (iii) local and wide area network design,
construction and operation.
Susquehanna Media was incorporated in 1993 as an intermediate cable and
radio broadcasting holding company subsidiary of Susquehanna Pfaltzgraff.
Susquehanna Pfaltzgraff was founded in 1941 by Louis J. Appell, Sr. to own and
operate WSBA-AM, our flagship radio station in York, Pennsylvania. In 1954, The
Pfaltzgraff Co., a leading manufacturer of ceramic dinnerware, was merged into
Susquehanna Pfaltzgraff. The Pfaltzgraff Co. had been owned by the family of
Mrs. Louis J. Appell, Sr. We entered the cable television business in 1965 when
we were awarded the franchise to operate in York, Pennsylvania.
MARKET AND INDUSTRY DATA SOURCES
Unless we indicate otherwise, the market data and industry forecasts that
we refer to in this prospectus were obtained from publicly available
information, industry publications and management estimates. All data concerning
station rank and station audience share in primary demographic market or target,
except where otherwise stated to the contrary, have been derived from surveys of
people ages 12 and over ("Adults 12+"), listening Monday through Sunday, 6 a.m.
to 12 midnight, as reported in the Winter 1999 Arbitron Market Report pertaining
to each market. Data concerning market ranking by, and share of, radio
advertising revenue by market has been obtained from Duncan's Radio Market
Guide, 1998 Edition. Certain other radio market advertising data has been
obtained from BIA's Radio '98 Market Report, 1998 Fourth Edition, Fall 1998,
compiled by BIA Research Inc. Although we believe that such data, information
and estimates are materially correct, we have not verified and cannot guarantee
them. When we refer in this prospectus to the rank of a particular radio
broadcast market (such as "top 10" or "top 40"), we are referring to such rank
relative to the United States radio broadcast market measured by amount of
revenues.
RADIO BROADCASTING
Our radio broadcasting business focuses on acquiring, developing and
operating radio stations in the 40 largest markets in the United States. We have
over 50 years of experience operating radio properties and currently own
stations serving the demographically attractive and fast-growing San Francisco,
Dallas, Houston and Atlanta markets, four of the top ten radio markets in the
United
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States. Our radio stations offer a broad range of programming formats, such as
country, top 40, adult contemporary, oldies, rock, and sports and talk radio,
each targeted to a specific demographic audience within a market. We believe
that our large market radio presence and variety of programming formats makes us
attractive to a diverse base of local and national advertisers and enables us to
capitalize on our ratings to generate higher market revenue share.
Our business strategy for radio includes the following key elements
intended to establish leadership positions in the markets we serve and to
enhance our operating and financial performance:
- - Focus on large markets. We generate approximately 73% of our radio revenue
from the ten largest markets in the United States and more than 90% from top
40 markets and intend to continue focusing on large markets. We believe that
advertisers are attracted to large markets because of their population size,
attractive demographic profile, and the ability to target more narrowly
certain demographic groups. We also believe that it is more efficient for our
management to focus on stations that are capable of producing significant
revenue as compared to stations in smaller markets with less revenue
potential.
- - Employ targeted programming and market research. We seek to maximize station
operating performance through extensive market research, innovative
programming, and distinctive marketing campaigns. We believe that,
collectively, these initiatives establish strong listener loyalty and steadily
increase audience share. We were one of the first radio broadcasting companies
to utilize market research to target specific demographic groups. We believe
that knowledge of local markets and innovative programming targeting specific
demographic groups are the most important determinants of individual radio
station success. We also believe that our commitment to high-quality, locally
originated programming provides us with a competitive advantage and increases
our share of each market audience.
- - Emphasize sales and marketing. We place great emphasis on being familiar with
our listening audience and their lifestyle characteristics in order to match
effectively the audience's demographics with the specific target audiences of
our advertisers. This strategy enables us to:
- partner with its advertisers to reach efficiently and effectively their
targeted audiences;
- attract more advertising revenues; and
- build audience loyalty.
Supporting this strategy, we offer a consumer card program, which provides
listeners with discounts and promotional offers at participating businesses. The
program has enabled us to build a proprietary database of more than 1.2 million
of our listeners. We use this database to increase the effectiveness of our
programming and to enable advertisers to target more effectively their desired
audiences. We also seek to maximize sources of revenue from activities other
than airing commercials that promote the station's brand awareness, such as
sponsoring local events and creating newsletters and magazines.
- - Decentralize management. We believe that radio is primarily a local business
and that much of its success results from the efforts of regional and local
management and staff. Accordingly, we decentralize much of our operations to
these levels. Each of our regional and local station groups is managed by a
team of experienced broadcasters who understand the musical tastes,
demographics and competitive opportunities of the particular market. Our
regional and local managers are responsible for preparing annual operating
budgets and have an average of 16 years with us. Our corporate management
approves each station group's annual operating budget and imposes strict
financial reporting requirements to track station performance. Members of
corporate management are responsible for long-range planning, establishing
policies and serving as a resource to local management and average more than
26 years with us.
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- - Selectively pursue strategic acquisitions. In addition to continuing rapid
internal growth, we intend to pursue acquisition opportunities that would
allow us to continue to compete more effectively for advertising revenues and
to increase our growth rate of revenues and cash flow. Our acquisition
strategy is selectively to acquire radio stations in our existing markets and
in new, demographically attractive, fast-growing markets where we believe that
we can effectively apply our operating strategies. We will primarily target
stations in the top 40 markets of the United States.
THE RADIO BROADCASTING INDUSTRY
The radio broadcasting industry is characterized by the following key
factors:
Significant growth. The sale of advertising time to local and national
spot advertisers and to national network advertisers is the primary source of
revenues for radio stations. Local and national spot advertising is generally
used to target the market where our station is located or to cover regions
larger than the markets where our station is located. National network
advertising is included in national syndicated programming aired on our
stations. The growth in total radio advertising revenue tends to be fairly
stable, growing over the last 25 years at an 8.9% compound annual rate, compared
to a gross domestic product growth rate of 7.8%. With the exception of 1991,
when total radio advertising revenue fell by approximately 3.1% compared to the
prior year, advertising revenue has increased more rapidly than both inflation
and the gross domestic product in each of the past 15 years. More than 80% of
radio advertising revenue is generated by local advertising, with the balance
generated by national advertising. In addition, radio's percentage of local
advertising revenues has increased steadily from 14.7% in 1985 to 18.2% today.
We believe that local advertising revenue is more predictable and resistant to
ad cycles and economic downturns than national advertising revenue.
Broad market coverage. According to the Radio Advertising Bureau's Radio
Marketing Guide and Fact Book for Advertisers 1997, each week radio reaches
approximately 96% of all Americans over the age of 12. More than one-half of all
radio listening occurs outside the home, and three out of four adults are
reached by car radio each week. The average listener spends approximately three
hours and 20 minutes per day listening to radio. The highest portion of radio
listening occurs during the morning, particularly between the time a listener
wakes up and the time he reaches work. This "morning drive time" period reaches
more than 80% of people over 12 years of age, and as a result, radio advertising
sold during this period achieves premium advertising rates.
Low cost advertising. The cost to reach a thousand listeners, or
impressions, is the benchmark for comparing different media with different reach
and frequency aspects. Radio is recognized by the advertising community for its
ability to generate a high frequency of commercial impressions cost efficiently.
This is caused by its low cost per minute, or low cost per rating point.
Stations are generally classified by their on-air format, such as country, adult
contemporary, oldies and news/talk. A station's format and style of presentation
enables it to efficiently target certain demographics. By capturing a specific
share of a market's radio listening audience, with particular concentration in a
targeted demographic, a station is able to market its broadcasting time to
enable advertisers to maximize their reach for each dollar of advertising
expenditures.
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RADIO PROPERTIES
Susquehanna Radio operates radio stations in San Francisco, Dallas, Houston
and Atlanta, all of which are top ten markets, as well as radio stations in
Cincinnati, Indianapolis and York, Pennsylvania. The following table sets forth
certain information regarding our radio stations and their respective markets.
The table excludes WABZ-FM in Albemarle, North Carolina, which is owned by us
but operated by a third party under a local marketing agreement. Market rank by
revenue is based upon market revenue size of the primary radio market served by
the station among all radio markets in the United States, as reported in
Duncan's Radio Market Guide. Station rank and audience share are based upon a
station's share of its primary demographic target for the period Monday through
Sunday, 6 a.m. to 12 midnight by market, as reported by Arbitron in Winter 1999.
Combined market revenue share represents our share of the total radio
advertising revenue from the market, as reported in Duncan's Radio Market Guide.
Combined market revenue rank represents our rank in the market as measured by
the amount of its radio advertising revenue from the market, as reported in
Duncan's Radio Market Guide.
<TABLE>
<CAPTION>
STATION
AUDIENCE
MARKET STATION RANK SHARE IN COMBINED COMBINED
RANK STATION PRIMARY IN PRIMARY PRIMARY MARKET MARKET
BY PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC REVENUE REVENUE
MARKET AND STATIONS REVENUE FORMAT ACQUIRED TARGET TARGET TARGET SHARE RANK
- ------------------- ------- ------------ --------- ----------- ------------ ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
San Francisco, CA............ 4 19.5% 3
KFOG/KFFG-FM(1)............ Adult Album 1983/1995 M 25-49 1 5.4%
Alternative
KNBR-AM.................... Sports/Talk 1989 M 25-54 1 5.3
KSAN-FM.................... Classic Rock 1997 M 25-44 17 2.3
KTCT-AM.................... Sports/Talk 1997 M 18-44 23 1.2
Dallas/Ft. Worth, TX......... 5 11.4 4
KTCK/KTBK-AM(1)............ Sports/Talk 1996 M 25-44 3 6.5
KPLX-FM.................... Country 1974 M 25-54 7 3.9
KLIF/KKLF-AM(1)............ Sports/Talk 1980/1998 M 25-54 20 1.7
KKZN/KXZN-FM(1)............ Adult Album 1996/1998 M 25-44 16 2.2
Alternative
Houston, TX.................. 8 6.6 6
KRBE-FM.................... Contemporary 1986 W 18-44 1 9.1
Hit Radio
Atlanta, GA.................. 9 6.5 6
WNNX-FM.................... Modern Rock 1974 M 18-34 1 16.6
WHMA-FM.................... Country 1997 -- -- --
(Anniston, AL)(2)
WHMA-AM.................... Sports/Talk 1997 -- -- --
(Anniston, AL)(2)
Cincinnati, OH............... 19 9.5 4
WRRM-FM.................... Adult 1972 W 35-54 1 12.6
Contemporary
WVAE-FM(3)................. New Adult 1997 W 35-54 5 5.9
Contemporary
Indianapolis, IN............. 30 19.8 3
WFMS-FM.................... Country 1972 W 35-54 1 13.3
WGLD-FM.................... Oldies 1993 A 35-54 3 8.8
WGRL-FM.................... Young 1997 W 18-34 12 2.5
Country
</TABLE>
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<TABLE>
<CAPTION>
STATION
AUDIENCE
MARKET STATION RANK SHARE IN COMBINED COMBINED
RANK STATION PRIMARY IN PRIMARY PRIMARY MARKET MARKET
BY PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC REVENUE REVENUE
MARKET AND STATIONS REVENUE FORMAT ACQUIRED TARGET TARGET TARGET SHARE RANK
- ------------------- ------- ------------ --------- ----------- ------------ ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
York, PA..................... 101 56.1 1
WARM-FM.................... Adult 1962 W 25-54 1 15.7
Contemporary
WSBA-AM.................... Talk 1942 M 35-64 4 6.1
</TABLE>
- ---------------
(1) These stations are simulcast and have been combined for market rank and
ratings.
(2) Both of these stations are located in Anniston, Alabama and do not currently
broadcast in the Atlanta market. We have pending before the FCC a petition
proposing to move WHMA-FM to the Atlanta market.
(3) This station was converted to a rhythmic oldies format with call letters
WMOJ on April 30, 1999.
MARKET OVERVIEWS
We own and operate radio stations in the following markets:
San Francisco. San Francisco is the 4th largest radio market in the United
States, and, with the highest per capita income in the United States, is one of
the most attractive. San Francisco's radio advertising revenue in 1997 was
$255.0 million and grew at a compound annual rate of 8.8% from 1992 through
1997. We have operated in the San Francisco market since 1983 and currently own
three FM and two AM stations in the area. We own KNBR-AM, one of the original
50,000 watt, clear channel AM licenses, which provides clear reception
throughout northern California and inland as far as eastern Nevada. The station
is currently programmed with a sports talk format and has the broadcast rights
to the San Francisco Giants and the Golden State Warriors. KFOG/KFFG-FM and
KNBR-AM are both ranked 1st in their respective target demographics.
Dallas/Ft. Worth. Dallas/Ft. Worth is the 5th largest radio market in the
United States and is expected to lead the nation in employment and population
gains through 2005. Dallas/Ft. Worth's radio advertising revenue in 1997 was
$249.5 million and grew at a compound annual rate of 12.8% from 1992 through
1997. We have been operating in the Dallas/Ft. Worth market since 1974 and
currently own three FM and four AM stations in the area. KTCK-AM and KTBK-AM,
which are programmed with a sports talk format and are simulcast, are ranked 3rd
in the market among males 25 to 44 and have the broadcast rights to the Dallas
Mavericks. We re-launched KPLX-FM as "The Wolf" in the summer of 1998 with a
regional country music format. Since this format change, the station's ranking
has increased from 13th to 7th in its target demographic.
Houston. Houston is the 8th largest radio market and 4th most populous
city in the United States. Houston's radio advertising revenue in 1997 was
$224.0 million and grew at a compound annual rate of 11.6% from 1992 through
1997. We entered the Houston market when we acquired KRBE-FM in 1986, which
serves the Houston market with a top 40 radio format. KRBE-FM has been a
dominant radio station in Houston since the 1970s and is ranked 1st among women
18 to 44 and 3rd overall.
Atlanta. Atlanta is the 9th largest radio market in the United States and
the commercial center of the southeast. Atlanta's radio advertising revenue in
1997 was $222.0 million and grew at a compound annual rate of 16.0% from 1992
through 1997. Atlanta represents one of the most desirable radio broadcast
markets in the country, with only 16 FM and 23 total radio stations serving the
market. We entered the Atlanta market in 1974 with the acquisition of WNNX-FM,
which is programmed with modern rock and ranked 1st among men 18 to 34. We
recently acquired WHMA-FM/AM in Anniston, Alabama, whose FM station is formatted
as country and whose AM station is programmed with a sports format. We are
pursuing a long-term strategy to obtain FCC approval to move the FM station into
the Atlanta market.
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Cincinnati. Cincinnati is the 19th largest radio market in the United
States. Cincinnati's radio advertising revenue in 1997 was $100.2 million and
grew at a compound annual rate of 10.8% from 1992 through 1997. We have operated
in Cincinnati since 1972 and currently own two FM stations in the market.
WRRM-FM, which is programmed with adult contemporary, is the sole adult
contemporary station in the market and is ranked 1st among women 35 to 54.
WVAE-FM was recently converted from a smooth jazz station to a rhythmic oldies
station.
Indianapolis. Indianapolis is the 30th largest radio market in the United
States. Indianapolis' radio advertising revenue in 1997 was $70.8 million and
grew at a compound annual rate of 8.8% from 1992 through 1997. We have operated
in Indianapolis since 1972 and currently own three FM stations in the market.
WFMS-FM, which is programmed with contemporary country, is the top ranked
station among women 35 to 54 and has ranked either 1st or 2nd in the entire
market since 1992.
York. York is the 101st largest radio market in the United States, and
ranks 16th in the nation for median household disposable income. York's radio
advertising revenue in 1997 was $15.8 million and grew at a compound annual rate
of 5.5% from 1992 through 1997. We have operated in York since 1942 and
currently own two stations in the market. WARM-FM, which is programmed with an
adult contemporary format, is the dominant station among women 25 to 54.
WSBA-AM, which is programmed with news and sports, is the AM ratings leader in
York.
ADVERTISING
Most of our radio revenues are generated from the sale of local, regional
and national advertising for broadcast on our radio stations. In 1998,
approximately 81% of our radio revenues were generated from the sale of local
and regional advertising. We generate additional radio revenues by marketing our
proprietary database of listeners, selling print advertising and sponsoring
local events. These important and growing sources of revenue supplement our
traditional advertising revenues without increasing on-air commercial time.
Each radio station's local sales staff solicits advertising either directly
from local advertisers or indirectly through advertising agencies. We employ
personnel in each of our markets to produce commercials for advertisers.
National ad sales are made by a firm specializing in such sales in exchange for
a commission from us based on our gross revenue from the advertising sold.
Regional advertising sales, which we define as sales in regions surrounding our
markets to companies that advertise in our markets, are generally made by our
local sales staff.
We estimate the optimum number of advertisements available for sale by a
station for a particular time period. The number of advertisements that can be
broadcast without jeopardizing listening levels (and resulting ratings) is
limited in part by the programming format of a particular station. We seek to
maximize revenue by managing on-air inventory of advertising time and adjusting
prices to local market conditions and to our ability, through our marketing
efforts, to provide advertisers with an effective means of reaching a targeted
demographic group. Each of our stations has a general target level of on-air
inventory that it makes available for advertising. This target level may be
different at different times of the day but tends to remain stable over time.
Much of our selling activity is based on demand for our on-air inventory, and in
general, we respond to this demand by varying prices rather than varying our
target inventory level for a particular station. As a result, most changes in
revenue are explained by demand-driven pricing changes rather than changes in
available inventory.
We believe that radio is one of the most efficient and cost-effective means
for advertisers to reach specific demographic groups. Advertising rates charged
by radio stations are based primarily on:
- a station's share of audiences in the demographic groups targeted by
advertisers;
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- the number of stations in the market competing for the same demographic
groups;
- the supply of and demand for radio advertising time; and
- certain qualitative factors.
Rates are generally highest during morning and afternoon commuting hours. A
station's listenership is reflected in ratings surveys that estimate the number
of listeners tuned to the station and the time they spend listening. Each
station's ratings are used by its advertisers and advertising representatives in
connection with advertising sales and are used by us to chart audience growth,
set advertising rates and adjust programming. The radio broadcast industry's
principal rating agency is Arbitron, which publishes periodic ratings surveys
for significant domestic radio markets. They are our primary source of ratings
data.
COMPETITION
The radio broadcasting industry is very competitive. The success of each of
our stations depends largely upon its audience ratings and its share of the
overall advertising revenues within its market. Our audience ratings and
advertising revenue are subject to change, and any adverse change in a
particular market affecting advertising expenditures or an adverse change in the
relative market positions of the stations located in a particular market could
have a material adverse effect on the revenues of our radio stations located in
that market. There can be no assurance that any one or all of our radio stations
will be able to maintain or increase current audience ratings or advertising
revenue market share.
Our stations compete for listeners and advertising revenues directly with
other radio stations within their respective markets. Radio stations compete for
listeners primarily on the basis of program content that appeals to a particular
demographic group. By building a strong listener base comprised of specific
demographic groups in each of its markets, we are able to attract advertisers
seeking to reach those listeners. Radio stations periodically change their
formats to compete directly with other stations for listeners and advertisers.
Another station's decision to convert to a format similar to that of one of our
radio stations in the same geographic area or launch an aggressive promotional
campaign may result in lower ratings and advertising revenue, increased
promotion and other expenses and, accordingly, lower our broadcast cash flow.
Factors that are material to a radio station's competitive position include
management experience, the station's local audience rank in its market,
transmitter power, assigned frequency, audience characteristics, local program
acceptance and the number and characteristics of other radio stations in the
market area. We attempt to improve our competitive position in each of our
markets by extensively researching our stations' programming, by implementing
advertising campaigns aimed at the demographic groups for which our stations
program and by managing our sales efforts to attract a larger share of
advertising dollars for each individual station. In selling advertising,
however, we compete with many organizations that have substantially greater
financial and other resources than us.
Recent changes in the Communications Act and the FCC's rules and policies
permit increased ownership and operation of multiple local radio stations. As a
result, organizations are acquiring and operating larger blocks of radio
stations. We compete with these organizations, as well as other radio station
groups, to purchase additional stations. Some of these groups are owned or
operated by companies that have substantially greater financial and other
resources than us.
Although the radio broadcasting industry is highly competitive, and
competition is enhanced to some extent by changes in existing radio station
formats and upgrades of power, certain regulatory limitations on market entry
exist. The operation of a radio broadcast station requires a license from the
FCC, and the number of radio stations that an entity can operate in a given
market is limited by
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the availability of FM and AM radio frequencies allotted or assigned by the FCC
to communities in that market, as well as by the FCC's multiple ownership rules
regulating the number of stations that may be owned and controlled by a single
entity. See "Regulation -- Federal Regulation of Radio Broadcasting."
In addition to other radio stations, we compete for advertising revenues
with other media, including newspapers, broadcast television, cable television,
magazines, direct mail, coupons and outdoor advertising. The radio broadcasting
industry also competes with new media technologies, such as the delivery of
audio programming by cable television systems and by satellite digital audio
radio services. Digital audio radio services may deliver by satellite to
nationwide and regional audiences, multi-channel, multi-format, digital radio
services with sound quality equivalent to compact discs. The delivery of
information through the presently unregulated Internet also could create a new
form of competition. Despite the introduction of new technologies for the
delivery of entertainment and information, including television broadcasting,
cable television, audio tapes, compact discs, the radio broadcasting industry
historically has grown. A growing population and greater availability of radios,
particularly car and portable radios, have contributed to this growth. There can
be no assurance, however, that the introduction of new media technology will not
have an adverse effect on the radio broadcasting industry.
The FCC has recently authorized spectrum for the use of digital audio radio
services, a new technology, to deliver audio programming. The FCC has also
authorized two companies to provide digital audio radio services, and a third is
seeking authorization. Digital audio radio services may provide a medium for the
delivery by satellite or terrestrial means of multiple new audio programming
formats to local and national audiences. We cannot predict whether this digital
technology may be used in the future by existing radio broadcast stations either
on existing or alternate broadcasting frequencies.
The FCC is seeking comments to a proposal to authorize three new classes of
low power (less than 1 kilowatt) and micropower (10 watts or less) FM stations,
each with less kilowatt power than our stations. We cannot predict what other
matters might be considered in the future by the FCC, nor can it assess in
advance what impact, if any, the implementation of any of these proposals or
changes might have on our business. See "Regulation -- Federal Regulation of
Radio Broadcasting."
CABLE TELEVISION
We entered the cable television industry in 1965 when we were awarded the
franchise to operate in York, Pennsylvania. Our cable systems currently serve
approximately 186,000 subscribers through 16 signal receiving and transmitting
facilities in Pennsylvania, Mississippi, Maine, Illinois and Indiana. We own,
develop and operate geographically clustered cable television systems in small
and medium-sized communities. We believe that these systems are less susceptible
to competition and subscriber turnover than urban cable television systems and
result in more predictable revenue and cash flow.
Our business strategy for cable television includes the following key
elements intended to enhance our operating and financial performance:
- - Build strategic clusters. We have pursued the development and acquisition of
cable television systems in communities that are within close proximity to our
existing systems to maximize operating efficiencies. Such operating
efficiencies include centralized billing and the sharing of general
management, customer service, marketing and technical support. We also
interconnect systems within a cluster with fiber optic cable, enabling the
consolidation of signal receiving and transmitting facilities. For example, we
recently acquired a system in Hanover, Pennsylvania, connected it to the York
system with fiber optic cable and eliminated a signal receiving and
transmitting facility. This added nearly 17,000 subscribers to the York
system. We also recently
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exchanged a number of systems in Maine and New Hampshire so that all of our
customers in Maine can be served from one signal receiving and transmitting
facility by the end of 2000.
- - Focus on customer satisfaction. To maximize customer satisfaction, we strive
to provide reliable, high-quality service offerings, superior customer service
and attractive programming choices at reasonable rates. To meet this
objective, we conduct subscriber surveys and marketing studies to determine
how we can better meet the needs of our customers and implement programs to
improve the skills of our customer service and technical employees. In 1997,
we introduced the Opportunities to Excel Program, which gives technical
personnel the opportunity to improve their earnings by successfully completing
skills courses. In 1998, we implemented a program entitled Sales Training for
Excellence in Leadership, Learning and Retention, which includes extensive
training, performance follow-up and standardized skills for all of our
customer service representatives. We believe that our customer service efforts
have contributed to subscriber growth and position us to sell additional
products and services in the future.
- - Continue upgrade of technical facilities. We seek to provide reliable,
high-quality cable television services to our customers. To achieve this goal,
we are expanding and upgrading our cable systems to increase channel capacity,
enhance signal quality, improve technical reliability and reduce the number of
signal receiving and transmitting facilities in existing systems. Over the
next three years, we intend to spend approximately $34 million to upgrade our
cable systems to serve approximately 87% of our subscribers with cable plant
of at least 550 MHz bandwidth capacity and 76% of our subscribers with cable
plant of 750 MHz bandwidth capacity. A bandwidth capacity of 750 MHz enables
us to offer our customers up to 82 analog channels over 550 MHz of bandwidth
and have 200 MHz of bandwidth available to transmit a digital television
signal. We believe that these improvements enhance our position as the leading
provider of multi-channel television services in our markets and create
additional revenue opportunities. We also believe that these improvements
enhance operating efficiencies, increase customer satisfaction and improve
relations with local franchising authorities.
- - Develop new sources of revenues. We believe that the investment we have made
in our cable systems has enabled us to generate additional revenue by
providing expanded tiers of basic programming, premium services, and
additional pay-per-view services. In addition, we are expanding new services,
such as Internet access, high speed data, and video-on-demand and other
interactive services. We believe that the new, enhanced services will attract
new subscribers, increase revenue and cash flow per subscriber, improve
customer loyalty and reduce customer turnover.
THE CABLE TELEVISION INDUSTRY
A cable customer generally pays an initial installation charge and fixed
monthly fees for cable television services and for other services (such as the
rental of converters and remote control devices). Such monthly service fees
constitute the primary source of revenue for cable television operators. In
addition to these services, cable television operators generate revenue from
additional fees paid by customers for pay-per-view programming of movies and
special events and from the sale of available advertising spots on
advertiser-supported programming. Cable television operators frequently also
offer to their customers home shopping services, which pay the systems a share
of revenue from sales of products in the systems' service areas. Cable
television operators are also generating increasing revenues from the sale of
enhanced data services. Cable television revenues tend to be stable, growing
over the last 14 years at an 11.7% compound annual rate, compared to a gross
domestic product growth rate of 6.2%. Cable television did not experience a
single down year in revenue during this period of time. See "-- Programming" and
"-- Marketing, Customer Service and Community Relations."
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<PAGE> 54
Cable television systems offer customers various levels (or "tiers") of
cable television services consisting of:
- a limited basic service comprised of off-air broadcast television
signals, local origination programming produced by the cable system
and/or public access groups, and a limited number of satellite services
such as home shopping channels and C-Span; and
- an expanded basic service comprised of satellite delivered, non-broadcast
channels such as: Cable News Network (CNN), Entertainment and Sports
Programming Network (ESPN) and Turner Network Television (TNT).
For an extra monthly charge, cable television systems also offer premium
television services to their customers. These services (such as Home Box Office
and Showtime) are satellite delivered channels offering feature films, live
sporting events, concerts and other special entertainment features presented
without commercial interruption.
A cable television system receives television, radio and data signals that
are transmitted to the system's signal receiving and transmitting facility by
means of off-air antennae, microwave relay systems and satellite earth stations.
These signals are then modulated, amplified and distributed, primarily through
coaxial and in some instances fiber optic cable, to customers who pay a fee for
this service. Cable television systems may also originate their own television
programming and other information services for distribution through the system.
Cable television systems generally are constructed and operated pursuant to
non-exclusive franchises or similar licenses granted by local governmental
authorities for a specified term of years, generally for extended periods of up
to 15 years.
CABLE PROPERTIES
The following table sets forth certain information regarding our cable
systems as of December 31, 1998. Homes passed represents the maximum number of
homes that could become subscribers in the particular cable system. Basic
penetration represents basic subscribers as a percentage of homes passed.
Premium penetration represents premium units as a percentage of basic
subscribers. Premium units represents the aggregate number of individual premium
services (e.g., HBO, Cinemax, Showtime) for which customers have subscribed.
Average monthly revenue per basic subscriber represents revenues divided by 12
divided by the weighted average number of subscribers for the year.
<TABLE>
<CAPTION>
AVERAGE MONTHLY
REVENUE
HOMES BASIC BASIC PREMIUM PER BASIC
CABLE SYSTEMS PASSED SUBSCRIBERS PENETRATION PENETRATION SUBSCRIBER
- ------------- ------- ----------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Pennsylvania
York(1)................. 112,241 87,180 77.7% 38.8% $36.98
Williamsport............ 44,414 34,951 78.7 31.8 33.89
Mississippi
Rankin.................. 29,882 21,998 73.6 45.4 36.35
Maine
Casco................... 26,365 19,099 72.4 32.0 33.94
Illinois/Indiana
SBC..................... 26,451 20,750 78.4 38.8 31.37
------- ------- ---- ---- ------
Totals.................... 239,353 183,978 76.9% 37.6% $35.18
======= ======= ==== ==== ======
</TABLE>
- ---------------
(1) Except for average monthly revenue per basic subscriber, information
includes Hanover Cable TV, which was acquired in January 1999.
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CABLE SYSTEMS
The following table sets forth selected technical, operating and financial
data for each of our cable systems as of and for the year ended December 31,
1998. Except for financial data, York information includes Hanover Cable TV,
which was acquired in January 1999. Density represents homes passed divided by
miles of plant. Plant Bandwidth represents percentage of basic subscribers
within a system served by the indicated plant bandwidth. Basic penetration
represents basic subscribers as a percentage of homes passed. Premium units
represents the aggregate number of individual premium services (e.g., HBO,
Cinemax, Showtime) for which customers have subscribed. Premium penetration
represents premium units as a percentage of basic subscribers. Average monthly
revenue per basic subscriber represents revenues divided by 12 divided by the
weighted average number of subscribers for the year.
SELECTED TECHNICAL, OPERATING AND FINANCIAL DATA BY CABLE SYSTEM
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
YORK WILLIAMSPORT RANKIN CASCO SBC TOTAL
-------- ------------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
TECHNICAL DATA:
Miles of Plant....................... 1,546 702 562 715 518 4,043
Density.............................. 73 63 53 37 51 59
Headends............................. 1 3 2 4 6 16
Planned 1999 Headend eliminations.... 0 1 0 3 1 5
Plant Bandwidth
330 MHz or less.................... 0.0% 67.1% 5.2% 17.5% 40.7% 20.7%
400-450MHz......................... 36.7% 0.0% 83.6% 32.3% 29.2% 35.1%
550 MHz............................ 0.0% 0.0% 11.2% 34.4% 30.1% 11.5%
750 MHz............................ 63.3% 32.9% 0.0% 15.8% 0.0% 32.7%
OPERATING DATA:
Homes passed......................... 112,241 44,414 29,882 26,365 26,451 239,353
Basic subscribers.................... 87,180 34,951 21,998 19,099 20,750 183,978
Basic penetration.................... 77.7% 78.7% 73.6% 72.4% 78.4% 76.9%
Premium units........................ 33,820 11,119 9,984 6,115 8,048 69,086
Premium penetration.................. 38.8% 31.8% 45.4% 32.0% 38.8% 37.6%
FINANCIAL DATA:
Revenue (in thousands)............... $30,805 $14,229 $ 9,356 $ 8,445 $ 7,806 $70,641
Average monthly revenue per basic
subscriber......................... $ 36.98 $ 33.89 $ 36.35 $ 33.94 $ 31.37 $ 35.18
</TABLE>
The following descriptions of our cable clusters include information as of
December 31, 1998 as adjusted for the January 1999 acquisition of Hanover Cable
TV.
York. The York, Pennsylvania cable system is our largest, serving
subscribers in 34 municipalities and accounting for 47% of our total
subscribers. On January 29, 1999, we acquired neighboring Hanover Cable TV,
which serves 17,000 customers in 17 municipalities. A hybrid fiber/coaxial
rebuild of the York system began in 1995, and approximately 63% of the system
(including Hanover) has cable plant with bandwidth capacity of 750 MHz. The
rebuild is expected to be completed by the end of 2001. We have constructed a
fiber optic link from York to Hanover, which enables us to serve York and
Hanover from one signal receiving and transmitting facility. The York system is
two-way capable.
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Williamsport. The Williamsport, Pennsylvania cable system was acquired in
a swap with Cox Communications, Inc. for our East Providence, Rhode Island
system in April 1996. We also acquired two adjacent systems in December 1996.
The Williamsport system accounts for 19% of our total subscribers. Approximately
33% of the system has been rebuilt to 750 MHz, and the rebuild is expected to be
completed by the second quarter of 2000. The system is two-way capable.
Rankin. The Rankin County, Mississippi cable system encompasses three
small towns, many upscale suburban developments and the southeastern shore of an
attractive reservoir recreation area just east of the state capitol of Jackson.
The area continues to experience explosive housing growth. Over the past five
years, the average annual internal growth rate of new subscribers to the Rankin
system has been 6.1%, and the system accounts for 12% of our total subscribers.
Approximately 95% of the Rankin system currently has a bandwidth of 450 MHz or
greater. The system is planning to introduce digital technology in 1999,
enabling it to add new programming services without having to rebuild the
system.
Casco. The Casco cable system serves the communities of Brunswick,
Freeport, Harpswell and Woolwich, Maine and accounts for 10% of our total
subscribers. Approximately 50% of the Casco system has been rebuilt to a minimum
of 550 MHz. The primary signal receiving and transmitting facility in Brunswick
serves approximately 79% of the subscribers. Three smaller signal receiving and
transmitting facilities, which were acquired in December 1998, will be
eliminated over the next 18 months and linked to the Brunswick signal receiving
and transmitting facility. The Casco system is two-way capable.
SBC. The SBC cable system serves Shelbyville, Indiana and Olney and
DuQuoin, Illinois. Shelbyville offers attractive demographics and growth
opportunities as a result of its proximity to the growing Indianapolis market.
The SBC system accounts for 12% of our total subscribers. The system currently
has bandwidth ranging from 330 MHz to 550 MHz.
PROGRAMMING
We have various contracts to obtain basic, satellite and premium
programming for our cable systems from program suppliers, including, in limited
circumstances, some broadcast stations, with compensation generally based on a
fixed fee per customer or a percentage of the gross receipts for the particular
service. Some program suppliers provide volume discount pricing structures and
some offer marketing support. We acquire a portion of our programming through an
affiliation agreement with a subsidiary of AT&T. Rates for programming obtained
through AT&T are generally lower than rates that we would be charged as a stand
alone multiple system operator. We receive favorable rates on AT&T programming
because Lenfest Communications, Inc., which currently is 50% owned by AT&T, has
minority ownership interests in Susquehanna Cable and its principal operating
subsidiaries. See "Certain Transactions -- The Lenfest Agreement." In January
1999, calculated on a cost basis, we acquired 67% of our programming through
AT&T, 32% through individual contracts and 1% through Lenfest.
Programming costs are expected to increase in the ordinary course of our
business as a result of increases in the number of basic subscribers, increased
costs to purchase cable programming, expansion of the number of channels
provided to customers and contractual rate increases from programming suppliers.
In the event that we acquire Lenfest's ownership interests in Susquehanna Cable,
our programming costs will increase faster than they would otherwise. See "Risk
Factors -- Risks Relating to the Cable Television Industry -- If our programming
costs continue to increase and we cannot pass them along to our customers, our
cash flow will decrease." and "Certain Transactions -- The Lenfest Agreement."
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<PAGE> 57
MARKETING, CUSTOMER SERVICE AND COMMUNITY RELATIONS
Our cable marketing strategy is designed to increase total revenues and
revenues per subscriber by:
- aggressively promoting and marketing our current services;
- expanding our product offerings; and
- providing superior customer service.
We believe that this strategy will enable us to acquire new customers and
maintain a positive relationship with existing customers to retain their
business and sell them additional products. Implementation strategies include:
- targeted marketing campaigns using door-to-door sales, direct mail and
telemarketing;
- price promotions, such as installation specials, to attract new
subscribers and discounts for premium packages for multi-pay customers;
- introduction of multiplexed premium channels to improve their price/value
perception; and
- advertisement and sponsorship of community-based events to enhance our
local presence.
We believe that providing superior customer service is a key element of our
long-term success because the quality of customer service affects our ability to
retain customers. We believe that it also contributes to subscriber growth and
positions us to sell additional products and services. To enhance customer
service, we have initiated programs to improve the skills of our employees. In
1997, we introduced the Opportunities to Excel Program, which gives technical
personnel the opportunity to improve their earnings by successfully completing
courses that enhance their on-the-job skills. In 1998, we introduced a parallel
initiative for customer service employees entitled Sales Training for Excellence
in Leadership, Learning and Retention, which includes extensive training,
performance follow-up and standardized skills for all customer service
representatives.
Recognizing that positive franchise and public relations are crucial to our
overall success, we emphasize maintaining good working relationships with
municipal officials in our franchise areas and with the communities that we
serve. Our local management meets regularly with municipal officials to keep
them informed of both our activities and trends in the industry. As a result of
these working relationships, we receive valuable feedback on our standing with
the municipalities and the satisfaction of our customers. Local management is
also responsible for maintaining a high level of visibility for us, which is
accomplished through active involvement in various community and nonprofit
organizations.
TECHNOLOGY
As part of our commitment to customer service, we seek to provide reliable,
high-quality cable television service. As such, our primary objective with
respect to Susquehanna Cable's capital expenditures is to maintain, expand and
upgrade its cable plant to improve and expand its cable television services.
Through a capital investment program, we are expanding channel capacity,
enhancing signal quality, improving technical reliability and providing a
platform to deliver high-speed data services, including Internet access. We
believe that such technical improvements and upgrades create additional revenue
opportunities, enhance operating efficiencies, improve franchising relations and
increase customer satisfaction.
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The following table summarizes, as of December 31, 1998, our existing
bandwidth profile and our bandwidth profile upon completion of work-in-progress
projects (which are generally expected to be completed by the end of 2001).
<TABLE>
<CAPTION>
330 MHZ OR LESS 400 TO 450 MHZ 550 MHZ 750 MHZ
(APPROXIMATELY (APPROXIMATELY (APPROXIMATELY (APPROXIMATELY
40 ANALOG 60 ANALOG 82 ANALOG 82 ANALOG
CHANNELS) CHANNELS) CHANNELS) CHANNELS(1))
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
EXISTING BANDWIDTH PROFILE
Miles of plant.................. 836 1,419 465 1,323
% miles of plant................ 20.7% 35.1% 11.5% 32.7%
BANDWIDTH PROFILE UPON
COMPLETION OF WORK-IN-PROGRESS
Miles of plant.................. 29 529 465 3,319
% miles of plant................ 0.7% 12.2% 10.7% 76.4%
</TABLE>
- ---------------
(1) Plus 200 MHz of additional bandwith for digital programming and other
enhanced services.
Our use of fiber optic technology as an enhancement to coaxial is enabling
us to consolidate signal receiving and transmitting facilities and reduce
amplifier cascades, thereby improving picture quality and system reliability and
reducing signal receiving and transmitting facility and maintenance
expenditures. Fiber optic strands are capable of carrying hundreds of video,
data and voice channels over extended distances without the extensive signal
amplification typically required for coaxial cable. We anticipate that the
installation of fiber optic cable will allow us to consolidate from 16 signal
receiving and transmitting facilities as of December 31, 1998 to approximately
11 signal receiving and transmitting facilities by the end of 1999. In our
larger systems, fiber optic technology is deployed in a "ring" design providing
a redundant path for video and data signals being delivered to large subscriber
groups. This approach provides an extra degree of reliability in the event that
fiber optic cable is damaged on the primary path.
We have been closely monitoring developments in the area of digital
compression, a technology that enables cable operators to increase the channel
capacity of cable television systems by permitting a significantly increased
number of digitized video signals to fit in a cable television system's existing
bandwidth. We believe that the utilization of digital compression technology in
the future could enable us to increase channel capacity in certain systems in a
cost efficient manner. Such utilization of digital compression would generally
be implemented as part of system upgrades, where some portion of the additional
analog channels would be allocated to additional tiers of cable services. The
use of digital compression will expand the number and types of services offered
and enhance the development of current and future revenue sources.
The provision of high-speed cable modems to residential and business
customers has recently become a source of additional revenue to the cable
industry. Cable modems provide Internet access at higher speeds and lower costs
than the technologies offered by other communication providers. For example, a
10 megabit cable modem provides Internet access at download speeds 350 times
faster than typical 28.8 kilobit dial-up telephone modem connections. Through
BlazeNet, we are developing high speed data revenues from both commercial and
consumer accounts. Cable modem service is now available in York, Pennsylvania
and Brunswick, Maine and on a more limited basis in Rankin County, Mississippi
and Shelbyville, Indiana. In addition, we plan to launch modem service in the
Williamsport market in 1999.
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OTHER SERVICES
Susquehanna Data Services. Susquehanna Data Services, Inc., a wholly-owned
subsidiary of Susquehanna Media, was formed in 1996 to provide Internet and data
networking services to residential and business customers. Marketing its
products and services under the tradename "BlazeNet," Susquehanna Data offers
Internet access over both telephone and cable modems, website creation, hosting
and maintenance, local and wide area network design, construction and operation,
and telecommunications products from Hyperion Susquehanna Telecommunications and
other local telephone companies. As of December 31, 1998, BlazeNet provided
access service to approximately 5,000 business and consumer accounts.
Approximately 13% of these accounts access the Internet using cable modems. The
access business continues to grow rapidly, with an increase in accounts of over
160% in 1998.
In addition to benefits created with Susquehanna Cable, BlazeNet is
actively working with both Susquehanna Radio and The Pfaltzgraff Co. to host
their websites. BlazeNet has also made progress developing an electronic
commerce product. Offering consulting, design, development, implementation and
hosting services for companies wanting to sell products on the Internet,
BlazeNet utilizes its programming and design staff to implement custom solutions
using custom-developed programs.
Hyperion Partnership. In 1997, Susquehanna Media, through its wholly-owned
subsidiary Susquehanna Fiber Systems, Inc., entered into a 50/50 partnership
with Hyperion Telecommunications of Pennsylvania, Inc., a subsidiary of Adelphia
Communications Corp., to enter the competitive local exchange carrier business
in the York, Pennsylvania market. The partnership provides long distance access
circuits to businesses bypassing the local telephone company, point-to-point
data circuits and switched business access services. Susquehanna Cable has
constructed and maintains a 125 mile fiber optic SONET ring network that is
leased to the partnership under a long-term contract. As of December 31, 1998,
the partnership provided service to 66 buildings in the York area and had over
2,400 access lines installed.
FRANCHISES
Cable television systems are constructed and operated under fixed-term
non-exclusive franchises or other types of operating permits that are granted by
local governmental authorities. These franchises contain many conditions, such
as:
- time limitations on commencement and completion of construction;
- conditions of service, including mix of programming required to meet the
needs and interests of the community;
- the provision of free service to schools and certain other public
institutions;
- the maintenance of insurance and indemnity bonds; and
- the payment of fees to communities.
Certain of these franchises may require the imposition of penalties if the
franchise agreements are violated. Certain provisions of these local franchises
are subject to limits imposed by federal law.
As of May 31, 1999, we held a total of 124 franchises. Many of these
franchises require the payment of fees to the issuing authorities ranging from
1% to 5% of gross revenues (as defined by each franchise agreement) from the
related cable system. The 1984 Cable Act prohibits franchising authorities from
imposing annual franchise fees in excess of 5% of gross annual revenues and
permits the cable television system operator to seek renegotiation and
modification of franchise requirements if warranted by changed circumstances
that render performance commercially impracticable.
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Our cable franchises expire at various times through 2012. The following
table sets forth certain information relating to our franchises (including
Hanover Cable TV):
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
YEAR OF FRANCHISE NUMBER OF TOTAL TOTAL BASIC
EXPIRATION FRANCHISES FRANCHISES SUBSCRIBERS
- ----------------- ------------- ------------- -------------
<S> <C> <C> <C>
1999-2001............................ 18 15% 11%
2002 and after....................... 106 85% 89%
--- ---- ----
Total................................ 124 100% 100%
=== ==== ====
</TABLE>
The 1984 and 1992 Cable Acts provide, among other things, for an orderly
franchise renewal process, which limits a franchising authority's ability to
deny a franchise renewal if the incumbent operator follows prescribed renewal
procedures. In addition, the 1984 and 1992 Cable Acts establish comprehensive
renewal procedures, which require, when properly elected by an operator, that an
incumbent franchisee's renewal application be assessed on its own merits and not
as part of a comparative process with competing applications.
COMPETITION
Cable television systems face competition from alternative methods of
distributing video programming and from other sources of news, information and
entertainment. These sources include off-air television broadcast programming,
newspapers, movie theaters, live sporting events, interactive online computer
services and home video products, including videotape cassette recorders. The
extent to which a cable television system is competitive depends, in part, upon
that system's ability to provide, at a reasonable price to customers, a greater
variety of programming and other communications services than those available
off-air or through alternative delivery sources and upon superior technical
performance and customer service.
Competing Franchises. Cable television systems generally operate pursuant
to franchises granted on a non-exclusive basis. Franchising authorities may not
unreasonably deny requests for additional franchises and may operate cable
television systems themselves. Well-financed businesses from outside the cable
television industry (such as the public utilities that own the poles to which
cable is attached) may become competitors for franchises or providers of
competing services. We are aware of direct competition from other franchised
cable television operators (called "overbuilding") in systems that service less
than 1% of its total basic subscribers. Additional cable television systems may
be constructed in our other franchise areas.
Digital Broadcast Satellites. The fastest growing method of satellite
distribution is by high-powered direct broadcast satellites utilizing video
compression technology, which provides more than 100 channels of programming
over a single high-powered digital broadcast satellite. Digital broadcast
satellite service can be received virtually anywhere in the United States
through small rooftop or side-mounted antennae and is not subject to certain
local restrictions on the location and use of digital broadcast satellite and
other satellite receiver dishes. Digital broadcast satellite service is
presently being heavily marketed on a nationwide basis by three service
providers. Digital broadcast satellite systems offer more programming and with
digital quality, but have high upfront costs and a lack of local programming,
service and equipment distribution. One digital broadcast satellite provider has
announced plans to offer some local signals in a limited number of markets.
Satellite Master Antenna Television Systems. Cable television operators
also face competition from private satellite master antenna television systems
that serve condominiums, apartment and office complexes and private residential
developments. Like cable television systems, satellite master antenna television
systems offer both improved reception of local television stations and many of
the same satellite-delivered program services. Satellite master antenna
television operators often enter into
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<PAGE> 61
exclusive agreements with building owners or homeowners associations, although
some states have enacted laws that authorize franchised cable television
operators access to such private complexes. Packages of data and video services
are also being offered to private residential and commercial developments. As
long as they do not use public rights-of-way, satellite master antenna
television systems can interconnect non-commonly owned buildings without having
to comply with local, state and federal regulations that are imposed on cable
television systems. Our ability to compete for customers in residential and
commercial developments served by satellite master antenna television operators
is uncertain.
Local Multipoint Distribution Service. Local multipoint distribution
service, a new wireless service, can deliver over 100 channels of programming
directly to consumers' homes. A large amount of this spectrum was auctioned in
March 1998, and cable television operators and local telephone companies were
restricted in their participation in this auction. It is uncertain whether this
spectrum will be used to deliver multichannel video programming and other
services to subscribers and thereby compete with franchised cable television
systems.
Multichannel Multipoint Distribution Systems. Multichannel multipoint
distribution systems use low power microwave frequencies to transmit video
programming over the air to customers. Wireless distribution services provide
many of the same programming services as cable television systems, and digital
compression technology is likely to increase significantly the channel capacity
of their systems. Multichannel multipoint distribution systems service requires
unobstructed "line of sight" transmission paths. In the majority of our
franchise service areas, prohibitive topography and "line of sight" access have
limited, and are likely to continue to limit, competition from multichannel
multipoint distribution systems. Moreover, in the majority of our franchise
areas, multichannel multipoint distribution systems operators face significant
barriers to growth because lower population densities make these areas less
attractive. We are not aware of any significant multichannel multipoint
distribution systems operation currently within our cable television franchise
service areas, other than Wireless One, Inc., which competes with us in Rankin
County, Mississippi.
Local Exchange Carriers. The 1996 Telecom Act allows local exchange
carriers and others to compete with cable television systems and other video
services in their telephone service territory, subject to certain regulatory
requirements. Local exchange carriers use a variety of distribution methods,
including both broadband wire facilities and wireless transmission facilities
within and outside of their telephone service areas. Unlike cable television
systems, local exchange carriers are not required, under certain circumstances,
to obtain local franchises to deliver video services and are not subject to
certain obligations imposed under such franchises. We believe that our rural
markets are unlikely to support competition in the provision of video and
telecommunications broadband services given the lower population densities and
higher capital costs per household of installing plant.
Public Utilities. Registered utility holding companies and their
subsidiaries may provide telecommunications services (including cable
television). Electric utilities must establish separate subsidiaries known as
"exempt telecommunications companies" and must apply to the FCC for operating
authority. Due to their resources, electric utilities could be formidable
competitors to traditional cable television systems.
Other New Technologies. Other new technologies, including Internet-based
services, may compete with cable television systems. Incumbent television
broadcast licensees may obtain licenses for digital television, which can
deliver high definition television pictures, multiple digital-quality program
streams, as well as CD-quality audio programming and advanced digital services,
such as data transfer or subscription video. Television broadcast stations are
authorized to transmit textual and graphic information. Commercial and
noncommercial FM stations may use their subcarrier frequencies to provide
nonbroadcast services, including data transmissions. In addition, over-the-air
interactive video and data service permits two-way interaction with commercial
and educational
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programming, along with informational and data services. Local exchange carriers
and other common carriers provide facilities for the transmission and
distribution of video services, including interactive computer-based services
like the Internet, data and other nonvideo services.
Advances in communications technology, as well as changes in the
marketplace and the regulatory and legislative environments, are constantly
occurring. We are not, therefore, able to predict the effect that current or
future developments might have on the cable industry or on our operations.
PROPERTIES
The headquarters of our cable television operations are located in York,
Pennsylvania in office space leased from a related party. We do not have a
separate headquarters for our radio broadcast operations.
We lease nine studio facilities for our radio operations. We own broadcast
towers for 11 of our radio stations and lease 13 other broadcast towers. We own
the real property under nine of our broadcast towers and lease the land under
our other 15 towers. We own three, and lease seven, office and signal receiving
and transmitting facilities for our cable television operations. In connection
with our cable operations, we own eight tower locations and lease eight others.
Our principal physical assets with respect to our cable operations consist
of cable television operating plant and equipment, including signal receiving,
encoding and decoding devices, headends and distribution systems and customer
house drop equipment for each of our cable television systems. The signal
receiving apparatus typically includes a tower, antenna, ancillary electronic
equipment and earth stations for reception of satellite signals. Headends,
consisting of associated electronic equipment necessary for the reception,
amplification and modulation of signals, are located near the receiving devices.
Our distribution system consists primarily of coaxial and fiber optic cables and
related electronic equipment.
We believe that our properties are suitable for our operations and are in
good condition.
LEGAL PROCEEDINGS
We currently and from time to time are involved in litigation incidental to
the conduct of our business, but we are not currently a party to any lawsuit or
proceeding which, in our opinion, is likely to have a material adverse effect on
us.
EMPLOYEES
We have approximately 1,314 employees. None of these employees are covered
by collective bargaining agreements, and we consider our relations with its
employees to be good.
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REGULATION
FEDERAL REGULATION OF RADIO BROADCASTING
INTRODUCTION
The ownership, operation and sale of broadcast stations, including those
licensed to us, are subject to the jurisdiction of the FCC, which acts under
authority derived from the Communications Act. The Communications Act was
amended in 1996 by the 1996 Telecom Act to make changes in several broadcast
laws. Among other things, the FCC grants permits and licenses to construct and
operate radio stations; assigns frequency bands for broadcasting; determines
whether to approve changes in ownership or control of station licenses;
regulates equipment used by stations and the operating power and other technical
parameters of stations; adopts and implements regulations and policies that
directly or indirectly affect the ownership, operation and employment practices
of stations; regulates some forms of radio broadcasting programming; and has the
power to impose penalties for violations of its rules under the Communications
Act.
LICENSE GRANT AND RENEWAL
Radio broadcast licenses are granted and renewed for maximum terms of eight
years. Licenses may be renewed through an application to the FCC. The
Communications Act requires that the FCC grant the renewal of a station's
license if the FCC finds that, during the preceding term of the license, the
station has served the public interest, convenience and necessity, that there
have been no serious violations by the licensee of the Communications Act or the
rules and regulations of the FCC, and that there have been no other violations
by the licensee of the Communications Act or the rules and regulations of the
FCC that, when taken together, would constitute a pattern of abuse.
Petitions to deny license renewal applications can be filed by interested
parties, including members of the public. Such petitions may raise various
issues before the FCC. The FCC is required to hold hearings on renewal
applications if it is unable to determine that renewal of a license would serve
the public interest, convenience and necessity, or if a petition to deny raises
a "substantial and material question of fact" as to whether the grant of the
renewal application would be prima facie inconsistent with the public interest,
convenience and necessity. Also, during certain periods when a renewal
application is pending, the transferability of the applicant's license may be
restricted. Historically, we have not experienced any material problems renewing
our licenses to operate our radio stations and are not currently aware of any
facts that would prevent the timely renewal of our licenses. There can be no
assurance, however, that our licenses will be renewed.
The following table sets forth certain regulatory information regarding
each of the stations owned by us. HAAT, which applies to FM stations only,
represents height above average terrain. Height above average terrain means the
actual height of the station's transmitting antenna above the ground level of
the surrounding terrain and is used to measure the coverage of a FM station. The
FCC class determines the maximum power and maximum height above average terrain
for the particular station.
<TABLE>
<CAPTION>
FREQUENCY
CITY OF (FM-MHZ) FCC HAAT POWER IN EXPIRATION DATE
MARKETS AND STATIONS LICENSURE (AM-KHZ) CLASS (METERS) KILOWATTS (DAY) OF LICENSE
- -------------------------------- ---------------- --------- ----- -------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
San Francisco, CA
KNBR-AM....................... San Francisco 680 KHz A -- 50 KW December 1, 2005
KFOG-FM....................... San Francisco 104.5 MHz B 459 7.1 KW December 1, 2005
KFFG-FM....................... Los Altos 97.7 MHz A 137 1.6 KW December 1, 2005
KSAN-FM....................... San Mateo 107.7 MHz B 354 8.9 KW December 1, 2005
KTCT-AM....................... San Mateo 1050 KHz B -- 50 KW December 1, 2005
</TABLE>
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<PAGE> 64
<TABLE>
<CAPTION>
FREQUENCY
CITY OF (FM-MHZ) FCC HAAT POWER IN EXPIRATION DATE
MARKETS AND STATIONS LICENSURE (AM-KHZ) CLASS (METERS) KILOWATTS (DAY) OF LICENSE
- -------------------------------- ---------------- --------- ----- -------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Dallas/Ft. Worth,TX
KLIF-AM....................... Dallas 570 KHz B -- 5 KW August 1, 2005
KKLF-AM....................... Dennison/Sherman 950 KHz B -- .5 KW August 1, 2005
KTCK-AM....................... Dallas 1310 KHz B -- 5 KW August 1, 2005
KPLX-FM....................... Ft. Worth 99.5 MHz C 511 100 KW August 1, 2005
KKZN-FM....................... Halton City 93.3 MHz C2 133 50 KW August 1, 2005
KXZN-FM....................... Sanger 104.1 MHz C3 150 11 KW August 1, 2005
KTBK-AM....................... Sherman 1700 KHz B -- 10 KW Pending
Houston, TX
KRBE-FM....................... Houston 104.1 MHz C 585 100 KW August 1, 2005
Atlanta, GA
WNNX-FM....................... Atlanta 99.7 MHz C 315 100 KW April 1, 2004
WHMA-FM....................... Anniston, AL 100.5 MHz C 348 100 KW April 1, 2003
WHMA-AM....................... Anniston, AL 1390 KHz B -- 5 KW April 1, 2003
Cincinnati, OH
WRRM-FM....................... Cincinnati 98.5 MHz B 246 18 KW October 1, 2004
WVAE-FM....................... Fairfield 94.9 MHz B 322 10.5 KW October 1, 2004
Indianapolis, IN
WFMS-FM....................... Indianapolis 95.5 MHz B 302 13 KW August 1, 2004
WGRL-FM....................... Noblesville 93.9 MHz A 150 2.75 KW August 1, 2004
WGLD-FM....................... Indianapolis 104.5 MHz B 150 50 KW August 1, 2004
York/Lancaster, PA
WSBA-AM....................... York 910 KHz B -- 5 KW August 1, 2006
WARM-FM....................... York 103.3 MHz B 398 6.4 KW August 1, 2006
Albemarle, NC
WABZ-FM(1).................... Albemarle 100.9 MHz A 61 3 KW December 1, 2003
</TABLE>
- ---------------
(1) Operated by a third party under a local marketing agreement.
REGULATORY APPROVALS
Broadcast licenses may not be assigned nor may the control of broadcast
licenses be transferred without the prior approval of the FCC. In determining
whether to assign, transfer, grant or renew a broadcast license, the FCC
considers a number of factors pertaining to the licensee, including limits on
common ownership of media properties, financial qualifications of the proposed
licensee, the "character" of the licensee (including that no party to the
application (i.e. officer, director, or 10% or greater owner) is subject to the
denial of federal benefits that include FCC benefits pursuant to Section 5301 of
the Anti-Drug Abuse Act of 1988, 21 U.S.C. sec.862), limitations on alien
ownership, and compliance with programming, filing and anti-discrimination
requirements.
Assigning a license or transferring control requires the filing of an
application with the FCC. The FCC staff reviews the application and determines
whether to grant the application. This process generally takes about four
months. During the application process, interested parties and the public may
file petitions, during specific periods of time, to deny or raise objections to
the application. A full FCC review of staff action can be requested, and final
FCC approval or disapproval is subject to judicial review.
Absent a timely request for reconsideration, administrative review or
judicial review, the FCC staff's grant of an application becomes final by
operation of law and generally is no longer subject to administrative or
judicial review.
The pendency of a license renewal application may alter the aforementioned
timetables, because the FCC might not issue an unconditional assignment grant if
the station's license renewal is pending.
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OWNERSHIP MATTERS
The 1996 Telecom Act and the FCC's broadcast multiple ownership rules do
not restrict the number of radio stations one person or entity may own, operate
or control on a national level, but do impose restrictions on a local level.
These restrictions are:
(i) in a market with 45 or more commercial radio signals, an entity
may own up to eight commercial radio stations, not more than five of which
are in the same service (FM or AM);
(ii) in a market with between 30 and 44 (inclusive) commercial radio
signals, an entity may own up to seven commercial radio stations, not more
than four of which are in the same service;
(iii) in a market with between 15 and 29 (inclusive) commercial radio
signals, an entity may own up to six commercial radio stations, not more
than four of which are in the same service; and
(iv) in a market with 14 or fewer commercial radio signals, an entity
may own up to five commercial radio stations, not more than three of which
are in the same service, except that an entity may not own more than 50% of
the stations in such market.
The foregoing summarizes the material radio broadcast industry regulations
with which we must comply. However, it does not purport to describe all present
and proposed regulations and legislation relating to the radio broadcasting
industry, some of which may be subject to judicial and legislative review and
change, and their impact on the radio broadcasting industry or us cannot be
predicted at this time.
REGULATION OF CABLE TELEVISION
The cable television industry is regulated by the FCC, some state
governments and substantially all local governments. In addition, various
legislative and regulatory proposals under consideration from time to time by
the Congress and various federal agencies have in the past, and may in the
future, materially affect us and the cable television industry. The following is
a summary of federal laws and regulations materially affecting the growth and
operation of the cable television industry and a description of certain state
and local laws. We believe that the regulation of the cable television industry
remains a matter of interest to Congress, the FCC and other regulatory
authorities. There can be no assurance as to what, if any, future actions such
legislative and regulatory authorities may take or the effect thereof on us.
FEDERAL LEGISLATION
The principal federal statute governing the cable television industry is
the Communications Act. As it affects the cable television industry, the
Communications Act has been significantly amended on three occasions, by the
1984 Cable Act, the 1992 Cable Act and the 1996 Telecom Act. The 1996 Telecom
Act altered the regulatory structure governing the nation's telecommunications
providers. It removed barriers to competition in both the cable television
market and the local telephone market. Among other things, it also reduced the
scope of cable rate regulation. In addition, the 1996 Telecom Act required the
FCC to undertake a host of rulemakings to implement the 1996 Telecom Act, the
final outcome of which cannot yet be determined.
FEDERAL REGULATION
The FCC is the principal federal regulatory agency with jurisdiction over
cable television. It has adopted regulations covering such areas as
cross-ownership between cable television systems and other communications
businesses, carriage of television broadcast programming, cable rates, consumer
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protection and customer service, leased access, indecent programming, programmer
access to cable television systems, programming agreements, technical standards,
consumer electronics equipment compatibility, ownership of home wiring, program
exclusivity, equal employment opportunity, consumer education and lockbox
enforcement, origination cablecasting and sponsorship identification, political
programming and advertising, advertising during children's programming, signal
leakage and frequency use, maintenance of various records, and antenna structure
notification, marking and lighting. The FCC has the authority to enforce these
regulations through the imposition of substantial fines, the issuance of cease
and desist orders and/or the imposition of other administrative sanctions, such
as the revocation of FCC licenses needed to operate certain transmission
facilities often used in connection with cable operations. A brief summary of
certain of these federal regulations as adopted to date follows.
RATE REGULATION
Substantial federal legislation and regulations have governed cable
television rates since 1984. Since that time, basic cable rates have been
deregulated for cable television systems that the FCC has determined to be
subject to effective competition. The 1996 Telecom Act expanded the definition
of effective competition to cover situations where a local telephone company or
its affiliate, or any multichannel video provider using telephone company
facilities, offers comparable video service by any means except direct broadcast
satellites. Satisfaction of this test deregulates both basic and nonbasic tiers.
We are currently being regulated for basic service, installation and equipment
rates in five of our franchise areas, three in Maine and two in Mississippi.
Local franchising authorities have authority to order reductions and, in
certain circumstances, refunds of existing rates for the basic service tier and
associated equipment. In carrying out their rate regulatory authority, however,
local officials are subject to certain FCC standards. As an alternative to the
FCC's benchmark price cap system for measuring the reasonableness of existing
rates, cable operators may make cost-of-service showings which may justify rates
above the applicable benchmarks. Future rate increases may not exceed an
inflation-indexed amount, plus increases in certain costs beyond the cable
operator's control, such as taxes, franchise fees and increased programming
costs. Cost-based adjustments to these capped rates also can be made in the
event a cable television operator adds or deletes channels. There is also a
streamlined cost-of-service methodology available to justify a rate increase for
"significant" system rebuilds or upgrades. The 1992 Cable Act authorized the FCC
to enforce similar regulations governing rates for the cable programming service
(i.e., expanded) tier. FCC review of cable programming service tier rates was
triggered by request from the local franchising authority based on its receipt
of two or more subscriber complaints. The 1996 Telecom Act eliminated cable
programming service tier rate regulation as of March 31, 1999. Premium
programming offered on a per-channel or pay-per-view basis has always been
exempt from rate regulation. New product tiers consisting of services new to the
cable system can be created free of rate regulation as long as certain
conditions are met, such as not moving services from existing tiers to the new
tier.
Existing regulations require cable television systems to permit customers
to purchase video programming on a per channel or a per program basis without
the necessity of subscribing to any tier of service, other than the basic
service tier, unless the cable television system is technically incapable of
doing so. Generally, this exemption from compliance with the statute for cable
television systems that do not have such technical capability is available until
a cable television system obtains the capability, but not later than December
2002.
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CARRIAGE OF BROADCAST TELEVISION SIGNALS
The 1992 Cable Act contains signal carriage requirements which allow
commercial television broadcast stations that are "local" to a cable television
system (i.e., the system is located in the station's area of dominant influence)
to elect every three years whether to require the cable television system to
carry the station, subject to certain exceptions, or whether the cable
television system will have to negotiate for "retransmission consent" to carry
the station. The next election between must-carry and retransmission consent
will be October 1, 1999. A cable television system is generally required to
devote up to one-third of its activated channel capacity for the carriage of
local commercial television stations whether pursuant to the mandatory carriage
requirements or retransmission consent requirements of the 1992 Cable Act. Local
non-commercial television stations are also given mandatory carriage rights,
subject to certain exceptions, on cable systems with the principal headend
located within the larger of: (i) a 50-mile radius from the station's city of
license; or (ii) the station's Grade B contour (a measure of signal strength).
Unlike commercial stations, noncommercial stations are not given the option to
negotiate retransmission consent for the carriage of their signal. In addition,
cable television systems have to obtain retransmission consent for the carriage
of all "distant" commercial broadcast stations, except for certain
"superstations" (i.e., commercial satellite-delivered independent stations such
as WGN). To date, compliance with the "retransmission consent" and "must carry"
provisions of the 1992 Cable Act has not had a material effect on us, although
this result may change in the future depending on such factors as market
conditions, channel capacity and similar matters when such arrangements are
renegotiated. The FCC has initiated a rulemaking proceeding on the carriage of
television signals in high definition and digital formats. The outcome of this
proceeding could have a material effect on the number of services that a cable
operator will be required to carry.
RENEWAL OF FRANCHISES AND FRANCHISE FEES
The 1984 Cable Act established renewal procedures and criteria designed to
protect incumbent franchisees against arbitrary denials of renewal. While these
formal procedures are not mandatory unless timely invoked by either the cable
television operator or the franchising authority, they can provide substantial
protection to incumbent franchisees. Even after the formal renewal procedures
are invoked, franchising authorities and cable television operators remain free
to negotiate a renewal outside the formal process. Nevertheless, renewal is by
no means assured, as the franchisee must meet certain statutory standards. Even
if a franchise is renewed, a franchising authority may impose new and more
onerous requirements such as upgrading cable-related facilities and equipment
and complying with voluntary commitments, although the municipality must take
into account the cost of meeting such requirements. In the case of franchises in
effect prior to the effective date of the 1984 Cable Act, franchising
authorities may enforce requirements contained in the franchise relating to
facilities, equipment and services, whether or not cable-related. The 1984 Cable
Act, under certain limited circumstances, permits a cable operator to obtain
modifications of franchise obligations. Franchises have generally been renewed
for cable television operators that have provided satisfactory services and have
complied with the terms of their franchises. Historically, we have not
experienced any material problems renewing our franchises for our cable
television systems. We are not aware of any current or past material failure on
our part to comply with our franchise agreements. We believe that we have
generally complied with the terms of our franchises and have provided quality
levels of service.
The 1992 Cable Act makes several changes to the process under which a cable
television operator seeks to enforce his renewal rights which could make it
easier in some cases for a franchising authority to deny renewal. Franchising
authorities may consider the "level" of programming service provided by a cable
television operator in deciding whether to renew. For alleged franchise
violations occurring after December 29, 1984, franchising authorities are no
longer
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precluded from denying renewal based on failure to substantially comply with the
material terms of the franchise where the franchising authority has "effectively
acquiesced" to such past violations. Rather, the franchising authority is
estopped if, after giving the cable television operator notice and opportunity
to cure, it fails to respond to a written notice from the cable television
operator of its failure or inability to cure. Courts may not reverse a denial of
renewal based on procedural violations found to be "harmless error."
Franchising authorities may generally impose franchise fees of up to 5% of
a cable television system's annual gross revenues, excluding revenues derived
from telecommunications services. However, they may be able to exact some
compensation for the use of public rights-of-way.
CHANNEL SET-ASIDES
The 1984 Cable Act permits local franchising authorities to require cable
television operators to set aside certain television channels for public,
educational and governmental access programming. The 1984 Cable Act further
requires cable television systems with thirty-six or more activated channels to
designate a portion of their channel capacity for commercial leased access by
unaffiliated third parties to provide programming that may compete with services
offered by the cable television operator. The 1992 Cable Act requires leased
access rates to be set according to a formula determined by the FCC.
COPYRIGHT MATTERS
Cable systems must obtain copyright licenses for programming and television
signals they carry. Copyright authority for programming on non-broadcast
networks typically is obtained from the networks in question, and copyright
authority for programming originated locally by the cable system must be
obtained directly from copyright holders. The Copyright Act provides a blanket
license for copyrighted material on television stations whose signals a cable
system retransmits. Cable operators can obtain this license by filing
semi-annual reports and paying a percentage of their revenues as a royalty fee
to the U.S. Copyright Office, which then distributes the royalty pool to
copyright holders. For larger cable systems, these payments vary with the
numbers and type of distant television stations the system carries. From time to
time, Congress considers proposals to alter the blanket copyright license, some
of which could make the license more costly.
STATE AND LOCAL REGULATION
Cable television systems generally are operated pursuant to nonexclusive
franchises, permits or licenses granted by a municipality or other state or
local government entity. The terms and conditions of franchises vary materially
from jurisdiction to jurisdiction. Franchises generally contain provisions
governing fees to be paid to the franchising authority, length of the franchise
term, renewal, sale or transfer of the franchise, territory of the franchise,
design and technical performance of the system, use and occupancy of public
streets and number and types of cable television services provided. The 1992
Cable Act prohibits exclusive franchises, and allows franchising authorities to
regulate customer service and rates. Franchising authorities may operate their
own multichannel video distribution system without a franchise. States and local
franchising authorities may adopt certain restrictions on cable television
systems ownership. See "Risk Factors -- Risks Relating To The Cable Television
Industry -- Changes in cable television regulation could increase our costs and
decrease our revenues."
The foregoing summarizes the material cable television industry regulations
with which we must comply. However, it does not purport to describe all present
and proposed federal, state and local regulations and legislation relating to
the cable television industry, some of which are subject to judicial and
legislative review and change, and their impact on the cable television industry
or us cannot be predicted at this time.
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MANAGEMENT
The following table sets forth certain information with respect to our
directors and executive officers and other key employees:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<S> <C> <C>
Louis J. Appell, Jr................... 74 Chairman of the Board of Directors
Peter P. Brubaker..................... 52 Director, Chief Executive Officer and
President
Craig W. Bremer....................... 50 Director, Secretary and General
Counsel
William H. Simpson.................... 57 Director
John L. Finlayson..................... 57 Director and Vice President
Alan L. Brayman....................... 47 Treasurer
David E. Kennedy...................... 46 Director and Vice President
James D. Munchel...................... 44 President and Chief Operating Officer
of Susquehanna Cable
</TABLE>
Louis J. Appell, Jr. is the Chairman of the Board of Directors of
Susquehanna Media, a position he has held since 1993. He is also Director,
President and Chief Executive Officer of Susquehanna Pfaltzgraff. He has over
fifty years of experience in the communications industry. Mr. Appell holds a BA
degree from Harvard College.
Peter P. Brubaker is a Director, Chief Executive Officer and President of
Susquehanna Media. He has been a director and officer of Susquehanna Media since
1993. Prior to 1995, Mr. Brubaker was Vice President/Finance of Susquehanna
Pfaltzgraff. He joined Susquehanna Pfaltzgraff in 1977 and assumed
responsibility for the cable operations in 1979. He holds a BA degree from
Wesleyan University and an MBA degree from the Harvard Business School. Mr.
Brubaker serves as a director of the National Cable Television Association.
Craig W. Bremer is a Director and the Secretary and General Counsel of
Susquehanna Media, positions he has held since 1993. He is also the Secretary of
Susquehanna Pfaltzgraff. Mr. Bremer has been employed by Susquehanna Pfaltzgraff
since 1978. Prior to joining Susquehanna Pfaltzgraff, Mr. Bremer was an
associate with the law firm of Beckley & Madden, Harrisburg, Pennsylvania. He
holds a JD degree from Dickinson School of Law and is a member of the
Pennsylvania Bar. He earned a BS degree in History from Washington & Lee
University.
William H. Simpson has been a Director of Susquehanna Media since 1993. He
has been employed by Susquehanna Pfaltzgraff or an affiliated corporation since
1971 and was promoted to his current position as President of The Pfaltzgraff
Co. in 1988. He was formerly Vice President and General Counsel of Susquehanna
Pfaltzgraff from 1971 to 1981. Mr. Simpson is a graduate of the United States
Air Force Academy and Harvard Law School.
John L. Finlayson is a Director and Vice President of Susquehanna Media and
the Chief Financial Officer of Susquehanna Pfaltzgraff, where he has been
employed since 1978. He has been a Vice President of Susquehanna Media since
1993. Prior to 1978, Mr. Finlayson was an audit manager with Arthur Andersen &
Co. He is a CPA and a graduate of Franklin and Marshall College.
Alan L. Brayman is the Treasurer of Susquehanna Media. He is also Vice
President, Treasury Operations, of Susquehanna Pfaltzgraff. Mr. Brayman joined
Susquehanna Media in February 1998. Prior to that, he was a principal of Global
Treasury Solutions from 1996 through January 1998. Mr. Brayman was also
Assistant Treasurer and an officer of VF Corporation, an apparel manufacturer,
from January 1993 to December 1995. Prior to that, Mr. Brayman was employed by
Armstrong World Industries Inc., a diversified manufacturer, from 1973 to 1992,
where he was
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Assistant Treasurer. Mr. Brayman is a graduate of the University of Delaware and
has an MBA from Shippensburg University.
David E. Kennedy is a Director and a Vice President of Susquehanna Media.
He has also been President of Susquehanna Radio since 1993. Mr. Kennedy joined
the radio group in 1973 as an on-air personality of its former Toledo, Ohio
station. He has held positions in programming, planning and research during his
career. Mr. Kennedy is a graduate of the University of Toledo and holds masters
and doctoral degrees from Bowling Green State University. He serves as a
director of the Radio Advertising Bureau and as a director of the National
Association of Broadcasters.
James D. Munchel is the President and Chief Operating Officer of
Susquehanna Cable. Mr. Munchel oversees the operations of all Susquehanna Cable
systems. He joined a predecessor of Susquehanna Media in 1981 and was promoted
to General Manager of the York cable system in 1986. Mr. Munchel was promoted to
his current position in 1999. He is a graduate of Shippensburg University.
BOARD COMPOSITION
Our by-laws provide that the number of directors shall not be less than
three nor more than seven and may be fixed from time to time by resolution of
our board of directors. Our board is currently comprised of six directors. All
members of our board of directors are elected annually by our parent,
Susquehanna Pfaltzgraff.
DIRECTOR COMPENSATION
Susquehanna Media does not compensate its directors for services provided
in that capacity.
EXECUTIVE SERVICES AND COMPENSATION
Susquehanna Media has no employees. All of the executive officers of
Susquehanna Media are also executive officers of Susquehanna Pfaltzgraff, our
parent company. Prior to and following the issuance of the exchange notes,
Susquehanna Pfaltzgraff paid all compensation of Susquehanna Media's executive
officers under a management agreement between Susquehanna Media and Susquehanna
Pfaltzgraff. Under that agreement, Susquehanna Media pays a fee to Susquehanna
Pfaltzgraff for executive office space, services of the legal department and
management services, including compensation for the services rendered to
Susquehanna Media by the executive officers of Susquehanna Pfaltzgraff. Under
the agreement, Susquehanna Media paid a management fee in the amount of $2.7
million in 1998. As executive officers of Susquehanna Pfaltzgraff, the executive
officers of Susquehanna Media will continue to render services to Susquehanna
Pfaltzgraff and its other subsidiaries in addition to Susquehanna Media. See
"Certain Transactions -- Related Party Transactions."
BENEFIT PLANS
Susquehanna Media does not maintain any employee benefit plans. Susquehanna
Pfaltzgraff maintains various employee benefit plans in which our employees
participate. We compensate Susquehanna Pfaltzgraff for participation by our
employees in the employee benefit plans maintained by Susquehanna Pfaltzgraff,
including:
- an employee stock ownership plan;
- a 401(k) plan;
- health, disability and life insurance plans; and
- supplemental executive retirement plans for senior and executive
management.
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Susquehanna Radio Corp. maintains an employee stock purchase/option plan
covering key employees, and Susquehanna Cable Co. maintains a performance share
plan covering key employees.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
As permitted by the Delaware General Corporation Law, Susquehanna Media's
charter eliminates personal liability of Susquehanna Media's directors to
Susquehanna Media and its stockholders for monetary damages for breaches of
fiduciary duty except for:
- any breach of the director's duty of loyalty to Susquehanna Media or its
shareholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- any transaction from which the director derived an improper personal
benefit; and
- acts covered by Section 174 of the Delaware General Corporation Law
relating to unlawful dividends or distributions or stock repurchases or
redemptions.
As a result of these provisions, Susquehanna Media and its stockholders may be
unable to obtain monetary damages from a director for breach of his fiduciary
duties.
Susquehanna Media's by-laws require Susquehanna Media to indemnify
directors and officers to the extent permitted under the Delaware General
Corporation Law. As permitted by the Delaware General Corporation Law, the
by-laws provide for indemnification of our directors and officers against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by them in connection with any
action, suit or proceeding if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to our best interests, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
their conduct was unlawful.
Susquehanna Pfaltzgraff maintains insurance covering expenditures that may
be incurred in connection with the lawful indemnification of our directors and
officers for their liabilities and expenses.
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BENEFICIAL OWNERSHIP OF SUSQUEHANNA MEDIA
AND SUSQUEHANNA PFALTZGRAFF
SUSQUEHANNA MEDIA
We have the authority under our charter to issue 1,100,000 shares of common
stock, par value $1.00 per share, and 110,000 shares of 7% cumulative preferred
voting stock, par value $100.00 per share. We currently have outstanding
1,100,000 shares of common stock and 70,499.22 shares of preferred stock. The
holders of our preferred stock are entitled to an annual cumulative preferential
dividend of $7.00 per share. After payment of the preferred stock dividend,
holders of our preferred stock do not participate in dividends on our common
stock. In the event of a liquidation of our company, our preferred stockholders
are entitled to a $100.00 liquidation preference and any accrued and unpaid
preferred stock dividends. Thereafter, only common stockholders are entitled to
distributions. Our preferred stock is not convertible into our common stock. The
holders of our preferred stock and common stock vote together as one class on
all matters voted upon by our stockholders. Both classes receive one vote per
share.
All of the outstanding common stock of Susquehanna Media is owned by our
parent, Susquehanna Pfaltzgraff. The following table sets forth certain
information regarding the beneficial ownership of our preferred stock as of June
1, 1999 by:
- each of our directors and executive officers;
- all of our directors and executive officers as a group; and
- each person (or group of affiliated persons) known by us to beneficially
own more than 5% of our outstanding preferred stock.
Unless otherwise indicated, each person has sole voting and investment power
with respect to the preferred shares shown as beneficially owned by such person.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------ ----------- ---------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Louis J. Appell, Jr.(1)..................................... 5,095.98 7.2%
Peter P. Brubaker........................................... 793.77 1.1%
Craig W. Bremer............................................. -- --
William H. Simpson.......................................... -- --
John L. Finlayson........................................... -- --
Alan L. Brayman............................................. -- --
David E. Kennedy............................................ -- --
All directors and executive officers as a group (7
persons).................................................. 5,889.75 8.3%
OTHER 5% HOLDERS
Louis J. Appell, III(2)..................................... 7,513.71 10.7%
Helen F. Appell, II(3)...................................... 7,513.71 10.7%
Barbara F. Appell(4)........................................ 7,513.71 10.7%
Walter M. Norton(5)......................................... 32,085.41 45.5%
</TABLE>
- ---------------
(1) Shares held by Louis J. Appell, Jr. and Josephine S. Appell, as trustees of
the Louis J. Appell, Jr. revocable trust. Address is 140 East Market Street,
York, PA 17401.
(2) Address is 1331 Via Colonna Terrace, Davis, CA 95616.
(3) Address is 1700 Powder Mill Road, York, PA 17403.
(4) Address is 306 West Princess Street, York, PA 17404.
(5) Of these shares, (a) 8,324.26 are held jointly with Helen A. Norton; (b)
5,109.81 are held individually; (c) 277.48 are held by Helen A. and Walter
M. Norton as trustees of the Helen A. Norton revocable trust; and (d)
18,373.86 are held in trust by Walter M. Norton. Address is RFD #1, Box 59,
South Harpswell, ME 04079.
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<PAGE> 73
SUSQUEHANNA PFALTZGRAFF
Susquehanna Pfaltzgraff has the authority under its charter to issue
40,000,000 shares of common stock, par value $.01 per share, 50,000,000 shares
of ESOP common stock, par value $.01 per share, and 10,000,000 shares of Class A
nonvoting common stock, par value $.01 per share. We currently have outstanding
18,251,601 shares of common stock, 6,702,146 shares of ESOP common stock and
2,301,955 shares of Class A nonvoting common stock. The holders of the ESOP
common stock are entitled to an annual cumulative preferential dividend of
approximately $1.05 per share. After payment of the ESOP common stock dividend,
the ESOP common stock, the common stock and the Class A nonvoting common stock
share equally and ratably on a share for share basis in dividends. In the event
of a liquidation of Susquehanna Pfaltzgraff, the holders of ESOP common stock
are entitled to the payment of all accrued and unpaid dividends before any
distributions to holders of common stock or Class A common stock. Thereafter,
all three classes of stock share in distributions on a pro rata basis. Except as
required by law, the holders of Class A nonvoting common stock have no voting
rights. Each share of common stock and ESOP common stock is entitled to one vote
on all matters submitted to a vote of stockholders.
The following table sets forth certain information regarding the beneficial
ownership of Susquehanna Pfaltzgraff's common stock, ESOP common stock and Class
A nonvoting common stock as of June 1, 1999 by:
- each of our directors and executive officers;
- all of our directors and executive officers as a group; and
- each person (or group of affiliated persons) known by us to beneficially
own more than 5% of our outstanding common stock.
Unless otherwise indicated, each person has sole voting and investment power
with respect to the shares shown as beneficially owned by such person.
<TABLE>
<CAPTION>
PERCENTAGE NUMBER OF PERCENTAGE NUMBER OF PERCENTAGE
NUMBER OF OF ESOP OF ESOP CLASS A OF CLASS A
COMMON COMMON COMMON COMMON COMMON COMMON
SHARES SHARES SHARES SHARES SHARES SHARES TOTAL
BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY VOTING
NAME OF BENEFICIAL OWNER OWNED OWNED OWNED OWNED OWNED OWNED POWER
- ------------------------ ------------ ------------ ------------ ------------ ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
DIRECTORS AND
EXECUTIVE OFFICERS
Louis J. Appell, Jr.(1)........ -- -- -- -- 1,252,900 54.4% --
William H. Simpson(1).......... -- -- -- -- 426,085 18.5% --
Peter P. Brubaker(1)........... -- -- -- -- 311,485 13.5% --
John L. Finlayson(1)........... -- -- -- -- 311,485 13.5% --
Craig W. Bremer(1)............. -- -- -- --
Alan L. Brayman(1)............. -- -- -- --
David E. Kennedy(1)............ -- -- -- --
Officers and directors as a
group (7 persons)............ -- -- -- -- 2,301,955 100.0% --
OTHER 5% HOLDERS
Louis J. Appell Trusts(2)...... 16,824,300 92.2% -- -- -- -- 67.4%
Susquehanna Pfaltzgraff
ESOP(3)...................... -- -- 6,702,146 100.0% -- -- 26.9%
</TABLE>
- ---------------
(1) All addresses are 140 East Market Street, York, PA 17401.
(2) Includes shares held as follows: (a) Louis J. Appell residuary trust for the
benefit of Louis J. Appell, Jr. (5,861,800 shares); (b) Louis J. Appell
residuary trust for the benefit of Helen A. Norton (5,968,900 shares); and
(c) Louis J. Appell residuary trust for the benefit of George N. Appell and
his descendants (4,993,600 shares). Addresses for each trust are 140 East
Market Street, York, PA 17401.
(3) Held of record by State Street Bank and Trust Co., as trustee of the
Susquehanna Pfaltzgraff Co. Employee Stock Ownership Plan. Address is P.O.
Box 1521, Boston, MA 02104-9818.
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<PAGE> 74
CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
Susquehanna Pfaltzgraff, our parent company, provides us with management
services, executive office space and services of the legal department. Under an
agreement between Susquehanna Pfaltzgraff and us, we paid a management fee for
such services in 1998 in the amount of $2.7 million. Susquehanna Pfaltzgraff
also provides us, at cost, accounting and tax services, human resources
services, treasury services and administrative services. For such services in
1998, we paid Susquehanna Pfaltzgraff an aggregate of $2.0 million.
Certain direct and indirect subsidiaries of Susquehanna Media lease three
office properties and one broadcast tower under lease agreements with L.A.B.
Realty Company. The aggregate amount paid to LAB under such agreements in 1998
was approximately $355,000. LAB is owned directly and indirectly by Louis J.
Appell, Jr., Chairman of Susquehanna Media, his siblings, certain members of
their families and trusts of which such persons or members of their families are
trustees or beneficiaries. Mr. Appell and John L. Finlayson are officers and
directors of both LAB and Susquehanna Media. Craig W. Bremer is an officer of
LAB and an officer and director of Susquehanna Media.
An indirect subsidiary of Susquehanna Media leases vehicles and equipment
from Queen Street Leasing. Susquehanna Radio leases a studio property from G-III
Partners. We paid Queen Street Leasing and G-III Partners approximately $45,000
and $176,000, respectively, in 1998 under such leases. Queen Street Leasing and
G-III Partners are limited partnerships owned directly and indirectly by Mr.
Appell, his siblings, certain members of their families and trusts of which such
persons or members of their families are trustees or beneficiaries. An indirect
subsidiary of Susquehanna Media pays an aggregate monthly amount of $5,357 to
three members of the Appell family under separate agreements for salary,
consulting and rent. We paid such individuals an aggregate of $64,284 in 1998.
Susquehanna Media and certain of its subsidiaries have entered into a Tax
Sharing Agreement with Susquehanna Pfaltzgraff, The Pfaltzgraff Co. and certain
subsidiaries of The Pfaltzgraff Co. for the payment of federal income tax
returns on a consolidated basis. The Tax Sharing Agreement establishes a method
for the computation, collection and payment of taxes by Susquehanna Pfaltzgraff
and the contribution to such payment by Susquehanna Media and The Pfaltzgraff
Co.
Upon completion of the offering of the outstanding notes, we loaned $116.9
million to Susquehanna Pfaltzgraff, which it then loaned to its newly formed
employee stock ownership plan. The employee stock ownership plan used the
proceeds of the loan to purchase approximately $116.9 million of Susquehanna
Pfaltzgraff's common stock from trusts for the benefit of Mr. Appell, his
siblings and certain members of their families. Our employees will participate
in the employee stock ownership plan. The loan to Susquehanna Pfaltzgraff
matures on December 30, 2018 and bears interest at a per annum rate of 6.0%. We
expect the loan to be repaid in annual installments of principal and interest.
Susquehanna Media has outstanding 70,499.22 shares of voting preferred
stock, $100 par value per share. The holders of the preferred stock are entitled
to a cumulative annual dividend of 7.0%. The total amount of dividends paid on
the preferred stock in 1998 was $634,769. The preferred stock is held by certain
members of Mr. Appell's family, trusts of which such persons are trustees or
beneficiaries and Peter P. Brubaker. The holders of the preferred stock have no
right to require Susquehanna Media to redeem their preferred stock.
Each of these transactions was on terms and conditions no less favorable to
us than we would be able to obtain from unaffiliated third parties.
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<PAGE> 75
THE LENFEST AGREEMENT
Pursuant to an agreement among Lenfest Communications, Inc., Susquehanna
Cable and certain of its subsidiaries (as amended, the "Lenfest Agreement"),
Lenfest holds minority ownership interests equal to 15.0% of Susquehanna Cable
and 17.75% of each of its principal operating subsidiaries. Lenfest is currently
50% owned by AT&T and 50% owned by H.F. Lenfest and members of his family. The
ownership interests were acquired by Lenfest in exchange for capital
contributions of $11.0 million in cash in May 1993 and cable television systems
in December 1993 valued at $14.0 million. The cable systems are located in Red
Lion and Mount Wolf, Pennsylvania and are now part of the York system. Under the
Lenfest Agreement, Susquehanna Cable may acquire cable programming and cable
equipment at AT&T rates. We estimate that the favorable programming rates saved
us at least $2.0 million in 1998.
The Lenfest Agreement provides for a right of first refusal whereby neither
Lenfest nor Susquehanna Cable may sell its ownership interests without offering
them first to the other party. In addition, Susquehanna Cable may not sell any
cable television systems without offering them first to Lenfest. If Susquehanna
Cable decides to sell the assets of a cable system and Lenfest does not exercise
its right of first refusal, Susquehanna Cable must offer to repurchase Lenfest's
shares in the subsidiary that is selling assets.
The Lenfest Agreement contains a buy-sell provision granting Susquehanna
Media, Susquehanna Cable or Lenfest the right to make an offer to purchase the
other party's ownership interests in Susquehanna Cable and its subsidiaries. If
such an offer is made and rejected, the party to whom the offer was made is then
obligated to purchase the offering party's ownership interests in Susquehanna
Cable and its subsidiaries on the same terms and conditions. If we purchase
Lenfest's interests pursuant to the buy-sell agreement, Lenfest is entitled to
receive a fee equal to 3.0% of Lenfest's original $25.0 million investment
compounded annually. This fee is not payable if Lenfest buys Susquehanna Cable's
interests. If the buy-sell provision has not been triggered by December 1, 2000,
Susquehanna Cable may pay Lenfest a fee equal to 1.5% of Lenfest's original
investment compounded annually and have no further obligations under the fee
arrangement. The buy-sell provision will, however, remain in place.
The Lenfest Agreement grants Lenfest the right to resell to us (the "Put
Right") all of its ownership interests in Susquehanna Cable and its subsidiaries
for a three-year period beginning 18 months after the closing on the new senior
credit facility. Accordingly, the Put Right will expire on November 12, 2003.
The Put Right may not be exercised during any period when a default exists under
our new senior credit facility or if consummation of the Put Right would create
a default under our new senior credit facility or under the covenant described
under "Description of the Notes -- Certain Covenants -- Limitation of
Indebtedness." The value of Lenfest's ownership interests in Susquehanna Cable
and its subsidiaries upon exercise of the Put Right would be the average of the
values determined by two independent appraisers with expertise in the cable
industry. In exchange for its ownership interests upon exercise of the Put
Right, Lenfest would receive cash up to the amount of borrowing availability
under our new senior credit facility and would receive a note for the balance,
so long as the issuance of such note would comply with the terms of the new
senior credit facility and the covenant described above. Upon Lenfest's exercise
of the Put Right, we would have the right, in our sole discretion and in lieu of
acquiring Lenfest's ownership interests, to sell Susquehanna Cable and its
subsidiaries to a third party and Lenfest would receive a pro rata share of the
proceeds of such sale.
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<PAGE> 76
DESCRIPTION OF CERTAIN INDEBTEDNESS
GENERAL
We recently entered into a new $450 million senior credit facility with a
group of financial institutions arranged by First Union Capital Markets Corp.
and for which First Union National Bank serves as agent. The new senior credit
facility is comprised of a $250 million reducing revolving credit facility (the
"Revolver"), a $100 million amortizing term loan A ("Term Loan A"), and a $100
million amortizing term loan B ("Term Loan B"). We used borrowings under the new
senior credit facility, together with the net proceeds from the offering of the
outstanding notes, to repay in full outstanding indebtedness under our old
senior credit facility and to make a $116.9 million loan to Susquehanna
Pfaltzgraff to fund its employee stock ownership plan.
The new senior credit facility is secured by substantially all of our
assets (excluding real property) and by all of the voting common stock of
Susquehanna Media and its direct and indirect subsidiaries. Such subsidiaries
also guaranteed the new senior credit facility.
Interest on the Revolver and Term Loan A is payable at rates per annum
equal to, at our option: (1) a base rate (the "Base Rate") equal to the higher
of (a) First Union National Bank's prime rate or (b) 0.50% plus the overnight
federal funds rate, plus 0% to 1.25% depending on our leverage ratio or (2) the
London Interbank Offered Rate ("LIBOR") plus 0.875% to 2.50% depending on the
leverage ratio. Interest on Term Loan B will be payable at a rate per annum
equal to LIBOR plus 2.50% to 2.75% depending on our leverage ratio, or the Base
Rate plus 1.25% to 1.50% depending on the leverage ratio. We may also access the
new senior credit facility through letters of credit. We will pay certain
customary fees in connection with maintenance of the new senior credit facility.
The Revolver and Term Loan A amortize quarterly at variable rates beginning
in 2002 until maturity on June 30, 2007 as follows:
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL REDUCTION % AMORTIZATION
- ------------- ---------------- --------------
<S> <C> <C>
2002........................... $ 28,000,000 8%
2003........................... 56,000,000 16%
2004........................... 70,000,000 20%
2005........................... 70,000,000 20%
2006........................... 84,000,000 24%
2007........................... 42,000,000 12%
------------ ---
$350,000,000 100%
</TABLE>
Term Loan B amortizes quarterly at a rate of 1% per year beginning June 30, 2002
until June 30, 2007, with the remaining balance of $95.0 million then amortizing
in equal quarterly installments until maturity on June 30, 2008.
Base Rate loans under the new senior credit facility may be prepaid at any
time without a premium or penalty. LIBOR loans may be prepaid prior to the end
of the applicable interest period upon our reimbursement of breakage costs.
COVENANTS AND EVENTS OF DEFAULT
The new senior credit facility restricts our ability to:
- incur additional indebtedness;
- make investments;
- incur liens;
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<PAGE> 77
- acquire new lines of business, whether related or unrelated;
- make payments to stockholders in the form of dividends, loans, advances
or redemptions of stock (other than a loan or dividend to Susquehanna
Pfaltzgraff to fund its employee stock ownership plan within 60 days of
closing not to exceed $120 million or other payments not to exceed a
basket of $10 million plus 5% of EBITDA (as defined) beginning January 1,
1999), or issue capital stock;
- consolidate, merge or sell all or any substantial part of its assets;
- change its business; and
- pay management fees to Susquehanna Pfaltzgraff.
We are also required to comply with certain financial tests and maintain
certain financial ratios. These financial tests and ratios include requirements
to maintain:
- a maximum Consolidated Total Leverage Ratio;
- a maximum Consolidated Senior Leverage Ratio;
- a minimum Interest Coverage Ratio;
- a minimum Debt Service Coverage Ratio; and
- a minimum Fixed Charge Coverage Ratio (in each case as defined in the new
senior credit facility).
As of the date of this prospectus, we are in compliance with each of the
financial tests and ratios listed above.
The new senior credit facility also includes customary events of default.
An event of default under the new senior credit facility permits the lenders to
accelerate (or, in certain events, triggers an automatic acceleration of) the
maturity of the indebtedness under the new senior credit facility, may result in
cross defaults under our other debt, including the notes, and may restrict our
ability to meet our obligations under the notes. A default on the notes
constitutes an event of default under the new senior credit facility.
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<PAGE> 78
DESCRIPTION OF THE EXCHANGE NOTES
We issued the outstanding notes and will issue the exchange notes under an
Indenture dated May 12, 1999, among us and Chase Manhattan Trust Company,
National Association, as Trustee. The terms of the exchange notes include those
stated in the Indenture and those made a part of the Indenture by reference to
the Trust Indenture Act of 1939 (the "TIA").
Key terms used in this section are defined under "--Certain Definitions."
When we refer to "Notes" in this section, we mean the exchange notes and also
the outstanding notes and any Additional Notes.
WE SUMMARIZE BELOW CERTAIN PROVISIONS OF THE INDENTURE, BUT DO NOT RESTATE
THE INDENTURE IN ITS ENTIRETY. WE URGE YOU TO READ THE INDENTURE BECAUSE IT, AND
NOT THIS DESCRIPTION, DEFINES YOUR RIGHTS AS A HOLDER OF THE NOTES. YOU CAN
OBTAIN A COPY OF THE INDENTURE IN THE MANNER DESCRIBED UNDER THE SECTION
ENTITLED "WHERE YOU CAN GET MORE INFORMATION."
GENERAL
The exchange notes will be issued solely in exchange for an equal principal
amount of outstanding notes pursuant to the exchange offer. The form and terms
of the exchange notes will be identical in all material respects to the form and
terms of the outstanding notes except that (i) the exchange notes will have been
registered under the Securities Act and (ii) the registration rights and
contingent liquidated damages provisions applicable to the outstanding notes are
not applicable to the exchange notes.
The Notes are general unsecured senior subordinated obligations of
Susquehanna Media. This means that the Notes are subordinate to Senior
Indebtedness of Susquehanna Media and rank equal or prior to other Indebtedness
of Susquehanna Media. In addition, the Notes are effectively subordinated to
secured Indebtedness of Susquehanna Media to the extent of the assets securing
such Indebtedness and to all Indebtedness of Susquehanna Media's subsidiaries.
PRINCIPAL, MATURITY AND INTEREST
Susquehanna Media will issue exchange notes in denominations of $1,000 and
integral multiples of $1,000. The Notes will be limited to $250.0 million in
principal amount, of which $150.0 million are being offered hereby, and will
mature on May 15, 2009.
Interest on the Notes will accrue at the rate of 8 1/2% per annum and will
be payable semi-annually in arrears on each May 15 and November 15, commencing
on November 15, 1999. Payments will be made to the persons who are registered
Holders at the close of business on May 1 and November 1, respectively,
immediately preceding the applicable interest payment date. Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from and including the date of issuance. The Notes
will not be entitled to the benefit of any mandatory sinking fund. The
redemption of Notes with unpaid and accrued interest to the date of redemption
will not affect the right of Holders of record on a record date to receive
interest due on an interest payment date.
Initially, the Trustee will act as Paying Agent and Registrar for the
Notes. Susquehanna Media may change the Paying Agent and Registrar without
notice to Holders. If a Holder has given wire transfer instructions to the
Paying Agent, the Paying Agent will make all principal, premium, if any, and
interest payments on those Notes in accordance with those instructions. All
other payments on the Notes will be made at the office or agency of the Paying
Agent and Registrar in New York City unless Susquehanna Media elects to cause
the Paying Agent to make interest payments by check mailed to the registered
Holders at their registered addresses.
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<PAGE> 79
ADDITIONAL NOTES
Subject to the limitations set forth under "-- Certain
Covenants -- Limitation on Incurrence of Additional Indebtedness," Susquehanna
Media may incur additional Indebtedness which, at its option, may consist of
additional Notes, in one or more series, having identical terms as outstanding
notes issued on the Issue Date or exchange notes (the "Additional Notes").
Holders of such Additional Notes will have the right to vote together with
Holders of Notes issued on the Issue Date and the exchange notes as one class.
No offering of any such Additional Notes is being or shall be deemed to be made
by this offering memorandum. In addition, there can be no assurance as to when
or whether Susquehanna Media will issue any such Additional Notes or as to the
aggregate principal amount of such Additional Notes.
BOOK-ENTRY; DELIVERY AND FORM
The exchange notes will be issued in the form of a global note (the "Global
Note"). The Global Note will be deposited with, or on behalf of, DTC and
registered in the name of DTC or its nominee. Except as set forth below, the
Global Note may be transferred in whole and not in part, only to DTC or another
nominee of DTC. Investors may hold their beneficial interests in the Global Note
directly through DTC if they have an account with DTC or indirectly through
organizations which have accounts with DTC.
Exchange notes that are issued as described below under "-- Certificated
Exchange Notes" will be issued in definitive form. Upon the transfer of an
exchange note in definitive form, such exchange note will, unless the Global
Note has previously been exchanged for exchange notes in definitive form, be
exchanged for an interest in the Global Note representing the principal amount
of exchange notes being transferred.
Certain Book-Entry Procedures for the Global Note
The descriptions of the operations and procedures of DTC, Euroclear and
Cedel Bank set forth below are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. We take
no responsibility for these operations or procedures, and investors are urged to
contact the relevant system or its participants directly to discuss these
matters.
DTC has advised us that it is:
- a limited purpose trust company organized under the laws of the State
of New York;
- a "banking organization" within the meaning of the New York Banking
Law;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the Uniform Commercial
Code, as amended; and
- a "clearing agency" registered pursuant to Section 17A of the Exchange
Act.
DTC was created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of its Participants, thereby eliminating the need for physical transfer
and delivery of certificates. DTC's Participants include securities brokers and
dealers (including the initial purchasers of the outstanding notes), banks and
trust companies, clearing corporations and certain other organizations. Indirect
access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect Participants")
that clear through or maintain a custodial relationship with a Participant,
either
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<PAGE> 80
directly or indirectly. Investors who are not Participants may beneficially own
securities held by or on behalf of DTC only through Participants or Indirect
Participants.
We expect that pursuant to procedures established by DTC:
- upon deposit of the Global Note, DTC will credit the accounts of
Participants with an interest in the Global Note; and
- ownership of the exchange notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by
DTC (with respect to the interests of Participants) and the records of
Participants and the Indirect Participants (with respect to the
interests of persons other than Participants).
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer interests in the Notes represented by a
Global Note to such persons may be limited. In addition, because DTC can act
only on behalf of its Participants, who in turn act on behalf of persons who
hold interests through Participants, the ability of a person having an interest
in exchange notes represented by a Global Note to pledge or transfer such
interest to persons or entities that do not participate in DTC's system, or to
otherwise take actions in respect of such interest, may be affected by the lack
of a physical definitive security in respect of such interest.
So long as DTC or its nominee is the registered owner of the Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the exchange notes represented by the Global Note for all purposes
under the Indenture. Except as provided below, owners of beneficial interests in
the Global Note will not be entitled to have exchange notes represented by such
Global Note registered in their names, will not receive or be entitled to
receive physical delivery of certificated notes, and will not be considered the
owners or holders thereof under the Indenture for any purpose, including with
respect to the giving of any direction, instruction or approval to the Trustee
thereunder. Accordingly, each holder owning a beneficial interest in the Global
Note must rely on the procedures of DTC and, if such holder is not a Participant
or an Indirect Participant, on the procedures of the Participant through which
such holder owns its interest, to exercise any rights of a holder of exchange
notes under the Indenture or such Global Note. We understand that under existing
industry practice, in the event that we request any action of holders of
exchange notes, or a holder that is an owner of a beneficial interest in the
Global Note desires to take any action that DTC, as the holder of such Global
Note, is entitled to take, DTC would authorize the Participants to take such
action and the Participants would authorize holders owning through such
Participants to take such action or would otherwise act upon the instruction of
such holders. Neither we nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of exchange notes by DTC, or for maintaining, supervising or reviewing any
records of DTC relating to such exchange notes.
We expect that DTC or its nominee, upon receipt of any payment of principal
of or interest on the Global Note, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of the Global Note as shown on the records of DTC or its
nominee. We also expect that payments by participants to owners of beneficial
interests in the Global Note held through such participants will be governed by
standing instructions and customary practices and will be the responsibility of
such participants. We will not have any responsibility or liability for any
aspect of the records relating to, or payments made on account of, beneficial
ownership interests in the Global Note for any Note or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests or for any other aspect of the relationship between DTC and its
participants or the relationship between such participants and the owners of
beneficial interests in the Global Note owning through such participants.
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<PAGE> 81
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Cedel Bank will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Cross-market transfers between the Participants in DTC, on the one hand,
and Euroclear or Cedel Bank participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or Cedel Bank,
as the case may be, by its respective depositary; however, such cross-market
transactions will require delivery of instructions to Euroclear or Cedel Bank,
as the case may be, by the counterparty in such system in accordance with the
rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or Cedel Bank, as the case may be, will, if the
transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Notes in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear participants and Cedel Bank
participants may not deliver instructions directly to the depositaries for
Euroclear or Cedel Bank.
Because of time zone differences, the securities account of a Euroclear or
Cedel Bank participant purchasing an interest in a Global Note from a
Participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Cedel Bank participant, during the securities
settlement processing day (which must be a business day for Euroclear and Cedel
Bank) immediately following the settlement date of DTC. Cash received in
Euroclear or Cedel Bank as a result of sales of interest in a Global Security by
or through a Euroclear or Cedel Bank participant to a Participant in DTC will be
received with value on the settlement date of DTC but will be available in the
relevant Euroclear or Cedel Bank cash account only as of the business day for
Euroclear or Cedel Bank following DTC's settlement date.
DTC, Euroclear and Cedel Bank are under no obligation to perform or to
continue to perform the foregoing procedures to facilitate transfers of
interests in the Global Note among participants in DTC, Euroclear and Cedel, and
such procedures may be discontinued at any time. Neither we nor the Trustee will
have any responsibility for the performance by DTC, Euroclear or Cedel Bank or
their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
The information in this prospectus concerning DTC, Euroclear and Cedel and
their book-entry systems has been obtained from sources that we believe to be
reliable, but we have not independently verified this information.
Certificated Exchange Notes
If
- we notify the Trustee in writing that DTC is no longer willing or able
to act as a depositary or DTC ceases to be registered as a clearing
agency under the Exchange Act and a successor depositary is not
appointed within 90 days of such notice or cessation;
- we, at our option, notify the Trustee in writing that we elect to
cause the issuance of exchange notes in definitive form under the
Indenture; or
- upon the occurrence of certain other events as provided in the
Indenture,
then, upon surrender by DTC of the Global Note, certificated exchange notes in
definitive form in denominations of U.S. $1,000 and integral multiples thereof
will be issued to each person that DTC identifies as the beneficial owner of the
Notes represented by the Global Note. Upon any such issuance, the Trustee is
required to register such certificated exchange notes in the name of such person
or persons (or the nominee of any thereof) and cause the same to be delivered
thereto.
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Subject to the foregoing, the Global Note is not exchangeable, except for a
Global Note of the same aggregate denomination to be registered in the name of
DTC or its nominee.
Neither we nor the Trustee shall be liable for any delay by DTC or any
Participant or Indirect Participant in identifying the beneficial owners of the
related exchange notes and we and the Trustee may conclusively rely on, and
shall be protected in relying on, instructions from DTC for all purposes,
including with respect to the registration and delivery, and the respective
principal amounts, of the exchange notes to be issued.
OPTIONAL REDEMPTIONS
- --------------------------------------------------------------------------------
Summary: At any time on or after November 15, 2004, Susquehanna Media may
redeem all or part of the Notes at redemption prices that decline over time
until 2007. In addition, at any time prior to May 15, 2002, Susquehanna Media
may redeem Notes with the proceeds of one or more Public Equity Offerings at a
redemption price equal to 108.50% of the principal amount so redeemed plus
accrued interest to the date of redemption, provided that at least 65% of the
original principal amount of the Notes remains outstanding after giving effect
to any such redemption.
- --------------------------------------------------------------------------------
Except as set forth in the following paragraph, the Notes will not be
redeemable at the option of Susquehanna Media prior to May 15, 2004. Beginning
May 15, 2004 the Notes will be redeemable in cash, at Susquehanna Media's
option, in whole or in part, upon 20 to 60 days' prior notice mailed to each
Holder's registered address, at the following redemption prices (expressed in
percentages of principal amount), plus accrued and unpaid interest thereon to
the redemption date, if redeemed during the 12-month period commencing on May 15
of the years set forth below:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- ------ ----------------
<S> <C>
2004........................................................ 104.250%
2005........................................................ 102.833%
2006........................................................ 101.417%
2007 and thereafter......................................... 100.000%
</TABLE>
In addition, prior to May 15, 2002, Susquehanna Media, at its option, may
redeem up to 35.0% of the original principal amount of the Notes with the Net
Cash Proceeds of one or more Public Equity Offerings following which there is a
Public Market, at a redemption price (expressed as a percentage of principal
amount) of 108.50% of the aggregate principal amount so redeemed, plus accrued
and unpaid interest thereon to the redemption date; provided, that:
(1) after each such redemption at least 65.0% of the original
principal amount of the Notes must remain outstanding; and
(2) Susquehanna Media shall make each such redemption within 60 days
of the date of closing of the related Public Equity Offering.
In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee on a pro rata basis, although no Note of
$1,000 in principal amount or less will be redeemed in part. If any Note is to
be redeemed in part only, the notice of redemption relating to such Note will
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note.
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RANKING OF THE NOTES
- --------------------------------------------------------------------------------
Summary: The Indebtedness evidenced by the Notes is a senior subordinated,
unsecured obligation of Susquehanna Media. The payment of principal and interest
on the Notes is subordinated in right of payment to the prior payment of all
existing and future Senior Indebtedness. The Notes will rank equal with or be
senior to all other Indebtedness of Susquehanna Media. The Indenture limits the
aggregate amount of additional Indebtedness that Susquehanna Media may incur,
but it does not limit the amount of Indebtedness that may be Senior
Indebtedness. If any Guarantees are entered into, those Guarantees will be
subordinated to all Senior Indebtedness of the Guarantors.
- --------------------------------------------------------------------------------
The Indebtedness evidenced by the Notes will be senior subordinated,
unsecured obligations of Susquehanna Media. The payment of principal, premium,
if any, and interest on the Notes is subordinated in right of payment to the
prior payment of all existing and future Senior Indebtedness. In addition, if
and when any Guarantees are entered into, such Guarantees will be subordinated
to all Senior Indebtedness of any such Guarantors.
Only Indebtedness of Susquehanna Media that is Senior Indebtedness will
rank senior to the Notes. The Notes will rank equal with or be senior to all
other Indebtedness of Susquehanna Media. Although the Indenture limits the
aggregate amount of additional Indebtedness that Susquehanna Media may incur,
the Indenture does not limit the amount of such Indebtedness that may be Senior
Indebtedness.
In the event of any distribution of the assets of Susquehanna Media upon a
liquidation, dissolution or reorganization of Susquehanna Media, the holders of
Senior Indebtedness will be entitled to receive payment in full of such Senior
Indebtedness before the Noteholders are entitled to receive any payment. Until
the Senior Indebtedness is paid, any payment to which Noteholders would be
entitled but for the subordination provisions of the Indenture will be made to
holders of such Senior Indebtedness. If a distribution is made to Noteholders
that, due to the subordination provisions, should not have been made to them,
such Noteholders are required to hold it in trust for the holders of Senior
Indebtedness and pay it over to them.
Notwithstanding anything herein to the contrary, Susquehanna Media may not
pay principal, premium, if any, or interest on the Notes or make any deposit
pursuant to the provisions described under "-- Defeasance" below if any
principal, interest, fees or other obligations in respect of Designated Senior
Indebtedness is not paid when due, unless the default has been cured or waived.
However, Susquehanna Media may pay the Notes without regard to the foregoing if
Susquehanna Media and the Trustee receive written notice approving such payment
from the representative of the Designated Senior Indebtedness. During the
continuance of any default (other than a default described in the first sentence
of this paragraph) with respect to any Designated Senior Indebtedness pursuant
to which the maturity thereof may be accelerated immediately, Susquehanna Media
may not pay the Notes for a period (a "Payment Blockage Period") commencing upon
the receipt by the Trustee (with a copy to Susquehanna Media) of written notice
(a "Blockage Notice") and ending 179 days thereafter (or earlier under certain
circumstances described in the Indenture). The Blockage Notice must be sent by a
representative of the holders of such Designated Senior Indebtedness and must
specify that a default has occurred and that the representative is electing to
effect a Payment Blockage Period. Subject to the first sentence of this
paragraph, unless the holders of such Designated Senior Indebtedness or the
representative of such holders have accelerated the maturity of such Designated
Senior Indebtedness, Susquehanna Media may resume payments on the Notes after
the end of such Payment Blockage Period. The Notes will not be subject to more
than one Payment Blockage Period in any consecutive 360-day period, irrespective
of the number of defaults with respect to Designated Senior Indebtedness during
such period.
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If payment of the Notes is accelerated because of an Event of Default,
Susquehanna Media will promptly notify the holders of Designated Senior
Indebtedness or the representative of such holders of the acceleration.
By reason of these subordination provisions, in the event of an insolvency,
bankruptcy, reorganization, or liquidation of Susquehanna Media, or upon the
occurrence of a Change of Control or an Asset Sale requiring repurchase by
Susquehanna Media of any Notes, there may not be sufficient assets remaining to
satisfy the claims of the Holders after satisfying the claims of creditors of
Susquehanna Media who are holders of Senior Indebtedness and claims of creditors
of Susquehanna Media's subsidiaries. See "Risk Factors -- Risk Factors Relating
to Our Indebtedness and the Notes -- Because the notes will be subordinated to
our senior debt, we must make payments on our senior debt before you receive
interest and principal payments." As of June 30, 1999, Susquehanna Media's
Senior Indebtedness was $270.4 million. Although the Indenture contains
limitations on the amount of additional Indebtedness that Susquehanna Media and
its Restricted Subsidiaries may incur, under certain circumstances the amount of
such Indebtedness could be substantial and, in any case, such Indebtedness may
be Senior Indebtedness. See "-- Certain Covenants -- Limitation on
Indebtedness."
The terms of the subordination provisions described above will not apply to
money or the proceeds of U.S. government obligations held in trust by the
Trustee for the payment of principal of and interest on the Notes pursuant to
the provisions described under "-- Defeasance."
CHANGE OF CONTROL
- --------------------------------------------------------------------------------
Summary: Upon a Change of Control of Susquehanna Media, each Holder of
Notes has the right to require Susquehanna Media to repurchase the Holder's
Notes at a price equal to 101% of the principal amount of the Notes repurchased
plus accrued interest to the date of repurchase.
- --------------------------------------------------------------------------------
Upon the occurrence of a Change of Control, each Holder will have the right
to require that Susquehanna Media repurchase such Holder's Notes at a purchase
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest thereon to the purchase date. Any of the following events shall
constitute a "Change in Control":
(1) (A) the Permitted Holders cease to be the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, in the aggregate of at least 50.1% of the total voting power of
the voting stock of Susquehanna Media or (B) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), other than one or
more Permitted Holders, is or becomes the "beneficial owner" (except that
for purposes of this clause (B) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 25% of the total
voting power of the voting stock of Susquehanna Media (for purposes of this
clause (1) the Permitted Holders shall be deemed to beneficially own any
voting stock of a corporation held by any other corporation so long as the
Permitted Holders beneficially own, directly or indirectly, in the
aggregate at least 50.1% of the voting power of the voting stock of such
other corporation);
(2) Susquehanna Media merges with or into another Person or sells or
disposes of all or substantially all of its assets to any Person, or any
Person merges with Susquehanna Media, in any such event pursuant to a
transaction in which the outstanding voting stock of Susquehanna Media is
converted into or exchanged for cash, securities or other property, other
than any such transaction where (A) the outstanding voting stock of
Susquehanna Media is converted into or
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exchanged for (i) voting stock (other than Disqualified Stock) of the
surviving or transferee corporation and/or (ii) cash, securities or other
property in an amount which could be paid by Susquehanna Media as a
Restricted Payment under the Indenture and (B) immediately after such
transaction no person or group (other than the Permitted Holders) is the
beneficial owner of 25% or more of the voting power of the voting stock of
the surviving or transferee corporation on a fully diluted basis;
(3) during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors of Susquehanna
Media (together with any new directors whose election by such board of
directors or whose nomination for election by the shareholders of
Susquehanna Media was approved by a vote of 66 2/3% of the directors of
Susquehanna Media at the time of such approval who were either directors at
the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority
of the board of directors then in office; or
(4) the liquidation or dissolution of Susquehanna Media.
The Indenture does not specify a percentage of our assets that would
constitute the sale of "all or substantially all," and to our knowledge, the
determination under New York law of whether such a sale has occurred is
dependent upon a number of factors, including our financial condition and
operating results at the time of the transaction and other facts and
circumstances. As a result, there may be uncertainty in the event of certain
sales, leases or transfers of assets by us as to the ability of Holders to
determine if a Change of Control has occurred, and the provisions of the
Indenture would not necessarily afford holders of the Notes protection in the
event of a reorganization, restructuring, merger or similar transaction
involving us that may adversely affect the Holders.
Within 30 days following any Change of Control, Susquehanna Media will mail
a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require Susquehanna Media to purchase such Holder's Notes at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest to the date of purchase;
(2) the circumstances and relevant facts regarding such Change of
Control;
(3) the repurchase date (which will be between 30 and 60 days from the
date such notice is mailed); and
(4) the instructions that a Holder must follow in order to have its
Notes purchased.
Susquehanna Media will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes upon a Change of
Control. To the extent that the provisions of any securities laws or regulations
conflict with Susquehanna Media's obligation to repurchase the Notes upon a
Change of Control, Susquehanna Media will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
under this covenant by virtue thereof.
Subject to the limitations discussed below, Susquehanna Media could, in the
future, enter into certain transactions that would not constitute a Change of
Control under the Indenture, but that could increase the amount of Indebtedness
outstanding at such time or otherwise affect Susquehanna Media's capital
structure or credit ratings. Restrictions on the ability of Susquehanna Media to
incur additional Indebtedness are contained in the covenant described under
"-- Certain Covenants -- Limitation on Indebtedness." Such restrictions can be
waived only with the consent of the Holders of a majority in principal amount of
the Notes then outstanding. Except for the limitations contained in
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<PAGE> 86
such covenants, however, the Indenture will not contain any covenants or
provisions that may afford Holders protection in the event of a highly leveraged
transaction.
The Senior Credit Facility contains, and future Senior Indebtedness of
Susquehanna Media may contain, prohibitions on the occurrence of certain events
that would constitute a Change of Control or require such Senior Indebtedness to
be repaid or repurchased upon a Change of Control. Moreover, the exercise by the
Holders of their right to require Susquehanna Media to repurchase the Notes
would cause a default under the Senior Credit Facility and could cause a default
under such other Senior Indebtedness even if the Change of Control itself does
not, due to the financial effect of such repurchase on Susquehanna Media. If an
offer to purchase the Notes pursuant to a Change of Control is made, there can
be no assurance that Susquehanna Media will have available funds sufficient to
pay the Change of Control purchase price for all the Notes that might be
delivered by Holders seeking to accept the offer to purchase the Notes pursuant
to a Change of Control. In the event Susquehanna Media is required to purchase
outstanding Notes pursuant to a Change of Control, Susquehanna Media expects
that it would seek third-party financing to the extent it does not have
available funds to meet its purchase obligations and any other obligations in
respect of Senior Indebtedness. However, there can be no assurance that
Susquehanna Media would be able to obtain such financing.
CERTAIN COVENANTS
- --------------------------------------------------------------------------------
Summary: In the Indenture, Susquehanna Media agreed to certain restrictions
that limit its and its Restricted Subsidiaries' ability, among other things, to:
- incur additional Indebtedness or issue Disqualified Stock, both beyond a
certain amount;
- pay dividends, redeem or acquire any shares of their capital stock, make
payments on Subordinated Obligations or make investments, all beyond a
certain amount;
- restrict payments or property transfers from any Restricted Subsidiary to
Susquehanna Media;
- create liens;
- sell or exchange assets or the capital stock of any Subsidiaries;
- enter into transactions with insiders or related parties;
- sell or issue capital stock of a Restricted Subsidiary;
- effect mergers or consolidations;
- incur any subordinated Indebtedness that is senior to the Notes;
- permit any Restricted Subsidiary to guarantee any Indebtedness of
Susquehanna Media unless the Restricted Subsidiary also guarantees the
Notes; and
- conduct any business unrelated to their current businesses.
- --------------------------------------------------------------------------------
The Indenture contains certain covenants including the following:
LIMITATION ON INDEBTEDNESS
Susquehanna Media will not, and will not permit any Restricted Subsidiary
to, incur any Indebtedness (including any Acquired Indebtedness) other than
Permitted Indebtedness. Notwithstanding the foregoing, in addition to Permitted
Indebtedness, Susquehanna Media may incur
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Indebtedness (including Acquired Indebtedness), and any Restricted Subsidiary
may incur Acquired Indebtedness and guarantee Senior Credit Facility
obligations, if, in either case:
(1) no Default or Event of Default exists on the date of the proposed
incurrence of Indebtedness or would result as a consequence of such
proposed incurrence; and
(2) immediately after giving effect to such incurrence of
Indebtedness, the Consolidated Leverage Ratio of Susquehanna Media is less
than 7.0 to 1.0.
LIMITATION ON RESTRICTED PAYMENTS
Susquehanna Media will not, and will not permit any Restricted Subsidiary
to, make a Restricted Payment if at the time Susquehanna Media or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default or Event of Default exists (or would result therefrom);
(2) Susquehanna Media or such Restricted Subsidiary is not able to
incur, after giving effect to such Restricted Payment, an additional $1.00
of Indebtedness pursuant to clause (2) under "-- Limitation on
Indebtedness"; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date (other than Restricted Payments
referred to in items (1) and (2)) would exceed the sum of:
(A) 100% of Consolidated EBITDA, accrued on a cumulative basis
during the period beginning on the first day of the fiscal quarter
beginning immediately following the Issue Date to the end of the most
recent fiscal quarter ending at least 45 days prior to the date of such
Restricted Payment (or, in case such Consolidated EBITDA shall be a
deficit, minus 100% of such deficit) less 1.4 times Consolidated
Interest Expense for the same period; plus
(B) the aggregate Net Cash Proceeds received by Susquehanna Media
from issuances or sales of its capital stock (other than Disqualified
Stock) subsequent to the Issue Date or the amount by which Indebtedness
of Susquehanna Media is reduced on Susquehanna Media's balance sheet
upon the conversion or exchange subsequent to the Issue Date of any
Indebtedness of Susquehanna Media convertible or exchangeable for
capital stock (other than Disqualified Stock) of Susquehanna Media; plus
(C) an amount equal to the sum of (i) the net reduction in
Investments in any Person resulting from dividends, repayments of loans
or advances or other transfers of assets, in each case to Susquehanna
Media or any Restricted Subsidiary from such Person, plus (ii) the
portion (proportionate to Susquehanna Media's equity interest in such
subsidiary) of the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary. Notwithstanding the foregoing, the
foregoing sum will not exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made (and treated as a
Restricted Payment) by Susquehanna Media or any Restricted Subsidiary in
such Unrestricted Subsidiary; plus
(D) $5.0 million.
The foregoing provisions will not prohibit:
(1) if no Default or Event of Default exists, any purchase or
redemption of capital stock or Subordinated Obligations of Susquehanna
Media made out of the proceeds of the concurrent sale of capital stock of
Susquehanna Media (other than Disqualified Stock and other than capital
stock issued or sold to a subsidiary of Susquehanna Media); provided, that
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(A) such purchase or redemption will be excluded in the calculation
of the amount of Restricted Payments; and
(B) the Net Cash Proceeds from such sale or capital contribution
will be excluded from the calculation of amounts under clause (3)(B)
above;
(2) if no Default or Event of Default exists, any purchase or
redemption of Subordinated Obligations made out of the proceeds of the
concurrent sale of Indebtedness of Susquehanna Media which is permitted to
be incurred under the "Limitation on Indebtedness" covenant; provided,
however, that such purchase or redemption will be excluded in the
calculation of the amount of Restricted Payments;
(3) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this covenant; provided, however, that at the time of payment of such
dividend, no other Default will exist (or result therefrom); provided
further, that such dividend will be included in the calculation of the
amount of Restricted Payments; and
(4) if no other Default or Event of Default will exist or would result
therefrom, any purchase of any fractional share of capital stock of
Susquehanna Media resulting from:
(A) any dividend or other distribution on outstanding shares of
capital stock that is payable in shares of such capital stock;
(B) any combination of all of the outstanding shares of capital
stock of Susquehanna Media;
(C) any reorganization or consolidation of Susquehanna Media in any
merger of Susquehanna Media with or into any other Person; or
(D) the conversion of any securities of Susquehanna Media into
shares of capital stock of Susquehanna Media;
provided, however, that such purchases of fractional shares will be
included in the calculation of the amount of Restricted Payments.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES
Susquehanna Media will not, and will not permit any Restricted Subsidiary
to, create or permit to exist any restriction on the ability of any Restricted
Subsidiary:
(1) to pay dividends or make any other distributions on its capital
stock or pay any Indebtedness owed to Susquehanna Media;
(2) to make any loans to Susquehanna Media or to any Restricted
Subsidiary; or
(3) to transfer any of its property or assets to Susquehanna Media or
to any Restricted Subsidiary.
The Indenture shall not prohibit:
(1) the Senior Credit Facility as in effect on the Issue Date and as
the same may be amended, modified, restated, supplemented or refinanced
from time to time; provided, however, that the restrictions contained in
any such amendment, modification, restatement, supplement or other
agreement are no less favorable in any material respect to the Noteholders
than restrictions contained in the Senior Credit Facility on the Issue
Date;
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(2) any encumbrances or restrictions existing as of the Issue Date or
pursuant to any agreement governing Indebtedness in existence on the Issue
Date, in each case as in effect on the Issue Date;
(3) the Notes or the Indenture, or any Guarantee;
(4) any instrument governing Acquired Indebtedness,
(5) Refinancing Indebtedness incurred pursuant to an agreement
referred to in clause (2) or (4); provided, however, that the restrictions
contained in any such refinancing agreement are no less favorable to the
Noteholders than restrictions contained in such agreements governing the
Indebtedness being refinanced;
(6) customary nonassignment provisions in leases to the extent such
provisions restrict the transfer of the lease or the property leased
thereunder;
(7) security agreements or mortgages securing Indebtedness of a
Restricted Subsidiary to the extent such restrictions restrict the transfer
of the property subject to such security agreements or mortgages;
(8) restrictions with respect to a Restricted Subsidiary imposed
pursuant to a binding agreement which has been entered into for the sale or
disposition of capital stock or assets of such Restricted Subsidiary;
provided, that such restrictions apply solely to the capital stock or
assets of such Restricted Subsidiary;
(9) liens securing Indebtedness otherwise permitted to be incurred
pursuant to the provisions of the covenant described in "Limitation on
Liens" that limit the right of Susquehanna Media or any of its Restricted
Subsidiaries to dispose of the assets subject to such lien; and
(10) applicable law.
LIMITATION ON LIENS
Other than Permitted Liens, Susquehanna Media will not, and will not permit
any Restricted Subsidiary to, create any lien on any property or asset of
Susquehanna Media or of any Restricted Subsidiary or assign or convey any right
to receive any income or profits therefrom, or file or permit the filing of any
financing statement or other similar notice of any lien with respect to any such
property or asset under the Uniform Commercial Code of any State or under any
similar statute unless:
(1) in the case of liens securing Indebtedness that is expressly
junior in right of payment to the Notes, the Notes are secured by a lien on
such property or assets that is senior to such liens; and
(2) in all other cases, the Notes are equally and ratably secured.
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK
Susquehanna Media will not, and will not permit any Restricted Subsidiary
to, consummate any Asset Sale unless:
(1) Susquehanna Media or such Restricted Subsidiary receives
consideration at least equal to the fair market value of the shares and
assets subject to such Asset Sale (which fair market value will be
determined in good faith by the board of directors of Susquehanna Media for
any transaction involving in excess of $1.0 million);
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(2) at least 75% of the consideration received by Susquehanna Media or
such Restricted Subsidiary is in the form of (A) cash and is received at
the time of such sale or (B) (1) long-term assets to be used by Susquehanna
Media or any Restricted Subsidiary in a Permitted Business or (2) capital
stock of a Restricted Subsidiary or a Person engaged primarily in a
Permitted Business that will become, upon such purchase, a Restricted
Subsidiary (collectively, "Replacements Assets"); and
(3) 100% of the Net Available Cash from such Asset Sale is applied by
Susquehanna Media or such Restricted Subsidiary:
(A) first, to the extent Susquehanna Media elects (or is required
by the terms of the Senior Credit Facility) to repay borrowings under
the Senior Credit Facility; provided, that there is a permanent
reduction in the availability under the Senior Credit Facility in an
amount equal to such repayment and such repayment is made within 365
days from the date of such Asset Sale; and
(B) second, to the extent Susquehanna Media elects, and within 365
days from the date of such Asset Sale, to purchase, construct or improve
Replacement Assets.
Any Net Available Cash not applied within 365 days after the consummation
of an Asset Sale as provided above will be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million,
Susquehanna Media will be obligated to make offers to purchase the Notes in an
amount equal to the amount of Excess Proceeds (and not just the amount thereof
that exceeds $5.0 million) at a purchase price equal to 100% of the principal
amount thereof plus accrued and unpaid interest thereon to the purchase date in
accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Notes tendered pursuant to an offer to purchase made
pursuant to this paragraph is less than the amount of Excess Proceeds,
Susquehanna Media may use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders is greater than the
amount of Excess Proceeds, the Trustee will select the Notes to be purchased on
a pro rata basis.
In the event of the transfer of substantially all (but not all) of the
assets of Susquehanna Media and its Subsidiaries to a Person in a transaction
permitted under the caption "Certain Covenants -- Merger and Consolidation"
below, the successor corporation will be deemed to have sold the assets of
Susquehanna Media and its Subsidiaries not so transferred for purposes of this
covenant, and will comply with the provisions of this covenant with respect to
such deemed sale as if it were an Asset Sale. In addition, the fair market value
of such assets of Susquehanna Media or its Subsidiaries deemed to be sold will
be deemed to be Net Available Cash for purposes of this covenant.
If any non-cash consideration received by Susquehanna Media or any
subsidiary in connection with any Asset Sale is disposed of for cash, then such
disposition will be deemed to constitute an Asset Sale hereunder and the Net
Available Cash thereof will be applied in accordance with this covenant.
Susquehanna Media will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, Susquehanna Media will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this clause by virtue thereof.
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LIMITATION ON AFFILIATE TRANSACTIONS
Except for Excluded Transactions, Susquehanna Media will not, and will not
permit any Restricted Subsidiary to, enter into any transaction with any
affiliate of Susquehanna Media unless the terms thereof:
(1) are no less favorable to Susquehanna Media or such Restricted
Subsidiary than those that could be obtained from a non-affiliate;
(2) if such affiliate transaction is in excess of $1.0 million;
(A) are set forth in writing; and
(B) have been approved by a majority of the disinterested members
of the board of directors of Susquehanna Media; and
(3) if such affiliate transaction is in excess of $5.0 million, has
been determined by a nationally recognized investment banking or accounting
firm to be fair to Susquehanna Media and its Restricted Subsidiaries.
This covenant will not prohibit or apply to:
(1) any Restricted Payment permitted to be paid pursuant to the
covenant described under "-- Limitation on Restricted Payments" so long as
any payment to a Permitted Holder is made ratably to all stockholders of
the applicable class of capital stock;
(2) any issuance of securities or payments of cash pursuant to
employee benefit plans or arrangements approved by the board of directors
of Susquehanna Media;
(3) the grant of stock options or similar rights to employees and
directors of Susquehanna Media pursuant to plans in existence on the Issue
Date and plans approved by the board of directors of Susquehanna Media;
(4) loans or advances to employees in the ordinary course of business;
(5) the payment of reasonable fees to directors of Susquehanna Media
and its Restricted Subsidiaries who are not employees of Susquehanna Media
or its Restricted Subsidiaries; and
(6) any affiliate transaction (A) between Susquehanna Media and a
Restricted Subsidiary or (B) between Restricted Subsidiaries.
LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES
Susquehanna Media will not sell any shares of capital stock of a Restricted
Subsidiary, and will not permit any Restricted Subsidiary to issue or sell any
shares of its capital stock except to Susquehanna Media or a wholly-owned
Restricted Subsidiary; provided, however, that this covenant will not prohibit
(1) the sale of all of the shares of the capital stock owned at the time of such
sale by Susquehanna Media or a Restricted Subsidiary of any other Restricted
Subsidiary effected in accordance with the covenants described under "Limitation
on Sales of Assets and Subsidiary Stock" and "-- Merger and Consolidation," (2)
the issuance of shares of capital stock of a Restricted Subsidiary pursuant to
employee benefit plans or arrangements approved by the board of directors of
Susquehanna Media or the applicable Restricted Subsidiary, (3) the sale,
pursuant to an underwritten registered public offering, of shares of capital
stock of a Restricted Subsidiary effected in accordance with the covenant
described in "Limitation on Sales of Assets and Subsidiary Stock" or (4) the
issuance of capital stock to Susquehanna Media or a Restricted Subsidiary in an
Investment described by clause (1) in the definition of "Permitted Investment."
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MERGER AND CONSOLIDATION
Susquehanna Media will not, in a single transaction or series of related
transactions, consolidate or merge with any Person, or sell or dispose of (or
permit any Restricted Subsidiary to sell or dispose of) all or substantially all
of the combined assets of Susquehanna Media and its Restricted Subsidiaries to
any Person, unless:
(1) Susquehanna Media, in the case of a transaction involving
Susquehanna Media, or such Restricted Subsidiary in the case of a
transaction involving a Restricted Subsidiary, will be the surviving or
transferee Person or the surviving or transferee Person (in either case,
the "Successor Company") will be a U.S. Person and the Successor Company
(if not Susquehanna Media or such Restricted Subsidiary) will expressly
assume, by an indenture supplemental thereto, all the obligations of
Susquehanna Media under the Notes and the Indenture, or the obligation of
such Restricted Subsidiary under its Guarantee (if any shall then exist),
as the case may be;
(2) immediately after giving effect to such transaction, no Default
will exist;
(3) immediately after giving effect to such transaction, Susquehanna
Media, if the transaction involves a Restricted Subsidiary, or the
Successor Company would be able to incur an additional $1.00 of
Indebtedness pursuant to clause (2) under "-- Limitation on Indebtedness;"
(4) in the case of a transaction involving Susquehanna Media,
immediately after giving effect to such transaction, the Successor Company
will have Consolidated Net Worth in an amount that is not less than the
Consolidated Net Worth of Susquehanna Media prior to such transaction;
(5) if, as a result of any transaction, property or assets of
Susquehanna Media or a Restricted Subsidiary would become subject to a lien
securing Indebtedness not excepted from the provisions of the Indenture
described above under the caption "-- Limitation on Liens," Susquehanna
Media, any such Restricted Subsidiary or the Successor Company, as the case
may be, will have secured the Notes (and, if applicable, the relevant
Guarantees) as required by such provisions; and
(6) Susquehanna Media will have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture.
The Successor Company will be the successor to Susquehanna Media or such
Restricted Subsidiary, as the case may be, and will succeed to, and may exercise
every right and power of Susquehanna Media or such Restricted Subsidiary under,
the Indenture, but the predecessor Company or Restricted Subsidiary in the case
of a conveyance, transfer or lease will not be released from the obligation to
pay the principal of and interest on the Notes.
LIMITATION ON LAYERED INDEBTEDNESS
Other than in connection with the Senior Credit Facility or the purchase or
redemption of minority equity interests in any Restricted Subsidiary from
non-affiliates of the Company, Susquehanna Media will not, and, if at any time
Restricted Subsidiaries become Guarantors, will not permit any Guarantor to,
incur any Indebtedness that is subordinate in right of payment to any other
Indebtedness, unless such Indebtedness is subordinate in right of payment to, or
ranks equal with, the Notes or, in the case of Restricted Subsidiaries that are
Guarantors, such Indebtedness is subordinate in right of payment to, or ranks
equal with, the Guarantees of such Guarantors.
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The Guarantors will not guarantee any Indebtedness of Susquehanna Media
that is subordinate in right of payment to any other Indebtedness of Susquehanna
Media unless such guarantee is subordinate in right of payment to, or ranks
equal with, the Guarantees of such Guarantors.
GUARANTEES OF CERTAIN INDEBTEDNESS
Susquehanna Media will not permit any of its Restricted Subsidiaries,
directly or indirectly, to guarantee or otherwise become liable for, or incur
any lien securing, the payment of any Indebtedness of Susquehanna Media (other
than obligations under the Senior Credit Facility from time to time or other
Indebtedness not to exceed $2,000,000 in aggregate at any one time outstanding
as to all of the Restricted Subsidiaries) unless such Restricted Subsidiary,
Susquehanna Media, and the Trustee execute and deliver a supplemental indenture
pursuant to which such Restricted Subsidiary becomes a Guarantor of the Notes
and which evidences such Restricted Subsidiary's Guarantee of the Notes. Such
Guarantee shall be a senior subordinated unsecured obligation of such Restricted
Subsidiary. Neither Susquehanna Media nor any such Guarantor shall be required
to make a notation on the Notes or its Guarantee to reflect any such subsequent
Guarantee. Nothing in this covenant shall be construed to permit any Restricted
Subsidiary of Susquehanna Media to incur Indebtedness otherwise prohibited by
the "Limitation on Indebtedness" covenant.
The Indebtedness evidenced by any Guarantee (including the payment of
principal of, premium, if any, and interest on the Notes) will be subordinated
to Senior Indebtedness of such Guarantor on terms analogous to those applicable
to the Notes. See "Ranking of the Notes."
The obligations of each Guarantor under its Guarantee will be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor (including, without limitation, any
guarantees under the Senior Credit Facility) and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to its contribution obligations under the Indenture, result in the
obligations of the Guarantor under the Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law.
Any Guarantor may consolidate with or merge into or sell its assets to
Susquehanna Media or to another Guarantor without limitation. Any Guarantor may
consolidate with or merge into or sell all or substantially all its assets to a
corporation, partnership, or trust other than Susquehanna Media or another
Guarantor (whether or not affiliated with the Guarantor). Upon the sale or
disposition of a Guarantor (or of all or substantially all of its assets) to a
Person (whether or not an affiliate of such Guarantor) that is not a Restricted
Subsidiary of Susquehanna Media, which is otherwise in compliance with the
Indenture, such Guarantor shall be deemed released from all its obligations
under the Indenture and its Guarantee and such Guarantee shall terminate;
provided that any such termination shall occur only to the extent that all
obligations of such Guarantor under the Senior Credit Facility, as applicable,
and all of its guarantees of, and under all of its pledges of assets or other
security interests which secure, Indebtedness of Susquehanna Media shall also
terminate upon such release, sale, or transfer; provided, further, that the
consideration received by Susquehanna Media in connection with such sale or
other disposition shall be applied in accordance with the Indenture.
CONDUCT OF BUSINESS
Susquehanna Media and its Restricted Subsidiaries will not engage in any
business other than a Permitted Business.
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COMMISSION REPORTS
Notwithstanding that Susquehanna Media may not be subject to the reporting
requirements of the Exchange Act, Susquehanna Media will file with the
Commission and provide the Trustee and Noteholders with such annual reports and
such information, documents and other reports as are specified in Sections 13
and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to
such Sections. In addition, Susquehanna Media will make available to any holder
and any prospective purchaser of Notes the information required pursuant to Rule
144A(d)(4) under the Securities Act during any period in which Susquehanna Media
is not subject to Section 13 or 15(d) of the Exchange Act.
DEFAULTS
An Event of Default is defined in the Indenture as:
(1) a default in the payment of interest on the Notes when due,
continued for 30 days;
(2) a default in the payment of principal of any Note when due at its
stated maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise;
(3) the failure by Susquehanna Media to comply with its obligations
under "-- Change of Control," and under "-- Certain Covenants" under
"-- Merger and Consolidation," "-- Limitation on Sales of Assets and
Subsidiary Stock," "-- Limitation on Indebtedness," or "-- Limitation on
Restricted Payments" above;
(4) the failure by Susquehanna Media to comply with its other
agreements contained in the Indenture within 45 days after receipt by
Susquehanna Media of notice of such default from the Trustee or the Holders
of 25% in principal amount of the outstanding Notes;
(5) Indebtedness of Susquehanna Media or any subsidiary is not paid
within any applicable grace period after final maturity or is accelerated
by the holders thereof because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds $5.0 million (the "cross
acceleration provision");
(6) certain events of bankruptcy, insolvency or reorganization of
Susquehanna Media or a subsidiary (the "bankruptcy provisions");
(7) any judgment or decree for the payment of money in excess of $5.0
million (to the extent not covered by third-party insurance as to which a
financially sound insurer has not disclaimed coverage) is rendered against
Susquehanna Media or a subsidiary, remains outstanding for a period of 60
days following the date such judgment becomes final and non-appealable (the
"judgment default provision"); or
(8) at any time that a Guarantee is required to be in effect under the
Indenture, the Guarantee of any Guarantor ceases to be in full force and
effect or any Guarantor denies or disaffirms its obligations under its
Guarantee.
If an Event of Default occurs and is continuing (other than an Event of
Default described in clause (6) with respect to Susquehanna Media), the Trustee
or the Holders of at least 25% in principal amount of the outstanding Notes may
declare the principal of and accrued but unpaid interest on all the Notes to be
due. Upon such a declaration, such principal and interest will be due
immediately. If an Event of Default described in clause (6) occurs and is
continuing with respect to Susquehanna Media, the principal of and interest on
all the Notes will become immediately due without any declaration or other act
on the part of the Trustee or any Holders of the Notes. Under certain
circumstances, the Holders of a majority in principal amount of the outstanding
Notes may rescind any such acceleration with respect to the Notes and its
consequences.
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Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders of the Notes unless
such Holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium, if any, or interest when due, no Holder of a Note
may pursue any remedy with respect to the Indenture or the Notes unless:
(1) such Holder has previously given the Trustee notice that an Event
of Default is continuing;
(2) Holders of at least 25% in principal amount of the outstanding
Notes have requested the Trustee to pursue the remedy;
(3) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the outstanding
Notes have not given the Trustee a direction inconsistent with such request
within such 60-day period.
Notwithstanding the foregoing, a Holder may individually institute a suit
for the enforcement of the payment of principal and interest on the Notes.
Subject to certain restrictions, the Holders of a majority in principal
amount of the outstanding Notes are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other Holder of a Note or that would involve the Trustee in personal
liability.
The Indenture provides that if a Default exists and is known to the
Trustee, the Trustee must mail to each Holder of the Notes notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment
of principal of or interest on any Note, the Trustee may withhold notice so long
as a committee of its trust officers determines that withholding notice is not
opposed to the interest of the Holders of the Notes. In addition, Susquehanna
Media is required to deliver to the Trustee, within 120 days after the end of
each fiscal year, a certificate indicating whether the signers thereof know of
any Default that occurred during the previous year. Susquehanna Media also is
required to deliver to the Trustee, within 30 days after the occurrence thereof,
written notice of any event which would constitute certain Defaults, their
status and what action Susquehanna Media is taking or proposes to take in
respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding and any past default or compliance with any provisions may also be
waived with the consent of the Holders of a majority in principal amount of the
Notes then outstanding. However, without the consent of each Holder of an
outstanding Note affected thereby, no amendment may:
(1) reduce the amount of Notes whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest on
any Note;
(3) reduce the principal of or extend the stated maturity of any Note;
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(4) reduce the premium, if any, payable upon the redemption of any
Note or change the time at which any Note may be redeemed as described
under "-- Optional Redemptions";
(5) make any Note payable in money other than that stated in the Note;
(6) impair the right of any Holder of the Notes to receive payment of
principal and interest on such Holder's Notes after the due dates therefor
or to institute suit for the enforcement of any payment on such Holder's
Notes;
(7) make any change in the amendment provisions which require each
Holder's consent or in the waiver provisions;
(8) make any change to the subordination provisions of the Indenture
that would adversely affect the Noteholders; or
(9) make any change in the Guarantees (if any should then exist) that
would adversely affect the Noteholders.
Without the consent of any Holder of the Notes, Susquehanna Media and the
Trustee may amend the Indenture to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of Susquehanna Media under the Indenture, to add Guarantees with
respect to the Notes, to secure the Notes, to add to the covenants of
Susquehanna Media for the benefit of the Holders of the Notes or to surrender
any right or power conferred upon Susquehanna Media, to make any change that
does not adversely affect the rights of any Holder of the Notes or to comply
with any requirement of the Commission in connection with the qualification of
the Indenture under the TIA. However, no amendment may be made to the
subordination provisions of the Indenture that adversely affects the rights of
any holder of Senior Indebtedness of Susquehanna Media or a Guarantor then
outstanding unless the holders of such Senior Indebtedness (or their
representative) consent to such change.
The consent of the Holders of the Notes is not necessary under the
Indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, Susquehanna Media
is required to mail to Holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all Holders of the Notes,
or any defect therein, will not impair or affect the validity of the amendment.
DEFEASANCE
- --------------------------------------------------------------------------------
Summary: Susquehanna Media may terminate its obligations with respect to
the Notes and some of the covenants in the Indenture, subject to the exceptions
described below.
- --------------------------------------------------------------------------------
Susquehanna Media at any time may terminate all its obligations under the
Notes and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. Susquehanna Media at any time may terminate its obligations under "Change
of Control" and under the covenants described under "-- Certain Covenants"
(other than the covenant described under "-- Merger and Consolidation"), the
operation of the cross acceleration provision, the bankruptcy provisions with
respect to subsidiaries and the judgment default provision described under
"-- Defaults" above and the limitations contained in clauses (3) and (4) under
"-- Certain Covenants -- Merger and Consolidation" (and clause (3) of the first
paragraph under "-- Defaults"
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as it relates to clauses (3) and (4) under "-- Certain Covenants -- Merger and
Consolidation") above ("covenant defeasance").
Susquehanna Media may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option. If Susquehanna Media
exercises its legal defeasance option, payment of the Notes may not be
accelerated because of an Event of Default with respect thereto. If Susquehanna
Media exercises its covenant defeasance option, payment of the Notes may not be
accelerated because of an Event of Default specified in clause (3) (other than
the breach of the covenant described under "-- Certain Covenants -- Merger and
Consolidation"), (4), (5) or (8) under "-- Defaults" above or because of the
failure of Susquehanna Media to comply with clause (3) or (4) under "-- Certain
Covenants -- Merger and Consolidation" above. If Susquehanna Media exercises its
legal defeasance option or its covenant defeasance option, each Guarantor will
be released from all its obligations with respect to its Guarantee (if any
should then exist).
In order to exercise either defeasance option, Susquehanna Media must
irrevocably deposit in trust (the "defeasance trust") with the Trustee money or
U.S. government obligations for the payment of principal and interest on the
Notes to redemption or maturity, as the case may be, and must comply with
certain other conditions, including delivery to the Trustee of an opinion of
counsel to the effect that Holders of the Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit and
defeasance and will be subject to federal income tax on the same amount and in
the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such opinion of counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable federal income tax law).
CONCERNING THE TRUSTEE
Chase Manhattan Trust Company, National Association is to be the Trustee
under the Indenture and has been appointed by Susquehanna Media as Registrar and
Paying Agent with regard to the Notes.
The Holders of a majority in principal amount of the outstanding Notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that if an Event of Default occurs (and is
not cured), the Trustee will be required to use the degree of care of a prudent
man in the conduct of his own affairs. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of Notes, unless such Holder will have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense and then only to the extent required by the terms of
the Indenture.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by the laws
of the State of New York.
CERTAIN DEFINITIONS
In addition to the other defined terms used herein, the following terms
have the meanings set forth below when used in this offering memorandum.
"Acquired Indebtedness" means, with respect to any Person:
(1) any Indebtedness or Disqualified Stock of any other Person
existing at the time such Person is merged with or becomes a Restricted
Subsidiary of such specified Person, and
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(2) Indebtedness secured by a lien encumbering any asset acquired by
such specified Person.
"Asset Acquisition" means
(1) an Investment by Susquehanna Media or any Restricted Subsidiary in
any other Person pursuant to which such Person will be merged with
Susquehanna Media or any Restricted Subsidiary; or
(2) the acquisition by Susquehanna Media or any Restricted Subsidiary
of the assets of any Person which constitute all or substantially all of
the assets of such Person or comprises any division or line of business of
such Person or any other properties or assets of such Person other than in
the ordinary course of business.
"Asset Sale" means any sale or other disposition (including by way of
merger) by Susquehanna Media or by any of its Restricted Subsidiaries to any
Person of:
(1) any of the stock of any of Susquehanna Media's Subsidiaries;
(2) substantially all of the assets of any division or line of
business of Susquehanna Media or of any of its Subsidiaries; or
(3) any other material amount of assets of Susquehanna Media or of any
of its Subsidiaries.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated EBITDA" means, for any period, the sum of:
(1) Consolidated Net Income; plus
(2) to the extent Consolidated Net Income has been reduced thereby,
(A) all income taxes of Susquehanna Media and its Restricted
Subsidiaries paid or accrued for such period; plus
(B) Consolidated Interest Expense; plus
(C) Consolidated Non-Cash Charges less any non-cash items
increasing Consolidated Net Income for such period; plus
(D) Minority interests; plus
(E) ESOP Expense; less
(3) to the extent Consolidated Net Income has been increased thereby,
the interest income received by Susquehanna Media as a result of the
repayment of the ESOP Loan.
"Consolidated Interest Expense" means, for any period, the sum of:
(1) all interest expense of Susquehanna Media and its Restricted
Subsidiaries for such period; and
(2) the interest component of capitalized lease obligations paid or
scheduled to be paid or accrued by Susquehanna Media and its Restricted
Subsidiaries during such period.
"Consolidated Leverage Ratio" as of any date of determination means the
ratio of:
(1) the sum of the aggregate outstanding amount of Indebtedness of
Susquehanna Media and its Restricted Subsidiaries as of the date of
calculation on a consolidated basis in accordance with GAAP to
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(2) Consolidated EBITDA of Susquehanna Media during the four full
fiscal quarters ending on or prior to the date of the transaction giving
rise to the need to calculate the Consolidated Leverage Ratio.
For purposes of this definition, Consolidated Leverage Ratio will be calculated
after giving effect on a pro forma basis for the period of such calculation to
(A) the incurrence or repayment of any Indebtedness of Susquehanna Media or any
of its Restricted Subsidiaries giving rise to the need to make such calculation
and any incurrence or repayment of other Indebtedness, other than the incurrence
or repayment of Indebtedness in the ordinary course of business for working
capital purposes, occurring during the four quarter period or at any time
subsequent to the last day of the four quarter period and on or prior to the
date of determination, as if such incurrence or repayment occurred on the first
day of the four quarter period and (B) any Asset Sales or Asset Acquisitions
(including any Asset Acquisition giving rise to the need to make such
calculation as a result of Susquehanna Media or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted Subsidiary as a
result of such Asset Acquisition) incurring or otherwise becoming liable for
Acquired Indebtedness) occurring during the four quarter period or at any time
subsequent to the last day of the four quarter period and on or prior to the
transaction date, as if such Asset Sale or Asset Acquisition (including the
incurrence, assumption or liability for any Acquired Indebtedness and also
including any Consolidated EBITDA associated with such Asset Acquisition)
occurred on the first day of the four quarter period. If Susquehanna Media or
any of its Restricted Subsidiaries guarantees Indebtedness of a third Person,
the preceding sentence will give effect to the incurrence of such guaranteed
Indebtedness as if Susquehanna Media or such Restricted Subsidiary, as the case
may be, had directly incurred such guaranteed Indebtedness. Furthermore, in
calculating Consolidated Interest Expense for the purposes of the calculation of
Consolidated EBITDA, (X) interest on Indebtedness determined on a fluctuating
basis as of the date of determination (including Indebtedness actually incurred
on the date of the transaction giving rise to the need to calculate the
Consolidated Leverage Ratio) and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest on such Indebtedness as in effect on the date of
determination and (Y) notwithstanding (X) above, interest determined on a
fluctuating basis, to the extent such interest is covered by interest rate
protection agreements, shall be deemed to accrue at the rate per annum resulting
after giving effect to the operation of such agreements.
"Consolidated Net Income" means, for any period, the aggregate net income
(or loss) of Susquehanna Media and its Restricted Subsidiaries for such period
on a consolidated basis; provided, the following items shall be excluded from
the calculation of Consolidated Net Income:
(1) after-tax gains and losses from Asset Sales or abandonment or
reserves relating thereto;
(2) items classified as extraordinary, nonrecurring or unusual gains,
losses or charges, and the related tax effects, each determined in
accordance with GAAP;
(3) the net income of any Person acquired in a "pooling of interests"
transaction accrued prior to the date it becomes a Restricted Subsidiary of
Susquehanna Media or is merged or consolidated with Susquehanna Media or
any Restricted Subsidiary of Susquehanna Media;
(4) the net income (but not loss) of any Restricted Subsidiary of
Susquehanna Media to the extent that the declaration of dividends, the
making of intercompany loans or similar payments by that Restricted
Subsidiary of that income is restricted by a contract, operation of law or
otherwise;
(5) the net income of any Person, other than a Restricted Subsidiary
of Susquehanna Media, except to the extent of cash dividends or
distributions paid to Susquehanna Media or a Restricted Subsidiary of
Susquehanna Media by such Person;
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(6) any restoration to income of any contingency reserve, except to
the extent that provision for such reserve was made out of Consolidated Net
Income accrued at any time after December 31, 1998;
(7) income or loss attributable to discontinued operations (including
operations disposed of during such period whether or not such operations
were classified as discontinued); and
(8) in the case of a successor to Susquehanna Media by consolidation
or merger or as a transferee of Susquehanna Media's assets, any earnings of
the successor corporation prior to such consolidation, merger or transfer
of assets.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of Susquehanna Media and its consolidated Restricted Subsidiaries,
as of the end of the most recent fiscal quarter of Susquehanna Media ending at
least 45 days prior to the taking of any action for the purpose of which the
determination is being made, as:
(1) the par or stated value of all outstanding capital stock of
Susquehanna Media; plus
(2) paid-in capital or capital surplus relating to such capital stock;
plus
(3) any retained earnings or earned surplus less (A) any accumulated
deficit and (B) any amounts attributable to Disqualified Stock.
"Consolidated Non-Cash Charges" means with respect to Susquehanna Media,
for any period, the aggregate depreciation, amortization and other non-cash
expenses (excluding any non-cash expense to the extent that it represents an
accrual of or reserve for cash expenses in any future period or amortization of
a prepaid cash expense that was paid in a prior period) of Susquehanna Media and
its Restricted Subsidiaries reducing Consolidated Net Income of Susquehanna
Media for such period.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means all obligations under or arising out
of the Senior Credit Facility and any other Senior Indebtedness of Susquehanna
Media which, at the date of determination, has an aggregate principal amount
outstanding of, or under which the holders thereof are committed to lend up to,
at least $5.0 million and is specifically designated by Susquehanna Media in the
instrument or agreement evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" and, in respect of any Guarantor, any guarantee
by such Guarantor of Designated Senior Indebtedness of Susquehanna Media.
"Disqualified Stock" means, with respect to any Person, any capital stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable):
(1) matures or is mandatorily redeemable for any reason;
(2) is convertible or exchangeable for Indebtedness or Disqualified
Stock; or
(3) is redeemable at the option of the holder thereof, in whole or in
part, in each case on or prior to the first anniversary of the stated
maturity of the Notes.
"ESOP" means the Susquehanna Pfaltzgraff Co. Employee Stock Ownership Plan.
"ESOP Expense" means, for any period without duplication, (1) to the extent
such expense is in the form of a cash payment, the amount of cash actually paid
by Susquehanna Media to Susquehanna Pfaltzgraff for the purpose of funding share
allocations in the ESOP; provided, that such amount shall be limited to the
lesser of (i) the amount of such cash payment and (ii) the amount of cash
received by Susquehanna Media from Susquehanna Pfaltzgraff within two business
days of any such payment as repayment of principal and interest on the ESOP
Loan; plus (2) to the
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extent such expense funding share allocations under the ESOP is a non-cash
expense, the amount of such non-cash expense.
"ESOP Loan" means the $116.9 million loan made by Susquehanna Media to
Susquehanna Pfaltzgraff Co. on or about the Issue Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Transactions" means (1) agreements in existence on or prior to
the Issue Date, (2) the ESOP Loan, (3) payments of management fees by
Susquehanna Media to Susquehanna Pfaltzgraff in an amount not to exceed 4.0% of
the consolidated net revenues of Susquehanna Media, (4) payments by Susquehanna
Media to Susquehanna Pfaltzgraff pursuant to any tax sharing agreement, (5)
payments to Susquehanna Pfaltzgraff constituting reimbursements of actual
out-of-pocket expenses reasonably incurred on behalf of Susquehanna Media and
its Restricted Subsidiaries in the ordinary course of their businesses and (6)
the annual cash payment from Susquehanna Media to Susquehanna Pfaltzgraff for
the purpose of funding share allocations in the ESOP.
"GAAP" means generally accepted accounting principles in the United States
as in effect as of the Issue Date.
"Guarantee" means any guarantee of the Notes, on a senior subordinated
basis, by a Restricted Subsidiary of Susquehanna Media that may be issued in
accordance with the covenant "Guarantees of Certain Indebtedness."
"Guarantor" means any Restricted Subsidiary of Susquehanna Media that in
the future executes a supplemental indenture in which such Restricted Subsidiary
agrees to be bound by the terms of the Indenture as a Guarantor; provided that
any Person constituting a Guarantor as described above shall cease to constitute
a Guarantor when its respective Guarantee is released in accordance with the
terms thereof.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Indebtedness" means, with respect to any Person on any date of
determination:
(1) all indebtedness of such Person for borrowed money;
(2) all indebtedness of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(3) all indebtedness of such Person for capitalized lease obligations;
(4) all indebtedness of such Person upon notes payable and drafts
accepted representing extensions of credit of such Person;
(5) all indebtedness of such Person for all or any part of the
deferred purchase price of property or services which purchase price is (a)
due more than six months (or a longer period of up to one year, if such
terms are available from suppliers in the ordinary course of business) from
the date of incurrence of the obligation in respect thereof or (b)
evidenced by a note or similar written instrument;
(6) all indebtedness secured by any lien on any property or asset
owned or held by that Person;
(7) all guarantees of such Person in respect of Indebtedness of other
Persons; and
(8) all Disqualified Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Stock being equal to the
greater of its voluntary or involuntary
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liquidation preference and its maximum fixed repurchase price, but
excluding accrued dividends, if any.
Indebtedness will not include trade payables and accrued liabilities incurred in
the ordinary course of business for the purchase of goods or services which are
not secured by a lien other than a lien permitted pursuant to clause (2) of the
definition of Permitted Liens and obligations under interest rate protection
agreements.
"Investment" in any Person means any advance, loan or other extension of
credit or capital contribution to, or any purchase, redemption or acquisition of
capital stock, indebtedness or other similar instruments issued by, such Person.
"Issue Date" means the date on which the Notes are originally issued.
"Net Available Cash" means, with respect to any Asset Sale, payments in
cash or cash equivalents received therefrom net of bona fide direct costs of
sale, including:
(1) income taxes reasonably estimated to be actually payable as a
result of such Asset Sale within two years of the date of such Asset Sale;
(2) payment of any Indebtedness that is secured by a lien on the stock
or assets in question and that is required to be repaid as a result of such
Asset Sale;
(3) out-of-pocket expenses and fees relating to such Asset Sale; and
(4) any portion of cash proceeds which Susquehanna Media determines in
good faith should be reserved for post-closing adjustments or liabilities
relating to the Asset Sale retained by Susquehanna Media or any of its
Restricted Subsidiaries.
Additionally, in connection with any Asset Sale of Susquehanna Cable and
its Subsidiaries, Net Available Cash will be reduced by that amount required to
be paid to holders or former holders of minority equity interests in Susquehanna
Cable and its Subsidiaries who were not affiliates of the Company in connection
with any sale, purchase or redemption of those interests or pursuant to the
terms of any Indebtedness relating to the deferred payment of any applicable
purchase or redemption price.
"Net Cash Proceeds" means, with respect to any sale of capital stock, the
proceeds of such sale in the form of cash or cash equivalents net of fees,
discounts or commissions actually incurred in connection with such sale.
"Permitted Business" means any business conducted by Susquehanna Media and
its Restricted Subsidiaries on the Issue Date and any business ancillary or
complementary or reasonably related thereto.
"Permitted Holders" means (1) descendants, and spouses of descendants, of
Louis J. Appell, Sr. (including any trusts established for the benefit of one or
more such descendants or spouses of such descendants so long as (i) one or more
of such descendants or spouses of such descendants, (ii) officers of Susquehanna
Pfaltzgraff or its Subsidiaries, or (iii) the trust department of a financial
institution is a trustee of any such trusts) and (2) the ESOP so long as
executive officers of Susquehanna Pfaltzgraff constitute the majority of the
ESOP Committee under the ESOP.
"Permitted Indebtedness" means each of the following:
(1) Indebtedness of Susquehanna Media and its Restricted Subsidiaries
outstanding on the Issue Date reduced by the amount of any scheduled
amortization payments or mandatory prepayments when actually paid or
permanent reductions thereon;
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(2) Indebtedness under the Indenture with respect to the Notes offered
hereby, and under any Guarantees;
(3) Indebtedness under the Senior Credit Facility (including any
guarantees thereof); provided that the aggregate principal amount of
Indebtedness outstanding under the Senior Credit Facility at any one time
will not exceed (A) $450.0 million less (B) the amount of any permanent
reductions to the Senior Credit Facility made in accordance with
"-- Limitation on Sales of Assets and Subsidiary Stock."
(4) interest rate protection agreements of Susquehanna Media and its
Restricted Subsidiaries covering their Indebtedness;
(5) Indebtedness of a Restricted Subsidiary to Susquehanna Media or to
a Restricted Subsidiary so long as such Indebtedness is held by Susquehanna
Media or a Restricted Subsidiary, in each case subject to no lien (other
than liens under the Senior Credit Facility) held by a Person other than
Susquehanna Media or a Restricted Subsidiary;
(6) Indebtedness of Susquehanna Media to a Restricted Subsidiary so
long as such Indebtedness is held by a Restricted Subsidiary, subject to no
lien (other than liens under the Senior Credit Facility); provided that any
Indebtedness of Susquehanna Media to any Restricted Subsidiary is
subordinated to Susquehanna Media's obligations under the Notes;
(7) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
drawn against insufficient funds in the ordinary course of business;
(8) Indebtedness of Susquehanna Media or any of its Restricted
Subsidiaries represented by letters of credit in order to provide security
for workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business;
(9) Refinancing Indebtedness incurred in respect of Indebtedness
originally incurred pursuant to the second sentence under "Limitation on
Indebtedness" or pursuant to this clause (9) or clause (1) or (3) of this
definition;
(10) Indebtedness of Susquehanna Media or any Restricted Subsidiary
incurred in respect of performance and payment bonds (other than in respect
of Indebtedness);
(11) additional Indebtedness of Susquehanna Media and its Restricted
Subsidiaries not to exceed $10.0 million at any one time outstanding for
capitalized lease obligations or for purposes of financing the purchase
price or construction cost of equipment, fixtures or similar property;
(12) additional Indebtedness of Susquehanna Media and its Restricted
Subsidiaries not to exceed $15.0 million at any one time outstanding; and
(13) Indebtedness in the form of guarantees of other Indebtedness
permitted to be incurred by any Restricted Subsidiary under this
definition, so long as such guarantees do not increase the principal amount
of such Indebtedness.
"Permitted Investment" means any of the following:
(1) Investments by Susquehanna Media or any Restricted Subsidiary in
any Person that is a Restricted Subsidiary or will become immediately after
such Investment a Restricted Subsidiary that is wholly-owned by the Person
making such Investment or that will merge or consolidate into Susquehanna
Media or a Restricted Subsidiary;
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(2) Investments in Susquehanna Media by any Restricted Subsidiary;
provided that any Indebtedness evidencing such Investment is unsecured and
subordinated to Susquehanna Media's obligations under the Notes and the
Indenture;
(3) the purchase or redemption by Susquehanna Media or any Restricted
Subsidiary of any minority equity interests in any Restricted Subsidiary.
(4) Investments in cash and cash equivalents;
(5) loans and advances to employees and officers of Susquehanna Media
and its Subsidiaries in the ordinary course of business;
(6) interest rate protection agreements entered into in the ordinary
course of Susquehanna Media's or its Restricted Subsidiaries' businesses;
(7) sales on credit by Susquehanna Media or any Restricted Subsidiary
in the ordinary course of business;
(8) Investments in securities of trade creditors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers;
(9) consideration other than cash or cash equivalents received by
Susquehanna Media or its Restricted Subsidiaries in connection with an
Asset Sale made in compliance with the "Limitation on Sales of Assets and
Subsidiary Stock" covenant;
(10) other Investments in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (10) since the date of the
Indenture, not to exceed $10.0 million in the aggregate; and
(11) the ESOP Loan.
"Permitted Liens" means any of the following:
(1) liens for taxes, assessments or governmental charges or claims
either (A) not delinquent or (B) contested in good faith by appropriate
proceedings and as to which Susquehanna Media or its Subsidiaries will have
set aside on its books such reserves as may be required pursuant to GAAP;
(2) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith;
(3) liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security;
(4) judgment liens not giving rise to an Event of Default so long as a
stay of execution has been entered or such lien is adequately bonded and
any appropriate legal proceedings which may have been duly initiated for
the review of such judgment will not have been finally terminated or the
period within which such proceedings may be initiated will not have
expired;
(5) easements, leases, subleases, rights-of-way zoning restrictions
and other similar charges or encumbrances in respect of real property not
interfering in any material respect with the ordinary conduct of the
business of Susquehanna Media or any of its subsidiaries;
(6) any interest or title of a lessor under any capitalized lease
obligation;
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(7) purchase money liens to finance property or assets of Susquehanna
Media or a Restricted Subsidiary acquired in the ordinary course of
business;
(8) liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(9) liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(10) liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements or appeal
or similar bonds of Susquehanna Media or a Restricted Subsidiary;
(11) liens securing Senior Indebtedness, including Indebtedness under
the Senior Credit Facility;
(12) liens existing on the Issue Date and liens to secure any
Refinancing Indebtedness which is incurred to refinance any Indebtedness
which has been secured by a lien permitted under the "Limitation on Liens"
covenant and which Indebtedness has been incurred in accordance with the
"Limitation on Indebtedness" covenant;
(13) liens securing Acquired Indebtedness incurred in accordance with
clause (2) of the "Limitation on Indebtedness" covenant; provided that (A)
such liens secured such Acquired Indebtedness prior to the incurrence of
such Acquired Indebtedness by Susquehanna Media or a Restricted Subsidiary
and were not granted in connection with the incurrence of such Acquired
Indebtedness by Susquehanna Media or a Restricted Subsidiary and (B) such
liens do not extend to or cover any property or assets of Susquehanna Media
or any Restricted Subsidiary other than the property or assets that secured
the Acquired Indebtedness prior to the time such Indebtedness became
Acquired Indebtedness of Susquehanna Media or a Restricted Subsidiary and
are no more favorable to the lienholders than the liens securing the
Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness
by Susquehanna Media or a Restricted Subsidiary; and
(14) liens securing Indebtedness incurred in connection with the
purchase or redemption of minority equity interests in any Restricted
Subsidiary, so long as such liens (A) are in favor of the holder of the
equity interests being purchased or redeemed and (B) encumber only those
equity interests purchased or redeemed.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Public Equity Offering" means an underwritten primary public offering of
any class of common stock of Susquehanna Media or any of its subsidiaries
pursuant to an effective registration statement under the Securities Act.
"Public Market" means any time after (A) an underwritten Public Equity
Offering of Susquehanna Media or any of its subsidiaries has been consummated
and (B) at least 10% of the total issued and outstanding common stock of
Susquehanna Media or such subsidiary has been distributed by means of an
effective registration statement under the Securities Act or sales pursuant to
Rule 144 under the Securities Act.
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"Refinancing Indebtedness" means any Indebtedness of Susquehanna Media or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to refinance other Indebtedness of Susquehanna Media or any of
its Restricted Subsidiaries; provided that:
(1) the principal amount of such Refinancing Indebtedness does not
exceed the principal amount of the Indebtedness so refinanced;
(2) such Refinancing Indebtedness has a weighted average life to
maturity equal to or greater than the weighted average life to maturity of
the Indebtedness being refinanced;
(3) if the Indebtedness being refinanced is subordinated in right of
payment to the Notes, such Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and is subordinated in right of
payment to, the Notes on terms at least as favorable to the Holders of
Notes as those relating to the Indebtedness being refinanced; and
(4) such Indebtedness is incurred either by Susquehanna Media or by
the Restricted Subsidiary of Susquehanna Media that is the obligor on the
Indebtedness being refinanced.
"Restricted Payment" means, with respect to any Person:
(1) the declaration or payment of any dividends or any other
distributions in respect of its capital stock or similar payment to the
holders of its capital stock other than (A) dividends or distributions
payable solely in its capital stock (other than Disqualified Stock) and (B)
dividends or distributions payable solely to Susquehanna Media or a
Restricted Subsidiary;
(2) the redemption or acquisition of any capital stock of Susquehanna
Media or any Restricted Subsidiary held by any Person (other than a
Permitted Investment and other than redemptions in which the redemption
price is payable solely in capital stock (other than Disqualified Stock));
(3) the redemption or other acquisition prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment of any Subordinated
Obligations; or
(4) the making of any Investment in any Person (other than a Permitted
Investment).
"Restricted Subsidiary" means any subsidiary of Susquehanna Media that is
not an Unrestricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means the Credit Agreement dated as of May 12,
1999 among Susquehanna Media, the lenders who are or may become a party thereto
and First Union National Bank ("FUNB"), as administrative agent, pursuant to
which certain financial institutions agreed to make loans and issue letters of
credit, together with the pledges, guarantees and other documents related
thereto, as such agreements may be amended or modified, refinanced, supplemented
or restated from time to time, including any agreement increasing the amount,
extending the maturity of, refinancing or otherwise restructuring all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders.
"Senior Indebtedness" means, with respect to any Person,
(1) Indebtedness (which for this purpose shall include letters of
credit and interest rate hedging agreements and other types of credit
referred to in the Senior Credit Facility) of such Person, whether
outstanding on the Issue Date or thereafter incurred; and
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(2) accrued and unpaid interest and fees and other obligations
(including interest and fees and other obligations accruing after
commencement of an insolvency or liquidation proceeding) in respect of
(A) indebtedness of such Person for money borrowed, letters of
credit and interest rate hedging agreements and other types of credit
referred to in the Senior Credit Facility; and
(B) indebtedness evidenced by notes or other similar instruments
for the payment of which such Person is responsible or liable;
unless, in the instrument evidencing any of the obligations referred to in
clauses (1) or (2) or pursuant to which any such obligations are outstanding, it
is provided that such obligations are subordinate in right of payment to the
Notes.
Notwithstanding the foregoing, Senior Indebtedness shall not include:
(1) any obligation of such Person to any of its subsidiaries;
(2) any liability for federal, state, local or other taxes owed or
owing by such Person;
(3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities);
(4) any Indebtedness of such Person (and any accrued and unpaid
interest in respect thereof) which is subordinate or junior in any respect
to any other Indebtedness or other obligation of such Person (other than
Indebtedness incurred in connection with the purchase or redemption of
minority equity interests in any Restricted Subsidiary from non-affiliates
of the Company); or
(5) that portion of any Indebtedness which at the time of incurrence
is incurred in violation of the "Limitation on Indebtedness" covenant.
"Subordinated Obligation" means any Indebtedness of Susquehanna Media or a
Restricted Subsidiary (whether outstanding on the Issue Date or thereafter
incurred) which is subordinate in right of payment to the Notes or any
Guarantees that may be issued.
"Subsidiary," with respect to any Person, means (1) any corporation of
which the outstanding capital stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person, or (2) any
other Person of which at least a majority of the voting interests under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Susquehanna Media" means Susquehanna Media Co., a Delaware corporation.
"Unrestricted Subsidiary" means (1) any subsidiary of Susquehanna Media
that at the time of determination will be designated an Unrestricted Subsidiary
by the board of directors of Susquehanna Media in the manner provided below and
(2) any subsidiary of an Unrestricted Subsidiary. The board of directors of
Susquehanna Media may designate any subsidiary of Susquehanna Media to be an
Unrestricted Subsidiary unless such subsidiary or any of its subsidiaries owns
any capital stock or Indebtedness of, or holds any lien on any property of,
Susquehanna Media or any other subsidiary of Susquehanna Media that is not a
subsidiary of the subsidiary to be so designated; provided, however, that (A)
either (i) the subsidiary to be so designated has total assets of $1,000 or less
or (ii) if such subsidiary has assets greater than $1,000, such designation
would be permitted under the covenant described under "-- Limitation on
Restricted Payments" and (B) such subsidiary to be so designated and each of its
subsidiaries has not at the time of such designation, and does not thereafter,
incur any Indebtedness pursuant to which the lender has recourse to any of the
assets or properties of Susquehanna Media or any of its Restricted Subsidiaries.
The board of directors may designate any
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Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation (X) Susquehanna Media could
incur $1.00 of additional Indebtedness pursuant to the second sentence under
"-- Certain Covenants -- Limitation on Indebtedness" and (Y) no Default will
exist.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain material U.S. federal
income tax consequences of the purchase, ownership and disposition of notes by
corporate and individual investors that acquire notes at original issuance for
cash at their face value. This discussion does not address the tax consequences
to subsequent purchasers of notes and is limited to investors who hold notes as
capital assets. Furthermore, this discussion does not address all aspects of
U.S. federal income taxation that may be applicable to investors in light of
their particular circumstances or to investors subject to special treatment
under U.S. federal income tax law (including, without limitation, certain
financial institutions, insurance companies, tax-exempt entities, dealers in
securities, persons that acquire notes as part of a straddle, hedge, conversion
transaction or other integrated investment or persons whose functional currency
is not the U.S. dollar), nor does it address the U.S. federal income tax
consequences to any investors that are trusts, estates or partnerships (or other
pass-through entities) or any beneficiaries, partners or members thereof. This
discussion is based on provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), United States Treasury Department ("Treasury") regulations
promulgated thereunder, and administrative and judicial interpretations thereof,
all as in effect on the date hereof and all of which are subject to change,
possibly with retroactive effect. This discussion does not describe any tax
consequences arising under U.S. federal gift and estate taxes (except to the
limited extent set forth below under "U.S. Taxation of Non-U.S. Holders") or
under the tax laws of any state, local or foreign jurisdiction.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE NOTES, INCLUDING THE APPLICABILITY OF ANY FEDERAL ESTATE OR
GIFT TAX LAWS, ANY STATE, LOCAL OR FOREIGN TAX LAWS, ANY CHANGES IN APPLICABLE
TAX LAWS AND ANY PENDING OR PROPOSED LEGISLATION OR REGULATIONS.
U.S. TAXATION OF U.S. HOLDERS
As used herein, the term "U.S. Holder" means a holder of a note that is,
for United States federal income tax purposes, (i) an individual citizen or
resident (as defined in Section 7701(b)(1) of the Code) of the United States, or
(ii) a corporation created or organized in or under the laws of the United
States or of any political subdivision thereof, and the term "Non-U.S. Holder"
means an individual or corporate holder of a note that is not a U.S. Holder.
PAYMENTS OF INTEREST
Stated interest payable on the notes generally will be included in the
gross income of a U.S. Holder as ordinary interest income at the time accrued or
received, in accordance with such U.S. Holder's method of accounting for U.S.
federal income tax purposes.
DISPOSITION OF THE NOTES
Upon the sale, exchange, redemption, retirement at maturity or other
disposition of a note (any of the foregoing being a "Disposition"), a U.S.
Holder generally will recognize capital gain or loss equal to the difference
between the amount realized by such U.S. Holder (except to the extent such
amount is attributable to accrued interest, which will be treated as ordinary
interest income) and such U.S. Holder's adjusted tax basis in the note. Such
capital gain or loss generally will be long-term capital gain or loss if the
holding period for the note exceeds one year at the time of the Disposition.
Individual taxpayers may be taxed at reduced rates of federal income tax in
respect of long-term capital gains realized on a Disposition of notes (e.g.,
generally, long-term capital gain recognized by an individual U.S. Holder would
be subject to a maximum tax rate of 20.0%). Prospective investors should consult
their own tax advisors regarding the tax consequences of realizing long-term
capital gains.
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The exchange of a certificated note for an interest in a global note, the
exchange of a note for an exchange note in the registered exchange offer, and
the exchange of a new note for the unredeemed portion of an original note
partially redeemed with the proceeds of one or more Public Equity Offerings
pursuant to the terms of the Indenture, will not constitute a "significant
modification" of the note for U.S. federal income tax purposes and, accordingly,
the certificated note, exchange note or new note received (as the case may be)
would be treated as a continuation of the original note in the hands of such
U.S. Holder. As a result, there would be no material U.S. federal income tax
consequences to a U.S. Holder who exchanges a certificated note for an interest
in a global note, exchanges a note for an exchange note in the registered
exchange offer, or exchanges the unredeemed portion of an original note for a
new note as part of a partial redemption of notes with the proceeds of one or
more Public Equity Offerings.
U.S. TAXATION OF NON-U.S. HOLDERS
PAYMENTS OF INTEREST
In general, payments of interest received by a Non-U.S. Holder will not be
subject to U.S. federal income tax (including the withholding tax imposed on
certain foreign investors, the "U.S. Withholding Tax"), provided that (i) the
Non-U.S. Holder (a) does not actually or constructively own 10.0% or more of the
total combined voting power of all classes of our stock entitled to vote, (b) is
not a controlled foreign corporation that is related to us actually or
constructively through stock ownership and (c) provides, under penalties of
perjury (either directly or through a financial institution that holds the note
on behalf of the Non-U.S. Holder and that holds customers' securities in the
ordinary course of its trade or business), us or our agent with the Non-U.S.
Holder's (or, if different, the beneficial owner's) name and address and
certifies, under penalties of perjury, that it is not a United States person (as
defined by Section 7701(a)(30) of the Code), or (ii) the Non-U.S. Holder is
entitled to the benefits of an income tax treaty under which the interest is
exempt from such tax and the Non-U.S. Holder complies with certain certification
and reporting requirements. In addition, payments of interest received by a
Non-U.S. Holder will not be subject to U.S. Withholding Tax if the interest
received on the note is effectively connected with the conduct by the Non-U.S.
Holder of a trade or business within the United States and the Non-U.S. Holder
complies with certain certification and reporting requirements. Payments of
interest received by a Non-U.S. Holder that are not exempt from U.S. Withholding
Tax as described above will be subject to such withholding tax at the rate of
30.0% of the gross amount of such payment (subject to reduction under an
applicable income tax treaty if applicable certification and reporting
requirements are met).
In October 1997, the Treasury issued final regulations (the "New
Regulations") that provide alternative methods of satisfying the beneficial
ownership certification requirements described above. The New Regulations are
effective January 1, 2000, although valid withholding certificates held on
December 31, 1999 will remain valid until the earlier of December 31, 2000 or
the expiration date of the certificate under the current rules. Non-U.S. Holders
should consult their own tax advisors concerning the application of the New
Regulations to an investment in the Notes.
DISPOSITION OF THE NOTES
A Non-U.S. Holder generally will not be subject to U.S. federal income tax
(and generally no tax will be withheld) with respect to gain realized on the
Disposition of a note, unless (i) the gain is effectively connected with a U.S.
trade or business conducted by the Non-U.S. Holder or (ii) the Non-U.S. Holder
is an individual who is present in the United States for 183 or more days during
the taxable year of the Disposition and certain other requirements are
satisfied. In addition, an exchange of a certificated note for an interest in a
global note, an exchange of a note for an exchange note in the registered
exchange offer, or an exchange of the unredeemed portion of an original note for
a new note as part of a partial redemption of notes with the proceeds of one or
more Public
107
<PAGE> 111
Equity Offerings will not constitute a taxable exchange of the note for Non-U.S.
Holders. See "U.S. Taxation of U.S. Holders -- Disposition of the Notes."
EFFECTIVELY CONNECTED INCOME
If interest and other payments received by a Non-U.S. Holder with respect
to the notes (including proceeds from the Disposition of the notes) are
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business within the United States (or the Non-U.S. Holder is otherwise subject
to U.S. federal income taxation on a net basis with respect to such Holder's
ownership of the Notes), such Non-U.S. Holder will generally be subject to the
rules described above under "U.S. Taxation of U.S. Holders" (subject to possible
modification provided under an applicable income tax treaty). Such Non-U.S.
Holder also may be subject to the U.S. "branch profits tax" if such Holder is a
corporation.
U.S. FEDERAL ESTATE TAXES
A note beneficially owned by an individual who is a Non-U.S. Holder at the
time of his or her death generally will not be subject to U.S. federal estate
tax as a result of such death if (i) the Non-U.S. Holder does not actually or
constructively own 10.0% or more of the total combined voting power of all our
classes of stock entitled to vote and (ii) interest payments with respect to the
note would not have been, if received at the time of such individual's death,
effectively connected with the conduct of a U.S. trade or business.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Certain individual U.S. Holders may be subject to backup withholding at a
rate of 31.0% on payments of principal, premium and interest on, and the
proceeds of the Disposition of, the notes. In general, backup withholding only
will be imposed on an individual U.S. Holder if he or she (i) fails to furnish a
taxpayer identification number ("TIN"), which would be his or her social
security number, (ii) furnishes an incorrect TIN, (iii) is notified by the IRS
that he or she has failed to report payments of interest or dividends or (iv)
under certain circumstances, fails to certify, under penalty of perjury, that he
or she (a) has furnished a correct TIN and (b) has not been notified by the IRS
that he or she is subject to backup withholding tax for failure to report
interest or dividend payments. In addition, such payments of principal and
interest to U.S. Holders will generally be subject to information reporting.
Backup withholding generally will not apply to payments made to a Non-U.S.
Holder of a Note who provides the certification described under "U.S. Taxation
of Non-U.S. Holders -- Payments of Interest" or otherwise establishes an
exemption from backup withholding. Payments by a U.S. office of a broker of the
proceeds of a Disposition of the notes generally will be subject to backup
withholding at a rate of 31.0% unless the Non-U.S. Holder certifies that it is a
Non-U.S. Holder under penalties of perjury or otherwise establishes an
exemption.
The amount of any backup withholding imposed on a payment to a Holder will
be allowed as a credit against such Holder's U.S. federal income tax liability
and may entitle such Holder to a refund, provided the required information is
furnished to the IRS. The New Regulations change certain of the rules relating
to backup withholding and information reporting. Holders should consult their
own tax advisors regarding the application to them of backup withholding and
information reporting.
108
<PAGE> 112
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange notes received in
exchange for outstanding notes where such outstanding notes were acquired as a
result of market-making activities or other trading activities. Susquehanna
Media has agreed that, starting on the expiration date and ending on the close
of business one year after the expiration date, it will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until , 1999, all dealers
effecting transactions in the exchange notes may be required to deliver a
prospectus.
Susquehanna Media will not receive any proceeds from the issuance of the
exchange notes offered hereby or any sale of exchange notes by broker-dealers.
Exchange notes received by broker-dealers for their own account pursuant to the
exchange offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the exchange notes or a combination of such methods of resale, at
market prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such exchange notes. Any
broker-dealer that resells exchange notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit from any
such resale of exchange notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the expiration date, Susquehanna Media will
promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. Susquehanna Media has agreed to pay all expenses
incident to the exchange offer (including the expenses of one counsel for the
holders of the outstanding notes) other than dealers' and brokers' discounts,
commissions and counsel fees and will indemnify the holders of the outstanding
notes (including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the exchange notes offered by this prospectus will be
passed upon for us by Hunton & Williams, Charlotte, North Carolina.
EXPERTS
The consolidated financial statements as of December 31, 1998 and 1997 and
for each of the three years in the period ended December 31, 1998, included in
this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
109
<PAGE> 113
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Income Statements.............................. F-4
Consolidated Statements of Stockholders' Equity (Deficit)... F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 114
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Susquehanna Media Co.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, stockholders' equity (deficit), and
of cash flows present fairly, in all material respects, the financial position
of Susquehanna Media Co. and Subsidiaries (Company) at December 31, 1998 and
1997, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 15, the accompanying consolidated financial statements
have been restated.
PricewaterhouseCoopers LLP
One South Market Square
Harrisburg, Pennsylvania
February 8, 1999, except for
Notes 8 and 13 for which the
date is March 24, 1999 and
Note 14 for which the date is
April 22, 1999
F-2
<PAGE> 115
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1998 1997
---------- ----------
(RESTATED) (RESTATED)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents................................. $ 1,942 $ --
Accounts receivable, less allowance for doubtful accounts
of $1,259 in 1998 and $1,120 in 1997................... 32,324 29,070
Deferred income taxes (Note 4)............................ 262 214
Other current assets...................................... 4,223 5,217
-------- --------
Total Current Assets.............................. 38,751 34,501
-------- --------
Property, Plant and Equipment, at cost
Land...................................................... 3,586 3,533
Buildings and improvements................................ 9,498 6,032
Equipment................................................. 151,169 131,400
Construction-in-progress.................................. 19,470 15,233
-------- --------
183,723 156,198
Accumulated depreciation and amortization................. 84,179 73,834
-------- --------
99,544 82,364
-------- --------
Intangible Assets, net (Notes 2, 3 and 5)................... 201,643 204,927
-------- --------
Investments and Other Assets (Notes 2, 3 and 6)............. 15,203 11,684
-------- --------
$355,141 $333,476
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Cash overdrafts........................................... $ -- $ 279
Accounts payable.......................................... 10,115 10,364
Current portion of long-term debt (Note 3)................ 12,054 12,600
Accrued interest.......................................... 1,691 2,587
Accrued income taxes...................................... 890 3,675
Other accrued expenses.................................... 8,350 8,245
-------- --------
Total Current Liabilities......................... 33,100 37,750
-------- --------
Long-term Debt (Note 3)..................................... 260,722 252,900
-------- --------
Deferred Compensation Liability............................. 776 1,186
-------- --------
Deferred Income Taxes (Note 4).............................. 34,119 31,130
-------- --------
Minority Interests.......................................... 17,223 12,805
-------- --------
Stockholders' Equity (Deficit) (Notes 3 and 7)
Preferred stock -- voting, 7% cumulative with par value of
$100, authorized 110,000 shares, 70,499.22 and
97,408.71 issued and outstanding in 1998 and 1997,
respectively........................................... 7,050 9,740
Common stock -- voting, $1 par value, authorized 1,100,000
shares, 1,100,000 shares issued and outstanding........ 1,100 1,100
Retained earnings (accumulated deficit)................... 1,051 (13,135)
-------- --------
Total Stockholders' Equity (Deficit).............. 9,201 (2,295)
-------- --------
$355,141 $333,476
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 116
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1998 1997 1996
---------- ---------- ----------
(RESTATED) (RESTATED) (RESTATED)
<S> <C> <C> <C>
Revenues
Radio.................................................... $151,170 $131,438 $116,300
Cable.................................................... 70,641 65,122 55,791
Other.................................................... 1,616 539 85
-------- -------- --------
Total revenues................................... 223,427 197,099 172,176
======== ======== ========
Operating Expenses
Operating and programming................................ 72,903 65,754 57,800
Selling.................................................. 36,675 32,139 28,281
General and administrative............................... 40,317 36,752 34,773
Depreciation and amortization............................ 22,329 19,744 14,531
-------- -------- --------
Total operating expenses......................... 172,224 154,389 135,385
-------- -------- --------
Operating Income........................................... 51,203 42,710 36,791
-------- -------- --------
Other Income (Expense):
Interest, net............................................ (20,506) (18,890) (13,797)
Gain on sale of assets (Note 2).......................... 1,748 9,451 21,768
Other income............................................. 334 426 1,177
-------- -------- --------
Income Before Income Taxes and Minority Interests.......... 32,779 33,697 45,939
Provision for Income Taxes (Note 4)........................ 14,523 14,033 20,305
-------- -------- --------
Income Before Minority Interests........................... 18,256 19,664 25,634
Minority Interests......................................... (4,304) (3,070) (4,111)
-------- -------- --------
Net Income................................................. 13,952 16,594 21,523
Preferred Dividends Declared............................... (635) (682) (682)
-------- -------- --------
Net Income Available for Common Shares..................... $ 13,317 $ 15,912 $ 20,841
======== ======== ========
Basic Net Income Per Share................................. $ 12.11 $ 14.47 $ 18.95
======== ======== ========
Diluted Net Income Per Share............................... $ 11.31 $ 13.50 $ 18.29
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 117
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED
PREFERRED STOCK COMMON STOCK EARNINGS STOCKHOLDERS'
---------------- ---------------- (ACCUMULATED EQUITY
SHARES AMOUNTS SHARES AMOUNTS DEFICIT) (DEFICIT)
------ ------- ------ ------- ------------ -------------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996............... 97 $ 9,740 1,100 $1,100 $(51,654) $(40,814)
Net income........................... 21,523 21,523
Preferred dividends declared......... (682) (682)
Adjustment of minority interest
value............................. 1,781 1,781
--- ------- ----- ------ -------- --------
Balance, January 1, 1997............... 97 9,740 1,100 1,100 (29,032) (18,192)
--- ------- ----- ------ -------- --------
Net income........................... 16,594 16,594
Preferred dividends declared......... (682) (682)
Adjustment of minority interest
value............................. (15) (15)
--- ------- ----- ------ -------- --------
Balance, December 31, 1997............. 97 9,740 1,100 1,100 (13,135) (2,295)
--- ------- ----- ------ -------- --------
Net income........................... 13,952 13,952
Preferred dividends declared......... (635) (635)
Repurchase of preferred stock........ (27) (2,690) (2,690)
Adjustment of minority interest
value............................. 869 869
--- ------- ----- ------ -------- --------
Balance, December 31, 1998............. 70 $ 7,050 1,100 $1,100 $ 1,051 $ 9,201
=== ======= ===== ====== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 118
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
(RESTATED) (RESTATED) (RESTATED)
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income............................................... $ 13,952 $ 16,594 $ 21,523
Adjustments to reconcile net income to net cash:
Depreciation and amortization......................... 22,329 19,744 14,531
Deferred income taxes................................. 2,938 1,300 11,496
Minority interest..................................... 4,304 3,070 4,111
Equity in earnings of investees....................... 534 281 (522)
Imputed deferred compensation......................... 200 318 678
Deferred financing amortization....................... 791 703 522
Gain on sale of assets................................ (1,748) (9,451) (21,768)
Changes in assets and liabilities:
Increase in accounts receivable, net.................. (2,550) (3,140) (4,803)
Decrease (increase) in other current assets........... 209 (637) (1,052)
Increase (decrease) in accounts payable............... (526) 1,157 2,878
Increase (decrease) in accrued interest............... (896) 1,345 (470)
Increase (decrease) in accrued income taxes........... (2,784) 3,362 (5,039)
Increase (decrease) in other accrued expenses......... 90 1,701 (374)
-------- -------- --------
Net cash provided by operating activities........ 36,843 36,347 21,711
-------- -------- --------
Cash Flows from Investing Activities
Purchase of property, plant and equipment, net........... (29,592) (22,610) (12,073)
Purchase of radio assets................................. (7,970) (68,649) (24,600)
Proceeds from sale of radio stations..................... -- 26,523 --
Acquisition of HCI, Inc.................................. -- (1,500) (13,705)
Proceeds related to sale of cable assets................. 3,203 -- --
Purchase of cable assets................................. (2,161) (1,160) (30,994)
Increase in investments and other assets................. (3,250) (3,000) (1,166)
Other.................................................... 928 (3) 950
-------- -------- --------
Net cash used by investing activities............ (38,842) (70,399) (81,588)
-------- -------- --------
Cash Flows from Financing Activities
Increase (decrease) in revolving credit borrowing........ 49,700 (53,600) 72,500
Proceeds from long-term debt............................. -- 100,000 --
Repayments of long-term debt............................. (42,600) (11,250) (9,600)
Repurchase of preferred stock............................ (2,690) -- --
Payment of deferred financing costs...................... -- (1,088) (1,169)
Payments of preferred dividends.......................... (635) (682) (682)
Sale (repurchase) of non-voting subsidiary common
stock................................................. 444 (325) 201
Increase (decrease) in cash overdrafts................... (278) 279 (655)
-------- -------- --------
Net cash provided by financing activities........ 3,941 33,334 60,595
-------- -------- --------
Net Increase (Decrease) in Cash and Cash Equivalents....... 1,942 (718) 718
Cash and Cash Equivalents, January 1,...................... -- 718 --
-------- -------- --------
Cash and Cash Equivalents, December 31,.................... $ 1,942 $ -- $ 718
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 119
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations -- Susquehanna Media Co. ("Media") and its
subsidiaries, Susquehanna Radio Corp. ("SRC"), Susquehanna Cable Co. ("SCC"),
Susquehanna Data Services, Inc. ("BlazeNet"), Susquehanna Fiber Systems, Inc.
and Media PCS Ventures, Inc. (collectively, the "Company"), are primarily in the
businesses of radio broadcasting, cable television services, Internet services
and other communications related services. Susquehanna Fiber Systems, Inc. is a
50% general partner in Hyperion Susquehanna Telecommunications, a competitive
access provider.
Through its subsidiaries, the Company operates radio stations in major U.S.
markets and cable television systems in Pennsylvania, Maine, Mississippi,
Illinois and Indiana. Internet services are provided in Pennsylvania, Maryland
and Mississippi.
Principles of Consolidation -- The consolidated financial statements
include the accounts of Media and its subsidiaries. All significant intercompany
accounts and transactions are eliminated. Media is a wholly-owned subsidiary of
Susquehanna Pfaltzgraff Co. (the "Parent").
Use of Estimates in the Preparation of Financial Statements -- The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents -- The Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
Credit Risk -- The Company's accounts receivable are largely from consumers
and consumer businesses whose ability to pay is subject to changes in general
economic conditions.
Media's revenues were concentrated in the following radio markets:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
San Francisco................................... 23% 21% 20%
Dallas-Fort Worth............................... 13% 14% 12%
</TABLE>
Property, Plant and Equipment -- These assets are stated at cost.
Depreciation and amortization are computed on the straight-line method for
financial statement purposes based on the following estimated useful lives:
<TABLE>
<S> <C>
Buildings and improvements.................... 10 to 40 years
Equipment..................................... 3 to 20 years
</TABLE>
Depreciation expense was approximately $12.6 million, $10.8 million and
$8.3 million for the years ended December 31, 1998, 1997 and 1996, respectively.
Asset additions and major renovations are capitalized and depreciated over
their estimated useful lives. Costs of maintenance, repairs and minor
renovations are charged against income. Gains or losses on dispositions are
credited to or charged against income and the related costs and accumulated
depreciation are removed from the balance sheet.
Impairment of Long-Lived Assets -- When events or changes in circumstances
indicate that the carrying value of an asset or group of assets may be impaired,
the estimated fair market value or the
F-7
<PAGE> 120
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
estimated future undiscounted pretax cash flows from the affected asset(s) are
compared with carrying value to determine if an impairment loss must be
recorded.
Disclosures About Fair Value of Financial Instruments -- Financial
instruments include cash and cash equivalents, investments and long-term debt.
The fair value of these financial instruments approximate their carrying values.
Investments and Other Assets -- The Company's investments of less than 20%
in other entities are reported on the cost method of accounting. Investments in
other entities which are at least 20% owned are reported on the equity method.
Net Income Per Share -- Basic net income per share excludes dilution and is
computed by dividing consolidated net income available for common shareholders
by the weighted-average number of common shares outstanding for the period (1.1
million shares for the years ended December 31, 1998, 1997 and 1996). Diluted
net income per share reflects the potential dilution that could occur if SRC
common stock options were exercised, resulting in the issuance of additional SRC
common stock that would then share in its earnings.
Revenues -- Radio revenues have been reported net of agency commissions.
Agency commissions for the fiscal years ended December 31, 1998, 1997 and 1996
were $20.2 million, $17.1 million and $14.9 million, respectively. Revenues are
recognized in the periods the services are provided.
Interest -- Interest paid was $21.8 million, $16.9 million and $13.9
million for the years ended December 31, 1998, 1997 and 1996, respectively.
Interest relating to construction of buildings and equipment is capitalized as
part of the related asset's cost. Approximately $1.2 million, $118 thousand and
$202 thousand of interest was capitalized during the years ended December 31,
1998, 1997 and 1996, respectively.
Deferred financing costs are included in Investments and Other Assets and
are being amortized straight-line over the repayment period of the related debt.
Income Taxes -- Income taxes are based on the liability method of
accounting. Deferred income taxes reflects the future tax consequences of
temporary differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year-end. Changes in enacted tax rates are
reflected in the tax provision as they occur.
2. ACQUISITIONS, EXCHANGE AND DISPOSITIONS
On January 29, 1999, a Cable subsidiary purchased assets serving
approximately 17,000 cable subscribers in the Hanover, Pennsylvania area for
$33.4 million cash. Investments and Other Assets included a $1 million escrowed
purchase deposit at December 31, 1998.
On November 30, 1998, a cable subsidiary exchanged assets serving
approximately 6,600 subscribers in Newcastle, Maine, Warren, Maine, and New
London, New Hampshire for assets serving approximately 4,500 subscribers in
Woolwich, Harpswell, and Freeport, Maine and $3.2 million cash. A gain of $3.1
million was recognized on the transaction, which was accounted for as a sale and
purchase.
On June 15, 1998, Susquehanna Radio Corp. purchased the assets of KXIL-FM
and KDSX-AM in North Dallas for $3.6 million and $2.6 million, respectively.
On June 2, 1998, Susquehanna Radio Corp purchased the assets of WABZ-FM in
Albermarle, North Carolina for $1.7 million. The Company will not operate the
station, but rather will attempt to
F-8
<PAGE> 121
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
relocate the signal into the Charlotte, North Carolina market and ultimately
sell or swap the station to facilitate a move of WHMA to the Atlanta market. The
purchase price has been included in Investments and Other Assets.
On October 8, 1997, Susquehanna Radio Corp. purchased the assets of radio
station KTCT-AM (formerly KOFY-AM) in the San Francisco, California area for
$14.5 million.
On September 30, 1997, a cable subsidiary acquired assets serving
approximately 970 subscribers in Warren, Maine for $1.2 million cash. Assets
serving approximately 1,700 subscribers in New London and Wilmot, New Hampshire
were acquired for $2.2 million as of February 1, 1998.
On July 14, 1997, a radio subsidiary purchased the assets of WGLD-FM in
Indianapolis, Indiana for $4.3 million cash.
On July 7, 1997, Susquehanna Radio Corp. purchased the assets of KSAN-FM in
San Francisco, California for $44.5 million cash.
Susquehanna Radio Corp. purchased the assets of WHMA-AM/FM, licensed to
Anniston, Alabama for $15.3 million on May 22, 1997. If the Company is permitted
to relocate the FM transmitting facilities within the next six years, the
WHMA-AM/FM purchase agreement provides for an additional payment to the sellers
of up to $20 million. It is not possible to determine whether relocation will be
approved or to estimate any additional cost at this time. Any payment would be
added to the cost basis of the station's Federal Communication Commissions
License.
In 1996, a radio subsidiary acquired a 49% interest in Hispanic Coalition,
Inc. ("HCI") for $1.5 million and agreed to construct a radio station for HCI in
exchange for a note. As part of the agreement, the subsidiary was granted an
option to purchase the remaining 51% interest for $4.3 million. In March 1997,
the remaining 51% interest was purchased. Costs incurred in this acquisition
were $1.5 million in 1997 and $13.7 million in 1996.
On June 10, 1997, Susquehanna Radio Corp. exchanged its Norfolk, Virginia
radio stations and $5 million cash for WVAE-FM in Cincinnati, Ohio. This
transaction was treated as an exchange, and accordingly, the cost basis of the
assets received were increased by $5 million. The $5 million was allocated to
the FCC license.
Susquehanna Radio Corp. purchased the assets of WVCL-FM in Norfolk,
Virginia on October 17, 1996 and the assets of KTCK-AM in Dallas, Texas on
October 18, 1996 for $6.5 million and $13.8 million cash, respectively.
On April 2, 1996, a cable subsidiary serving approximately 15,600
subscribers in East Providence, Rhode Island exchanged its assets and $13.6
million cash for assets serving approximately 24,800 subscribers in the
Williamsport, Pennsylvania area. A gain of $21.6 million was recognized on the
transaction, which was accounted for as a sale and purchase. In December 1996,
Susquehanna Cable Co. purchased assets serving 11,200 subscribers in nearby
Avis/Hughesville, Pennsylvania for $17.4 million cash.
All radio and cable properties acquired during the years ended December 31,
1998, 1997 and 1996 have been accounted for as purchases. The results of their
operations have been included in the
F-9
<PAGE> 122
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidated Income Statements since acquisition. The Company has allocated the
costs of purchased assets, at their fair market values, as follows (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---------- -------- ----------
(RESTATED) (RESTATED)
<S> <C> <C> <C>
Radio
Property, plant and equipment............. $ 630 $ 1,648 $ 3,657
Investments and other assets (WABZ-FM).... 1,703 -- --
Intangible assets......................... 5,637 98,501 20,943
------ -------- -------
Total............................. $7,970 $100,149 $24,600
====== ======== =======
Cable and Other
Property, plant and equipment............. $1,800 $ -- $12,157
Intangible assets......................... 2,315 1,160 40,465
------ -------- -------
Total............................. $4,115 $ 1,160 $52,622
====== ======== =======
</TABLE>
For disclosures related to the Consolidated Statements of Cash Flows,
acquired intangibles and property, plant and equipment of $2.0 million in 1998
and $21.6 million in 1996 were non-cash items.
In December 1998, a cable subsidiary completed the rebuild of its
distribution system in Williamsport, Pennsylvania. Assets replaced in the
rebuild were retired. Retirement of these assets resulted in a $1.3 million
charge against 1998 operations. The rebuild of the Mount Wolf, Pennsylvania area
resulted in a similar charge of $0.7 million against 1997 operations.
On May 22, 1997, a radio subsidiary purchased the assets of KBYA-FM,
licensed to Carson City, Nevada for $15.1 million. On November 26, 1997, the
radio subsidiary sold the assets of KBYA-FM for $15.9 million. A $0.7 million
gain, net of selling expenses, was recognized.
On April 18, 1997, Susquehanna Radio Corp. sold the assets of WARM-AM and
WMGS-FM for $10.6 million cash. A gain of $9.8 million was recognized on the
sale.
3. LONG-TERM DEBT
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Long-term debt includes (in thousands):
Term Loan................................................. $100,000 $100,000
Reducing Revolver Commitment.............................. 126,100 76,400
6.375% Note............................................... -- 30,000
8.61% Senior Notes, Series A.............................. 19,500 22,000
8.41% Senior Notes, Series B.............................. 19,500 22,000
11.15% Senior Notes, Series C............................. 7,500 12,500
8% Promissory Note........................................ -- 1,500
8.5% Note................................................. -- 1,100
Other..................................................... 176 --
-------- --------
272,776 265,500
Less amounts payable within one year...................... 12,054 12,600
-------- --------
$260,722 $252,900
======== ========
</TABLE>
F-10
<PAGE> 123
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On July 17, 1997, the Company's collateralized Reducing Revolver Commitment
was increased to $225 million. The commitment begins reducing in 2000 and
matures in 2005. Under terms of the amended and restated loan agreement, the
Company utilized a $100 million Term Loan commitment which matures in 2004 and
2005. Both the Reducing Revolver and Term Loan bear interest priced at the prime
rate or a LIBOR rate plus applicable margin based on certain ratios. The
interest rate on the Term Loan was 6.98% and 7.49% at December 31, 1998 and
1997, respectively. The interest rate on the Reducing Revolver Commitment was
6.74% and 7.25% at December 31, 1998 and 1997, respectively. Deferred financing
expenses of approximately $1.1 million were incurred in connection with the
increased commitment.
The 6.375% Note was repaid in January 1998 by using the Reducing Revolver
Commitment. The $30 million was classified as long-term at December 31, 1997.
For disclosures related to the Consolidated Statements of Cash Flows, the Note
and corresponding cost of assets acquired are treated as non-cash.
The 8.61% Series A and 8.41% Series B Senior Notes with insurance companies
began amortizing in 1996 and mature in 2002. The interest rates on the Senior
Notes are fixed to maturity.
The 11.15% Series C Senior Notes which are held by an insurance company
mature through 2000.
The Company has commenced efforts to replace its existing bank and
insurance company debt with a new bank credit facility and a debt offering. This
refinancing will result in the recognition of an extraordinary loss of
approximately $3.2 million (net of income taxes) in 1999.
The banks and insurance companies have collateralized interests in certain
FCC licenses and stock pledges from shareholders of the Company and its
subsidiaries. The Company has agreed to maintain debt coverage and financial
ratios at prescribed levels. The Company has further agreed to restrict payment
of common stock dividends, investment transactions with affiliates, ownership
changes, sale of assets and issuance of additional debt.
The Company uses derivative financial instruments solely to limit interest
rate exposure on its Reducing Revolver Commitment. Financial instruments are not
used for trading purposes. During 1997, the Company entered into three interest
rate collar agreements expiring in 2001 with an aggregate notional amount of $75
million. The effect of these agreements limits the interest rate exposure on the
notional amount to between 7.5% and 8%, plus an applicable margin. No income or
loss was recognized related to these instruments.
The non-current portion of long-term debt matures in the following years
(in thousands):
<TABLE>
<S> <C>
2000.................. $ 10,561
2001.................. $ 12,061
2002.................. $ 12,000
2003.................. $ 45,100
2004.................. $104,000
2005.................. $ 77,000
</TABLE>
F-11
<PAGE> 124
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. INCOME TAXES
The provision for income taxes is summarized as follows for the year ended
December 31 (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
(RESTATED) (RESTATED) (RESTATED)
<S> <C> <C> <C>
Current
Federal............................ $ 8,637 $ 9,756 $ 6,615
State.............................. 2,946 2,977 2,194
------- ------- -------
Total current.............. 11,583 12,733 8,809
------- ------- -------
Deferred
Federal............................ 2,671 1,073 10,016
State.............................. 269 227 1,480
------- ------- -------
Total deferred............. 2,940 1,300 11,496
------- ------- -------
Provision for Income Taxes........... $14,523 $14,033 $20,305
======= ======= =======
</TABLE>
The Company is included in the consolidated federal income tax return of
its Parent. The Company's tax provision is computed on a separate return basis.
Losses utilized in the consolidated return may reduce the Company's tax payments
on a pro rata basis.
Cash paid for income taxes was $14.5 million, $10.4 million and $13.8
million in 1998, 1997 and 1996, respectively.
Reconciliations of the difference between the U.S. statutory income tax
rate and the annual effective book income tax rate follow:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
U.S. statutory rate................................ 35.0% 35.0% 35.0%
State income taxes, net of federal income tax
benefit.......................................... 6.4 6.2 5.2
Non-deductible amortization and expense............ 1.5 1.2 1.7
Other, net......................................... 1.4 (0.8) 2.3
---- ---- ----
Annual effective book income tax rate.............. 44.3% 41.6% 44.2%
==== ==== ====
</TABLE>
F-12
<PAGE> 125
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1998 and 1997, deferred tax assets and liabilities result
from the following temporary differences (in thousands):
<TABLE>
<CAPTION>
1998 1997
---------- ----------
(RESTATED) (RESTATED)
<S> <C> <C>
Deferred tax assets:
Allowance for bad debts....................... $ 86 $ 30
Investment in partnerships.................... 359 235
Self insurance................................ 159 161
Accruals not recognized for tax purposes...... 135 86
Stock option benefits......................... 343 513
Deferred revenue.............................. 733 649
Other assets.................................. 51 42
------- -------
Total deferred tax assets....................... 1,866 1,716
------- -------
Deferred tax liabilities:
Pension benefits.............................. 656 691
Book asset basis in excess of tax basis....... 9,668 8,867
Tax over book depreciation.................... 16,978 16,776
Tax over book amortization.................... 6,970 4,895
Investment in partnerships.................... 1,448 1,309
Other liabilities............................. 3 94
------- -------
Total deferred tax liabilities.................. 35,723 32,632
------- -------
Net deferred tax liabilities.................... $33,857 $30,916
======= =======
</TABLE>
5. INTANGIBLE ASSETS
Intangible assets at cost, net of accumulated amortization, are comprised
of the following (in thousands):
<TABLE>
<CAPTION>
1998 1997
---------- ----------
(RESTATED) (RESTATED)
<S> <C> <C>
Federal Communications Commission licenses..... $ 146,656 $143,039
Cable franchise values......................... 42,562 46,977
Goodwill....................................... 6,577 9,003
Favorable leases............................... 1,833 1,964
Cable subscriber lists......................... 1,549 1,887
Other intangible assets........................ 2,466 2,057
---------- --------
$ 201,643 $204,927
========== ========
</TABLE>
Cable franchise values and cable subscriber lists are being amortized
through 2011 and 2003, respectively. Favorable leases and covenants
not-to-compete are amortized according to the life of the agreements. Federal
Communications Commission (FCC) licenses and goodwill are amortized over 40
years. Intangible assets are amortized using the straight-line method over
periods ranging from 5 to 8 years. Amortization for the years ended December 31,
1998, 1997 and 1996 was $10.5 million, $9.6 million and $6.7 million,
respectively.
F-13
<PAGE> 126
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. INVESTMENTS AND OTHER ASSETS
KNBR, Inc., a subsidiary, is a limited partner in San Francisco Baseball
Associates L.P. In July 1998, KNBR, Inc. entered into a rights agreement that
extends radio station KNBR-AM's right to broadcast Giants' baseball games
through the 2004 baseball season. The agreement requires annual rights payments
ranging from $4.8 million in 1999 to $6 million in 2004. An $800 thousand
contract fee was paid at signing. KNBR, Inc. expensed rights payments and
contract fees of $4.7 million, $4.6 million and $4.5 million in 1998, 1997 and
1996, respectively. The investment in San Francisco Baseball Associates L.P. and
prepaid rights fees was $3.2 million at December 31, 1998 and $2.5 million at
December 31, 1997.
A subsidiary is a 50% general partner in Hyperion Susquehanna
Telecommunications ("Hyperion"), a competitive access provider partnership.
Capital contributions totaling $2.3 million and $3 million were made during the
years ended December 31, 1998 and 1997, respectively. The investment's carrying
value was $4.1 million at December 31, 1998 and $2.5 million at December 31,
1997.
Unamortized deferred financing expenses were $2.8 million at December 31,
1998 and $3.6 million at December 31, 1997.
7. STOCKHOLDERS' EQUITY (DEFICIT)
On October 21, 1998, the Company repurchased and retired $2.7 million of
preferred stock at par. The Company had offered to repurchase up to $3 million
of preferred stock at par.
Certain minority interests are valued using a contractual formula, which
differs from a pro-rata valuation. Accordingly, the contractual value is used to
determine the liability and any adjustment to the pro-rata amount is charged or
credited to accumulated deficit. Other minority interest expense recognized in
the income statement is also adjusted for subsidiaries with a stockholders'
deficit.
SRC maintains an Employee Stock Plan to compensate certain key employees
who may purchase SRC Class "B" non voting common stock at a formula value based
on stockholders' equity and earnings. Formula value is considered fair value at
date of grant. With each share purchased, participants receive options to
purchase two additional shares at the same formula value, which is fair value at
date of grant. Options expire ten years and one month after the grant date.
Total shares and options offered may not exceed 400,000 shares. Options are not
subject to repurchase. Shares are subject to repurchase by SRC, generally at
formula value, which is determined annually in accordance with the Plan
Agreement. The Plan's transaction year is April 1 through March 31. Although SRC
may modify, suspend or terminate the Plan at any time, previously offered
purchase rights or options are not subject to change. Stock sales and options
granted are accounted for in accordance with SFAS No. 123, "Accounting for
Stock-Based Compensation."
In 1998, SRC Class "B" non-voting common stock was split 4 for 1.
Outstanding options were also split 4 to 1. All stock and options for 1997 and
1996 have been restated to reflect the split.
F-14
<PAGE> 127
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Option activity in the Employee Stock Plan was as follows:
<TABLE>
<CAPTION>
SHARES OPTION PRICE
------- --------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995....................... 145,120 $ .84 - $ 3.45
Granted.......................................... 26,136 $ 9.54
Exercised........................................ (29,040) $ .84 - $ 9.54
-------
Balance at December 31, 1996....................... 142,216 $1.26 - $ 9.54
Granted.......................................... 20,688 $14.24
Exercised........................................ (68,040) $1.26 - $14.24
-------
Balance at December 31, 1997....................... 94,864 $1.26 - $14.24
Granted.......................................... 22,440 $18.82
Exercised........................................ (44,944) $1.26 - $14.24
-------
Balance at December 31, 1998....................... 72,360 $1.26 - $18.82
=======
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Total compensation expense (in thousands)........... $203 $318 $678
Risk free rate...................................... 5.73% 6.88% 6.35%
</TABLE>
An expected duration of six years, no expected dividends and no volatility
were used as factors in determining the compensation expense recognized for
options granted and not immediately exercised.
On April 2, 1997, SRC repurchased 29,820 shares of Class "B" non-voting
common stock at the formula share price of $18.82 from its former president. The
approximately $499,000 excess of formula share price over issue cost was charged
to minority interests.
8. NET INCOME PER SHARE
The Company computes basic and diluted net income per share in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings per Share".
The following table provides a reconciliation of the computation from basic to
diluted net income per share (in thousands, except for per share data):
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
(RESTATED) (RESTATED) (RESTATED)
<S> <C> <C> <C>
Net income........................... $ 13,952 $ 16,594 $21,523
Preferred dividends declared......... (635) (682) (682)
--------- --------- -------
Basic net income available for common
shares............................. 13,317 15,912 20,841
Dilutive effect of potential issuance
of SRC common stock................ (877) (1,062) (717)
--------- --------- -------
Diluted net income available for
common shares...................... $ 12,440 $ 14,850 $20,124
========= ========= =======
Basic and diluted weighted-average
shares............................. 1,100 1,100 1,100
Basic net income per share........... $ 12.11 $ 14.47 $ 18.95
Diluted net income per share......... $ 11.31 $ 13.50 $ 18.29
</TABLE>
F-15
<PAGE> 128
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. EMPLOYEE BENEFITS
Full-time employees of the Company and its subsidiaries are covered by the
Susquehanna Pfaltzgraff Co. Pension Plan (the Plan), a noncontributory qualified
defined benefit pension plan. Benefits under the Plan are based on employees'
years of service and earnings over part or all of their careers. The Company's
funding policy is to make contributions, as required by various regulations, not
to exceed the maximum amounts deductible for federal income tax purposes. Plan
assets, primarily listed bonds and stocks, are held by independent trustees.
The funded status of the Plan at December 31, follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Benefit obligation, beginning of year............ $26,503 $22,902
Service cost................................... 1,838 1,538
Interest cost.................................. 1,798 1,599
Actuarial losses............................... 2,621 1,206
Benefits paid.................................. (884) (742)
------- -------
Benefit obligation, end of year.................. 31,876 26,503
------- -------
Fair value of plan assets, beginning of year..... 32,247 25,440
Actual return on plan assets................... 3,627 6,249
Employer contributions......................... 740 1,300
Benefits paid.................................. (884) (742)
------- -------
Fair value of plan assets, end of year........... 35,730 32,247
------- -------
Excess of fair value of plan assets over benefit
obligation at end of year...................... 3,854 5,744
Unrecognized net actuarial gain................ (3,386) (4,773)
Unrecognized prior service costs............... 1,276 1,423
Unrecognized transition obligation............. 115 128
------- -------
Prepaid pension cost at December 31,............. $ 1,859 $ 2,522
======= =======
</TABLE>
The Plan had net periodic benefit cost for the years ended December 31, as
follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Service cost.......................... $ 1,838 $ 1,538 $ 1,815
Interest cost......................... 1,798 1,599 1,538
Expected return on plan assets........ (2,393) (2,038) (1,716)
Amortization of net asset............. 13 13 13
Amortization of prior service cost.... 147 146 147
Amortization of loss.................. -- -- 94
------- ------- -------
Net periodic benefit cost for Plan.... $ 1,403 $ 1,258 $ 1,891
======= ======= =======
</TABLE>
The weighted average discount rate used in determining the actuarial
present value of projected benefit obligations was 6.5% for 1998 and 7% 1997.
The assumed rate of increase in future compensation levels was 5.0% for both
1998 and 1997. The expected long-term rate of return on Plan assets was 9% for
both 1998 and 1997.
F-16
<PAGE> 129
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company was allocated $1 million, $0.8 million and $1.0 million pension
cost for the years ended December 31, 1998, 1997 and 1996, respectively.
Included in the Company's other current assets are prepaid pension costs of
$411 thousand and $586 thousand at December 31, 1998 and 1997, respectively.
The Parent also sponsors a defined contribution (401k) plan which covers
all full-time employees. The plan matches 75% of the first 2% of salary
contributed by a participant. The Company contributed approximately $446
thousand, $407 thousand and $255 thousand to the plan for the years ended
December 31, 1998, 1997 and 1996, respectively.
10. LEASE COMMITMENTS
Rental expenses for operating leases were $4.5 million, $3.5 million and
$2.6 million for the years ended December 31, 1998, 1997 and 1996, respectively.
Annual aggregate minimum rental commitments under non-cancelable operating
leases are as follows (in thousands):
<TABLE>
<S> <C> <C> <C>
1999..................... $3,425 2002..................... $ 2,452
2000..................... $2,932 2003..................... $ 2,452
2001..................... $2,643 2004 and beyond.......... $12,649
</TABLE>
11. RELATED PARTIES
The Company purchases management services, office space and administrative
services from related parties, primarily its Parent. Included in general and
administrative expenses for the years ended December 31, are charges for (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Management fees.................................. $2,722 $2,566 $3,916
Accounting and tax services...................... 589 498 479
Human resources.................................. 863 824 734
Treasury......................................... 270 262 175
Occupancy, administrative services and vehicle
rentals........................................ 815 608 565
------ ------ ------
$5,259 $4,758 $5,869
====== ====== ======
</TABLE>
Expenses are allocated based on the Parent's best estimates of proportional
or incremental cost, whichever is deemed more appropriate in the circumstances.
In management's opinion, expenses shown in the financial statements approximate
expenses on a stand alone basis.
12. CONTINGENCIES AND COMMITMENT
An unrelated cable television Multiple System Operator (MSO) owns a 15.0%
interest in Susquehanna Cable Co. and a 17.75% interest in each of Susquehanna
Cable Co.'s cable television operating subsidiaries. Susquehanna Cable Co.
receives favorable program rates due to the MSO's ownership.
The MSO may offer to purchase the Company's interest in its cable
television operations. The Company must either accept or reject an offer within
sixty days. If the Company rejects the offer, the
F-17
<PAGE> 130
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MSO may require the Company to repurchase the MSO's holdings at the offer price
plus a fee equal to 3% of the MSO's $25 million investment, compounded annually
from 1993.
If the MSO does not offer to purchase the Company's cable television
operations by December 1, 2000, the Company may elect to pay the MSO a fee equal
to 1 1/2% of the MSO's $25 million investment compounded annually from 1993 and
avoid any further fee obligation. No liability has been recorded due to the
uncertainty of future events.
The Company is involved in litigation and administrative proceedings
primarily arising in the normal course of its business. In the opinion of
management, the Company's recovery, if any, or the Company's liability, if any,
under any pending litigation or administrative proceeding would not materially
affect its financial condition or operations.
13. SEGMENTS
Effective January 1, 1997, the Company adopted SFAS No. 131, Disclosures
About Segments of an Enterprise and Related Information, which changes the
method in which the Company reports information about its operating segments.
The Company's five business units have separate management teams and
infrastructures that offer different products and services. The business units
have been aggregated into three reportable segments: Radio, Cable and Other.
Other includes internet services and miscellaneous revenues.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
performance based on operating income of the respective business units.
Segment information for the years ended December 31, 1998, 1997 and 1996
was as follows (in thousands):
<TABLE>
<CAPTION>
RADIO CABLE OTHER CONSOLIDATED
-------- ---------- ------- ------------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
1998
Operating income (loss)........................ $ 34,406 $ 16,945 $ (148) $ 51,203
Interest expense, net.......................... 8,210 9,390 2,906 20,506
Depreciation and amortization.................. 7,281 14,609 439 22,329
Income (loss) before income taxes and minority
interests.................................... 27,062 9,447 (3,730) 32,779
Provision (benefit) for income taxes........... 11,928 3,907 (1,312) 14,523
Identifiable assets............................ 211,842 135,927 7,372 355,141
Capital expenditures........................... 7,727 20,737 1,128 29,592
1997
Operating income (loss)........................ $ 27,991 $ 15,161 $ (442) $ 42,710
Interest expense, net.......................... 5,852 10,626 2,412 18,890
Depreciation and amortization.................. 5,542 13,949 253 19,744
Income (loss) before income taxes and minority
interests.................................... 33,207 3,848 (3,358) 33,697
Provision (benefit) for income taxes........... 13,385 1,789 (1,141) 14,033
Identifiable assets............................ 201,527 128,433 3,516 333,476
Capital expenditures........................... 6,994 12,667 2,949 22,610
</TABLE>
F-18
<PAGE> 131
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
RADIO CABLE OTHER CONSOLIDATED
-------- ---------- ------- ------------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
1996
Operating income (loss)........................ $ 25,740 $ 12,261 $(1,210) $ 36,791
Interest expense, net.......................... 2,141 9,536 2,120 13,797
Depreciation and amortization.................. 3,308 11,151 72 14,531
Income (loss) before income taxes and minority
interests.................................... 24,311 25,056 (3,428) 45,939
Provision (benefit) for income taxes........... 10,959 10,441 (1,095) 20,305
Identifiable assets............................ 112,663 121,676 4,289 238,628
Capital expenditures........................... 4,880 5,533 1,660 12,073
</TABLE>
14. SUBSEQUENT EVENTS
On March 19, 1999, the Parent's Board of Directors approved a cessation of
benefit accruals under its defined benefit pension plans effective April 30,
1999. Based on preliminary information, the curtailment will not have a material
effect on the Company's financial position or its results of operations.
On April 16, 1999, the Company prepaid all outstanding indebtedness under
its senior notes using borrowings under the existing senior credit facility.
On April 22, 1999, a three year "Put Right" was granted to the MSO holding
a minority interest in SCC. After an eighteen month period beginning with the
closing of a new senior credit facility, the MSO may require the Company to
repurchase its ownership interests at a price determined by independent
appraisers. This "Put Right" may not be exercised if exercise would create a
default under certain debt agreements. In exchange for its ownership interests,
the MSO would receive cash up to the amount of borrowing availability under the
new senior credit facility and a note for the balance. The note would be
subordinate to the senior credit facility. If the "Put Right" is exercised, the
Company may, at its sole discretion and in lieu of acquiring the MSO's ownership
interests, sell SCC and pay the MSO its pro rata share of net proceeds.
15. RESTATEMENT
In connection with the Company's submission of the S-4 Exchange
Registration Statement related to its Senior Subordinated Notes which were
issued May 12, 1999, financial statements for the years ended December 31, 1996,
1997 and 1998 were restated to account for the effects of cable system
acquisitions in 1996 and 1998 as required by EITF Issue No. 86-29, "Nonmonetary
Transactions: Magnitude of Boot and the Exceptions to the Use of Fair Value".
The 1996 transaction involved an exchange of cable assets in Rhode Island and
cash for cable assets in Williamsport, Pennsylvania. In the 1998 transaction, a
subsidiary gave cable assets in Maine and New Hampshire and received cable
assets in Maine and cash. The transactions were originally recorded as asset
exchanges. The transactions have been restated at fair value and accordingly,
additional gains of $21.6 million in 1996 and $1.9 million in 1998 were
recognized. The fair value adjustments were also added to the book basis of the
assets acquired. The adjustments are being amortized over the related assets'
remaining lives.
F-19
<PAGE> 132
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Net income for the years ended December 31, 1996, 1997 and 1998 were
adjusted as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1996 1997 1998
-------- -------- -------
<S> <C> <C> <C>
Pretax gain on transactions................................. $ 21,628 $ -- $ 1,954
Depreciation and amortization............................... (1,314) (1,752) (1,766)
Income taxes................................................ (8,329) 718 (77)
Minority interests.......................................... (2,127) 184 (19)
-------- -------- -------
Total............................................. $ 9,858 $ (850) $ 92
======== ======== =======
</TABLE>
The adjustments effect on per share data for the years ended December 31,
1996, 1997 and 1998 were as follows:
<TABLE>
<CAPTION>
1996 1997 1998
-------- -------- -------
<S> <C> <C> <C>
Basic net income per share.................................. $ 8.96 $ (.77) $ .08
======== ======== =======
Diluted net income per share................................ $ 8.96 $ (.77) $ .08
======== ======== =======
</TABLE>
The adjustments' effect on Stockholders Equity (Deficit) at December 31,
1996, 1997 and 1998 were as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1996 1997 1998
-------- -------- -------
<S> <C> <C> <C>
As originally reported...................................... $(30,176) $(13,216) $(1,861)
Adjustments................................................. 11,984 10,951 11,062
As restated................................................. $(18,192) $ (2,295) $ 9,201
======== ======== =======
</TABLE>
F-20
<PAGE> 133
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1999
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Condensed Consolidated Balance Sheets....................... F-22
Condensed Consolidated Income Statements.................... F-23
Condensed Consolidated Statements of Cash Flows............. F-24
Notes to Condensed Consolidated Financial Statements........ F-25
</TABLE>
F-21
<PAGE> 134
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents................................. $ 1,413 $ 1,942
Accounts receivable, net.................................. 39,766 32,324
Deferred income taxes..................................... 177 262
Other current assets...................................... 4,442 4,223
-------- --------
Total Current Assets.............................. 45,798 38,751
Property, Plant and Equipment, net.......................... 112,905 99,544
Intangible Assets, net...................................... 220,852 201,643
Note receivable from Parent................................. 116,850 --
Investments and Other Assets................................ 23,149 15,203
-------- --------
$519,554 $355,141
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable.......................................... $ 10,888 $ 10,115
Current portion of long-term debt......................... 55 12,054
Accrued interest.......................................... 3,482 1,691
Accrued income taxes...................................... 1,575 890
Other accrued expenses.................................... 12,742 8,350
-------- --------
Total Current Liabilities......................... 28,742 33,100
-------- --------
Long-term Debt.............................................. 420,393 260,722
-------- --------
Deferred Compensation Liability............................. 807 776
-------- --------
Deferred Income Taxes....................................... 36,012 34,119
-------- --------
Minority Interests.......................................... 19,145 17,223
-------- --------
Stockholders' Equity
Preferred stock -- Voting, 7% cumulative with par value of
$100, authorized 110,000 shares, 70,449.22 issued and
outstanding............................................ 7,050 7,050
Common stock -- Voting, $1 par value, authorized 1,100,000
shares, 1,100,000 shares issued and outstanding........ 1,100 1,100
Retained Earnings......................................... 6,305 1,051
-------- --------
Total Stockholders' Equity........................ 14,455 9,201
-------- --------
$519,554 $355,141
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-22
<PAGE> 135
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------------
1999 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Revenues
Radio..................................................... $ 82,230 $ 70,701
Cable..................................................... 39,520 34,486
Other..................................................... 1,400 681
-------- --------
Total revenues.................................... 123,150 105,868
-------- --------
Operating Expenses
Operating and programming................................. 44,836 39,269
Selling................................................... 14,501 13,065
General and administrative................................ 22,890 19,058
Depreciation and amortization............................. 13,763 10,932
-------- --------
Total operating expenses.......................... 95,990 82,324
-------- --------
Operating Income............................................ 27,160 23,544
Other Income (Expense)
Interest expense.......................................... (12,006) (10,400)
Interest income on note from Parent....................... 941 --
Pension curtailment gain.................................. 2,299 --
Other..................................................... (76) (446)
-------- --------
Income Before Income Taxes Extraordinary Loss and Minority
Interests................................................. 18,318 12,698
Income Taxes................................................ 7,616 5,387
-------- --------
Income Before Extraordinary Loss and Minority Interests..... 10,702 7,311
Extraordinary Loss (related to early retirement of debt, net
of tax benefit)........................................... (3,316) --
-------- --------
Income Before Minority Interest............................. 7,386 7,311
Minority Interests.......................................... (1,362) (1,706)
-------- --------
Net Income.................................................. 6,024 5,605
Preferred Dividends Declared................................ (247) (341)
-------- --------
Net Income Available for Common Shares...................... $ 5,777 $ 5,264
======== ========
Basic Net Income Per Share
Income before extraordinary loss.......................... $8.26 $4.79
Extraordinary loss........................................ (3.01) --
-------- --------
$5.25 $4.79
======== ========
Basic Net Income Per Share
Income before extraordinary loss.......................... $7.66 $4.71
Extraordinary loss........................................ (2.96) --
-------- --------
$4.70 $4.71
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-23
<PAGE> 136
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash Flows from Operating Activities
Income before minority interests.......................... $ 7,386 $ 7,311
Adjustments to reconcile net income to net cash:
Depreciation and amortization.......................... 13,763 10,932
Deferred financing expense write-off................... 2,556 --
Deferred income taxes.................................. 1,978 907
Equity in earnings of investees........................ (54) 426
Imputed deferred compensation.......................... 53 107
Deferred financing amortization........................ 381 400
Curtailment gain....................................... (2,299) --
Changes in assets and liabilities:
Increase in accounts receivable, net................... (7,442) (3,144)
Decrease (increase) in other current assets............ (742) 410
Increase (decrease) in accounts payable................ 774 (2,176)
Increase (decrease) in accrued interest................ 1,791 (485)
Increase (decrease) in accrued income taxes............ 684 (1,232)
Increase (decrease) in other accrued expenses.......... 4,392 (24)
--------- --------
Net cash provided by operating activities............ 23,221 13,432
--------- --------
Cash Flows from Investing Activities
Loan to Susquehanna Pfaltzgraff Co. ...................... (116,850) --
Purchase of property, plant and equipment, net............ (12,788) (13,432)
Purchase of cable assets.................................. (32,400) (2,161)
Purchase of radio assets.................................. - (7,970)
Increase in investments, other assets and intangible
assets................................................. (219) (54)
Partnership capital contribution.......................... (1,400) (1,500)
Other..................................................... 200
--------- --------
Net cash used by investing activities................ (163,657) (24,917)
--------- --------
Cash Flows from Financing Activities
Increase in revolving credit borrowing.................... 70,300 14,500
Proceeds from long-term debt.............................. 350,000 --
Repayment of refinanced debt.............................. (272,600) --
Payment of deferred financing costs....................... (7,560) --
Payments of preferred dividends........................... (247) (341)
Repayment of long-term debt............................... -- (1,100)
Sale (repurchase) of non-voting subsidiary common stock... 14 385
Decrease in cash overdrafts............................... -- (279)
--------- --------
Net cash provided by financing activities............ 139,907 13,165
--------- --------
Net Increase (Decrease) in Cash and Cash Equivalents........ (529) 1,680
Cash and Cash Equivalents, January 1........................ 1,942 --
--------- --------
Cash and Cash Equivalents, June 30.......................... $ 1,413 $ 1,680
========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-24
<PAGE> 137
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements (the
"financial statements") include the accounts of Susquehanna Media Co. and all
its subsidiaries. All significant intercompany accounts and transactions have
been eliminated.
The balance sheet as of June 30, 1999 and the related statements of income
and cash flows for the six month periods ended June 30, 1999 and 1998, have been
prepared by the Company without audit. In the opinion of management, the
financial statements include all of the adjustments necessary for fair
presentation. All adjustments made were of a normal recurring nature. Interim
results are not necessarily indicative of results for a full year. These
financial statements should be read in conjunction with the audited financial
statements of the Company and the notes thereto for the year ended December 31,
1998.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. RECENT DEVELOPMENTS
Acquisition of Hanover Cable -- On January 29, 1999, a Cable subsidiary
purchased assets serving approximately 16,700 cable subscribers in the Hanover,
Pennsylvania area for $33.4 million cash. Pending completion of an acquisition
valuation, the purchase price has been equally allocated to property, plant and
equipment and intangible assets. Operating results for Hanover have been
included in the Company's results of operations since acquisition.
Financing Changes -- On April 16, 1999, the Company repaid its $46.5
million of insurance company notes with borrowings from its then existing senior
bank credit facility. Prepayment penalties of $2.9 million were incurred.
On May 12, 1999, the Company entered into a new $450 million senior credit
facility with a group of financial institutions which replaced its prior senior
bank credit facility. The new facility is comprised of a $250 million reducing
revolver maturing on June 30, 2007, a $100 million amortizing term loan A
maturing on June 30, 2007, and a $100 million amortizing term loan B maturing on
June 30, 2008.
Media simultaneously issued $150 million of 8.5% Senior Subordinated Notes
due 2009 at 99.75% of its face amount. Proceeds to Media totaled $145.5 million.
Employee Stock Ownership Plan (ESOP) -- On March 19, 1999, the Parent's
Board of Directors approved creation of an Employee Stock Ownership Plan (ESOP)
for Susquehanna Pfaltzgraff Co. Company employees participate in the ESOP.
Estimated ESOP expense of $2.5 million was recorded for the six months ended
June 30, 1999. On May 12, 1999, the Company made a $116.9 million twenty-year
loan to its Parent at a 6% interest rate. Principal and interest payments are
receivable annually in December. The loan proceeds were used to fund the ESOP.
On March 19, 1999, the Parent's Board of Directors approved a cessation of
benefit accruals under the Susquehanna Pfaltzgraff Co. Pension Plan effective
April 30, 1999. Based on an independent actuarial calculation, the Company has
been allocated a $2.3 million curtailment gain.
F-25
<PAGE> 138
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Negative pension expense recognized for the six months ended June 30, 1999 was
$0.2 million. Pension expense allocated for the six months ended June 30, 1998
was $0.7 million.
3. NET INCOME PER SHARE
The Company computes basic and diluted net income per share in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings per Share".
The following table provides a reconciliation of the computation from basic to
diluted net income per share (in thousands, except for per share data):
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Income before extraordinary loss............................ $9,340 $5,605
Extraordinary loss.......................................... (3,316) --
------ ------
Net income.................................................. 6,024 5,605
Preferred dividends declared................................ (247) (341)
------ ------
Basic net income available for common shares................ 5,777 5,264
Dilutive effect of potential issuance of SRC common stock... (603) (83)
------ ------
Dilutive net income available for common shares............. $5,174 $5,181
====== ======
Basic and diluted weighted-average shares................... 1,100 1,100
Basic net income per common share
Income before extraordinary loss.......................... $ 8.26 $ 4.79
Extraordinary loss.......................................... (3.01) --
------ ------
$ 5.25 4.79
====== ======
Diluted net income per common share
Income before extraordinary loss.......................... $ 7.66 $ 4.71
Extraordinary loss........................................ (2.96) --
------ ------
$ 4.70 $ 4.71
====== ======
</TABLE>
SRC refers to Susquehanna Radio Corp., a Company subsidiary.
4. SEGMENT INFORMATION
The Company's five business units have separate management teams and
infrastructures that offer different products and services. The business units
have been aggregated into three reportable segments: Radio, Cable and Other.
Segment information for the six months ended June 30, 1999 and 1998 was as
follows (in thousands):
<TABLE>
<CAPTION>
RADIO CABLE OTHER CONSOLIDATED
------- ---------- ------- ------------
<S> <C> <C> <C> <C>
1999
Operating income (loss).................. 19,709 7,164 287 27,160
Interest expense, net.................... 3,342 5,572 3,092 12,006
Depreciation and amortization............ 4,044 9,376 343 13,763
Income (loss) before income taxes,
minority interests and extraordinary
loss................................... 18,107 2,017 (1,806) 18,318
Provision (benefit) for income taxes..... 7,254 1,352 (990) 7,616
Identifiable assets...................... 217,697 171,944 129,913 519,554
Capital expenditures..................... 1,377 10,177 1,234 12,788
</TABLE>
F-26
<PAGE> 139
SUSQUEHANNA MEDIA CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
RADIO CABLE OTHER CONSOLIDATED
------- ---------- ------- ------------
<S> <C> <C> <C> <C>
1998
Operating income (loss).................. 15,665 7,928 (49) 23,544
Interest expense, net.................... 4,156 4,909 1,335 10,400
Depreciation and amortization............ 3,359 7,390 183 10,932
Income (loss) before income taxes and
minority interests..................... 11,470 3,154 (1,926) 12,698
Provision (benefit) for income taxes..... 4,649 1,499 (761) 5,387
Identifiable assets...................... 211,560 132,608 7,119 351,287
Capital expenditures..................... 2,935 9,544 953 13,432
</TABLE>
5. CONTINGENCIES AND COMMITMENTS
Susquehanna Radio Corp. purchased the assets of WHMA-AM/FM, licensed to
Anniston, Alabama for $15.3 million on May 22, 1997. If SRC is permitted to
relocate the FM transmitting facilities within six years of acquisition, the
purchase agreement provides for an additional payment to the sellers of up to
$20 million. It is not possible to determine whether relocation will be approved
or to estimate any additional cost at this time.
An unrelated cable television Multiple System Operator (MSO) owns a 14.9%
interest in Susquehanna Cable Co. and a 17.75% interest in each of Susquehanna
Cable Co.'s cable television operating subsidiaries. Susquehanna Cable Co.
receives a pass-through of the MSO's program rates plus a fee.
The MSO may offer to purchase the Company's interest in its cable
television operations. The Company must either accept or reject an offer within
sixty days. If the Company rejects the offer, the MSO may require the Company to
repurchase the MSO's holdings at the offer price plus a fee equal to 3% of the
MSO's $25 million investment, compounded annually from 1993.
If the MSO does not offer to purchase the Company's cable television
operations by May 28, 2000, the Company may elect to pay the MSO a fee equal to
1 1/2% of the MSO's $25 million investment compounded annually from 1993 and
avoid any further fee obligation. No liability has been recorded due to the
uncertainty of future events.
On April 22, 1999, the MSO was granted a three year "Put Right". After an
eighteen month holding period beginning May 12, 1999, the MSO may require the
Company to repurchase its ownership interest at a price to be determined by
independent appraisers. The "Put Right" could not be exercised if exercise would
create default under certain debt agreements. If the "Put Right" would be
exercised, the Company may, at its sole discretion and in lieu of acquiring the
MSO's ownership interests, sell Cable and pay the MSO its pro rata share of net
proceeds.
The Company is involved in litigation and administrative proceedings
arising in the normal course of its business. In the opinion of management, the
Company's recovery, if any, or the Company's liability, if any, under any
pending litigation or administrative proceeding would not materially affect its
financial condition or operations.
F-27
<PAGE> 140
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The by-laws of Susquehanna Media provide for the indemnification of
Susquehanna Media's directors and officers to the fullest extent permitted by
law. Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers or controlling persons of Susquehanna Media
pursuant to Susquehanna Media's by-laws and the Delaware General Corporation Law
(the "DGCL"), Susquehanna Media is aware that it is the opinion of the SEC that
such indemnification is against public policy as expressed in such Act and is
therefore unenforceable.
As permitted by the DGCL, Susquehanna Media's charter eliminates personal
liability of Susquehanna Media's directors to Susquehanna Media and its
stockholders for monetary damages for breaches of fiduciary duty except for (i)
any breach of the director's duty of loyalty to Susquehanna Media or its
shareholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) any transaction from
which the director derived an improper personal benefit; and (iv) acts covered
by Section 174 of the DGCL relating to unlawful dividends or distributions or
stock repurchases or redemptions. As a result of these provisions, Susquehanna
Media and its stockholders may be unable to obtain monetary damages from a
director for breach of his fiduciary duties.
Susquehanna Media's by-laws require Susquehanna Media to indemnify
directors and officers to the extent permitted under the DGCL. As permitted by
the DGCL, the by-laws provide for indemnification of the Company's directors and
officers against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by them in
connection with any action, suit or proceeding if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
Susquehanna Pfaltzgraff maintains insurance covering expenditures that may
be incurred in connection with the lawful indemnification of the Company's
directors and officers for their liabilities and expenses.
II-1
<PAGE> 141
ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
3.1* - Certificate of Incorporation of Susquehanna Media Co., as
amended
3.2* - By-laws of Susquehanna Media Co.
4.1* - Indenture for the 8 1/2% Senior Subordinated Notes due
2009, dated as of May 12, 1999, between Susquehanna Media
Co. and Chase Manhattan Trust Company, National
Association, as Trustee
4.2* - Form of Exchange Global Note for 8 1/2% Senior
Subordinated Note due 2009
4.3* - Form of Exchange Certificated Note for 8 1/2% Senior
Subordinated Note due 2009
5** - Opinion of Hunton & Williams regarding the legality of
the 8 1/2% Senior Subordinated Notes being registered
10.1** - $450 million syndicated credit facility arranged by First
Union Capital Markets Corp.
10.2** - Agreement dated November 6, 1992, by and among Lenfest
Communications, Inc., Susquehanna Cable Co. and certain
subsidiaries of Susquehanna Cable Co., as amended
10.3** - Management Agreement dated May 24, 1993 by and between
Susquehanna Pfaltzgraff Co. and Susquehanna Media Co.
12** - Computation of ratios of earnings to fixed charges
21** - Subsidiaries of Susquehanna Media Co.
23.1** - Consent of PricewaterhouseCoopers LLP
23.2** - Consent of Hunton & Williams (included in Exhibit 5)
24* - Power of attorney is contained on the signature page of
this Registration Statement
25** - Statement of the eligibility and qualification on Form
T-1 of Chase Manhattan Trust Company, National Association,
as Trustee under the Indenture
27*** - Financial Data Schedule
99.1** - Form of Letter of Transmittal
99.2** - Form Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.3** - Form of Letter to Clients
99.4** - Form of Notice of Guaranteed Delivery
</TABLE>
- ---------------
* Previously filed.
** Filed herewith.
*** To be filed by amendment.
ITEM 22. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total
dollar value of the securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to
II-2
<PAGE> 142
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
C. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt
of such request, and to send the incorporated documents by first class mail
or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of this Registration
Statement through the date of responding to the request.
D. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-3
<PAGE> 143
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of York, State of
Pennsylvania, on this 9th day of September, 1999.
SUSQUEHANNA MEDIA CO.
/s/ PETER P. BRUBAKER
--------------------------------------
Peter P. Brubaker,
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ LOUIS J. APPELL, JR. Chairman of the Board of September 9, 1999
- --------------------------------------------------- Directors
Louis J. Appell, Jr.
/s/ PETER P. BRUBAKER Director, Chief Executive September 9, 1999
- --------------------------------------------------- Officer and President
Peter P. Brubaker
/s/ DAVID E. KENNEDY Director, Vice President September 9, 1999
- ---------------------------------------------------
David E. Kennedy
/s/ CRAIG W. BREMER Director, Secretary and September 9, 1999
- --------------------------------------------------- General Counsel
Craig W. Bremer
/s/ WILLIAM H. SIMPSON Director September 9, 1999
- ---------------------------------------------------
William H. Simpson
/s/ JOHN L. FINLAYSON Director, Vice President September 9, 1999
- --------------------------------------------------- (and principal financial
John L. Finlayson and
accounting officer)
</TABLE>
II-4
<PAGE> 144
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
3.1* - Certificate of Incorporation of Susquehanna Media Co., as
amended
3.2* - By-laws of Susquehanna Media Co.
4.1* - Indenture for the 8 1/2% Senior Subordinated Notes due
2009, dated as of May 12, 1999, between Susquehanna Media
Co. and Chase Manhattan Trust Company, National
Association, as Trustee
4.2* - Form of Exchange Global Note for 8 1/2% Senior
Subordinated Note due 2009
4.3* - Form of Exchange Certificated Note for 8 1/2% Senior
Subordinated Note due 2009
5** - Opinion of Hunton & Williams regarding the legality of
the 8 1/2% Senior Subordinated Notes being registered
10.1** - $450 million syndicated credit facility arranged by First
Union Capital Markets Corp.
10.2** - Agreement dated November 6, 1992, by and among Lenfest
Communications, Inc., Susquehanna Cable Co. and certain
subsidiaries of Susquehanna Cable Co., as amended
10.3** - Management Agreement dated May 24, 1993 by and between
Susquehanna Pfaltzgraff Co. and Susquehanna Media Co.
12** - Computation of ratios of earnings to fixed charges
21** - Subsidiaries of Susquehanna Media Co.
23.1** - Consent of PricewaterhouseCoopers LLP
23.2** - Consent of Hunton & Williams (included in Exhibit 5)
24* - Power of attorney is contained on the signature page of
this Registration Statement
25** - Statement of the eligibility and qualification on Form
T-1 of Chase Manhattan Trust Company, National Association,
as Trustee under the Indenture
27*** - Financial Data Schedule
99.1** - Form of Letter of Transmittal
99.2** - Form Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.3** - Form of Letter to Clients
99.4** - Form of Notice of Guaranteed Delivery
</TABLE>
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* Previously filed.
** Filed herewith.
*** To be filed by amendment.
II-5
<PAGE> 1
EXHIBIT 5
[LETTERHEAD OF HUNTON & WILLIAMS]
September 9, 1999
Board of Directors
Susquehanna Media Co.
140 East Market Street
York, Pennsylvania 17401
Registration Statement on Form S-4 for Exchange of
Outstanding 8-1/2% Senior Subordinated Notes due 2009 for
Registered 8-1/2% Senior Subordinated Notes due 2009
Ladies and Gentlemen:
We are acting as special counsel for Susquehanna Media Co. (the
"Company") in connection with the registration of $150.0 million aggregate
principal amount of 8-1/2% Senior Subordinated Notes due 2009 (the "Exchange
Notes"). The Exchange Notes are to be issued by the Company in exchange for an
equal amount of unregistered 8-1/2% Senior Subordinated Notes due 2009 (the
"Outstanding Notes") issued on May 12, 1999 in a private placement pursuant to
Rule 144A under the Securities Act of 1933. The Outstanding Notes and Exchange
Notes are governed by an indenture between the Company and Chase Manhattan Trust
Company, National Association, as trustee ("Trustee"), dated May 12, 1999 (the
"Indenture"). The issuance of the Exchange Notes in exchange for the Outstanding
Notes is more fully described in the Registration Statement on Form S-4
(333-80523) (the "Registration Statement") initially filed with the Securities
and Exchange Commission (the "Commission") on June 11, 1999. In connection with
the filing of the Registration Statement, you have requested our opinion
concerning certain corporate matters.
In rendering the following opinions, we have relied, as to factual
matters, upon certificates of executive officers of the Company. We have assumed
the authenticity of all documents submitted to us as originals, the conformity
to originals of documents submitted as certified or photostatic copies and the
genuineness of signatures not witnessed by us.
We are not expressing an opinion on any laws other than the General
Corporation Laws of the State of Delaware, the laws of the State of New York and
the federal laws of the United States of America. Based upon the foregoing and
the further qualifications stated below, we are of the opinion that the Exchange
Notes have been duly authorized by all necessary corporate action of the Company
and, when executed by the Company, authenticated and delivered by the Trustee
and issued in accordance with the terms of the Indenture and as described in the
<PAGE> 2
Registration Statement, will constitute valid and legally binding obligations of
the Company, enforceable against the Company in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general application relating to or affecting the
enforcement of creditors' rights and to general equity principles.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement and to the references to us included
therein. In giving this consent, we do not admit that we are within the category
of persons whose consent is required by Section 7 of the Securities Act of 1933
or the rules and regulations promulgated thereunder by the Commission.
Very truly yours,
/s/ Hunton & Williams
HUNTON & WILLIAMS
<PAGE> 1
Exhibit 10.1
-------------------------------
CREDIT AGREEMENT
among
SUSQUEHANNA MEDIA CO.
THE LENDERS PARTY TO THIS LOAN AGREEMENT, and
FIRST UNION NATIONAL BANK, as Agent
----------------------------------
FIRST UNION CAPITAL MARKETS CORP., as Lead Arranger, Advisor and
Book Manager
----------------------------------
Dated as of May 12, 1999
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TABLE OF CONTENTS
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BACKGROUND OF AGREEMENT ........................................................................................ 1
ARTICLE 1 THE LOANS..................................................................................... 2
1.1 Revolving Credit Loans........................................................................ 2
1.1.1 Commitment to Make Revolving Loans................................................... 2
1.1.2 Available Commitment................................................................. 2
1.1.3 Voluntary Commitment Reductions...................................................... 2
1.1.4 Scheduled Commitment Reductions...................................................... 3
1.1.5 Commitment Reductions In Connection With Certain Asset Dispositions.................. 3
1.1.6 Relationship Between Scheduled Commitment Reductions and Other Commitment
Reductions........................................................................... 4
1.1.7 Prepayment In Connection With Commitment Reductions.................................. 4
1.1.8 Voluntary Prepayments................................................................ 4
1.2 Swing Loans................................................................................... 5
1.2.1 Swing Loan Advances.................................................................. 5
1.2.2 Terms of Swing Loan Borrowings....................................................... 5
1.2.3 Participation by RC Lenders.......................................................... 5
1.2.4 No Set-off, Etc...................................................................... 6
1.2.5 Certain Limitations.................................................................. 6
1.3 Term Loans.................................................................................... 7
1.3.1 Commitment for Term A Loan........................................................... 7
1.3.2 Commitment for Term B Loan........................................................... 7
1.3.3 Repayment of Term A Loan............................................................. 7
1.3.4 Repayment of Term B Loan............................................................. 8
1.3.5 Voluntary Prepayments................................................................ 9
1.3.6 Mandatory Prepayments in Connection With Asset Sales................................. 9
1.3.7 Relationship of Voluntary and Other Mandatory Prepayments to Scheduled Payments...... 9
1.4 Lenders' Obligations Several.................................................................. 9
1.5 Notes......................................................................................... 10
1.6 Borrowing Notice.............................................................................. 10
1.7 Fees to Lenders............................................................................... 11
1.7.1 Commitment Fees...................................................................... 11
1.7.2 Letter of Credit Fees and Fronting Fees.............................................. 12
1.7.3 Other Fees........................................................................... 12
1.8 Interest...................................................................................... 12
1.8.1 The Rates............................................................................ 12
1.8.3 Officers' Certificate................................................................ 14
1.8.4 LIBOR Election....................................................................... 15
1.8.5 Definition of Adjusted LIBOR......................................................... 16
1.8.6 Additional Costs, Unavailability, Etc................................................ 17
1.8.7 Source of Funds...................................................................... 18
1.8.8 Default Rate......................................................................... 19
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1.9 Purpose....................................................................................... 19
1.10 Additional Provisions concerning Prepayments and Failure to Borrow............................ 19
1.10.1 Interest on Amounts Prepaid.......................................................... 19
1.10.2 Breakage............................................................................. 19
1.10.3 Certain Presumptions Regarding Application of Prepayments............................ 20
1.11 Replacement of Lender......................................................................... 20
ARTICLE 2 MECHANICS OF PAYMENTS; TAX FORMS.............................................................. 20
2.1 Company Payment............................................................................... 20
2.2 Lender Required Payment....................................................................... 21
2.3 Company Required Payment...................................................................... 22
2.4 Tax Forms..................................................................................... 22
ARTICLE 3 LETTERS OF CREDIT............................................................................. 23
3.1 Letters of Credit............................................................................. 23
3.1.1 Commitment to Issue Letters of Credit................................................ 23
3.1.2 Limitation on Amount................................................................. 24
3.1.3 Obligations Absolute................................................................. 24
3.1.4 Reliance by Issuing Bank............................................................. 24
3.1.5 Fees................................................................................. 24
3.1.6 Participation by RC Lenders.......................................................... 25
3.1.7 Standard of Conduct.................................................................. 25
3.1.8 Cash Collateral Account.............................................................. 26
3.1.9 Obligations Secured.................................................................. 26
ISSUANCE OF LETTERS OF CREDIT................................................................................... 26
4.1 Conditions to Initial Funding................................................................. 26
4.1.1 Execution of this Agreement.......................................................... 26
4.1.2 The Notes............................................................................ 26
4.1.3 Security Agreement................................................................... 26
4.1.4 Guaranty and Suretyship Agreement.................................................... 27
4.1.5 Pledge Agreements.................................................................... 27
4.1.6 Subordination Agreements............................................................. 28
4.1.7 Trademark Collateral Agreement....................................................... 28
4.1.8 Repayment of Existing Indebtedness................................................... 28
4.1.9 Tax Sharing Agreement................................................................ 28
4.1.10 Management Agreement................................................................. 29
4.1.11 ESOP Sharing Agreement............................................................... 29
4.1.12 Lenfest Agreement.................................................................... 29
4.1.13 Senior Subordinated Indenture........................................................ 29
4.1.14 Creation of ESOP..................................................................... 29
4.1.15 Payment of Fees and Costs............................................................ 29
4.1.16 No Default........................................................................... 29
4.1.17 Correctness of Representations and Warranties........................................ 29
4.1.18 Financial Statements; Projections.................................................... 30
4.1.19 Legal Proceedings.................................................................... 30
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4.1.20 Consents and Approvals............................................................... 30
4.1.21 Material Adverse Change or Effect; Compliance With Law............................... 30
4.1.22 Opinions of Counsel.................................................................. 31
4.1.23 Officers' Compliance Certificate..................................................... 31
4.1.24 Good Standing........................................................................ 31
4.1.25 Lien Searches........................................................................ 31
4.1.26 Evidence of Insurance................................................................ 32
4.1.27 Other Requirements................................................................... 32
4.2 Requirements for Each Loan/Letter of Credit................................................... 32
4.2.1 No Default........................................................................... 32
4.2.2 Request for Advance/Letter of Credit................................................. 32
4.2.3 Representations and Warranties....................................................... 32
4.2.4 Material Adverse Change.............................................................. 32
4.2.5 Material Adverse Effect.............................................................. 32
4.2.6 Senior Subordinated Notes............................................................ 32
4.2.7 Miscellaneous........................................................................ 33
4.2.8 Method of Certifying Certain Conditions.............................................. 33
ARTICLE 5 REPORTING REQUIREMENTS AND NOTICES............................................................ 33
5.1 Financial Data and Reporting Requirements; Notice of Certain Events........................... 33
5.1.1 Delivery of Quarterly Financial Statements........................................... 33
5.1.2 Delivery of Annual Financial Statements; Accountants' Certification.................. 34
5.1.3 Delivery of Officers' Certificates as to No Default.................................. 34
5.1.4 Delivery of Officers' Compliance Certificate; Subscriber Levels, Etc................. 34
5.1.5 Auditors' Reports.................................................................... 35
5.1.6 SPC Financial Statement.............................................................. 35
5.1.7 Officers' Certificate for Rate and Fee Calculations.................................. 35
5.1.8 ESOP Information..................................................................... 35
5.1.9 Reports to Senior Subordinated Noteholders, SEC Filings, Etc......................... 36
5.2 Notice of Defaults, Disputes and Other Matters................................................ 37
5.2.1 Certain Orders by PUC................................................................ 37
5.2.2 License or Franchise Revocation...................................................... 37
5.2.3 Certain Disputes..................................................................... 37
5.2.4 Certain Litigation................................................................... 37
5.2.5 Governmental Reports................................................................. 38
5.2.6 Lenfest Agreement.................................................................... 38
5.2.7 Events of Default.................................................................... 38
5.2.8 Contract Default..................................................................... 38
5.2.9 Cross Default........................................................................ 38
5.2.10 Material Adverse Change.............................................................. 38
5.2.11 Representations and Warranties....................................................... 38
5.2.12 Equity Issuance...................................................................... 38
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5.2.13 Purchase of Minority Interests....................................................... 39
5.3 The ESOP and ERISA Matters.................................................................... 39
5.3.1 The ESOP............................................................................. 39
5.3.2 Annual Reports....................................................................... 39
5.3.3 Other ERISA Information.............................................................. 39
5.3.4 Reportable Events, Etc............................................................... 39
5.4 Miscellaneous................................................................................. 40
5.5 Disclosure.................................................................................... 40
ARTICLE 6 FINANCIAL COVENANTS........................................................................... 41
6.1 Interest Coverage Ratio....................................................................... 41
6.2 The Debt Service Coverage Ratio............................................................... 41
6.3 Consolidated Total Leverage Ratio............................................................. 41
6.4 Consolidated Senior Leverage Ratio............................................................ 41
6.5 Fixed Charge Coverage Ratio................................................................... 42
6.6 Additional Provisions Respecting Calculation of Financial Covenants........................... 42
ARTICLE 7 BUSINESS COVENANTS............................................................................ 43
7.1 Indebtedness.................................................................................. 43
7.1.1 In General........................................................................... 43
7.1.2 Limitation on Incurrence............................................................. 46
7.2 Liens......................................................................................... 46
7.2.1 In General........................................................................... 46
7.2.2 Negative Pledge...................................................................... 48
7.3 Investments, Loans, Acquisitions etc.......................................................... 48
7.3.1 Limitation........................................................................... 48
7.3.2 Investments.......................................................................... 48
7.3.3 Acquisitions......................................................................... 50
7.3.4 Additional Limitations on Investments................................................ 52
7.4 Restricted Payments........................................................................... 53
7.5 Sale-Leasebacks............................................................................... 54
7.6 Transactions with Shareholders and Affiliates................................................. 54
7.7 Mergers and Dispositions...................................................................... 54
7.7.1 Consolidations and Mergers........................................................... 54
7.7.2 Sales and Other Dispositions......................................................... 55
7.8 Management Fees............................................................................... 58
7.8.1 Limitations on Management Arrangements............................................... 58
7.8.2 Limitations on Management Fees....................................................... 59
7.9 Existence..................................................................................... 59
7.10 Compliance with Law........................................................................... 60
7.11 Payment of Taxes and Claims................................................................... 60
7.12 Tax Consolidation............................................................................. 60
7.13 Compliance with ERISA......................................................................... 60
7.14 Matters Relating to the ESOP.................................................................. 62
7.14.1 Tax Determination Letter............................................................. 62
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7.14.2 Reimbursement and Allocation Matters................................................. 62
7.15 Insurance..................................................................................... 62
7.15.1 Liability, Property Damage, Etc...................................................... 62
7.15.2 PBGC................................................................................. 62
7.16 Maintenance of Properties..................................................................... 62
7.17 Maintenance of Records; Fiscal Year........................................................... 63
7.18 Inspection.................................................................................... 63
7.19 Exchange of Notes............................................................................. 63
7.20 Other Agreements.............................................................................. 64
7.21 Further Assurances............................................................................ 64
7.22 Consistent Action - Voting.................................................................... 64
7.23 Type of Business.............................................................................. 64
7.23.1 Permitted Businesses................................................................. 64
7.23.2 The Company.......................................................................... 64
7.23.3 Radio License Subsidiaries........................................................... 64
7.24 Control of Business........................................................................... 65
7.25 Shareholders.................................................................................. 65
7.26 Change in Documents; New Documents............................................................ 65
7.26.1 Limitations on Changes to Certain Agreements......................................... 65
7.26.2 Consistent Action - Conflicting Agreement............................................ 66
7.27 Payment of Indebtedness; Subordination........................................................ 66
7.28 Subsidiary Stock Ownership Interests and Indebtedness......................................... 67
7.29 Compliance with Federal Reserve Regulations................................................... 68
7.30 Filings....................................................................................... 68
7.31 Limitations on Certain Restrictive Provisions................................................. 68
7.32 Interest Rate Protection...................................................................... 68
7.33 Environmental Matters......................................................................... 69
7.34 Corporate Separateness........................................................................ 69
ARTICLE 8 EVENTS OF DEFAULT............................................................................. 70
8.1 Events of Default............................................................................. 70
8.1.1 Failure to Pay Principal............................................................. 70
8.1.2 Failure to Pay Interest, Fees, Reimbursement Obligations, Etc........................ 70
8.1.3 Cross Default to Indebtedness........................................................ 70
8.1.4 Other Cross-Defaults................................................................. 70
8.1.5 Misrepresentations................................................................... 71
8.1.6 Certain Covenant Defaults............................................................ 71
8.1.7 Other Covenant Defaults.............................................................. 71
8.1.8 Other Loan Document Defaults; Security............................................... 71
8.1.9 Custody or Control of Assets......................................................... 72
8.1.10 Discontinuance of Business; Insolvency............................................... 72
8.1.11 FCC Licenses and Other Franchises.................................................... 73
8.1.12 Material Adverse Effect.............................................................. 73
8.1.13 Judgments............................................................................ 73
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8.1.14 Change of Control.................................................................... 73
8.1.15 Lenfest Matters...................................................................... 73
8.1.16 Loss of Tax Qualification of ESOP.................................................... 73
8.1.17 Subordination........................................................................ 73
8.2 Acceleration; Remedies........................................................................ 74
8.2.1 Remedies in General.................................................................. 74
8.2.2 Waivers.............................................................................. 74
8.2.3 Regulatory Matters................................................................... 75
8.2.4 Certain Limitations.................................................................. 76
ARTICLE 9 REPRESENTATIONS AND WARRANTIES................................................................ 76
9.1 Status........................................................................................ 76
9.1.1 Organization and Qualification....................................................... 76
9.1.2 Stock Ownership...................................................................... 76
9.1.3 Certain Entities..................................................................... 77
9.2 Power and Authority........................................................................... 78
9.3 No Violation of Agreements.................................................................... 78
9.4 Recording, Enforceability and Consent; Validity of Security Interest.......................... 78
9.5 Litigation; Compliance with Laws.............................................................. 79
9.6 No Burdensome Agreements...................................................................... 79
9.7 Condition of Property......................................................................... 79
9.8 Fees.......................................................................................... 80
9.9 Licenses...................................................................................... 80
9.10 Title to Properties; Liens.................................................................... 81
9.11 Patents, Trademarks, Agreements, Etc.......................................................... 81
9.12 Names......................................................................................... 81
9.13 Management Agreement.......................................................................... 81
9.14 Financial Statements and Projections.......................................................... 81
9.14.1 Financial Statements................................................................. 81
9.14.2 Projections.......................................................................... 82
9.15 Changes....................................................................................... 82
9.16 Tax Returns and Payments...................................................................... 82
9.17 Indebtedness.................................................................................. 82
9.18 Federal Reserve Regulations................................................................... 83
9.19 Investment Company Act........................................................................ 83
9.20 Public Utility Holding Company Act............................................................ 83
9.21 Compliance with ERISA and ESOP Matters........................................................ 83
9.21.1 Plans................................................................................ 83
9.21.2 Favorable Determination Letters...................................................... 83
9.21.3 Compliance with Law.................................................................. 83
9.21.4 Absence of Certain Conditions........................................................ 83
9.21.5 Absence of Certain Liabilities...................................................... 84
9.21.6 ESOP Valuation Matters.............................................................. 84
9.21.7 84
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9.21.8 No Prohibited Transaction........................................................... 84
9.21.9 ESOP Liabilities.................................................................... 85
9.21.9 ESOP Liabilities TC "9.21.9 ESOP Liabilities" \l "3"................................ 85
9.21.10 Annual Contribution to ESOP......................................................... 85
9.21.11 Failure to Pay ESOP Compensation Expense............................................ 85
9.21.12 Fiduciary Liability................................................................. 85
9.21.13 .................................................................................... 85
9.21.14 Disposition of Code Section 1042 Shares............................................. 85
9.22 Accuracy and Completeness of Disclosure...................................................... 85
9.23 Adequacy of Capital.......................................................................... 85
9.24 Absence of Restrictive Provisions............................................................ 86
9.25 Environmental Compliance..................................................................... 86
9.26 Solvency..................................................................................... 87
9.27 Subordination................................................................................ 87
9.28 Year 2000 Compliance......................................................................... 87
ARTICLE 10 DEFINITIONS.................................................................................. 88
10.1 Defined Terms................................................................................ 88
ARTICLE 11 MISCELLANEOUS................................................................................ 115
11.1 Notices...................................................................................... 115
11.2 Duration; Survival........................................................................... 116
11.3 No Implied Waiver............................................................................ 116
11.4 Entire Agreement and Amendments.............................................................. 116
11.5 Successors and Assigns....................................................................... 117
11.5.1 In General; The Company............................................................. 117
11.5.2 Participations...................................................................... 117
11.5.3 Assignments......................................................................... 118
11.5.4 Mechanics of Assignments............................................................ 118
11.5.5 Certain Permitted Pledges........................................................... 119
11.5.6 Affected Lenders.................................................................... 119
11.6 Calculations and Financial Data.............................................................. 119
11.7 Descriptive Headings......................................................................... 120
11.8 Governing Law................................................................................ 120
11.9 Arbitration; Consent to Jurisdiction, Service and Venue; Waiver of Jury Trial................ 120
11.9.2 Consent to Jurisdiction, Service and Venue; Waiver of Jury Trial.................... 121
11.10 Holidays..................................................................................... 123
11.11 Counterparts................................................................................. 123
11.12 Maximum Lawful Interest Rate................................................................. 123
11.13 Set-off...................................................................................... 124
11.14 Severability................................................................................. 124
11.15 Payment and Reimbursement of Costs and Expenses; Indemnification............................. 124
11.15.1 Indemnification and Reimbursement in General........................................ 124
11.15.2 Certification of Amounts............................................................ 126
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11.15.3 Interest on Obligations............................................................. 126
11.15.4 Obligations Absolute................................................................ 126
11.15.5 Limitations on Indemnification...................................................... 127
ARTICLE 12 AGENT........................................................................................ 127
12.1 Authority.................................................................................... 127
12.2 Expenses..................................................................................... 127
12.3 Exculpatory Provisions....................................................................... 127
12.4 Investigation by Lenders..................................................................... 128
12.5 Amendments, Waivers and Consents............................................................. 128
12.6 Action Upon Defaults......................................................................... 130
12.6.1 Actions by Agent.................................................................... 130
12.6.2 Proceeds of Collateral.............................................................. 130
12.7 Instructions................................................................................. 131
12.8 Resignation; Termination..................................................................... 131
12.9 Sharing...................................................................................... 131
12.10 Failure of a Lender to Make an Advance....................................................... 131
12.11 Other Relationships.......................................................................... 132
PRIVATE LIST OF ADDENDA (EXHIBITS AND SCHEDULES)............................................................... 150
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<PAGE> 10
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of the 12th day of May, 1999 (this
"Agreement") by and among FIRST UNION NATIONAL BANK ("First Union"),
individually, as Issuing Bank and as Agent, the OTHER FINANCIAL INSTITUTIONS
listed on the signature pages to this Agreement, and SUSQUEHANNA MEDIA CO., a
Delaware corporation (the "Company"). First Union, the financial institutions
listed on the signature pages to this Agreement and any other financial
institutions which may become parties to this Agreement from time to time, are
sometimes collectively referred to as the "Lenders" and individually as a
"Lender." First Union, when acting in its capacity as agent for the Lenders and
Issuing Bank, or any successor or assign that assumes that position pursuant to
the terms hereof, is hereinafter sometimes referred to as the "Agent." In
connection with this Agreement, FIRST UNION CAPITAL MARKETS CORP. has served as
Lead Arranger, Advisor and Book Manager.
BACKGROUND OF AGREEMENT
The Company is, through its subsidiaries, engaged primarily in the
radio broadcast and cable television businesses. The Company currently wishes to
refinance its existing indebtedness (which consists of a senior bank facility
and a pari passu senior note purchase facility). In connection therewith, it
wishes to increase the maximum aggregate principal amount of its bank facility
to $450,000,000, provide security therefor and issue certain senior subordinated
notes in an aggregate principal amount not to exceed $200,000,000. The
obligations under this Agreement are senior to those senior subordinated notes
and constitute "Designated Senior Indebtedness" within the meaning of the Senior
Subordinated Indenture (as defined below) relating to such notes.
The senior bank facility, which is provided for in this Agreement, is
to be guaranteed by the Company's subsidiaries and secured by the equity of the
Company and its subsidiaries (other than the non-voting stock of Susquehanna
Radio Corp. and BlazeNet) issued pursuant to employee stock plans) as well as by
the material assets (other than real property) of those entities. Certain terms
are used in this Agreement as defined in Article 10 below.
NOW, THEREFORE, it is agreed:
<PAGE> 11
ARTICLE 1
THE LOANS
1.1 REVOLVING CREDIT LOANS.
1.1.1 COMMITMENT TO MAKE REVOLVING LOANS. Subject to and upon
the terms and conditions set forth in this Agreement, the RC Lenders shall make
advances to the Company until the Revolver Maturity Date up to the aggregate
principal amount outstanding at any one time of Two Hundred and Fifty Million
Dollars ($250,000,000) (as the same may be reduced pursuant to this Agreement,
the "Revolving Credit Commitment"); provided however that (a) the aggregate
amount of the Revolving Credit Commitment available for borrowing at any time
shall not exceed the Available Commitment (as hereinafter defined); (b) the
amount and percentage of the Revolving Credit Commitment and the Available
Commitment which each RC Lender is obligated to lend shall not exceed at any
time the amount or percentage set forth opposite the name of such RC Lender on
Schedule 1.1 hereto (as supplemented and amended by giving effect to the
assignments contemplated in this Agreement). Within the limits set forth above,
the Company may borrow under this Section 1.1, repay or prepay such advances,
and reborrow under this Section 1.1. The amounts loaned to the Company pursuant
to the reducing revolver facility described in this Section 1.1 are referred to
as the "Revolving Loans".
1.1.2 AVAILABLE COMMITMENT. "Available Commitment" shall mean
the initial Revolving Credit Commitment, as the same is reduced by:
(a) voluntary reductions in the Revolving Credit
Commitment pursuant to Subsection 1.1.3 below;
(b) scheduled and other mandatory reductions in the
Revolving Credit Commitment pursuant to Subsections 1.1.4 and 1.l.5,
respectively, below;
(c) the face amount of any outstanding Letters of
Credit and any Unreimbursed Drawings (if any) relating to Letters of Credit; and
(d) the aggregate principal amount of any outstanding
Swing Loans and Revolving Loans.
1.1.3 VOLUNTARY COMMITMENT REDUCTIONS. The Company shall have
the right at any time and from time to time upon five (5) Business Days' prior
written notice to the Agent to reduce (on a pro rata basis among the RC Lender)
permanently, in minimum amounts of Five Million Dollars ($5,000,000) or in whole
multiples of One Million Dollars ($1,000,000) in excess of Five Million Dollars
($5,000,000) of principal, or terminate the Revolving Credit Commitment, without
penalty or premium except as otherwise provided in Subsections 1.8.6 (Additional
Costs), 1.10.2 (Breakage) and 11.15 (Indemnification).
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1.1.4 SCHEDULED COMMITMENT REDUCTIONS. The Revolving Credit
Commitment shall be automatically and permanently reduced on March 31, June 30,
September 30 and December 31 of each year commencing on September 30, 2002 and
ending on the Revolver Maturity Date by an amount equal to (a) the amount of the
Revolving Credit Commitment on September 30, 2002 (before accounting for the
September 30, 2002 reduction) multiplied by (b) the quarterly reduction
percentage specified below, such that on the Revolver Maturity Date there will
be no Revolving Credit Commitment:
<TABLE>
<CAPTION>
Revolving Credit
Commitment as of
12/31, Assuming Only Quarterly
Calendar Scheduled (No Voluntary or Reduction
Year Other Mandatory) Reductions Percentage
-------- --------------------------- ----------
<S> <C> <C>
2002 $230,000,000 4.00% (two payments only)
2003 $190,000,000 4.00%
2004 $140,000,000 5.00%
2005 $ 90,000,000 5.00%
2006 $ 30,000,000 6.00%
2007 $ 0 (6/30/07) 6.00% (two payments only)
</TABLE>
1.1.5 COMMITMENT REDUCTIONS IN CONNECTION WITH CERTAIN ASSET
DISPOSITIONS. In addition to the Revolving Credit Commitment reductions
specified in the preceding Subsections 1.1.3 (Voluntary Commitment Reductions)
and 1.1.4 (Scheduled Commitment Reductions), the Revolving Credit Commitment
shall be permanently reduced by an amount equal to the Unapplied Net Proceeds on
each Application Date, provided that in lieu of reducing the Revolving Credit
Commitment, or in combination with reducing the Revolving Credit Commitment, the
Company may upon five (5) Business Days' written notice to the Agent prior to
the Application Date (i) prepay Term A Loan and/or Term B Loan and/or (ii)
reduce the Revolving Credit Commitment, such that the total amount of the
Revolving Credit Commitment and the outstanding Term Loans, collectively, is
reduced by an amount equal to the Unapplied Net Proceeds on each Application
Date. In addition to the foregoing, at any time that the Company makes a
disposition of assets that would require a prepayment under the Senior
Subordinated Indenture if those proceeds are not used to pay down the Loans, the
facility will be permanently reduced pursuant to this Subsection 1.1.5. Any time
that the Revolving Credit Commitment is reduced pursuant to this Subsection
1.1.5, the Company shall concurrently prepay the Revolving Loans and/or Swing
Loans in an amount equal to the amount by which the Revolving Credit Commitment
is reduced.
Notwithstanding the foregoing if a sale is effected by the
Company (or by Susquehanna Cable and/or its Subsidiaries) of stock or assets of
Susquehanna Cable and its Subsidiaries, a portion of the proceeds of such sale
may be used by the Company to pay or
- 3 -
<PAGE> 13
prepay its obligations under the Lenfest Note so long as no Potential Event of
Default or Event of Default shall have occurred and be continuing or be caused
thereby and the Company delivers to the Agent and each Lender at least five (5)
Business Days prior to the date such payment is made an Officer's Compliance
Certificate showing compliance, on a Pro Forma Basis, with the financial
covenants set forth in Article 6 after giving effect to the payment or
prepayment.
1.1.6 RELATIONSHIP BETWEEN SCHEDULED COMMITMENT REDUCTIONS AND
OTHER COMMITMENT REDUCTIONS. Any voluntary reductions to the Revolving Credit
Commitment made pursuant to Subsection 1.1.3 above or mandatory reductions to
the Revolving Credit Commitment made pursuant to Subsection 1.1.5 above shall
serve to reduce the amount of scheduled reductions in the Revolving Credit
Commitment pursuant to Subsection 1.1.4 above occurring on or after the
effective date of such voluntary or mandatory reduction above on a pro rata
basis, reducing proportionately each of the reductions specified in said
Subsection 1.1.4.
1.1.7 PREPAYMENT IN CONNECTION WITH COMMITMENT REDUCTIONS.
Upon the effective date of each reduction in the Revolving Credit Commitment
referred to above, the Company shall be required to pay to the Agent for the
benefit of the RC Lenders the principal amount of the Revolving Loans and/or
Swing Loans, to the extent, if any, that the aggregate amount of the Revolving
Loans and Swing Loans then outstanding plus the aggregate face value of Letters
of Credit then outstanding and Unreimbursed Drawings exceeds the amount of the
Available Commitment as so reduced. If after prepayment of all outstanding
Revolving Loans and Swing Loans, the amounts of outstanding Letters of Credit
and Unreimbursed Drawings exceed the Available Commitment as so reduced, the
Company shall pay to the Agent for the benefit of the RC Lenders an amount by
which the aggregate face value of all outstanding Letters of Credit and
Unreimbursed Drawings exceeds the Available Commitment as so reduced, such
amount first to be applied against Unreimbursed Drawings and the remainder to be
maintained by the Agent in an interest bearing cash collateral account in the
name of and for the benefit of the Agent and the RC Lenders to secure the
repayment of Company's obligation to reimburse the RC Lenders from drafts drawn
or which may be drawn under outstanding Letters of Credit until such time as the
applicable Letters of Credit have expired or been cancelled). At the request of
the Agent, accrued interest on the Loans so prepaid shall be due and payable at
the time of such prepayment. All amounts of principal, interest and fees
relating to Revolving Loans not due and payable before June 30, 2007 are due and
payable on that date.
1.1.8 VOLUNTARY PREPAYMENTS. Except as otherwise provided in
this Agreement, the Company shall be permitted to prepay the Revolving Loans at
any time without penalty or premium. In connection with each voluntary
prepayment:
(a) The Company shall provide the Agent with notice
of its intention to prepay,
- 4 -
<PAGE> 14
(i) no later than 11:00 a.m. (Philadelphia,
PA time) on the date of prepayment in the
case of Revolving Loans bearing interest at
the Base Rate plus Applicable Margin, and
(ii) no later than 11:00 a.m. (Philadelphia,
PA time) three (3) Business Days prior to
the date of prepayment in the case of
Revolving Loans bearing interest at Adjusted
LIBOR plus Applicable Margin.
(b) Each prepayment of principal of a Revolving Loan
shall be in a minimum amount equal to Two Million Dollars ($2,000,000.00) or in
amounts in excess thereof equal to Two Million Dollars ($2,000,000) plus
integral multiples of $500,000 in excess thereof.
1.2 SWING LOANS.
1.2.1 SWING LOAN ADVANCES. Upon the terms and subject to the
conditions of this Agreement, the Swing Lender agrees to make, from time to
time, from and including the Closing Date to but excluding the Revolver Maturity
Date, one or more Loans ("Swing Loans") to the Company, in an aggregate
principal amount not exceeding at any time $5,000,000, provided, however, that
no Swing Loan shall be made at any time in an amount in excess of the Available
Commitment.
1.2.2 TERMS OF SWING LOAN BORROWINGS. The Company shall give
the Swing Lender notice (which shall be irrevocable) of a request for a Swing
Loan (with a copy to the Agent) no later than 12:00 noon (Philadelphia, PA time)
on the day such Loan is requested; if such notice is received later than 12:00
noon (Philadelphia, PA time), then the request shall be deemed to be a request
for a Swing Loan to be made on the next Business Day. Each Swing Loan shall be
in a principal amount equal to or greater than Two Hundred Thousand Dollars
($200,000) and shall bear interest at the Base Rate plus Applicable Margin. The
Company shall repay each Swing Loan no later than 3:00 p.m. (Philadelphia, PA
time) on the earlier of (A) the date that demand is made therefor by the Swing
Lender and (B) the Revolver Maturity Date. The Swing Lender shall provide prompt
notice to the Agent of any repayment of Swing Loans by the Company.
1.2.3 PARTICIPATION BY RC LENDERS. Upon demand made to all of
the RC Lenders by the Swing Lender, which demand may be made before or after an
Event of Default or Potential Event of Default (including, without limitation,
an Event of Default arising in connection with an insolvency, bankruptcy, etc.),
and before or after the maturity date of the subject Swing Loans, but subject to
the provisions of Subsection 1.2.5 (Certain Limitations) below, each RC Lender
shall promptly, irrevocably and unconditionally purchase from the Swing Lender,
without recourse or warranty, an undivided interest and participation in the
Swing Loans then outstanding.
- 5 -
<PAGE> 15
Each RC Lender shall effect such purchase by paying to the Swing Lender in
immediately available funds, without reduction or deduction of any kind,
including reductions or deductions for set-off, recoupment or counterclaim, an
amount equal to such RC Lender's pro rata share of the principal amount of all
Swing Loans then outstanding. Each RC Lender's pro rata share of the Swing Loans
shall be based on the amount of such RC Lender's pro rata share of the total
Revolving Credit Commitment. Thereafter, the RC Lenders' respective interests in
such Swing Loans, and the remaining interest of the Swing Lender in such Swing
Loans, shall in all respects be treated as Revolving Loans under this Agreement,
except that (x) subject to Subsection 1.8.8 (Default Rate) below, such Swing
Loans shall continue to bear interest at the rate specified in Subsection 1.2.2
above for such Swing Loans until such Swing Loans are due and payable and (y)
such Swing Loans shall be due and payable by the Company on the dates referred
to in Subsection 1.2.2 (Terms of Swing Loan Borrowing).
If any RC Lender does not pay any amount which it is required to pay pursuant to
this Subsection 1.2.3 promptly upon the Swing Lender's demand therefor, (i) the
Swing Lender shall be entitled to recover such amount on demand from such RC
Lender, together with interest thereon, at the Federal Funds Rate for the first
three Business Days, and thereafter at the Base Rate, for each day from the date
of such demand, if made prior to 2:00 p.m. (Philadelphia, Pennsylvania time) on
any Business Day, or, if made at any later time, from the next Business Day
following the date of such demand, until the date such amount is paid in full to
the Swing Lender by such RC Lender and (ii) the Swing Lender shall be entitled
to all interest payable by the Company on such amount until the date on which
such amount is received by the Swing Lender from such RC Lender. Moreover, any
RC Lender that shall fail to make available the required amount shall not be
entitled to vote on or consent to or approve any matter under this Agreement and
the other Loan Documents until such amount with interest is paid in full to the
Swing Lender by such RC Lender. Without limiting any obligations of any RC
Lender pursuant to this Subsection 1.2.3, if any RC Lender does not pay such
corresponding amount promptly upon the Swing Lender's demand therefor, the Swing
Lender shall notify the Company and the Company shall promptly repay such
corresponding amount to the Swing Lender together with accrued interest thereon
at the applicable rate on such Swing Loans.
1.2.4 NO SET-OFF, ETC. Subject only to the limitations set
forth in the following Subsection 1.2.5 (Certain Limitations), the obligations
of each RC Lender to make available to the Swing Lender the amounts set forth in
the preceding Subsection 1.2.3 shall be absolute, unconditional and irrevocable
under any and all circumstances, shall be without reduction for any set-off or
counterclaim of any nature whatsoever, may not be terminated, suspended or
delayed for any reason whatsoever, shall not be subject to qualification or
exception and shall be made in accordance with the terms of this Agreement.
1.2.5 CERTAIN LIMITATIONS. No RC Lender shall be obligated to
purchase a participation in any Swing Loan pursuant to Subsection 1.2.4, if such
RC Lender proves that (A) the conditions set forth in Subsections 4.2.1 (No
Default) or 4.2.3 (Representations and
- 6 -
<PAGE> 16
Warranties) were not satisfied at the time such Swing Loan was made (unless such
condition was waived in accordance with the terms of this Agreement) and (B)
such RC Lender or the Agent had notified the Swing Lender in a writing received
by the Swing Lender at least one Business Day prior to the time that it made
such Swing Loan that the Swing Lender was not authorized to make such Swing Loan
because such conditions were not satisfied and stating with specificity the
reason therefor. The Swing Lender shall not be obligated to the Company to make
any Swing Loans at any time after it has received a notice pursuant to clause
(B) above whether or not the statements made therein are true.
1.3 TERM LOANS.
1.3.1 COMMITMENT FOR TERM A LOAN. Upon the terms and subject
to the conditions of this Agreement, each Term A Lender agrees to make advances
("Term A Loans") to the Company on the Closing Date in an aggregate principal
amount not to exceed One Hundred Million Dollars ($100,000,000) (the "Term A
Loan Commitment"), provided, however, that the amount and percentage of the Term
A Loan Commitment that any Lender is obligated to lend shall not exceed the
amount or percentage set forth opposite the name of such Lender on Schedule 1.2
hereto. The Company shall not be permitted to reborrow any amount of the Term A
Loans once repaid.
1.3.2 COMMITMENT FOR TERM B LOAN. Upon the terms and subject
to the conditions of this Agreement, each Term B Lender agrees to make advances
("Term B Loans") to the Company on the Closing Date in an aggregate principal
amount not to exceed One Hundred Million Dollars ($100,000,000) (the "Term B
Loan Commitment"), provided, however, that the amount and percentage of the Term
B Loan Commitment that any Lender is obligated to lend shall not exceed the
amount or percentage set forth opposite the name of such Lender on Schedule 1.2
hereto. The Company shall not be permitted to reborrow any amount of the Term B
Loans once repaid.
1.3.3 REPAYMENT OF TERM A LOAN. The principal of Term A Loans
shall be due and payable in quarterly installments on March 31, June 30,
September 30 and December 31 of each year commencing on September 30, 2002 and
ending June 30, 2007, in each case in an amount equal to (a) the Term A Loan
Commitment on the date hereof multiplied by the quarterly reduction percentage
specified below, such that all of the Term A Loans will be repaid in full on or
before June 30, 2007:
- 7 -
<PAGE> 17
<TABLE>
<CAPTION>
Outstandings as of
12/31, Assuming Only Quarterly
Calendar Scheduled (No Voluntary or Reduction
Year Other Mandatory) Prepayments Percentage
-------- ---------------------------- ----------
<S> <C> <C> <C>
2002 $ 92,000,000 4.00% (two payments only)
2003 $ 76,000,000 4.00%
2004 $ 56,000,000 5.00%
2005 $ 36,000,000 5.00%
2006 $ 12,000,000 6.00%
2007 $ 0 (6/30/07) 6.00% (two payments only)
</TABLE>
All amounts of principal, interest and fees relating to Term A Loans not due and
payable before June 30, 2007 are due and payable on that date.
1.3.4 REPAYMENT OF TERM B LOAN. The principal of Term B Loans
shall be due and payable in quarterly installments on March 31, June 30,
September 30 and December 31 of each year commencing on June 30, 2002 and ending
June 30, 2008, in each case in an amount equal to (a) the Term B Loan Commitment
on the date hereof multiplied by the quarterly reduction percentage specified
below, such that all of the Term B Loans will be repaid on or before June 30,
2008:
<TABLE>
<CAPTION>
Outstandings
Assuming Only Quarterly
Calendar. Scheduled (No Voluntary or Reduction
Quarter Other Mandatory) Repayments Percentage
---------- --------------------------- ----------
<S> <C> <C> <C>
6/30/02 $99,750,000 .25%
9/30/02 $99,500,000 .25%
12/31/02 $99,250,000 .25%
3/31/03 $99,000,000 .25%
6/30/03 $98,750,000 .25%
9/30/03 $98,500,000 .25%
12/31/03 $98,250,000 .25%
3/31/04 $98,000,000 .25%
6/30/04 $97,750,000 .25%
9/30/04 $97,500,000 .25%
12/31/04 $97,250,000 .25%
3/31/05 $97,000,000 .25%
6/30/05 $96,750,000 .25%
9/30/05 $96,500,000 .25%
12/31/05 $96,250,000 .25%
3/31/06 $96,000,000 .25%
6/30/06 $95,750,000 .25%
</TABLE>
- 8 -
<PAGE> 18
<TABLE>
<S> <C> <C> <C>
9/30/06 $95,500,000 .25%
12/31/06 $95,250,000 .25%
3/31/07 $95,000,000 .25%
6/30/07 $94,750,000 .25%
9/30/07 $71,062,500 23.6875%
12/31/07 $47,375,000 23.6875%
3/31/08 $23,687,500 23.6875%
6/30/08 $0 23.6875%
</TABLE>
All amounts of principal, interest and fees relating to Term B Loans as well as
all other amounts payable under this Agreement not due and payable before June
30, 2008 are due and payable on that date.
1.3.5 VOLUNTARY PREPAYMENTS. The Company may at any time and
from time to time upon five (5) Business Days' prior written notice to the Agent
prepay either Term A Loans or Term B Loans in whole or in part in a minimum
amount equal to $5,000,000 or in incremental amounts equal to $1,000,000 in
excess of such minimum amount, without penalty or premium except as provided in
Subsections 1.8.6 (Additional Costs), 1.10.2 (Breakage) and Section 11.15
(Indemnification).
1.3.6 MANDATORY PREPAYMENTS IN CONNECTION WITH ASSET SALES.
The Company shall prepay the Term A Loans and/or Term B Loans at such times and
in such amounts as is required by Subsection 1.1.5 above (Commitment Reductions
in Connection with Asset Sales).
1.3.7 RELATIONSHIP OF VOLUNTARY AND OTHER MANDATORY
PREPAYMENTS TO SCHEDULED PAYMENTS. Any voluntary prepayments of Term A Loans or
Term B Loans pursuant to Subsection 1.3.5 above (Voluntary Prepayments) shall be
applied against the scheduled payments set forth in Subsection 1.3.3 (Repayment
of Term A Loans) and Subsection 1.3.4 (Repayment of Term B Loans), as
applicable, in inverse order of maturity. Any mandatory prepayments of Term A
Loans or Term B Loans pursuant to Subsection 1.3.6 above (Mandatory Prepayments
in Connection with Asset Sales) shall be applied against the scheduled payments
set forth in Subsection 1.3.3 (Repayment of Term A Loans) and Subsection 1.3.4
(Repayment of Term B Loans), as applicable, on a pro rata basis, reducing
proportionately each of the scheduled payments specified in said Subsection
1.3.3 or 1.3.4, as applicable, on or after the effective date of such mandatory
prepayment.
1.4 LENDERS' OBLIGATIONS SEVERAL.
Each Lender is severally bound by this Agreement, but there
shall be no joint obligation of the Lenders under this Agreement. The failure of
any Lender to make any share of the Loans or obligations respecting Letters of
Credit to be made by it on the date specified for the Loans or such obligations
shall not relieve any other Lender of its obligation to make its share of
- 9 -
<PAGE> 19
the Loans or other obligations on such date, but neither any Lender nor the
Agent shall be responsible for the failure of any other Lender to make a share
of the Loans or other obligations to be made by such other Lender.
1.5 NOTES.
Upon the request of any RC Lender, the aggregate principal
amount of each RC Lender's share of the Revolving Credit Commitment and
Revolving Loans shall be evidenced by a note to be issued by the Company to each
RC Lender in substantially the form attached hereto as Exhibit A-1 (with
appropriate completion of the name of the applicable RC Lender). Upon the
request of any Term A Lender, the aggregate amount of such Term A Lender's share
of the Term A Commitment and Term A Loans shall be evidenced by a note to be
issued by the Company to such Term A Lender in substantially the form attached
hereto as Exhibit A-2 (with the appropriate completion of the name of the
applicable Term A Lender). Upon the request of any Term B Lender, the aggregate
amount of such Term B Lenders' share of the Term B Commitment and Term B Loans
shall be evidenced by a note to be issued by the Company to such Term B Lender
in substantially the form attached as Exhibit A-3 to this Agreement (with
appropriate completion of the name of the applicable Term B Lender). Upon the
request of the Swing Lender, the Swing Loans and commitment therefor shall be
evidenced by a note to be issued by the Company to the Swing Lender in
substantially the form attached as Exhibit A-4 to this Agreement.
1.6 BORROWING NOTICE.
Fundings of Revolving Loans shall be in the minimum amount of
Two Million Dollars ($2,000,000) and integral multiples of Five Hundred Thousand
Dollars ($500,000) in excess of such minimum amount. To effect a funding, the
Company shall give the Agent written notice in the form annexed to this
Agreement as Exhibit B specifying the amount and date of each intended borrowing
and the manner in which the same shall be disbursed, which notice
(a) in the case of borrowings to bear interest at a
rate based upon the Base Rate, shall be given no later than 11:00 a.m.
(Philadelphia, PA time) on the date of such borrowing,
(b) in the case of borrowings to bear interest based
upon Adjusted LIBOR, shall be given no later than 11:00 a.m. (Philadelphia, PA
time) at least three (3) Eurodollar Business Days prior to each such borrowing
and shall specify the Interest Period with respect to such borrowing, and
(c) in the case of an advance, or an advance which is
part of a series of related advances, in excess of $25,000,000 for the purpose
of effecting an Acquisition or purchasing a minority interest as more fully set
forth in Subsection 1.8.3 (Officers' Certificate), shall be accompanied by the
Officers' Certificate required by said Subsection 1.8.3.
- 10 -
<PAGE> 20
The Agent in turn shall give prompt written or telephonic (promptly confirmed in
writing) notice to each Lender of its pro rata share of the borrowing, the
interest rate option selected and the scheduled date of the funding. After
receipt of such notice, each Lender shall make such arrangements as are
necessary to assure that its share of the funding shall be immediately available
(in U.S. Dollars) to the Agent no later than 2:30 p.m. (Philadelphia, PA time),
on the date on which the funding is to occur. After receipt of the funds, the
Agent, subject to the satisfaction of the conditions precedent set forth in
Section 4.2 (Requirements for Each Loan/Letter of Credit), shall disburse the
amount of such funding in accordance with instructions in the Company's
borrowing notice.
The Lenders shall not be obligated to comply with a borrowing
notice if there shall then exist an Event of Default or a Potential Event of
Default regardless of whether Lenders have determined to exercise their remedies
arising upon the occurrence of such Event of Default or Potential Event of
Default.
1.7 FEES TO LENDERS.
1.7.1 COMMITMENT FEES. The Company shall pay to the Agent for
the account of the RC Lenders quarterly in arrears on each Quarterly Payment
Date a commitment fee (the "Commitment Fee") (calculated on the basis of a 360
day year for the actual days elapsed) equal to the product of the Commitment Fee
Base (as hereafter defined) and
(i) One-half of one per cent (1/2%), at any
time that the Consolidated Total Leverage
Ratio is greater than or equal to 5.50:1;
and
(ii) Three eighths of one per cent (3/8%),
at any time that the Consolidated Total
Leverage Ratio is greater than or equal to
4.00:1 but less than 5.50:1; and
(iii) One-quarter of one per cent (1/4%), at
any time that the Consolidated Total
Leverage Ratio is less than 4.00:1.
"Commitment Fee Base" means an amount at any time equal to (a) the amount of the
Revolving Credit Commitment less (b) the sum of the aggregate principal amount
of outstanding Revolver Loans, the face amount of outstanding Letters of Credit
and any Unreimbursed Drawings in respect of Letters of Credit. (Swing Loans
shall not reduce the Commitment Fee Base).
Any change in the percentage amount set forth in clauses (i) through (iii) of
this Subsection 1.7.1 shall be effective on the fifth (5th) Business Day
immediately following delivery of the Officers' Certificate described in
Subsection 1.8.3 (Officers' Certificate) below warranting such change (including
any Officers' Certificate delivered in connection with an Acquisition or
purchase of minority interest). In the event that any Officers' Certificate
referred to in clause (a) or (b) of
- 11 -
<PAGE> 21
Subsection 1.8.3 is not delivered in a timely fashion, the percentage amount
shall be the highest rate set forth above effective on the fifth (5th) Business
Day after written notice to such effect is given by the Agent to the Company
until the fifth (5th) Business Day immediately following delivery of such
Officers' Certificate. The Commitment Fee shall begin to accrue from the Closing
Date and shall be shared by the RC Lenders entitled thereto in proportion to
their respective shares of the Revolving Credit Commitment.
1.7.2 LETTER OF CREDIT FEES AND FRONTING FEES. The Company
shall pay to the Agent for the account of the RC Lenders such letter of credit
fees as are described in Article 3 (Letters of Credit) below, except that the
Fronting Fee shall be paid only to the Issuing Bank.
1.7.3 OTHER FEES. The Company shall pay such other fees, if
any, as the Company has otherwise agreed to pay to the Agent, the Issuing Bank
and/or the Lenders.
1.8 INTEREST.
1.8.1 THE RATES. The Loans (other than Swing Loans) shall bear
interest at Company's option (subject to the limitation and conditions set forth
in this Section) at the Base Rate plus the Applicable Margin or at the Adjusted
LIBOR plus the Applicable Margin. Interest accruing at the Base Rate plus the
Applicable Margin shall be payable quarterly on each Quarterly Payment Date,
commencing with the first Quarterly Payment Date after the Closing Date.
Interest accruing at Adjusted LIBOR plus the Applicable Margin shall be payable
on the last day of each Interest Period, provided that if the Interest Period is
six (6) Months or longer, interest shall be payable on the ninetieth (90th) day
of the Interest Period, every ninetieth (90th) day thereafter until the end of
the Interest Period and on the last day of the Interest Period. Interest
calculated at the Base Rate plus the Applicable Margin shall be computed on the
basis of a 365/6 day year and interest calculated at the Adjusted LIBOR plus the
Applicable Margin shall be computed on the basis of a 360 day year.
1.8.2 APPLICABLE MARGIN. The term "Applicable Margin" when
used with respect to the Base Rate shall mean the following:
- 12 -
<PAGE> 22
<TABLE>
<CAPTION>
Consolidated Total Base Rate Base Rate
Leverage Applicable Margin Applicable Margin
Ratio for Revolving Loans and Term A Loans for Term B Loan
- ------------------ ------------------------------------ --------------------
<S> <C> <C>
Equal to or greater
than 6.50 1.250% 1.500%
Equal to or greater
than 6.00 but less than 6.50 0.875% 1.500%
Equal to or greater 0.625% 1.250%
than 5.50 but less than 6.00
Equal to or greater 0.375% 1.250%
than 5.00 but less
than 5.50
Less than 5.00 0.000% 1.250%
</TABLE>
The term "Applicable Margin" when used with respect to
Adjusted LIBOR shall mean the following:
<TABLE>
<CAPTION>
Consolidated Total Adjusted LIBOR Adjusted LIBOR
Leverage Applicable Margin for Applicable Margin
Ratio Revolving Loans and Term A Loans for Term B Loans
- ------------------ -------------------------------- ------------------
<S> <C> <C>
Equal to or greater 2.500% 2.750%
than 6.50
Equal to or greater 2.125% 2.750%
than 6.00 but less
than 6.50
Equal to or greater 1.875% 2.500%
than 5.50 but less
than 6.00
Equal to or greater 1.625% 2.500%
than 5.00 but less
than 5.50
</TABLE>
- 13 -
<PAGE> 23
<TABLE>
<S> <C> <C>
Equal to or greater 1.375% 2.500%
than 4.50 but less
than 5.00
Equal to or greater 1.125% 2.500%
than 4.00 but less
than 4.50
Less than 4.00 0.875% 2.500%
</TABLE>
1.8.3 OFFICERS' CERTIFICATE.
(a) The Company shall provide the Agent with an
Officers' Certificate in the form annexed to 27 this Agreement as Exhibit D
within sixty (60) days after the close of each of the first three quarters of
each fiscal year of the Company and within one hundred twenty (120) days after
the close of each fiscal year of the Company setting forth the computations and
information as of the end of the preceding fiscal quarter necessary for the
determination of the Applicable Margin and the percentage amount applicable to
the Commitment Fee.
(b) In addition, at any time that the Company
requests an advance, or a series of related advances, in an amount in excess of
$25,000,000 for the purpose of effecting an Acquisition or purchasing a minority
interest in any direct or indirect Subsidiary of the Company (whether in
connection with a buy-sell agreement, a put, a call or otherwise), the Company
shall provide the Agent with an Officers' Certificate on a Pro Forma Basis
(along with the request for advance as required by Section 1.6 (Borrowing
Notice) above). Such Officers' Certificate on Pro Forma Basis shall set forth
the calculation of the Consolidated Leverage Ratio after giving pro forma effect
to the proposed Loans and transactions contemplated in connection therewith.
(c) In addition, at any time that the Company makes a
disposition of assets in accordance with Section 7.7 (Mergers and Dispositions)
below and prepays the Loans in accordance with Subsection 1.1.5 (Commitment
Reductions in Connection with Certain Asset Sales) above or Subsection 1.3.6
(Mandatory Prepayments in Connection with Asset Sales) in an amount in excess of
$25,000,000 (whether in one prepayment or a series of related prepayments), the
Company may provide the Agent with an Officers' Certificate on a Pro Forma Basis
(along with the notice of prepayment). Such Officers' Certificate on Pro Forma
Basis shall set forth the calculation of the Consolidated Leverage Ratio after
giving pro forma effect to the proposed prepayment of the Loans, the disposition
of the assets and transactions contemplated in connection therewith.
The determination of the Applicable Margin shall be effective with respect to
the Loans as of the fifth (5th) Business Day immediately following delivery of
any such Officers' Certificate. In the event that any Officers' Certificate
required by paragraph (a) or (b) above is not delivered in a
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timely fashion, the Applicable Margin shall be the Applicable Margin otherwise
applicable if the Consolidated Leverage Ratio is equal to or greater than 6.50,
effective on the fifth (5th) Business Day after written notice to such effect is
given by the Agent and continuing until any such Officers' Certificate is
delivered to Agent, whereupon, in the latter event any required change to the
Applicable Margin shall be effective with respect to the Loans commencing as of
the fifth (5th) Business Day immediately following delivery of such Officers'
Certificate.
1.8.4 LIBOR ELECTION. (a) Unless otherwise elected by the
Company, the Loans shall bear interest at the Base Rate plus the Applicable
Margin. The Company may, upon three (3) Eurodollar Business Days' prior written
notice to the Agent in the form of Exhibit C to this Agreement, and subject to
and upon the terms and conditions set forth in this Agreement, elect to borrow
money that will bear interest based on Adjusted LIBOR plus the Applicable Margin
or to convert a portion of the Loans to bear interest based on Adjusted LIBOR
plus the Applicable Margin. Any such election may be made with respect to a
principal amount designated in such notice and equal to at least Five Million
Dollars ($5,000,000) and integral multiples of One Million Dollars ($1,000,000)
in excess of such minimum, for the period next ensuing, which period ("Interest
Period") shall equal one, two, three or six Months or, if available in the
opinion of all Lenders, one year, as designated by Company in its notice.
(b) The Company may not convert any outstanding Loans
to a borrowing bearing interest based on Adjusted LIBOR plus the Applicable
Margin or otherwise elect an interest rate based on Adjusted LIBOR plus the
Applicable Margin if at the time of such conversion or election there shall
exist an Event of Default or Potential Event of Default under Subsections 8.1.1
(Failure to Pay Principal), 8.1.2 (Failure to Pay Interest, Etc.), 8.1.3
(Cross-Default) or 8.1.6 (Certain Covenant Defaults), but, in the case of
Subsection 8.1.6, only if the underlying default relates to breach of the
covenants set forth in Article 6 (Financial Covenants).
(c) If an interest rate based on Adjusted LIBOR plus
the Applicable Margin is elected, such interest rate shall remain in effect for
the Interest Period selected and such interest rate shall not otherwise be
converted to another interest rate prior to the expiration of the Interest
Period except as otherwise required by this Section. If an Interest Period with
respect to a rate of interest based on Adjusted LIBOR plus the Applicable Margin
would otherwise commence on a day which is not a Eurodollar Business Day, such
Interest Period shall commence on the next Eurodollar Business Day.
(d) The principal accruing interest based on Adjusted
LIBOR plus the Applicable Margin shall, commencing on the last day of the
Interest Period, bear interest at the Base Rate plus the Applicable Margin
unless prior thereto the Agent has received a notice pursuant to this Section
(and within the time periods required) that an elective rate based on Adjusted
LIBOR plus the Applicable Margin shall be effective commencing on such date with
respect to any or all of such principal.
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(e) The Company may not elect an interest rate based
on Adjusted LIBOR plus the Applicable Margin if such election would require the
Agent to administer concurrently Loans (including Revolving Loans, Term A Loans
and Term B Loans collectively) for more than a combination of elective rates of
interest based on Adjusted LIBOR or Interest Periods that exceed an aggregate of
eight (8).
(f) If an Interest Period would otherwise end on a
day which is not a Eurodollar Business Day, such Interest Period shall be
extended to the next Eurodollar Business Day, unless such next Eurodollar
Business Day shall fall in the next calendar month in which event such Interest
Period shall end on the immediately preceding Eurodollar Business Day.
(g) The Company may not elect an interest rate based
on Adjusted LIBOR plus the Applicable Margin with respect to any portion of the
Loans if, as a result of a reduction in the Revolving Credit Commitment, a
scheduled payment or otherwise, the Company knows that it would be required to
repay a portion of the Loans bearing interest based on Adjusted LIBOR plus the
Applicable Margin on a day other than the last day of any applicable Interest
Period or Periods.
(h) No Interest Period may be elected that would end
later than the Revolver Maturity Date (for Revolver Loans) or the Term A
Maturity Date (for Term A Loans) or the Term B Maturity Date (for Term B Loans).
1.8.5 DEFINITION OF ADJUSTED LIBOR. As used in this Agreement,
the term "Adjusted LIBOR" shall mean the rate per annum (rounded upwards if
necessary to the nearest one-hundredth of one percent) determined by the Agent
to be equal to the quotient of (a) LIBOR, divided by (b) a number equal to 1.00
minus the Reserve Percentage.
As used herein, "LIBOR" means the rate of interest
per annum determined on the basis of the rate for deposits in Dollars in minimum
amounts of at least $5,000,000 for a period equal to the applicable Interest
Period which appears on the Telerate Page 3750 at approximately 11:00 a.m.
(London time) two (2) Business Days prior to the first day of the applicable
Interest Period (rounded upward, if necessary, to the nearest one-sixteenth of
one percent (1/16%)). If, for any reason, such rate does not appear on Telerate
Page 3750, then "Adjusted LIBOR" shall be determined by the Agent to be the
arithmetic average (rounded upward, if necessary, to the nearest one-sixteenth
of one percent (1/16%)) of the rate per annum at which deposits in Dollars would
be offered by first class banks in the London interbank market to the Agent at
approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior to
the first day of the applicable Interest Period for a period equal to such
Interest Period and in an amount substantially equal to the amount of the
applicable Loan.
As used in this Agreement, the term "Reserve
Percentage" means, for any day, the percentage (expressed as a decimal and
rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in
effect for such day as prescribed by the Federal Reserve Board (or any
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successor) for determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) in respect of
eurocurrency liabilities or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.
1.8.6 ADDITIONAL COSTS, UNAVAILABILITY, ETC.
(a) The Company shall pay to the Agent for the
account of the affected Lender or Lenders within thirty (30) days of demand such
additional sums as will compensate such Lender or Lenders for the effect of any
change in reserve requirements or any taxes, duties or other charges (or changes
in the amount thereof) based upon an allocation by such affected Lender or
Lenders of the additional sums payable as a result of the Loans or Letters of
Credit. No failure on the part of the Agent or any Lender to demand compensation
for any increased costs in any period shall constitute a waiver of any Lender's
right to demand such compensation at any time, provided, however, that the
Company shall not be required to pay any such compensation for any such
increased costs incurred more than ninety (90) days prior to the making of the
affected Lender's initial such request. Each affected Lender shall certify the
amount of such cost to the Company and provide the Company with a written
statement setting forth the cost claimed and the calculations used in
determining such cost, which certification and statement shall be conclusive in
the absence of manifest error.
(b) In the event that the Company shall have elected
an interest option and period based on Adjusted LIBOR plus the Applicable Margin
and the Requisite Lenders shall have reasonably determined that quotations of
interest rates for the relevant deposits referred to in the definition of
Adjusted LIBOR are not being provided in the relevant amounts or for the
relevant Interest Period for purposes of determining an interest rate based on
Adjusted LIBOR plus the Applicable Margin or that by reason of circumstances
affecting the London Interbank Eurocurrency Market adequate and reasonable means
do not exist for ascertaining Adjusted LIBOR applicable to such deposits for the
specified Interest Period, the Agent shall promptly give notice of such
determination to the Company, and no part of the Loans shall thereafter be
available at Adjusted LIBOR for the specified Interest Period until the
Requisite Lenders determine that the circumstances described above cease to
exist. At such time, Agent shall notify the Company that Adjusted LIBOR is again
available; however, neither Agent nor any of the Lenders shall have any
liability for failure to give such notice. A determination by the Requisite
Lenders shall be conclusive and binding upon the Company.
(c) In the event that by reason of any change in any
law, regulation or official directive, or in the interpretation thereof by any
governmental body charged with the administration thereof, any Lender becomes
subject to restrictions on the amount of any category of deposits or other
liabilities of such Lender which includes deposits by reference to which
Adjusted LIBOR is determined as set forth in this Agreement or a category of
extensions of credit or other assets of such Lender which includes any portion
of the Loans as to which a rate based on Adjusted LIBOR has been elected, then,
if such Lender so elects by notice to the Company setting out the basis of such
election (with a copy to the Agent), the obligation of such
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Lender to permit additional borrowings under the Loans at a rate based on
Adjusted LIBOR shall be suspended until such change ceases to be in effect and,
during such suspension, such Lender's portion of all borrowings under the Loans
requested to be made at a rate based on Adjusted LIBOR shall instead bear
interest at a rate determined by reference to the Base Rate and Applicable
Margin.
(d) Notwithstanding anything herein contained to the
contrary, if, prior to or during any Interest Period with respect to which a
rate based on Adjusted LIBOR plus the Applicable Margin is in effect, any change
in any law, regulation or official directive, or in the interpretation thereof,
by any governmental body charged with the administration thereof, shall make it
unlawful for any Lender to fund or maintain its funding in Eurodollars of any
portion of the principal amount of the Loans or otherwise to give effect to such
Lender's obligations as contemplated by this Agreement, (i) the affected Lender
shall by written notice to the Company and the Agent declare the Company's right
to elect an interest rate based on Adjusted LIBOR plus the Applicable Margin
with respect to such Lender's share of the Loans to be suspended, (ii) any
portion of the Loans made by the affected Lender bearing interest at a rate
based on Adjusted LIBOR plus the Applicable Margin shall forthwith cease to bear
interest at such rate, and interest on such portion of the Loans shall from and
after such date be calculated at a rate based upon the Base Rate plus the
Applicable Margin and (iii) the Company shall indemnify the affected Lender
against any loss or expense suffered by it in liquidating prior to maturity
Eurodollar deposits which correspond to its pro rata share of the principal
amount of the Loans to which a rate based on Adjusted LIBOR was applicable. The
affected Lender shall certify the amount of such loss or expense to the Company
and such certification shall be conclusive in the absence of manifest error.
(e) If either (i) the introduction of, or any change
in, or in the interpretation of, any applicable law or (ii) compliance with any
guideline or request from any central bank or comparable agency or other
governmental authority (whether or not having the force of law), has or would
have the effect of reducing the rate of return on the capital of, or has
affected or would affect the amount of capital required to be maintained by, any
Lender or any corporation controlling such Lender as a consequence of, or with
reference to the Commitments and other commitments of this type, below the rate
which the Lender or such other corporation could have achieved but for such
introduction, change or compliance, then within five (5) Business Days after
written demand by any such Lender, the Borrower shall pay to such Lender from
time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction. A certificate as
to such amounts submitted to the Borrower and the Agent by such Lender, shall,
in the absence of manifest error, be presumed to be correct and binding for all
purposes.
1.8.7 SOURCE OF FUNDS. Although each Lender may elect to
purchase in the London Inter-Bank Eurocurrency Market one or more Eurodollar
deposits in order to fund or maintain its funding of its pro rata share of the
principal amount of the Loans with respect to which the Company has elected a
rate based upon Adjusted LIBOR plus the Applicable Margin
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during the Interest Period in question, it is acknowledged that the provisions
of this Agreement relating to such funding are included only for the purpose of
determining the rate of interest to be paid and any other amounts owing under
this Agreement in connection with such election, and each Lender shall be
entitled to fund and maintain its funding of all or any part of that portion of
the principal amount of the Loans in any manner it sees fit. Nonetheless, all
such determinations shall be made as if each Lender had actually funded and
maintained that portion of the principal amount of the Loans to which a rate
based upon Adjusted LIBOR plus the Applicable Margin is applicable during such
Interest Period through the purchase of Eurodollar deposits in an amount equal
to its pro rata share of the principal amount of the Loans to which a rate based
upon Adjusted LIBOR plus the Applicable Margin is applicable and having a
maturity corresponding to such Interest Period.
1.8.8 DEFAULT RATE. Anything in this Agreement to the contrary
notwithstanding, (a) after maturity, whether scheduled, by acceleration or
otherwise, and whether prior to or after a judgment against the Company, or (b)
during the existence of an Event of Default specified in Subsection 8.1.1
(Failure to Pay Principal), 8.1.2 (Failure to Pay Interest, Etc.) or 8.1.3
(Cross-Default) or (c) during the existence of an Event of Default specified in
Subsection 8.1.6 (Covenant Defaults) as a result of a breach of the covenants
set forth in Article 6 (Financial Covenants), the Loans shall bear interest at
two percent (2%) per annum plus the interest rate(s) otherwise in effect from
time to time pursuant to this Agreement (the "Default Rate").
1.9 PURPOSE.
Upon satisfaction of the conditions and other requirements set
forth in this Agreement, the proceeds of the Loans shall be used by the Company:
(i) to refinance existing Indebtedness on the Closing Date; (ii) to make
Restricted Payments permitted under this Agreement; (iii) to finance
acquisitions, investments and Capital Expenditures permitted under this
Agreement; and (iv) for working capital needs and general corporate purposes.
1.10 ADDITIONAL PROVISIONS CONCERNING PREPAYMENTS AND FAILURE TO
BORROW.
1.10.1 INTEREST ON AMOUNTS PREPAID. At any time that the
Company makes a prepayment of principal, it shall pay accrued interest on the
amount so prepaid.
1.10.2 BREAKAGE. In the event that the Company makes a
prepayment (whether voluntary or mandatory) of any Loans bearing interest at a
rate based on Adjusted LIBOR plus the Applicable Margin for a specified Interest
Period on a day other than the last day of such Interest Period or fails to
borrow on the date specified in the applicable borrowing notice (or convert to a
Loan based on Adjusted LIBOR on the date specified in the LIBOR election) any
amount which the Company shall have requested to borrow at a rate based on
Adjusted LIBOR plus Applicable Margin, the Company will pay to the Agent, upon
demand, for the account of the affected Lenders any cost or expense incurred as
a result thereof. Each affected Lender shall
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certify the amount of such cost or expense to the Company and provide the
Company with a written statement setting forth the cost or expense claimed and
the calculations used in determining such loss and expense, which certification
and statement shall be conclusive in the absence of manifest error.
1.10.3 CERTAIN PRESUMPTIONS REGARDING APPLICATION OF
PREPAYMENTS. Unless otherwise provided in this Agreement or other Loan
Documents, prepayments shall be applied first to fees, then to interest (to the
extent then payable) and then to principal with respect to the portions of the
Loans accruing interest at a rate based upon the Base Rate plus the Applicable
Margin, and then to those portions of the Loans accruing interest at a rate
based upon Adjusted LIBOR plus the Applicable Margin and among such portions of
the Loans accruing interest at rates based upon Adjusted LIBOR plus the
Applicable Margin to such portions with the earliest expiring Interest Periods.
1.11 REPLACEMENT OF LENDER. If any Lender requests compensation
pursuant to Subsection 1.8.6 (Additional Costs, Unavailability, Etc.) above, the
Company, upon three Business Days' notice, may require that such Lender transfer
all of its right, title and interest under this Agreement, such Lender's Notes
and the other Loan Documents to any Eligible Assignee identified by the Company
with the consent of the Agent, subject to the following: (a) such proposed
transferee shall agree to assume all of the obligations of such Lender for
consideration equal to the outstanding principal amount of such Lender's Loans,
together with interest thereon to the date of such transfer, and satisfactory
arrangements are made for payment to such Lender of all other amounts payable
hereunder to such Lender on or prior to the date of such transfer (including any
fees accrued hereunder and any amounts that would be payable under Subsection
1.10.2 (Breakage) as if all of such Lender's Loans were being prepaid in full on
such date) and (b) if such Lender being replaced has requested compensation
pursuant to Subsection 1.8.6, such proposed transferee's aggregate requested
compensation, if any, pursuant to Subsection 1.8.6 with respect to such replaced
Lender's Loans is lower than that of the Lender replaced. Without prejudice to
the survival of any other agreement of the Company hereunder, the agreements of
the Company contained in this Section 1.11 and in Section 11.15
(Indemnification) (without duplication of any payments made to such Lender by
the Company or the proposed transferee) shall survive for the benefit of any
Lender replaced under this Section 1.11 with respect to the time prior to such
replacement.
ARTICLE 2
MECHANICS OF PAYMENTS; TAX FORMS
2.1 COMPANY PAYMENT.
All payments on account of principal and interest on the
Loans, the Commitment Fee, and all other amounts otherwise payable to Lenders
under this Agreement (other than payments in respect of Swing Loans which shall
be made directly to the Swing Lender), shall be
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made to the Agent in U.S. Dollars which are immediately available (unless
otherwise specified) by noon (Philadelphia, PA time), on the due date for such
payment, at the Agent's principal office (which as of the date of this Agreement
is at One South Penn Square, Philadelphia, PA 19107) specifying the amount and
date of payment, re: Susquehanna Media Co. (and if by wire transfer, in
accordance with the instructions on the signature page to this Agreement
executed by First Union), or to such other accounts or Persons or at such other
place as the Agent may direct in writing. The Company hereby authorizes the
Lenders (after receipt of notice from the Agent to do so) to (i) apply to the
aforesaid payments, up to the amount of such payments, any portion of the
balance of any account maintained by the Company for the purpose of facilitating
said payments, and/or (ii) cause the aforesaid payments to be made, if not paid
by the Company when due, by drawing under the loan facilities provided under
this Agreement, or making additional loans, (and any such loan shall be subject
to interest at the Default Rate and shall be secured by all of the security
interests granted pursuant to the Loan Documents); provided, however, that
notwithstanding the making by the Lenders of any of the aforesaid payments as
set forth in this sentence, the failure of the Company to make any of the
aforesaid payments when due shall constitute an Event of Default. The failure by
the Company to make a payment by noon shall not constitute an Event of Default
if such payment is made on the due date; however, any payment made after such
time on such due date shall be deemed made on the next Business Day for the
purpose of interest and reimbursement calculations. Except as otherwise set
forth in this Agreement, such payments shall be deemed to be made to the Lenders
in proportion to their respective shares of the applicable amount due. The Agent
shall promptly (on the same day if payment has been received by the Agent by
2:00 p.m. (Philadelphia, PA time) on such day, and including the additional per
diem interest and reimbursement amount paid by Company if such payment was made
by the Company to the Agent after noon on such day) remit to each Lender its pro
rata share of such payment in immediately available funds, except that all
reimbursement payments in respect of losses, out-of-pocket expenses, funding
losses or like matters shall be retained by the Agent or remitted to the Lenders
according to their respective appropriate entitlement to such reimbursement. The
requirement that the Company pay any amount to a Lender shall be discharged by
the Company when such amount of funds are received by the Agent to be disbursed
to such Lender.
2.2 LENDER REQUIRED PAYMENT.
Unless the Agent shall have been notified by a Lender prior to
noon (unless otherwise specified in this Agreement) on the date on which it is
scheduled to fund to the Agent a portion of the Commitment or any other amount
payable by a Lender under this Agreement (such payment being the "Lender
Required Payment"), which notice will be effective upon receipt, that it does
not intend to make the Lender Required Payment to the Agent, the Agent may
assume that the Lender Required Payment has been made and may, in reliance upon
such assumption (but shall not be required to), make the amount thereof
available to the Company (or other appropriate party) on such date and, if such
Lender has not in fact made the Lender Required Payment to the Agent, the
Company, if applicable, or such Lender shall, on demand, repay to the Agent the
amount so made available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made available by
the Agent until the date the Agent recovers such
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amount at a rate per annum equal to the Federal Funds Rate for such day (as
determined by the Agent). Any Lender that fails to make a Lender Required
Payment upon receipt of notice therefor, shall not be entitled to vote on any
matters that it otherwise would be entitled to vote on under this Agreement
until it makes such payment.
Notwithstanding anything to the contrary contained herein, any
lender, (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPFV") the option to fund all or any part of any Loan that such Granting Lender
would otherwise be obligated to fund pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPFV to fund any Loan,
and (ii) if an SPFV elects not to exercise such option or otherwise fails to
fund all or any part of such Loan, the Granting Lender shall be obligated to
fund such Loan pursuant to the terms hereof. The funding of a Loan by an SPFV
hereunder shall utilize the Revolving Credit Commitment of the Granting Lender
to the same extent, and as if, such Loan were funded by such Granting Lender.
Each party hereto hereby agrees that no SPFV shall be liable for any indemnity
or payment under this Agreement for which a Lender would otherwise be liable for
so long as, and to the extent, the Granting Lender provides such indemnity or
makes such payment. Notwithstanding anything to the contrary contained in this
Agreement, any SPFV may disclose on a confidential basis any non-public
information relating to its funding of Loans to any rating agency, commercial
paper dealer or provider of any surety or Loans to any rating agency, commercial
paper, dealer or provider of any surety or guarantee to such SPFV. This Section
may not be amended without the prior written consent of each Granting Lender,
all or any part of whose Loan is being funded by an SPFV at the time of such
amendment. No SPFV shall be entitled to any indemnities or additional costs or
other amounts referred to in Subsection 1.8.6 (Additional Costs, Unavailability,
Etc.) or breakage pursuant to Subsection 1.10.2 (Breakage) or similar payments
except to the extent it shares in payments made to the Granting Lender pursuant
to entitlements of the Granting Lender hereunder.
2.3 COMPANY REQUIRED PAYMENT.
Unless the Agent shall have been notified by the Company in
writing prior to the date on which the Company is scheduled to make a payment to
the Agent for the account of one or more of the Lenders or the Issuing Bank
(such payment being the "Company Required Payment"), which notice shall be
effective upon receipt, that the Company does not intend to make the Company
Required Payment to the Agent, the Agent may assume that the Company Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make such amount available to the Lenders entitled thereto on
such date. If the Company has not in fact made the Company Required Payment to
the Agent, the recipient(s) of such payment shall, on demand, repay to the Agent
the amount so made available together with interest in respect of each day
during the period commencing on the date such amount was so made available by
the Agent until the date the Agent recovers such amount at a rate per annum
equal to the Federal Funds Rate for such day (as determined by the Agent).
2.4 TAX FORMS.
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At least five (5) Business Days prior to the first date on
which interest or fees are payable under this Agreement for the account of any
Lender, each Lender that is not incorporated or organized under the laws of the
United States of America or a state thereof shall deliver to each of the Company
and the Agent two duly completed copies of United States Internal Revenue
Service Form W-9, 4224 or 1001, or other applicable form prescribed by the
Internal Revenue Service of the United States, certifying in either case that
such Lender is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes, or
are subject to such tax at a reduced rate under an applicable tax treaty, or
Form W-8 or other applicable form or a certificate of the Lender indicating that
no such exemption or reduced rate is allowable with respect to such payments.
Each Lender which so delivers a Form W-8, W-9, 4224 or 1001 further undertakes
to deliver to each of the Company and the Agent two additional copies of such
form (or a successor form) on or before the date that such form expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent form so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by the Company or the Agent,
either certifying that such Lender is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes or are subject to such tax at a reduced rate under an
applicable tax treaty or stating that no such exemption or reduced rate is
allowable. The Agent shall be entitled to withhold United States federal income
taxes at the full withholding rate unless the Lender establishes an exemption or
at the applicable reduced rate as established pursuant to the above provisions.
ARTICLE 3
LETTERS OF CREDIT
3.1 LETTERS OF CREDIT.
3.1.1 COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the
requirements set forth below, the Company may use a portion of the Revolving
Credit Commitment, which portion shall not exceed Fifty Million Dollars
($50,000,000) (the "Letter of Credit Sublimit") for the purpose of causing the
Issuing Bank to issue standby Letters of Credit for the account of the Company,
provided that (i) the Company executes and delivers a letter of credit
application and reimbursement agreement in a form acceptable to the Issuing Bank
and complies with any conditions to the issuance of such Letter of Credit
(including the payment of any applicable fees) set forth therein; (ii) the
Issuing Bank approves the form of such Letter of Credit; (iii) such Letter of
Credit bears an expiration date not later than the Revolver Maturity Date; (iv)
the Issuing Bank receives a request for issuance three (3) Business Days prior
to the date of issuance (unless the Issuing Bank, in its sole and absolute
discretion, agrees to shorter notice in any instance) and (v) the conditions set
forth in Section 4.2 (Requirements for Each Loan/Letter of Credit) are satisfied
as of the date of the issuance of such Letter of Credit.
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3.1.2 LIMITATION ON AMOUNT. The Issuing Bank shall not be
obligated or permitted under this Section 3.1 to issue any Letter of Credit for
the account of the Company to the extent that the sum of (i) the amount that
would be available to be drawn under the proposed Letter of Credit plus (ii) the
sum of all amounts available to be drawn under outstanding Letters of Credit
plus (iii) any Unreimbursed Drawings would exceed the lesser of (a) the Letter
of Credit Sublimit and (b) the Available Commitment. It is acknowledged that
First Union has previously issued a $125,000 Letter of Credit for the benefit of
California Public Employees Retirement Fund, which shall, as long as it remains
outstanding, be considered a Letter of Credit issued under this Section 3.1.
3.1.3 OBLIGATIONS ABSOLUTE. The Company's obligations under
this Section 3.1 (including any obligations to repay draws under Letters of
Credit issued hereunder) shall be absolute and unconditional under any and all
circumstances and irrespective of the occurrence of any Potential Event of
Default or Event of Default or any condition precedent whatsoever or any setoff,
counterclaim or defense to payment which the Company may have or have had
against the Issuing Bank, the Agent, any Lender or any beneficiary of a Letter
of Credit. The Company further agrees that the Issuing Bank, the Agent and the
Lenders shall not be responsible for, and the Company's reimbursement
obligations shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or forged,
or any dispute between or among the Company, the beneficiary of any Letter of
Credit or any financing institution or other party to which any Letter of Credit
may be transferred or any claims or defenses whatsoever of the Company against
the beneficiary of any Letter of Credit or any such transferee. The Issuing
Bank, the Agent and the Lenders 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. Any action
taken or omitted by the Issuing Bank, the Agent or any Lender under or in
connection with each Letter of Credit and the related drafts and documents, if
done in good faith and without willful misconduct or gross negligence on the
part of the Issuing Bank, the Agent or the Lenders, shall be binding upon the
Company and shall not result in any liability on the part of the Issuing Bank,
the Agent or any Lender to the Company.
3.1.4 RELIANCE BY ISSUING BANK. The Issuing Bank shall be
entitled to rely, and shall be fully protected in relying upon, any Letter of
Credit, draft, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document believed by it to be genuine and correct and believed by
it to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel, independent accountants and other
experts selected by the Issuing Bank and the Agent.
3.1.5 FEES. The Company shall pay to the Agent for the account
of the RC Lenders a fee equal to the product of (i) the Applicable Margin which
would apply to the face amount of the Letter of Credit if it were part of the
Revolving Loan and was bearing interest at a
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rate based on Adjusted LIBOR multiplied by (ii) the face amount of each Letter
of Credit (the "Letter of Credit Fees"). In addition, the Issuing Bank shall
receive a fronting fee equal to 1/8 of 1% per annum of the face amount of all
outstanding Letters of Credit ("Fronting Fee"). All Letter of Credit Fees and
Fronting Fees shall be payable quarterly in arrears on each Quarterly Payment
Date based on the number of days during each quarter that a Letter of Credit is
outstanding during such quarter (calculated on the basis of a 360-day year). The
Company shall also pay to the Issuing Bank all of the Issuing Bank's standard
fees and charges for the opening, amendment, modification, presentation or
cancellation of a Letter of Credit and otherwise in respect of a Letter of
Credit and shall execute all of the Issuing Bank's standard agreements in
connection with the issuance of the Letter of Credit.
3.1.6 PARTICIPATION BY RC LENDERS. The Issuing Bank shall
notify the Agent promptly upon receipt of notice of an intended draw under a
Letter of Credit, whereupon the Agent shall give written, telecopied or
telegraphic notice to each of the other RC Lenders of its pro rata share of such
draw and the scheduled date thereof. After receipt of such notice, and whether
or not an Event of Default or Potential Event of Default then exists, each RC
Lender shall make such arrangements as are necessary to assure that its share of
such draw shall be immediately available (in U.S. dollars) to the Agent no later
than noon (Philadelphia, PA time), on the date specified in the Agent's notice,
which shall be no earlier than the day after the date the Agent's notice is
given. Any amount paid by Agent and RC Lenders pursuant to a draw made under a
Letter of Credit shall constitute a borrowing under the Available Commitment,
provided that if an Event of Default or Potential Event of Default exists at the
time of a draw, the Company shall immediately reimburse the amount of such draw
to the Agent for the benefit of the RC Lenders.
To effectuate the purposes of this Subsection 3.1.6,
effective immediately upon the issuance of each Letter of Credit and without
further action on the part of the Issuing Bank, the Issuing Bank shall be deemed
to have granted to each RC Lender, and each RC Lender shall be deemed to have
irrevocably purchased and received from the Issuing Bank, without recourse or
warranty, an undivided interest and participation in such Letter of Credit to
the extent of each RC Lender's percentage of the Revolving Credit Commitment.
Further, each Lender acknowledges and agrees that it shall be absolutely liable,
to the extent of its percentage of the Revolving Credit Commitment, to fund on
demand or reimburse the Issuing Bank on demand for the amount of each draft paid
by the Issuing Bank under each Letter of Credit to the extent that such amount
is not immediately reimbursed by the Company.
3.1.7 STANDARD OF CONDUCT. The Issuing Bank shall be entitled
to administer each Letter of Credit in the ordinary course of business and in
accordance with its usual practices, modified from time to time as it deems
appropriate under the circumstances, and shall be entitled to use its discretion
in taking or refraining from taking any action in connection herewith as if it
were the sole party involved. Any action taken or omitted to be taken by the
Issuing Bank under or in connection with any Letter of Credit, if taken or
omitted in the absence
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of gross negligence or willful misconduct, shall not create for the Issuing Bank
any resulting liability to any other Lender.
3.1.8 CASH COLLATERAL ACCOUNT. In the event that (a) the
excess of (i) the amount of the Revolving Credit Commitment over (ii) the amount
of outstanding Revolving Loans and Swing Loans is less than (b) the face amount
of outstanding Letters of Credit and Unreimbursed Drawings for any reason
(whether because the Revolving Credit Commitment has been reduced or terminated
or otherwise), the Company shall forthwith pay to the Agent an amount equal to
the excess of the amount described in clause (b) above over the amount described
in clause (a) above. Such amount shall first be applied against Unreimbursed
Drawings and the remainder shall be maintained by the Agent in an interest
bearing cash collateral account in the name of and for the benefit of the Agent
and the Lenders to secure the repayment of Company's obligation to reimburse the
Lenders for drafts drawn or which may be drawn under outstanding Letters of
Credit until such time as all outstanding Letters of Credit have expired or been
cancelled.
3.1.9 OBLIGATIONS SECURED. The obligations of the Company to
the Issuing Bank, the Agent and the Lenders in respect of Letters of Credit
shall be guaranteed pursuant to the Loan Documents and shall be secured by the
Collateral.
ARTICLE 4
CONDITIONS TO FUNDINGS AND
ISSUANCE OF LETTERS OF CREDIT
4.1 CONDITIONS TO INITIAL FUNDING. The obligation of the Lenders to
make the initial Loans or the Issuing Bank to issue the initial Letters of
Credit pursuant to this Agreement shall be subject to the fulfillment, to the
satisfaction of the Lenders and Issuing Bank (unless otherwise specified), of
the following conditions (the date of such fulfillment being the "Closing
Date"). The making of any Loan by any Lender on the Closing Date or the issuance
of any Letters of Credit by the Issuing Bank shall constitute evidence of such
Lender's or Issuing Bank's satisfaction with the fulfillment thereof.
4.1.1 EXECUTION OF THIS AGREEMENT. This Agreement shall have
been duly executed by the Company, each Lender, each Issuing Bank and the Agent.
4.1.2 THE NOTES. The Company shall have delivered duly
executed Notes to each of the Lenders that requests a Note.
4.1.3 SECURITY AGREEMENT. The Company and each Subsidiary of
the Company shall have executed and delivered to the Agent a Security Agreement
(as amended, modified or supplemented from time to time in accordance with the
terms hereof and thereof, the "Security Agreement") in substantially the form
annexed to this Agreement as Exhibit E, together with
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such Uniform Commercial Code financing statements as are necessary to perfect
the security interests created by such Security Agreement and together with such
landlord waivers as the agent shall request, provided, that fixture filings will
only be delivered to the extent that the Company is able to provide the
necessary property descriptions without undue difficulty unless the Agent
otherwise requests.
4.1.4 GUARANTY AND SURETYSHIP AGREEMENT. Each Subsidiary of
the Company shall have executed and delivered to the Agent a Guaranty and
Suretyship Agreement (as amended, modified or supplemented from time to time the
"Subsidiary Suretyship") in substantially the form annexed to this Agreement as
Exhibit F.
4.1.5 PLEDGE AGREEMENTS.
(a) SPC shall own directly all of the common stock of
the Company and shall have executed and delivered to the Agent a Pledge
Agreement (as the same may be amended, modified or supplemented from time to
time, the "SPC Pledge") in substantially the form and annexed to this Agreement
as Exhibit G, together with the stock certificates, assignment powers and
financing statements required thereunder.
(b) The Company shall own directly all of the capital
stock of the Subsidiaries specified as being owned by it on Schedule 9.1 hereto
and the Company shall have executed and delivered to the Agent a Pledge
Agreement (as the same may be amended, modified or supplemented from time to
time, the "Company Pledge") in substantially the form annexed to this Agreement
as Exhibit H, together with the stock certificates, assignment powers and
financing statements required thereunder. (The Company represents that except
for certain non-voting stock of BlazeNet and Susquehanna Radio, all of the
capital stock of the Subsidiaries will be, as of the Closing Date, pledged
pursuant to one or more Pledge Agreements.)
(c) The Subsidiaries of the Company shall own
directly all of the capital stock of the Subsidiaries specified as being owned
by them on Schedule 9.1 hereto and all of the partnership interests in Hyperion
Susquehanna Telecommunications, Mt. Diablo Group and Senior Road Tower
Partnership reflected on said Schedule 9.1, and such Subsidiaries shall have
executed and delivered to the Agent a Pledge Agreement (as amended, modified and
supplemented from time to time, "Subsidiary Pledge") in substantially the form
annexed to this Agreement as Exhibit I, together with the stock certificates,
assignment powers and financing statements required thereunder.
(d) The shareholders of the Company and the Company's
Subsidiaries other than SPC, the Company, its Subsidiaries and Lenfest (and
other than the owners of the non-voting stock of BlazeNet and Susquehanna Radio)
(collectively, the "Other Shareholders") shall own directly the capital stock
and/or partnership interests of the Company and its Subsidiaries specified as
being owned by them on Schedule 9.1. The Other Shareholders shall have executed
and delivered to the Agent a Pledge Agreement (as amended, supplemented and
modified from
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time to time, the "Other Shareholders Pledge") in substantially the form annexed
to this Agreement as Exhibit J, together with the stock certificates, assignment
powers and financing statements required thereunder.
(e) Lenfest shall own directly the capital stock of
the Subsidiaries of the Company specified as being owned by it on Schedule 9.1
hereto. Lenfest shall have executed and delivered to the Agent a Pledge
Agreement (as amended, modified or supplemented from time to time, the "Lenfest
Pledge") in substantially the form annexed to this Agreement as Exhibit K,
together with the stock certificates, assignment powers and financing statements
required thereunder.
4.1.6 SUBORDINATION AGREEMENTS.
(a) SPC shall have executed and delivered to the
Agent a Subordination Agreement (as amended, modified or supplemented from time
to time "SPC Subordination Agreement") in substantially the form and annexed to
this Agreement as Exhibit L.
(b) The Other Shareholders shall have executed and
delivered to the Agent a Subordination Agreement (as amended, modified or
supplemented from time to time the "Shareholder Subordination Agreement") in
substantially the form annexed to this Agreement as Exhibit M.
(c) Lenfest shall have executed and delivered to the
Agent a Subordination Agreement (as amended, modified or supplemented from time
to time, the "Lenfest Subordination Agreement") in substantially the form
annexed to this Agreement as Exhibit N.
4.1.7 TRADEMARK COLLATERAL AGREEMENT. The Company and each
Subsidiary shall have executed and delivered to the Agent a Trademark Collateral
Agreement (as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof, the "Trademark Collateral Agreement") in
substantially the form annexed to this Agreement as Exhibit O, together with
such notices for filing in the United States Patent Trademark Office and such
Uniform Commercial Code financing statements as are necessary to perfect the
security interests created by such Trademark Collateral Agreement.
4.1.8 REPAYMENT OF EXISTING INDEBTEDNESS. All Indebtedness
under that certain Third Amended and Restated Loan Agreement, dated as of July
17, 1997, among the Company, First Union (as successor to CoreStates Bank, N.A.)
as agent and the lenders referred to therein, (the "Existing Facilities") shall
have been repaid in full concurrently with the initial advances under this
Agreement.
4.1.9 TAX SHARING AGREEMENT. The Company shall have delivered
a fully executed tax sharing agreement (the "Tax Sharing Agreement") among the
Company, its
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Subsidiaries, SPC and its other Subsidiaries, respecting the allocation of tax
liabilities among SPC and its Subsidiaries in form and substance satisfactory to
the Agent.
4.1.10 MANAGEMENT AGREEMENT. The Company shall have delivered
a fully executed Management Agreement (the "Management Agreement") between the
Company and SPC, in form and substance satisfactory to the Agent.
4.1.11 ESOP SHARING AGREEMENT. The Company shall have
delivered a fully executed ESOP sharing agreement (the "ESOP Sharing Agreement")
among the Company, its Subsidiaries, SPC and its other Subsidiaries, respecting
the allocation of certain liabilities in respect of the ESOP as between SPC, the
Company and Pfaltzgraff in form and substance satisfactory to the Agent.
4.1.12 LENFEST AGREEMENT. The Company shall have delivered to
the Agent a fully executed copy of the Lenfest Agreement.
4.1.13 SENIOR SUBORDINATED INDENTURE. The Company shall have
delivered to the Agent a copy of the Senior Subordinated Indenture (if it shall
then be executed) and the Senior Subordinated Notes issued thereunder (if then
issued).
4.1.14 CREATION OF ESOP. SPC shall have set up an employee
stock ownership plan ("ESOP") that complies with section 401 of the Code and
with the applicable provisions of section 409 of the Code. Further, SPC shall
have delivered to the Agent copies of the plan and trust documents establishing
the ESOP, each of which shall be in form and substance satisfactory to the
Agent.
4.1.15 PAYMENT OF FEES AND COSTS. The Company shall have paid
all of the fees required to be paid to the Agent and other Lenders on the
Closing Date and all of the fees and disbursements of counsel for the Agent in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other documents contemplated herein.
4.1.16 NO DEFAULT. Before and after giving effect to the
Indebtedness to be incurred hereunder, there shall exist no Event of Default or
Potential Event of Default under this Agreement.
4.1.17 CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement or otherwise made in
writing in connection with this Agreement, whether made by SPC, the Company, any
Subsidiary of the Company or any other Person on behalf of SPC, the Company or
any of the Company's Subsidiaries, shall be true and correct with the same
effect as though such representations and warranties were made to Lenders or
Agent on behalf of Lenders on and as of the Closing Date.
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4.1.18 FINANCIAL STATEMENTS; PROJECTIONS.
(a) The Lenders shall have received audited financial
statements of SPC and its Subsidiaries for the fiscal year ended December 31,
1998 in form and substance satisfactory to the Agent.
(b) The Lenders shall have received a final set of
operating projections for the Company and its Subsidiaries, dated no more than
120 days prior to the Closing Date, for the period ending on December 31, 2008,
which shall be in reasonable detail, shall be based on the closing capital
structure of the Company and its Subsidiaries, shall reflect the consummation of
the transactions contemplated by this Agreement including the creation and
funding of the ESOP and shall be in form and substance satisfactory to the
Agent.
4.1.19 LEGAL PROCEEDINGS. All corporate, partnership and other
legal proceedings and all instruments in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance to
the Agent and its counsel, and the Agent and its counsel shall have received all
information and copies of all documents and records of all corporate and
partnership proceedings, which the Agent or its counsel has requested, such
documents where appropriate to be certified by proper corporate, partnership,
governmental or other authorities.
4.1.20 CONSENTS AND APPROVALS. All material corporate,
governmental and judicial consents and approvals and waivers (including, without
limitation, any requisite FCC or PUC approvals) and third party consents
(including Lenfest) and approvals (except for those consents, approvals and
waivers not required by the Agent as a condition to closing) necessary in
connection with this Agreement and the Loans, or other related transactions
(including, without limitation, those required in connection with the creation
of the ESOP), shall have been obtained and become final or Final Orders, as
applicable, and shall remain in full force and effect, without the imposition of
any conditions that are not acceptable to the Lenders provided that the
transfers of the radio licenses WGRL, WGLD, WFMS and WRRM to the special purpose
Subsidiaries, Indy Lico, Inc., WFMS Lico, Inc., and WRRM Lico, Inc. need not be
Final Orders so long as there is no reason to believe that with the passage of
time they will not become Final Orders. It is understood that certain third
party consents in connection with the pledge of certain assets such as
franchises and minority partnership interests are being delivered on a
commercially reasonable basis.
4.1.21 MATERIAL ADVERSE CHANGE OR EFFECT; COMPLIANCE WITH LAW.
(a) No Material Adverse Change shall have occurred
since December 31, 1998.
(b) No event shall have occurred or be threatened and
no facts or circumstances shall exist, including, without limitation, any
action, suit, investigation, litigation
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or proceeding pending or threatened in a court or before any arbitrator or
governmental instrumentality, that could have a Material Adverse Effect.
(c) The Company and its Subsidiaries shall be in
substantial compliance with all applicable laws, including environmental laws.
4.1.22 OPINIONS OF COUNSEL. The Agent shall have received the
following favorable opinions of counsel as to the transactions contemplated
hereby addressed to the Agent, the Issuing Bank and the Lenders and dated as of
the Closing Date, in form and content satisfactory to Agent, the Issuing Bank
and the Lenders:
(i) Craig W. Bremer, counsel to SPC, the
Company, and the Company's Subsidiaries and certain
of the Other Shareholders;
(ii) Barley Snyder Senft and Cohen, counsel
to SPC, the Company and the Company's Subsidiaries;
(iii) Cohn and Marks, FCC counsel to Company
and its Subsidiaries with respect to broadcast
matters;
(iv) Wiley, Rein & Fielding, FCC counsel to
the Company and its Subsidiaries with respect to
cable television matters; and
(v) Ivins Phillips & Barker, Chartered,
special tax counsel to the Company, as to the due
formation and valid existence of the ESOP, the
favorable tax treatment of the ESOP under Section 401
and, as applicable, Section 409 of the Code and such
other matters as the Agent shall reasonably request.
4.1.23 OFFICERS' COMPLIANCE CERTIFICATE. There shall have been
delivered to the Agent an Officers' Compliance Certificate dated as of the
Closing Date.
4.1.24 GOOD STANDING. The Agent shall have received (a) good
standing certificates for each of SPC, the Company and the Company's
Subsidiaries, evidencing its good standing under the laws of the state of its
incorporation or formation and (b) good standing certificates for each of the
Company and the Company's Subsidiaries, evidencing its good standing under the
laws of the states in which it is required to qualify to do business.
4.1.25 LIEN SEARCHES. The Company shall have delivered to the
Agent Uniform Commercial Code, tax and judgment lien searches of a recent date,
in such offices as are acceptable to the Agent, with respect to Company and each
of Company's Subsidiaries, showing no Liens except Permitted Liens.
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4.1.26 EVIDENCE OF INSURANCE. The Agent shall have received
evidence of the insurance required by Section 7.15 (Insurance) below.
4.1.27 OTHER REQUIREMENTS. The Agent shall have received such
additional information and material as the Agent or any Lender may reasonably
request.
4.2 REQUIREMENTS FOR EACH LOAN/LETTER OF CREDIT.
The Lenders shall not be required to make any Loans to the
Company and the Issuing Bank shall not be required to issue any Letters of
Credit unless the following conditions are fulfilled to the satisfaction of
Agent:
4.2.1 NO DEFAULT. There shall not, either prior to or after
giving effect to each such funding or Letter of Credit, exist an Event of
Default or Potential Event of Default;
4.2.2 REQUEST FOR ADVANCE/LETTER OF CREDIT. Agent shall have
timely received a borrowing notice pursuant to Section 1.6 (Borrowing Notice) or
request for a Letter of Credit pursuant to Subsection 3.1.1 (Commitment to Issue
Letters of Credit). Each request for a Loan that individually or together with
other related Loans exceeds $25,000,000 for the purpose of effecting an
Acquisition or purchasing a minority interest in a Subsidiary shall be
accompanied by the Officer's Certificate referred to in Subsection 1.8.3
(Officers' Certificate);
4.2.3 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of SPC, the Company, its Subsidiaries, Lenfest and the Other
Shareholders made in the Loan Documents shall be true and correct in all
material respects as of the date of each such Loan or Letter of Credit (both
immediately prior to and after giving effect to said Loan or Letter of Credit)
as if made on and as of such date, except to the extent that changes in the
facts and conditions on which such representations and warranties are based do
not result from an act or omission that constitutes a breach of any covenant set
forth in this Agreement or in any other Loan Document and have been disclosed to
Lenders in writing;
4.2.4 MATERIAL ADVERSE CHANGE. No Material Adverse Change
shall have occurred since the date of this Agreement;
4.2.5 MATERIAL ADVERSE EFFECT. No event shall have occurred
and no fact or condition shall exist, including, without limitation, any action,
suit, investigation, litigation or proceeding pending or threatened in a court
or before any arbitrator or governmental instrumentality, that could have a
Material Adverse Effect;
4.2.6 SENIOR SUBORDINATED NOTES. The obligation of the Company
hereunder to repay each such Loan or Letter of Credit shall be senior to any
obligation of the Company to repay the Senior Subordinated Notes (if the same
are outstanding); and
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4.2.7 MISCELLANEOUS. The Agent shall have received such
additional information and material as the Agent may reasonably request,
including such additional agreements or certifications executed by SPC, the
Company or any Subsidiary of the Company as the Agent may reasonably request.
4.2.8 METHOD OF CERTIFYING CERTAIN CONDITIONS. The request
for, and acceptance of, each Loan and each Letter of Credit by the Company shall
be deemed a representation and warranty by the Company that the conditions
specified in Subsections 4.2.1 (No Default), 4.2.3 (Representations and
Warranties), 4.2.4 (Material Adverse Change), 4.2.5 (Material Adverse Effect)
and 4.2.6 (Senior Subordinated Notes) have been satisfied.
ARTICLE 5
REPORTING REQUIREMENTS AND NOTICES
The Company covenants that from the date of this Agreement so long as
any of the Senior Secured Obligations remain unpaid, any Letters of Credit
remain outstanding, the Lenders have an unexpired Commitment to lend hereunder
or the Issuing Bank has an unexpired commitment to issue Letters of Credit
hereunder, it shall comply with each of the reporting and notice requirements
set forth in this Article 5.
5.1 FINANCIAL DATA AND REPORTING REQUIREMENTS; NOTICE OF CERTAIN
EVENTS.
5.1.1 DELIVERY OF QUARTERLY FINANCIAL STATEMENTS. As soon as
practicable and in any event within sixty (60) days after the close of each of
the first three quarters of each fiscal year of Company, the Company shall
deliver to the Lenders,
(a) an unaudited Consolidated balance sheet,
statement of income and changes in retained earnings, and statement of cash
flows of Company and its Subsidiaries as at the end of and for (i) the period
commencing at the end of the previous fiscal year and ending with such quarter
and (ii) the period commencing at the end of the previous fiscal quarter and
ending with such currently reported quarter, setting forth in comparative form
the corresponding figures for the appropriate periods of the preceding fiscal
year, and
(b) a supplemental consolidating balance sheet
showing separately a balance sheet, and a supplemental consolidating statement
of operations showing separately a statement of operations, for each of
Susquehanna Cable and its Subsidiaries and Susquehanna Radio and its
Subsidiaries and each of the other direct Subsidiaries of the Company as at the
end of and for each such fiscal quarter, all in reasonable detail and certified
by the Treasurer or a Vice President of Company to be true and complete, subject
to normal recurring year-end audit adjustments, it being understood that
footnotes may be omitted.
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5.1.2 DELIVERY OF ANNUAL FINANCIAL STATEMENTS; ACCOUNTANTS'
CERTIFICATION. As soon as practicable and in any event within one hundred twenty
(120) days after the close of each fiscal year of the Company, the Company shall
deliver to the Lenders,
(a) an audited Consolidated balance sheet, statement
of income and changes in retained earnings, and statement of cash flows of
Company and its Subsidiaries, as at the end of and for the fiscal year just
closed in reasonable detail and certified (without any qualification,
modification or exception) by nationally-recognized independent certified public
accountants selected by Company and satisfactory to Agent,
(b) a supplemental consolidating balance sheet
showing separately a balance sheet, and a supplemental consolidating statement
of operations showing separately a statement of operations, for each of
Susquehanna Cable and its Subsidiaries and Susquehanna Radio and its
Subsidiaries and each of the other direct Subsidiaries of the Company as at the
end of and for each fiscal year and, in the case of the statement of operations,
for the fourth quarter of the fiscal year just closed, setting forth the
corresponding figures for the previous fiscal year in comparative form, all in
reasonable detail;
(c) concurrently with such financial statements
described in clause (a) above, (x) a written statement signed by such
accountants to the effect that in making the examination necessary for their
certification of the financial statements referred to in clause (a) above, they
have not obtained any knowledge of the existence of any Event of Default or any
Potential Event of Default, or, if such accountants shall have obtained from
such examination any such knowledge, they shall disclose in such written
statement the Event of Default or Potential Event of Default; and
(d) concurrently with the consolidating financial
statements referred to in clause (b) above, a certificate of a Vice President or
the Treasurer that the consolidating statements described therein are true and
complete.
5.1.3 DELIVERY OF OFFICERS' CERTIFICATES AS TO NO DEFAULT. As
soon as practicable after the close of each quarter of each fiscal year of the
Company and in any event no later than the date on which financial statements
are required to be delivered for each such quarter or year, as provided in
Subsections 5.1.1 or 5.1.2, the Company shall deliver to the Lenders an
Officers' Certificate stating that there existed during such quarter and, in the
case of the certificate delivered after the fourth quarter, such fiscal year, no
Event of Default and no Potential Event of Default or if any such Event of
Default or Potential Event of Default existed, specifying the nature thereof,
the period of existence thereof and what action the Company proposes to take, or
has taken, with respect thereto.
5.1.4 DELIVERY OF OFFICERS' COMPLIANCE CERTIFICATE; SUBSCRIBER
LEVELS, ETC. Together with each quarterly report or annual report of the Company
required under Subsections 5.1.1 and 5.1.2 above the Company shall deliver to
the Lenders:
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(a) an Officers' Compliance Certificate;
(b) a report as to certain operating data in
substantially the form of Exhibit P;
(c) for each broadcast station owned by Company or
any of its Subsidiaries, a report indicating market revenues, broadcast station
revenues, billings share, broadcast station cash flow, broadcast station cash
flow margin and Arbitron rating (12 + and the target demographic group for such
broadcast station); and
(d) a schedule of depreciation for (a) each radio
station, (b) each cable system and (c) BlazeNet.
5.1.5 AUDITORS' REPORTS. Promptly upon receipt, the Company
shall deliver to the Lenders copies of all financial reports or written
recommendations, if any, submitted to the Company or any of its Subsidiaries by
its auditors in connection with each annual or interim audit or examination of
its books by such auditors.
5.1.6 SPC FINANCIAL STATEMENT. As soon as practicable and in
any event within one hundred twenty (120) days after the close of each fiscal
year of SPC, the Company shall deliver to the Agent, the Issuing Bank and each
Lender (a) audited consolidated balance sheets, statements of operations and
shareholders' equity and statements of cash flows of SPC and its Subsidiaries,
as at the end of and for the fiscal year just closed, setting forth the
corresponding figures for the previous fiscal year in comparative form all in
reasonable detail, certified (without any qualification, modification or
exception) by nationally-recognized independent certified public accountants
selected by SPC, and, (b) consolidating balance sheets, statements of operations
and shareholders' equity of SPC and its Subsidiaries, as of the end of and for
the fiscal year just closed, all in reasonable detail and certified by the Chief
Financial Officer or Vice President, Treasury Operations, of SPC to fairly
present the information contained therein in accordance with GAAP.
5.1.7 OFFICERS' CERTIFICATE FOR RATE AND FEE CALCULATIONS. The
Company shall deliver the Officers' Certificates as required by Subsection 1.8.3
(Officers' Certificate) above at the times specified therein.
5.1.8 ESOP INFORMATION. Annually at the time of delivery of
the financial statements pursuant to Subsection 5.1.2 above, the Company shall
provide the following information:
(a) The consolidated amount of the ESOP Compensation
Expense relative to the ESOP;
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(b) The total amount of ESOP Compensation Expense
(broken down by cash and non-cash components, if
applicable) allocated to the Company;
(c) The total amount of ESOP Compensation Expense
allocated to Pfaltzgraff Corp.;
(d) The total amount of ESOP Compensation Expense
allocated to SPC;
(e) The total amount of direct operating expenses of
the ESOP;
(f) The amount of payments made by SPC to the Company
in respect of debt service prepayments on the loan
made on the Closing Date;
(g) The total amount of ESOP Repurchase Payments of
the Company.
The Company shall, at the same time, certify that the allocations and payments
made with respect to the ESOP were made in compliance with the ESOP Sharing
Agreement.
5.1.9 REPORTS TO SENIOR SUBORDINATED NOTEHOLDERS, SEC FILINGS,
ETC. Promptly upon receipt or transmission thereof, as applicable, the Company
shall deliver to the Agent and the Lenders:
(a) at any time when SPC, the Company or any of the
Company's Subsidiaries is subject to the reporting requirements of the
Securities Exchange Act of 1934, all letters of comment or material
correspondence sent to SPC, the Company or any of the Company's Subsidiaries by
any securities exchange or the Securities and Exchange Commission in relation to
the affairs of SPC, the Company or any of the Company's Subsidiaries,
(b) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by SPC, the Company or
any of the Company's Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental authority succeeding to
any of its functions,
(c) financial statements, reports, notices and proxy
statements sent or made available generally by SPC, the Company or any of the
Company's Subsidiaries to the Senior Subordinated Noteholders or other lenders
to such Persons, (if any) and their other respective unit holders, bondholders
or security holders (or any trustee or other representative of any of the
foregoing) and any non-routine notices or other non-routine correspondence from
such Senior Subordinated Noteholders, unit holders, bondholders or security
holders (or trustee or other representative of such Persons), and
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<PAGE> 46
(d) all press releases and other statements made
available by SPC, the Company or any of the Company's Subsidiaries to the public
concerning material developments in their respective businesses.
5.2 NOTICE OF DEFAULTS, DISPUTES AND OTHER MATTERS.
The Company shall give written notice to Agent, the Issuing
Bank and the Lenders of the following matters promptly upon (and in any event
within three (3) Business Days of) any officer of the Company obtaining
knowledge thereof:
5.2.1 CERTAIN ORDERS BY PUC. Any citation, order to show
cause, or other legal process, order, notice, protest or reconsideration
affecting the Company or any of its Subsidiaries or directing the Company or any
of its Subsidiaries to become a party to or to appear at any proceeding or
hearing by or before any governmental instrumentality (including without
limitation the FCC, any PUC or other instrumentality which shall have granted to
any such Person a Franchise) which, if adversely determined, could, either
individually or in the aggregate, have a Material Adverse Effect and include
with such notice a copy of any such citation, order to show cause or other legal
process, notice order or protest;
5.2.2 LICENSE OR FRANCHISE REVOCATION. Any (a) actual or
threatened denial, refusal or failure to renew or revocation or material adverse
modification by the FCC of any FCC License or by any PUC or any other
governmental instrumentality of any other Franchise, (except the routine,
scheduled expiration of FCC Licenses and any PUC Franchises for which
applications for renewal are timely and properly filed with the appropriate
governmental agency unless, at any time with respect thereto, a competing
application or petition to deny, or other challenge is filed against any such
renewal application), or (b) dispute or other action with respect to any
Franchise which if resolved adversely could have a Material Adverse Effect, or
(c) notice from the FCC or any PUC of apparent liability for forfeiture or of
the imposition of any fines or penalties or forfeitures in the amount or amounts
of $50,000 or more in any twelve (12) month period, or (d) written notices or
written requests by other parties with respect to any of the foregoing or with
respect to any proceeding or hearing which might reasonably be expected to
result in any of the foregoing which, either individually or in the aggregate,
could have a Material Adverse Effect;
5.2.3 CERTAIN DISPUTES. Any dispute concerning, or any
threatened non-renewal or modification of, any agreement to which the Company or
any of its Subsidiaries is a party, including, without limitation, any lease for
or easement over real property, any lease for personal property, any pole
attachment agreement or any programming agreement, if such dispute or threatened
non-renewal or modification, either individually or in the aggregate, could have
a Material Adverse Effect;
5.2.4 CERTAIN LITIGATION. Any actions, proceedings or claims
commenced or asserted against SPC, Company or any of the Company's Subsidiaries
in which the amount
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<PAGE> 47
involved is $100,000 or more and which is not fully covered by insurance, or
which, if not solely a claim for monetary damages, could reasonably be expected
to, if adversely determined, have a Material Adverse Effect;
5.2.5 GOVERNMENTAL REPORTS. All non-routine material reports,
requests or correspondence filed by SPC (except for information relating only to
The Pfaltzgraff Co.), the Company or any of the Company's Subsidiaries with the
FCC or any PUC, court or other governmental agency relative to the operations of
Company or any of its Subsidiaries and all material, non-routine correspondence
or material, non-routine official notices received by SPC (except for
information relating only to The Pfaltzgraff Co.), the Company or any of the
Company's Subsidiaries from any governmental agency which regulates all or any
part of the operations of any such entity;
5.2.6 LENFEST AGREEMENT. Copies of any non-routine notices
under the Lenfest Agreement including any notices relating to buy/sell
provisions or put provisions and any notices of amendment required by Subsection
7.26.1 (Changes in Certain Agreements) and, if the Lenfest Note is issued,
notice of any default or payment in connection therewith;
5.2.7 EVENTS OF DEFAULT. The occurrence of any Event of
Default or Potential Event of Default;
5.2.8 CONTRACT DEFAULT. The occurrence of any event which
constitutes, or with notice or lapse of time or both, would constitute, a
default or an event of default under any contractual obligations of the Company
or any of its Subsidiaries which, if adversely determined, could, either
individually or in the aggregate, have a Material Adverse Effect;
5.2.9 CROSS DEFAULT. Any notice given to the Company or any of
its Subsidiaries by any Person or any other action taken by any Person with
respect to a claimed default or event or condition of the type referred to in
Subsections 8.1.3 (Cross Default to Indebtedness) or 8.1.4 (Other
Cross-Defaults) below;
5.2.10 MATERIAL ADVERSE CHANGE. Any Material Adverse Change or
the existence of any facts or circumstances or the occurrence or failure to
occur of any event which could have a Material Adverse Effect;
5.2.11 REPRESENTATIONS AND WARRANTIES. Any changes in facts or
circumstances on which the representations and warranties set forth in this
Agreement are made which makes such representations and warranties false or
misleading in any material respect;
5.2.12 EQUITY ISSUANCE. Any issuance by the Company or a
Subsidiary of capital stock or other equity, which issuance may be made only to
the extent not prohibited by this Agreement; and
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<PAGE> 48
5.2.13 PURCHASE OF MINORITY INTERESTS. Any purchase of any
minority interests in any Subsidiaries, together with an Officers' Compliance
Certificate prepared on a Pro Forma Basis, showing compliance with the financial
covenants set forth in this Agreement after giving effect to such purchase.
5.3 THE ESOP AND ERISA MATTERS.
5.3.1 THE ESOP. Promptly upon receipt thereof, the Company
shall deliver to each Lender a copy of any ruling or non-routine correspondence
from the Internal Revenue Service respecting the tax status of the ESOP and
promptly upon the Company having knowledge thereof, the Company shall deliver
notice of any event or condition which could cause the ESOP to lose its
tax-qualified status. In addition, the Company shall provide on an annual basis
the information required by Subsection 5.1.8 (ESOP Information) above.
5.3.2 ANNUAL REPORTS. Upon request of any Lender, the Company
shall deliver to such Lender each annual report filed with respect to the ESOP
or any Plan with the Internal Revenue Service, Secretary of Labor or the PBGC;
and all reports delivered to any such Person from its actuary with respect to
any Plan; and the most recent actuarial report for each Employee Pension Plan.
5.3.3 OTHER ERISA INFORMATION. The Company shall deliver to
each Lender all material non-routine correspondence with the PBGC, Secretary of
Labor or any representative of the Internal Revenue Service with respect to any
Plan or the ESOP.
5.3.4 REPORTABLE EVENTS, ETC.
(a) The Company shall deliver to each Lender notice
of the occurrence of any Reportable Event as such term is defined in Section
4043 of ERISA, or "prohibited transaction" as such term is defined in Section
4975 of the Code, in connection with any Plan or any trust created thereunder.
(b) Company shall furnish to Agent (i) within 30 days
after any officer of the Company obtains knowledge that the Company, any of its
Subsidiaries, or any ERISA Affiliate has incurred or anticipates incurring
Withdrawal Liability, or that any Multiemployer Plan is in Reorganization or
that any Reportable Event has occurred with respect to any Employee Pension Plan
or that the PBGC has instituted or will institute proceedings under Title IV of
ERISA to terminate any Employee Pension Plan or to appoint a trustee to
administer any Employee Pension Plan, a statement setting forth the details as
to such Withdrawal Liability, Reorganization, Reportable Event or termination or
appointment proceedings and the action which it, any of its Subsidiaries or
ERISA Affiliates (or the Multiemployer Plan sponsor or Employee Pension Plan
sponsor if other than the Company) proposes to take with respect thereto,
together with a copy of any notice of Withdrawal Liability or Reorganization
given to the Company, any of its Subsidiaries or ERISA Affiliates and a copy of
the notice of such
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<PAGE> 49
Reportable Event given to PBGC if a copy of such notice is available to the
Company, any of its Subsidiaries or any of its ERISA Affiliates, and (ii)
promptly after receipt thereof, a copy of any notice the Company, any of its
Subsidiaries or any of its ERISA Affiliates or the sponsor of any Plan receives
from the PBGC, or the Internal Revenue Service or the Department of Labor which
sets forth or proposes any action or determination with respect to such Plan.
(c) The Company will promptly notify the Agent of any
excise taxes or penalties which have been assessed or which the Company, any of
its Subsidiaries or any of its ERISA Affiliates has reason to believe may be
assessed against the Company, any of its Subsidiaries or any of its ERISA
Affiliates by the Internal Revenue Service or the Department of Labor with
respect to any Plan or Multiemployer Plan.
(d) Within the time required for notice to the PBGC
under Section 302(f)(4)(A) of ERISA, the Company will notify the Agent of any
lien arising under Section 302(f) of ERISA in favor of any Plan.
Each notice pursuant to this Subsection 5.3.4 shall be accompanied by a
statement of the President or a Vice President or the Treasurer of the Company
setting forth details of the matter referred to therein and stating what action
the Company or the affected Subsidiary has taken, is taking and proposes to take
with respect thereto. For the purpose of this Subsection 5.3.4, the Company
shall be deemed to have knowledge of all facts attributable to the administrator
of such Plan.
5.4 MISCELLANEOUS. With reasonable promptness, the Company shall
deliver such other information respecting the business, operations and financial
condition of (i) SPC (other than information relating only to The Pfaltzgraff
Co. and/or its Subsidiaries) or any of its Subsidiaries or any entities in which
SPC or any of its Subsidiaries have an ownership interest, or (ii) Company or
any of Company's Subsidiaries, as the Agent or any Lender may from time to time
reasonably request.
5.5 DISCLOSURE.
The Agent, the Issuing Bank and the Lenders are hereby
authorized to show or deliver a copy of any financial statement or any other
information relating to the business, operations or financial condition of SPC,
the Company and the Company's Subsidiaries, which may be furnished to Agent, the
Issuing Bank or any Lender or come to their attention pursuant to this Agreement
(the "Financial Information"), to any regulatory body or agency having
jurisdiction over the Agent, the Issuing Bank or any Lender, to the Agent's, the
Issuing Bank's or any Lender's counsel, advisers and auditors, and to any Person
which shall, or shall have any right or obligation to, succeed to all or any
part of the Agent's, the Issuing Bank's or any Lender's interest (the "Lender's
Interest"), in the Notes or any Note, and/or this Agreement or to any Person who
shall express a desire to acquire all or part of such Lender's Interest.
Effective during the existence of an Event of Default, Agent, the Issuing Bank
and the Lenders and their
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<PAGE> 50
respective counsel, advisors and auditors are hereby further authorized to show
or deliver a copy of the Financial Information to other Persons in connection
with protecting, preserving, exercising or enforcing any rights of the Agent,
the Issuing Bank or the Lenders in, under or related to the Loan Documents or
any collateral.
ARTICLE 6
FINANCIAL COVENANTS
The Company covenants that from the date of this Agreement so long as
any of the Senior Secured Obligations remain unpaid, any Letters of Credit
remain outstanding, the Lenders have an unexpired Commitment to lend hereunder
or the Issuing Bank has an unexpired commitment to issue Letters of Credit
hereunder, it shall comply with each of the financial covenants set forth in
this Article 6.
6.1 INTEREST COVERAGE RATIO. The Company shall maintain at all times an
Interest Coverage Ratio of at least 1.75:1 through December 31, 1999 and 2.00:1
thereafter. This ratio shall be tested as of the end of each fiscal quarter of
the Company.
6.2 THE DEBT SERVICE COVERAGE RATIO. The Company shall maintain at all
times a Debt Service Coverage Ratio of at least 1.20:1. This ratio shall be
tested as of the end of each fiscal quarter of Company.
6.3 CONSOLIDATED TOTAL LEVERAGE RATIO. The Company shall not, and shall
not permit any of its Subsidiaries to, incur or permit Consolidated Indebtedness
to exist that would at any time cause the Consolidated Total Leverage Ratio,
during each period specified below, to equal or exceed the applicable ratio for
such period specified below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through 6/30/01 7.00:1
7/1/01 through 6/30/02 6.50:1
7/1/02 and thereafter 6.00:1
</TABLE>
This ratio shall be tested as at the (i) end of each fiscal quarter of Company
during each period specified above, and (ii) the date of each incurrence of
Consolidated Indebtedness (after giving effect to such proposed incurrence).
6.4 CONSOLIDATED SENIOR LEVERAGE RATIO. The Company shall not, and
shall not permit any of its Subsidiaries to, incur or permit to exist any Senior
Debt that would at any time cause the Consolidated Senior Leverage Ratio, during
each period specified below, to exceed the applicable ratio for such period
specified below:
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<PAGE> 51
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through 6/30/01 5.00:1
7/1/01 through 6/30/02 4.50:1
7/1/02 and thereafter 4.00:1
</TABLE>
This ratio shall be tested as at (i) the end of each fiscal quarter of the
Company during each period specified above and (ii) the date of the incurrence
of Senior Debt (after giving effect to such proposed incurrence).
6.5 FIXED CHARGE COVERAGE RATIO. The Company shall maintain at all
times a Fixed Charge Coverage Ratio of at least 1.00:1 through December 31, 2000
and 1.05:1 thereafter. This ratio shall be tested as of the end of each fiscal
quarter of Company.
6.6 ADDITIONAL PROVISIONS RESPECTING CALCULATION OF FINANCIAL
COVENANTS. Except as otherwise provided in this Agreement, the following
provisions shall apply.
6.6.1 All the calculations of financial covenants shall be
based upon the figures set forth in the Consolidated financial statements of the
Company most recently delivered pursuant to this Agreement even where this
Agreement may refer to a period ended on, or most recently prior to a specified
date of determination.
6.6.2 For all purposes other than the calculation of the Fixed
Charge Coverage Ratio, calculations made pursuant to this Article 6 shall give
effect, on a Pro Forma Basis, to all Acquisitions and dispositions made during
the quarter or year to which the required compliance relates, as if such
Acquisition or disposition had been consummated on the first day of the
applicable period.
6.6.3 For purposes of calculation of the financial covenants
(other than the calculation of the Fixed Charge Coverage Ratio) in connection
with an Acquisition, disposition, purchase of minority interest or other event
requiring demonstration of pro forma compliance under this Agreement (a
"Designated Event"), the calculations shall
(i) be based on the results of operations and
financial condition of the Company, as at and for the fiscal quarter or year (as
applicable) ended on, or most recently prior to, the date of the Designated
Event for which the Company has provided financial statements (the "Designated
Period"), adjusted to reflect, on a Pro Forma Basis, the occurrence of such
Designated Event (including the incurrence of any Indebtedness incurred in
connection therewith) as if such Designated Event had occurred on the first day
of such Designated Period; and
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<PAGE> 52
(ii) shall be judged against the required financial
covenant standards applicable as at the end of such Designated Period.
By way of example, if the Company consummates an Acquisition on 7/10/02, for
purposes of determining compliance with the Consolidated Total Leverage Ratio,
on a Pro Forma Basis, at the time of the Acquisition (1) the amount of Total
Debt would be the amount of Total Debt on 7/10/02 after giving effect to
Indebtedness incurred to effect the Acquisition, (2) if the financial statements
most recently delivered under this Agreement were the ones for the period ended
3/31/02, the amount of EBITDA would be the amount of EBITDA reflected on those
financial statements, adjusted as if the Acquisition had been consummated on
4/1/01, and (3) the resulting ratio would be tested against the required ratio
at 3/31/02 which is 6.5:1.
6.6.4 For purposes of calculating the financial covenants for
the period ending March 31, 1999, the amount of Indebtedness shall be the amount
of Indebtedness outstanding on the Closing Date after giving effect to the
Indebtedness incurred on that date.
ARTICLE 7
BUSINESS COVENANTS
The Company covenants that from the date of this Agreement so long as
any of the Senior Secured Obligations remain unpaid, any Letters of Credit
remain outstanding, the Lenders have an unexpired Commitment to lend hereunder
or the Issuing Bank has an unexpired commitment to issue Letters of Credit
hereunder, it shall comply with each of the covenants set forth in this Article
7.
7.1 INDEBTEDNESS.
7.1.1 IN GENERAL. The Company will not, and will not permit
any Subsidiary to, directly or indirectly, create, incur, assume, guarantee,
permit to exist or otherwise become or remain directly or indirectly liable with
respect to any Indebtedness other than each of the following:
(a) subject to the terms of Section 7.32 (Interest
Rate Protection Agreements), obligations under Interest Rate Protection
Agreements;
(b) obligations under the Loan Documents;
(c) obligations under the Senior Subordinated
Indenture and Senior Subordinated Notes in respect of an outstanding principal
amount not in excess of Two Hundred Million Dollars ($200,000,000), provided
that the Senior Subordinated Indenture and Senior Subordinated Notes shall (i)
be on terms set forth in the Indenture issued pursuant to the Offering
Memorandum marked "subject to completion, dated April 23, 1999" (which Offering
Memorandum was distributed to the Lenders prior to the Closing Date) or on such
other terms as
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<PAGE> 53
is acceptable to the Requisite Lenders acceptable to the Agent, (ii) have no
principal amortization or a final maturity prior to the date which is 91 days
after the Maturity Date, (iii) be unsecured and (iv) have covenants no more
restrictive than those set forth herein;
(d) obligations in a principal amount not to exceed
Ten Million Dollars ($10,000,000);
(e) obligations owing to the Company or to a
Subsidiary of Company; and
(f) a promissory note (the "Lenfest Note") issued to
Lenfest in connection with the exercise by Lenfest of the put (the "Lenfest
Put") under Section 5 of the Fifth Amendment to the Lenfest Agreement, subject
to the following terms and conditions:
(i) at the time that the Put is
exercised, there is no Event of
Default or Potential Event of
Default and no default under the
Senior Subordinated Indenture;
(ii) at the time that the Put is
consummated, there is no Event of
Default or Potential Event of
Default and the Company is able to
demonstrate projected pro forma
compliance with the financial
covenants for the period ending one
year plus one day after the
consummation of the Lenfest Put and
the Company shall have delivered to
the Agent and the Lenders at least
ten (10) Business Days prior to the
date of the proposed consummation,
a notice of consummation, together
with
(1) an Officers Compliance
Certificate, showing compliance
with the financial covenants
set forth in Article 6 above,
on a Pro Forma Basis, after
giving effect to the
consummation of the Lenfest Put
(including any additional
Indebtedness incurred in
connection therewith);
(2) revised projections through the
Maturity Date, which shall be
made in good faith and based on
reasonable assumptions, which
shall show pro forma compliance
with the financial covenants
for the period
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<PAGE> 54
ending one year plus one day
after the consummation of the
Lenfest Put, after giving
effect to the transactions
contemplated by the Lenfest Put
(including any additional
Indebtedness and payments made
in respect thereof); and
(3) a certificate demonstrating
compliance with the debt
incurrence test set forth in
the Senior Subordinated
Indenture;
(iii) all obligations under the Lenfest
Note shall be fully subordinated to
the Senior Secured Obligations
pursuant to the Lenfest
Subordination Agreement;
(iv) the Lenfest Note will be payable in
three equal annual installments and
will bear interest at 8% and may be
prepaid, provided, however, that
cash payments may only be made
under the Lenfest Note if the
following conditions are satisfied:
(1) there is no Event of Default or
Potential Event of Default both
before and after the proposed
payment is made;
(2) the Company can demonstrate
compliance, on a Pro Forma
Basis, with the Fixed Charge
Coverage Ratio test set forth
in Section 6.5 of this
Agreement (it being understood
that any cash payments under
the Lenfest Note would be
deemed to be Restricted
Payments);
(v) Except as permitted by the
preceding clause (iv), the Lenfest
Note shall be recourse only to
Lenfest's second priority lien on
the stock put to the Company
pursuant to the Lenfest Put, which
lien is second to the Lien in favor
of the Agent and fully
subordinated;
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<PAGE> 55
(vi) The Lenfest Note shall have no
covenants and no remedies provided,
however, that if there is no Event
of Default or Potential Event of
Default under this Agreement (other
than the cross default to the
Lenfest Note) and no Potential
Event of Default or Event of
Default would be caused thereby,
and the Company fails
(1) to make a principal payment on
the Lenfest Note which payment
default is not cured within
nine months, or
(2) to make four consecutive
interest payments on the
Lenfest Note (or adds interest
to principal for four
consecutive quarters)
then Lenfest shall be entitled to
require the Company to sell the
stock or assets (at the Company's
option) of Susquehanna Cable and its
Subsidiaries in accordance with the
terms of Section 5 (h) of the Fifth
Amendment to the Lenfest Agreement.
Lenfest's right to require the
Company to sell the stock or assets
of Susquehanna Cable and its
Subsidiaries shall, among other
things, be subject to there being no
default in this Agreement and Senior
Subordinated Indenture at the
closing of the sale (other than the
cross default to the Lenfest Note)
both before and after giving effect
to the sale. Any such sale shall be
subject to the provisions of
paragraph (d) of Section 7.7.2. This
right of Lenfest shall not restrict
any right that the Agent and the
Senior Secured Parties shall have
under or in connection with the Loan
Documents.
7.1.2 LIMITATION ON INCURRENCE. In addition to the limitations
on the incurrence or existence of Indebtedness referred to above, no
Indebtedness may be incurred by Company or any of its Subsidiaries unless (a)
immediately before and after giving effect to the incurrence of such
Indebtedness, no Potential Event of Default or Event of Default shall have
occurred and be continuing and (b) it would not cause a default under the Senior
Subordinated Indenture.
7.2 LIENS.
7.2.1 IN GENERAL. The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset (including,
without limitation, any document or instrument in
- 46 -
<PAGE> 56
respect of goods or accounts receivable) of the Company or any Subsidiary of
Company, except each of the following (the Liens referred to in clauses (a)
through (i) are, collectively, the "Permitted Liens"):
(a) Liens created in favor of the Agent for the
benefit of the Lenders pursuant to the Loan Documents;
(b) Liens for taxes, assessments or other
governmental charges the payment of which is not at the time required by Section
7.11 (Payment of Taxes and Claims);
(c) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics and materialmen incurred in the ordinary
course of business for sums not yet due or the payment of which is not at the
time required by Section 7.11 (Payment of Taxes and Claims);
(d) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);
(e) Liens arising out of judgments or awards with
respect to which the Company or a Subsidiary of the Company shall be prosecuting
an appeal in good faith and in respect of which a stay of execution shall have
been issued;
(f) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances, in each
case incidental to, and not interfering with, the ordinary conduct of the
business of the Company or any of its Subsidiaries;
(g) Capital Leases incurred in compliance with
paragraph (d) of Section 7.1 (Indebtedness) and purchase money security
interests which are granted to secure purchase money obligations related to
assets acquired in the ordinary course of business and which are incurred in
compliance with said paragraph (d) of Section 7.1, provided that no such
security interest shall extend to or cover any property other than the property
being acquired;
(h) the right of first refusal and buy/sell
provisions contained in Sections 13 and 14 of the Lenfest Agreement, which may
constitute encumbrances on the stock of Susquehanna Cable and its Subsidiaries,
provided that the exercise by Lenfest of such rights may create an Event of
Default and the characterization of such encumbrances as a Permitted Lien shall
not be construed as consent by the Lenders to, or a waiver by Lenders of, any
such Event of Default or any rights they or the Agent may have upon, the
exercise of any one or more of such rights by Lenfest;
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<PAGE> 57
(i) a second priority security interest in favor of
Lenfest (subordinate to the security interest in favor of the Agent) in the
stock of Susquehanna Cable and certain of its Subsidiaries which may be
purchased by the Company (or a Subsidiary thereof) in connection with the
Lenfest Put, to secure the obligations under the Lenfest Note, if any.
7.2.2 NEGATIVE PLEDGE. Except as otherwise provided in Section
9.24 (Absence of Restrictive Provisions), the Company will not, and will not
permit any of its Subsidiaries to, agree with any Person, to restrict or place
limitations on the right of the Company or any of its Subsidiaries to create,
incur, assume or permit to exist any Lien on or with respect to any property or
asset of the Company or any of its Subsidiaries except such restrictions and
limitations as are set forth in the Senior Subordinated Indenture.
7.3 INVESTMENTS, LOANS, ACQUISITIONS ETC.
7.3.1 LIMITATION. The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly: (a) make or own any
Investment in any Person (including, without limitation, the contribution or
transfer of ownership or possession of any of its cash, property rights or other
assets to any Subsidiary of the Company); or (b) purchase or otherwise acquire
any assets or property of any nature after the date of this Agreement other than
assets and property used in the ordinary course of its business, except as set
forth in Subsections 7.3.2 (Investments) and 7.3.3 (Acquisitions) below.
7.3.2 INVESTMENTS. Notwithstanding the terms of Subsection
7.3.1 above, the Company and its Subsidiaries may make or own any or all of the
following Investments:
(a) Investments that exist as of the date of this
Agreement which are described on Schedule 7.3 to this
Agreement;
(b) Investments by the Company in any of its
Subsidiaries or by any Subsidiary of Company in the Company or
another Subsidiary of Company;
(c) Investments made in compliance with Subsection
7.3.3 (Acquisitions);
(d) minority Investments determined by the amount of
cash invested not in excess of Ten Million Dollars
($10,000,000) in the aggregate after the Closing Date in
Persons engaged in Permitted Businesses, provided that
immediately before and after the making of each such
Investment no Potential Event of Default or Event of Default
shall have occurred and be continuing;
(e) Investments in short-term obligations issued or
unconditionally guaranteed by the United States or any agency
thereof and backed by the full faith and credit of the United
States;
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(f) Repurchase obligations of up to one week with any
Lender or any other commercial bank meeting the qualifications
in clause (g) of this Section that are fully collateralized by
securities referred to in clause (e) of this Section;
(g) Investments in certificates of deposit or
Eurodollar time deposits that become payable within one year
of the date of purchase of (i) any of the Lenders or (ii) any
other commercial bank having combined capital, surplus and
undivided profits of $100,000,000 or more, FDIC membership,
and debt obligations, or those of a holding company of which
it is a Subsidiary, rated not less than A by Standard & Poor's
Corporation or equivalent by a nationally recognized
investment rating agency;
(h) INTENTIONALLY OMITTED;
(i) Investments in readily marketable commercial
paper, maturing within 270 days after the acquisition thereof,
which at the time of acquisition has the highest rating by
Standard & Poor's Corporation or Moody's Investors Service,
Inc.;
(j) U.S. Dollars on hand and in insured demand
deposit accounts or, if in excess of insurable amounts, in
deposit accounts at banks described in clause (g) above;
(k) Interest Rate Protection Agreements entered into
in compliance with Section 7.32 (Interest Rate Protection
Agreement);
(l) Promissory notes received in connection with a
disposition as permitted by Subsection 7.7.2(b) (Sales and
Other Dispositions);
(m) Money market funds which are substantially
invested in the types of Investments permitted in clauses (e)
through (j) above; and
(n) Investments which constitute purchases of
minority interests in Subsidiaries of the Company (from
Persons that hold minority interests as of the date of this
Agreement) subject to satisfactions of each of the following:
(i) no Event of Default or Potential Event
of Default shall have occurred and be continuing or
shall be caused thereby;
(ii) all (rather than a portion) of the
interests of the selling party or parties in the
Company and its Subsidiaries shall be purchased in
the same transaction;
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<PAGE> 59
(iii) the purchase price shall be no greater
than the fair market value of the Investment so
purchased and, if the Agent so requests, the Company
shall provide a third party fairness or other opinion
to that effect;
(iv) both before and (on a Pro Forma Basis)
after giving effect to the Investment, the Company
shall be in compliance with the financial covenants
set forth in Article 6;
(v) the Company shall give the Agent and
each Lender ten (10) Business Days prior written
notice of the proposed Investment, together with an
Officers' Compliance Certificate showing compliance
on a Pro Forma Basis with the financial covenants set
forth in Article 6; and
(vi) if the purchase of the minority
interest is pursuant to the Lenfest Put, (A) the
Company shall deliver at least ten (10) Business Days
prior to the date of the proposed purchase, revised
projections through the Maturity Date, which shall be
made in good faith and based on reasonable
assumptions and which shall show pro forma compliance
with the financial covenants through the period
ending one year plus one day after the purchase is
consummated, after giving effect to the transactions
contemplated by the Lenfest Put (including any
additional Indebtedness and payments scheduled to be
made in respect thereof) and (B) the purchase price
may be paid in cash up to the Available Commitment
and through the issuance of the Lenfest Note.
7.3.3 ACQUISITIONS. Notwithstanding the terms of Subsection
7.3.1 above, the Company or any Subsidiary of the Company may acquire all or
substantially all of the capital stock in, and a Subsidiary of the Company may
acquire all or substantially all of the assets of, any Person that is solely
engaged in a Permitted Business (an "Acquisition"), but only subject to and upon
satisfaction of the following terms and conditions:
(a) The Company shall provide the Lenders with not
less than five (5) Business Days prior written notice of each Acquisition (or
series of related Acquisitions), the aggregate consideration for which would
exceed Five Million Dollars ($5,000,000), together with an Officers' Compliance
Certificate showing, on a Pro Forma Basis, compliance with the provisions of
paragraph (c) below and, upon request, will provide the Agent with a copy of the
acquisition agreement and copies of related documents as they become available;
(b) no Acquisition may be made if an Event of Default
or Potential Event of Default exists either before or after giving effect to
such Acquisition;
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(c) no Acquisition may be made if, on a Pro Forma
Basis after giving effect to such Acquisition, the Company is not in compliance
with the financial covenants specified in Article 6 (Financial Covenants);
(d) without the prior written approval of the
Requisite Lenders, which approval may be granted or withheld in the sole
discretion of the Requisite Lenders, no single Acquisition may be made for
consideration in excess of Seventy-Five Million Dollars ($75,000,000) (including
in determining consideration the present value (computed utilizing the Base Rate
plus Applicable Margin then in effect) of payments directly or indirectly to
principals of the seller for non-compete, consulting or the like), provided that
approval of the Requisite Lenders shall not be required for any Acquisition even
if the consideration paid is in excess of Seventy-Five Million Dollars
($75,000,000) if the Consolidated Leverage Ratio is below 4.50:1 (measured as of
the end of the last fiscal quarter with respect to which quarterly or annual
financial statements of the Company and its Subsidiaries have been furnished to
Lenders, and taking into account Indebtedness incurred since such date) at the
time of the execution of the definitive agreement relating to the Acquisition,
both before giving effect to the Acquisition and on a Pro Forma Basis after
giving effect to the Acquisition;
(e) without the prior written approval of the
Requisite Lenders, which approval may be granted or withheld in the sole
discretion of Requisite Lenders, no Acquisition may be made if the aggregate
consideration paid or payable in respect of all Acquisitions from and after the
Closing Date, including the proposed Acquisition, exceeds One Hundred Million
Dollars ($100,000,000), provided that approval of the Requisite Lenders shall
not be required for any Acquisition even if the consideration paid and payable
for such Acquisition, together with the consideration paid and payable for all
other Acquisitions from and after the Closing Date, exceeds $100,000,000 if the
Consolidated Leverage Ratio is below 4.50:1 (measured as of the end of the last
fiscal quarter with respect to which quarterly or annual financial statements of
the Company and its Subsidiaries have been furnished to Lenders, and taking into
account Indebtedness incurred since such date) at the time of the execution of
the definitive agreement relating to the Acquisition, both before giving effect
to the Acquisition and on a Pro Forma Basis after giving effect to the
Acquisition. If the aggregate amount of consideration paid and payable in
respect of Acquisitions from and after the Closing Date exceeds $100,000,000 at
any time, and at any time thereafter the Consolidated Leverage Ratio equals or
exceeds 4.50:1, any additional Acquisition shall require the prior written
approval of the Requisite Lenders;
(f) if such Acquisition is of a Subsidiary,
contemporaneously with the closing of such Acquisition, all of the capital stock
of the Subsidiary and all material assets of such Subsidiary shall be subject to
a valid first priority security interest pursuant to the Loan Documents (subject
only to Permitted Liens) and the Subsidiary that is acquired shall execute and
deliver to Agent the Subsidiary Suretyship;
(g) if such acquisition is of assets (rather than
equity), contemporaneously with the closing of such Acquisition, all of the
material assets so acquired shall be subject to a
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valid first priority security interest pursuant to the Loan Documents, subject
only to Permitted Liens;
(h) if such Acquisition includes FCC Licenses to be
used in connection with the radio broadcast business, such licenses shall be
owned by Radio License Subsidiaries;
(i) all necessary or appropriate governmental,
judicial or other third party approvals, waivers or consents necessary for such
Acquisition shall have been obtained and become final or Final Orders, as
applicable, and shall remain in full force and effect; and
(j) Company shall promptly upon request of the Agent
or any Lender provide such further information and documentation as may be
reasonably requested by the Agent or such Lender.
7.3.4 ADDITIONAL LIMITATIONS ON INVESTMENTS. Notwithstanding
any provision in this Agreement to the contrary, no Investment may be made:
(i) which would result in any Subsidiary being a
Person other than a corporation, limited partnership or
limited liability company organized under the laws of any
state of the United States all of whose capital stock or
ownership interests is owned directly or indirectly by the
Company provided, that nothing in this Subsection 7.3.4 shall
(1) prohibit the Company from making additional investments
(otherwise permitted by this Agreement) in any Subsidiary that
as of the date of this Agreement is not wholly-owned directly
or indirectly by the Company (collectively, "Permitted
Non-wholly Owned Subsidiaries") or (2) prohibit any such
Permitted Non-wholly Owned Subsidiary from acquiring another
Subsidiary that (after such acquisition) is wholly-owned by
the Permitted Non-wholly Owned Subsidiary;
(ii) unless all of the equity interest acquired in
connection with such Investment is pledged pursuant to the
Loan Documents; and
(iii) if such Investment is an Investment in a
Subsidiary, (1) unless the Agent has a first priority security
interest in all of the material assets of such Subsidiary,
subject only to Permitted Liens, and (2) such Subsidiary is or
becomes a party to the Subsidiary Suretyships as a guarantor
and surety.
The restrictions on Acquisitions and Investments contained in this Subsection
7.3.4 shall be construed to be in addition to, and not in lieu of, the
restrictions contained elsewhere in this Agreement.
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7.4 RESTRICTED PAYMENTS.
The Company will not and will not permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum or property for any Restricted Payment, except that:
(a) INTERCOMPANY. Restricted Payments may be declared and paid
by a Subsidiary of the Company to the Company or another Subsidiary of the
Company which is a shareholder in any of the Company's Subsidiaries to the
extent of their proportionate interests in items of revenues, income and assets
of the Subsidiary making such Restricted Payments.
(b) ESOP LOAN. In addition, one or more Restricted Payments
may be made to SPC in a Net Amount (as defined below) not to exceed One Hundred
and Twenty Million Dollars ($120,000,000) on (or within 60 days of) the Closing
Date (the "ESOP Loan"), to effect the funding of the ESOP, so long as (i) no
Event of Default or Potential Event of Default exists or would thereby be
created and (ii) the Company shall have received net proceeds in an amount at
least equal to $100,000,000 from the issuance of Senior Subordinated Notes
issued in compliance with the terms of Section 7.1 (Indebtedness) above. (It is
understood that, for purposes of this paragraph (b), "Net Amount" means the
excess of the gross amount of the loan to SPC over the amount repaid by SPC on
the date that the loan is made. Further, it is understood that the Company may
loan a gross amount not to exceed $176,000,000 to SPC but, of that amount, SPC
shall repay to the Company an amount equal to at least $58,000,000 on the same
day as the loan is made.)
(c) RESTRICTED PAYMENT BASKET. In addition, Restricted
Payments may be made in any fiscal year in an amount not to exceed the amount of
the Restricted Payments Basket (as hereinafter defined) so long as no Event of
Default or Potential Event of Default exists or would be created as a result of
paying the Restricted Payment. "Restricted Payments Basket" is an amount
initially equal to Ten Million Dollars ($10,000,000) to which shall be added in
each year beginning with the year 2000 an amount equal to five percent (5%) of
the Actual EBITDA for the prior fiscal year and from which shall be deducted an
amount equal to the amount of any Restricted Payments made pursuant to this
clause (c) from time to time.
(d) LENFEST NOTE AND PURCHASE OF MINORITY INTEREST. So long as
there is no Event of Default or Potential Event of Default both before and after
the proposed payment is made and the Company can demonstrate compliance, on a
Pro Forma Basis, with the Fixed Charge Coverage Ratio test set forth in Section
6.5 of this Agreement, the Company may make payments of principal or interest or
prepayments of principal and accrued interest, from time to time, under the
Lenfest Note. In addition, subject to availability under this Agreement, the
Company or applicable Subsidiary may use proceeds of Loans to pay in cash as
much of the purchase price of the stock subject to the Lenfest Put as is
permitted by clause (n) (vi) of Subsection 7.3.2 (Investments).
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<PAGE> 63
(e) PAYMENTS SEPARATE. For the sake of clarity, each of the
exceptions to the limitation on Restricted Payments set forth in this Section
7.4 is separate and cumulative. By way of example, Restricted Payments made to
Lenfest pursuant to paragraph (d) above shall be in addition to, and not reduce,
the amount of the Restricted Payments Basket.
7.5 SALE-LEASEBACKS.
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly sell or otherwise transfer, in one or
more related transactions, any property (whether real, personal or mixed) and
thereafter rent or lease such transferred property or substantially identical
property.
7.6 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, engage in any transaction with (a) any
holder of 5% or more of any class of the capital stock or ownership interest of
the Company or any of its Subsidiaries or (b) any Affiliate of the Company or of
any such holder, on terms that are less favorable to the Company or any
Subsidiary of Company than those which might be obtained at the time from
Persons which are not such a holder or Affiliate, provided that the foregoing
restrictions shall not apply to (i) loans by Company to its Subsidiaries
permitted under Paragraph (e) of Subsection 7.1.1 (Indebtedness), (ii)
transactions between a Subsidiary of the Company and the Company or another
Subsidiary of the Company which are not otherwise prohibited under the
provisions of this Agreement, and (iii) the transactions described on Schedule
7.6. If any such Affiliate transaction other than an Excluded Transaction is in
excess of $1.0 million, it shall be
(a) set forth in writing; and
(b) approved by a majority of the disinterested
members of the board of directors of the Company.
If any such Affiliate transaction (excluding any Excluded Transaction) is in
excess of $5.0 million, it shall be determined by a nationally recognized
investment banking or accounting firm to be fair to the Company and its
Subsidiaries.
7.7 MERGERS AND DISPOSITIONS.
7.7.1 CONSOLIDATIONS AND MERGERS. The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly:
(a) consolidate with or merge into any other Person,
except that (i) a Subsidiary of the Company, other than a Radio License
Subsidiary, may consolidate with or
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merge into a Subsidiary of the Company or a Person which simultaneously
therewith becomes a Subsidiary of the Company as a result of an Acquisition
permitted under Section 7.3 (Investments and Acquisitions) and (ii) a Radio
License Subsidiary may consolidate with or merge into a Subsidiary of the
Company so long as the surviving entity is a Radio License Subsidiary; and
(b) permit any Person that is not a Subsidiary of the
Company to consolidate with or merge into it, except that a Person that is not a
Subsidiary of the Company may be consolidated with or merged into the Company or
a Subsidiary of the Company in connection with an Acquisition permitted under
Subsection 7.3.3 (Acquisitions) so long as the Consolidated Net Worth of the
Company after the merger is at least as great as the Consolidated Net Worth
prior to the merger.
7.7.2 SALES AND OTHER DISPOSITIONS. The Company will not, and
will not permit any Subsidiaries to, directly or indirectly sell, lease, abandon
or otherwise transfer or dispose of any substantial amount of its assets or
property, or sell, lease, abandon or otherwise transfer or dispose of any of its
assets or property of any nature except in the ordinary course of its business,
except as follows:
(a) a Subsidiary of the Company, other than a Radio
License Subsidiary, may transfer its assets to another Subsidiary of the
Company.
(b) The Company and its Subsidiaries may, upon twenty
(20) days prior written notice to the Agent and the Lenders, dispose (by sale,
merger, consolidation or otherwise) of all or any part of its assets outside the
ordinary course of business so long that as of the date of such disposition, and
both before and after giving effect thereto, no Event of Default or Potential
Event of Default exists, and, in the case of a disposition made pursuant to this
clause (b),
(i) such disposition is a sale to any Person
not an Affiliate of the Company for consideration
equal to not less than the fair market value of the
assets sold as determined in the good faith judgment
of the Board of Directors of the Company or the
applicable Subsidiary, at least seventy percent (70%)
of which consideration shall be cash and the balance
of which consideration shall be in the form of (A)
transferable promissory notes which shall, together
with any collateral or other credit support given to
the seller to secure such promissory note, be
immediately assigned to the Agent, for the benefit of
the Lenders, pursuant to instruments, assignments and
other documents in form and substance satisfactory to
Agent and if requested by Agent, accompanied by an
opinion of counsel in form and substance satisfactory
to the Agent in its reasonable judgment with respect
to the effectiveness and perfection of such
assignment or (B) other consideration satisfactory to
the Requisite Lenders in their sole discretion;
provided that the amount of consideration
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which may be accepted in the form of transferable
promissory notes or other consideration may not
exceed an aggregate of Five Million Dollars
($5,000,000) at any time outstanding in respect of
all dispositions made by the Company or any of its
Subsidiaries; or
(ii) such disposition is an exchange with
any Person not an Affiliate of the Company of assets
of the Company or one of its Subsidiaries comprising
one or more cable television systems or radio
broadcast systems or the ownership interests of the
Person owning such a system or systems for assets
comprising one or more other cable television systems
or radio broadcast systems, as applicable, of a
similar nature and of equal or greater value as
determined in the good faith judgment of the Board of
Directors of the Company or the applicable
Subsidiary; or
(iii) the consideration for such disposition
is a combination of an exchange described in the
preceding clause (ii) and cash.
In the case of any disposition made pursuant to subparagraphs (i), (ii) or (iii)
above, the following conditions shall apply:
(A) the sum of (x) EBITDA attributable to
all assets subject to such disposition
determined as of the last day of the fiscal
quarter ending immediately preceding such
disposition for which quarterly or annual
financial statements of the Company and its
Subsidiaries were delivered to Lenders, plus
(y) EBITDA attributable to all other assets
disposed of by the Company and its
Subsidiaries pursuant to this paragraph (b),
in each case determined as of the last day
of the fiscal quarter ending immediately
preceding each such disposition for which
quarterly or annual financial statements of
the Company and its Subsidiaries were
delivered to Lenders, during the preceding
four fiscal quarters, shall not exceed 15%
of EBITDA determined as of the last day of
the fiscal quarter ending immediately
preceding the most recent disposition for
which quarterly or annual financial
statements of the Company and its
Subsidiaries were delivered to Lenders;
(B) The Company shall have furnished to
Lenders, not later than ten (10) days
preceding the date of such disposition, a
notice of disposition and, if the
disposition is for an aggregate purchase
price in an amount equal to Five Million
Dollars ($5,000,000) or more, an Officers'
Compliance Certificate showing compliance
with the terms of the following clause (C),
and other information relating to such
disposition, including the disposition
agreement
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<PAGE> 66
(and promptly, as they became available, any
related documents), which shall be in form
and content satisfactory to Agent;
(C) after giving effect to such disposition,
the Company is in compliance, on a Pro Forma
Basis, with the financial covenants
specified in Article 6 (Financial
Covenants);
(D) if the disposition is of ownership
interests in a Subsidiary, the Subsidiary
being disposed of has no continuing
Investment in the Company or any other
Subsidiary not being simultaneously disposed
of; and
(E) the disposition is made on a
non-recourse basis to the Company and its
Subsidiaries, other than to the extent of
normal and customary representations,
warranties and indemnities given to buyers
of Permitted Businesses.
(c) In addition to dispositions made pursuant to
clauses (a) or (b) above or clause (d) below, the Company or any Subsidiary of
the Company may sell the equity interest in any Subsidiary of the Company to any
minority investor thereof (that is a minority investor on the date of this
Agreement), subject to the following terms and conditions:
(i) no Event of Default or Potential Event
of Default shall have occurred and be continuing or
shall be caused thereby;
(ii) the Company and/or its Subsidiaries
shall sell to such minority investor all (but not
less than all) of the remaining interests that the
Company or any Subsidiary thereof has in each
Subsidiary that such minority investor has an
interest in;
(iii) the sale price shall be payable in
cash and no less than the fair market value of the
interests so sold and, if the Agent so requests, the
Company shall provide a third party fairness or other
opinion to that effect;
(iv) both before and (on a Pro Forma Basis)
after giving effect to the sale, the Company shall be
in compliance with the financial covenants set forth
in Article 6; and
(v) the Company shall give the Agent and
each Lender ten (10) Business Days prior written
notice of the proposed sale, together with an
Officers' Compliance Certificate showing compliance
on a Pro Forma Basis with the financial covenants set
forth in Article 6.
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(d) In addition to dispositions permitted pursuant to
clauses (a), (b) and (c) above, the Company may dispose of the stock or assets
(at the Company's option) of Susquehanna Cable and its Subsidiaries in
accordance with the terms of Section 5 (h) of the Fifth Amendment to the Lenfest
Agreement (as such terms are incorporated into the Lenfest Note), subject to the
following terms and conditions:
(i) no Event of Default or Potential Event
of Default or default under the Senior Subordinated
Indenture shall have occurred and be continuing or
shall be caused thereby;
(ii) the Company shall be in compliance with
the financial covenants set forth in Article 6 above,
on a Pro Forma Basis, after giving effect to the
disposition and the application of proceeds pursuant
to subclause (iv) below;
(iii) the Company shall give the Agent and
each Lender ten (10) Business Days prior written
notice of the proposed sale along with an Officers
Compliance Certificate, showing compliance with the
financial covenants set forth in Article 6 above, on
a Pro Forma Basis, after giving effect to the
disposition and the application of proceeds pursuant
to subclause (iv) below; and
(iv) Proceeds of such disposition shall be
applied first to repay the Senior Secured Obligations
to the extent then due and payable, and other
Indebtedness of the entities sold, then to prepay or
repay the Lenfest Note to the extent that such
repayment does not cause an Event of Default or
Potential Event of Default or default under the
Senior Subordinated Indenture, and the excess shall
be used to repay Loans pursuant to Section 1.1.5
(Commitment Reductions In Connection With Asset
Sales) or 1.3.6 (Mandatory Prepayments in Connection
with Certain Asset Sales) above.
7.8 MANAGEMENT FEES.
7.8.1 LIMITATIONS ON MANAGEMENT ARRANGEMENTS. Except for the
Management Agreement and the payment of Management Fees to SPC pursuant thereto,
the Company shall not, and shall not permit any of its Subsidiaries to, (a)
enter into any management agreement with any Person that gives such Person the
right to manage any broadcast radio station or cable television system or other
Permitted Business owned by the Company or any of its Subsidiaries, or (b)
directly or indirectly pay or accrue to an entity any sum or property for fees
for management or similar services rendered in connection with the operation of
a Permitted Business. Notwithstanding the foregoing (i) other than ESOP-related
expenses which may be paid only to the extent provided in the ESOP Sharing
Agreement, the Company and its
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Subsidiaries may reimburse SPC for actual out of pocket expenses paid by SPC
(and not overhead expense) for the account of the Company and its Subsidiaries
in respect of the items listed on Schedule 7.8 (which expenses are deducted in
the computation of Consolidated Net Income) so long as SPC does not profit from
any such reimbursements and such reimbursements are not in excess of amounts
that the Company and its Subsidiaries would have paid had they paid for such
items directly (the reimbursement referred to in this clause (i) (which excludes
ESOP-related expenses) is hereinafter referred to as "SPC Expense
Reimbursement"), (ii) the Company or any of its Subsidiaries may enter into a
management agreement to give a Person that is not an Affiliate of the Company or
any of its Subsidiaries the right to manage one or more radio broadcast
stations, cable television systems or other Permitted Business owned by the
Company or any of its Subsidiaries so long as all of the stations, systems or
businesses so managed do not contribute more than an aggregate of five percent
(5%) of EBITDA in respect of any fiscal year of the Company, and (iii) the
Company or any of its Subsidiaries may enter into agreements in the ordinary
course of business to pay Persons that are not Affiliates of the Company or any
of its Subsidiaries for certain management type services provided to the Company
or its Subsidiaries, such as joint sales agreements, local marketing agreements,
or time brokerage agreements entered into in connection with permitted
divestitures.
7.8.2 LIMITATIONS ON MANAGEMENT FEES. Management Fees payable
by the Company and its Subsidiaries may not exceed four percent (4%) of the
Consolidated revenues (net of agency commissions) of the Company and its
Subsidiaries for any fiscal year provided, however, that during any period that
an Event of Default has occurred and is continuing Management Fees payable by
the Company and its Subsidiaries may not exceed two and one-half percent (2
- -1/2%) of the Consolidated revenues (net of agency commissions) of the Company
and its Subsidiaries for any fiscal year.
7.9 EXISTENCE.
The Company will at all times preserve and keep in full force
and effect (i) its corporate existence and its rights and franchises and (ii)
the corporate or partnership existence of each of its Subsidiaries and the
rights and franchises of each such Person, including the good standing of such
Persons in all states in which they are formed or required to qualify to do
business, except where the failure to keep in full force and effect any such
rights and franchises could not have a Material Adverse Effect and except that a
Subsidiary of the Company may be dissolved following the transfer of all of its
assets to one or more other Subsidiaries of the Company (the "transferee
Subsidiaries") subject to the conditions that (y) both before and after the
transfer and subsequent dissolution, no Event of Default or Potential Default
shall exist and (z) all of the equity of the transferee Subsidiaries shall have
been duly pledged to the Agent pursuant to the Pledge Agreements, all of the
material assets of the transferee Subsidiaries shall have been pledged as
security pursuant to the Security Agreement and the transferee Subsidiaries
shall all be parties to one or more Subsidiary Suretyships.
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7.10 COMPLIANCE WITH LAW.
The Company and each of its Subsidiaries shall comply with all
laws, ordinances and governmental rules and regulations to which each is
subject, and obtain or maintain all Franchises (including without limitation FCC
Licenses or PUC Franchises), permits, franchises and other governmental
authorizations and approvals necessary for the ownership, acquisition and
disposition of their respective properties and the conduct of their respective
businesses and shall comply with FCC and PUC construction, operating and
reporting requirements, except to the extent that the failure to do any of the
foregoing could not have a Material Adverse Effect.
7.11 PAYMENT OF TAXES AND CLAIMS.
The Company will, and will cause each of its Subsidiaries to,
pay all taxes, assessments and other governmental charges imposed upon it or any
of its properties or assets or in respect of any of its franchises, business,
income or profits before any penalty or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
might become a Lien upon any of its properties or assets, provided that no such
charge or claim need be paid if being contested in good faith by appropriate
proceedings promptly initiated and diligently conducted and if such reserve or
other appropriate provision, if any, as shall be required by GAAP shall have
been made therefor and, if the filing of a bond or other indemnity is necessary
to avoid the creation of a Lien against any of the assets of the Company or any
of its Subsidiaries, such bond shall have been filed or indemnity provided.
7.12 TAX CONSOLIDATION.
Except as contemplated by the Tax Sharing Agreement, the
Company will not file or consent to or permit the filing of any consolidated
income tax return on behalf of it or any of its Subsidiaries with any Person
(other than a consolidated return of the Company and its Subsidiaries). Except
as provided in the Tax Sharing Agreement, the Company will not enter into any
agreement with any Person which would cause the Company to bear more than the
amount of taxes to which it would have been subject had it separately filed a
consolidated return with its own Subsidiaries as an affiliated group.
7.13 COMPLIANCE WITH ERISA.
7.13.1 The Company shall, and shall cause its Subsidiaries and ERISA Affiliates
to, make all contributions to any Employee Pension Plan and Multiemployer Plan
when such contributions are due and not incur any Accumulated Funding
Deficiency, whether or not waived, and will otherwise comply with the
requirements of the Code and ERISA with respect to the operation of all Plans,
except to the extent that the failure to so comply could not have a Material
Adverse Effect.
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7.13.2 The Company shall, and shall cause its Subsidiaries and
ERISA Affiliates to, comply in all material respects with the provisions of
ERISA and the Code with respect to any Plan both in form and operation
including, but not limited to, the timely filing of required annual reports and
the payment of PBGC premiums.
7.13.3 The Company shall, and shall cause its Subsidiaries and
ERISA Affiliates to, comply in all respects with the requirements of COBRA
regarding continued health coverage and of the Health Insurance Portability and
Accountability Act of 1996 with respect to any Plans subject to the requirements
thereof, except to the extent that the failure to so comply could not have a
Material Adverse Effect.
7.13.4 The Company will not, and will not permit any of its
Subsidiaries or any of its ERISA Affiliates to take any of the following actions
or permit any of the following events to occur if such action or event together
with all other such actions or events would subject the Company, any of its
Subsidiaries, or any of its ERISA Affiliates to any tax, penalty, or other
liabilities which could have a Material Adverse Effect:
(a) engage in any transaction in connection with
which the Company, any of its Subsidiaries or any ERISA Affiliate could be
subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA
or a tax imposed by Section 4975 of the Code;
(b) terminate any Employee Pension Plan in a manner,
or take any other action, which could result in any liability of the Company,
any of its Subsidiaries or any ERISA Affiliate to the PBGC;
(c) fail to make full payment when due of all amounts
which, under the provisions of any Plan, the Company, any of its Subsidiaries or
any ERISA Affiliate is required to pay as contributions thereto, or permit to
exist any Accumulated Funding Deficiency, whether or not waived, with respect to
any Employee Pension Plan;
(d) permit the current value of all vested accrued
benefits under all Plans which are subject to Title IV of ERISA to exceed the
current value of the assets of such Plans allocable to such vested accrued
benefits, except as may be permitted under actuarial funding standards adopted
in accordance with Section 412 of the Code; or
(e) withdraw from any Multiemployer Plan, if such
withdrawal would result in the imposition of Withdrawal Liability.
7.13.5 The Company shall comply with the ERISA reporting
requirements set forth in Subsection 5.3.4 (Reportable Events, Etc.) hereof.
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As used in this Section, the term "accrued benefit" has the meaning
specified in Section 3(23) of ERISA and the term "current value" has the meaning
specified in Section 4001(a)(18)(B) of ERISA.
7.14 MATTERS RELATING TO THE ESOP.
7.14.1 TAX DETERMINATION LETTER. The Company shall seek or
cause SPC to seek and take the necessary steps to receive a favorable
determination letter issued by the Internal Revenue Service stating that the
ESOP is qualified for favorable tax treatment under Section 401 and as
applicable, Section 409 of the Code. Such request shall be filed with the
Internal Revenue Service before the end of the ESOP's initial remedial amendment
period under Section 401(b) of the Code and the regulations issued thereunder.
7.14.2 REIMBURSEMENT AND ALLOCATION MATTERS. The Company shall
make all payments in respect of the ESOP in accordance with the terms of the
ESOP Sharing Agreement.
7.15 INSURANCE.
7.15.1 LIABILITY, PROPERTY DAMAGE, ETC. The Company will
maintain or cause to be maintained with financially sound and reputable
insurers, insurance with respect to the properties and business of the Company
and its Subsidiaries against loss or damage of the kinds customarily insured
against by Persons of established reputation engaged in the same or similar
businesses and similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by other such Persons and
otherwise as is prudent for Persons engaged in conducting business in the cable
television industry and radio broadcast industry and any such other insurance as
may be required by the Security Agreement. Annually (and from time to time upon
request of the Agent) the Company will promptly furnish or cause to be furnished
to the Agent and Lenders evidence, in form and substance satisfactory to the
Agent, of the maintenance of all insurance, indemnities or bonds required by
this Section or by any permit, license, or other agreement to be maintained,
including copies thereof and proof of premium payments.
7.15.2 PBGC. The Company shall maintain or cause to be
maintained all insurance available through the PBGC and/or insurers acceptable
to the Agent against its obligations and the obligations of its Subsidiaries to
the PBGC.
7.16 MAINTENANCE OF PROPERTIES.
The Company will maintain or cause to be maintained its
properties and the properties of its Subsidiaries in good repair, working order
and condition and make or cause to be made all appropriate and proper repairs,
renewals, replacements, additions and improvements thereto, and keep all systems
and equipment which may now or in the future be subject to compliance with any
material standards or rules (including, without limitation, compliance with
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requirements as to the time periods in which system construction must be
completed) imposed by any governmental agency or authority (including, without
limitation, the FCC, any PUC or other state or local governments or
instrumentalities) in compliance in all material respects with such standards or
rules. The Company shall and shall cause its Subsidiaries to install and
maintain their respective equipment and systems in compliance in all material
respects with any material requirement imposed under FCC or PUC regulations,
permits, or licenses or under agreements affecting the Company or any of its
Subsidiaries. The Company and its Subsidiaries shall maintain, preserve and
protect, and, when necessary, renew, all Franchises and all service marks,
trademarks and tradenames held by any of them and all agreements to which any of
them are parties which are necessary or useful to conduct the Permitted
Businesses, except where the failure to do any of the foregoing could not have a
Material Adverse Effect.
7.17 MAINTENANCE OF RECORDS; FISCAL YEAR.
The Company will, and will cause each of its Subsidiaries to,
keep at all times books of record and account in which full, true and correct
entries will be made of all dealings or transactions in relation to its business
and affairs. The Company will keep and will cause each of its Subsidiaries to
keep its books of account and financial statements in accordance with GAAP and
report on the basis of a fiscal year ending December 31.
7.18 INSPECTION.
Upon reasonable notice (and for this purpose no more than two
Business Days notice shall be required under any circumstances) if no Event of
Default or Potential Event of Default shall exist, or at any time with or
without notice after the occurrence of an Event of Default or Potential Event of
Default, the Company will, and will cause each of its Subsidiaries to, allow any
representative of Agent, the Issuing Bank or any Lender to visit and inspect any
of the properties of the Company and any of its Subsidiaries, to examine the
books of account and other records and files of the Company and any of its
Subsidiaries (including, without limitation, the financial statements (audited
and unaudited, to the extent prepared) of each Subsidiary and information with
respect to each Permitted Business operated by the Company and any of its
Subsidiaries), to make copies thereof and to discuss the affairs, business,
finances and accounts of the Company and its Subsidiaries with its personnel and
accountants, all at such reasonable times (and to the extent feasible, during
ordinary business hours) and as often as the Agent, the Issuing Bank or any
Lender may request.
7.19 EXCHANGE OF NOTES.
Upon receipt of a written notice of loss, theft, destruction
or mutilation of any or all of the Notes and of a letter of indemnity from the
affected Lender or its successors or assigns, and upon surrendering for
cancellation such Note(s) if mutilated (in which event no indemnity shall be
required), the Company shall execute and deliver a new Note or Notes of like
tenor in lieu of such
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lost, stolen, destroyed or mutilated Note(s), as the case may be. Any Note(s)
issued pursuant to this Section shall be dated so that neither gain nor loss of
interest shall result therefrom.
7.20 OTHER AGREEMENTS.
The Company will, and will cause each of its Subsidiaries to,
comply with all covenants and agreements set forth in, or required pursuant to,
any other agreement or document previously, concurrently or hereafter executed
or delivered by the Company or such Subsidiary in connection with this Agreement
or the other Loan Documents.
7.21 FURTHER ASSURANCES.
At its sole cost and expense, upon the reasonable request of
the Agent, the Company will duly execute and deliver or cause to be duly
executed and delivered, to the Agent and the Lenders such further instruments
and do or cause to be done such further acts as may be necessary or proper in
the reasonable opinion of the Agent to carry out more effectively the provisions
and purpose of this Agreement and the other Loan Documents.
7.22 CONSISTENT ACTION - VOTING.
The Company shall and shall cause its Subsidiaries to exercise
any and all voting or similar rights which they hold in any Person in a manner
consistent with adherence to the provisions of this Agreement and the other Loan
Documents.
7.23 TYPE OF BUSINESS.
7.23.1 PERMITTED BUSINESSES. Neither the Company nor any of
its Subsidiaries will directly or indirectly enter into any business which is
not a Permitted Business.
7.23.2 THE COMPANY. The Company shall have no business or
operations other than the ownership of the stock of, or partnership or other
equity interest in, its Subsidiaries, the ownership of other Investments
permitted hereunder and such other activities as may be consented to in writing
by the Requisite Lenders.
7.23.3 RADIO LICENSE SUBSIDIARIES. The Radio License
Subsidiaries shall have no business or operations other than the ownership of
their respective FCC Licenses and the granting of the right to use such FCC
Licenses to the Subsidiaries of the Company that use such licenses to operate
their respective radio broadcast businesses.
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7.24 CONTROL OF BUSINESS.
Neither the Company nor any of its Subsidiaries shall enter
into any agreement with any Person which shall confer upon such Person the right
or authority to control or direct any of the business or assets of the Company
or any of its Subsidiaries.
7.25 SHAREHOLDERS.
The Company shall not issue, authorize the issuance of, or
obligate itself to issue any shares of its capital stock to any Person that (i)
would contravene any other provision of this Agreement, including result in a
Change of Control, or (ii) would result in there being capital stock of the
Company that is not pledged pursuant to the Pledge Agreements. No Subsidiary of
the Company shall issue, authorize the issuance of, or obligate itself to issue
any shares of its capital stock or ownership interests to any Person, that (i)
would contravene any other provision of this Agreement, including result in a
Change of Control, or (ii) would result in there being capital stock or
ownership interests of a Subsidiary that is not pledged pursuant to the Pledge
Agreements, except that stock and options to purchase non-voting stock of
BlazeNet and of Susquehanna Radio may be issued pursuant to the stock option
plans of such Subsidiaries presently in effect without requiring that such stock
be pledged pursuant to the Pledge Agreements so long as the amount of stock of
BlazeNet and of Susquehanna Radio that is not pledged does not exceed an
aggregate of ten percent (10%) of the issued and outstanding stock of each such
entity.
7.26 CHANGE IN DOCUMENTS; NEW DOCUMENTS.
7.26.1 LIMITATIONS ON CHANGES TO CERTAIN AGREEMENTs. The
Company will not, and will not permit any of its Subsidiaries to, amend or
supplement, and the Company will not, and will not permit any of its
Subsidiaries to consent to, any amendment or supplement to
(a) the respective articles or certificate of
incorporation, bylaws or other organization document of such Person (except that
the articles of incorporation of BlazeNet) may be amended to provide for a class
of non-voting shares) or the Management Agreement or Tax Sharing Agreement
without the prior written consent of the Agent, which consent will not be
unreasonably withheld if in the good faith judgment of the Agent the proposed
amendment or supplement could not have a Material Adverse Effect or otherwise
materially and adversely affect the interests of the Agent, the Issuing Bank or
the Lenders,
(b) the Senior Subordinated Indenture, the Senior
Subordinated Notes or any documents executed pursuant thereto that would (i)
increase the maximum principal amount of the Senior Subordinated Notes, (ii)
increase the interest payable on the Senior Subordinated Notes, or increase the
premium payable in the event of a prepayment of the Senior Subordinated Notes,
(iii) accelerate or otherwise shorten the time for payment of all or any part of
the Senior Subordinated Notes, (iv) add financial covenants or make any
financial covenants more restrictive, (v) add or modify any other covenants
thereto which would result in there being
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covenants in the Senior Subordinated Notes or Senior Subordinated Indenture that
are more restrictive than the covenants herein, (vi) require collateral to be
pledged to secure the Senior Subordinated Notes or require any additional credit
support for the Senior Subordinated Notes, (vii) add events of default or make
any events of default more restrictive, (viii) affect in any way the
subordination terms thereof or (ix) directly or indirectly effectuate any of the
items referred to in clauses (i) through (ix), or
(c) the Lenfest Agreement without the prior written
consent of the Requisite Lenders, except that the prior written consent of the
Requisite Lenders shall not be required for amendments, supplements or waivers
to the Lenfest Agreement which are not material. The Company shall provide to
the Lenders a written copy of any proposed nonmaterial amendment, supplement or
waiver to the Lenfest Agreement, together with a certification as to such
nonmateriality, at least five (5) Business Days prior to its effectiveness.
For purposes of this Section 7.26, an amendment or supplement will be deemed to
include, without limitation, the granting or receiving of a waiver or extension
howsoever such waiver or extension is denominated.
7.26.2 CONSISTENT ACTION - CONFLICTING AGREEMENTS. The Company
will not, and will not permit any of its Subsidiaries to, enter into any new
agreement or amend any existing agreement with or for the benefit of any
shareholder or other Person which, insofar as can be foreseen, will cause or
contemplates a non-compliance with a covenant under any of the Loan Documents.
7.27 PAYMENT OF INDEBTEDNESS; SUBORDINATION.
(a) Neither the Company nor any of its Subsidiaries
will make any payments of principal or interest (however denominated) with
respect to any Indebtedness, excluding the Loans, except such payments as are
required under the terms of the agreements or instruments as in effect on the
Closing Date representing such Indebtedness or pursuant to which such
Indebtedness was issued or created, or with respect to Indebtedness incurred
after the Closing Date and permitted by Section 7.1 (Indebtedness) as are
required under the original terms of the agreement or instruments representing
such Indebtedness or pursuant to which such Indebtedness is issued or created
and, as to Indebtedness incurred after the date thereof, amendments permitted
pursuant to the terms of such agreements or instruments. If any Person shall
hold Indebtedness of the Company which is subordinated in any degree to the
Loans and shall also hold Indebtedness which is not subordinated to the Loans or
is subordinated in a different degree, all payments to such Person prior to the
occurrence of an Event of Default or Potential Event of Default shall be made in
such manner as shall clearly distinguish the Indebtedness with respect to which
such payments are made by the Company or any of its Subsidiaries, and no
payments of subordinated Indebtedness shall be made after the occurrence of an
Event of Default or Potential Event of Default without the written consent of
the Agent, the
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Issuing Bank and all of the Lenders. This provision shall not be deemed to
permit Indebtedness which is otherwise prohibited under this Agreement.
(b) The Company shall, and shall cause each of its
Subsidiaries to take such action (or refrain from taking such action) as may be
necessary to insure that the Senior Subordinated Notes are, and remain,
subordinated to all of the obligations hereunder.
7.28 SUBSIDIARY STOCK OWNERSHIP INTERESTS AND INDEBTEDNESS.
The Company will not, except to the Agent pursuant to the Loan
Documents or as permitted in Section 7.7 (Mergers and Dispositions) above or as
permitted in Section 7.2 (Liens) above:
(a) directly or indirectly sell, assign, pledge or
otherwise dispose of any Indebtedness of any Subsidiary or any shares of stock
of or ownership interest in any of its Subsidiaries (or warrants, rights or
options to acquire such Indebtedness, stock or ownership interest);
(b) permit any of its Subsidiaries directly or
indirectly to sell, assign, pledge or otherwise dispose of (i) any Indebtedness
of the Company or of any other Subsidiary of the Company except to the Company
or to another Subsidiary of the Company, or (ii) any shares of stock of (or
warrants, rights or options to acquire stock of) any other corporate Subsidiary
except to the Company or a Subsidiary of the Company, or (iii) any ownership
interests in any other Subsidiary of the Company that is not a corporation,
except to the Company or to another Subsidiary of the Company;
(c) have outstanding, or permit any of its
Subsidiaries to have outstanding, any shares of preferred stock (or warrants,
rights or options exercisable therefor), except such preferred stock as is
outstanding on the date of this Agreement as set forth on Schedule 9.1; or
(d) permit any of its Subsidiaries directly or
indirectly to issue or sell any shares of such Subsidiary's stock or ownership
interests (or warrants, rights or options to acquire its stock or ownership
interests), except to the Company or a wholly-owned Subsidiary of the Company
and except pursuant to the currently existing stock option plans of BlazeNet and
Susquehanna Radio, but only so long as any stock issued pursuant to such plans
does not exceed ten percent (10%) of the issued and outstanding stock of each
such entity.
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7.29 COMPLIANCE WITH FEDERAL RESERVE REGULATIONS.
No proceeds of the Loans shall be used by the Company, any of
its Subsidiaries or other Person, directly or indirectly to purchase or carry
any margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock. Neither the Company nor any of its Subsidiaries will,
directly or indirectly, otherwise take or permit to be taken any action which
would result in the Loans or the carrying out of any of the other transactions
contemplated by this Agreement, being violative of such Regulation U or of
Regulation T (12 C.F.R. 220, as amended) or of Regulation X (12 C.F.R. 224, as
amended) or any other regulation of the Board of Governors of the Federal
Reserve System.
7.30 FILINGS.
Company will file with the FCC, each PUC and other regulatory
or administrative bodies in a timely fashion (taking into account extensions
authorized under applicable regulations that will not result in any penalty)
copies of the Loan Documents to the extent required under applicable law and any
and all other documents required to be filed by applicable law, rules or
regulations.
7.31 LIMITATIONS ON CERTAIN RESTRICTIVE PROVISIONS.
The Company will not, and will not permit any of its
Subsidiaries to (a) permit or place any restriction, directly or indirectly, on
(x) the payment of dividends or distributions by any Subsidiary or (y) the
making of advances or other cash payments by any such Subsidiary or (z) the
transfer by any Subsidiary of any of its properties or assets, in each case to
the Company or its Subsidiaries, other than restrictions in favor of the Senior
Subordinated Noteholders pursuant to the Senior Subordinated Indenture, or (b)
agree with any Person other than the Agent and the Lenders that the Company
and/or its Subsidiaries shall not amend the Loan Documents.
7.32 INTEREST RATE PROTECTION.
If at any time the Consolidated Total Leverage Ratio shall be
greater than 4.50:1 for two (2) consecutive fiscal quarters (as determined in
accordance with the financial statements and Officers' Compliance Certificate
delivered to the Lenders pursuant to Subsection 5.1.4 (Delivery of Officers'
Compliance Certificate) hereof, and if such financial statements and Officers'
Compliance Certificate are not delivered in a timely manner, then at the option
of the Agent regardless of the Consolidated Total Leverage Ratio), then within
ninety (90) days of the earlier of the time of delivery of such financial
statements and such Officers' Compliance Certificate or the time when such
delivery is due, at least forty percent (40%) but no more than one hundred
percent (100%) of Consolidated Indebtedness of Company and its Subsidiaries for
money borrowed shall bear interest at a fixed rate of interest and/or there
shall be in effect Interest Rate Protection Agreements, in form and substance
satisfactory to the Agent, that result in at least forty percent (40%) but no
more than
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one hundred percent (100%) of Consolidated Indebtedness of the Company and its
Subsidiaries bearing interest at a fixed rate of interest.
7.33 ENVIRONMENTAL MATTERS.
The Company shall not, and shall not allow any of its
Subsidiaries to, (a) use or knowingly permit any Person to use any of the real
property owned or occupied by the Company or any Subsidiary of the Company for
the purposes of treating, producing, handling, transferring, processing,
transporting, disposing, storing or otherwise Releasing Hazardous Substances in
violation of any Environmental Laws, or (b) cause or knowingly permit to exist
as the result of an intentional or unintentional action or omission on the part
of the Company or any Subsidiary of the Company or any Person who occupies any
real property owned or occupied by the Company or any Subsidiary of the Company,
the Releasing, spilling, leaking, pumping, pouring, emitting or dumping from, or
on any real property owned or occupied by the Company or any Subsidiary of the
Company of any Hazardous Substance in violation of any Environmental Law,
except, in any such case, to any extent which could not have a Material Adverse
Effect.
7.34 CORPORATE SEPARATENESS.
The Company shall conduct its business and operations separate
from that of each of its Subsidiaries and from SPC and its other Subsidiaries.
Susquehanna Cable and each of its Subsidiaries shall conduct their business and
operations separately from that of Susquehanna Radio and each of its
Subsidiaries. Each of the foregoing shall take all such actions as are
appropriate to preserve such separation including, without limitation, not
commingling funds or other assets of SPC and its Subsidiaries (other than the
Company and the Subsidiaries of the Company) with the funds or other assets of
the Company and/or its Subsidiaries and (subject to the last sentence of this
Section 7.34) not commingling funds or other assets of Susquehanna Cable and
each of its Subsidiaries with the funds or assets of Susquehanna Radio and each
of its Subsidiaries and maintaining separate corporate and financial records and
observing all corporate and partnership formalities. It is understood that SPC
may provide certain administrative support to such Persons, that SPC and such
Persons may have a common employee stock ownership plan (including the ESOP) or
pension or other retirement plan, and that SPC and such Persons may have certain
common employees, so long as accurate records are kept of the allocation of each
such Person's respective obligations to bear its proportionate share of the
costs of any such support or employees and of the funds of each such Person
and/or the employees of such Person in a common employee stock ownership plan or
pension or other retirement plan. It is further understood that the Company and
its Subsidiaries may utilize common cash management services among themselves
(but not together with SPC or its other Subsidiaries), so long as accurate
separate financial records are kept for the Company and each of its
Subsidiaries.
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ARTICLE 8
EVENTS OF DEFAULT
8.1 EVENTS OF DEFAULT.
"Event of Default" wherever used herein means any one of the
following events (whatever the reason for such Event of Default, whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court, or any order, rule or regulation
of any administrative or governmental instrumentality):
8.1.1 FAILURE TO PAY PRINCIPAL. If the Company shall fail to
make any payment of the principal of the Loans on the dates when the same shall
become due and payable, whether at stated maturity or at a date fixed for any
installment or prepayment thereof or otherwise; or
8.1.2 FAILURE TO PAY INTEREST, FEES, REIMBURSEMENT
OBLIGATIONS, ETC. If the Company shall fail to make any payment of interest on
the Loans, the Commitment Fees, reimbursement obligations in respect of Letters
of Credit or any other amounts owing hereunder (other than principal of the
Loans) or under any Letters of Credit on the dates when such interest,
Commitment Fees or other amounts shall become due and payable and such failure
continues for more than three (3) Business Days; or
8.1.3 CROSS DEFAULT TO INDEBTEDNESS. (a) If the Company or any
of its Subsidiaries shall default (as payor or guarantor or other surety) in the
payment of (i) any principal of or premium or interest on any Indebtedness
(other than obligations which are covered in Subsections 8.1.1 or 8.1.2 above),
or (ii) any direct or contingent reimbursement obligations arising on account of
the issuance of a letter of credit (other than those covered by Subsection 8.1.2
above), or (iii) any payment required to be made under any Interest Rate
Protection Agreement or other agreement having a similar purpose, and the
underlying obligation referred to in clauses (i), (ii) and/or (iii) with respect
to which a default has occurred aggregates One Million Dollars ($1,000,000) or
more or could result in a required payment of One Million Dollars ($1,000,000)
or more, or (b) if any event shall occur or condition shall exist in respect of
any such (i) Indebtedness, (ii) direct or contingent reimbursement obligations,
or (iii) payment obligations under any Interest Rate Protection Agreement or
other agreement having a similar purpose, or under any evidence of any of the
foregoing obligations referred to in clauses (i), (ii) and (iii) or under any
mortgage, indenture or other agreement relating thereto which would permit, or
shall have caused, the acceleration of the payment, time for payment or maturity
of any such obligations, and such default, event or condition referred to in
clauses (a) and/or (b) shall continue for more than the period of grace, if any,
specified therein and shall not have been waived pursuant thereto; or
8.1.4 OTHER CROSS-DEFAULTS. If the Company or any of its
Subsidiaries shall default in a payment or performance of any obligation (except
obligations which are covered in
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Subsections 8.1.1, 8.1.2 and 8.1.3 hereof), whether now or hereafter incurred,
which default could have a Material Adverse Effect, and such default shall
continue for more than the period of grace, if any, specified in the agreement
or other documents setting forth the terms of such obligation, or shall not have
been waived pursuant thereto; or
8.1.5 MISREPRESENTATIONS. If any representation or warranty
made (a) by the Company in this Agreement or in any other Loan Document or (b)
by the Company or any other Person (other than the Agent, the Issuing Bank or a
Lender) in any document, certificate or statement furnished pursuant to this
Agreement or any other Loan Document, shall be false or misleading in any
material respect when made or deemed made; or
8.1.6 CERTAIN COVENANT DEFAULTS. If there shall occur a
default in the due performance or observance of any term, covenant or agreement
to be performed or observed pursuant to any of Article 6 (Financial Covenants),
Section 7.1 (Indebtedness), Section 7.2 (Liens), Subsection 7.3.3
(Acquisitions), Subsection 7.3.4 (Additional Limitations on Investments),
Section 7.4 (Restricted Payments), Section 7.5 (Sale-Leasebacks), Section 7.7
(Merger and Dispositions), the first sentence of Section 7.8 (Management Fees),
Section 7.9 (Existence) (insofar as such section requires the preservation of
existence of the Company and its Subsidiaries), Section 7.10 (Compliance with
Law), Section 7.11 (Taxes), Section 7.14 (ESOP), Section 7.17 (Records), Section
7.18 (Inspection), Section 7.22 (Consistent Action) through Section 7.28
(Stock), Section 7.31 (Limitations on Certain Restricted Provisions), Section
7.34 (Corporate Separateness) and Section 7.35 (Radio Licenses) of this
Agreement; or
8.1.7 OTHER COVENANT DEFAULTS. If there shall occur any
default in the due performance or observance of any term, covenant or agreement
to be performed or observed pursuant to the provisions of this Agreement, other
than as provided in Subsections 8.1.1, 8.1.2, 8.1.3, 8.1.4 and/or 8.1.6 above,
or any agreement incidental hereto (other than as provided in Subsection 8.1.8)
and, if capable of being remedied, such default shall continue unremedied after
the earlier of thirty (30) days after notice of the default shall have been
given to the Company or thirty (30) days after the Company becomes aware, or
should in the exercise of reasonable diligence have become aware, of such
default, provided, that if such default is of such nature that it can be
remedied by the Company but not within such period, the same shall not
constitute an Event of Default until the forty-fifth (45th) day (rather than the
30th day) so long as the Company institutes remedial action within such thirty
(30) day period and continuously and diligently pursues the same; or
8.1.8 OTHER LOAN DOCUMENT DEFAULTS; SECURITY. If any of the
parties, other than the Agent, the Issuing Bank and the Lenders, to any of the
Loan Documents (other than this Agreement) shall fail to perform any of its
obligations under any of such agreements (after taking into account any
applicable cure period set forth in such agreements); or if the validity of this
Agreement or any of the other Loan Documents shall have been challenged or
disaffirmed by or on behalf of any of such parties thereto; or if, other than as
a direct result of any action of the Agent, the Issuing Bank or the Lenders, any
Liens created or intended to be created by any of the
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Loan Documents shall at any time cease to be valid and perfected first priority
Liens, subject to no equal or prior Liens except Permitted Liens; or
8.1.9 CUSTODY OR CONTROL OF ASSETS. If custody or control of
any substantial part of the property of SPC, the Company or any of the Company's
Subsidiaries shall be assumed by any governmental agency or any court of
competent jurisdiction, at the insistence of any governmental agency, or if any
governmental regulatory authority shall take any final action the effect of
which could have a Material Adverse Effect; or
8.1.10 DISCONTINUANCE OF BUSINESS; INSOLVENCY. If SPC, the
Company or any of the Company's Subsidiaries shall suspend or discontinue its
business, shall make an assignment for the benefit of creditors or a composition
with creditors, shall generally not be paying its debts as they mature, shall
admit its inability to pay its debts as they mature, shall file a petition in
bankruptcy, shall become insolvent (howsoever such insolvency may be evidenced),
shall be adjudicated insolvent or bankrupt, shall petition or apply to any
tribunal for the appointment of any receiver, custodian, liquidator or trustee
of or for it or any substantial part of its property or assets, shall commence
any proceeding relating to it under any bankruptcy, reorganization, arrangement,
readjustment of debt, receivership, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or if there shall be
commenced against SPC, the Company or any of the Company's Subsidiaries, any
such proceeding and the same shall not be dismissed within sixty (60) days or an
order, judgment or decree approving the petition in any such proceeding shall be
entered against SPC, the Company or any of the Company's Subsidiaries; or if
SPC, the Company or any of the Company's Subsidiaries, shall by any act or
failure to act indicate its consent to, approval of or acquiescence in, any such
proceeding or any appointment of any receiver, custodian, liquidator or trustee
of or for it or for any substantial part of its property or assets, or shall
suffer the appointment of any receiver, liquidator or trustee, or shall take any
corporate action for the purpose of effecting any of the foregoing; or if any
court of competent jurisdiction shall assume jurisdiction with respect to any
such proceeding and the same shall not be dismissed within sixty (60) days or if
a receiver or a trustee or other officer or representative of a court or of
creditors, or if any court, governmental office or agency, shall, under color of
legal authority, take and hold possession of any substantial part of the
property or assets of SPC, the Company or any of the Company's Subsidiaries, and
shall not have relinquished possession within sixty (60) days, or if SPC, the
Company or any of the Company's Subsidiaries, shall have concealed, removed, or
permitted to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors, or any of them, or shall have made or
suffered a transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law, or if SPC, the Company or any
of the Company's Subsidiaries, shall have made any transfer of its property to
or for the benefit of a creditor which constitutes a preferential transfer under
any bankruptcy or similar law, or if SPC, the Company or any of the Company's
Subsidiaries, shall have suffered or permitted, while insolvent, any creditor to
obtain a lien upon any of its property through legal proceedings or distraint;
or
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8.1.11 FCC LICENSES AND OTHER FRANCHISES. If the FCC or any
cable franchising authority or any other governmental agency (i) revokes,
terminates, suspends, fails to renew or extend, or substantially and adversely
modifies any Franchise(s) held by the Company or any of its Subsidiaries (any
such occurrence is herein referred to as an "Adverse Event") and the sum of (x)
that portion of the EBITDA attributable to the Franchise(s) affected by an
Adverse Event determined for the fiscal year immediately preceding such Adverse
Event, plus (y) that portion of the EBITDA attributable to all other
Franchise(s) affected by an Adverse Event since the Closing Date, (in each case
determined for the fiscal year immediately preceding the Adverse Event), exceeds
10% of EBITDA determined for the fiscal year immediately preceding the most
recent Adverse Event, or (ii) commences a proceeding in which the FCC or such
cable franchising authority or other governmental authority or agency seeks to
suspend, revoke, terminate or substantially or adversely modify any Franchise(s)
(and such suspension, revocation, termination or modification is not dismissed
or discharged within 180 days) which, either alone or in combination with other
Franchises with respect to which any such proceeding has been commenced and not
been dismissed or discharged, contributed more than 10% of EBITDA determined for
the fiscal year most recently ended; or
8.1.12 MATERIAL ADVERSE EFFECT. If there shall occur or be
threatened any event, or if there shall exist any fact or condition, which could
have a Material Adverse Effect; or
8.1.13 JUDGMENTS. If any final judgment or judgments or
non-appealable assessment or assessments for the payment of money in excess of
Five Hundred Thousand Dollars ($500,000) in the aggregate shall be rendered
against SPC, the Company or any of the Company's Subsidiaries and such judgment
remains either unstayed or unsatisfied for a period of thirty (30) days or more;
or
8.1.14 CHANGE OF CONTROL. If there shall occur a Change of
Control; or
8.1.15 LENFEST MATTERS. If Lenfest assumes management control
of Susquehanna Cable or any of its Subsidiaries pursuant to the Lenfest
Agreement or if there is any default under any Lenfest Note at any time; or
8.1.16 LOSS OF TAX QUALIFICATION OF ESOP. If the IRS issues a
final notice (i.e., a notice that can no longer be appealed within the IRS
itself) that the ESOP has been disqualified for favorable tax treatment.
8.1.17 SUBORDINATION. If the obligations in respect of the
Senior Subordinated Notes and Senior Subordinated Indenture cease to be fully
subordinated to all of the obligations under this Agreement; or if the
obligations under the Senior Subordinated Notes or Senior Subordinated Indenture
become subject to guarantees of one or more Subsidiaries of the Company; or if
there is a "Change of Control" within the meaning of the Senior Subordinated
Indenture or if any other event or condition shall exist which requires the
Company to purchase
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or prepay (or offer to purchase or prepay) all or any portion of the obligations
under the Senior Subordinate Notes or Senior Subordinated Indenture.
8.2 ACCELERATION; REMEDIES.
8.2.1 REMEDIES IN GENERAL. Upon the occurrence of any event
described in Section 8.1.10 (Insolvency), the entire unpaid principal balance of
the Notes, and interest accrued and premium, if any, thereon, and any unpaid
accrued Commitment Fees and all other amounts accrued hereunder or under the
other Loan Documents, shall be immediately due and payable by the Company and
the Commitment shall terminate without presentation, demand, protest, notice of
protest or other notice of dishonor of any kind, all of which are hereby
expressly waived by the Company. Upon the occurrence of any other Event of
Default, or at any time thereafter, if any Event of Default shall then be
continuing, the Agent may (and shall if directed by the necessary Lenders
pursuant to Subsection 12.6.1 (Actions upon Default)) by written notice to the
Company, declare the entire unpaid principal balance or any portion of the
principal balance of all or any of the Notes, and interest accrued and premium,
if any, thereon and any unpaid accrued Commitment Fees and all other amounts
accrued hereunder or under the other Loan Documents, to be immediately due and
payable by the Company and the Commitment shall terminate or, if no principal
balance shall be outstanding, the Agent may terminate the Commitment. Such
principal and interest, premium, fees, and other amounts shall thereupon become
and be immediately due and payable, without presentation, demand, protest,
notice of protest or other notice of dishonor of any kind, all of which are
hereby expressly waived by the Company; and the Agent (acting directly or
through appointment of one or more trustees of the Agent's choosing) may proceed
to protect and enforce its rights and those of the Issuing Bank, the Lenders and
other Senior Secured Parties under the Loan Documents in any manner or order it
deems expedient without regard to any equitable principles of marshalling or
otherwise. It is agreed that, in addition to all other rights hereunder or under
law, the Agent shall have the right to institute proceedings in equity or other
appropriate proceedings for the specific performance of any covenant or
agreement made in any of the Loan Documents or for an injunction against the
violation of any of the terms of any of the Loan Documents or in aid of the
exercise of any power granted in any of the Loan Documents or by law or
otherwise. Further, the Lenders shall be entitled to the appointment of a
trustee or receiver for all or any part of the businesses of the Company or any
of its Subsidiaries, which trustee or receiver shall have such powers as may be
conferred by the appointing authority. All rights and remedies given by this
Agreement, the Notes and the other Loan Documents are cumulative and not
exclusive of any of such rights or remedies or of any other rights or remedies
available to the Agent or any Lender, and no course of dealing between the
Company and the Agent or any Lender or any delay or omission in exercising any
right or remedy shall operate as a waiver of any right or remedy, and every
right and remedy may be exercised from time to time and as often as shall be
deemed appropriate by the Agent or any Lender.
8.2.2 WAIVERS. The Agent may (if authorized pursuant to
Subsection 12.5 (Amendments, Waivers and Consents)), by written notice to the
Company, at any time and from
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time to time waive in whole or in part, and absolutely or unconditionally, any
Event of Default. Any such waiver shall be for such period and subject to such
conditions or limitations as may be specified in any such notice. In the case of
any such waiver, the rights of the Agent and the Lenders shall be otherwise
unaffected and any Event of Default so waived shall be deemed to be cured and
not continuing only to the extent and on the conditions or limitations set forth
in such waiver (unless such waiver shall state to the contrary), but no such
waiver shall extend to any subsequent or other Event of Default, or impair any
right upon the occurrence of any Event of Default.
8.2.3 REGULATORY MATTERS. If counsel to the Agent, the Issuing
Bank or any Lender, as the case may be, reasonably determines that the consent
of the FCC, any PUC, or other applicable regulatory authority is required in
connection with any of the actions which may be taken by the Agent, the Issuing
Bank or any of the Lenders, as the case may be, in the exercise of their rights
hereunder or under the other Loan Documents, then the Company, at its sole cost
and expense, shall use its best efforts to secure such consent and to cooperate
fully with the Agent, the Issuing Bank or the Lenders, as the case may be, in
any action commenced by any such Person, to secure such consent. Upon the
occurrence and during the continuation of an Event of Default, the Company,
subject to the provisions of applicable law, shall promptly execute and file
and/or cause the execution and filing of all applications, certificates,
instruments and other documents that the Agent, the Issuing Bank or the Lenders
deem necessary or advisable to file in order to obtain any governmental consent,
approval, or authorization, and if the Company fails or refuses to execute, or
fails or refuses to cause another Person to execute, such documents, the clerk
of any court with jurisdiction over the Loan Documents may execute and file the
same on behalf of the Company. The Company recognizes that the FCC Licenses and
other Franchises held by the Company and its Subsidiaries are unique assets
which may have to be transferred in order for the Lenders and other Senior
Secured Parties adequately to realize the value of their security interests. The
Company further recognizes that a violation of this covenant would result in
irreparable harm to the Lenders and other Senior Secured Parties for which
monetary damages are not readily ascertainable. Therefore, in addition to any
other remedy which may be available to the Agent, the Lenders or other Senior
Secured Parties, as the case may be, at law or in equity, the Agent, the Lenders
or other Senior Secured Parties, as the case may be, shall have the remedy of
specific performance of the provisions of this Subsection. To enforce the
provisions of this Subsection 8.2.3, the Agent is authorized to request the
consent or approval of the FCC, any PUC or other regulatory authority to a
voluntary or an involuntary transfer of control of any FCC License or other
Franchise. In connection with the exercise of its remedies under the Loan
Documents, the Agent may obtain the appointment of a trustee or receiver to
assume, upon receipt of all necessary judicial, FCC, PUC or other regulatory
authority consents or approvals, control of the Company or any of its
Subsidiaries. Such trustee or receiver shall have all rights and powers provided
to it by law or by court order or provided to the Agent or the Lenders or other
Senior Secured Parties under the Loan Documents. In addition, the Company shall
take, or cause to be taken, any action which the Agent may reasonably request in
order to obtain and enjoy the full rights and benefits granted to the Agent, the
Lenders and other Senior Secured Parties by the Loan Documents, including,
without
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limitation, at the Company's cost and expense, the exercise of its best efforts
to cooperate in obtaining FCC, any PUC, or other regulatory approval of any
action or transaction contemplated by the Loan Documents which is then required
by law.
8.2.4 CERTAIN LIMITATIONS. Notwithstanding anything to the
contrary contained in this Agreement or any of the other Loan Documents, the
Agent and the Lenders will not knowingly take any action pursuant to this
Agreement or any such documents which would constitute or result in assignment
of an FCC License or other Franchise or any transfer of control of the holder of
an FCC License or other Franchise if such assignment of license or transfer of
control would require under then existing law (including the written rules and
regulations promulgated by the FCC or any PUC), the prior approval of the FCC or
such PUC, without first obtaining such approval. In connection with this
provision, the Agent and the Lenders shall be entitled to rely upon the advice
of counsel of the Agent's choice whether or not the advice rendered is
ultimately determined to have been accurate.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
In order to induce the Issuing Bank and the Lenders to enter
into this Agreement and to make the Loans and other extensions of credit
contemplated by this Agreement, the Company hereby makes the following
representations, covenants and warranties, which representations, covenants and
warranties shall survive the execution and delivery of this Agreement, the Notes
and the other Loan Documents and shall not be affected or waived by any
inspection or examination made by or on behalf of the Agent, Issuing Bank or
Lenders:
9.1 STATUS.
9.1.1 ORGANIZATION AND QUALIFICATION. SPC, the Company and
each of the Company's Subsidiaries are duly organized and validly existing
corporations, partnerships or limited liability companies, as applicable, under
the laws of the respective states indicated on Schedule 9.1 and each is in good
standing under the laws of its state of formation. Each of SPC, the Company and
the corporate Subsidiaries of the Company, has perpetual corporate existence,
and each of SPC, the Company, and the Subsidiaries of the Company has the
corporate, partnership or limited liability company power and authority to own
its property and assets and to transact the business in which it is engaged or
presently proposes to engage. None of SPC, the Company, or any of the Company's
Subsidiaries has failed to qualify to do business in any state or jurisdiction
where the failure to so qualify could have a Material Adverse Effect.
9.1.2 STOCK OWNERSHIP. All of the common stock of the Company
is owned by SPC. The preferred stock of the Company is owned by the Other
Shareholders specified on Schedule 9.1. The classes of stock of the Company and
the principal characteristics of each such
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class and the number and percentage interests of each class (and certificate
numbers by which such interests are designated) owned by SPC and the Other
Shareholders are listed on Schedule 9.1. The Company does not have any
Subsidiary and does not presently operate all or any portion of its businesses
through any Person, other than as disclosed on Schedule 9.1. Schedule 9.1 also
correctly lists as to each Subsidiary of the Company on the date of this
Agreement
(a) its name,
(b) the jurisdiction of its incorporation or
organization,
(c) the classes of stock or partnership or other
equity interest issued by such Person and the principal characteristics of each
such class, and
(d) the names of each of the Other Shareholders and
the number and percentage of the issued and outstanding shares or partnership
interests of each class (and certificate numbers by which such interests are
designated) owned by each of the holders of such shares or interests.
All the outstanding shares of capital stock of the Company and of each of its
Subsidiaries are validly issued, fully paid and nonassessable, and all such
shares owned by SPC and all such shares and partnership and other equity
interests indicated in Schedule 9.1 as owned by the Company or any of its
Subsidiaries are so owned beneficially and of record by SPC, the Company and
each such Subsidiary, free and clear of any Lien, except for the Lien created
pursuant to the Loan Documents. Schedule 9.1 also correctly lists as to the
Company and each Subsidiary of the Company any options, warrants or other
securities issued by the Company or any Subsidiary of the Company and the
identity of each holder of any such option, warrant or other security. No
Subsidiary owns any shares of the Company as of the date hereof. Except as set
forth on Schedule 9.1, there are no preemptive rights or other rights to
subscribe for or to purchase, or any restriction on the voting or transfer of
any shares of, capital stock of the Company or any Subsidiary of the Company
pursuant to the certificate or articles of incorporation, bylaws or other
governing document or any agreement or other instrument to which the Company or
any Subsidiary of the Company is a party or by which any of them may be bound.
Notwithstanding the foregoing, it is understood that Susquehanna Cable and, from
time to time, other Subsidiaries of the Company may have certain phantom equity
programs as part of their employee incentive programs, but such phantom equity
issued pursuant to such programs provides only an economic (rather than
ownership) benefit to the beneficiaries.
9.1.3 CERTAIN ENTITIES. Susquehanna Ad Net, Inc., a
Pennsylvania corporation, KTHX Radio, Inc., a Nevada corporation, KTHX License
Investment Co., a Nevada corporation, and Susquehanna Energy Ventures, Inc., a
Pennsylvania corporation, as of the Closing Date have substantially no assets or
liabilities and it is the current intent of the Company to dissolve those
entities. Accordingly, they are excluded as of the Closing Date from the
definition of "Subsidiaries" as that term applies to "Subsidiaries of the
Company". If at any time any of those
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entities acquire assets, it shall automatically be deemed to be a "Subsidiary"
of the Company and the Company shall cause such entities to execute the
Subsidiary Pledge, the Subsidiary Suretyship, the Security Agreement and take
such other action as is required of Subsidiaries of the Company under this
Agreement.
9.2 POWER AND AUTHORITY.
SPC, the Company and each of the Company's Subsidiaries has
the corporate, partnership or other power to execute, deliver and carry out, as
the case may be, the terms and provisions of the Loan Documents to which each is
a party, and each such Person has taken all necessary corporate, partnership or
other action (including, without limitation, any consent of stockholders or
partners required by law or by their respective articles of incorporation or
bylaws or other organizational documents) to authorize (as applicable to such
Person) the execution, delivery and performance of the Loan Documents to which
each is a party. The Loan Documents, when executed and delivered by SPC, the
Company or the Company's Subsidiaries, as applicable, constitute or will
constitute the authorized, valid and legally binding obligations of such Person
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity (regardless of whether such enforcement is
sought in a court of law or at equity).
9.3 NO VIOLATION OF AGREEMENTS.
None of SPC, the Company or any Subsidiary of the Company is
in default under the provisions of any agreement to which it is a party, which
default could result in a Material Adverse Effect. The execution and delivery of
the Loan Documents, the consummation of the transactions contemplated by the
Loan Documents and compliance with the terms and provisions of the Loan
Documents, will not (x) violate any provision of law or any injunction or any
applicable regulation, order, writ, judgment or decree of any court or
governmental department, commission, board, bureau, agency or instrumentality
applicable to SPC, the Company or any of the Company's Subsidiaries, or (y)
require consent under, conflict or will be inconsistent with, or will result in
any breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to impose) any Lien, other than the Liens created under the Loan
Documents or Permitted Liens, upon any of the property or assets of SPC, the
Company or any of the Company's Subsidiaries pursuant to the terms of, any
agreement, indenture, franchise, license, permit, mortgage or deed of trust to
which any such Person is a party or by which any such Person may be bound, or to
which any such Person may be subject, or (z) violate any of the provisions of
the articles of incorporation, bylaws or other organizational document of any
such Person.
9.4 RECORDING, ENFORCEABILITY AND CONSENT; VALIDITY OF SECURITY
INTEREST.
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(a) Assuming the due recording of the UCC-1 financing
statements delivered in connection herewith, no consent, approval or
authorization of any Person, or recording, filing, registration, notice or other
similar action with or to any Person, is required in order to insure the
legality, validity, binding effect or enforceability of any of the Loan
Documents as against all Persons, except (i) such consents, approvals or
authorizations as have been obtained and remain in effect, (ii) certain consents
respecting the pledge of specific franchises, minority interests and certain
other assets which in the aggregate, do not constitute a material amount of
assets and (iii) such filings as may be required as contemplated in Section 7.30
(Filings). No consent, approval or authorization of any Person which has not
been obtained is required for the continued conduct by the Company or any of its
Subsidiaries of their business as now conducted or as proposed to be conducted.
(b) The Company has delivered, or caused to be
delivered, to the Agent all UCC-1 financing statements in recordable form that
may be necessary to perfect the security interests granted pursuant to the Loan
Documents to the extent that such security instruments may be perfected by
filing. The Company has delivered, or caused to be delivered, to the Agent all
instruments, documents and investment property necessary to perfect the security
interest granted pursuant to the Loan Documents, to the extent that a security
interest therein may be perfected by delivery. The Agent has a valid, first
priority security interest in all of the equity and Material Assets of the
Company and its Subsidiaries (other than the non-voting stock of BlazeNet and
Susquehanna Radio issued pursuant to its employee stock option plans), subject
only to Permitted Liens.
9.5 LITIGATION; COMPLIANCE WITH LAWS.
There are no actions, suits, protests, reconsiderations or
proceedings pending, or to the knowledge of the Company, threatened, against or
affecting SPC, the Company or any of the Company's Subsidiaries before any court
or before any governmental or administrative body or agency, including without
limitation the FCC or any PUC, wherein unfavorable decisions, rulings or
findings individually or in the aggregate could have a Material Adverse Effect.
None of SPC, the Company or any of the Company's Subsidiaries is in default
under the provisions of any applicable statute, rule, order, writ, injunction,
judgment, decree, certificate or regulation of any governmental authority having
jurisdiction in respect of any such Person, which default could have a Material
Adverse Effect.
9.6 NO BURDENSOME AGREEMENTS.
None of SPC, the Company or any of the Company's Subsidiaries
is a party to any agreement or instrument or subject to any corporate or other
restrictions which, assuming compliance by such Persons with the terms of such
agreements or instruments, could have a Material Adverse Effect.
9.7 CONDITION OF PROPERTY.
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All of the material properties, equipment and systems of the
Company and its Subsidiaries are in good repair, working order and condition and
are and will be in material compliance with all standards or rules imposed by
any governmental agency or authority (including, without limitation, the FCC,
any PUC, and state or other local governments or instrumentalities) and as
imposed under any Franchise or agreements with telephone companies, other
utility companies and other Persons.
9.8 FEES.
The Company and each of its Subsidiaries has paid all
franchise, license and other fees and charges which have become due pursuant to
any franchise or permit in respect of its business and has made appropriate
provision as is required by GAAP for any such fees and charges which have
accrued.
9.9 LICENSES.
The Company and each of its Subsidiaries has duly secured all
necessary Franchises from, and has filed all required registrations,
applications, reports and other documents with, and paid all required royalty
and other fees to, the FCC, United States Copyright Office, the Register of
Copyrights, the Copyright Royalty Tribunal, each PUC and other entities
exercising jurisdiction over the provision of cable television and broadcast
radio or the construction of delivery systems therefor, in respect of their
respective businesses as currently conducted, in each case, where the failure to
do any of the foregoing could have a Material Adverse Effect. Without limiting
the generality of the foregoing, the Company and its Subsidiaries hold the FCC
Licenses and Franchises specified on Schedule 9.9 hereto; all such FCC Licenses
and Franchises are valid and in full force and effect; no event has occurred
which could (i) result in the revocation or termination of any such FCC License
or Franchise, or (ii) materially and adversely affect any rights of the Company
or its Subsidiaries under any such FCC License or Franchise; and the Company has
no reason to believe and no knowledge that the FCC Licenses and Franchises
specified on Schedule 9.9 will not be renewed in the ordinary course. True and
correct copies of all FCC Licenses and all Franchises listed on Schedule 9.9
have been delivered to any Lender that has so requested, and true and correct
copies of any additional material FCC Licenses and Franchises secured after the
date of this Agreement by the Company or any of its Subsidiaries (including
renewals of existing FCC Licenses and Franchises) shall be promptly delivered to
any Lender that so requests.
Schedule 9.9 correctly lists (a) the FCC Licenses which are
held by the Company or its Subsidiaries and (b) the other Franchises which are
held by such Persons, (c) the geographical area to which each such FCC License
or other Franchise relates and (d) the expiration date, if any, of each such FCC
License or other Franchise. Each Franchise issued to the Company or its
Subsidiaries is in full force and effect and each of the Company and its
Subsidiaries has fulfilled and performed all of its material obligations with
respect to each such Franchise. No event has occurred which permits, or after
notice or lapse of time or both would permit, revocation or
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termination of any such Franchise, or which materially adversely affects or, so
far as the Company can now foresee, will materially adversely affect the rights
of a holder of any such Franchise.
9.10 TITLE TO PROPERTIES; LIENS.
The Company and each of its Subsidiaries has good and
marketable title to its properties and assets, including the properties and
assets reflected in the financial statements referred to in Subsection 9.14.1
(Financial Statements) (except properties and assets disposed of since the date
thereof in the ordinary course of business and properties and assets held under
Capital Leases), and none of such properties or assets is subject to any Liens
except Permitted Liens. Each of the Company and its Subsidiaries enjoys peaceful
and undisturbed possession under all leases necessary in any material respect
for the operation of such properties and assets, and all such leases are valid
and subsisting and are in full force and effect.
9.11 PATENTS, TRADEMARKS, AGREEMENTS, ETC.
Each of the Company and its Subsidiaries holds or has agreed
to purchase all patents, trademarks, service marks, trade names, copyrights,
franchises, licenses (including FCC Licenses and Franchises) and authorizations,
and all rights with respect to the foregoing, necessary for the conduct of its
business as now conducted, without any known material conflict with the rights
of others and subject only to Permitted Liens. Each of the Company and its
Subsidiaries has obtained all material easements and equipment rental or other
agreements necessary for the operation of its business as now conducted.
9.12 NAMES.
None of SPC, the Company or any of the Company's Subsidiaries
uses or has used for any material purposes within the past five (5) years any
fictitious, trade or assumed name other than "BlazeNet" or has had a corporate
or partnership name.
9.13 MANAGEMENT AGREEMENT.
Except for management agreements permitted by Subsection 7.8.1
(Management Arrangements), the Company and its Subsidiaries are not parties to
any management or other similar agreement.
9.14 FINANCIAL STATEMENTS AND PROJECTIONS.
9.14.1 FINANCIAL STATEMENTS. The Company has delivered to each
of the Lenders and the Issuing Bank complete and correct copies of the audited
financial statements of SPC and its Subsidiaries for the fiscal year ended
December 31, 1998. Such financial statements delivered to the Lenders and the
Issuing Bank have been prepared in accordance with GAAP applied on a consistent
basis throughout the period specified and present fairly in all material
respects the
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financial position of SPC and its Subsidiaries as of the date specified and the
results of operations and statements of cash flow for the period specified.
Officers' Certificates delivered to the Lenders and the Issuing Bank after the
date of this Agreement which certify the truth and accuracy of the
representations (including those set forth in Sections 9.14 and 9.15) shall be
deemed to apply to financial statements which the Company has most recently
delivered to the Lenders and the Issuing Bank as of the time of such
certification.
9.14.2 PROJECTIONS. The operating projections submitted on
behalf of the Company to the Lenders and the Issuing Bank pursuant to Subsection
4.1.18 (Projections) present to the best of the Company's knowledge and belief
based on the assumptions set forth in such projections the expected results of
operations and sources and uses of cash of the Company for the periods covered
by the projections.
9.15 CHANGES.
Since December 31, 1998, there has been no Material Adverse
Change. Neither the Company nor any of its Subsidiaries has since December 31,
1998 directly or indirectly declared, ordered, paid, made or set apart any sum
or property for any Restricted Payment or agreed to do so, except (a) prior to
the Closing Date, transactions permitted under the Existing Facilities, and (b)
after the Closing Date, transactions permitted by this Agreement.
9.16 TAX RETURNS AND PAYMENTS.
All tax returns required by law to be filed (including
extensions) by or in respect of each of SPC, the ESOP, the Company and the
Company's Subsidiaries have been filed and all taxes, assessments and other
governmental charges levied upon them and any of their respective properties,
assets, income or franchises which are due and payable have been paid, other
than those presently payable without penalty or interest. The Company knows of
no unpaid assessment for additional federal or state income or business and
occupation taxes for any period or any basis for any such assessment for which
adequate provision has not been made in its accounts or in the balance sheets
referred to in Section 9.14 (Financial Statements and Projections).
9.17 INDEBTEDNESS.
Schedule 9.17 correctly describes all secured and unsecured
Indebtedness of the Company and each of its Subsidiaries outstanding or for
which any such Person has commitments. The Company and its Subsidiaries are not
in default beyond any applicable grace period with respect to any Indebtedness
or any instrument or agreement relating to such Indebtedness. No instrument or
agreement relating to any Indebtedness and no instrument or agreement applicable
to or binding on the Company or any of its Subsidiaries contains any
restrictions on the incurrence by the Company or any Subsidiary of the Company
of additional Indebtedness, except the Loan Documents and the Senior
Subordinated Indenture.
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9.18 FEDERAL RESERVE REGULATIONS.
No Indebtedness that is required to be, or will be, reduced or
retired from the proceeds of the Loans was incurred for the purpose of
purchasing or carrying any "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System (12 C.F.R. 221, as
amended), and neither the Company nor any of its Subsidiaries owns or has any
present intention to acquire any such margin stock.
9.19 INVESTMENT COMPANY ACT.
None of SPC, the Company or any of the Company's Subsidiaries
is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
9.20 PUBLIC UTILITY HOLDING COMPANY ACT.
None of SPC, the Company or any Subsidiary of the Company is a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act of
1935, as amended.
9.21 COMPLIANCE WITH ERISA AND ESOP MATTERS.
9.21.1 PLANS. None of SPC, the Company, any of the Company's
Subsidiaries or any ERISA Affiliate maintains or contributes to any Plan or
other pension or similar employee benefit plan, except as disclosed in Schedule
9.21.
9.21.2 FAVORABLE DETERMINATION LETTERS. Each Plan as most
recently amended, which is intended to be qualified within the meaning of
Section 401 of the Code (other than the ESOP, as to which SPC shall apply for a
favorable determination letter), is the subject of a favorable determination by
the Internal Revenue Service with respect to its qualification under Section 401
of the Code.
9.21.3 COMPLIANCE WITH LAW. The Company, its Subsidiaries and
their respective ERISA Affiliates have operated each Plan in all material
respects in compliance with the requirements of the Code and ERISA and the terms
of each Plan.
9.21.4 ABSENCE OF CERTAIN CONDITIONS. Except as specifically
disclosed in Schedule 9.21: (1) no Plan has engaged in any transaction in
connection with which SPC, the Company or any of the Company's Subsidiaries
could be subject to either a material civil penalty assessed pursuant to Section
502(i) of ERISA or a material tax penalty imposed pursuant to Section 4975 of
the Code, (2) there is no Accumulated Funding Deficiency with respect to any
Employee Pension Plan, whether or not waived, or an unfulfilled obligation to
contribute to any
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Multiemployer Plan or withdrawal from any Multiemployer Plan, (3) no Employee
Pension Plan has been terminated under conditions which resulted or could result
in any material liability to the PBGC, (4) no material liability to the PBGC has
been or is expected by the Company to be incurred with respect to any Plan
maintained by SPC, the Company or any of the Company's Subsidiaries or ERISA
Affiliates except for required premium payments to the PBGC, (5) there has been
(a) since January 1, 1995 no Reportable Event with respect to any Employee
Pension Plan (except to the extent that the PBGC has waived such reporting
requirement with respect to any such event), and (b) no event or condition which
presents a material risk of termination of any Employee Pension Plan by the
PBGC, in either case involving conditions which could result in any liability to
the PBGC, (6) none of SPC, the Company and any of the Company's Subsidiaries or
any ERISA Affiliate has incurred or anticipates incurring Withdrawal Liability
with respect to any Multiemployer Plan, (7) no Multiemployer Plan is in
Reorganization, (8) SPC, the Company and the Company's Subsidiaries have
complied in all material respects with the health continuation coverage
requirements of COBRA and the requirements of the Health Insurance Portability
and Accountability Act of 1996, (9) there is no unfunded liability in respect of
any Plan, and (10) there is not now, and has not been, any violation of the Code
or ERISA with respect to the filing of applicable reports, documents, and
notices regarding any Plan with the Secretary of Labor, the Secretary of the
Treasury, the PBGC or any other governmental entity or the furnishing of such
documents to the participants or beneficiaries of such Plan.
9.21.5 ABSENCE OF CERTAIN LIABILITIES. No liability (whether
or not such liability is being litigated) has been asserted against SPC, the
Company, any of the Company's Subsidiaries or any ERISA Affiliate in connection
with any Employee Pension Plan or any Multiemployer Plan by the PBGC other than
for required premium payments to the PBGC, by a trustee appointed pursuant to
Section 4042(b) or (c) of ERISA, or by a sponsor or an agent of a sponsor of a
Multiemployer Plan, and no lien has been attached and no Person has threatened
to attach a lien on any of SPC's, the Company's, any of the Company's
Subsidiaries' or any ERISA Affiliate's property as a result of failure to comply
with ERISA or as a result of the termination of any Plan.
9.21.6 ESOP VALUATION MATTERS. The ESOP has purchased or will
purchase the shares of stock subject thereto for fair market value as evidenced
by a valuation provided by an independent and nationally-respected third-party
appraiser.
9.21.7 INDEPENDENT REVIEW. The ESOP's purchase of shares, as
described in Subsection 9.21.6 above, was or will be reviewed and approved by an
independent fiduciary of the ESOP.
9.21.8 NO PROHIBITED TRANSACTION. The ESOP loan described in
Section 7.4(b)(i) will be exempt by Section 4975(d)(3) of the Code and by
Section 408(b)(3) of ERISA from the "prohibited transactions" listed in Section
4975(c) of the Code and in Section 406 of ERISA, respectively; and (ii) the
purchase of shares of stock in SPC by the ESOP will be exempt by
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Section 4975(d)(13) of the Code and by Section 408(e) of ERISA from such
"prohibited transactions".
9.21.9 ESOP LIABILITIES. Under the terms of the ESOP and the
ESOP Sharing Agreement, the Company is not, and will not at any time (by means
of an amendment to the ESOP Plan or otherwise) be, liable for the ESOP
Compensation Expense or ESOP Repurchase Payments related to any Persons that are
not employees of the Company and its Subsidiaries.
9.21.10 ANNUAL CONTRIBUTION TO ESOP. Under the terms of the
ESOP, a participating employer in the ESOP is required to contribute the ESOP
Compensation Expense on an annual basis to the ESOP's trust fund.
9.21.11 FAILURE TO PAY ESOP COMPENSATION EXPENSE. Under the
terms of the ESOP and the ESOP Loan, if a party other than the Company fails to
contribute its ESOP Compensation Expense, it may result in the ESOP's default on
the ESOP loan, but will not have a Material Adverse Effect on the Company.
9.21.12 FIDUCIARY LIABILITY. Any breach of fiduciary
responsibilities under ERISA by a fiduciary of the ESOP will not have a Material
Adverse Effect on the Company.
9.21.13 QUALIFICATION FOR CODE SECTION 1042 TREATMENT. To the
extent the ESOP's purchase of shares, as described in Subsection 9.21.6 above,
is from outstanding shareholders, the purchase will allow such shareholders to
elect the non-recognition of gain provided in Section 1042 of the Code (provided
such shareholders meet the other requirements of that Section).
9.21.14 DISPOSITION OF CODE SECTION 1042 SHARES. During the
three-year period after the date the ESOP acquires shares from the outstanding
shareholders described in Subsection 9.21.13 above, the ESOP will not dispose of
such shares in any manner that would cause the imposition of an excise tax under
Section 4978 of the Code on SPC or any of its Affiliates.
9.22 ACCURACY AND COMPLETENESS OF DISCLOSURE.
Neither this Agreement nor any other document, certificate or
instrument delivered to the Agent or Lenders by or on behalf of SPC, the Company
or any of the Company's Subsidiaries in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained in this Agreement and in such other documents, certificates or
instruments not misleading in light of the circumstances under which such
statements were made.
9.23 ADEQUACY OF CAPITAL.
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The proceeds of the Loans, together with the proceeds of
Indebtedness permitted under Section 7.1 (Indebtedness), will be sufficient
until satisfaction in full of the Loans to enable the Company and its
Subsidiaries to operate their respective businesses as currently contemplated by
the Company.
9.24 ABSENCE OF RESTRICTIVE PROVISIONS.
Other than this Agreement and the Senior Subordinated
Indenture, none of SPC, the Company or any of the Company's Subsidiaries is
subject or party to any agreement, lien or encumbrance, charter or bylaw,
regulatory, or other provision (except for applicable statutory corporate law),
restricting, directly or indirectly, (a) the payment of dividends by a
Subsidiary of the Company or the making of advances or other cash payments by
any Subsidiary to the Company, or (b) the ability of SPC, the Company or any of
the Company's Subsidiaries to create, incur, assume or permit to exist any Lien
on or with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of SPC, the
Company or any of the Company's Subsidiaries, provided that the representation
as to SPC in this clause (b) applies only with respect to SPC's ownership
interest in the Company.
9.25 ENVIRONMENTAL COMPLIANCE.
9.25.1 Except as set forth on Schedule 9.25, none of the real
property owned and/or occupied by the Company or any of its Subsidiaries has to
the knowledge of the Company ever been used by previous owners and/or operators
or ever been used by the Company or any of its Subsidiaries to treat, produce,
store, handle, transfer, process, transport, dispose or otherwise Release any
Hazardous Substances in violation of any Environmental Law;
9.25.2 Except as set forth on Schedule 9.25, to the knowledge
of the Company and its Subsidiaries, there is no condition which exists on the
real property owned and/or occupied by the Company or any of its Subsidiaries
which requires Remedial Action;
9.25.3 Neither the Company nor any of its Subsidiaries has
been notified of, or has actual knowledge of any notification having been filed
with regard to, a Release on or into any real property owned and/or occupied by
the Company or any of its Subsidiaries;
9.25.4 Neither the Company nor any of its Subsidiaries has
received a summons, citation, notice of violation, administrative order,
directive, letter or other communication, written or oral, from any governmental
or quasi-governmental authority concerning any intentional or unintentional
action or omission related to the generation, storage, transportation, handling,
transfer, disposal or treatment of Hazardous Substances in violation of any
Environmental Law;
9.25.5 There are no "friable" (as that term is defined in
regulations under the Federal Clean Air Act) asbestos or asbestos-containing
materials which have not been
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encapsulated in accordance with accepted guidelines promulgated by the United
States Environmental Protection Agency existing in any real property owned
and/or occupied by the Company or any of its Subsidiaries;
9.25.6 No equipment containing polychlorinated biphenyls,
including electrical transformers, are located on any real property occupied by
the Company or any of its Subsidiaries in levels which exceed those permitted by
any and all governmental authorities with jurisdiction over such premises and
which are not properly labeled in accordance with requisite standards; and
9.25.7 Except as set forth on Schedule 9.25, to the knowledge
of the Company there are no tanks on any real property owned and/or occupied by
the Company or any of its Subsidiaries that have been used for the storage of
petroleum products or any other substance, nor, except as to sites set forth on
Schedule 9.25, have any such tanks been located on such property at any time in
which a Release in violation of any Environmental Laws has occurred.
9.25.8 Each of the tanks referred to on Schedule 9.25 have
been registered and tested to the extent required by, and in accordance with,
any applicable Environmental Laws and there is no evidence of leakage from any
such tanks. All tanks that have been removed or abandoned have been closed in
accordance with applicable standards under Environmental Laws.
9.26 SOLVENCY.
The Company and each of its Subsidiaries is Solvent and will
be Solvent after giving effect to the Restricted Payment contemplated by
paragraph (b) of Section 7.4 (Restricted Payments).
9.27 SUBORDINATION.
All of the obligations under the Senior Subordinated Indenture
and Senior Subordinated Notes (if any) are subordinated and junior in right of
payment to all of the Senior Secured Obligations. The Senior Secured Obligations
constitute "Designated Senior Indebtedness" within the meaning of the Senior
Subordinated Indenture. Each of the Subordination Agreements is in full force
and effect and the subordinated obligations referred to therein are subordinated
and junior in right of payment to all of the Senior Secured Obligations.
9.28 YEAR 2000 COMPLIANCE.
(a) The Company and each of its Subsidiaries have
reviewed the areas within their businesses and operations which could be
adversely affected by a "Year 2000 Problem" (i.e. the risk that applications
used by them or on which they rely may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999) and have developed or are developing a program to
address on a
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timely basis any such Year 2000 Problem. Based upon such review, the Company and
each Subsidiary reasonably believe that the Year 2000 Problem will not have any
Material Adverse Effect.
(b) In addition to the steps taken as described in
paragraph (a) above, the Company has identified relationships with third
parties, including vendors, suppliers and service providers, which the Company
believes are critical to its business operations. The Company is in the process
of communicating with these third parties to determine the extent to which they
are addressing the Year 2000 Problem. The Company will continue to communicate,
assess and monitor the progress of these third parties in resolving the Year
2000 Problem.
ARTICLE 10
DEFINITIONS
10.1 DEFINED TERMS.
As used in this Agreement, the following terms shall have the
meanings specified in this Section unless the context otherwise requires.
Defined terms in this Agreement shall also mean in the singular number the
plural and in the plural the singular.
- Accumulated Funding Deficiency: any accumulated funding
deficiency as defined in Section 302(a) of ERISA.
- Acquisition: the meaning specified in Subsection 7.3.3
(Acquisitions).
- Actual EBITDA: the sum of (i) the Consolidated Net Income of
the Company and its Subsidiaries for a specified period, plus (ii) the sum of
the following to the extent deducted in such computation of such Consolidated
Net Income:
(a) depreciation expense;
(b) amortization expense;
(c) Interest Expense;
(d) income tax provision;
(e) ESOP Retirement Plan Expenses; and
(f) minority interests in Subsidiaries of the
Company, less interest income.
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- Adjusted LIBOR: the meaning specified in Subsection 1.8.5.
- Adverse Event: the meaning specified in Subsection 8.1.11
(FCC Licenses and Other Franchises).
- Affected Lender: the meaning specified in Subsection 11.5.6.
- Affiliate: with reference to any Person, a spouse of such
Person, any relative (by blood, adoption or marriage) of such Person within the
third degree, any director, officer or employee of such Person, any other Person
of which such Person is a partner, member, trustee director, officer or
employee, and any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such Person. For purposes of
this definition "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean (i) the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise
or (ii) the beneficial ownership of 10% or more of the total voting power of the
Voting Stock (on a fully diluted basis) of such Person.
- Agent: the meaning specified in the preamble to this
Agreement.
- Agreement: this Agreement, as amended, modified or
supplemented from time to time.
- Applicable Margin: the meaning specified in Subsection
1.8.2.
- Application Date: the 365th day after the date the Company
or a Subsidiary of the Company receives the Net Proceeds from a disposition of
assets.
- Approved Fund: any investment fund that has been approved by
the Agent and Borrower prior to the Closing Date, it being understood that
receipt of an Assignment and Acceptance from the Agent is one form of conclusive
evidence of such approval.
- Assignment and Acceptance: the meaning specified in
Subsection 11.5.3.
- Available Commitment: the meaning specified in Subsection
1.1.2.
- Base Rate: the higher of (i) the rate of interest publicly
announced by the Agent from time to time at its principal office as its prime
commercial lending rate (which rate is not necessarily the lowest rate charged
by the Agent to its borrowers) and (ii) the Federal Funds Rate plus one-half of
one percent (1/2%).
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- Basic Subscribers: with respect to any cable television
system, (i) all dwelling units, including separate units within an apartment
building, hotel, motel, condominium, cooperative or similar building, in respect
of which the Company or any Subsidiary of the Company is paid the full monthly
price for basic services offered in such cable television system in accordance
with standard basic rates generally charged by the Company or such Subsidiary in
respect of such cable television system and (ii) all Equivalent Basic
Subscribers in such cable television system.
- BlazeNet: Susquehanna Data Services, Inc. (d/b/a BlazeNet).
- Business Day: a day other than a Saturday, Sunday or day on
which commercial banks are required or permitted to close in Philadelphia,
Pennsylvania, New York, New York or Dallas, Texas.
- Capital Expenditures: expenditures for fixed or capital
assets, including, but not limited to, the purchase, construction or
rehabilitation of equipment or other physical assets or the expansion or
improvement of any cable television system or broadcast radio system or the
addition of capacity or versatility to such a system.
- Capital Lease: a lease with respect to which the lessee is
required to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.
- Capital Lease Obligation: with respect to any Capital Lease,
the amount of the obligation of the lessee thereunder which would in accordance
with GAAP appear on a balance sheet of such lessee in respect of such Capital
Lease or otherwise be disclosed in a note to such balance sheet.
- CERCLA: the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time to time, and all
rules and regulations promulgated in connection therewith.
- Change of Control: (1) (A) the Permitted Holders cease to be
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, in the aggregate or at least 80% of the total
voting power of the voting stock of the Company or (B) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or
more Permitted Holders, is or becomes the "beneficial owner" (except that for
purposes of this clause (B) such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 20% of the total voting power of the voting
stock of the Company (for purposes of this clause (1) the Permitted Holders
shall be deemed to beneficially own any voting stock of a corporation held by
any other corporation so long as the Permitted Holders beneficially own,
directly or indirectly, in the aggregate at least 80% of the voting power of the
voting stock of such other corporation);
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(2) The Company merges with or into another Person or
sells or disposes of all or substantially all of its assets to any Person, or
any Person merges with the Company, in any such event pursuant to a transaction
in which the outstanding voting stock of the Company is converted into or
exchanged for cash, securities or other property, other than any such
transaction where (A) the outstanding voting stock of the Company is converted
into or exchanged for (i) voting stock (other than Disqualified Stock) of the
surviving or transferee corporation and/or (ii) cash, securities or other
property in an amount which could be paid by the Company as a Restricted Payment
under this Agreement and the Senior Subordinated Indenture and (B) immediately
after such transaction no person or group (other than the Permitted Holders) is
the beneficial owner of 20% or more of the voting power of the voting stock of
the surviving or transferee corporation on a fully diluted basis;
(3) during any period of two consecutive years,
individuals who at the beginning of such period constituted the board of
directors of the Company (together with any new directors whose election by such
board of directors or whose nomination for election by the shareholders of the
Company was approved by a vote of 66 2/3% of the directors of the Company at the
time of such approval who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the board of directors then in
office; or
(4) the liquidation or dissolution of the Company.
- Closing Date: the meaning specified in Section 4.1.
- COBRA: the group health plan continuation coverage
requirements of Section 4980B of the Code and Part 6 of Subtitle B of the Title
I of ERISA.
- Code: the Internal Revenue Code of 1986, as amended, or its
predecessor or successor, as applicable, and any Treasury regulations, revenue
rulings or technical information releases issued thereunder.
- Collateral: all property of any sort in which the Company or
any Subsidiary of the Company has granted, or purported to grant, a security
interest or other Lien pursuant to any of the Loan Documents.
- Commitment: the commitment of the Lenders to make advances
under this Agreement.
- Commitment Fee: the meaning specified in Subsection 1.7.1.
- Commitment Fee Base: the meaning specified in Subsection
1.7.1.
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- Company: Susquehanna Media Co., a Delaware corporation.
- Company Pledge: the meaning specified in paragraph (b) of
Subsection 4.1.5.
- Company Required Payment: the meaning specified in Section
2.3.
- Consolidated: with respect to any Person and any specified
Subsidiaries, refers to the consolidation of financial statements of such Person
and such Subsidiaries and of particular items in such financial statements in
accordance with GAAP.
Consolidated Net Worth: means the total of the amounts shown
on the balance sheet of the Company and its Consolidated Subsidiaries, as of the
end of the most recent fiscal quarter of the Company ending at least 45 days
prior to the taking of any action for the purpose of which the determination is
being made, as:
(1) the par or stated value of all outstanding
capital stock of the Company, plus
(2) paid-in capital or capital surplus relating to
such capital stock, plus
(3) any retained earnings or earned surplus less (A)
any accumulated deficit and (B) any amounts attributable to Disqualified Stock.
Consolidated Principal Payments: with respect to any past
period, the aggregate amount of scheduled or required payments or prepayments of
principal due on, or with respect to, Consolidated Indebtedness of the Company
and its Subsidiaries for such period.
- Consolidated Senior Leverage Ratio: The ratio, as
applicable, of
(i) Senior Debt, as at the last day of each fiscal
quarter, to EBITDA for the four fiscal quarters ended on such
date or
(ii) Senior Debt, as at the day Indebtedness is
incurred after giving effect to such Indebtedness (or as at
the day another specified transaction occurs after giving
effect to such transactions), to EBITDA for the four fiscal
quarters ended on, or most recently prior to, such date.
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- Consolidated Total Leverage Ratio: the ratio, as applicable,
of
(i) Total Debt, as at the last day of each fiscal
quarter to EBITDA for the four fiscal quarters ended on such
date, or
(ii) Total Debt as at the day Indebtedness is
incurred, after giving effect to such Indebtedness (or as at
the day another specified transaction occurs after giving
effect to such transactions), to EBITDA for the four fiscal
quarters ended on, or most recently prior to, such date.
- Debt Service Coverage Ratio: as at any date of
determination, the ratio of (i) EBITDA for the four fiscal quarters ended on, or
most recently prior to, such date of determination, to (ii) the sum of the
Projected Principal Payments (adjusted in 1999 to exclude principal payments on
the Existing Facilities) and Projected Interest Expense, in each case for the
four fiscal quarters immediately succeeding such date.
- Default Rate: the meaning specified in Subsection 1.8.8.
Disqualified Stock: means, with respect to any Person, any
capital stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable):
(1) matures or is mandatorily redeemable for any
reason,
(2) is convertible or exchangeable for Indebtedness
or Disqualified Stock, or
(3) is redeemable at the option of the holder
thereof, in whole or in part, in each case on or prior to the first anniversary
of the stated maturity of the Notes.
- EBITDA: Actual EBITDA, adjusted, if any Acquisition or
disposition is effected in accordance with the terms of this Agreement, as
follows:
(x) to include the net income (or net loss)
of any other Person (with adjustments for various
costs of such Person (such as executive salaries and
corporate overhead) that the Board of Directors of
the Company in good faith determines are appropriate
based on the structure and operation of such Person
as compared to the manner in which the Company and
its Subsidiaries are structured and operated) accrued
from the beginning of the period for which Net Income
is being measured to the date such other Person
became a Subsidiary of the Company, or to the date it
merged into or consolidated with the Company or a
Subsidiary of the Company, or to the date all or
substantially all of its assets were acquired by a
Subsidiary of the
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Company; however, such net income (or net loss)
shall, at the option of the Company, not be included
if the business plan of such Person is being
materially modified by the Company or a Subsidiary of
the Company,
(y) to exclude net income (or net loss) of
any Subsidiary of the Company accrued from the
beginning of such period to the date it ceases to be
a Subsidiary of the Company or to the date it merged
into or consolidated with any other Person (other
than the Company or a Subsidiary of the Company), or
to the date substantially all of its assets were
sold, and
(z) to exclude net income (or net loss) of
any station or cable system which is subject to any
local marketing agreement or time brokerage agreement
entered into in connection with any disposition
permitted under Subsection 7.7.2(b) or (c) except to
the extent that such net income is received in cash.
- Eligible Assignee:
(i) a Lender;
(ii) an Affiliate of a Lender;
(iii) a commercial bank organized under the laws of
the United States, or any State thereof, and having a combined
capital and surplus of at least $1,000,000,000.00;
(iv) a savings and loan association or savings bank
organized under the laws of the United States, or any State
thereof, and having a combined capital and surplus of at least
$1,000,000,000.00;
(v) a commercial bank organized under the laws of any
other country that is a member of the Organization for
Economic Cooperation and Development (the OECD) or has
concluded special lending arrangements with the International
Monetary Fund associated with its General Arrangements to
Borrow or under the laws of a political subdivision of any
such country, and having a combined capital and surplus of at
least $1,000,000,000.00, so long as such bank is acting
through a branch or agency located in the United States;
(vi) a finance company, insurance company or other
financial institution or Fund (whether a corporation,
partnership, trust or other entity) that is engaged in making,
purchasing or otherwise investing in commercial loans in the
ordinary course of its business and having a
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combined capital and surplus or total assets of at least
$250,000,000.00 or any Approved Fund; and
(vii) with respect to any Lender that is a Fund, any
other Person that is in the same Family of Funds;
provided, however, that neither SPC, the Company, any Subsidiary of the Company
nor any Affiliate of the foregoing shall qualify as an Eligible Assignee under
this definition and provided, further, that Funds described above shall be
Eligible Assignees only for Term A Loans or Term B Loans.
- Employee Pension Plan: any Plan which (1) is maintained by
the Company, any of its Subsidiaries or any ERISA Affiliate and (2) is subject
to Part 3 of Subtitle B of Title I of ERISA.
- Environmental Laws: any national, state or local law or
regulation (including, without limitation, CERCLA and RCRA) enacted in
connection with or relating to the protection or regulation of the environment,
including, without limitation, those laws, statutes, and regulations regulating
the disposal, removal, production, storing, refining, handling, transferring,
processing, or transporting of Hazardous Substances, and any regulations issued
or promulgated in connection with such statutes by any governmental authority
and any orders, decrees or judgments issued by any court of competent
jurisdiction in connection with any of the foregoing.
- Equivalent Basic Subscribers: with respect to each
subscriber (such as a hotel, a motel, a condominium, an apartment, a cooperative
and any other similar development) that purchases bulk basic subscription
services offered in a cable television system of the Company or any Subsidiary
of Company, the number of subscribers obtained by dividing the monthly basic
revenues of the Company or such Subsidiary from such bulk subscriber's account
by the average monthly basic subscription price for individual Basic Subscribers
in such cable television system.
- ERISA: the Employee Retirement Income Security Act of 1974,
as amended, and any regulations issued thereunder by the Department of Labor or
PBGC.
- ERISA Affiliate: (i) any corporation included with the
Company in a controlled group of corporations within the meaning of Section
414(b) of the Code, (ii) any trade or business (whether or not incorporated)
which is under common control with the Company within the meaning of Section
414(c) of the Code, and (iii) any member of an affiliated service group of which
the Company is a member within the meaning of Section 414(m) of the Code.
- ESOP: the meaning specified in Subsection 4.1.14 (Creation
of ESOP).
ESOP Compensation Expense: the expense related to funding
share allocations in the ESOP.
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ESOP Loan: the meaning specified in Section 7.4(b) (Restricted
Payments/ESOP Loan) above.
- ESOP Retirement Plan Expenses: the sum of the following:
(i) the amount of ESOP Compensation Expense paid in
cash to the extent that such amount is no greater than the
amount of cash received by the Company from SPC within two (2)
business days of any such payment as repayment of principal
and interest on the ESOP Loan; and
(ii) the amount of ESOP Compensation Expense not paid
in cash.
ESOP Repurchase Payments: the expense related to
repurchase of shares allocated to individuals participating in the ESOP, whether
upon the retirement of such Persons or otherwise.
ESOP Sharing Agreement: the meaning specified in
Subsection 4.1.11 (ESOP Sharing Agreement).
- Eurodollar Business Day: a day on which the relevant London
international financial markets are open for the transaction of business
contemplated in this Agreement and which is also other than a Saturday, Sunday
or other day on which commercial banks are required or permitted to close in
Philadelphia, Pennsylvania, New York, New York or Dallas, Texas.
- Event of Default: the meaning specified in Section 8.1.
- Excluded Transactions: (1) Agreements in existence on or
prior to the Closing Date, (2) the ESOP Loan, (3) payments of Management Fees
permitted hereunder, (4) payments provided for by the Tax Sharing Agreement, (5)
SPC Reimbursement Expenses and (6) ESOP Compensation Expenses and ESOP
Repurchase Payments made in conformity with the ESOP Sharing Agreement.
- Existing Facilities: the meaning specified in Subsection
4.1.8.
- Family of Funds: a group of Funds that invests in bank loans
and is managed by a common investment advisor or an affiliate thereof or has a
common principal underwriter and that has a common individual who is designated
to receive financial statements, waivers and amendments and other notices under
this Agreement.
- FCC: the Federal Communications Commission or any
governmental body succeeding to the functions of such commission.
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- FCC License: any radio, microwave, or other communications
license, permit, certificate of compliance, franchise, approval or authorization
granted or issued by the FCC for control, ownership, acquisition, construction
or operation of a Permitted Business.
- Federal Funds Rate: for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next Business Day as
so published on the next succeeding Business Day, and (b) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to Agent on such day on such transactions as determined by the
Agent.
- Final Order: an action by the FCC, any PUC, court or other
governmental authority or other applicable state regulatory agency as to which:
(i) no request for stay of the action is pending, no such stay is in effect,
and, if any deadline for filing any such request is designated by statute or
regulation, it has passed; (ii) no petition for rehearing or reconsideration or
application for review or appeal of the action is pending and the time for
filing any such petition or application has passed; (iii) the FCC, any PUC,
court or other governmental authority or other state agency, as applicable, does
not have the action under reconsideration on its own motion and the time for
such reconsideration has passed; and (iv) no appeal to a court, or request for
stay by a court, of the action is pending or in effect, and, if any deadline for
filing any such appeal or request is designated by statute or rule, it has
passed.
- Financial Information: the meaning specified in Section 5.5.
- Fixed Charge Coverage Ratio: as of any date of
determination, the ratio of
(i) Actual EBITDA for the four fiscal quarters ended
on, or most recently prior to the date of determination to
(ii) the sum of
(a) Consolidated Principal Payments
(adjusted in 1999 to exclude principal
payments in respect of the Existing
Facilities and the senior notes which were
issued pursuant to a certain Note Purchase
Agreement on a pari passu basis with the
Existing Facilities),
(b) Interest Expense net of interest income,
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(c) Capital Expenditures (which shall not
include Acquisitions but shall include
Capital Expenditures associated with
Acquisitions after the date of the
Acquisition),
(d) Restricted Payments (other than the
Restricted Payments relating to intercompany
payments referred to in clause (a) of
Section 7.4 (Restricted Payments) or
Restricted Payments relating to the ESOP
referred to in clause (b) of Section 7.4 ),
and
(e) cash taxes paid,
in each case made or incurred during the four (4) fiscal quarters ended on, or
most recently prior to, such date of determination.
- Franchise: a franchise, permit or license (including,
without limitation, an FCC License), designation or certificate granted by the
United States or any other country, territory or state or a city, town, county
or other municipality, PUC or any other regulatory authority pursuant to which a
Person has the right to own, control, acquire, construct or operate a Permitted
Business.
- Fronting Fees: the meaning specified in Subsection 3.1.5.
- Fund: an "investment company" within the meaning of Section
3(a)(1) of the Investment Company Act of 1940; notwithstanding any exemption
provided by that Act or any rules promulgated thereunder.
- GAAP: generally accepted accounting principles consistently
applied, which, as applied to the Company and its Subsidiaries shall be
consistent with those applied in the preparation of the financial statements
referred to in Subsection 4.1.18 (Financial Statements and Projections).
- Guaranty: as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another Person, including,
but not limited to, any such obligation directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course of
business) or discounted or sold with recourse by such Person, or in respect of
which such Person is otherwise directly or indirectly liable, including, but not
limited to, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies or for
any transportation or services regardless of the non-delivery or nonfurnishing
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thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected against loss in respect thereof. No Guaranty shall
be permitted by this Agreement unless the maximum dollar amount of the
obligation being guaranteed is readily ascertainable by the terms of such
obligation or the agreement or instrument evidencing such Guaranty specifically
limits the dollar amount of the maximum exposure of the guarantor thereunder,
and the amount involved in any Guaranty made during any period shall be the
aggregate amount of the obligation guaranteed (or such lesser amount as to which
the maximum exposure of the guarantor shall have been specifically limited),
less any amount by which the guarantor may have been discharged with respect
thereto (including any discharge by way of a reduction in the amount of the
obligation guaranteed).
- Guarantor: each direct and indirect Subsidiary of the
Company and each other Person that may become a guarantor under the Subsidiary
Suretyship from time to time.
- Hazardous Substances: any and all pollutants, contaminants,
toxic or hazardous wastes or any other substances that might pose a hazard to
health or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage, seepage
or filtration of which is or shall be restricted, prohibited or penalized by any
Environmental Law (including, without limitation, petroleum products, asbestos,
urea formaldehyde foam insulation and polychlorinated biphenyls and substances
defined as Hazardous Substances under CERCLA).
- Homes Passed: dwelling units, including separate units
within an apartment building, hotel, motel, condominium, cooperative, or similar
building passed by an operational portion of a cable television system of the
Company or any Subsidiary of the Company.
- Indebtedness: with respect to any Person (without
duplication):
(a) all indebtedness of such Person for
borrowed money;
(b) all obligations of such Person for the
deferred purchase price of capital assets or for any
part of the deferred purchase price of other property
or services which purchase price for other property
or services is due more than six months (or a longer
period of up to one year, if such terms are available
from suppliers in the ordinary course of business)
from the date of incurrence of the obligation in
respect thereof;
(c) all obligations of such Person evidenced
by notes, bonds (other than performance bonds),
debentures or other similar instruments;
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(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) and all other indebtedness secured by a
Lien on the property or assets of such Person;
(e) all Capital Lease Obligations of such
Person;
(f) all obligations, contingent or
otherwise, of such Person under acceptance, letter of
credit or similar facilities;
(g) all obligations in respect of
Disqualified Stock or other obligations of such
Person to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of such
Person or any warrants, rights or options to acquire
such capital stock, which obligations shall be
valued, in the case of redeemable preferred stock, at
the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid
dividends and, in the case of other such obligations,
at the amount that, in light of all the facts and
circumstances existing at the time of determination,
can reasonably be expected to become payable;
(h) a Guaranty of such Person, provided that
a Guaranty shall not be considered Indebtedness if
the underlying obligation that is guaranteed is taken
into account in computing Consolidated Net Income of
the Company and its Subsidiaries (e.g., operating
leases of Subsidiaries guaranteed by the Company or
another Subsidiary);
(i) all Indebtedness referred to in clauses
(a) through (g) above secured by (or which the holder
of such Indebtedness 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, even
though such Person has not assumed or become liable
for the payment of such Indebtedness;
(j) all unfunded pension liabilities;
(k) all payments required by such Person
under non-compete agreements; and
(l) all obligations of such Person that are
the functional equivalent of the Indebtedness
referred to in clauses (a) through (d) such as
synthetic lease obligations.
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- Indemnitees: the meaning specified in Section 11.15.
- Interest Coverage Ratio: as at any date of determination,
the ratio of (i) EBITDA for the four fiscal quarters on, or most recently prior
to, such date of determination, to (ii) Projected Interest Expense for the four
fiscal quarters immediately succeeding such date of determination.
- Interest Expense: for any period, the sum of (a) the amount
of interest accrued on, or with respect to, Consolidated Indebtedness for such
period, including without limitation imputed interest on Capitalized Leases and
imputed or accreted interest in respect of deep discount or zero coupon
obligations, plus (b) the net amount payable under all Interest Rate Protection
Agreements in respect of such period (or minus the net amount receivable under
Interest Rate Protection Agreements in respect of such period). For purposes of
calculating Interest Expense, it shall be assumed that any Guaranties
constituting Indebtedness will require payments of interest, if any, in the
amounts as called for in the underlying obligation which is the subject of the
Guaranty.
- Interest Period: the meaning specified in paragraph (a) of
Subsection 1.8.4.
- Interest Rate Protection Agreement: an interest rate swap,
cap or collar agreement or similar arrangement between any Person and a
financial institution providing for the transfer or mitigation of interest risks
either generally or under specific contingencies.
- Investment: as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of stock or other securities of any
other Person, or any direct or indirect loan, advance (other than advances to
employees for moving and travel expenses in amounts which are immaterial both
individually and in the aggregate), or capital contribution by such Person to
any other Person, including all Indebtedness and accounts receivable from such
other Person which are not current assets or did not arise from sales to such
other Person in the ordinary course of business. For purposes of this Agreement,
as applied to the Company or any Subsidiary thereof, an Investment shall include
any purchase of a minority interest in any Subsidiary of the Company regardless
of how that purchase is structured including, without limitation, a repurchase
or redemption of shares that is expressly excluded from the definition of
"Restricted Payment".
- Issuing Bank: First Union so long as it is a Lender, or if
First Union is no longer a Lender, a Lender designated by the Company and
acceptable to the Agent.
- Lenders: each of the Persons that execute this Agreement as
a Lender (including, without limitation, the Swing Lender) together with any
other Persons which become parties to this Agreement as a Lender from time to
time.
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- Lender's Interest: the meaning specified in the last
paragraph of Section 5.5.
- Lender Required Payment: the meaning specified in Section
2.2.
- Lenfest: Lenfest Communications, Inc. and Lenfest York,
Inc., each a Delaware corporation.
- Lenfest Agreement: an agreement dated November 6, 1992 by
and among Lenfest, Susquehanna Cable and certain Subsidiaries of Susquehanna
Cable as amended by a Modification Agreement dated as of March 24, 1993, a
letter dated March 31, 1993, a Third Amendment dated May 17, 1993, a Fourth
Amendment dated November 30, 1993 and a Fifth Amendment dated April 22, 1999,
and as may be further amended, from time to time, by such amendments as shall
have been approved by the Requisite Lenders or such other amendments as are
permitted by the terms of this Agreement. The term "Lenfest Agreement" shall
also include the shareholders agreement entered into pursuant to section 8(g) of
the Lenfest Agreement, provided that references in the Loan Documents to
particular paragraphs or sections of the Lenfest Agreement shall not be
references to paragraphs and sections of such shareholders agreement.
- Lenfest Note: the meaning specified in Section 7.1(f).
- Lenfest Pledge: the meaning specified in paragraph (e) of
Subsection 4.1.5.
- Lenfest Programming Payments: payments made by Susquehanna
Cable and its Subsidiaries to Lenfest to purchase cable television programming
pursuant to the first sentence of Section 18 of the Lenfest Agreement as in
effect on May 28, 1993.
- Lenfest Put: the meaning specified in Section 7.1(f).
- Lenfest Subordination Agreement: the meaning specified in
paragraph (c) of Section 4.1.6.
- Letters of Credit: letters of credit issued pursuant to this
Agreement.
- Letter of Credit Fees: the meaning specified in Subsection
3.1.5.
- Letter of Credit Sublimit: the meaning specified in Section
3.1.1.
- Lien: as to any Person, any mortgage, lien, pledge, adverse
claim, charge, security interest or other encumbrance in or on, or any interest
or title of any vendor, lessor, lender or other Senior Secured Party to or of
such Person under any conditional sale or other title retention agreement or
Capital Lease with respect to, any property or asset of such Person.
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- Loans: the amounts loaned to the Company pursuant to this
Agreement. Loans may be Revolving Loans, Swing Loans or Term Loans.
- Loan Documents: this Agreement, the Notes, the Subsidiary
Suretyship, the Pledge Agreements, the Subordination Agreements, the Security
Agreement and any and all agreements, documents and instruments executed,
delivered or filed pursuant to this Agreement, as the same may be amended,
modified or supplemented from time to time; in addition, solely for purposes of
the references to "Loan Documents" in the Subsidiary Suretyship, Subordination
Agreements, Security Agreement, the Trademark Collateral Agreement and Pledge
Agreements (or any other Loan Document to the extent necessary to afford the
obligations under the documents referred to below the status of being guaranteed
and secured pari passu with the other obligations hereunder), the term "Loan
Document" shall also be deemed to include Interest Rate Protection Agreements
which have been entered into in compliance with Section 7.32 (Interest Rate
Protection Agreements) in favor of one or more Lenders or their Affiliates and
all agreements, instruments and other documents relating to Letters of Credit.
- Management Agreement: the meaning specified in Section
4.1.10.
- Management Fees: for any period, all fees and other amounts
payable to SPC under the Management Agreement (including, without limitation,
fees due, amounts accrued, and overhead and administrative costs allocated by
SPC to the Company or any Subsidiary of the Company), but not SPC Expense
Reimbursement.
- Material Assets: Inventory, accounts receivable, equipment,
investment property, instruments (other than the note in respect of the ESOP
Loan) and general intangibles as defined in the Uniform Commercial Code,
provided, however, it is acknowledged that certain franchises and other rights
may not be able to be effectively pledged without third-party consent and the
Company and its Subsidiaries will not be required to seek or obtain such
third-party consent except in those cases specifically requested by the Agent.
Further, the Company and its Subsidiaries will not be required to file fixture
financing statements if it is burdensome for such entities to ascertain the
correct property descriptions.
- Material Adverse Change: either (a) any material adverse
change in the business, condition (financial or otherwise), operations or
properties of (i) the Company and its Subsidiaries taken as a whole, (ii)
Susquehanna Cable and its Subsidiaries taken as a whole, or (iii) Susquehanna
Radio and its Subsidiaries taken as a whole or (b) any material adverse change
in the business, condition (financial or otherwise), operations, properties or
prospects of the Company or any of its Subsidiaries, individually, if such
change could result in the insolvency or dissolution of such Person or in the
loss of control (by the current holder thereof) over such Person's assets.
- Material Adverse Effect: any material adverse effect on:
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(a) the business, condition (financial or otherwise),
operations or properties of (i) the Company and its
Subsidiaries taken as a whole, (ii) Susquehanna Cable and its
Subsidiaries taken as a whole, (iii) Susquehanna Radio and its
Subsidiaries taken as a whole, or (iv) the Company or any of
its Subsidiaries, individually, if such material adverse
effect on the business (financial or otherwise), operations,
or properties of the Company or any of its Subsidiaries
individually, could result in the insolvency or dissolution of
such Person or in the loss of control (by the current holder
thereof) over such Person's assets,
(b) the ability of SPC, the Company or any of the
Company's Subsidiaries to perform their respective obligations
under the Loan Documents,
(c) the binding nature, validity or enforceability of
any of the Loan Documents as an obligation of SPC, the Company
or the Company's Subsidiaries to the extent they are parties
to such documents, or
(d) the validity, perfection, priority or
enforceability of the Liens granted to Agent for the benefit
of the Issuing Bank, the Lenders and other Senior Secured
Parties in respect of the property of SPC, the Company and the
Company's Subsidiaries.
- Maturity Date: the latest of the Revolver Maturity Date, the
Term A Maturity Date and the Term B Maturity Date.
- Month: shall mean a period from and including a given day in
a calendar month to the day in the subsequent calendar month numerically
corresponding to such given day except that (a) if there is no numerical
correspondent in such subsequent calendar month, or (b) if such given day is the
last day of a calendar month, such day shall be the last day of such subsequent
calendar month.
- Multiemployer Plan: means a multiemployer pension plan as
defined in Section 3(37) of ERISA to which Company, any of its Subsidiaries or
any ERISA Affiliate is or has been required to contribute subsequent to
September 25, 1980.
- Net Income: means, for any period, the aggregate net income
(or loss) of the Company and its Subsidiaries for such period on a consolidated
basis, provided, the following items shall be excluded from the calculation of
Net Income:
(1) after-tax gains and losses from asset sales or
abandonment or reserves relating thereto;
(2) items classified as extraordinary, nonrecurring
or unusual gains, losses or charges, and the related tax effects, each
determined in accordance with GAAP;
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(3) the net income of any Person acquired in a
"pooling of interests" transaction accrued prior to the date it becomes a
Subsidiary of the Company or is merged or consolidated with the Company or any
Subsidiary of the Company;
(4) the net income (but not loss) of any Subsidiary
of the Company to the extent that the declaration of dividends, the making of
intercompany loans or similar payments by that Subsidiary of that income is
restricted by a contract, operation of law or otherwise;
(5) the net income of any Person, other than a
Subsidiary of the Company, except to the extent of cash dividends or
distributions paid to the Company or a Subsidiary of the Company by such Person;
(6) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
Consolidated Net Income accrued at any time after December 31, 1998;
(7) income or loss attributable to discontinued
operations (including operations disposed of during such period whether or not
such operations were classified as discontinued); and
(8) in the case of a successor to the Company by
consolidation or merger or as a transferee of the Company's assets, any earnings
of the successor corporation prior to such consolidation, merger or transfer of
assets.
- Net Proceeds: means, for any sale, lease, transfer or other
disposition of any asset, or for any sale or issuance of any security, by any
Person, the aggregate amount of cash consideration received by such Person for
such asset or security, including cash payments received in respect of a
promissory note issued as part of the original consideration in such
transaction, after deducting therefrom
(a) the amount of such proceeds required to
be applied to repay Indebtedness secured by any asset
so disposed of, other than Indebtedness to the
Lenders under the Loan Documents (including
indebtedness in respect of Interest Rate Protection
Agreements),
(b) reasonable brokerage commissions, legal
fees, finders' fees and other similar fees and
commissions and related expenses incurred by such
Person in connection with such transaction,
(c) taxes payable in connection with or as a
result of such transaction or, if applicable, held in
reserve to pay taxes when due, and
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(d) other reasonable out-of-pocket costs incurred in
connection therewith by such Person,
in the case of each of clauses (a), (b), (c) and (d) above to the extent, but
only to the extent, that the amounts so deducted are, at the time of receipt of
such cash, paid to a Person that is not an Affiliate of such Person (or, if paid
to such an Affiliate, to the extent the terms of such payment are no more
favorable to such Affiliate than such terms would be in an arm's-length
transaction) and are properly attributable to such transaction or to the asset
or security that is the subject thereof. All Net Proceeds received from sales or
dispositions of assets, payable to Lenders pursuant to this Agreement, shall be
in the form of cash, in U.S.
Dollars.
- Notes: the promissory notes delivered by the Company to the
Lenders (including any successors or assigns thereof) pursuant to this Agreement
(including any amendments, modifications or supplements which may from time to
time, be created in respect of such notes), and any replacement promissory notes
issued in lieu of the foregoing.
- Officers' Compliance Certificate: an Officers' Certificate
in the form of Exhibit Q.
- Officers' Certificate: a certificate executed on behalf of
the Company by its President or one of its Vice Presidents or its Treasurer.
- Other Shareholders: the meaning specified in paragraph (d)
of Subsection 4.1.5.
- Other Shareholders Pledge: the meaning specified in
paragraph (d) of Subsection 4.1.5.
- Paragon: Paragon Research Limited Partnership, a Delaware
limited partnership.
- PBGC: means Pension Benefit Guaranty Corporation, or any
governmental agency or instrumentality succeeding to the functions thereof.
- Permitted Businesses: means owning, operating, managing and
maintaining domestic cable television systems, radio broadcasting stations and
businesses directly related thereto, including marketing research, internet,
telephony and high speed data transmission services.
Permitted Holders: means (1) descendants, and spouses of
descendants, of Louis J. Appell, Sr. (including any trusts established for the
benefit of one or more such descendants or spouses of such descendants of which
one or more of such descendants or spouses
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of such descendants are trustees together with officers of SPC or its
Subsidiaries and/or the trust department of a financial institution) and (2) the
ESOP so long as executive officers of SPC constitute the majority of the ESOP
Committee under ESOP.
- Permitted Lien: the meaning specified in Subsection 7.2.1.
- Permitted Uses: (i) an Acquisition permitted under this
Agreement, and (ii) the incurrence of Capital Expenditures in connection with an
Acquisition permitted under this Agreement.
- Person: a corporation, an association, a partnership, an
organization, a Fund, a business, an individual, a government or political
subdivision thereof or a governmental agency.
- Plan: means an "Employee Pension Benefit Plan" (as defined
in Section 3(2) of ERISA) or an "Employee Welfare Benefit Plan" (as defined in
Section 3(3) of ERISA) which is or has been established or maintained, or to
which contributions are or have been made, by SPC, the Company, any of its
Subsidiaries or any ERISA Affiliate (or any predecessor thereof).
- Pledge Agreements: the Lenfest Pledge, the Company Pledge,
the Subsidiary Pledge, the SPC Pledge and the Other Shareholders Pledge,
collectively.
- Potential Event of Default: any condition or event specified
in Article 8 which, with notice or lapse of time or both, would become an Event
of Default.
- Pro Forma Basis: calculation of the financial covenants
specified in Article 6 (Financial Covenants) other than the Fixed Charge
Coverage Ratio in connection with an Acquisition, disposition or other specified
transaction with the following adjustments: (i) EBITDA shall be adjusted in the
manner set forth in the last sentence of such definition to take account of such
Acquisition or disposition or other specified transaction and any other
Acquisition or disposition or other specified transaction which has occurred
during the period to which such calculations relate and (ii) Consolidated
Indebtedness of the Company and its Subsidiaries shall be adjusted to reflect
Indebtedness incurred or paid in connection with such Acquisition, disposition
or other specified transaction and any other Acquisition, disposition or other
specified transaction which has occurred during the relevant period.
- Projected Interest Expense: with respect to any future
period, Interest Expense payable during such period other than interest payable
on the Lenfest Note. For purposes of calculating Projected Interest Expense, it
shall be assumed that (i) the interest rate on the Loans during a period is the
interest rate or rates in effect at the date of determination of Projected
Interest Expense, (ii) all required or mandatory prepayments of principal on
Consolidated Indebtedness are made in accordance with their terms during such
period and no optional prepayments of principal are made in respect of
Consolidated Indebtedness during such period, (iii) any Guaranties constituting
Indebtedness will require payments of principal and interest, if any, in the
amounts as
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called for in the underlying obligation which is the subject of such Guaranty,
and (iv) in the case of Interest Rate Protection Agreements, the rates of
interest or other basis on which the parties' payment obligations are
determined, as in effect at the beginning of such period, shall remain in effect
throughout such period or if shorter the remaining term of such Interest Rate
Protection Agreement.
- Projected Principal Payments: with respect to any future
period, the aggregate amount of scheduled or required payments or prepayments of
principal due on, or with respect to, Consolidated Indebtedness of the Company
and its Subsidiaries for such period, including, without limitation, the amount
by which the outstanding principal amount of the Revolving Loan, face amount of
Letters of Credit and Unreimbursed Drawings as at the beginning of such period
exceeds the Revolving Credit Commitment as at the end of such period and imputed
principal payments on Capital Leases during such period but excluding principal
payments on the Lenfest Note. For purposes of calculating Consolidated Principal
Payments, it shall be assumed that any Indebtedness constituting Guaranties will
require payments of principal in the amounts as called for in the underlying
obligation which is the subject of such Guaranty.
- PUC: any state or local regulatory agency or body that
exercises jurisdiction over the ownership, construction or operation of
Permitted Businesses.
- PUC Franchise: any Franchise granted or issued by any PUC.
- Quarterly Payment Date: the last Business Day of each March,
June, September and December.
- Radio License Subsidiaries: the Subsidiaries of the Company
whose sole activity is to hold FCC Licenses and grant rights to use such FCC
Licenses to other Subsidiaries of the Company that use such FCC Licenses to
operate their respective radio broadcast businesses.
- RC Lender: each Lender designated as an "RC Lender" on
Schedule 1.1 hereto and each successor and assign thereof.
- RCRA: the Resource Conservation and Recovery Act of 1976, as
amended, and any rules and regulations issued in connection therewith.
- Release: a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Hazardous Substances through or in the air, soil, surface water,
groundwater or property.
- Regulatory Change: with respect to any Lender, any change or
implementation after the date of this Agreement in United States federal, state
or foreign laws or regulations, including, without limitation, the issuance of
any final regulations or guidelines, or the
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adoption or making after such date of any interpretations, directives or
requests applying to a class of banks, including any such Lender, of or under
any United States federal or state, or any foreign, laws or regulations (whether
or not having the force of law) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
- Remedial Action: actions necessary to comply with any
Environmental Law with respect to (1) clean up, removal, treatment or handling
Hazardous Substances in the indoor or outdoor environment; (2) prevention of
Releases or threats of Releases or minimization of further Releases of Hazardous
Substances so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; or (3) performance of
pre-remedial studies and investigations and post-remedial monitoring and care.
- Reorganization: any reorganization as defined in Section
4241(a) of ERISA.
- Reportable Event: means, with respect to any Employee
Pension Plan, an event described in Section 4043(c) of ERISA.
- Requisite Lenders: at any time, Lenders having greater than
or equal to Fifty-One percent (51%) of the Total Facility. For purposes of this
definition, "Total Facility" means, collectively, at any time (a) the Revolving
Credit Commitment (whether borrowed or not) and (b) the outstanding principal
amount of the Term Loans, but shall exclude any Revolving Credit Commitment or
Term Loans of Lenders who have forfeited their right to vote under the terms of
this Agreement.
- Reserve Percentage: The meaning specified in Subsection
1.8.5.
- Restricted Payment: (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock or ownership
interest of the Company or any of its Subsidiaries, as the case may be, now or
hereafter outstanding, except a dividend payable solely in shares of stock
(other than Disqualified Stock) of the Company or such Subsidiary, as the case
may be;
(b) any redemption, retirement, purchase or other
acquisition, direct or indirect, of any shares of any class of stock or
ownership interest of the Company or any of its Subsidiaries, as the case may
be, now or hereafter outstanding, or of any warrants, rights or options to
acquire any such shares or interests, except to the extent that the
consideration therefor consists solely of shares of stock (other than
Disqualified Stock) of the Company or such Subsidiary, as the case may be, and
other than purchases of minority interests in the Subsidiaries of the Company
from Persons that hold minority interests in the Company or its Subsidiaries on
the date of this Agreement (it being understood that such purchases are subject
to the provisions of Section 7.3 (Investments, Loans and Acquisitions) above and
other relevant provisions of this Agreement);
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(c) any sinking fund, other prepayment or installment
payment on account of any shares of stock or ownership interests of the Company
or any of its Subsidiaries, as the case may be;
(d) any other payment, loan or advance to a
shareholder or other equity holder of the Company or of any Subsidiary of the
Company whether in the capacity of such Person as a shareholder or otherwise,
except
(i) Management Fees permitted to be
paid under this Agreement,
(ii) payments under the Tax Sharing
Agreement,
(iii) payments of royalties to the Radio
License Subsidiaries for the right
to use the FCC Licenses held by
them,
(iv) SPC Expense Reimbursement,
(v) Lenfest Programming Payments,
(vi) salaries and other compensation,
the payment of which is not
otherwise restricted under the Loan
Documents, paid in the ordinary
course of business,
(vii) amounts paid to SPC in respect of
ESOP Compensation Expense allocated
to the Company in accordance with
the terms of the ESOP Sharing
Agreement provided, however, that
ESOP Repurchase Payments and other
amounts paid to SPC in respect of
the ESOP shall be deemed to be
Restricted Payments, and
(viii) payments made to purchase minority
interests in Subsidiaries of the
Company in accordance with the
provisions of Section 7.3.2(n)
(Investments) above, other than
payments made in respect of the
Lenfest Note.
(e) any payments to Lenfest under Section 15 of the
Lenfest Agreement as in effect on May 28, 1993 or as subsequently amended and
payments made (whether principal or interest) in respect of the Lenfest Note,
whether or not Lenfest is then a shareholder of any Subsidiary of the Company;
and
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(f) any forgiveness or release without adequate
consideration by the Company or any Subsidiary of the Company of any
Indebtedness or other obligation owing to the Company or such Subsidiary by a
Person (other than the Company or a Subsidiary) that is a shareholder or other
equity holder of the Company or a Subsidiary or an Affiliate of any such
shareholder or other equity holder.
The amount of the purchase price payable in cash at the time of the exercise of
the Lenfest Put pursuant to clause (n) (vi) (B) of Subsection 7.3.2
(Investments) shall not be deemed to be a Restricted Payment.
- Revolving Credit Commitment: the meaning specified in
Subsection 1.1.1.
- Revolving Loans: the meaning specified in Subsection 1.1.1.
- Revolver Maturity Date: June 30, 2007 or such earlier date
as the Revolving Credit Commitment is terminated hereunder.
- Security Agreement: the meaning specified in Subsection
4.1.3.
- Senior Debt: Total Debt less Indebtedness under the Lenfest
Note, Senior Subordinated Notes and any other unsecured subordinated
Indebtedness that is issued on subordination and other terms acceptable to the
Agent.
- Senior Secured Obligations: shall mean and include any and
all indebtedness, obligations and liabilities of any type or nature, direct or
indirect, absolute or contingent, related or unrelated, due or not due,
liquidated or unliquidated, arising by operation of law or otherwise, now
existing or hereafter arising or created of the Company, and/or any Subsidiary
of the Company, and/or any other Person, to any Senior Secured Party,
represented by or incurred pursuant or relating to the Loan Documents (which,
for this purpose only shall include Interest Rate Hedging Agreements required or
permitted by this Agreement and Letters of Credit issued pursuant to this
Agreement). Without limiting the generality of the foregoing, the term "Senior
Secured Obligations" shall include, without limitation:
(a) principal of, and interest on the Loans and the
Notes (including, without limitation, Swing Loans and Swing Notes);
(b) any and all other fees, indemnities, costs,
obligations and liabilities of the Company, each Subsidiary thereof and each and
every other Loan Party from time to time owing to the Senior Secured Parties;
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(c) all obligations of the Company owing to any
Issuing Bank or Lender under Letters of Credit or other debt instruments issued
by any Issuing Bank or Lender under the terms of the Loan Agreement;
(d) obligations in respect of Interest Rate
Protection Agreements; and
(e) all amounts (including but not limited to
post-petition interest) in respect of the foregoing that would be payable but
for the fact that the obligations to pay such amounts are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Loan Party or any other Person.
- Senior Secured Parties: the Agent (in any capacity
including, without limitation, in its capacity as agent hereunder and as agent
under any other Loan Document), any Issuing Bank, any Lender (in any capacity
including, without limitation, as an issuer of Interest Rate Hedging Agreements
required or permitted under the terms of this Agreement for so long as such
issuer is a Lender hereunder), any Affiliate of a Lender that issues Interest
Rate Hedging Agreements required under the terms of this Agreement, any
Indemnitee, and any successor or assign of the foregoing.
- Senior Subordinated Indenture: the Indenture dated on or
about the date hereof, setting forth the terms of the issuance by the Company of
certain senior subordinated notes due 2009 described in that certain Offering
Memorandum, dated as of April 23, 1999.
- Senior Subordinated Notes: the promissory notes issued
pursuant to the Senior Subordinated Indenture.
- Senior Subordinated Noteholders: the holders of the Senior
Subordinated Notes.
- Shareholder Subordination Agreement: the meaning specified
in paragraph (b) of Subsection 4.1.6.
- Solvent or Solvency: a condition of a Person on a particular
date, whereby on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including, but not limited to,
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. In
computing the amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount that, in light
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of all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
- SPC: Susquehanna Pfaltzgraff Co., a Delaware corporation.
- SPC Expense Reimbursement: the meaning specified in
Subsection 7.8.1.
- SPC Pledge: the meaning specified in paragraph (a) of
Subsection 4.1.5.
- SPC Subordination Agreement: the meaning specified in
paragraph (a) of Subsection 4.1.6.
- Subordinated Party: each party (and each other Person that
may, from time to time, become a party) to a Subordination Agreement, other than
the Agent.
- Subordination Agreements: collectively, the SPC
Subordination Agreement, the Shareholder Subordination Agreement and the Lenfest
Subordination Agreement and any other subordination agreement hereafter executed
and delivered to the Agent pursuant to the terms of this Agreement.
- Subsidiary: with respect to any Person, (a) any corporation
of which more than 50% of the issued and outstanding capital stock having
ordinary voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries and (b) any
partnership, joint venture or other association of which more than 50% of the
equity interests having the power to vote to direct or control the management of
such partnership, joint venture or other association is at the time owned or
controlled, directly or indirectly, by such Person, by such Person and one or
more of the other Subsidiaries or by one or more of such Person's other
Subsidiaries. Notwithstanding the foregoing, KTHX Radio, Inc., Susquehanna Ad
Net, Inc., KTHX License Investment Co. and Susquehanna Energy Ventures, Inc.
will not be deemed to be Subsidiaries of the Company so long as such entities
have substantially no assets or liabilities.
- Subsidiary Pledge: the meaning specified in paragraph (c) of
Subsection 4.1.5.
- Subsidiary Suretyship: the meaning specified in Subsection
4.1.4.
- Susquehanna Cable: Susquehanna Cable Co., a Pennsylvania
corporation and a Subsidiary of the Company.
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- Susquehanna Radio: Susquehanna Radio Corp., a Pennsylvania
corporation and a Subsidiary of the Company.
- Swing Lender: First Union so long as it is a Lender, or if
First Union is no longer a Lender, then a Lender designated by the Company and
acceptable to the Agent.
- Swing Loan: the meaning specified in Subsection 1.2.1.
- Tax Sharing Agreement: the meaning specified in Subsection
4.1.9.
- Term A Lender: each Lender designated as a "Term A Lender"
on Schedule 1.2 hereto and each successor and assign thereof.
- Term A Loan: the meaning specified in Subsection 1.3.1.
- Term A Loan Commitment: the meaning specified in Subsection
1.3.1.
- Term A Maturity Date: June 30, 2007 or such earlier date as
all Term A Loans are due and payable hereunder.
- Term B Lender: each Lender designated as a "Term B Lender"
on Schedule 1.2 hereto and each successor and assign thereof.
- Term B Loan: the meaning specified in Subsection 1.3.2.
- Term B Loan Commitment: the meaning specified in Subsection
1.3.2.
- Term B Maturity Date. June 30, 2008 or such earlier date as
all Term B Loans are due and payable hereunder.
- Term Loans: collectively the Term A Loans and Term B Loans.
- Total Debt: the aggregate principal amount of Consolidated
Indebtedness of the Company and its Subsidiaries. Obligations under Interest
Rate Protection Agreements shall not constitute Total Debt.
- Unapplied Net Proceeds: Net Proceeds received from a
disposition pursuant to Subsection 7.7.2(b), (c) or (d) (Sales and Other
Dispositions) that are not applied to a Permitted Use by the Application Date.
- Unreimbursed Drawings: drawings made under Letters of Credit
which, for any reason, have not been reimbursed by or on behalf of the Company
whether through borrowings of Loans hereunder or otherwise.
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- U.S. Dollars and $: lawful money of the United States of
America.
- Voting Stock: means capital stock or other ownership
interests of any class or classes of a corporation or another entity the holders
of which are entitled to elect a majority of the corporate directors or Persons
performing similar functions.
- Withdrawal Liability: any withdrawal liability as defined in
Section 4201 of ERISA.
ARTICLE 11
MISCELLANEOUS
11.1 NOTICES.
All notices, requests, demands, directions and other
communications (collectively "notices") given to or made upon any party under
the provisions of this Agreement shall be by telephone or in writing (including
facsimile communication) unless otherwise expressly provided under this
Agreement. If in writing, it shall be delivered or sent by facsimile to the
respective parties at the addresses and numbers set forth under their respective
names on the signature pages of this Agreement or in accordance with any
subsequent unrevoked written direction from any party to the others. All notices
shall, except as otherwise expressly provided in this Agreement, be effective
(a) in the case of facsimile, when received, (b) in the case of hand-delivered
notice, when hand delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective, telephonic notices must be
confirmed in writing no later than the next day by letter, facsimile or telex,
(d) if given by mail, four (4) days after such communication is deposited in the
mails with first class postage prepaid, return receipt requested, and (e) if
given by any other means (including by air courier), when delivered; provided,
that notices to the Agent shall not be effective until received. Any Lender
giving any notice to the Company shall simultaneously send a copy of such notice
to the Agent, and the Agent, if appropriate, shall promptly notify the other
Lenders of the receipt by it of any such notice. In the event of a discrepancy
between any telephonic or written notice, the written notice shall control.
All notices or demands given to the Company pursuant to
Section 8.1 (Events of Default) or Subsection 8.2.1 (Remedies) of this Agreement
shall also be given to Lenfest at the address for Lenfest set forth or given
pursuant to the Lenfest Pledge, provided that the failure of the Agent, the
Issuing Bank or any Lender to give such notice shall not limit the exercise by
the Agent, the Issuing Bank or any Lender of their rights and remedies under the
Loan Documents or subject the Agent, the Issuing Bank or any Lender to any
liability.
11.2 DURATION; SURVIVAL.
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All representations and warranties of SPC, the Company, any
Subsidiary of the Company or other pledgor or subordinated party contained in
the Loan Documents shall survive the making of the Loans and shall not be waived
by the execution and delivery of this Agreement, any investigation by the Agent
or the Lenders, the making of the Loans, or payment in full of the Loans. All
covenants and agreements of the Company and such Persons contained in the Loan
Documents shall continue in full force and effect from and after the date of
this Agreement so long as the Company may borrow or obtain Letters of Credit
under this Agreement and until termination of the Commitment and payment in full
of the Loans and all other Senior Secured Obligations.
11.3 NO IMPLIED WAIVER.
No failure or delay on the part of the Agent, the Issuing Bank
or any Lender in exercising any right, power or privilege under the Loan
Documents and no course of dealing between the Company and the Agent, the
Issuing Bank or any Lender shall operate as a waiver of any such right, power or
privilege; nor shall any single or partial exercise of any right, power or
privilege under the Loan Documents preclude any other or further exercise of any
such right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies expressly provided in the Loan Documents are
cumulative and not exclusive of any rights or remedies which the Agent, the
Issuing Bank or any Lender would otherwise have. No notice to or demand on the
Company in any case shall entitle the Company to any other or further notice or
demand in similar or other circumstances or shall constitute a waiver of the
right of the Agent, the Issuing Bank or any Lender to take any other or further
action in any circumstances without notice or demand.
11.4 ENTIRE AGREEMENT AND AMENDMENTS.
This Agreement, the Letters of Credit and related documents
and the other Loan Documents represent the entire agreement between the parties
to this Agreement with respect to the Commitment, the Letters of Credit, the
Loans and the transactions contemplated under the Loan Documents and, except as
expressly provided in the Loan Documents, shall not be affected by reference to
any other documents. Neither this Agreement nor any provision of this Agreement
may be changed, waived, discharged or terminated orally, but such may be
accomplished only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought, subject
to the provisions of Section 12.5 (Amendments, Waivers and Consents) in the case
of a waiver to be signed by the Agent. Subject to the provisions of said Section
12.5, as amended from time to time, the Agent and the Company may enter into
agreements amending, changing or supplementing any of the provisions of this
Agreement, the Notes or any other Loan Document. Similarly, subject to said
Section 12.5, the Agent may waive compliance with any provision of this
Agreement, the Notes or any other Loan Document. It is understood and agreed,
however, that Agent, the Issuing Bank and the Lenders may amend or modify the
provisions of Article 12 (other than the last sentence of Section 12.8
(Resignation; Termination) to the extent it refers to the Company) without the
need for any consent or approval from the Company, it being acknowledged that
the Company and its Subsidiaries are not third party
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beneficiaries of the provisions of Article 12 (other than the last sentence of
Section 12.8 to the extent it refers to the Company).
11.5 SUCCESSORS AND ASSIGNS.
11.5.1 IN GENERAL; THE COMPANY. Whenever in this Agreement any
of the parties to this Agreement is referred to, such reference shall be deemed
to include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Company, the Agent, the Issuing Bank or
the Lenders that are contained in this Agreement shall bind and inure to the
benefit of their respective successors and assigns. Without the prior written
consent of the Agent, the Issuing Bank and the Lenders, the Company may not
assign any of its rights or delegate any of its duties or obligations under this
Agreement or the other Loan Documents.
11.5.2 PARTICIPATIONS. Each Lender may, upon giving prior
written notice to the Agent and, if no Event of Default or Potential Event of
Default has occurred and is continuing, the Company, sell participations to one
or more banks or other entities in all or a portion of its rights and
obligations under this Agreement; provided, however, that (i) any RC Lender must
sell proportionate participation interests in its Revolving Credit Commitment,
outstanding Revolving Loans, Letters of Credit and Unreimbursed Drawings in
respect thereof to any participant, (ii) such Lender's obligations under this
Agreement shall remain unchanged, (iii) such Lender shall remain solely
responsible to the other parties to this Agreement for the performance of such
obligations, (iv) all amounts payable by the Company under this Agreement shall
be determined as if such transferor Lender had not sold such participation and
no participant shall be entitled to receive any greater amount pursuant to this
Agreement 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, and (v) the Company, the
Agent, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such transferor Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right
and responsibility vis-a-vis the Company to enforce the obligations of the
Company relating to the Loans and Letters of Credit including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement (other than amendments, modifications or waivers
with respect to the matters specifically referred to in clauses (a), (b), (c)
and (h) of Section 12.5 (Amendments, Waivers and Consents) hereof).
11.5.3 ASSIGNMENTS. Each Lender may assign to one or more
Eligible Assignees a portion of its interest, rights and obligations under this
Agreement and the other Loan Documents; provided, however, that (i) the Agent
and, if no Event of Default or Potential Event of Default has occurred and is
continuing, the Company must give their prior written consent to such assignment
(which consents shall not be unreasonably withheld) unless such assignment is to
an Affiliate of the assigning Lender and no increased cost to the Company shall
result from such assignment, (ii) any RC Lender must assign proportionate
interests in its Revolving Credit
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Commitment, outstanding Revolving Loans, Letters of Credit and Unreimbursed
Drawings to any assignee, (iii) the amount of the interest in Loans, Letters of
Credit and Available Commitment of the assigning Lender subject to each such
assignment (determined as of the closing date of the Assignment and Acceptance)
shall be not less than Five Million Dollars ($5,000,000) unless
(1) the assigning Lender is assigning its entire
interest under this Agreement or
(2) a Lender that is a Fund is assigning an interest
to an other Fund in the same Family of Funds or (unless
consent has been obtained from the Agent and Borrower) there
are not more than four Funds in such Family of Funds that are
Lenders hereunder, or
(3) the assignee is an Approved Fund, or
(4) the assignee is one of no more than four
assignees that are in the same Family of Funds and which in
the aggregate, are being assigned an interest equal to at
least $5,000,000,
and (iv) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and the Company's acceptance, an Assignment and
Acceptance Agreement in substantially the form attached hereto as Exhibit R (an
"Assignment and Acceptance"), together with any Note requiring cancellation, a
processing and recordation fee of $3,500 (payable by the applicable assignor)
and reimbursement for fees of the Agent's counsel in connection with services
rendered in respect of such assignment (which amounts are payable by the
applicable assignee and assignor). Upon compliance with the conditions specified
in this Subsection 11.5.3 and the execution, delivery and acceptance of the
Assignment and Acceptance, from and after the closing date specified in such
Assignment and Acceptance, (x) the assignee shall be a party to this Agreement,
and to the extent provided in such Assignment and Acceptance have the rights and
obligations of a Lender under this Agreement and under the other Loan Documents
and (y) the assigning Lender shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this Agreement.
11.5.4 MECHANICS OF ASSIGNMENTS. Upon its receipt of an
Assignment and Acceptance executed by an assigning Lender and the assignee and
fulfillment of such other conditions as are set forth on Subsection 11.5.3
above, the Agent shall (i) accept such Assignment and Acceptance, and (ii) give
prompt notice of such acceptance to the assignor and assignee Lenders and the
Company. Within five (5) Business Days after receipt of such notice, the
Company, at its own expense, shall execute and deliver to the Agent, if
necessary, a new Note to the order of such assignee. If the assignor has
assigned all of its interest in this Agreement and the Notes, it shall promptly
return its Note (if any) to the Borrower for cancellation.
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11.5.5 CERTAIN PERMITTED PLEDGES. Notwithstanding any of the
terms of this Section 11.5, (i) any Lender may assign all or any portion of its
rights to payments in connection with this Agreement to a Federal Reserve Bank
as collateral in accordance with Regulation A of the Board of Governors of the
Federal Reserve System. Such assignment shall not affect any other rights or any
obligations of the assigning Lender, and (ii) any Lender that (x) is a Fund, (y)
pursuant to its organizational structure, must pledge its assets to its trustee
or the holders of its securities, and (z) invests in bank loans may, without
notice to or consent of the Agent or the Company, pledge all or any portion of
its rights in connection with this Agreement to any holders of obligations owed,
or securities issued, by such investment company as security for such
obligations or securities, or to any trustee for, or any other representative
of, such holders; provided that any foreclosure, transfer or similar action by
the pledgee shall be subject to the provisions of this Section concerning
assignments including, without limitation, the requirement that the transferee
be an Eligible Assignee.
11.5.6 AFFECTED LENDERS. In the event that the Company is
obligated to pay any material additional amounts to any Lender (the "Affected
Lender") pursuant to Subsections 1.8.6 (Additional Costs, Unavailability, Etc.),
or 1.10.2 (Breakage) as a result of any event or condition of the type referred
to in such Subsections (and such event or condition is not applicable to all
Lenders), then, so long as no Event of Default or Potential Event of Default
then exists, unless the Affected Lender has theretofore removed or cured the
conditions creating the cause for the obligations to pay such additional
amounts, the Company may, within one hundred eighty (180) days of a request for
compensation by the Affected Lender pursuant to either such Subsections,
designate one replacement lender which is acceptable in the reasonable judgment
of the Agent to (a) purchase, for a consideration equal to all amounts then due
or accrued in respect of all of the Company's obligations to the Affected Lender
pursuant to the Loan Documents, the Affected Lender's rights and (b) assume the
Affected Lender's obligations under the Loan Documents. Such replacement of a
Lender may be made only upon satisfaction of all of the conditions set forth in
this Section 11.5, except that with respect to the initial assignment to the
replacement lender, the $3,500 fee and attorneys' fees payable pursuant to
Subsection 11.5.3 shall be payable by the Company, and the aggregate amount of
the assignment shall be with respect to 100% of the Affected Lender's Commitment
participations in Letters of Credit and Loans; thereafter all conditions in this
Section 11.5 shall apply to all assignments to or by the replacement lender.
11.6 CALCULATIONS AND FINANCIAL DATA.
Except as otherwise provided in this Agreement, calculations
under this Agreement shall be made and financial data and terms referred to in
this Agreement shall be prepared and interpreted both as to classification of
items and as to amounts in accordance with GAAP. It is hereby acknowledged that
the unaudited quarterly financial statements required by Subsection 5.1.1 of
this Agreement shall be deemed to comply with this Section, notwithstanding that
they may not contain footnotes.
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11.7 DESCRIPTIVE HEADINGS.
The descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not affect the meaning or
construction of any of the provisions of this Agreement.
11.8 GOVERNING LAW.
This Agreement and the rights and obligations of the parties
under this Agreement and under the Notes shall be construed in accordance with,
and shall be governed by the laws of, the Commonwealth of Pennsylvania.
11.9 ARBITRATION; CONSENT TO JURISDICTION, SERVICE AND VENUE; WAIVER OF
JURY TRIAL.
11.9.1 ARBITRATION.
(a) Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any claim or controversy
arising out of, or relating to, the Loan Documents between any or all of the
parties hereto(a "Dispute") shall be resolved by binding arbitration conducted
under and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and the
Federal Arbitration Act. Disputes may include, without limitation, tort claims,
counterclaims, a dispute as to whether a matter is subject to arbitration,
claims brought as class actions, or claims arising from documents executed in
the future. A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under related to Interest Rate Protection Agreements.
(b) All arbitration hearings shall be conducted in
the city of Philadelphia, State of Pennsylvania unless otherwise agreed by all
parties to such arbitration. A hearing shall begin within 90 days of demand for
arbitration and all hearings shall conclude within 120 days of demand for
arbitration. These time limitations may not be extended unless a party shows
cause for extension and then for no more than a total of 60 days. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration rules shall be
applicable to claims of less than $1,000,000.00. Arbitrators shall be licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The parties do not waive applicable Federal or state substantive law
except as provided herein.
(c) Notwithstanding the preceding binding arbitration
provisions, the parties agree to preserve, without diminution, certain remedies
that any party may exercise before or after an arbitration proceeding is
brought. The parties shall have the right to proceed in any court of proper
jurisdiction or by self-help to exercise or prosecute the following remedies, as
applicable: (i) all rights to foreclose against any real or personal property or
other security by
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exercising a power of sale or under applicable law by judicial foreclosure
including a proceeding to confirm the sales; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; and (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing of involuntary bankruptcy
proceedings. Any claim or controversy with regard to any party's entitlement to
such remedies is a Dispute.
(d) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A
REMEDY OF SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AGAINST OTHER
PARTIES IN ANY DISPUTE AND HEREBY WAIVE ANY RIGHT OR CLAIM TO SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN
THE FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY
ARBITRATION OR JUDICIALLY.
11.9.2 CONSENT TO JURISDICTION, SERVICE AND VENUE; WAIVER OF
JURY TRIAL.
(a) With respect to any matters which may be heard
before a court of competent jurisdiction under paragraph (c) of the preceding
Subsection 11.9.1, each of the Company and its Subsidiaries hereby consents to
the jurisdiction and venue of the courts of the Commonwealth of Pennsylvania or
of any federal court located in such state, waive personal service of any and
all process upon it and consents that all such service of process be made by
certified or registered mail directed to the Company or such Subsidiary at the
address provided for in Section 11.1 (Notices) and service so made shall be
deemed to be completed upon actual receipt. Each of the Company and its
Subsidiaries hereby waives the right to contest the jurisdiction and venue of
the courts located in the county of Philadelphia, Commonwealth of Pennsylvania
on the ground of inconvenience or otherwise and, further, waives any right to
bring any action or proceeding against (a) the Agent in any court outside the
county of Philadelphia, Commonwealth of Pennsylvania, or (b) any other Lender
other than in a state within the United States designated by such Lender. The
provisions of this Section 11.9 shall not limit or otherwise affect the right of
the Agent, any Lender or other Senior Secured Party to institute and conduct an
action in any other appropriate manner, jurisdiction or court.
(b) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE,
SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY
TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY
OTHER LOAN DOCUMENT OR ANY GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE
RELATIONSHIP BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NEITHER THE AGENT NOR
ANY LENDER NOR ANY SUBSIDIARY OF THE COMPANY NOR THE COMPANY NOR ANY OTHER
PERSON WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
(c) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH (d)
OF THE PRECEDING SUBSECTION 11.9.1 EXCEPT AS PROHIBITED BY LAW,
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EACH PARTY TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER
IN ANY ARBITRATION OR OTHER LITIGATION, ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
PUNITIVE DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
EACH PARTY TO THIS AGREEMENT (i) CERTIFIES THAT NEITHER THE AGENT NOR ANY
REPRESENTATIVE, OR ATTORNEY OF THE AGENT NOR ANY LENDER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE AGENT OR SUCH LENDER WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.9.
THE PROVISIONS OF THIS SECTION 11.9 HAVE BEEN FULLY DISCLOSED TO THE PARTIES AND
THE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED
WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 11.9
WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
For the purpose of enforcing payment and performance of the
Loan Documents, including without limitation, any of the Notes and performance
of the obligations under the Loan Documents, the Company hereby consents to the
jurisdiction and venue of the courts of the Commonwealth of Pennsylvania or of
any federal court located in such state, waives personal service of any and all
process upon it and consents that all such service of process be made by
certified or registered mail directed to the Company and the address provided
for in Section 11.1 (Notices) and service so made shall be deemed to be
completed upon actual receipt. The Company hereby waives the right to contest
the jurisdiction and venue of the courts located in the Commonwealth of
Pennsylvania on the ground of inconvenience or otherwise and, further, waives
any right to bring any action or proceeding against (a) the Agent or First Union
in any other capacity in any court outside the Commonwealth of Pennsylvania, or
(b) any other Lender other than in a state within the United States designated
by such Lender. The provisions of this Section shall not limit or otherwise
affect the right of the Agent or any Lender to institute and conduct action in
any other appropriate manner, jurisdiction or court.
NO PARTY TO THIS AGREEMENT SHALL SEEK A JURY TRIAL IN ANY
PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT, ANY COLLATERAL FOR THE PAYMENT OF THE INDEBTEDNESS TO THE LENDERS
UNDER THE LOAN DOCUMENTS OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG
SUCH PERSONS, OR ANY OF THEM. NO PARTY TO THIS AGREEMENT WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES ANY
RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THIS
SECTION, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
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DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY
TO THIS AGREEMENT (i) CERTIFIES THAT NEITHER ANY REPRESENTATIVE, AGENT OR
ATTORNEY OF AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
AGENT OR LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS AGREEMENT. THE PROVISIONS OF THIS SECTION
HAVE BEEN FULLY DISCLOSED BY AND TO THE PARTIES AND THE PROVISIONS SHALL BE
SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO
ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED
IN ALL INSTANCES.
11.10 HOLIDAYS.
Except as provided in Subsection 1.8.4 (LIBOR Election) as to
payments with respect to Adjusted LIBOR, whenever any payment to be made under
the Loan Documents shall become due and payable on a day which is not a Business
Day, such payment may be made on the next succeeding Business Day and such
extension of time shall in such case be included in computing interest on such
payment.
11.11 COUNTERPARTS.
The Loan Documents and any notice or communication under the
Loan Documents may be executed in one or more counterparts, each of which shall
constitute an original, but all of which together shall constitute one and the
same instrument. Delivery of a photocopy or telecopy of an executed counterpart
of a signature page to any Loan Document shall be effective as delivery of a
manually executed counterpart of such Loan Document.
11.12 MAXIMUM LAWFUL INTEREST RATE.
Notwithstanding any provision contained in this Agreement or
the Notes, the total liability of the Company for payment of interest pursuant
to this Agreement and the Notes shall not exceed the maximum amount of such
interest permitted by law to be charged, collected, or received from the
Company, and if any payments by the Company include interest in excess of such a
maximum amount, each Lender shall apply such excess to the reduction of the
unpaid principal amount due pursuant to this Agreement and the Notes, or if none
is due, such excess shall be refunded to the Company.
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11.13 SET-OFF.
The Company hereby pledges and gives to each Lender a lien and
security interest for the amount of the Indebtedness owing to such Lender under
the Loan Documents upon and in the balance of any account maintained by the
Company with such Lender or any other liability of Lender to the Company. Upon
the occurrence of and throughout the period in which there is continuing an
Event of Default, in such Lender's sole option, at any time and from time to
time, the Company hereby authorizes such Lender to apply any such account
balances now or hereafter in the possession of such Lender and/or a credit in
the amount of any such other liability to the payment of the Indebtedness owing
to Lender under the Loan Documents. The provisions of this Section shall not be
deemed or construed to limit rights of set-off or liens or similar rights which
any Lender may otherwise have by reason of applicable law.
11.14 SEVERABILITY.
Every provision of the Loan Documents is intended to be
severable, and if any term or provision of the Loan Documents shall be invalid,
illegal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions shall not be affected or impaired
thereby, and any invalidity, illegality or unenforceability in any jurisdiction
shall not affect the validity, legality or enforceability of any such term or
provision in any other jurisdiction. In the event that any provisions affecting
the Lenders' remedies or security interests shall be held illegal, invalid or
unenforceable, the Lenders shall be entitled, among other things, to reduce the
Available Commitment to the lesser of (a) the outstanding principal amount of
the Revolving Loan, as of the date of the rendering of such decision as to
illegality, invalidity or unenforceability or (b) the amount of such outstanding
principal as of the date on which such reduction is made.
11.15 PAYMENT AND REIMBURSEMENT OF COSTS AND EXPENSES; INDEMNIFICATION.
11.15.1 INDEMNIFICATION AND REIMBURSEMENT IN GENERAL. Whether
or not any Loans are made or Letters of Credit are issued under this Agreement,
the Company shall, unconditionally upon demand, pay or reimburse the Agent and
Lenders for, and indemnify and save the Agent, Lenders, and their respective
Affiliates, officers, directors, employees, agents, attorneys, shareholders,
partners and consultants (collectively, "Indemnitees") harmless against, any all
liabilities, losses, costs, expenses, claims and/or charges (including without
limitation fees and disbursements of legal counsel, accountants, investigators
and other experts, whether or not they are employees of the Agent or the
Lenders, including fees and disbursements of counsel for such Indemnitees in any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be a party thereto) imposed on, incurred by or asserted
against such Indemnitees (whether direct, indirect or consequential and whether
based on any federal, state, or local laws and regulations, under common law or
at equity, or on contract, tort or otherwise, arising from or connected with the
past, present or future operations of the Company, its Subsidiaries or their
respective predecessors in interest, or the past, present or future
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environmental condition of property of the Company and its Subsidiaries) and
arising out of, relating to or connected with:
(a) (i) the negotiation, preparation, execution and
delivery of (A) the Loan Documents and (B) whether or not executed, any waiver,
amendment or consent under or with respect to any of the Loan Documents, (ii)
consulting with respect to any matter in any way arising out of, related to, or
connected with, the Loan Documents, including (A) the protection or preservation
of the collateral securing the Senior Secured Obligations, (B) the protection,
preservation, exercise or enforcement of any of the rights of the Agent and
Lenders in, under or related to such collateral or the Loan Documents or (C) the
performance of any of the obligations of the Agent or Lenders under or related
to the Loan Documents, (iii) protecting or preserving such collateral or (iv)
protecting, preserving, exercising or enforcing any of the rights of the Agent
and Lenders in, under or related to such collateral or the Loan Documents,
including defending the security interest granted to Lenders as a valid,
perfected, first priority security interest in such collateral, provided that,
anything in this Agreement to the contrary notwithstanding, the Company shall
only be responsible for the Agent's costs and expenses, and not those of any
other Lenders, arising out of, relating to or connected with the matters
referred to clauses (i) and (ii) of this paragraph;
(b) all transfer, documentary, stamp and similar
taxes, and all recording and filing fees and taxes payable in connection with,
arising out of, or in any way related to, the execution, delivery and
performance of the Loan Documents or the making of the Loans;
(c) (i) the Company's failure to borrow, convert or
prepay a portion of the Loans with respect to which an interest rate based on
Adjusted LIBOR (or a fixed rate, in the case of Swing Loans) has been elected
pursuant to a notice given with respect thereto, (ii) the Company's repayment of
any portion of the Loans upon acceleration or prepayment, including without
limitation, prepayment of principal bearing interest at a rate based upon
Adjusted LIBOR, (iii) the Company's failure to make any repayment (including any
voluntary prepayment which it notifies Agent it intends to make) pursuant to
this Agreement or the Notes, (iv) any payment, prepayment or conversion of a
portion of the Loans with respect to which an interest rate based on Adjusted
LIBOR has been elected required by any other provision of this Agreement or
otherwise made on a date other than the last day of the Interest Period
applicable thereto or (v) the occurrence of any Event of Default;
(d) any Regulatory Changes which (A) impose, modify
or deem applicable any reserve, asset, special deposit, deposit insurance or
assessment, capital or similar requirements (other than reserve requirements
included in the Reserve Percentage used to calculate Adjusted LIBOR) relating to
or in respect of (i) any category of liabilities which includes deposits by
reference to which Adjusted LIBOR is to be determined as provided in the
definition of such term, (ii) any category of extensions of credit or other
assets which include any portion of the Loans as to which a rate based on
Adjusted LIBOR has been elected, or (iii) the
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Commitment, the Letters of Credit or the Loans, (B) subject a Lender to any tax
(including without limitation United States withholding tax) with respect to
this Agreement or change the basis of taxation (including without limitation
United States withholding tax) of payments to a Lender of principal, interest or
fees payable under this Agreement (except for local franchise taxes or changes
in the rate of tax on a Lender's net income imposed by the United States or any
other government of the principal place of business of a Lender or any political
subdivision or taxing authority thereof) or (C) impose on any Lender or the
London Interbank Eurocurrency Market any other condition with respect to this
Agreement or any portion of the Loans, including without limitation the
maintenance by such Lender of capital in respect of its portion of the
Commitment or Loans. The Company's indemnification obligations under this clause
(d) shall include, without limitation, an amount equal to any reduction of the
rate of return on assets or equity of a Lender to a level below that which such
Lender could have achieved but for such laws, executive orders, regulations,
interpretations, directives or requests or guidelines;
(e) (i) the Loan Documents, or any act, event or
transaction or alleged act, event or transaction relating or attendant thereto;
(ii) any acquisition or proposed acquisition of stock or assets by the Company
or any of its Subsidiaries; and/or (iii) any use made or proposed to be made by
the Company or any of its Subsidiaries of all or any portion of the Loans; and
(f) commissions or claims by or on behalf of brokers,
finders or agents not retained by Lenders. The Company represents that it has
not engaged or used any such broker, finder or agent in connection with this
Agreement.
11.15.2 CERTIFICATION OF AMOUNTS. The certification by a
Lender hereunder of the amount of liabilities, losses, costs, expenses, claims
and/or charges shall be conclusive if such amounts have been computed or reached
in a reasonable manner.
11.15.3 INTEREST ON OBLIGATIONS. The Company's payment
obligations under this Section shall, together with all of Company's other
payment obligations under this Agreement, effective at the time of demand made
therefor in accordance with this Agreement, bear interest at the Base Rate plus
the Applicable Margin, or if not paid within ten (10) days after such demand, at
the Default Rate.
11.15.4 OBLIGATIONS ABSOLUTE. All of the foregoing obligations
shall continue to apply with respect to and during the collection of amounts due
under the Loan Documents or the proof and allowability of any claim arising
under this Agreement or any other Loan Document, whether in bankruptcy or
receivership proceedings or otherwise, and in any workout, restructuring or in
connection with the protection, preservation, exercise or enforcement of any of
the terms of this Agreement or of any rights under this Agreement or under any
other Loan Document or in connection with any foreclosure, collection or
bankruptcy proceedings.
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11.15.5 LIMITATIONS ON INDEMNIFICATION. Notwithstanding the
foregoing, the Company shall not be required to indemnify any Indemnitee with
respect to a claim or liability that arises as the result of the gross
negligence or willful misconduct of any Indemnitee as shall have been determined
in a nonappealable judgment of a court of competent jurisdiction.
ARTICLE 12
AGENT
12.1 AUTHORITY.
The Lenders hereby irrevocably appoint First Union to act as
Agent as specified in the Loan Documents, and each of the Lenders hereby
irrevocably authorizes, and each of the holders of a Note by the acceptance of
the Notes shall be deemed irrevocably to authorize First Union, for such Lender
and such holder, to execute and take such action on its behalf under the
provisions of this Agreement, the Notes, and the other Loan Documents and to
exercise such powers under the Loan Documents as are specifically delegated to
the Agent by the terms of the Loan Documents and such powers as are reasonably
incidental thereto.
12.2 EXPENSES.
In default of reimbursement or indemnification by the Company,
the Lenders will, in proportion to their respective portions of the Commitment,
reimburse the Agent for and against all expense, liability, penalty and damage
of any nature whatsoever (including but not limited to reasonable attorneys'
fees) which may be incurred or sustained by the Agent in any way in connection
with the Loan Documents or its duties under the Loan Documents provided that (i)
no Lender shall be liable for any portion of the foregoing items resulting from
the gross negligence or willful misconduct of the Agent and (ii) unless an Event
of Default has occurred and is continuing (or is reasonably believed by the
Agent to have occurred and be continuing), no Lender shall be liable for the
normal administrative costs and expenses of the Agent incident to the
performance of its duties as Agent under the Loan Documents, but Lenders shall
be liable for all out of pocket costs and expenses of the Agent (including out
of pocket administrative costs) during the existence of an Event of Default
(including one reasonably believed to exist by Agent) after demand and failure
by the Company to pay promptly. The Agent shall not have any obligation to take
any action in connection with the performance of its duties as Agent under the
Loan Documents which, in its opinion, requires the payment of expenses or the
incurrence of liability, if there is a reasonable ground for belief that
reimbursement of such expenses or liability is not reasonably assured to it.
12.3 EXCULPATORY PROVISIONS.
Neither the Agent, nor any Lender constituting the Agent, nor
any of its or their officers, directors, employees or agents, shall be liable
for any action taken or omitted under the Loan Documents or in connection with
the Loan Documents unless caused by its or their gross
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negligence or willful misconduct. The Agent shall not be responsible for any
recitals, warranties or representations in the Loan Documents or for the
validity, enforceability, collectibility or due execution of this Agreement or
any of the other Loan Documents. The Lenders hereby acknowledge that they have
reviewed this Agreement and the other Loan Documents and are fully aware of the
terms thereof. The Agent may execute any of its duties by or through agents or
employees and shall be entitled to advice of counsel, accountants or other
professionals of its selection concerning all matters pertaining to the Loan
Documents and its duties under the Loan Documents. The Agent shall be entitled
to rely upon any writing or other document, telegram or telephone conversation
believed by it to have been signed, sent or made by the proper person or persons
and, in respect of legal matters, upon the advice of counsel selected by the
Agent. With respect to the portion of the Loans made by it and Notes issued to
it, the Agent shall have the same rights and powers under the Loan Documents as
any other Lender or holder of a Note and may exercise the same as though it were
not the Agent, and the term "Lenders" or "holders of Notes" or any similar term
shall, unless the context otherwise indicates, include the Agent in its capacity
as a Lender.
12.4 INVESTIGATION BY LENDERS.
Each Lender expressly acknowledges that the Agent has not made
any representation or warranty to it and that no act taken by the Agent shall be
deemed to constitute a representation or warranty by the Agent to the Lenders.
Each Lender further acknowledges that it has taken and will continue to take
such action and to make such investigation as it deems necessary to inform
itself of the affairs of the Company and that it has made and will continue to
make its own independent investigation of the creditworthiness and the business
and operations of the Company. In entering into this Agreement, and in making an
advance under this Agreement, each Lender represents that it has not relied and
will not rely upon any information or representations furnished or given by the
Agent or by any other Lender. The Agent shall be under no duty or responsibility
to the Lenders to ascertain or to inquire into the performance or observance by
the Company of any of the provisions of this Agreement or any document or
instrument now or hereafter executed in connection with this Agreement. It is
expressly understood and agreed that the Agent shall not be deemed to have
knowledge of the existence, occurrence or continuance of an Event of Default or
Potential Event of Default, unless the officers of such Agent immediately
responsible for matters concerning this Agreement shall have actual knowledge of
such occurrence or the Agent shall have been notified in writing by any Lender
or the Company that such Lender or the Company, as applicable, considers that an
Event of Default or Potential Event of Default has occurred and is continuing
and specifying the nature of such Event of Default or Potential Event of
Default.
12.5 AMENDMENTS, WAIVERS AND CONSENTS.
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With the written consent of the Requisite Lenders, the Agent
may, on behalf of the Lenders, enter into agreements which change, amend or
supplement this Agreement or any other Loan Document, and with such consent, the
Agent may waive compliance with any provision of any of the Loan Documents, all
as referred to in this Section 12.5. However, no such change, amendment,
supplement or waiver shall, without the consent of each Lender:
(a) change the maximum amount of (i) the Loans, (ii)
the Available Commitment or (iii) the Commitment, except as specifically
provided in this Agreement,
(b) extend the Revolver Maturity Date, the Term A
Maturity Date, the Term B Maturity Date, the Maturity Date or any scheduled
amortization or date for payment of interest or fees of the Loans,
(c) decrease the rate of interest, provided that the
written consent of the Requisite Lenders, rather than the consent of all
Lenders, shall be sufficient to waive imposition of the Default Rate pursuant to
clause (c) of Subsection 1.8.8,
(d) reduce the amount of the fees payable under
Subsection 1.7.1 (Commitment Fees) or other fees, other than any fee payable
solely to Agent,
(e) modify the provisions of this Section,
(f) amend the definition of "Requisite Lenders",
(g) change the number of Lenders which are required
to consent to any proposed action under this Agreement before such action may be
taken under this Agreement,
(h) release any guaranty, any guarantor, any pledgor
or any collateral security granted pursuant to the Loan Documents; provided
however, the Agent may without the consent of any Person release any guarantor
or any collateral security granted pursuant to the Loan Documents and file UCC-3
termination statements or statements of amendment or take other appropriate
action (i) as a court of competent jurisdiction may direct, (ii) in connection
with a disposition (other than to the Borrower or a Subsidiary thereof)
permitted under Subsection 7.7.2 (which subsection may be amended by the
Requisite Lenders) or as otherwise provided under the Loan Documents, (iii) if
in accordance with this Agreement cash proceeds from any sale or transfer of the
collateral are used to prepay outstanding sums due under the Loans or are
reinvested in the Company and its Subsidiaries, (iv) if such collateral security
is of little or no value (such as certificates representing stock redeemed or
exchanged consistent with the terms of this Agreement or assets which have been
abandoned) as certified by the Company in a written statement requesting such
release or (v) where a filing is no longer required because collateral has been
moved away from the subject jurisdiction or for a similar reason, or
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(i) waive an Event of Default under Subsection 8.1.1
(Payment of Principal) or 8.1.2 (Payment of Interest, Etc.) after such Event of
Default shall have occurred, or
(j) change any provision that requires payments to be
made on a pro rata basis among the Lenders; or
(k) forgive any principal or interest on the Loans.
12.6 ACTION UPON DEFAULTS.
12.6.1 ACTIONS BY AGENT. Upon the occurrence and during the
continuation of an Event of Default, the Agent upon (a) (i) the request of any
three Lenders (which are not affiliates of each other) upon the occurrence of an
Event of Default under Subsection 8.1.1 (Payment of Principal) or 8.1.2 (Payment
of Interest; Etc.) or (ii) the request of the Requisite Lenders in the event of
any other Event of Default (other than a default under Subsection 8.1.1 or 8.1.2
as to which clause (a)(i) above shall govern and other than a default under
Subsection 8.1.10 (Insolvency) as to which the first sentence of Subsection
8.2.1 (Remedies) provides for automatic acceleration) and (b) the Lenders (in
proportion to their respective portions of the Loans) providing an indemnity in
form and substance reasonably satisfactory to the Agent (the Agent acknowledging
that an indemnity substantially in the form of the indemnity set forth in
Section 11.15 will be satisfactory) of all expenses to the extent not reimbursed
by the Company (including but not limited to reasonable attorneys' fees and
disbursements), shall declare the Notes to be due and payable and shall, subject
to Subsections 8.2.3 (Regulatory Matters) and 8.2.4 (Certain Limitations),
proceed to enforce the rights of the holders of the Notes by such proceedings as
the Agent may deem appropriate, whether at law or in equity. Upon any request as
aforesaid, the Agent shall declare the Notes to be due and payable, but the
Agent shall be justified in failing or refusing to take any further action
unless it shall be indemnified to its satisfaction as aforesaid. It is agreed
that if the Agent, having been so indemnified to its satisfaction as aforesaid,
or not having been so indemnified, shall fail to so proceed, any Lender shall be
entitled to take such action as it shall deem appropriate to enforce its rights.
If the exigencies of the circumstances so require, the Agent may (but is under
no circumstances obligated to) declare the Notes due and payable after an Event
of Default without any Lender's direction. For the purposes of clause (a)(i)
above, all Lenders which are part of the same Family of Funds shall be treated
as one Lender.
12.6.2 PROCEEDS OF COLLATERAl. The Agent, on behalf of all the
Lenders, shall hold in accordance with the Loan Documents all items of
collateral or interests therein received or held by the Agent. Subject to the
Agent's rights to reimbursement for its fees, costs and expenses (including,
without limitation, reasonable attorneys fees) and subject to any terms in this
Agreement specifically directing that proceeds be applied otherwise, each Lender
shall have an interest in any collateral or interests therein in the same
proportions that the aggregate outstanding principal amount of the Loans and
obligations under or in respect of Letters of Credit and Interest Rate
Protection Agreements owed such Lender bear to the aggregate outstanding
- 130 -
<PAGE> 140
principal amount of the Loans and obligations under or in respect of Letters of
Credit and Interest Rate Protection Agreements owed to all the Lenders, without
priority or preference among the Lenders.
12.7 INSTRUCTIONS.
The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under the Loan Documents in accordance with written
instructions of the Requisite Lenders or all Lenders, as applicable.
12.8 RESIGNATION; TERMINATION.
The Agent may resign at any time by giving prior written
notice to the Company and the Lenders and the Agent may be removed at any time
with or without cause by the Requisite Lenders. Such resignation or removal
shall take effect at the end of the sixty (60) day period after such notice of
resignation or removal has been given or upon the earlier appointment of a
successor agent by the Requisite Lenders. The Lenders shall, upon receipt of
such notice, appoint a successor agent from among the Lenders, and the Lenders
and the Company shall execute such documents as shall be necessary to effect
such appointment. During any period that there shall not be a duly appointed and
acting Agent, the Company agrees to make each payment due under this Agreement
and under the Notes directly to each Lender entitled thereto and to provide
copies of each certificate or other document required under this Agreement
directly to each Lender. Any appointment under this Section shall require the
consent of all Lenders and, so long as no Event of Default exists, the Company
(which consent of the Company shall not be unreasonably withheld or delayed).
12.9 SHARING.
If any Lender shall at any time receive payment of or on
account of all or a part of any Note held by it, whether by set-off or
otherwise, in a greater proportion than the payments made on the Notes held by
the other Lenders, such Lender shall simultaneously purchase, without recourse,
for cash, ratably from each of the other Lenders, such portion of the Notes held
by such other Lenders so that, after such purchase, each Lender will hold an
unpaid principal amount of Notes in the same proportion that the outstanding
principal balance due to such Lender immediately prior to such payment bore to
the aggregate outstanding principal balance due to all Lenders immediately prior
to such payment. In the event that, at any time, any Lender shall be required to
refund any amount which has been paid to or received by it on account of any
Note held by it, and which has been applied to the purchase of a portion of the
Notes held by other Lenders pursuant to this Section, then, upon notice from
such Lender, each of the other Lenders shall simultaneously purchase, without
recourse, its portion for cash, to the extent of its ratable share thereof, of
the Notes held by the Lender required to make such refund.
12.10 FAILURE OF A LENDER TO MAKE AN ADVANCE.
- 131 -
<PAGE> 141
In addition to other ramifications of a Lender failing to fund
as set forth elsewhere in this Agreement, each Lender agrees that if, in breach
of its obligations to the Company under this Agreement, it fails to pay its full
share of any Loans or other amounts that it is obligated to fund hereunder, as a
result of which the unpaid principal amount of the Notes held by it shall be
proportionately less than the unpaid principal amount of the Notes held by the
other Lenders, (a) it shall be deemed to have simultaneously purchased from the
other Lenders a participation in the Notes held by such other Lenders so that
the aggregate unpaid principal amount of all Notes held by all Lenders shall be
in the same proportion to the aggregate unpaid principal amount of the Loans as
is each such Lender's percentage of the Commitment and the Term Loan Commitment,
and (b) it shall promptly reimburse the appropriate amounts (including, without
limitation, interest) due in connection with such purchase to the other Lenders;
provided that if thereafter the Lender pays to the Company the amount which it
failed to pay, then such purchase shall be deemed rescinded and the purchase
price shall be repaid by the other Lenders without interest. Nothing contained
in this Agreement or any other Loan Document and no action taken by the Agent or
the Lenders or any of them pursuant to this Agreement or any other Loan Document
may, or may be deemed to, make the Lenders a partnership, an association, a
joint venture, or other entity, either among themselves or with the Company. A
default by any Lender will not increase the commitment of any other Lender. Any
Lender not in default may, if it desires, assume any such proportion as the
non-defaulting Lenders agree of the obligations of any Lender in default, but no
Lender is obligated to do so. Nothing in this Section shall affect the rights of
the Company as to any such defaulting Lender.
12.11 OTHER RELATIONSHIPS.
It is acknowledged that the Agent and the Lenders may now or hereafter have
lending or other relationships with the Company and Affiliates of the Company,
and it is agreed that the Agent and the Lenders are free to act with respect
thereto without consulting with one another and without regard to the effect of
any such action or relationship upon the Loans or obligations hereunder.
- 132 -
<PAGE> 142
IN WITNESS WHEREOF, the Company, the Agent and the Lenders
have caused this Loan Agreement to be duly executed by their respective, duly
authorized officers as of the date first above written.
SUSQUEHANNA MEDIA CO.
By: /s/ Alan L. Brayman
---------------------------------------
Name: Alan L. Brayman
Title: Treasurer
Notice Information
Address: 140 East Market Street
York, Pennsylvania 17401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
FIRST UNION NATIONAL BANK, in its capacity
as Agent and a Lender
By: /s/ Elizabeth Elmore
---------------------------------------
Name: Elizabeth Elmore
Title: Senior Vice President
Notice Information
Address: Communications/Media Group
PA 4829
One South Penn Square
P.O. Box 7618
Philadelphia, Pennsylvania 19107-7618
Phone No.: (215) 786-4321
Fax No.: (215) 786-7721
Attention: Elizabeth Elmore, Senior Vice President
- 133 -
<PAGE> 143
Wire Transfer Information
First Union Bank, N.A.
Commercial Loans
Philadelphia, PA
ABA Number 031-0000-11
Account Number 0132-0452
Attention: Stacy Shegda
Re: Susquehanna Media Co.
Any notices relating to the administration of the Loan, including, without
limitation, requests for fundings and selection of a rate of interest based on
Adjusted LIBOR, should also be sent to the Agent at:
First Union Investment Banking
PA 4830
One South Penn Square
P.O. Box 7618
Philadelphia, Pennsylvania 19107-7618
Phone No. (215) 973-6621
Fax No. (215) 973-1887
Attention: Stacy Shegda, Associate Director
- 134 -
<PAGE> 144
NATIONSBANK, N.A., in its capacity as a
Managing Agent and a Lender
By: /s/ Roselyn Drake
-----------------------------------
Name: Roselyn Drake
Title: Vice President
Address: NationsBank, N.A.
901 Main Street, 64th Floor
Dallas, TX 75202
Phone No.: (214) 209-0988
Fax No.: (214) 209-9390
Attention: Roselyn Drake
UNION BANK OF CALIFORNIA, N.A., in its
capacity as a Managing Agent and a Lender
By: /s/ Jenny Dongo
-----------------------------------
Name: Jenny Dongo
Title: Assistant Vice President
Address: Union Bank of California, N.A.
Communications/Media Group
445 South Figueroa Street, 15th Floor
Los Angeles, CA 90071
Phone No.: (213) 236-6908
Fax No.: (213) 236-5747
Attention: William Gooch, Senior Vice President
- 135 -
<PAGE> 145
KEY CORPORATE CAPITAL INC. in its
capacity as a Managing Agent and a Lender
By: /s/ Kenneth J. Keeler
-----------------------------------
Name: Kenneth J. Keeler
Title: Senior Vice President
Address: 127 Public Square
Mailcode: OH-01-27-0602
Cleveland, OH 44114
Phone No.: (216) 689-5789
Fax No.: (216) 689-4666
Attention: Kenneth Keeler, Vice President
MELLON BANK, N.A.
By: /s/ Jennifer L. Livengood
-----------------------------------
Name: Jennifer L. Livengood
Title: Officer
Address: Mellon Bank, N.A.
One Mellon Bank Center
Room 4440
Pittsburgh, PA 15258
Phone No.: (412) 236-2790
Fax No.: (412) 234-6375
Attention: Jennifer L. Livengood
- 136 -
<PAGE> 146
SUMMIT BANK
By: /s/ Henry G. Kush, Jr.
-----------------------------------
Name: Henry G. Kush, Jr.
Title: Vice President
Address: Summit Bank
301 Carnegie Center
Princeton, NJ 08543
Phone No.: (609) 987-3497
Fax No.: (609) 734-9125
Attention: Henry G. Kush, Jr., Vice President
THE BANK OF NOVA SCOTIA
By: /s/ Vincent J. Fitzgerald, Jr.
-----------------------------------
Name: Vincent J. Fitzgerald, Jr.
Title: Authorized Signatory
Address: The Bank of Nova Scotia
One Liberty Plaza
New York, NY 10006
Phone No.: (212) 225-5043
Fax No.: (212) 225-5090
Attention: Brenda Insull
- 137 -
<PAGE> 147
ABN AMRO BANK N.V.
By: /s/ James Dunleavy
-----------------------------------
Name: James Dunleavy
Title: Senior Vice President
By: /s/ David Carrington
-----------------------------------
Name: David Carrington
Title: Vice President
Address: ABN AMRO BANK N.V.
208 South LaSalle, Suite 1500
Chicago, IL 60604-1003
Phone No.: (312) 992-5110
Fax No.: (312) 992-5111
Attention: Credit Administration
With a copy to:
Address: ABN AMRO BANK N.V.
500 Park Avenue
New York, NY 10022
Phone No.: (212) 446-4382
Fax No.: (212) 446-4203
Attention: David Carrington
BANK OF MONTREAL
By: /s/ Allegra Griffiths
-----------------------------------
Name: Allegra Griffiths
Title: Director of Communication
Address: Bank Of Montreal
430 Park Avenue
New York, NY 10022
Phone No.: (212) 605-1438
Fax No.: (212) 605-1648
Attention: Naghmeh Hashemifard
- 138 -
<PAGE> 148
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Karen L. Kooman
-----------------------------------
Name: Karen L. Kooman
Title: Assistant Vice President
Address: PNC Bank, National Association
Communications Banking Division
21st Floor, Mail Stop: F2-F070-21-1
1600 Market Street
Philadelphia, PA 19103
Phone No.: (215) 585-6470
Fax No.: (215) 585-6680
Attention: Karen L. Kooman, Asst. Vice President
CRESTAR BANK
By: /s/ J. Eric Millham
-----------------------------------
Name: J. Eric Millham
Title: Vice President
Address: Crestar Bank
919 East Main Street
22nd Floor
Richmond, VA 23219
Phone No.: (804) 782-5675
Fax No.: (804) 782-5413
Attention: J. Eric Millham
- 139 -
<PAGE> 149
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Matthew S. Thoreson
-----------------------------------
Name: Matthew S. Thoreson
Title: Vice President
Address: U.S. Bank National Association
1420 Fifth Avenue, 10th Floor
Seattle, WA 98101
Phone No.: (206) 344-3712
Fax No.: (206) 344-2331
Attention: Matthew S. Thoreson, Vice President
BANK OF HAWAII
By: /s/ Bernadine M. Havertine
-----------------------------------
Name: Bernadine M. Havertine
Title: Assistant Vice President
Address: Bank of Hawaii
1850 North Central Avenue, Suite 400
Phoenix, AZ 85004
Phone No.: (602) 257-2416
Fax No.: (602) 257-2235
Attention: Bernadine Havertine
With a copy to:
Address: Bank of Hawaii
130 Merchant Street, 20th Floor
Honolulu, HI 96813
Phone No.: (808) 693-1698
Fax No.: (808) 693-1672
Attention: Donna Arakawa
- 140 -
<PAGE> 150
FIRST HAWAIIAN BANK
By: /s/ Donald C. Young
-----------------------------------
Name: Donald C. Young
Title: Vice President
Address: First Hawaiian Bank
1450 Treat Boulevard
Walnut Creek, CA 94596
Phone No.: (925) 942-8880
Fax No.: (925) 210-1831
Attention: Donald C. Young, Vice President
FMB BANK
By: /s/ Timothy A. Knabe
-----------------------------------
Name: Timothy A. Knabe
Title: Vice President
Address: FMB Bank
25 South Charles Street, 18th Floor
Baltimore, MD 21201
Phone No.: (410) 244-4350
Fax No.: (410) 244-4920
Attention: Timothy A. Knabe, Vice President
- 141 -
<PAGE> 151
THE CIT GROUP/EQUIPMENT FINANCING, INC.
By: /s/ J.E. Palmer
-----------------------------------
Name: J.E. Palmer
Title: Assistant Vice President
Address: The CIT Group/Equipment Financing, Inc.
900 Ashwood Parkway, Suite 600
Atlanta, GA 30338
Phone No.: (770) 551-7827
Fax No.: (770) 206-9295
Attention: John E. Palmer, Asst. Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Janet K. Williams
-----------------------------------
Name: Janet K. Williams
Title: Duly Authorized Signatory
Address: General Electric Capital Corporation
Commercial Finance
201 High Ridge Road
Stamford, CT 06927-5100
Phone No.: (203) 961-2993
Fax No.: (203) 316-7978
Attention: David Rich
- 142 -
<PAGE> 152
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By: /s/ Marcus Edwards /s/ Anthony Roch
-------------------------------------
Name: Marcus Edwards and Anthony Roch
Title:
Address: Compagnie Financiere de CIC et
de l'Union Europeenne
520 Madison Avenue, 37th Floor
New York, NY 10022
Phone No.: (212) 715-4427
Fax No.: (212) 715-4535
Attention: Marcus Edward
NATIONAL CITY BANK OF PENNSYLVANIA
By: /s/ W. Christopher Kohler
-----------------------------------
Name: W. Christopher Kohler
Title: Corporate Banking Officer
Address: National City Bank of Pennsylvania
20 Stanwix Street
LOC. #25-192
Pittsburgh, PA 15222
Phone No.: (412) 644-8879
Fax No.: (412) 644-6224
Attention: W. Christopher Kohler,
Corporate Banking Officer
- 143 -
<PAGE> 153
MICHIGAN NATIONAL BANK
By: /s/ Jeffrey W. Billig
-----------------------------------
Name: Jeffrey W. Billig
Title: Relationship Manager
Address: Michigan National Bank
27777 Inkster Road 10-36
Farmington Hills, MI 48334
Phone No.: (248) 473-4329
Fax No.: (248) 473-4345
Attention: Jeffrey W. Billig
MORGAN STANLEY DEAN WITTER PRIME
INCOME TRUST
By: /s/ Sheyla Finnerty
-----------------------------------
Name: Sheyla Finnerty
Title: Vice President
Address: Morgan Stanley Dean Witter Prime Income
Trust
c/o Morgan Stanley Dean Witter Advisors,
Inc.
Two World Trade Center, 72nd Floor
New York, NY 10048
Phone No.: (212) 392-5845
Fax No.: (212) 392-5345
Attention: Kevin Egan
- 144 -
<PAGE> 154
THE TRAVELERS INSURANCE COMPANY
By: /s/ Allen R. Cantrell
-----------------------------------
Name: Allen R. Cantrell
Title: Investment Officer
Address: The Travelers Insurance Company
One Tower Square
Securities Department, 9-PB
Hartford, CT 06183-2030
Phone No.: (860) 954-2396
Fax No.: (860) 954-5243
Attention: Allen Cantrell
NEW YORK LIFE INSURANCE COMPANY
By: /s/ S. Thomas Knoff
-----------------------------------
Name: S. Thomas Knoff
Title: Director
Address: New York Life Insurance Company
51 Madison Avenue, Room 206
New York, NY 10010
Phone No.: (212) 576-7628
Fax No.: (212) 447-4122
Attention: Thomas Knoff, Director
- 145 -
<PAGE> 155
FIRSTRUST BANK
By: /s/ Kent Nelson
-----------------------------------
Name: Kent Nelson
Title: Vice President
Address: Firstrust Bank
15 E. Ridge Pike
Conshohocken, PA 19428
Phone No.: (610) 238-5026
Fax No.: (610) 238-5066
Attention: Kent Nelson
- 146 -
<PAGE> 156
INTENTIONALLY LEFT BLANK
- 147 -
<PAGE> 157
CITY NATIONAL BANK
By: /s/ David C. Burdge
-----------------------------------
Name: David C. Burdge
Title: Senior Vice President
Address: City National Bank
400 N. Roxbury Drive, 3rd Floor
Beverly Hills, CA 90210
Phone No.: (310) 888-6531
Fax No.: (310) 888-6564
Attention: Aaron Cohen, Asst. Vice President
BROWN BROTHERS HARRIMAN & CO.
By: /s/ J. Clark O'Donoghue
-----------------------------------
Name: J. Clark O'Donoghue
Title: Manager
Address: Brown Brothers Harriman & Co.
Private Bankers
1531 Walnut Street
Philadelphia, PA 19102
Phone No.: (215) 864-1826
Fax No.: (215) 864-3989
Attention: J. Clark O'Donoghue, Manager
- 148 -
<PAGE> 158
TRAVELERS CORPORATE LOAN FUND INC.
BY: TRAVELERS ASSET MANAGEMENT
INTERNATIONAL CORPORATION
By: /s/ Allen R. Cantrell
-----------------------------------
Name: Allen R. Cantrell
Title: Investment Officer
Address: Travelers Corporate Loan Fund Inc.
c/o Salomon Smith Barney
388 Greenwich Street, 22nd Floor
New York, NY 10013
Phone No.: (212) 816-5515
Fax No.: (212) 816-6344
Attention: Barbara Brinn
- 149 -
<PAGE> 159
LIST OF ADDENDA (EXHIBITS AND SCHEDULES)
EXHIBITS
Exhibit A-1 - Form of RC Note - (Section 1.5)
Exhibit A-2 - Form of Term A Note - (Section 1.5)
Exhibit A-3 - Form of Term B Note - (Section 1.5)
Exhibit A-4 - Form of Swing Note - (Section 1.5)
Exhibit B - Request for Advance - (Section 1.6)
Exhibit C - LIBOR Election - (Section 1.8.4)
Exhibit D Form of Officer's Certificate as to Applicable Margin -(Section
1.8.3(a))
Exhibit E - Form of Security Agreement - (Section 4.1.3)
Exhibit F - Form of Guaranty and Suretyship Agreement - (Section 4.1.4)
Exhibit G - Form of SPC Pledge Agreement - (Section 4.1.5(a))
Exhibit H - Form of Company Pledge Agreement - (Section 4.1.5(b))
Exhibit I - Form of Subsidiary Pledge Agreement - (Section 4.1.5(c))
Exhibit J - Form of Other Shareholder Pledge Agreement (Section 4.1.5(d))
Exhibit K - Form of Lenfest Pledge Agreement - (Section 4.1.5(e))
Exhibit L - Form of SPC Subordination Agreement - (Section 4.1.6(a))
Exhibit M - Form of Shareholder Subordination Agreement - (Section 4.1.6(b))
Exhibit N - Form of Lenfest Subordination Agreement - (Section 4.1.6(c))
Exhibit O - Form of Trademark Collateral Agreement - (Section 4.1.7)
Exhibit P - Form of Subscriber Penetration Levels Report - (Section 5.1.4(b))
Exhibit Q - Form of Officer's Compliance Certificate - (Section 10.1)
Exhibit R - Form of Assignment and Acceptance - (Section 11.5.3)
SCHEDULES
Schedule 1.1 - Revolving Credit Commitment
Schedule 1.2 - Term Loan Commitment
Schedule 7.3 - Existing Investments
Schedule 7.6 - Permitted Transactions with Shareholders and Affiliates
Schedule 7.8 - SPC Expense Reimbursement
Schedule 9.1 - Equity Ownership, Etc.
Schedule 9.9 - Franchises and Licenses
Schedule 9.17 - Outstanding Indebtedness
Schedule 9.21 - ERISA
Schedule 9.25 - Environmental Compliance
- 150 -
<PAGE> 160
EXHIBIT A-1
to
Credit Agreement
dated as of ____________ __, 1999
by and among
Susquehanna Media Co.
as Borrower,
the Lenders party thereto,
and
First Union National Bank,
as Agent
FORM OF REVOLVING CREDIT NOTE
<PAGE> 161
REVOLVING CREDIT NOTE
___________ __, 1999
FOR VALUE RECEIVED, the undersigned, Susquehanna Media Co., a
corporation organized under the laws of Delaware (the "Borrower"), promises to
pay to the order of _________________________________, (the "Lender"), the
principal amount of the Revolving Credit Loans of the Lender, together with
interest thereon, all as set forth in that certain Credit Agreement, dated as of
even date herewith (as amended, extended, supplemented, restated or otherwise
modified or refinanced, the "Credit Agreement") among the Borrower, the Lenders
who are or may become a party thereto (collectively, the "Lenders") and First
Union National Bank, as Agent. All payments shall be made at the place and times
provided in the Credit Agreement. Capitalized terms used herein and not defined
herein shall have the meanings assigned thereto in the Credit Agreement.
The unpaid principal amount of this Revolving Credit Note from time to
time outstanding is subject to mandatory repayment from time to time as provided
in the Credit Agreement and, as set forth above, shall bear interest as provided
in the Credit Agreement. As more fully set forth in the Credit Agreement, all
obligations evidenced hereby, to the extent not due and payable before, shall be
due and payable on the Revolver Maturity Date. All payments of principal and
interest on this Revolving Credit Note shall be payable in lawful currency of
the United States of America in immediately available funds to the account
designated in the Credit Agreement.
This Revolving Credit Note is entitled to the benefits of, and
evidences Senior Secured Obligations incurred under, the Credit Agreement, to
which reference is made for a description of the security for this Revolving
Credit Note and for a statement of the terms and conditions on which the
Borrower is permitted and required to make prepayments and repayments of
principal of the Senior Secured Obligations evidenced by this Revolving Credit
Note and on which such Senior Secured Obligations may be declared to be
immediately due and payable.
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REFERENCE
TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
The obligations evidenced by this Revolving Credit Note are senior in
right of payment to all Senior Subordinated Notes and any other subordinated
debt referred to in the Credit Agreement. The obligations evidenced hereby are
"Designated Senior Indebtedness" within the meaning of the Senior Subordinated
Indenture and Senior Subordinated Notes.
<PAGE> 162
The Company hereby waives all requirements as to diligence,
presentment, demand of payment, protest and (except as required by the Credit
Agreement) notice of any kind with respect to this Revolving Credit Note.
IN WITNESS WHEREOF, the undersigned has executed this Revolving Credit
Note under seal as of the day and year first above written.
SUSQUEHANNA MEDIA CO.
[CORPORATE SEAL]
By: _________________________________
Name:____________________________
Title:___________________________
<PAGE> 163
EXHIBIT A-2
to
Credit Agreement
dated as of ____________ __, 1999
by and among
Susquehanna Media Co.
as Borrower,
the Lenders party thereto,
and
First Union National Bank,
as Agent
FORM OF TERM A NOTE
<PAGE> 164
TERM A NOTE
___________ __, 1999
FOR VALUE RECEIVED, the undersigned, Susquehanna Media Co., a
corporation organized under the laws of Delaware (the "Borrower"), promises to
pay to the order of _________________________________, (the "Lender"), the
principal amount of the Term A Loans of the Lender, together with interest
thereon, all as set forth in that certain Credit Agreement, dated as of even
date herewith (as amended, extended, supplemented, restated or otherwise
modified or refinanced, the "Credit Agreement") among the Borrower, the Lenders
who are or may become a party thereto (collectively, the "Lenders") and First
Union National Bank, as Agent. All payments shall be made at the place and time
provided in the Credit Agreement. Capitalized terms used herein and not defined
herein shall have the meanings assigned thereto in the Credit Agreement.
The unpaid principal amount of this Term A Note from time to time
outstanding is subject to mandatory repayment from time to time as provided in
the Credit Agreement and, as set forth above, shall bear interest as provided in
the Credit Agreement. As more fully set forth in the Credit Agreement, all
obligations evidenced hereby, to the extent not due and payable before, shall be
due and payable on the Term A Maturity Date. All payments of principal and
interest on this Term A Note shall be payable in lawful currency of the United
States of America in immediately available funds to the account designated in
the Credit Agreement.
This Term A Note is entitled to the benefits of, and evidences Senior
Secured Obligations incurred under, the Credit Agreement, to which reference is
made for a description of the security for this Term A Note and for a statement
of the terms and conditions on which the Borrower is permitted and required to
make prepayments and repayments of principal of the Senior Secured Obligations
evidenced by this Term A Note and on which such Senior Secured Obligations may
be declared to be immediately due and payable.
THIS TERM A NOTE SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REFERENCE
TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
The obligations evidenced by this Term A Note are senior in right of
payment to all Senior Subordinated Notes and any other subordinated debt
referred to in the Credit Agreement. The obligations evidenced hereby are
"Designated Senior Indebtedness" within the meaning of the Senior Subordinated
Indenture and Senior Subordinated Notes.
<PAGE> 165
The Company hereby waives all requirements as to diligence,
presentment, demand of payment, protest and (except as required by the Credit
Agreement) notice of any kind with respect to this Term A Note.
IN WITNESS WHEREOF, the undersigned has executed this Term A Note under
seal as of the day and year first above written.
SUSQUEHANNA MEDIA CO.
[CORPORATE SEAL]
By: _______________________________
Name:__________________________
Title: ________________________
<PAGE> 166
EXHIBIT A-3
to
Credit Agreement
dated as of ____________ __, 1999
by and among
Susquehanna Media Co.
as Borrower,
the Lenders party thereto,
and
First Union National Bank,
as Agent
FORM OF TERM B NOTE
<PAGE> 167
TERM B NOTE
___________ __, 1999
FOR VALUE RECEIVED, the undersigned, Susquehanna Media Co., a
corporation organized under the laws of Delaware (the "Borrower"), promises to
pay to the order of _________________________________, (the "Lender"), the
principal amount of the Term B Loans of the Lender, together with interest
thereon, all as set forth in that certain Credit Agreement, dated as of even
date herewith (as amended, extended, supplemented, restated or otherwise
modified or refinanced, the "Credit Agreement") among the Borrower, the Lenders
who are or may become a party thereto (collectively, the "Lenders") and First
Union National Bank, as Agent. All payments shall be made at the place and times
provided in the Credit Agreement. Capitalized terms used herein and not defined
herein shall have the meanings assigned thereto in the Credit Agreement.
The unpaid principal amount of this Term B Note from time to time
outstanding is subject to mandatory repayment from time to time as provided in
the Credit Agreement and, as set forth above, shall bear interest as provided in
the Credit Agreement. As more fully set forth in the Credit Agreement, all
obligations evidenced hereby, to the extent not due and payable before, shall be
due and payable on the Term B Maturity Date. All payments of principal and
interest on this Term B Note shall be payable in lawful currency of the United
States of America in immediately available funds to the account designated in
the Credit Agreement.
This Term B Note is entitled to the benefits of, and evidences Senior
Secured Obligations incurred under, the Credit Agreement, to which reference is
made for a description of the security for this Term B Note and for a statement
of the terms and conditions on which the Borrower is permitted and required to
make prepayments and repayments of principal of the Senior Secured Obligations
evidenced by this Term B Note and on which such Senior Secured Obligations may
be declared to be immediately due and payable.
THIS TERM B NOTE SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REFERENCE
TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
The obligations evidenced by this Term B Note are senior in right of
payment to all Senior Subordinated Notes and any other subordinated debt
referred to in the Credit Agreement. The obligations evidenced hereby are
"Designated Senior Indebtedness" within the meaning of the Senior Subordinated
Indenture and Senior Subordinated Notes.
<PAGE> 168
The Company hereby waives all requirements as to diligence,
presentment, demand of payment, protest and (except as required by the Credit
Agreement) notice of any kind with respect to this Term B Note.
IN WITNESS WHEREOF, the undersigned has executed this Term B Note under
seal as of the day and year first above written.
SUSQUEHANNA MEDIA CO.
[CORPORATE SEAL]
By: _______________________________
Name: _________________________
Title: ________________________
<PAGE> 169
EXHIBIT A-4
to
Credit Agreement
dated as of ____________ __, 1999
by and among
Susquehanna Media Co.
as Borrower,
the Lenders party thereto,
and
First Union National Bank,
as Agent
FORM OF SWING NOTE
<PAGE> 170
SWING NOTE
__________ __, 1999
FOR VALUE RECEIVED, the undersigned, Susquehanna Media Co., a
corporation organized under the laws of Delaware (the "Borrower"), promises to
pay to the order of FIRST UNION NATIONAL BANK (the "Lender"), the principal
amount of the Swing Loans of the Lender, together with interest thereon, all in
the amounts and as set forth in that certain Credit Agreement, dated as of even
date herewith (as amended, extended, supplemented, restated or otherwise
modified or refinanced, the "Credit Agreement") among the Borrower, the Lenders
who are or may become a party thereto (collectively, the "Lenders") and First
Union National Bank, as Agent. All payments shall be made at the place and times
provided in the Credit Agreement. Capitalized terms used herein and not defined
herein shall have the meanings assigned thereto in the Credit Agreement.
The unpaid principal amount of this Swing Note from time to time
outstanding is subject to mandatory repayment on the date that demand is made
therefor as provided in the Credit Agreement and, as set forth above, shall bear
interest as provided in the Credit Agreement. As more fully set forth in the
Credit Agreement, all obligations evidenced hereby, to the extent not due and
payable before, shall be due and payable on the Revolver Maturity Date. All
payments of principal and interest on this Swing Note shall be payable in lawful
currency of the United States of America in immediately available funds to the
account designated in the Credit Agreement.
This Swing Note is entitled to the benefits of, and evidences Senior
Secured Obligations incurred under, the Credit Agreement, to which reference is
made for a description of the security for this Swing Note and for a statement
of the terms and conditions on which the Borrower is permitted and required to
make prepayments and repayments of principal of the Senior Secured Obligations
evidenced by this Swing Note and on which such Senior Secured Obligations may be
declared to be immediately due and payable.
THIS SWING NOTE SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REFERENCE TO THE
CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
The obligations evidenced by this Swing Note are senior in right of
payment to the Senior Subordinated Notes and any other subordinated debt
referred to in the Credit Agreement. The obligations evidenced hereby are
"Designated Senior Indebtedness" within the meaning of the Senior Subordinated
Indenture and Senior Subordinated Notes.
The Company hereby waives all requirements as to diligence,
presentment, demand of payment, protest and (except as required by the Credit
Agreement) notice of any kind with
<PAGE> 171
respect to this Swing Note.
IN WITNESS WHEREOF, the undersigned has executed this Swing Note under
seal as of the day and year first above written.
SUSQUEHANNA MEDIA CO.
[CORPORATE SEAL]
By: ________________________________
Name: Alan L. Brayman
Title: Treasurer
<PAGE> 172
EXHIBIT B
to
Credit Agreement
dated as of ____________ __, 1999
by and among
SUSQUEHANNA MEDIA CO.,
as Borrower,
the Lenders party thereto,
and
First Union National Bank,
as Agent
FORM OF NOTICE OF BORROWING
<PAGE> 173
NOTICE OF BORROWING
Dated as of: ______________
First Union National Bank, as Agent
One South Penn Square
PA 4830
Philadelphia, PA 19107
Attention: Stacy Shegda, Associate Director
Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Borrowing is delivered to you under Section
1.6 of the Revolving Credit and Term Loan Agreement dated as of __________ __,
1999 (as amended, restated or otherwise modified, the "Credit Agreement"), by
and among SUSQUEHANNA MEDIA CO, a Delaware corporation ("Company"), the lenders
party thereto (the "Lenders") and First Union National Bank, as Agent.
1. Company hereby requests that the Lenders make a Revolving Loan to
Company in the aggregate principal amount of $___________. (COMPLETE WITH AN
AMOUNT IN ACCORDANCE WITH SECTION 1.6 OF THE CREDIT AGREEMENT.)
2. Company hereby requests that such Revolving Loan be made on the
following Business Day: _____________________. (COMPLETE WITH A BUSINESS DAY IN
ACCORDANCE WITH SECTION 1.6 OF THE CREDIT AGREEMENT).
3. Company hereby requests that the Revolving Loan bear interest at the
following interest rate, plus the Applicable Margin, as set forth below:
<TABLE>
<CAPTION>
Interest Rate Interest Period Termination Date for
Component (Base Rate or (LIBOR Interest Period
of Loan LIBOR Rate) Rate only) (if applicable)
- ------- ----------- ---------- ---------------
<S> <C> <C> <C>
</TABLE>
(A NOTICE OF BORROWING FOR A BORROWING TO BEAR INTEREST AT A RATE BASED UPON
ADJUSTED LIBOR MUST ALSO BE ACCOMPANIED BY AN ELECTION FOR ADJUSTED LIBOR.)
(A NOTICE OF BORROWING FOR A BORROWING IN EXCESS OF $25,000,000 FOR THE PURPOSE
OF EFFECTING AN ACQUISITION OR PURCHASING A MINORITY INTEREST AS MORE FULLY SET
FORTH IN SUBSECTION 1.8.3 OF THE CREDIT AGREEMENT, SHALL BE ACCOMPANIED BY THE
OFFICERS' CERTIFICATE REQUIRED BY SAID SUBSECTION 1.8.3.)
4. Company hereby requests that the Lenders make a Term A Loan to
Company in
<PAGE> 174
the aggregate principal amount of $___________ on _________, 1999.(1) (COMPLETE
WITH AN AMOUNT IN ACCORDANCE WITH SECTION 1.3 OF THE CREDIT AGREEMENT.)
5. Company hereby requests that the Term A Loan bear interest at the
following interest rate, plus the Applicable Margin, as set forth below:
<TABLE>
<CAPTION>
Interest Rate Interest Period Termination Date for
Component (Base Rate or (LIBOR Interest Period
of Loan LIBOR Rate) Rate only) (if applicable)
- ------- ----------- ---------- ---------------
<S> <C> <C> <C>
</TABLE>
6. Company hereby requests that the Lenders make a Term B Loan to
Company in the aggregate principal amount of $___________ on _________, 1999.(2)
(COMPLETE WITH AN AMOUNT IN ACCORDANCE WITH SECTION 1.3 OF THE CREDIT
AGREEMENT.)
7. Company hereby requests that the Term B Loan bear interest at the
following interest rate, plus the Applicable Margin, as set forth below:
<TABLE>
<CAPTION>
Interest Rate Interest Period Termination Date for
Component (Base Rate or (LIBOR Interest Period
of Loan LIBOR Rate) Rate only) (if applicable)
- ------- ----------- ---------- ---------------
<S> <C> <C> <C>
</TABLE>
8. The principal amount of all Loans, Letters of Credit and
Unreimbursed Drawings outstanding as of the date hereof (including the requested
Loan) does not exceed the maximum amount permitted to be outstanding pursuant to
the terms of the Credit Agreement.
9. Please disburse the proceeds of the Loans requested above by [insert
requested method of disbursement].
10. All of the conditions applicable to the Loans requested herein as
set forth in the Credit Agreement have been satisfied as of the date hereof and
will remain satisfied to the date of such Loans.
11. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
- --------
(1) A Term Loan may only be made on the Closing Date.
(2) A Term Loan may only be made on the Closing Date.
-3-
<PAGE> 175
[Signature Page Follows]
-4-
<PAGE> 176
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Borrowing on behalf of Company this ____ day of _______, ____.
SUSQUEHANNA MEDIA CO.
By:
Name:
Title:
-5-
<PAGE> 177
EXHIBIT C
to
Credit Agreement
dated as of ____________ __, ____
by and among
SUSQUEHANNA MEDIA CO.,
as Borrower,
the Lenders party thereto,
and
First Union National Bank,
as Agent
FORM OF NOTICE OF CONVERSION/CONTINUATION
<PAGE> 178
NOTICE OF CONVERSION/CONTINUATION
(LIBOR Loans)
Dated as of: ______________
First Union National Bank, as Agent
One South Penn Square
PA 4830
Philadelphia, PA 19107
Attention: Stacy Shegda, Associate Director
Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Conversion/Continuation (the "Notice") is
delivered to you under Subsection 1.8.4(a) of the Revolving Credit and Term Loan
Agreement dated as of __________ __, 1999 (as amended, restated or otherwise
modified, the "Credit Agreement"), by and among SUSQUEHANNA MEDIA CO., a
Delaware corporation ("Company"), the lenders party thereto (the "Lenders") and
First Union National Bank, as Agent.
1. This Notice is submitted for the purpose of: (CHECK ONE AND COMPLETE
APPLICABLE INFORMATION IN ACCORDANCE WITH THE CREDIT AGREEMENT.)
Converting all or a portion of a Base Rate Loan into a LIBOR
Rate Loan
(a) The aggregate outstanding principal balance of the
[Revolving Loan] [Term A Loan] [Term B Loan] to be
converted is $_______________.
(b) The principal amount of such Loan to be converted is
$_______________.
(c) The requested effective date of the conversion of
such Loan is _______________.
(d) The requested Interest Period applicable to the
converted Loan is [one] [two][three][six] [months]
[one year].
Converting a portion of LIBOR Rate Loan into a Base Rate
Loan(1)
(a) The aggregate outstanding principal balance of the
[Revolving Loan] [Term A Loan] [Term B Loan] to be
converted is $_______________.
- --------
(1) If no election to continue a LIBOR Rate Loan as a new LIBOR Rate Loan is
made prior to the end of the applicable Interest Period, it will be assumed that
the Loan will convert to a Base Rate Loan whether or not this section is
completed.
<PAGE> 179
(b) The last day of the current Interest Period for such
Loan is _______________.
(c) The principal amount of such Loan to be converted is
$_______________.
(d) The requested effective date of the conversion of
such Loan is _______________.
Continuing all or a portion of a LIBOR Rate Loan as a LIBOR
Rate Loan
(a) The aggregate outstanding principal balance of the
[Revolving Loan] [Term A Loan] [Term B Loan] to be
converted is $_______________.
(b) The last day of the current Interest Period for such
Loan is _______________.
(c) The principal amount of such Loan to be continued is
$_______________.
(d) The requested effective date of the continuation of
such Loan is _______________.
(e) The requested Interest Period applicable to the
continued Loan is [one] [two][three][six] [months]
[one year].
2. The principal amount of all Loans, Letters of Credit and
Unreimbursed Drawings outstanding as of the date hereof does not exceed the
maximum amount permitted to be outstanding pursuant to the terms of the Credit
Agreement.
3. All of the conditions applicable to the conversion or continuation
of the Loan requested herein as set forth in the Credit Agreement (including,
without limitation, Section 1.8.4 (LIBOR Election) thereof) have been satisfied
or waived as of the date hereof and will remain satisfied or waived to the date
of such Loan.
4. "LIBOR Rate Loan" means a Loan bearing interest based on Adjusted
LIBOR plus the Applicable Margin and "Base Rate Loan" means a Loan bearing
interest based on the Base Rate plus the Applicable Margin. Other capitalized
terms used herein and not defined herein shall have the meanings assigned
thereto in the Credit Agreement.
[Signature Page Follows]
-3-
<PAGE> 180
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Conversion/Continuation this ____ day of __________, ____.
SUSQUEHANNA MEDIA CO.
By:
Name:
Title:
-4-
<PAGE> 181
EXHIBIT D
to
Credit Agreement
dated as of May 11, 1999
by and among
SUSQUEHANNA MEDIA CO.,
as Borrower,
the Lenders party thereto,
and
First Union National Bank,
as Agent
FORM OF OFFICER'S CERTIFICATE
REGARDING APPLICABLE MARGIN
<PAGE> 182
OFFICER'S CERTIFICATE
REGARDING APPLICABLE MARGIN
The undersigned, on behalf of SUSQUEHANNA MEDIA CO. ("Company"), hereby
certifies to the Administrative Agent and the Lenders (each as defined in the
Credit Agreement referred to below), as follows:
1. This Certificate is delivered to you pursuant to Section 1.8.3 of
the Revolving Credit and Term Loan Agreement dated as of May __, 1999 (as
amended, restated or otherwise modified, the "Credit Agreement"), by and among
Company, the lenders party thereto and First Union National Bank, as Agent.
Capitalized terms used herein and not defined herein shall have the meanings
assigned thereto in the Credit Agreement.
Company hereby certifies:
1. There exists no Event of Default or Potential Event of
Default.
2. Effective ______, the Applicable Margins and Commitment Fees
will be as set forth below. This [is] [is not] a change from the existing
Applicable Margins.
<TABLE>
<CAPTION>
REVOLVING LOANS
AND TERM A LOANS TERM B LOANS
---------------- ------------
<S> <C> <C>
Applicable Margin for Base Rate Loans:
Applicable Margin for LIBOR Loans:
Commitment Fee Rate:
</TABLE>
3. The calculations determining such Applicable Margins and Commitment
Fees are set forth on the attached Schedule 1.
4. Company is in compliance with the financial covenants contained in
Article 6 of the Credit Agreement and Company and its Subsidiaries are in
compliance with the other covenants and restrictions contained in the Credit
Agreement.
[5. This Certificate is delivered to you in connection with a request
for a Loan, or one in a series of related Loans, in an amount in excess of
$25,000,000 for the purpose of effecting an Acquisition or purchasing a minority
interest in any direct or indirect Subsidiary of Company. The calculations set
forth on Schedule 1 are on a Pro Forma Basis after giving effect to the
<PAGE> 183
proposed Loan and transactions contemplated in connection therewith.]
[6. This Certificate is delivered to you in connection with a
disposition of assets in accordance with Section 7.7 of the Credit Agreement and
a prepayment of the Loans in accordance with [Subsection 1.1.5] [Subsection
1.3.6] of the Credit Agreement in an amount in excess of $25,000,000 (whether in
one prepayment or a series of related prepayments). The calculations set forth
on Schedule 1 are on a Pro Forma Basis after giving effect to the proposed
prepayment of the Loans, the disposition of the assets and transactions
contemplated in connection therewith.
WITNESS the following signature as of the _____ day of _________, ____.
SUSQUEHANNA MEDIA CO.
By:
Name:
Title:
-3-
<PAGE> 184
SCHEDULE 1
to
OFFICER'S CERTIFICATE
REGARDING APPLICABLE MARGIN
<PAGE> 185
SECURITY AGREEMENT
SECURITY AGREEMENT made as of the 12th day of May, 1999, by and between
SUSQUEHANNA MEDIA CO. (the "Borrower"), and all of its Subsidiaries (other than
Paragon Research Limited Partnership ("Paragon")), which are listed on the
signature pages to this Security Agreement (the foregoing, including the
Borrower, together with any other entity that becomes a Debtor hereunder
pursuant to the terms hereof, individually a "Debtor" and collectively the
"Debtors"), and FIRST UNION NATIONAL BANK, a national banking association as
agent on behalf of the Senior Secured Parties (as defined in the Credit
Agreement). First Union National Bank in its capacity as agent hereunder,
including its successors and assigns, is hereinafter referred to as "Agent."
BACKGROUND OF AGREEMENT
On the date hereof certain lenders and issuers of letters of credit and
FIRST UNION NATIONAL BANK as agent have entered into a Credit Agreement (as
amended, extended, supplemented, restated, or otherwise modified or refinanced,
including, without limitation, any amendment involving an increase in principal,
interest rate or other amount, the "Credit Agreement") with the Borrower,
pursuant to which such lenders and issuers agreed to extend certain credit to
the Borrower upon the terms and conditions specified in the Credit Agreement
under (1) a Revolving Credit Facility with a swing line subfacility, and (2) two
separate Term Loan Facilities and to issue, and/or participate in the issuance
of, certain letters of credit. In addition, the Credit Agreement under certain
circumstances requires the Borrower to enter into certain interest rate hedging
agreements.
Each of the Debtors (other than the Borrower itself) is a Subsidiary,
direct or indirect, of the Borrower. The Subsidiaries, wishing to induce the
certain lenders and issuers of letters of credit to enter into the financings
described above to enable the Borrower to (among other things) make loans to
them, and the Borrower and the Subsidiaries having determined that they can
obtain their borrowings more economically by combining their financing needs
into a single borrowing unit on the parent company level, borrowing funds from
institutional lenders on that basis, and then entering into the requisite
intercompany financings, the Subsidiaries other than Paragon agreed to jointly
and severally guaranty the Borrower's obligations under and in connection with
the Credit Agreement and to grant the liens set forth below in order to
facilitate such financings. Each Debtor determined that it was in its best
interests and in pursuant of its business purposes that it do so and that it was
and will be Solvent before and after giving effect to the transactions
contemplated by the Credit Agreement.
One of the prerequisites to the making of advances and the issuing of
letters of credit by the certain lenders and issuers under the Credit Agreement
was that the Debtors enter into this Security Agreement and grant to the Agent
for the benefit of the Senior Secured Parties a security interest in and to
substantially all of their assets, properties and rights (as more fully
<PAGE> 186
described below) to secure the obligations of the Debtors under the Credit
Agreement and certain related documents and agreements as more fully set forth
below.
NOW, THEREFORE, the Debtors, jointly and severally, intending to be
legally bound hereby, and in consideration of the mutual covenants herein
contained and other good and valuable consideration receipt of which is hereby
acknowledged, agree as follows:
SECTION 1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to such terms in, or by reference in, the Credit
Agreement or (except for the definition of "Proceeds" which is defined more
broadly herein than in the Uniform Commercial Code) in the Uniform Commercial
Code. The following terms shall have the following meanings:
"Collateral" shall mean (without duplication):
(a) all franchises, including without limitation, all cable
television franchises and rights, all FCC licenses (including without
limitation, all radio broadcast licenses), all rights to operate any
telecommunications business and all other franchises now or hereafter granted by
any local franchising authority or any other local, state or federal authority
or other entity, including, without limitation, those franchises and licenses
described in Schedule 9.9 to the Credit Agreement, and all other authorizations,
licenses, permits and franchises;
(b) all Equipment and Fixtures, including without limitation
(and whether or not the same constitutes Equipment or Fixtures), all machinery,
furniture, antennas, towers, systems or apparatus, microwave equipment,
electronic amplification transmission and filtering equipment, coaxial cable (in
stock, underground and affixed to utility poles), subscriber connection
equipment, office equipment, computers, electronic testing equipment, electronic
communications equipment, transmitting equipment, wiring, appliances, cable
connections, pole attachment appliances and, with respect to all of the
foregoing, all accessions, parts, substitutions, improvements, accessories,
replacements, additions, renewals, filings, components, tools, dies, patterns,
molds, attachments, and appurtenances in any way used with, attached or related
to, or installed in, or intended to be so used, attached, related to or
installed in, any of the foregoing;
(c) all Accounts and Chattel Paper of whatever kind or nature,
including without limitation (and whether or not the same constitute Accounts or
Chattel Paper), all accounts receivable and rights to receive money of any kind
including, without limitation, all accounts, notes receivable arising out of,
existing or acquired in connection with the operation of one or more cable
television systems, radio broadcast systems, or any other activities of such
Debtor;
(d) all contract rights of any nature including, without
limitation, all leases (for real property, personal property or a combination
thereof), licenses, easements and
-2-
<PAGE> 187
agreements permitting the attachment of coaxial cable to utility poles or in
underground or similar conduits or granting access rights as to such able (such
as cable duct agreements, multidwelling unit agreements, pole attachment
agreements and equipment/cost sharing agreements), all contracts for goods or
services, all network affiliation, programming, advertising and similar
agreements and all agreements with common carriers or others for the
transmission and delivery of programming, Internet access or other services to
subscribers (all such property described in this clause (d) collectively, the
"Contracts");
(e) All General Intangibles, including, without limitation
(and whether or not the same constitute General Intangibles), all of the items
referred to in paragraphs (a) and (d) above and all partnership and other equity
interests, intellectual property and intangibles, manufacturing and processing
rights, patents, patent rights, licenses, trademarks and service marks,
goodwill, trade names, other names, trade styles, trade dress, call letters,
trade secrets, copyrights, rights to receive payment of money of any kind,
invoices, brands, license agreements and rights, confidential or proprietary
information, know-how, secret formulas, technical information, computer
software, programs, source code, object code, tape disks and related materials,
business and marketing plans, customer lists, registrations and applications
thereafter, logos and slogans and tax and other refunds, together with any
certificates, agreements, instruments or other documents of any nature
evidencing or related to the foregoing;
(f) all Goods, Inventory and Documents, including, without
limitation (and whether or not the same constitute Goods, Inventory or
Documents), the items referred to in paragraph (b) above, warehouse receipts,
bills of lading, telephones, and satellite dishes, together with all deeds,
bills of sale, manuals of operation, maintenance or repair, computer records,
printouts, drawings, blueprints and other documents and written materials
related thereto;
(g) all Instruments, Deposit Accounts, Investment Property,
cash and cash equivalents, including without limitation (and whether or not the
same constitute Investment Property or cash or cash equivalents), Securities,
Securities Entitlements, Securities Accounts, Commodities Contracts, Commodities
Accounts and mortgages, provided, however, that the note in respect of the ESOP
Loan (as defined in the Credit Agreement) shall not constitute collateral;
(h) all books, ledgers, computerized information, records of
any kind and other personal property, assets and things of value of every kind
and nature, tangible or intangible, absolute or contingent, legal or equitable;
(i) all Proceeds of any of the foregoing.
If for any reason any security interest in any of the property described in (a)
through (i) above is deemed invalid, the Senior Secured Party nonetheless shall
have and retain a security interest in the Proceeds of such assets.
All the property described in (a) through (i) above, whether now owned or
hereafter acquired, and wherever located, tangible or intangible, is
collectively referred to herein as the "Collateral."
-3-
<PAGE> 188
"Event of Default" hereunder shall mean any "Event of Default"
as defined in the Credit Agreement, but in any event shall include (a) any
failure to make any payment in respect of the Senior Secured Obligations within
the applicable grace period, if any, related thereto; (b) any breach of any
covenant contained in the Credit Agreement which shall remain in effect beyond
the applicable grace period, if any, related thereto; and (c) any breach of any
covenant by the Borrower or any of its Subsidiaries under any of the Loan
Documents, which breach shall remain in effect past the applicable grace period,
if any, related thereto.
"FCC" shall mean the Federal Communications Commission or any
governmental body succeeding to the functions of such commission.
"FCC License" shall mean any radio, microwave, or other
communications license, permit, certificate of compliance, franchise, approval
or authorization granted or issued by the FCC for control, ownership,
acquisition, construction, operation, management or maintenance of Systems.
"Franchise" shall mean a franchise, permit or license
(including, without limitation, an FCC License), designation or certificate
granted by the United States or any other country, territory or state or a city,
town, county or other municipality, PUC or any other regulatory authority
pursuant to which a Person has the right to own, control, acquire, construct,
operate, manage or maintain a domestic cable television system, radio
broadcasting system or business directly related thereto.
"Lien" shall mean, as to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance in or on,
or any interest or title of any vendor, lessor, lender or other Senior Secured
Party to or of such Person under any conditional sale or other title retention
agreement or capital lease with respect to, any property or asset of such
Person.
"Proceeds" shall mean both proceeds within the meaning of the
Uniform Commercial Code and, in addition, the proceeds of any sale or other
disposition of any assets in which any Debtor has an interest whether or not
such assets constitute Collateral and any other rights to receive money or other
consideration in respect of any asset, including all rights to receive moneys
due to the Debtors in connection with any sale or other disposition and, in any
event, shall include without limitation (i) any and all proceeds of any
guarantee, insurance or indemnity payable to a Debtor from time to time with
respect to any of the Collateral; (ii) any and all payments (in any form
whatsoever) made or due and payable to a Debtor from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any governmental authority (or any person
acting under color of governmental authority); (iii) all proceeds of any sale or
other disposition of any of the Collateral and of any of the assets, properties
and rights whether or not such assets, properties or rights constitute
Collateral and whether or not the lien therein purportedly granted hereunder is
valid or attaches or is perfected; and (iv) any and all other amounts from time
to time paid or payable with respect to or in connection with any of the
Collateral.
-4-
<PAGE> 189
"PUC" shall mean any state or local regulatory agency or body
that exercises jurisdiction over the ownership, construction, operation,
acquisition, management or maintenance of domestic cable television systems,
radio broadcasting systems or businesses directly related thereto.
"Systems" means any domestic cable television systems, radio
broadcasting systems, businesses related thereto and any other
telecommunications systems.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code, as amended, as is in effect in the Commonwealth of Pennsylvania or in any
applicable state, as the case may be.
SECTION 2. CREATION OF SECURITY INTEREST
(a) As security for the due and punctual payment and performance in full of each
and all of the Senior Secured Obligations, each Debtor hereby hypothecates,
pledges, assigns, sets over and delivers unto the Agent, and grants to the
Agent, for the equal (in priority) and ratable benefit of the Senior Secured
Parties, a continuing first priority security interest in all its right, title
and interest in, to and under each item and portion of and all of the
Collateral, TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Agent, pursuant to the terms, covenants and conditions hereinafter set
forth.
(b) This Security Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until terminated
pursuant to Section 10 below, (ii) be binding upon each Debtor, its successors
and assigns, and (iii) inure to the benefit of the Agent, the other Senior
Secured Parties and their respective successors, transferees and assigns,
provided, however, that no Debtor shall be permitted to transfer or delegate any
of its obligations hereunder.
SECTION 3. ACKNOWLEDGEMENT OF REGULATORY CONSIDERATIONS; UNIQUE NATURE OF ASSETS
3.1 FCC/PUC Approval. It is hereby acknowledged that transfer of certain
Collateral and the exercise of certain other remedies provided herein may
constitute a transfer of an FCC License or other Franchise or a sale or transfer
of control of a holder of an FCC License or other Franchise, requiring approval
of the FCC or a PUC, pursuant to rules and regulations of the FCC or such PUC.
Notwithstanding anything to the contrary contained in this Agreement, the Agent
will not knowingly take any action pursuant to this Agreement which would
constitute or result in assignment of an FCC License or other Franchise or any
transfer of control of the holder of an FCC License or other Franchise if such
assignment of license or transfer of control would require under then existing
law (including the written rules and regulations promulgated by the FCC or any
PUC), the prior approval of the FCC or such PUC, without first obtaining such
approval. In connection with this provision, the Agent shall be entitled to rely
without liability upon the advice of counsel of Agent's choice whether or not
the advice rendered is ultimately determined
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to have been accurate.
3.2 FCC Licenses. With respect to any FCC License held by a Debtor, currently
applicable law may render the grant of a security interest in any such FCC
License ineffective. The grant contained herein is intended to confer upon the
Agent all rights in the FCC Licenses which can be granted under currently
applicable law. If the law is subsequently changed or interpretation of existing
law is changed to permit the granting of security interests in the FCC Licenses,
then the Debtor's FCC Licenses, whether now held or hereafter acquired, shall
automatically become subject to the effective security interest provided for
hereunder to the maximum extent permitted by the law as then in effect. To the
extent applicable law permits, a security interest in all Proceeds of the FCC
Licenses is intended to be granted hereby even if there is a limitation of the
Agent's rights with respect to its security interest in the FCC Licenses.
3.3 Debtor and Subsidiary of Debtor Assistance in Obtaining Approval. Without
limiting the generality of Sections 3.1 and 3.2 above, if counsel to the Agent
reasonably determines that the consent of the FCC or a PUC is required in
connection with any of the actions hereunder or under any other Loan Document,
then each Debtor and each Subsidiary thereof (at its cost and expense) agrees to
use its best efforts to secure such consent and to cooperate fully with the
Agent in any action to secure such consent. Without limiting the generality of
the foregoing, after an Event of Default has occurred and is continuing each
Debtor and each Subsidiary thereof shall promptly execute and file and/or cause
the execution and filing of all applications, certificates, instruments, and
other documents and papers that the Agent deems necessary or advisable to file
in order to obtain any necessary governmental consent, approval, or
authorization, and if Borrower, any Debtor or any Subsidiary thereof fails or
refuses to execute (or fails or refuses to cause another Person to execute) such
documents, the Agent or the clerk of any court of competent jurisdiction may
execute and file the same on behalf of the Debtor or such other Person.
3.4 Unique Nature of Assets. It is agreed that the FCC Licenses and other
Franchises held by each Debtor and its Subsidiaries are unique assets which (or
the control of which) may have to be transferred for the Agent to adequately
realize the value of its security interest. A violation of the covenants set
forth in this Section would result in irreparable harm to the Agent for which
monetary damages are not readily ascertainable. Therefore, in addition to any
other remedy which may be available to the Agent at law or in equity, Agent
shall have the remedy of specific performance of the provisions of this Section.
To enforce the provisions of this Section, the Agent is authorized to request
the consent or approval of the FCC or any PUC to a voluntary or an involuntary
transfer of control of any FCC License or other Franchise or sale or transfer of
control of a holder of an FCC License or other Franchise.
3.5 Selection by Collateral Agent of Different Transferee. If, for any reason,
the FCC or a PUC does not approve within a reasonable period of time (which
period shall be determined conclusively by the Agent), the initial application
for approval of the transfer of the Collateral, the Agent shall then have the
right to transfer the Collateral to such other Person as the Agent shall select
(subject to the prior approval of the FCC or such PUC). With respect to such
subsequent selection, each Debtor agrees to cooperate fully in the manner set
forth above. Exercise by the
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Agent of the right to such cooperation shall not be exhausted by the initial or
any subsequent exercise thereof.
3.6 Responsibility of Secured Party. It is the intent of the parties that the
Agent will not, solely by reason of the execution, delivery and performance of
this Security Agreement (other than the enforcement of certain remedies) or any
other instrument or agreement referred to herein, be subject to the regulation
or control of the FCC or any PUC. Neither the Agent nor any Senior Secured Party
shall incur any liability in connection with the matters described in this
Section except for such liability as arose solely out of its gross negligence or
willful misconduct as finally determined by a court of competent jurisdiction.
3.7 Certain Consents. The parties acknowledge that certain General Intangibles
are not assignable, or are not assignable without the consent of certain third
parties, and nothing in this Agreement shall be construed in such a manner as to
cause the Debtors to lose their rights with respect to those General Intangibles
or to incur liability to third parties in connection with the security interest
granted hereunder. However, the Debtors represent that the necessary third party
consents that have not been obtained do not affect the rights of the Agent and
the Senior Secured Parties under this Agreement with respect to any material
amount of the assets of the Debtors.
SECTION 4. REPRESENTATIONS AND COVENANTS OF DEBTORS
Each Debtor represents and warrants that each representation,
warranty and covenant set forth in the Loan Documents that relates to or refers
to a Debtor or the Collateral subject hereto (or, in either case, any other term
that is used with the same or similar meaning) is incorporated herein by
reference and is true and correct on and as of the date hereof and shall be
performed after the date hereof. Without limiting the generality of the
foregoing, each Debtor further represents, warrants and covenants as follows:
4.1 Locations of Debtors and Collateral. The principal place of business and all
additional places of business, if any, of each Debtor and the locations of
substantially all the Collateral and the locations where all books and records
of each Debtor are kept are listed on Schedule 4.1 attached hereto. Each Debtor
will not change its principal place of business or any other place of business
or keep Collateral at any location not listed on Schedule 4.1 without taking
such action as is necessary to maintain the perfected status of the Senior
Secured Parties' security interest in the Collateral.
4.2 Head-End Facilities and Broadcast Towers. Without limiting the generality of
the provisions set forth in the preceding Section 4.1, no Debtor will cause or
permit any of its head-end facilities or broadcast towers to be located
otherwise than as set forth on Schedule 4.1, without taking all such action as
is necessary to maintain the perfected status of the Senior Secured Parties'
security interest therein. Schedule 4.1 also sets forth the locations of such
head-end facilities and towers to the extent available from the Debtors'
records.
4.3 Security Interest, Perfection, Etc.
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(a) Security Interest. This Security Agreement creates in favor of the Senior
Secured Parties, a valid security interest in all the right, title and interest
of each Debtor in and to all of the Collateral.
(b) Perfection, Etc. Upon the filing of the UCC-1 financing statements in the
jurisdictions listed on Schedule 4.1, no further action is or will be necessary
to establish, perfect and maintain the Senior Secured Parties' duly perfected
security interests in the Collateral, except for the periodic filing of
continuation statements with respect to such UCC-1 financing statements that
must be filed at the end of five (5) years to maintain the perfected status of
certain Collateral. The security interest granted herein is a first priority
Lien, subject only to Permitted Liens and subject to, with respect to certain
leased property, the rights of certain lessors.
4.4 UCC Filings, Recordings, Etc. Each Debtor has previously executed and
delivered to the Agent the financing statements referred to in Section 4.3 above
and will cause such financing statements to be filed and all fees in connection
therewith to be paid. Each Debtor will, from time to time, execute and cause to
be filed such additional financing statements (and provide copies to the Agent)
and perform such other and further acts as may be necessary to perfect the
security interests contemplated hereby. Upon request of the Agent at any time
(which request has not been made as of the Closing Date), each Debtor shall
cause notations of the security interest created hereby to be made on
certificates of title with respect of any vehicles now or hereafter from time to
time constituting Collateral.
4.5 Disposition and Condition of Collateral. No Debtor will sell, lease or
otherwise dispose of any of the Collateral or any interest therein (including,
without limitation, pursuant to the grant of a Lien thereon), except as
specifically permitted under the terms of the Credit Agreement, and each Debtor
will keep the Collateral owned, leased or used by it in such order as is
required by the Credit Agreement.
4.6 Fixtures. It is the intention of the Debtors and the Agent that none of the
Collateral shall become fixtures, and without limiting the generality of the
foregoing, each Debtor agrees that it will, if requested by the Agent, use its
best efforts to obtain waivers of liens and claims in form reasonably
satisfactory to the Agent, from each lessor, landlord, mortgagee, co-owner,
encumbrancer and other party in interest with respect to real property on which
any of the Collateral is or is to be located, and, if so requested, will obtain
a legal description of such real property together with a reasonably detailed
description of the Collateral attached thereto or otherwise located thereon.
4.7 Further Assurances. At the Debtors' sole cost and expense (after a Potential
Event of Default or Event of Default or, if applicable, prior to such time) at
the request of the Agent each Debtor will at any time and from time to time,
duly and promptly execute and deliver or cause to be duly executed and delivered
to the Agent such further instruments and documents, and do or cause to be done
such further acts as may be necessary or proper in the sole discretion of the
Agent, to carry out more effectively the provisions and purposes of this
Security Agreement and to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral including,
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without limitation, (a) using its best efforts to cooperate in obtaining any
FCC, PUC, or other governmental approval of any action or transaction
contemplated hereby or thereby (it being understood that no application for
transfer of any franchise or other FCC License is contemplated hereby prior to
an Event of Default); (b) using its best efforts to cause any third parties to
grant consents or approvals and obtaining and recording assignments respecting
the Contracts, (c) using its best efforts to obtain landlord's consents and
waivers, memoranda of lease and mortgagee waivers, all in recordable form and
otherwise satisfactory to the Agent, (d) executing and delivering security
agreements relating to intellectual property and related documents to be
recorded with the Patent & Trademark Office.
4.8 General Representations and Warranties.
(a) Title to Collateral. Each Debtor has, and at all times will continue to
have, good legal and equitable title to all of the Collateral now or hereafter
purported to be owned by it, subject to no Liens except Permitted Liens.
(b) Right to Pledge; Defense of Title. Each Debtor (i) has, and at all times
will have, the right and legal authority to pledge the Collateral in the manner
hereby contemplated and (ii) will defend its and the Senior Secured Parties'
respective title and interest thereto or therein against any and all
attachments, claims, impediments and (without duplication) Liens of any nature
howsoever arising except Permitted Liens.
(c) Absence of Conflicts. The execution and delivery of this Security Agreement,
the consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof, will not (x) violate any provision of law or any
injunction or any applicable regulation, order, writ, judgment or decree of any
court or governmental department, commission, board, bureau, agency or
instrumentality applicable to any Debtor, or (y) conflict or be inconsistent
with, or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to impose) any Lien, other than the Liens
created hereunder, upon any of the property or assets of any Debtor, pursuant to
the terms of any agreement, indenture, franchise, license, permit, mortgage or
deed of trust to which any Debtor is a party or by which it may be bound or
subject, or (z) violate any of the provisions of the articles of incorporation,
bylaws or other organizational documents of any Debtor. No material consents
(other than those that have been duly obtained) are required for the execution,
delivery and performance of this Agreement including the creation of the first
priority security interest in the Collateral, which is subject to any Permitted
Liens.
(d) Binding Obligations. This Security Agreement constitutes the authorized,
valid and legally binding obligations of each Debtor, enforceable in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity.
(e) Representations. All representations herein and all information herein and
Exhibits hereto are true, correct and complete. Debtors shall promptly update
all Exhibits hereto so they are at all times true, correct and complete.
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4.9 Inspection. Each of the Debtors will keep accurate and complete
books and records concerning the Collateral, and will keep its books and records
concerning its Inventory in accordance with GAAP. The Agent shall have the right
to review the books and records of each of the Debtors concerning the Collateral
and to copy the same and make excerpts therefrom, and to inspect the Collateral,
at any time during regular business hours; except during the continuance of an
Event of Default, such review and inspection shall be carried out upon
reasonable prior written notice without substantial disruption of the operations
of each of the Debtors. In particular, each of the Debtors shall furnish to the
Agent at such times and in such form and substance as may be reasonably
requested by the Agent, information concerning the unpaid invoiced amounts and
the age and collectibility of the Accounts and Contracts, the names and
addresses of those liable herein (the "Account Debtors"), the location, cost and
fair market value of the Inventory, and such information as the Agent may deem
relevant concerning the Proceeds received or receivable by the Debtors.
SECTION 5. INSURANCE AND PROCEEDS
5.1 Risk of Loss; Insurance.
(a) Risk of loss of, damage to, or destruction of, the Collateral shall be on
each of the Debtors at all times. Each of the Debtors shall maintain all risk
hazard insurance on the Collateral at all times against loss or damage by fire
and other casualty, with extended coverage, for their insurable value with
replacement cost endorsement. All policies of insurance covering the Collateral
shall contain loss payable clauses in favor of the Agent for the benefit of the
Senior Secured Parties as its interest may appear. Certificates evidencing the
policies covering the Collateral as well as all renewals and modifications
thereof, providing for thirty (30) days' notice of cancellation or other lapse
to the Agent, shall be delivered to the Agent. If any of the Debtors fails to
obtain and continuously keep in full force and effect such insurance, or fails
to pay the premiums thereon when due, the Agent may (but shall not be obligated
to) do so for the account of such Debtors and the cost thereof shall be added to
the Obligations.
(b) Each of the Debtors hereby assigns and sets over unto the Agent all moneys
which may become payable on account of such insurance, excluding any return of
unearned premiums which may be due upon cancellation of any such insurance, and
irrevocably directs the insurers to pay the Agent any amount so due to the
extent provided below. In the event of any casualty loss of any Collateral:
(i) If the loss is in excess of $250,000, the Debtors will give notice thereof
within three (3) Business Days to the Agent, and the Agent may make proof of
loss if not made promptly by Debtors;
(ii) any adjustment of a proof of loss exceeding such amount by an amount in
excess of $ 1,000,000 shall require the prior written consent of the Agent;
(iii) the Agent, its officers, employees and authorized agents are hereby
irrevocably appointed the attorneys-in-fact of each of the Debtors to endorse
any draft or check which may be payable to it
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as set forth in paragraph (c) below in order to collect the proceeds of such
insurance or any return of unearned premiums; and
(iv) any sum paid with respect to any casualty loss shall be paid directly to
the Agent (and if nonetheless received by any of the Debtors, shall be held in
trust for the Agent until paid over) to the extent provided by paragraph (c)
below.
(c) Any proceeds or return which are paid with respect to any casualty loss with
respect to which the higher of the insurance proceeds therefor or the
replacement cost thereof exceeds $5,000,000 (a "Major Casualty Loss"), or,
regardless of amount, during the continuance of an Event of Default, may be
applied in whole or in part, as deemed desirable by the Agent in the exercise of
its reasonable discretion, toward (i) the repair or replacement of any property
or assets of any of the Debtors that have been damaged or destroyed and in
respect of which the insurance proceeds were payable, or (ii) the payment or
prepayment of any of the Senior Secured Obligations, whether or not otherwise
due. Any balance of insurance proceeds remaining in the possession of the Agent
after payment in full of the Senior Secured Obligations shall be paid to the
appropriate Debtor.
(d) If subsection (c) above is not applicable, all insurance proceeds or return
shall be promptly applied by the Debtors toward the replacement of the property
that has been damaged or destroyed.
5.2 Operating Account Consent Letter. During continuance of a Potential
Event of Default or Event of Default, at Agent's request, each of the Debtors
will promptly execute and deliver to the Agent an Operating Account Consent
Letter executed by each bank at which any of the Debtors has an account, in the
form of Schedule 5.2 annexed hereto.
5.3 Proceeds of Collateral Disposition. During the continuance of a
Potential Event of Default or an Event of Default, at the Agent's request, each
or all of the Debtors shall establish and maintain at all times a trust account
with the Agent, and all Proceeds before or after an Event of Default, shall be
deposited directly and immediately into such account. The Debtors shall be
responsible for all costs and fees arising with respect to such account at the
standard rates. Each of the Debtors expressly and irrevocably authorizes and
consents to the ability of the Agent to charge the account, in its sole
discretion, and recover from the funds on deposit therein, from time to time and
at any time, and apply those funds against any and all Senior Secured
Obligations. All Senior Secured Obligations, as well as chargebacks to any
Debtor for protested remittances, negative float charges and other such items,
may also be charged as Advances by the Senior Secured Parties to the Borrower to
be repaid in accordance with the Loan Documents. All funds in the possession of
any Senior Secured Party pursuant to this Section or otherwise, whether in the
account referred to herein, a lock-box, any Senior Secured Party's general
ledger account or any concentration or operating account of any Debtor, are
hereby pledged to the Agent for the benefit of the Senior Secured Parties as
Collateral for the payment of the Senior Secured Obligations, independent of any
right of banker's lien or set-off.
SECTION 6. RIGHTS AND LIABILITIES OF COLLATERAL AGENT AND
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SECURED PARTIES
6.1 Appointment as Attorney-in-fact. Effective upon the occurrence of an Event
of Default, and so long as Agent reasonably believes such Event of Default is
continuing, each Debtor hereby appoints the Agent as its true and lawful agent,
proxy, and attorney-in-fact for the purpose of carrying out this Security
Agreement and taking any action and executing any instrument which the Agent may
deem necessary or advisable to accomplish the purposes hereof including, without
limitation, the execution on behalf of each Debtor of any financing or
continuation statement with respect to the security interest created hereby and
the endorsement of any drafts or orders which may be payable to a Debtor in
respect of, arising out of, or relating to any or all of the Collateral. This
power shall be valid until the termination of the security interests created
hereunder, any limitation under law as to the length or validity of a proxy to
the contrary notwithstanding. This appointment is irrevocable and coupled with
an interest and any proxies heretofore given by any Debtor to any other Person
are revoked. The designation set forth herein shall be deemed to amend and
supersede any inconsistent provision in the articles of incorporation, bylaws or
other documents to which any Debtor or any Subsidiary of a Debtor is subject or
to which any is a party.
6.2 Performance of Debtor's Duties. In furtherance, and not by way of
limitation, of the foregoing Section 6.1 if (at any time either before or after
the occurrence of an Event of Default) a Debtor fails to perform any agreement
contained herein, the Agent may (but under no circumstance is obligated to)
perform such agreement and any expenses incurred shall be payable by the Debtors
and shall be Senior Secured Obligations; provided, however, that nothing herein
shall be deemed to relieve a Debtor from fulfilling any of its obligations
hereunder.
6.3 Acts May Be Performed By Agents and Employees. Any act of the Agent to be
performed pursuant to this Section 6 or elsewhere in this Security Agreement may
be performed by agents or employees of the Agent.
6.4 In General. No act or omission of any Senior Secured Party (or agent or
employee thereof) shall give rise to any defense, counterclaim or offset in
favor of a Debtor or any claim or action against any such Senior Secured Party
(or agent or employee thereof), in the absence of gross negligence or willful
misconduct of such Senior Secured Party as determined in a final, nonappealable
judgment of a court of competent jurisdiction. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Agent accords to its own property, it being understood that it
has no duty to take any action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral or to preserve
any rights of any parties and shall only be liable for losses that are a result
of its gross negligence or willful misconduct as determined in a final,
nonappealable judgment of a court of competent jurisdiction.
6.5 Reliance on Advice of Counsel. In taking any action under this Security
Agreement, the Agent shall be entitled to rely upon the advice of counsel of
Agent's choice and shall be fully protected in acting on such advice whether or
not the advice rendered is ultimately determined to have
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been accurate.
6.6 Duties Respecting Collateral, etc. Neither the Agent nor any other Senior
Secured Party shall be under any duty or liability with respect to the
Collateral, other than to use reasonable care to prevent the damage or
destruction thereof while in its own possession or control. Anything herein or
in any other Loan Document to the contrary notwithstanding, neither the Agent
nor any other Senior Secured Party shall have any obligation or liability by
reason of or arising out of this Security Agreement to make any inquiry as to
the nature or sufficiency of, to present or file any claim with respect to, or
to take any action to collect or enforce the payment of, any amounts to which it
may be entitled at any time or times by virtue of this Security Agreement.
Neither the Agent nor any other Senior Secured Party makes any representations
or warranties with respect to the Collateral or any part thereof, nor shall it
be chargeable with any obligations or liabilities of any Debtor or any other
Person with respect thereto. Neither the Agent nor any other Senior Secured
Party shall have any liability or obligation arising out of any claims with
respect to the Collateral settled by any such person. Neither the Agent nor any
other Senior Secured Party shall incur any liability to any Debtor or any other
Person for the care or maintenance of the Collateral or any actions (or failure
to act) of the Senior Secured Party in connection with the Collateral or in
connection with this Security Agreement, except for the gross negligence or
willful misconduct of such Person as finally determined by a court of competent
jurisdiction.
6.7 This Security Agreement is executed only as security for the Senior Secured
Obligations. THEREFORE (NOTWITHSTANDING ANYTHING ELSE SET FORTH IN THIS SECURITY
AGREEMENT WHICH, IF INCONSISTENT WITH THIS SECTION, SHALL BE DEEMED MODIFIED TO
THE EXTENT NECESSARY TO BE CONSISTENT WITH THIS SECTION), THE EXECUTION AND
DELIVERY OF THIS AGREEMENT SHALL NOT SUBJECT THE AGENT OR THE OTHER SENIOR
SECURED PARTIES TO, OR IN ANY WAY RELIEVE ANY DEBTOR OF, ANY LIABILITY OR
OBLIGATION RELATING TO, OR ARISING FROM, THE COLLATERAL. IT IS UNDERSTOOD AND
AGREED THAT, NOTWITHSTANDING THIS SECURITY AGREEMENT, ALL THE DEBTORS'
LIABILITIES OR OTHER OBLIGATIONS RELATING TO ANY COLLATERAL SHALL BE AND REMAIN
ENFORCEABLE AGAINST, BUT ONLY AGAINST THE DEBTORS, UNLESS AND TO THE EXTENT,
AFTER AN EVENT OF DEFAULT, NOTICE IS GIVEN BY THE AGENT AND APPROPRIATE ACTION
IS TAKEN TO TRANSFER THE INTEREST IN THE SUBJECT COLLATERAL TO A PERSON
DESIGNATED BY THE AGENT, WHICH SPECIFICALLY ASSUMES CERTAIN LIABILITIES.
SECTION 7. DEFAULT
In addition to any other rights accorded to the Agent and the
Senior Secured Parties hereunder, under the Loan Documents or under applicable
law, upon the occurrence and during the continuation of an Event of Default:
7.1 In General.
(a) The Agent shall have all the rights and remedies of a Senior Secured Party
under the Uniform
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Commercial Code, as amended, or under any other applicable law and all rights
and remedies under the Loan Documents and other agreements. In any event, to the
fullest extent permitted by applicable law, the Agent shall have the right
(without any obligation) to seek performance of any guaranty or resort to any
other security, right or remedy granted to it, to take possession of the
Collateral, to enter upon any premises on which the Collateral or any part
thereof may be situated and to remove the same therefrom, to receive, collect,
appropriate and realize upon the Collateral or any part thereof, and to sell,
assign, give an option or options to purchase, contract to sell or otherwise
dispose of and deliver the Collateral or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange, brokers board or
otherwise, for cash, upon credit or for future delivery, as the Agent may
determine. The Agent may require the Debtor to assemble and to make the
Collateral available to the Agent at a place to be designated by the Agent in a
commercially reasonable manner.
(b) The Agent shall have the right, with full power of substitution either in
the Agent's name or the name of a Debtor, to ask for, demand, sue, collect and
receive any and all moneys due or to become due under and by virtue of the
Collateral and to settle, compromise, prosecute or defend any action, claim or
proceeding with respect thereto, provided, however, that nothing herein shall be
construed as requiring the Agent to take any action, including, without
limitation, requiring or obligating the Agent to make any inquiry as to the
nature or sufficiency of any payment received, or to present or file any claim
or notice, or to take any action with respect to the Collateral or any part
thereof or the moneys due or to become due in respect thereof or any property
covered thereby.
7.2 Public or Private Sale. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, the Agent will give the Debtor or Debtors which own the specific
property of which the Agent intends to dispose at least ten (10) Business Days'
prior notice of the time and place of any public sale thereof or of the time
after which any private sale or any other intended disposition thereof is to be
made. Any such notice shall be deemed to meet any requirement hereunder or under
any applicable law (including the Uniform Commercial Code) that reasonable
notification be given of the time and place of such sale or other disposition.
7.3 Purchasers at Sale. At any public or private sale, the Agent, or any other
Senior Secured Party may, to the fullest extent permitted by applicable law, bid
for and purchase the Collateral offered for sale and, upon compliance with the
terms of such sale, may hold, retain and dispose of such property without
further accountability therefor to the Debtors or any other party. The receipt
given by such Senior Secured Party for purchase money paid at any sale shall be
a sufficient discharge therefor to any purchaser of all or any part of the
Collateral sold. No such purchaser, after paying such purchase money and
receiving such receipt, shall be bound in such capacity to see to the
application of such purchase money or any part thereof, or in any manner be
answerable for any loss, misapplication or nonapplication of any such purchase
money, or any part thereof, or be bound to inquire as to the authorization,
necessity, expediency or regularity of any such sale. Each such purchaser at any
such sale shall hold the property so sold absolutely free from any claim or
right on the part of the Debtors (other than rights that any Debtor may have
against such purchaser generally and without regard to this Security Agreement
or such
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sale) and (without limiting the generality of other waivers set forth herein)
each Debtor hereby waives (to the fullest extent permitted by law) all rights of
redemption, stay and appraisal which such Debtor may now have or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted.
7.4 Proceeds of Sale. After deducting all reasonable costs and expenses of
collection, storage, custody, sale or other disposition and delivery (including
legal costs and attorneys fees) and all other reasonable charges against the
Collateral, the residue of the proceeds of any such sale or disposition shall be
applied as provided in the Credit Agreement. If the Credit Agreement fails to
designate the manner in which proceeds of Collateral are to be applied, then
they shall be applied (1) first, to pay all expenses and costs of the Agent (and
any Person acting on behalf of the Agent) and all other amounts owing to the
Agent in its capacity as Agent or Senior Secured Party or any other similar
capacity, (2) second, to interest and fees constituting Senior Secured
Obligations (and if there is insufficient proceeds to repay all such interest
and fees, then to each creditor thereof ratably in proportion to its percentage
interest in all such interest and fees) and (3) last, to all other Senior
Secured Obligations (and if there is insufficient proceeds to repay all such
Senior Secured Obligations, then to each creditor thereof ratably in proportion
to its percentage interest in all such Senior Secured Obligations). In the event
the proceeds of any sale, lease or other disposition of the Collateral hereunder
are insufficient to pay all of the Senior Secured Obligations in full, the
Debtors will be liable for the deficiency in accordance with and to the extent
set forth in the Credit Agreement and the other Loan Documents, together with
interest thereon at the maximum rates provided in the Credit Agreement, and the
cost and expenses of collection of such deficiency, including (to the extent
permitted by law), without limitation, reasonable attorneys fees, expenses and
disbursements.
7.5 Rights of Collateral Agent to Use and Operate Collateral. The Agent shall
have the right and power, to the fullest extent permitted by applicable law, to
take possession of all or any part of the Collateral, and to exclude the
Debtors, and all Persons claiming under them wholly or partly therefrom, and
thereafter to hold, store, and/or use, operate, manage and control the same.
Upon any such taking of possession, the Agent may (but shall not be obligated
to) from time to time, at the expense of the Debtors, make all such repairs,
replacements, alterations, additions and improvements to and of the Collateral
as the Agent may reasonably deem proper. In any such case, subject as aforesaid,
the Agent shall have the right to manage and control the Collateral and to carry
on the business and to exercise all rights and powers of any Debtor in respect
thereto, as the Agent shall deem best, including, without limitation, the right
to enter into any and all such agreements with respect to the sale, leasing or
subleasing, management and/or operation of the Collateral or any part thereof as
the Agent may reasonably see fit; and the Agent shall be entitled to collect and
receive all rents, issues, profits, fees, revenues and other income of the same
and every part thereof.
7.6 Collection of Accounts Receivable, etc. The Agent may, at any time or from
time to time, notify or may require any Debtor to notify Account Debtors
obligated (including, without limitation, any or all subscribers and
advertisers), whether now existing or hereafter arising, to make payment
directly to the Agent, and may take possession of all Proceeds of any Accounts
in any Debtor's possession. With respect to instruments issued to any Debtor,
the Agent may, in the
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name of such Debtor, endorse (or require the applicable Debtor to endorse) for
deposit and deposit, and otherwise reduce to possession, or may protest, demand
payment upon and bring suit to collect on any checks, notes or other instruments
and take any other steps which the Agent deems reasonably necessary or advisable
to collect, realize upon or reduce to possession any or all Accounts or other
Collateral.
7.7 Certain Rights Respecting Contracts. The Agent shall have the right (but not
the obligation) to assume any Debtor's rights under any (or all) Contracts of
such Debtor, it being in the Agent's sole discretion whether to do so and as to
which Contracts are to be so assumed. Without limiting the generality of the
foregoing, the Agent may notify (or require the applicable Debtor to notify)
other parties to any such Contract that it has assumed the applicable Debtor's
rights under the Contract, may perform and discharge any or all such Debtor's
obligations under any such Contract and in the exercise of such rights, may pay
any costs and expenses and employ agents and legal counsel, all at the sole cost
and expense of the Debtors. The Agent shall not be obligated to perform or
discharge any obligation or duty to be performed or discharged by any Debtor
under any Contract, and each Debtor hereby agrees to indemnify the Agent, its
nominee and each other Principal for, and hold each such Person harmless from,
any and all liability arising from said Contracts. Nothing herein shall be
construed to place responsibility for the control, care, management, or repair
of any property to which any Debtor has rights under the Contracts upon the
Agent or make it liable for any negligence in the management, operation, upkeep,
repair or control of such property.
7.8 Appointment of Receiver. Without limiting the generality of the foregoing or
any rights in the Credit Agreement or any other Loan Document, upon the
occurrence of an Event of Default, the Agent shall have the right to apply for
and have a receiver appointed by a court of competent jurisdiction in any action
taken by the Agent to enforce its rights and remedies hereunder in order to
manage, protect and preserve the Collateral and continue all revenues and
profits thereof and apply the same to the payment of all expenses and other
charges of such receivership, including, without limitation, the compensation of
the receiver, and to the payment of the Senior Secured Obligations as aforesaid
until a sale or other disposition of such Collateral shall be finally made and
consummated as more fully set forth in the Credit Agreement.
7.9 Action by Debtors. Each Debtor and each of its Subsidiaries shall take any
action necessary or required or requested by the Agent from time to time in
order to allow it fully to enforce the security interest in the Collateral
hereunder and to realize thereof to the fullest extent possible, including, but
not limited to, the filing of any claims with any court, liquidator, trustee,
guardian, receiver or other like person or party. In addition, in the event
that, upon an occurrence of an Event of Default, the Agent shall sell all or any
of the Collateral to another party or parties (herein called "Transferee") or
shall purchase or retain all or any of the Collateral, each Debtor and each
Subsidiary of each Debtor shall:
(a) Deliver to the Agent or Transferee, as the case may be, all Collateral and
all related documents and records of each Debtor and each Subsidiary of each
Debtor;
(b) Use its best efforts to obtain any approvals that are required by any
governmental or regulatory
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body in order to permit the sale of the Collateral to the Transferee or the
purchase or retention of the Collateral by the Agent and allow the Transferee or
the Agent to continue the business of each Debtor.
7.10 Agreement to Sell. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the Agent
shall be free to carry out such sale pursuant to such agreement, and no Debtor
shall be entitled to the return of the Collateral or any portion thereof,
notwithstanding the fact that after Agent shall have entered into such an
agreement, any and all Events of Default shall have been remedied and the Senior
Secured Obligations paid in full.
7.11 Collateral Agent May Exercise Less Than All Rights. Each Debtor hereby
acknowledges and agrees that the Agent is not required to exercise all remedies
and rights available to it equally with respect to all of the Collateral, and
the Agent may select less than all of the Collateral with respect to which the
remedies as determined by the Agent may be exercised.
SECTION 8. SECURITY INTEREST ABSOLUTE; WAIVERS BY DEBTOR
8.1 Absolute Nature of Security Interest. All rights of the Agent hereunder, the
grant of the security interest in the Collateral and all obligations of each
Debtor hereunder, shall be absolute and unconditional irrespective of (i) any
lack of validity or enforceability of any of the terms of the Loan Documents or
any other instrument or document relating hereto or thereto, (ii) any change in
the amount of the Senior Secured Obligations (including, without limitation, any
increase in the principal amount of the Loans), or any change in the time,
manner or place of payment of, or in any other term of, all or any of the Senior
Secured Obligations, or any other amendment or waiver of any terms related
thereto, (iii) any exchange, release or nonperfection of any other collateral,
or any release or amendment or waiver of any guaranty, (iv) any failure by the
Senior Secured Party or any other Person to demand payment or performance by any
Loan Party or to exercise or enforce any right or remedy in respect thereof, or
(v) any other circumstance that might otherwise constitute a defense available
to, or a discharge of, any Debtor or any other Person in respect of the Senior
Secured Obligations or in respect of this Security Agreement or any other Loan
Document or any obligations hereunder or thereunder.
8.2 No Duty To Marshal Assets. The Agent shall have no obligation to marshal any
assets in favor of any Debtor or any other Person or against or in payment of
any or all of the Senior Secured Obligations.
8.3 Waiver of Subrogation, Etc. Each Debtor acknowledges that until all the
Senior Secured Obligations shall have been indefeasibly paid in full, such
Debtor shall have no right (or hereby waives any such right) of subrogation,
reimbursement, or indemnity whatsoever, in respect of any Debtor, arising out of
remedies exercised by the Agent hereunder.
8.4 Waivers. Each Debtor hereby:
(a) waives presentment, demand, notice of acceptance, protest and, except as is
otherwise
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specifically provided herein or in the Credit Agreement, all other demands and
notices in connection with this Security Agreement or the enforcement of the
rights of the Agent or any other Senior Secured Party hereunder or in connection
with any Senior Secured Obligation or any Collateral;
(b) consents to and waives notice of (i) the granting of renewals, extensions of
time for payment or other indulgences to any account debtor in respect of any
account receivable, (ii) substitution, release or surrender of any Collateral,
(iii) the addition or release of Persons primarily or secondarily liable on any
Senior Secured Obligation or on any account receivable or other Collateral, (iv)
the acceptance of partial payments on any account or note receivable or other
Collateral and/or the settlement or compromise thereof, (v) any requirement of
diligence or promptness on the part of the Agent or any other Senior Secured
Party or any holder of Senior Secured Obligations in the enforcement of any
rights in respect of any Collateral or any other agreement or instrument
directly or indirectly relating thereto, and (vi) any enforcement of any present
or future agreement or instrument relating directly or indirectly to the
Collateral;
(c) to the extent that it may lawfully do so, covenants that it shall not at any
time insist upon or plead, or in any manner claim or take the benefit or advance
of, any stay (except in connection with a pending appeal), valuation, appraisal,
redemption or extension law now or at any time hereafter in force that, but for
this waiver, might be applicable to any sale made under any judgment, order or
decree or based on this Security Agreement or any other Loan Document;
(d) to the extent that it may lawfully do so hereby expressly waives and
relinquishes all benefit and advance of any and all such laws and hereby
covenants that it will not hinder, delay or impede the execution of any power in
this Security Agreement or therein granted and delegated to the Senior Secured
Party, but that it will suffer and permit the execution of every such power as
though no such law or laws had been made or enacted; and
(e) waives, to the fullest extent permitted by law, any right it may have under
the constitutions of the Commonwealth of Pennsylvania or under the constitution
of any other state in which any of the Collateral may be located, or under the
Constitution of the United States of America, to notice (except for notice
specifically required hereby or specifically required to be given to a Debtor
pursuant to the Credit Agreement, if any) or to a judicial hearing prior to the
exercise of any right or remedy provided by this Security Agreement to the
Senior Secured Party, and waives its rights, if any, to set aside or invalidate
any sale duly consummated in accordance with the foregoing provisions hereof on
the grounds (if such be the case) that the sale was consummated without a prior
judicial hearing.
EACH DEBTOR'S WAIVERS UNDER THIS SECTION HAVE BEEN MADE VOLUNTARILY,
INTELLIGENTLY AND KNOWINGLY AND AFTER SUCH DEBTOR HAS BEEN APPRISED AND
COUNSELED BY ITS ATTORNEYS AS TO THE NATURE THEREOF AND ITS POSSIBLE ALTERNATIVE
RIGHTS.
SECTION 9. NON-WAIVER AND NON-EXCLUSIVE REMEDIES
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9.1 Non-Exclusive Remedies. No remedy or right herein conferred upon, or
reserved to the Agent is intended to be to the exclusion of any other remedy or
right, but each and every such remedy or right shall be cumulative and shall be
in addition to every other remedy or right given hereunder or under any other
Loan Document or under law.
9.2 Delay and Non-Waiver. No delay or omission by the Agent to exercise any
remedy or right hereunder shall impair any such remedy or right or shall be
construed to be a waiver of any Event of Default, or an acquiescence therein,
nor shall it affect any subsequent Event of Default of the same or of a
different nature.
9.3 Actions by Senior Secured Party. Whether or not explicitly stated, any
action required or permitted to be taken by any Senior Secured Party hereunder
may be taken by any one or more Person or Persons designated by such Senior
Secured Party (whether as nominee, employee, agent or otherwise) and such Person
or Persons shall have all rights (including, without limitation, all rights to
indemnification and other protections), powers and privileges granted to such
Senior Secured Party hereunder (except as may be limited by such Senior Secured
Party in its sole discretion).
SECTION 10. TERMINATION OF AGREEMENT; RELEASE OF COLLATERAL
10.1 Termination of Agreement. At such time as (a) the Senior Secured Parties
have no obligation to make further loans or extensions of credit to the Borrower
or any other Debtor and (b) all the Senior Secured Obligations have been
indefeasibly paid and/or performed in full, then this Security Agreement shall
terminate and the Collateral shall be released pursuant to Section 10.2;
provided that if at the time of the payment in full of the Senior Secured
Obligations (i) such payment and performance is not subject to any filed or
threatened claim, contest, avoidance or offset of any kind whatsoever, (ii) the
chief financial officer of the Borrower so certifies in writing to the Agent and
(iii) the Borrower supplies to the Agent such valuations, information, evidence,
certifications and opinions as the Agent may request in connection therewith,
this Security Agreement shall terminate upon satisfaction of the conditions in
clauses (a) and (b) above without giving effect to the requirement that the
payment in full be indefeasible.
10.2 Duties of Agent With Respect To Release of Collateral. When this Agreement
terminates pursuant to Section 10.1 above, the Agent shall reassign and deliver
to each Debtor, or to such Person as each Debtor shall designate, against
receipt, such of the Collateral (if any) as shall not have been sold or
otherwise applied by the Agent pursuant to the terms hereof and shall still be
held by it hereunder, together with appropriate instruments of reassignment and
release, all without any recourse to, or warranty whatsoever by, the Agent, at
the sole cost and expense of the Debtors.
10.3 Release of Certain Collateral. There shall be a partial release of
Collateral under the following circumstances:
(i) as a court of competent jurisdiction may
direct;
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(ii) in connection with a disposition (other than
to the Borrower or a Subsidiary thereof)
permitted under Subsection 7.7.2 of the
Credit Agreement or as otherwise provided
under the Loan Documents,
(iii) if in accordance with the Credit Agreement
cash proceeds from any sale or transfer of
the collateral are used to prepay
outstanding sums due under the Loans or are
reinvested in the Company and its
Subsidiaries, and
(iv) if such collateral security is of little or
no value (such as certificates representing
stock redeemed or exchanged consistent with
the terms of this Agreement or assets which
have been abandoned) as certified by the
Company in a written statement requesting
such release.
In addition, the Agent will terminate a UCC filing if
that filing is no longer required because the subject collateral has
been moved or for a similar reason, and the Debtor so certifies to that
fact.
The Agent shall thereupon reassign and deliver to the
applicable Debtor, or to such Person as such Debtor shall designate, against
receipt, the released Collateral, together with appropriate instruments or
reassignment and release, all without any recourse to, or warranty whatsoever
by, the Agent, at the sole cost and expense of the Borrower and its
Subsidiaries.
10.4 Survival of Representations. All representations, warranties and covenants
of Debtors herein (including, without limitation, those incorporated by
reference) shall survive the execution and delivery of this Security Agreement
and shall continue until this Security Agreement is terminated as provided
herein and shall not be affected or waived by any inspection or examination made
by or on behalf of Agent or any Senior Secured Party.
SECTION 11. PAYMENT OF COSTS AND EXPENSES; INDEMNITIES
11.1 Costs and Expenses. Upon demand, each Debtor shall pay to the Agent the
amount of any and all reasonable expenses incurred by the Agent hereunder or in
connection herewith, including, without limitation those that may be incurred in
connection with (i) the administration of this Security Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Agent hereunder or (iv) the failure of a Debtor to
perform or observe any of the provisions hereof.
11.2 Fees. The Debtors will, upon demand, pay to the Agent such reasonable fees
(in addition to its expenses) for its services as Agent as may be agreed upon
from time to time between the Agent and the Borrower.
11.3 Indemnification. The Debtors jointly and severally agree to indemnify and
hold harmless the
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Agent and other Senior Secured Parties (and, in each case, its directors,
officers, agents and employees) to the fullest extent permitted by law, from and
against any and all claims, losses, liabilities, actions, judgments, demands,
costs and expenses of whatever nature incurred by the Agent or such Senior
Secured Party hereunder or in connection herewith, unless such claim, loss,
liability, action, judgment, demand, cost or expense is the result of the
willful misconduct or gross negligence of said indemnified party as shall have
been determined in a final, nonappealable judgment of a court of competent
jurisdiction. This indemnification shall survive the termination of this
Agreement.
11.4 Taxes. The Borrower and its Subsidiaries hereby jointly and severally agree
to pay to the Agent, upon demand, the amount of any taxes which the Agent may
have been required to pay by reason of the security interests established
pursuant to this Security Agreement (including any applicable transfer taxes).
11.5 Interest. All monetary obligations of the Borrower and its Subsidiaries
under this Section shall bear interest following demand at the Base Rate (as
defined in the Credit Agreement) plus two per cent (2%).
11.6 Additional Obligations. Any amounts payable pursuant to this Section shall
be additional Senior Secured Obligations secured hereby.
SECTION 12. MISCELLANEOUS PROVISIONS
12.1 Notices. All notices, requests, demands, directions and other
communications (collectively "notices") given or made upon any party under the
provisions of this Security Agreement shall be by telephone or in writing
(including facsimile communication) unless otherwise expressly provided under
this Security Agreement and if in writing, shall be delivered or sent by
facsimile to the respective parties at the addresses and numbers set forth under
their respective names on the signature pages to this Security Agreement or in
accordance with any subsequent unrevoked written direction from any party to the
others. All notices shall, except as otherwise expressly provided in this
Security Agreement, be effective (a) in the case of facsimile, when received,
(b) in case of hand-delivered notice, when hand delivered, (c) in the case of
telephone, when telephoned, provided, however, that in order to be effective,
telephonic notices must be confirmed in writing no later than the next day by
letter, facsimile or telex, (d) if given by mail, four (4) days after such
communication is deposited in the mails with first class postage prepaid, return
receipt requested, and (e) if given by any other means (including air courier),
when delivered; provided, that notices to the Agent shall not be effective until
received. In the event of a discrepancy between any telephonic or written
notice, the written notice shall control.
12.2 Entire Agreement. This Security Agreement sets forth all of the promises,
covenants, agreements, conditions and understandings among the parties hereto
with respect to the subject matter hereof, and supersedes all prior agreements
and understandings, inducements or conditions, express or implied, oral or
written, with respect thereto, except as contained or referred to herein.
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12.3 Amendments. The terms of this Security Agreement may be amended,
terminated, modified, supplemented or waived only upon the written consent of
the Agent and each Debtor. The rights of the Agent to so change, modify, waive,
discharge or terminate any provision hereof is subject to the terms of Section
12.5 of the Credit Agreement, it being understood, however, that the Debtors are
not third party beneficiaries of Section 12.5 of the Credit Agreement.
12.4 Governing Law. This Security Agreement and the rights and obligations of
the parties hereunder shall be construed and enforced in accordance with and
shall be governed by the laws of the Commonwealth of Pennsylvania.
12.5 Arbitration; Consent to Jurisdiction, Service and Venue; Waiver of Jury
Trial. 12.5.1 Arbitration.
(a) Upon demand of any party hereto, whether made before or after institution of
any judicial proceeding, any claim or controversy arising out of, or relating
to, the Loan Documents between any or all of the parties hereto (a "Dispute")
shall be resolved by binding arbitration conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and the Federal Arbitration Act.
Disputes may include, without limitation, tort claims, counterclaims, a dispute
as to whether a matter is subject to arbitration, claims brought as class
actions, or claims arising from documents executed in the future. A judgment
upon the award may be entered in any court having jurisdiction. Notwithstanding
the foregoing, this arbitration provision does not apply to disputes under or
related to Interest Rate Protection Agreements.
(b) All arbitration hearings shall be conducted in the City of Philadelphia,
Commonwealth of Pennsylvania, unless otherwise agreed by all parties to such
arbitration. A hearing shall begin within 90 days of demand for arbitration and
all hearings shall conclude within 120 days of demand for arbitration. These
time limitations may not be extended unless a party shows cause for extension
and then for no more than a total of 60 days. The expedited procedures set forth
in Rule 51 et seq. of the Arbitration Rules shall be applicable to claims of
less than $1,000,000.00. Arbitrators shall be licensed attorneys selected from
the Commercial Financial Dispute Arbitration Panel of the AAA. The parties do
not waive applicable federal or state substantive law except as provided herein.
(c) Notwithstanding the preceding binding arbitration provisions, the parties
agree to preserve, without diminution, certain remedies that any party may
exercise before or after an arbitration proceeding is brought. The parties shall
have the right to proceed in any court of proper jurisdiction or by self-help to
exercise or prosecute the following remedies, as applicable: (i) all rights to
foreclose against any real or personal property or other security by exercising
a power of sale or under applicable law by judicial foreclosure including a
proceeding to confirm the sales; (ii) all rights of self-help including peaceful
occupation of real property and collection of rents, set-off, and peaceful
possession of personal property; and (iii) obtaining provisional or ancillary
remedies including injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and filing of involuntary bankruptcy proceedings. Any
claim or controversy with regard
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to any party's entitlement to such remedies is a Dispute.
(d) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A REMEDY OF SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AGAINST OTHER PARTIES IN ANY
DISPUTE AND HEREBY WAIVE ANY RIGHT OR CLAIM TO SPECIAL, CONSEQUENTIAL, PUNITIVE
OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN THE FUTURE IN
CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION OR
JUDICIALLY.
12.5.2 Consent to Jurisdiction, Service and Venue; Waiver of Jury Trial.
(a) With respect to any matters that may be heard before a court of competent
jurisdiction under paragraph (c) of the preceding subsection 12.5.1, the
Borrower and its Subsidiaries each hereby consents to the jurisdiction and venue
of the courts of the Commonwealth of Pennsylvania or of any federal court
located in such state, waives personal service of any and all process upon it
and consents that all such service of process be made by certified or registered
mail directed to the Borrower or such Subsidiary at the address provided for in
Section 12.1 above and service so made shall be deemed to be completed upon
actual receipt. The Borrower and its Subsidiaries each hereby waives the right
to contest the jurisdiction and venue of the courts located in the County of
Philadelphia, Commonwealth of Pennsylvania on the ground of inconvenience or
otherwise and, further, waives any right to bring any action or proceeding
against (a) the Agent in any court outside the County of Philadelphia,
Commonwealth of Pennsylvania, or (b) any other Senior Secured Party other than
in a state within the United States designated by such Senior Secured Party. The
provisions of this subsection 12.5.2 shall not limit or otherwise affect the
right of the Agent or any Senior Secured Party to institute and conduct an
action in any other appropriate manner, jurisdiction or court.
(b) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL
REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY TRIAL IN ANY PROCEEDING BASED
UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT OR ANY
GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE RELATIONSHIP BETWEEN OR AMONG SUCH
PERSONS OR ANY OF THEM. NEITHER THE AGENT NOR ANY SENIOR SECURED PARTY NOR ANY
SUBSIDIARY OF THE BORROWER NOR THE BORROWER NOR ANY OTHER PERSON WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED.
(c) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH (d) OF THE PRECEDING SUBSECTION
12.5.1 EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES ANY
RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY ARBITRATION OR OTHER LITIGATION,
ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS AGREEMENT (i)
CERTIFIES THAT NEITHER THE AGENT NOR ANY REPRESENTATIVE, OR ATTORNEY OF THE
AGENT NOR ANY SENIOR SECURED PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE AGENT OR SUCH SENIOR
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SECURED PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.5. THE PROVISIONS OF THIS SECTION
12.5 HAVE BEEN FULLY DISCLOSED TO THE PARTIES AND THE PROVISIONS SHALL BE
SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO
ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 12.6 WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
12.6 Severability. If any of the provisions or terms of this Security Agreement
shall for any reason be held to be invalid or unenforceable such invalidity or
unenforceability shall not affect any of the other terms hereof, but this
Security Agreement shall be construed as if such invalid or unenforceable term
had never been contained herein. Any such invalidity or unenforceability in a
particular jurisdiction shall not be deemed to render a provision invalid or
unenforceable in any other jurisdiction.
12.7 Counterparts. This Security Agreement may be executed in one or more
counterparts, each of which shall constitute an original agreement, but all of
which together shall constitute one and the same instrument. A photocopied or
facsimile copy of any signature page to this Agreement shall be deemed to be the
functional equivalent of a manually executed original for all purposes.
12.8 Joint and Several Liability. All Debtors shall jointly and severally be
liable for the obligations of each Debtor to the Agent hereunder.
12.9 Additional Debtors; Ratification. Any Person that shall at any time become
a Subsidiary of the Borrower shall, if not already a party to this Agreement,
immediately become a party hereto (an "Additional Debtor") by the execution and
delivery of an Additional Debtor Joinder in substantially the form of Schedule
12.9 attached hereto and shall immediately comply with the provisions hereof
applicable to Debtors. Concurrent therewith, the Additional Debtor shall deliver
replacement schedules for, or supplements to all other Schedules to this
Agreement, as applicable, which replacement schedules shall supersede, or
supplements shall modify, the Schedules then in effect. Upon delivery of the
foregoing to the Agent, the Additional Debtor shall be and become a Debtor for
all purposes hereof as fully and to the same extent as if it were an original
signatory hereto and shall be deemed to have made the representations,
warranties and covenants set forth herein as of the date of execution and
delivery of such Additional Debtor Joinder and thereafter at any time that such
representations and covenants must be restated pursuant to the terms of the Loan
Documents.
12.10 Effect of Amendment. On and after the effectiveness of this Security
Agreement, any reference to the Security Agreement or similar term used in any
Loan Document shall mean and refer to this Security Agreement, as amended,
modified, joined or supplemented, from time to time.
12.11 Successors and Assigns. All covenants, agreements, representations and
warranties made herein, and in certificates delivered herewith by or on behalf
of any Debtor shall bind such Debtor's
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successors and assigns, whether so expressed or not, and all such covenants,
agreements, representations and warranties, and all other rights of the Agent
and the Senior Secured Parties hereunder, shall inure to the benefit of its
successors and assigns; provided, that the foregoing shall not be construed to
permit any assignment of any rights or obligations of any Debtor hereunder
except as expressly provided herein or in the Credit Agreement and any attempt
to make such an assignment in violation of the provisions hereof and thereof
shall be void. In the event that a successor Agent is appointed (which successor
may be appointed by the then serving Agent or as otherwise provided in the
Credit Agreement), such successor shall become vested with the powers and rights
of the Agent hereunder, and the predecessor of the Agent shall thereafter be
released and discharged from any liability or responsibility hereunder, except
with respect to claims arising prior to such assignment.
12.12 Relationship with Credit Agreement. To the extent that any terms of this
Security Agreement shall be inconsistent with the terms of the Credit Agreement,
the terms of the Credit Agreement shall control. The Agent's performance of its
duties hereunder shall in all respects be subject to and governed by the Credit
Agreement. Nothing contained herein shall be construed to enlarge the degree of
responsibility or discretion or the duty of care to be exercised by the Agent
beyond that expressly set forth in the Credit Agreement. Without limiting the
generality of the foregoing, each of the Debtors hereby acknowledges and agrees
that the Agent shall, with respect to all of its rights, obligations and duties
under this Agreement, be entitled to all of its rights, protections and
immunities provided for under Article 12 of the Credit Agreement as fully and to
the same extent as if such provisions were set forth in full herein.
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IN WITNESS WHEREOF, the parties have caused this Security
Agreement to be duly executed and delivered by their respective authorized
officers on the date first above written.
DEBTORS: SUSQUEHANNA MEDIA CO.
SUSQUEHANNA CABLE CO.
SUSQUEHANNA CABLE INVESTMENT CO.
CABLE TV OF EAST PROVIDENCE, INC.
CASCO CABLE TELEVISION, INC.
CASCO CABLE TELEVISION OF BATH, MAINE
SBC CABLE CO.
YORK CABLE TELEVISION, INC.
SUSQUEHANNA RADIO CORP.
RADIO CINCINNATI, INC.
RADIO INDIANAPOLIS, INC.
RADIO METROPLEX, INC.
RADIO SAN FRANCISCO, INC.
KRBE CO.
KNBR, INC.
BAY AREA RADIO CORP.
WSBA LICO, INC.
WVAE LICO, INC.
WNNX LICO, INC.
Signature Page to Security Agreement
<PAGE> 211
KNBR LICO, INC.
KRBE LICO, INC.
INDIANAPOLIS RADIO LICENSE CO.
SUSQUEHANNA DATA SERVICES, INC.
SUSQUEHANNA FIBER SYSTEMS, INC.
MEDIA PCS VENTURES, INC.
KFFG LICO, INC.
KPLX RADIO, INC.
KPLX LICO, INC.
KLIF BROADCASTING, INC.
KLIF LICO, INC.
KLIF RADIO, INC.
TEXAS STAR RADIO, INC.
INDY LICO, INC.
WRRM LICO, INC.
WFMS LICO, INC.
By:_______________________________________
Alan L. Brayman, on behalf of each of
the foregoing as Treasurer
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attn: Craig Bremer, Esquire
Signature Page to Security Agreement
<PAGE> 212
KPLX LIMITED PARTNERSHIP,
by KPLX Radio, Inc., its General Partner
KLIF BROADCASTING LIMITED
PARTNERSHIP, by KLIF Radio, Inc.,
its General Partner
By:_______________________________________
Alan L. Brayman on behalf of each of the
foregoing as Treasurer of the General Partner
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attn: Craig Bremer, Esquire
Signature Page to Security Agreement
<PAGE> 213
ACKNOWLEDGED BY AGENT:
FIRST UNION NATIONAL BANK, in its capacity as
Agent
By:
Name: Elizabeth Elmore
Title: Senior Vice President
Notice Information
Communications/Media Group
PA 4829
1 South Penn Square
P.O. Box 7618
Philadelphia, PA 19101-7618
Phone No.: (215) 786-4321
Fax No. (215) 786-7721
Attention: Elizabeth Elmore, Senior Vice President
Signature Page to Security Agreement
<PAGE> 214
SCHEDULE 4.1
<PAGE> 215
SCHEDULE 5.2 TO SECURITY AGREEMENT
OPERATING ACCOUNT CONSENT LETTER
[Name and address of
Operating Account Bank]
Ladies and Gentlemen:
We refer to account numbers ____________, ____________ and ____________
(the "Operating Accounts") maintained with you by ____________, Inc. (the
"Company") and into which certain monies, instruments and other property are
deposited from time to time. The Company has granted to First Union National
Bank as Agent (the "Agent") for the benefit of the the Senior Secured Parties
under, and as defined in, the Security Agreement, dated as of ____________,
1999, among the Company, certain other Debtors and the Agent, a security
interest in all assets and properties of the Company, including, among other
things, the Operating Accounts, all monies, instruments and other property
deposited therein and all certificates or instruments, if any, representing or
evidencing the Operating Accounts. It is a condition to the continued
maintenance of the Operating Accounts with you that you agree to this Letter
Agreement.
By signing this Letter Agreement, you agree that from the date hereof
the Operating Accounts shall be under the exclusive dominion and control of the
Agent and all monies, instruments and other property of the Company received in
connection therewith whether or not deposited in the Operating Accounts shall be
held solely for the benefit of the Agent. The Operating Accounts shall be
subject to written instructions only from the Agent. You agree to:
(a) follow your usual operating procedures for the handling of
any remittance received in the Operating Accounts that contains restrictive
endorsements, irregularities, such as a variance between the written and
numerical amounts, undated or postdated items, missing signature, incorrect
payee, etc.;
(b) endorse and process all eligible checks and other
remittance items, not covered by subparagraph (a) above, deposit such checks and
other remittance items in the Operating Accounts; and
(c) maintain a record of all checks and other remittance items
received in the Operating Accounts and, in addition to providing the Company
with photostats, vouchers, enclosures, etc. of checks and other remittance items
received on a daily basis, as well as a monthly statement, furnish to the Agent,
free of any service charge payable by the Agent, your regular bank statement
with respect to the Operating Accounts, with the words "First Union National
Bank, as Agent Re: ____________, Inc." included thereon so that there is no
confusion as to ownership of the Operating Accounts and so that the Agent is
able to properly identify the Operating Accounts.
<PAGE> 216
You hereby agree to follow the instructions of the Company with respect
to the disposition of any and all money deposited in the Operating Accounts as
directed by the Company unless and until you have received written instructions
to the contrary from the Agent, in which case you agree to follow such
instructions from the Agent.
You waive and agree not to assert, claim or endeavor to exercise, and
by executing this Letter Agreement bar and estop yourself from asserting,
claiming or exercising, and you acknowledge that you have not heretofore
received a notice from any other party asserting, claiming or exercising, any
right of setoff, banker's lien or other purported form of claim with respect to
the Operating Accounts and funds from time to time therein. You shall have no
rights in the Operating Accounts or the funds therein. To the extent you may
ever have any such rights, you hereby expressly subordinate all such rights to
all rights of the Agent.
You may terminate this Letter Agreement only upon thirty days' prior
written notice to that effect to the Company and the Agent, by canceling the
Operating Accounts maintained with you and transferring all funds, if any, in
such Operating Accounts to the Agent. After any such termination, you shall
nonetheless remain obligated promptly to transfer to the Agent at such address
anything from time to time received in the Operating Accounts.
This Letter Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
Very truly yours,
_____________________________, INC.
By:
Title:
By:
Title:
By:
Title:
Acknowledged and agreed to as
of the date first above written.
[OPERATING ACCOUNT BANK]
By:
Title:
<PAGE> 217
SCHEDULE 12.9
FORM OF ADDITIONAL DEBTOR JOINDER
Security Agreement dated as of , 1999 from
Susquehanna Media Co. and Subsidiaries as Debtors
party thereto, from time to time, to and in favor of
First Union National Bank, as Agent (the "Security Agreement")
Reference is made to the Security Agreement as defined above;
capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in, or by reference in, the Security Agreement.
The undersigned hereby agrees that upon delivery of this Additional
Debtor Joinder to the Agent referred to above or its successor, the undersigned
shall be and become a Debtor for all purposes of the Security Agreement as fully
and to the same extent as if it were an original signatory thereto and shall be
deemed to have made the representations and warranties set forth in Section 4
therein as of the date of execution and delivery of this Additional Debtor
Joinder and at any future dates that such representations must be restated
pursuant to the terms of the Loan Documents. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, THE UNDERSIGNED SPECIFICALLY ACKNOWLEDGES AND AGREES TO THE
ARBITRATION CLAUSE SET FORTH IN SUBSECTION 12.5.1 THEREOF AND TO THE CONSENT TO
JURISDICTION AND WAIVER OF JURY TRIAL PROVISIONS SET FORTH IN SUBSECTION 12.5.2
THEREOF.
Attached hereto are supplemental and/or replacement Exhibits to the
Security Agreement, as applicable.
An executed copy of this Joinder shall be delivered to the Agent, and
the Agent and the Senior Secured Parties may rely on the matters set forth
herein in entering into and extending credit under the Credit Agreement on or
after the date hereof. This Joinder shall not be modified, amended or terminated
without the prior written consent of the Agent.
[Name of New Debtor]
By:
Title:
Address:
Dated:
<PAGE> 218
GUARANTY AND SURETYSHIP AGREEMENT
("Guaranty Agreement")
GUARANTY AND SURETYSHIP AGREEMENT made as of the 12th day of May, 1999
by and among SUSQUEHANNA MEDIA CO., a Delaware corporation (the "Borrower") and
the parties designated as "GUARANTORS" on the signature lines hereto (jointly
and severally, a "Guarantor" or the "Guarantors"), in favor of FIRST UNION
NATIONAL BANK, a national banking association, as agent on behalf of the Senior
Secured Parties (as defined in the Credit Agreement as referred to below). First
Union National Bank in its capacity as agent for the Senior Secured Parties
hereunder, with its successors and assigns, is hereinafter referred to as
"Agent."
BACKGROUND OF AGREEMENT
On the date hereof certain lenders and issuers of letters of credit and
FIRST UNION NATIONAL BANK as Agent have entered into a Credit Agreement (as
amended, extended, supplemented, restated, or otherwise modified or refinanced,
including without limitation any amendment involving an increase in principal,
interest rate or other amount, the "Credit Agreement") with the Borrower,
pursuant to which such lenders and issuers agreed to lend certain sums to the
Borrower upon the terms and conditions specified in the Credit Agreement under
(1) a revolving credit facility with a swing line subfacility, and (2) two
separate term loan facilities, and to issue, or participate in the issuance of,
certain letters of credit. In addition, the Credit Agreement currently requires
the Borrower under certain conditions to enter into certain interest rate
hedging agreements.
Each of the Guarantors is a direct or indirect Subsidiary of the
Borrower. The Subsidiaries, wishing to induce the Lenders (as defined in the
Credit Agreement) to enter into the financings described above to enable the
Borrower to (among other things) make loans to them, and the Borrower and the
Subsidiaries having determined that they can obtain their borrowings more
economically by combining their financing needs into a single borrowing unit on
the parent company level, borrowing funds from institutional lenders on that
basis, and then entering into the requisite intercompany financings, the
Subsidiaries agreed jointly and severally to extend the guaranties set forth
below in order to facilitate such financings. Each Guarantor determined that it
was in its best interests and in pursuance of its business purposes that it do
so and that it was and will be Solvent, before and after giving effect to the
transactions contemplated by the Credit Agreement.
The Lenders entered into the Credit Agreement and the transactions
contemplated thereby in reliance, in part, upon each of the Guarantors entering
into the Guaranty Agreement. Accordingly, the parties have agreed to enter into
the Guaranty Agreement on the terms and subject to the conditions set forth
below.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable
<PAGE> 219
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. GUARANTY AND SURETYSHIP.
1.1 Surety; Guaranty of Payment. The Guarantors hereby jointly
and severally, irrevocably and unconditionally, agree to act as surety for the
benefit of the Agent (for the benefit of the Senior Secured Parties) with
respect to the Senior Secured Obligations (as defined in the Credit Agreement)
and guaranty that the Senior Secured Obligations shall be paid in full when due
and payable, whether at the stated or accelerated maturity thereof or upon any
mandatory or voluntary prepayment or otherwise.
1.2 Designated Senior Indebtedness. If at any time, any
Guarantor provides any guaranty or otherwise becomes liable in respect of any
obligations under the Senior Secured Notes or Senior Secured Indenture, the
obligations hereunder shall automatically be deemed to be "Designated Senior
Indebtedness" within the meaning of those agreements.
1.3 Obligations of Guarantors Absolute, etc. The obligations
of the Guarantors hereunder shall be absolute and unconditional. Each Guarantor,
jointly and severally, guarantees that the Senior Secured Obligations will be
paid strictly in accordance with the terms of the agreement, instrument or
document giving rise to such Senior Secured Obligations, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
such terms or the rights of the Agent or the Senior Secured Parties with respect
thereto. The liability of the Guarantors hereunder shall be absolute and
unconditional irrespective of:
(i) any lack of validity or enforceability of any
Loan Document;
(ii) any change in the time, manner or place of
payment of the Senior Secured Obligations;
(iii) any amendment or modification of or supplement
to the Loan Documents, or any furnishing or acceptance of any security, or any
release of any security or the release of any Person's obligations (including
without limitation, any Guarantor, Pledgor or Borrower), with respect to the
Senior Secured Obligations;
(iv) any waiver, consent, extension, indulgence or
other action or inaction under or in respect of any such instrument, document or
agreement or any exercise or nonexercise of any right, remedy, power or
privilege under or in respect of any such instrument;
(v) any counterclaim, set-off, recoupment or defense
based upon any claim any Guarantor, the Borrower or any Pledgor may have against
the Agent or any Senior Secured Party;
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<PAGE> 220
(vi) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar proceeding with
respect to the Borrower, any Affiliate of the Borrower or any Guarantor or their
respective properties or creditors;
(vii) any invalidity or unenforceability, in whole or
in part, of any term hereof or of the Loan Documents;
(viii) any failure on the part of the Borrower or any
Affiliate or any Person that may have been an Affiliate for any reason to
perform or comply with any term of the Loan Documents; or
(ix) any other occurrence whatsoever, whether similar
or dissimilar to the foregoing.
1.4 Continuing Guaranty. This guaranty and suretyship is an
absolute, unconditional, present and continuing guaranty and suretyship of
payment and is in no way conditional or contingent; it shall remain in full
force and effect until terminated pursuant to Section 7 below.
1.5 Joint and Several Liability. Each and every
representation, warranty, covenant and agreement made by the Guarantors, or any
of them, under this Guaranty Agreement shall be and constitute joint and several
obligations of all of the Guarantors, whether or not so expressly stated herein.
1.6 Waivers. Each Guarantor hereby waives, to the fullest
extent permitted by applicable law, (a) all presentments, demands for
performance, notice of non-performance, protests, notices of protests and
notices of dishonor in connection with the Senior Secured Obligations or any
agreement relating thereto; (b) notice of acceptance of this Guaranty Agreement;
(c) any requirement of diligence or promptness on the part of the Agent or the
Senior Secured Parties in the enforcement of its/their rights hereunder or under
the Loan Documents; (d) any enforcement of any present or future agreement or
instrument relating directly or indirectly to the Senior Secured Obligations;
(e) notice of any of the matters referred to in subsection 1.3 hereof; (f)
notices of every kind and description which may be required to be given by any
statute or rule of law; and (g) any defense of any kind which it may now or
hereafter have with respect to its liability under this Guaranty Agreement.
Without limiting the foregoing, neither the Senior Secured Parties nor the Agent
shall be required to make any demand upon, or to pursue or exhaust any rights or
remedies against the Borrower, any other Guarantor or any other Person, or
against the collateral security, for the Senior Secured Obligations. No failure
on the part of the Agent or any Senior Secured Party to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law. Each
Guarantor hereby agrees that it will not enforce or otherwise exercise or claim
or assert any rights of subrogation or contribution against any Person with
respect to the Senior Secured
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Obligations or any security therefor unless and until all the Senior Secured
Obligations are paid in full.
SECTION 2. EXPENSES.
The Guarantors jointly and severally agree to reimburse the
Agent and the Senior Secured Parties for all reasonable costs of collection or
enforcement (including, without limitation, reasonable attorneys' fees and
expenses and allocated costs of counsel who are employees of a Senior Secured
Party) incurred in enforcing the obligations of the Guarantors under this
Guaranty Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
The Guarantors hereby jointly and severally represent and
warrant that each of the representations and warranties relating to them set
forth in any Loan Document is incorporated herein by reference and is true and
correct on and as of the date hereof.
SECTION 4. COVENANTS.
Each of the covenants and agreements of the Borrower which are
set forth or incorporated in any of the Loan Documents and which are expressly
applicable or refer to the "Subsidiaries" of the Borrower or otherwise refer to
any Guarantors are hereby incorporated by reference as though set forth herein
in their entirety, and each Guarantor hereby agrees to perform and abide by each
such covenant and agreement which purports to be applicable to it.
SECTION 5. SUCCESSORS AND ASSIGNS.
5.1 The obligations hereunder are binding upon each Guarantor,
its successors, transferees and assigns, and shall inure to the benefit of and
be enforceable by the Senior Secured Parties, the Agent and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing, any Senior Secured Party may assign or otherwise transfer any note
held by it to any other Person or entity in accordance with the terms of the
governing Credit Agreement, and such other Person or entity shall thereupon
become vested with all the rights granted to such Senior Secured Party herein
and therein, provided, however, that no Guarantor may assign any of its
obligations hereunder. Notwithstanding the foregoing, if there shall become
additional "Guarantors" or if there should be any assignment of any guaranty
obligations by operation of law or in contravention of the terms of this
Guaranty Agreement or otherwise, then all covenants, agreements, representations
and warranties made herein or pursuant hereto by or on behalf of the Guarantors
shall bind the successors and assigns of the Guarantors and any such additional
Guarantors, jointly and severally, together with the preexisting Guarantors
whether or not such new or additional Guarantors execute the Joinder as set
forth in Section 5.2.
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5.2 Additional Parties. Except as otherwise provided in the
Loan Documents, Guarantors shall at all times constitute all of the Subsidiaries
of the Borrower, other than Paragon Research Limited Partnership. Any Person
that becomes such a Subsidiary after the date hereof shall become a Guarantor
hereunder, and Borrower shall cause such Person to signify its acceptance of the
terms hereof by execution and delivery to the Agent of one or more counterparts
of a Joinder hereto in the form of Exhibit A, appropriately dated.
SECTION 6. RIGHT OF SET-OFF.
Upon the occurrence and during the continuance of any Event of
Default, each Senior Secured Party is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Senior Secured
Party to or for the credit or the account of any Guarantor against any and all
of the obligations of the Guarantor now or hereafter existing under this
Guaranty Agreement, irrespective of whether or not such Senior Secured Party
shall have made any demand under this Guaranty Agreement and although such
obligations may be contingent and unmatured. The rights of each Senior Secured
Party under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which such Senior
Secured Party may have.
SECTION 7. TERMINATION OF GUARANTY
7.1 Termination of Guaranty Obligations of All Guarantors. At
such time as (a) Senior Secured Parties have no obligations to make further
fundings to the Borrower under the terms of the Credit Agreement and (b) all the
Senior Secured Obligations have been paid and/or performed in full, then the
guaranty provided for herein and this Guaranty Agreement shall terminate,
provided, however, that (i) all indemnities of the Guarantors or the Borrower
contained in this Guaranty Agreement or any Loan Document shall survive and
remain operative and in full force and effect regardless of the termination of
this Guaranty Agreement, and (ii) the guaranty provided for herein and this
Guaranty Agreement shall be reinstated if at any time any payment of any of the
Senior Secured Obligations is rescinded or must otherwise be returned by the
Agent or any Senior Secured Party upon the insolvency, bankruptcy or
reorganization of the Borrower or any Guarantor or otherwise, all as though such
payment had not been made.
7.2 Termination of Guaranty Obligations of Sold Guarantors.
Effective upon the closing of a sale by the Borrower or any Subsidiary of the
Borrower of all the outstanding capital stock of, or all partnership interests
or all other equity interests in, any of the Guarantors hereunder (any Guarantor
being so sold is hereinafter the "Sold Guarantor") in conformity with the
provisions of the Credit Agreement providing for dispositions to third parties
free of Liens, and receipt by the Agent of a certification to such effect from
the chief financial officer of the Borrower, the obligations of that Sold
Guarantor hereunder (including, without limitation, obligations under Section 14
below) shall terminate. However, all the obligations of the other Guarantors
hereunder shall remain in full force and effect.
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SECTION 8. AMENDMENTS AND WAIVERS.
This Guaranty Agreement represents the entire agreement
between the parties with respect to the transactions contemplated herein.
Neither this Guaranty Agreement nor any provision hereof may be changed,
modified, waived, discharged or terminated without the written agreement of the
Agent and the Guarantors or the written agreement of the Agent and the party
against whom enforcement of the change, modification, waiver, discharge or
termination is sought. The rights of the Agent to so change, modify, waive,
discharge or terminate any provision hereof is subject to the terms of Section
12.5 of the Credit Agreement, it being understood, however, that the Guarantors
are not third party beneficiaries of Section 12.5 of the Credit Agreement.
SECTION 9. NOTICES AND COMMUNICATIONS.
All notices, requests, demands, directions and other
communications (collectively "notices") given to or made upon any party under
the provisions of this Guaranty Agreement shall be by telephone or in writing
(including facsimile communications) unless otherwise expressly provided under
this Guaranty Agreement and if in writing shall be delivered or sent by
facsimile to the respective parties at the addresses and numbers set forth under
their respective names on the signature pages of this Guaranty Agreement or in
accordance with any subsequent unrevoked written direction from any party to the
others. All notices shall, except as otherwise expressly provided in this
Guaranty Agreement, be effective (a) in the case of facsimile, when received,
(b) in the case of hand-delivered notice, when hand delivered, (c) in the case
of telephone, when telephoned, provided, however, that in order to be effective,
telephone notices must be confirmed in writing no later than the next day by
letter, facsimile or telex, (d) if given by mail, four (4) days after such
communication is deposited in the mails with first class postage prepaid, return
receipt requested, and (e) if given by any other means (including by air
courier), when delivered; provided, that notices to the Agent shall not be
effective until received. Any Guarantor giving any notice to any other party
hereto shall simultaneously send a copy of such notice to the Agent. In the
event of a discrepancy between any telephonic or written notice, the written
notice shall control.
SECTION 10. GOVERNING LAW.
This Guaranty Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
SECTION 11. ARBITRATION; CONSENT TO JURISDICTION, SERVICE AND VENUE;
WAIVER OF.
11.1 Arbitration.
(i) Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any claim or controversy
arising out of, or relating to, the Loan Documents between any or all of the
parties hereto (a "Dispute") shall be resolved by
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binding arbitration conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and the Federal Arbitration Act. Disputes may include,
without limitation, tort claims, counterclaims, a dispute as to whether a matter
is subject to arbitration, claims brought as class actions, or claims arising
from documents executed in the future. A judgment upon the award may be entered
in any court having jurisdiction. Notwithstanding the foregoing, this
arbitration provision does not apply to disputes under or related to Interest
Rate Protection Agreements.
(ii) All arbitration hearings shall be conducted in
the City of Philadelphia, Commonwealth of Pennsylvania unless otherwise agreed
by all parties to such arbitration. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall conclude within 120 days of demand
for arbitration. These time limitations may not be extended unless a party shows
cause for extension and then for no more than a total of 60 days. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000.00. Arbitrators shall be licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The parties do not waive applicable Federal or state substantive law
except as provided herein.
(iii) Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without diminution,
certain remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (a) all rights to foreclose against any real or
personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sales; (b) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; and (c) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment of
receiver and filing of involuntary bankruptcy proceedings. Any claim or
controversy with regard to any party's entitlement to such remedies is a
Dispute.
(iv) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A
REMEDY OF SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AGAINST OTHER
PARTIES IN ANY DISPUTE AND HEREBY WAIVE ANY RIGHT OR CLAIM TO SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN
THE FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY
ARBITRATION OR JUDICIALLY.
11.2 Consent to Jurisdiction, Service and Venue; Waiver of Jury Trial.
(i) With respect to any matters that may be heard
before a court of competent jurisdiction under paragraph (iii) of the preceding
subsection 11.1, the Borrower and the Guarantors each hereby consents to the
jurisdiction and venue of the courts of the Commonwealth of Pennsylvania or of
any federal court located in such state, waives personal service of any and all
process upon it and consents that all such service of process be made by
certified or registered mail directed to the Borrower or such Guarantor at the
address provided for
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in Section 9 above and service so made shall be deemed to be completed upon
actual receipt. The Borrower and the Guarantors each hereby waives the right to
contest the jurisdiction and venue of the courts located in the County of
Philadelphia, Commonwealth of Pennsylvania on the ground of inconvenience or
otherwise and, further, waives any right to bring any action or proceeding
against (a) the Agent in any court outside the County of Philadelphia,
Commonwealth of Pennsylvania, or (b) any other Senior Secured Party other than
in a state within the United States designated by such Senior Secured Party. The
provisions of this Section 11 shall not limit or otherwise affect the right of
the Agent or any Senior Secured Party to institute and conduct an action in any
other appropriate manner, jurisdiction or court.
(ii) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE,
SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY
TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY
OTHER LOAN DOCUMENT OR ANY GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE
RELATIONSHIP BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NEITHER THE AGENT NOR
ANY SENIOR SECURED PARTY NOR ANY GUARANTOR NOR THE BORROWER NOR ANY OTHER PERSON
WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
(iii) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH
(iv) OF THE PRECEDING SUBSECTION 11.1 EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO
THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY
ARBITRATION OR OTHER LITIGATION, ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
PUNITIVE DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
EACH PARTY TO THIS AGREEMENT (a) CERTIFIES THAT NEITHER THE AGENT NOR ANY
REPRESENTATIVE, OR ATTORNEY OF THE AGENT NOR ANY SENIOR SECURED PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR SUCH SENIOR SECURED PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(b) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 11. THE PROVISIONS OF THIS SECTION 11 HAVE BEEN
FULLY DISCLOSED TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
PARTY THAT THE PROVISIONS OF THIS SECTION 11 WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
SECTION 12. HEADINGS; COUNTERPARTS.
Headings to this Guaranty Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof. This
Guaranty Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall
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constitute one instrument. A photocopied or facsimile copy of any signature page
to this Guaranty Agreement shall be deemed to be the functional equivalent of a
manually executed original for all purposes.
SECTION 13. SEVERABILITY.
Any invalidity, illegality or unenforceability of any term or
provision of this Guaranty Agreement in any jurisdiction or as against any
Guarantor shall not affect the validity, legality or enforceability of any other
terms hereof or in any other jurisdiction or against any other Guarantor.
SECTION 14. INDEMNIFICATION.
Each Guarantor, jointly and severally, shall indemnify and
hold harmless the Agent and each Senior Secured Party from and against all
losses (including judgments, penalties and fines) suffered, and pay or reimburse
each such indemnified party for all reasonable costs and expenses (including
reasonable fees and disbursements of legal counsel and other experts employed or
retained by such indemnified party) incurred by such indemnified party in
connection with, arising out of, or in any way related to this Guaranty
Agreement or the Senior Credit Documents, provided that none of the Guarantors
shall be liable under this Section for any losses, costs or expenses to the
extent they arise from gross negligence or willful misconduct on the part of the
Person requesting indemnification as shall have been determined in a final
nonappealable judgment of a court of competent jurisdiction. This
indemnification shall survive the termination of this Agreement.
SECTION 15. SUBORDINATION PROVISIONS.
15.1 Subordination. The payment of any and all Subordinated
Debt is expressly subordinated to the extent and in the manner set forth in this
Section 15 to Senior Debt and to interest on Senior Debt at the rate stated in
the instrument evidencing such Senior Debt from the date of filing of any
Petition under the Bankruptcy Code of 1978, as amended, to the date of payment
(herein called "Post-petition Interest"). The term "Subordinated Debt" as used
in this agreement shall mean and include the principal of and interest on all
liabilities of the Borrower to any Guarantor (the "Subordinated Debt Holder"),
direct or contingent, joint, several or independent, now or hereafter existing,
due or to become due to, or held or to be held by, the Subordinated Debt Holder,
whether created directly or acquired by assignment or otherwise.
The term "Senior Debt" as used in this agreement shall mean
and include the Senior Secured Obligations (including extensions, renewals and
refundings thereof, whether or not the principal amount is increased) and any
other note or notes issued in substitution therefor or upon any transfer
thereof.
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15.2 Receipt of Payments. The Subordinated Debt Holder will
not receive or accept any payment from the Borrower on account of Subordinated
Debt, if the making of such payment would constitute a violation of any Loan
Document. In the event that the Subordinated Debt Holder shall receive any
payment on Subordinated Debt which such Holder is not entitled to receive under
the provisions of the foregoing sentence, such Holder will hold any amount so
received in trust for the holders of all Senior Debt and will forthwith turn
over such payment to the Agent, in the form received, to be applied on the
Senior Debt.
15.3 Commencement of Proceedings. The Subordinated Debt Holder
will not commence any action or proceeding against the Borrower to recover all
or any part of the Subordinated Debt or join with any creditor, unless the Agent
shall also join in bringing any proceedings against the Borrower pursuant to any
bankruptcy, reorganization, readjustment of debt, arrangement of debt,
receivership, liquidation or insolvency law or statute of the Federal or any
State government unless and until all Senior Debt shall be paid in full.
15.4 Bankruptcy, Insolvency, Reorganization, etc. In the event
of any liquidation, dissolution or other winding up of the Borrower, or in the
event of any receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization or arrangement with creditors, whether or not pursuant
to bankruptcy laws, sale of all or substantially all of the assets or any other
marshalling of the assets and liabilities of the Borrower, (i) Senior Debt shall
first be paid in full in cash before the Subordinated Debt Holder shall be
entitled to receive any moneys, dividends or other assets in any such
proceeding, and (ii) the Subordinated Debt Holder will at the request of the
holders of Senior Debt file any claim, proof of claim or other instrument of
similar character necessary to enforce the obligations of the Borrower in
respect of Subordinated Debt and will hold in trust for the holders of Senior
Debt and pay over to the Agent on behalf of the holders of Senior Debt, in the
form received, to be applied on Senior Debt and Post-petition Interest, any and
all moneys, dividends or other assets received in any such proceeding on account
of Subordinated Debt, unless and until Senior Debt and Post-petition Interest
shall be paid in full in cash. In the event that the Subordinated Debt Holder
shall fail to take such action requested by the holders of Senior Debt, the
Agent may, as attorney-in-fact for the Subordinated Debt Holder, take such
action on behalf of the Subordinated Debt Holder, and the Subordinated Debt
Holder hereby agrees that the Agent may designate any person as the
attorney-in-fact (the "Attorney-in-Fact") for the Subordinated Debt Holder to
demand, sue for, collect and receive any and all such moneys, dividends or other
assets and give acquittance therefor and to file any claim, proof of claim or
other instrument of similar character and to take such other action (including
acceptance or rejection of any plan of reorganization or arrangement) in the
name of the holders of Senior Debt or in the name of the Subordinated Debt
Holder as the Attorney-in-Fact may deem necessary or advisable for the
enforcement of the agreement contained herein, and the Subordinated Debt Holder
will execute and deliver such other and further powers of attorney or other
instruments as may be requested by the Agent in order to accomplish the
foregoing.
15.5 Changes in Loan Documents. The holders of Senior Debt
may, at any time and from time to time, without the consent of or notice to the
Subordinated Debt Holder,
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without incurring responsibility to the Subordinated Debt Holder, and without
impairing or releasing any of the rights of the holders of Senior Debt, or any
of the obligations of the Subordinated Debt Holder hereunder, by such holders of
Senior Debt's unanimous action, or, as the appropriate Loan Document may
otherwise provide with respect to the Senior Debt governed thereby, by the
action of such holders as may be required under such Loan Document.
(i) change the amount, manner, place or terms of or
renew or alter Senior Debt or amend such Loan Document in any manner or enter
into or amend in any manner any other agreement relating to Senior Debt
(including provisions restricting or further restricting payments of principal
of and interest on Subordinated Debt);
(ii) sell, exchange, release or otherwise deal with
any property by whomsoever at any time pledged or mortgaged to secure, or
howsoever securing, Senior Debt in accordance with the terms of any of the Loan
Documents or any other present or future agreement between the Borrower and any
Guarantor and the applicable Senior Secured Parties;
(iii) release anyone liable in any manner for the
payment or collection of Senior Debt;
(iv) exercise or refrain from exercising any rights
against the Borrower and others (including the Subordinated Debt Holder); and
(v) apply any sums by whomsoever paid or however
realized to Senior Debt.
15.6 Waiver of Notice of Acceptance. Notice of acceptance of
the agreement contained in this Section 15 is hereby waived.
15.7 Marking Books. The Subordinated Debt holder will mark its
books to show that the Subordinated Debt is subordinated to Senior Debt in the
manner and to the extent herein set forth.
15.8 No Violation, etc. The Subordinated Debt Holder
represents and warrants that (i) neither the execution nor delivery hereof nor
fulfillment nor compliance with the terms and provisions hereof will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any agreement or instrument to which the
Subordinated Debt Holder is now subject and (ii) none of the Subordinated Debt
is or will be subordinated to any indebtedness of the Borrower other than Senior
Debt.
15.9 Effect of Amendment. On and after the effectiveness of
this Guaranty Agreement, any reference to the Guaranty Agreement or similar term
used in any Loan Documents shall mean and refer to this Guaranty Agreement, as
amended modified or supplemented, from time to time.
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IN WITNESS WHEREOF, the undersigned have executed this Guaranty
Agreement on the date and year first above written.
BORROWER: SUSQUEHANNA MEDIA CO.
By:
Name: Alan L. Brayman
Title: Treasurer
Notice Information:
140 East Market Street
York, PA 17401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
GUARANTORS:
SUSQUEHANNA CABLE CO.
SUSQUEHANNA CABLE INVESTMENT CO.
CABLE TV OF EAST PROVIDENCE, INC.
CASCO CABLE TELEVISION, INC.
CASCO CABLE TELEVISION OF BATH, MAINE
SBC CABLE CO.
YORK CABLE TELEVISION, INC.
SUSQUEHANNA RADIO CORP.
RADIO CINCINNATI, INC.
RADIO INDIANAPOLIS, INC.
RADIO METROPLEX, INC.
TEXAS STAR RADIO, INC.
RADIO SAN FRANCISCO, INC.
Signature Page to Guaranty Agreement
<PAGE> 230
KRBE CO.
KNBR, INC.
BAY AREA RADIO CORP.
WSBA LICO, INC.
WVAE LICO, INC.
WNNX LICO, INC.
KNBR LICO, INC.
KRBE LICO, INC.
INDIANAPOLIS RADIO LICENSE CO.
SUSQUEHANNA DATA SERVICES, INC.
SUSQUEHANNA FIBER SYSTEMS, INC.
MEDIA PCS VENTURES, INC.
KFFG LICO, INC.
KPLX RADIO, INC.
KPLX LICO, INC.
KLIF BROADCASTING, INC.
KLIF LICO, INC.
KLIF RADIO, INC.
INDY LICO, INC.
WRRM LICO, INC.
Signature Page to Guaranty Agreement
<PAGE> 231
WFMS LICO, INC.
By:_______________________________
Alan L. Brayman, on behalf of each
of the foregoing as Treasurer
Notice Information:
140 East Market Street
York, PA 17401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
KPLX LIMITED PARTNERSHIP, by KPLX Radio, Inc., its
General Partner
KLIF BROADCASTING LIMITED PARTNERSHIP, by KLIF
Radio, Inc., its General Partner
By:______________________________________
Alan L. Brayman on behalf of each of the
foregoing as Treasurer of the General Partner
Notice Information:
140 East Market Street
York, PA 17401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
Signature Page to Guaranty Agreement
<PAGE> 232
AGENT: FIRST UNION NATIONAL BANK,
in its capacity as Agent
By:
Name: Elizabeth Elmore
Title: Senior Vice President
Notice Information:
Communications/Media Group
PA 4829
1 South Penn Square
P.O. Box 7618
Philadelphia, PA 19101-7618
Phone No.: (215) 786-4321
Fax No.: (215) 786-7721
Attention: Elizabeth Elmore, Senior Vice President
Signature Page to Guaranty Agreement
<PAGE> 233
EXHIBIT A
FORM OF ADDITIONAL GUARANTOR JOINDER
Guaranty and Suretyship Agreement dated as of , 1999 from
Susquehanna Media Co. and Subsidiaries as Guarantors party thereto,
from time to time, in favor of First Union National Bank, as Collateral
Agent (the "Guaranty Agreement")
Reference is made to the Guaranty Agreement as defined above;
capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in, or by reference in, the Guaranty Agreement.
The undersigned hereby agrees that upon delivery of this Additional
Guarantor Joinder to the Agent referred to above or its successor, the
undersigned shall be and become a Guarantor for all purposes of the Guaranty
Agreement as fully and to the same extent as if it were an original signatory
thereto and shall be deemed to have made the representations and warranties set
forth in Section 4 therein as of the date of execution and delivery of this
Additional Guarantor Joinder and at any future dates that such representations
must be restated pursuant to the terms of the Loan Documents. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY ACKNOWLEDGES AND
AGREES TO THE ARBITRATION CLAUSE SET FORTH IN SECTION 11 THEREOF AND TO THE
CONSENT TO JURISDICTION AND WAIVER OF JURY TRIAL PROVISIONS SET FORTH IN SECTION
12 THEREOF.
Attached hereto are supplemental and/or replacement Exhibits to the
Guaranty Agreement, as applicable.
An executed copy of this Joinder shall be delivered to the Agent, and
the Agent and the Senior Secured Parties may rely on the matters set forth
herein in entering into and extending credit under the Credit Agreement on or
after the date hereof. This Joinder shall not be modified, amended or terminated
without the prior written consent of the Agent.
[Name of New Guarantor]
By:
Title:
Address:
Dated:
<PAGE> 234
STOCK PLEDGE AGREEMENT
("SPC Pledge Agreement")
SPC PLEDGE AGREEMENT made as of the 12th day of May, 1999, by and
between SUSQUEHANNA PFALTZGRAFF CO., a Delaware corporation, ("Pledgor") and
FIRST UNION NATIONAL BANK, a national banking association as agent on behalf of
the Senior Secured Parties (as defined in the Credit Agreement referred to
below). First Union National Bank in its capacity as agent hereunder, with its
successors and assigns, is hereinafter referred to as "Agent."
BACKGROUND OF AGREEMENT
On the date hereof certain lenders and issuers of letters of credit and
FIRST UNION NATIONAL BANK as Agent have entered into a Credit Agreement (as
amended, extended, supplemented, restated, or otherwise modified or refinanced,
including without limitation any amendment involving an increase in principal,
interest rate or other amount, the "Credit Agreement") with Susquehanna Media
Co. (the "Borrower"), pursuant to which such lenders and issuers agreed to lend
certain sums to the Borrower upon the terms and conditions specified in the
Credit Agreement under (1) a revolving credit facility with a swing loan
subfacility, and (2) two separate term loan facilities, and to issue, or
participate in the issuance of, certain letters of credit. In addition, the
Credit Agreement currently requires the Borrower under certain conditions to
enter into certain interest rate hedging agreements.
One of the prerequisites to the making of advances by the Lenders (as
defined in the Credit Agreement) under the Credit Agreement and the issuing of
letters of credit thereunder is that the Pledgor (which owns one hundred percent
(100%) of the outstanding common stock of the Borrower) shall have entered into
this SPC Pledge Agreement and shall have granted to the Agent for the benefit of
the Senior Secured Parties a security interest in and to all of the shares of
capital stock or other securities of the Borrower owned by Pledgor to secure the
Borrower's obligations to the Senior Secured Parties. This SPC Pledge Agreement
is being executed and delivered pursuant to Section 4.1.5 of the Credit
Agreement.
Pledgor acknowledges that the loan made pursuant to the Credit
Agreement will benefit the Borrower and thereby also benefit Pledgor. Pledgor
also acknowledges that it was and will be Solvent, before or after giving effect
to the transactions contemplated by the Credit Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, and in consideration of the mutual covenants herein contained and other
good and valuable consideration receipt of which is hereby acknowledged, agree
as follows:
<PAGE> 235
SECTION 1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to such terms in, or by reference in, the Credit
Agreement or the Uniform Commercial Code, as applicable. The following terms
shall have the following meanings:
"Collateral" shall mean (without duplication):
(i) all Investment Property evidencing ownership interests in,
or related to, the Borrower and/or any Subsidiary of the Borrower, including,
without limitation, shares of capital stock and other securities owned by the
Pledgor listed on Schedule 1 hereto (as the same may be modified from time to
time pursuant to the terms hereof), and any other shares of capital stock of
and/or other securities of and/or ownership interests in the Borrower and/or any
Subsidiary of the Borrower obtained in the future by the Pledgor, and, in each
case, all certificates representing such shares and/or securities and/or
ownership interests and, in each case, all rights, options, warrants, stock,
other securities and ownership interests which may hereafter be received,
receivable or distributed in respect of, or exchanged for, any of the foregoing
(all of the foregoing being referred to herein as the "Pledged Securities");
(ii) all other property which may be delivered to and held by
the Agent pursuant to the terms hereof of any character whatsoever into which
any of the foregoing may be converted or which may be substituted for any of the
foregoing; and
(iii) all Proceeds of the Pledged Securities and of such other
property, including, without limitation, all dividends, cash, securities or
other property at any time and from time to time acquired, receivable or
otherwise distributed in respect of, or in exchange for, any of or all such
Pledged Securities or other property.
"FCC" shall mean the Federal Communications Commission or any
governmental body succeeding to the functions of such commission.
"FCC License" shall mean any radio, microwave, or other
communications license, permit, certificate of compliance, franchise, approval
or authorization granted or issued by the FCC for control, ownership,
acquisition, construction, operation, management or maintenance of domestic
cable television systems, radio broadcasting systems or businesses directly
related thereto.
"Franchise" shall mean a franchise, permit or license
(including, without limitation, an FCC License), designation or certificate
granted by the United States or any other country, territory or state or a city,
town, county or other municipality, PUC or any other regulatory authority
pursuant to which a Person has the right to own, control, acquire, construct,
operate, manage or maintain a domestic cable television system, radio
broadcasting system or business directly related thereto.
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<PAGE> 236
"Lien" shall mean, as to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance in or on,
or any interest or title of any vendor, lessor, lender or other secured party to
or of such Person under any conditional sale or other title retention agreement
or capital lease with respect to, any property or asset of such Person.
"Necessary Endorsement" shall mean undated stock powers
endorsed in blank (with signatures properly guaranteed) or other proper
instruments of assignment duly executed and such other instruments or documents
as the Agent may reasonably request.
"Proceeds" shall have the meaning assigned to such term under
the Pennsylvania Uniform Commercial Code and, in any event, shall include (i)
any and all proceeds of any guarantee, insurance or indemnity payable to the
Pledgor from time to time with respect to any of the Collateral; (ii) any and
all payments (in any form whatsoever) made or due and payable to the Pledgor
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of governmental
authority); and (iii) any and all other amounts from time to time paid or
payable with respect to or in connection with any of the Collateral.
"PUC" shall mean any state or local regulatory agency or body
that exercises jurisdiction over the ownership, construction, operation,
acquisition, management or maintenance of domestic cable television systems,
radio broadcasting systems or businesses directly related thereto.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code, as amended, as is in effect in the Commonwealth of Pennsylvania or in any
applicable state as the case may be.
SECTION 2. CREATION OF SECURITY INTEREST
As security for the payment and performance in full of the
Senior Secured Obligations, the Pledgor hereby hypothecates, pledges, assigns,
sets over and delivers unto the Agent, and grants to the Agent, for the equal
(in priority) and ratable benefit of the Senior Secured Parties, a continuing
first priority security interest in all its right, title and interest in, to and
under the Collateral, TO HAVE AND TO HOLD the Collateral, together with all
right, title, interest, powers, privileges and preferences pertaining or
incidental thereto, unto the Agent, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 3. NON-RECOURSE GUARANTY
The Pledgor hereby irrevocably and unconditionally guaranties
to the Agent the full and timely payment and performance of the Senior Secured
Obligations, it being the Pledgor's intent that the guaranty set forth in this
Section 3 shall be a guaranty of payment and not a guaranty of collection. The
guaranty hereunder is a primary and original obligation of the Pledgor and is an
absolute, unconditional guaranty of payment and performance which is irrevocable
and, to the extent allowed by applicable law, shall remain in full force and
effect
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<PAGE> 237
without respect to future changes in conditions. The Pledgor shall have no right
of subrogation, reimbursement or indemnity whatsoever and no right of recourse
to or with respect to any assets or property of the Borrower or to any
Collateral. The Pledgor's liability under this SPC Pledge Agreement, and the
rights and remedies of Agent hereunder, shall be immediate and shall not be
contingent upon the exercise or enforcement by Agent of whatever remedies it may
have against the Borrower or others or the enforcement of any lien or the
realization upon any security that Agent may at any time possess.
Notwithstanding the foregoing paragraph, the recourse of Agent
in respect of the guaranty of the Pledgor set forth in this Section 3 is limited
to the Pledgor's interest in the Collateral. However, this paragraph shall not
limit Agent's rights against the Pledgor as a result of any breach by the
Pledgor of any representation, warranty or covenant of the Pledgor set forth in
this SPC Pledge Agreement.
SECTION 4. DELIVERY OF COLLATERAL
4.1 At Time of Execution of Agreement. Contemporaneously with
the execution of this SPC Pledge Agreement or, in any event, prior to the
Closing Date, the Pledgor shall deliver or cause to be delivered to the Agent
(i) any and all certificates and other instruments evidencing the Pledged
Securities, (ii) any and all other certificates or other instruments or
documents representing any of the Collateral and (iii) all other property
comprising part of the Collateral, in each case along with the Necessary
Endorsements.
4.2 Subsequent Delivery of Collateral. If the Pledgor shall
become entitled to receive or shall receive any securities or other property
(including, without limitation, shares of Pledged Securities acquired after the
Closing Date, or any options, warrants, rights or other similar property or
certificates representing a stock dividend, or any distribution in connection
with any recapitalization, reclassification or increase or reduction of capital,
or issued in connection with any reorganization of the Borrower or any
Subsidiary, but excluding dividends permitted to be retained under Section 6) in
respect of the Pledged Securities (whether as an addition to, in substitution
of, or in exchange for, such Pledged Securities or otherwise), the Pledgor
agrees:
(i) to accept the same as the agent of the Agent,
(ii) to hold the same in trust on behalf of and for
the benefit of the Agent, and
(iii) to deliver any and all certificates or
instruments evidencing the same to the Agent on or before the close of business
on the seventh (7th) Business Day following the receipt thereof by the Pledgor,
in the exact form received together with the Necessary Endorsements, to be held
by the Agent subject to the terms of this SPC Pledge Agreement, as additional
Collateral.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PLEDGOR
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<PAGE> 238
5.1 Representations and Warranties. Pledgor represents and
warrants as follows:
(i) Pledgor is a duly organized and validly existing
corporation in good standing under the laws of the State of Delaware. Pledgor
has perpetual corporate existence, and Pledgor has the corporate power and
authority to own its property and assets and to transact the business in which
it is engaged and presently proposes to engage. Pledgor has not failed to
qualify to do business in any state or jurisdiction where the failure to so
qualify could have a material adverse effect on (a) the ability of Pledgor to
perform its obligations hereunder, (b) the binding nature, validity or
enforceability of this SPC Pledge Agreement, or (c) the validity, perfection,
priority or enforceability of the Lien of the Agent for the benefit of the
Senior Secured Parties in the Collateral. The principal place of business of
Pledgor is located at the address set forth on the signature page hereto and the
sole name under which Pledgor conducts business is set forth in the first
paragraph of this SPC Pledge Agreement.
(ii) All the Pledged Securities are validly issued,
fully paid and nonassessable, and are owned by Pledgor beneficially and of
record free and clear of any Lien, except for the Liens created pursuant to this
SPC Pledge Agreement. The execution and delivery by Pledgor of this SPC Pledge
Agreement and the delivery of the Collateral to the Agent simultaneously
therewith has created a valid and perfected first priority security interest in
the Collateral in favor of the Agent, for the equal (in priority) and ratable
benefit of the Senior Secured Parties, to secure payment of the Senior Secured
Obligations.
(iii) Pledgor has the corporate power to execute,
deliver and carry out the terms and provisions of this SPC Pledge Agreement, and
Pledgor has taken all necessary corporate action (including, without limitation,
any consent of stockholders required by law or by its articles of incorporation
or bylaws or other organizational documents) to authorize the execution,
delivery and performance of this SPC Pledge Agreement. This SPC Pledge Agreement
constitutes the authorized, valid and legally binding obligation of Pledgor
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether such enforcement is sought in a
court of law or at equity).
(iv) The execution and delivery of this SPC Pledge
Agreement, the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof, will not (x) violate any
provision of law or any injunction or any applicable regulation, order, writ,
judgment or decree of any court or governmental department, commission, board,
bureau, agency or instrumentality, or (y) conflict or be inconsistent with, or
result in any breach of, any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to impose) any Lien, other than the Liens created hereby,
upon any of the Collateral pursuant to the terms of, any agreement, indenture,
franchise, license, permit, mortgage or deed of trust to which Pledgor is a
party or by which Pledgor is bound, or to which Pledgor is subject, or (z)
violate any of the provisions of the articles of incorporation, bylaws or other
organizational documents of Pledgor.
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<PAGE> 239
(v) No consent, approval or authorization of any
Person, or recording, filing, registration, notice or other similar action with
or to any Person, is required in order to insure the legality, validity, binding
effect or enforceability of this SPC Pledge Agreement, except such filings as
may be required as contemplated by Section 7.30 of the Credit Agreement.
(vi) The shares of stock and securities of the
Borrower included in the Collateral are not subject to any charter, bylaw,
statutory, contractual or other restriction governing their issuance, transfer,
ownership or control which restriction would limit the effectiveness or
enforceability of the pledge and security interest created under this SPC Pledge
Agreement, except to the extent that regulatory considerations reflected in
Section 12 hereof may affect the enforceability of certain rights and remedies
of the Agent and the Senior Secured Parties hereunder.
5.2 Survival of Representations and Warranties. All the
foregoing representations and warranties shall survive the execution and
delivery of this SPC Pledge Agreement and shall continue until this SPC Pledge
Agreement is terminated as provided herein and shall not be affected or waived
by any inspection or examination made by or on behalf of Agent or any Senior
Secured Party.
SECTION 6. VOTING; DIVIDENDS
6.1 Rights Prior To Default. Other than during the existence
of an Event of Default,
(i) Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Securities or any
part thereof for any purpose not inconsistent with the terms of the Loan
Documents.
(ii) Subject to and limited by the restrictions on
dividends and other payments in respect of the Collateral set forth in the Loan
Documents, Pledgor shall be entitled to receive and retain any and all dividends
and other payments paid in respect of the Collateral, provided, however, that
any and all
(a) dividends or other payments paid or
payable other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in exchange for,
any Collateral,
(b) dividends and other distributions paid
or payable in cash in respect of any Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and
(c) except as otherwise provided in the
Credit Agreement, cash paid, payable or otherwise distributed in redemption of
or exchange for, any Collateral,
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shall forthwith be delivered to the Agent to hold as Collateral and shall, if
received by Pledgor, be received in trust for the benefit of the Agent, be
segregated from the other property or funds of Pledgor, and be forthwith
delivered to the Agent as Collateral in the same form as so received (with any
Necessary Endorsement).
(iii) The Agent shall execute and deliver to the
Pledgor all such proxies and other instruments as the Pledgor may reasonably
request for the purpose of enabling the Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to paragraph (i) above and to
receive the dividends or interest payments which it is authorized to receive and
retain pursuant to paragraph (ii) above.
6.2 Rights After a Default. Upon the occurrence and during the
continuation of an Event of Default and as more fully set forth in Section 11
below,
(i) Subject to Section 12 below, all rights of the
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to subsection 6. 1 above and to
receive the dividends and payments which it would otherwise be authorized to
receive and retain pursuant to subsection 6.1 above shall cease, and all such
rights shall thereupon become vested in the Agent who shall have the sole right
to exercise such voting and other consensual rights and to receive and hold as
Collateral such dividends and payments.
(ii) All dividends and other payments which are
received by the Pledgor contrary to the provisions of paragraph (i) of this
subsection 6.2 shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor and shall forthwith be paid over to
the Agent as Collateral in the same form as so received (with any Necessary
Endorsement).
SECTION 7. COVENANTS OF PLEDGOR
7.1 Pledgor covenants that until this SPC Pledge Agreement is
terminated in accordance with the terms hereof:
(i) Pledgor shall not transfer, sell, encumber or
otherwise dispose of any of the Collateral, except in connection with a sale
permitted under the provisions of the Credit Agreement providing for
dispositions to third parties free of Liens, and shall not create, assume or
suffer to exist any Lien in or on any of the Collateral, except the Liens
created hereunder.
(ii) To the extent permitted by applicable law,
Pledgor hereby waives any rights which it otherwise may have under Section 9-112
of the Uniform Commercial Code as in effect in the Commonwealth of Pennsylvania.
(iii) Pledgor shall not change the location of its
principal office or its name referred to in Section 5.1(i), or conduct business
under any other name, without having first (a) given to Agent at least thirty
(30) days' prior written notice of same and (b) executed,
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delivered and filed (and paid or cause to be paid by the Borrower all filing
fees and taxes) all such documents as may be necessary or advisable in the
opinion of Agent to continue to perfect and protect the Liens created hereby.
(iv) Pledgor shall vote the stock and securities
included in the Collateral in a manner consistent with the covenants and
agreements of Pledgor, the Borrower and the Subsidiaries of the Borrower set
forth in the Loan Documents, including, without limitation, restricting the
issuance of additional shares of stock of the Borrower and its Subsidiaries (or
rights or options therefore) except such as is pledged to the Agent pursuant to
the terms of the Loan Documents.
7.2 Proceeds of Collateral Disposition. During the continuance
of a Potential Event of Default or an Event of Default, at the Agent's request,
the Pledgor shall establish and maintain at all times a trust account with the
Agent, and all Proceeds, before or after an Event of Default, shall be deposited
directly and immediately into such account. The Pledgor shall be responsible for
all costs and fees arising with respect to such account at the standard rates.
The Pledgor expressly and irrevocably authorizes and consents to the ability of
the Agent to charge such trust account, in its sole discretion, and recover from
the funds on deposit therein, from time to time and at any time, and apply those
funds against any and all Senior Secured Obligations.
SECTION 8. FURTHER ASSURANCES
The Pledgor agrees that at any time and from time to time, at
the expense of the Borrower, the Pledgor will (and will require the Borrower to)
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that the Agent may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral including,
without limitation, using its best efforts to cooperate in obtaining any FCC,
PUC, or other governmental approval of any action or transaction contemplated
hereby or thereby.
SECTION 9. AGENT APPOINTED ATTORNEY-IN-FACT, MAY PERFORM CERTAIN DUTIES
9.1 Appointment as Attorney-in-fact. Effective upon the
occurrence of an Event of Default, and so long as Agent reasonably believes such
Event of Default is continuing, the Pledgor hereby appoints the Agent as its
true and lawful agent, proxy, and attorney-in-fact for the purpose of carrying
out this SPC Pledge Agreement and taking any action and executing any instrument
which the Agent may deem necessary or advisable to accomplish the purposes
hereof including, without limitation, the execution on behalf of Pledgor of any
financing or continuation statement with respect to the security interest
created hereby and the endorsement of any drafts or orders which may be payable
to Pledgor in respect of, arising out of, or relating to any or all of the
Collateral. This power shall be valid until the termination of the security
interests created hereunder, any limitation under law as to the length or
validity of a proxy to the contrary notwithstanding. This appointment is
irrevocable and coupled with an interest and any proxies
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heretofore given by the Pledgor to any other Person are revoked. The designation
set forth herein shall be deemed to amend and supersede any inconsistent
provision in the articles of incorporation, bylaws or other documents to which
Pledgor or the Borrower is subject or to which either is a party.
9.2 Registration of Securities. Pledgor shall cause the
Borrower to, and the Borrower shall, register the pledge of the shares included
in the Collateral in the name of the Agent on the books of the Borrower. Upon
the occurrence of an Event of Default, Pledgor shall at the direction of Agent
cause the Borrower to, and the Borrower shall, register the shares included in
the Collateral in the name of the Agent on the books of the Borrower.
9.3 Performance of Pledgor's Duties. In furtherance, and not
by way of limitation, of the foregoing subsections 9.1 and 9.2, if (at any time
either before or after the occurrence of an Event of Default) the Pledgor fails
to perform any agreement contained herein, the Agent may (but under no
circumstance is obligated to) perform such agreement and any expenses incurred
shall be payable by the Borrower provided, however, that nothing herein shall be
deemed to relieve the Pledgor from fulfilling any of its obligations hereunder.
9.4 Acts May Be Performed By Agents and Employees. Any act of
the Agent to be performed pursuant to this Section 9 or elsewhere in this SPC
Pledge Agreement may be performed by agents or employees of the Agent.
SECTION 10. STANDARD OF CARE.
10.1 In General. No act or omission of any Senior Secured
Party (or agent or employee thereof) shall give rise to any defense,
counterclaim or offset in favor of the Pledgor or any claim or action against
any such Senior Secured Party (or agent or employee thereof), in the absence of
gross negligence or willful misconduct of such Senior Secured Party as
determined in a final, nonappealable judgment of a court of competent
jurisdiction. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Agent accords to its
own property, it being understood that it has no duty to take any action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral or to preserve any rights of any parties and shall
only be liable for losses which are a result of its gross negligence or willful
misconduct as determined in a final, nonappealable judgment of a court of
competent jurisdiction.
10.2 Reliance on Advice of Counsel. In taking any action under
this SPC Pledge Agreement, the Agent shall be entitled to rely upon the advice
of counsel of Agent's choice and shall be fully protected in acting on such
advice whether or not the advice rendered is ultimately determined to have been
accurate.
SECTION 11. DEFAULT
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11.1 Certain Rights Upon Default. In addition to any other
rights accorded the Senior Secured Parties hereunder, upon the occurrence and
during the continuation of an Event of Default:
11.1.1 The Agent shall be entitled to receive any
cash dividends or payments on the Collateral and subject to Section 12 below, to
exercise in the Agent's discretion all voting rights pertaining thereto as more
fully set forth in Section 6 above. Without limiting the generality of the
foregoing, subject to Section 12 below, the Agent shall have the right to
exercise all rights with respect to the Collateral as if it were the sole and
absolute owner thereof, including, without limitation, to vote and/or to
exchange, at its sole discretion, any or all of the Collateral in connection
with a merger, reorganization, consolidation, recapitalization or other
readjustment concerning or involving the Collateral or the Borrower, any
Subsidiary, the Borrower or the Pledgor.
11.1.2 Pledgor shall (and shall require the Borrower
to) take any action necessary or required or requested by the Agent in order to
allow it fully to enforce the security interest in the Collateral hereunder and
to realize thereon to the fullest extent possible, including, but not limited
to, the filing of any claims with any court, liquidator, trustee, guardian,
receiver or other like person or party.
11.1.3 The Agent shall have all of the rights of a
secured party under the Uniform Commercial Code of Pennsylvania, as amended, and
any other applicable law including the right to sell on such terms as it may
deem appropriate any or all of the Collateral at one or more public or private
sales upon at least ten (10) Business Days' written notice to Pledgor of the
time and place of any public sale and of the date on which the Collateral will
first be offered for sale in the case of any private sale. Agent shall have the
right to bid thereat or purchase any part or all the Collateral in its own or a
nominee's name (subject to applicable FCC or PUC requirements or restrictions).
The Agent shall have the right to apply the proceeds of the sale, after
deduction for any costs and expenses of sale (including any liabilities incurred
in connection therewith including reasonable attorneys' fees and allocated costs
of attorneys who are employees of the Agent), to the payment of the Senior
Secured Obligations in any manner or order which the Agent, in its sole
discretion, may elect (whether pursuant to the Credit Agreement or otherwise),
to the payment of any other amount required by law (including without limitation
Section 9-504(l)(c) of the Uniform Commercial Code), and to pay any remaining
proceeds to Pledgor or its successors or assigns or to whomsoever may lawfully
be entitled to receive the same or as a court of competent jurisdiction may
direct, without further notice to or consent of Pledgor and without regard to
any equitable principles of marshalling or other like equitable doctrines.
Pledgor hereby acknowledges and agrees that the notice provided for above is
reasonable and expressly waives any rights it may have of equity of redemption,
stay or appraisal with respect to the Collateral.
11.1.4 For purposes hereof, a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof; the Agent shall be free to carry out such sale pursuant to such
agreement, and Pledgor shall not be entitled to the return of the Collateral or
any portion thereof, notwithstanding the fact that after Agent shall have
entered into such an
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agreement, any and all Events of Default shall have been remedied and the Senior
Secured Obligations paid in full.
11.1.5 The Agent shall have the right, with full
power of substitution either in the Agent's name or the name of the Pledgor, to
ask for, demand, sue, collect and receive any and all moneys due or to become
due under and by virtue of the Collateral and to settle, compromise, prosecute
or defend any action, claim or proceeding with respect thereto, provided,
however, that nothing herein shall be construed as requiring the Agent to take
any action, including, without limitation, requiring or obligating the Agent to
make any inquiry as to the nature or sufficiency of any payment received, or to
present or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby.
11.1.6 The Agent shall be entitled to the appointment
of a receiver or trustee for all or any part of the businesses of the Borrower
or Pledgor, which receiver shall have such powers as may be conferred by law or
the appointing authority.
11.2 Agent May Exercise Less Than All Rights. Pledgor hereby
acknowledges and agrees that the Agent is not required to exercise all remedies
and rights available to it equally with respect to all of the Collateral, and
the Agent may select less than all of the Collateral with respect to which the
remedies as determined by the Agent may be exercised.
11.3 Duties of Pledgor/Borrower With Respect to Transferee. In
the event that, upon an occurrence of an Event of Default, the Agent shall sell
all or any of the Collateral to another party or parties (herein called
"Transferee") or shall purchase or retain all or any of the Collateral, Pledgor
shall cause the Borrower to:
(i) Deliver to the Agent or Transferee, as the case
may be, the articles of incorporation, bylaws, minute books, stock certificate
books, corporate seals, deeds, leases, indentures, agreements, evidences of
indebtedness, books of account, financial records and all other documents and
records of the Borrower;
(ii) Use its best efforts to obtain resignations of
the persons then serving as officers and directors of the Borrower, if so
requested; and
(iii) Use its best efforts to obtain any approvals
that are required by any governmental or regulatory body in order to permit the
sale of the Collateral to the Transferee or the purchase or retention of the
Collateral by the Agent and allow the Transferee or the Agent to continue the
business of the issuer.
SECTION 12. ACKNOWLEDGEMENT OF REGULATORY CONSIDERATIONS; UNIQUE NATURE
OF ASSETS.
12.1 FCC/PUC Approval. It is hereby acknowledged that transfer
of certain Collateral and the exercise of certain other remedies provided herein
may constitute a transfer of
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an FCC License or other Franchise or a sale or transfer of control of a holder
of an FCC License or other Franchise, requiring approval of the FCC or PUC,
pursuant to rules and regulations of the FCC or PUC. Notwithstanding anything to
the contrary contained in this Agreement, the Agent will not knowingly take any
action pursuant to this Agreement which would constitute or result in assignment
of an FCC License or other Franchise or any transfer of control of the holder of
an FCC License or other Franchise if such assignment of license or transfer of
control would require under then existing law (including the written rules and
regulations promulgated by the FCC or any PUC), the prior approval of the FCC or
such PUC, without first obtaining such approval. In connection with this
provision, the Agent shall be entitled to rely upon the advice of counsel of
Agent's choice whether or not the advice rendered is ultimately determined to
have been accurate.
12.2 Pledgor/Borrower Assistance in Obtaining Approval.
Without limiting the generality of Section 8 above, if counsel to the Agent
reasonably determines that the consent of the FCC or PUC is required in
connection with any of the actions hereunder or under any other Loan Document,
then the Pledgor (at the cost and expense of the Borrower) agrees to use its
best efforts to secure such consent and to cooperate fully with the Agent in any
action to secure such consent. Further, the Pledgor shall use its best efforts
to require the Borrower to do the same. Without limiting the generality of the
foregoing, Pledgor and the Borrower shall promptly execute and file and/or cause
the execution and filing of all applications, certificates, instruments, and
other documents and papers that the Agent deems necessary or advisable to file
in order to obtain any necessary governmental consent, approval, or
authorization, and if the Borrower or Pledgor fails or refuses to execute (or
fails or refuses to cause another Person to execute) such documents, the Agent
or the clerk of any court of competent jurisdiction may execute and file the
same on behalf of the Borrower and Pledgor (or either of them) or such other
Person.
12.3 Unique Nature of Assets. It is agreed that the FCC
Licenses and other Franchises held by the Borrower and its Subsidiaries are
unique assets which (or the control of which) may have to be transferred in
order for the Agent adequately to realize the value of its security interest. A
violation of the covenants set forth in this Section would result in irreparable
harm to the Agent for which monetary damages are not readily ascertainable.
Therefore, in addition to any other remedy which may be available to the Agent
at law or in equity, the Agent shall have the remedy of specific performance of
the provisions of this Section. To enforce the provisions of this Section, the
Agent is authorized to request the consent or approval of the FCC or PUC to a
voluntary or an involuntary transfer of control of any FCC License or other
Franchise or sale or transfer of control of a holder of an FCC License or other
Franchise.
12.4 Selection by Agent of Different Transferee. If, for any
reason, the FCC or PUC does not approve within a reasonable period of time
(which period shall be determined conclusively by the Agent), the initial
application for approval of the transfer of the Collateral, the Agent shall then
have the right to transfer the Collateral to such other Person as the Agent
shall select (subject to the prior approval of the FCC or PUC). With respect to
such subsequent selection, Pledgor agrees to cooperate fully in the manner set
forth above. Exercise by the Agent of the right to such cooperation shall not be
exhausted by the initial or any subsequent exercise thereof.
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SECTION 13. SECURITIES LAW PROVISION
Pledgor recognizes that the Agent may be limited in its
ability to effect a sale to the public of all or part of the Collateral by
reason of certain prohibitions in the Securities Act of 1933, as amended, or
other federal or state securities laws (collectively, the "Securities Laws"),
and may be compelled to resort to one or more sales to a restricted group of
purchasers who may be required to agree to acquire the Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor agrees that sales so made may be at prices and on terms less
favorable than if the Collateral were sold to the public, and that the Agent has
no obligation to delay the sale of any Collateral for the period of time
necessary to register the Collateral for sale to the public under the Securities
Laws. Pledgor shall (and require the Borrower to) cooperate with the Agent in
its attempts to satisfy any requirements under the Securities Laws (including
without limitation registration thereunder if requested by Agent) applicable to
the sale of the Collateral by the Agent at the Borrower's cost and expense.
SECTION 14. SECURITY INTEREST ABSOLUTE; WAIVERS BY PLEDGOR
14.1 Absolute Nature of Security Interest All rights of the
Agent hereunder, the grant of the security interest in the Collateral and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of (i) any lack of validity or enforceability of any of the terms
of the Loan Documents or any other instrument or document relating hereto or
thereto, (ii) any change in the time, manner or place of payment of, increases
in, or in any other term of, all or any of the Senior Secured Obligations, or
any other amendment or waiver of any terms related thereto, (iii) any exchange,
release or nonperfection of any other collateral, or any release or amendment or
waiver of any guaranty, or (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Pledgor or any other
Person in respect of the Senior Secured Obligations or in respect of this SPC
Pledge Agreement or any other Loan Document or any obligations hereunder or
thereunder.
14.2 No Duty To Marshal Assets. The Agent shall have no
obligation to marshal any assets in favor of the Pledgor or the Borrower or any
other Person or against or in payment of any or all of the Senior Secured
Obligations.
14.3 Waiver of Right of Subrogation, Etc. The Pledgor
acknowledges that until all the Senior Secured Obligations shall have been
indefeasibly paid in full, the Pledgor shall have no right (or hereby waives any
such right) of subrogation, reimbursement, or indemnity whatsoever in respect of
the Borrower arising out of remedies exercised by the Agent hereunder.
14.4 Other Waivers. The Pledgor hereby waives notice of
acceptance of this SPC Pledge Agreement. The Pledgor further waives presentment
and demand for payment of any of the Senior Secured Obligations, protest and
notice of dishonor or default with respect to any of the Senior Secured
Obligations, and all other notices to which the Pledgor might otherwise be
entitled, except as otherwise expressly provided in this SPC Pledge Agreement or
any of the other Loan Documents. The Pledgor (to the extent that it may lawfully
do so)
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covenants that it shall not at any time insist upon or plead, or in any manner
claim or take the benefit of, any stay, valuation, appraisal or redemption now
or at any time hereafter in force that, but for this waiver, might be applicable
to any sale made under any judgment, order or decree based on this SPC Pledge
Agreement or any other Loan Document; and the Pledgor (to the extent that it may
lawfully do so) hereby expressly waives and relinquishes all benefit of any and
all such laws and hereby covenants that it will not hinder, delay or impede the
execution of any power in this SPC Pledge Agreement or in any other Loan
Document delegated to the Agent, but that it will suffer and permit the
execution of every such power as though no such law or laws had been made or
enacted.
SECTION 15. NON-WAIVER AND NON-EXCLUSIVE REMEDIES
15.1 Non-Exclusive Remedies. No remedy or right herein
conferred upon, or reserved to the Agent is intended to be to the exclusion of
any other remedy or right, but each and every such remedy or right shall be
cumulative and shall be in addition to every other remedy or right given
hereunder or under any other Loan Document or under law.
15.2 Delay and Non-Waiver. No delay or omission by the Agent
to exercise any remedy or right hereunder shall impair any such remedy or right
or shall be construed to be a waiver of any Event of Default, or an acquiescence
therein, nor shall it affect any subsequent Event of Default of the same or of a
different nature.
SECTION 16. CONTINUING SECURITY INTEREST; HEIRS AND ASSIGNS
This SPC Pledge Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
payment in full of the Senior Secured Obligations or until terminated pursuant
to Section 17 below, (ii) be binding upon the Pledgor, its successors and
assigns and (iii) inure to the benefit of the Agent, the other Senior Secured
Parties and their respective successors, transferees and assigns provided,
however, that the Pledgor shall not be permitted to transfer any of its
obligations hereunder.
SECTION 17. TERMINATION OF AGREEMENT; RELEASE OF COLLATERAL
17.1 Termination of Agreement. At such time as (a) the Senior
Secured Parties have no obligation to make further loans or other extensions of
credit to the Borrower under the Credit Agreement, and (b) all the Senior
Secured Obligations have been indefeasibly paid and/or performed in full, this
SPC Pledge Agreement shall terminate and the Collateral shall be released
pursuant to subsection 17.2 below, provided that if at the time of the payment
in full of the Senior Secured Obligations (i) such payment and performance is
not subject to any filed or threatened claim, contest, voidance or offset of any
kind whatsoever, (ii) the chief financial officer of the Borrower so certifies
in writing to Agent and (iii) the Borrower supplies to Agent such valuations,
information, evidence, certifications and opinions as Agent may request in
connection therewith, this SPC Pledge Agreement shall terminate upon
satisfaction of the conditions in clauses (a) and (b) above without giving
effect to the requirement that the payment in full be indefeasible.
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17.2 Duties of Agent With Respect To Release of Collateral.
When this Agreement terminates pursuant to subsection 17.1 above, the Agent
shall reassign and deliver to the Pledgor, or to such Person as the Pledgor
shall designate, against receipt, such of the Collateral (if any) as shall not
have been sold or otherwise applied by the Agent pursuant to the terms hereof
and shall still be held by it hereunder, together with appropriate instruments
of reassignment and release, all without any recourse to, or warranty whatsoever
by, the Agent, at the sole cost and expense of the Borrower.
SECTION 18. MISCELLANEOUS PROVISIONS
18.1 Notices. All notices, requests, demands, directions and
other communications (collectively "notices") given or made upon any party under
the provisions of this SPC Pledge Agreement shall be by telephone or in writing
(including facsimile communication) unless otherwise expressly provided under
this SPC Pledge Agreement and if in writing, shall be delivered or sent by
facsimile to the respective parties at the addresses and numbers set forth under
their respective names on the signature pages to this SPC Pledge Agreement or in
accordance with any subsequent unrevoked written direction from any party to the
others. All notices shall, except as otherwise expressly provided in this SPC
Pledge Agreement, be effective (a) in the case of facsimile, when received, (b)
in case of hand-delivered notice, when hand delivered, (c) in the case of
telephone, when telephoned, provided, however, that in order to be effective,
telephonic notices must be confirmed in writing no later than the next day by
letter, facsimile or telex, (d) if given by mail, four (4) days after such
communication is deposited in the mails with first class postage prepaid, return
receipt requested, and (e) if given by any other means (including air courier),
when delivered; provided, that notices to the Agent shall not be effective until
received. In the event of a discrepancy between any telephonic or written
notice, the written notice shall control.
18.2 Entire Agreement. This SPC Pledge Agreement sets forth
all of the promises, covenants, agreements, conditions and understandings among
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings, inducements or conditions, express or
implied, oral or written, with respect thereto, except as contained or referred
to herein.
18.3 Amendments. The terms of this SPC Pledge Agreement may be
amended, terminated, modified, supplemented or waived only upon the written
consent of the Agent and the Pledgor. The rights of the Agent to so change,
modify, waive, discharge or terminate any provision hereof is subject to the
terms of Section 12.5 of the Credit Agreement, it being understood, however,
that the Pledgor is not a third party beneficiary of Section 12.5 of the Credit
Agreement.
18.4 Governing Law. This SPC Pledge Agreement and the rights
and obligations of the parties hereunder shall be construed and enforced in
accordance with and shall be governed by the laws of the Commonwealth of
Pennsylvania.
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18.5 Arbitration; Consent to Jurisdiction, Service and Venue;
Waiver of Jury Trial.
18.5.1 Arbitration.
(i) Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any claim or controversy
arising out of, or relating to, the Loan Documents between any or all of the
parties hereto (a "Dispute") shall be resolved by binding arbitration conducted
under and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and the
Federal Arbitration Act. Disputes may include, without limitation, tort claims,
counterclaims, a dispute as to whether a matter is subject to arbitration,
claims brought as class actions, or claims arising from documents executed in
the future. A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to Interest Rate Protection Agreements.
(ii) All arbitration hearings shall be conducted in
the City of Philadelphia, Commonwealth of Pennsylvania unless otherwise agreed
by all parties to such arbitration. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall conclude within 120 days of demand
for arbitration. These time limitations may not be extended unless a party shows
cause for extension and then for no more than a total of 60 days. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000.00. Arbitrators shall be licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The parties do not waive applicable Federal or state substantive law
except as provided herein.
(iii) Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without diminution,
certain remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (a) all rights to foreclose against any real or
personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sales; (b) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; and (c) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment of
receiver and filing of involuntary bankruptcy proceedings. Any claim or
controversy with regard to any party's entitlement to such remedies is a
Dispute.
(iv) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A
REMEDY OF SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AGAINST OTHER
PARTIES IN ANY DISPUTE AND HEREBY WAIVE ANY RIGHT OR CLAIM TO SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN
THE FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY
ARBITRATION OR JUDICIALLY.
18.5.2 Consent to Jurisdiction, Service and Venue;
Waiver of Jury Trial.
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(i) With respect to any matters that may be heard
before a court of competent jurisdiction under paragraph (iii) of the preceding
subsection 18.5.1, the Pledgor hereby consents to the jurisdiction and venue of
the courts of the Commonwealth of Pennsylvania or of any federal court located
in such state, waives personal service of any and all process upon it and
consents that all such service of process be made by certified or registered
mail directed to the Pledgor at the address provided for in Section 18.1 above
and service so made shall be deemed to be completed upon actual receipt. The
Pledgor hereby waives the right to contest the jurisdiction and venue of the
courts located in the County of Philadelphia, Commonwealth of Pennsylvania on
the ground of inconvenience or otherwise and, further, waives any right to bring
any action or proceeding against (a) the Agent in any court outside the County
of Philadelphia, Commonwealth of Pennsylvania, or (b) any other Senior Secured
Party other than in a state within the United States designated by such Senior
Secured Party. The provisions of this Section 18.5 shall not limit or otherwise
affect the right of the Agent or any Senior Secured Party to institute and
conduct an action in any other appropriate manner, jurisdiction or court.
(ii) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE,
SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY
TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY
OTHER LOAN DOCUMENT OR ANY GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE
RELATIONSHIP BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NEITHER THE AGENT NOR
ANY SENIOR SECURED PARTY NOR THE PLEDGOR NOR ANY OTHER PERSON WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED.
(iii) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH
(iv) OF THE PRECEDING SUBSECTION 18.5.1 EXCEPT AS PROHIBITED BY LAW, EACH PARTY
TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY
ARBITRATION OR OTHER LITIGATION, ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
PUNITIVE DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
EACH PARTY TO THIS AGREEMENT (i) CERTIFIES THAT NEITHER THE AGENT NOR ANY
REPRESENTATIVE, OR ATTORNEY OF THE AGENT NOR ANY SENIOR SECURED PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR SUCH SENIOR SECURED PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 18.5. THE PROVISIONS OF THIS SECTION 18.5 HAVE
BEEN FULLY DISCLOSED TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
PARTY THAT THE PROVISIONS OF THIS SECTION 18.5 WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
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<PAGE> 251
18.6 Severability. If any of the provisions or terms of this
SPC Pledge Agreement shall for any reason be held to be invalid or unenforceable
such invalidity or unenforceability shall not affect any of the other terms
hereof, but this SPC Pledge Agreement shall be construed as if such invalid or
unenforceable term had never been contained herein. Any such invalidity or
unenforceability in a particular jurisdiction shall not be deemed to render a
provision invalid or unenforceable in any other jurisdiction.
18.7 Counterparts. This SPC Pledge Agreement may be executed
in one or more counterparts, each of which shall constitute an original
agreement, but all of which together shall constitute one and the same
instrument. A photocopied or facsimile copy of any signature page to this SPC
Pledge Agreement shall be deemed to be the functional equivalent of a manually
executed original for all purposes.
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IN WITNESS WHEREOF, the parties have caused this SPC Pledge
Agreement to be duly executed and delivered by their respective authorized
officers on the date first above written.
PLEDGOR:
SUSQUEHANNA PFALTZGRAFF CO.
By:_________________________________
Name: John L. Finlayson
Title: Vice President
Notice Information:
140 East Market Street
York, PA 18401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
AGENT: FIRST UNION NATIONAL BANK, in its
capacity as Agent
By:_________________________________
Name: Elizabeth Elmore
Title: Senior Vice President
Notice Information:
Communications/Media Group
PA 4829
1 South Penn Square
P.O. Box 7618
Philadelphia, PA 19101-7618
Phone No.: (215) 786-4321
Fax No.: (215) 786-7721
Attention: Elizabeth Elmore, Senior
Vice President
Signature Page to the SPC Pledge Agreement
<PAGE> 253
JOINDER
The undersigned acknowledges the SPC Pledge Agreement to which this
Joinder is attached, and hereby agrees to be bound by the foregoing SPC Pledge
Agreement and to perform the covenants contained therein required to be
performed by it.
SUSQUEHANNA MEDIA CO.
By:_____________________________
Name: Alan L. Brayman
Title: Treasurer
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
Joinder to the SPC Pledge Agreement
<PAGE> 254
SCHEDULE 1
TO SPC PLEDGE AGREEMENT
SHARES OF STOCK AND OTHER SECURITIES OWNED BY SPC
1. 1,100,000 shares of Common Stock of Susquehanna Media Co.
2. 4 shares of Common Stock of Radio Cincinnati, Inc.
3. 50 shares of Common Stock of Radio Indianapolis, Inc.
4. 20 shares of Common Stock of Radio Metroplex, Inc.
5. 90 shares of Common Stock of Radio San Francisco, Inc.
6. 20 shares of Common Stock of KLIF Broadcasting, Inc.
<PAGE> 255
PLEDGE AGREEMENT
("Borrower Pledge Agreement")
BORROWER PLEDGE AGREEMENT made as of the 12th day of May, 1999, by and
between SUSQUEHANNA MEDIA CO., a Delaware corporation ("Pledgor"), and FIRST
UNION NATIONAL BANK, a national banking association as agent on behalf of the
Senior Secured Parties (as defined in the Credit Agreement referred to below).
First Union National Bank in its capacity as agent hereunder, with its
successors and assigns, is hereinafter referred to as "Agent."
BACKGROUND OF AGREEMENT
On the date hereof certain lenders and issuers of letters of credit and
FIRST UNION NATIONAL BANK as Agent have entered into a Credit Agreement (as
amended, extended, supplemented, restated, or otherwise modified or refinanced,
including without limitation any amendment involving an increase in principal,
interest rate or other amount, the "Credit Agreement") with the Pledgor,
pursuant to which such lenders and issuers agreed to lend certain sums to the
Pledgor upon the terms and conditions specified in the Credit Agreement under
(1) a revolving credit facility with a swing loan subfacility, and (2) two
separate term loan facilities, and to issue, or participate in the issuance of,
certain letters of credit. In addition, the Credit Agreement currently requires
the Borrower under certain conditions to enter into certain interest rate
hedging agreements.
One of the prerequisites to the making of advances by the Lenders (as
defined in the Credit Agreement) under the Credit Agreement and the issuing of
letters of credit thereunder is that the Pledgor shall have entered into this
Borrower Pledge Agreement and shall have granted to the Agent for the benefit of
the Senior Secured Parties a security interest in and to all of the ownership
interests in the Pledgor's Subsidiaries owned by Pledgor and certain
intercompany notes (as more fully described below) to secure its obligations
under the Credit Agreement, and certain related documents and agreements as more
fully set forth below. This Borrower Pledge Agreement is being executed and
delivered pursuant to Section 4.1.5 of the Credit Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, and in consideration of the mutual covenants herein contained and other
good and valuable consideration receipt of which is hereby acknowledged, agree
as follows:
SECTION 1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to such terms in, or by reference in, the Credit
Agreement or the Uniform Commercial Code, as applicable. The following terms
shall have the following meanings:
<PAGE> 256
"Collateral" shall mean (without duplication):
(i) all Investment Property evidencing ownership
interests in, or related to, any Subsidiary of the Pledgor, including, without
limitation: (a) the shares of capital stock and other securities of, or issued
by, any of the entities listed on Schedule I hereto (as the same may be modified
from time to time pursuant to the terms hereof), and any other shares of capital
stock of and/or other securities of any Subsidiary of the Pledgor obtained in
the future by the Pledgor, and, in each case, all certificates representing such
shares and/or securities and/or ownership interests and, in each case, all
rights, options, warrants, stock, other securities and ownership interests which
may hereafter be received, receivable or distributed in respect of, or exchanged
for, any of the foregoing (all of the foregoing being referred to herein as the
"Pledged Securities"); and (b) all of Pledgor's right, title and interest,
direct or indirect, present or future, in and to any Subsidiary of the Pledgor
which is, or may be from time to time, formed as a partnership or limited
partnership or other such entity, including, without limitation, all rights
under the governing partnership agreement and all rights of the Pledgor to
receive monies due and to become due pursuant thereto (all the foregoing being
referred to herein as "Pledged Partnership Interests");
(ii) all other property which may be delivered to and
held by the Agent pursuant to the terms hereof of any character whatsoever into
which any of the foregoing may be converted or which may be substituted for any
of the foregoing; and
(iii) all Proceeds of the Pledged Securities and
Pledged Partnership Interests and of such other property, including, without
limitation, all dividends, interest, cash, notes, securities or other property
at any time and from time to time acquired, receivable or otherwise distributed
in respect of, or in exchange for, any of or all such Pledged Securities,
Pledged Partnership Interests or other property.
"FCC" shall mean the Federal Communications Commission or any
governmental body succeeding to the functions of such commission.
"FCC License" shall mean any radio, microwave, or other
communications license, permit, certificate of compliance, franchise, approval
or authorization granted or issued by the FCC for control, ownership,
acquisition, construction, operation, management or maintenance of domestic
cable television systems, radio broadcasting systems or businesses directly
related thereto.
"Franchise" shall mean a franchise, permit or license
(including, without limitation, an FCC License), designation or certificate
granted by the United States or any other country, territory or state or a city,
town, county or other municipality, PUC or any other regulatory authority
pursuant to which a Person has the right to own, control, acquire, construct,
operate, manage or maintain a domestic cable television system, radio
broadcasting system or business directly related thereto.
"Lien" shall mean, as to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance in or on,
or any interest or title of any vendor, lessor, lender or other secured party to
or of such Person under any conditional sale or other title retention agreement
or capital lease with respect to, any property or asset of such Person.
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"Necessary Endorsement" shall mean undated stock powers
endorsed in blank (with signatures properly guaranteed) or other proper
instruments of assignment duly executed and such other instruments or documents
as the Agent may reasonably request.
"Proceeds" shall have the meaning assigned to such term under
the Uniform Commercial Code and, in any event, shall include (i) any and all
proceeds of any guarantee, insurance or indemnity payable to the Pledgor from
time to time with respect to any of the Collateral; (ii) any and all payments
(in any form whatsoever) made or due and payable to the Pledgor from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
(or any person acting under color of governmental authority); and (iii) any and
all other amounts from time to time paid or payable with respect to or in
connection with any of the Collateral.
"PUC" shall mean any state or local regulatory agency or body
that exercises jurisdiction over the ownership, construction, operation,
acquisition, management or maintenance of domestic cable television systems,
radio broadcasting systems or businesses directly related thereto.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code, as amended, as is in effect in the Commonwealth of Pennsylvania or in any
applicable state as the case may be.
SECTION 2. CREATION OF SECURITY INTEREST
As security for the payment and performance in full
of the Senior Secured Obligations, the Pledgor hereby hypothecates, pledges,
assigns, sets over and delivers unto the Agent, and grants to the Agent, for the
equal (in priority) and ratable benefit of the Senior Secured Parties, a
continuing first priority security interest in all its right, title and interest
in, to and under the Collateral, TO HAVE AND TO HOLD the Collateral, together
with all right, title, interest, powers, privileges and preferences pertaining
or incidental thereto, unto the Agent, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 3. DELIVERY OF COLLATERAL
3.1 At Time of Execution of Agreement. Contemporaneously with
the execution of this Borrower Pledge Agreement or, in any event, prior to the
Closing Date, the Pledgor shall deliver or cause to be delivered to the Agent
(i) any and all certificates and other instruments representing or evidencing
the Pledged Securities or Pledged Partnership Interests, (ii) any and all
certificates and other instruments or documents representing any of the
Collateral and (iii) all other property comprising part of the Collateral, in
each case along with the Necessary Endorsements. Pledgor is, contemporaneously
with the execution hereof, delivering to Agent, or has previously delivered to
Agent, an original counterpart of each partnership agreement governing the
Pledged Partnership Interests. (At any time and from time to time at the request
of Agent, Pledgor shall deliver to Agent certificates, if any, evidencing the
Pledged
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Partnership Interests, Partnership Interest Assignment Powers duly endorsed in
blank for transfer and UCC-1 Financing Statements covering the Collateral.)
3.2 Subsequent Delivery of Collateral. If the Pledgor shall
become entitled to receive or shall receive any securities or other property
(including, without limitation, shares of Pledged Securities or instruments
representing Pledged Partnership Interests acquired after the Closing Date, or
any options, warrants, rights or other similar property or certificates
representing a stock dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of the Pledgor or any Subsidiary of
Pledgor but excluding dividends and interest permitted to be retained under
Section 5) in respect of the Pledged Securities or Pledged Partnership Interests
(whether as an addition to, in substitution of, or in exchange for, such Pledged
Securities or Pledged Partnership Interests or otherwise), the Pledgor agrees:
(i) to accept the same as the agent of the Agent,
(ii) to hold the same in trust on behalf of and for
the benefit of the Agent, and
(iii) to deliver any and all certificates or
instruments evidencing the same to the Agent on or before the close of business
on the seventh (7th) Business Day following the receipt thereof by the Pledgor,
in the exact form received together with the Necessary Endorsements, to be held
by the Agent subject to the terms of this Borrower Pledge Agreement, as
additional Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PLEDGOR
4.1 Representations and Warranties. Pledgor represents and
warrants that each representation and warranty set forth in the Loan Documents
that relates to or refers to the Pledgor or the Collateral subject hereto (or,
in either case, any other term that is used with the same or similar meaning) is
incorporated herein by reference and is true and correct on and as of the date
hereof. Without limiting the generality of the foregoing, the Pledgor further
represents and warrants that:
(i) the Pledged Securities and the Pledged
Partnership Interests included in the Collateral are not subject to any charter,
bylaw, statutory, contractual or other restriction governing their issuance,
transfer, ownership or control which restriction would limit the effectiveness
or enforceability of the pledge and security interest created under this
Borrower Pledge Agreement, except to the extent that regulatory considerations
reflected in Section 11 hereof may affect the enforceability of certain rights
and remedies of the Senior Secured Parties hereunder and
(ii) the stock and securities listed on Schedule I
hereto represents all of the stock and securities held by Pledgor in any
Subsidiary of Pledgor;
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<PAGE> 259
(iii) the indebtedness listed on Schedule II hereto
represents all the intercompany debt owing or issued to the Pledgor;
(iv) the partnership interests listed on Schedule III
hereto represents all the partnership interests (whether as a general or limited
partner) held by Pledgor in any Subsidiary of the Pledgor;
(v) The chief executive office of the Pledgor and the
other offices or places of business of Pledgor or any offices where records
concerning the Collateral are kept are set forth on the signature pages hereto.
Pledgors are not known by any other name except the name appearing on the
signature page hereof;
(vi) the Pledgor is the legal and beneficial owner of
the Pledged Securities and Pledged Partnership Interests, free and clear of any
lien, security interest, option or of the charge or encumbrance except for the
security interests created by this Borrower Pledge Agreement; and
(vii) the pledge of the Pledged Securities and
Pledged Partnership Interests pursuant to this Borrower Pledge Agreement and the
filing of the necessary financing statements (which filings have been duly made)
create a valid and perfected first priority security interest in the Collateral
securing payment of the Senior Secured Obligations.
4.2 Survival of Representations and Warranties. All the
foregoing representations and warranties (including, without limitation, those
incorporated by reference) shall survive the execution and delivery of this
Borrower Pledge Agreement and shall continue until this Borrower Pledge
Agreement is terminated as provided herein and shall not be affected or waived
by any inspection or examination made by or on behalf of Agent or any Secured
Party.
SECTION 5. VOTING; DIVIDENDS
5.1 Rights Prior To Default. Other than during the existence
of an Event of Default,
(i) Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral or any part
thereof for any purpose not inconsistent with the terms of the Loan Documents.
(ii) Subject to and limited by the restrictions on
dividends and other payments in respect of the Collateral set forth in the Loan
Documents, Pledgor shall be entitled to receive and retain any and all
dividends, interest and other payments paid in respect of the Collateral,
provided, however, that any and all
(a) dividends or other payments paid or
payable other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in exchange for,
any Collateral,
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(b) dividends and other distributions paid
or payable in cash in respect of any Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and
(c) cash paid, payable or otherwise
distributed in respect of principal of, or in redemption of, or exchange for,
any Collateral, except as specifically permitted by the Credit Agreement, shall
forthwith be delivered to the Agent to hold as Collateral and shall, if received
by Pledgor, be received in trust for the benefit of the Agent on behalf of the
Senior Secured Parties, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to the Agent as Collateral in the same form
as so received (with any Necessary Endorsement).
(iii) The Agent shall execute and deliver to the
Pledgor all such proxies and other instruments as the Pledgor may reasonably
request for the purpose of enabling the Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to paragraph (i) above and to
receive the dividends or interest payments which it is authorized to receive and
retain pursuant to paragraph (ii) above.
5.2 Rights After a Default. Upon the occurrence and during the
continuation of an Event of Default and as more fully set forth in Section 10
below,
(i) Subject to Section 11 below, all rights of the
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to subsection 5.1 above and to
receive the dividends, interest and other payments which it would otherwise be
authorized to receive and retain pursuant to subsection 5.1 above shall cease,
and all such rights shall thereupon become vested in the Agent who shall have
the sole right to exercise such voting and other consensual rights and to
receive and hold as Collateral such dividends, interest and other payments.
(ii) All dividends, interest and other payments which
are received by the Pledgor contrary to the provisions of paragraph (i) of this
subsection 5.2 shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor and shall forthwith be paid over to
the Agent as Collateral in the same form as so received (with any Necessary
Endorsement).
5.3 Liability of Agent and of the Senior Secured Parties
Nothing in the Borrower Pledge Agreement shall be construed to subject the Agent
or any Senior Secured Parties to liability as a partner in any Subsidiary of
Pledgor that is a partnership nor shall the Agent or any Senior Secured Party be
deemed to have assumed any obligations under any partnership agreement of such a
Subsidiary or otherwise, unless and until Agent exercises its right to be
substituted for the Pledgor as a partner pursuant hereto.
SECTION 6. COVENANTS OF PLEDGOR
6.1 Each of the covenants and agreements which are set forth
or incorporated in the Loan Documents and which are applicable or refer to the
Pledgor or the Collateral subject
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hereto (or, in either case, any other term that is used with the same or similar
meaning) are incorporated herein by reference and the Pledgor agrees to perform
and abide by each such covenant and agreement. Without limiting the generality
of the foregoing and in furtherance thereof, the Pledgor shall vote the stock
and securities included in the Collateral to comply with the covenants and
agreements set forth in the Loan Documents. Without limiting the generality of
the foregoing, Pledgor shall not sell or otherwise dispose of, or grant any
option with respect to, any of the Collateral, except in connection with a sale
permitted under the provisions of the Credit Agreement providing for
dispositions to third parties free of Liens.
6.2 Proceeds of Collateral Disposition. During the continuance
of a Potential Event of Default or an Event of Default, at the Agent's request,
the Pledgor shall establish and maintain at all times a trust account with the
Agent, and all Proceeds, before or after an Event of Default, shall be deposited
directly and immediately into such account. The Pledgor shall be responsible for
all costs and fees arising with respect to such account at the standard rates.
The Pledgor expressly and irrevocably authorizes and consents to the ability of
the Agent to charge such trust account, in its sole discretion, and recover from
the funds on deposit therein, from time to time and at any time, and apply those
funds against any and all Senior Secured Obligations.
SECTION 7. FURTHER ASSURANCES
The Pledgor agrees that at any time and from time to
time, at the expense of the Pledgor and its Subsidiaries, the Pledgor and its
Subsidiaries will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral including, without limitation, using its best efforts to cooperate in
obtaining any FCC, PUC, or other governmental approval of any action or
transaction contemplated hereby or thereby.
SECTION 8. AGENT APPOINTED ATTORNEY-IN-FACT; MAY PERFORM CERTAIN DUTIES
8.1 Appointment as Attorney-in-fact. Effective upon the
occurrence of an Event of Default, and so long as Agent reasonably believes such
Event of Default is continuing, the Pledgor hereby appoints the Agent as its
true and lawful agent, proxy, and attorney-in-fact for the purpose of carrying
out this Borrower Pledge Agreement and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes hereof including, without limitation, the execution on behalf of
Pledgor of any financing or continuation statement with respect to the security
interest created hereby and the endorsement of any drafts or orders which may be
payable to Pledgor in respect of, arising out of, or relating to any or all of
the Collateral. This power shall be valid until the termination of the security
interests created hereunder, any limitation under law as to the length or
validity of a proxy to the contrary notwithstanding. This appointment is
irrevocable and coupled with an interest and any proxies heretofore given by the
Pledgor to any other Person are revoked. The designation set forth herein shall
be deemed to amend and supersede any inconsistent provision in the articles of
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incorporation, bylaws or other documents to which Pledgor or any Subsidiary of
Pledgor is subject or to which any is a party.
8.2 Registration of Securities. Pledgor and each Subsidiary of
the Pledgor shall register the pledge of the shares included in the Collateral
in the name of the Agent on the books of the Pledgor or such Subsidiary. Upon
the occurrence of an Event of Default, Pledgor and each of the Subsidiaries of
Pledgor shall at the direction of the Agent register the shares included in the
Collateral in the name of the Agent on the books of the Pledgor and Pledgor's
Subsidiaries.
8.3 Performance of Pledgor's Duties. In furtherance, and not
by way of limitation, of the foregoing subsections 8.1 and 8.2, if (at any time
either before or after the occurrence of an Event of Default) the Pledgor fails
to perform any agreement contained herein, the Agent may (but under no
circumstance is obligated to) perform such agreement and any expenses incurred
shall be payable by the Pledgor and its Subsidiaries provided, however, that
nothing herein shall be deemed to relieve the Pledgor from fulfilling any of its
obligations hereunder.
8.4 Acts May Be Performed By Agents and Employees. Any act of
the Agent to be performed pursuant to this Section 8 or elsewhere in this
Borrower Pledge Agreement may be performed by agents or employees of the Agent.
SECTION 9. STANDARD OF CARE.
9.1 In General. No act or omission of any Secured Party (or
agent or employee thereof) shall give rise to any defense, counterclaim or
offset in favor of the Pledgor or any claim or action against any such Secured
Party (or agent or employee thereof), in the absence of gross negligence or
willful misconduct of such Secured Party as determined in a final, nonappealable
judgment of a court of competent jurisdiction. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Agent accords to its own property, it being understood that it
has no duty to take any action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral or to preserve
any rights of any parties and shall only be liable for losses which are a result
of its gross negligence or willful misconduct as determined in a final,
nonappealable judgment of a court of competent jurisdiction.
9.2 Reliance on Advice of Counsel. In taking any action under
this Borrower Pledge Agreement, the Agent shall be entitled to rely upon the
advice of counsel of Agent's choice and shall be fully protected in acting on
such advice whether or not the advice rendered is ultimately determined to have
been accurate.
SECTION 10. DEFAULT
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10.1 Certain Rights Upon Default. In addition to any other
rights accorded to the Agent and the Senior Secured Parties hereunder, upon the
occurrence and during the continuation of an Event of Default:
10.1.1 The Agent shall be entitled to receive any interest,
cash dividends or other payments on the Collateral and, subject to Section 11
below, to exercise in the Agent's discretion all voting rights pertaining
thereto as more fully set forth in Section 5 above. Without limiting the
generality of the foregoing, subject to Section 11 below, the Agent shall have
the right to exercise all rights with respect to the Collateral as if it were
the sole and absolute owner thereof, including, without limitation, to vote
and/or to exchange, at its sole discretion, any or all of the Collateral in
connection with a merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral or the Pledgor or any
Subsidiary of the Pledgor.
10.1.2 Pledgor and each of its Subsidiaries shall take any
action necessary or required or requested by the Agent in order to allow it
fully to enforce the security interest in the Collateral hereunder and to
realize thereon to the fullest extent possible, including, but not limited to,
the filing of any claims with any court, liquidator, trustee, guardian, receiver
or other like person or party.
10.1.3 The Agent shall have all of the rights of a secured
party under the Uniform Commercial Code of Pennsylvania, as amended, and any
other applicable law including the right to sell on such terms as it may deem
appropriate any or all of the Collateral at one or more public or private sales
upon at least ten (10) Business Days' written notice to Pledgor of the time and
place of any public sale and of the date on which the Collateral will first be
offered for sale in the case of any private sale. Agent shall have the right to
bid thereat or purchase any part or all the Collateral in its own or a nominee's
name (subject to applicable FCC or PUC requirements or restrictions). The Agent
shall have the right to apply the proceeds of the sale, after deduction for any
costs and expenses of sale (including any liabilities incurred in connection
therewith including reasonable attorneys' fees and allocated costs of attorneys
who are employees of the Agent), to the payment of the Senior Secured
Obligations in any manner or order which the Agent, in its sole discretion, may
elect (whether pursuant to the Credit Agreement or otherwise), to the payment of
any other amount required by law (including without limitation Section
9-504(1)(c) of the Uniform Commercial Code), and to pay any remaining proceeds
to Pledgor or its successors or assigns or to whomsoever may lawfully be
entitled to receive the same or as a court of competent jurisdiction may direct,
without further notice to or consent of Pledgor and without regard to any
equitable principles of marshalling or other like equitable doctrines. Pledgor
hereby acknowledges and agrees that the notice provided for above is reasonable
and expressly waives any rights it may have of equity of redemption, stay or
appraisal with respect to the Collateral.
10.1.4 For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Agent shall be free to carry out such sale pursuant to such agreement, and
Pledgor shall not be entitled to the return of the Collateral or any portion
thereof, notwithstanding the fact that after Agent shall have entered into such
an agreement, any and all Events of Default shall have been remedied and the
Senior Secured Obligations paid in full.
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10.1.5 The Agent shall have the right, with full power of
substitution either in the Agent's name or the name of the Pledgor, to ask for,
demand, sue, collect and receive any and all moneys due or to become due under
and by virtue of the Collateral and to settle, compromise, prosecute or defend
any action, claim or proceeding with respect thereto, provided, however, that
nothing herein shall be construed as requiring the Agent to take any action,
including, without limitation, requiring or obligating the Agent to make any
inquiry as to the nature or sufficiency of any payment received, or to present
or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby.
10.1.6 The Agent shall be entitled to the appointment of a
receiver or trustee for all or any part of the businesses of the Pledgor or its
Subsidiaries, which receiver shall have such powers as may be conferred by law
or the appointing authority.
10.2 Agent May Exercise Less Than All Rights. Pledgor hereby
acknowledges and agrees that the Agent is not required to exercise all remedies
and rights available to it equally with respect to all of the Collateral, and
the Agent may select less than all of the Collateral with respect to which the
remedies as determined by the Agent may be exercised.
10.3 Duties of Pledgor and Subsidiaries of the Pledgor With
Respect to Transferee. In the event that, upon an occurrence of an Event of
Default, the Agent shall sell all or any of the Collateral to another party or
parties (herein called "Transferee") or shall purchase or retain all or any of
the Collateral, Pledgor and each Subsidiary of the Pledgor shall:
(i) Deliver to the Agent or Transferee, as the case
may be, the articles of incorporation, bylaws, minute books, stock certificate
books, corporate seals, deeds, leases, indentures, agreements, evidences of
indebtedness, books of account, financial records and all other documents and
records of Pledgor and each Subsidiary of the Pledgor;
(ii) Use its best efforts to obtain resignations of
the persons then serving as officers and directors of Pledgor and each
Subsidiary of the Pledgor, if so requested; and
(iii) Use its best efforts to obtain any approvals
that are required by any governmental or regulatory body in order to permit the
sale of the Collateral to the Transferee or the purchase or retention of the
Collateral by the Agent and allow the Transferee or the Agent to continue the
business of the issuer.
SECTION 11. ACKNOWLEDGEMENT OF REGULATORY CONSIDERATIONS; UNIQUE NATURE
OF ASSETS.
11.1 FCC/PUC Approval. It is hereby acknowledged that transfer
of certain Collateral and the exercise of certain other remedies provided herein
may constitute a transfer of an FCC License or other Franchise or a sale or
transfer of control of a holder of an FCC License or other Franchise, requiring
approval of the FCC or PUC, pursuant to rules and regulations of the FCC or PUC.
Notwithstanding anything to the contrary contained in this Agreement, the Agent
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will not knowingly take any action pursuant to this Agreement which would
constitute or result in assignment of an FCC License or other Franchise or any
transfer of control of the holder of an FCC License or other Franchise if such
assignment of license or transfer of control would require under then existing
law (including the written rules and regulations promulgated by the FCC or any
PUC), the prior approval of the FCC or such PUC, without first obtaining such
approval. In connection with this provision, the Agent shall be entitled to rely
upon the advice of counsel of Agent's choice whether or not the advice rendered
is ultimately determined to have been accurate.
11.2 Pledgor and Subsidiary of Pledgor Assistance in Obtaining
Approval. Without limiting the generality of Section 7 above, if counsel to the
Agent reasonably determines that the consent of the FCC or the PUC is required
in connection with any of the actions hereunder or under any other Loan
Document, then the Pledgor and each Subsidiary thereof (at its cost and expense)
agrees to use its best efforts to secure such consent and to cooperate fully
with the Agent in any action to secure such consent. Without limiting the
generality of the foregoing, Pledgor and each Subsidiary thereof shall promptly
execute and file and/or cause the execution and filing of all applications,
certificates, instruments, and other documents and papers that the Agent deems
necessary or advisable to file in order to obtain any necessary governmental
consent, approval, or authorization, and if Pledgor or any Subsidiary thereof
fails or refuses to execute (or fails or refuses to cause another Person to
execute) such documents, the Agent or the clerk of any court of competent
jurisdiction may execute and file the same on behalf of the Pledgor or such
other Person.
11.3 Unique Nature of Assets. It is agreed that the FCC
Licenses and other Franchises held by the Pledgor and its Subsidiaries are
unique assets which (or the control of which) may have to be transferred in
order for the Agent adequately to realize the value of its security interest. A
violation of the covenants set forth in this Section would result in irreparable
harm to the Agent for which monetary damages are not readily ascertainable.
Therefore, in addition to any other remedy which may be available to the Agent
at law or in equity, Agent shall have the remedy of specific performance of the
provisions of this Section. To enforce the provisions of this Section, the Agent
is authorized to request the consent or approval of the FCC or PUC to a
voluntary or an involuntary transfer of control of any FCC License or other
Franchise or sale or transfer of control of a holder of an FCC License or other
Franchise.
11.4 Selection by Agent of Different Transferee. If, for any
reason, the FCC or PUC does not approve within a reasonable period of time
(which period shall be determined conclusively by the Agent), the initial
application for approval of the transfer of the Collateral, the Agent shall then
have the right to transfer the Collateral to such other Person as the Agent
shall select (subject to the prior approval of the FCC or PUC). With respect to
such subsequent selection, Pledgor agrees to cooperate fully in the manner set
forth above. Exercise by the Agent of the right to such cooperation shall not be
exhausted by the initial or any subsequent exercise thereof.
SECTION 12. SECURITIES LAW PROVISION
Pledgor recognizes that the Agent may be limited in its
ability to effect a sale to the public of all or part of the Collateral by
reason of certain prohibitions in the Securities
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Act of 1933, as amended, or other federal or state securities laws
(collectively, the "Securities Laws"), and may be compelled to resort to one or
more sales to a restricted group of purchasers who may be required to agree to
acquire the Collateral for their own account, for investment and not with a view
to the distribution or resale thereof. Pledgor agrees that sales so made may be
at prices and on terms less favorable than if the Collateral were sold to the
public, and that the Agent has no obligation to delay the sale of any Collateral
for the period of time necessary to register the Collateral for sale to the
public under the Securities Laws. Pledgor and each Subsidiary thereof shall
cooperate with the Agent in its attempts to satisfy any requirements under the
Securities Laws (including without limitation registration thereunder if
requested by Agent) applicable to the sale of the Collateral by the Agent.
SECTION 13. SECURITY INTEREST ABSOLUTE; WAIVERS BY PLEDGOR
13.1 Absolute Nature of Security Interest. All rights of the
Agent hereunder, the grant of the security interest in the Collateral and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of (i) any lack of validity or enforceability of any of the terms
of the Loan Documents or any other instrument or document relating hereto or
thereto, (ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Senior Secured Obligations, or any other
amendment or waiver of any terms related thereto, (iii) any exchange, release or
nonperfection of any other collateral, or any release or amendment or waiver of
any guaranty, or (iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor or any other Person in
respect of the Senior Secured Obligations or in respect of this Borrower Pledge
Agreement or any other Loan Document or any obligations hereunder or thereunder.
13.2 No Duty To Marshal Assets. The Agent shall have no
obligation to marshal any assets in favor of the Pledgor or any other Person or
against or in payment of any or all of the Senior Secured Obligations.
13.3 Waiver with Right of Subrogation, Etc. The Pledgor
acknowledges that until all the Senior Secured Obligations shall have been
indefeasibly paid in full, the Pledgor shall have no right (or hereby waives any
such right) of subrogation, reimbursement, or indemnity whatsoever, in respect
of any Subsidiary of the Pledgor, arising out of remedies exercised by the Agent
hereunder.
13.4 Waivers. The Pledgor hereby waives notice of acceptance
of this Borrower Pledge Agreement. The Pledgor further waives presentment and
demand for payment of any of the Senior Secured Obligations, protest and notice
of dishonor or default with respect to any of the Senior Secured Obligations,
and all other notices to which the Pledgor might otherwise be entitled, except
as otherwise expressly provided in this Borrower Pledge Agreement or any of the
other Loan Documents. The Pledgor (to the extent that it may lawfully do so)
covenants that it shall not at any time insist upon or plead, or in any manner
claim or take the benefit of, any stay, valuation, appraisal or redemption now
or at any time hereafter in force that, but for this waiver, might be applicable
to any sale made under any judgment, order or decree based on this Borrower
Pledge Agreement or any other Loan Document; and the Pledgor (to the extent that
it may lawfully do so) hereby expressly waives and relinquishes all benefit of
any and all such laws and hereby covenants
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that it will not hinder, delay or impede the execution of any power in this
Borrower Pledge Agreement or in any other Loan Document delegated to the Agent,
but that it will suffer and permit the execution of every such power as though
no such law or laws had been made or enacted.
SECTION 14. NON-WAIVER AND NON-EXCLUSIVE REMEDIES
14.1 Non-Exclusive Remedies. No remedy or right herein
conferred upon, or reserved to the Agent is intended to be to the exclusion of
any other remedy or right, but each and every such remedy or right shall be
cumulative and shall be in addition to every other remedy or right given
hereunder or under any other Loan Document or under law.
14.2 Delay and Non-Waiver. No delay or omission by the Agent
to exercise any remedy or right hereunder shall impair any such remedy or right
or shall be construed to be a waiver of any Event of Default, or an acquiescence
therein, nor shall it affect any subsequent Event of Default of the same or of a
different nature.
SECTION 15. EFFECT OF PLEDGE ON CERTAIN SHAREHOLDER RIGHTS.
If any of the Collateral subject to this Borrower
Pledge Agreement consists of shares of nonvoting stock (regardless of their
class, designation, preference or rights) or other instruments which may be
converted into voting stock upon the occurrence of certain events (including,
without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such stock or other instruments
pursuant to this Borrower Pledge Agreement or the enforcement of any of the
Agent's rights hereunder shall not be deemed to be the type of event which would
trigger such conversion rights notwithstanding any provisions in the charter,
bylaws or agreements of the issuer or the Pledgor to the contrary.
SECTION 16. CONTINUING SECURITY INTEREST; HEIRS AND ASSIGNS.
This Borrower Pledge Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in full
force and effect until terminated pursuant to Section 17 below, (ii) be binding
upon the Pledgor, its successors and assigns and (iii) inure to the benefit of
the Agent, the other Senior Secured Parties and their respective successors,
transferees and assigns provided, however, that the Pledgor shall not be
permitted to transfer any of its obligations hereunder.
SECTION 17. TERMINATION OF AGREEMENT; RELEASE OF COLLATERAL
17.1 Termination of Agreement. At such time as (a) the Senior
Secured Parties have no obligation to make further loans or other extensions of
credit to the Pledgor under the Credit Agreement, and (b) all the Senior Secured
Obligations have been indefeasibly paid and/or performed in full, then this
Borrower Pledge Agreement shall terminate and the Collateral shall be released
pursuant to subsection 17.2, provided that if at the time of the payment in full
of the Senior Secured Obligations (i) such payment and performance is not
subject to any filed or threatened claim, contest, voidance or offset of any
kind whatsoever, (ii) the chief financial officer of the Pledgor so certifies in
writing to the Agent and (iii) Pledgor supplies to Agent such valuations,
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<PAGE> 268
information, evidence, certifications and opinions as Agent may request in
connection therewith, this Borrower Pledge Agreement shall terminate upon
satisfaction of the conditions in clauses (a) and (b) above without giving
effect to the requirement that the payment in full be indefeasible.
17.2 Duties of Agent With Respect To Release of Collateral.
When this Agreement terminates pursuant to subsection 17.1 above, the Agent
shall reassign and deliver to the Pledgor, or to such Person as the Pledgor
shall designate, against receipt, such of the Collateral (if any) as shall not
have been sold or otherwise applied by the Agent pursuant to the terms hereof
and shall still be held by it hereunder, together with appropriate instruments
of reassignment and release, all without any recourse to, or warranty whatsoever
by, the Agent, at the sole cost and expense of the Pledgor.
17.3 Release of Certain Collateral. Effective upon the closing
of a sale of any Collateral in conformity with the provisions of the Credit
Agreement providing for dispositions to third parties free of Liens, and receipt
by the Agent of a certification to such effect from the chief financial officer
of the Pledgor, then the security interest in the assets which are the subject
of the sale (the "Sold Collateral") shall terminate. The Agent shall thereupon
reassign and deliver to Pledgor, or to such Person as the Pledgor shall
designate, against receipt, the Sold Collateral, together with appropriate
instruments or reassignment and release, all without any recourse to, or
warranty whatsoever by, the Agent, at the sole cost and expense of the Pledgor
and its Subsidiaries.
SECTION 18. PAYMENT OF COSTS AND EXPENSES; INDEMNITIES
18.1 Payment of Costs and Expenses. Upon demand, the Pledgor
shall pay to the Agent the amount of any and all reasonable expenses incurred by
the Agent hereunder or in connection herewith, including, without limitation
those that may be incurred in connection with (i) the administration of this
Borrower Pledge Agreement (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Agent hereunder or (iv) the
failure of the Pledgor to perform or observe any of the provisions hereof.
18.2 Fees. The Pledgor will, upon demand, pay to the Agent
such reasonable fees (in addition to its expenses) for its services as Agent as
may be agreed upon from time to time between the Agent and the Pledgor.
18.3 Indemnification. The Pledgor agrees to indemnify and hold
harmless the Agent and other Senior Secured Parties (and, in each case, its
directors, officers, agents and employees) to the fullest extent permitted by
law, from and against any and all claims, losses, liabilities, actions,
judgments, demands, costs and expenses of whatever nature incurred by the Agent
or such Secured Party hereunder or in connection herewith, unless such claim,
loss, liability, action, judgment, demand, cost or expense is the result of the
willful misconduct or gross negligence of said indemnified party as shall have
been determined in a final, nonappealable judgment of a court of competent
jurisdiction. This indemnification shall survive the termination of this
Agreement.
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18.4 Taxes. The Pledgor hereby agrees to pay to the Agent,
upon demand, the amount of any taxes which the Agent may have been required to
pay by reason of the security interests established pursuant to this Borrower
Pledge Agreement (including any applicable transfer taxes).
18.5 Interest. All monetary obligations of the Pledgor under
this Section 18 shall bear interest following demand at the Base Rate (as
defined in the Credit Agreement) plus two (2) per cent.
18.6 Additional Obligations. Any amounts payable pursuant to
this Section 18 shall be additional Senior Secured Obligations secured hereby.
SECTION 19. MISCELLANEOUS PROVISIONS
19.1 Notices
All notices, requests, demands, directions and other
communications (collectively "notices") given or made upon any party under the
provisions of this Borrower Pledge Agreement shall be by telephone or in writing
(including facsimile communication) unless otherwise expressly provided under
this Borrower Pledge Agreement and if in writing, shall be delivered or sent by
facsimile to the respective parties at the addresses and numbers set forth under
their respective names on the signature pages to this Borrower Pledge Agreement
or in accordance with any subsequent unrevoked written direction from any party
to the others. All notices shall, except as otherwise expressly provided in this
Borrower Pledge Agreement, be effective (a) in the case of facsimile, when
received, (b) in case of hand-delivered notice, when hand delivered, (c) in the
case of telephone, when telephoned, provided, however, that in order to be
effective, telephonic notices must be confirmed in writing no later than the
next day by letter, facsimile or telex, (d) if given by mail, four (4) days
after such communication is deposited in the mails with first class postage
prepaid, return receipt requested, and (e) if given by any other means
(including air courier), when delivered; provided, that notices to the Agent
shall not be effective until received. In the event of a discrepancy between any
telephonic or written notice, the written notice shall control.
19.2 Entire Agreement. This Borrower Pledge Agreement sets
forth all of the promises, covenants, agreements, conditions and understandings
among the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings, inducements or conditions,
express or implied, oral or written, with respect thereto, except as contained
or referred to herein.
19.3 Amendments. The terms of this Borrower Pledge Agreement
may be amended, terminated, modified, supplemented or waived only upon the
written consent of the Agent and the Pledgor. The rights of the Agent to so
change, modify, waive, discharge or terminate any provision hereof is subject to
the terms of Section 12.5 of the Credit Agreement, it being understood, however,
that the Pledgor is not a third party beneficiary of Section 12.5 of the Credit
Agreement.
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19.4 Governing Law. This Borrower Pledge Agreement and the
rights and obligations of the parties hereunder shall be construed and enforced
in accordance with and shall be governed by the laws of the Commonwealth of
Pennsylvania.
19.5 Arbitration; Consent to Jurisdiction, Service and Venue;
Waiver of Jury Trial.
19.5.1 Arbitration.
(i) Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any claim or controversy
arising out of, or relating to, the Loan Documents between any or all of the
parties hereto (a "Dispute") shall be resolved by binding arbitration conducted
under and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and the
Federal Arbitration Act. Disputes may include, without limitation, tort claims,
counterclaims, a dispute as to whether a matter is subject to arbitration,
claims brought as class actions, or claims arising from documents executed in
the future. A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to Interest Rate Protection Agreements.
(ii) All arbitration hearings shall be conducted in
the City of Philadelphia, Commonwealth of Pennsylvania unless otherwise agreed
by all parties to such arbitration. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall conclude within 120 days of demand
for arbitration. These time limitations may not be extended unless a party shows
cause for extension and then for no more than a total of 60 days. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000.00. Arbitrators shall be licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The parties do not waive applicable Federal or state substantive law
except as provided herein.
(iii) Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without diminution,
certain remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (a) all rights to foreclose against any real or
personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sales; (b) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; and (c) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment of
receiver and filing of involuntary bankruptcy proceedings. Any claim or
controversy with regard to any party's entitlement to such remedies is a
Dispute.
(iv) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A
REMEDY OF SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AGAINST OTHER
PARTIES IN ANY DISPUTE AND HEREBY WAIVE ANY RIGHT OR CLAIM TO SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES
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THEY HAVE NOW OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY DISPUTE
WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION OR JUDICIALLY.
19.5.2 Consent to Jurisdiction, Service and Venue; Waiver of
Jury Trial.
(i) With respect to any matters that may be heard
before a court of competent jurisdiction under paragraph (iii) of the preceding
subsection 19.5.1, the Pledgor hereby consents to the jurisdiction and venue of
the courts of the Commonwealth of Pennsylvania or of any federal court located
in such state, waives personal service of any and all process upon it and
consents that all such service of process be made by certified or registered
mail directed to the Pledgor at the address provided for in Section 19.1 above
and service so made shall be deemed to be completed upon actual receipt. The
Pledgor hereby waives the right to contest the jurisdiction and venue of the
courts located in the County of Philadelphia, Commonwealth of Pennsylvania on
the ground of inconvenience or otherwise and, further, waives any right to bring
any action or proceeding against (a) the Agent in any court outside the County
of Philadelphia, Commonwealth of Pennsylvania, or (b) any other Senior Secured
Party other than in a state within the United States designated by such Senior
Secured Party. The provisions of this Section 19.5 shall not limit or otherwise
affect the right of the Agent or any Senior Secured Party to institute and
conduct an action in any other appropriate manner, jurisdiction or court.
(ii) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE,
SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY
TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY
OTHER LOAN DOCUMENT OR ANY GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE
RELATIONSHIP BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NEITHER THE AGENT NOR
ANY SENIOR SECURED PARTY NOR THE PLEDGOR NOR ANY OTHER PERSON WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED.
(iii) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH
(iv) OF THE PRECEDING SUBSECTION 19.5.1 EXCEPT AS PROHIBITED BY LAW, EACH PARTY
TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY
ARBITRATION OR OTHER LITIGATION, ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
PUNITIVE DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
EACH PARTY TO THIS AGREEMENT (a) CERTIFIES THAT NEITHER THE AGENT NOR ANY
REPRESENTATIVE, OR ATTORNEY OF THE AGENT NOR ANY SENIOR SECURED PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR SUCH SENIOR SECURED PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(b) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 19.5. THE PROVISIONS OF THIS SECTION 19.5 HAVE
BEEN FULLY DISCLOSED TO THE PARTIES AND THE PROVISIONS SHALL BE
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SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO
ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 19.5 WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
19.6 Severability. If any of the provisions or terms of this
Borrower Pledge Agreement shall for any reason be held to be invalid or
unenforceable such invalidity or unenforceability shall not affect any of the
other terms hereof, but this Borrower Pledge Agreement shall be construed as if
such invalid or unenforceable term had never been contained herein. Any such
invalidity or unenforceability in a particular jurisdiction shall not be deemed
to render a provision invalid or unenforceable in any other jurisdiction.
19.7 Counterparts. This Borrower Pledge Agreement may be
executed in one or more counterparts, each of which shall constitute an original
agreement, but all of which together shall constitute one and the same
instrument. A photocopied or facsimile copy of any signature page to this
Borrower Pledge Agreement shall be deemed to be the functional equivalent of a
manually executed original for all purposes.
19.8 Compliance with Partnership Agreement. To the extent that
the grant of the security interest herein created in the Pledged Partnership
Interests and the enforcement of the terms hereof require the consent, approval
or action of any partner of the subject partnership or compliance with any
provisions of the subject partnership agreement, the Pledgor hereby grants such
consent and approval and waives any such noncompliance with the terms of said
partnership agreements.
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IN WITNESS WHEREOF, the parties have caused this Borrower
Pledge Agreement to be duly executed and delivered by their respective
authorized officers on the date first above written.
PLEDGOR:
SUSQUEHANNA MEDIA CO.
By:__________________________________
Name: Alan L. Brayman
Title: Treasurer
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717) 848-5500
Fax No. (717) 771-1440
Attention: Craig Bremer, Esquire
AGENT:
FIRST UNION NATIONAL BANK, in its capacity
as Agent
By:__________________________________
Name: Elizabeth Elmore
Title: Senior Vice President
Notice Information
Communications/Media Group
PA 4829
1 South Penn Square
P.O. Box 7618
Philadelphia, PA 19101
Phone No.: (215)786-4321
Fax No.: (215)786-7721
Attention: Elizabeth Elmore,
Senior Vice President
Signature Page to the Borrower Pledge Agreement
<PAGE> 274
JOINDER
The undersigned acknowledge the Borrower Pledge Agreement to
which this Joinder is attached, and hereby jointly and severally agree to be
bound by the foregoing Borrower Pledge Agreement and to perform the covenants
contained therein required to be performed by each.
SUSQUEHANNA CABLE CO.
SUSQUEHANNA CABLE INVESTMENT CO.
CABLE TV OF EAST PROVIDENCE, INC.
CASCO CABLE TELEVISION, INC.
CASCO CABLE TELEVISION OF BATH, MAINE
SBC CABLE CO.
YORK CABLE TELEVISION, INC.
SUSQUEHANNA RADIO CORP.
RADIO CINCINNATI, INC.
RADIO INDIANAPOLIS, INC.
RADIO METROPLEX, INC.
KPLX LICO, INC.
KPLX RADIO, INC.
KLIF BROADCASTING, INC.
KLIF LICO, INC.
KLIF RADIO, INC.
RADIO SAN FRANCISCO, INC.
KFFG LICO, INC.
Joinder to Borrower Pledge Agreement
<PAGE> 275
KRBE CO.
KNBR, INC.
BAY AREA RADIO CORP.
WSBA LICO, INC.
WVAE LICO, INC.
WNNX LICO, INC.
INDIANAPOLIS RADIO LICENSE CO.
KNBR LICO, INC.
KRBE LICO, INC.
TEXAS STAR RADIO, INC.
SUSQUEHANNA FIBER SYSTEMS, INC.
SUSQUEHANNA DATA SERVICES, INC.
MEDIA PCS VENTURES, INC.
INDY LICO, INC.
WRRM LICO, INC.
WFMS LICO, INC.
By:__________________________________
Name: Alan L. Brayman
Title: Treasurer
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717)848-5500
Fax No.: (717)771-1440
Attention: Craig Bremer, Esquire
Joinder to Borrower Pledge Agreement
<PAGE> 276
PARAGON RESEARCH LIMITED PARTNERSHIP,
by Susquehanna Radio Corp., its General
Partner*
KPLX LIMITED PARTNERSHIP, by KPLX Radio, Inc.,
its General Partner
KLIF BROADCASTING LIMITED PARTNERSHIP,
by KLIF Radio, Inc., its General Partner
By:_______________________________________
Alan L. Brayman on behalf of each of the
foregoing as Treasurer of the General
Partner
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717)848-5500
Fax No.: (717)771-1440
Attention: Craig Bremer, Esquire
*Subject to unwaived restrictions on transfer in partnership agreement.
Joinder to Borrower Pledge Agreement
<PAGE> 277
SCHEDULE I
TO BORROWER PLEDGE AGREEMENT
PLEDGED SECURITIES
SHARES OF STOCK AND OTHER SECURITIES OWNED BY BORROWER
1. 750,000 shares of Class A Common Stock of Susquehanna Cable Co.
2. 4,000,000 shares of Class A Common Stock of Susquehanna Radio Co.
3. 1,000 shares of Common Stock of Susquehanna Fiber Systems, Inc.
4. 1,000 shares of Common Stock of Susquehanna Data Services, Inc.
5. 1,000 shares of Common Stock of Media PCS Ventures, Inc.
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SCHEDULE II
TO BORROWER PLEDGE AGREEMENT
PLEDGED DEBT
None.
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SCHEDULE III
TO BORROWER PLEDGE AGREEMENT
PLEDGED PARTNERSHIP INTERESTS
None.
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PLEDGE AGREEMENT
("Subsidiary Pledge Agreement")
SUBSIDIARY PLEDGE AGREEMENT made as of the ____ day of _____, 1999, by
and between the Subsidiaries of Susquehanna Media Co. listed on the signature
pages to this Subsidiary Pledge Agreement (the foregoing, together with any
other entity that becomes a Pledgor hereunder pursuant to Section 20.10 below,
individually a "Pledgor" and collectively the "Pledgors") and FIRST UNION
NATIONAL BANK, a national banking association as agent on behalf of the Senior
Secured Parties (as defined in the Credit Agreement referred to below). First
Union National Bank in its capacity as agent hereunder, with its successors and
assigns, is hereinafter referred to as "Agent."
BACKGROUND OF AGREEMENT
On the date hereof certain lenders and issuers of letters of credit and
FIRST UNION NATIONAL BANK as Agent have entered into a Credit Agreement (as
amended, extended, supplemented, restated or otherwise modified or refinanced,
including without limitation any amendment involving an increase in principal,
interest rate or other amount, the "Credit Agreement") with Susquehanna Media
Co. (the "Borrower"), pursuant to which such lenders and issuers agreed to
extend credit to the Borrower upon the terms and conditions specified in the
Credit Agreement under (1) a revolving credit facility with a swing loan
subfacility, and (2) two separate term loan facilities, and to issue, or
participate in the issuance of, certain letters of credit. In addition, the
Credit Agreement currently requires the Borrower under certain conditions to
enter into certain interest rate hedging agreements.
Each of the Pledgors is a Subsidiary, direct or indirect, of the
Borrower. The Subsidiaries, wishing to induce the Lenders (as defined in the
Credit Agreement) to enter into the financings described above to enable the
Borrower to (among other things) make loans to them, and the Borrower and the
Subsidiaries having determined that they can obtain their borrowings more
economically by combining their financing needs into a single borrowing unit on
the parent company level, borrowing funds from institutional lenders on that
basis, and then entering into the requisite intercompany financings, the
Subsidiaries agreed to make the pledges set forth below in order to facilitate
such financings. Each Pledgor determined that it was in its best interests and
in pursuant of its business purposes that it do so and that it was and will be
Solvent, before and after giving effect to the transactions contemplated by the
Credit Agreement.
One of the prerequisites to the making of advances by the Lenders under
the Credit Agreement and the issuing of letters of credit thereunder was that
the Pledgors enter into this Subsidiary Pledge Agreement and grant to the Agent
for the benefit of the Senior Secured Parties a security interest in and to all
of the ownership interests in the Pledgors' Subsidiaries owned by Pledgors and
certain intercompany notes and other ownership interests (as more fully
described below) to secure the obligations of the Borrower under the Credit
Agreement, and certain related documents and agreements as more fully set forth
below. This Subsidiary Pledge Agreement is being executed and delivered pursuant
to Section 4.1.5 of the Credit Agreement.
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NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, and in consideration of the mutual covenants herein contained and other
good and valuable consideration receipt of which is hereby acknowledged, agree
as follows:
SECTION 1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to such terms in, or by reference in, the Credit
Agreement or the Uniform Commercial Code, as applicable. The following terms
shall have the following meanings:
"Collateral" shall mean (without duplication):
(i) all Investment Property evidencing ownership interests in,
or related to, the Borrower and/or any Subsidiary of the Borrower, including,
without limitation: (a) the shares of capital stock and other securities of, or
issued by, any of the entities listed on Schedule I hereto (as the same may be
modified from time to time pursuant to the terms hereof), and any other shares
of capital stock of and/or other securities of the Borrower and/or any
Subsidiary of the Borrower obtained in the future by any Pledgor, and, in each
case, all certificates representing such shares and/or securities and/or
ownership interests and in each case, all rights, options, warrants, stock,
other securities and ownership interests which may hereafter be received,
receivable or distributed in respect of, or exchanged for, any of the foregoing
(all the foregoing being referred to herein as "Pledged Securities"); and (b)
all the partnership and other equity interests of, or issued by, any of the
entities listed on Schedule II hereto (as the same may be modified from time to
time pursuant to the terms hereof) and all other rights, title and interest,
direct or indirect, present or future, of any Pledgor in and to (i) any
Subsidiary of such Pledgor and (without duplication) any Subsidiary of the
Borrower which is, or may be from time to time, formed as a partnership, limited
partnership, limited liability company or other such entity, including, without
limitation, in each case all rights under the governing partnership or other
organizational agreement and all rights of such Pledgor to receive monies due
and to become due pursuant thereto (all the foregoing being referred to herein
as "Pledged Partnership Interests");
(ii) all other property which may be delivered to and held by
the Agent pursuant to the terms hereof of any character whatsoever into which
any of the foregoing may be converted or which may be substituted for any of the
foregoing; and
(iii) all Proceeds of the Pledged Securities and Pledged
Partnership Interests and of such other property, including, without limitation,
all dividends, interest, cash, notes, securities or other property at any time
and from time to time acquired, receivable or otherwise distributed in respect
of, or in exchange for, any of or all such Pledged Securities, Pledged
Partnership Interests or other property.
"FCC" shall mean the Federal Communications Commission or any
governmental body succeeding to the functions of such commission.
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"FCC License" shall mean any radio, microwave, or other
communications license, permit, certificate of compliance, franchise, approval
or authorization granted or issued by the FCC for control, ownership,
acquisition, construction, operation, management or maintenance of domestic
cable television systems, radio broadcasting systems or businesses directly
related thereto.
"Franchise" shall mean a franchise, permit or license
(including, without limitation, an FCC License), designation or certificate
granted by the United States or any other country, territory or state or a city,
town, county or other municipality, PUC or any other regulatory authority
pursuant to which a Person has the right to own, control, acquire, construct,
operate, manage or maintain a domestic cable television system, radio
broadcasting system or business directly related thereto.
"Lien" shall mean, as to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance in or on,
or any interest or title of any vendor, lessor, lender or other secured party to
or of such Person under any conditional sale or other title retention agreement
or capital lease with respect to, any property or asset of such Person.
"Necessary Endorsement" shall mean undated stock powers
endorsed in blank (with signatures properly guaranteed) or other proper
instruments of assignment duly executed and such other instruments or documents
as the Agent may reasonably request.
"Proceeds" shall have the meaning assigned to such term under
the Uniform Commercial Code and, in any event, shall include (i) any and all
proceeds of any guarantee, insurance or indemnity payable to a Pledgor from time
to time with respect to any of the Collateral; (ii) any and all payments (in any
form whatsoever) made or due and payable to a Pledgor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
(or any person acting under color of governmental authority); and (iii) any and
all other amounts from time to time paid or payable with respect to or in
connection with any of the Collateral.
"PUC" shall mean any state or local regulatory agency or body
that exercises jurisdiction over the ownership, construction, operation,
acquisition, management or maintenance of domestic cable television systems,
radio broadcasting systems or businesses directly related thereto.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code, as amended, as is in effect in the Commonwealth of Pennsylvania or in any
applicable state as the case may be.
SECTION 2. CREATION OF SECURITY INTEREST
As security for the payment and performance in full of the
Senior Secured Obligations, each Pledgor hereby hypothecates, pledges, assigns,
sets over and delivers unto the Agent, and grants to the Agent, for the equal
(in priority) and ratable benefit of the Senior
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Secured Parties, a continuing first priority security interest in all its right,
title and interest in, to and under the Collateral, TO HAVE AND TO HOLD the
Collateral, together with all right, title, interest, powers, privileges and
preferences pertaining or incidental thereto, unto the Agent, forever; subject,
however, to the terms, covenants and conditions hereinafter set forth.
SECTION 3. DELIVERY OF COLLATERAL
3.1 At Time of Execution of Agreement. Prior to or
contemporaneously with the execution of this Subsidiary Pledge Agreement or, in
any event, prior to the Closing Date, each Pledgor shall deliver or cause to be
delivered to the Agent (i) any and all certificates and other instruments
representing or evidencing the Pledged Securities or Pledged Partnership
Interests, (ii) any and all certificates and other instruments or documents
representing any of the Collateral and (iii) all other property comprising part
of the Collateral, in each case along with the Necessary Endorsements. Each
Pledgor is, contemporaneously with the execution hereof, delivering to Agent, or
has previously delivered to Agent, an original counterpart of each partnership
or other similar agreement governing the Pledged Partnership Interests. (At any
time and from time to time at the request of Agent, each Pledgor shall deliver
to Agent certificates, if any, evidencing the Pledged Partnership Interests,
Partnership Interest assignment powers duly endorsed in blank for transfer and
UCC-1 Financing Statements covering the Collateral.)
3.2 Subsequent Delivery of Collateral. If a Pledgor shall
become entitled to receive or shall receive any securities or other property
(including, without limitation, shares of Pledged Securities or instruments
representing Pledged Partnership Interests acquired after the Closing Date, or
any options, warrants, rights or other similar property or certificates
representing a stock dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of a Pledgor or any Subsidiary of a
Pledgor but excluding dividends and interest permitted to be retained under
Section 5) in respect of the Pledged Securities or Pledged Partnership Interests
(whether as an addition to, in substitution of, or in exchange for, such Pledged
Securities or Pledged Partnership Interests or otherwise), such Pledgor agrees:
(i) to accept the same as the agent of the Agent,
(ii) to hold the same in trust on behalf of and for
the benefit of the Agent, and
(iii) to deliver any and all certificates or
instruments evidencing the same to the Agent on or before the close of business
on the seventh (7th) Business Day following the receipt thereof by such Pledgor,
in the exact form received together with the Necessary Endorsements, to be held
by the Agent subject to the terms of this Subsidiary Pledge Agreement, as
additional Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PLEDGORS
4.1 Representations and Warranties. Each Pledgor represents
and warrants that each representation and warranty set forth in the Loan
Documents that relates to or refers to
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a Pledgor or the Collateral subject hereto (or, in either case, any other term
that is used with the same or similar meaning) is incorporated herein by
reference and is true and correct on and as of the date hereof. Without limiting
the generality of the foregoing, each Pledgor further represents and warrants
that:
(i) the Pledged Securities and the Pledged
Partnership Interests included in the Collateral are not subject to any charter,
bylaw, statutory, contractual or other restriction governing their issuance,
transfer, ownership or control which restriction would limit the effectiveness
or enforceability of the pledge and security interest created under this
Subsidiary Pledge Agreement, except to the extent that regulatory considerations
reflected in Section 12 hereof may affect the enforceability of certain rights
and remedies of the Senior Secured Parties hereunder;
(ii) the stock and securities listed on Schedule I
hereto represents all of the stock and securities held by each Pledgor in any
Subsidiary of such Pledgor;
(iii) the interests listed on Schedule II hereto
represent all the partnership interests (whether as a general or limited
partner) or other ownership interests held by a Pledgor in any Subsidiary of
such Pledgor;
(iv) the Pledged Partnership Interests, by their
express terms, do not provide that they are securities governed by Article 8 of
the Uniform Commercial Code and are not held in a securities account or by any
financial intermediary;
(v) the chief executive office of each Pledgor and
the other offices or places of business of Pledgor or any offices where records
concerning the Collateral are kept are set forth on the signature pages hereto.
No Pledgor is known by any other name except the name appearing on the signature
page hereof;
(vi) each Pledgor is the legal and beneficial owner
of the Pledged Securities and Pledged Partnership Interests which is reflected
as owned by it on the schedules hereto, free and clear of any lien, security
interest, option or of the charge or encumbrance except for the security
interests created by this Subsidiary Pledge Agreement; and
(vii) the pledge of the Pledged Securities and
Pledged Partnership Interests pursuant to this Subsidiary Pledge Agreement and
the filing of the necessary financing statements (which filings have been duly
made) create a valid and perfected first priority security interest in the
Collateral securing payment of the Senior Secured Obligations.
4.2 Survival of Representations and Warranties. All the
foregoing representations and warranties (including, without limitation, those
incorporated by reference) shall survive the execution and delivery of this
Subsidiary Pledge Agreement and shall continue until this Subsidiary Pledge
Agreement is terminated as provided herein and shall not be affected or waived
by any inspection or examination made by or on behalf of Agent or any Senior
Secured Party.
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SECTION 5. VOTING; DIVIDENDS
5.1 Rights Prior To Default. Other than during the existence
of an Event of Default,
(i) Each Pledgor shall be entitled to exercise any
and all voting and other consensual rights pertaining to the Collateral or any
part thereof for any purpose not inconsistent with the terms of the Loan
Documents.
(ii) Subject to and limited by the restrictions on
dividends and other payments in respect of the Collateral set forth in the Loan
Documents, each Pledgor shall be entitled to receive and retain any and all
dividends, interest and other payments paid in respect of the Collateral,
provided, however, that any and all
(a) dividends or other payments paid or
payable other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in exchange for,
any Collateral,
(b) dividends and other distributions paid
or payable in cash in respect of any Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and
(c) except as otherwise provided in the
Credit Agreement, cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or exchange for, any Collateral,
shall forthwith be delivered to the Agent to hold as Collateral and shall, if
received by a Pledgor, be received in trust for the benefit of the Agent on
behalf of the Senior Secured Parties, be segregated from the other property or
funds of such Pledgor, and be forthwith delivered to the Agent as Collateral in
the same form as so received (with any Necessary Endorsement).
(iii) The Agent shall execute and deliver to each
Pledgor all such proxies and other instruments as such Pledgor may reasonably
request for the purpose of enabling such Pledgor to exercise the voting and
other rights which it is entitled to exercise pursuant to paragraph (i) above
and to receive the dividends or interest payments which it is authorized to
receive and retain pursuant to paragraph (ii) above.
5.2 Rights After a Default. Upon the occurrence and during the
continuation of an Event of Default and as more fully set forth in Section 11
below.
(i) Subject to Section 12 below, all rights of a
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to subsection 5.1 above and to
receive the dividends, interest and other payments which it would otherwise be
authorized to receive and retain pursuant to subsection 5.1 above shall cease,
and all such rights shall thereupon become vested in the Agent who shall have
the sole right to exercise
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such voting and other consensual rights and to receive and hold as Collateral
such dividends, interest and other payments.
(ii) All dividends, interest and other payments which
are received by the Pledgor contrary to the provisions of paragraph (i) of this
subsection 5.2 shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of each Pledgor and shall forthwith be paid over to
the Agent as Collateral in the same form as so received (with any Necessary
Endorsement).
5.3 Liability of Agent and of the Senior Secured Parties.
(i) As more fully set forth in the following
paragraph (ii), nothing in the Subsidiary Pledge Agreement shall be construed to
subject the Agent or any Senior Secured Party to liability as a partner in any
Subsidiary of a Pledgor that is a partnership or in any partnership entity in
which a Pledgor owns Collateral that is pledged hereunder nor shall the Agent or
any Senior Secured Party be deemed to have assumed any obligations under any
partnership agreement of such a Subsidiary or other entity or otherwise, unless
and until Agent exercises its right to be substituted for a Pledgor as a partner
pursuant hereto.
(ii) This Subsidiary Pledge Agreement is executed
only as security for the Senior Secured Obligations. THEREFORE (NOTWITHSTANDING
ANYTHING ELSE SET FORTH IN THIS SUBSIDIARY PLEDGE AGREEMENT WHICH, IF
INCONSISTENT WITH THIS PARAGRAPH (ii), SHALL BE DEEMED MODIFIED TO THE EXTENT
NECESSARY TO BE CONSISTENT WITH THIS PARAGRAPH (ii)), THE EXECUTION AND DELIVERY
OF THIS AGREEMENT SHALL NOT SUBJECT THE AGENT, THE SENIOR SECURED PARTIES TO, OR
IN ANY WAY RELIEVE ANY PLEDGOR OF, ANY LIABILITY OR OBLIGATION AS A PARTNER OR
OWNER OF ANY ISSUER OR ANY OTHER LIABILITIES OR OBLIGATIONS RELATING TO, OR
ARISING FROM, THE COLLATERAL. IT IS UNDERSTOOD AND AGREED THAT, NOTWITHSTANDING
THIS SUBSIDIARY PLEDGE AGREEMENT, ALL THE PLEDGORS' LIABILITIES OR OTHER
OBLIGATIONS AS PARTNER OR OTHER OWNER OF EQUITY CONSTITUTING COLLATERAL SHALL BE
AND REMAIN ENFORCEABLE AGAINST, BUT ONLY AGAINST THE PLEDGORS, UNLESS AND UNTIL,
AFTER AN EVENT OF DEFAULT, NOTICE IS GIVEN BY THE AGENT AND APPROPRIATE ACTION
IS TAKEN TO TRANSFER THE INTEREST IN THE SUBJECT COLLATERAL TO A PERSON
DESIGNATED BY THE AGENT.
SECTION 6. COVENANTS OF PLEDGORS
6.1 Each of the covenants and agreements which are set forth
or incorporated in the Loan Documents and which are applicable or refer to a
Pledgor or the Collateral subject hereto (or, in either case, any other term
that is used with the same or similar meaning) are incorporated herein by
reference and each Pledgor agrees to perform and abide by each such covenant and
agreement. Without limiting the generality of the foregoing and in furtherance
thereof, each Pledgor shall vote the stock and securities included in the
Collateral to comply with the covenants and agreements set forth in the Loan
Documents. Without limiting the generality
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of the foregoing, each Pledgor (i) shall restrict the issuance of additional
intercompany debt except as permitted in the Loan Documents and additional
shares of stock or ownership interests of its Subsidiaries (or rights or options
therefore) except as permitted pursuant to the terms of the Loan Documents; (ii)
shall not sell or otherwise dispose of, or grant any option with respect to, any
of the Collateral except in connection with a sale permitted under the
provisions of the Credit Agreement providing for dispositions to third parties
free of Liens; and (iii) with respect to Collateral consisting of partnership or
other ownership interests, shall perform and discharge all material obligations
set forth in the governing agreements of such entities and not amend any such
agreements except as permitted by Section 7.26 of the Credit Agreement (or any
successor provision).
6.2 Proceeds of Collateral Disposition. During the continuance
of a Potential Event of Default or an Event of Default, at the Agent's request,
each or all of the Pledgors shall establish and maintain at all times a trust
account with the Agent, and all Proceeds, before or after an Event of Default,
shall be deposited directly and immediately into such account. The Pledgors
shall be responsible for all costs and fees arising with respect to such account
at the standard rates. Each of the Pledgors expressly and irrevocably authorizes
and consents to the ability of the Agent to charge such trust account, in its
sole discretion, and recover from the funds on deposit therein, from time to
time and at any time, and apply those funds against any and all Senior Secured
Obligations.
SECTION 7. FURTHER ASSURANCES
Each Pledgor agrees that at any time and from time to
time, at the expense of the Borrower and its Subsidiaries, such Pledgor and its
Subsidiaries will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral including, without limitation, using its best efforts to cooperate in
obtaining any FCC, PUC, or other governmental approval of any action or
transaction contemplated hereby or thereby.
SECTION 8. ISSUERS OF PLEDGED PARTNERSHIP INTERESTS TO COMPLY WITH
INSTRUCTIONS OF AGENT
EACH PARTY HERETO WHICH IS AN ISSUER OF PLEDGED
PARTNERSHIP INTERESTS LISTED ON SCHEDULE IIA HERETO OR OTHER COLLATERAL HEREBY
AGREES TO COMPLY WITH ANY AND ALL ORDERS AND INSTRUCTIONS OF THE AGENT REGARDING
THE PLEDGED PARTNERSHIP INTERESTS OR SUCH OTHER COLLATERAL WITHOUT THE FURTHER
CONSENT OF THE PLEDGOR.
SECTION 9. AGENT APPOINTED ATTORNEY-IN-FACT; MAY PERFORM CERTAIN DUTIES
9.1 Appointment as Attorney-in-fact. Effective upon the
occurrence of an Event of Default, and so long as Agent reasonably believes such
Event of Default is continuing, the Pledgor hereby appoints the Agent as its
true and lawful agent, proxy, and attorney-in-fact for
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the purpose of carrying out this Subsidiary Pledge Agreement and taking any
action and executing any instrument which the Agent may deem necessary or
advisable to accomplish the purposes hereof including, without limitation, the
execution on behalf of each Pledgor of any financing or continuation statement
with respect to the security interest created hereby and the endorsement of any
drafts or orders which may be payable to a Pledgor in respect of, arising out
of, or relating to any or all of the Collateral. This power shall be valid until
the termination of the security interests created hereunder, any limitation
under law as to the length or validity of a proxy to the contrary
notwithstanding. This appointment is irrevocable and coupled with an interest
and any proxies heretofore given by any Pledgor to any other Person are revoked.
The designation set forth herein shall be deemed to amend and supersede any
inconsistent provision in the articles of incorporation, bylaws or other
documents to which any Pledgor or any Subsidiary of a Pledgor is subject or to
which any is a party.
9.2 Registration of Securities. Each Pledgor shall register
the pledge provided for herein on the books of such Pledgor. Each Pledgor shall
notify each issuer (the "Issuer") of equity pledged hereunder to register the
pledge of Collateral in the name of the Agent on the books of such Issuer.
Further, except with respect to certificate securities delivered to the Agent
with appropriate transfer instruments, the applicable Pledgor shall deliver to
the Agent an acknowledgement of pledge (which, where appropriate, shall comply
with the requirements of the relevant Uniform Commercial Code with respect to
perfection by registration) signed by the Issuer, which acknowledgement shall
confirm that (a) it has registered the pledge on its books and records, (b) at
any time the Agent so directs after an Event of Default, the Issuer will
transfer the record ownership of the securities into the name of any designee of
the Agent, will take such steps as may be necessary to effect the transfer, and
will comply with all other instructions of the Agent regarding such Collateral
without the further consent of the Pledgor, and (c) the equity is not designated
by its terms as a security governed by Article 8 pursuant to Section 8-103 of
the Uniform Commercial Code as in effect in the governing jurisdiction, if
applicable. Each party hereto that is also an Issuer confirms the foregoing
statements with respect to any equity issued by it.
9.3 Performance of Pledgor's Duties. In furtherance, and not
by way of limitation, of the foregoing subsections 9.1 and 9.2, if (at any time
either before or after the occurrence of an Event of Default) a Pledgor fails to
perform any agreement contained herein, the Agent may (but under no circumstance
is obligated to) perform such agreement and any expenses incurred shall be
payable by the Borrower and its Subsidiaries provided, however, that nothing
herein shall be deemed to relieve a Pledgor from fulfilling any of its
obligations hereunder.
9.4 Acts May Be Performed By Agents and Employees. Any act of
the Agent to be performed pursuant to this Section 9 or elsewhere in this
Subsidiary Pledge Agreement may be performed by agents or employees of the
Agent.
SECTION 10. STANDARD OF CARE
10.1 In General. No act or omission of any Senior Secured
Party (or agent or employee thereof) shall give rise to any defense,
counterclaim or offset in favor of a Pledgor or
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any claim or action against any such Senior Secured Party (or agent or employee
thereof), in the absence of gross negligence or willful misconduct of such
Senior Secured Party as determined in a final, nonappealable judgment of a court
of competent jurisdiction. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which the Agent accords to its own property, it being understood that it has no
duty to take any action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral or to preserve
any rights of any parties and shall only be liable for losses which are a result
of its gross negligence or willful misconduct as determined in a final,
nonappealable judgment of a court of competent jurisdiction.
10.2 Reliance on Advice of Counsel. In taking any action under
this Subsidiary Pledge Agreement, the Agent shall be entitled to rely upon the
advice of counsel of Agent's choice and shall be fully protected in acting on
such advice whether or not the advice rendered is ultimately determined to have
been accurate.
SECTION 11. DEFAULT
11.1 Certain Rights Upon Default. In addition to any other
rights accorded to the Agent and the Senior Secured Parties hereunder, upon the
occurrence and during the continuation of an Event of Default:
11.1.1 The Agent shall be entitled to receive any
interest, cash dividends or other payments on the Collateral and, subject to
Section 12 below, to exercise in the Agent's discretion all voting rights
pertaining thereto as more fully set forth in Section 5 above. Without limiting
the generality of the foregoing, subject to Section 12 below, the Agent shall
have the right to exercise all rights with respect to the Collateral as if it
were the sole and absolute owner thereof, including, without limitation, to vote
and/or to exchange, at its sole discretion, any or all of the Collateral in
connection with a merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral or any Pledgor or any
Subsidiary of any Pledgor.
11.1.2 Each Pledgor and each of its Subsidiaries
shall take any action necessary or required or requested by the Agent in order
to allow it fully to enforce the security interest in the Collateral hereunder
and to realize thereon to the fullest extent possible, including, but not
limited to, the filing of any claims with any court, liquidator, trustee,
guardian, receiver or other like person or party.
11.1.3 The Agent shall have all of the rights of a
secured party under the Uniform Commercial Code of Pennsylvania, as amended, and
any other applicable law including the right to sell on such terms as it may
deem appropriate any or all of the Collateral at one or more public or private
sales upon at least ten (10) Business Days' written notice to the Pledgors of
the time and place of any public sale and of the date on which the Collateral
will first be offered for sale in the case of any private sale. Agent shall have
the right to bid thereat or purchase any part or all the Collateral in its own
or a nominee's name (subject to applicable FCC or PUC requirements or
restrictions). The Agent shall have the right to apply the proceeds of the
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sale, after deduction for any costs and expenses of sale (including any
liabilities incurred in connection therewith including reasonable attorneys'
fees and allocated costs of attorneys who are employees of the Agent), to the
payment of the Senior Secured Obligations in any manner or order which the
Agent, in its sole discretion, may elect (whether pursuant to the Credit
Agreement or otherwise), to the payment of any other amount required by law
(including without limitation Section 9-504(l)(c) of the Uniform Commercial
Code), and to pay any remaining proceeds to the applicable Pledgor or its
successors or assigns or to whomsoever may lawfully be entitled to receive the
same or as a court of competent jurisdiction may direct, without further notice
to or consent of such Pledgor and without regard to any equitable principles of
marshalling or other like equitable doctrines. Each Pledgor hereby acknowledges
and agrees that the notice provided for above is reasonable and expressly waives
any rights it may have of equity of redemption, stay or appraisal with respect
to the Collateral.
11.1.4 For purposes hereof, a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof; the Agent shall be free to carry out such sale pursuant to such
agreement, and no Pledgor shall be entitled to the return of the Collateral or
any portion thereof, notwithstanding the fact that after Agent shall have
entered into such an agreement, any and all Events of Default shall have been
remedied and the Senior Secured Obligations paid in full.
11.1.5 The Agent shall have the right with full power
of substitution either in the Agent's name or the name of a Pledgor, to ask for,
demand, sue, collect and receive any and all moneys due or to become due under
and by virtue of the Collateral and to settle, compromise, prosecute or defend
any action, claim or proceeding with respect thereto, provided, however, that
nothing herein shall be construed as requiring the Agent to take any action,
including, without limitation, requiring or obligating the Agent to make any
inquiry as to the nature or sufficiency of any payment received, or to present
or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby.
11.1.6 The Agent shall be entitled to the appointment
of a receiver or trustee for all or any part of the businesses of a Pledgor or
its Subsidiaries, which receiver shall have such powers as may be conferred by
law or the appointing authority.
11.2 Agent May Exercise Less Than All Rights. Each Pledgor
hereby acknowledges and agrees that the Agent is not required to exercise all
remedies and rights available to it equally with respect to all of the
Collateral, and the Agent may select less than all of the Collateral with
respect to which the remedies as determined by the Agent may be exercised.
11.3 Duties of Pledgors and Subsidiaries of the Pledgors With
Respect to Transferee. In the event that, upon an occurrence of an Event of
Default, the Agent shall sell all or any of the Collateral to another party or
parties (herein called "Transferee") or shall purchase or retain all or any of
the Collateral, such Pledgor and each Subsidiary of such Pledgor shall:
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(i) Deliver to the Agent or Transferee, as the case
may be, the articles of incorporation, bylaws, minute books, stock certificate
books, corporate seals, deeds, leases, indentures, agreements, evidences of
indebtedness, books of account, financial records and all other documents and
records of such Pledgor and each Subsidiary of such Pledgor;
(ii) Use its best efforts to obtain resignations of
the persons then serving as officers and directors of such Pledgor and each
Subsidiary of such Pledgor, if so requested; and
(iii) Use its best efforts to obtain any approvals
that are required by any governmental or regulatory body in order to permit the
sale of the Collateral to the Transferee or the purchase or retention of the
Collateral by the Agent and allow the Transferee or the Agent to continue the
business of the issuer.
SECTION 12. ACKNOWLEDGEMENT OF REGULATORY CONSIDERATIONS; UNIQUE NATURE
OF ASSETS
12.1 FCC/PUC Approval. It is hereby acknowledged that transfer
of certain Collateral and the exercise of certain other remedies provided herein
may constitute a transfer of an FCC License or other Franchise or a sale or
transfer of control of a holder of an FCC License or other Franchise, requiring
approval of the FCC or PUC, pursuant to rules and regulations of the FCC or PUC.
Notwithstanding anything to the contrary contained in this Agreement, the Agent
will not knowingly take any action pursuant to this Agreement which would
constitute or result in assignment of an FCC License or other Franchise or any
transfer of control of the holder of an FCC License or other Franchise if such
assignment of license or transfer of control would require under then existing
law (including the written rules and regulations promulgated by the FCC or any
PUC), the prior approval of the FCC or such PUC, without first obtaining such
approval. In connection with this provision, the Agent shall be entitled to rely
upon the advice of counsel of Agent's choice whether or not the advice rendered
is ultimately determined to have been accurate.
12.2 Pledgor and Subsidiary of Pledgor Assistance in Obtaining
Approval. Without limiting the generality of Section 7 above, if counsel to the
Agent reasonably determines that the consent of the FCC or the PUC is required
in connection with any of the actions hereunder or under any other Loan
Document, then the Borrower, each Pledgor and each Subsidiary thereof (at its
cost and expense) agrees to use its best efforts to secure such consent and to
cooperate fully with the Agent in any action to secure such consent. Without
limiting the generality of the foregoing, the Borrower, each Pledgor and each
Subsidiary thereof shall promptly execute and file and/or cause the execution
and filing of all applications, certificates, instruments, and other documents
and papers that the Agent deems necessary or advisable to file in order to
obtain any necessary governmental consent, approval, or authorization, and if
the Borrower, any Pledgor or any Subsidiary thereof fails or refuses to execute
(or fails or refuses to cause another Person to execute) such documents, the
Agent or the clerk of any court of competent jurisdiction may execute and file
the same on behalf of the Pledgor or such other Person.
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12.3 Unique Nature of Assets. It is agreed that the FCC
Licenses and other Franchises held by each Pledgor and its Subsidiaries are
unique assets which (or the control of which) may have to be transferred in
order for the Agent adequately to realize the value of its security interest. A
violation of the covenants set forth in this Section would result in irreparable
harm to the Agent for which monetary damages are not readily ascertainable.
Therefore, in addition to any other remedy which may be available to the Agent
at law or in equity, Agent shall have the remedy of specific performance of the
provisions of this Section. To enforce the provisions of this Section, the Agent
is authorized to request the consent or approval of the FCC or PUC to a
voluntary or an involuntary transfer of control of any FCC License or other
Franchise or sale or transfer of control of a holder of an FCC License or other
Franchise.
12.4 Selection by Agent of Different Transferee. If, for any
reason, the FCC or PUC does not approve within a reasonable period of time
(which period shall be determined conclusively by the Agent), the initial
application for approval of the transfer of the Collateral, the Agent shall then
have the right to transfer the Collateral to such other Person as the Agent
shall select (subject to the prior approval of the FCC or PUC). With respect to
such subsequent selection, the Borrower and each Pledgor agrees to cooperate
fully in the manner set forth above. Exercise by the Agent of the right to such
cooperation shall not be exhausted by the initial or any subsequent exercise
thereof.
SECTION 13. SECURITIES LAW PROVISION
Each Pledgor recognizes that the Agent may be limited
in its ability to effect a sale to the public of all or part of the Collateral
by reason of certain prohibitions in the Securities Act of 1933, as amended, or
other federal or state securities laws (collectively, the "Securities Laws"),
and may be compelled to resort to one or more sales to a restricted group of
purchasers who may be required to agree to acquire the Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Pledgor agrees that sales so made may be at prices and on terms
less favorable than if the Collateral were sold to the public, and that the
Agent has no obligation to delay the sale of any Collateral for the period of
time necessary to register the Collateral for sale to the public under the
Securities Laws. Each Pledgor and each Subsidiary thereof shall cooperate with
the Agent in its attempts to satisfy any requirements under the Securities Laws
(including without limitation registration thereunder if requested by Agent)
applicable to the sale of the Collateral by the Agent.
SECTION 14. SECURITY INTEREST ABSOLUTE; WAIVERS BY PLEDGOR
14.1 Absolute Nature of Security Interest. All rights of the
Agent hereunder, the grant of the security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (i) any lack of validity or enforceability of any of the terms
of the Loan Documents or any other instrument or document relating hereto or
thereto, (ii) any change in the time, manner or place of payment of, increases
in, or in any other term of, all or any of the Senior Secured Obligations, or
any other amendment or waiver of any terms related thereto, (iii) any exchange,
release or nonperfection of any other collateral, or any release or amendment or
waiver of any guaranty, or (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Borrower, any Pledgor
or any
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other Person in respect of the Senior Secured Obligations or in respect of this
Subsidiary Pledge Agreement or any other Loan Document or any obligations
hereunder or thereunder.
14.2 No Duty To Marshal Assets. The Agent shall have no
obligation to marshal any assets in favor of any Pledgor or any other Person or
against or in payment of any or all of the Senior Secured Obligations.
14.3 Waiver with Right of Subrogation, Etc. Each Pledgor
acknowledges that until all the Senior Secured Obligations shall have been
indefeasibly paid in full, such Pledgor shall have no right (or hereby waives
any such right) of subrogation, reimbursement, or indemnity whatsoever, in
respect of the Borrower or any of its Subsidiaries, arising out of remedies
exercised by the Agent hereunder.
14.4 Waivers. Each Pledgor hereby waives notice of acceptance
of this Subsidiary Pledge Agreement. Each Pledgor further waives presentment and
demand for payment of any of the Senior Secured Obligations, protest and notice
of dishonor or default with respect to any of the Senior Secured Obligations,
and all other notices to which a Pledgor might otherwise be entitled, except as
otherwise expressly provided in this Subsidiary Pledge Agreement or any of the
other Loan Documents. Each Pledgor (to the extent that it may lawfully do so)
covenants that it shall not at any time insist upon or plead, or in any manner
claim or take the benefit of, any stay, valuation, appraisal or redemption now
or at any time hereafter in force that, but for this waiver, might be applicable
to any sale made under any judgment, order or decree based on this Subsidiary
Pledge Agreement or any other Loan Document; and each Pledgor (to the extent
that it may lawfully do so) hereby expressly waives and relinquishes all benefit
of any and all such laws and hereby covenants that it will not hinder, delay or
impede the execution of any power in this Subsidiary Pledge Agreement or in any
other Loan Document delegated to the Agent, but that it will suffer and permit
the execution of every such power as though no such law or laws had been made or
enacted.
SECTION 15. NON-WAIVER AND NON-EXCLUSIVE REMEDIES
15.1 Non-Exclusive Remedies. No remedy or right herein
conferred upon, or reserved to the Agent is intended to be to the exclusion of
any other remedy or right, but each and every such remedy or right shall be
cumulative and shall be in addition to every other remedy or right given
hereunder or under any other Loan Document or under law.
15.2 Delay and Non-Waiver. No delay or omission by the Agent
to exercise any remedy or right hereunder shall impair any such remedy or right
or shall be construed to be a waiver of any Event of Default, or an acquiescence
therein, nor shall it affect any subsequent Event of Default of the same or of a
different nature.
SECTION 16. EFFECT OF PLEDGE ON CERTAIN SHAREHOLDER RIGHTS
If any of the Collateral subject to this Subsidiary
Pledge Agreement consists of shares of nonvoting stock (regardless of their
class, designation, preference or rights) or other instruments which may be
converted into voting stock upon the occurrence of certain
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events (including, without limitation, upon the transfer of all or any of the
other stock or assets of the issuer), it is agreed that the pledge of such stock
or other instruments pursuant to this Subsidiary Pledge Agreement or the
enforcement of any of the Agent's rights hereunder shall not be deemed to be the
type of event which would trigger such conversion rights notwithstanding any
provisions in the charter, bylaws or agreements of the issuer or a Pledgor to
the contrary.
SECTION 17. CONTINUING SECURITY INTEREST; HEIRS AND ASSIGNS
This Subsidiary Pledge Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in full
force and effect until terminated pursuant to Section 18 below, (ii) be binding
upon each Pledgor, its successors and assigns and (iii) inure to the benefit of
the Agent, the other Senior Secured Parties and their respective successors,
transferees and assigns provided, however, that no Pledgor shall be permitted to
transfer any of its obligations hereunder.
SECTION 18. TERMINATION OF AGREEMENT; RELEASE OF COLLATERAL
18.1 Termination of Agreement. At such time as (a) the Senior
Secured Parties have no obligation to make further loans or other extensions of
credit to the Borrower, and (b) all the Senior Secured Obligations have been
indefeasibly paid and/or performed in full, then this Subsidiary Pledge
Agreement shall terminate and the Collateral shall be released pursuant to
subsection 18.2 below, provided that if at the time of the payment in full of
the Senior Secured Obligations (i) such payment and performance is not subject
to any filed or threatened claim, contest, voidance or offset of any kind
whatsoever, (ii) the chief financial officer of the Borrower so certifies in
writing to the Agent and (iii) the Borrower supplies to Agent such valuations,
information, evidence, certifications and opinions as Agent may request in
connection therewith, this Subsidiary Pledge Agreement shall terminate upon
satisfaction of the conditions in clauses (a) and (b) above without giving
effect to the requirement that the payment in full be indefeasible.
18.2 Duties of Agent With Respect To Release of Collateral.
When this Agreement terminates pursuant to subsection 18.1 above, the Agent
shall reassign and deliver to each Pledgor, or to such Person as each Pledgor
shall designate, against receipt, such of the Collateral (if any) as shall not
have been sold or otherwise applied by the Agent pursuant to the terms hereof
and shall still be held by it hereunder, together with appropriate instruments
of reassignment and release, all without any recourse to, or warranty whatsoever
by, the Agent, at the sole cost and expense of the Borrower and its
Subsidiaries.
18.3 Release of Certain Collateral. Effective upon the closing
of a sale of any Collateral in conformity with the provisions of the Credit
Agreement providing for dispositions to third parties free of Liens, and receipt
by the Agent of a certification to such effect from the chief financial officer
of the Borrower, then the security interest in the assets which are the subject
of the sale (the "Sold Collateral") shall terminate. The Agent shall thereupon
reassign and deliver to the applicable Pledgor, or to such Person as such
Pledgor shall designate, against receipt, the Sold Collateral, together with
appropriate instruments or reassignment and release,
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all without any recourse to, or warranty whatsoever by, the Agent, at the sole
cost and expense of the Borrower and its Subsidiaries.
SECTION 19. PAYMENT OF COSTS AND EXPENSES; INDEMNITIES
19.1 Costs and Expenses. Upon demand, each Pledgor shall pay
to the Agent the amount of any and all reasonable expenses incurred by the Agent
hereunder or in connection herewith, including, without limitation those that
may be incurred in connection with (i) the administration of this Subsidiary
Pledge Agreement (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Agent hereunder or (iv) the failure of a
Pledgor to perform or observe any of the provisions hereof.
19.2 Fees. The Borrower and its Subsidiaries will, upon
demand, pay to the Agent such reasonable fees (in addition to its expenses) for
its services as Agent as may be agreed upon from time to time between the Agent
and the Borrower.
19.3 Indemnification. The Borrower and its Subsidiaries
jointly and severally agree to indemnify and hold harmless the Agent and other
Senior Secured Parties (and, in each case, its directors, officers, agents and
employees) to the fullest extent permitted by law, from and against any and all
claims, losses, liabilities, actions, judgments, demands, costs and expenses of
whatever nature incurred by the Agent or such Senior Secured Party hereunder or
in connection herewith, unless such claim, loss, liability, action, judgment,
demand, cost or expense is the result of the willful misconduct or gross
negligence of said indemnified party as shall have been determined in a final,
nonappealable judgment of a court of competent jurisdiction. This
indemnification shall survive the termination of this Agreement.
19.4 Taxes. The Borrower and its Subsidiaries hereby jointly
and severally agree to pay to the Agent, upon demand, the amount of any taxes
which the Agent may have been required to pay by reason of the security
interests established pursuant to this Subsidiary Pledge Agreement (including
any applicable transfer taxes).
19.5 Interest. All monetary obligations of the Borrower and
its Subsidiaries under this Section 19 shall bear interest following demand at
the Base Rate (as defined in the Credit Agreement) plus two (2) per cent.
19.6 Additional Obligations. Any amounts payable pursuant to
this Section 19 shall be additional Senior Secured Obligations secured hereby.
SECTION 20. MISCELLANEOUS PROVISIONS
20.1 Notices. All notices, requests, demands, directions and
other communications (collectively "notices") given or made upon any party under
the provisions of this Subsidiary Pledge Agreement shall be by telephone or in
writing (including facsimile communication) unless otherwise expressly provided
under this Subsidiary Pledge Agreement and if in writing, shall be delivered or
sent by facsimile to the respective parties at the addresses
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and numbers set forth under their respective names on the signature pages to
this Subsidiary Pledge Agreement or in accordance with any subsequent unrevoked
written direction from any party to the others. All notices shall, except as
otherwise expressly provided in this Subsidiary Pledge Agreement, be effective
(a) in the case of facsimile, when received, (b) in case of hand-delivered
notice, when hand delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective, telephonic notices must be
confirmed in writing no later than the next day by letter, facsimile or telex,
(d) if given by mail, four (4) days after such communication is deposited in the
mails with first class postage prepaid, return receipt requested, and (e) if
given by any other means (including air courier), when delivered; provided, that
notices to the Agent shall not be effective until received. In the event of a
discrepancy between any telephonic or written notice, the written notice shall
control.
20.2 Entire Agreement. This Subsidiary Pledge Agreement sets
forth all of the promises, covenants, agreements, conditions and understandings
among the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings, inducements or conditions,
express or implied, oral or written, with respect thereto, except as contained
or referred to herein.
20.3 Amendments. The terms of this Subsidiary Pledge Agreement
may be amended, terminated, modified, supplemented or waived only upon the
written consent of the Agent and each Pledgor. The rights of the Agent to so
change, modify, waive, discharge or terminate any provision hereof is subject to
the terms of Section 12.5 of the Credit Agreement, it being understood, however,
that the Pledgors are not third party beneficiaries of Section 12.5 of the
Credit Agreement.
20.4 Governing Law. This Subsidiary Pledge Agreement and the
rights and obligations of the parties hereunder shall be construed and enforced
in accordance with and shall be governed by the laws of the Commonwealth of
Pennsylvania.
20.5 Arbitration; Consent to Jurisdiction, Service and Venue;
Waiver of Jury Trial.
20.5.1 Arbitration.
(i) Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any claim or controversy
arising out of, or relating to, the Loan Documents between any or all of the
parties hereto (a "Dispute") shall be resolved by binding arbitration conducted
under and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and the
Federal Arbitration Act. Disputes may include, without limitation, tort claims,
counterclaims, a dispute as to whether a matter is subject to arbitration,
claims brought as class actions, or claims arising from documents executed in
the future. A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to Interest Rate Protection Agreements.
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(ii) All arbitration hearings shall be conducted in
the City of Philadelphia, Commonwealth of Pennsylvania unless otherwise agreed
by all parties to such arbitration. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall conclude within 120 days of demand
for arbitration. These time limitations may not be extended unless a party shows
cause for extension and then for no more than a total of 60 days. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000.00. Arbitrators shall be licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The parties do not waive applicable Federal or state substantive law
except as provided herein.
(iii) Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without diminution,
certain remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (a) all rights to foreclose against any real or
personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sales; (b) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; and (c) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment of
receiver and filing of involuntary bankruptcy proceedings. Any claim or
controversy with regard to any party's entitlement to such remedies is a
Dispute.
(iv) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A
REMEDY OF SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AGAINST OTHER
PARTIES IN ANY DISPUTE AND HEREBY WAIVE ANY RIGHT OR CLAIM TO SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN
THE FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY
ARBITRATION OR JUDICIALLY.
20.5.2 Consent to Jurisdiction, Service and Venue;
Waiver of Jury Trial.
(i) With respect to any matters that may be heard
before a court of competent jurisdiction under paragraph (iii) of the preceding
subsection 20.5.1, each of the Pledgors hereby consents to the jurisdiction and
venue of the courts of the Commonwealth of Pennsylvania or of any federal court
located in such state, waives personal service of any and all process upon it
and consents that all such service of process be made by certified or registered
mail directed to the such Pledgor at the address provided for in Section 20.1
above and service so made shall be deemed to be completed upon actual receipt.
Each of the Pledgors hereby waives the right to contest the jurisdiction and
venue of the courts located in the County of Philadelphia, Commonwealth of
Pennsylvania on the ground of inconvenience or otherwise and, further, waives
any right to bring any action or proceeding against (a) the Agent in any court
outside the County of Philadelphia, Commonwealth of Pennsylvania, or (b) any
other Senior Secured Party other than in a state within the United States
designated by such Senior Secured Party. The provisions of this Section 20.5
shall not limit or otherwise affect the right of the Agent or any Senior Secured
Party to institute and conduct an action in any other appropriate manner,
jurisdiction or court.
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(ii) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE,
SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY
TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY
OTHER LOAN DOCUMENT OR ANY GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE
RELATIONSHIP BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NEITHER THE AGENT NOR
ANY SENIOR SECURED PARTY NOR ANY PLEDGOR NOR ANY OTHER PERSON WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED.
(iii) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH
(iv) OF THE PRECEDING SUBSECTION 20.5.1 EXCEPT AS PROHIBITED BY LAW, EACH PARTY
TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY
ARBITRATION OR OTHER LITIGATION, ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
PUNITIVE DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
EACH PARTY TO THIS AGREEMENT (i) CERTIFIES THAT NEITHER THE AGENT NOR ANY
REPRESENTATIVE, OR ATTORNEY OF THE AGENT NOR ANY SENIOR SECURED PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR SUCH SENIOR SECURED PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 20.5. THE PROVISIONS OF THIS SECTION 20.5 HAVE
BEEN FULLY DISCLOSED TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
PARTY THAT THE PROVISIONS OF THIS SECTION 20.5 WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
20.6 Severability. If any of the provisions or terms of this
Subsidiary Pledge Agreement shall for any reason be held to be invalid or
unenforceable such invalidity or unenforceability shall not affect any of the
other terms hereof, but this Subsidiary Pledge Agreement shall be construed as
if such invalid or unenforceable term had never been contained herein. Any such
invalidity or unenforceability in a particular jurisdiction shall not be deemed
to render a provision invalid or unenforceable in any other jurisdiction.
20.7 Counterparts. This Subsidiary Pledge Agreement may be
executed in one or more counterparts, each of which shall constitute an original
agreement, but all of which together shall constitute one and the same
instrument. A photocopied or facsimile copy of any signature page to this
Subsidiary Pledge Agreement shall be deemed to be the functional equivalent of a
manually executed original for all purposes.
20.8 Compliance with Partnership Agreement. To the extent that
the grant of the security interest herein created in the Pledged Partnership
Interests and the enforcement of the terms hereof require the consent, approval
or action of any partner of the subject partnership or compliance with any
provisions of the subject partnership agreement, each Pledgor hereby
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grants such consent and approval and waives any such noncompliance with the
terms of said partnership agreements.
20.9 Joint and Several Liability. All Pledgors shall jointly
and severally be liable for the obligations of each Pledgor to the Agent
hereunder. To the extent that such obligations are coextensive with obligations
of the Borrower, the Borrower and all Pledgors shall be jointly and severally
liable.
20.10 Additional Pledgors. Any Person that shall at any time
have any right or interest in the capital stock, partnership interests or other
equity of any Subsidiary of the Borrower shall, if not already a party to this
Agreement or another Pledge Agreement, become a party hereto (an "Additional
Pledgor") by the execution and delivery of an Additional Pledgor Joinder in
substantially the form of Exhibit A attached hereto and shall comply with the
provisions hereof applicable to Pledgors. Concurrent therewith, the Additional
Pledgor shall deliver replacement schedules for, or supplements to, Schedule I,
Schedule II, Schedule IIA and/or Schedule III to this Agreement, as applicable,
which replacement Schedules shall supersede, or supplements shall modify, the
Schedules then in effect. Upon delivery of the foregoing to the Agent, the
Additional Pledgor shall be and become a Pledgor for all purposes hereof as
fully and to the same extent as if it were an original signatory hereto and
shall be deemed to have made the representations and warranties set forth in
Section 4.1 hereof as of the date of execution and delivery of such Additional
Pledgor Joinder and thereafter at any time that such representations must be
restated pursuant to the terms of the Loan Documents.
20.11 Effect of Amendment. On and after the effectiveness of
this Subsidiary Pledge Agreement, any reference to the Subsidiary Pledge
Agreement or similar term used in any Loan Documents shall mean and refer to
this Subsidiary Pledge Agreement, as amended, modified or supplemented, from
time to time.
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IN WITNESS WHEREOF, the parties have caused this Subsidiary
Pledge Agreement to be duly executed and delivered by their respective
authorized officers on the date first above written.
PLEDGORS: SUSQUEHANNA CABLE CO.
SUSQUEHANNA CABLE INVESTMENT CO.
CABLE TV OF EAST PROVIDENCE, INC.
CASCO CABLE TELEVISION, INC.
CASCO CABLE TELEVISION OF BATH, MAINE
SBC CABLE CO.
YORK CABLE TELEVISION, INC.
SUSQUEHANNA RADIO CORP.
RADIO CINCINNATI, INC.
RADIO INDIANAPOLIS, INC.
RADIO METROPLEX, INC.
RADIO SAN FRANCISCO, INC.
KRBE CO.
KNBR, INC.
BAY AREA RADIO CORP.
WSBA LICO, INC.
WVAE LICO, INC.
WNNX LICO, INC.
KNBR LICO, INC.
KRBE LICO, INC.
Signature Page to the Subsidiary Pledge Agreement
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INDIANAPOLIS RADIO LICENSE CO.
SUSQUEHANNA DATA SERVICES, INC.
SUSQUEHANNA FIBER SYSTEMS, INC.
MEDIA PCS VENTURES, INC.
KFFG LICO, INC.
KPLX RADIO, INC.
KPLX LICO, INC.
KLIF BROADCASTING, INC.
KLIF LICO, INC.
KLIF RADIO, INC.
TEXAS STAR RADIO, INC.
INDY LICO, INC.
WRRM LICO, INC.
WFMS LICO, INC.
By:_______________________________________
Alan L. Brayman, on behalf of each of
the foregoing as Treasurer
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717) 848-5500
Fax No.: (717)771-1440
Attn: Craig Bremer, Esquire
Signature Page to the Subsidiary Pledge Agreement
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KPLX LIMITED PARTNERSHIP, by KPLX Radio,
Inc., its General Partner
KLIF BROADCASTING LIMITED PARTNERSHIP,
by KLIF Radio, Inc., its General Partner
By:_______________________________________
Alan L. Brayman on behalf of each of the
foregoing as Treasurer of the General
Partner
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717) 848-5500
Fax No.: (717)771-1440
Attn: Craig Bremer, Esquire
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AGENT: FIRST UNION NATIONAL BANK, in its
capacity as Agent
By:_______________________________________
Name: Elizabeth Elmore
Title: Senior Vice President
Notice Information
Communications/Media Group
PA 4829
1 South Penn Square
P.O. Box 7618
Philadelphia, PA 19101-7618
Phone No.: (215) 786-4321
Fax No.: (215) 786-7721
Attention: Elizabeth Elmore,
Senior Vice President
Signature Page to the Subsidiary Pledge Agreement
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JOINDER
The undersigned acknowledges the Subsidiary Pledge Agreement to which
this Joinder is attached, and hereby agrees to be bound by the foregoing
Subsidiary Pledge Agreement and to perform the covenants contained therein
required to be performed by it.
SUSQUEHANNA MEDIA CO.
By:_______________________________________
Name: Alan L. Brayman
Title: Treasurer
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attn: Craig Bremer, Esquire
Joinder to the Subsidiary Pledge Agreement
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SCHEDULE I
TO SUBSIDIARY PLEDGE AGREEMENT
PLEDGED SECURITIES
SHARES OF CAPITAL STOCK OF THE SUBSIDIARIES
OF THE BORROWER OWNED BY EACH PLEDGOR
SHARES OWNED BY SUSQUEHANNA RADIO CORP.
360 shares of Common Stock of Radio Cincinnati, Inc.
4,500 shares of Common Stock of Radio Indianapolis, Inc.
1,800 shares of Common Stock of Radio Metroplex, Inc.
4,000 shares of Common Stock of KLIF Broadcasting, Inc.
12,000 shares of Common Stock of Radio San Francisco, Inc.
400 shares of Common Stock of KRBE Co.
85,000 shares of Common Stock of Bay Area Radio Corp.
10 shares of Common Stock of WSBA Lico, Inc.
10 shares of Common Stock of WVAE Lico, Inc.
10 shares of Common Stock of WNNX Lico, Inc.
1,000 shares of Common Stock of Indianapolis Radio License Co.
10,000 shares of Common Stock of Texas Star Radio, Inc.
SHARES OWNED BY BAY AREA RADIO CORP.
1 share of Common Stock of KNBR, Inc.
SHARES OWNED BY KNBR, INC.
10 shares of Common Stock of KNBR Lico, Inc.
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SHARES OWNED BY KRBE CO.
10 shares of Common Stock of KRBE Lico, Inc..
SHARES OWNED BY RADIO SAN FRANCISCO, INC.
10 shares of Common Stock of KFFG Lico, Inc..
SHARES OWNED BY SUSQUEHANNA CABLE CO.
51 shares of Common Stock of Susquehanna Cable Investment Co.
320 shares of Common Stock of Casco Cable Television, Inc.
200 shares of Common Stock of Casco Cable Television of Bath, Maine
6,000 shares of Common Stock of Cable TV of East Providence, Inc.
43,200 shares of Common Stock of SBC Cable Co.
50 shares of Common Stock of York Cable Television, Inc.
SHARES OWNED BY RADIO METROPLEX, INC.
10 shares of Common Stock of KPLX Lico, Inc.
10 shares of Common Stock of KPLX Radio, Inc.
SHARES OWNED BY KLIF BROADCASTING, INC.
10 shares of Common Stock of KLIF Lico, Inc.
10 shares of Common Stock of KLIF Radio, Inc.
SHARES OWNED BY INDIANAPOLIS RADIO LICENSE CO.
10 shares of Common Stock of Indy Lico, Inc.
SHARES OWNED BY RADIO CINCINNATI, INC.
10 shares of Common Stock of WRRM Lico, Inc.
SHARES OWNED BY RADIO INDIANAPOLIS, INC.
10 shares of Common Stock of WFMS Lico, Inc.
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SCHEDULE II
TO SUBSIDIARY PLEDGE AGREEMENT
PLEDGED SUBSIDIARY PARTNERSHIP INTERESTS
PARTNERSHIP INTERESTS OWNED BY SUSQUEHANNA RADIO CORP.
90.1% interest in Paragon Research Limited Partnership
PARTNERSHIP INTERESTS OWNED BY KPLX RADIO, INC.
1% interest in KPLX Limited Partnership
PARTNERSHIP INTERESTS OWNED BY RADIO METROPLEX, INC.
99% interest in KPLX Limited Partnership
PARTNERSHIP INTERESTS OWNED BY KLIF RADIO, INC.
1% interest in KLIF Broadcasting Limited Partnership
PARTNERSHIP INTERESTS OWNED BY KLIF BROADCASTING, INC.
99% interest in KLIF Broadcasting Limited Partnership
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EXHIBIT A
FORM OF ADDITIONAL PLEDGOR JOINDER
Subsidiary Pledge Agreement dated as of ______, 1999 among
certain Subsidiaries of Susquehanna Media Co. as
Pledgors party thereto, from time to time, and First Union National Bank as
Agent (the "Subsidiary Pledge Agreement")
Reference is made to the Subsidiary Pledge Agreement as defined above;
capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in, or by reference in, the Subsidiary Pledge
Agreement.
The undersigned hereby agrees that upon delivery of this Additional
Pledgor Joinder to the Agent referred to above, the undersigned shall be and
become a Pledgor for all purposes of the Subsidiary Pledge Agreement as fully
and to the same extent as if it were an original signatory thereto and shall be
deemed to have made the representations and warranties set forth in Section 4.1
therein as of the date of execution and delivery of this Additional Pledgor
Joinder and at any future dates that such representations must be restated
pursuant to the terms of the Loan Documents. Without limiting the generality of
the foregoing, the undersigned specifically acknowledges and agrees to the
Arbitration Clause in Section 20.5 thereof and to the Consent to Jurisdiction
and Waiver of Jury Trial provisions set forth in Section 20.6 thereof.
Attached hereto are [supplemental] [replacement] Schedules [I, II, IIA
and/or III] to the Subsidiary Pledge Agreement.
An executed copy of this Joinder shall be delivered to the Agent, and the Agent
and the Senior Secured Parties may rely on the matters set forth herein in
entering into and extending credit under the Credit Agreement on or after the
date hereof. This Joinder shall not be modified, amended, or terminated without
the prior written consent of the Agent.
[Name of New Pledgor]
By:__________________________________
Title:
Address:
Dated:_______________________________
<PAGE> 309
STOCK PLEDGE AGREEMENT
("Other Shareholders Pledge Agreement")
OTHER SHAREHOLDERS PLEDGE AGREEMENT made as of the 12th day of May,
1999, by and between the pledgors set forth on the signature pages hereto (each
hereinafter referred to as "Pledgor" and collectively referred to as
"Pledgors"), and FIRST UNION NATIONAL BANK, a national banking association as
agent on behalf of the Senior Secured Parties (as defined in the Credit
Agreement referred to below). First Union National Bank in its capacity as agent
hereunder, with its successors and assigns, is hereinafter referred to as
"Agent."
BACKGROUND OF AGREEMENT
On the date hereof certain lenders and issuers of letters of credit and
FIRST UNION NATIONAL BANK as Agent have entered into a Credit Agreement (as
amended, extended, supplemented, restated or otherwise modified or refinanced,
including without limitation any amendment involving an increase in principal,
interest rate or other amount, the "Credit Agreement") with Susquehanna Media
Co. (the "Borrower"), pursuant to which such lenders and issuers agreed to
extend credit to the Borrower upon the terms and conditions specified in the
Credit Agreement under (1) a revolving credit facility with a swing loan
subfacility, and (2) two separate term loan facilities, and to issue, or
participate in the issuance of, certain letters of credit. In addition, the
Credit Agreement currently requires the Borrower under certain conditions to
enter into certain interest rate hedging agreements.
One of the prerequisites to the making of advances by the Lenders (as
defined in the Credit Agreement) under the Credit Agreement and issuing the
letters of credit thereunder is that the Pledgors (which own the capital stock
or other securities of the Borrower and certain Subsidiaries of the Borrower as
specified on Schedule 1) shall have entered into this Other Shareholders Pledge
Agreement and shall have granted to the Agent for the benefit of the Senior
Secured Parties a security interest in and to all of the shares of capital stock
of the Borrower and the Subsidiaries, direct and/or indirect, of the Borrower
owned by Pledgors to secure the Borrower's obligations to the Senior Secured
Parties. This Other Shareholders Pledge Agreement is being executed and
delivered pursuant to Section 4.1.5 of the Credit Agreement.
Each Pledgor acknowledges that the loan made pursuant to the Credit
Agreement will benefit the Borrower and the Subsidiaries of the Borrower in
which such Pledgor has an interest and thereby also benefit such Pledgor. Each
Pledgor also acknowledges that it was and will be Solvent, before and after
giving effect to the transactions contemplated by the Credit Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, and in consideration of the mutual covenants herein contained and other
good and valuable consideration receipt of which is hereby acknowledged, agree
as follows:
<PAGE> 310
SECTION 1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to such terms in, or by reference in, the Credit
Agreement or in the Uniform Commercial Code, as applicable. Each covenant or
representation set forth in this Other Shareholders Pledge Agreement shall be
deemed to be made by each Pledgor as to itself only, and any references to the
"Pledged Securities" or "Collateral" in such covenants or representations shall
be deemed to refer only to the Pledged Securities and Collateral owned or
purportedly owned (in accordance with Schedule 1 hereto, Schedule 9.1 of the
Credit Agreement or otherwise) by the Pledgor making such covenant or
representation. The following terms shall have the following meanings:
"Collateral" shall mean (without duplication):
(i) all Investment Property evidencing ownership
interests in, or related to, the Borrower and/or any Subsidiary of the Borrower
including, without limitation, the shares of capital stock or other securities
listed on Schedule 1 hereto (as the same may be modified from time to time
pursuant to the terms hereof), and any other shares of capital stock of and/or
other securities of and/or ownership interests in the Borrower and/or any
Subsidiary of the Borrower obtained in the future by any Pledgor, and, in each
case, all certificates representing such shares and/or securities and/or
ownership interests and, in each case, all rights, options, warrants, stock,
other securities and ownership interests which may hereafter be received,
receivable or distributed in respect of, or exchanged for, any of the foregoing
(all of the foregoing being referred to herein as the "Pledged Securities");
(ii) all other property which may be delivered to and
held by the Agent pursuant to the terms hereof of any character whatsoever into
which any of the foregoing may be converted or which may be substituted for any
of the foregoing; and
(iii) all Proceeds of the Pledged Securities and of
such other property, including, without limitation, all dividends, cash,
securities or other property at any time and from time to time acquired,
receivable or otherwise distributed in respect of, or in exchange for, any of or
all such Pledged Securities or other property.
"FCC" shall mean the Federal Communications Commission or any
governmental body succeeding to the functions of such commission.
"FCC License" shall mean any radio, microwave, or other
communications license, permit, certificate of compliance, franchise, approval
or authorization granted or issued by the FCC for control, ownership,
acquisition, construction, operation, management or maintenance of domestic
cable television systems, radio broadcasting systems or businesses directly
related thereto.
"Franchise" shall mean a franchise, permit or license
(including, without limitation, an FCC License), designation or certificate
granted by the United States or any other country, territory or state or a city,
town, county or other municipality, PUC or any other regulatory authority
pursuant to which a Person has the right to own, control, acquire, construct,
operate,
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manage or maintain a domestic cable television system, radio broadcasting system
or business directly related thereto.
"Lien" shall mean, as to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance in or on,
or any interest or title of any vendor, lessor, lender or other secured party to
or of such Person under any conditional sale or other title retention agreement
or capital lease with respect to, any property or asset of such Person.
"Necessary Endorsement" shall mean undated stock powers
endorsed in blank (with signatures properly guaranteed) or other proper
instruments of assignment duly executed and such other instruments or documents
as the Agent may reasonably request.
"Proceeds" shall have the meaning assigned to such term under
the Uniform Commercial Code and, in any event, shall include (i) any and all
proceeds of any guarantee, insurance or indemnity payable to the Pledgor from
time to time with respect to any of the Collateral; (ii) any and all payments
(in any form whatsoever) made or due and payable to the Pledgor from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
(or any person acting under color of governmental authority); and (iii) any and
all other amounts from time to time paid or payable with respect to or in
connection with any of the Collateral.
"PUC" shall mean any state or local regulatory agency or body
that exercises jurisdiction over the ownership, construction, operation,
acquisition, management or maintenance of domestic cable television systems,
radio broadcasting systems or businesses directly related thereto.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code, as amended, as is in effect in the Commonwealth of Pennsylvania or in any
applicable state as the case may be.
SECTION 2. CREATION OF SECURITY INTEREST
As security for the payment and performance in full of the
Senior Secured Obligations, each Pledgor hereby hypothecates, pledges, assigns,
sets over and delivers unto the Agent, and grants to the Agent, for the equal
(in priority) and ratable benefit of the Senior Secured Parties, a continuing
first priority security interest in all its right, title and interest in, to and
under the Collateral, TO HAVE AND TO HOLD the Collateral, together with all
right, title, interest, powers, privileges and preferences pertaining or
incidental thereto, unto the Agent, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 3. NON-RECOURSE GUARANTY
Each Pledgor hereby irrevocably and unconditionally guaranties
to the Agent the full and timely payment and performance of the Senior Secured
Obligations, it being each Pledgor's intent that the guaranty set forth in this
Section 3 shall be a guaranty of payment and not a guaranty of collection. The
guaranty hereunder is a primary and original obligation of each Pledgor and is
an
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absolute, unconditional guaranty of payment and performance which is irrevocable
and, to the extent allowed by applicable law, shall remain in full force and
effect without respect to future changes in conditions. No Pledgor shall have a
right of subrogation, reimbursement or indemnity whatsoever or right of recourse
to or with respect to any assets or property of the Borrower or to any
Collateral. Each Pledgor's liability under this Other Shareholder Pledge
Agreement, and the rights and remedies of Agent hereunder, shall be immediate
and shall not be contingent upon the exercise or enforcement by Agent of
whatever remedies it may have against the Borrower or others or the enforcement
of any lien or the realization upon any security that Agent may at any time
possess.
Notwithstanding the foregoing paragraph, the recourse of Agent
in respect of the guaranty of each Pledgor set forth in this Section 3 is
limited to such Pledgor's interest in the Collateral. However, this paragraph
shall not limit Agent's rights against any Pledgor as a result of any breach by
such Pledgor of any representation, warranty or covenant of such Pledgor set
forth in this Other Shareholder Pledge Agreement.
SECTION 4. DELIVERY OF COLLATERAL
4.1 At Time of Execution of Agreement. Contemporaneously with the
execution of this Other Shareholder Pledge Agreement or, in any event, prior to
the Closing Date, each Pledgor shall deliver or cause to be delivered to the
Agent (i) any and all certificates and other instruments evidencing the Pledged
Securities, (ii) any and all other certificates or other instruments or
documents representing any of the Collateral and (iii) all other property
comprising part of the Collateral, in each case along with the Necessary
Endorsements.
4.2 Subsequent Delivery of Collateral. If a Pledgor shall become
entitled to receive or shall receive any securities or other property
(including, without limitation, shares of Pledged Securities acquired after the
Closing Date, or any options, warrants, rights or other similar property or
certificates representing a stock dividend, or any distribution in connection
with any recapitalization, reclassification or increase or reduction of capital,
or issued in connection with any reorganization of the Borrower or any
Subsidiary, but excluding dividends permitted to be retained under Section 6) in
respect of the Pledged Securities (whether as an addition to, in substitution
of, or in exchange for, such Pledged Securities or otherwise), each Pledgor
agrees:
(i) to accept the same as the agent of the Agent,
(ii) to hold the same in trust on behalf of and for the
benefit of the Agent, and
(iii) to deliver any and all certificates or instruments
evidencing the same to the Agent on or before the close of business on the
seventh (7th) Business Day following the receipt thereof by such Pledgor, in the
exact form received together with the Necessary Endorsements, to be held by the
Agent subject to the terms of this Other Shareholder Pledge Agreement, as
additional Collateral.
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF PLEDGOR
5.1 Representations and Warranties. Each Pledgor, as to itself only,
represents and warrants as follows:
(i) The address set forth below such Pledgor's name on the
signature pages hereto is the place where such Pledgor resides or, in the case
of an entity other than an individual, its principal place of business is
located.
(ii) All the Pledged Securities are validly issued, fully paid
and nonassessable, and are owned by such Pledgor beneficially and of record free
and clear of any Lien, except for the Liens created pursuant to this Other
Shareholder Pledge Agreement. The execution and delivery by such Pledgor of this
Other Shareholder Pledge Agreement and the delivery of the Collateral to the
Agent simultaneously therewith has created a valid and perfected first priority
security interest in the Collateral in favor of the Agent, for the equal (in
priority) and ratable benefit of the Senior Secured Parties, to secure payment
of the Senior Secured Obligations.
(iii) Such Pledgor has the power to execute, deliver and carry
out the terms and provisions of this Other Shareholders Pledge Agreement. This
Other Shareholder Pledge Agreement constitutes the authorized, valid and legally
binding obligation of such Pledgor enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether such enforcement is sought in a court of law or at equity).
(iv) The execution and delivery of this Other Shareholder
Pledge Agreement, the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof, will not (x) violate any
provision of law or any injunction or any applicable regulation, order, writ,
judgment or decree of any court or governmental department, commission, board,
bureau, agency or instrumentality, or (y) conflict or be inconsistent with, or
result in any breach of, any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to impose) any Lien, other than the Liens created hereby,
upon any of the Collateral pursuant to the terms of, any agreement, indenture,
franchise, license, permit, mortgage or deed of trust to which such Pledgor is a
party or by which such Pledgor is bound, or to which such Pledgor is subject, or
(z) violate any organizational documents, if any, of such Pledgor.
(v) No consent, approval or authorization of any Person, or
recording, filing, registration, notice or other similar action with or to any
Person, is required in order to insure the legality, validity, binding effect or
enforceability of this Other Shareholders Pledge Agreement, except such filings
as may be required as contemplated by Section 7.30 of the Credit Agreement.
(vi) The shares of stock and securities of the Borrower or the
Subsidiaries of the Borrower included in the Collateral are not subject to any
charter, bylaw,
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statutory, contractual or other restriction governing their issuance, transfer,
ownership or control which restriction would limit the effectiveness or
enforceability of the pledge and security interest created under this Other
Shareholder Pledge Agreement, except to the extent that regulatory
considerations reflected in Section 12 hereof may affect the enforceability of
certain rights and remedies of the Agent and the Senior Secured Parties
hereunder.
5.2 Survival of Representations and Warranties. All the foregoing
representations and warranties shall survive the execution and delivery of this
Other Shareholders Pledge Agreement and shall continue until this Other
Shareholders Pledge Agreement is terminated as provided herein and shall not be
affected or waived by any inspection or examination made by or on behalf of
Agent or any Secured Party.
SECTION 6. VOTING; DIVIDENDS
6.1 Rights Prior To Default. Other than during the existence of an
Event of Default,
(i) Each Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Securities or any part
thereof for any purpose not inconsistent with the terms of the Loan Documents.
(ii) Subject to and limited by the restrictions on dividends and
other payments in respect of the Collateral set forth in the Loan Documents,
each Pledgor shall be entitled to receive and retain any and all dividends and
other payments paid in respect of the Collateral, provided, however, that any
and all
(a) dividends or other payments paid or payable other than in
cash in respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Collateral,
(b) dividends and other distributions paid or payable in cash
in respect of any Collateral in connection with a partial or total liquidation
or dissolution or in connection with a reduction of capital, capital surplus or
paid-in-surplus, and
(c) except as otherwise provided in the Credit Agreement, cash
paid, payable or otherwise distributed in redemption of or exchange for, any
Collateral,
shall forthwith be delivered to the Agent to hold as Collateral and shall, if
received by a Pledgor, be received in trust for the benefit of the Agent, be
segregated from the other property or funds of such Pledgor, and be forthwith
delivered to the Agent as Collateral in the same form as so received (with any
Necessary Endorsement).
(iii) The Agent shall execute and deliver to each Pledgor all such
proxies and other instruments as such Pledgor may reasonably request for the
purpose of enabling such Pledgor to exercise the voting and other rights which
it is entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments which it is authorized to receive and retain
pursuant to paragraph (ii) above.
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6.2 Rights After a Default. Upon the occurrence and during the
continuation of an Event of Default and as more fully set forth in Section 11
below,
(i) Subject to Section 12 below, all rights of each Pledgor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to subsection 6.1 above and to receive the
dividends and payments which it would otherwise be authorized to receive and
retain pursuant to subsection 6.1 above shall cease, and all such rights shall
thereupon become vested in the Agent who shall have the sole right to exercise
such voting and other consensual rights and to receive and hold as Collateral
such dividends and payments.
(ii) All dividends and other payments which are received by a
Pledgor contrary to the provisions of paragraph (i) of this subsection 6.2 shall
be received in trust for the benefit of the Agent, shall be segregated from
other funds of such Pledgor and shall forthwith be paid over to the Agent as
Collateral in the same form as so received (with any Necessary Endorsement).
SECTION 7. COVENANTS OF PLEDGOR
Each Pledgor covenants as to itself only that until this Other
Shareholders Pledge Agreement is terminated in accordance with the terms hereof:
(i) Such Pledgor shall not transfer, sell, encumber or otherwise
dispose of any of the Collateral, except in connection with a sale permitted
under the provisions of the Credit Agreement providing for dispositions to third
parties free of Liens, and shall not create, assume or suffer to exist any Lien
in or on any of the Collateral, except the Liens created hereunder.
(ii) To the extent permitted by applicable law, such Pledgor hereby
waives any rights which it otherwise may have under Section 9-112 of the Uniform
Commercial Code as in effect in the Commonwealth of Pennsylvania.
(iii) If there are any UCC financing statements filed in favor of
the Agent on the Collateral and if such Pledgor shall change the location of its
residence or principal office, as the case may be, or its name, or conduct
business under any other name, such as to make the information on the financing
statement untrue or misleading, then such Pledgor shall take such action as is
necessary to correct the information contained thereon so that the filings shall
be true, correct and complete.
SECTION 8. FURTHER ASSURANCES
Each Pledgor agrees that at any time and from time to time, at the
expense of the Borrower and its Subsidiaries, such Pledgor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Agent may request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Agent to exercise and enforce its rights and remedies
hereunder
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with respect to any Collateral including, without limitation, using
its best efforts to cooperate in obtaining any FCC, PUC, or other governmental
approval of any action or transaction contemplated hereby or thereby.
SECTION 9. AGENT APPOINTED ATTORNEY-IN-FACT; MAY PERFORM CERTAIN DUTIES
9.1 Appointment as Attorney-in-fact. Effective upon the occurrence of
an Event of Default, and so long as Agent reasonably believes such Event of
Default is continuing, each Pledgor hereby appoints the Agent as its true and
lawful agent, proxy, and attorney-in-fact for the purpose of carrying out this
Other Shareholders Pledge Agreement and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes hereof including, without limitation, the execution on behalf of such
Pledgor of any financing or continuation statement with respect to the security
interest created hereby and the endorsement of any drafts or orders which may be
payable to such Pledgor in respect of, arising out of, or relating to any or all
of the Collateral. This power shall be valid until the termination of the
security interests created hereunder, any limitation under law as to the length
or validity of a proxy to the contrary notwithstanding. This appointment is
irrevocable and coupled with an interest and any proxies heretofore given by a
Pledgor to any other Person are revoked. The designation set forth herein shall
be deemed to amend and supersede any inconsistent provision in the articles of
incorporation, bylaws or other documents to which the Borrower or any Subsidiary
of the Borrower in which each Pledgor holds capital stock is subject or to which
any is a party.
9.2 Registration of Securities. Each Pledgor shall cause the Borrower
and each Subsidiary of Borrower in which such Pledgor holds capital stock to,
and the Borrower and such Subsidiary of Borrower shall, register the pledge of
the shares included in the Collateral in the name of the Agent on the books of
such Subsidiary of Borrower. Upon the occurrence of an Event of Default, each
Pledgor shall at the direction of Agent cause the Borrower and each Subsidiary
of Borrower in which such Pledgor holds capital stock to, and the Borrower and
such Subsidiary of the Borrower shall, register the shares included in the
Collateral in the name of the Agent on the books of the Borrower or such
Subsidiary of the Borrower.
9.3 Performance of Pledgor's Duties. In furtherance, and not by way of
limitation, of the foregoing subsections 9.1 and 9.2, if (at any time either
before or after the occurrence of an Event of Default) a Pledgor fails to
perform any agreement contained herein, the Agent may (but under no circumstance
is obligated to) perform such agreement and any expenses incurred shall be
payable by the Borrower and its Subsidiaries provided, however, that nothing
herein shall be deemed to relieve a Pledgor from fulfilling any of its
obligations hereunder.
9.4 Acts May Be Performed By Agents and Employees. Any act of the Agent
to be performed pursuant to this Section 9 or elsewhere in this Other
Shareholder Pledge Agreement may be performed by agents or employees of the
Agent.
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SECTION 10. STANDARD OF CARE
10.1 In General. No act or omission of any Secured Party (or agent or
employee thereof) shall give rise to any defense, counterclaim or offset in
favor of a Pledgor or any claim or action against any such Secured Party (or
agent or employee thereof), in the absence of gross negligence or willful
misconduct of such Secured Party as determined in a final, nonappealable
judgment of a court of competent jurisdiction. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Agent accords to its own property, it being understood that it
has no duty to take any action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral or to preserve
any rights of any parties and shall only be liable for losses which are a result
of it gross negligence or willful misconduct as determined in a final,
nonappealable judgment of a court of competent jurisdiction.
10.2 Reliance on Advice of Counsel. In taking any action under this
Other Shareholders Pledge Agreement, the Agent shall be entitled to rely upon
the advice of counsel of Agent's choice and shall be fully protected in acting
on such advice whether or not the advice rendered is ultimately determined to
have been accurate.
SECTION 11. DEFAULT
11.1 Certain Rights Upon Default. In addition to any other rights
accorded to the Agent and the Senior Secured Parties hereunder, upon the
occurrence and during the continuation of an Event of Default:
11.1.1 The Agent shall be entitled to receive any cash dividends or
payments on the Collateral and, subject to Section 12 below, to exercise in the
Agent's discretion all voting rights pertaining thereto as more fully set forth
in Section 6 above. Without limiting the generality of the foregoing, subject to
Section 12 below, the Agent shall have the right to exercise all rights with
respect to the Collateral as if it were the sole and absolute owner thereof,
including, without limitation, to vote and/or to exchange, at its sole
discretion, any or all of the Collateral in connection with a merger,
reorganization, consolidation, recapitalization or other readjustment concerning
or involving the Collateral or the Borrower, any Subsidiary of the Borrower or
the Pledgor.
11.1.2 Each Pledgor shall take any action necessary or required or
requested by the Agent in order to allow it fully to enforce the security
interest in the Collateral hereunder and to realize thereon to the fullest
extent possible, including, but not limited to, the filing of any claims with
any court, liquidator, trustee, guardian, receiver or other like person or
party.
11.1.3 The Agent shall have all of the rights of a secured party
under the Uniform Commercial Code of Pennsylvania, as amended, and any other
applicable law including the right to sell on such terms as it may deem
appropriate any or all of the Collateral at one or more public or private sales
upon at least ten (10) Business Days' written notice to applicable
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Pledgor of the time and place of any public sale and of the date on which the
Collateral will first be offered for sale in the case of any private sale. Agent
shall have the right to bid thereat or purchase any part or all the Collateral
in its own or a nominee's name (subject to applicable FCC or PUC requirements or
restrictions). The Agent shall have the right to apply the proceeds of the sale,
after deduction for any costs and expenses of sale (including any liabilities
incurred in connection therewith including reasonable attorneys' fees and
allocated costs of attorneys who are employees of the Agent), to the payment of
the Senior Secured Obligations in any manner or order which the Agent, in its
sole discretion, may elect (whether pursuant to the Credit Agreement or
otherwise), to the payment of any other amount required by law (including
without limitation Section 9-504(1)(c) of the Uniform Commercial Code), and to
pay any remaining proceeds to the applicable Pledgor or its respective
successors or assigns or to whomsoever may lawfully be entitled to receive the
same or as a court of competent jurisdiction may direct, without further notice
to or consent of such Pledgor and without regard to any equitable principles of
marshalling or other like equitable doctrines. Each Pledgor hereby acknowledges
and agrees that the notice provided for above is reasonable and expressly waives
any rights it may have of equity of redemption, stay or appraisal with respect
to the Collateral.
11.1.4 For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the Agent
shall be free to carry out such sale pursuant to such agreement, and no Pledgor
shall be entitled to the return of the Collateral or any portion thereof,
notwithstanding the fact that after Agent shall have entered into such an
agreement, any and all Defaults shall have been remedied and the Senior Secured
Obligations paid in full.
11.1.5 The Agent shall have the right, with full power of
substitution either in the Agent's name or the name of a Pledgor, to ask for,
demand, sue, collect and receive any and all moneys due or to become due under
and by virtue of the Collateral and to settle, compromise, prosecute or defend
any action, claim or proceeding with respect thereto, provided, however, that
nothing herein shall be construed as requiring the Agent to take any action,
including, without limitation, requiring or obligating the Agent to make any
inquiry as to the nature or sufficiency of any payment received, or to present
or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby.
11.1.6 The Agent shall be entitled to the appointment of a receiver
or trustee for all or any part of the businesses of the Borrower or of the
Subsidiary of the Borrower in which a Pledgor owns an interest or of a Pledgor,
which receiver shall have such powers as may be conferred by law or the
appointing authority.
11.2 Agent May Exercise Less Than All Rights. Each Pledgor hereby
acknowledges and agrees that the Agent is not required to exercise all remedies
and rights available to it equally with respect to all of the Collateral, and
the Agent may select less than all of the Collateral with respect to which the
remedies as determined by the Agent may be exercised. Without limiting the
generality of the foregoing, the Agent may exercise certain rights with respect
to the Collateral of one Pledgor, but not another Pledgor.
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11.3 Duties of the Borrower and Subsidiary of the Borrower With Respect
to Transferee. In the event that, upon an occurrence of an Event of Default, the
Agent shall sell all or any of the Collateral to another party or parties
(herein called "Transferee") or shall purchase or retain all or any of the
Collateral, the Borrower and each Subsidiary of the Borrower shall:
(i) Deliver to the Agent or Transferee, as the case may be, the
articles of incorporation, bylaws, minute books, stock certificate books,
corporate seals, deeds, leases, indentures, agreements, evidences of
indebtedness, books of account, financial records and all other documents and
records of the Borrower and the Subsidiary of the Borrower in which Pledgor has
an interest;
(ii) Use its best efforts to obtain resignations of the persons
then serving as officers and directors of the Borrower and Subsidiaries of the
Borrower in which Pledgor has an interest, if so requested; and
(iii) Use its best efforts to obtain any approvals that are
required by any governmental or regulatory body in order to permit the sale of
the Collateral to the Transferee or the purchase or retention of the Collateral
by the Agent and allow the Transferee or the Agent to continue the business of
the issuer.
SECTION 12. ACKNOWLEDGEMENT OF REGULATORY CONSIDERATIONS; UNIQUE NATURE
OF ASSETS.
12.1 FCC/PUC Approval. It is hereby acknowledged that transfer of
certain Collateral and the exercise of certain other remedies provided herein
may constitute a transfer of an FCC License or other Franchise or a sale or
transfer of control of a holder of an FCC License or other Franchise, requiring
approval of the FCC or PUC, pursuant to rules and regulations of the FCC or PUC.
Notwithstanding anything to the contrary contained in this Agreement, the Agent
will not knowingly take any action pursuant to this Agreement which would
constitute or result in an assignment of an FCC License or other Franchise or
any transfer of control of the holder of an FCC License or other Franchise if
such assignment of license or transfer of control would require under then
existing law (including the written rules and regulations promulgated by the FCC
or any PUC), the prior approval of the FCC or such PUC, without first obtaining
such approval. In connection with this provision, the Agent shall be entitled to
rely upon the advice of counsel of Agent's choice whether or not the advice
rendered is ultimately determined to have been accurate.
12.2 Pledgor/Borrower and Subsidiary of the Borrower Assistance in
Obtaining Approval. Without limiting the generality of Section 8 above, if
counsel to the Agent reasonably determines that the consent of the FCC or PUC is
required in connection with any of the actions hereunder or under any other Loan
Document, then each Pledgor (at the cost and expense of the Borrower and its
Subsidiaries) agrees to cooperate fully with the Agent in any action to secure
such consent. the Borrower and Subsidiaries of the Borrower agree to do the same
and shall use their best efforts to secure such consent. Without limiting the
generality of the foregoing, each Pledgor and the Borrower and its Subsidiaries
shall promptly execute and file and/or cause the execution and filing of all
applications, certificates, instruments, and other documents and papers
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that the Agent deems necessary or advisable to file in order to obtain any
necessary governmental consent, approval, or authorization, and if the Borrower,
any Subsidiary of the Borrower or a Pledgor fails or refuses to execute (or
fails or refuses to cause another Person to execute) such documents, the Agent
or the clerk of any court of competent jurisdiction may execute and file the
same on behalf of the Borrower, any Subsidiary of the Borrower and such Pledgor
(or any of them) or such other Person.
12.3 Unique Nature of Assets. It is agreed that the FCC Licenses and
other Franchises held by the Borrower and its Subsidiaries are unique assets
which (or the control of which) may have to be transferred in order for the
Agent adequately to realize the value of its security interest. A violation of
the covenants set forth in this Section would result in irreparable harm to the
Agent for which monetary damages are not readily ascertainable. Therefore, in
addition to any other remedy which may be available to the Agent at law or in
equity, they shall have the remedy of specific performance of the provisions of
this Section. To enforce the provisions of this Section, the Agent is authorized
to request the consent or approval of the FCC or PUC to a voluntary or an
involuntary transfer of control of any FCC License or other Franchise or sale or
transfer of control of a holder of an FCC License or other Franchise.
12.4 Selection by Agent of Different Transferee. If, for any reason,
the FCC or PUC does not approve within a reasonable period of time (which period
shall be determined conclusively by the Agent), the initial application for
approval of the transfer of the Collateral, the Agent shall then have the right
to transfer the Collateral to such other Person as the Agent shall select
(subject to the prior approval of the FCC or PUC). With respect to such
subsequent selection, each Pledgor agrees to cooperate fully in the manner set
forth above. Exercise by the Agent of the right to such cooperation shall not be
exhausted by the initial or any subsequent exercise thereof.
SECTION 13. SECURITIES LAW PROVISION
Each Pledgor recognizes that the Agent may be limited in its
ability to effect a sale to the public of all or part of the Collateral by
reason of certain prohibitions in the Securities Act of 1933, as amended, or
other federal or state securities laws (collectively, the "Securities Laws"),
and may be compelled to resort to one or more sales to a restricted group of
purchasers who may be required to agree to acquire the Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Pledgor agrees that sales so made may be at prices and on terms
less favorable than if the Collateral were sold to the public, and that the
Agent has no obligation to delay the sale of any Collateral for the period of
time necessary to register the Collateral for sale to the public under the
Securities Laws. The Borrower, Subsidiaries of the Borrower and each Pledgor
shall cooperate with the Agent in its attempts to satisfy any requirements under
the Securities Laws (including without limitation registration thereunder if
requested by Agent) applicable to the sale of the Collateral by the Agent at the
Borrower's and its Subsidiaries' cost and expense.
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SECTION 14. SECURITY INTEREST ABSOLUTE; WAIVERS BY PLEDGOR
14.1 Absolute Nature of Security Interest. All rights of the Agent
hereunder, the grant of the security interest in the Collateral and all
obligations of the each Pledgor hereunder, shall be absolute and unconditional
irrespective of (i) any lack of validity or enforceability of any of the terms
of the Loan Documents or any other instrument or document relating hereto or
thereto, (ii) any change in the time, manner or place of payment of, increases
in, or in any other term of, all or any of the Senior Secured Obligations, or
any other amendment or waiver of any terms related thereto, (iii) any exchange,
release or nonperfection of any other collateral, or any release or amendment or
waiver of any guaranty, or (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, a Pledgor or any other
Person in respect of the Senior Secured Obligations or in respect of this Other
Shareholders Pledge Agreement or any other Loan Document or any obligations
hereunder or thereunder.
14.2 No Duty To Marshal Assets. The Agent shall have no obligation to
marshal any assets in favor of a Pledgor or any other Person or against or in
payment of any or all of the Senior Secured Obligations.
14.3 Waiver of Right of Subrogation, Etc. Each Pledgor acknowledges
that until all the Senior Secured Obligations shall have been indefeasibly paid
in full, such Pledgor shall have no right (or hereby waives any such right) of
subrogation, reimbursement, or indemnity whatsoever in respect of the Borrower
or any Subsidiary of the Borrower arising out of remedies exercised by the Agent
hereunder.
14.4 Other Waivers. Each Pledgor hereby waives notice of acceptance of
this Other Shareholders Pledge Agreement. Each Pledgor further waives
presentment and demand for payment of any of the Senior Secured Obligations,
protest and notice of dishonor or default with respect to any of the Senior
Secured Obligations, and all other notices to which a Pledgor might otherwise be
entitled, except as otherwise expressly provided in this Other Shareholder
Pledge Agreement or any of the other Loan Documents. Each Pledgor (to the extent
that it may lawfully do so) covenants that it shall not at any time insist upon
or plead, or in any manner claim or take the benefit of, any stay, valuation,
appraisal or redemption now or at any time hereafter in force that, but for this
waiver, might be applicable to any sale made under any judgment, order or decree
based on this Other Shareholders Pledge Agreement or any other Loan Document;
and each Pledgor (to the extent that it may lawfully do so) hereby expressly
waives and relinquishes all benefit of any and all such laws and hereby
covenants that it will not hinder, delay or impede the execution of any power in
this Other Shareholders Pledge Agreement or in any other Loan Document delegated
to the Agent, but that it will suffer and permit the execution of every such
power as though no such law or laws had been made or enacted.
SECTION 15. NON-WAIVER AND NON-EXCLUSIVE REMEDIES
15.1 Non-Exclusive Remedies. No remedy or right herein conferred upon,
or reserved to the Agent is intended to be to the exclusion of any other remedy
or right, but each and every such remedy or right shall be cumulative and shall
be in addition to every other remedy or right given hereunder or under any other
Loan Document or under law.
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15.2 Delay and Non-Waiver. No delay or omission by the Agent to
exercise any remedy or right hereunder shall impair any such remedy or right or
shall be construed to be a waiver of any Event of Default, or an acquiescence
therein, nor shall it affect any subsequent Event of Default of the same or of a
different nature.
SECTION 16. CONTINUING SECURITY INTEREST; HEIRS AND ASSIGNS
This Other Shareholder Pledge Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect until terminated pursuant to Section 17 below, (ii) be binding upon each
Pledgor, its heirs, successors and assigns and (iii) inure to the benefit of the
Agent, the other Senior Secured Parties and their respective successors,
transferees and assigns provided, however, that a Pledgor shall not be permitted
to transfer any of its obligations hereunder.
SECTION 17. TERMINATION OF AGREEMENT; RELEASE OF COLLATERAL
17.1 Termination of Agreement. At such time as (a) the Senior
Secured Parties have no obligation to make further loans and other extensions of
credit to the Borrower under the Credit Agreement, and (b) all the Senior
Secured Obligations have been indefeasibly paid and/or performed in full, this
Other Shareholder Pledge Agreement shall terminate and the Collateral shall be
released pursuant to subsection 17.2, provided that if at the time of the
payment in full of the Senior Secured Obligations (i) such payment and
performance is not subject to any filed or threatened claim, contest, voidance
or offset of any kind whatsoever, (ii) the chief financial officer of the
Borrower so certifies in writing to Agent and (iii) the Borrower supplies to
Agent such valuations, information, evidence, certifications and opinions as
Agent may request in connection therewith, this Other Shareholder Pledge
Agreement shall terminate upon satisfaction of the conditions in clauses (a) and
(b) above without giving effect to the requirement that the payment in full be
indefeasible.
17.2 Duties of Agent With Respect To Release of Collateral. When
this Agreement terminates pursuant to subsection 17.1 above, the Agent shall
reassign and deliver to each Pledgor, or to such Person as such Pledgor shall
designate, against receipt, such of the Collateral (if any) as shall not have
been sold or otherwise applied by the Agent pursuant to the terms hereof and
shall still be held by it hereunder, together with appropriate instruments of
reassignment and release, all without any recourse to, or warranty whatsoever
by, the Agent, at the sole cost and expense of the Borrower.
17.3 Release of Certain Collateral. Effective upon the closing of a
sale of any Collateral in conformity with the provisions of the Credit Agreement
providing for dispositions to third parties free of Liens, and receipt by the
Agent of a certification to such effect from the chief financial officer of the
Borrower, then the security interest in the assets which are the subject of the
sale (the "Sold Collateral") shall terminate. The Agent shall thereupon reassign
and deliver to the applicable Pledgor, or to such Person as such Pledgor shall
designate, against receipt, the Sold Collateral, together with appropriate
instruments of reassignment and release,
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all without any recourse to, or warranty whatsoever by, the Agent, at the sale
cost and expense of the Borrower and its Subsidiaries.
SECTION 18. MISCELLANEOUS PROVISIONS
18.1 Notices. All notices, requests, demands, directions and other
communications (collectively "notices") given or made upon any party under the
provisions of this Other Shareholders Pledge Agreement shall be by telephone or
in writing (including facsimile communication) unless otherwise expressly
provided under this Other Shareholders Pledge Agreement and if in writing, shall
be delivered or sent by facsimile to the respective parties at the addresses and
numbers set forth under their respective names on the signature pages to this
Other Shareholders Pledge Agreement or in accordance with any subsequent
unrevoked written direction from any party to the others. All notices shall,
except as otherwise expressly provided in this Other Shareholders Pledge
Agreement, be effective (a) in the case of facsimile, when received, (b) in case
of hand-delivered notice, when hand delivered, (c) in the case of telephone,
when telephoned, provided, however, that in order to be effective, telephonic
notices must be confirmed in writing no later than the next day by letter,
facsimile or telex, (d) if given by mail, four (4) days after such communication
is deposited in the mails with first class postage prepaid, return receipt
requested, and (e) if given by any other means (including air courier), when
delivered; provided, that notices to the Agent shall not be effective until
received. In the event of a discrepancy between any telephonic or written
notice, the written notice shall control.
18.2 Entire Agreement. This Other Shareholders Pledge Agreement
sets forth all of the promises, covenants, agreements, conditions and
understandings among the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings, inducements or
conditions, express or implied, oral or written, with respect thereto, except as
contained or referred to herein.
18.3 Amendments. The terms of this Other Shareholders Pledge
Agreement may be amended, terminated, modified, supplemented or waived only upon
the written consent of the Agent and the Pledgor. The rights of the Agent to so
change, modify, waive, discharge or terminate any provision hereof is subject to
the terms of Section 12.5 of the Credit Agreement, it being understood, however,
that the Pledgors are not third party beneficiaries of Section 12.5 of the
Credit Agreement.
18.4 Governing Law. This Other Shareholders Pledge Agreement and
the rights and obligations of the parties hereunder shall be construed and
enforced in accordance with and shall be governed by the laws of the
Commonwealth of Pennsylvania.
18.5 Arbitration; Consent to Jurisdiction, Service and Venue;
Waiver of Jury Trial.
18.5.1 Arbitration.
(i) Upon demand of any party hereto, whether made before or
after institution of any judicial proceeding, any claim or controversy arising
out of, or relating to, the
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Loan Documents between any or all of the parties hereto (a "Dispute") shall be
resolved by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. Disputes
may include, without limitation, tort claims, counterclaims, a dispute as to
whether a matter is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A judgment upon the award
may be entered in any court having jurisdiction. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to
Interest Rate Protection Agreements.
(ii) All arbitration hearings shall be conducted in the City
of Philadelphia, Commonwealth of Pennsylvania unless otherwise agreed by all
parties to such arbitration. A hearing shall begin within 90 days of demand for
arbitration and all hearings shall conclude within 120 days of demand for
arbitration. These time limitations may not be extended unless a party shows
cause for extension and then for no more than a total of 60 days. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000.00. Arbitrators shall be licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The parties do not waive applicable Federal or state substantive law
except as provided herein.
(iii) Notwithstanding the preceding binding arbitration
provisions, the parties agree to preserve, without diminution, certain remedies
that any party may exercise before or after an arbitration proceeding is
brought. The parties shall have the right to proceed in any court of proper
jurisdiction or by self-help to exercise or prosecute the following remedies, as
applicable: (a) all rights to foreclose against any real or personal property or
other security by exercising a power of sale or under applicable law by judicial
foreclosure including a proceeding to confirm the sales; (b) all rights of
self-help including peaceful occupation of real property and collection of
rents, set-off, and peaceful possession of personal property; and (c) obtaining
provisional or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment, appointment of receiver and filing of involuntary
bankruptcy proceedings. Any claim or controversy with regard to any party's
entitlement to such remedies is a Dispute.
(iv) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A REMEDY OF
SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AGAINST OTHER PARTIES IN
ANY DISPUTE AND HEREBY WAIVE ANY RIGHT OR CLAIM TO SPECIAL, CONSEQUENTIAL,
PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN THE FUTURE IN
CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION OR
JUDICIALLY.
18.5.2 Consent to Jurisdiction, Service and Venue; Waiver of
Jury Trial.
(i) With respect to any matters that may be heard before a
court of competent jurisdiction under paragraph (iii) of the preceding
Subsection 18.5.1, each of the Pledgors hereby consents to the jurisdiction and
venue of the courts of the Commonwealth of Pennsylvania or of any federal court
located in such state, waives personal service of any and all process upon it
and consents that all such service of process be made by certified or registered
mail directed to such Pledgor at the address provided for in Section 18.1 above
and service so made shall be deemed to be completed upon actual receipt. Each of
the Pledgors hereby waives
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the right to contest the jurisdiction and venue of the courts located in the
County of Philadelphia, Commonwealth of Pennsylvania on the ground of
inconvenience or otherwise and, further, waives any right to bring any action or
proceeding against (a) the Agent in any court outside the County of
Philadelphia, Commonwealth of Pennsylvania, or (b) any other Senior Secured
Party other than in a state within the United States designated by such Senior
Secured Party. The provisions of this Section 18.5 shall not limit or otherwise
affect the right of the Agent or any Senior Secured Party to institute and
conduct an action in any other appropriate manner, jurisdiction or court.
(ii) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE, SUCCESSOR,
HEIR OR PERSONAL REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY TRIAL IN ANY
PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY OTHER LOAN
DOCUMENT OR ANY GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE RELATIONSHIP
BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NEITHER THE AGENT NOR ANY SENIOR
SECURED PARTY NOR ANY PLEDGOR NOR ANY OTHER PERSON WILL SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED.
(iii) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH (iv) OF THE
PRECEDING SUBSECTION 18.5.1 EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS
AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY ARBITRATION
OR OTHER LITIGATION, ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES
OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS
AGREEMENT (i) CERTIFIES THAT NEITHER THE AGENT NOR ANY REPRESENTATIVE, OR
ATTORNEY OF THE AGENT NOR ANY SENIOR SECURED PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE AGENT OR SUCH SENIOR SECURED PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
18.5. THE PROVISIONS OF THIS SECTION 18.5 HAVE BEEN FULLY DISCLOSED TO THE
PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN
ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF
THIS SECTION 18.5 WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
18.6 Severability. If any of the provisions or terms of this Other
Shareholders Pledge Agreement shall for any reason be held to be invalid or
unenforceable such invalidity or unenforceability shall not affect any of the
other terms hereof, but this Other Shareholders Pledge Agreement shall be
construed as if such invalid or unenforceable term had never been contained
herein. Any such invalidity or unenforceability in a particular jurisdiction
shall not be deemed to render a provision invalid or unenforceable in any other
jurisdiction.
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18.7 Counterparts. This Other Shareholders Pledge Agreement may be
executed in one or more counterparts, each of which shall constitute an original
agreement, but all of which together shall constitute one and the same
instrument. A photocopied or facsimile copy of any signature page to this Other
Shareholders Pledge Agreement shall be deemed to be the functional equivalent of
a manually executed copy for all purposes.
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IN WITNESS WHEREOF, the parties have caused this Other
Shareholders Pledge Agreement to be duly executed and delivered by their
respective authorized officers on the date first above written.
PLEDGORS:
------------------------------------
Walter M. Norton
Address: RFD #1, Box 59
South Harpswell, ME 04079
------------------------------------
Walter M. Norton, Trustee
of Helen A. Norton Revocable Trust
U/D/T 12/17/87
Address: RFD #1, Box 59
South Harpswell, ME 04079
------------------------------------
Walter M. Norton, Trustee
U/D/T 12/31/80
Address: RFD #1, Box 59
South Harpswell, ME 04079
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 328
------------------------------------
Helen A. Norton, Trustee of
Helen A. Norton Revocable Trust
U/D/T 12/17/87
Address: RFD #1, Box 59
South Harpswell, ME 04079
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 329
------------------------------------
Laura W. R. Appell, trustee
U/D/T 6/18/80
Address:
------------------------------------
Laura W. R. Appell, Trustee
of George N. Appell Revocable Trust
U/D/T 3/21/88
Address:
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 330
------------------------------------
Louis J. Appell, Jr.
Address: 1700 Powder Mill Road
York, PA 17403
------------------------------------
Louis J. Appell, Jr., Trustee
of Louis J. Appell, Jr.,
Revocable Trust
U/D/T 1/29/88
Address: 1700 Powder Mill Road
York, PA 17403
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 331
------------------------------------
Louis J. Appell, III
Address: 1331 Via Colonna Terrace
Davis, CA 95616
------------------------------------
Louis J. Appell, III, Trustee
U/D/T 12/31/79 f.b.o.
Louis J. Appell, III
Address: 1331 Via Colonna Terrace
Davis, CA 95616
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 332
------------------------------------
Helen F. Appell, II
Address: 1700 Powder Mill Road
York, PA 17403
------------------------------------
Helen F. Appell, II, Trustee
U/D/T 12/31/79 f.b.o.
Helen F. Appell, II
Address: 1700 Powder Mill Road
York, PA 17403
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 333
------------------------------------
Barbara F. Appell
Address: 306 W. Princess Street
York, PA 17404
------------------------------------
Barbara F. Appell, trustee
U/D/T 12/31/79 f.b.o.
Barbara F. Appell
Address: 306 W. Princess Street
York, PA 17404
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 334
------------------------------------
Josephine S. Appell, Trustee of
Louis S. Appell, Jr. Revocable Trust
U/D/T 1/29/88
Address: 1700 Powder Mill Road
York, PA 17403
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 335
------------------------------------
George N. Appell, Trustee of
George N. Appell Revocable Trust
U/D/T 3/21/88
Address:
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 336
------------------------------------
Peter P. Brubaker
Address: 160 Edgewood Drive
York, PA 17403
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 337
------------------------------------
Helen Norton Coon,
a/k/a Helen A. Norton, II
Address: 102 Raymond Road
Brunswick, ME 04011
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 338
------------------------------------
Sandra A. Norton (Davis)
Address: RR 2, Box 366
South Harpswell, ME 04079
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 339
------------------------------------
Laura M. Norton
Address: RFD #1, Box 59
South Harpswell, ME 04079
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 340
------------------------------------
Laura Appell-Warren,
Trustee of Harrier Trust
U/D/T 3/21/88
Address: Milton Academy
170 Centre Street
Milton, MA 02186
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 341
------------------------------------
Amity A. Doolittle,
Trustee of Harrier Trust
U/D/T 3/21/88
Address: 119 Everit Street
New Haven, CT 06511
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 342
------------------------------------
Charity R. Appell (Wheelock)
Trustee of Harrier
Trust U/D/T 3/21/88
Address: Route 1, Box 59
Brookfield, VT 05036
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 343
------------------------------------
William H. Simpson, trustee
U/D/T 12/31/79 f.b.o.
Louis J. Appell, III
Address: 140 East Market Street
York, PA 17401
------------------------------------
William H. Simpson, trustee
U/D/T 12/31/79 f.b.o.
Helen F. Appell, II
Address: 140 East Market Street
York, PA 17401
------------------------------------
William H. Simpson, trustee
U/D/T 12/31/79 f.b.o.
Barbara F. Appell
Address: 140 East Market Street
York, PA 17401
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 344
AGENT: FIRST UNION NATIONAL BANK, in its
capacity as Agent
By:
---------------------------------
Name: Elizabeth Elmore
Title: Senior Vice President
Notice Information
Communications/Media Group
PA 4829
1 South Penn Square
P.O. Box 7618
Philadelphia, PA 19101-7618
Phone No.: (215) 786-4321
Fax No.: (215) 786-7721
Attention: Elizabeth Elmore,
Senior Vice President
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 345
JOINDER
The undersigned acknowledge the Other Shareholders Pledge
Agreement to which this Joinder is attached, and hereby jointly and severally
agree to be bound by the foregoing Other Shareholders Pledge Agreement and to
perform the covenants contained therein required to be performed by each.
SUSQUEHANNA MEDIA CO.
SUSQUEHANNA CABLE CO.
SUSQUEHANNA CABLE INVESTMENT CO.
CABLE TV OF EAST PROVIDENCE, INC.
CASCO CABLE TELEVISION, INC.
CASCO CABLE TELEVISION OF BATH, MAINE
SBC CABLE CO.
YORK CABLE TELEVISION, INC.
SUSQUEHANNA RADIO CORP.
RADIO CINCINNATI, INC.
RADIO INDIANAPOLIS, INC.
RADIO METROPLEX, INC.
KPLX LICO, INC.
KPLX RADIO, INC,
KLIF BROADCASTING, INC.
KLIF LICO, INC.
KLIF RADIO, INC.
RADIO SAN FRANCISCO, INC.
Signature Page to Other Shareholders Pledge Agreement
<PAGE> 346
KFFG LICO, INC.
KRBE CO.
KRBE LICO, INC.
KNBR INC.
KNBR LICO, INC.
BAY AREA RADIO CORP.
WSBA LICO, INC.
WVAE LICO, INC.
WNNX LICO, INC.
INDIANAPOLIS RADIO LICENSE CO.
TEXAS STAR RADIO, INC.
SUSQUEHANNA FIBER SYSTEMS, INC.
SUSQUEHANNA DATA SERVICES, INC.
MEDIA PCS VENTURES, INC.
INDY LICO, INC.
WRRM LICO, INC.
WFMS LICO, INC.
By:
-------------------------------------------
Alan L. Brayman, on behalf of each of the
foregoing as Treasurer
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attn: Craig Bremer, Esquire
<PAGE> 347
PARAGON RESEARCH LIMITED PARTNERSHIP,*
by Susquehanna Radio Corp.,
its General Partner
KPLX LIMITED PARTNERSHIP, by KPLX Radio,
Inc., its General Partner
KLIF BROADCASTING LIMITED PARTNERSHIP,
by KLIF Radio, Inc., its General Partner
By:
----------------------------------------
Alan L. Brayman on behalf of each of the
foregoing as Treasurer of the
General Partner
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attn: Craig Bremer, Esquire
*Subject to unwaived restrictions on transfer in partnership agreement.
<PAGE> 348
SCHEDULE 1
TO OTHER SHAREHOLDER PLEDGE AGREEMENT
Shares of Capital Stock of
the Borrower and/or Subsidiaries of the
Borrower Owned by Each Pledgor
SHARES OWNED BY LOUIS J. APPELL, JR.
5,000 shares of common stock of Bay Area Radio Corp.
SHARES OWNED BY TRUSTEES OF REVOCABLE TRUST DATED 1/29/88 IN FAVOR OF
LOUIS J. APPELL, JR.
14 shares of common stock of Radio Cincinnati, Inc.
250 shares of common stock of Radio Indianapolis, Inc.
70 shares of common stock of Radio Metroplex Inc.
400 shares of common stock of Radio San Francisco, Inc.
5,095.98 shares of preferred stock of Susquehanna Media Co.
SHARES OWNED BY LOUIS J. APPELL, III
2 shares of common stock of Radio Cincinnati, Inc.
10 shares of common stock of Radio Metroplex, Inc.
150 shares of common stock of Radio San Francisco, Inc.
7,513.71 shares of preferred stock of Susquehanna Media Co.
SHARES OWNED BY BARBARA F. APPELL
2 shares of common stock of Radio Cincinnati, Inc.
10 shares of common stock of Radio Metroplex, Inc.
150 shares of common stock of Radio San Francisco, Inc.
7,513.71 shares of preferred stock of Susquehanna Media Co.
<PAGE> 349
SHARES OWNED BY LAURA W. R. APPELL, TRUSTEE UNDER TRUST DATED 6/18/80
300 shares of common stock of KLIF Broadcasting, Inc.
SHARES OWNED BY WALTER M. NORTON, TRUSTEE UNDER TRUST DATED 12/31/80
300 shares of common stock of KLIF Broadcasting, Inc.
5000 shares of common stock of Bay Area Radio Corp.
SHARES OWNED BY WILLIAM H. SIMPSON AND LOUIS J. APPELL, III, TRUSTEES UNDER
TRUST DATED 12/31/79 FOR THE BENEFIT OF LOUIS J. APPELL, III
100 shares of common stock of KLIF Broadcasting, Inc.
SHARES OWNED BY WILLIAM H. SIMPSON AND HELEN F. APPELL, II, TRUSTEES UNDER TRUST
DATED 12/31/79 FOR THE BENEFIT OF HELEN F. APPELL, II
100 shares of common stock of KLIF Broadcasting, Inc.
SHARES OWNED BY WILLIAM H. SIMPSON AND BARBARA F. APPELL, TRUSTEES UNDER TRUST
DATED 12/31/79 FOR THE BENEFIT OF BARBARA F. APPELL
100 shares of common stock of KLIF Broadcasting, Inc.
SHARES OWNED BY GEORGE N. APPELL AND LAURA W.R. APPELL, TRUSTEES UNDER TRUST
DATED 3/21/88 FOR THE BENEFIT OF GEORGE N. APPELL
850 shares of common stock of Radio San Francisco, Inc.
SHARES OWNED BY SANDRA A. NORTON
283.33 shares of common stock of Radio San Francisco, Inc.
3,086.43 shares of preferred stock of Susquehanna Media Co.
SHARES OWNED BY LAURA M. NORTON
283.33 shares of common stock of Radio San Francisco, Inc.
3,086.43 shares of preferred stock of Susquehanna Media Co.
<PAGE> 350
SHARES OWNED BY HELEN A. NORTON-COON
283.33 shares of common stock of Radio San Francisco, Inc.
SHARES OWNED BY LAURA P. APPELL-WARREN, AMITY DOOLITTLE AND CHARITY APPELL,
TRUSTEES OF HARRIER TRUST UNDER TRUST DATED 3/21/88
5000 shares of common stock of Bay Area Radio Corp.
3,810.08 shares of preferred stock of Susquehanna Media Co.
SHARES OWNED BY WALTER M. AND HELEN A. NORTON
8,324.26 shares of preferred stock of Susquehanna Media Co.
SHARES OWNED BY WALTER M. NORTON
5,109.81 shares of preferred stock of Susquehanna Media Co.
SHARES OWNED BY HELEN A. NORTON AND WALTER NORTON, TRUSTEES OF HELEN A. NORTON
REVOCABLE TRUST UNDER TRUST DATED 12/17/87
277.48 shares of preferred stock of Susquehanna Media Co.
SHARES OWNED BY WALTER M. NORTON, TRUSTEE UNDER TRUST DATED 12/31/80
18,373.86 shares of preferred stock of Susquehanna Media Co.
SHARES OWNED BY PETER P. BRUBAKER
793.77 shares of preferred stock of Susquehanna Media Co.
SHARES OWNED BY HELEN F. APPELL, II
7,513.71 shares of preferred stock of Susquehanna Media Co.
2 shares of common stock of Radio Cincinnati Inc.
10 shares of common stock of Radio Metroplex, Inc.
150 shares of common stock of Radio San Francisco, Inc.
<PAGE> 351
STOCK PLEDGE AGREEMENT
("Lenfest Pledge Agreement")
LENFEST PLEDGE AGREEMENT made as of the 12th day of May, 1999, by and
between LENFEST YORK, INC., a Delaware corporation ("Pledgor"), and FIRST UNION
NATIONAL BANK, a national banking association as agent on behalf of the Senior
Secured Parties (as defined in the Credit Agreement referred to below). First
Union National Bank in its capacity as agent hereunder, with its successors and
assigns, is hereinafter referred to as "Agent."
BACKGROUND OF AGREEMENT
On the date hereof certain lenders and issuers of letters of credit and
FIRST UNION NATIONAL BANK as Agent have entered into a Credit Agreement (as
amended, extended, supplemented, restated or otherwise modified or refinanced,
including without limitation any amendment involving an increase in principal,
interest rate or other amount, the "Credit Agreement") with Susquehanna Media
Co. (the "Borrower"), pursuant to which such lenders and issuers agreed to
extend credit to the Borrower upon the terms and conditions specified in the
Credit Agreement under (1) a revolving credit facility with a swing loan
subfacility, and (2) two separate term loan facilities, and to issue, or
participate in the issuance of, certain letters of credit. In addition, the
Credit Agreement currently requires under certain conditions the Borrower to
enter into certain interest rate hedging agreements.
One of the prerequisites to the making of advances by the Lenders (as
defined in the Credit Agreement) under the Credit Agreement and the issuing of
letters of credit thereunder is that the Pledgor (which owns the capital stock
of certain Subsidiaries, direct or indirect, of the Borrower as specified on
Schedule 1) shall have entered into this Lenfest Pledge Agreement and shall have
granted to the Agent for the benefit of the Senior Secured Parties a security
interest in and to all of the shares of capital stock of the Subsidiaries of the
Borrower owned by Pledgor to secure the Borrower's obligations to the Senior
Secured Parties. This Lenfest Pledge Agreement is being executed and delivered
pursuant to Section 4.1.5 of the Credit Agreement.
Pledgor acknowledges that the loans made pursuant to the Credit
Agreement will benefit the Subsidiaries of the Borrower in which Pledgor has an
interest and thereby also benefit Pledgor. Pledgor also acknowledges that it was
and will be Solvent, before and after giving effect to the transactions
contemplated by the Credit Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, and in consideration of the mutual covenants herein contained and other
good and valuable consideration receipt of which is hereby acknowledged, agree
as follows:
<PAGE> 352
SECTION 1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in, or by reference in, the Credit Agreement or
in the Uniform Commercial Code, as applicable. The following terms shall have
the following meanings:
"Collateral" shall mean (without duplication):
(i) all Investment Property evidencing ownership interests in,
or related to, the Borrower and/or any Subsidiary of the Borrower, including,
without limitation, the shares of capital stock and other securities owned by
the Pledgor in any of the entities listed on Schedule I hereto (as the same may
be modified from time to time pursuant to the terms hereof), and any other
shares of capital stock of and/or other securities of and/or ownership interests
in the Borrower and/or any Subsidiary of the Borrower obtained in the future by
the Pledgor, and, in each case, all certificates representing such shares and/or
securities and/or ownership interests and, in each case, all rights, options,
warrants, stock, other securities and ownership interests which may hereafter be
received, receivable or distributed in respect of, or exchanged for, any of the
foregoing (all of the foregoing being referred to herein as the "Pledged
Securities");
(ii) all other property which may be delivered to and held by
the Agent pursuant to the terms hereof of any character whatsoever into which
any of the Pledged Securities may be converted or which may be substituted for
any of the foregoing; and
(iii) all Proceeds of the Pledged Securities and of such other
property, including, without limitation, all dividends, cash, securities or
other property at any time and from time to time acquired, receivable or
otherwise distributed in respect of, or in exchange for, any of or all such
Pledged Securities or other property.
"FCC" shall mean the Federal Communications Commission or any
governmental body succeeding to the functions of such commission.
"FCC License" shall mean any radio, microwave, or other
communications license, permit, certificate of compliance, franchise, approval
or authorization granted or issued by the FCC for control, ownership,
acquisition, construction, operation, management or maintenance of domestic
cable television systems, radio broadcasting systems or businesses directly
related thereto.
"Franchise" shall mean a franchise, permit or license
(including, without limitation, an FCC License), designation or certificate
granted by the United States or any other country, territory or state or a city,
town, county or other municipality, PUC or any other regulatory authority
pursuant to which a Person has the right to own, control, acquire, construct,
operate, manage or maintain a domestic cable television system, radio
broadcasting system or business directly related thereto.
"Lien" shall mean, as to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance in or on,
or any interest or title of any vendor,
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<PAGE> 353
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or capital lease with respect to, any
property or asset of such Person.
"Necessary Endorsement" shall mean undated stock powers
endorsed in blank (with signatures property guaranteed) or other proper
instruments of assignment duly executed and such other instruments or documents
as the Agent may reasonably request.
"Proceeds" shall have the meaning assigned to such term under
the Uniform Commercial Code and, in any event, shall include (i) any and all
proceeds of any guarantee, insurance or indemnity payable to the Pledgor from
time to time with respect to any of the Collateral; (ii) any and all payments
(in any form whatsoever) made or due and payable to the Pledgor from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
(or any person acting under color of governmental authority); and (iii) any and
all other amounts from time to time paid or payable with respect to or in
connection with any of the Collateral.
"PUC" shall mean any state or local regulatory agency or body
that exercises jurisdiction over the ownership, construction, operation,
acquisition, management or maintenance of domestic cable television systems,
radio broadcasting systems or businesses directly related thereto.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code, as amended, as is in effect in the Commonwealth of Pennsylvania or in any
applicable state as the case may be.
SECTION 2. CREATION OF SECURITY INTEREST
As security for the payment and performance in full of the
Senior Secured Obligations, the Pledgor hereby hypothecates, pledges, assigns,
sets over and delivers unto the Agent, and grants to the Agent, for the equal
(in priority) and ratable benefit of the Senior Secured Parties, a continuing
first priority security interest in all its right, title and interest in, to and
under the Collateral, TO HAVE AND TO HOLD the Collateral, together with all
right, title, interest, powers, privileges and preferences pertaining or
incidental thereto, unto the Agent, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 3. NON-RECOURSE GUARANTY
The Pledgor hereby irrevocably and unconditionally guaranties
to the Agent the full and timely payment and performance of the Senior Secured
Obligations, it being the Pledgor's intent that the guaranty set forth in this
Section 3 shall be a guaranty of payment and not a guaranty of collection. The
guaranty hereunder is a primary and original obligation of the Pledgor and is an
absolute, unconditional guaranty of payment and performance which is irrevocable
and, to the extent allowed by applicable law, shall remain in full force and
effect without respect to future changes in conditions. The Pledgor shall have
no right of subrogation, reimbursement or indemnity whatsoever and no right of
recourse to or with respect to any assets or property of the Borrower or to any
Collateral. The Pledgors liability under this Lenfest Pledge
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<PAGE> 354
Agreement, and the rights and remedies of Agent hereunder, shall be immediate
and shall not be contingent upon the exercise or enforcement by Agent of
whatever remedies it may have against the Borrower or others or the enforcement
of any lien or the realization upon any security that Agent may at any time
possess.
Notwithstanding the foregoing paragraph, the recourse of Agent
in respect of the guaranty of the Pledgor set forth in this Section 3 is limited
to the Pledgor's interest in the Collateral. However, this paragraph shall not
limit Agent's rights against the Pledgor as a result of any breach by the
Pledgor of any representation, warranty or covenant of the Pledgor set forth in
this Lenfest Pledge Agreement.
SECTION 4. DELIVERY OF COLLATERAL
4.1 At Time of Execution of Agreement. Contemporaneously with
the execution of this Lenfest Pledge Agreement or, in any event, prior to the
Closing Date, the Pledgor shall deliver or cause to be delivered to the Agent
(i) any and all certificates and other instruments evidencing the Pledged
Securities, (ii) any and all other certificates or other instruments or
documents representing any of the Collateral and (iii) all other property
comprising part of the Collateral, in each case along with the Necessary
Endorsements.
4.2 Subsequent Delivery of Collateral. If the Pledgor shall
become entitled to receive or shall receive any securities or other property
(including, without limitation, shares of Pledged Securities acquired after the
Closing Date (including, without limitation, stock in York Cable Television,
Inc.), or any options, warrants, rights or other similar property or
certificates representing a stock dividend, or any distribution in connection
with any recapitalization, reclassification or increase or reduction of capital,
or issued in connection with any reorganization of the Borrower or any
Subsidiary, but excluding dividends permitted to be retained under Section 6) in
respect of the Pledged Securities (whether as an addition to, in substitution
of, or in exchange for, such Pledged Securities or otherwise), the Pledgor
agrees:
(i) to accept the same as the agent of the Agent,
(ii) to hold the same in trust on behalf of and for
the benefit of the Agent, and
(iii) to deliver any and all certificates or
instruments evidencing the same to the Agent on or before the close of business
on the seventh (7th) Business Day following the receipt thereof by the Pledgor,
in the exact form received together with the Necessary Endorsements, to be held
by the Agent subject to the terms of this Lenfest Pledge Agreement, as
additional Collateral.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PLEDGOR
5.1 Representations and Warranties. Pledgor represents and
warrants as follows:
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<PAGE> 355
(i) Pledgor is a duly organized and validly existing
corporation in good standing under the laws of the State of Delaware. Pledgor
has perpetual corporate existence, and Pledgor has the corporate power and
authority to own its property and assets and to transact the business in which
it is engaged and presently proposes to engage. Pledgor has not failed to
qualify to do business in any state or jurisdiction where the failure to so
qualify could have a material adverse effect on (a) the ability of Pledgor to
perform its obligations hereunder, (b) the binding nature, validity or
enforceability of this Lenfest Pledge Agreement, or (c) the validity,
perfection, priority or enforceability of the Lien of the Agent for the benefit
of the Senior Secured Parties in the Collateral. The principal place of business
of Pledgor is located at the address set forth on the signature page hereto and
the sole name under which Pledgor conducts business is set forth in the first
paragraph of this Lenfest Pledge Agreement.
(ii) All the Pledged Securities are owned by Pledgor
beneficially and of record free and clear of any Lien, except for the Liens
created pursuant to this Lenfest Pledge Agreement. The execution and delivery by
Pledgor of this Lenfest Pledge Agreement and the delivery of the Collateral to
the Agent simultaneously therewith has created a valid and perfected security
interest in the Collateral in favor of the Agent, for the equal (in priority)
and ratable benefit of the Senior Secured Parties, to secure payment of the
Senior Secured Obligations.
(iii) Pledgor has the corporate power to execute,
deliver and carry out the terms and provisions of this Lenfest Pledge Agreement,
and Pledgor has taken all necessary corporate action (including, without
limitation, any consent of stockholders required by law or by its articles of
incorporation or bylaws or other organizational documents) to authorize the
execution, delivery and performance of this Lenfest Pledge Agreement. This
Lenfest Pledge Agreement constitutes the authorized, valid and legally binding
obligation of Pledgor enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity (regardless of whether such enforcement is
sought in a court of law or at equity).
(iv) The execution and delivery of this Lenfest
Pledge Agreement, the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof, will not (x) violate any
provision of law or any injunction or any applicable regulation, order, writ,
judgment or decree of any court or governmental department, commission, board,
bureau, agency or instrumentality applicable to Pledgor, or (y) conflict or be
inconsistent with, or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to impose) any Lien, other than the
Liens created hereby, upon any of the Collateral or assets of Pledgor pursuant
to the terms of, any agreement, indenture, franchise, license, permit, mortgage
or deed of trust to which Pledgor is a party or by which Pledgor is bound, or to
which Pledgor is subject, or (z) violate any of the provisions of the articles
of incorporation, bylaws or other organizational documents of Pledgor.
(v) No consent, approval or authorization of any
Person which has not been obtained, or recording, filing, registration, notice
or other similar action with or to any Person, is required in order to insure
the legality, validity, binding effect or enforceability of this
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<PAGE> 356
Lenfest Pledge Agreement, except such filings and may be required as
contemplated by Section 7.30 of the Credit Agreement.
(vi) The shares of stock and securities of the
Subsidiaries of the Borrower included in the Collateral are not, to the
knowledge of Pledgor, subject to any charter, bylaw, statutory, contractual or
other restriction governing their issuance, transfer, ownership or control which
restriction would limit the effectiveness or enforceability of the pledge and
security interest created under this Lenfest Pledge Agreement, except to the
extent that regulatory considerations reflected in Section 12 hereof may affect
the enforceability of certain rights and remedies of the Agent and the Senior
Secured Parties hereunder.
5.2 Survival of Representations and Warranties. All the
foregoing representations and warranties shall survive the execution and
delivery of this Lenfest Pledge Agreement and shall continue until this Lenfest
Pledge Agreement is terminated as provided herein and shall not be affected or
waived by any inspection or examination made by or on behalf of Agent or any
Senior Secured Party.
SECTION 6. VOTING; DIVIDENDS
6.1 Rights Prior To Default. Other than during the existence
of an Event of Default,
(i) Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Securities or any
part thereof for any purpose not inconsistent with the terms of the Loan
Documents.
(ii) Subject to and limited by the restrictions on
dividends and other payments in respect of the Collateral set forth in the Loan
Documents, Pledgor shall be entitled to receive and retain any and all dividends
and other payments paid in respect of the Collateral, provided, however, that
any and all
(a) dividends or other payments paid or
payable other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in exchange for,
any Collateral,
(b) dividends and other distributions paid
or payable in cash in respect of any Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and
(c) cash paid, payable or otherwise
distributed in redemption of or exchange for, any Collateral except in a
transaction permitted by the Credit Agreement,
shall forthwith be delivered to the Agent to hold as Collateral and shall, if
received by Pledgor, be received in trust for the benefit of the Agent, be
segregated from the other property or funds of Pledgor, and be forthwith
delivered to the Agent as Collateral in the same form as so received (with any
Necessary Endorsement).
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<PAGE> 357
(iii) The Agent shall execute and deliver to the
Pledgor all such proxies and other instruments as the Pledgor may reasonably
request for the purpose of enabling the Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to paragraph (i) above and to
receive the dividends or interest payments which it is authorized to receive and
retain pursuant to paragraph (ii) above.
6.2 Rights After a Default. Upon the occurrence and during the
continuation of an Event of Default and as more fully set forth in Section 11
below,
(i) Subject to Section 12 below, all rights of the
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to subsection 6.1 above and to
receive the dividends and payments which it would otherwise be authorized to
receive and retain pursuant to subsection 6.1 above shall cease, and all such
rights shall thereupon become vested in the Agent who shall have the sole right
to exercise such voting and other consensual rights and to receive and hold as
Collateral such dividends and payments.
(ii) All dividends and other payments which are
received by the Pledgor contrary to the provisions of paragraph (i) of this
subsection 6.2 shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor and shall forthwith be paid over to
the Agent as Collateral in the same form as so received (with any Necessary
Endorsement).
SECTION 7. COVENANTS OF PLEDGOR
Pledgor covenants that until this Lenfest Pledge Agreement is
terminated in accordance with the terms hereof:
(i) Pledgor shall not transfer, sell, encumber or
otherwise dispose of any of the Collateral, except in connection with a sale
permitted under the provisions of the Credit Agreement providing for
dispositions to third parties free of Liens or to the Borrower and/or one or
more Subsidiaries of the Borrower, and shall not create, assume or suffer to
exist any Lien in or on any of the Collateral, except the Liens created
hereunder, provided that Pledgor may transfer the Collateral to AT&T Corp. if
prior to such transfer (1) such transferee executes and delivers to Agent such
documents as Agent may request so that such transferee becomes bound by this
Lenfest Pledge Agreement as if an original signatory hereto and the transferred
Collateral remains pledged to Agent and (2) such transferee has executed and
delivered to the Company a confirmation that the Company shall be entitled to
programming discounts that are at least as favorable to the Company and its
Subsidiaries as those offered through Lenfest.
(ii) To the extent permitted by applicable law,
Pledgor hereby waives any rights which it otherwise may have under Section 9-112
of the Uniform Commercial Code as in effect in the Commonwealth of Pennsylvania.
(iii) Pledgor shall not change the location of its
principal office or its name referred to in Section 5.1 (i), or conduct business
under any other name, without having
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first (a) given to Agent at least thirty (30) days' prior written notice of same
and (b) executed, delivered and filed (and paid or cause to be paid by the
Borrower or any Subsidiary of the Borrower all filing fees and taxes) all such
documents as may be necessary or advisable in the opinion of Agent to continue
to perfect and protect the Liens created hereby.
(iv) Pledgor shall vote the stock and securities
included in the Collateral in a manner consistent with the covenants and
agreements of Pledgor, the Borrower and the Subsidiaries of the Borrower set
forth in the Loan Documents, including, without limitation, restricting the
issuance of additional shares of stock of the Borrower and its Subsidiaries (or
rights or options therefore) except such as is pledged to the Agent pursuant to
the terms of the Loan Documents.
SECTION 8. FURTHER ASSURANCES
The Pledgor agrees that at any time and from time to time, at
the expense of the Borrower and its Subsidiaries, the Pledgor will (and will
require the Borrower and its Subsidiaries to at the expense of the Borrower and
its Subsidiaries) promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral including, without limitation, using its reasonable best efforts to
cooperate in obtaining any FCC, PUC, or other governmental approval of any
action or transaction contemplated hereby or thereby.
SECTION 9. AGENT APPOINTED ATTORNEY-IN-FACT; MAY PERFORM CERTAIN DUTIES
9.1 Appointment as Attorney-in-fact. Effective upon the
occurrence of an Event of Default, and so long as Agent reasonably believes such
Event of Default is continuing, the Pledgor hereby appoints the Agent as its
true and lawful agent, proxy, and attorney-in-fact for the purpose of carrying
out this Lenfest Pledge Agreement and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes hereof including, without limitation, the execution on behalf of
Pledgor of any financing or continuation statement with respect to the security
interest created hereby and the endorsement of any drafts or orders which may be
payable to Pledgor in respect of, arising out of, or relating to any or all of
the Collateral. This power shall be valid until the termination of the security
interests created hereunder, any limitation under law as to the length or
validity of a proxy to the contrary notwithstanding. This appointment is
irrevocable and coupled with an interest and any proxies heretofore given by the
Pledgor to any other Person are revoked. The designation set forth herein shall
be deemed to amend and supersede any inconsistent provision in the articles of
incorporation, bylaws or other documents to which Pledgor or any Subsidiary of
the Borrower in which Pledgor holds capital stock is subject or to which any is
a party.
9.2 Registration of Securities. Pledgor shall instruct each
Subsidiary of the Borrower in which Pledgor holds capital stock to, and such
Subsidiary of the Borrower shall, register the pledge of the shares included in
the Collateral in the name of the Agent on the books
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of such Subsidiary of the Borrower. Upon the occurrence and during the
continuance of an Event of Default, Pledgor shall at the direction of Agent
instruct each Subsidiary of the Borrower in which Pledgor holds capital stock
to, and such Subsidiary of the Borrower shall, register the shares included in
the Collateral in the name of the Agent on the books of such Subsidiary of the
Borrower.
9.3 Performance of Pledgor's Duties. In furtherance, and not
by way of limitation, of the foregoing subsections 9.1 and 9.2, if (at any time
either before or after the occurrence of an Event of Default) the Pledgor fails
to perform any agreement contained herein, the Agent may (but under no
circumstance is obligated to) perform such agreement and any expenses incurred
shall be payable by the Borrower and its Subsidiaries provided, however, that
nothing herein shall be deemed to relieve the Pledgor from fulfilling any of its
obligations hereunder.
9.4 Acts May Be Performed By Agents and Employees. Any act of
the Agent to be performed pursuant to this Section 9 or elsewhere in this
Lenfest Pledge Agreement may be performed by agents or employees of the Agent.
SECTION 10. STANDARD OF CARE
10.1 In General. No act or omission of any Senior Secured
Party (or agent or employee thereof shall give rise to any defense, counterclaim
or offset in favor of the Pledgor or any claim or action against any such Senior
Secured Party (or agent or employee thereof, in the absence of gross negligence
or willful misconduct of such Senior Secured Party as determined in a final,
nonappealable judgment of a court of competent jurisdiction. The Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Agent accords to its own property, it
being understood that it has no duty to take any action with respect to calls,
conversions or exchanges or to preserve any rights of any parties and shall only
be liable for losses which are a result of it gross negligence or willful
misconduct as determined in a final, nonappealable judgment of a court of
competent jurisdiction.
10.2 Reliance on Advice of Counsel. In taking any action under
this Lenfest Pledge Agreement, the Agent shall be entitled to rely upon the
advice of counsel of Agent's choice and shall be fully protected in acting on
such advice whether or not the advice rendered is ultimately determined to have
been accurate.
SECTION 11. DEFAULT
11.1 Certain Rights Upon Default. In addition to any other
rights accorded to the Agent and the Senior Secured Parties hereunder, upon the
occurrence and during the continuation of an Event of Default:
11.1.1 The Agent shall be entitled to receive any
cash dividends or payments on the Collateral and, subject to Section 12 below,
to exercise in the Agent's discretion all voting rights pertaining thereto as
more fully set forth in Section 6 above. Without limiting
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the generality of the foregoing, subject to Section 12 below, the Agent shall
have the right to exercise all rights with respect to the Collateral as if it
were the sole and absolute owner thereof, including, without limitation, to vote
and/or to exchange, at its sole discretion, any or all of the Collateral in
connection with a merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral or the Borrower, any
Subsidiary of the Borrower or the Pledgor.
11.1.2 Pledgor, the Borrower and each Subsidiary of
the Borrower shall take any action necessary or required or requested by the
Agent in order to allow it fully to enforce the security interest in the
Collateral hereunder and to realize thereon to the fullest extent possible,
including, but not limited to, the filing of any claims with any court,
liquidator, trustee, guardian, receiver or other like person or party.
11.1.3 The Agent shall have all of the rights of a
secured party under the Uniform Commercial Code of Pennsylvania, as amended, and
any other applicable law including the right to sell on such terms as it may
deem appropriate any or all of the Collateral at one or more public or private
sales upon at least ten (10) Business Days' written notice to Pledgor of the
time and place of any public sale and of the date on which the Collateral will
first be offered for sale in the case of any private sale. Agent shall have the
right to bid thereat or purchase any part or all the Collateral in its own or a
nominee's name (subject to applicable FCC or PUC requirements or restrictions).
The Agent shall have the right to apply the proceeds of the sale, after
deduction for any costs and expenses of sale (including any liabilities incurred
in connection therewith including reasonable attorneys' fees and allocated costs
of attorneys who are employees of the Agent), to the payment of the Senior
Secured Obligations in any manner or order which the Agent, in its sole
discretion, may elect (whether pursuant to the Credit Agreement or otherwise),
to the payment of any other amount required by law (including without limitation
Section 9-504(l)(c) of the Uniform Commercial Code), and to pay any remaining
proceeds to Pledgor or its successors or assigns or to whomsoever may lawfully
be entitled to receive the same or as a court of competent jurisdiction may
direct, without further notice to or consent of Pledgor and without regard to
any equitable principles of marshalling or other like equitable doctrines.
Pledgor hereby acknowledges and agrees that the notice provided for above is
reasonable and expressly waives any rights it may have of equity of redemption,
stay or appraisal with respect to the Collateral.
11.1.4 For purposes hereof, a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof; the Agent shall be free to carry out such sale pursuant to such
agreement, and Pledgor shall not be entitled to the return of the Collateral or
any portion thereof, notwithstanding the fact that after Agent shall have
entered into such an agreement, any and all Defaults shall have been remedied
and the Senior Secured Obligations paid in full.
11.1.5 The Agent shall have the right, with full
power of substitution either in the Agent's name or the name of the Pledgor, to
ask for, demand, sue, collect and receive any and all moneys due or to become
due under and by virtue of the Collateral and to settle, compromise, prosecute
or defend any action, claim or proceeding with respect thereto, provided,
however, that nothing herein shall be construed as requiring the Agent to take
any
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action, including, without limitation, requiring or obligating the Agent to
make any inquiry as to the nature or sufficiency of any payment received, or to
present or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby.
11.1.6 The Agent shall be entitled to the appointment
of a receiver or trustee for all or any part of the businesses of the Borrower
or of the Subsidiary of the Borrower in which Pledgor owns an interest or of the
Pledgor, which receiver shall have such powers as may be conferred by law or the
appointing authority.
11.2 Agent May Exercise Less Than All Rights. Pledgor hereby
acknowledges and agrees that the Agent is not required to exercise all remedies
and rights available to it equally with respect to all of the Collateral, and
the Agent may select less than all of the Collateral with respect to which the
remedies as determined by the Agent may be exercised.
11.3 Duties of Pledgor/Borrower and Subsidiary of the Borrower
With Respect to Transferee. In the event that, upon an occurrence of an Event of
Default, the Agent shall sell all or any of the Collateral to another party or
parties (herein called "Transferee") or shall purchase or retain all or any of
the Collateral, Pledgor shall instruct the Borrower and each Subsidiary of the
Borrower in which Pledgor holds an interest to, and the Borrower and each such
Subsidiary shall:
(i) Deliver to the Agent or Transferee, as the case
may be, the articles of incorporation, bylaws, minute books, stock certificate
books, corporate seals, deeds, leases, indentures, agreements, evidences of
indebtedness, books of account, financial records and all other documents and
records of the Subsidiary of the Borrower in which Pledgor has an interest;
(ii) Use its best efforts to obtain resignations of
the persons then serving as officers and directors of Subsidiaries of the
Borrower in which Pledgor has an interest, if so requested; and
(iii) Use its best efforts to obtain any approvals
that are required by any governmental or regulatory body in order to permit the
sale of the Collateral to the Transferee or the purchase or retention of the
Collateral by the Agent and allow the Transferee or the Agent to continue the
business of the issuer.
SECTION 12. ACKNOWLEDGEMENT OF REGULATORY CONSIDERATIONS; UNIQUE NATURE
OF ASSETS.
12.1 FCC/PUC Approval. It is hereby acknowledged that transfer
of certain Collateral and the exercise of certain other remedies provided herein
may constitute a transfer of an FCC License or other Franchise or a sale or
transfer of control of a holder of an FCC License or other Franchise, requiring
approval of the FCC or PUC, pursuant to rules and regulations of the FCC or PUC.
Notwithstanding anything to the contrary contained in this Agreement, the Agent
will not knowingly take any action pursuant to this Agreement which would
constitute or result in an assignment of an FCC License or other Franchise or
any transfer of control of the
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holder of an FCC License or other Franchise if such assignment of license or
transfer of control would require under then existing law (including the written
rules and regulations promulgated by the FCC or any PUC), the prior approval of
the FCC or such PUC, without first obtaining such approval. In connection with
this provision, the Agent shall be entitled to rely upon the advice of counsel
of Agent's choice whether or not the advice rendered is ultimately determined to
have been accurate.
12.2 Pledgor/Borrower and Subsidiary of the Borrower
Assistance in Obtaining Approval. Without limiting the generality of Section 8
above, if counsel to the Agent reasonably determines that the consent of the FCC
or PUC is required in connection with any of the actions hereunder or under any
other Loan Document, then the Pledgor (at the cost and expense of the Borrower
and its Subsidiaries) agrees to use its best efforts to secure such consent and
to cooperate fully with the Agent in any action to secure such consent. Further,
the Pledgor shall use its best efforts to require the Borrower and Subsidiaries
of the Borrower to do the same, Without limiting the generality of the
foregoing, Pledgor, the Borrower and the Borrower's Subsidiaries shall promptly
execute and file and/or cause the execution and filing of all applications,
certificates, instruments, and other documents and papers that the Agent deems
necessary or advisable to file in order to obtain any necessary governmental
consent, approval, or authorization, and if the Borrower, any Subsidiary of the
Borrower or Pledgor fails or refuses to execute (or fails or refuses to cause
another Person to execute) such documents, the Agent or the clerk of any court
of competent jurisdiction may execute and file the same on behalf of the
Borrower, any Subsidiary of the Borrower and Pledgor (or any of them) or such
other Person.
12.3 Unique Nature of Assets. It is agreed that the FCC
Licenses and other Franchises held by the Borrower and its Subsidiaries are
unique assets which (or the control of which) may have to be transferred in
order for the Agent adequately to realize the value of its security interest. A
violation of the covenants set forth in this Section would result in irreparable
harm to the Agent for which monetary damages are not readily ascertainable.
Therefore, in addition to any other remedy which may be available to the Agent
at law or in equity, Agent shall have the remedy of specific performance of the
provisions of this Section. To enforce the provisions of this Section, the Agent
is authorized to request the consent or approval of the FCC or PUC to a
voluntary or an involuntary transfer of control of any FCC License or other
Franchise or sale or transfer of control of a holder of an FCC License or other
Franchise.
12.4 Selection by Agent of Different Transferee. If, for any
reason, the FCC or PUC does not approve within a reasonable period of time
(which period shall be determined conclusively by the Agent), the initial
application for approval of the transfer of the Collateral, the Agent shall then
have the right to transfer the Collateral to such other Person as the Agent
shall select (subject to the prior approval of the FCC or PUC). With respect to
such subsequent selection, Pledgor agrees to cooperate fully in the manner set
forth above. Exercise by the Agent of the right to such cooperation shall not be
exhausted by the initial or any subsequent exercise thereof.
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SECTION 13. SECURITIES LAW PROVISION
Pledgor recognizes that the Agent may be limited in its
ability to effect a sale to the public of all or part of the Collateral by
reason of certain prohibitions in the Securities Act of 1933, as amended, or
other federal or state securities laws (collectively, the "Securities Laws"),
and may be compelled to resort to one or more sales to a restricted group of
purchasers who may be required to agree to acquire the Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor agrees that sales so made may be at prices and on terms less
favorable than if the Collateral were sold to the public, and that the Agent has
no obligation to delay the sale of any Collateral for the period of time
necessary to register the Collateral for sale to the public under the Securities
Laws. Pledgor shall (and require the Borrower and its Subsidiaries to) cooperate
with the Agent in its attempts to satisfy any requirements under the Securities
Laws (including without limitation registration thereunder if requested by
Agent) applicable to the sale of the Collateral by the Agent at the Borrower's
and its Subsidiaries' cost and expense.
SECTION 14. SECURITY INTEREST ABSOLUTE; WAIVERS BY PLEDGOR
14.1 Absolute Nature of Security Interest. All rights of the
Agent hereunder, the grant of the security interest in the Collateral and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of (i) any lack of validity or enforceability of any of the terms
of the Loan Documents or any other instrument or document relating hereto or
thereto, (ii) any change in the time, manner or place of payment of, increases
in, or in any other term of, all or any of the Senior Secured Obligations, or
any other amendment or waiver of any terms related thereto, (iii) any exchange,
release or nonperfection of any other collateral, or any release or amendment or
waiver of any guaranty, or (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Pledgor or any other
Person in respect of the Senior Secured Obligations or in respect of this
Lenfest Pledge Agreement or any other Loan Document or any obligations hereunder
or thereunder.
14.2 No Duty To Marshal Assets. The Agent shall have no
obligation to marshal any assets in favor of the Pledgor or any other Person or
against or in payment of any or all of the Senior Secured Obligations.
14.3 Waiver of Right of Subrogation, Etc. The Pledgor
acknowledges that until all the Senior Secured Obligations shall have been
indefeasibly paid in full, the Pledgor shall have no right (or hereby waives any
such right) of subrogation, reimbursement, or indemnity whatsoever in respect of
the Borrower or any Subsidiary of the Borrower arising out of remedies exercised
by the Agent hereunder.
14.4 Other Waivers. The Pledgor hereby waives notice of
acceptance of this Lenfest Pledge Agreement. The Pledgor further waives
presentment and demand for payment of any of the Senior Secured Obligations,
protest and notice of dishonor or default with respect to any of the Senior
Secured Obligations, and all other notices to which the Pledgor might otherwise
be entitled, except as otherwise expressly provided in this Lenfest Pledge
Agreement or any of the other Loan Documents. The Pledgor (to the extent that it
may lawfully do so)
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covenants that it shall not at any time insist upon or plead, or in any manner
claim or take the benefit of, any stay, valuation, appraisal or redemption now
or at any time hereafter in force that, but for this waiver, might be applicable
to any sale made under any judgment, order or decree based on this Lenfest
Pledge Agreement or any other Loan Document; and the Pledgor (to the extent that
it may lawfully do so) hereby expressly waives and relinquishes all benefit of
any and all such laws and hereby covenants that it will not hinder, delay or
impede the execution of any power in this Lenfest Pledge Agreement or in any
other Loan Document delegated to the Agent, but that it will suffer and permit
the execution of every such power as though no such law or laws had been made or
enacted.
SECTION 15. NON-WAIVER AND NON-EXCLUSIVE REMEDIES
15.1 Non-Exclusive Remedies. No remedy or right herein
conferred upon, or reserved to the Agent is intended to be to the exclusion of
any other remedy or right, but each and every such remedy or right shall be
cumulative and shall be in addition to every other remedy or right given
hereunder or under any other Loan Document or under law.
15.2 Delay and Non-Waiver. No delay or omission by the Agent
to exercise any remedy or right hereunder shall impair any such remedy or right
or shall be construed to be a waiver of any Event of Default, or an acquiescence
therein, nor shall it affect any subsequent Event of Default of the same or of a
different nature.
SECTION 16. CONTINUING SECURITY INTEREST; HEIRS AND ASSIGNS
This Lenfest Pledge Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect until terminated pursuant to Section 17 below, (ii) be binding upon the
Pledgor, its successors and assigns and (iii) inure to the benefit of the Agent,
the other Senior Secured Parties and their respective successors, transferees
and assigns provided, however, that except as specifically set forth in clause
(i) of Section 7, the Pledgor shall not be permitted to transfer any of its
obligations hereunder.
SECTION 17. TERMINATION OF AGREEMENT; RELEASE OF COLLATERAL
17.1 Termination of Agreement.
17.1.1 At such time as (a) the Senior Secured Parties
have no obligation to make further loans or other extensions of credit to the
Borrower under the Credit Agreement, and (b) all the Senior Secured Obligations
have been indefeasibly paid and/or performed in full, this Lenfest Pledge
Agreement shall terminate and the Collateral shall be released pursuant to
subsection 17.2, provided that if at the time of the payment in full of the
Senior Secured Obligations (i) such payment and performance is not subject to
any filed or threatened claim, contest, voidance or offset of any kind
whatsoever, (ii) the chief financial officer of the Borrower so certifies in
writing to Agent and (iii) the Borrower supplies to Agent such valuations,
information, evidence, certifications and opinions as Agent may request in
connection therewith, this Lenfest Pledge Agreement shall terminate upon
satisfaction of the conditions in clauses (a) and (b) above without giving
effect to the requirement that the payment in full be indefeasible.
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17.1.2 At such time as Lenfest shall have acquired
all (but not less than all) of the equity of all Partially-Owned Subsidiaries
(as hereafter defined) in compliance with Subsection 7.7.2(c) of the Credit
Agreement (which subsection addresses dispositions to minority investors), this
Lenfest Pledge Agreement shall terminate and the Collateral shall be released
pursuant to Subsection 17.2 below. "Partially-Owned Subsidiaries" means all
Subsidiaries of the Borrower that the Pledgor has any interest in at the time of
the acquisition referred to in the preceding sentence. For purposes of this
Subsection 17.1.2 only, the reference to Subsection 7.7.2(c) of the Credit
Agreement shall mean that Subsection as in effect on the Closing Date, or as
amended in any manner that is not more restrictive than that set forth in the
Credit Agreement on the Closing Date.
17.2 Duties of Agent With Respect To Release of Collateral.
When this Agreement terminates pursuant to subsection 17.1 above, the Agent
shall reassign and deliver to the Pledgor, or to such Person as the Pledgor
shall designate, against receipt, such of the Collateral (if any) as shall not
have been sold or otherwise applied by the Agent pursuant to the terms hereof
and shall still be held by it hereunder, together with appropriate instruments
of reassignment and release, all without any recourse to, or warranty whatsoever
by, the Agent, at the sole cost and expense of the Borrower.
17.3 Release of Certain Collateral. Effective upon the closing
of a sale of any Collateral as part of a disposition made by the Borrower or any
of its Subsidiaries in conformity with the provisions of the Credit Agreement
providing for dispositions to third parties free of Liens, and receipt by the
Agent of a certification to such effect from the chief financial officer of the
Borrower, then the security interest in the assets which are the subject of the
sale (the "Sold Collateral") shall terminate. The Agent shall thereupon reassign
and deliver to Pledgor, or to such Person as the Pledgor shall designate,
against receipt, the Sold Collateral, together with appropriate instruments of
reassignment and release, all without any recourse to, or warranty whatsoever
by, the Agent, at the sale cost and expense of the Borrower and its
Subsidiaries.
SECTION 18. MISCELLANEOUS PROVISIONS
18.1 Notices. All notices, requests, demands, directions and
other communications (collectively "notices") given or made upon any party under
the provisions of this Lenfest Pledge Agreement shall be by telephone or in
writing (including facsimile communication) unless otherwise expressly provided
under this Lenfest Pledge Agreement and if in writing, shall be delivered or
sent by facsimile to the respective parties at the addresses and numbers set
forth under their respective names on the signature pages to this Lenfest Pledge
Agreement or in accordance with any subsequent unrevoked written direction from
any party to the others. All notices shall, except as otherwise expressly
provided in this Lenfest Pledge Agreement, be effective (a) in the case of
facsimile, when received, (b) in case of hand-delivered notice, when hand
delivered, (c) in the case of telephone, when telephoned, provided, however,
that in order to be effective, telephonic notices must be confirmed in writing
no later than the next day by letter, facsimile or telex, (d) if given by mail,
four (4) days after such communication is deposited in the mails with first
class postage prepaid, return receipt requested, and (e) if given by any other
means (including air courier), when delivered; provided, that notices to the
Agent
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shall not be effective until received. In the event of a discrepancy between any
telephonic or written notice, the written notice shall control.
18.2 Entire Agreement. This Lenfest Pledge Agreement sets
forth all of the promises, covenants, agreements, conditions and understandings
among the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings, inducements or conditions,
express or implied, oral or written, with respect thereto, except as contained
or referred to herein.
18.3 Amendments. The terms of this Lenfest Pledge Agreement
may be amended, terminated, modified, supplemented or waived only upon the
written consent of the Agent and the Pledgor. The rights of the Agent to so
change, modify, waive, discharge or terminate any provision hereof is subject to
the terms of Section 12.5 of the Credit Agreement, it being understood, however,
that the Pledgor is not a third party beneficiary of Section 12.5 of the Credit
Agreement.
18.4 Governing Law. This Lenfest Pledge Agreement and the
rights and obligations of the parties hereunder shall be construed and enforced
in accordance with and shall be governed by the laws of the Commonwealth of
Pennsylvania.
18.5 Arbitration; Consent to Jurisdiction, Service and Venue;
Waiver of Jury Trial.
18.5.1 Arbitration.
(i) Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any claim or controversy
arising out of, or relating to, the Loan Documents between any or all of the
parties hereto (a "Dispute") shall be resolved by binding arbitration conducted
under and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and the
Federal Arbitration Act. Disputes may include, without limitation, tort claims,
counterclaims, a dispute as to whether a matter is subject to arbitration,
claims brought as class actions, or claims arising from documents executed in
the future. A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to Interest Rate Protection Agreements.
(ii) All arbitration hearings shall be conducted in
the City of Philadelphia, Commonwealth of Pennsylvania unless otherwise agreed
by all parties to such arbitration. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall conclude within 120 days of demand
for arbitration. These time limitations may not be extended unless a party shows
cause for extension and then for no more than a total of 60 days. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000.00. Arbitrators shall be licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The parties do not waive applicable Federal or state substantive law
except as provided herein.
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(iii) Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without diminution,
certain remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any real or
personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sales; (ii) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; and (iii) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment of
receiver and filing of involuntary bankruptcy proceedings. Any claim or
controversy with regard to any party's entitlement to such remedies is a
Dispute.
(iv) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A
REMEDY OF SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AGAINST OTHER
PARTIES IN ANY DISPUTE AND HEREBY WAIVE ANY RIGHT OR CLAIM TO SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN
THE FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY
ARBITRATION OR JUDICIALLY.
18.5.2 Consent to Jurisdiction, Service and Venue;
Waiver of Jury Trial
(i) With respect to any matters that may be heard
before a court of competent jurisdiction under paragraph (iii) of the preceding
subsection 18.5.1, the Pledgor hereby consents to the jurisdiction and venue of
the courts of the Commonwealth of Pennsylvania or of any federal court located
in such state, waives personal service of any and all process upon it and
consents that all such service of process be made by certified or registered
mail directed to the Pledgor at the address provided for in Section 18.1 above
and service so made shall be deemed to be completed upon actual receipt. The
Pledgor hereby waives the right to contest the jurisdiction and venue of the
courts located in the County of Philadelphia, Commonwealth of Pennsylvania on
the ground of inconvenience or otherwise and, further, waives any right to bring
any action or proceeding against (a) the Agent in any court outside the County
of Philadelphia, Commonwealth of Pennsylvania, or (b) any other Senior Secured
Party other than in a state within the United States designated by such Senior
Secured Party. The provisions of this Section 18.5 shall not limit or otherwise
affect the right of the Agent or any Senior Secured Party to institute and
conduct an action in any other appropriate manner, jurisdiction or court.
(ii) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE,
SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY
TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY
OTHER LOAN DOCUMENT OR ANY GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE
RELATIONSHIP BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NEITHER THE AGENT NOR
ANY SENIOR SECURED PARTY NOR ANY PLEDGOR NOR ANY OTHER PERSON WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED.
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<PAGE> 368
(iii) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH
(iv) OF THE PRECEDING SUBSECTION 18.5.1 EXCEPT AS PROHIBITED BY LAW, EACH PARTY
TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY
ARBITRATION OR OTHER LITIGATION, ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
PUNITIVE DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
EACH PARTY TO THIS AGREEMENT (i) CERTIFIES THAT NEITHER THE AGENT NOR ANY
REPRESENTATIVE, OR ATTORNEY OF THE AGENT NOR ANY SENIOR SECURED PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR SUCH SENIOR SECURED PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 18.5. THE PROVISIONS OF THIS SECTION 18.5 HAVE
BEEN FULLY DISCLOSED TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
PARTY THAT THE PROVISIONS OF THIS SECTION 18.5 WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
18.6 Severability. If any of the provisions or terms of this
Lenfest Pledge Agreement shall for any reason be held to be invalid or
unenforceable such invalidity or unenforceability shall not affect any of the
other terms hereof, but this Lenfest Pledge Agreement shall be construed as if
such invalid or unenforceable term had never been contained herein. Any such
invalidity or unenforceability in a particular jurisdiction shall not be deemed
to render a provision invalid or unenforceable in any other jurisdiction.
18.7 Counterparts. This Lenfest Pledge Agreement may be
executed in one or more counterparts, each of which shall constitute an original
agreement, but all of which together shall constitute one and the same
instrument. A photocopied or facsimile copy of any signature page to this
Lenfest Pledge Agreement shall be deemed to be the functional equivalent of a
manually executed original for all purposes.
18.8 Rights under Lenfest Agreement.
18.8.1 Pledgor consents to the terms and conditions
of the Credit Agreement and the Senior Subordinated Indenture and the incurring
of additional debt pursuant thereto. Pledgor acknowledges that the debt
facilities under the Credit Agreement and the Senior Subordinated Indenture
constitute a "Refinancing" and "Media Debt" and the lenders under such credit
facilities constitute "Creditors" for the purposes of, and as such capitalized
terms are used in, the Lenfest Agreement (as defined in the Credit Agreement).
18.8.2 Neither Pledgor nor any affiliate of Pledgor
may exercise the right of first refusal or the other rights set forth in
Sections 13 and 14 of the Lenfest Agreement if immediately prior to such
exercise, and before giving effect thereto, a Default or Event of Default
exists.
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<PAGE> 369
18.8.3 Pledgor acknowledges that (i) the exercise by
it or any of its affiliates of certain of the Pledgor's rights under the Lenfest
Agreement, including, without limitation, under Sections 13, 14, 27 and 28
thereof, may be a Default under the Loan Documents, (ii) the Agent and the
Senior Secured Parties are not waiving any rights or remedies they may have
against the Borrower, any of the Borrower's Subsidiaries, Pledgor or any
affiliate of Pledgor as a result of any exercise of such rights, and (iii) the
exercise of any such rights shall not impair the paramount rights of Agent and
the Senior Secured Parties pursuant to the Loan Documents, including the first
priority security interest of Agent in all of the stock of the Subsidiaries of
the Borrower that Pledgor or any affiliate of Pledgor now owns or may hereafter
acquire. Pledgor shall give to Agent and each Senior Secured Party (at the
address of such Senior Secured Party specified in the Credit Agreement or such
other address of which Pledgor is notified by a Senior Secured Party) at least
thirty (30) days prior written notice of its intention to exercise any of its
rights under Sections 13, 14, 27 or 28 of the Lenfest Agreement, which notice
shall specify the Section of the Lenfest Agreement pursuant to which Pledgor
intends to exercise its rights and the basis for such exercise.
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<PAGE> 370
IN WITNESS WHEREOF, the parties have caused this Lenfest
Pledge Agreement to be duly executed and delivered by their respective
authorized officers on the date first above written.
PLEDGOR: LENFEST YORK, INC.
By:_______________________________________
Name:
Title:
Notice Information
202 Shoemaker Road
Pottstown, PA 19464
Phone No.: (215) 327-0965
Fax No.: (215) 327-8378
Attention: H.F. Lenfest, President
AGENT: FIRST UNION NATIONAL BANK, in its capacity
as Agent
By:_______________________________________
Name: Elizabeth Elmore
Title: Senior Vice President
Notice Information
Communications/Media Group
PA 4829
1 South Penn Square
P.O. Box 7618
Philadelphia, PA 19101-7618
Phone No.: (215) 786-4321
Fax No.: (215) 786-7721
Attention: Elizabeth Elmore,
Senior Vice President
Signature Page to Lenfest Pledge Agreement
<PAGE> 371
JOINDER
The undersigned acknowledge the Lenfest Pledge Agreement to
which this Joinder is attached, and hereby jointly and severally agree to be
bound by the foregoing Lenfest Pledge Agreement and to perform the covenants
contained therein required to be performed by each.
SUSQUEHANNA MEDIA CO.
SUSQUEHANNA CABLE CO.
CABLE TV OF EAST PROVIDENCE, INC.
CASCO CABLE TELEVISION, INC.
CASCO CABLE TELEVISION OF BATH, MAINE
SBC CABLE CO.
YORK CABLE TELEVISION, INC.
By: ___________________________________
Name: Alan L. Brayman
Title: Treasurer
Notice Information
140 East Market Street
York, PA 18401
Phone: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
Joinder to Lenfest Pledge Agreement
<PAGE> 372
SCHEDULE I
TO LENFEST PLEDGE AGREEMENT
SHARES OWNED BY LENFEST
132,431.41 shares of Class A Common Stock of Susquehanna Cable Co.
69.06 shares of Common Stock of Casco Cable Television, Inc.
43.16 shares of Common Stock of Casco Cable Television of Bath, Maine
1,294.83 shares of Common Stock of Cable TV of East Providence, Inc.
9,322.8 shares of Common Stock of SBC Cable Co.
10.79 shares of Common Stock of York Cable Television, Inc.
<PAGE> 373
AFFILIATE SUBORDINATION AGREEMENT
(Susquehanna Pfaltzgraff Co.)
AFFILIATE SUBORDINATION AGREEMENT (as same may be amended, modified or
supplemented from time to time, this "Agreement") dated as of May 12, 1999 among
SUSQUEHANNA PFALTZGRAFF CO., a Delaware corporation ("SPC"), SUSQUEHANNA MEDIA
CO., a Delaware corporation (the "Borrower"), and FIRST UNION NATIONAL BANK, as
Agent (in such capacity, including successors and assigns, the "Agent"),
appointed pursuant to a certain Credit Agreement dated as of even date (as such
term is hereinafter defined), among (i) the Borrower and the (ii) lenders
referred to therein, and (iii) the Agent.
Background
On the date hereof certain lenders and issuers of letters of credit and
FIRST UNION NATIONAL BANK as Agent have entered into a Credit Agreement (as
amended, extended, supplemented, restated or otherwise modified or refinanced,
including without limitation any amendment involving an increase in principal,
interest rate or other amount, the "Credit Agreement") with the Borrower
pursuant to which such lenders and issuers agreed to extend certain credit to
the Borrower upon the terms and conditions specified in the Credit Agreement
under (1) a revolving credit facility with a swing loan subfacility, and (2) two
separate term loan facilities, and to issue, or participate in the issuance of,
certain letters of credit. In addition, the Credit Agreement currently requires
the Borrower under certain conditions to enter into interest rate hedging
agreements.
To induce the Lenders (as defined in the Credit Agreement) to enter
into the Credit Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, SPC, the Borrower and
the Agent wish to enter into this Agreement pursuant to which SPC and the
Borrower will agree that certain obligations of the Borrower to SPC shall be
subordinate in right of payment to the Senior Secured Obligations (as defined in
the Credit Agreement). Accordingly, SPC, the Borrower, and the Agent, intending
to be legally bound, hereby agree as follows:
Section 1. Definitions. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Credit Agreement. The
following terms shall have the meanings set forth below:
"Debtor" shall mean the Borrower and/or its Subsidiaries.
"SPC Debt" shall mean all Indebtedness, whether principal or interest,
and other obligations from time to time owing by the Borrower or any of its
Subsidiaries to SPC, whether in respect of Management Fees or otherwise,
provided, however, that SPC Debt shall not include obligations of the Borrower
or any of its Subsidiaries to SPC in respect of (i) SPC Expense Reimbursement,
and (ii) that portion of Management Fees which does not exceed an amount equal
to two and one-half
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percent (2-1/2%) of the consolidated revenues (net of agency commissions) of
the Borrower and its Subsidiaries for any fiscal year, (iii) required payments
under the Tax Sharing Agreement, and (iv) ESOP Compensation Expense allocated to
the Debtor pursuant to the ESOP Sharing Agreement.
Section 2. Representations and Warranties. SPC represents and warrants
to the Agent for the benefit of the Senior Secured Parties that:
2.01 Existence. SPC is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware.
2.02 Authority. The making and performance by SPC of this Agreement
have been duly authorized by all necessary corporate action and do not and will
not violate any provision of law, rules, regulations, or orders or any provision
of the charter or bylaws of SPC or result in the breach of, or constitute a
default or require any consent under, any indenture or other agreement or
instrument by which SPC may be bound or affected. This Agreement has been duly
and validly executed and delivered by SPC and constitutes the legal, valid and
binding obligation of SPC enforceable in accordance with its terms, subject as
to enforceability (a) to bankruptcy, insolvency, reorganization or moratorium
and other similar laws affecting creditor's rights generally and (b) to the
application of general principles of equity (regardless of whether considered in
a proceeding in equity or at law).
2.03 Approvals. No approval or consent of, or filing or registration
with, any state or federal commission or other federal, state or local
regulatory or governmental authority is required in connection with the
execution, delivery and performance by SPC of this Agreement.
Section 3. Subordination Provisions. It is intended by the Agent and
the Senior Secured Parties that the subordination provisions contained in this
Agreement shall benefit the Agent and the Senior Secured Parties equally (in
priority) and ratably, and that the SPC Debt and the payment thereof shall be
subordinate to the Senior Secured Obligations. To implement the foregoing (but
without limiting the generality thereof as it may apply to other provisions of
this Agreement), SPC agrees as follows:
3.01 Subordination. SPC hereby agrees that, except as and to the extent
hereinafter provided, the SPC Debt is and shall be subordinate and subject in
right of payment to the prior payment in full of all of the Senior Secured
Obligations, whether or not such Senior Secured Obligations have been voided,
disallowed or subordinated pursuant to Section 548 of the United States
Bankruptcy Code or any applicable state fraudulent conveyance laws, whether
asserted directly or under Section 544 of the United States Bankruptcy Code.
Without limiting the foregoing, SPC also hereby agrees that, (a) except as
otherwise provided in Section 3.02 of this Agreement, it will not ask, demand,
sue for, take or receive from the Borrower or any Subsidiary thereof (other than
directing the Borrower or such Subsidiary to make payment directly to the
holders of the Senior Secured Obligations for the purpose of causing the Senior
Secured Obligations to be paid), by set-off or in any other manner, payment of
the whole or any part of the SPC Debt, or any security therefor, and (b) it will
not accelerate all or any portion of the SPC Debt or otherwise implement any
remedy it may have in respect of the SPC Debt (provided that SPC may accelerate
the SPC Debt if all outstanding Senior Secured Obligations shall have been
previously accelerated), in each case unless and until all of the Senior Secured
Obligations shall
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have been fully, finally and indefeasibly paid in cash, whether or not such
Senior Secured Obligations have been voided, disallowed or subordinated pursuant
to Section 548 of the United States Bankruptcy Code or any applicable state
fraudulent conveyance laws, whether asserted directly or under Section 544 of
the United States Bankruptcy Code. SPC hereby irrevocably directs the Borrower
to make such prior payment. SPC further agrees that it will not institute
against the Borrower or any Subsidiary thereof any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law until such time as
the Senior Secured Obligations have been fully, finally and indefeasibly paid in
cash.
3.02 Certain Payments Permitted. So long as no Potential Event of
Default or Event of Default has occurred and is continuing, and only to the
extent not prohibited by the provisions of any of the Loan Documents, SPC may
from time to time receive from the Borrower payments of principal of and
interest on the SPC Debt.
3.03 Distributions, etc. In furtherance of, and to make effective, the
subordination provided for herein, SPC further agrees as follows:
(a) In the event of any distribution, division or application,
partial or complete, voluntary or involuntary, by operation of law or
otherwise, of all or any part of the assets of the Borrower or the
proceeds thereof, to creditors of the Borrower by reason of (1) the
liquidation, dissolution or other winding up, partial or complete, of
the Borrower or the Borrower's business, (2) any receivership,
insolvency or bankruptcy proceeding, or assignment for the benefit of
creditors, or (3) any proceeding by or against the Borrower for any
relief under any bankruptcy or insolvency law or laws relating to the
relief of debtors, readjustment of indebtedness, arrangements,
reorganizations, compositions or extensions, then and in any such
event:
(i) any payment or distribution of any kind or
character, whether in cash, securities or other property which
but for this Agreement would be payable or deliverable upon or
with respect to any or all of the SPC Debt, shall instead be
paid or delivered directly to the Agent for application to the
Senior Secured Obligations, whether then due or not due, until
the Senior Secured Obligations shall have first been fully,
finally and indefeasibly paid in cash and satisfied; and
(ii) SPC hereby irrevocably authorizes and empowers
the Agent to demand, sue for, collect and receive every such
payment or distribution and give acquittance therefor, and to
file and/or vote claims and take such other proceedings, in
the Agent's own name or in the name of SPC, or otherwise, as
the Agent may deem necessary or advisable for the enforcement
of this Agreement (including, without limitation, the filing
of any proof of claim in respect of the SPC Debt in any
bankruptcy or insolvency proceeding of the Borrower). In
furtherance of the foregoing, SPC agrees duly and promptly to
take such action as may be reasonably requested by the Agent
to assist in the collection of the SPC Debt for the account of
the Agent and/or to file appropriate proofs of claim in
respect of the SPC Debt, and to execute and deliver to the
Agent on demand such powers of attorney, proofs of claim,
assignments of claim or other instruments as may be reasonably
requested by
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<PAGE> 376
the Agent to enable the Agent to enforce any and all claims
upon or with respect to the SPC Debt, and to collect and
receive any and all payments or distributions which may be
payable or deliverable at any time upon or with respect to the
SPC Debt.
(b) If any payment, distribution of security or proceeds of
any security are received by SPC upon or in respect of the SPC Debt in
contravention of the provisions hereof, SPC will forthwith deliver the
same to the Agent in precisely the form received (except for the
endorsement or assignment of SPC where necessary), for application to
the Senior Secured Obligations, whether then due or not due, and, until
so delivered, the same shall be held in trust by SPC as property of the
Agent. In the event of the failure of SPC to make any such endorsement
or assignment, the Agent, or any of its officers or employees, are
hereby irrevocably authorized to make the same.
(c) SPC agrees that it will not transfer, assign, pledge or
encumber the SPC Debt or any part thereof or any instrument evidencing
the same unless the respective instrument of assignment specifically
provides that the assignee takes the SPC Debt subject to the provisions
of this Agreement and such assignee executes and delivers to the Agent
an instrument in form and substance satisfactory to the Agent pursuant
to which such assignee agrees to be bound by the provisions of this
Agreement. From and after the occurrence of any Default of which SPC
has or should reasonably be expected to have knowledge, and for so long
as the same shall be continuing, SPC agrees that it will not exchange,
forgive, waive or cancel the SPC Debt or any part thereof or reduce the
principal amount of the SPC Debt in whole or in part.
(d) Without limiting the effect of any of the other provisions
hereof, during the continuance of any Default or Event of Default with
respect to any Obligation or any default in the payment of any
Obligation, no payment of principal, sinking fund, interest or premium
(or any other amount) shall be made on or with respect to the SPC Debt
or any renewals or extensions thereof.
3.04 Continuing Subordination, etc. The subordination effected by this
Agreement is a continuing subordination, and SPC hereby agrees that at any time
and from time to time, without notice to it:
(a) the time for the Borrower's performance of or compliance
with any of its agreements contained in any of the Loan Documents may
be extended or such performance or compliance may be waived by the
applicable Senior Secured Parties;
(b) any of the acts mentioned in any of the Loan Documents may
be done;
(c) any of the Loan Documents may be amended for the purpose
of adding any provisions thereto or increasing the amount of, or
changing the terms of, the Senior Secured Obligations or changing in
any manner the rights of the Agent, any of the Senior Secured Parties
or the Borrower thereunder;
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<PAGE> 377
(d) payment of any of the Senior Secured Obligations or any
portion thereof may be extended; and
(e) the maturity of any of the Senior Secured Obligations may
be accelerated, and any collateral security thereof may be exchanged,
sold, surrendered, released or otherwise dealt with, in accordance with
the terms of any of the Loan Documents or any other present or future
agreement between the Borrower and the applicable Senior Secured
Parties;
all without impairing or affecting the obligations of SPC hereunder.
3.05 Waiver of Notice. SPC hereby unconditionally waives notice of the
incurring of the Senior Secured Obligations or any part thereof and reliance by
any Senior Secured Party upon the subordination of the SPC Debt to the Senior
Secured Obligations.
3.06 Application of Payments. Whenever any payment or distribution
shall be paid or delivered to the Agent pursuant to the provisions of this
Section 3 for application on the Senior Secured Obligations, such payment or
distribution shall be applied by the Agent in accordance with the priorities set
forth in the Credit Agreement.
3.07 Subrogation. Subject to the prior indefeasible payment in full in
cash of the Senior Secured Obligations, SPC shall be subrogated to the rights of
the Agent and the Senior Secured Parties to receive payments or distributions in
cash, property or securities of the Borrower applicable to the Senior Secured
Obligations until all amounts owing on the Senior Secured Obligations shall be
paid in full in cash, and as between and among the Borrower, its creditors other
than the Agent and the Senior Secured Parties, and SPC, no such payment or
distribution made to the Agent or the Senior Secured Parties by virtue of this
Agreement which otherwise would have been made to SPC shall be deemed to be a
payment by the Borrower on account of the Senior Secured Obligations, it being
understood that the provisions of this Section 3 are intended solely for the
purpose of defining the relative rights of SPC, the Agent and the Senior Secured
Parties.
3.08 Certain Agreements. SPC agrees that:
(a) all holders of Senior Secured Obligations, in determining
to acquire and retain Senior Secured Obligations, have relied upon the
subordination of the SPC Debt to the Senior Secured Obligations as
provided herein;
(b) promptly upon the written request of the Requisite
Creditors, SPC shall execute and deliver to the Senior Secured Parties
a written instrument by which SPC affirms and agrees that the SPC Debt
is subordinated and junior in right of payment to such Senior Secured
Obligations on terms and conditions provided herein;
(c) promptly upon the written request of any holder of Senior
Secured Obligations, SPC shall take such other action as may be
reasonably requested by the Agent to protect the rights of the Agent or
effectuate the subordination provided herein;
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(d) the SPC Debt shall not at any time be (i) secured by any
lien or security interest on property of the Borrower or any Subsidiary
of the Borrower or (ii) subordinated to any other obligations, other
than the Senior Secured Obligations; and
(e) the payments to which SPC is entitled under the Tax
Sharing Agreement (as defined in the Credit Agreement) and the other
payments excluded from the definition of SPC Debt pursuant to the
proviso set forth in that definition, shall not be subordinated to any
obligations.
Section 4. Miscellaneous.
4.01 Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the Commonwealth of Pennsylvania.
4.02 Notices. All notices, requests, demands, directions and other
communications (collectively "notices") given to or made upon any party under
the provisions of this Agreement shall be by telephone or in writing (including
facsimile communications) unless otherwise expressly provided under this
Agreement and if in writing shall be delivered or sent by facsimile to the
respective parties at the addresses and numbers set forth under their respective
names on the signature pages of this Agreement or in accordance with any
subsequent unrevoked written direction from any party to the others. All notices
shall, except as otherwise expressly provided in this Agreement, be effective
(a) in the case of facsimile, when received, (b) in the case of hand-delivered
notice, when hand delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective, telephone notices must be
confirmed in writing no later than the next day by letter, facsimile or telex,
(d) if given by mail, four (4) days after such communication is deposited in the
mails with first class postage prepaid, return receipt requested, and (e) if
given by any other means (including by air courier), when delivered; provided,
that notices to the Agent shall not be effective until received. In the event of
a discrepancy between any telephonic or written notice, the written notice shall
control.
4.03 Arbitration; Consent to Jurisdiction, Service and Venue; Waiver of
Jury Trial.
(a) Arbitration.
(i) Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any
claim or controversy arising out of, or relating to, this
Agreement between any or all of the parties hereto (a
"Dispute") shall be resolved by binding arbitration conducted
under and governed by the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal
Arbitration Act. Disputes may include, without limitation,
tort claims, counterclaims, a dispute as to whether a matter
is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A
judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration
provision does not apply to disputes under or related to
Interest Rate Protection Agreements.
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<PAGE> 379
(ii) All arbitration hearings shall be conducted in
the City of Philadelphia, Commonwealth of Pennsylvania unless
otherwise agreed by all parties to such arbitration. A hearing
shall begin within 90 days of demand for arbitration and all
hearings shall conclude within 120 days of demand for
arbitration. These time limitations may not be extended unless
a party shows cause for extension and then for no more than a
total of 60 days. The expedited procedures set forth in Rule
51 et seq. of the Arbitration Rules shall be applicable to
claims of less than $1,000,000.00. Arbitrators shall be
licensed attorneys selected from the Commercial Financial
Dispute Arbitration Panel of the AAA. The parties do not waive
applicable Federal or state substantive law except as provided
herein.
(iii) Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without
diminution, certain remedies that any party may exercise
before or after an arbitration proceeding is brought. The
parties shall have the right to proceed in any court of proper
jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (a) all rights to foreclose
against any real or personal property or other security by
exercising a power of sale or under applicable law by judicial
foreclosure including a proceeding to confirm the sales; (b)
all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful
possession of personal property; and (c) obtaining provisional
or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of
receiver and filing of involuntary bankruptcy proceedings. Any
claim or controversy with regard to any party's entitlement to
such remedies is a Dispute.
(iv) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A
REMEDY OF SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY
DAMAGES AGAINST OTHER PARTIES IN ANY DISPUTE AND HEREBY WAIVE
ANY RIGHT OR CLAIM TO SPECIAL, CONSEQUENTIAL, PUNITIVE OR
EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN THE
FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS
RESOLVED BY ARBITRATION OR JUDICIALLY.
(b) Consent to Jurisdiction, Service and Venue; Waiver of Jury
Trial.
(i) With respect to any matters that may be heard
before a court of competent jurisdiction under paragraph (iii)
of the preceding subsection 4.03(a), SPC and the Borrower each
hereby consents to the jurisdiction and venue of the courts of
the Commonwealth of Pennsylvania or of any federal court
located in such state, waives personal service of any and all
process upon it and consents that all such service of process
be made by certified or registered mail directed to the SPC or
the Borrower at the address provided for in Section 4.02 above
and service so made shall be deemed to be completed upon
actual receipt. SPC and the Borrower each hereby waives the
right to contest the jurisdiction and venue of the courts
located in the County of Philadelphia, Commonwealth of
Pennsylvania on the ground of inconvenience or otherwise and,
further, waives
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any right to bring any action or proceeding against (a) the
Agent in any court outside the County of Philadelphia,
Commonwealth of Pennsylvania, or (b) any other Senior Secured
Party other than in a state within the United States
designated by such Senior Secured Party. The provisions of
this Section 4.03 shall not limit or otherwise affect the
right of the Agent, any Senior Secured Party or other Senior
Secured Party to institute and conduct an action in any other
appropriate manner, jurisdiction or court.
(ii) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE,
SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE FOREGOING
SHALL SEEK A JURY TRIAL IN ANY PROCEEDING BASED UPON OR
ARISING OUT OF THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT OR
ANY GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE RELATIONSHIP
BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NEITHER THE
AGENT NOR ANY SENIOR SECURED PARTY NOR SPC NOR THE BORROWER
NOR ANY OTHER PERSON WILL SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS
NOT BEEN WAIVED.
(iii) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH
(iv) OF THE PRECEDING SUBSECTION 4.03(a) EXCEPT AS PROHIBITED
BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY
HAVE TO CLAIM OR RECOVER IN ANY ARBITRATION OR OTHER
LITIGATION, ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH PARTY TO THIS AGREEMENT (i) CERTIFIES THAT
NEITHER THE AGENT NOR ANY REPRESENTATIVE, OR ATTORNEY OF THE
AGENT NOR ANY SENIOR SECURED PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT THE AGENT OR SUCH SENIOR SECURED PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN
DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 4.03. THE PROVISIONS OF THIS
SECTION 4.03 HAVE BEEN FULLY DISCLOSED TO THE PARTIES AND THE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN
ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE
PROVISIONS OF THIS SECTION 4.03 WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.
4.04 Waivers, etc. The terms of this Agreement may be waived, altered
or amended only by an instrument in writing duly executed by SPC and the Agent.
Any such amendment or waiver shall be binding upon all Senior Secured Parties
and each other party to this Agreement.
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<PAGE> 381
4.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of SPC, Borrower,
the Agent and each of the Senior Secured Parties (provided, however, that SPC
shall not assign or transfer its rights or obligations hereunder without the
prior written consent of the Agent).
4.06 Counterparts. This Agreement may be executed in one or more
counterparts and all of such counterparts taken together shall constitute one
and the same instrument. A photocopied or facsimile copy of any signature page
to this Agreement shall be deemed to be the functional equivalent of a manually
executed original for all purposes.
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<PAGE> 382
IN WITNESS WHEREOF, the parties hereto have caused this
Affiliate Subordination Agreement to be duly executed as of the day and year
first above written.
SUSQUEHANNA PFALTZGRAFF CO.
By: _______________________________
Name: John L. Finlayson
Title Vice President
Notice Information
140 East Market Street
York, Pennsylvania 17401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
SUSQUEHANNA MEDIA CO.
By: _______________________________
Name: Alan L. Brayman
Title: Treasurer
Notice Information
140 East Market Street
York, Pennsylvania 17401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
Signature Page to the Susquehanna Pfaltzgraff Co. Affiliate Subordination
Agreement
<PAGE> 383
FIRST UNION NATIONAL BANK, in its
capacity as Agent
By: _______________________________
Elizabeth Elmore
Senior Vice President
Notice Information
Communications/Media Group
PA 4829
1 South Penn Square
P.O. Box 7618
Philadelphia, PA 19101-7618
Phone No.: (215) 786-4321
Fax No.: (215) 786-7721
Attention: Elizabeth Elmore,
Senior Vice President
Signature Page to the Susquehanna Pfaltzgraff Co.
Affiliate Subordination Agreement
<PAGE> 384
OTHER SHAREHOLDERS SUBORDINATION AGREEMENT
(Other Shareholders)
OTHER SHAREHOLDERS SUBORDINATION AGREEMENT (as same may be amended,
modified or supplemented from time to time, this "Agreement") dated as of May
12, 1999 among the subordinated shareholders listed on the signature pages
hereto (collectively, the "Subordinated Shareholders" or individually a
"Subordinated Shareholder"), SUSQUEHANNA MEDIA CO., a Delaware corporation (the
"Borrower"), the Subsidiaries of the Borrower who execute this Agreement
(collectively, the "Subsidiaries of the Borrower"), and FIRST UNION NATIONAL
BANK, as agent (in such capacity, including successors and assigns, the
"Agent"), appointed pursuant to the Credit Agreement dated as of even date (as
amended, modified or supplemented from time to time, the "Credit Agreement")
among (i) the lenders referred to therein, and (iii) the Agent.
Background
On the date hereof, certain lenders and issuers of letters of credit
and FIRST UNION NATIONAL BANK as Agent have entered into a Credit Agreement (as
amended, extended, supplemented, restated or otherwise modified or refinanced,
including without limitation any amendment involving an increase in principal,
interest rate or other amount, the "Credit Agreement") with the Borrower,
pursuant to which such lenders and issuers agreed to extend credit to the
Borrower upon the terms and conditions specified in the Credit Agreement under
(1) a revolving credit facility with a swing loan subfacility, and (2) two
separate term loan facilities, and to issue, or participate in the issuance of,
certain Letters of Credit. In addition, the Credit Agreement currently requires
the Borrower under certain conditions to enter into Interest Rate Hedging
Agreements.
To induce the Lenders (as defined in the Credit Agreement) to enter
into the Credit Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Subordinated
Shareholders, the Borrower and the Subsidiaries of the Borrower wish to enter
into this Agreement pursuant to which the Subordinated Shareholders, the
Borrower, and the Subsidiaries of the Borrower will agree that certain
obligations of the Borrower and the Subsidiaries of the Borrower to the
Subordinated Shareholders shall be subordinate in right of payment to the Senior
Secured Obligations (as defined in the Credit Agreement). Accordingly, the
Subordinated Shareholders, the Borrower, the Subsidiaries of the Borrower, and
the Agent, intending to be legally bound, hereby agree as follows:
Section 1. Definitions. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Credit Agreement. The
following term shall have the meaning set forth below:
"Subordinated Debt" shall mean all indebtedness, whether
principal or
<PAGE> 385
interest, dividends and other obligations from time to time owing by the
Borrower or any of the Subsidiaries of the Borrower to one or more of the
Subordinated Shareholders, provided, however, that Subordinated Debt shall not
include obligations of the Borrower or any of the Subsidiaries of the Borrower
to any Subordinated Shareholder in respect of salaries or other compensation not
restricted under the Loan Documents and paid in the ordinary course of business.
Section 2. Representations and Warranties. Each Subordinated
Shareholder, as to itself only, represents and warrants to the Agent for the
benefit of the Senior Secured Parties that:
2.01 Authority. The making and performance by such Subordinated
Shareholder of this Agreement has been duly authorized and does not and will not
violate any provision of law, rules, regulations, or result in the breach of, or
constitute a default or require any consent under, any indenture or other
agreement or instrument by which any such Subordinated Shareholder may be bound
or affected. This Agreement has been duly and validly executed and delivered by
such Subordinated Shareholder and constitutes the legal, valid and binding
obligation of such Subordinated Shareholder enforceable in accordance with its
terms, subject as to enforceability (a) to bankruptcy, insolvency,
reorganization or moratorium and other similar laws affecting creditor's rights
generally and (b) to the application of general principles of equity (regardless
of whether considered in a proceeding in equity or at law).
2.02 Approvals. No approval or consent of, or filing or registration
with, any state or federal commission or other federal, state or local
regulatory or governmental authority is required in connection with the
execution, delivery and performance by such Subordinated Shareholder of this
Agreement.
Section 3. Subordination Provisions. It is intended by the Agent and
the Senior Secured Parties that the subordination provisions contained in this
Agreement shall benefit the Agent and the Senior Secured Parties equally (in
priority) and ratably, and that the Subordinated Debt and the payment thereof
shall be subordinate to the Senior Secured Obligations. To implement the
foregoing (but without limiting the generality thereof as it may apply to other
provisions of this Agreement), each Subordinated Shareholder, as to itself only,
agrees as follows:
3.01 Subordination. Each Subordinated Shareholder hereby agrees that,
except as and to the extent hereinafter provided, the Subordinated Debt is and
shall be subordinate and subject in right of payment to the prior payment in
full of all of the Senior Secured Obligations, whether or not such Senior
Secured Obligations have been voided, disallowed or subordinated pursuant to
Section 548 of the United States Bankruptcy Code or any applicable state
fraudulent conveyance laws, whether asserted directly or under Section 544 of
the United States Bankruptcy Code. Without limiting the foregoing, each
Subordinated Shareholder also hereby agrees that, (a) except as otherwise
provided in Section 3.02 of this Agreement, it will not ask, demand, sue for,
take or receive from the Borrower or any Subsidiary of the Borrower or any
Subsidiary of the Borrower (other than directing the Borrower or such Subsidiary
to make payment directly to the holders of the Senior Secured Obligations for
the purpose of causing the Senior Secured Obligations to be paid), by set-off or
in any other manner, payment of the whole or any part of the Subordinated Debt,
or any security therefor, and (b) it will not accelerate all or any portion of
the Subordinated Debt or otherwise implement any remedy it may have in respect
of the Subordinated Debt (provided that a Subordinated Shareholder may
accelerate the Subordinated Debt owed to it if all
2
<PAGE> 386
outstanding Senior Secured Obligations shall have been previously accelerated),
in each case unless and until all of the Senior Secured Obligations shall have
been fully, finally and indefeasibly paid in cash, whether or not such Senior
Secured Obligations have been voided, disallowed or subordinated pursuant to
Section 548 of the United States Bankruptcy Code or any applicable state
fraudulent conveyance laws, whether asserted directly or under Section 544 of
the United States Bankruptcy Code. Each Subordinated Shareholder hereby
irrevocably directs the Borrower and the Subsidiaries of the Borrower to make
such prior payment. Each Subordinated Shareholder further agrees that it will
not institute against the Borrower or the Subsidiaries of the Borrower any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law until such time as the Senior Secured Obligations have been fully,
finally and indefeasibly paid in cash.
3.02 Certain Payments Permitted. So long as no Potential Event of
Default or Event of Default has occurred and is continuing, and only to the
extent not prohibited by the provisions of any of the Loan Documents, the
Subordinated Shareholders may from time to time receive from the Borrower or the
Subsidiaries of the Borrower payments of the Subordinated Debt.
3.03 Distributions, etc. In furtherance of, and to make effective, the
subordination provided for herein, each Subordinated Shareholder, as to itself
only, further agrees as follows:
(a) In the event of any distribution, division or application,
partial or complete, voluntary or involuntary, by operation of law or
otherwise, of all or any part of the assets of the Borrower or any of
the Subsidiaries of the Borrower or the proceeds thereof, to creditors
of the Borrower or any of the Subsidiaries of the Borrower by reason of
(1) the liquidation, dissolution or other winding up, partial or
complete, of the Borrower or any of the Subsidiaries of the Borrower or
the business of the Borrower or any of the Subsidiaries of the
Borrower, (2) any receivership, insolvency or bankruptcy proceeding, or
assignment for the benefit of creditors, or (3) any proceeding by or
against the Borrower or any of the Subsidiaries of the Borrower for any
relief under any bankruptcy or insolvency law or laws relating to the
relief of debtors, readjustment of indebtedness, arrangements,
reorganizations, compositions or extensions, then and in any such
event:
(i) any payment or distribution of any kind or
character, whether in cash, securities or other property which
but for this Agreement would be payable or deliverable upon or
with respect to any or all of the Subordinated Debt, shall
instead be paid or delivered directly to the Agent for
application to the Senior Secured Obligations, whether then
due or not due, until the Senior Secured Obligations shall
have first been fully, finally and indefeasibly paid in cash
and satisfied; and
(ii) each Subordinated Shareholder hereby irrevocably
authorizes and empowers the Agent to demand, sue for, collect
and receive every such payment or distribution and give
acquittance therefor, and to file and/or vote claims and take
such other proceedings, in the Agent's own name or in the name
of the Subordinated Shareholder, or otherwise, as the Agent
may deem necessary or advisable for the enforcement of this
Agreement (including, without limitation, the filing of any
proof of claim in respect of the Subordinated Debt in any
bankruptcy or insolvency proceeding of the Borrower or of any
Subsidiary of the Borrower). In furtherance of
3
<PAGE> 387
the foregoing, each Subordinated Shareholder agrees duly and
promptly to take such action as may be reasonably requested by
the Agent to assist in the collection of the Subordinated Debt
for the account of the Agent and/or to file appropriate proofs
of claim in respect of the Subordinated Debt, and to execute
and deliver to the Agent on demand such powers of attorney,
proofs of claim, assignments of claim or other instruments as
may be reasonably requested by the Agent to enable the Agent
to enforce any and all claims upon or with respect to the
Subordinated Debt, and to collect and receive any and all
payments or distributions which may be payable or deliverable
at any time upon or with respect to the Subordinated Debt.
(b) If any payment, distribution of security or proceeds of
any security are received by any Subordinated Shareholder upon or in
respect of the Subordinated Debt in contravention of the provisions
hereof, such Subordinated Shareholder will forthwith deliver the same
to the Agent in precisely the form received (except for the endorsement
or assignment of such Subordinated Shareholder where necessary), for
application to the Senior Secured Obligations, whether then due or not
due, and, until so delivered, the same shall be held in trust by such
Subordinated Shareholder as property of the Agent. In the event of the
failure of such Subordinated Shareholder to make any such endorsement
or assignment, the Agent, or any of its officers or employees, are
hereby irrevocably authorized to make the same.
(c) Each Subordinated Shareholder agrees that it will not
transfer, assign, pledge or encumber the Subordinated Debt or any part
thereof or any instrument evidencing the same unless the respective
instrument of assignment specifically provides that the assignee takes
the Subordinated Debt subject to the provisions of this Agreement and
such assignee executes and delivers to the Agent an instrument in form
and substance satisfactory to the Agent pursuant to which such assignee
agrees to be bound by the provisions of this Agreement. From and after
the occurrence of any Default of which a Subordinated Shareholder has
or should reasonably be expected to have knowledge, and for so long as
the same shall be continuing, such Subordinated Shareholder agrees that
it will not exchange, forgive, waive or cancel the Subordinated Debt or
any part thereof or reduce the principal amount of the Subordinated
Debt in whole or in part.
(d) Without limiting the effect of any of the other provisions
hereof, during the continuance of any Default or Event of Default with
respect to any Obligation or any default in the payment of any
Obligation, no payment of principal, sinking fund, interest or premium
(or any other amount) shall be made on or with respect to the
Subordinated Debt or any renewals or extensions thereof.
3.04 Continuing Subordination, etc. The subordination effected by this
Agreement is a continuing subordination, and each Subordinated Shareholder, as
to itself only, hereby agrees that at any time and from time to time, without
notice to it:
(a) the time for the performance by the Borrower and the
Subsidiaries of the Borrower of or compliance with any of its
agreements contained in any of the Loan Documents may be extended or
such performance or compliance may be waived by the applicable Senior
Secured Parties;
4
<PAGE> 388
(b) any of the acts mentioned in any of the Loan Documents may
be done;
(c) any of the Loan Documents may be amended for the purpose
of adding any provisions thereto or increasing the amount of, or
changing the terms of, the Senior Secured Obligations or changing in
any manner the rights of the Agent, any of the Senior Secured Parties,
the Borrower or the Subsidiaries of the Borrower thereunder;
(d) payment of any of the Senior Secured Obligations or any
portion thereof may be extended; and
(e) the maturity of any of the Senior Secured Obligations may
be accelerated, and any collateral security thereof may be exchanged,
sold, surrendered, released or otherwise dealt with, in accordance with
the terms of any of the Loan Documents or any other present or future
agreement between the Borrower, any Subsidiary of the Borrower and the
applicable Senior Secured Parties;
all without impairing or affecting the obligations of the Subordinated
Shareholders hereunder.
3.05 Waiver of Notice. Each Subordinated Shareholder hereby
unconditionally waives notice of the incurring of the Senior Secured Obligations
or any part thereof and reliance by any Senior Secured Party upon the
subordination of the Subordinated Debt to the Senior Secured Obligations.
3.06 Application of Payments. Whenever any payment or distribution
shall be paid or delivered to the Agent pursuant to the provisions of this
Section 3 for application on the Senior Secured Obligations, such payment or
distribution shall be applied by the Agent in accordance with the priorities set
forth in the Credit Agreement.
3.07 Subrogation. Subject to the prior indefeasible payment in full in
cash of the Senior Secured Obligations, the Subordinated Shareholders shall be
subrogated to the rights of the Agent and the Senior Secured Parties to receive
payments or distributions in cash, property or securities of the Borrower and
the Subsidiaries of the Borrower applicable to the Senior Secured Obligations
until all amounts owing on the Senior Secured Obligations shall be paid in full
in cash, and as between and among the Borrower, the Subsidiaries of the
Borrower, their creditors other than the Agent and the Senior Secured Parties,
and the Subordinated Shareholders, no such payment or distribution made to the
Agent or the Senior Secured Parties by virtue of this Agreement which otherwise
would have been made to the Subordinated Shareholders shall be deemed to be a
payment by the Borrower or any Subsidiary of the Borrower on account of the
Senior Secured Obligations, it being understood that the provisions of this
Section 3 are intended solely for the purpose of defining the relative rights of
the Subordinated Shareholders, the Agent and the Senior Secured Parties.
3.08 Certain Agreements. Each Subordinated Shareholder, as to itself
only, agrees that:
5
<PAGE> 389
(a) all holders of Senior Secured Obligations, in determining
to acquire and retain Senior Secured Obligations, have relied upon the
subordination of the Subordinated Debt to the Senior Secured
Obligations as provided herein;
(b) promptly upon the written request of the Requisite
Creditors, such Subordinated Shareholder shall execute and deliver to
the Senior Secured Parties a written instrument by which such
Subordinated Shareholder affirms and agrees that the Subordinated Debt
is subordinated and junior in right of payment to such Senior Secured
Obligations on terms and conditions provided herein;
(c) promptly upon the written request of any holder of Senior
Secured Obligations, such Subordinated Shareholder shall take such
other action as may be reasonably requested by the Agent to protect the
rights of the Agent or effectuate the subordination provided herein;
and
(d) the Subordinated Debt shall not at any time be (i) secured
by any lien or security interest on property of the Borrower or any
Subsidiary of the Borrower or (ii) subordinated to any other
obligations, other than the Senior Secured Obligations.
Section 4. Miscellaneous.
4.01 Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the Commonwealth of Pennsylvania.
4.02 Notices. All notices, requests, demands, directions and other
communications (collectively "notices") given to or made upon any party under
the provisions of this Agreement shall be by telephone or in writing (including
facsimile communications) unless otherwise expressly provided under this
Agreement and if in writing shall be delivered or sent by facsimile to the
respective parties at the addresses and numbers set forth under their respective
names on the signature pages of this Agreement or in accordance with any
subsequent unrevoked written direction from any party to the others. All notices
shall, except as otherwise expressly provided in this Agreement, be effective
(a) in the case of facsimile, when received, (b) in the case of hand-delivered
notice, when hand delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective, telephone notices must be
confirmed in writing no later than the next day by letter, facsimile or telex,
(d) if given by mail, four (4) days after such communication is deposited in the
mails with first class postage prepaid, return receipt requested, and (e) if
given by any other means (including by air courier), when delivered; provided,
that notices to the Agent shall not be effective until received. In the event of
a discrepancy between any telephonic or written notice, the written notice shall
control.
4.03 Arbitration; Consent to Jurisdiction, Service and Venue; Waiver of
Jury Trial.
(a) Arbitration.
(i) Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any
claim or controversy arising out of, or relating to, this
Agreement between any or all of the parties hereto (a
6
<PAGE> 390
"Dispute") shall be resolved by binding arbitration conducted
under and governed by the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal
Arbitration Act. Disputes may include, without limitation,
tort claims, counterclaims, a dispute as to whether a matter
is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A
judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration
provision does not apply to disputes under or related to
Interest Rate Protection Agreements.
(ii) All arbitration hearings shall be conducted in
the City of Philadelphia, Commonwealth of Pennsylvania unless
otherwise agreed by all parties to such arbitration. A hearing
shall begin within 90 days of demand for arbitration and all
hearings shall conclude within 120 days of demand for
arbitration. These time limitations may not be extended unless
a party shows cause for extension and then for no more than a
total of 60 days. The expedited procedures set forth in Rule
51 et seq. of the Arbitration Rules shall be applicable to
claims of less than $1,000,000.00. Arbitrators shall be
licensed attorneys selected from the Commercial Financial
Dispute Arbitration Panel of the AAA. The parties do not waive
applicable Federal or state substantive law except as provided
herein.
(iii) Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without
diminution, certain remedies that any party may exercise
before or after an arbitration proceeding is brought. The
parties shall have the right to proceed in any court of proper
jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (a) all rights to foreclose
against any real or personal property or other security by
exercising a power of sale or under applicable law by judicial
foreclosure including a proceeding to confirm the sales; (b)
all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful
possession of personal property; and (c) obtaining provisional
or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of
receiver and filing of involuntary bankruptcy proceedings. Any
claim or controversy with regard to any party's entitlement to
such remedies is a Dispute.
(iv) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A
REMEDY OF SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY
DAMAGES AGAINST OTHER PARTIES IN ANY DISPUTE AND HEREBY WAIVE
ANY RIGHT OR CLAIM TO SPECIAL, CONSEQUENTIAL, PUNITIVE OR
EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN THE
FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS
RESOLVED BY ARBITRATION OR JUDICIALLY.
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<PAGE> 391
(b) Consent to Jurisdiction, Service and Venue; Waiver of Jury
Trial.
(i) With respect to any matters that may be heard
before a court of competent jurisdiction under paragraph (iii)
of the preceding subsection 4.03(a), the Borrower, the
Subsidiaries of the Borrower and the Subordinated Shareholders
each hereby consents to the jurisdiction and venue of the
courts of the Commonwealth of Pennsylvania or of any federal
court located in such state, waives personal service of any
and all process upon it and consents that all such service of
process be made by certified or registered mail directed to
the Borrower, such Subsidiary of the Borrower or such
Subordinated Shareholder at the address provided for in
Section 4.02 above and service so made shall be deemed to be
completed upon actual receipt. The Borrower, the Subsidiaries
of the Borrower and the Subordinated Shareholders each hereby
waives the right to contest the jurisdiction and venue of the
courts located in the County of Philadelphia, Commonwealth of
Pennsylvania on the ground of inconvenience or otherwise and,
further, waives any right to bring any action or proceeding
against (a) the Agent in any court outside the County of
Philadelphia, Commonwealth of Pennsylvania, or (b) any other
Senior Secured Party other than in a state within the United
States designated by such Senior Secured Party. The provisions
of this Section 4.03 shall not limit or otherwise affect the
right of the Agent, any Senior Secured Party or other Senior
Secured Party to institute and conduct an action in any other
appropriate manner, jurisdiction or court.
(ii) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE,
SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE FOREGOING
SHALL SEEK A JURY TRIAL IN ANY PROCEEDING BASED UPON OR
ARISING OUT OF THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT OR
ANY GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE RELATIONSHIP
BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NEITHER THE
AGENT NOR ANY SENIOR SECURED PARTY NOR THE BORROWER NOR ANY
SUBSIDIARY OF THE BORROWER NOR ANY SUBORDINATED SHAREHOLDER
NOR ANY OTHER PERSON WILL SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS
NOT BEEN WAIVED.
(iii) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH
(iv) OF THE PRECEDING SUBSECTION 4.03(a) EXCEPT AS PROHIBITED
BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY
HAVE TO CLAIM OR RECOVER IN ANY ARBITRATION OR OTHER
LITIGATION, ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH PARTY TO THIS AGREEMENT (i) CERTIFIES THAT
NEITHER THE AGENT NOR ANY REPRESENTATIVE, OR ATTORNEY OF THE
AGENT NOR ANY SENIOR SECURED PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE,
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<PAGE> 392
THAT THE AGENT OR SUCH SENIOR SECURED PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 4.03.
THE PROVISIONS OF THIS SECTION 4.03 HAVE BEEN FULLY DISCLOSED
TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED
TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 4.03
WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
4.04 Waivers, etc. The terms of this Agreement may be waived, altered
or amended only by an instrument in writing duly executed by the Subordinated
Shareholders and the Agent. Any such amendment or waiver shall be binding upon
all Senior Secured Parties and each other party to this Agreement.
4.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the
Subordinated Shareholders, the Borrower, the Subsidiaries of the Borrower, the
Agent and each of the Senior Secured Parties (provided, however, that the
Subordinated Shareholders, the Borrower and the Subsidiaries of the Borrower
shall not assign or transfer its rights or obligations hereunder without the
prior written consent of the Agent).
4.06 Counterparts. This Agreement may be executed in one or more
counterparts and all of such counterparts taken together shall constitute one
and the same instrument. A photocopied or facsimile copy of any signature page
to this Agreement shall be deemed to be the functional equivalent of a manually
executed original for all purposes.
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<PAGE> 393
IN WITNESS WHEREOF, the parties hereto have caused this Other
Shareholder Subordination Agreement to be duly executed as of the day and year
first above written.
BORROWER & SUBSIDIARIES: SUSQUEHANNA MEDIA CO.
SUSQUEHANNA CABLE CO.
SUSQUEHANNA CABLE INVESTMENT CO.
CABLE TV OF EAST PROVIDENCE, INC.
CASCO CABLE TELEVISION, INC.
CASCO CABLE TELEVISION OF BATH, MAINE
SBC CABLE CO.
YORK CABLE TELEVISION, INC.
SUSQUEHANNA RADIO CORP.
RADIO CINCINNATI, INC.
RADIO INDIANAPOLIS, INC.
RADIO METROPLEX, INC.
KPLX LICO, INC.
KPLX RADIO, INC.
KLIF BROADCASTING, INC.
KLIF LICO, INC.
KLIF RADIO, INC.
RADIO SAN FRANCISCO, INC.
KFFG LICO, INC.
KRBE CO.
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 394
KNBR, INC.
BAY AREA RADIO CORP.
WSBA LICO, INC.
WVAE LICO, INC.
WNNX LICO, INC.
KNBR LICO, INC.
KRBE LICO, INC.
INDIANAPOLIS RADIO LICENSE CO.
TEXAS STAR RADIO, INC.
SUSQUEHANNA FIBER SYSTEMS, INC.
SUSQUEHANNA DATA SERVICES, INC.
MEDIA PCS VENTURES, INC.
INDY LICO, INC.
WRRM LICO, INC.
WFMS LICO, INC.
By: ____________________________________
Alan L. Brayman, on behalf of each of
the foregoing as Treasurer
Notice Information
140 East Market Street
York, PA 17401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 395
PARAGON RESEARCH LIMITED
PARTNERSHIP, by Susquehanna Radio Corp.,
its General Partner
KPLX LIMITED PARTNERSHIP, by KPLX
Radio, Inc., its General Partner
KLIF BROADCASTING LIMITED
PARTNERSHIP, by KLIF Radio, Inc., its
General Partner
By: ___________________________________
Alan L. Brayman on behalf of each of
the foregoing as Treasurer the
General Partner
Notice Information
140 East Market Street
York, PA 17401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 396
AGENT: FIRST UNION NATIONAL BANK, in its capacity
as Agent
By: ____________________________________
Elizabeth Elmore
Senior Vice President
Notice Information
Communications/Media Group
PA 4829
1 South Penn Square
P.O. Box 7168
Philadelphia, PA 19101-7618
Phone No.: (215) 786-4321
Fax No.: (215) 786-7721
Attention: Elizabeth Elmore, Senior Vice
President
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 397
SUBORDINATED SHAREHOLDERS:
__________________________________________
Walter M. Norton
Address: RFD #1, Box 59
South Harpswell, ME 04079
__________________________________________
Walter M. Norton, Trustee
of Helen A. Norton Revocable Trust
U/D/T 12-17-87
Address: RFD #1, Box 59
South Harpswell, ME 04079
__________________________________________
Walter M. Norton, Trustee
U/D/T 12-31-80
Address: RFD #1, Box 59
South Harpswell, ME 04079
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 398
__________________________________________
Helen A. Norton, Trustee of
Helen A. Norton Revocable Trust
U/D/T 12-17-87
Address: RFD #1, Box 59
South Harpswell, ME 04079
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 399
__________________________________________
Laura W. R. Appell, Trustee
U/D/T 6-18-80
Address:
__________________________________________
Laura W. R. Appell, Trustee
of George N. Appell Revocable Trust
U/D/T 3/21/88
Address:
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 400
__________________________________________
Louis J. Appell, Jr.
Address: 1700 Powder Mill Road
York, PA 17403
__________________________________________
Louis J. Appell, Jr., Trustee
of Louis J. Appell, Jr., Revocable Trust
U/D/T 1/29/88
Address: 1700 Powder Mill Road
York, PA 17403
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 401
__________________________________________
Louis J. Appell, III
Address: 1331 Via Colonna Terrace
Davis, CA 95616
__________________________________________
Louis J. Appell, III, Trustee
U/D/T 12/31/79 f.b.o.
Louis J. Appell, III
Address: 1331 Via Colonna Terrace
Davis, CA 95616
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 402
__________________________________________
Helen F. Appell, II
Address: 1700 Powder Mill Road
York, PA 17403
__________________________________________
Helen F. Appell, II, Trustee
U/D/T 12/31/79 f.b.o.
Address: 1700 Powder Mill Road
York, PA 17403
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 403
__________________________________________
Barbara F. Appell
Address: 306 W. Princess Street
York, PA 17404
__________________________________________
Barbara F. Appell, Trustee
U/D/T 12/31/79 f.b.o.
Barbara F. Appell
Address: 306 W. Princess Street
York, PA 17404
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 404
__________________________________________
Josephine S. Appell, Trustee of
Louis S. Appell, Jr. Revocable Trust
U/D/T 1/29/88
Address: 1700 Powder Mill Road
York, PA 17403
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 405
__________________________________________
George N. Appell, Trustee of
George N. Appell Revocable Trust
U/D/T 3/21/88
Address:
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 406
__________________________________________
Peter P. Brubaker
Address: 160 Edgewood Drive
York, PA 17403
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 407
__________________________________________
Helen Norton Coon, a/k/a Helen A. Norton, II
Address: 102 Raymond Road
Brunswick, ME 04011
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 408
__________________________________________
Sandra A. Norton (Davis)
Address: RR 2, Box 366
South Harpswell, ME 04079
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 409
__________________________________________
Laura M. Norton
Address: RFD #1, Box 59
South Harpswell, ME 04079
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 410
__________________________________________
Laura Appell-Warren,
Trustee of Harrier Trust
U/D/T 3/21/88
Address: Milton Academy
170 Centre Street
Milton, MA 02186
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 411
__________________________________________
Amity A. Doolittle,
Trustee of Harrier Trust
U/D/T 3/21/88
Address: 119 Everit Street
New Haven, CT 06511
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 412
__________________________________________
Charity R. Appell (Wheelock)
Trustee of Harrier
Trust U/D/T 3/21/88
Address: Route 1, Box 59
Brookfield, VT 05036
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 413
__________________________________________
William H. Simpson, trustee
U/D/T 12/31/79 f.b.o.
Louis J. Appell, III
Address: 140 East Market Street
York, PA 17401
__________________________________________
William H. Simpson, trustee
U/D/T 12/31/79 f.b.o.
Helen F. Appell, II
Address: 140 East Market Street
York, PA 17401
__________________________________________
William H. Simpson, trustee
U/D/T 12/31/79 f.b.o.
Barbara F. Appell
Address: 140 East Market Street
York, PA 17401
Signature Page to Other Shareholders Subordination Agreement
<PAGE> 414
AFFILIATE SUBORDINATION AGREEMENT
(Lenfest)
AFFILIATE SUBORDINATION AGREEMENT (as same may be amended, modified or
supplemented from time to time, this "Agreement") dated as of May 12, 1999 among
LENFEST COMMUNICATIONS, INC. and LENFEST YORK, INC., each a Delaware corporation
(collectively "Lenfest"), SUSQUEHANNA MEDIA CO., a Delaware corporation (the
"Borrower"), the Subsidiaries of the Borrower who execute this Agreement
(collectively, the "Subsidiaries of the Borrower"), and FIRST UNION NATIONAL
BANK, as agent (in such capacity, including successors and assigns, the
"Agent"), appointed pursuant to a certain Credit Agreement dated as of even date
(as such term is hereinafter defined) among (i) the Borrower, (ii) the Senior
Secured Parties (as defined in Credit Agreement), and (iii) the Agent.
Background
On the date hereof certain lenders and issuers of letters of credit and
FIRST UNION NATIONAL BANK as Agent have entered into a Credit Agreement (as
amended, extended, supplemented, restated or otherwise modified or refinanced,
including without limitation any amendment involving an increase in principal,
interest rate or other amount, the "Credit Agreement") with the Borrower
pursuant to which such lenders and issuers agreed to lend certain sums to the
Borrower upon the terms and conditions specified in the Credit Agreement under
(1) a revolving credit facility with a swing loan subfacility, and (2) two
separate term loan facilities, and to issue, or participate in the issuance of,
certain Letters of Credit. In addition, the Credit Agreement currently requires
under certain conditions the Borrower to enter into Interest Rate Hedging
Agreements.
To induce the Lenders (as defined in the Credit Agreement) to enter
into the Credit Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lenfest, the Borrower,
the Subsidiaries of the Borrower, and the Agent wish to enter into this
Agreement pursuant to which Lenfest, the Borrower, and the Subsidiaries of the
Borrower will agree that certain obligations of the Borrower and the
Subsidiaries of the Borrower to Lenfest shall be subordinate in right of payment
to the Senior Secured Obligations (as defined in the Credit Agreement).
Accordingly, Lenfest, the Borrower, the Subsidiaries of the Borrower, and the
Agent, intending to be legally bound, hereby agree as follows:
Section 1. Definitions. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Credit Agreement. The
following terms shall have the meanings set forth below:
"Debtor" shall mean the Borrower and/or the Subsidiaries of the
Borrower.
<PAGE> 415
"Lenfest Debt" shall mean all indebtedness, whether principal or
interest, and other obligations from time to time owing by the Borrower or any
of the Subsidiaries of the Borrower to Lenfest, provided, however, that Lenfest
Debt shall not include obligations of the Borrower or any of the Subsidiaries of
the Borrower to Lenfest in respect of Lenfest Programming Payments (as defined
in the Credit Agreement).
Section 2. Representations and Warranties. Each Person included in the
definition of Lenfest under this Agreement jointly and severally represents and
warrants to the Agent for the benefit of the Senior Secured Parties that:
2.01 Existence. Each Person included in the definition of Lenfest under
this Agreement is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware.
2.02 Authority. The making and performance by Lenfest of this Agreement
has been duly authorized by all necessary corporate action and does not and will
not violate any provision of law, rules, regulations, or orders or any provision
of the charter or bylaws of Lenfest or result in the breach of, or constitute a
default or require any consent (other than consents which have been obtained)
under, any indenture or other agreement or instrument by which Lenfest may be
bound or affected. This Agreement has been duly and validly executed and
delivered by Lenfest and constitutes the legal, valid and binding obligation of
Lenfest enforceable in accordance with its terms, subject as to enforceability
(a) to bankruptcy, insolvency, reorganization or moratorium and other similar
laws affecting creditor's rights generally and (b) to the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
2.03 Approvals. No approval or consent of, or filing or registration
with, any state or federal commission or other federal, state or local
regulatory or governmental authority is required in connection with the
execution, delivery and performance by Lenfest of this Agreement.
Section 3. Subordination Provisions. It is intended by the Agent and
the Senior Secured Parties that the subordination provisions contained in this
Agreement shall benefit the Agent and the Senior Secured Parties equally (in
priority) and ratably, and that the Lenfest Debt and the payment thereof shall
be subordinate to the Senior Secured Obligations. To implement the foregoing
(but without limiting the generality thereof as it may apply to other provisions
of this Agreement), each Person included in the definition of Lenfest under this
Agreement, jointly and severally, agrees as follows:
3.01 Subordination. Lenfest hereby agrees that, except as and to the
extent hereinafter provided, the Lenfest Debt is and shall be subordinate and
subject in right of payment to the prior payment in full of all of the Senior
Secured Obligations, whether or not such Senior Secured Obligations have been
voided, disallowed or subordinated pursuant to Section 548 of the United States
Bankruptcy Code or any applicable state fraudulent conveyance laws, whether
asserted directly or under Section 544 of the United States Bankruptcy Code.
Without limiting the foregoing, Lenfest also hereby agrees that, (a) except as
otherwise provided in Section 3.02 of this Agreement, it will not ask, demand,
sue for, take or receive from the Borrower or any Subsidiary of the Borrower
(other than directing the Borrower or such Subsidiary of the Borrower to make
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<PAGE> 416
payment directly to the holders of the Senior Secured Obligations for the
purpose of causing the Senior Secured Obligations to be paid), by set-off or in
any other manner, payment of the whole or any part of the Lenfest Debt, or any
security therefor, and (b) it will not accelerate all or any portion of the
Lenfest Debt or otherwise implement any remedy it may have in respect of the
Lenfest Debt (provided that Lenfest may accelerate the Lenfest Debt if all
outstanding Senior Secured Obligations shall have been previously accelerated),
in each case unless and until all of the Senior Secured Obligations shall have
been fully, finally and indefeasibly paid in cash, whether or not such Senior
Secured Obligations have been voided, disallowed or subordinated pursuant to
Section 548 of the United States Bankruptcy Code or any applicable state
fraudulent conveyance laws, whether asserted directly or under Section 544 of
the United States Bankruptcy Code. Lenfest hereby irrevocably directs the
Borrower and the Subsidiaries of the Borrower to make such prior payment.
Lenfest further agrees that it will not institute against the Borrower or the
Subsidiaries of the Borrower any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law until such time as the Senior
Secured Obligations have been fully, finally and indefeasibly paid in cash.
3.02 Certain Payments Permitted. So long as no Potential Event of
Default or Event of Default has occurred and is continuing, and only to the
extent not prohibited by the provisions of any of the Loan Documents, Lenfest
may from time to time receive from the Borrower or the Subsidiaries of the
Borrower payments of the Lenfest Debt, provided, however, for the purpose of
determining whether payments may be made under the Lenfest Note only, no Event
of Default shall be deemed to have occurred for purposes of this Section 3.02 if
the only Event of Default is the cross-default to the Lenfest Note and no other
Event of Default or Potential Event of Default shall have then occurred and be
continuing or would be caused thereby.
3.03 Distributions, etc. In furtherance of, and to make effective, the
subordination provided for herein, Lenfest further agrees as follows:
(a) In the event of any distribution, division or application,
partial or complete, voluntary or involuntary, by operation of law or
otherwise, of all or any part of the assets of the Borrower or any of
the Subsidiaries of the Borrower or the proceeds thereof, to creditors
of the Borrower or any of the Subsidiaries of the Borrower by reason of
(1) the liquidation, dissolution or other winding up, partial or
complete, of the Borrower or any of the Subsidiaries of the Borrower or
the business of the Borrower or any of the Subsidiaries of the
Borrower, (2) any receivership, insolvency or bankruptcy proceeding, or
assignment for the benefit of creditors, or (3) any proceeding by or
against the Borrower or any of the Subsidiaries of the Borrower for any
relief under any bankruptcy or insolvency law or laws relating to the
relief of debtors, readjustment of indebtedness, arrangements,
reorganizations, compositions or extensions, then and in any such
event:
(i) any payment or distribution of any kind or
character, whether in cash, securities or other property which
but for this Agreement would be payable or deliverable upon or
with respect to any or all of the Lenfest Debt, shall instead
be paid or delivered directly to the Agent for application to
the Senior Secured Obligations, whether then due or not due,
until the Senior Secured Obligations shall have first been
fully, finally and indefeasibly paid in cash and satisfied;
and
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<PAGE> 417
(ii) Lenfest hereby irrevocably authorizes and
empowers the Agent to demand, sue for, collect and receive
every such payment or distribution and give acquittance
therefor, and to file and/or vote claims and take such other
proceedings, in the Agent's own name or in the name of
Lenfest, or otherwise, as the Agent may deem necessary or
advisable for the enforcement of this Agreement (including,
without limitation, the filing of any proof of claim in
respect of the Lenfest Debt in any bankruptcy or insolvency
proceeding of the Borrower or of any Subsidiary of the
Borrower). In furtherance of the foregoing, Lenfest agrees
duly and promptly to take such action as may be reasonably
requested by the Agent to assist in the collection of the
Lenfest Debt for the account of the Agent and/or to file
appropriate proofs of claim in respect of the Lenfest Debt,
and to execute and deliver to the Agent on demand such powers
of attorney, proofs of claim, assignments of claim or other
instruments as may be reasonably requested by the Agent to
enable the Agent to enforce any and all claims upon or with
respect to the Lenfest Debt, and to collect and receive any
and all payments or distributions which may be payable or
deliverable at any time upon or with respect to the Lenfest
Debt.
(b) If any payment, distribution of security or proceeds of
any security are received by Lenfest upon or in respect of the Lenfest
Debt in contravention of the provisions hereof, Lenfest will forthwith
deliver the same to the Agent in precisely the form received (except
for the endorsement or assignment of Lenfest where necessary), for
application to the Senior Secured Obligations, whether then due or not
due, and, until so delivered, the same shall be held in trust by
Lenfest as property of the Agent. In the event of the failure of
Lenfest to make any such endorsement or assignment, the Agent, or any
of its officers or employees, are hereby irrevocably authorized to make
the same.
(c) Lenfest agrees that it will not transfer, assign, pledge
or encumber the Lenfest Debt or any part thereof or any instrument
evidencing the same unless the respective instrument of assignment
specifically provides that the assignee takes the Lenfest Debt subject
to the provisions of this Agreement and such assignee executes and
delivers to the Agent an instrument in form and substance satisfactory
to the Agent pursuant to which such assignee agrees to be bound by the
provisions of this Agreement. From and after the occurrence of any
Default of which Lenfest has or should reasonably be expected to have
knowledge, and for so long as the same shall be continuing, Lenfest
agrees that it will not exchange, forgive, waive or cancel the Lenfest
Debt or any part thereof or reduce the principal amount of the Lenfest
Debt in whole or in part.
(d) Without limiting the effect of any of the other provisions
hereof, during the continuance of any Default or Event of Default with
respect to any Obligation or any default in the payment of any
Obligation, no payment of principal, sinking fund, interest or premium
(or any other amount) shall be made on or with respect to the Lenfest
Debt or any renewals or extensions thereof.
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<PAGE> 418
3.04 Continuing Subordination, etc. The subordination effected by this
Agreement is a continuing subordination, and Lenfest hereby agrees that at any
time and from time to time, without notice to it:
(a) the time for the performance by the Borrower and the
Subsidiaries of the Borrower of or compliance with any of its
agreements contained in any of the Loan Documents may be extended or
such performance or compliance may be waived by the applicable Senior
Secured Parties;
(b) any of the acts mentioned in any of the Loan Documents may
be done;
(c) any of the Loan Documents may be amended for the purpose
of adding any provisions thereto or increasing the amount of, or
changing the terms of, the Senior Secured Obligations or changing in
any manner the rights of the Agent, any of the Senior Secured Parties,
the Borrower or the Subsidiaries of the Borrower thereunder;
(d) payment of any of the Senior Secured Obligations or any
portion thereof may be extended; and
(e) the maturity of any of the Senior Secured Obligations may
be accelerated, and any collateral security thereof may be exchanged,
sold, surrendered, released or otherwise dealt with, in accordance with
the terms of any of the Loan Documents or any other present or future
agreement between the Borrower, any Subsidiary of the Borrower and the
applicable Senior Secured Parties;
all without impairing or affecting the obligations of Lenfest hereunder.
3.05 Waiver of Notice. Lenfest hereby unconditionally waives notice of
the incurring of the Senior Secured Obligations or any part thereof and reliance
by any Senior Secured Party upon the subordination of the Lenfest Debt to the
Senior Secured Obligations.
3.06 Application of Payments. Whenever any payment or distribution
shall be paid or delivered to the Agent pursuant to the provisions of this
Section 3 for application on the Senior Secured Obligations, such payment or
distribution shall be applied by the Agent in accordance with the priorities set
forth in the Credit Agreement.
3.07 Subrogation. Subject to the prior indefeasible payment in full in
cash of the Senior Secured Obligations, Lenfest shall be subrogated to the
rights of the Agent and the Senior Secured Parties to receive payments or
distributions in cash, property or securities of the Borrower and the
Subsidiaries of the Borrower applicable to the Senior Secured Obligations until
all amounts owing on the Senior Secured Obligations shall be paid in full in
cash, and as between and among the Borrower, the Subsidiaries of the Borrower,
their creditors other than the Agent and the Senior Secured Parties, and
Lenfest, no such payment or distribution made to the Agent or the Senior Secured
Parties by virtue of this Agreement which otherwise would have been made to
Lenfest shall be deemed to be a payment by the Borrower or any Subsidiary of the
Borrower on account of the Senior Secured Obligations, it being understood that
the provisions of this Section 3 are
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<PAGE> 419
intended solely for the purpose of defining the relative rights of Lenfest, the
Agent and the Senior Secured Parties.
3.08 Certain Agreements. Lenfest agrees that:
(a) all holders of Senior Secured Obligations, in determining
to acquire and retain Senior Secured Obligations, have relied upon the
subordination of the Lenfest Debt to the Senior Secured Obligations as
provided herein;
(b) promptly upon the written request of the Requisite
Creditors, Lenfest shall execute and deliver to the Senior Secured
Parties a written instrument by which Lenfest affirms and agrees that
the Lenfest Debt is subordinated and junior in right of payment to such
Senior Secured Obligations on terms and conditions provided herein;
(c) promptly upon the written request of any holder of Senior
Secured Obligations, Lenfest shall (at the expense of the Borrower)
take such other action as may be reasonably requested by the Agent to
protect the rights of the Agent or effectuate the subordination
provided herein; and
(d) other than the second priority lien securing the Lenfest
Note, the Lenfest Debt shall not at any time be (i) secured by any lien
or security interest on property of the Borrower or any Subsidiary of
the Borrower or (ii) subordinated to any other obligations, other than
the Senior Secured Obligations.
Section 4. Miscellaneous.
4.01 Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the Commonwealth of Pennsylvania.
4.02 Notices. All notices, requests, demands, directions and other
communications (collectively "notices") given to or made upon any party under
the provisions of this Agreement shall be by telephone or in writing (including
facsimile communications) unless otherwise expressly provided under this
Agreement and if in writing shall be delivered or sent by facsimile to the
respective parties at the addresses and numbers set forth under their respective
names on the signature pages of this Agreement or in accordance with any
subsequent unrevoked written direction from any party to the others. All notices
shall, except as otherwise expressly provided in this Agreement, be effective
(a) in the case of facsimile, when received, (b) in the case of hand-delivered
notice, when hand delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective, telephone notices must be
confirmed in writing no later than the next day by letter, facsimile or telex,
(d) if given by mail, four (4) days after such communication is deposited in the
mails with first class postage prepaid, return receipt requested, and (e) if
given by any other means (including by air courier), when delivered; provided,
that notices to the Agent shall not be effective until received. In the event of
a discrepancy between any telephonic or written notice, the written notice shall
control.
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<PAGE> 420
4.03 Arbitration; Consent to Jurisdiction, Service and Venue; Waiver of
Jury Trial.
(a) Arbitration.
(i) Upon demand of any party hereto, whether made before or
after institution of any judicial proceeding, any claim or controversy
arising out of, or relating to, this Agreement between any or all of
the parties hereto (a "Dispute") shall be resolved by binding
arbitration conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act.
Disputes may include, without limitation, tort claims, counterclaims, a
dispute as to whether a matter is subject to arbitration, claims
brought as class actions, or claims arising from documents executed in
the future. A judgment upon the award may be entered in any court
having jurisdiction. Notwithstanding the foregoing, this arbitration
provision does not apply to disputes under or related to Interest Rate
Protection Agreements.
(ii) All arbitration hearings shall be conducted in the City
of Philadelphia, Commonwealth of Pennsylvania unless otherwise agreed
by all parties to such arbitration. A hearing shall begin within 90
days of demand for arbitration and all hearings shall conclude within
120 days of demand for arbitration. These time limitations may not be
extended unless a party shows cause for extension and then for no more
than a total of 60 days. The expedited procedures set forth in Rule 51
et seq. of the Arbitration Rules shall be applicable to claims of less
than $1,000,000.00. Arbitrators shall be licensed attorneys selected
from the Commercial Financial Dispute Arbitration Panel of the AAA. The
parties do not waive applicable Federal or state substantive law except
as provided herein.
(iii) Notwithstanding the preceding binding arbitration
provisions, the parties agree to preserve, without diminution, certain
remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed in
any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable: (a) all rights to
foreclose against any real or personal property or other security by
exercising a power of sale or under applicable law by judicial
foreclosure including a proceeding to confirm the sales; (b) all rights
of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal
property; and (c) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment
of receiver and filing of involuntary bankruptcy proceedings. Any claim
or controversy with regard to any party's entitlement to such remedies
is a Dispute.
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<PAGE> 421
(iv) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A REMEDY OF
SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AGAINST OTHER
PARTIES IN ANY DISPUTE AND HEREBY WAIVE ANY RIGHT OR CLAIM TO SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY
ARISE IN THE FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE
IS RESOLVED BY ARBITRATION OR JUDICIALLY.
(b) Consent to Jurisdiction, Service and Venue; Waiver of Jury Trial.
(i) With respect to any matters that may be heard before a
court of competent jurisdiction under paragraph (iii) of the preceding
subsection 4.03(a), Lenfest, the Borrower and the Subsidiaries of the
Borrower each hereby consents to the jurisdiction and venue of the
courts of the Commonwealth of Pennsylvania or of any federal court
located in such state, waives personal service of any and all process
upon it and consents that all such service of process be made by
certified or registered mail directed to the Lenfest, the Borrower or
such Subsidiary of the Borrower at the address provided for in Section
4.02 above and service so made shall be deemed to be completed upon
actual receipt. Lenfest, the Borrower and the Subsidiaries of the
Borrower each hereby waives the right to contest the jurisdiction and
venue of the courts located in the County of Philadelphia, Commonwealth
of Pennsylvania on the ground of inconvenience or otherwise and,
further, waives any right to bring any action or proceeding against (a)
the Agent in any court outside the County of Philadelphia, Commonwealth
of Pennsylvania, or (b) any other Senior Secured Party other than in a
state within the United States designated by such Senior Secured Party.
The provisions of this Section 4.03 shall not limit or otherwise affect
the right of the Agent, any Senior Secured Party or other Senior
Secured Party to institute and conduct an action in any other
appropriate manner, jurisdiction or court.
(ii) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE, SUCCESSOR,
HEIR OR PERSONAL REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY
TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR
ANY OTHER LOAN DOCUMENT OR ANY GUARANTY RELATING TO SUCH INDEBTEDNESS
OR THE RELATIONSHIP BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM.
NEITHER THE AGENT NOR ANY SENIOR SECURED PARTY NOR LENFEST NOR THE
BORROWER NOR ANY SUBSIDIARY OF THE BORROWER NOR ANY OTHER PERSON WILL
SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
(iii) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH (iv) OF THE
PRECEDING SUBSECTION 4.03(a) EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO
THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY
ARBITRATION OR OTHER LITIGATION, ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY
OR
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<PAGE> 422
PUNITIVE DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH PARTY TO THIS AGREEMENT (i) CERTIFIES THAT NEITHER THE
AGENT NOR ANY REPRESENTATIVE, OR ATTORNEY OF THE AGENT NOR ANY SENIOR
SECURED PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT
OR SUCH SENIOR SECURED PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 4.03. THE PROVISIONS OF THIS SECTION 4.03 HAVE BEEN FULLY
DISCLOSED TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY
OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 4.03 WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
4.04 Waivers, etc. The terms of this Agreement may be waived, altered
or amended only by an instrument in writing duly executed by Lenfest and the
Agent. Any such amendment or waiver shall be binding upon all Senior Secured
Parties and each other party to this Agreement.
4.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of Lenfest, the
Borrower, the Subsidiaries of the Borrower, the Agent and each of the Senior
Secured Parties (provided, however, that Lenfest, the Borrower and the
Subsidiaries of the Borrower shall not assign or transfer its rights or
obligations hereunder without the prior written consent of the Agent).
4.06 Counterparts. This Agreement may be executed in one or more
counterparts and all of such counterparts taken together shall constitute one
and the same instrument. A photocopied or facsimile copy of any signature page
to this Agreement shall be deemed to be the functional equivalent of a manually
executed original for all purposes.
4.07 Joint and Several Obligations. Unless the context specifically
otherwise requires, all references herein to, and all obligations of Lenfest
hereunder, shall refer to and be joint and several obligations of each of the
Persons included in the definition of Lenfest under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Affiliate Subordination Agreement (Lenfest) to be duly executed as of the day
and year first above written.
Lenfest:
LENFEST COMMUNICATIONS, INC.
By:
----------------------------------------
Name:
Title:
LENFEST YORK, INC.
By:
----------------------------------------
Name:
Title:
Notice Information
202 Shoemaker Road
Pottstown, PA 19464
Attention: H. F. Lenfest, President
Phone No.: (215) 327-0965
Fax No.: (215) 327-8378
Signature Page to Lenfest Affiliate Subordination Agreement
<PAGE> 424
BORROWER:
SUSQUEHANNA MEDIA CO.
SUBSIDIARIES:
SUSQUEHANNA CABLE CO.
SUSQUEHANNA CABLE
INVESTMENT CO.
CABLE TV OF EAST PROVIDENCE, INC.
CASCO CABLE TELEVISION, INC.
CASCO CABLE TELEVISION OF BATH, MAINE
SBC CABLE CO.
YORK CABLE TELEVISION, INC.
By:
--------------------------------------
Alan L. Brayman, on behalf of each
of the foregoing as Treasurer
Notice Information
140 East Market Street
York, PA 18401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attention: Craig Bremer, Esquire
Signature Page to Lenfest Affiliate Subordination Agreement
<PAGE> 425
FIRST UNION NATIONAL BANK, in its
capacity as Agent
By:
------------------------------------
Elizabeth Elmore
Senior Vice President
Notice Information
Communications/Media Group
PA 4829
1 South Penn Square
P.O. Box 7618
Philadelphia, PA 19101-7618
Phone No.: (215) 786-4321
Fax No.: (215) 786-7721
Attention: Elizabeth Elmore, Senior
Vice President
Signature Page to Lenfest Affiliate Subordination Agreement
<PAGE> 426
TRADEMARK COLLATERAL AGREEMENT
This TRADEMARK COLLATERAL AGREEMENT is made as of the 12th day of May,
1999 by SUSQUEHANNA MEDIA CO., a Delaware corporation (the "Borrower"), all of
its Subsidiaries, each of which is a signatory hereto, the Borrower's parent
Susquehanna Pfaltzgraff Co., Inc. ("Parent") and their successors and assigns
(collectively with the Borrower, the "Assignors"), to and in favor of FIRST
UNION NATIONAL BANK, a national banking association, for itself and as Agent
(hereinafter referred to, with its successors and assignees, as the "Assignee")
for the Senior Secured Parties (as defined in the Credit Agreement referred to
below).
BACKGROUND
WHEREAS, the Assignors are the owner of certain trademarks, service
marks and tradenames;
WHEREAS, pursuant to a Credit Agreement (as amended, extended,
supplemented, restated or otherwise modified or refinanced, including without
limitation, any amendment involving an increase in principal, interest rate or
other amount, the "Credit Agreement") of even date herewith, by and among
Borrower, the Assignee, and certain lenders and issuers of letters of credit (as
defined in the Credit Agreement, the "Lenders") for which the Assignee is acting
as Agent, the Lenders are making available to the Borrower (and through the
Borrower, its Subsidiaries), certain credit facilities (the "Credit
Facilities");
WHEREAS, all capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the Credit Agreement;
WHEREAS, each of the Assignors (other than the Borrower itself, and the
Parent) is a Subsidiary of the Borrower. The Assignors, wishing to induce the
Lenders to enter into the financings described above to enable the Borrower to
(among other things) make loans to its Subsidiaries, and the Assignors having
determined that they can obtain their borrowings more economically by combining
their financing needs into a single borrowing unit on the parent company level,
borrowing funds from institutional lenders on that basis, and then entering into
the requisite intercompany financings, the Subsidiaries have agreed to grant the
liens set forth below in order to facilitate such financings. Each Assignor
determined that it was in its best interests and in pursuance of its business
purposes that it do so and that it was and will be Solvent before and after
giving effect to the transactions contemplated by the Credit Agreement; and
WHEREAS, the Lenders are willing to make the Credit Facilities
available pursuant to the Credit Agreement only upon the condition that all of
the Borrower's Subsidiaries guarantee all of the Senior Secured Obligations (as
defined in the Credit Agreement) and that each Assignor creates and grants to
the Assignee for the benefit of the Senior Secured Parties security
<PAGE> 427
interests in substantially all assets of the Assignor as security for the
payment, performance of and compliance with all of the Senior Secured
Obligations contained in the Credit Agreement or the other Loan Documents;
NOW, THEREFORE, for and in consideration of the credit extended by the
Lenders under the Credit Agreement, and intending to be legally bound hereby,
each Assignor hereby covenants and agrees as follows, jointly and severally:
1. Definitions.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in, or by reference in, the Credit Agreement or
(except for the definition of "Proceeds" which is defined more broadly herein
than in the Uniform Commercial Code) in the Uniform Commercial Code, as
applicable. The following terms shall have the following meanings:
"Proceeds" shall have the meaning assigned to such term under the
Uniform Commercial Code and, in any event, shall also include without limitation
(i) any and all proceeds of any guarantee, insurance or indemnity payable to the
Assignee from time to time with respect to any of the Marks; (ii) any and all
payments (in any form whatsoever) made or due and payable to the Assignee from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Marks by any governmental
authority (or any person acting under color of governmental authority); (iii)
all proceeds of any sale or other disposition of any of the Marks and of any of
the assets, properties and rights described in the definition of "Marks" whether
or not the lien therein purportedly granted hereunder is valid or attaches or is
perfected; and (iv) any and all other amounts from time to time paid or payable
with respect to or in connection with any of the Marks.
"Uniform Commercial Code" shall mean the Uniform Commercial Code, as
amended, as is in effect in the Commonwealth of Pennsylvania or in any
applicable state, as the case may be.
2. Security Agreement and Collateral Assignment.
2.1 Grant.
(a) To secure the complete and timely payment, performance and
satisfaction of all of the Senior Secured Obligations, each Assignor hereby
pledges and grants to the Assignee a security interest in each and all of the
following, whether now or hereafter existing, arising or created (collectively,
the "Marks"):
(i) all present and future trademarks, service marks,
tradenames, logos and other distinctive indicia which are, have been or may
hereafter be adopted or used by such Assignor, including, without limitation,
those now or hereafter listed in Schedule 2.1 hereto;
(ii) all actual or potential applications, registrations,
affidavits, renewals, divisions, continuations or extensions thereof;
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(iii) all goodwill associated therewith;
(iv) all rights to sue for past, present and future
infringements thereof;
(v) all rights owned by the Assignor corresponding or relating
thereto throughout the world; and
(vi) all Proceeds thereof (such as, by way of example and not
by way of limitation, license royalties and proceeds of infringement suits).
(b) Notwithstanding anything to the contrary contained in
subsection (a) (i) above, and Section 2.2 below, Parent is granting a security
interest only in the Marks specifically listed in Schedule 2.1 hereto.
2.2 Future Marks. If, before the Senior Secured Obligations shall have
been finally satisfied in full, any Assignor or any other Subsidiary shall adopt
or use or obtain any other Mark, then the provisions of this Section 1 shall
automatically apply thereto, and the Assignors shall give to the Assignee prompt
notice thereof in writing. Each Assignor hereby irrevocably authorizes the
Assignee to modify this Agreement by amending Schedule 2.1 hereto to include any
future Mark.
2.3 Notice. Each Assignor agrees that simultaneously with the execution
of this Agreement, and upon any amendment of Schedule 2.1, such Assignor shall
execute the form of Notice appended hereto as Exhibit 2.3 (each, a "Notice")
with respect to each Mark, now owned or hereafter acquired, and shall deliver it
to Assignee for recording in the Patent and Trademark Office so as to record
formally this Agreement.
2.4 Negative Pledge. Except for assignments and transfers among
Subsidiaries (in any case subject to the execution by the transferee of this
Agreement, a Notice, appropriate financing statements and other documentation
necessary for the Assignee's liens in the Marks to be continuously valid and
perfected) or as permitted under the terms of the Credit Agreement, each
Assignor agrees that it (a) will not assign, transfer, sell, hypothecate or
encumber any Mark; (b) will not take any action, nor enter into any license,
royalty, assignment or other agreement which is inconsistent with such
Assignor's obligations under this Agreement, or which has the effect of reducing
the distinctiveness of the Marks; and (c) will give the Assignee thirty (30)
days prior written notice of any proposed license, royalty, assignment or other
agreement.
2.5 Continuing Security Interest. This Agreement shall create a
continuing security interest in the Marks and shall (i) remain in full force and
effect until terminated pursuant to Section 2.6 below, (ii) be binding upon each
Assignor, its successors and assigns, and (iii) inure to the benefit of the
Assignee, the other Senior Secured Parties and their respective successors,
transferees and assigns, provided, however, that no Assignor shall be permitted
to transfer or delegate any of its obligations hereunder.
2.6 Release of Marks.
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(a) Termination of Agreement. At such time as (i) the Senior
Secured Parties have no obligation to make further loans or extensions of credit
under the Credit Agreement to the Borrower or any Subsidiary and (ii) all the
Senior Secured Obligations have been indefeasibly paid and/or performed in full,
then this Agreement shall terminate and the lien thereof shall be released,
provided that if at the time of the payment in full of the Senior Secured
Obligations (a) such payment and performance is not subject to any filed or
threatened claim, contest, avoidance or offset of any kind whatsoever, (b) the
chief financial officer of the Borrower so certifies in writing to the Assignee,
and (c) the Borrower supplies to the Assignee such valuations, information,
evidence, certifications and opinions as Assignee may request in connection
therewith, this Agreement shall terminate upon satisfaction of the conditions in
clauses (i) and (ii) above without giving effect to the requirement that the
payment in full be indefeasible. Upon such termination, the Assignee shall
promptly execute and deliver to the Assignors all instruments as may be
necessary or proper to fully release the security interest pledged and granted
hereunder, subject to any disposition thereof which may have been made by the
Assignee pursuant hereto.
(b) Partial Release of Marks. There shall be a partial release
of the Marks under the any of following circumstances: (i) as a court of
competent jurisdiction may direct; (ii) in connection with a disposition (other
than to an Assignor) permitted under subsection 7.7.2 of the Credit Agreement or
as otherwise provided under the Loan Documents, (iii) if in accordance with the
Credit Agreement cash proceeds from any sale or transfer of the collateral are
used to prepay outstanding sums due under the Loan or are reinvested in the
Borrower and its Subsidiaries, and (iv) if such collateral security is of little
or no value as certified by the Borrower in a written statement requesting such
release. The Agent shall thereupon promptly execute and deliver to the
applicable Assignor all instruments as may be necessary or proper to release the
security interest in such Marks, subject to any disposition thereof which may
have been made by the Assignee pursuant thereto.
2.7 Further Assurances. At any time and from time to time, upon request
of the Assignee and at the sole expense of the Assignors, the Assignors will
give, execute, file, transfer and record any further notice, financing
statement, continuation statement, instrument, document or agreement that the
Assignee may consider necessary or desirable to create, preserve, continue,
perfect, charge or validate the security interest pledged and granted hereunder
or which the Assignee may consider necessary, convenient or desirable to
exercise or enforce its rights hereunder with respect to such security interest.
3. Parties and Secured Obligations.
3.1 Senior Secured Parties. "Senior Secured Parties" shall have the
meaning assigned to it in the Credit Agreement and include the Assignee (whether
in its capacity as Agent under the Credit Agreement, as the Assignee under this
Agreement or otherwise). It is understood and agreed by the parties hereto that
the security interests in the Marks granted to and created by this Agreement
shall be for the benefit of each Senior Secured Party. Each of the rights,
privileges and remedies accorded the Senior Secured Parties under this Agreement
or otherwise by statute or at law or in equity with respect to the Marks may be
exercised by the Senior Secured Parties.
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Any Marks held or recovered at any time by any of the Senior Secured Parties or
any realization on account thereof shall inure to the benefit of the Senior
Secured Parties.
3.2 Joinder. The Assignors shall cause each additional Subsidiary,
hereafter formed or acquired, and whether directly or indirectly owned, and
having rights in any Marks, to sign and join in this Agreement by execution of a
Joinder in the form attached hereto as Exhibit 3.2, and thereafter each such
Subsidiary shall be deemed an Assignor, subject to all obligations of an
Assignor hereunder.
4. Representations and Covenants with Respect to Marks.
4.1 Representations. Each Assignor hereby represents and warrants, now
and automatically upon each amendment of Schedule 2.1, that:
(a) as indicated on Schedule 2.1, each Assignor is the sole and
exclusive owner of the entire and unencumbered right, title and interest in the
Marks, free and clear of any liens, charges and encumbrances except for those
created hereunder; and Schedule 2.1 is complete and correct and lists all Marks
owned by any Assignor;
(b) each Assignor has the unqualified right to enter into this
Agreement and perform its terms, and the agreements and assignments herein
provided are and shall be the legal, valid, binding and enforceable obligations
of the Assignors subject only to bankruptcy, insolvency and similar laws
affecting creditors rights;
(c) upon execution and filing of each Notice, the Assignee, for the
benefit of the Senior Secured Parties, shall have a valid first priority lien
and security interest on each of the Marks, securing the Senior Secured
Obligations;
(d) there are no infringement actions filed or, to the knowledge of
any Assignor, threatened against the Marks, and to the Assignors' knowledge, no
person is engaging in any activity that in any way infringes upon any Mark;
(e) to the knowledge of the Assignors, the Marks are all valid,
subsisting and enforceable; and
(f) to the Assignors' knowledge, there are no other users of the
Marks or variations thereof that are similar enough to the Marks hereby
assigned, with due regard to goods and services with which the respective Marks
are used, as to be likely to cause confusion or mistake among consumers.
4.2 Conduct of Business; Quality Control. To preserve and protect the
goodwill associated with the Marks, the Assignors covenant that they shall
maintain the quality of the products and services sold under or in connection
with the Marks and shall not at any time permit any impairment of the quality of
such products and services, and will provide the Assignee from time to time with
a certificate to such effect signed by an officer of the Assignor upon request.
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The Assignors shall do any and all acts reasonably required by the Assignee to
ensure the Assignors' compliance with this Section.
4.3 Indemnification. Without limiting the generality of any
indemnifications provided in the Credit Agreement or other Loan Documents, the
Assignors shall (jointly and severally) indemnify, defend and hold harmless the
Assignee and each of the Senior Secured Parties, and each of their directors,
officers, employees and agents, on demand, from and against any and all losses,
claims, obligations, damages, fees, costs, liabilities, expenses or
disbursements of any kind and nature whatsoever (including, but not limited to,
reasonable fees and disbursements of counsel, interest, penalties, and amounts
paid in settlement):
(a) which may be imposed on, incurred by or asserted against the
Assignee or any Senior Secured Party, or any director, officer, employee or
agent thereof, in any way related to or arising out of this Agreement, the
assignment of the Marks, the use of the Marks, the alleged infringement by any
Assignor of the intellectual property rights of others, any infringement action
or other claim relating to the Marks, or the enforcement of any of the terms
hereof, including, but not limited to, the negligence of the Assignee, any
Senior Secured Party or any director, officer, employee or agent thereof, or any
action taken or omitted by such party; or
(b) incurred by the Assignee in connection with the payment or
discharge of any taxes, counsel fees, maintenance fees, encumbrances or
otherwise protecting, maintaining, preserving the Marks, or in defending or
prosecuting any actions or proceedings arising out of or related to the Marks;
except only in each case such losses, claims, damages, liabilities or expenses
which the Assignors prove were clearly and directly a result of such party's
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.
4.4 Prosecution and Maintenance. Until the Senior Secured Obligations
have been paid in full and the Lenders have no commitment to extend credit
pursuant to the Credit Agreement, the Assignors shall have the duty to prosecute
diligently any trademark/service mark application for the Marks pending as of
the date of this Agreement or thereafter, to maintain any trademark/service mark
registrations for the Marks in effect as of the date of this Agreement or
thereafter, to make application for registration of non-registered marks as they
are adopted and used, and to preserve and maintain all rights in the Marks and
any registrations thereof and/or the applications therefor. In each case, the
Assignors shall notify the Assignee so that the Assignee may record and/or
perfect its security interest in and to such Marks and will cooperate with the
Assignee in preparation and filing of all required documents. Any expenses
incurred in connection with such applications shall be borne by the Assignors.
The Assignors shall not unreasonably allow any pending trademark or service mark
application to become abandoned or unreasonably allow any trademark or service
mark registration to become cancelled, and shall not unreasonably forego any
right to protect and enforce any rights to trademarks, service marks or other
distinctive styles or designations.
4.5 Enforcement of Marks. The Assignee shall have the right, but shall
in no way be obligated, to bring suit in its own or any Assignor's name to
enforce and protect rights to the Marks in which event each Assignor shall at
the request of the Assignee do any and all lawful
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acts and execute any and all proper documents required by the Assignee in aid of
such enforcement and the Assignor shall promptly, upon demand, reimburse and
indemnify the Assignee for all reasonable costs and expenses incurred by the
Assignee in the exercise of its rights under this Section.
4.6 Responsibility of Assignors. In furtherance and not limitation of
the other provisions of this Section 4, neither Assignee nor any Senior Secured
Party shall have any duty or responsibility with respect to the Marks or their
preservation. Each Assignor acknowledges and agrees that it has reviewed the
terms of this Agreement with trademark counsel of its choosing and that the
Assignors have determined that neither execution, delivery, nor performance of
this Agreement by the Assignors, the Assignee or the Senior Secured Parties will
in any way impair the Marks or the Assignors' right, title and interest therein,
subject to the purpose of this Agreement which is to impose a lien thereon in
favor of the Assignee and the Senior Secured Parties.
4.7 Reimbursement. Any and all reasonable fees, costs and expenses, of
whatever kind or nature, including the reasonable attorney's fees and legal
expenses incurred by the Assignee or the Senior Secured Parties in connection
with the preparation of this Agreement and all other documents relating hereto
and the consummation of this transaction, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance fees, encumbrances
or otherwise protecting, maintaining or preserving the Marks, or in defending or
prosecuting any actions or proceedings arising out of or related to the Marks,
shall be borne and paid by the Assignors on demand and until so paid shall be
added to the principal amount of the Senior Secured Obligations and shall bear
interest at the rate prescribed in the Credit Agreement.
5. Events of Default and Remedies.
5.1 Rights of Assignee. If any Event of Default shall have occurred and
be continuing, the Assignee shall have, in addition to all other rights and
remedies given it by this Agreement, the Credit Agreement, or any other Loan
Document, those allowed by law and the rights and remedies of a Senior Secured
Party under the Uniform Commercial Code as enacted in any jurisdiction the law
of which is applicable and, without limiting the generality of the foregoing,
the Assignee may immediately, without demand of performance and without
advertisement, require each Assignor to assign of record the Marks to the
Assignee (or its designees), and beneficially, sell at public or private sale or
otherwise realize upon, the whole or from time to time any part of the Marks and
the goodwill associated therewith, or any interest that any Assignor has
therein, and after deducting from the proceeds of said sale or other disposition
of the Marks all expenses (including all reasonable expenses for brokers, fees
and legal services), shall apply the residue of such proceeds toward the payment
of the Senior Secured Obligations as set forth in the Loan Documents and under
applicable law. Any remainder of the proceeds after payment in full of the
Senior Secured Obligations shall be paid over to the Assignors. Prior notice of
any sale or other disposition of the Marks need not be given to any Assignor
unless otherwise required by law (and if notice is required by law, it shall be
given ten (10) days before the time of any intended public or private sale or
other disposition of the Marks is to be made, which the Assignors hereby agree
shall be reasonable notice of such
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sale or other disposition). At any such sale or other disposition, any holder of
any Note (including renewals and substitutions therefor) or the Assignee may, to
the extent permissible under applicable law, purchase the whole or any part of
or interest in the Marks sold, free from any right of redemption on the part of
any Assignor, which right is hereby waived and released.
5.2 Power of Attorney. Effective immediately and automatically after a
Potential Event of Default or an Event of Default, and in furtherance of and in
accordance with Section 5.1, each Assignor hereby irrevocably authorizes and
empowers the Assignee to make, constitute and appoint any officer or agent of
the Assignee as the Assignee may select in its exclusive discretion, as such
Assignor's true and lawful attorney-in-fact, with the power to endorse such
Assignor's name on all applications, documents, papers and instruments necessary
for the Assignee to use the Marks, or to grant or issue any exclusive or
non-exclusive license under the Marks to any third person, or necessary for the
Assignee to assign, pledge, convey or otherwise transfer title in or dispose of
the Marks, including the goodwill and equipment associated therewith, to
Assignee or any third person. Each Assignor hereby ratifies all that such
attorney shall lawfully do or cause to be done by virtue hereof. This power of
attorney, being coupled with an interest, shall be irrevocable for the life of
this Agreement.
5.3 Conduct of Business after Default. The parties understand and agree
that the collateral assignment with respect to the Marks as provided for in this
Agreement, together with other Collateral provided to the Assignee pursuant to
the Loan Documents, will and is intended to permit the Assignee and its
successors and assigns, upon the occurrence and continuance of an Event of
Default as provided herein, to take title to and make use of all rights to the
Marks in conjunction with the other Collateral and to carry on the business of
the Assignor.
5.4 Proceeds of Collateral Disposition. During the continuance of a
Potential Event of Default or an Event of Default, at the Assignee's request,
each or all of the Assignors shall establish and maintain at all times a trust
account with the Assignee, and all Proceeds of any disposition of Marks, before
or after an Event of Default, shall be deposited directly and immediately into
such account. The Assignors shall be responsible for all costs and fees arising
with respect to such account at the standard rates. Each of the Assignors
expressly and irrevocably authorizes and consents to the ability of the Assignee
to charge such trust account, in its sole discretion, and recover from the funds
on deposit therein, from time to time and at any time, and to apply such funds
in payment (or partial payment) for any and all Senior Secured Obligations.
5.5 Deficiency. If proceeds referred to in Section 5.1 above are
insufficient to pay the Senior Secured Obligations in full, each of the
Assignors shall continue to be liable for the entire deficiency.
6. Miscellaneous Provisions.
6.1 Notices. All notices, requests, demands, directions and other
communications (collectively "notices") given or made upon any party under the
provisions of this Agreement shall be by telephone or in writing (including
facsimile communication) unless otherwise expressly provided under this
Agreement and if in writing, shall be delivered or sent by facsimile
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to the respective parties at the addresses and numbers set forth under their
respective names on the signature pages to this Agreement or in accordance with
any subsequent unrevoked written direction from any party to the others. All
notices shall, except as otherwise expressly provided in this Agreement, be
effective (a) in the case of facsimile, when received, (b) in case of
hand-delivered notice, when hand delivered, (c) in the case of telephone, when
telephoned, provided, however, that in order to be effective, telephonic notices
must be confirmed in writing no later than the next day by letter, facsimile or
telex, (d) if given by mail, four (4) days after such communication is deposited
in the mails with first class postage prepaid, return receipt requested, and (e)
if given by any other means (including air courier), when delivered; provided,
that notices to the Assignee shall not be effective until received. In the event
of a discrepancy between any telephonic or written notice, the written notice
shall control.
6.2 No Waiver. No course of dealing between any Assignor or any other
obligor on the Senior Secured Obligations and the Assignee, nor any failure to
exercise, nor any delay in exercising, on the part of the Assignee, any right,
power or privilege hereunder or under the Credit Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
6.3 Remedies Cumulative. All of the Assignee's rights and remedies with
respect to the Marks, whether established hereby or by the Credit Agreement, or
by any other agreements or by law shall be cumulative and may be exercised
singularly or concurrently.
6.4 Severability. The provisions of this Agreement are severable, and
if any clause or provision shall be held invalid and unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
6.5 Amendment and Assigns. This Agreement is subject to modification
only by a writing signed by the parties, except as specifically provided
otherwise in Section 2.2 above. The rights of the Assignee to so change, modify,
waive, discharge or terminate any provision hereof is subject to the terms of
Section 12.5 of the Credit Agreement, it being understood, however, that the
Assignors are not third party beneficiaries of Section 12.5 of the Credit
Agreement. This Agreement shall be binding upon each Assignor and its successors
and permitted assigns, but shall not be assignable by any Assignor, and shall
inure to the benefit of the Assignee and the Senior Secured Parties, each of
which may assign and/or participate its interests as set forth in the Credit
Agreement.
6.6 Arbitration; Consent to Jurisdiction, Service and Venue; Waiver of
Jury Trial.
(a) Arbitration.
(i) Upon demand of any party hereto, whether made before or
after institution of any judicial proceeding, any claim or controversy arising
out of, or relating to, this Agreement between any or all of the parties hereto
(a "Dispute"), shall be resolved by binding
-9-
<PAGE> 435
arbitration conducted under and governed by the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and the Federal Arbitration Act. Disputes may include,
without limitation, tort claims, counterclaims, a dispute as to whether a matter
is subject to arbitration, claims brought as class actions, or claims arising
from documents executed in the future. A judgment upon the award may be entered
in any court having jurisdiction. Notwithstanding the foregoing, this
arbitration provision does not apply to disputes under or related to Interest
Rate Protection Agreements.
(ii) All arbitration hearings shall be conducted in
the City of Philadelphia, Commonwealth of Pennsylvania, unless otherwise agreed
by all parties to such arbitration. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall conclude within 120 days of demand
for arbitration. These time limitations may not be extended unless a party shows
cause for extension and then for no more than a total of 60 days. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000.00. Arbitrators shall be licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The parties do not waive applicable federal or state substantive law
except as provided herein.
(iii) Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without diminution,
certain remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (a) all rights to foreclose against any real or
personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sales; (b) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; and (c) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment of
receiver and filing of involuntary bankruptcy proceedings. Any claim or
controversy with regard to any party's entitlement to such remedies is a
Dispute.
(iv) THE PARTIES AGREE THAT THEY SHALL NOT HAVE A
REMEDY OF SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AGAINST OTHER
PARTIES IN ANY DISPUTE AND HEREBY WAIVE ANY RIGHT OR CLAIM TO SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN
THE FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY
ARBITRATION OR JUDICIALLY.
(b) Consent to Jurisdiction, Service and Venue;
Waiver of Jury Trial
(i) With respect to any matters that may be heard
before a court of competent jurisdiction under paragraph (iii) of the preceding
subsection 6.6(a), each of the Assignors hereby consents to the jurisdiction and
venue of the courts of the Commonwealth of Pennsylvania or of any federal court
located in such state, waives personal service of any and all process upon it
and consents that all such service of process be made by certified or registered
mail directed to such Assignor at the address provided for in Section 6.1 above
and service so made shall be deemed to be completed upon actual receipt. Each of
the Assignors hereby waives the right to contest the jurisdiction and venue of
the courts located in the County of Philadelphia,
-10-
<PAGE> 436
Commonwealth of Pennsylvania on the ground of inconvenience or otherwise and,
further, waives any right to bring any action of proceeding against (a) the
Assignee in any court outside the County of Philadelphia, Commonwealth of
Pennsylvania, or (b) any other Senior Secured Party other than in a state within
the United States designated by such Senior Secured Party. The provisions of
this Section 6.6 shall not limit or otherwise affect the right of the Agent or
any Senior Secured Party to institute and conduct an action in any other
appropriate manner, jurisdiction or court.
(ii) NO PARTY TO THIS AGREEMENT, NOR ANY ASSIGNEE,
SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY
TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY
OTHER LOAN DOCUMENT OR ANY GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE
RELATIONSHIP BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NEITHER THE ASSIGNEE
NOR ANY SENIOR SECURED PARTY NOR ANY ASSIGNOR NOR ANY OTHER PERSON WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED.
(iii) WITHOUT LIMITING THE GENERALITY OF PARAGRAPH
(iv) OF THE PRECEDING SUBSECTION 6.6(a) EXCEPT AS PROHIBITED BY LAW, EACH PARTY
TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY
ARBITRATION OR OTHER LITIGATION, ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
PUNITIVE DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
EACH PARTY TO THIS AGREEMENT (a) CERTIFIES THAT NEITHER THE ASSIGNEE NOR ANY
REPRESENTATIVE, OR ATTORNEY OF THE ASSIGNEE NOR ANY SENIOR SECURED PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ASSIGNEE OR SUCH SENIOR SECURED
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS AND (b) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.6. THE PROVISIONS OF THIS SECTION
6.6 HAVE BEEN FULLY DISCLOSED TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT
TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY
OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 6.6 WILL NOT BE FULLY ENFORCED
IN ALL INSTANCES.
6.7 Governing Law. The validity and interpretation of this Agreement
and the rights and obligations of the parties shall be governed by the laws of
the Commonwealth of Pennsylvania to the extent not governed, under applicable
conflicts of laws principles or preemption, by the federal law of the United
States of America.
-11-
<PAGE> 437
IN WITNESS WHEREOF, and intending to be legally bound hereby, each
Assignor has executed this Agreement as of the day and year first above written.
ASSIGNORS: SUSQUEHANNA MEDIA CO.
SUSQUEHANNA CABLE CO.
SUSQUEHANNA CABLE INVESTMENT CO.
CABLE TV OF EAST PROVIDENCE, INC.
CASCO CABLE TELEVISION, INC.
CASCO CABLE TELEVISION OF BATH, MAINE
SBC CABLE CO.
YORK CABLE TELEVISION, INC.
SUSQUEHANNA RADIO CORP.
RADIO CINCINNATI, INC.
RADIO INDIANAPOLIS, INC.
RADIO METROPLEX, INC.
RADIO SAN FRANCISCO, INC.
KRBE CO.
KNBR, INC.
BAY AREA RADIO CORP.
WSBA LICO, INC.
WVAE LICO, INC.
WNNX LICO, INC.
<PAGE> 438
KNBR LICO, INC.
KRBE LICO, INC.
INDIANAPOLIS RADIO LICENSE CO.
SUSQUEHANNA DATA SERVICES, INC.
SUSQUEHANNA FIBER SYSTEMS, INC.
MEDIA PCS VENTURES, INC.
KFFG LICO, INC.
KPLX RADIO, INC.
KPLX LICO, INC.
KLIF BROADCASTING, INC.
KLIF LICO, INC.
KLIF RADIO, INC.
TEXAS STAR RADIO, INC.
INDY LICO, INC.
WRRM LICO, INC.
WFMS LICO, INC.
By:
---------------------------------------
Alan L. Brayman, on behalf of each of
the foregoing as Treasurer
Notice Information
140 East Market Street
York, Pa 18401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attn: Craig Bremer, Esquire
Signature Page to Trademark Collateral Agreement
<PAGE> 439
KPLX LIMITED PARTNERSHIP,
by KPLX Radio, Inc., its General Partner
KLIF BROADCASTING LIMITED
PARTNERSHIP, by KLIF Radio, Inc.,
its General Partner
By:
---------------------------------------------
Alan L. Brayman on behalf of each of the
foregoing as Treasurer of the General Partner
SUSQUEHANNA PFALTZGRAFF CO.
By:
---------------------------------------------
Name:
Title:
Notice Information
------------------
140 East Market Street
York, Pa 18401
Phone No.: (717) 848-5500
Fax No.: (717) 771-1440
Attn: Craig Bremer, Esquire
Signature Page to Trademark Collateral Agreement
<PAGE> 440
ACKNOWLEDGED BY ASSIGNEE:
FIRST UNION NATIONAL BANK, in its capacity as Agent
By:
------------------------------------
Name: Elizabeth Elmore
Title: Senior Vice President
Notice Information
------------------
Communications/Media Group
PA 4829
1 South Penn Square
P.O. Box 7618
Philadelphia, PA 19101-7618
Phone No.: (215) 786-4321
Fax No.: (215) 786-7721
Attention: Elizabeth Elmore, Senior Vice President
<PAGE> 441
SCHEDULE 2.1
[INSERT SMC LIST]
<PAGE> 442
EXHIBIT 2.3
TRADEMARK COLLATERAL AGREEMENT AND NOTICE
TRADEMARK COLLATERAL AGREEMENT AND NOTICE dated as of ______________,
1999 by __________________, a ______________ corporation ("Assignor"), having an
address at _____________________, to and in favor of FIRST UNION NATIONAL BANK,
having offices at 1 South Penn Square, Philadelphia, Pennsylvania, 19101, for
itself and as Agent ("Assignee") for certain secured parties (the "Senior
Secured Parties") under a certain Credit Agreement of even date herewith among
Susquehanna Media Co. (the "Borrower"), the Assignee and certain lenders and
issuers of letters of credit (the "Lenders") (as amended, the "Credit
Agreement").
WHEREAS, Assignor is the owner of certain United States Trademarks as
listed on Exhibit I hereto; and
WHEREAS, the Lenders have agreed to extend certain credit to the
Borrower and certain subsidiaries under the Credit Agreement on condition that
the Assignor pledge and grant to Assignee as collateral for the Senior Secured
Obligations (as defined in the Credit Agreement) under the Credit Agreement a
security interest and lien in and to such Trademarks and all applications
therefor described above, including the registrations thereof, the goodwill
associated therewith and all other related claims and rights as more fully
described in a certain Trademark Collateral Agreement in favor of the Assignee
(the "Marks");
NOW THEREFORE, for good and valuable consideration, as security for the
due and timely payment and performance of the Senior Secured Obligations,
Assignor hereby pledges and grants to Assignee for itself and as Agent for the
other Senior Secured Parties a security
<PAGE> 443
interest and lien in and to the aforesaid Marks, and gives notice of such
security interest and the existence of such Trademark Collateral Agreement
providing therefor.
Executed as of the date first above written.
ATTEST: ______________________________
By:______________________________ By:___________________________
Name: Name:
Title: Secretary (SEAL) Title: President
-2-
<PAGE> 444
COMMONWEALTH OF PENNSYLVANIA :
SS.
COUNTY OF PHILADELPHIA :
Before me, the undersigned, a Notary Public in and for the state and
county aforesaid, on this ____ day of _________________, 19__, personally
appeared __________________, and __________________, to me known personally, and
who, being first by me duly sworn, depose and say that they are the President
and Secretary, respectively of _____________, and that the seal affixed to the
foregoing instrument is the corporate seal of said corporation, and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and that they acknowledged said instrument to be the
free act and deed of said corporation.
__________________________________
Notary Public
My Commission Expires:
<PAGE> 445
EXHIBIT 3.2 TO TRADEMARK
COLLATERAL AGREEMENT
JOINDER TO TRADEMARK COLLATERAL AGREEMENT
JOINDER dated as of ______________, ______ given by the undersigned to
and in favor of FIRST UNION NATIONAL BANK, for itself and as Agent (the
"Assignee").
The undersigned hereby (a) joins as an "Assignor" and becomes party to,
and agrees to be bound as an "Assignor" by that certain Trademark Collateral
Agreement dated as of _________, 1999, as amended, given by Susquehanna Media
Co. (the "Borrower") and the Subsidiaries named therein to and in favor of the
Assignee and the Senior Secured Parties, relating to that certain Credit
Agreement dated as of _____________, 1999, as amended, among the Senior Secured
Parties (as defined in the Credit Agreement), the Assignee, for itself and the
Senior Secured Parties, and the Borrower; and (b) confirms that the Senior
Secured Obligations (as defined in the Credit Agreement) include, without
limitation, all credit being extended to the Borrower or any Subsidiary by the
Assignee and the Senior Secured Parties on or about the date hereof.
An executed copy of this Joinder shall be delivered to the Assignee,
and the Assignee and the Senior Secured Parties may rely on the matters set
forth herein in entering into and extending credit under the Credit Agreement on
or after the date hereof. This Joinder shall not be modified, amended or
terminated without the prior written consent of the Assignee.
EXECUTED as of the day first above written.
Attest: (Seal)______________________________
By:_______________________________ By:___________________________
Name: Name:
Title: Title:
<PAGE> 446
EXHIBIT P
SUSQUEHANNA CABLE CO. SCHEDULE 1
CABLE SYSTEM OPERATING RESULTS CMA
Dollars in Thousands [Date]
-----------------------------------------
AT DECEMBER 31,
MILES OF PLANT current year prior year Inc/(Dec)
------------------------------------------
<TABLE>
<S> <C> <C> <C>
York
Williamsport
Rankin County
Brunswick/Bath
DuQuoin
Shelbyville
Olney AT DECEMBER 31,
------------------
TOTAL SUSQUEHANNA CABLE current year prior year Inc/(Dec)
================== ----------------------------------
HOMES PASSED DENSITY (HOMES/MILE)
York York
Williamsport Williamsport
Rankin County Rankin County
Brunswick/Bath Brunswick/Bath
DuQuoin DuQuoin
Shelbyville Shelbyville
Olney Olney
------------------- ---------------------
TOTAL SUSQUEHANNA CABLE TOTAL CABLE
=================== =====================
BASIC SUBSCRIBERS BASIC PENETRATION
York York
Williamsport Williamsport
Rankin County Rankin County
Brunswick/Bath Brunswick/Bath
DuQuoin DuQuoin
Shelbyville Shelbyville
Olney Olney
------------------- ---------------------
TOTAL SUSQUEHANNA CABLE TOTAL CABLE
=================== =====================
PAY UNITS PAY PENETRATION
York York
Williamsport Williamsport
Rankin County Rankin County
Brunswick/Bath Brunswick/Bath
DuQuoin DuQuoin
Shelbyville Shelbyville
Olney Olney
------------------- ---------------------
TOTAL SUSQUEHANNA CABLE TOTAL CABLE
=================== =====================
</TABLE>
<PAGE> 447
SUSQUEHANNA CABLE CO. SCHEDULE 1
CABLE SYSTEM OPERATING RESULTS CMA
Dollars in Thousands [Date]
<TABLE>
<CAPTION>
-------------------------------------------- --------------------------------------------
CURRENT QUARTER YEAR-TO-DATE
TOTAL REVENUE current year prior year Fav/(Unfav) current year prior year Fav/(Unfav)
-------------------------------------------- --------------------------------------------
<S> <C> <C>
York
Williamsport
Rankin County
Brunswick/Bath
DuQuoin
Shelbyville
Olney
Cable Management Group
-------------------------------------------- --------------------------------------------
TOTAL REVENUE
============================================ ============================================
AVERAGE REVENUE PER SUBSCRIBER
York
Williamsport
Rankin County
Brunswick/Bath
DuQuoin
Shelbyville
Olney
-------------------------------------------- --------------------------------------------
TOTAL SUSQUEHANNA CABLE
============================================ ============================================
OPERATING CASH FLOW
York
Williamsport
Rankin County
Brunswick/Bath
DuQuoin
Shelbyville
Olney
Cable Management Group
-------------------------------------------- --------------------------------------------
OPERATING CASH FLOW
============================================ ============================================
OPERATING CASH FLOW MARGIN
York
Williamsport
Rankin County
Brunswick/Bath
DuQuoin
Shelbyville
Olney
-------------------------------------------- --------------------------------------------
TOTAL SUSQUEHANNA CABLE
============================================ ============================================
</TABLE>
<PAGE> 448
OFFICERS' COMPLIANCE CERTIFICATE
The undersigned officers of Susquehanna Media Co. ("Company"), pursuant
to the Revolving Credit and Term Loan Agreement dated as of __________ __, 1999
(as amended, restated or otherwise modified, the "Credit Agreement"), by and
among Company, the lenders party thereto and First Union National Bank, as
Agent, hereby certify to Agent and Lenders as set forth below. All capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Credit Agreement. All section references are to sections of the
Credit Agreement.
1. This Certificate is delivered by Company in respect of the fiscal
[year] [quarter] of the Company and its Subsidiaries ending on ______________
(the "Reference Date") and relates to the consolidated and consolidating
financial statements of the Company and its Subsidiaries delivered in respect of
such period (the "Reference Period").(1)
2. THE FOLLOWING IS APPLICABLE TO THE CERTIFICATE DELIVERED PURSUANT TO
SUBSECTION 4.1.23 ON THE CLOSING DATE:(2)
(a) Both before and after giving effect to the Indebtedness to be
incurred and other transactions contemplated to occur on the Closing Date, there
exists no Event of Default or Potential Event of Default;
(b) All representations and warranties contained in the Credit
Agreement or otherwise made in writing in connection with the Credit Agreement,
whether made by SPC, the Company, any Subsidiary of the Company or any other
Person on behalf of SPC, the Company or any of the Company's Subsidiaries, are
true and correct with the same effect as though such representations and
warranties were made to Lenders or Agent on behalf of Lenders on and as of the
date of this Certificate;
(c) Attached as Schedule 1 are the computations to establish whether or
not the Company is in compliance with the financial covenants set forth in
Article 6 of the Credit Agreement;
(d) No Material Adverse Change has occurred since December 31, 1998;
(e) No event has occurred or has been threatened and no facts or
circumstances exist, including, without limitation, any action, suit,
investigation, litigation or proceeding pending or threatened in a court or
before any arbitrator or governmental instrumentality, that could have a
Material Adverse Effect;
________________________
(1) Modify if Certificate is being delivered as of another date.
(2) Not all sections of this form will be applicable to each Certificate. Modify
as appropriate.
<PAGE> 449
(f) The Company and each of it Subsidiaries are in substantial
compliance with all applicable laws, including environmental laws; and
(g) All material corporate, governmental and judicial consents and
approvals and waivers (including, without limitation, any requisite FCC or PUC
approvals) and third party consents (including Lenfest) and approvals (except
for those consents, approvals and waivers not required by the Agent as a
condition to closing) necessary in connection with the Credit Agreement and the
Loans, or other related transactions (including, without limitation, those
required in connection with the creation of the ESOP), have been obtained and
become final or Final Orders, as applicable, and will remain in full force and
effect, without the imposition of any conditions that are not acceptable to the
Lenders.
3. THE FOLLOWING IS APPLICABLE TO CERTIFICATES DELIVERED PURSUANT TO
SUBSECTION 5.1.4 ACCOMPANYING THE QUARTERLY OR ANNUAL FINANCIAL STATEMENTS
DELIVERED UNDER SUBSECTIONS 5.1.1 OR 5.1.2:
(a) The accompanying financial statements supplied to Agent and
Lenders (i) have been prepared in accordance with GAAP (except, in the case of
such financial statements that are unaudited, for the exclusion of footnote
disclosure), (ii) are true and correct (subject, in the case of such financial
statements that are unaudited, to normal recurring year end audit adjustments),
and (iii) present fairly the consolidated financial position of the Company and
its Subsidiaries as of the Reference Date and the results of operations and
changes of cash flow for the Reference Period (subject, in the case of such
financial statements that are unaudited, to normal recurring year end audit
adjustments). Since the Reference Date, there has been no Material Adverse
Change.
(b) A review of the activities of Company and its Subsidiaries
during the Reference Period has been made in accordance with established
procedures and with a view to determining whether all of the obligations and
covenants under or in connection with the Credit Agreement have been performed
and fulfilled and such review showed that [there existed during such period no
Event of Default and no Potential Event of Default] [if any Event of Default or
Potential Event of Default existed, Schedule 2 attached hereto includes a
statement specifying the nature thereof, the period of existence thereof and
what action Company proposes to take, or has taken, with respect thereto].
(c) Attached as Schedule 3 are the calculations to establish
compliance with covenants set forth in the following Sections of the Credit
Agreement:
(i) 6.1 (Interest Coverage Ratio)
(ii) 6.2 (Debt Service Coverage Ratio)
(iii) 6.3 (Consolidated Total Leverage Ratio)
(iv) 6.4 (Consolidated Senior Leverage Ratio)
-2-
<PAGE> 450
(v) 6.5 (Fixed Charge Coverage Ratio)
(vi) 7.4 (Restricted Payments)
THE INFORMATION IN PARAGRAPHS (d) AND (e) NEED ONLY BE INCLUDED IN THE
CERTIFICATES DELIVERED ALONG WITH THE ANNUAL FINANCIAL STATEMENTS REFERRED TO IN
SUBSECTION 5.1.2:
(d) Schedule 3 hereto specifies the amount of Management Fees that (i)
were paid during each year Reference Period, and (ii) were permitted to be paid
during such Reference Period.
(e) Schedule 3 hereto specifies the following information with respect
to the ESOP:
The consolidated amount of the compensation expense(3) and relative to
the ESOP
The total amount of compensation expense allocated to the Company
The total amount of compensation expense allocated to Pfaltzgraff Corp.
The total amount of compensation expense allocated to SPC
The total amount of direct operating expenses of the ESOP
The amount of payments made by SPC to the Company in respect of debt
service prepayments on the loan made on the Closing Date
The total amount of liquidation expense of the Company
The allocations and payments made with respect to the ESOP as set forth on
Schedule 3 hereto were made in compliance with the ESOP Sharing Agreement.
4. THE FOLLOWING IS APPLICABLE TO CERTIFICATES DELIVERED PURSUANT TO
SUBSECTIONS 5.2.13 (NOTICE OF PURCHASE OF MINORITY INTEREST) AND 7.3.2(n)
(LIMITATION ON INVESTMENTS - MINORITY INTERESTS):
(a) Both before and after giving effect to the purchase of the
minority interests in a Subsidiary or Subsidiaries in respect of which this
Certificate is being delivered, no Event of Default or Potential Event of
Default exists.
- ----------------------
(3) Compensation expense is the expense related to funding share allocations in
the ESOP.
-3-
<PAGE> 451
(b) Attached as Schedule 4 are the calculations to establish
compliance with the financial covenants contained in Article 6, before and (on a
Pro Forma Basis) after giving effect to the purchase in respect of which this
Certificate is being delivered.
5. THE FOLLOWING IS APPLICABLE TO CERTIFICATES DELIVERED PURSUANT TO
SUBSECTION 7.3.3(a) (LIMITATION ON ACQUISITIONS):
(a) Both before and after giving effect to the Acquisition in
respect of which this Certificate is being delivered, no Event of Default or
Potential Event of Default exists.
(b) Attached as Schedule 5 are the calculations to establish
compliance with the financial covenants contained in Article 6 on a Pro Forma
Basis after giving effect to the Acquisition.
6. THE FOLLOWING IS APPLICABLE TO CERTIFICATES DELIVERED PURSUANT TO
SUBSECTION 7.7.2(b) (LIMITATION ON DISPOSITIONS IN GENERAL):
(a) Both before and after giving effect to the disposition in
respect of which this Certificate is being delivered, no Event of Default or
Potential Event of Default exists.
(b) Attached as Schedule 6 are the calculations to establish
compliance with the financial covenants contained in Article 6, on a Pro Forma
Basis, after giving effect to the disposition in respect of which this
Certificate is being delivered.
7. THE FOLLOWING IS APPLICABLE TO CERTIFICATES DELIVERED PURSUANT TO
SUBSECTION 7.7.2(c) (DISPOSITION TO A MINORITY HOLDER):
(a) Both before and after giving effect to the disposition in
respect of which this Certificate is being delivered, no Event of Default or
Potential Event of Default exists.
(b) Attached as Schedule 7 are the calculations to establish
compliance with the financial covenants contained in Article 6, before and (on a
Pro Forma Basis) after giving effect to the disposition in respect of which this
Certificate is being delivered.
8. THE FOLLOWING IS APPLICABLE TO CERTIFICATES DELIVERED PURSUANT TO
SUBSECTION 1.1.5 (COMMITMENT REDUCTIONS IN CONNECTION WITH CERTAIN ASSET
DISPOSITIONS) AND SUBSECTION 7.7.2(d) (SALES AND OTHER DISPOSITIONS):
-4-
<PAGE> 452
(a) Both before and after giving effect to the disposition of the
[stock] [assets] of Susquehanna Cable and its Subsidiaries in accordance with
the terms of Section 5 (h) of the Fifth Amendment to the Lenfest Agreement, and
before and after the application of the proceeds of such disposition as shown in
Schedule 8, no Event of Default or Potential Event of Default exists.
(b) Schedule 8 lists the parties to whom the proceeds of such
disposition are to be paid, pursuant to Subsection 7.7.2(d)(iv).
(c) Attached as Schedule 9 are the calculations to establish
compliance with the financial covenants contained in Article 6, before and (on a
Pro Forma Basis) after giving effect to the disposition in respect of which this
Certificate is being delivered and the application of the proceeds of such
disposition as shown in Schedule 8.
9. THE FOLLOWING IS APPLICABLE TO CERTIFICATES DELIVERED PURSUANT TO
SUBSECTION 7.1.1(f)(ii) (INDEBTEDNESS):
(a) Both before and after giving effect to the consummation of the
Lenfest Put (including any additional Indebtedness incurred in connection
therewith), no Event of Default or Potential Event of Default exists.
(b) Attached as Schedule 10 are the calculations to establish
compliance with the financial covenants contained in Article 6, before and (on a
Pro Forma Basis) after giving effect to the consummation of the Lenfest Put
(including any additional Indebtedness incurred in connection therewith).
(c) Attached as Schedule 11 are the calculations to establish
compliance with the financial covenants contained in Article 6, after giving
effect to the consummation of the Lenfest Put (including any additional
Indebtedness incurred in connection therewith and payments in respect thereof)
as of the end of the period ending one year plus one day after the consummation
of the Lenfest Put.
(d) Attached as Schedule 12 are the calculations to establish
compliance with the debt incurrence test set forth in Section 4.08 of the Senior
Subordinated Indenture.
Date: SUSQUEHANNA MEDIA CO.
By:_________________________________________
(Vice) President)(Treasurer)
-5-
<PAGE> 453
Schedule 1
(To be delivered on the Closing Date)
Section 6.1 (Interest Coverage Ratio):
Section 6.2 (Debt Service Coverage Ratio):
Section 6.3 (Consolidated Total Leverage Ratio):
Section 6.4 (Consolidated Senior Leverage Ratio):
Section 6.5 (Fixed Charge Coverage Ratio):
-6-
<PAGE> 454
Schedule 3
(To be delivered with annual and quarterly financial statements)
Section 6.1 - Interest Coverage Ratio:
Section 6.2 - Debt Service Coverage Ratio:
Section 6.3 - Consolidated Total Leverage Ratio:
Section 6.4 - Consolidated Senior Leverage Ratio:
Section 6.5 - Fixed Charge Coverage Ratio:
Section 7.4 (Restricted Payments) -
the amount of Restricted Payments that were made during the Reference
Period: $_____
the amount of Restricted Payments that were permitted to be made during
the Reference Period: $____
THE FOLLOWING INFORMATION NEED ONLY BE INCLUDED IN THE CERTIFICATES DELIVERED
ALONG WITH THE ANNUAL FINANCIAL STATEMENTS REFERRED TO IN SUBSECTION 5.1.2:
Section 7.8 (Management Fees) -
The amount of Management Fees that were paid during each year Reference
Period: $___
The amount of Management Fees were permitted to be paid during such
Reference Period: $___
-7-
<PAGE> 455
Section 7.14.2 (ESOP Payments) -
1. Consolidated amount of the compensation expense(4) relative
to the ESOP: $____________.
2. Total amount of compensation expense allocated to the Company:
$____________.
3. Total amount of compensation expense allocated to Pfaltzgraff
Corp.: $___________.
4. Total amount of compensation expense allocated to SPC:
$__________.
5. Total amount of direct operating expenses of the ESOP:
$___________.
6. Amount of payments made by SPC to the Company in respect of
debt service on the loan made on the Closing Date:
$_____________.
7. Total amount of liquidation expense of the Company:
$___________.
__________________
(4) Compensation expense is the expense related to funding share allocations
in the ESOP.
-8-
<PAGE> 456
Schedule 4
(Purchase of Minority Interests)
Before Giving Effect to the Purchase
Section 6.1 - Interest Coverage Ratio:
Section 6.2 - Debt Service Coverage Ratio:
Section 6.3 - Consolidated Total Leverage Ratio:
Section 6.4 - Consolidated Senior Leverage Ratio:
Section 6.5 - Fixed Charge Coverage Ratio:
After Giving Effect to the Purchase
Section 6.1 - Interest Coverage Ratio, on a Pro Forma Basis:
Section 6.2 - Debt Service Coverage Ratio, on a Pro Forma Basis:
Section 6.3 - Consolidated Total Leverage Ratio, on a Pro Forma Basis:
Section 6.4 - Consolidated Senior Leverage Ratio, on a Pro Forma Basis:
Section 6.5 - Fixed Charge Coverage Ratio:
-9-
<PAGE> 457
Schedule 5
(Acquisitions)
Section 6.1 - Interest Coverage Ratio, on a Pro Forma Basis:
Section 6.2 - Debt Service Coverage Ratio, on a Pro Forma Basis:
Section 6.3 - Consolidated Total Leverage Ratio, on a Pro Forma Basis:
Section 6.4 - Consolidated Senior Leverage Ratio, on a Pro Forma Basis:
Section 6.5 - Fixed Charge Coverage Ratio:
-10-
<PAGE> 458
Schedule 6
(Dispositions)
Section 6.1 - Interest Coverage Ratio, on a Pro Forma Basis:
Section 6.2 - Debt Service Coverage Ratio, on a Pro Forma Basis:
Section 6.3 - Consolidated Total Leverage Ratio, on a Pro Forma Basis:
Section 6.4 - Consolidated Senior Leverage Ratio, on a Pro Forma Basis:
Section 6.5 - Fixed Charge Coverage Ratio:
-11-
<PAGE> 459
Schedule 7
(Disposition to Minority Holder)
Before Giving Effect to the Disposition
Section 6.1 - Interest Coverage Ratio:
Section 6.2 - Debt Service Coverage Ratio:
Section 6.3 - Consolidated Total Leverage Ratio:
Section 6.4 - Consolidated Senior Leverage Ratio:
Section 6.5 - Fixed Charge Coverage Ratio:
After Giving Effect to the Disposition
Section 6.1 - Interest Coverage Ratio, on a Pro Forma Basis:
Section 6.2 - Debt Service Coverage Ratio, on a Pro Forma Basis:
Section 6.3 - Consolidated Total Leverage Ratio, on a Pro Forma Basis:
Section 6.4 - Consolidated Senior Leverage Ratio, on a Pro Forma Basis:
Section 6.5 - Fixed Charge Coverage Ratio:
-12-
<PAGE> 460
Schedule 8
(Application of Proceeds of a Disposition pursuant to Lenfest Note)
1. Proceeds Used to Repay Senior Secured Obligations: _____________________.
2. Proceeds Used to Prepay or Repay the Lenfest Note: _____________________.
3. Proceeds to be Retained by Company or a Subsidiary: _____________________.
-13-
<PAGE> 461
Schedule 9
(Disposition pursuant to Lenfest Note)
Before Giving Effect to the Disposition
Section 6.1 - Interest Coverage Ratio:
Section 6.2 - Debt Service Coverage Ratio:
Section 6.3 - Consolidated Total Leverage Ratio:
Section 6.4 - Consolidated Senior Leverage Ratio:
Section 6.5 - Fixed Charge Coverage Ratio:
After Giving Effect to the Disposition
Section 6.1 - Interest Coverage Ratio, on a Pro Forma Basis:
Section 6.2 - Debt Service Coverage Ratio, on a Pro Forma Basis:
Section 6.3 - Consolidated Total Leverage Ratio, on a Pro Forma Basis:
Section 6.4 - Consolidated Senior Leverage Ratio, on a Pro Forma Basis:
Section 6.5 - Fixed Charge Coverage Ratio:
-14-
<PAGE> 462
Schedule 10
(Consummation of the Lenfest Put)
Before Giving Effect to the Consummation of the Lenfest Put
Section 6.1 - Interest Coverage Ratio:
Section 6.2 - Debt Service Coverage Ratio:
Section 6.3 - Consolidated Total Leverage Ratio:
Section 6.4 - Consolidated Senior Leverage Ratio:
Section 6.5 - Fixed Charge Coverage Ratio:
After Giving Effect to the Consummation of the Lenfest Put
Section 6.1 - Interest Coverage Ratio, on a Pro Forma Basis:
Section 6.2 - Debt Service Coverage Ratio, on a Pro Forma Basis:
Section 6.3 - Consolidated Total Leverage Ratio, on a Pro Forma Basis:
Section 6.4 - Consolidated Senior Leverage Ratio, on a Pro Forma Basis:
Section 6.5 - Fixed Charge Coverage Ratio:
-15-
<PAGE> 463
Schedule 11
(Consummation of the Lenfest Put)
Calculations as of the End of the Period Ending One Year and One Day after
Consummation of the Lenfest Put, After Giving Effect Thereto:
Section 6.1 - Interest Coverage Ratio, on a Pro Forma Basis:
Section 6.2 - Debt Service Coverage Ratio, on a Pro Forma Basis:
Section 6.3 - Consolidated Total Leverage Ratio, on a Pro Forma Basis:
Section 6.4 - Consolidated Senior Leverage Ratio, on a Pro Forma Basis:
Section 6.5 - Fixed Charge Coverage Ratio, on a Pro Forma Basis:
-16-
<PAGE> 464
Schedule 12
(Consummation of the Lenfest Put)
[Calculations to show compliance with the debt incurrence test set forth in
Section 4.08 of the Senior Subordinated Indenture]
-17-
<PAGE> 465
EXHIBIT R
ASSIGNMENT AND ACCEPTANCE
Dated as of: ____________
Reference is made to the Credit Agreement dated as of May __, 1999 (as
amended, extended, supplemented, restated or otherwise modified from time to
time, the "Credit Agreement") by and among Susquehanna Media Co., a Delaware
corporation (the "Borrower"), the lenders party thereto (the "Lenders") and
First Union National Bank, as Agent. Capitalized terms used herein which are not
defined herein shall have the meanings assigned to such terms in, or by
reference in, the Credit Agreement. This Assignment and Acceptance is entered
pursuant to, and authorized by, Section 11.5.3 of the Credit Agreement.
_____________ (the "Assignor") and ___________ (the "Assignee") agree
as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, without recourse, as of
the Effective Date (as defined below):
a. ___% interest in and to the Revolving Credit Commitment and
Revolving Loans (including such percentage of the outstanding Swing Loans and
outstanding Letters of Credit) and the Assignor thereby retains ____% interest
therein as more fully set forth on Schedule 1A hereto; and/or
b. ___% interest in and to the Term A Loan and the Assignor
thereby retains ____% interest therein as more fully set forth on Schedule 1B
hereto; and/or
c. ___% interest in and to the Term B Loan and the Assignor
thereby retains ____% interest therein as more fully set forth on Schedule 1C
hereto.
2. The Assignor represents that the interests it has in the Credit
Agreement and Notes before and after giving effect to the assignment referred to
in paragraph 1 above are as set forth on Schedule 1A, Schedule 1B and Schedule
1C hereto.
3. The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto, other than (a) as set forth in the preceding paragraph 2, (b)
that the Assignor is the legal and beneficial owner of the interest being
assigned by it hereunder and (c) that such interest is free and clear of any
adverse claim. Without limiting the generality of the foregoing, the Assignor
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or its Subsidiaries or the
performance or
<PAGE> 466
observance by the Borrower or its Subsidiaries of any of their obligations under
the Credit Agreement or any other instrument or document furnished or executed
pursuant thereto.
4. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Sections 5.1.1 and 5.1.2
thereof and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it will, independently and without reliance upon the
Assignor or any other Lender or Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement; (d)
confirms that it is an Eligible Assignee; (e) appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under the
Credit Agreement and the other Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (f) agrees that it will perform in accordance with their terms all the
obligations which by the terms of the Credit Agreement and the other Loan
Documents are required to be performed by it as a Lender; and (g) includes
herewith (if not previously delivered) for the Agent any Note requiring
cancellation, a processing and recordation fee of $3,500 payable by the Assignor
to the Agent, and any fees representing reimbursement for counsel fees, each of
which are required by Section 11.5.3 of the Credit Agreement.
5. Subject to any required consent of the Agent and/or Borrower, the
effective date for this Assignment and Acceptance shall be as set forth in
Section 1 of Schedule 1 hereto (the "Effective Date").
6. From and after the Effective Date, (a) the Assignee shall be a party
to the Credit Agreement and the other Loan Documents to which Lenders are
parties and, to the extent provided in this Assignment and Acceptance, have the
rights and obligations of a Lender under each such agreement, and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement and the other Loan Documents.
7. From and after the Effective Date, the Agent shall make all payments
in respect of the interest assigned hereby (including payments of principal,
interest, fees and other amounts) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments for periods prior to the
Effective Date or with respect to the making of this assignment directly between
themselves.
8. Payments hereunder shall be made in accordance with the payment
instructions on Schedule 1 hereto unless otherwise specified in writing by the
payee.
<PAGE> 467
9. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE DEEMED TO BE A CONTRACT
UNDER SEAL AND SHALL BE COVERED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
ASSIGNOR:
_________________________
By: _____________________
Title:___________________
ASSIGNEE:
_________________________
By: _____________________
Title:___________________
<PAGE> 468
Acknowledged and Consented to on behalf of the Borrower:(1)
SUSQUEHANNA MEDIA CO.
By: __________________________________
Name:_________________________________
Title:________________________________
Consented to and Accepted:
FIRST UNION NATIONAL BANK
as Agent
By: __________________________________
Title _________________________________
______________________
(1) If applicable pursuant to Section 11.5.3
<PAGE> 469
SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE
1. Effective Date: ______________________
2. Payment Instructions
(a) If payable to Assignor, to the account of Assignor to:
_______________________________________________________
_______________________________________________________
ABA No.: ______________________________________________
Account Name:__________________________________________
Acct. No.: __________________________________________
Attn: _________________________________________________
Ref.: _________________________________________________
(b) If payable to Assignee, to the account of Assignee to:
_______________________________________________________
ABA No.: ______________________________________________
Account Name:__________________________________________
Acct. No.: __________________________________________
Ref.: _________________________________________________
<PAGE> 470
SCHEDULE 1A
TO
ASSIGNMENT AND ACCEPTANCE
(REVOLVING CREDIT LOANS AND REVOLVING CREDIT COMMITMENT)
1. Assignor's Interest In Revolving Credit Commitment and Revolving Loans
PRIOR to Assignment
<TABLE>
<S> <C> <C>
(a) Revolving Credit Commitment Percentage _______%
(b) Outstanding balance of Assignor's Revolving Loans $ _______
(c) Outstanding Balance of
(i) Assignor's Revolving Credit Commitment
Percentage of the Letters of Credit $ _______
(ii) Assignor's Revolving Credit Commitment
Percentage of the Swing Loans $ _______
2. Assigned Interest of Revolving Loans (from Section 1) _______%
3. Assignee's Extensions of Credit AFTER Effective Date
(a) Total Outstanding balance of
Assignee's Revolving Loans $ _______
(b) Total Outstanding balance of
Assignee's Revolving Credit
Commitment Percentage of the
Letters of Credit $ _______
(c) Total Outstanding balance of
Assignee's Revolving Credit
Commitment Percentage of the
Swing Loans $ _______
4. Retained Interest of Assignor AFTER Effective Date
(a) Retained Interest of Revolving
Credit Commitment Percentage (from Section 1) _______%
(b) Outstanding balance of Assignor's Revolving
Credit Loans $ _______
</TABLE>
<PAGE> 471
<TABLE>
<S> <C> <C>
(c) Outstanding balance of Assignor's
Revolving Credit Commitment
Percentage of Letters of Credit $ _______
(d) Outstanding balance of Assignor's
Revolving Credit Commitment Percentage
of Swing Loans $ _______
</TABLE>
<PAGE> 472
SCHEDULE 1B
TO
ASSIGNMENT AND ACCEPTANCE
(TERM A LOANS)
<TABLE>
<S> <C>
1. Assignor's Interest PRIOR to Assignment
(a) Term A Loan Commitment Percentage _______%
(b) Outstanding balance of Assignor's Term A Loan $ _______
2. Assigned Interest of Term A Loan (from Section 1) _______%
3. Assignee's Interest AFTER Effective Date
(a) Total Outstanding balance of Assignee's Term A Loan $_______
4. Retained Interest of Assignor AFTER Effective Date
(a) Retained Interest of Term A Loan
Commitment Percentage (from Section 1) _______%
(b) Outstanding balance of Assignor's Term A Loan $________
</TABLE>
<PAGE> 473
SCHEDULE 1C
TO
ASSIGNMENT AND ACCEPTANCE
(TERM B LOANS)
1. Assignor's Interest PRIOR to Assignment
<TABLE>
<S> <C> <C>
(a) Term B Loan Commitment Percentage _______%
(b) Outstanding balance of Assignor's Term B Loan $ _______
2. Assigned Interest of Term B Loan (from Section 1) _______%
3. Assignee's Extensions of Credit AFTER Effective Date
(a) Total Outstanding balance of Assignee's Term B Loan $ _______
4. Retained Interest of Assignor AFTER Effective Date
(a) Retained Interest of Term B Loan
Commitment Percentage (from Section 1) _______%
(b) Outstanding balance of Assignor's Term B Loan $________
</TABLE>
<PAGE> 1
EXHIBIT 10.2
AGREEMENT
This Agreement dated this 6th day of November, 1992, by and among
Susquehanna Cable Co., a Pennsylvania corporation with offices at 140 East
Market Street, York, Pennsylvania 17401 ("SCC" herein), and Cable TV of East
Providence, Inc. Casco Cable Television Inc., Casco Cable Television of Bath,
Inc., SBC Cable Co. and York Cable Television, Inc. (collectively
"Subsidiaries") corporations with offices at 140 E. Market Street York,
Pennsylvania and Lenfest Communications, Inc. and Lenfest York, Inc., Delaware
corporations with offices c/o Suburban Cable TV Co., Inc., 202 Shoemaker Road,
Pottstown, Pennsylvania 19464 (collectively "Lenfest" herein).
W I T N E S S E T H:
WHEREAS, Susquehanna Pfaltzgraff Co. ("Susquehanna" herein) is the
owner of all issued and outstanding voting common stock of SCC and 98.8% of the
total voting and nonvoting common stock of SCC;
WHEREAS, Susquehanna is contemplating the formation of a new subsidiary
("Susquehanna Media") which will become the owner of all the issued and
outstanding voting common stock of SCC;
<PAGE> 2
WHEREAS, SCC owns at least 80% of the issued and outstanding stock of
its Subsidiaries and will own 100% at Closing (as hereinafter defined in Section
3);
WHEREAS, Lenfest has requested and SCC has agreed to recapitalize SCC
and its subsidiaries by borrowing One Hundred Nine Million Dollars
($109,000,000) of debt in conjunction with the refinancing of its parent,
Susquehanna ("Refinancing" herein);
WHEREAS, SCC and its Subsidiaries desire to issue equity interests in
SCC and its Subsidiaries; and
WHEREAS, Lenfest desires to acquire equity interests in SCC and the
Subsidiaries in exchange for capital contributions of cash and the cable
television systems in Red Lion and Mount Wolf, Pennsylvania ("Red Lion System"
herein) and will further provide SCC the opportunity to purchase cable
television programming for the systems owned by its Subsidiaries;
NOW, THEREFORE, in consideration of the promises and covenants
contained herein, the parties intending to be legally bound, mutually agree as
follows:
SECTION 1. SUBSCRIPTION AND ISSUANCE OF NEW SHARES. Subject to the terms and
conditions set forth in this Agreement, Lenfest shall subscribe for and SCC and
its Subsidiaries shall issue the
2
<PAGE> 3
following minority percentage equity interests ("Equity Interests") in SCC and
its Subsidiaries:
<TABLE>
<CAPTION>
% Equity Shares to Be
Company Interest Issued to Lenfest
- ------- -------- -----------------
<S> <C> <C>
SCC 14.9% 132,886.64
York Cable Television, Inc. 14.1% 8.21
Casco Cable Television, Inc. 14.1% 47.27
Casco Cable Television of
Bath, Inc. 14.1% 26.26
Cable TV of East Providence, Inc. 14.1% 787.89
SBC Cable Co. 14.1% 5,909.20
</TABLE>
SECTION 2. PURCHASE PRICE AND CONTRIBUTION OF RED LION SYSTEM.
(a) Lenfest shall pay at Closing by transfer to each appropriate payee, which
shall be allocated to the acquisition of the various equity interests the
amounts as follows:
<TABLE>
<CAPTION>
Company Purchase Price
- ------- --------------
<S> <C>
SCC $10,213,000
Casco Cable Television, Inc. 100,000
Casco Cable Television of Bath, Inc. 50,000
Cable TV of East Providence, Inc. 387,000
SBC Cable Co. 250,000
</TABLE>
(b) Lenfest shall transfer or cause the transfer of the assets and franchises of
the Red Lion System ("Assets" herein) used or useful in the operation of the Red
Lion System to York Cable Television, Inc., ("York Cable" herein) said Assets
having an agreed upon value of the cost to acquire the Red Lion System. Lenfest
shall contribute sufficient cash to York Cable to acquire the Assets at no cost
to York Cable. In the event that the Assets are acquired at a cost of less than
$13,000,000, Lenfest shall compensate York Cable and SCC for any additional
taxes
3
<PAGE> 4
caused by the loss of depreciation associated with the difference in the
purchase price and $13,000,000. If Lenfest is unable to transfer the Assets to
York Cable at Closing or at the Extended Red Lion Closing, Lenfest shall convey
to York Cable in lieu of the Assets, Fifteen Million Five Hundred Thousand
Dollars ($15,500,000) except as otherwise provided herein.
SECTION 3. CLOSING DATE. (a) The Closing shall take place at 10:00 a.m. on a
date mutually agreed upon by the parties which shall be within fifteen (15) days
after the satisfaction of all of the conditions precedent in this Agreement, at
SCC's offices at 140 E. Market Street, York, Pennsylvania. If Closing does not
occur prior to March 31, 1993, either party may terminate this Agreement,
provided, however, that if a party's breach of this Agreement has prevented the
consummation of the transactions contemplated hereby, that party shall not be
entitled to terminate this Agreement.
(b) Extended Red Lion Closing. Notwithstanding Section 3(a) above, in the event
that Lenfest is unable to transfer or cause the transfer of the Assets as
contemplated in Section 2(b) above on the Closing Date contemplated in Section
3(a), above, but except as provided in Section 7(a) below, then the Closing Date
for the Assets shall be extended to June 30, 1993 without penalty. If the
Extended Red Lion Closing occurs subsequent to June 30, 1993, Lenfest shall pay
$75,000 per month on the fifteenth of the month for each additional month
(subject to proration for a partial month) that Lenfest is unable to have the
4
<PAGE> 5
Assets conveyed to York Cable. The $75,000 per month payments shall continue
until the Assets are conveyed to York Cable or Lenfest has determined in good
faith that it cannot cause the transfer of the Assets and has made the cash
payment in lieu thereof. If Lenfest does not cause the transfer of the Assets on
or before December 31, 1993, Lenfest shall pay to York Cable in lieu of the
Assets and in consideration of the Equity Interest in York Cable Fifteen Million
Five Hundred Thousand Dollars ($15,500,000) on December 31, 1993 as set forth in
Section 2(b) of this Agreement except as otherwise provided herein. The shares
of York Cable will be issued to Lenfest on the date of the Extended Red Lion
Closing.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SCC. As an incentive to Lenfest to
enter into this Agreement and to consummate the transactions contemplated
herein, SCC represents and warrants to Lenfest as follows:
(a) Subsistence. Each of SCC and the Subsidiaries are corporations duly
organized, validly existing and in good standing under the laws of their
respective states of incorporation and duly qualified to do business as a
foreign corporation in any state where such qualification would be required.
(b) Corporate Authority. Each of SCC and its Subsidiaries has the corporate
power and authority to enter into and perform its obligations under this
Agreement and SCC and its Subsidiaries
5
<PAGE> 6
will not take any action to impair such power and authority between the date
hereof and Closing. Neither the execution nor the delivery of the Agreement nor
the consummation of the transactions contemplated herein, nor compliance with or
fulfillment of the terms and provisions hereof, will conflict with or result in
a breach or violation of the terms, conditions or provisions of, or constitute a
default under (i) the articles of incorporation or bylaws of SCC or the
Subsidiaries, (ii) any instrument, agreement, judgement, order, award, decree to
or by which SCC or the Subsidiaries are a party or are bound and which is
material to their respective financial condition other than loan agreement with
current lenders which will be cured by the Refinancing to close
contemporaneously with the Closing or (iii) subject to compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, ("HSR Act") if applicable,
and subject to approvals, if any, required under existing governmental
franchises, permits, licenses and authorizations, any statute, law, rule or
regulation to which SCC or its Subsidiaries are subject except various
franchising authorities listed on Schedule 1. The execution, delivery and
performance of this Agreement by SCC or the Subsidiaries have been duly
authorized by all requisite corporate action, and this Agreement constitutes a
valid and binding agreement of SCC and its Subsidiaries enforceable against SCC
and its Subsidiaries in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency or similar laws
affecting
6
<PAGE> 7
creditor's rights generally and by general principles of equity, including,
without limitation, the availability of equitable remedies.
(c) Capital Structures of SCC and the Subsidiaries. The authorized, issued and
outstanding capital of SCC and the Subsidiaries are as follows:
<TABLE>
<CAPTION>
To be
Shares Outstanding Par
Company Authorized at Closing Value
- ------- ---------- ---------- -----
<S> <C> <C> <C>
SCC Class A 1,000,000 750,000 $ 1.00
Class B 100,000 8,970 $ 1.00
York Cable Television, Inc. 100 50 $ 1.00
Casco Cable Television, Inc. 1,000 288 $100.00
Casco Cable Television of
Bath, Inc. 2,000 160 None
Cable TV of East Providence
Inc. 10,000 4,800 $ 1.00
SBC Cable, Inc. 100,000 36,000 $ 1.00
</TABLE>
All of the shares of stock of SCC and the Subsidiaries are fully paid, validly
issued and non-assessable. Susquehanna owns 100% of the voting stock of SCC and
98.8% of all of the capital stock of SCC. SCC owns in excess of 80% of each
subsidiary. At Closing, SCC shall own 100% of the issued and outstanding stock
of the Subsidiaries. With the exception of (i) rights to purchase 2,600 shares
of Class B Nonvoting Common Stock of SCC and options to acquire an additional
5200 shares (assuming all rights to purchase 2,600 shares are exercised), (ii)
the option to purchase 12,740 shares of Class B Nonvoting Common Stock of
7
<PAGE> 8
SCC, and (iii) the right of holders of Class B stock of SCC to convert this
stock to Class A stock if 50% of the stock or assets of SCC are sold, there are
no other rights or options to acquire shares of the capital stock of SCC or any
Subsidiary, whether upon conversion of other securities or otherwise.
(d) Title to Shares. Susquehanna or Susquehanna Media with respect to SCC and
SCC with respect to the subsidiaries, will have good and indefeasible title to
the shares of capital stock it currently holds and, at Closing, will have good
and indefeasible title to all of the outstanding voting shares of SCC and its
Subsidiaries, free and clear of all liens, charges, security interests, adverse
claims, pledges, encumbrances, or restrictions of any kind. At Closing, Lenfest
will acquire good and valid title to the Equity Interests being issued by SCC
and its Subsidiaries fully paid and non-assessable and free and clear of any
lien or encumbrance.
(e) No distribution on Shares. Neither SCC nor any of the Subsidiaries have
since December 31, 1991, purchased or redeemed (other than redemption of
minority interests in the Subsidiaries or SCC) any of its capital stock, paid or
declared any dividend or made any other distribution in respect of its capital
stock. No dividends or distributions will be declared or paid from the date
hereof to Closing except that SCC and the Subsidiaries will declare dividends of
approximately Eighty Million Dollars ($80,000,000) in connection with the
refinancing contemplated by this transaction.
8
<PAGE> 9
(f) No Material Adverse Changes. Except as otherwise disclosed in this
Agreement, or in other information provided to Lenfest by SCC, and the
refinancing of SCC and Susquehanna by which SCC will have intercompany debt in
the amount of $109,000,000, there have been no material Adverse changes in the
assets or liabilities, or in the condition, financial or otherwise, of SCC or
the Subsidiaries.
(g) No Material Undisclosed Liabilities. To the best knowledge of SCC, after due
inquiry and investigation, neither SCC nor any of the Subsidiaries is subject to
any material liability, absolute or contingent, which is not reflected in, or
which is substantially in excess of the amounts shown or reserved for in, the
balance sheet of SCC dated December 31, 1991, or which is not otherwise
disclosed in this Agreement, other than liabilities of the same nature as those
set forth in such balance sheet or disclosed herein and reasonably incurred in
the ordinary course of its business.
(h) No Material Default or Litigation. To the best knowledge of SCC, after due
inquiry and investigation, neither SCC nor the Subsidiaries are in default and
no condition exists which with notice or the passage of time would constitute a
default under any agreement, lease or other obligations to which it is a party,
which default, if acted upon by the party or parties legally entitled to do so,
would have a material adverse effect on the financial condition of SCC or the
Subsidiaries other than defaults in certain loan agreements with its current
lenders
9
<PAGE> 10
which will be cured by the Refinancing completed contemporaneously with Closing.
Except as set forth in Schedule 2, there are no lawsuits, proceedings, claims or
governmental investigations or demands pending or, to the best knowledge of SCC
after due inquiry and investigation threatened against SCC or its Subsidiaries
or any of the properties or businesses of SCC or the subsidiaries. None of the
lawsuits, if adversely decided, would have a material adverse effect on the
financial condition of SCC or seek to restrain, prohibit or delay consummation
of the transactions contemplated hereby. There are no outstanding decrees,
orders, judgments or stipulations to which SCC or its Subsidiaries are subject
which materially adversely affect the financial condition of SCC or its
Subsidiaries.
(i) Tax Liabilities. All income, excise, property, sales and other tax
returns which are required to be filed by or on behalf of SCC and its
Subsidiaries up to and including the date hereof have been filed by SCC, are
true and correct to the best of SCC's knowledge and all taxes which have become
due pursuant to such returns, or pursuant to any assessment which has become
payable have been paid. No extension of the time for filing a return with
respect to SCC is currently in effect except that Susquehanna had obtained an
extension of time to file its consolidated federal income tax return and certain
state tax returns for the year ended December 31, 1991 which returns have been
filed. Such returns for periods ended on or before December 31, 1991, and the
returns to be filed by or on behalf of the SCC
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and its Subsidiaries with respect to any interim period thereafter, and any
final returns required to be filed on or before the Closing Date, are or will be
true and correct in all material respects and, to the extent that any taxable
liability has accrued but has not yet become payable, the amounts accrued and
reflected in the 1991 Financial Statements or referred to in the notes thereto
are sufficient for the payment of all accrued, unpaid or deferred income,
excise, property and sales taxes (including any interest or penalties) for the
year ended December 31, 1991 and all prior fiscal years. SCC and the
Subsidiaries are not currently being audited by the Internal Revenue Service or
any state or local taxing authority and have received no notice regarding any
pending audit or investigation.
(j) Insurance. SCC and the Subsidiaries maintain policies of fire, casualty and
other liability and other forms of insurance in such amounts and against such
risks and losses as are reasonable for their businesses and properties. SCC and
the Subsidiaries will keep such insurance in full force and effect through the
Closing Date.
(k) Corporate Records. The corporate minute books of SCC and the Subsidiaries
contain all the minutes of meetings of directors and shareholders of SCC and the
Subsidiaries, and the share certificate books of SCC and the Subsidiaries are
complete and accurate in all material respects.
(l) Conduct of Business. Since December 31, 1991, SCC and the Subsidiaries have
(a) conducted their business in the ordinary
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course; (b) not been engaged in any significant labor disputes; (c) not
experienced any material change in their condition (financial or otherwise),
assets, liabilities, properties, or business, including any damage, destruction
or loss (whether or not covered by insurance) to property by fire or other
casualty, except changes in the ordinary course of their business, none of which
have been material; (d) not increased the compensation, bonuses, pensions or
profit sharing payable to their employees other than in the ordinary course of
business, or paid or declared any dividend or other distribution to their
shareholders except as provided in Schedule 4; (e) not placed a lien on any of
their assets, except in the ordinary course of business; (f) not sold, lent,
abandoned or otherwise disposed of any of their assets other than in the
ordinary course of business and other than a cable system serving approximately
1,300 subscribers in Wilkinson and Amite counties, Mississippi; (g) not
incurred, created or assumed any indebtedness, liability or obligation not in
the ordinary course of business; (h) not entered into any material agreement not
in the ordinary course of business and which has not been at arm's length rates
and terms; and (i) not acquired or disposed of any fixed assets made or
contracted for any capital expenditures or settled or discharged any balance
sheet receivable for less than the stated amount thereof, other than in the
ordinary course of business.
(m) Compliance with Laws. SCC and the Subsidiaries have complied in all material
respects with and are in material compliance with
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all federal, state and local statutes, laws, judgments, orders or decrees
applicable to it, and there does not exist any basis for any claim of default
under or violation of any such statute, law, judgment, order or decree except
such defaults or violations, if any, that in the aggregate do not and will not
materially and adversely affect SCC and the Subsidiaries.
(n) Indebtedness. At Closing, SCC will have consolidated indebtedness of One
Hundred Nine Million Dollars ($109,000,000) owing to Susquehanna Media which
shall be evidenced by a grid note payable in seven years with no predetermined
amortization. Such inter-company debt will have an interest rate equal to the
weighted average interest rate of Susquehanna Media's third party borrowings;
provided, however, that at Closing such rate shall not exceed nine and one-half
percent (9-1/2%) per annum.
(o) Financial Statements. The financial operating statements (pretax) of SCC and
its Subsidiaries dated December 31, 1991, and for the period through August 31,
1992 and which have been provided to Lenfest have been prepared in accordance
with generally accepted accounting principles consistently applied.
(p) Disclosure. No representation or warranty by SCC and its Subsidiaries or
Susquehanna, to the extent it makes any representation or warranty, in this
Agreement or any Schedule to this Agreement or any statement, list or
certificate furnished or to be furnished by SCC or its Subsidiaries or
Susquehanna, to the extent it has furnished or furnishes any list or
certificate, pursuant to this Agreement, contains or will contain any untrue
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statement of material fact, or omits or will omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading or necessary in order to provide a prospective purchaser
of the Equity Interests with proper information as to such Equity Interests.
(q) Effect of Certificates. All certificates of SCC and its Subsidiaries and
Susquehanna, to the extent Susquehanna is delivering any certificates, delivered
under this Agreement shall be deemed to be additional representations and
warranties of SCC and its Subsidiaries.
Section 5. Representations and Warranties of Lenfest.
As an inducement to SCC to enter into this Agreement and to consummate
the transactions contemplated herein, Lenfest hereby represents and warrants to
SCC as follows:
(a) Subsistence. (i) Lenfest Communications Inc. is a corporation duly organized
and validly existing under the laws of the State of Delaware; (ii) Lenfest York
is a corporation duly organized and validly existing under the laws of the State
of Delaware.
(b) Corporate Authority. Lenfest has, the corporate power and authority to enter
into and perform its obligations under this Agreement, to acquire the Equity
Interests pursuant to this Agreement and to do all acts and things required to
be done by it under this Agreement except that Lenfest is required to provide
notice to certain banks prior to execution of this Agreement which Lenfest has
done and further it will not take any action to impair such power and authority
between the date hereof and the
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Closing. The execution, delivery and performance of this Agreement by Lenfest
has been duly authorized by all requisite corporate action. Neither the
execution nor the delivery of this Agreement nor the consummation of the
transactions contemplated hereby, nor compliance with, nor fulfillment of, the
terms and provisions hereof will conflict with or result in a breach or
violation of the terms, conditions or provisions of or constitute a default and
no condition exists which with notice or the passage of time would constitute a
default under (i) the articles of incorporation or bylaws of Lenfest, (ii) any
instrument, agreement, mortgage, judgment, order, award, or decree to which
Lenfest is a party or by which it is bound, or (iii) subject to compliance with
the HSR Act, if applicable, any statute, law, rule or regulation to which
Lenfest is subject. This Agreement, when executed and delivered by Lenfest, will
constitute a valid and binding agreement of Lenfest enforceable against Lenfest
in accordance with its terms, except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity, including,
without limitation, the availability of equitable remedies.
(c) Financing. Lenfest has sufficient financing available to it to pay the cash
portion of the purchase price in full at Closing.
(d) Investment Intent. Lenfest is acquiring the Equity Interests for its own
account for investment and not with a view to the public sale or distribution of
any part thereof.
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(e) Red Lion System. Specifically with reference to the Red Lion System, Lenfest
will use its best efforts to cause the owner of the Red Lion System ("Seller")
to transfer to York Cable the Assets with the following representations and
warranties and covenants:
(i) Title to Red Lion Assets. Seller will convey good and marketable
title to all of the material Assets and the Assets are free and clear of all
security interests, liens and encumbrances of any kind or nature, except for any
property taxes not delinquent.
(ii) Required Consent. With respect to the Red Lion System, Seller has
obtained all material governmental franchises, approvals, licenses, consents and
other authorizations, and has entered into all other agreements and obtained all
other approvals and consents necessary and required for York Cable to operate
the Red Lion System and to own, lease, use, and operate, as the case may be, the
Assets at the places and in the manner in which the Red Lion System is presently
conducted and will be conducted on the Closing Date or Extended Red Lion Closing
Date (collectively, the "Required Consents"), unless SCC agrees that any
Required Consent need not be obtained until after the Closing Date or Extended
Red Lion Closing Date.
(iii) CATV Instruments. All intangible assets including but not limited
to channel distribution rights owned, leased, used or held for use by Seller,
franchises, pole attachment rights, leases, license, easements, crossing permits
and service
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agreements (the "CATV Instruments") are currently in full force and effect and
are valid under all applicable federal, state, and local laws. Seller is not in
violation or default under any CATV Instrument. There is no material legal
action, governmental proceeding or investigation, pending or threatened, for the
purpose of modifying, revoking, terminating, suspending, cancelling, or
reforming any CATV Instrument. Seller is in material compliance with other
applicable requirements of all governing or regulatory authorities (including
the FCC and the Register of Copyrights) relating to the CATV Instruments,
including, without limitation, all requirements relating to notifications,
filing, reporting, posting, and maintenance of logs and records. Seller holds
valid and continuing CATV Instruments, rights-of-way, rights of entry, permits,
and other rights and authorizations necessary to enable it to operate the Red
Lion System. Seller is in compliance in all material respects with the terms and
conditions of all such CATV Instruments, rights-of-way, rights of entry,
permits, and other rights and authorizations. No franchise will restrict York
Cable's ability to change any rates charged for cable television services
provided that such ability may be affected by the Cable Television Consumer
Protection and Competition Act of 1992. There is no pending assertion or claim
that operations pursuant to any franchise have been improperly conducted or
maintained. A request for renewal has been filed under Section 626 of the Cable
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Communications Policy Act of 1984 with respect to all franchises expiring within
36 months of the date of this Agreement.
(iv) Copies of CATV Instruments. True, complete, and correct copies of
the CATV Instruments and any amendments to the CATV Instruments to the date of
this Agreement will be delivered by Seller to SCC at the Closing or Extended Red
Lion Closing.
(v) FCC Compliance. The Red Lion System is duly authorized under
applicable CATV Instruments and FCC rules, regulations, and orders to distribute
the FM signals and off-air television broadcast signals presently being carried
to the Subscribers of the Red Lion System, and is licensed to operate all the
facilities, including, without limitation, any business radio and any cable
television relay service ("CARS") system, being operated by the Red Lion System.
The operation of the Red Lion System and of any FCC-licensed facility used in
conjunction with the operation of the Red Lion System has been, and is, in
compliance with the FCC's rules and regulations, and Seller has received no
notice, and otherwise has no reason to know, of any claimed default or violation
with respect to the foregoing. The Red Lion System has complied with its
obligations in connection with the Cumulative Leakage Index (CLI) under
applicable FCC rules and regulations including, without limitation, (i)
purchasing adequate CLI monitoring equipment, (ii) maintaining appropriate log
books and other recordkeeping, and (iii) correcting any radiation leakage
discovered in connection with its monitoring obligations under such FCC rules
and regulations.
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The Red Lion System complies with CLI standards under applicable FCC rules and
regulations. All required reports with the FCC have been filed.
(vi) Patents, Trademarks. and Copyrights. All requisite filings and
payments with the Register of Copyrights have been made and the Red Lion System
is otherwise in compliance with all applicable rules and regulations of the
Copyright Office. Seller has allocated revenues with respect to the payment of
copyright fees. Seller agrees to deliver to SCC copies of all current and past
reports and filings necessary to support compliance with FCC and Copyright rules
and regulations, as SCC shall request. There are no patents, patent rights,
trademarks, or copyrights and the Red Lion System is not a party to any license
or royalty agreement with respect to any patent, trademark, or copyright except
for licenses respecting program material and obligations under the Copyright Act
of 1976 applicable to CATV systems generally. The Assets are free of the
rightful claim of any third party by way of copyright infringement or the like.
The manner in which program services are offered over the Red Lion System will
not result in material additional reportable gross receipts under applicable
rules and regulations of the Copyright office.
(vii) Assets. All Assets are in good operating condition and repair,
ordinary wear and tear excepted and except as set forth in the purchase
agreement with Seller. None of the buildings, structures, or appurtenances used
in the Red Lion
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System violates applicable laws, ordinances, codes, regulations or restrictive
covenants, the enforcement of which would involve excessive cost to correct,
would detract from their value, or would interfere with their use. Except as set
forth in any of the Schedules, all facilities of the Red Lion System are
properly located and comply with applicable laws and regulations. The
distribution facilities of the Red Lion System do not constitute a trespass,
prohibited encumbrance, or illegal occupation of the land of any third person.
All cable used is coaxial, and, except for such conditions as might be expected
for a cable system of its age and geographic location, is water-tight and
properly joined and connected. The Red Lion system and the Assets are suitable
for continued use in the manner in which they are presently operated without the
need for repairs or replacement. Seller maintains insurance on its Red Lion
System in amounts and of such a nature and with insurers as is sufficient to
protect and save it harmless from casualty loss, and shall keep such policies in
such amounts duly in force until the Extended Red Lion Closing.
(viii) Litigation and Violations. There is no litigation at law, in
equity, or in any other proceeding or investigation pending or to Seller's
knowledge, threatened against, or which may adversely affect Seller, or any
judgment, decree, order, award or other decision which could have any adverse
effect on Seller's Red Lion System, might impair the quality of title to the
Assets, or might adversely affect the rights, title, or
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interest of Seller and Seller does not know of any basis for such litigation or
proceedings. Any liabilities and costs arising from such litigation shall be
the responsibility of Seller. Seller is not in default in any way with respect
to any order, writ, injunction, or decree of any court or federal, state,
municipal, or other governmental department, commission, board, bureau, agency,
or instrumentality which relates specifically to the operation of its Red Lion
System, and Seller has complied in all material respects with all laws, rules,
or regulations applicable to its Red Lion System and its operation by Seller.
(ix) Tax Returns; Other Reports. Seller has duly and timely filed in
proper form all federal, state, local, and foreign income, franchise, sales,
use, property, excise, payroll and other tax returns and all other reports
(whether or not relating to taxes) required to be filed by law with the
appropriate governmental authority. All taxes, fees, and assessments of whatever
nature due or payable by Seller pursuant to said returns, reports, or otherwise,
have been paid. There are no tax audits pending and no outstanding agreements of
or waivers extending the statutory period of limitations applicable to any
federal, state, or local income tax return for any period.
There are no outstanding taxes, fees or assessments against the Red
Lion System or its Assets as of the Closing or Extended Red Lion Closing.
(x) Bulk Sales. Neither the sale and transfer of the Assets pursuant
to this Agreement, nor York Cable's ownership,
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possession, or use of the Assets from and after the Closing because of such sale
and transfer, will result in or be subject to: (a) any law pertaining to bulk
sales or transfers or fraudulent conveyances which might make such sale or
transfer or any part thereof ineffective as to creditors of or claimants against
Seller; or (b) the imposition of any liability upon York Cable for appraisal
rights or any other liability of any nature whatsoever owing to any shareholder
of Seller or any other person which has not been expressly assumed by York Cable
under this Agreement.
(xi) Employment Matters. (A) At the Closing or Extended Red Lion
Closing, Seller shall provide a true and complete list of names and positions of
all employees of Seller's Red Lion System. Upon request by York Cable, Seller
will provide York Cable with current hourly wages or monthly salary and other
compensation amounts for all laws relating to the employment of labor,
including, without limitation, the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and those relating to wages, hours, collective
bargaining, unemployment insurance, worker's compensation, equal employment
opportunity and the payment and withholding of taxes.
(B) The Red Lion System has no employment agreements, either written or
oral, with any person which would require York Cable to employ any person after
the Closing Date or the Extended Red Lion Closing. From and after the Closing
Date or the Extended Red Lion Closing, York Cable may, but shall have no
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obligation to offer employment to such of the current employees of the Red Lion
System as York Cable may desire. On or prior to the Closing Date or the Extended
Red Lion Closing, the Red Lion System will pay its employees all accrued
compensation, including vacation, sick pay, or other similar benefits accrued as
of the Closing Date or the Extended Red Lion Closing.
(C) The Red Lion System is not a party to any contract with any labor
organization, and neither has it agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective bargaining
unit been certified as representing any of its employees.
(D) SCC and York Cable are not required to continue any defined
benefit, defined contribution, or other employee benefit plan subject to the
jurisdiction of ERISA to which Seller is currently a party.
(E) Seller agrees to assume total responsibility for maintenance and/or
distribution of benefits accrued under any qualified plans maintained by Seller
pursuant to the plan provisions of all such plans sponsored by Seller. Neither
SCC nor York Cable will assume any liability for any such accrued benefits or
any fiduciary or administrative responsibility to account for or dispose of any
such accrued benefits maintained under any qualified plans for the benefit of
the employees of the Red Lion System.
(F) All welfare plan claims and short or long term disability plan
obligations incurred on or before the Closing or
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Extended Red Lion Closing shall remain the responsibility of Seller. Eligible
indemnity plan expenses attributable to any of the Red Lion System's covered
employees or dependents who are confined to a hospital or medical institution on
the date of the Closing will continue to be the responsibility of Seller under
Seller's applicable indemnity plan provisions until (a) such individual has been
discharged from the hospital or medical institution, and (b) the employee is
actually employed by York Cable and such employee meets York Cable's active work
requirements as described below.
(G) Current employees of the Red Lion System hired by York Cable shall
not be considered to be in the employ of York Cable until such time as they
satisfy the active work requirement of completing one full hour of active
service for York Cable.
(xii) Continuity and Maintenance of Operations. Seller shall continue
to operate the Red Lion System, shall maintain the Assets (including maintenance
of the inventories of spare equipment and parts), and shall keep all of its
Business Books, records, and files all in the ordinary course of business in
accordance with past practices, consistently applied. Seller shall not, without
prior written consent of SCC or York Cable which consent shall not be
unreasonably withheld, change the rate charged for Basic CATV Services, or Pay
TV and shall not add or delete any program services. Seller shall not sell,
transfer, assign, or permit the creation of any Security Interest on any of the
Assets, other than in the ordinary course of business,
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without prior written consent of SCC. Seller will not permit the amendment of
cancellation of any of the CATV Instruments, or any other contract or agreement
which is necessary for the operation of the Red Lion System, without the prior
written consent of SCC or York Cable. The Red Lion System shall not enter into
any contract or commitment or incur any indebtedness or other liability or
obligation of any kind relating to the Red Lion System involving an expenditure
in excess of $10,000 without the prior written consent of SCC or York Cable.
(xiii) Existing Relationships. Seller shall use its best efforts to
preserve its business as going concern concerns and to preserve existing
relationships with suppliers, customers, and others having business dealings
with Seller.
(xiv) Employees. Seller shall use its best efforts to preserve the Red
Lion System's relationship with its employees and shall pay to those employees
all salaries, commissions, and other compensation to which they are entitled for
services rendered prior to the Closing. The Red Lion System shall not, without
the prior written consent of York Cable, change the compensation of any
employees of the Red Lion System.
(f) Litigation. There is no litigation at law, equity, or in any other
proceeding or investigation pending or to Lenfest's knowledge threatened which
may adversely affect Lenfest, or any judgment, decree, order or award or other
decision which might impair the ability of Lenfest to perform under this
Agreement.
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(g) Disclosure. No representation or warranty by Lenfest in this Agreement or
any statement, list, or certificate furnished or to be furnished by Lenfest
pursuant to this Agreement, contains or will contain any untrue statement of
material fact, or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading or necessary in order to provide a prospective purchaser of the Red
Lion System with proper information as to such assets and business.
(h) Effect of Certificates. All certificates of Lenfest delivered under this
Agreement shall be deemed to be additional representations and warranties of
Lenfest.
SECTION 6. CONDUCT PENDING CLOSING.
(a) Hart-Scott-Rodino Filings. Each of the parties will use its best efforts to
promptly comply with any applicable requirements under the HSR Act, as amended,
and all applicable rules and regulations promulgated thereunder, relating to
filing and furnishing of information to the Federal Trade Commission ("FTC") and
the Antitrust Division of the Department of Justice ("DOJ"). Any filing fees
required to be paid under the HSR Act shall be paid 50 percent by Lenfest and 50
percent by SCC. SCC shall not be responsible for any fees due on Lenfest's
transaction with Seller. The parties' actions shall include, without limitation,
(i) preparing and submitting or causing to be prepared and submitted all
documents required to be filed under the HSR Act by
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the parties, or by any other person or entity which is part of the same "Person"
(as that term is defined in the HSR Act); and (ii) coordinating the preparation
and submission of such filings (including exchanging drafts thereof, but
deleting from such exchanged drafts any confidential or proprietary information)
so as to submit all required filings to the FTC and DOJ at substantially the
same time and to avoid errors or inconsistencies, particularly with respect to
the description of the transaction. If either the FTC or DOJ issues a request
for additional information, the parties shall use reasonable efforts to promptly
respond to such request. Notwithstanding anything to the contrary contained
herein, if the consummation of the transactions contemplated hereby is
challenged by the FTC, the DOJ, or any agency or instrumentality of the federal
government by an action to stay or enjoin such consummation, then either party
shall have the right to terminate this Agreement at any time.
(b) Access to Premises and Records. Between the date of execution and delivery
of this Agreement and the Closing Date, SCC and the Subsidiaries shall give to
Lenfest and its authorized representatives full access at reasonable times to
all the premises and books and records of SCC and the Subsidiaries, and Lenfest
shall furnish to SCC and its authorized representatives full access at
reasonable times to all the premises and books and records of the Red Lion
System at such time as Lenfest has access to such books and records.
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(c) Leased Equipment. Unless York Cable agrees to assume all reasonable
equipment and office leases for the Red Lion System, Lenfest shall pay off the
remaining balances on any leases used in operating the Red Lion System and
deliver title to such equipment free and clear of all claims, liens, and other
encumbrances to York Cable at the Closing.
(d) Approvals. York Cable and Lenfest shall use their best efforts and shall
cooperate with one another to obtain all approvals and consents required to
transfer the Assets and the Equity Interests; provided, however, that best
efforts shall not require Lenfest or York Cable to undertake any extraordinary
or unreasonable measures to obtain such approvals and consents, including,
without limitation, the initiation or prosecution of legal proceedings or the
payment of fees in excess of normal and usual filing and processing fees, if
any.
SECTION 7. MATERIALITY OF WARRANTIES. (a) With respect to the Red Lion System,
the warranties and representations set forth in Section 5(e), (i), (ii), (iii)
limited to the third and fourth sentences, (v), (vii) limited to the last
sentence, (viii), (xi) (D) and (F) shall be considered material warranties. To
the extent that said warranties are not true and correct in all material
respects, York Cable shall not be obligated to accept the transfer of the Assets
and may accept, at its option, $14,000,000 in exchange for the Equity Interest
in York Cable. (b) To the extent that the warranties and representations in
Section 5(e) other than those specifically set forth above are
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not true and correct in all material respects, York Cable shall nevertheless be
obligated to accept the transfer of the Red Lion System in consideration of the
issuance of the Equity Interest in York Cable to Lenfest and York Cable shall be
responsible for any costs necessary to make the warranties and representations
true and correct up to $50,000 in the aggregate and Lenfest shall be responsible
for any costs in excess of $50,000. The customary proration adjustments between
Seller and York Cable for the Red Lion System shall not be counted against the
$50,000 amount. Prorations for the Red Lion System will be made between Seller
and York Cable and Lenfest will not be required to contribute additional cash on
account of subscriber prepayments for service or converter deposits. If Lenfest
buys the accounts receivables from Seller, York Cable will reimburse Lenfest for
its cost in obtaining such receivables excluding receivables which are more than
60 days past due.
SECTION 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF LENFEST. The obligations of
Lenfest under this Agreement shall, at the option of Lenfest, be subject to the
fulfillment, on or prior to the Closing Date, of the following conditions:
(a) Each of the representations and warranties of SCC and its
Subsidiaries and Susquehanna, to the extent it made any, contained in this
Agreement shall be true and correct in all material respects on the Closing as
though made at Closing and Susquehanna and SCC shall furnish at Closing a
certificate to that effect.
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(b) Between the date hereof and the Closing, there shall have been no
material adverse change in the affairs, assets, liabilities, conditions
(financial or otherwise) of SCC or its Subsidiaries, other than any adverse
change occurring as a result of any change in any Federal government legislation
or regulation affecting the cable television industry generally.
(c) Certified Resolutions of the shareholders and Board of Directors of
Susquehanna and SCC and its Subsidiaries evidencing authorizations and approval
of the transaction as contemplated by this Agreement.
(d) All material consents, approvals, permits and authorization of
appropriate federal, state, municipal or other governmental or administrative
bodies as may be required to permit the change of ownership of the Equity
Interests herein provided.
(e) SCC and its Subsidiaries shall have issued and delivered at the
Closing, certificates representing the Equity Interests being purchased by
Lenfest.
(f) Lenfest shall have received from counsel for SCC an opinion, dated as
of the Closing in form and substance satisfactory to Lenfest.
(g) A Shareholders Agreement will have been executed by SCC incorporating
the provisions of Sections 13, 14, 15, 16, 17 and 18 of this Agreement in form
and substance satisfactory to Lenfest.
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(h) No action or proceeding shall have been instituted, on or prior to
Closing, to set aside or modify the authorization of the transaction provided
for in this Agreement or to enjoin or prevent its consummation.
(i) The Refinancing shall have been completed to the satisfaction of
Lenfest.
(j) Susquehanna Media shall have been created and shall hold 100% of the
outstanding voting common stock of SCC and Susquehanna Radio Corp. immediately
prior to Closing.
Section 9. Conditions Precedent to Obligations of Susquehanna, SCC and its
Subsidiaries.
(a) Each of the representations and warranties of Lenfest contained in
this Agreement shall be true and correct in all material respects at the Closing
as though made at the Closing.
(b) Lenfest shall have tendered a total of Eleven Million Dollars
($11,000,000) to SCC and the Subsidiaries set forth in Section 2.
(c) Susquehanna, SCC or its Subsidiaries shall have received from counsel
for Lenfest, an opinion, dated as of the Closing in form and substance
satisfactory to SCC.
(d) York Cable shall have received executed bills of sale, deeds,
assignments or other instruments of conveyance sufficient to convey to SCC good
and marketable title to the Assets free and clear of all liens, claims or
encumbrances as of the Closing.
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(e) All of the Required Consents, shall have been obtained and delivered
to York Cable on or before Closing, except to the extent that Lenfest and York
Cable execute a memorandum at Closing specifying any Required Consent that York
Cable agrees need not be obtained until after the Closing Date. York Cable shall
have received evidence satisfactory to York Cable that the terms and conditions
of the CATV Instruments have not been and will not be substantially changed
prior to or effective with the Closing, except to the extent that York Cable has
previously agreed to such changes.
(f) Operability. The Red Lion System shall not have suffered, on or prior
to Closing, any loss, casualty, or calamity which materially adversely affects
the Assets or the Red Lion System whether or not covered by insurance.
(g) Restraint of Proceedings. No action or proceeding shall have been
instituted, on or prior to Closing, to set aside or modify the authorization of
the transaction provided for in this Agreement or to enjoin or prevent its
consummation.
(h) Consent of Franchising Authorities. SCC and its Subsidiaries shall
have obtained the consent to issue the Equity Interests from any franchising
authority from which such consent is required.
(i) No Material Adverse Change. There shall have not occurred any
material adverse change in the Assets, other than any adverse change occurring
as a result of any change in any
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Federal governmental legislation or regulation affecting the cable television
industry generally.
(j) Shareholder's Agreement. A Shareholders Agreement executed by Lenfest
incorporating the provisions of Sections 13, 14, 15, 16, 17 and 18 of this
Agreement in form and substance satisfactory to Susquehanna Media and SCC.
(k) York Cable's Examination. York Cable shall have been satisfied from
its examination of the Assets, books and records of the Red Lion System that all
of the terms and conditions of this Agreement have been complied with in all
material respects.
(l) Extended Red Lion Closing. To the extent that Lenfest is unable to
the convey or cause the conveyance of the Assets at Closing, and all of the
conditions precedent to York Cable's obligations shall be satisfied at the
Extended Red Lion Closing notwithstanding their satisfaction as of Closing.
(m) Refinancing. The Refinancing shall have been completed to the
satisfaction of SCC and its parent Susquehanna.
(n) Assignment of Purchase Agreement. The purchase agreement by and
between Lenfest and the Seller of the Assets shall be assignable to York Cable
and all warranties and representations and obligations of the Seller and all
rights of Lenfest shall inure to the benefit of York Cable.
Section 9. Other Agreement Relative to Red Lion. Lenfest shall obtain the
following agreements from Seller in substantially the following form:
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(a) Prorations (i) Appropriate adjustments to the Purchase Price
payable shall be made on a pro rata basis as of the Closing Date or Extended Red
Lion Closing Date with respect to the Assets (or as of such other date as
mutually agreed by the parties) for all prepaid expenses, accrued expenses,
prepaid income and outstanding accounts receivable for no more than two billing
cycles as shown on the Red Lion System's billing reports as of the Closing Date
or Extended Red Lion Closing, all as determined in accordance with generally
accepted accounting principles, consistently applied to reflect the principle
that all expenses and income attributable to the Red Lion System for the period
on and prior to the Closing are for the account of Seller, and all expenses and
income attributable to the Red Lion System for the period after the Closing Date
are for the account of York Cable. Seller shall receive no credit for any
outstanding accounts receivable for more than two billing cycles or for any
accounts receivable due from inactive subscribers as shown on Red Lion System's
billing reports as of the Closing. All advance payments to, or monies of, third
parties on deposit with Seller, as of the, Closing Date, relating to the Red
Lion System, including, without limitation, advance payments and deposits by
Subscribers served by the Red Lion System for converters, encoders, decoders,
CATV service and related sales, shall be retained by Seller and credited to the
account of York Cable. York Cable shall receive credit for the credit balances
of inactive Subscribers as reflected on the books and records of Seller. All
monies
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relating to the Red Lion System that are on deposit with third parties as of the
Closing Date for the account of Seller or as security for Seller's performance
of its obligations, including, without limitation, deposits on real property
leases and deposits for utilities, shall be credited to the account of Seller in
their full amounts and shall become the property of SCC.
(ii) Seller shall deliver to SCC a preliminary report (the "Preliminary
Prorations Report"), certified by Seller, in full detail, on the preliminary
determination of the adjustments referred to above, which are calculated as of
the Closing Date (or as of such other date as mutually agreed by the parties),
and any documents supporting the adjustments proposed in the Preliminary
Prorations Report at least two business days prior to closing. The Preliminary
Prorations Report shall include a complete itemized list of subscribers and of
accounts receivable relating to the Red Lion System showing sums due and their
respective aging as of the Closing Date.
(iii) Within 60 days following the Closing, Seller shall deliver to SCC a
final report (the "Final Prorations Report"), similarly certified by Seller, in
full detail, on the final determination of all adjustments which were not
calculated as of the Closing Date (or as of such other date mutually agreed by
the parties) and containing any corrections to the Preliminary Prorations
Report, including any corrections to the number of Subscribers as of the Closing
Date, and any documents supporting the adjustments proposed in the Final
Prorations Report.
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(iv) SCC shall review Seller's Final Prorations Report and if SCC
disapproves of any statement contained therein, SCC shall give Seller written
notice stating SCC's objections thereto and identifying reasons therefor within
30 days after receipt of the Final Prorations Report. If SCC makes any such
objections, the parties shall agree on the amount, if any, which is not in
dispute within 30 days after Seller's receipt of SCC's objections to the Final
Settlement Statement. Any undisputed amount shall be paid by SCC to Seller
within 90 days after the Closing Date or within three days after agreement on
the undisputed portion of the Final Prorations Report, if later. Any remaining
disputed amounts shall be determined within 30 days by a partner in a major
accounting firm with substantial cable television audit experience which is not
the auditor of either SCC or Seller and who is mutually acceptable to SCC and
Seller (the Arbitrator"), whose determination shall be final and conclusive. If
SCC and Seller cannot agree with respect to selection of the Arbitrator, SCC and
Seller each shall select an Arbitrator and those two persons so selected shall
select a third Arbitrator whose determination shall govern. Seller and SCC shall
bear equally the expenses arising in connection with such determination. The
payment required as a result of determination of all remaining disputed amounts
shall be made by the party responsible therefor to the other party within three
days after the final determination. If the payment determined hereunder by the
Arbitrator is payable by SCC to Seller, SCC also shall pay simple
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interest on such amount at the Prime Rate charged by Chase Manhattan Bank, N.A.
in effect on the Closing Date from the Closing Date to but not including the
date of payment of the amount determined by the Arbitrator hereunder. If the
payment determined hereunder by the Arbitrator is payable by Seller to SCC,
Seller also shall pay simple interest on such amount to the extent such amount
was determined by the Arbitrator to have been overpaid by SCC to Seller as a
result of resolution of any disputed amounts at the Prime Rate charged by Chase
Manhattan Bank, N.A. in effect on the Closing Date from the date on which SCC
paid to Seller the overpayment but not including the date of payment of the
amount determined by the Arbitrator hereunder.
(b) Allocation of Purchase Price. Prior to Closing or Extended Red Lion
Closing, York Cable and Seller shall agree to an allocation of the Purchase
Price for the Red Lion System and to be bound by such allocation and to file all
returns and reports with respect to the transaction contemplated by this
Agreement, including, but not limited to, all federal, state, and local tax
returns, on the basis of such allocation.
(c) Indemnification. Seller shall indemnify and hold harmless York
Cable and its shareholders, directors and officers from and against any loss,
liability, damage or expense (including attorney's fees) relating to the
ownership and operation by Seller of its Red Lion System and the Assets for the
period prior to the Extended Red Lion Closing Date.
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SECTION 10. ASSUMPTION OF LIABILITIES.
Assignment and Assumption. Seller shall assign, and York Cable shall
assume, only those of Seller's obligations with respect to the Red Lion System
as York Cable specifically agrees to assume provided that York Cable shall not
unreasonably reject Seller's obligations with respect to the Red Lion System.
Section 11. Indemnification and Hold Harmless.
(a) Lenfest's Indemnification of SCC and its subsidiaries.
(i) Lenfest agrees to indemnify and hold harmless SCC and its
Subsidiaries from and against any loss, liability, damage or expense (including
attorneys' fees) arising from any breach of any representation, warranty, or
covenant by Lenfest in this Agreement (including any Schedules and Exhibits) or
any other breach by Lenfest of this Agreement (including any Schedules and
Exhibits), including copyright infringement.
(ii) If a claim to which these indemnification provisions apply arises
out of a suit or other demand by a third party against SCC and/or its
subsidiaries, SCC and/or its Subsidiaries will cause notice of such claim to be
promptly given to Lenfest and will tender the defense of such claim to Lenfest.
The failure by SCC and/or its Subsidiaries to give Lenfest prompt notice of a
claim will not eliminate Lenfest's obligation to indemnify SCC and its
Subsidiaries to the extent required in this Section so long as Lenfest has time
to defend such claim. If Lenfest accepts defense of such claim, Lenfest will pay
all amounts resulting from such claim to the extent of the
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indemnification required in this Section. If Lenfest does not accept defense of
the claim, Lenfest will nevertheless provide reasonable cooperation to SCC and
its Subsidiaries in the defense of same, and SCC AND its Subsidiaries will
consult with Lenfest prior to effecting any settlement of such claim, but this
shall in no way limit Lenfest's indemnification obligations in this Section.
(iii) If an indemnification claim arises which does not involve a suit
or demand by a person against SCC and/or its Subsidiaries, SCC and its
Subsidiaries agree that prompt notice of such claim will be given to Lenfest.
(iv) Notwithstanding any other provision of this Agreement, SCC and
York Cable shall not have any right to indemnification hereunder (i) for any
claim asserted against Lenfest more than one year after the Closing Date, or
(ii) until all claims asserted by SCC and York Cable exceed in the aggregate the
sum of Fifty Thousand Dollars ($50,000) (the "Threshold Amount"), after which
SCC and York Cable shall be entitled to make a claim for and recover all damages
it has incurred and subsequently incurs regardless of amount, including, without
limitation, the Threshold Amount; provided, however, that the foregoing
limitations as to time and amount shall not apply to (a) claims based on fraud
or intentional misrepresentation or claims based on a failure by Lenfest to
discharge its obligations with respect to retention of liabilities not
specifically assumed by SCC and York Cable under this Agreement, which claims
may be made at any
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time within the applicable statute of limitations and in any amount, (b) claims
related to Lenfest's breach of its representation with respect to title to the
Assets contained in Section 5(e), which claims must be made within two years and
which shall not be subject to the Threshold Amount.
(b) SCC's Indemnification of Lenfest. (i) SCC agrees to indemnify and
hold harmless Lenfest from and against any loss, liability, damage, or expense
(including attorneys' fees) arising from any breach of any representation,
warranty, or covenant by Susquehanna, SCC and its Subsidiaries in this Agreement
(including any Schedules and Exhibits) or any other breach by Susquehanna, SCC
or its Subsidiaries of this Agreement (including any Schedules and Exhibits).
(ii) If a claim to which these indemnification provisions apply arises
out of a suit or other demand by a third party against Lenfest, Lenfest will
cause notice of such claim to be promptly given to SCC, and will tender the
defense of such claim to SCC. The failure by Lenfest to give SCC prompt notice
of a claim will not eliminate SCC's obligation to indemnify Lenfest to the
extent required in this Section so long as SCC shall have time to defend such
claim. If SCC accepts defense of such claim, SCC will pay all amounts resulting
from such claim to the extent of the indemnification required in this Section.
If SCC does not accept defense of the claim, SCC will nevertheless provide
reasonable cooperation to Lenfest in the defense of same, and Lenfest will
consult with SCC prior to effecting any settlement
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of such claim, but this shall in no way limit SCC's indemnification obligations
in this Section.
(iii) If an indemnification claim arises which does not involve a suit
or demand by a person against Lenfest, Lenfest agrees that prompt notice of such
claim will be given to SCC.
(iv) Notwithstanding any other provision of this Agreement, Lenfest
shall not have any right to indemnification hereunder (i) for any claim asserted
against SCC more than one year after the Closing Date, or (ii) until all claims
asserted by Lenfest exceed in the aggregate the sum of Fifty Thousand Dollars
($50,000.00) (the "Threshold Amount"), after which Lenfest shall be entitled to
make a claim for and recover all damages it has incurred and subsequently incurs
regardless of amount, including, without limitation, the Threshold Amount;
provided, however, that the foregoing limitations as to time and amount shall
not apply to claims based on fraud or intentional misrepresentation or claims
based on a failure by SCC to discharge its obligations which respect to
retention of liabilities not specifically assumed by Lenfest under this
Agreement, which claims may be made at any time within the applicable statute of
limitations and in any amount.
Section 12. BOARD OF DIRECTORS REPRESENTATION. Commencing upon the Closing Date
and continuing until Lenfest does not hold any Equity Interests, Lenfest shall
have a representative on the Board of Directors of SCC and the Board shall not
exceed seven
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directors. In addition, a Lenfest representative shall be appointed to SCC's
Finance Committee.
Section 13. RIGHT OF FIRST REFUSAL. So long as Lenfest owns an Equity Interest
in SCC or its Subsidiaries, neither Lenfest nor SCC can sell its stock without
offering it first to the other party and SCC and its Subsidiaries shall not sell
any cable television systems without offering them first to Lenfest. In the
event that either party desires to sell, it shall notify the other party in
writing which writing will identify (i) what is to be sold and (ii) the price
offered. The party receiving such notice shall have sixty (60) days to accept or
reject the terms of the offer. Failure to respond within 60 days shall be deemed
a rejection. If rejected, the party desiring to sell shall have period of
forty-five (45) days after notice of rejection has been given in which to enter
into a binding agreement at a price which is equal to or greater than the
offering price and on substantially similar terms and conditions. It the
purchase agreement is signed, the parties to the agreement shall have an
additional eight (8) months to consummate the transaction.
If the party desiring to sell is unable to execute a purchase agreement
with forty-five (45) days after notice of rejection has been given at a price
which equals or exceeds the price initially offered to the other party and on
substantially similar terms and conditions, it will be precluded from selling
the stock or systems being offered without first offering them again to the
other party to this Agreement. Notwithstanding the
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foregoing, prior to the fifth anniversary of Closing, Lenfest shall have the
right to transfer and assign its Equity Interests and its rights and obligations
under a Shareholders Agreement and this Agreement to Tele-Communications, Inc.
or Liberty Cable, Inc. without offering the Equity Interests first to SCC.
If SCC or a Subsidiary decides to sell the assets of a cable system
Lenfest shall have the right of first refusal on the same terms as set forth
above for stock sales. If Lenfest does not exercise its right of first refusal,
SCC or a Subsidiary shall have the right to sell the assets to a third party on
the same terms as set forth above for stock sales. Further, prior to completing
any such sale, SCC or a Subsidiary shall offer to repurchase and if accepted,
shall repurchase Lenfest's shares in the subsidiary selling assets for a price
per share equal to the total asset sales price less any debt outstanding less
20% divided by the total number of shares outstanding. This provision for
repurchase of Lenfest's stock also shall be applicable if SCC offers to sell
substantially all of the assets of SCC.
Section 14. Buy/Sell Agreement. On or subsequent to the fifth anniversary of
Closing, either Susquehanna Media or SCC or Lenfest may make an offer to
purchase the other party's ownership interest in SCC and its Subsidiaries. The
party to whom the offer is made shall have a period of sixty (60) days to accept
or reject the offer; provided, however, that if the offer is rejected the party
to whom the offer was made is then obligated
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to purchase the offering party's ownership interest in SCC and its Subsidiaries
to the same aggregate economic effect and with the same terms and conditions.
Any agreement made hereunder shall be consummated within eight (8) months of the
date of the agreement to purchase and sell.
Section 15. Fee to Lenfest. At the end of the seventh year from the Extended Red
Lion Closing Date, if Lenfest still has any Equity Interests, SCC and its
Subsidiaries, at their option, may each pay Lenfest a fee of 1 1/2% of the
amount contributed to such company by Lenfest compounded annually from the date
contributed as a fee and SCC and its Subsidiaries shall have no further
obligation for any additional fee. Notwithstanding the foregoing, if Lenfest
shall make an offer under Section 14 of this Agreement, SCC and its subsidiaries
shall not be permitted subsequent to the receipt of the offer to pay the fee at
1 1/2%. The fee shall be in consideration for the following from Lenfest: (i)
acting on behalf of York Cable in negotiating for the purchase for the Red Lion
System from Tele-Communications, Inc., (ii) providing the opportunity to SCC and
its Subsidiaries to save money on the cost of programming, (iii) agreeing not to
expand its Wrightsville cable television system so that it would overlap with
any subscribers being served by the Red Lion System, (iv) assisting SCC and its
Subsidiaries in obtaining discounts on the purchase of equipment or purchasing
such equipment for SCC and its Subsidiaries at discounts available to Lenfest,
and (v) using its best efforts to make SCC aware of any possible acquisitions
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in the States of Pennsylvania, Maine, Rhode Island, Illinois, Indiana and
Mississippi which would be contiguous to or compatible with cable television
systems currently owned by SCC or its Subsidiaries. If SCC or an affiliated
entity repurchases Lenfest's Equity Interests pursuant to Section 14 of this
Agreement and the payment contemplated in this Section has not been made,
Lenfest shall be paid a fee by SCC and its subsidiaries equal to 3% of (i)
$11,000,000 compounded annually allocated to the companies listed in Section 2
in proportion to the allocation of the purchase price in such section, from the
date of Closing to the date of the purchase of Lenfest's Equity Interests and
(ii) $14,000,000 or the actual cost, if less, to acquire the Red Lion System
from the date of the Extended Red Lion Closing to the date of the purchase of
Lenfest's Equity Interests. If Lenfest acquires substantially all of the stock
or assets of SCC and its Subsidiaries, there shall be no fee paid pursuant to
this Section.
Section 16. SCC's Expenses and Intercompany Activities. SCC's operating
statements will reflect usual and customary operating expenses which shall
specifically include (1) interest payments due and owing on the debt referenced
in Section 4(n) of this Agreement, (2) all expenses relating to supervisory
personnel who are directly involved an a full-time basis in the cable operations
of SCC, (3) bonus calculated on the performance of the cable operations payable
to Peter P. Brubaker or his successor up
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to $50,000 per year and (4) fair and reasonable allocated corporate expenses
from Susquehanna not to exceed 2% of the revenues of SCC and its Subsidiaries
for 1993 and 1.6% of said annual revenues thereafter. Susquehanna will not
materially change the manner in which it allocates corporate expenses.
SCC and its Subsidiaries also lease certain vehicles and office
facilities from affiliated entities. Subsequent to Closing, no new leases shall
be entered into with affiliated entities without Lenfest's approval, which shall
not be unreasonably withheld. Leases presently in existence shall be adjusted,
if necessary, to reflect lease costs comparable to those that SCC would incur if
such services were provided by unaffiliated third parties.
Section 17. Employee Stock Plan. SCC currently has in existence an employee
stock plan ("Employee Stock Plan" herein) for certain employees of SCC and its
Subsidiaries. Pursuant to the terms of the Employee Stock Plan, there are i)
6,370 shares of Class B nonvoting common stock outstanding and options to
purchase an additional 12,740 shares, and ii) rights to purchase 2,600 shares.
SCC agrees that Lenfest shall be protected against dilution which may occur by
virtue of the exercise of stock options currently outstanding or which may
become outstanding to employees who purchase stock pursuant to the rights for
2,600 shares currently outstanding. The parties agree that subsequent to
Closing, SCC may sell or issue pursuant to the exercise of options additional
nonvoting stock equivalent to an additional 4%
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of the outstanding equity of the SCC in accordance with the terms of the
Employee Stock Plan and Lenfest and SCC agree that their equity interests would
be diluted on a pro rata basis by the additional shares being sold.
In addition, Lenfest acknowledges that under the terms of the Employee
Stock Plan, if fifty percent (50%) or more of the stock or assets of SCC are
sold, the price of the employee stock shall be the greater of the formula price
or the actual sale price for a period of twelve (12) months.
Section 18. Programming Agreement. SCC and its Subsidiaries shall be entitled to
purchase cable television programming at the group rates currently paid by
Lenfest, plus a service charge of five percent (5%) of the total cost of
programming billed to SCC by Lenfest. In the event Lenfest is unable to pass on
these group rates to SCC and its Subsidiaries or in the event said group rates
are no longer available to Lenfest, Lenfest will nevertheless pay to SCC and its
Subsidiaries the difference between the cost actually paid by SCC and its
Subsidiaries for the programming and the cost which would have been paid at the
aforementioned group rates. This amount shall be billed within 30 days of the
end of SCC's fiscal year and paid on an annual basis within 40 days of the
billing by SCC provided, however, that the total aggregate amount paid by
Lenfest under this Section shall not exceed Five Million Dollars ($5,000,000).
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Section 19. Transfer Taxes. All transfer or sales taxes due as a result of this
Agreement shall be divided equally between the parties.
Section 20. Broker's Fee. SCC has not paid or become obligated to pay any fee or
commission to any agent, broker, finder or intermediary in connection with the
transactions contemplated herein with the exception that SCC has agreed to pay
$100,000 to Communications Equity Associates and all fees due to Daniels &
Associates. Lenfest has not paid or become obligated to pay any fee or
commission any agent, broker, finder or intermediary in connection with the
transactions contemplated herein with the exception that Lenfest has agreed to
pay all fees in excess of $100,000 due to Communications Equity Associates.
Section 21. Tax Payment Differential. In the event of a sale of all of the stock
by SCC and its Subsidiaries either to Lenfest or to a third party or the
redemption of Lenfest's Equity Interests by SCC and its Subsidiaries, Lenfest
will be compensated for its share of the difference between federal and 50% of
the state income taxes that would have been paid if Lenfest had purchased assets
at Closing and federal and state income taxes that are actually paid during the
five year period commencing on the date of the Extended Red Lion Closing ("Tax
Differential Payment") provided that such amount shall not exceed $3,000,000 in
the aggregate.
The amount of the payment due to Lenfest shall be calculated as follows:
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(a) The assets of SCC will be valued at $173,000,000 as of the Closing
Date.
(b) Tax depreciation and amortization calculated for the five year period
set forth above in this Section shall be based upon a mutually acceptable asset
allocation. If the parties are unable to agree upon a mutually acceptable asset
allocation within sixty (60) days after the Closing Date, an independent
appraiser, Kane Reece Associates shall be hired to make an asset allocation
which shall be binding upon the parties. The cost of the appraiser shall be
divided equally between the parties.
(c) For the five year period set forth above, the difference between tax
depreciation and amortization as determined in paragraph (b) above and actual
tax depreciation and amortization will be calculated and multiplied by the
maximum Federal income tax rate in effect from time to time. These calculations
will be made based upon the tax laws as they exist at that point in time. In
addition a similar calculation as set forth in (b) through (f) of this Section
shall be made for those states where a state income tax is levied provided that
the tax differential shall be calculated at 50% of the statutory rate.
(d) If there is a sale of stock or redemption of Lenfest's Equity Interests
as described above, SCC will pay to Lenfest 30% of the incremental taxes for the
five year period as calculated in subparagraph (c) in an amount not to exceed
Three Million Dollars ($3,000,000).
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(e) It is understood and agreed that any increase in the amount of
depreciation and amortization deductible for tax purposes relating to capital
expenditures and/or acquisitions can be used to decrease the amount of the tax
differential payable to Lenfest as calculated above.
(f) In the event of a stock sale or redemption of all of Lenfest's Equity
Interests prior to December 31, 1997, the tax differential payment will be
prorated through the actual sale date.
(g) In the event that Lenfest does not transfer the Assets to York Cable
prior to December 31, 1993 and pays cash in exchange for the issuance of stock
from York Cable as contemplated herein, Lenfest shall receive 24.5% of the
amount calculated in (a) through (f) in lieu of the 30% set forth in (d) above.
Section 22. Notices. All notices and communications required or permitted to be
given under any of the provisions of this Agreement shall be in writing and
shall be deemed to have been duly given when delivered by messenger, by
overnight delivery service, or by facsimile (receipt confirmed) or mailed by
first class certified mail, return receipt requested, addressed to the parties
at the addresses set forth below (or at such other addresses mutually agreed to
by the parties):
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If to SCC or its Subsidiaries: Peter P. Brubaker, President
Susquehanna Cable Co.
140 E. Market Street
York, PA 17404
Telephone: (717) 852-2302
Facsimile: (717) 771-1440
With copy to: Craig W. Bremer, Esquire
Susquehanna Pfaltzgraff Co.
140 E. Market Street
York, PA 17404
Telephone: (717) 852-2305
Facsimile: (717) 771-1440
if to Lenfest: H. F. Lenfest, President
Lenfest Communications, Inc.
c/o 202 Shoemaker Road
Pottstown, PA 19464
Telephone: (215) 327-0965
Facsimile: (215) 327-8378
With copy to: Samuel W. Morris, Jr.
Hoyle, Morris and Kerr
One Liberty Place, Suite 4900
1650 Market Street
Philadelphia, PA 19103
Telephone: (215) 981-5720
Facsimile: (215) 851-0436
Section 23. Miscellaneous.
(a) Construction; Choice of Law. The unenforceability or invalidity of any
section or subsection of this Agreement shall not affect the validity of the
remainder of this Agreement provided that the remainder of the Agreement shall
be interpreted to give substantial effect to the agreement of the parties. The
failure of any party to enforce any right arising under this Agreement on one or
more occasions shall not operate as a waiver
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of that or any other right on that or any other occasion. This Agreement and the
rights of the parties under it shall be governed and construed in all respects
under the laws of the Commonwealth of Pennsylvania.
(b) Assignment of Agreement. Neither party may assign this Agreement or any
interest in this Agreement without the prior written consent of the other party.
(c) Entire Agreement. This Agreement (including all Exhibits and Schedules)
represents the entire understanding of the parties, supersedes all other and
prior memoranda and agreements between the parties, and may not be modified or
amended except by a written instrument executed by the parties.
(d) Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the parties to this Agreement and their respective successors and
assigns.
(e) Additional Agreements. Susquehanna, SCC and Lenfest agree to sign any
additional agreements and other documents necessary to carry out the terms of
this Agreement.
(f) Expenses and Taxes. Except as otherwise expressly provided in this
Agreement, each party shall pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations hereunder and the consummation of the
transactions contemplated by this Agreement. SCC and Lenfest each shall pay
one-half of all transfer taxes incurred as a
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result of the consummation of the transactions contemplated by this Agreement.
(g) Execution in Multiple Counterparts. This Agreement may be executed in
one or more identical counterparts, and all of such counterparts, when taken
together, shall be deemed to constitute the original of this Agreement.
Section 25. No Guarantees. Susquehanna covenants that it will not cause
Susquehanna Media, SCC or its Subsidiaries to guarantee or provide collateral
for or otherwise to become obligated or liable for the debt of any other entity,
without Lenfest's approval which shall not be unreasonably withheld, except that
SCC and its Subsidiaries and Susquehanna Radio Corp. and its Subsidiaries may
guarantee the debt of Susquehanna Media in connection with the Refinancing.
[Rest of page intentionally left blank]
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LENFEST COMMUNICATIONS, INC.
By: /s/ H. F. Lenfest
-----------------------------
President
LENFEST-YORK
By: /s/ H. F. Lenfest
-----------------------------
President
SUSQUEHANNA CABLE CO.
By: /s/ Peter P. Brubaker
-----------------------------
President
CABLE TV OF EAST PROVIDENCE, INC.
By: /s/ Peter P. Brubaker
-----------------------------
President
CASCO CABLE TELEVISION, INC.
By: /s/ Peter P. Brubaker
-----------------------------
(Vice) President
CASCO CABLE TELEVISION OF BATH, INC.
By: /s/ Peter P. Brubaker
-----------------------------
(Vice) President
SBC CABLE CO.
By: /s/ Peter P. Brubaker
-----------------------------
President
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YORK CABLE TELEVISION, INC.
By: /s/ Peter P. Brubaker
-----------------------------
President
SUSQUEHANNA PFALTZGRAFF CO.
By: /s/ Peter P. Brubaker
-----------------------------
(Vice) President
55
<PAGE> 56
SCHEDULE 1
1. Brandon, Mississippi
2. Pearl River Valley Water Supply District, Mississippi
3. Bath, Maine
4. Brunswick, Maine
5. Springfield Township, Pennsylvania
<PAGE> 57
SCHEDULE 2
There is currently pending an investigation by the Rhode Island
Commission for Human Rights (Case No. 93 1ESE 055-02/03) pursuant to a complaint
filed by a former employee, Shirley Ann Miller. Ms. Miller alleges her
termination was the result of sex discrimination. We have responded that Ms.
Miller was terminated after it was discovered that she had been terminated from
her previous employer, another cable operator in Rhode Island for illegally
connecting potential subscribers. She had not been truthful on her employment
application as to her reason for termination from her previous employer.
<PAGE> 58
MODIFICATION AGREEMENT
This Modification Agreement is made as of March 24, 1993, by and
among Susquehanna, SCC and the Subsidiaries and Lenfest.
WHEREAS, the parties hereto have previously entered into an
Agreement, dated November 6, 1992 ("Agreement"), by and among Susquehanna, SCC
and the Subsidiaries and Lenfest, which provided for, among other things, the
purchase by Lenfest of shares of stock of SCC and the Subsidiaries; and
WHEREAS, the parties now wish to amend a portion of that Agreement
to better reflect their intentions with respect thereto;
NOW, THEREFORE, in consideration of the premises, and intending to
be legally bound hereby, the parties hereto agree as follows:
1. Section 15 of the Agreement is hereby amended by deleting
subparagraph (iii) on page 44 of the Agreement and replacing it with the
following: "(iii) [intentionally blank]".
2. All of the terms, conditions, provisions, covenants and
agreements in the Agreement shall remain unaltered and in full force and effect
except as modified by this Modification Agreement.
3. Any capitalized term not defined in this Modification Agreement
shall have the meaning given to it in the Agreement.
4. This Modification Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute but one
and the same original.
IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the day and year first written above.
LENFEST COMMUNICATIONS, INC.
By: /s/ Harry F. Brooks, VP
-------------------------
LENFEST YORK, INC.
By: /s/ Harry F. Brooks, VP
-------------------------
(signatures continue on the next page)
<PAGE> 59
SUSQUEHANNA CABLE CO.
By: /s/ Peter P. Brubaker
----------------------
CABLE TV OF EAST PROVIDENCE, INC.
By: /s/ Peter P. Brubaker
----------------------
CASCO CABLE TELEVISION, INC.
By: /s/ Peter P. Brubaker
----------------------
CASCO CABLE TELEVISION OF BATH, INC.
By: /s/ Peter P. Brubaker
----------------------
SBC CABLE CO.
By: /s/ Peter P. Brubaker
----------------------
YORK CABLE TELEVISION, INC.
By: /s/ Peter P. Brubaker
----------------------
SUSQUEHANNA PFALTZGRAFF CO.
By: /s/ Peter P. Brubaker
----------------------
2
<PAGE> 60
[LETTERHEAD OF SUSQUEHANNA PFALTZGRAFF]
March 31, 1993
Harry Brooks
Lenfest Communications, Inc.
202 Shoemaker Road
Pottstown, PA 19464
Dear Harry:
The Agreement between Lenfest Communications, Inc. and Susquehanna Cable Co. and
its subsidiaries dated November 6, 1992 provides in Section 3 that either party
may terminate the Agreement if closing does not occur prior to March 31, 1993.
This letter will amend the Agreement to delete March 31, 1993 in Section 3 and
insert June 30, 1993.
Except as modified by this letter and the Modification Agreement dated as of
March 24, 1993, the Agreement shall remain in full force and effect.
Very truly yours,
Susquehanna Cable Co.
/s/ Peter P. Brubaker
Peter P. Brubaker
President
Agreed to:
Lenfest Communications, Inc.
By: /s/ Harry F. Brooks
-------------------
Title: Vice President
----------------
cc: Tom Pasch, Esq. w/enc.
<PAGE> 61
[LETTERHEAD OF SUSQUEHANNA PFALTZGRAFF]
March 31, 1993
Harry Brooks
Lenfest Communications, Inc.
202 Shoemaker Road
Pottstown, PA 19464
Dear Harry:
The Agreement between Lenfest Communications, Inc. and Susquehanna Cable Co. and
its subsidiaries dated November 6, 1992 provides in Section 3 that either party
may terminate the Agreement if closing does not occur prior to March 31, 1993.
This letter will amend the Agreement to delete March 31, 1993 in Section 3 and
insert June 30, 1993.
Except as modified by this letter and the Modification Agreement dated as of
March 24, 1993, the Agreement shall remain in full force and effect.
Very truly yours,
Susquehanna Cable Co.
/s/ Peter P. Brubaker
Peter P. Brubaker
President
Agreed to:
Lenfest Communications, Inc.
By: /s/ Harry F. Brooks
-------------------
Title: Vice President
----------------
cc: Tom Pasch, Esq. w/enc.
<PAGE> 62
MODIFICATION AGREEMENT
This Modification Agreement is made as of March 24, 1993, by and among
Susquehanna, SCC and the Subsidiaries and Lenfest.
WHEREAS, the parties hereto have previously entered into an Agreement,
dated November 6, 1992 ("Agreement"), by and among Susquehanna, SCC and the
Subsidiaries and Lenfest, which provided for, among other things, the purchase
by Lenfest of shares of stock of SCC and the Subsidiaries; and
WHEREAS the parties now wish to amend a portion of that Agreement to
better reflect their intentions with respect thereto;
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Section 15 of the Agreement is hereby amended by deleting
subparagraph (iii) on page 44 of the Agreement and replacing it with the
following: "(iii) [intentionally blank]".
2. All of the terms, conditions, provisions, covenants and agreements
in the Agreement shall remain unaltered and in full force and effect except as
modified by this Modification Agreement.
3. Any capitalized term not defined in this Modification Agreement
shall have the meaning given to it in the Agreement.
4. This Modification Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute but one
and the same original.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day and year first written above.
LENFEST COMMUNICATIONS, INC.
By: /s/ Harry F. Brooks, VP
------------------------
LENFEST YORK, INC.
By: /s/ Harry F. Brooks, VP
------------------------
(signatures continue on the next page)
<PAGE> 63
SUSQUEHANNA CABLE CO.
By: /s/ Peter P. Brubaker
---------------------
CABLE TV OF EAST PROVIDENCE, INC.
By: /s/ Peter P. Brubaker
---------------------
CASCO CABLE TELEVISION, INC.
By: /s/ Peter P. Brubaker
---------------------
CASCO CABLE TELEVISION OF BATH,
INC.
By: /s/ Peter P. Brubaker
---------------------
SBC CABLE CO.
By: /s/ Peter P. Brubaker
---------------------
YORK CABLE TELEVISIONS, INC.
By: /s/ Peter P. Brubaker
---------------------
SUSQUEHANNA PFALTZGRAFF CO.
By: /s/ Peter P. Brubaker
---------------------
2
<PAGE> 64
THIRD AMENDMENT
to the
AGREEMENT, DATED NOVEMBER 6, 1992
by and among
SUSQUEHANNA CABLE CO. ("SCC")
YORK CABLE TELEVISION, INC. ("York")
CASCO CABLE TELEVISION, INC. ("Casco")
CASCO CABLE TELEVISION OF BATH, MAINE ("Bath")
CABLE TV OF EAST PROVIDENCE, INC. ("Providence")
SBC CABLE CO. ("SBC") , and
SUSQUEHANNA PFALTZGRAFF CO. ("Susquehanna")
and
LENFEST YORK, INC. ("Lenfest") and
LENFEST COMMUNICATIONS, INC. ("LCI")
This Third Amendment Agreement is made this May 17, 1993, by and
among Susquehanna, SCC and the Subsidiaries and Lenfest and is joined by
Susquehanna Media Co. ("Media") and Susquehanna Radio Corp. ("Radio").
WHEREAS, the parties hereto have previously entered into an
Agreement, dated November 6, 1992, as subsequently amended as of March 24, 1993
and March 31, 1993 (collectively, the Agreement) , by and among Susquehanna, SCC
and the Subsidiaries and Lenfest, which provided for, among other things, the
purchase by Lenfest of shares of stock of SCC and the Subsidiaries; and
WHEREAS, Susquehanna has presented to Lenfest the terms and
conditions of the Refinancing for the approval of Lenfest as contemplated by the
Agreement;
WHEREAS, Lenfest has requested, and Susquehanna and SCC and the
Subsidiaries have agreed to make, certain modifications to the Agreement as a
condition to its approval of the terms and conditions of the Refinancing;
WHEREAS, to better implement the Agreement as modified hereby,
Media and Radio have agreed to join in and agree to be bound by all of the terms
and conditions of the Agreement:, as modified hereby, with the same force and
legal effect as if each of' them had been a party to the Agreement as previously
executed by the parties; and
WHEREAS the parties now wish to amend a portion of that Agreement
to better reflect their intentions with respect thereto;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
<PAGE> 65
1. Section 1 of the Agreement is hereby amended to correct the
number of shares to be issued to Lenfest, as follows;
<TABLE>
<CAPTION>
Company Lenfest% Equity Interest Lenfest Shares
------- ------------------------ --------------
<S> <C> <C>
SCC 14.9% 132,431.41
York Cable 14.1% 8.21
Casco 14.1% 52.53
Bath 14.1% 32.83
Providence 14.1% 984.87
SBC 14.1% 7,091.04
</TABLE>
2. Section 2(b) of the Agreement is hereby amended and restated in
its entirety, as follows:
"(b) Lenfest shall cause the transfer of the assets and franchises of
the Red Lion System ("Assets" herein) used or useful in the operation of
the Red Lion System to York. Lenfest shall contribute cash to York for
its Equity Interest in York in the following amount under the described
circumstances:
A. $14,000,000 -- if York acquires the Assets;
B. $14,000,000 -- if York does not acquire the Assets on or before
December 31, 1993, except under the circumstance described in
(C), below; or
C. $15,500,000 if York does not acquire the Assets on or before
December 31, 1993 through no fault of its own.
3. Section 3(b) of the Agreement is hereby amended and restated in
its entirety as follows:
"(b) Extended Red Lion Closing. Notwithstanding Section 3 (a) above, in
the event that the Assets have not been acquired by York on the Closing
Date contemplated in section 3 (a) , above, then the Closing Date for the
acquisition by Lenfest of the Equity Interest. in York shall be extended
to the date York acquires the Assets; provided, however, that the closing
on the acquisition of the Equity Interest in York ("Extended Red Lion
Closing") shall occur no later than December 31, 1993. The shares of York
shall be issued to Lenfest on the date of the Extended Red Lion Closing."
4. A new section 3(c) shall be added to the Agreement, as follows:
"(c) Lenfest agrees to pay one-half (1/2) at any amount paid by SCC
and/or its Subsidiaries to Tele-Communications, Inc. which amount is
required to obtain the consent of Integrated Resources to the transfer of
the Tuolumne, California systems to York."
<PAGE> 66
5. Section 5 (e) of the Agreement is hereby amended and restated in
its entirety, as follows:
"(e) Red Lion System. [Intentionally Deleted.]"
6. Section 6 (c) of the Agreement is hereby amended and restated in
its entirety, as follows:
"(c) Leased Equipment. [Intentionally Deleted.]"
7. Section 7 of the Agreement is hereby amended and restated in its
entirety, as follows:
"Section 7. Materiality of Warranties. [Intentionally Deleted.]"
8. Section 18 of the Agreement is hereby amended by deleting the
last sentence of Section 18 and replacing it with the following:
"This amount shall be billed within 30 days following June 30 of the
periods set forth in A, below, and paid within the 40 days of the billing
by SCC. Notwithstanding the foregoing, the following limitations shall
apply to the liability of Lenfest under this Section 18:
A. The maximum liability for payments hereunder shall be $1,000,000
for each of the following periods:
July 1, 1993 -- June 30,1994
July 1, 1994 -- June 30,1995
July 1, 1995 -- June 30,1996
July 1, 1996 -- June 30,1997
July 1, 1997 -- June 30,1998
B. The obligations for payments set forth in A, above, are
non-cumulative.
C. The liability of Lenfest for payments shall terminate with the
period ending June 30, 1998.
D. Media, SCC and its Subsidiaries agree to execute all additional
documentation, including, without limitation, a Programming Supply
Agreement, as Lenfest shall request in order that SCC and its
Subsidiaries may qualify for cable television programming at the
group rates then paid by Lenfest. Any failure to sign such
Programming Supply Agreement or additional documentation similar
thereto to comply with this subsection D shall relieve Lenfest of
any liability for payments under this Section 18."
<PAGE> 67
9. Section 20 of the Agreement is hereby amended and restated in
its entirety as follows:
"Section 20. Broker's Fee. SCC has not paid or become obligated to pay any
fee or other commission to any agent, broker, finder or intermediary in
connection with the transactions contemplated herein with the exception
that SCC has agreed to pay all fees due to Daniels & Associates. Lenfest
has not paid or become obligated to pay any fee or other commission to any
agent, broker, finder or intermediary in connection with the transactions
contemplated herein with the exception that Lenfest has agreed to pay all
fees due to Communications Equity Associates."
10. A new Section 26 is hereby created as follows:
"Section 26. Intercompany Debt. It is understood and agreed that Media
may create intercompany debt by advancing funds to either SCC or Radio;
provided, however, that (1) all such intercompany debt shall be evidenced
by one or more demand promissory notes ("Intercompany Notes") delivered
by each of SCC and Radio, and (2) as of the date hereof, the intercompany
debt shall not exceed $109 million payable from SCC to Media and
$45,660,000 payable from Radio to Media. Nothing contained herein shall
prohibit Media, Radio or SCC or any of the Subsidiaries from refinancing
existing debt or from incurring additional debt for the purpose of
acquiring additional radio and/or cable properties; provided, however,
that (a) the terms and conditions of any such refinancing or the
incurring of additional debt are reasonably satisfactory to Lenfest and
(b) no default shall exist or be created under the Media Debt (as
defined in Section 27) as a result thereof."
11. A new Section 27 is hereby created as follows:
"Section 27. Lenfest Rights with respect to Intercompany Debt Owing from
Radio to Media. The parties agree, as of the Closing date, that Media
Debt shall consist of the obligations created under that certain Loan
Agreement dated May _, 1993 among Media, the Lenders party to the Loan
Agreement, and CoreStates Bank, N.A. as Agent, and under several Note
Purchase Agreements dated May _, 1993 between Media and the several
insurance companies party thereto (collectively, along with the holders
of other Senior Debt, the "Creditors"). In the event that Radio shall.
fail to amortize its intercompany debt on a pro rata basis with the
amortization of all of Media's 1-.hen current. debt obligations ("Media
Debt") , then the following provisions shall apply:
<PAGE> 68
A. If at the end of any calendar quarter Radio has failed to amortize its
debt proportionately to the amortization of the Media Debt (after such
amortization has been adjusted for any acquisitions permitted under Section 26
above), then Media shall promptly give notice to Lenfest.
B. Media and Radio shall have a period of one year to bring the
amortization of Radio's debt into compliance with its obligations hereunder.
Media may take any action it deems appropriate in its sole discretion, including
the sale of all or part of the stock or assets of Radio, to effect compliance
with the terms of Radio's Intercompany Note and the provisions of this Section.
C. If at the end of one year, Media has not been successful in bringing
Radio's intercompany debt into compliance as required hereunder, then Lenfest
may exercise immediately its rights under Section 14. (Lenfest hereby
acknowledges its obligation to the Creditors under the Lenfest Pledge Agreement
and the Lenfest Subordination Agreement, as defined in the Media Debt).
12. A new Section 28 is hereby created as follows:
"Section 28. Lenfest rights with respect to a Major Default. In the event that
(i) the Creditors accelerate all or any part of the Media Debt, (ii) the
Creditors exercise their rights under the Pledge Agreements as defined in the
Media Debt to liquidate the collateral held by them, or (iii) Media fails to
make any scheduled payment of interest or principal when due and the appropriate
period of time for curing such default has ended then Lenfest may (a) exercise
immediately its right under Section 14, and/or (b) assume management control of
SCC and its Subsidiaries."
13. A new Section 29 is hereby created as follows:
"Section 29. Notices to Lenfest. Media shall deliver to Lenfest any notice of
default and copies of consolidated and consolidating financial statements
concurrently with any delivery thereof to the Creditors."
<PAGE> 69
14. A new Section 30 is hereby created as follows:
"Section 30. Media Indemnification. In the event that there is default in
the Media Debt which results in the Creditors exercising their rights with
respect to collateral held by them and selling all or part of the assets
(including the assets or stock of the Subsidiaries) or the stock of SCC,
and if the proceeds of such sales to SCC, one or more Subsidiaries and/or
Media exceed the amount of intercompany debt then owing from SCC to Media,
then Media, SCC and the Subsidiaries shall cause Lenfest to be reimbursed
from the proceeds received by Media, SCC and the Subsidiaries so that
Lenfest shall receive, in the aggregate, what it would have received if
the stock and/or assets of SCC were sold in the ordinary course of
business."
15. Notwithstanding anything to the contrary contained in the
Agreement, dated November 6, 1992, by and among Susquehanna, SCC and the
Subsidiaries and Lenfest, the terms, conditions and obligation of the Agreement
as modified hereby shall survive the execution hereof for so long as Lenfest has
any rights under the Agreement or any obligations under or in connection with
the agreements and other documents created in connection with or otherwise
defining the rights of the creditors of media in connection with the Media Debt.
16. No failure or delay on the part of Lenfest in exercising any
right, power or privilege contained in the Agreement, as amended hereby, shall
operate as a waiver of any such right, power or privilege, except to the extent
SCC reasonably relies upon said failure or delay to its detriment or the
exercise of any other right, power or privilege; nor shall any single exercise
of any right, power or privilege preclude any further exercise of any right,
power or privilege.
17. All of the terms, conditions, provisions, covenants and
agreements in the Agreement shall remain unaltered and in full force and effect
except as modified by this Third Amendment Agreement.
18. Any capitalized term not defined in this Third Amendment
Agreement shall have the meaning given to it in the Agreement.
19. This Third Amendment Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute but one
and the same original.
<PAGE> 70
IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the day and year first written above.
ATTEST: LENFEST COMMUNICATIONS, INC.
/s/ Debra A. Krzywicki By: /s/ H. F. Lenfest
- --------------------------------- --------------------------------
Pres.
ATTEST: LENFEST YORK, INC.
/s/ Debra A. Krzywicki By: /s/ H. F. Lenfest
- --------------------------------- --------------------------------
Pres.
ATTEST: SUSQUEHANNA CABLE CO.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- --------------------------------- --------------------------------
Pres.
ATTEST: CABLE TV OF EAST PROVIDENCE, INC.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- --------------------------------- --------------------------------
Pres.
ATTEST: CASCO CABLE TELEVISION, INC.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- --------------------------------- --------------------------------
V.P.
ATTEST: CASCO CABLE TELEVISION OF BATH, MAINE
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- --------------------------------- --------------------------------
V.P.
ATTEST: SBC CABLE CO.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- --------------------------------- --------------------------------
Pres.
ATTEST: YORK CABLE TELEVISION, INC.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- --------------------------------- --------------------------------
Pres.
ATTEST: SUSQUEHANNA PFALTZGRAFF CO.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- --------------------------------- --------------------------------
V.P.
ATTEST: SUSQUEHANNA MEDIA CO.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- --------------------------------- --------------------------------
E.V.P.
ATTEST: SUSQUEHANNA RADIO CORP.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- --------------------------------- --------------------------------
V.P.
<PAGE> 71
FOURTH AMENDMENT
to the
AGREEMENT, DATED NOVEMBER 6, 1992
by and among
SUSQUEHANNA CABLE CO. ("SCC"),
YORK CABLE TELEVISION, INC. ("York")
CASCO CABLE TELEVISION, INC. ("Casco")
CASCO CABLE TELEVISION OF BATH, MAINE ("Bath")
CABLE TV OF EAST PROVIDENCE, INC. ("Providence")
SBC CABLE CO. ("SBC"),
SUSQUEHANNA MEDIA CO. ("Media"),
SUSQUEHANNA RADIO CORP. ("Radio") and
SUSQUEHANNA PFALTZGRAFF CO. ("Susquehanna")
and
LENFEST YORK, INC. ("Lenfest") and
LENFEST COMMUNICATIONS, INC. ("LCI")
This Fourth Amendment is made on November 30, 1993, with an effective
date of November 6, 1992, by and among the parties hereto.
WHEREAS, the parties hereto have previously entered into an Agreement,
dated November 6, 1992, as subsequently amended as of March 24, 1993, March 31,
1993 and May 17, 1993 (collectively, the "Agreement"), by and among Susquehanna,
SCC, the Subsidiaries, Media and Radio and Lenfest providing for the purchase by
Lenfest of shares of stock of SCC and the Subsidiaries; and
WHEREAS, the parties have discovered that the basis for their original
calculations were in error; and
WHEREAS, the parties have agreed that it is important to amend the
Agreement to reflect accurately the intent of the parties;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Section 1 of the Agreement is hereby amended to correct the number
of shares to be issued to Lenfest, as follows:
<TABLE>
<CAPTION>
Lenfest %
Company Equity Interest Lenfest Shares
- ------- --------------- --------------
<S> <C> <C>
SCC 14.9% 132,431.41
York Cable 17.75% 10.79
Casco 17.75% 69.06
Bath 17.75% 43.16
Providence 17.75% l,294.83
SBC 17.75% 9,322.80
</TABLE>
<PAGE> 72
2. The first sentence of Section 16 of the Agreement is hereby amended
and restated in its entirety, as follows:
"SCC's operating statements will reflect usual and customary
operating expenses which shall specifically include (1) interest
payments due and owing on the debt referenced in Section 4(n) of this
Agreement, (2) all expenses relating to supervisory personnel who are
directly involved on a full-time basis in the cable operations of SCC,
(3) bonus calculated on the performance of the cable operations
payable to Peter P. Brubaker or his successor up to $50,000 per year
and (4) fair and reasonable allocated corporate expenses not to exceed
two percent (2%) of the annual revenues of SCC and its Subsidiaries."
3. In order to give full effect to the original intent of the parties,
the amendments to the Agreement made herein shall have an effective date as of
November 6, 1992.
4. All of the terms, conditions, provisions, representations, covenants
and agreements in the Agreement shall remain unaltered and in full force and
effect except as modified by this Fourth Amendment Agreement. All of the
representations, warranties and covenants are true and correct on the date
hereof as if originally given on the date hereof.
5. Any capitalized term not defined in this Fourth Amendment Agreement
shall have the meaning given to it in the Agreement.
6. This Fourth Amendment Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original as against the
party whose signature appears thereon, and all of which together shall
constitute but one and the same original.
(REMAINDER OF PAGE INTENTIONALLY BLANK]
2
<PAGE> 73
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first written above.
<TABLE>
<CAPTION>
ATTEST: SUSQUEHANNA CABLE CO.
<S> <C>
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- ------------------------------- --------------------------------
Peter P. Brubaker, President
ATTEST: YORK CABLE TELEVISION, INC.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- ------------------------------- --------------------------------
Peter P. Brubaker, President/Treasurer
ATTEST: CASCO CABLE TELEVISION, INC.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- ------------------------------- --------------------------------
Peter P. Brubaker, Vice President
ATTEST: CASCO CABLE TELEVISION OF BATH,
MAINE
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- ------------------------------- --------------------------------
Peter P. Brubaker, Vice President
ATTEST: CABLE TV OF EAST PROVIDENCE, INC.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- ------------------------------- --------------------------------
Peter P. Brubaker, President/Treasurer
ATTEST: SBC CABLE CO.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- ------------------------------- --------------------------------
Peter P. Brubaker, President/Treasurer
ATTEST: SUSQUEHANNA MEDIA CO.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- ------------------------------- --------------------------------
Peter P. Brubaker, Executive Vice President/Treasurer
ATTEST: SUSQUEHANNA RADIO CORP.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- ------------------------------- --------------------------------
Peter P. Brubaker, Vice President/Finance, Treasurer
</TABLE>
(SIGNATURES CONTINUE ON THE FOLLOWING PAGE)
3
<PAGE> 74
<TABLE>
<CAPTION>
ATTEST: SUSQUEHANNA PFALTZGRAFF CO.
<S> <C>
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- ------------------------------- --------------------------------
Peter P. Brubaker, Vice President/Finance
ATTEST: LENFEST YORK, INC.
/s/ Robert W. Mohollen By: /s/ Harry F. Brooks
- ------------------------------- --------------------------------
Harry F. Brooks, VP
ATTEST: LENFEST COMMUNICATIONS, INC.
/s/ Robert W. Mohollen By: /s/ Harry F. Brooks
- ------------------------------- --------------------------------
Harry F. Brooks, VP
</TABLE>
4
<PAGE> 75
FIFTH AMENDMENT
to the
AGREEMENT, DATED NOVEMBER 6, 1992
by and among
SUSQUEHANNA CABLE CO. ("SCC")
YORK CABLE TELEVISION, INC.
CASCO CABLE TELEVISION, INC.
CASCO CABLE TELEVISION OF BATH, MAINE
CABLE TV OF EAST PROVIDENCE, INC.
SBC CABLE CO.
SUSQUEHANNA MEDIA CO. ("Media")
SUSQUEHANNA RADIO CORP. ("Radio") and
SUSQUEHANNA PFALTZGRAFF CO. ("Susquehanna")
and
LENFEST YORK, INC. ("Lenfest") and
LENFEST COMMUNICATIONS, INC. ("LCI")
This Fifth Amendment is made on this 22nd day of April, 1999, by and
among the parties hereto.
WHEREAS, the parties hereto have previously entered into an Agreement,
dated November 6, 1992, as subsequently amended as of March 24, 1993, March 31,
1993, May 17, 1993 and November 30, 1993 (collectively, the "Agreement"), by and
among Susquehanna, SCC, the Subsidiaries (as defined below), Media and Radio and
LCI and Lenfest (collectively "Lenfest"); and
WHEREAS, the parties desire to further amend the Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, and intending to be bound, the parties hereto agree as
follows:
<PAGE> 76
1. Put.
Lenfest currently owns the following stock ("Stock") of SCC and
certain of its subsidiaries listed below ("Subsidiaries"):
<TABLE>
<CAPTION>
Company # of Shares
- ------- -----------
<S> <C>
Susquehanna Cable Co. 132,431.41
York Cable Television, Inc. 10.79
Casco Cable Television, Inc. 69.06
Casco Cable Television of Bath, Maine 43.16
Cable TV of East Providence, Inc. 1,294.83
SBC Cable Co. 9,322.8
</TABLE>
Lenfest is hereby granted a put option ("Put") with respect to the Stock that it
holds in SCC and its Subsidiaries for a period of three years commencing 18
months after the date of the closing of the Credit Agreement to be entered into
by and among Media and First Union National Bank, individually and as Agent, and
other signatory banks (as amended, restated or modified from time to time
"Credit Agreement"). If Lenfest exercises the Put, it shall be exercised for all
of the Stock held by Lenfest in SCC and its Subsidiaries. The Put shall be
exercised in writing and sent to Media at the address set forth in the Agreement
with a copy to the Agent at the address set forth in the Credit Agreement.
2. Conditions to Exercise of Put. The Put cannot be exercised, or if
exercised cannot be consummated during any period when:
(a) there is a default under the Credit Agreement, or
2
<PAGE> 77
(b) if, after giving effect to the transaction contemplated by the
Put, Media:
(i) would violate the debt incurrence test under its
$150,000,000 Senior Subordinated Notes, or
(ii) would be in default on a pro forma basis under the Credit
Agreement at any time within one year and one day of Closing based on reasonable
projections.
3. Valuation. Upon receipt of the notice from Lenfest to SCC that it is
exercising its Put, each party shall choose an appraiser to appraise the fair
market value of all of the equity of SCC and each of its Subsidiaries. The
appraisers shall be selected within ten (10) days of the exercise of the Put and
each appraiser shall be a nationally recognized broker or investment banker with
experience in valuing cable systems. Each appraiser will have sixty (60) days
from its selection to complete an independent valuation. The value of the Stock
("Value") shall be the average of the two valuations times 30%; provided,
however, that if the higher valuation is 10% greater than the lower valuation
neither valuation will be used and the parties shall choose two new appraisers
who shall repeat the process.
4. Closing. The Closing of the Put transaction ("Closing") shall occur
within 15 days after the last governmental approval is obtained, but in no event
shall Closing be less than 60 days after the determination of the Value.
5. Payments for Stock. Subject to Section 2 hereof, Media shall pay the
Value in cash by wire transfer at Closing subject to the following:
3
<PAGE> 78
(a) Cash shall be paid up to the amount of availability under the
Credit Agreement provided that Media can demonstrate pro forma compliance (after
giving effect to the additional debt to be incurred by repurchase of the Stock
by Media under the Credit Agreement) at any time within one year and one day of
Closing based on reasonable projections. if Media is unable to pay the agreed
upon valuation in cash, Lenfest shall have the option to withdraw the Put
without prejudice to the future exercise of the "Put" right granted herein or
the rights granted in the Agreement. In addition, the time elapsed from the
exercise of the Put to the date Lenfest withdraws the Put shall be added to the
end of the three year exercise period for the Put.
(b) To the extent that Lenfest does not receive cash at Closing for
the Stock put to Media, Lenfest shall receive a Note from Media (the "Note") for
the amount of the Value not paid in cash.
(c) Principal on the Note will be payable in three equal annual
installments each on the anniversary of the Closing and shall bear interest at
the rate of 8% per annum, payable quarterly. If Media is prohibited from paying
interest under the terms of the Credit Agreement, unpaid interest shall be added
to the principal of the Note and shall thereupon bear interest at the rate set
forth above.
(d) Scheduled payments of principal or interest on the Note shall
not be paid if at the time of payment there is a default in the Credit Agreement
or, after giving effect to the payment, there would be a pro forma default under
the Credit Agreement.
4
<PAGE> 79
(e) The Note may be prepaid at any time if there is (i) no default
under the Credit Agreement or any default has been waived and (ii) pro forma
compliance with the fixed charge ratio (which for this purpose will consider
payments under the Note as Restricted Payments).
(f) The Note shall have no covenants and be nonrecourse except to
the second lien on the Stock. Lenfest agrees that, except as and to the extent
provided herein, its right to the payments contemplated by the Note (and all
other obligations under the Put) shall be subordinate to and subject in right of
payment in full, on substantially the terms set forth in the draft dated March
25, 1999 of the Subordination Agreement, to all of the obligations under the
Credit Agreement. The obligation under the Note will be senior to the Senior
Subordinated Notes.
(g) Upon receipt of the Note, Lenfest shall have a security
interest in the Stock subject only to the prior security interest granted to
First Union National Bank, as Agent for itself and other Media lenders under the
Credit Agreement. Lenfest will not be entitled to or accept and neither Media
nor any subsidiary will grant Lenfest an interest in any other stock or assets
of Media or its subsidiaries as security for the Note.
(h) If there is no default in the Credit Agreement (or if no
default will be caused thereby) and Media fails:
(i) to make a principal payment on the Note which payment
default is not cured within nine months, or
5
<PAGE> 80
(ii) to make four consecutive interest payments on the Note (or
adds interest to principal for four consecutive quarters),
then Lenfest shall be permitted to notify Media of a default under the Note and
require Media to sell the stock or assets (at Media's option) of SCC and its
Subsidiaries. Media shall have nine months to consummate the sale transaction.
Lenfest's right to require Media to sell the stock or assets of SCC and its
Subsidiaries shall be (i) Lenfest's sole recourse and remedy with respect to the
Note and (ii) subject to there being no default in the Credit Agreement at
closing on the sale both before and after giving effect to the sale. So long as
there are remaining payment obligations or any commitment to extend credit under
the Credit Agreement Lenfest shall not be entitled to (i) otherwise accelerate
the Note or any payments contemplated thereunder, (ii) file or force to be filed
any involuntary proceedings under any bankruptcy, receivership, reorganization,
arrangement, dissolution or liquidation law or (iii) otherwise proceed against
the assets of Media or its subsidiaries.
6. Sale of SCC and Subsidiaries.
(a) If the Put is exercised by Lenfest, Media and/or SCC shall have
the right to sell all of the stock or assets of SCC and its Subsidiaries to a
bona fide third party purchaser for cash in lieu of acquiring the Stock. Media
or SCC shall notify Lenfest of the decision to sell to a third party no later
than 10 days after completion of determination of the Value. In the event that
Media or SCC decides to sell stock, such sale shall include all of the stock of
SCC and its Subsidiaries including the Stock held by Lenfest and Lenfest shall
receive
6
<PAGE> 81
its pro rata share of the net proceeds after all debts are repaid. Media or SCC
shall have the right in its discretion to decline to sell the stock or assets of
SCC if the price offered or other terms are unacceptable. In such case, Media or
SCC shall notify Lenfest and have 90 days from such notice to consummate the Put
transaction.
(b) If Media and/or SCC decide to proceed to closing on the sale of
all of the stock or assets of SCC and its Subsidiaries as provided in Paragraph
6(a), they shall notify Lenfest and the time for a Closing on the Put set forth
herein shall be extended to a period of not in excess of nine months from the
date of the Valuation in order to allow for an orderly sale. In the event that
the sale of SCC and its Subsidiaries is not consummated, the time elapsed from
the decision by Media to sell to the date when Media determines that the sale
will not be consummated shall be added to the end of the period in which the Put
can be exercised.
7. Limitations on Exercise of rights under Buy/Sell provisions of
Section 14 of the Lenfest Agreement.
(a) Section 14 of the Lenfest Agreement provides that either party
may initiate an offer to purchase the interest of the other party in SCC and its
Subsidiaries. The terms and conditions of Section 14 shall remain in full force
and effect and shall be unamended by this Agreement, except for the following
limitations:
(i) Neither Lenfest, Media nor SCC nor any person claiming by or
through them shall be permitted to
7
<PAGE> 82
exercise their rights under Section 14 of the Agreement after Lenfest has
exercised its Put.
(ii) If Media or SCC has made an offer to purchase pursuant to
Section 14 of the Agreement, Lenfest shall not be permitted to exercise its Put
during the pendency of the offer.
(iii) If the Put is exercised and the transaction contemplated
by the Put is not consummated or cannot be consummated within the time period
contemplated herein, the parties' rights under Section 14 of the Agreement shall
be reinstated.
8. Deletion of Tax Payment Differential. Section 21 of the Agreement
entitled Tax Payment Differential shall be deleted and of no further force or
effect.
9. Restricted Payments. For clarification, the parties agree that the
fee contemplated by Section 15 of the Agreement if paid, will be considered a
Restricted Payment under the Credit Agreement.
10. Change to Credit Agreement. Section 7.3.2(o), Investments, and
Section 7.7.2(c), Sales and Other Dispositions, of the draft of the Credit
Agreement dated March 12, 1999 contained a condition that both before and after
the transactions contemplated by these sections the Consolidated Total Leverage
Ratio shall be no greater than 5.0 to 1.0. Media agrees that this language shall
be deleted from the Credit Agreement when executed by Media.
8
<PAGE> 83
11. Consent. Susquehanna Pfaltzgraff Co. ("SPC") and Media have advised
Lenfest that SPC is establishing an employee stock ownership plan ("ESOP") and
that Media intends to enter into the Credit Agreement and to issue $150,000,000
of Senior Subordinated Notes in the institutional public markets (collectively
"Credit Facilities"). Lenfest consents to the establishment of the ESOP and to
Media entering into the Credit Facilities and agrees to execute such instruments
and documents as Media or any person providing all or a portion of the Credit
Facilities may reasonably request from time to time for the purposes of (a)
confirming the foregoing consent, (b) subjecting all equity interests of Lenfest
held in SCC and its Subsidiaries to a security interest as security for the
Credit Agreement and (c) subordinating its interests to those of the lenders
under the Credit Agreement provided that any agreement, instrument or document
to be executed for the purposes stated in clause (b) and (c) shall be on terms
substantially consistent with the terms hereof and, (i) with respect to the
Pledge Agreement and Subordination Agreement, not less favorable to Lenfest in
any material respect than in the drafts dated March 25, 1999, and (ii) with
respect to the Credit Agreement, not less favorable to Lenfest in any material
respect than in the draft dated April 13, 1999, all of which have been delivered
to counsel for Lenfest.
12. Survival. Notwithstanding anything to the contrary contained in the
Agreement, dated November 6, 1992, by and among Susquehanna, SCC and the
Subsidiaries and Lenfest, the terms, conditions and obligation of the Agreement
as modified by the previous four amendments and this Amendment shall survive the
execution hereof for so long as Lenfest has any rights under the Agreement or
any obligations under or in connection with the
9
<PAGE> 84
agreements and other documents created in connection with or otherwise defining
the rights of the creditors of Media in connection with the Credit Agreement or
the Senior Subordinated Notes. Notwithstanding the foregoing, upon consummation
of the Put transaction, all of Lenfest's rights shall terminate other than its
rights under Sections 5, 10, 11 and 13 of this Fifth Amendment.
13. No Waiver. No failure or delay on the part of parties to the
Agreement in exercising any right, power or privilege contained in the
Agreement, as amended hereby, shall operate as a waiver of any such right, power
or privilege, except to the extent the other party reasonably relies upon said
failure or delay to its detriment nor shall any single exercise of any right,
power or privilege preclude any further exercise of any right, power or
privilege.
14. Notices. Section 22 of the Agreement is amended to change the
address for Lenfest and its counsel which shall be:
If to Lenfest:
Lenfest Communications, Inc.
200 Cresson Blvd.
Oaks, PA 19456-0989
Attention: General Counsel
Facsimile No.: 610/650-3062
With Copy to:
Thomas K. Pasch, Esq.
Saul, Ewing, Remick and Saul, LLP
Centre Square West, 38th Floor
Philadelphia, PA 19102
Facsimile No.: 215/972-1831
10
<PAGE> 85
Except as amended above, Section 22 of the Agreement shall remain in
full force and effect.
15. Continuing Agreement. All of the terms, conditions, provisions,
covenants and agreements in the Agreement as previously amended shall remain
unaltered and in full force and effect except as modified by this Fifth
Amendment.
15. Defined Terms. Any capitalized term not defined in this Fifth
Amendment shall have the meaning given to it in the Agreement.
16. Counterparts. This Fifth Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute but one
and the same original.
17. Effective Date. This Amendment shall be effective on the date of
its execution.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day and year first written above.
ATTEST: LENFEST COMMUNICATIONS, INC.
BY: /s/ H. F. Lenfest
-------------------------------
President
ATTEST: LENFEST YORK, INC.
By: /s/ H. F. Lenfest
-------------------------------
President
11
<PAGE> 86
ATTEST: SUSQUEHANNA CABLE CO.
By: /s/ Peter P. Brubaker
--------------------------------
President
ATTEST: CABLE TV OF EAST PROVIDENCE, INC.
By: /s/ Peter P. Brubaker
--------------------------------
President
ATTEST: CASCO CABLE TELEVISION, INC.
By: /s/ Peter P. Brubaker
--------------------------------
Vice President
ATTEST: CASCO CABLE TELEVISION OF
BATH, MAINE
By: /s/ Peter P. Brubaker
--------------------------------
Vice President
ATTEST: SBC CABLE CO.
By: /s/ Peter P. Brubaker
--------------------------------
President
12
<PAGE> 87
ATTEST: YORK CABLE TELEVISION, INC.
By: /s/ Peter P. Brubaker
--------------------------------
President
ATTEST: SUSQUEHANNA PFALTZGRAFF CO.
By: /s/ Peter P. Brubaker
--------------------------------
Vice President
ATTEST: SUSQUEHANNA MEDIA CO.
By: /s/ Peter P. Brubaker
--------------------------------
President
13
<PAGE> 1
EXHIBIT 10.3
MANAGEMENT AGREEMENT
This Agreement made as of this 24th day of May, 1993, by and between
Susquehanna Media Co., a corporation organized and existing under the laws of
the State of Delaware ("Company" herein) and Susquehanna Pfaltzgraff Co., a
corporation organized and existing under the laws of the State of Delaware
("Susquehanna" herein).
WITNESSETH:
WHEREAS, Susquehanna has a qualified and experienced staff of trained
personnel capable of providing management oversight, legal, financial/treasury,
human resources, real estate, accounting, and administrative services;
WHEREAS, Company requires competent and qualified management which can
assume and actively discharge management oversight, legal, financial/treasury,
human resources, real estate, accounting and administrative services, and
WHEREAS, Company recognizes that Susquehanna can provide certain goods,
services and employee benefits an advantageous prices or terms, and
WHEREAS, Company desires to retain the services of Susquehanna and
Susquehanna for a fee desires to provide services to Company;
NOW, THEREFORE, the parties intending to be legally bound, mutually
agree as follows:
1. Company will retain the services of Susquehanna and Susquehanna will
perform certain Management Oversight, Finance/Treasury, Legal, Human
<PAGE> 2
Resources, Real Estate, Accounting and Administrative Services more specifically
set forth on Exhibit "A" attached hereto and made a part hereof. In addition,
Susquehanna agrees to provide certain goods, services and employee benefits
(including but not limited to those listed in Exhibit "B") at its cost.
2. This Agreement shall be for a term of one year commencing on the
date of this Agreement. Thereafter, this Agreement shall continue in effect from
year to year unless terminated by either party by written notice sent to the
other party at least sixty (60) days prior to the end of the initial term or any
revised term.
3. During the term of this Agreement, Susquehanna through its
employees, shall devote its best efforts, and such time and attention as it
deems necessary to provide the services set forth on Exhibit "A".
4. Susquehanna agrees that its management personnel will be accessible
at all times to personnel of Company to review the operation of Company and the
services being provided by Susquehanna and will furnish such recommendations as
appropriate.
5. In consideration for the services rendered by Susquehanna to
Company, Susquehanna shall receive as annual compensation a sum equal to 3 1/2%
of Consolidated Revenues of the Company, payable in monthly installments on the
first day of each month.
6. Susquehanna, in its sole discretion, shall employ such personnel as
are required in conjunction with the proper performance of its duties under this
Agreement and Susquehanna shall have the right to terminate or transfer any
employee as it deems appropriate. Company shall not have the right to
2
<PAGE> 3
require that any particular functions be performed by specific employees of
Susquehanna.
7. The parties agree that Susquehanna shall perform its management
services as an independent contractor to Company and nothing contained in this
Agreement shall constitute or be construed to be or to create a partnership or
joint venture between Susquehanna and Company and nothing herein shall be
construed as reserving to Susquehanna the right to control Company's business.
As an independent contractor, Susquehanna shall be responsible for payment of
all applicable federal, state and local taxes related to its operations and for
all wages, benefits, payroll taxes and insurance for its employees.
8. Susquehanna acknowledges that from time to time its employees will
be exposed to Company's confidential and proprietary information. Susquehanna
agrees that any confidential or proprietary information will be kept in
strictest confidence and not revealed to any third party without Company's prior
written authorization. Susquehanna and its employees shall not be required to be
bonded.
9. (a) Company shall have the right to terminate this Agreement if any
of the following events shall occur upon ten days written notice to Susquehanna
given at any time after the period permitted to cure any of the following
defaults has elapsed:
(i) Susquehanna fails to keep, observe or perform any material
covenant, agreement, term or provision of this Agreement to be kept, observed or
performed by Susquehanna, and such default shall continue for a period of 30
days after notice thereof by Company to Susquehanna, or,
(ii) A receiver, liquidator, or trustee of Susquehanna, or of any
of its property is appointed by court order and such order remains in effect
3
<PAGE> 4
for more than 30 days, or a petition is filed against Susquehanna under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or hereafter in
effect, and is not dismissed within 30 days after filing, or
(iii) Susquehanna files a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or hereafter in effect, or consents to the filing
of any petition against it under such law, or
(iv) Susquehanna makes an assignment for the benefit of its
creditors, or admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, trustee, or liquidator
of Susquehanna or of all or any part of its property.
(v) Susquehanna sells all or substantially all of its interest in
Company other than to an Affiliate of Susquehanna. "Affiliate" for purposes of
this Agreement shall mean with respect to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with, such Person. For purposes of this definition, a Person shall be
deemed to be "controlled by" another Person if the other possesses, directly or
indirectly, power either (i) to vote 50% or more of the securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
(b) Susquehanna shall have the right to terminate this Agreement if
any of the following events shall occur upon ten days written notice given
4
<PAGE> 5
to Company at any time after the period permitted to cure any of the following
defaults has elapsed:
(i) The breach of any material covenant, condition, or provision of
this Agreement to be kept, observed, or performed by Company, and such default
shall continue for a period of 30 days after notice thereof by Susquehanna to
Company; or
(ii) A receiver, liquidator, or trustee of Company, or of any of its
property, is appointed by court order and such order remains in effect for more
than 30 days, or Company is adjudicated bankrupt or insolvent; or any of its
property is sequestered by court order and such order remains in effect for more
than 30 days; or a petition is filed against Company under any bankruptcy,
reorganization, arrangement, insolvency, readjustment or debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, and is
not dismissed within 30 days after filing, or
(iii) Company files a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents to the filing of
any petition against it under such law, or
(iv) Company makes an assignment for the benefit of its creditors,
or admits in writing its inability to pay its debts generally as they become due
or consents to the appointment of a receiver, trustee, or liquidator of Company
or of all or any part of its property.
(v) Susquehanna sells all or substantially all of its interest in
Company other than to an Affiliate of Susquehanna.
5
<PAGE> 6
10. Should any disagreement or dispute arise under the terms of this
Agreement, which can not be resolved by the parties, either party shall have the
right to refer the disagreement or dispute to the American Arbitration
Association and both parties agree to abide by the Commercial Arbitration Rules
of the Association and be bound by any decision of an arbitrator.
11. This Agreement supersedes any prior verbal or written agreement
between the parties and represents their entire understanding. Modifications and
amendments to this Agreement to be effective must be in writing and executed
with the same formalities as this Agreement.
12. Should any part of this Agreement or the application of such part
be held to be invalid, the remainder of this Agreement shall not be affected
thereby, and shall continue in full force and effect during the term of this
Agreement and any renewal thereof.
13. This Agreement is entered into and shall be governed by the laws of
the Commonwealth of Pennsylvania and shall be binding upon and inure to the
benefit of each party's successors and assigns.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals the day and year first above written.
ATTEST: SUSQUEHANNA PFALTZGRAFF CO.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- ----------------------------- ------------------------------
Secretary Vice President
(Seal)
ATTEST: SUSQUEHANNA MEDIA CO.
/s/ Craig W. Bremer By: /s/ Peter P. Brubaker
- ----------------------------- ------------------------------
Secretary Vice President
(Seal)
7
<PAGE> 8
EXHIBIT A
The management fee shall cover the following services:
Management Oversight
1. Approval of operating plans and budgets
2. Approval of capital expenditures in excess of $20,000
3. Negotiation of acquisitions and divestitures
4. Approval of senior management selection and compensation
arrangements
Financial/Treasury
1. Acquisition valuation and due diligence
2. Financial analysis and projections
3. Capital budgeting
4. Arranging and negotiating financing
5. Lender relations
6. Pension fund manager selection and performance evaluation
7. Payroll tax administration
8. Cash management
9. Risk management
10. Computer graphics
Insurance premium and payroll taxes are not included in the management
fee charged by Susquehanna.
Legal
1. Acquisition due diligence
2. Acquisition and financing document drafting and review
3. Real estate transactions (PA)
8
<PAGE> 9
4. Lease negotiation and drafting
5. Bad debt collection
6. Representation at zoning hearings, as requested by management
7. Representation at revocation and permit appeals before state
and local officials
8. Labor law advice
9. Personnel action advice and representation (terminations,
disciplinary actions, discrimination cases)
10. Representation at workers, compensation hearings
11. Interface with outside legal counsel
12. Franchise negotiations
Outside legal fees are not included in the management fee charged by
Susquehanna
Human Resources
1. Employee Benefit Administration of all benefit plans
including:
- Health Insurance Plans (AEtna and several HMO's)
administration, including health care cost containment
programs, PPO options, participant communication, etc.
Insurance premiums and claim costs are paid directly by the
Company to the Susquehanna Pfaltzgraff Voluntary Employee
Benefit Account (VEBA).
- Pension Plans administration including annual actuarial
valuations, PBGC premium payments, investment management fees,
consulting expenses and participant communication, etc.
Pension expenses are charged directly to the Company as part
of Retirement Expense.
- 401K Savings Plan administration including administrative and
investment management expenses, annual discrimination testing,
consulting expenses and participant communication. Savings
Plan expenses including Company match of employee
contributions are charged directly to Company.
- Life Insurance Plan administration. Premiums are charged
directly to Company as part of Employee Benefit Expense.
- Sick Leave/LTD Plans administration. LTD premiums are charged
directly to Company as part of Employee Benefit Expense.
Salary continuation and sick leave costs are paid by Company
as Salary Expenses.
9
<PAGE> 10
- Educational Assistance Program administration. Employee
reimbursement expenses for Educational Assistance are paid
directly by Company.
- Executive Physical Program administration. Expenses for
executive physicals are paid directly by Company.
2. Salary administration consultation and annual compensation
planning, reviews, and analysis.
3. Human Resources Information Systems (HRIS) software
maintenance and support, including payroll record maintenance,
and ad-hoc report generation.
4. Union negotiation and labor relations support, analysis and
consultation. Expenses for outside legal counsel and
consulting, as required, are billed directly to Company.
5. Employee relations support and consultation. In addition,
Corporate Human Resources provides guidance in compliance with
Federal and State legislation and regulations such as ADA,
Sexual Harassment, wage and hour laws, etc.
6. Training and employee development support and consultation.
Expenses for customized training and materials are billed
directly to Company.
7. Coordination and administration of employee relocations.
Expenses for relocating Company employees or new hires are
billed directly to Company.
8. Coordinate Susquehanna wide programs such as drug testing,
employee social activities, United Way, etc. Expenses for drug
testing of Company employees are billed directly to Company.
9. Job posting program in York area and consultation on
employment and recruiting issues.
10. Employee Assistance Program including both administration and
the actual program cost.
Real Estate
The Corporate Real Estate Department provides consulting and
administrative services related to real property owned or utilized by
the Company. These services include:
1. Administration of contracts and leases, market analysis and
site selection in response to operating needs.
10
<PAGE> 11
2. The sale and disposition of excess assets.
3. Building design and construction services.
4. Lease negotiations.
5. Building, environmental and tax monitoring and appeals related
to real estate.
Accounting
1. Quarterly financial statement disclosures and preparation
(Company maintains general ledger and supplies data for
financial reports)
2. Income tax return preparation (federal, state and local)
3. Federal and State information returns (including magnetic
media reporting)
4. Personal property tax returns
5. Federal, state and local audits and tax appeals (business,
property, income and use taxes)
6. Pension plan reporting (5500s)
7. Fixed asset system software maintenance and support
8. General tax advice (advice from outside tax counsel will be
billed directly to Company)
Administrative
1. Office space for Company's executive offices including HVAC
and utilities.
2. Mail room and courier services.
3. Large volume copy and printing support.
11
<PAGE> 12
EXHIBIT B
Goods, Services and Employee Benefits purchased through Susquehanna:
Property, casualty and liability insurance
Telephone Services
Office Supplies
Pension Expense
Employee Savings Plan Expense
Payroll Withholding Taxes
Property Taxes
12
<PAGE> 1
Exhibit 12
SUSQUEHANNA MEDIA CO.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(000's)
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEARS ENDED DECEMBER 31, ENDED JUNE 30,
----------------------------------------------------------------- ------------------
1994 1995 1996 1997 1998 AS ADJUSTED 1998 1999
----------------------------------------------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings, as Defined:
Income before income taxes
and minority interests............... $18,613 $19,384 $14,658 $33,697 $32,779 $25,755 $12,698 $18,318
Interest including interest
in leases............................ 12,738 13,197 14,658 20,042 22,013 31,125 11,117 11,833
Amortization of capitalized interest.. 14 63 107 123 190 180 95 107
------- ------- ------- ------- ------- ------- ------- -------
Total earnings, as defined........... (A) $31,365 $32,644 $60,704 $53,862 $54,982 $57,070 $23,910 $30,258
======= ======= ======= ======= ======= ======= ======= =======
Fixed Changes, as Defined:
Interest including interest........... $12,738 $13,197 $14,658 $20,042 $22,013 $31,125 $11,117 $11,833
Capitalized interest.................. 277 690 202 118 1,216 1,215 458 318
Amortization of capitalized interest.. 14 83 107 123 190 180 95 107
------- ------- ------- ------- ------- ------- ------- -------
Total fixed changes, as defined..... (B) $13,029 $13,950 $14,967 $20,283 $23,419 $32,520 $11,670 $12,258
======= ======= ======= ======= ======= ======= ======= =======
Ratio of Earnings to Fixed
Charges(A)/(B)....................... 2.4 2.3 4.1 2.7 2.3 1.8 2.0 2.5
</TABLE>
<PAGE> 1
EXHIBIT 21
List of Subsidiaries
SUSQUEHANNA MEDIA CO.
Susquehanna Radio Corp.
WSBA Lico, Inc.
WVAE Lico, Inc.
WNNX Lico, Inc.
Radio Cincinnati, Inc.
WRRM Lico, Inc.
Radio Indianapolis, Inc.
WFMS Lico, Inc.
Indianapolis Radio License Co.
Indy Lico, Inc.
Radio Metroplex, Inc.
Radio San Francisco, Inc.
KFFG Lico, Inc.
KRBE Co.
KRBE Lico, Inc.
KNBR, Inc.
Bay Area Radio Corp.
KNBR Lico, Inc.
KPLX Lico, Inc.
KLIF Broadcasting, Inc.
KLIF Lico, Inc.
KPLX Radio, Inc.
KLIF Radio, Inc.
Texas Star Radio, Inc.
Susquehanna Cable Co.
York Cable Television, Inc.
Susquehanna Cable Investment Co.
Casco Cable Television, Inc.
Casco Cable Television of Bath, Maine
Cable TV of East Providence, Inc.
SBC Cable Co.
Media PCS Ventures, Inc.
Susquehanna Fiber Systems, Inc.
Susquehanna Data Services, Inc.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4
(Amendment No. 1) of Susquehanna Media Co. and Subsidiaries of our report dated
February 8, 1999, except for Notes 8 and 13 for which the date is March 24, 1999
and Note 14 for which the date is April 22, 1999 relating to the consolidated
financial statements of Susquehanna Media Co. and Subsidiaries, which appear in
such Registration Statement. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
September 8, 1999
<PAGE> 1
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____X___
CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
N/A 29-2933369
(State of incorporation (I.R.S. employer
if not a national bank) identification no.)
ONE OXFORD CENTER
301 GRANT STREET, SUITE 1100
PITTSBURGH, PA 15219
(Address of principal executive offices including zip code)
WILLIAM H. McDAVID
THE CHASE MANHATTAN BANK
GENERAL COUNSEL
270 PARK AVENUE
NEW YORK, NEW YORK 10017
TEL: (212) 270-2611
(Name, address and telephone number of agent for service)
SUSQUEHANNA MEDIA CO.
(Exact name of obligor as specified in its charter)
DELAWARE 23-2722964
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
140 EAST MARKET STREET
YORK, PA 17401
(Address of principal executive offices including zip code)
8 1/2% SENIOR SUBORDINATED NOTES DUE 2009
(Title of the indenture securities)
<PAGE> 2
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
ITEMS 3-15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect.
2. A copy of the Certificate of Authority of the Trustee (previously known
as New Trust Company, National Association) to commence business.
3. Letter dated November 24, 1997 from the Comptroller of the Currency
authorizing the exercise of fiduciary powers by the Trustee.
4. Letter dated November 24, 1997 acknowledging the name change of the
Trustee.
5. The Authorization of the Trustee to exercise corporate trust powers
(included in Exhibit 2 above).
6. A copy of the By-Laws of the Trustee as now in effect.
7. Not applicable.
8. The Trustee's consent required by Section 321(b) of the Act.
9. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining
authority.
10. Not applicable.
11. Not applicable.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Chase Manhattan Trust Company, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of
Philadelphia and State of Pennsylvania, on the 9th day of September, 1999.
CHASE MANHATTAN TRUST COMPANY,
NATIONAL ASSOCIATION
By: /s/ J.C. Progar
--------------------------
J. C. Progar
Vice President
<PAGE> 4
EXHIBIT 1
[CHASE LOGO]
CHASE MANHATTAN TRUST COMPANY,
NATIONAL ASSOCIATION
CHARTER NO. 23548
ARTICLES OF ASSOCIATION
For the purpose of organizing an Association to perform any lawful activities of
a national bank, the undersigned do enter into the following Articles of
Association:
FIRST. The title of this Association shall be Chase Manhattan Trust Company,
National Association (the "Association").
SECOND. The main office of the Association shall be in the City of Pittsburgh,
County of Allegheny, Commonwealth of Pennsylvania. The business of the
Association shall be limited to the fiduciary powers and the support of
activities incidental to the exercise of those powers. The Association will
obtain the prior written approval of the Office of the Comptroller of the
Currency before amending these Articles of Association to expand the scope of
its activities and services.
THIRD. The board of directors of this Association shall consist of not less than
five nor more than twenty-five persons, the exact number to be fixed and
determined from time to time by resolution of a majority of the full board of
directors or by resolution of a majority of the shareholders at any annual or
special meeting thereof. Each director, during the full term of his
directorship, shall own common or preferred stock of the Association or of a
holding company owning the Association, with an aggregate par, fair market or
equity value of not less than $1,000. Any vacancy in the board of directors may
be filled by action of the shareholders or a majority of the remaining
directors.
Terms of directors, including directors selected to fill vacancies, shall expire
at the next regular meeting of shareholders at which directors are elected,
unless the directors resign or are removed from office.
Despite the expiration of a director's term, the director shall continue to
serve until his or her successor is elected and qualifies or until there is a
decrease in the number of directors and his or her position is eliminated.
FOURTH. There shall be an annual meeting of the shareholders to elect directors
and transact whatever other business may be brought before the meeting. It shall
be held at the main office or any other convenient place the board of directors
may designate, on the day of each year specified therefore in the by-laws, or if
that day falls on a legal holiday in the state in which the Association is
located, on the next following banking day. If no election is held on the day
fixed or in event of a legal holiday, on the following banking day, an election
may be held on any subsequent day within 60 days of the day fixed, to be
designated by the board of directors, or, if the directors fail to fix the day,
by shareholders representing two-thirds of the shares issued and outstanding.
Advance notice of the meeting may be duly waived by the sole shareholder in
accordance with 12 C.F.R. 7.2001.
A director may resign at any time by delivering written notice to the board of
directors, its Chairperson, or to the Association, which resignation shall be
effective when the notice is delivered unless the notice specifies a later
effective date.
A director may be removed by shareholders at a meeting called to remove him or
her, when notice of the meeting stating that the purpose or one of the purposes
is to remove him or her is provided, if there is a failure to fulfill one of the
affirmative requirements for qualification, or for cause.
FIFTH. The authorized amount of capital stock of this Association shall be five
million dollars ($5,000,000), divided into fifty thousand (50,000) shares of
common stock of the par value of one hundred dollars ($ 100) each; but said
capital stock may be increased or decreased from time to time, according to the
provisions of the laws of the United States.
<PAGE> 5
No holder of shares of the capital stock of any class of the Association shall
have any preemptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued, or sold, nor
any right to subscription to any thereof other than such, if any, as the board
of directors, in its discretion may from time to time determine and at such
price as the board of directors may from time to time fix.
Unless otherwise specified in the Articles of Association or required by law,
(1) all matters requiring shareholder action, including amendments to the
Articles of Association, must be approved by shareholders owning a majority
voting interest in the outstanding voting stock, and (2) each shareholder shall
be entitled to one vote per share.
The Association, at any time and from time to time, may authorize and issue debt
obligations, whether or not subordinated, without the approval of the
shareholders.
SIXTH. The board of directors may appoint one of its members President of this
Association, and one of its members Chairperson of the board or two of its
members as Co-Chairpersons of the board, and shall have the power to appoint one
or more Vice Presidents, a Secretary who shall keep minutes of the directors'
and shareholders' meetings and be responsible for authenticating the records of
the Association, and such other officers and employees as may be required to
transact the business of this Association. A duly appointed officer may appoint
one or more officers or assistant officers if authorized by the board of
directors in accordance with the by-laws.
The board of directors shall have the power to:
(1) Define the duties of the officers, employees, and agents of the
Association.
(2) Delegate the performance of its duties, but not the responsibility for
its duties, to the officers, employees, and agents of the Association.
(3) Fix the compensation and enter into employment contracts with its
officers and employees upon reasonable terms and conditions consistent with
applicable law.
(4) Dismiss officers and employees.
(5) Require bonds from officers and employees and fix the penalty thereof.
(6) Ratify written policies authorized by the Association's management or
committees of the board.
(7) Regulate the manner in which any increase or decrease of the capital of
the Association shall be made, provided that nothing herein shall restrict the
power of shareholders to increase or decrease the capital of the Association in
accordance with law.
(8) Manage and administer the business and affairs of the Association.
(9) Adopt initial by-laws, not inconsistent with law or the Articles of
Association, for managing the business and regulating the affairs of the
Association.
(10) Amend or repeal by-laws, except to the extent that the Articles of
Association reserve this power in whole or in part to shareholders.
(11) Make contracts.
(12) Generally perform all acts that are legal for a board of directors to
perform.
SEVENTH. The board of directors shall have the power to change the location of
the main office to any other location permitted under applicable law, without
the approval of the shareholders, and shall have the power to establish or
change the location of any branch or branches of the Association to any other
location permitted under applicable law, without the approval of the
shareholders subject to approval by the Office of the Comptroller of the
Currency.
EIGHTH. The corporate existence of this Association shall continue until
termination according to the laws of the United States.
NINTH. These Articles of Association may be amended at any regular or special
meeting of the shareholders by the affirmative vote of the holders of a majority
of the stock of this Association, unless the vote of the holders of a greater
amount of stock is required by law, and in that case by the vote of the holders
of such greater amount. The Association's board of directors may propose one or
more amendments to the Articles of Association for submission to the
shareholders.
<PAGE> 6
EXHIBIT 2
[LOGO]
Comptroller of the Currency
Administrator of National Banks
Washington, D.C. 20219
CERTIFICATE
WHEREAS, satisfactory evidence has been presented to the Comptroller of
the Currency that NEW TRUST COMPANY, NATIONAL ASSOCIATION located in PITTSBURGH
State of PENNSYLVANIA has complied with all provisions of the statutes of the
United States required to be complied with before being authorized to commence
the business of banking as a National Banking Association;
NOW THEREFORE, I hereby certify that the above-named association is
authorized to commence the business of banking as a National Banking
Association.
IN TESTIMONY WHEREOF, witness my signature and seal
of office this 24th day of November, 1997.
Charter No. 23548
/s/ [signature not legible]
Deputy Comptroller of the Currency
[SEAL OF THE COMPTROLLER OF THE CURRENCY]
<PAGE> 7
EXHIBIT 3
[Logo]
Comptroller of the Currency
Administrator of National Banks
Northeastern District Licensing
1114 Avenue of the Americas, Suite 3900 Telephone: (212) 790-4055
New York, New York 10036 Fax: (212) 790-4098
November 24, 1997
Mr. Daryl J. Zupan
President and CEO
New Trust Company, National Association
c/o Mellon Bank, N.A., Corporate Trust
Two Mellon Bank Center, Suite 325
Pittsburgh, Pennsylvania 15259
Re: Charter for a National Trust Bank, New Trust Company, National
Association, Pittsburgh, Pennsylvania ACN 97 NE 01 0022
Dear Mr. Zupan:
The Comptroller of the Currency (OCC) has found that you have met all conditions
imposed by the OCC and completed all steps necessary to commence the business of
banking. Your charter certificate is enclosed. You are authorized to commence
business on November 24, 1997.
This letter also constitutes OCC authorization to exercise fiduciary powers.
You are reminded that several of the standard conditions contained in the
preliminary approval letter dated October 23, 1997 will continue to apply once
the bank opens and by opening, you agree to subject your association to these
conditions of operation. Some of the conditions bear reiteration here:
1. Regardless of the association's FDIC insurance status, the association
is subject to the Change in Bank Control Act (12 U.S.C. 1817(j)) by
virtue of its national bank charter. Please refer to item 4 in the list
of standard conditions sent with the preliminary approval letter.
2. The board of directors is responsible for regular review and update of
policies and procedures and for assuring ongoing compliance with them.
This includes maintaining an internal control system that ensures
compliance with the currency reporting and record keeping requirements
of the Bank Secrecy Act (BSA). The board is expected to train its
personnel in BSA procedures and designate one person or a group to
monitor day-to-day compliance.
3. The bank will not engage in full commercial powers authorized to
national banks without the OCC's prior approval.
Following the commencement of operations, bank management is urged to become
familiar with the requirements of the Securities Exchange Act of 1934 and Part
11 of the Comptroller's regulations relative to the registration of the bank's
equity securities and related periodic reports. These requirements will be
applicable to your bank when the number of shareholders of record is maintained
at 500 or more. Such registration may be subsequently terminated pursuant to the
Act, only when the number of shareholders of record is reduced to fewer than
300.
<PAGE> 8
Should you have any questions regarding the supervision of your bank, please
contact the portfolio manager who will be responsible for OCC's ongoing
supervisory effort at your institution. You will be notified of the name and
number of the appropriate individual in the near future.
Sincerely,
/s/ Michael G. Tiscia
Michael G. Tiscia
Licensing Manager
Enclosure
cc: Official File
Field File
<PAGE> 9
EXHIBIT 4
[Logo]
Comptroller of the Currency
Administrator of National Banks
Northeastern District
1114 Avenue of the Americas, Suite 3900
New York, New York 10036
November 24, 1997
Joseph R. Bielawa
Vice President and Assistant General Counsel
The Chase Manhattan Bank
270 Park Avenue, 39th Floor
New York, New York 10017
Re: Change in Corporate Title
New Trust Company, National Association (Bank)
Pittsburgh, Pennsylvania
Dear Mr. Bielawa:
The Office of the Comptroller of the Currency (OCC) has received your
submission, concerning the change and amendment to Article First of the
above-referenced Bank's Articles of Association. The OCC has amended its records
to reflect that effective November 24, 1997, the corporate title of New Trust
Company, National Association, Charter Number 23548, was changed to "Chase
Manhattan Trust Company, National Association."
You are reminded that the OCC does not approve national bank name changes nor
does it maintain official titles or the retention of alternate titles. The use
of other titles or the retention of the rights to any previously used title is
the responsibility of the Bank's board of directors. Legal counsel should be
consulted to determine whether or not the new title, or any previously used
title, could be challenged by competing institutions under the provisions of
federal or state law.
A copy of the amended Articles as accepted for filing is enclosed for the Bank's
records.
Very truly yours,
/s/ Linda Leickel
Linda Leickel
Senior Licensing Analyst
Charter No.: 23548
Control No.: 97 NE 04 010 w/97 NE 01 022
<PAGE> 10
EXHIBIT 6
[CHASE LOGO]
CHASE MANHATTAN TRUST COMPANY,
NATIONAL ASSOCIATION
BY-LAWS
ARTICLE I. MEETINGS OF SHAREHOLDERS
SECTION 1.1. ANNUAL MEETING. The regular annual meeting of the shareholders to
elect directors and transact whatever other business may properly come before
the meeting, shall be held at the main office of the Association, or such other
place as the board may designate, and at such time in each year as may be
designated by the board of directors. Unless otherwise provided by law, notice
of the meeting may be waived by the Association's sole shareholder in accordance
with 12 C.F.R. Section 7.2001. If, for any cause, an election of directors is
not made on that date, or in the event of a legal holiday, on the next following
banking day, an election may be held on any subsequent day within 60 days of the
date fixed, to be designated by the board, or, if the directors fail to fix the
date, by shareholders representing two thirds of the shares issued and
outstanding.
SECTION 1.2. SPECIAL MEETINGS. Except as otherwise specifically provided by
statute, special meetings of the shareholders may be called for any purpose at
any time by a majority of the board of directors or by any one or more
shareholders owning, in the aggregate, not less than twenty-five percent of the
stock of the Association or by the Chairperson of the board of directors or the
President. Unless otherwise provided by law, advance notice of a special meeting
may be waived by the Association's Sole Shareholder in accordance with 12 C.F.R.
Section 7.2001.
SECTION 1.3. NOMINATIONS OF DIRECTORS. Nominations for election to the board of
directors may be made by the board of directors or by any stockholder of any
outstanding class of capital stock of the Association entitled to vote for the
election of directors. Nominations, other than those made by or on behalf of the
existing management of the Association, shall be made in writing and shall be
delivered or mailed to the President of the Association and to the Comptroller
of the Currency, Washington, D.C., not less than 14 days nor more than 50 days
prior to any meeting of shareholders called for the election of directors,
provided, however, that if less than 21 days' notice of the meeting is given to
shareholders, such nomination shall be mailed or delivered to the President of
the Association and to the Comptroller of the Currency not later than the close
of business on the seventh (7th) day following the day on which the notice of
meeting was mailed. Such notification shall contain the following information to
the extent known to the notifying shareholder.
(1) The name and address of each proposed nominee.
(2) The principal occupation of each proposed nominee.
(3) The total number of shares of capital stock of the Association
that will be voted for each proposed nominee.
(4) The name and residence address of the notifying shareholder.
(5) The number of shares of capital stock of the Association owned
by the notifying shareholder. Nominations not made in accordance herewith may,
in his/her discretion, be disregarded by the Chairperson of the meeting, and
upon his/her instructions, the vote tellers may disregard all votes cast for
each such nominee.
SECTION 1.4. PROXIES. Shareholders may vote at any meeting of the shareholders
by proxies duly authorized in writing, but no officer or employee of this
Association shall act as proxy. Proxies shall be valid only for one meeting to
be specified therein, and any adjournments of such meeting. Proxies shall be
dated and filed with the records of the meeting. Proxies with rubber stamped
facsimile signatures may be used and unexecuted proxies may be counted upon
receipt of a confirming telegram from the shareholder. Proxies meeting above
requirements submitted at any time during a meeting shall be accepted.
SECTION 1.5 QUORUM. A majority of the outstanding capital stock, represented in
person or by proxy, shall constitute a quorum at any meeting of shareholders,
unless otherwise provided by law, or by the shareholders or directors pursuant
to Section 10.2, but less than a quorum may adjourn any meeting, from time to
time, and the meeting may be held, as adjourned, without further notice. A
majority of the votes cast shall decide every question or matter submitted to
the shareholders at any meeting, unless otherwise provided by law or by the
Articles of Association, or by the shareholders or directors pursuant to Section
10.2. Any action required or permitted to be taken by the shareholders may be
taken without a meeting by unanimous written consent of the shareholders to a
<PAGE> 11
resolution authorizing the action. The resolution and the written consent shall
be filed with the minutes of the proceedings of the shareholders.
ARTICLE II. DIRECTORS
SECTION 2.1. BOARD OF DIRECTORS. The board of directors ("board") shall have the
power to manage and administer the business and affairs of the Association.
Except as expressly limited by law, all corporate powers of the Association
shall be vested in and may be exercised by the board.
SECTION 2.2. NUMBER. The board shall consist of not less than five nor more than
twenty-five persons, the exact number within such minimum and maximum limits to
be fixed and determined from time to time by resolution of a majority of the
full board or by resolution of a majority of the shareholders at any meeting
thereof; provided, however, that a majority of the full board may not increase
the number of directors to a number which: (1) exceeds by more than two the
number of directors last elected by shareholders where such number was 15 or
less; and (2) exceeds by more than four the number of directors last elected by
shareholders where such number was 16 or more, but in no event shall the number
of directors exceed 25.
SECTION 2.3. ORGANIZATION MEETING. The Secretary shall notify the
directors-elect of their election and of the time at which they are required to
meet at the main office of the Association to organize the new board and elect
and appoint officers of the Association for the succeeding year. Such meeting
shall be held on the day of the election or as soon thereafter as practicable,
and, in any event, within 30 days thereof. If, at the time fixed for such
meeting, there shall not be a quorum, the directors present may adjourn the
meeting, from time to time, until a quorum is obtained.
SECTION 2.4. REGULAR MEETINGS. The time and location of regular meetings of the
board shall be set by the board. Such meetings may be held without notice. Any
business may be transacted at any regular meeting. The board may adopt any
procedures for the notice and conduct of any meetings as are not prohibited by
law.
SECTION 2.5. SPECIAL MEETINGS. Special meetings of the board may be called at
the request of the Chairperson or Co-Chairperson of the board, the President, or
three or more directors. Each member of the board shall be given notice stating
the time and place, by telegram, telephone, letter or in person, of each such
special meeting at least one day prior to such meeting. Any business may be
transacted at any special meeting.
SECTION 2.6. ACTION BY THE BOARD. Except as otherwise provided by law, corporate
action to be taken by the board shall mean such action at a meeting of the
board. Any action required or permitted to be taken by the board or any
committee of the board may be taken without a meeting if all members of the
board or the committee consent in writing to a resolution authorizing the
action. The resolution and the written consents thereto shall be filed with the
minutes of the proceedings of the board or committee. Any one or more members of
the board or any committee may participate in a meeting of the board or
committee by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to hear each other at the same
time. Participation by such means shall constitute presence in person at such
meeting.
SECTION 2.7. WAIVER OF NOTICE. Notice of a special meeting need not be given to
any director who submits a signed waiver of notice, whether before or after the
meeting, or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to him or her.
SECTION 2.8. QUORUM AND MANNER OF ACTING. Except as otherwise required by law,
the Articles of Association or these by-laws, a majority of the directors shall
constitute a quorum for the transaction of any business at any meeting of the
board and the act of a majority of the directors present and voting at a meeting
at which a quorum is present shall be the act of the board. In the absence of a
quorum, a majority of the directors present may adjourn any meeting, from time
to time, until a quorum is present and no notice of any adjourned meeting need
be given. At any such adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally called.
SECTION 2.9. VACANCIES. In the event a majority of the full board increases the
number of directors to a number which exceeds the number of directors last
elected by shareholders, as permitted by Section 2.2, directors may be appointed
to fill the resulting vacancies by vote of such majority of the full board. In
the event of a vacancy in the board for any other cause, a director may be
appointed to fill such vacancy by vote of a majority of the remaining directors
then in office.
<PAGE> 12
SECTION 2.10. REMOVAL OF DIRECTORS. The vacancy created by the removal of a
director pursuant to this Section may be filled by the board in accordance with
Section 2.9 of these by-laws or by the shareholders.
ARTICLE III. COMMITTEES
SECTION 3.1. EXECUTIVE COMMITTEE. There may be an executive committee consisting
of the Chairperson or Co-Chairperson of the board and not less than two other
directors appointed by the board annually or more often. Subject to the
limitations in Section 3.4(g) of these by-laws, the executive committee shall
have the maximum authority permitted by law.
SECTION 3.2. AUDIT COMMITTEE. There may be an audit committee composed of not
less than two directors, exclusive of any active officers, appointed by the
board annually or more often, whose duty it shall be to make an examination at
least once during each calendar year and within fifteen months of the last
examination into the affairs of the Association, or cause continuous suitable
examinations to be made, by auditors responsible only to the board, and to
report the results of any such examinations in writing to the board from time to
time. Such examinations shall include audits of the fiduciary business of the
Association as may be required by law or regulation.
SECTION 3.3. OTHER COMMITTEES. The board may appoint, from time to time, other
committees of one or more persons, for such purposes and with such powers as the
board may determine.
SECTION 3.4. GENERAL. (a) Each committee shall elect a Chairperson from among
the members thereof and shall also designate a Secretary of the committee, who
shall keep a record of its proceedings.
(b) Vacancies occurring from time to time in the membership of any
committee shall be filled by the board for the unexpired term of the member
whose departure causes such vacancy. The board may designate one or more
alternate members of any committee, who may replace any absent member or members
at any meeting of such committee.
(c) Each committee shall adopt its own rules of procedure and shall
meet at such stated times as it may, by resolution, appoint. It shall also meet
whenever called together by its Chairperson or the Chairperson of the board.
(d) No notice of regular meetings of any committee need be given.
Notice of every special meeting shall be given either by mailing such notice to
each member of such committee at his or her address, as the same appears in the
records of the Association, at least two days before the day of such meeting, or
by notifying each member on or before the day of such meeting by telephone or by
personal notice, or by leaving a written notice at his or her residence or place
of business on or before the day of such meeting. Waiver of notice in writing of
any meeting, whether prior or subsequent to such meeting, or attendance at such
meeting, shall be equivalent to notice of such meeting. Unless otherwise
indicated in the notice thereof, any and all business may be transacted at any
special meeting.
(e) All committees shall, with respect to all matters, be subject to
the authority and direction of the board and shall report to it when required.
(f) Unless otherwise required by law, the Articles of Association or
these by-laws, a quorum at any meeting of any committee shall be one-third of
the full membership and present shall be the act of the committee.
(g) No committee shall have authority to take any action which is
expressly required by law or regulation to be taken at a meeting of the board or
by a specified proportion of directors.
ARTICLE IV. OFFICERS AND EMPLOYEES
SECTION 4.1. CHAIRPERSON OF THE BOARD. The board shall appoint one of its
members to be the Chairperson of the board, or two persons to serve as
Co-Chairperson of the board to serve at its pleasure. Such person shall preside
at all meetings of the board. The Chairperson or Co-Chairpersons of the board
shall supervise the carrying out of the policies adopted or approved by the
board; shall have general executive powers, as well as the specific powers
conferred by these by-laws; and shall also have and may exercise such further
powers and duties as from time to time may be conferred upon, or assigned by the
board.
SECTION 4.2. PRESIDENT. The board may appoint one of its members to be the
President of the Association. In the absence of the Chairperson or
Co-Chairpersons, the President shall preside at any meeting of the board. The
President shall have general executive powers, and shall have and may exercise
any and all other powers and duties pertaining by law, regulation, or practice
to the office of President, or imposed by these by-laws. The President
<PAGE> 13
shall also have and may exercise such further powers and duties as from time to
time may be conferred, or assigned by the board.
SECTION 4.3. VICE PRESIDENT. The board may appoint one or more Vice Presidents.
Each Vice President shall have such powers and duties as may be assigned by the
board.
SECTION 4.4. SECRETARY. The board shall appoint a Secretary, Cashier, or other
designated officer who shall be Secretary of the board and of the Association,
and shall keep accurate minutes of all meetings. The Secretary shall attend to
the giving of all notices required by these by-laws; shall be custodian of the
corporate seal, records, documents and papers of the Association; shall provide
for the keeping of proper records of all transactions of the Association; shall
have and may exercise any and all other powers and duties pertaining by law,
regulation or practice, to the office of Cashier, or imposed by these by-laws;
and shall also perform such other duties as may be assigned from time to time,
by the board.
SECTION 4.5. OTHER OFFICERS. The board may appoint one or more Assistant Vice
Presidents, one or more Trust Officers, one or more Assistant Secretaries, one
or more Assistant Cashiers, one or more Managers and Assistant Managers of
branches and such other officers and attorneys in fact as from time to time may
appear to the board to be required or desirable to transact the business of the
Association. Such officers shall respectively exercise such powers and perform
such duties as pertain to their several offices, or as may be conferred upon, or
assigned to, them by the board, the Chairperson or Co-Chairpersons of the board,
or the President. The board may authorize an officer to appoint one or more
officers or assistant officers.
SECTION 4.6. RESIGNATION. An officer may resign at any time by delivering notice
to the Association. A resignation is effective when the notice is given unless
the notice specifies a later effective date.
ARTICLE V. FIDUCIARY ACTIVITIES
SECTION 5.1. TRUST COMMITTEE. There shall be a Trust Committee of this
Association composed of four or more members, who shall be capable and
experienced officers or directors of the Association. The Committee is charged
with the responsibility for the investment, retention, or disposition of assets
held in accounts with respect to which the Association has investment authority;
for the review of the assets of accounts for which the Association has
investment authority promptly after the acceptance of such an account and at
least once during every calendar year thereafter to determine the advisability
of retaining or disposing of such assets; for the determination of the manner in
which proxies received for accounts for which the Association has responsibility
for the voting of proxies shall be voted; for the determination of all
substantial questions involving discretionary authority of the Association of a
non-investment nature, including, but not limited to, distribution of principal
and/or income in respect of any account; for providing advice as to the
investment, retention, or disposition of assets in investment advisory accounts
maintained by the Association; for the making of such reports as this board
shall require; and for such other responsibilities as may be assigned by this
board. The Trust Committee, in discharging its aforementioned responsibilities,
may authorize officers of the Association to exercise such powers and under such
conditions as the Committee may from time to time prescribe.
SECTION 5.2. TRUST INVESTMENTS. Funds held in a fiduciary capacity shall be
invested according to the instrument establishing the fiduciary relationship and
local law. Where such instrument does not specify the character and class of
investments to be made and does not vest in the Association a discretion in the
matter, funds held pursuant to such instrument shall be invested in investments
in which corporate fiduciaries may invest under applicable law.
SECTION 5.3. TRUST AUDIT COMMITTEE. The board shall appoint a committee of at
least two directors, exclusive of any active officer of the association, which
shall, at least once during each calendar year make suitable audits of the
association's fiduciary activities or cause suitable audits to be made by
auditors responsible only to the board, and at such time shall ascertain whether
fiduciary powers have been administered according to law, Part 9 of the
Regulations of the Comptroller of the Currency, and sound fiduciary principles.
SECTION 5.4. FIDUCIARY FILES. There shall be maintained by the association all
fiduciary records necessary to assure that its fiduciary responsibilities have
been properly undertaken and discharged.
ARTICLE VI. STOCK AND STOCK CERTIFICATES
<PAGE> 14
SECTION 6.1. TRANSFERS. Shares of stock shall be transferable on the books of
the Association, and a transfer book shall be kept in which all transfers of
stock shall be recorded. Every person becoming a shareholder by such transfer
shall, in proportion to his or her shares, succeed to all rights of the prior
holder of such shares. The board may impose conditions upon the transfer of the
stock reasonably calculated to simplify the work of the Association with respect
to stock transfers, voting at shareholder meetings, and related matters and to
protect it against fraudulent transfers.
SECTION 6.2. STOCK CERTIFICATES. Certificates of stock shall bear the signature
of the Chairperson or Co-Chairpersons of the board or President (which may be
engraved, printed or impressed), and shall be signed manually or by facsimile
process by the Secretary, Assistant Secretary, Cashier, Assistant Cashier, or
any other officer appointed by the board for that purpose, to be known as an
authorized officer, and the seal of the Association shall be engraved thereon.
Each certificate shall recite on its face that the stock represented thereby is
transferable only upon the books of the Association properly endorsed. In case
any such officer who has signed or whose facsimile signature has been placed
upon such certificate shall have ceased to be such before such certificate is
issued, it may be issued by the Association with the same effect as if such
officer had not ceased to be such at the time of its issue. The corporate seal
may be a facsimile, engraved or printed.
ARTICLE VII. CORPORATE SEAL
SECTION 7.1. CORPORATE SEAL. The Chairperson, the President, the Cashier, the
Secretary or any Assistant Cashier or Assistant Secretary, or other officer
thereunto designated by the board, shall have authority to affix the corporate
seal to any document requiring such seal, and to attest the same. Such seal
shall be substantially in the following form: A circle, with the words "Chase
Manhattan Trust Company, National Association" within such circle.
ARTICLE VIII. MISCELLANEOUS PROVISIONS
SECTION 8.1. FISCAL YEAR. The fiscal year of the Association shall be the
calendar year.
SECTION 8.2. EXECUTION OF INSTRUMENTS. All agreements, indentures, mortgages,
deeds, conveyances, transfers, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules, accounts,
affidavits, bonds, undertakings, proxies and other instruments or documents may
be signed, executed, acknowledged, verified, delivered or accepted on behalf of
the Association by the Chairperson or Co-Chairpersons of the board, or the
President, or any Vice Chairperson, or any Managing Director, or any Vice
President, or any Assistant Vice President, or the Chief Financial Officer, or
the Controller, or the Secretary, or the Cashier, or, if in connection with
exercise of fiduciary powers of the Association, by any of those officers or by
any Trust Officer. Any such instruments may also be executed, acknowledged,
verified, delivered or accepted on behalf of the Association in such other
manner and by such other officers as the board may from time to time direct. The
provisions of this Section 8.2 are supplementary to any other provision of these
by-laws.
SECTION 8.3. RECORDS. The Articles of Association, the by-laws and the
proceedings of all meetings of the shareholders, the board, and standing
committees of the board, shall be recorded in appropriate minute books provided
for that purpose. The minutes of each meeting shall be signed by the Secretary,
Cashier or other officer appointed to act as Secretary of the meeting.
SECTION 8.4. CORPORATE GOVERNANCE PROCEDURES. To the extent not inconsistent
with applicable Federal banking law, bank safety and soundness or these by-laws,
the corporate governance procedures found in the Delaware General Corporation
Law shall be followed by the Association.
ARTICLE IX. INDEMNIFICATION
SECTION 9.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director or an officer of the Association or is or was serving at the request of
the Association as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan (hereinafter an "indemnitee"), whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent,
<PAGE> 15
shall be indemnified and held harmless by the Association to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Association to provide broader indemnification
rights than such law permitted the Association to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith; provided, however, that, except as provided in Section 9.3 of these
by-laws with respect to proceedings to enforce rights to indemnification, the
Association shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the board.
SECTION 9.2. RIGHT TO ADVANCEMENT OF EXPENSES. The right to indemnification
conferred in Section 9.1 of these by-laws shall include the right to be paid by
the Association the expenses (including attorney's fees) incurred in defending
any such proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the Association of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section 9.2 or otherwise. The rights to indemnification and to the advancement
of expenses conferred in Sections 9.1 and 9.2 of these by-laws shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
SECTION 9.3. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Section 9.1 or
9.2 of these by-laws is not paid in full by the Association within sixty (60)
days after a written claim has been received by the Association except in the
case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty (20) days, the indemnitee may at any time thereafter
bring suit against the Association to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by the
Association to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (1) any suit brought by the indemnitee to
enforce a right to indemnification hereunder (but not in a suit brought by the
indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (2) any suit brought by the Association to recover an
advancement of expenses pursuant to the terms of an undertaking, the Association
shall be entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation Law. Neither the failure of the Association
(including the board, the Association's independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Association (including the board, the Association's independent legal counsel,
or its shareholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Association to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article IX or otherwise shall be on the Association.
SECTION 9.4. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and to the
advancement of expenses conferred in this Article IX shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, the Association's Articles of Association, by-laws, agreement, vote of
shareholders or disinterested directors or otherwise.
SECTION 9.5. INSURANCE. The Association may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Association or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Association would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
SECTION 9.6. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE ASSOCIATION. The
Association may, to the extent authorized from time to time by the board, grant
rights to indemnification and to the advancement of expenses to
<PAGE> 16
any employee or agent of the Association to the fullest extent of the provisions
of this Article IX with respect to the indemnification and advancement of
expenses of directors and officers of the Association.
ARTICLE X. BY-LAWS
SECTION 10.1. INSPECTION. A copy of the by-laws, with all amendments, shall at
all times be kept in a convenient place at the main office of the Association,
and shall be open for inspection to all shareholders during banking hours.
SECTION 10.2. AMENDMENTS. The by-laws may be amended, altered or repealed, at
any regular meeting of the board by a vote of a majority of the total number of
the directors except as provided below. The Association's shareholders may amend
or repeal the by-laws even though the by-laws may be amended or repealed by its
board.
<PAGE> 17
EXHIBIT 8
Consent for Records of Governmental Agencies
to be Made Available to the Commission
The undersigned, Chase Manhattan Trust Company, National Association,
pursuant to Section 321(b) of The Trust Indenture Act of 1939, hereby authorizes
the Board of Governors of the Federal Reserve System, the Federal Reserve Banks,
the Treasury Department, the Comptroller of the Currency and the Federal Deposit
Insurance Corporation, under such conditions as they may prescribe, to make
available to the Commission such reports, records or other information as they
may have available with respect to the undersigned as a prospective trustee
under an indenture to be qualified under the aforesaid Trustee Indenture Act of
1939 and to make through their examiners or other employees for the use of the
Commission, examinations of the undersigned prospective Trustee.
The undersigned also, pursuant to Section 321(b) of said Trust
Indenture Act of 1939, consents that reports of examination by the Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Commission upon request therefor.
Dated this September 9, 1999.
Chase Manhattan Trust Company,
National Association
By: /s/ J.C. Progar
--------------------------
J.C. Progar
Vice President
<PAGE> 18
EXHIBIT 9
CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION
STATEMENT OF CONDITION
MARCH 31, 1999
<TABLE>
<CAPTION>
($000)
--------
<S> <C>
ASSETS
Cash and Due From Banks $ 6,195
Securities Available for Sale 3,027
Premises and Fixed Assets
647
Intangible Assets 159,849
--------
Total Assets $169,718
========
LIABILITIES
Sundry Liabilities and Accrued Expenses $ 985
--------
STOCKHOLDER'S EQUITY
Common Stock $ 5,000
Surplus 156,892
Retained Earnings 6,841
--------
Total Stockholder's Equity $168,733
--------
Total Liabilities and Stockholder's Equity $169,718
========
</TABLE>
<PAGE> 1
EXHIBIT 99.1
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON _________, 1999,
UNLESS EXTENDED.
Susquehanna Media Co.
LETTER OF TRANSMITTAL
Offer To Exchange Its 8 1/2% Senior Subordinated Notes Due 2009
Which Have Been Registered Under The Securities Act of 1933
For Any And All Of Its Outstanding 8 1/2% Senior Subordinated Notes Due 2009
Pursuant To The Prospectus Dated _________, 1999
The exchange agent
for the exchange offer is:
CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION
<TABLE>
<S> <C>
By Facsimile: By Mail or Hand (9:00 a.m. to 5:00 p.m., local time):
(215) 972-8372 Chase Manhattan Trust Company, National Association
Attention: Joseph C. Progar 1650 Market Street
Confirm by Telephone to: (215) 988-1317 One Liberty Place, Suite 5210
Philadelphia, Pennsylvania 19103
Attention: Joseph C. Progar
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE
INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of outstanding
notes (as defined below) if either (i) outstanding notes are to be forwarded
herewith, or (ii) tenders of outstanding notes are to be made by book-entry
transfer to an account maintained by Chase Manhattan Trust Company, National
Association (the "exchange agent") at The Depository Trust Company ("DTC")
pursuant to the procedures set forth in "The Exchange Offer Procedures for
Tendering Outstanding Notes" in the prospectus.
Holders of outstanding notes whose certificates for such outstanding
notes are not immediately available or who cannot deliver their certificates,
this Letter of Transmittal and all other required documents to the exchange
agent on or prior to the expiration date or who cannot complete the procedures
for book-entry transfer on a timely basis, may tender their outstanding notes
according to the guaranteed delivery procedures set forth in "The Exchange
Offer-- Procedures for Tendering Outstanding Notes" in the prospectus.
<PAGE> 2
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
List below the outstanding notes of which you are a holder. If the
space provided below is inadequate, list the certificate numbers and principal
amount on a separate signed schedule and attach that schedule to this Letter of
Transmittal. SEE INSTRUCTION 3.
ALL TENDERING HOLDERS COMPLETE THIS BOX:
Description of Outstanding Notes Tendered
<TABLE>
<CAPTION>
Name(s) and Address(es) of Registered Holder(s) Outstanding Notes Tendered
(Fill in, if blank)
- ----------------------------------------------------------------------------------------------------------------------
Certificate
Number(s)* Principal Amount Principal Amount
(Attach (Attach Tendered (if less
additional list if additional list if than all)**
necessary) necessary)
------------------ ------------------ -----------------
<S> <C> <C> <C>
$ $
------------------ ------------------ -----------------
------------------ ------------------ -----------------
------------------ ------------------ -----------------
------------------ ------------------ -----------------
Total Amount Tendered: $ $
------------------ ------------------ -----------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF ANY ADDITIONAL LISTS ARE ATTACHED.
* Need not be completed by book-entry holders. Such holders should check
the appropriate box below and provide the requested information.
** Need not be completed if tendering for exchange all outstanding notes
held. Outstanding notes may be tendered in whole or in part in integral
multiples of $1,000 principal amount. ALL OUTSTANDING NOTES HELD SHALL
BE DEEMED TENDERED UNLESS A LESSER NUMBER IS SPECIFIED IN THIS COLUMN.
SEE INSTRUCTION 4.
(Boxes Below To Be Checked By Eligible Institutions Only. SEE INSTRUCTION 1.)
[ ] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AT DTC AND
COMPLETE THE FOLLOWING:
2
<PAGE> 3
Name of Tendering Institution:__________________________________________________
DTC Account Number:_____________________________________________________________
Transaction Code Number:________________________________________________________
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OUTSTANDING NOTES are BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):________________________________________________
Window Ticket Number (if any):__________________________________________________
Date of Notice of Guaranteed Delivery:__________________________________________
Institution Which Guaranteed Delivery:__________________________________________
If Guaranteed Delivery is to be made by book-entry transfer:____________________
Name of Tendering Institution:__________________________________________________
DTC Account Number:_____________________________________________________________
Transaction Code Number:________________________________________________________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED OUTSTANDING NOTES FOR
YOUR OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:___________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
Telephone Number and Contact Person:____________________________________________
3
<PAGE> 4
Ladies and Gentlemen:
The undersigned hereby tenders to Susquehanna Media Co., a Delaware
corporation ("Susquehanna Media" or the "Company"), the above described
principal amount of Susquehanna Media's 8 1/2% Senior Subordinated Notes due
2009 (the "outstanding notes") in exchange for a like principal amount of
Susquehanna Media's 8 1/2% Senior Subordinated Notes due 2009 (the "exchange
notes"), which have been registered under the Securities Act of 1933 (the
"Securities Act"), upon the terms and subject to the conditions set forth in the
prospectus dated ________, 1999 (as the same may be amended or supplemented from
time to time, the "prospectus"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which, together with the prospectus, constitute the
"exchange offer").
Subject to and effective upon the acceptance for exchange of the
outstanding notes tendered herewith, the undersigned hereby sells, assigns and
transfers to or upon the order of Susquehanna Media all right, title and
interest in and to such outstanding notes as are being tendered herewith. The
undersigned hereby irrevocably constitutes and appoints the exchange agent as
its agent and attorney-in-fact (with full knowledge that the exchange agent is
also acting as agent of Susquehanna Media in connection with the exchange offer
and as trustee under the indenture for the outstanding notes and the exchange
notes) with respect to the tendered outstanding notes, with full power of
substitution (such power of attorney being an irrevocable power coupled with an
interest), subject only to the right of withdrawal described in the prospectus,
to: (i) deliver such outstanding notes to Susquehanna Media together with all
accompanying evidences of transfer and authenticity to, or upon the order of,
Susquehanna Media upon receipt by the exchange agent, as the undersigned's
agent, of the exchange notes to be issued in exchange for such outstanding
notes; (ii) present certificates for such outstanding notes for transfer, and to
transfer such outstanding notes on the account books maintained by DTC; and
(iii) receive for the account of Susquehanna Media all benefits and otherwise
exercise all rights of beneficial ownership of such outstanding notes, all in
accordance with the terms and conditions of the exchange offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
OUTSTANDING NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, SUSQUEHANNA MEDIA WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OUTSTANDING NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE
CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY
ADDITIONAL DOCUMENTS DEEMED BY SUSQUEHANNA MEDIA OR THE EXCHANGE AGENT TO BE
NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, SALE, ASSIGNMENT AND TRANSFER
OF THE OUTSTANDING NOTES TENDERED HEREBY. THE UNDERSIGNED HAS READ AND AGREES TO
ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the
outstanding notes tendered hereby should be printed above, if they are not
already set forth above, as they appear on the certificates representing such
outstanding notes. The certificate number(s) and the outstanding notes that the
undersigned wishes to tender should be indicated in the appropriate boxes above.
If any tendered outstanding notes are not exchanged pursuant to the
exchange offer for any reason, or if certificates are submitted for more
outstanding notes than are tendered or accepted for exchange, certificates for
such nonexchanged or nontendered outstanding notes will be returned (or, in the
case of outstanding notes tendered by book-entry transfer, such outstanding
notes will be credited to
4
<PAGE> 5
an account maintained at DTC), without expense to the tendering holder promptly
following the expiration or termination of the exchange offer.
The undersigned understands that tenders of outstanding notes pursuant
to any one of the procedures described in "The Exchange Offer - Procedures for
Tendering Outstanding Notes" in the prospectus and in the instructions herein
will, upon Susquehanna Media's acceptance for exchange of such tendered
outstanding notes, constitute a binding agreement between the undersigned and
Susquehanna Media upon the terms and subject to the conditions of the exchange
offer. The undersigned recognizes that, under certain circumstances set forth in
the prospectus, Susquehanna Media may not be required to accept for exchange any
of the outstanding notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the exchange notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of outstanding notes, that such exchange notes be credited to the
account indicated above maintained at DTC. If applicable, substitute
certificates representing outstanding notes not exchanged or not accepted for
exchange will be issued to the undersigned or, in the case of a book-entry
transfer of outstanding notes, will be credited to the account indicated above
maintained at DTC. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please deliver exchange notes to the undersigned at the address
shown below the undersigned's signature.
BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT:
(i) THE UNDERSIGNED IS NOT AN "AFFILIATE" OF SUSQUEHANNA MEDIA
(WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT), OR
IF THE UNDERSIGNED IS AN AFFILIATE, THE UNDERSIGNED WILL
COMPLY WITH THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES ACT TO THE EXTENT APPLICABLE;
(ii) ANY EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING
ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS; AND
(iii) THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY
PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF
THE SECURITIES ACT) OF EXCHANGE NOTES TO BE RECEIVED IN THE
EXCHANGE OFFER.
IF THE UNDERSIGNED IS NOT A BROKER-DEALER, BY TENDERING OUTSTANDING
NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED REPRESENTS AND
AGREES THAT IT IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A
DISTRIBUTION OF EXCHANGE NOTES. IF THE UNDERSIGNED IS A BROKER-DEALER THAT WILL
RECEIVE EXCHANGE NOTES FOR ITS OWN ACCOUNT IN EXCHANGE FOR OUTSTANDING NOTES
PURSUANT TO THE EXCHANGE OFFER, BY TENDERING OUTSTANDING NOTES AND EXECUTING
THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED REPRESENTS AND AGREES THAT SUCH
OUTSTANDING NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL
DELIVER A PROSPECTUS MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN
CONNECTION WITH ANY RESALE OF EXCHANGE NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING
AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT
THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
SUSQUEHANNA MEDIA HAS AGREED THAT STARTING ON THE EXPIRATION DATE AND ENDING ON
THE CLOSE OF BUSINESS ON THE FIRST ANNIVERSARY OF THE EXPIRATION DATE, IT WILL
MAKE THE PROSPECTUS AVAILABLE TO ANY PARTICIPATING BROKER-DEALER IN CONNECTION
WITH ANY SUCH RESALE.
5
<PAGE> 6
All authority herein conferred or agreed to be conferred in this Letter
of Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the prospectus and in the instructions contained in this Letter of
Transmittal, this tender is irrevocable.
PLEASE SIGN HERE PLEASE SIGN HERE
_________________________________ _________________________________
Authorized Signature Authorized Signature
Name:____________________________ Name:____________________________
Title:___________________________ Title:___________________________
Address:_________________________ Address:_________________________
_________________________________ _________________________________
Telephone Number:________________ Telephone Number:________________
Dated:___________________________ Dated:___________________________
_________________________________ _________________________________
Taxpayer Identification or Taxpayer Identification or
Social Security Number Social Security Number
(NOTE: Signature(s) must be guaranteed if required by INSTRUCTIONS 2
AND 5. This Letter of Transmittal must be signed by the registered holder(s)
exactly as the name(s) appear(s) on certificate(s) for the outstanding notes
hereby tendered or on a security position listing, or by any person(s)
authorized to become the registered holder(s) by endorsements and documents
transmitted herewith, including such opinions of counsel, certifications and
other information as may be required by Susquehanna Media or the trustee for the
outstanding notes to comply with the restrictions on transfer applicable to the
outstanding notes. If signature is by an attorney-in-fact, executor,
administrator, trustee, guardian, officer of a corporation or another acting in
a fiduciary capacity or representative capacity, please set forth the signer's
full title. SEE INSTRUCTIONS 2 AND 5. Please complete substitute Form W-9
below.)
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<PAGE> 7
Guarantee of Signature(s)
(IF REQUIRED--SEE INSTRUCTIONS 2 AND 5)
Signature(s) Guaranteed by
an Eligible Institution:____________________________________ Date:______________
Authorized Signature
Name of Eligible Institution
Guaranteeing Signature:_________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
Capacity (full title):__________________________________________________________
Telephone Number:_______________________________________________________________
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 2, 5 AND 6)
To be completed ONLY if the exchange notes or any outstanding notes that are not
tendered are to be issued in the name of someone other than the registered
holder(s) of the outstanding notes whose name(s) appear(s) above.
Issue:
[ ] Outstanding notes not tendered, to:
[ ] Exchange notes, to:
Name(s) ________________________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________
Telephone Number _______________________________________________________________
________________________________________________________________________________
(Tax Identification or
Social Security Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2, 5 AND 6)
To be completed ONLY if exchange notes or any outstanding notes that are not
tendered are to be sent to someone other than the registered holder(s) of the
outstanding notes whose name(s) appear(s) above, or to such registered holder(s)
at an address other than that shown above.
Mail:
[ ] Outstanding notes not tendered, to:
[ ] Exchange notes, to:
Name(s) ________________________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________
Telephone Number _______________________________________________________________
________________________________________________________________________________
(Tax Identification or
Social Security Number)
7
<PAGE> 8
INSTRUCTIONS
(Forming part of the terms and conditions of the exchange offer)
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed either if (a)
certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offer Procedures for Tendering Outstanding Notes" in the prospectus.
Certificates, or timely confirmation of a book-entry transfer of such
outstanding notes into the exchange agent's account at DTC, as well as this
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the exchange agent
at its address set forth herein on or prior to the expiration date. The term
"book-entry confirmation" means a timely confirmation of book-entry transfer of
outstanding notes into the exchange agent's account at DTC. Outstanding notes
may be tendered in whole or in part in integral multiples of $1,000 principal
amount.
Holders who wish to tender their outstanding notes and: (i) whose
certificates for such outstanding notes are not immediately available; (ii) who
cannot deliver their certificates, this Letter of Transmittal and all other
required documents to the exchange agent prior to the expiration date; or (iii)
who cannot complete the procedures for delivery by book-entry transfer on a
timely basis, may tender their outstanding notes by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in "The Exchange Offer - Procedures for Tendering
Outstanding Notes" in the prospectus. Pursuant to such procedures: (i) such
tender must be made by or through an Eligible Institution (as defined below);
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying this Letter of Transmittal, must be
received by the exchange agent prior to the expiration date; and (iii) the
certificates (or a book-entry confirmation) representing all tendered
outstanding notes, in proper form for transfer, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the exchange agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offer - Procedures for
Tendering Outstanding Notes" in the prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the exchange agent and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery. For outstanding notes to be properly tendered pursuant to
the guaranteed delivery procedure, the exchange agent must receive a Notice of
Guaranteed Delivery prior to the expiration date. As used herein and in the
prospectus, "Eligible Institution" means a firm or other entity identified in
Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein): (i) a bank; (ii) a broker,
dealer, municipal securities broker or dealer or government securities broker or
dealer; (iii) a credit union; (iv) a national securities exchange, registered
securities association or clearing agency; or (v) a savings association that is
a participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY AND PROPER INSURANCE SHOULD BE OBTAINED. NO
LETTER OF TRANSMITTAL OR
8
<PAGE> 9
OUTSTANDING NOTES SHOULD BE SENT TO SUSQUEHANNA MEDIA. HOLDERS MAY REQUEST THEIR
RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO
EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Susquehanna Media will not accept any alternative, conditional or
contingent tenders. Each tendering holder, by execution of a Letter of
Transmittal (or facsimile thereof), waives any right to receive any notice of
the acceptance of such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter
of Transmittal is required if: (i) this Letter of Transmittal is signed by the
registered holder (which shall include any participant in DTC whose name appears
on a security position listing as the owner of the outstanding notes) of
outstanding notes tendered herewith, unless such holder has completed either the
box entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" above; or (ii) such outstanding notes are tendered for
the account of a firm that is an Eligible Institution. In all other cases, an
Eligible Institution must guarantee the signature(s) on this Letter of
Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Outstanding Notes Tendered" is inadequate, the certificate
number(s) and/or the principal amount of outstanding notes and any other
required information should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of outstanding
notes will be accepted only in integral multiples of $1,000 principal amount. If
less than all the outstanding notes evidenced by any certificate submitted are
to be tendered, fill in the principal amount of outstanding notes which are to
be tendered in the box entitled "Principal Amount Tendered (if less than all)."
In such case, new certificate(s) for the remainder of the outstanding notes that
were evidenced by the old certificate(s) will be sent to the tendering holder,
unless the appropriate boxes on this Letter of Transmittal are completed,
promptly after the expiration date. All outstanding notes represented by
certificates delivered to the exchange agent will be deemed to have been
tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of outstanding notes may
be withdrawn at any time prior to the expiration date. In order for a withdrawal
to be effective, a written, telegraphic or facsimile transmission of such notice
of withdrawal must be timely received by the exchange agent at its address set
forth above prior to the expiration date. Any such notice of withdrawal must
specify the name of the person who tendered the outstanding notes to be
withdrawn, the aggregate principal amount of outstanding notes to be withdrawn,
and (if certificates for such outstanding notes have been tendered) the name of
the registered holder of the outstanding notes as set forth on the
certificate(s), if different from that of the person who tendered such
outstanding notes. If certificates for outstanding notes have been delivered or
otherwise identified to the exchange agent, the notice of withdrawal must
specify the serial numbers on the particular certificates for the outstanding
notes to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of outstanding notes
tendered for the account of an Eligible Institution. If outstanding notes have
been tendered pursuant to the procedures for book-entry transfer set forth in
"The Exchange Offer Procedures for Tendering Outstanding Notes," the notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawal of outstanding notes and must otherwise comply with the
procedures of DTC. Withdrawals of tenders of outstanding notes may not be
rescinded. Outstanding notes properly withdrawn will not be deemed validly
tendered for purposes of the exchange offer, but may be
9
<PAGE> 10
retendered at any subsequent time prior to the expiration date by following any
of the procedures described in the prospectus under "The Exchange Offer -
Procedures for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by Susquehanna Media,
in its sole discretion, which determination shall be final and binding on all
parties. None of Susquehanna Media, any affiliates of Susquehanna Media, the
exchange agent or any other person shall be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification. Any outstanding
notes which have been tendered but which are withdrawn will be returned to the
holder thereof promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the outstanding notes tendered hereby, the signature(s) must
correspond exactly with the name(s) as written on the face of the certificate(s)
or on a security position listing, without alteration, enlargement or any change
whatsoever.
If any of the outstanding notes tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered outstanding notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles thereof) as there are names in which
certificates are registered.
If this Letter of Transmittal or any certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to Susquehanna Media, in its sole discretion, of such
persons' authority to so act.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the outstanding notes listed and transmitted hereby, the
certificate(s) must be endorsed or accompanied by appropriate bond power(s),
signed exactly as the name(s) of the registered owner appear(s) on the
certificate(s), and also must be accompanied by such opinions of counsel,
certifications and other information as Susquehanna Media or the trustee for the
outstanding notes may require in accordance with the restrictions on transfer
applicable to the outstanding notes. Signature(s) on such certificate(s) or bond
power(s) must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If exchange notes
or certificates for outstanding notes not exchanged are to be issued in the name
of a person other than the signer of this Letter of Transmittal, or are to be
sent to someone other than the signer of this Letter of Transmittal or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. In the case of issuance in a different name,
the taxpayer identification number of the person named must also be indicated.
Holders tendering outstanding notes by book-entry transfer may request that
outstanding notes not exchanged be credited to such account maintained at DTC as
such holder may designate. If no such instructions are given, outstanding notes
not exchanged will be returned by mail or, if tendered by book-entry transfer,
by crediting the account indicated above maintained at DTC.
7. IRREGULARITIES. Susquehanna Media will determine, in its sole
discretion, all questions as to the form of documents, validity, eligibility
(including time of receipt) and acceptance for exchange of any tender of
outstanding notes, which determination shall be final and binding on all
parties. Susquehanna Media reserves the absolute right, in its sole and absolute
discretion, to reject any and all
10
<PAGE> 11
tenders determined by it not to be in proper form or the acceptance for exchange
of which may, in the view of counsel to Susquehanna Media, be unlawful.
Susquehanna Media also reserves the right, exercising reasonable discretion and
subject to applicable law, to waive any of the conditions of the exchange offer
set forth in the prospectus under "The Exchange Offer--Conditions to the
Exchange Offer" or any defect or irregularity in any tender of outstanding notes
of any particular holder whether or not similar defects or irregularities are
waived in the case of other holders. Susquehanna Media's interpretation of the
terms and conditions of the exchange offer (including this Letter of Transmittal
and the instructions hereto) will be final and binding. No tender of outstanding
notes will be deemed to have been validly made until all defects or
irregularities with respect to such tender have been cured or waived. None of
Susquehanna Media, any affiliates of Susquehanna Media, the exchange agent, or
any other person shall be under any duty to give any notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES.
Questions and requests for assistance may be directed to the exchange agent at
its address and telephone number set forth above. Additional copies of the
prospectus, the Notice of Guaranteed Delivery and the Letter of Transmittal may
be obtained from the exchange agent or from your broker, dealer, commercial
bank, trust company or other nominee.
9. BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. federal
income tax law, a holder whose tendered outstanding notes are accepted for
exchange is required to provide the exchange agent with such holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 below. If the
exchange agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the holder or other payee to a $50 penalty. In
addition, payments to such holders or other payees with respect to outstanding
notes exchanged pursuant to the exchange offer may be subject to 31% backup
withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 3 is checked, the
holder or other payee must also complete the certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the exchange agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the exchange agent. The exchange agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the exchange agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the exchange agent with its TIN within such 60 day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The holder is required to give the exchange agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the outstanding notes or of the last transferee appearing on the transfers
attached to, or endorsed on, the outstanding notes. If the outstanding notes are
registered in more than one name or are not in the name of the actual owner,
consult the Instructions to Form W-9 (Request for Identification Number and
Certification) for additional guidance on which number to report.
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<PAGE> 12
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the Instructions to Form W-9 (Request for Identification Number
and Certification) for additional guidance on which holders are exempt from
backup withholding.
Backup withholding is not an additional U.S. federal income tax.
Rather, the U.S. federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
10. MUTILATED, LOST, DESTROYED OR STOLEN CERTIFICATES. If any
certificate representing outstanding notes has been mutilated, lost, destroyed
or stolen, the holder should promptly notify the exchange agent. The holder will
then be instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing mutilated, lost, destroyed or
stolen certificates have been followed.
11. SECURITY TRANSFER TAXES. Holders who tender their outstanding
notes for exchange will not be obligated to pay any transfer taxes in connection
therewith, except that if exchange notes are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of the
outstanding notes tendered, or if a transfer tax is imposed for any reason other
than the exchange of outstanding notes in connection with the exchange offer,
then the amount of any such transfer tax (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such transfer tax or exemption therefrom is
not submitted with the Letter of Transmittal, the amount of such transfer tax
will be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF),
TOGETHER WITH CERTIFICATES REPRESENTING TENDERED OUTSTANDING NOTES OR A BOOK
ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
12
<PAGE> 13
TO BE COMPLETED BY ALL TENDERING SECURITY HOLDERS:
(SEE INSTRUCTION 9)
PAYER'S NAME: CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION
<TABLE>
<S> <C>
Part 1 - PLEASE PROVIDE YOUR
TIN ON THE LINE AT RIGHT AND
CERTIFY BY SIGNING AND
DATING BELOW
SUBSTITUTE Social Security Number or
Form W-9 Employer Identification
Number
_________________________
Department of the Part 2 - CERTIFICATION - Under penalties of perjury,
Treasury Internal I certify that:
Revenue Service
(1) The number shown on this form is my correct
taxpayer identification number (or I am
waiting for a number to be issued to me);
Payer's Request for (2) I am not subject to backup withholding
Taxpayer either because: (a) I am exempt from backup
Identification withholding; (b) I have not been notified by
Number (TIN) the Internal Revenue Service ("IRS") that I
am subject to backup withholding as a result
of a failure to report all interest or
dividends; or (c) the IRS has notified me
that I am no longer subject to backup
withholding; and
(3) Any other information provided on this form
is true and correct.
Certification Instructions - You must cross out item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because of
underreporting interest or dividends on your tax
return and you have not been notified by the IRS that
you are no longer subject to backup withholding.
Part 3 - Awaiting TIN [ ]
SIGNATURE__________________________________________________
PRINTED NAME_______________________________________________
DATE_______________________________________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN
CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF
31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
</TABLE>
13
<PAGE> 14
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer
identification number has not been issued to me, and
either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social
Security Administration Office or (2) I intend to
mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer
identification number by the time of payment, 31% of
all payments made to me on account of the Exchange
Notes shall be retained until I provide a taxpayer
identification number to the Exchange Agent and that,
if I do not provide my taxpayer identification number
within 60 days, such retained amounts shall be
remitted to the Internal Revenue Service as backup
withholding and 31% of all reportable payments made
to me thereafter will be withheld and remitted to the
Internal Revenue Service until I provide a taxpayer
identification number.
SIGNATURE:___________________________ DATE:_______________
14
<PAGE> 1
EXHIBIT 99.2
Susquehanna Media Co.
Offer to Exchange its
8 1/2% Senior Subordinated Notes Due 2009
Which Have Been Registered Under
the Securities Act of 1933
For Any and All of its Outstanding
8 1/2% Senior Subordinated Notes Due 2009
Pursuant to the Prospectus Dated _________, 1999
TO: BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES:
Susquehanna Media Co. ("Susquehanna Media") is offering to exchange,
upon and subject to the terms and conditions set forth in the enclosed
prospectus, dated _________, 1999 (the "prospectus"), and the enclosed Letter of
Transmittal (the "Letter of Transmittal"), its 8 1/2% Senior Subordinated Notes
due 2009, which have been registered under the Securities Act of 1933 (the
"exchange notes"), for any and all of its outstanding 8 1/2% Senior Subordinated
Notes due 2009 (the "outstanding notes"). The exchange offer is being made in
order to satisfy certain of Susquehanna Media's obligations contained in the
Registration Rights Agreement dated as of May 12, 1999, among Susquehanna Media,
First Union Capital Markets Corp., and Banc of America Securities LLC (formerly
NationsBanc Montgomery Securities LLC).
In connection with the exchange offer, we are requesting that you
contact your clients for whom you hold outstanding notes registered in your name
or in the name of your nominee, or who hold outstanding notes registered in
their own names. Susquehanna Media, First Union Capital Markets Corp., and Banc
of America Securities LLC will not pay any fees or commissions to any broker,
dealer or other person in connection with the solicitation of tenders pursuant
to the exchange offer. However, you will, upon request, be reimbursed for
reasonable out-of-pocket expenses incurred in connection with soliciting
acceptances of the exchange offer. Susquehanna Media, First Union Capital
Markets Corp., and Banc of America Securities LLC will pay or cause to be paid
all transfer taxes applicable to the exchange of outstanding notes pursuant to
the exchange offer, except as set forth in the prospectus and the Letter of
Transmittal.
For your information and for forwarding to your clients, we are
enclosing the following documents:
1. Prospectus dated _________, 1999;
2. A Letter of Transmittal for your use and for the information of your
clients;
3. A form of Notice of Guaranteed Delivery; and
<PAGE> 2
4. A form of letter which may be sent to your clients for whose
account you hold outstanding notes registered in your name or
the name of your nominee, with space provided for obtaining
such clients' instructions with regard to the exchange offer.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON _________, 1999 (THE "EXPIRATION DATE"), UNLESS
EXTENDED BY SUSQUEHANNA MEDIA (IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL
MEAN THE LATEST DATE AND TIME TO WHICH THE EXCHANGE OFFER IS EXTENDED). THE
OUTSTANDING NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN,
SUBJECT TO THE PROCEDURES DESCRIBED IN THE PROSPECTUS AND THE LETTER OF
TRANSMITTAL, AT ANY TIME PRIOR TO THE EXPIRATION DATE.
To participate in the exchange offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
exchange agent and certificates representing the outstanding notes should be
delivered to the exchange agent, all in accordance with the instructions set
forth in the prospectus and the Letter of Transmittal.
If holders of outstanding notes wish to tender, but it is impracticable
for them to forward their certificates for outstanding notes prior to the
expiration of the exchange offer or to comply with the book-entry transfer
procedures on a timely basis, a tender may be effected by following the
guaranteed delivery procedures described in the prospectus and the Letter of
Transmittal.
Any inquiries you may have with respect to the exchange offer, or
requests for additional copies of the enclosed materials, should be directed to
the exchange agent for the outstanding notes, at its address and telephone
number set forth on the front of the Letter of Transmittal.
Very truly yours,
Susquehanna Media Co.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
OTHER PERSON AS AN AGENT OF SUSQUEHANNA MEDIA OR THE EXCHANGE AGENT, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON
BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR
STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
2
<PAGE> 1
EXHIBIT 99.3
Susquehanna Media Co.
Offer to Exchange its
8 1/2% Senior Subordinated Notes Due 2009
Which Have Been Registered Under the Securities Act of 1933
For Any and All of its Outstanding
8 1/2% Senior Subordinated Notes Due 2009
TO OUR CLIENTS:
Enclosed for your consideration is a prospectus, dated _________, 1999
(the "prospectus"), and a form of Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "exchange offer") of Susquehanna Media
Co. ("Susquehanna Media") to exchange its 8 1/2% Senior Subordinated Notes due
2009, which have been registered under the Securities Act of 1933 (the "exchange
notes"), for any and all of its outstanding 8 1/2% Senior Subordinated Notes due
2009 (the "outstanding notes"), upon the terms and subject to the conditions
described in the prospectus and the Letter of Transmittal. The exchange offer is
being made in order to satisfy certain of Susquehanna Media's obligations
contained in the Registration Rights Agreement dated as of May 12, 1999, among
Susquehanna Media, First Union Capital Markets Corp., and Banc of America
Securities LLC (formerly NationsBanc Montgomery Securities LLC).
This material is being forwarded to you as the beneficial owner of the
outstanding notes carried by us in your account but not registered in your name.
A TENDER OF SUCH OUTSTANDING NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to
tender on your behalf the outstanding notes held by us for your account,
pursuant to the terms and conditions set forth in the enclosed prospectus and
Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the outstanding notes on your behalf in accordance
with the provisions of the exchange offer. The exchange offer will expire at
5:00 p.m., New York City time, on _________, 1999, unless extended by
Susquehanna Media (the "expiration date"). Any outstanding notes tendered
pursuant to the exchange offer may be withdrawn, subject to the procedures
described in the prospectus and the Letter of Transmittal, at any time prior to
the expiration date.
If you wish to have us tender your outstanding notes, please so
instruct us by completing, executing and returning to us the instruction form
included with this letter.
THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY AND
MAY NOT BE USED DIRECTLY BY YOU TO TENDER OUTSTANDING NOTES.
<PAGE> 2
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein, including the prospectus and the accompanying form
of Letter of Transmittal, relating to the exchange offer made by Susquehanna
Media Co. with respect to its outstanding notes.
This will instruct you as to the action to be taken by you relating to
the exchange offer with respect to the outstanding notes held by you for the
account of the undersigned, upon and subject to the terms and conditions set
forth in the prospectus and the Letter of Transmittal.
The aggregate principal amount of the outstanding notes held by you for
the account of the undersigned is (fill in amount):
$ __________ of the 8 1/2% Senior Subordinated Notes due 2009
With respect to the exchange offer, the undersigned hereby instructs you (check
appropriate box):
[ ] To TENDER the following outstanding notes held by you for the account of
the undersigned (insert aggregate principal amount at maturity of outstanding
notes to be tendered, in integral multiples of $1,000):
$ __________ of the 8 1/2% Senior Subordinated Notes due 2009
[ ] NOT to tender any outstanding notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the outstanding notes held
by you for the account of the undersigned, it is understood that you are
authorized to make, on behalf of the undersigned (and the undersigned, by its
signature below, hereby makes to you), the representations, warranties and
agreements contained in the Letter of Transmittal that are to be made with
respect to the undersigned as beneficial owner.
SIGN HERE
Name of beneficial owner(s):____________________________________________________
Signature(s):___________________________________________________________________
Name(s) (please print):_________________________________________________________
Address:________________________________________________________________________
Telephone Number:_______________________________________________________________
Taxpayer Identification or Social Security Number(s):___________________________
Date:___________________________________________________________________________
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<PAGE> 3
None of the outstanding notes held by us for your account will be
tendered unless we receive written instructions from you to do so. Unless a
specific contrary instruction is given in the space provided, your signature(s)
hereon shall constitute an instruction to us to tender all the outstanding notes
held by us for your account.
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<PAGE> 1
EXHIBIT 99.4
NOTICE OF GUARANTEED DELIVERY
for Tender of
8 1/2% Senior Subordinated Notes Due 2009
(the "outstanding notes")
of
Susquehanna Media Co.
This Notice of Guaranteed Delivery, or one substantially equivalent to
this form, must be used to tender outstanding notes pursuant to the exchange
offer described in the prospectus dated _________, 1999 (as the same may be
amended or supplemented from time to time, the "prospectus") of Susquehanna
Media Co., a Delaware corporation ("Susquehanna Media"), if certificates for the
outstanding notes are not immediately available, or time will not permit the
outstanding notes, the Letter of Transmittal and all other required documents to
be delivered to Chase Manhattan Trust Company, National Association (the
"exchange agent") prior to 5:00 p.m., New York City time, on _________, 1999 or
such later date and time to which the exchange offer may be extended (the
"expiration date"), or the procedures for delivery by book-entry transfer cannot
be completed on a timely basis. This Notice of Guaranteed Delivery, or one
substantially equivalent to this form, must be delivered by hand or sent by
facsimile transmission or mail to the exchange agent, and must be received by
the exchange agent prior to the expiration date. See "The Exchange Offer --
Procedures for Tendering Outstanding Notes" in the prospectus. Capitalized terms
used but not defined herein shall have the same meaning given them in the
prospectus.
The exchange agent
for the exchange offer is:
CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION
<TABLE>
<S> <C>
By Facsimile: By Mail or Hand:
(215) 972-8372 Chase Manhattan Trust Company, National Association
Attention: Joseph C. Progar 1650 Market Street
Confirm by Telephone to: (215) 988-1317 One Liberty Place, Suite 5210
Philadelphia, Pennsylvania 19103
Attention: Joseph C. Progar
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If
a signature on a Letter of Transmittal is required to be guaranteed by an
"Eligible Institution" under the instructions thereto,
<PAGE> 2
such signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to Susquehanna Media, upon the terms and subject
to the conditions set forth in the prospectus and the related Letter of
Transmittal, the outstanding notes indicated below pursuant to the guaranteed
delivery procedures set forth in the prospectus under the caption "The Exchange
Offer - Procedures for Tendering Outstanding Notes."
Name(s) of Registered Holder(s):________________________________________________
(Please Print or Type)
Signature(s):___________________________________________________________________
Address(es):____________________________________________________________________
________________________________________________________________________________
Area Code(s) and Telephone Number(s):___________________________________________
Account Number:_________________________________________________________________
Date:___________________________________________________________________________
Certificate No(s). Principal Amount of Outstanding
(if available) Notes Tendered *
_____________________________________ _____________________________________
_____________________________________ _____________________________________
_____________________________________ _____________________________________
_____________________________________ _____________________________________
_____________________________________ _____________________________________
_____________________________________ _____________________________________
* Must be in integral multiples of $1,000 principal amount.
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or a correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees
that the undersigned will deliver to the exchange agent the certificates
representing the outstanding notes being tendered hereby in proper form for
transfer (or a confirmation of book-entry transfer of such outstanding notes,
into the exchange agent's account at the book-entry transfer facility of The
Depository Trust Company ("DTC")) with delivery of a properly completed and duly
executed Letter of Transmittal (or facsimile
2
<PAGE> 3
thereof), with any required signature guarantees and any other required
documents, all within three New York Stock Exchange trading days after the date
of execution of the Notice of Guaranteed Delivery.
Name of Firm:_____________________________ ___________________________________
Authorized Signature
Address:__________________________________ Name:______________________________
Please Print or Type
__________________________________________ Title:_____________________________
Telephone Number:_________________________ Dated:_____________________________
The institution that completes this form must communicate the guarantee to the
exchange agent and must deliver the certificates representing any outstanding
notes (or a confirmation of book-entry transfer of such outstanding notes into
the exchange agent's account at DTC) and the Letter of Transmittal to the
exchange agent within the time period shown herein. Failure to do so could
result in a financial loss to such institution.
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