<PAGE>
As filed with the Securities and Exchange Commission on February 2, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE ACKERLEY GROUP, INC.
(Exact name of registrant as specified in its charter)
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<TABLE>
<S> <C> <C>
Delaware 7310 91-1043807
(State or other jurisdiction (Primary standard industrial (I.R.S. employer
of incorporation or
organization) classification code number) identification no.)
</TABLE>
1301 Fifth Avenue
Suite 4000
Seattle, Washington 98101
(206) 624-2888
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
-----------
Denis M. Curley
Co-President and Chief Financial Officer
1301 Fifth Avenue
Suite 4000
Seattle, Washington 98101
(206) 624-2888
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies of communications to:
Carmen L. Smith
Graham & Dunn PC
1420 Fifth Avenue, 33rd Floor
Seattle, Washington 98101
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Approximate date of commencement of proposed sale of securities to the
public: As soon as practicable after the effective date of this Registration
Statement.
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 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. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed
Proposed Maximum
Amount Maximum Aggregate Amount of
Title of Each Class of Being Offering Price Offering Registration
Securities Being Registered Registered Per Note(1) Price(1) Fee(1)
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<S> <C> <C> <C> <C>
9% Series B Senior Subordinated
Notes
due 2009....................... $175,000,000 100% $175,000,000 $48,650
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</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
-----------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
files a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a)
1933 Act, or until the Registration Statement becomes effective on such date
as the Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
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<PAGE>
THE INFORMATION IN THIS PROSPECTUS WILL BE AMENDED OR COMPLETED; DATED FEBRUARY
2, 1999
PROSPECTUS CONFIDENTIAL
The Ackerley Group, Inc.
Offer to Exchange 9% Series B Senior Subordinated Notes due 2009 For Any and
All Outstanding 9% Series A Senior Subordinated Notes due 2009
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We are offering a total of $175,000,000 of our 9% Series B Senior
Subordinated Notes due 2009, which will be freely transferable, in exchange for
our outstanding 9% Series A Senior Subordinated Notes due 2009. We refer to
this Prospectus and the Letter of Transmittal that accompanies it as the
"Exchange Offer." We refer to the 9% Series B Senior Subordinated Notes due
2009 being offered in the Exchange Offer as the "Exchange Notes" and we refer
to the outstanding 9% Series A Senior Subordinated Notes due 2009 that can be
exchanged for Exchange Notes as the "Initial Notes." We refer to the Exchange
Notes and the Initial Notes together as the "Notes."
Terms of the Exchange Offer
The Exchange Offer expires at 5:00 p.m., New York City time, on ,
1999, unless extended.
The Exchange Offer is subject to certain customary conditions, including the
condition that the Exchange Offer not violate any applicable law or any
applicable interpretation of the staff of the Securities and Exchange
Commission.
Tenders of Initial Notes may be withdrawn at any time prior to the expiration
of the Exchange Offer.
All Initial Notes that are validly tendered and not withdrawn will be
exchanged for Exchange Notes.
We will not receive any proceeds from the Exchange Offer.
All broker-dealers must comply with the registration and prospectus deliver
requirements of the Securities Act. See "Plan of Distribution."
See "The Exchange Offer" for more information.
Terms of the Exchange Notes
The terms of the Exchange Notes are identical to the terms of the Initial
Notes, except that the Exchange Notes will not have any transfer restrictions
or registration rights.
The Exchange Notes will bear interest at the rate of 9% per year. Interest on
the Exchange Notes is payable on January 15 and July 15 of each year, beginning
on July 15, 1999. The Exchange Notes will mature on January 15, 2009.
We may redeem some or all of the Exchange Notes at any time after January 15,
2004. The redemption prices are discussed under the caption "Description of the
Exchange Notes--Optional Redemption." In addition, on or prior to January 15,
2002, we may, at our option, use the net cash proceeds of one or more of Public
Equity Offerings (as defined in this Prospectus) to redeem the Exchange Notes
in part at a redemption price equal to 109.000% of the aggregate principal
amount of the Exchange Notes, provided that 66 2/3% of the aggregate principal
amount of the Exchange Notes originally issued remain outstanding after any
such redemption.
The Exchange Notes will be unsecured obligations, subordinated in right of
payment to all of our Senior Debt (as defined in this Prospectus).
We do not intend to apply for listing of the Exchange Notes on any stock
exchange or arrange for them to be quoted on any quotation system.
See "Description of the Notes" for more information about the Exchange Notes.
Investing in the Exchange Notes involves certain risks. See "Risk Factors"
beginning on page 17.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
--------
, 1999.
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
Securities and Exchange Commission 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.
<PAGE>
You should rely only on the information contained and incorporated by
reference in this Prospectus. The Company has not authorized anyone to provide
you with different information. We are not making an offer of these securities
in any state or other jurisdiction where the offer is not permitted. You should
not assume that the information contained in this Prospectus is accurate as of
any date other than the date on the front of this Prospectus.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Where You Can Find More Information........................................ 3
Prospectus Summary......................................................... 4
Risk Factors............................................................... 17
Use of Proceeds............................................................ 30
Capitalization............................................................. 31
Selected Consolidated Financial Data....................................... 32
Unaudited Pro Forma Condensed Consolidated Financial Information........... 34
Management................................................................. 38
Description of Other Indebtedness.......................................... 40
The Exchange Offer......................................................... 43
Description of the Notes................................................... 52
Book Entry; Delivery and Form.............................................. 73
Certain Federal Income Tax Considerations.................................. 76
Plan of Distribution....................................................... 76
Legal Matters.............................................................. 77
Experts.................................................................... 77
</TABLE>
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-4 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), covering the
Exchange Notes. This Prospectus does not contain all of the information
included in the Registration Statement. Any statement made in this Prospectus
concerning the contents of any contract, agreement or other document is not
necessarily complete. If we have filed any such contract, agreement or other
document as an exhibit to the Registration Statement, you should read the
exhibit for a more complete understanding of the document or matter involved.
Each statement regarding a contract, agreement or other document is qualified
in its entirety by reference to the actual document. We are required to file
periodic reports and other information with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly, we file
reports and other information with the SEC.
You may read and copy the Registration Statement, including the attached
exhibits, and any reports, statements or other information that we file, at the
SEC's public reference room at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549-1004, and at the SEC's Midwest Regional Office located at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and
its Northeast Regional Office located at 7 World Trade Center, Suite 1300, New
York, New York 10048. You can request copies of these documents, upon payment
of a duplicating fee, by writing to the SEC at its principal office at 450
Fifth Street, N.W., Washington, D.C. 20549-1004. Please call the SEC at 1-800-
SEC-0330 for further information on the operation of the public reference
rooms. Our SEC filings are also available to the public on the SEC's Internet
site (http://www.sec.gov).
The SEC allows us to "incorporate by reference' the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. These incorporated documents contain
important business and financial information about us that is not included in
or delivered with this Prospectus. The information incorporated by reference is
considered to be part of this Prospectus, and later information filed with the
SEC will update and supersede this information.
The following documents filed by the Company with the SEC, and all other
documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
expiration of the Exchange Offer, are incorporated by reference into this
Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1997;
(2) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1998; and
(3) The Company's Current Reports on Form 8-K filed July 15, 1998 and
December 7, 1998.
These filings are available at the SEC's offices and internet site described
above. They are also available to holders of Initial Notes, without charge,
directly from us. To obtain such materials, please contact Denis M. Curley, The
Ackerley Group, Inc., 1301 Fifth Avenue, Suite 4000, Seattle, Washington 98101.
The Company's telephone number is (206) 624-2888.
In order to ensure timely delivery of any copies of filings requested from
us, please write or telephone us no later than , 1999 (five business days
prior to the expiration date of the Exchange Offer).
3
<PAGE>
PROSPECTUS SUMMARY
You should read this summary together with the more detailed information and
financial data, including our consolidated financial statements and related
notes (the "Consolidated Financial Statements"), included and incorporated by
reference in this Prospectus. Unless otherwise expressly stated or the context
otherwise requires, all references to "we," "our," "us," and the "Company" mean
The Ackerley Group, Inc., a Delaware corporation, and its subsidiaries on a
consolidated basis. In addition, references to the "DMA" ranking of markets
refer to their Designated Market Area rank, a measure of market size in the
United States based on population as reported by the Nielsen Rating Service and
a standard market measure used by the media industry; and references to "rating
points" for television programs refer to the ratio of the total number of
viewers of the program to the total number of television viewers in the
geographic market.
The Company
We are a diversified media and entertainment company which engages in three
principal businesses: out-of-home media, broadcasting, and sports &
entertainment. Our out-of-home media, broadcasting, and sports & entertainment
segments accounted for 41%, 37%, and 22%, respectively, of our net revenue for
the nine-month period ended September 30, 1998.
Out-of-Home Media. We engage in outdoor advertising in Florida,
Massachusetts, and the Pacific Northwest. At December 31, 1997, we had 8,838
outdoor displays in the markets of Miami/Fort Lauderdale and West Palm
Beach/Fort Pierce, Florida; Boston/Worcester, Massachusetts; Seattle/Tacoma,
Washington; and Portland, Oregon. We believe that we have leading positions in
outdoor advertising in each of these markets, based upon the number of outdoor
advertising displays.
The following chart summarizes our out-of-home media operations.
<TABLE>
<CAPTION>
At December 31, 1997
----------------------------------
DMA Junior
Market Rank(1) Bulletins(2) Posters(2) Posters(2)
------ ------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Pacific Northwest:
Seattle/Tacoma..................... 12 213 1,666 315
Portland........................... 24 146 1,130 0
Massachusetts:
Boston/Worcester................... 6 294 1,881 83
Florida:
Miami/Fort Lauderdale.............. 16 515 1,087 955
West Palm Beach/Fort Pierce........ 43 195 358 0
</TABLE>
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(1) Source: Television & Cable Factbook, 1998 Edition.
(2) Bulletins are generally 14 feet high by 48 feet wide. Posters, the most
common type of billboard, are generally 12 feet high by 25 feet wide.
Junior posters are generally six feet high by 12 feet wide.
Broadcasting. We also engage in television and radio broadcasting. Assuming
completion of all pending transactions, we would own eleven television
stations, operate two additional television stations under time brokerage
agreements, and own and operate six radio stations.
4
<PAGE>
The following table sets forth information about our portfolio of television
stations (including television stations we plan to acquire and television
stations operated under time brokerage agreements) and the markets in which
they operate. Further information regarding pending acquisitions and
dispositions is set forth under "--Recent Developments" and "Risk Factors--
Broadcasting--Approval of Purchase and Sale Transactions."
<TABLE>
<CAPTION>
Date Acquired No. of
or of Time Commercial
Call Brokerage Network DMA TV Stations
Market Letters Agreement Affiliation Frequency Rank(1) in Market(2)
- ------ ------- --------------- ----------- --------- ------ ------------
Central New York
- ----------------
<S> <C> <C> <C> <C> <C> <C>
Syracuse, New York (owned)............ WIXT May 1982 ABC VHF 72 3 VHF
2 UHF(3)
Rochester, New York (pending WOKR --(4) ABC VHF 75 3 VHF
acquisition)......................... 1 UHF
Binghamton, New York (owned).......... WIVT July 1997(5) ABC UHF 154 1 VHF
2 UHF
Utica, New York (time brokerage WUTR June 1997(6) ABC UHF 169 1 VHF
agreement)........................... 2 UHF
<CAPTION>
California
- ----------
<S> <C> <C> <C> <C> <C> <C>
Santa
Barbara/Santa Maria/San Luis Obispo,
California (pending acquisition; KCOY January 1999(7) CBS VHF 115 3VHF
interim time brokerage agreement)....
Salinas/Monterey, California (owned;
pending sale; future time brokerage KCBA(TV) June 1986(8) FOX UHF 121 1 VHF
agreement)........................... 3 UHF(9)
Salinas/Monterey, California (pending
acquisition; interim time brokerage KION(TV) April 1996(10) CBS UHF 121 1 VHF
agreement)........................... 3 UHF(9)
Bakersfield, California (owned)....... KGET October 1983 NBC UHF 131 4 UHF(11)
Eureka, California (owned)............ KVIQ July 1998(12) CBS VHF 189 2 VHF
2 UHF
Santa Rosa, California (owned)........ KFTY April 1996 None UHF --(13) 6 VHF
11 UHF
<CAPTION>
Other
- -----
<S> <C> <C> <C> <C> <C> <C>
Colorado Springs/Pueblo, Colorado
(owned; pending sale)................ KKTV January 1983(14) CBS VHF 94 3 VHF
1 UHF(15)
Eugene, Oregon (pending acquisition; KMTR December 1998(16) NBC VHF 120 3 VHF
interim time brokerage agreement).... 6 UHF
Fairbanks, Alaska (pending VHF 205 4 VHF
acquisition)......................... KTVF --(17) NBC/UPN
Vancouver, British Columbia and
portions of
Seattle, Washington (owned).......... KVOS June 1985 None VHF --(18) --(18)
</TABLE>
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(1) Source: Television & Cable Factbook, 1998 Edition. DMA rank is based on
population as reported by the Nielsen Rating Service.
(2) Source: Television & Cable Factbook, 1998 Edition. The number of stations
listed does not include digital television stations, public broadcasting
stations, satellite stations, or translators which rebroadcast signals
from distant stations, and also may not include smaller television
stations whose rankings fall below reporting thresholds.
(3) Two additional UHF channels have been allocated in the Syracuse market;
however, there has been no construction activity to date with respect to
these channels.
(4) In September 1998, we entered into an agreement to purchase WOKR.
(5) We acquired WIVT in August 1998. Pending approval of the acquisition by
the FCC, we operated the station under a time brokerage agreement with the
previous owner. The date in this column reflects the date the time
brokerage agreement was entered into.
5
<PAGE>
(6) We do not own WUTR but operate the station under a time brokerage
agreement with the current owner. The date in this column reflects the
date the time brokerage agreement was entered into.
(7) In December 1998, we entered into an asset exchange agreement, pursuant to
which we would exchange KKTV for KCOY and a cash payment. Pending approval
of this transaction by the FCC, we are operating KCOY under a time
brokerage agreement with the current owner. The date in this column
reflects the date that the time brokerage agreement was entered into.
(8) In November 1998, we entered into an agreement to sell substantially all
the assets of KCBA(TV). Subject to FCC approval, we would continue to
operate the station after the sale pursuant to a time brokerage agreement
with the purchaser.
(9) One additional UHF channel has been allocated in the Salinas/Monterey
market; however, there has been no construction activity to date with
respect to this channel.
(10) In November 1998, we entered into a purchase agreement to acquire
KION(TV). The purchase of this station is contingent upon our sale of
KCBA(TV), as described in footnote (8). Pending approval of this
acquisition by the FCC, we are operating the station under a time
brokerage agreement with the current owner. The date in this column
reflects the date the time brokerage agreement was entered into.
(11) Two additional UHF channels have been allocated in the Bakersfield market;
however, there has been no construction activity to date with respect to
these channels.
(12) We acquired KVIQ in January 1999. Pending approval of this acquisition by
the FCC, we operated the station under a time brokerage agreement with the
former owner. The date in this column reflects the date the time brokerage
agreement was entered into.
(13) While KFTY is included in the San Francisco-Oakland-San Jose DMA market,
which has a DMA rank of 5, the station principally serves the community of
Santa Rosa, which is not separately ranked.
(14) In December 1998, we entered into an asset exchange agreement, pursuant to
which we would exchange KKTV for KCOY and a cash payment. Pending approval
of this transaction by the FCC, the purchaser is operating KKTV under a
time brokerage agreement.
(15) Two additional UHF channels have been allocated in the Colorado
Springs/Pueblo market; however, there has been no construction activity to
date with respect to these channels.
(16) In December 1998, we entered into an agreement to acquire the assets of
KMTR. Pending approval of this acquisition by the FCC, we are operating
the station under a time brokerage agreement with the current owner. The
date in this column reflects the date the time brokerage agreement was
entered into. The acquisition includes the assets of two satellite
stations, KMTX (Roseburg, Oregon) and KMTZ (Coos Bay, Oregon), and one low
power station, KMOR-LP (Eugene, Oregon).
(17) In August 1998, we entered into an agreement to purchase KTVF.
(18) KVOS, located in Bellingham, Washington, serves primarily the Vancouver,
British Columbia market (located in size, according to the Nielsen Rating
Service as of January 1998, between the markets of Denver, Colorado and
Pittsburgh, Pennsylvania, which have DMA rankings of 18 and 19,
respectively), and a portion of the Seattle, Washington market (DMA rank
12) and the Whatcom County, Washington market. The station's primary
competition consists of five Canadian stations. DMA rankings are from the
Television & Cable Factbook, 1998 Edition.
The following table sets forth information about our portfolio of radio
stations (including radio stations we plan to acquire). Further information
with respect to pending acquisitions of radio stations is set forth under "--
Recent Developments" and "Risk Factors--Broadcasting--Approval of Purchase and
Sale Transactions."
<TABLE>
<CAPTION>
Radio Station
No. of Format and
MSA Commercial Primary
Call Market Radio Stations Demographic
Market Letters Date Acquired Rank(1) in Market(1) Target
------ ------- ------------- ------ -------------- ---------------------
<S> <C> <C> <C> <C> <C>
Seattle/Tacoma, KJR(AM) May 1984(2) 13 9 AM Sports Talk;
Washington Men 25-54(3)
(owned)
KJR-FM(4) October 1987(2) 19 FM Classic Hits;
Adults 25-54
KUBE(FM) July 1994(5) Top 40 Contemporary
Hit Radio;
Persons 18-34
KHHO(AM) March 1998 Sports Talk;
Men 25-54
Fairbanks, Alaska KXLR(FM) --(6) --(7) 7 FM(8) Oldies; Classic Rock;
(pending acquisition) Persons 25-49(8)
KCBF(AM) --(6) 3 AM(8) Oldies;
Persons 35-54(8)
</TABLE>
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(1) Source: Summer 1998 Arbitron Radio Market Report. Metro Survey Area ("MSA")
market rank is based on population.
(2) Reflects the dates on which we originally acquired the stations. We
contributed the stations' assets to New Century Seattle Partners, L.P., a
Delaware limited partnership (the "Partnership"), in 1994. We first
acquired a limited partnership interest in the Partnership in 1994 and, in
1998, the Partnership became our wholly-owned subsidiary. Since then, the
broadcast licenses have been transferred to one of our other subsidiaries,
and the Partnership dissolved.
6
<PAGE>
(3) KJR(AM) serves as the Seattle SuperSonics' flagship radio station.
(4) Formerly KLTX(FM).
(5) The date shown in the column reflects the date on which the Partnership
acquired the station from Cook Inlet, Inc.
(6) On August 4, 1998, we entered into an agreement to acquire these stations.
(7) Not ranked.
(8) Source: Broadcasting & Cable Yearbook, 1997 Edition.
Sports & Entertainment. Our sports & entertainment segment includes ownership
of the Seattle SuperSonics, the National Basketball Association's (the "NBA")
Pacific Division Champions for the past three NBA seasons. In addition, we
engage in sports marketing and promotion of the SuperSonics through our Full
House Sports & Entertainment division.
We have our principal executive offices at 1301 Fifth Avenue, Suite 4000,
Seattle, Washington 98101, and our telephone number is (206) 624-2888.
Strategy
Our primary strategy is to develop and acquire media assets which enable us
to offer advertisers a choice of media outlets for distributing their marketing
messages. To this end, we assembled a diverse portfolio of media assets. We
believe our businesses are linked by a common goal of increasing the number of
advertising impressions made, regardless of whether the impression is made via
radio, television, or out-of-home media display. Further, we seek to exploit
the operating synergies which we believe exist from its ownership of both
distribution (the broadcasting and out-of-home segments) and content (the
sports & entertainment segment) assets.
We seek to grow by investing in the expansion of our existing operations
through additions and upgrades to our facilities and programming. We also look
to grow through opportunistic acquisitions in our existing business lines and
by exploring new synergistic business ventures. We target markets where we see
an opportunity to improve market share, take advantage of regional
efficiencies, and develop our television stations into local news franchises.
We believe the following elements of our strategy provide us with certain
competitive advantages:
Leading Market Position in Outdoor Markets Served. We believe that we own the
most outdoor advertising display faces in each of the five geographic markets
in which we operate, based on the Traffic Audit Bureau's most recent Summary of
Audited Markets, issued in October 1998. Our five outdoor advertising markets
are Seattle/Tacoma, Washington; Portland, Oregon; Boston/Worcester,
Massachusetts; Miami/Fort Lauderdale, Florida; and West Palm Beach/Fort Pierce,
Florida.
Focus on Local News Leadership as Driver of Broadcast Revenue. We believe
local news leadership is an important contributor to audience and revenue
growth for our television stations, and seek to be the market leader in terms
of local news ratings points delivered in the geographic markets served by our
television stations. We favor investing in the production of our own local news
programming over the purchase of syndicated programming because we believe we
have greater ability to improve the ratings of local news programming. For
example, after we acquired KGET in Bakersfield, California and WIXT in
Syracuse, New York, they both improved to be the first-ranked stations in their
respective markets, in terms of local news ratings points delivered according
to the February 1998 Nielsen Station Index. Of the five network-affiliated
television stations we currently own, three ranked number one in local news
ratings points delivered, according to the February 1998 Nielsen Station Index.
Over the last three years, we have increased local news programming at eight of
the television stations we own or operate by one to three and a half hours per
weekday. We believe that this has contributed to the improved financial
performance of those stations, and we continue to invest in local news
programming.
Diversified Portfolio of Television Stations. Our television station
portfolio is diversified across networks, including stations affiliated with
major networks, and across geographic regions. We believe such diversification
is beneficial, as it reduces our reliance upon any one network's programming,
and mitigates our exposure to the economic cycles of any one geographic market.
7
<PAGE>
Strength in Seattle/Tacoma Radio Market. We have developed a strong presence
in the Seattle/Tacoma radio market through our ownership and operation of four
radio stations in the area. One of those stations, KUBE(FM), is the leading FM
station in the market in terms of audience share, according to the Summer 1998
Arbitron Radio Market Report. We also seek to use our ownership of the Seattle
SuperSonics to increase the audience share of these radio stations, as
discussed in the paragraph below.
Ownership of the Seattle SuperSonics. The Seattle SuperSonics have the second
best aggregate regular season win/loss record of any NBA team over the past
five seasons. We believe that our ownership of the Seattle SuperSonics enhances
the effectiveness of our media operations by (i) providing regionally
significant programming, (ii) generating listener loyalty for our radio
stations, and (iii) increasing the number of individuals exposed to the
advertising we provide. We seek to extract additional value from our ownership
of the Seattle SuperSonics through the sale of team sponsorships, which
includes sales of advertising on signs in Seattle's Key Arena and on radio and
television broadcasts of SuperSonics games. We also receive revenue from our
interest in activities coordinated by the NBA, such as advertising on
nationally televised games and other licensing arrangements. As a result of our
ownership of different media outlets, our sports & entertainment segment can
offer advertisers greater choice than a single outlet entity. We believe this
helps our advertisers to more effectively reach their target audiences.
Low Reliance Upon Tobacco Advertisers. Over the past several years, the U.S.
Food and Drug Administration ("FDA") and other governmental entities have
become more active in their regulation and scrutiny of tobacco, including its
advertising. We expect that such increased scrutiny will continue, and will
lead to additional restrictions or prohibition of outdoor advertising of
tobacco products. For more information on regulation of tobacco advertising,
see "Risk Factors--Out-of-Home Media--Tobacco Advertising." We are proactively
seeking to reduce our reliance upon tobacco advertising. For the nine-month
period ended September 30, 1998, outdoor tobacco advertising represented
approximately 3% of our consolidated net revenue, down from 5% of our
consolidated net revenue for the year ended December 31, 1997.
Leadership of Company Founder. Barry A. Ackerley, one of our founders and
our current Chairman and Chief Executive Officer, has been actively involved
with the Company since our inception in 1975. Early in our history, Mr.
Ackerley recognized the synergies that could be achieved through ownership of
outdoor advertising, broadcasting, and sports & entertainment assets. With this
vision, Mr. Ackerley led our expansion from outdoor advertising into
broadcasting and sports and entertainment well before the current trend toward
consolidation among these industries.
Experienced Corporate Management. While Mr. Ackerley remains significantly
involved in our operations, and is the single largest stockholder in the
Company, he has developed an experienced corporate management team to help us
achieve the desired synergies among our business units. Our four executive
officers have worked together for eight years, and collectively have an
aggregate of 98 years of experience in the various industries in which we are
involved.
Decentralized Management Structure; Experienced Management. We have granted
the management of our operating units the authority and autonomy necessary to
run each unit as a business and to respond effectively to changes in each
market environment. Experienced local managers enhance our ability to respond
to local market changes rapidly and effectively. The average experience of our
12 division managers in their respective industries is more than 18 years. We
aim to continue improving our operating performance through our team of
experienced local managers and corporate staff.
Recent Developments
New Credit Facility. On January 22, 1999, we entered into a new bank credit
agreement ("1999 Credit Agreement") providing us with an aggregate $325.0
million in borrowing capacity. We borrowed $70.0
8
<PAGE>
million at closing consisting of $65.0 million of the term loan facility ("Term
Loan Facility") and $5.0 million of the revolving loan facility ("Revolving
Loan Facility"). Borrowings under the 1999 Credit Agreement were used to repay
our previous credit agreement ("1998 Credit Agreement") and for working capital
purposes. We may borrow an additional $85.0 million of the Term Loan Facility
to acquire WOKR(TV). See "Pending Acquisition of WOKR(TV)" below. For further
description of the terms of the 1999 Credit Agreement, see "Description of
Other Indebtedness--1999 Credit Agreement."
NBA Lockout. On March 23, 1998 the Board of Governors of the NBA voted to
reopen the NBA's collective bargaining agreement with the National Basketball
Players Association. As a result, the collective bargaining agreement expired
on June 30, 1998 and the players were locked out. Preseason and regular season
games scheduled through approximately the beginning of February 1999 have been
cancelled. On January 20, 1999, the NBA Board of Governors and the National
Basketball Players Association entered into a new six-year collective
bargaining agreement between the NBA and the National Basketball Players
Association. Consequently, the 1998-1999 NBA season will start on February 5,
1999, with 50 regular-season games planned. For more information regarding the
NBA lockout and the new collective bargaining agreement, see "Risk Factors--
Sports & Entertainment--NBA Lockout; Labor Relations in Professional Sports."
Pending Acquisition of WOKR(TV). On September 25, 1998, we entered into a
purchase agreement with Sinclair Communications, Inc. to acquire substantially
all of the assets of WOKR(TV), an ABC affiliate licensed to Rochester, New
York. The purchase price is approximately $125.0 million, subject to possible
adjustments under the terms of the purchase agreement, plus the assumption of
certain liabilities. We have paid $12.5 million of the purchase price into an
escrow account, with the balance due at closing. We will finance the balance
principally through funds borrowed under the 1999 Credit Agreement. For more
information regarding the 1999 Credit Agreement, see "--New Credit Facility"
above and "Description of Other Indebtedness--Credit Agreement." Closing of the
transaction is subject to a number of conditions, including the acquisition of
the station by Sinclair Communications, Inc. from Guy Gannett Communications
and the receipt of approval from the FCC, which we have requested. We
anticipate that the closing will occur in the first quarter of 1999. Either
party may terminate the purchase agreement, subject to certain conditions, if
closing has not occurred by September 4, 1999. See "Risk Factors--Conditions to
Acquiring WOKR(TV)."
Pending Acquisition of KMTR(TV). On November 30, 1998, we entered into an
Acquisition Agreement with Wicks Broadcast Group Limited Partnership to acquire
the assets of television station KMTR(TV), Eugene, Oregon, together with two
satellite stations licensed to Roseburg and Coos Bay, Oregon and a low power
station licensed to Eugene. The purchase price is approximately $26.0 million,
subject to certain adjustments, plus the assumption of certain liabilities.
Closing is subject to, among other things, approval of the FCC, which the
parties have requested. We anticipate closing will take place in the first
quarter of 1999. Also on November 30, 1998, we entered into a time brokerage
agreement to operate the stations until closing.
Sale of Airport Advertising Operations. On June 30, 1998, we sold
substantially all of the assets of our airport advertising operations to Sky
Sites, Inc., a subsidiary of Havas, S.A., pursuant to an agreement dated May
19, 1998. The sale price consisted of a base cash price of $40.0 million, paid
on the closing date of the transaction, and an additional cash payment of
approximately $2.9 million (the "Contingent Payment"), of which $1.2 million
was paid in December 1998 and the remainder was paid in January 1999. The pre-
tax gain on this transaction (after giving effect to the Contingent Payment)
was approximately $35.3 million. The asset sale agreement contains customary
indemnification provisions by us and the buyer, and also contains a non-
competition agreement whereby we have agreed not to engage in the airport
advertising business for a period of five years after the closing date of the
transaction.
9
<PAGE>
Pending Acquisition of KTVF(TV), KXLR(FM) and KCBF(AM). On August 4, 1998, we
entered into an agreement to purchase the assets of KTVF(TV), a NBC affiliate,
for $7.2 million, and two radio stations, KXLR(FM) and KCBF(AM), for $800,000.
All three stations are licensed to Fairbanks, Alaska. The transactions are
subject to, among other things, FCC approval. In conjunction with this
agreement, on August 5, 1998, we granted an option to a third party for
$500,000 to purchase from the Company the assets of KTVF(TV) for $6.7 million
and the two radio stations for $800,000, plus certain additional payments. The
option may be exercised at any time beginning on the third anniversary of our
acquisition of the stations through the seventh anniversary of the acquisition,
subject to earlier termination under certain circumstances. In addition, the
optionee may require us to repurchase the option for $500,000 under certain
circumstances.
Pending Sale of KCBA(TV) and Acquisition of KION(TV). On November 2, 1998, we
entered into an agreement to purchase substantially all of the assets of
KION(TV), a CBS affiliate licensed to Monterey, California, for $7.7 million,
subject to certain reductions. The purchase of this station is subject to FCC
approval and is contingent upon our sale of KCBA(TV) as described below.
Pending FCC approval of this transaction, we are operating the station pursuant
to a time brokerage agreement with the current owner.
On November 3, 1998, we entered into an agreement to sell substantially all
of the assets of KCBA(TV), a FOX affiliate licensed to Salinas, California, for
$11.0 million. This transaction is subject to FCC approval and is contingent
upon the Company's purchase of KION(TV), as described above. Subject to FCC
approval, we would continue to operate the station after the sale pursuant to a
time brokerage agreement with the purchaser.
Pending Exchange of KKTV(TV) for KCOY(TV). On December 30, 1998, we entered
into an asset exchange agreement with Benedek Broadcasting Corporation. Under
the agreement, Benedek Broadcasting Corporation would acquire substantially all
of the assets, and assume certain liabilities, of KKTV(TV), a CBS affiliate
licensed to Colorado Springs, Colorado. In exchange, we would (i) acquire
substantially all of the assets, and assume certain liabilities, of KCOY(TV), a
CBS affiliate licensed to Santa Maria, California, and (ii) receive a cash
payment of approximately $9.0 million (subject to certain adjustments). Closing
is subject to, among other things, approval of the FCC and the expiration of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976. We anticipate closing will take place in the first quarter of 1999. Also
on December 30, 1998, we entered into a time brokerage agreement to operate
KCOY(TV) until closing, and a time brokerage agreement for Benedek to operate
KKTV(TV) until closing.
Acquisition of KVIQ(TV). On January 4, 1999, we purchased substantially all
of the assets of KVIQ(TV), a CBS affiliate licensed to Eureka, California, for
$5.5 million, pursuant to an agreement dated July 15, 1998. Pending closing of
the transaction, we operated the station pursuant to a time brokerage agreement
with the former owner.
The pending acquisitions and disposition described above are subject to
certain conditions, including receipt of FCC approval. See "Risk Factors--
Broadcasting--Approval of Purchase and Sale Transactions." Accordingly, we
cannot guarantee that such transactions will be completed.
Acquisition of Out-Of-Home Advertising Company in Miami, Florida. On
September 4, 1998, we purchased substantially all of the assets of an out-of-
home advertising company in Miami, Florida for approximately $2.4 million.
Repayment of Senior Secured Notes. In October 1998, we repaid $120.0 million
aggregate principal amount of our 10.75% Senior Secured Notes due 2003 (the
"Senior Secured Notes") with borrowings under the term loan facility of our
1998 Credit Agreement. This repayment resulted in a charge of $4.3 million, net
of applicable income taxes, consisting of prepayment fees and the write-off of
deferred financing costs, which charge will be recognized in the fourth quarter
of 1998. In addition, we repaid $35.0 million aggregate principal amount of
borrowings under a subsidiary's credit agreement with the proceeds from
revolving credit borrowings under the 1998 Credit Agreement, and terminated
that subsidiary's credit agreement.
10
<PAGE>
The Exchange Offer
Registration Rights Agreement... We issued the Initial Notes on December 14,
1998 to Salomon Smith Barney, First Union
Capital Markets, and Fleet Securities, Inc.
(the "Initial Purchasers").
The Initial Purchasers placed the Initial
Notes with qualified institutional buyers and
non-U.S. persons in transactions exempt from
the registration requirements of the
Securities Act and applicable state
securities laws. In connection with this
private placement, we entered into a
registration rights agreement with the
Initial Purchasers, which provides, among
other things, for the Exchange Offer. See
"The Exchange Offer."
The Exchange Offer.............. We are offering Exchange Notes in exchange
for an equal principal amount of Initial
Notes. As of this date, there is $175,000,000
aggregate principal amount of Initial Notes
outstanding. Initial Notes may be tendered
only in integral multiples of $1,000.
Resale of Exchange Notes........ We believe that the Exchange Notes issued in
the Exchange Offer may be offered for resale,
resold or otherwise transferred by you
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, do not
intend to participate, and have no
arrangement or understanding with any
person to participate, in the
distribution of the Exchange Notes; and
. you are not an "affiliate" of ours.
If any of the foregoing are not true and you
transfer any Exchange Note without
registering such Exchange Note and delivering
a prospectus meeting the requirements of the
Securities Act, or without an exemption from
registration of your Exchange Notes from such
requirements, you may incur liability under
the Securities Act. We do not assume or
indemnify you against such liability.
Each broker-dealer that is issued Exchange
Notes for its own account in exchange for
Initial Notes that 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 the Exchange
Notes. A broker-dealer may use this
Prospectus for an offer to resell, a resale
or any other retransfer of the Exchange
Notes. See "Plan of Distribution."
Subject to certain limitations, we will take
steps to ensure that the issuance of the
Exchange Notes will comply with state
securities or "blue sky' laws.
11
<PAGE>
Consequences of Failure to
Exchange Initial Notes......... If you do not exchange your Initial Notes for
Exchange Notes, you will no longer be able to
compel us to register the Initial Notes under
the Securities Act. In addition, you will not
be able to offer or sell the Initial Notes
unless they are registered under the
Securities Act (and we will have no
obligation to register them, except for some
limited exceptions), or unless you offer or
sell them under an exemption from the
requirements of, or a transaction not subject
to, the Securities Act. See "Risk Factors--
Failure to Participate in the Exchange Offer
Will Have Adverse Consequences" and "The
Exchange Offer--Effect of the Exchange
Offer."
Expiration of the Exchange
Offer.......................... The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1999 (the
"Expiration Date"), unless we decide to
extend the Expiration Date.
Conditions to the Exchange
Offer.......................... The Exchange Offer is not subject to any
condition other than certain customary
conditions, including that: the Exchange
Offer does not violate any applicable law or
applicable interpretation of law of the staff
of the SEC; no litigation materially impairs
our ability to proceed with the Exchange
Offer; and we obtain all the governmental
approvals we deem necessary for the Exchange
Offer. See "The Exchange Offer--Certain
Conditions to the Exchange Offer."
Procedures for Tendering
Initial Notes.................. If you wish to accept the Exchange Offer, you
must complete, sign and date the Letter of
Transmittal, or a facsimile of the Letter of
Transmittal, and transmit it together with
all other documents required by the Letter of
Transmittal (including the Initial Notes to
be exchanged) to The Bank of New York, as
exchange agent (the "Exchange Agent") at the
address set forth on the cover page of the
Letter of Transmittal. In the alternative,
you can tender your Initial Notes by
following the procedures for book-entry
transfer, as described in this document. For
more information on accepting the Exchange
Offer and tendering your Initial Notes, see
"The Exchange Offer--Procedures for
Tendering" and "--Book-Entry Transfer."
Guaranteed Delivery
Procedures..................... If you wish to tender your Initial Notes and
you cannot get your required documents to the
Exchange Agent by the Expiration Date, you
may tender your Initial Notes according to
the guaranteed delivery procedure under the
heading "The Exchange Offer--Guaranteed
Delivery Procedures."
Special Procedure for
Beneficial Holders............. If you are a beneficial holder whose Initial
Notes are registered in the name of a broker,
dealer, commercial bank, trust company, or
other nominee and you wish to tender your
Initial Notes in the Exchange Offer, you
should contact the
12
<PAGE>
registered holder promptly and instruct the
registered holder to tender your Initial
Notes on your behalf. If you are a beneficial
holder and you wish to tender your Initial
Notes on your own behalf, you must, prior to
delivering the Letter of Transmittal and your
Initial Notes to the Exchange Agent, either
make appropriate arrangements to register
ownership of your Initial Notes in your own
name or obtain a properly completed bond
power from the registered holder. See "The
Exchange Offer--Procedures for Tendering."
Withdrawal Rights............... You may withdraw the tender of your Initial
Notes at any time prior to 5:00 p.m., New
York City time, on the Expiration Date. To
withdraw, you must send a written or
facsimile transmission of your notice of
withdrawal to the Exchange Agent at its
address set forth herein under "The Exchange
Offer--Exchange Agent" by 5:00 p.m., New York
City time, on the Expiration Date.
Acceptance of Initial Notes and
Delivery of Exchange Notes..... Subject to certain conditions, we will accept
any and all Initial Notes that are properly
tendered in the Exchange Offer and not
withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. We will deliver
the Exchange Notes promptly after the
Expiration Date. See "The Exchange Offer--
Acceptance of Initial Notes for Exchange;
Delivery of Exchange Notes."
Tax Considerations.............. We believe that the exchange of Initial Notes
for Exchange Notes will not be a taxable
exchange for federal income tax purposes, but
you should consult your tax adviser about the
tax consequences of this exchange. See
"Certain U.S. Federal Income Tax
Considerations."
Exchange Agent.................. The Bank of New York is serving as exchange
agent in connection with the Exchange Offer.
Fees and Expenses............... We will bear all expenses related to
consummating the Exchange Offer and complying
with the Registration Rights Agreement. See
"The Exchange Offer--Fees and Expenses."
Use of Proceeds................. We will not receive any cash proceeds from
the issuance of the Exchange Notes. We used
the proceeds from the sale of the Initial
Notes to reduce outstanding borrowings under
the 1998 Credit Agreement. See "Use of
Proceeds."
13
<PAGE>
Summary Description of the Exchange Notes
The terms of the Exchange Notes and the terms of the Initial Notes for which
they are offered in exchange are identical in all material respects, except
that (i) the Exchange Notes will be free of transfer restrictions for most
investors, as described below opposite the caption "Resale of Exchange Notes"
and (ii) the Exchange Notes will not entitle their holders to registration
rights. The terms of the Exchange Notes, which are specified in greater detail
in this Prospectus under the heading "Description of the Notes," include the
following:
Notes Offered................... $175,000,000 aggregate principal amount of 9%
Series B Senior Subordinated Notes due 2009.
Maturity........................ January 15, 2009.
Interest Payments............... January 15 and July 15, commencing July 15,
1999.
Ranking......................... The Exchange Notes will be unsecured senior
subordinated obligations and will be
subordinated to all existing and future
Senior Debt. The Exchange Notes effectively
will rank junior to all liabilities of our
subsidiaries. Because the Exchange Notes are
subordinated, in the event of bankruptcy,
liquidation or dissolution, holders of the
Exchange Notes will not receive any payment
until holders of Senior Debt have been paid
in full. The term "Senior Debt" is defined in
the "Description of the Notes--Certain
Definitions" section of this Prospectus.
As of September 30, 1998, on a pro forma
basis after giving effect to the offering of
the Initial Notes and our use of the
estimated net proceeds therefrom to repay
borrowings as described under "Use of
Proceeds," and assuming that the repayment of
our Senior Secured Notes with borrowings
under the 1998 Credit Agreement had occurred
on September 30, 1998, we would have had
approximately $51.8 million of consolidated
Senior Debt outstanding.
Optional Redemption............. We may redeem the Exchange Notes, in whole or
in part, at any time on or after January 15,
2004 at the redemption prices set forth in
this Prospectus.
Public Equity Offering Optional
Redemption..................... On or prior to January 15, 2002, we may
redeem Exchange Notes with the net proceeds
of one or more public equity offerings at
109.000% of the principal amount thereof,
plus accrued interest, if at least 66 2/3% of
the original aggregate principal amount of
the Exchange Notes remains outstanding after
such redemption. See "Description of the
Notes--Optional Redemption."
Change in Control............... Upon a Change of Control (as defined below
under "Description of the Notes--Certain
Definitions"), each holder of Exchange Notes
may require us to repurchase all or a portion
of the Exchange Notes at a purchase price
equal to 101% of the principal amount
thereof, plus accrued interest.
14
<PAGE>
See "Description of the Notes--Change of
Control." However, if any such Change of
Control occurs, there can be no assurance
that we will be able to repurchase Exchange
Notes tendered by holders. See "Risk
Factors--Limitations on Purchase of Notes
Upon a Change of Control."
Sinking Fund.................... None.
Certain Covenants............... The indenture governing the Exchange Notes
(the "Indenture") contains covenants that,
among other things, limit our ability and the
ability of our subsidiaries (other than
Unrestricted Subsidiaries (as defined in this
Prospectus)) to:
. incur additional indebtedness,
. pay dividends on, redeem or repurchase our
capital stock, or make investments,
. issue or allow any person to own any
preferred stock of restricted subsidiaries,
. incur or permit to exist indebtedness of
The Ackerley Group, Inc. senior to the
Exchange Notes which is subordinated to any
other indebtedness of The Ackerley Group,
Inc.,
. enter into sale and leaseback transactions,
. incur or permit to exist certain liens,
. sell assets,
. in the case of our subsidiaries (other than
Unrestricted Subsidiaries), guarantee
indebtedness,
. in the case of our subsidiaries (other than
Unrestricted Subsidiaries), create or
permit to exist dividend or payment
restrictions with respect to The Ackerley
Group, Inc.,
. engage in transactions with affiliates, and
. consolidate, merge or transfer all or
substantially all of our assets and the
assets of our subsidiaries on a
consolidated basis.
These covenants are subject to important
exceptions and qualifications, which are
described under the heading "Description of
the Notes" in this Prospectus.
Trading......................... We do not intend to apply for listing of the
Exchange Notes on any stock exchange or
arrange for them to be quoted on any
quotation system.
Risk Factors.................... See "Risk Factors" for a discussion of
factors which should be carefully considered
before deciding to invest in the Exchange
Notes.
15
<PAGE>
Summary Financial Data
The following historical consolidated statement of operations data and
historical consolidated other data for each of the three years in the period
ended December 31, 1997 and the historical consolidated balance sheet data at
December 31, 1997 and 1996 are derived from the Consolidated Financial
Statements included in our Annual Report on Form 10-K for the year ended
December 31, 1997 included and incorporated by reference. The Consolidated
Financial Statements for such periods have been audited by Ernst & Young LLP,
independent auditors. The historical consolidated statement of operations data
and historical consolidated other data for the years ended December 31, 1994
and 1993 and the historical consolidated balance sheet data at December 31,
1995, 1994, and 1993 are derived from our audited financial statements not
included or incorporated by reference in this Prospectus. The financial data as
of and for the nine-month periods ended September 30, 1998 and 1997 are
unaudited but, in our opinion include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the results
for such periods. The results of operations for the nine-month period ended
September 30, 1998 are not necessarily indicative of the results to be expected
for the full fiscal year.
The following data should be read in conjunction with, and are qualified in
their entirety by reference to, the historical financial statements and other
historical financial data included and incorporated by reference in this
Prospectus.
<TABLE>
<CAPTION>
Nine-Month Period
Ended September 30, Year Ended December 31,
----------------------- -------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------- ----------- -------- -------- -------- -------- ---------
(unaudited) (unaudited)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Net revenue............. $204,970 $192,266 $271,175 $247,298 $207,397 $186,102 $ 170,617
Income (loss) before
income taxes and
extraordinary item(1).. 37,824 12,380 13,757 18,887 (1,399) 9,004 3,093
Income (loss) before
extraordinary item(1).. 23,435 14,603 32,929 16,129 (2,914) 8,931 2,960
Net income (loss)(1).... 23,435 14,603 32,929 15,774 (2,914) 6,832 2,335
Other Data:
Segment Operating Cash
Flow(2)................ 47,444 48,797 70,436 68,577 58,571 49,342 42,800
Corporate overhead...... (10,944) (7,685) (10,013) (8,233) (7,517) (6,052) (4,499)
EBITDA(3)............... 36,500 41,112 60,423 60,344 51,054 43,290 38,301
Depreciation and
amortization........... 10,771 9,858 16,103 16,996 13,243 10,883 12,018
Capital expenditures.... 24,207 13,219 17,593 13,124 15,098 8,794 3,478
Interest expense........ 20,238 19,131 26,219 24,461 25,010 25,909 22,431
Ratio of EBITDA to
interest expense....... 1.80x 2.15x 2.30x 2.47x 2.04x 1.67x 1.71x
Consolidated Balance
Sheet Data (at end of
period):
Working capital
(deficiency)........... (7,379) 9,089 12,019 11,154 15,110 16,783 7,970
Total assets............ 308,240 243,609 266,385 224,912 189,882 170,783 160,491
Total long-term
debt(4)................ 227,318 221,243 213,294 229,350 215,328 225,613 213,165
Total debt(4)........... 250,685 226,941 229,424 235,141 220,147 228,646 224,080
Stockholders'
deficiency............. (21,726) (64,939) (44,909) (83,839) (99,093) (95,958) (102,852)
</TABLE>
- --------
(1) Income (loss) before income taxes and extraordinary item for the nine-month
period ended September 30, 1998 includes a $32.9 million pre-tax gain from
the sale of the assets of our airport advertising operations. Excluding the
sale of our airport advertising operations, net income would have been $3.0
million for the nine-month period ended September 30, 1998. The increase in
net income in 1997 over 1996 reflects a $19.2 million income tax benefit
primarily due to the recognition of a deferred tax asset and a $5.0 million
reduction in an accrual for litigation expense, offset in part by a $9.3
million charge for stock compensation expense. Disregarding the impact of
this reduction in the accrual for litigation expense and this stock
compensation expense, income before income taxes and extraordinary items
would have been $18.1 million for 1997 compared to $18.9 million for 1996.
Net income for the nine-month period ended September 30, 1997 also reflects
such reduction in the accrual for litigation expense, offset in part by a
portion of such charge for stock compensation expense ($4.7 million).
Disregarding the impact of this reduction in the accrual for litigation
expense and this stock compensation expense, income before income taxes and
extraordinary items would have been $12.1 million for the nine-month period
ended September 30, 1997. See "Selected Consolidated Financial Data."
(2) "Operating Cash Flow" is defined as net revenue less operating expenses
before depreciation, amortization, interest expense, disposition of assets,
and stock compensation expense. "Segment Operating Cash Flow" is defined as
Operating Cash Flow less corporate overhead. Operating Cash Flow and
Segment Operating Cash Flow are not to be considered as alternatives to net
income (loss) as an indicator of our operating performance or to cash flow
as a measure of debt liquidity.
(3) EBITDA means, in general, the sum of consolidated net income (loss),
consolidated depreciation and amortization expense, consolidated interest
expense and consolidated income tax expense (benefit), consolidated noncash
charges, and extraordinary or nonrecurring items. EBITDA has been included
solely because we understand that it is used by certain investors and
financial analysts as one measure of our historical ability to service its
debt. EBITDA is the same as Operating Cash Flow and is not to be considered
as an alternative to net income (loss) as an indicator of our operating
performance or to cash flow as a measure of our liquidity.
(4) Historical data as of December 31, 1995, 1994, and 1993 have been restated
to conform to the current presentation.
16
<PAGE>
RISK FACTORS
This Prospectus contains forward-looking statements, which are statements
other than statements of historical facts. We have based these forward-looking
statements on our current expectations and projections about future events,
based on the information currently available to us. Certain such forward-
looking statements can be identified by the use of words like "believes,"
"expects," "may," "will," "should," "seeks," "pro forma," "approximately,"
"intends," "plans," "estimates," or "anticipates" or by discussions of
strategy, plans or intentions.
The forward-looking statements are subject to risks, uncertainties and
assumptions about us and about the future, and could prove not to be correct.
Important factors that could cause actual results to differ materially from our
expectations are discussed in this Prospectus and in the documents incorporated
by reference in the Prospectus, including in conjunction with the forward-
looking statements included in this Prospectus and under "Risk Factors." Among
the factors that could impact the Company's ability to achieve its goals are:
. material adverse changes in general economic conditions, including
changes in inflation and interest rates;
. changes in laws and regulations affecting the outdoor advertising and
television and radio broadcasting businesses, including changes in the
FCC's treatment of time brokerage agreements and related matters, and the
possible inability to obtain FCC consent to proposed or pending
acquisitions or dispositions of broadcasting stations;
. competitive factors in the outdoor advertising, television and radio
broadcasting, and sports and entertainment businesses;
. material changes to accounting standards;
. expiration or non-renewal of broadcasting licenses and time brokerage
agreements;
. labor matters, including after effects of the NBA lockout, changes in
labor costs, renegotiation of labor contracts, and risk of work stoppages
or strikes;
. matters relating to the Company's level of indebtedness, including
restrictions imposed by financial covenants and the need to refinance a
portion of that indebtedness over the next several years;
. the win-loss record of the Seattle SuperSonics, which has a substantial
influence on attendance, and whether the team participates in the NBA
playoffs; and
. recessionary influences in the regional markets that we serve.
In addition, we recently sold substantially all of the assets of our airport
advertising operations, which will cause our results of operations and
financial condition for periods and dates subsequent to the sale to differ in
certain respects from the results of operations and financial condition for
periods and dates prior to the sale. See "Prospectus Summary--Recent
Developments" and "Unaudited Pro Forma Condensed Consolidated Financial
Information."
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, uncertainties and assumptions, the forward-looking
events discussed in this Prospectus may not occur.
You should carefully consider the following factors as well as the other
matters described or incorporated by reference in this Prospectus.
Failure To Participate In The Exchange Offer Will Have Adverse Consequences
If you do not exchange your Initial Notes for Exchange Notes pursuant to the
Exchange Offer, you will continue to be subject to the restrictions on transfer
of your Initial Notes, as set forth in the legend on your
17
<PAGE>
Initial Notes. The restrictions on transfer of your Initial Notes arise because
we issued the Initial Notes pursuant to exemptions from, or in transactions not
subject to, the registration requirements of the Securities Act and applicable
state securities laws. In general, the Initial Notes may not be offered or
sold, unless registered under the Securities Act and applicable state
securities laws, or pursuant to an exemption from such requirements. We do not
intend to register the Initial Notes under the Securities Act.
After completion of the Exchange Offer, holders of Initial Notes who do not
tender their Initial Notes in the Exchange Offer will no longer be entitled to
any exchange or registration rights under the Registration Rights Agreement,
except under limited circumstances.
If you exchange your Initial Notes in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes, you may be deemed to
have received restricted securities and, if so, will be required to comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. To the extent Initial Notes are
tendered and accepted in the Exchange Offer, the trading market, if any, for
the Initial Notes would be adversely affected. See "The Exchange Offer."
Conditions to Acquiring WOKR(TV)
On September 25, 1998, we entered into a purchase agreement with Sinclair
Communications, Inc. to acquire substantially all of the assets of WOKR(TV), an
ABC affiliate licensed to Rochester, New York. The purchase price is $125.0
million, subject to possible adjustments under the terms of the purchase
agreement, plus the assumption of certain liabilities. We have paid $12.5
million into an escrow account, with the balance of the purchase price due on
closing. Closing of the transaction is subject to a number of conditions,
including (i) the acquisition of the station by Sinclair Communications, Inc.
from Guy Gannett Communications, (ii) the accuracy of the parties'
representations and warranties, (iii) receipt of certain legal opinions, (iv)
the parties' performance of their respective obligations under the purchase
agreement, (v) the absence of any injunction or legal proceeding restraining or
prohibiting the transaction or limiting our ability to own or operate the
station, and (vi) receipt of FCC approval. While our management expects these
conditions to be satisfied and the transaction to be completed, there can be no
assurance in this regard. Either party may terminate the purchase agreement,
subject to certain conditions, if closing has not occurred by September 4,
1999. See "Prospectus Summary--Recent Developments."
We intend to finance our acquisition of WOKR(TV) through additional
borrowings under the 1999 Credit Agreement as follows: (i) an additional $85.0
million under the Term Loan Facility and (ii) $27.5 million under the Revolving
Credit Facility. The lending banks' commitment to provide the $85.0 million
term loans, however, terminates April 30, 1999 unless the bank lenders agree to
extend this date, and is subject to compliance with the additional borrowing
terms under the 1999 Credit Agreement. See "Description of Other Indebtedness--
1999 Credit Agreement."
If we were unable to complete the acquisition of WOKR(TV) under the terms of
the purchase agreement, whether due to lack of necessary financing or
otherwise, we could forfeit our deposit.
Financial Condition
Financial Leverage. As of September 30, 1998, on a pro forma basis after
giving effect to the issuance of the Initial Notes and the application of the
estimated net proceeds therefrom to repay borrowings under the 1998 Credit
Agreement, and assuming that we had repaid our Senior Secured Notes with
borrowings under the 1998 Credit Agreement as of that date, we would have had
approximately $261.0 million of outstanding indebtedness (including the Initial
Notes) and a consolidated stockholders' deficit of $21.7 million. See
"Capitalization." This stockholders' deficit resulted primarily from net losses
that were incurred during the fiscal years 1982 through 1991, which were caused
primarily by (i) high levels of interest expense and depreciation and (ii)
amortization of fixed assets and acquired intangibles related to acquisitions.
The stockholders' deficit declined by approximately $38.9 million in fiscal
year 1997 and $23.2 million in the first
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nine months of 1998, primarily as a result of net earnings. While we expect
that this trend will continue, there can be no assurance that it will.
In addition, we intend to continue to acquire additional out-of-home media
and broadcasting businesses, subject to the availability of required financing.
We may assume the indebtedness of businesses that we acquire. We may also make
acquisitions or capital expenditures that are financed with the proceeds from
borrowings. As a result of such acquisitions, our outstanding indebtedness and
interest expense will increase, perhaps substantially. In that regard, the
proposed acquisition of WOKR(TV) will, as described above, substantially
increase our indebtedness. Likewise, further acquisitions will likely increase
our depreciation and amortization expenses, perhaps substantially.
Our degree of leverage could have important consequences to investors,
including the following:
. our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, general corporate purposes,
or other purposes may be impaired;
. Operating Cash Flow (defined as net revenue less operating expenses plus
other income before depreciation, amortization, interest expense,
disposition of assets, and stock compensation expense) available to us
for purposes other than payment of indebtedness may be reduced;
. we may be exposed to the risk of increased interest rates since a portion
of our borrowings, including borrowings under the 1999 Credit Agreement,
bear interest at floating rates;
. we may have a competitive disadvantage against competitors that are less
leveraged;
. we may have limited ability to adjust to changing market conditions;
. we may have decreased ability to withstand competitive pressures; and
. we may have increased vulnerability to a downturn in general economic
conditions or its business.
Our ability to make scheduled payments on or to refinance our indebtedness
will depend on our financial and operating performance, which in turn will be
subject to economic conditions and to financial, business, and other factors
beyond our control. In order to fund our debt service and other obligations, we
may be forced to reduce or delay planned expansion and capital expenditures,
sell assets, obtain additional equity capital or debt financing, or restructure
our debt. Although our economic performance has improved since 1992, we cannot
guarantee that our operating results, Operating Cash Flow, and capital
resources will be sufficient for future payments of our indebtedness, to make
planned capital expenditures, to finance acquisitions or to pay our other
obligations.
Restrictions Imposed by Debt Instruments; Pledge of Collateral. We are
subject to a number of significant operating and financial restrictions that
are set forth in the 1999 Credit Agreement and in the agreements (the "Senior
Subordinated Note Agreements") pursuant to which $20.0 million of our senior
subordinated notes (the "Senior Subordinated Notes") is outstanding. These
covenants, among other things, limit our ability to assume or issue new debt,
declare and pay dividends, repurchase shares of Common Stock and our Class B
common stock (the "Class B Common Stock"), and dispose of assets. In addition,
we are required to maintain specified financial ratios, including a maximum
leverage ratio, minimum interest coverage ratio, and minimum fixed charge
coverage ratio. Our ability to comply with such covenants and financial ratios
may be affected by events beyond our control.
The 1999 Credit Agreement also requires, subject to certain exceptions, that
we apply 50% of the net cash proceeds (as defined in the 1999 Credit Agreement)
received by us from the sale of our capital stock, 100% of the net cash
proceeds received by us from the sale of our debt securities, 100% of the net
cash proceeds in excess of an aggregate of $35.0 million received by us from
certain asset dispositions, and, under certain circumstances, up to 50% of our
excess cash flow (as defined in the 1999 Credit Agreement) to repay borrowings
under the 1999 Credit Agreement. It further provides that the amount of
borrowings available under the 1999 Credit Agreement will be permanently
reduced by the amount of such repayments.
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The 1999 Credit Agreement also provides that it is an event of default
thereunder if the Ackerley Family (as defined in the 1999 Credit Agreement)
owns less than 51% of our outstanding voting stock. In addition, upon the
occurrence of a change of control (as defined in the Senior Subordinated Note
Agreements), the holders of the Senior Subordinated Notes have the right to
require us to repurchase the Senior Subordinated Notes. See "Description of
Other Indebtedness--Senior Subordinated Notes."
The breach by us of any of those covenants would result in a default under
any or all of the 1999 Credit Agreement, the Senior Subordinated Note
Agreements, or the Indenture. In the event of any such default, the bank
lenders under the 1999 Credit Agreement, or the holders of the Senior
Subordinated Notes or the Notes, as the case may be, could elect to declare all
amounts outstanding under the 1999 Credit Agreement, the Senior Subordinated
Notes or the Notes, as the case may be, together with accrued interest, to be
due and payable. Likewise, because of cross-default provisions in our debt
instruments, a default under the 1999 Credit Agreement, the Senior Subordinated
Notes or the Notes could result in acceleration of indebtedness outstanding
under these or other debt instruments.
In addition, we have pledged substantially all the stock and the material
assets of our subsidiaries to secure our obligations under the 1999 Credit
Agreement. If we were unable to repay any amounts due under the 1999 Credit
Agreement when due (whether upon acceleration or otherwise), the bank lenders
would be entitled to proceed against the collateral.
As a result, default by us under the 1999 Credit Agreement, any of the Senior
Subordinated Note Agreements, or the Indenture could have a material adverse
effect on our business, financial conditions, or results of operations. If the
indebtedness under any of these debt instruments were accelerated, there can be
no assurance that we would be able to repay such indebtedness.
Subordination; Holding Company Structure
The payment of principal, premium, if any, and interest on the Notes will be
subordinated to the prior payment in full of all existing and future Senior
Debt. As of September 30, 1998, on a pro forma basis after giving effect to the
offering of the Initial Notes and the application of the estimated net proceeds
therefrom and assuming we had repaid our Senior Secured Notes with borrowings
under the 1998 Credit Agreement as of that date, approximately $51.8 million of
Senior Debt would have been outstanding. The Indenture will limit the amount of
additional debt we may incur, but not its form. In the event of the bankruptcy,
liquidation, dissolution, reorganization or other winding up of the Company,
our assets will be available to pay obligations on the Notes only after all
Senior Debt has been paid in full, and there may not be sufficient assets
remaining to pay amounts due on any or all of the Notes. In addition, under
certain circumstances set forth in the Indenture, we may not pay principal of,
premium, if any, or interest on the Notes, or purchase, redeem or otherwise
retire the Notes, if a payment default or a non-payment default exists with
respect to certain Senior Debt, including Senior Debt under the 1999 Credit
Agreement and, in the case of non-payment default, if a payment blockage notice
has been received by the Trustee (as defined). See "Description of the Notes--
Subordination" and "Description of Other Indebtedness--1999 Credit Agreement."
In addition, although the Notes are intended to rank pari passu with the
Senior Subordinated Notes, the subordination provisions of the Senior
Subordinated Note Agreements differ in some material respects from the
subordination provisions of the Indenture. Under certain circumstances, these
differences could result in the holders of the Notes receiving less, ratably,
than the holders of the Senior Subordinated Notes in the event of bankruptcy,
insolvency or similar proceedings with respect to the Company or in certain
other circumstances. See "Description of Other Indebtedness--Senior
Subordinated Notes."
Under certain circumstances, if any of our subsidiaries (other than an
Unrestricted Subsidiary (as defined under "Description of the Notes--Certain
Definitions")) guarantee indebtedness of either the Company or any other
guarantor of the Notes, or grant or incur any lien securing any such
indebtedness (other than liens on capital stock, partnership interests and
other ownership interests in our subsidiaries securing indebtedness under
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the 1999 Credit Agreement or other bank credit facilities), such subsidiaries
will be required to guarantee payment of the Notes, on a senior subordinated
basis with subordination provisions analogous to those applicable to the Notes;
provided that none of our subsidiaries will be required to guarantee payment of
the Notes so long as any Senior Subordinated Notes remain outstanding. See
"Description of the Notes--Certain Covenants--Guarantees of Certain
Indebtedness." In that regard, the final scheduled maturity date of the Senior
Subordinated Notes is December 15, 2000. Accordingly, the holders of Notes will
not be entitled to the benefit of any subsidiary guarantees so long as the
Senior Subordinated Notes are outstanding. Even if one or more of our
subsidiaries thereafter guarantees the Notes, the lenders under the 1999 Credit
Agreement will have a prior claim on the assets of the Company and its
subsidiaries to the extent those assets are pledged to secure borrowings under
the 1999 Credit Agreement. In addition, upon repayment of the Senior
Subordinated Notes, substantially all of our direct and indirect subsidiaries
will guarantee all amounts payable under the 1999 Credit Agreement. However, if
our subsidiaries were to guarantee amounts under the 1999 Credit Agreement
after repayment of the Senior Subordinated Notes, such subsidiaries (other than
Unrestricted Subsidiaries) would be required to guarantee the Notes on a senior
subordinated basis, as described above.
We are a holding company, and the Exchange Notes will be our direct
obligation. In addition, substantially all of our consolidated assets are held
by our subsidiaries. The Notes will be either effectively subordinated to all
existing and future indebtedness and other liabilities (including trade
payables) of each of our subsidiaries or, if a subsidiary enters into a
guarantee of the Notes as described above, will be contractually subordinated
to the Guarantor Senior Debt (as defined under "Description of the Notes--
Certain Definitions") of such subsidiary by the terms of such subsidiary
guaranty. Any right we have to receive assets of our subsidiaries upon their
liquidation or reorganization (and the consequent right of the holders of the
Notes to participate in those assets) would be subordinated to the claims of
the subsidiary's creditors except in certain limited circumstances.
As a holding company, our cash flow and the consequent ability to service our
debt, including the Notes, will depend upon the results of operations of our
subsidiaries and upon the ability of our subsidiaries to provide cash (whether
in the form of dividends, loans or otherwise) to pay amounts due in respect of
our obligations, including the Notes. Our subsidiaries are separate and
distinct legal entities and, at least initially, will have no obligations to
pay any amounts due on the Notes or to make any funds available to pay any
amounts due on the Notes.
Limitations on Purchase of Notes Upon a Change of Control
Upon a Change of Control, each holder of Notes will have the right, at the
holder's option, to require us to purchase all or a portion of such holder's
Notes. However, if a Change of Control were to occur, there can be no assurance
that we would have or be able to obtain sufficient funds to pay the purchase
price for all Notes tendered by the holders thereof or that we would be
permitted, under the terms of its debt instruments, to purchase any of the
Notes. If a Change of Control were to occur, we would likely be required to
seek additional financing to repurchase Notes tendered by holders, and there
can be no assurance that any such financing would be available on terms
favorable to us or at all. In addition, a Change of Control would constitute a
default under the 1999 Credit Agreement and could result in an acceleration of
indebtedness under the 1999 Credit Agreement. Moreover, the 1999 Credit
Agreement limits, and any future credit agreements or other agreements relating
to other indebtedness to which we or any of our subsidiaries may become parties
may limit or prohibit, us from repurchasing Notes upon a Change of Control. In
the event a Change of Control occurs at a time when we are prohibited from
purchasing, or are otherwise unable to purchase, Notes, our failure to purchase
tendered Notes would constitute an event of default under the Indenture
relating to the Notes, which could in turn constitute an event of default under
the 1999 Credit Agreement, the Senior Subordinated Note Agreements or under
other debt instruments or credit agreements to which we or any of our
subsidiaries may from time to time be a party. In such circumstances, the
subordination provisions of the Indenture would likely prohibit the purchase of
Notes. As a result, there can be no assurance that we would be able to purchase
Notes upon the occurrence of a Change of Control. See "Description of the
Notes."
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Absence of Public Market
The Exchange Notes are a new issue of securities for which there is currently
no established market. There can be no assurance as to (i) the liquidity of any
such market that may develop, (ii) the ability of the holders of Exchange Notes
to sell any of their Exchange Notes, or (iii) the price at which the holders of
Exchange Notes would be able to sell any of their Exchange Notes. We do not
presently intend to apply for listing of the Exchange Notes on any national
securities exchange or arrange for them to be quoted on any quotation system.
The Initial Purchasers have advised us that they intend to make a market in the
Exchange Notes. The Initial Purchasers are not obligated, however, to make a
market in the Exchange Notes, and any such market-making may be discontinued at
any time at the sole discretion of the Initial Purchasers and without notice.
Accordingly, we cannot guarantee the development or liquidity of any market for
the Exchange Notes. If a market for the Exchange Notes were to develop, the
Exchange Notes could trade at prices that may be higher or lower than reflected
by the initial offering price of the Initial Notes depending on many factors,
including prevailing interest rates, our operating results and the market for
similar securities. Historically, the market for securities such as the
Exchange Notes has been subject to disruptions that have caused substantial
volatility in the prices of similar securities. We cannot guarantee that, if a
market for the Exchange Notes were to develop, such a market would not be
subject to similar disruptions.
Out-of-Home Media
Tobacco Advertising. Approximately 5% and 3% of our consolidated net revenue
for the year ended December 31, 1997 and the nine-month period ended September
30, 1998, respectively, came from the tobacco products industry. Manufacturers
of tobacco products, principally cigarettes, historically have been major users
of outdoor advertising displays. Tobacco advertising is currently subject to
regulation and legislation has been introduced from time to time in the U.S.
Congress that would further regulate and in certain instances prohibit
advertising of tobacco products. On November 23, 1998, the major tobacco
companies and the Attorneys General of 46 states entered into a broad-based
consent judgment in which, among other things, these companies agreed to
terminate all cigarette advertising on outdoor advertising within 150 days. The
consent judgment affects our operations in Massachusetts, Oregon and Washington
(other than King County). In 1997, we voluntarily agreed to eliminate tobacco
advertising on displays located in King County (Washington) effective January
1, 1998. In addition, the State of Florida previously entered into a settlement
agreement with the tobacco industry that eliminated tobacco advertising on
billboards throughout the state. As a result of these and other factors, it is
likely that our advertising revenue from tobacco companies will continue to
decrease. Historically, we have been able to replace tobacco industry
advertising revenue with revenue from other advertisers. However, we cannot
predict when or to what extent we will be able to do so in the future.
Regulation of Outdoor Advertising. Outdoor advertising displays are subject
to governmental regulation at the federal, state, and local levels. These
regulations, in some cases, limit the height, size, location, and operation of
outdoor displays and, in some circumstances, regulate the content of the
advertising copy displayed on outdoor displays. As described above, certain
jurisdictions have recently proposed or enacted regulations restricting or
banning outdoor advertising of tobacco or liquor. Likewise, regulations in
certain jurisdictions prohibit the construction of new outdoor displays or the
replacement, relocation, enlargement, or upgrading of existing structures. As a
result, we cannot guarantee that existing or future laws or regulations
relating to outdoor advertising will not have a material adverse effect on our
business, financial condition, or results of operations.
Our outdoor advertising operations are significantly affected by local zoning
regulations. Some jurisdictions impose a limitation on the number of outdoor
advertising structures permitted within the city limits. In addition, local
zoning ordinances can restrict or prohibit outdoor advertising displays in
specific areas. Most of our outdoor advertising structures are located in
commercial and industrial zones subject to such regulations.
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Federal and corresponding state outdoor advertising statutes require payment
of compensation for removal of existing structures by governmental order in
some circumstances. Some jurisdictions have adopted ordinances which have
sought the removal of existing structures without compensation. Ordinances
requiring the removal of a billboard without compensation have been challenged
in various state and federal courts on both statutory and constitutional
grounds, with differing results.
Although we have been successful in the past in challenging circumstances in
which its displays have been subject to removal, we cannot predict whether we
will be successful in the future and what effect, if any, such regulations may
have on our operations. In addition, we are unable to predict what additional
regulations may be imposed on outdoor advertising in the future. Legislation
regulating the content of billboard advertisements, including the legislation
described above, has been introduced in the U.S. Congress from time to time in
the past. Changes in laws and regulations affecting outdoor advertising at any
level of government may have a material adverse effect on our business,
financial condition, or results of operations.
Broadcasting
Government Regulation of Broadcasting Industry. Pursuant to the
Communications Act of 1934 (the "Communications Act"), the domestic
broadcasting industry is subject to extensive federal regulation. Among other
things, federal law requires approval by the FCC for the issuance, renewal,
transfer, and assignment of broadcasting station operating licenses, and
limits, among other things, the number of broadcasting properties we may
acquire in any market. In addition, our television station, KVOS, which is
located in Bellingham, Washington and broadcasts into Vancouver, British
Columbia, is regulated and affected by Canadian law. The restrictions and
obligations imposed by these laws and regulations, including their amendment,
interpretation, or enforcement, could have a material adverse effect on our
business, financial condition, or results of operations.
Renewal of Broadcasting Licenses. Our business will continue to be dependent
upon acquiring and maintaining broadcasting licenses issued by the FCC. Such
licenses are currently issued for a term of eight years, in accordance with the
Telecommunications Act of 1996 (the "Telecommunications Act"). We own and
operate seven television stations, operate an additional three television
stations under time brokerage agreements, and own and operate four radio
stations. License renewal applications for KVOS and the five television
stations in California are currently pending. License renewal applications for
the three New York television stations will be filed in 1999. As a result, the
renewal of these licenses, as well as the renewal of licenses for its other
broadcasting stations, is crucial to our broadcasting operations. In
considering whether to renew a license, the FCC considers several factors,
including the licensee's compliance with the FCC's children's television rules,
the FCC's equal employment opportunity rules, and the FCC's radio frequency
rules. The FCC also considers the Communications Act's limitations on license
ownership by foreign individuals and foreign companies, and rules limiting
common ownership of broadcast, cable, and newspaper properties. In addition,
the FCC considers the licensee's general character, including the character of
the persons holding interests in the licensee. In addition, third parties may
challenge renewal applications or file competing applications to acquire the
licenses that are subject to renewal. Historically, we have been able to renew
its broadcast licenses on a regular basis. However, we cannot guarantee that
pending or future applications to acquire or renew broadcasting licenses will
be approved, or will not include conditions or qualifications adversely
affecting our operations, any of which could have a material adverse effect on
the Company. Moreover, governmental regulations and policies may change over
time and we cannot guarantee that such changes would not have a material
adverse impact on our business, financial condition, or results of operations.
Approval of Purchase and Sale Transactions. We are seeking FCC approval to
acquire the broadcasting licenses for five television stations and two radio
stations as discussed under "Prospectus Summary--Recent Developments," and will
be required to obtain FCC approval to acquire additional broadcasting licenses
in the future. In connection with the application to acquire a broadcasting
license, the FCC considers factors generally
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similar to those discussed in the preceding paragraph. In addition, the filing
by third parties of petitions to deny, informal objections or comments to a
proposed transaction can result in significant delays to, as well as denial of,
FCC action on a particular application. On May 21, 1996, certain local persons
filed a Petition for Emergency Relief with the FCC, seeking an order
terminating our existing time brokerage agreement for KION(TV) and the purchase
option pursuant to which we are seeking to acquire KION(TV). This Petition for
Emergency Relief is still pending before the FCC. The petitioners have filed
comments in connection with the KCBA(TV) and KION(TV) assignment and license
renewal applications noting the pendency of their petition. Also, a Petition to
Deny the Company's application to acquire KTVF(TV), KXLR(FM), and KCBF(AM) has
been filed by a competing radio station owner. As a result, we cannot guarantee
that the FCC will approve our application for the broadcasting licenses we are
seeking or in the future may seek to acquire. Likewise, we are seeking to sell
one television station, which requires that the purchaser obtain FCC approval
as discussed above. Accordingly, there can be no assurance that the FCC will
approve our disposition of broadcasting stations it is seeking or in the future
may seek to sell. Failure to obtain FCC approval to transfer broadcasting
licenses in connection with such transactions could adversely affect our
business, financial condition, or results of operations.
Time Brokerage Agreements. Currently, the FCC's Duopoly Rule prevents the
common ownership of more than one television station in a single market, or in
two different markets if the stations have significantly overlapping service
areas. Without regard to the Duopoly Rule, however, the FCC does permit a
television station owner to program significant amounts of the broadcast time
of another station under a time brokerage agreement, as long as the licensee of
that other station maintains ultimate control and responsibility for the
programming and operations of the station and compliance with applicable FCC
rules and policies. In addition, the FCC currently has a policy of granting
waivers of the Duopoly Rule to permit common ownership of two stations with
overlapping service areas in certain circumstances, provided the stations are
located in different markets. These waivers are conditioned upon the outcome of
the FCC's review of its television ownership rules.
The FCC is considering whether to eliminate or amend the Duopoly Rule and
whether to treat the programming of more than 15% of another station's weekly
broadcast time under a time brokerage agreement as outright ownership of that
station in counting the number of stations the programmer owns. The FCC has
indicated that if it ultimately decides to treat time brokerage agreements as
equivalent to ownership, it will either grandfather time brokerage agreements
entered into before a specific date or provide a period of time (which we
expect would be at least six months) for station owners to comply with the new
rules by disposing of their interests in television stations and/or time
brokerage agreements for television stations operating in the same markets or
with overlapping service areas. We cannot predict whether or when the FCC will
change these rules or whether Congress will take action which impacts these
rules.
Currently, the only areas in which we both own a television station and
operate another television station under a time brokerage agreement are (i) the
Syracuse/Utica, New York area, where we own and operate WIXT in Syracuse and
operate WUTR in Utica under a time brokerage agreement, and (ii) the
Monterey/Salinas, California area, where we own and operate KCBA(TV) in Salinas
and operate KION(TV) in Monterey under a time brokerage agreement. We have
applications pending with the FCC to acquire KION(TV) and to sell KCBA(TV). We
also have a time brokerage agreement with the purchaser of KCBA(TV) which
provides for us to operate KCBA(TV) following its sale. See "Prospectus
Summary--Recent Developments." Thus, if the FCC were to treat time brokerage
agreements as equivalent to outright station ownership without eliminating the
Duopoly Rule or grandfathering our time brokerage agreements, we would be
required to dispose of our interests in one of the stations in the
Syracuse/Utica area and one of the stations in the Monterey/Salinas area, which
could have a material adverse effect on our business, financial condition, or
results of operations. If, prior to the time it acts on the KCBA(TV)
application, the FCC changes its rules to prohibit time brokerage agreements
with stations in the same markets, it is not certain that we would be permitted
to operate KCBA(TV) under a time brokerage agreement following the sale.
In addition, in August 1998 we acquired a television station (WIVT) in
Binghamton, New York. Since the service areas of the Binghamton station and our
television station (WIXT) in Syracuse, New York overlap, we
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obtained a waiver of the Duopoly Rule conditioned on the outcome of the FCC's
review of its television ownership rules. Similarly, the service areas of
WOKR(TV) and WIXT(TV) overlap and we have requested a waiver of the Duopoly
Rule in connection with the acquisition of WOKR(TV). If the FCC decides to
retain its current Duopoly Rule, we would be required to dispose of our
interest in one of these stations, which could have a material adverse effect
on our business, financial condition, or results of operations.
New Technologies. The FCC is considering ways to introduce new technologies
to the public, including digital television ("DTV"). The Telecommunications Act
requires the FCC to oversee the transition from current analog television
broadcasting to DTV broadcasting. During the transition period, the FCC will
issue one digital broadcast license to each existing television licensee which
files a license application. The FCC has ordered network affiliates in larger
broadcast markets to begin DTV broadcasts during 1999. Our stations are
required to begin construction of their digital transmission facilities by May
1, 2002. The stations will then be allowed to broadcast two signals using two
channels, one digital and one analog, during the transition period which will
extend until 2006. At the end of the transition period, broadcasters will be
required to choose whether they will continue broadcasting on the digital or
the analog channel, and to return the other channel to the FCC.
We are unable to predict the effect any such new technology will have on the
Company. However, DTV will impose additional costs on our television
broadcasting operations, due to increased equipment and operating costs. In
addition, conversion to DTV may reduce the geographical coverage area of our
television stations. The increased costs of DTV for us and its potential
limitations on geographical coverage may have a material adverse effect on our
business, financial condition, or results of operations.
KJR(AM) Transmission Facilities. KJR(AM) broadcasts from transmission
facilities located on property leased from the Port of Seattle, currently on a
month-to-month basis. We have filed an application with the FCC to co-locate
KJR(AM)'s transmission facilities with KHHO's facilities in Tacoma, Washington.
On May 5, 1998 the FCC issued a construction permit granting us authority to
begin construction of the transmission facilities at the KHHO site. We are
negotiating with the Port of Seattle to continue broadcasting from the present
tower location or from an alternative site until KJR(AM) can broadcast from the
KHHO site. However, we do not expect that KJR(AM) will be able to broadcast
from the KHHO site for at least one to two years. We are exploring our legal
options in the event that the Port of Seattle attempts to eject us from the
current site before we are able to use the new site. While management expects
to successfully resolve this matter, there can be no assurance that it will do
so or that this matter will not have a material adverse effect on our business,
financial condition, or results of operations.
Sports & Entertainment
NBA Lockout; Labor Relations in Professional Sports. Players in the NBA are
covered by the terms of a collective bargaining agreement, which was originally
scheduled to expire on June 30, 2001. On March 23, 1998, the Board of Governors
of the NBA voted to exercise their option to reopen the NBA's collective
bargaining agreement with the National Basketball Players Association. As a
result, the collective bargaining agreement expired on June 30, 1998 and the
players were locked out. Preseason and regular season games scheduled through
February 4, 1999 have been cancelled. On January 7, 1999, the NBA Board of
Governors ratified a new six-year collective bargaining agreement between the
NBA and the National Basketball Players Association. Consequently, the 1998-99
NBA season will start on February 5, 1999. The 1998-99 NBA season will consist
of a shortened regular season in which each team plays 50 games (25 at home and
25 on the road), and playoffs in the usual NBA format. In a full-length NBA
season, each team plays 82 regular season games (41 at home and 41 on the
road).
We estimate that, due to the cancellation of all games scheduled through the
end of December 1998, our EBITDA for fiscal year 1998 is approximately $6.0
million to $7.0 million lower than it would have been if no games were
cancelled. We also estimate that, due to the cancellation of games through
February 4, 1999 our
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EBITDA for January 1999 will be approximately $3.0 million to $4.0 million
lower than it would have been if no games were cancelled. There can be no
assurance that the NBA or the Seattle SuperSonics will not experience other
labor relations difficulties in the future, which could have a material adverse
effect on our business, financial condition, or results of operations.
We share equally with the other NBA members in revenues generated by the NBA
as a whole. Contracts between the NBA and two major television networks (NBC
and TBS/TNT) accounted for a total of approximately $12.0 million of our net
revenue for fiscal year 1997. Recently, the NBA renewed its contracts with NBC
and TBS/TNT through the 2001-02 season. These contracts provide for total
payments to the NBA over the four year contract period of up to $2.6 billion,
plus, under certain circumstances, revenue sharing payments. Over the course of
the year, fees are paid by NBC in five installments and by TBS/TNT in six
installments. However, as a result of the NBA lockout, the NBA will not receive
the full $2.6 billion over the life of these contracts (due to the contract
provisions described below), which could have a material adverse effect on the
Company.
Under these contracts, the NBA continued to receive scheduled fees during the
lockout. However, fees received from the networks during the lockout are
considered to be loans to the NBA and must be repaid as described below. In
addition, the NBA is required to pay interest on certain of the fee payments
made during the lockout at the rate of 4% per annum. Following the end of the
lockout, the NBA is required to repay the loans and accrued interest through
equal deductions from the fee payments due from the networks over the remaining
term of the contracts (currently due to expire at the end of the 2001-02
season), subject to the following exceptions. Under the NBC contract the loans
will be repaid through equal deductions from the first ten fee installments
after the end of the lockout. However, such repayments may be reduced if NBC
and/or TBS/TNT decide to broadcast additional games over the term of the
contracts.
Dependence on Competitive Success. Our financial results and those of our
sports & entertainment segment operations depend, to a large extent, on the
performance of the Seattle SuperSonics and its ranking relative to other NBA
teams in its division. By qualifying for the NBA playoffs, for example, we can
receive significant additional revenue from ticket sales for home playoff games
and from selling advertising during broadcasts of playoff games. In that
regard, the Seattle SuperSonics qualified for the NBA playoffs in both their
1995-96 and 1996-97 seasons, which substantially increased our net revenue and
Operating Cash Flow, as well as the net revenue and Operating Cash Flow for our
sports & entertainment segment, for fiscal years 1996 and 1997. Although the
Seattle SuperSonics qualified for the NBA playoffs for the 1997-98 season, our
results of operations and those for our sports & entertainment segment would
likely be adversely affected by poor performance by the Seattle SuperSonics in
subsequent seasons, and there can be no assurance that the Seattle SuperSonics
will perform well or qualify for the playoffs in the future.
League Membership Risks. Because the NBA is a joint venture, the Seattle
SuperSonics and other members of the NBA are generally jointly and severally
liable for the debts and other liabilities of the NBA. Any failure of other
members of the NBA to pay their pro rata share of any such debts and other
liabilities could adversely affect the Company. The success of the NBA and its
member teams depends in part on the competitiveness of other NBA teams and
their ability to maintain fiscally sound franchises. Certain NBA teams have at
times encountered financial difficulties, and there can be no assurance that
the NBA and its members will continue to be able to operate on a fiscally
stable and effective basis. In addition, the Seattle SuperSonics and its
personnel are bound by a number of rules, regulations, and agreements,
including the constitution and by-laws of the NBA, national television
contracts, and collective bargaining agreements. Any changes to these rules,
regulations, and agreements adopted by the NBA will be binding upon the Seattle
SuperSonics and its personnel regardless of whether the Seattle SuperSonics
agree or disagree with them, and it is possible that any such changes could
adversely affect our business, financial condition, or results of operations.
The Commissioner of the NBA has the exclusive power to interpret the
constitution, by-laws, rules, and regulations of the NBA. The Commissioner's
interpretations are final and binding on the Company, the Seattle
26
<PAGE>
SuperSonics, and its personnel. In addition, member clubs of the NBA may not
resort to the courts to enforce or maintain rights or claims against other
member clubs, or to seek resolution of any dispute or controversy between
member clubs. Instead, all such matters will be decided by the Commissioner of
the NBA without any right of appeal to the courts or otherwise.
Dependence on Talented Players; Risks Related to Player Salaries. The success
of the Seattle SuperSonics will depend upon the team's continued ability to
retain and attract talented players. The Seattle SuperSonics compete with other
United States and foreign basketball teams for available players. There can be
no assurance that the Seattle SuperSonics will be able to retain players upon
expiration of their contracts or identify and obtain new players of comparable
talent to replace players who retire or are injured, traded, or released. Even
if the Seattle SuperSonics are able to retain or obtain players who have had
successful college or professional careers, there can be no assurance that
their performance for the Seattle SuperSonics in subsequent years will be at
the same level as their prior performance.
Players' salaries in the NBA have increased significantly in recent years.
Significant further increases in players' salaries could occur and could have a
material adverse effect on our business, financial condition, or results of
operations.
NBA player contracts generally provide that a player is entitled to receive
his salary even if he is unable to play as a result of injuries sustained from
basketball-related activities during the course of his employment. These
salaries represent significant financial commitments of the Seattle
SuperSonics. Disability insurance for NBA players (which in certain instances
provides up to 80% of salary reimbursement after 41 consecutive games are
missed) is costly to maintain, and, as required by NBA rules, the Seattle
SuperSonics carry such insurance for its six most highly compensated players.
In the event an injured player is not insured or insurance does not cover the
entire amount of the injured player's salary, we would be obligated to pay all
or a portion, as the case may be, of the injured player's salary. In addition,
if we acquire a new player to replace the injured player, we would also be
required to pay the salary of the replacement player. To the extent that our
financial results are dependent on the Seattle SuperSonics' competitive success
(as discussed above), the likelihood of achieving such success is substantially
reduced by serious injuries to key players. There can be no assurance that key
players for the Seattle SuperSonics will not sustain serious injuries during
any given season. As a result, injuries to players could have a material
adverse effect on our business, financial condition, or results of operations.
Competition
Our three business segments are in highly competitive industries. Our
broadcasting and out-of-home media businesses compete for audiences and
advertising revenue with other broadcasting stations and out-of-home media
advertising companies, as well as with other media forms. Such other media
forms may include newspapers, magazines, transit advertising, yellow page
directories, direct mail, local cable systems, and satellite broadcasting
systems. Audience ratings and market shares are subject to change and any
adverse change in a particular market could have a material adverse effect on
our business, financial condition, or results of operations. Changes which
could have an adverse effect on us include economic conditions, both general
and local; shifts in population and other demographics; the level of
competition for advertising dollars; a station's market rank, broadcasting
power, assigned frequency, network affiliation, and audience identification;
fluctuations in operating costs; technological changes and innovations; changes
in labor conditions; and changes in governmental regulations and policies and
actions of federal regulatory bodies. There can be no assurance that we will be
able to maintain or increase our current audience ratings and advertising
revenue. In this respect, the entrance of a new television station in the
Vancouver, British Columbia market in October 1997 has adversely affected the
financial performance of our television station in Bellingham, Washington
(KVOS), which could have a material adverse effect on our business, financial
condition, or results of operations.
27
<PAGE>
Certain of our competitors, including a few outdoor advertising companies
that are substantially larger than our outdoor advertising operations, have
significantly greater financial, marketing, sales and other resources than we
have. There can be no assurance that we will be able to compete successfully
against our competitors in the future.
The Seattle SuperSonics compete directly with other professional and amateur
sporting franchises and events, both in the Seattle/Tacoma market area and
nationally via sports broadcasting. During portions of their season, the
Seattle SuperSonics experience competition from professional football (the
Seattle Seahawks) and professional baseball (the Seattle Mariners). In
addition, the colleges and universities in the region, as well as public and
private secondary schools, offer a full schedule of athletic events throughout
the year. The Seattle SuperSonics also compete for attendance and advertising
revenue with a wide range of other entertainment and recreational activities
available in the region, including television, radio, newspapers, movies, live
performances, and other events.
Legal Proceedings
We become involved, from time to time, in various claims and lawsuits
incidental to the ordinary course of our operations, including such matters as
contract and lease disputes and complaints alleging employment discrimination.
In addition, we participate in various governmental and administrative
proceedings relating to, among other things, condemnation of outdoor
advertising structures without payment of just compensation and matters
affecting the operation of broadcasting facilities. Management believes that
the outcome of any such pending claims or proceedings, individually or in the
aggregate, will not have a material adverse effect upon our business or
financial condition, except for the matters disclosed below.
Lambert v. Ackerley. In December 1994 six former employees of one of our
subsidiaries filed a complaint in King County (Washington) Superior Court
against Seattle SuperSonics, Inc. and Full House Sports & Entertainment, Inc.,
both of which are our wholly-owned subsidiaries, and two of our officers, Barry
A. Ackerley, Chairman and Chief Executive Officer, and William N. Ackerley,
former Co-President and Chief Operating Officer. The complaint alleged various
violations of applicable wage and hour laws and breaches of employment
contracts. The plaintiffs sought unspecified damages and injunctive relief.
On or about January 10, 1995, those claims were removed on motion by the
defendants to the U.S. District Court for the Western District of Washington in
Seattle. On September 5, 1995, the plaintiffs amended the claims (1) to specify
violations of Washington and U.S. federal labor laws and (2) to seek additional
relief, including liquidated and punitive damages under the U.S. Fair Labor
Standards Act and double damages under Washington law for willful refusal to
pay overtime and minimum wages.
On February 29, 1996, the jury rendered a verdict finding that the defendants
had wrongfully terminated the plaintiffs' employment under Washington law and
U.S. federal laws, and awarded compensatory damages of approximately $1.0
million for the plaintiffs and punitive damages against the defendants of $12.0
million. Following post-trial motions, the court reduced the punitive damages
award to $4,182,000, comprised of $1,394,000 against each of Barry A. Ackerley
and William N. Ackerley, and $1,394,000 against the corporate defendants
collectively.
On November 22, 1996, the defendants filed their Notice of Appeal from the
U.S. District Court to the Ninth Circuit Court of Appeals in San Francisco.
On October 1, 1998, the U.S. Court of Appeals for the Ninth Circuit issued an
opinion ruling in our favor, holding that plaintiffs did not have a valid claim
under the federal Fair Labor Standards Act and striking the award of damages,
including all punitive damages that had been entered by the District Court. The
Court of Appeals further reversed the lower court's award of $75,000 in
emotional distress damages. Finally, the Court of Appeals remanded the cases
for further consideration of whether or not the plaintiffs had a valid claim
under the Washington State Fair Labor Standards Act and whether, if such was
the case, the corporate officers named
28
<PAGE>
in the suit could have individual liability separate from the Company under
State law. Subsequently, the plaintiffs filed a Motion for Rehearing or
Reconsideration en banc that is presently pending before the Court of Appeals.
Van Alstyne v. The Ackerley Group, Inc. On June 7, 1996, a former sales
manager for television station WIXT, Syracuse, New York filed a complaint in
the U.S. District Court for the Northern District of New York against The
Ackerley Group, Inc., WIXT and the current and former general managers of WIXT.
The complaint seeks unspecified damages and injunctive relief for
discrimination on the basis of gender and disability, as well as unlawful
retaliation, under both state and federal law. A trial date has not been set,
but is not likely to take place before December 1999.
RSA Media Inc. v. AK Media Group, Inc. On June 4, 1997, RSA Media Inc., a
supplier of out-of-home advertising in Massachusetts, filed a complaint in the
U.S. District Court for the District of Massachusetts ("Court") alleging that
we have unlawfully monopolized the Boston-area billboard market in violation of
the Sherman Antitrust Act, engaged in unlawful restraint of trade in violation
of the Sherman Antitrust Act, and committed unfair trade practices in violation
of Massachusetts state law. The plaintiff is seeking in excess of $20.0 million
in damages. On May 22, 1998, the Court, in a ruling from the bench, dismissed
count 2 of plaintiff's complaint, which alleged that the existence of leases
between us and landowners restricted the landowners' ability to lease that same
space to the plaintiff in violation of the Sherman Antitrust Act. We have filed
a motion for summary judgment which is currently pending.
Dependence on Management
Certain of our executive officers and divisional managers, including Mr.
Barry A. Ackerley, are especially important to our direction and management.
The loss of the services of such persons could have a material adverse effect
on the Company, and there can be no assurance that we would be able to find
replacements for such persons with equivalent business experience. See
"Management."
Voting Control by Principal Stockholder
Each share of our Common Stock has one vote per share and each share of our
Class B Common Stock has ten votes per share. As of December 31, 1998, Barry A.
Ackerley, our Chairman of the Board and Chief Executive Officer, beneficially
owned approximately 48% of the outstanding shares of Common Stock and
approximately 99% of the outstanding shares of Class B Common Stock, giving him
approximately 92% of the combined voting power of our voting securities.
As a director, the Chairman and Chief Executive Officer, and the majority
stockholder of the Company, Mr. Ackerley has certain fiduciary duties to
minority stockholders under applicable law. However, so long as Mr. Ackerley
continues to own or control stock having a majority of the combined voting
power of our voting securities, he will have the power to elect all of our
directors and effect fundamental corporate transactions, such as mergers, asset
sales, and "going private" transactions, without the approval of any other
stockholders. Moreover, Mr. Ackerley's voting control would effectively prevent
any other person or entity from acquiring or taking control of the Company
without his approval.
Year 2000
Many computer systems will experience problems handling dates beyond the year
1999. Therefore, some computer hardware and software will need to be modified
prior to the year 2000 in order to remain functional. Management has completed
an assessment of our automated systems and has implemented a program to
complete all steps necessary to resolve identified issues. Our compliance
program has several phases, including (1) project management, (2) assessment,
(3) testing, and (4) remediation and implementation.
29
<PAGE>
We formed a Year 2000 compliance team in December 1997. All of our mission-
critical software programs have been identified, and the assessment phase is
essentially complete. Our primary software vendors and business partners were
also assessed during this phase, and vendors/business partners who provide
mission-critical software have been contacted. In most cases, the
vendors/business partners that are not already compliant have planned new Year
2000 compliant releases to be available early in 1999. Updating and testing of
our automated systems is currently underway and we anticipate that testing will
be complete by April 30, 1999. The remediation and implementation process, in
which in-house software applications and hardware will be made compliant, will
continue through 1999.
The total financial impact that Year 2000 issues will have on us cannot be
predicted with certainty at this time. In fact, in spite of all efforts being
made to rectify these issues, the success of our efforts will not be known for
sure until the year 2000 actually arrives. However, based on our assessment to
date, we do not believe that expenses related to meeting Year 2000 challenges
will exceed $750,000, although there can be no assurance in this regard.
The year 2000 poses certain risks to us and our operations. Some of these
risks are present because we purchase technology and information systems
applications from other parties who face Year 2000 challenges. Other risks are
present simply because we transact business with organizations who also face
Year 2000 challenges. Although it is impossible to identify all possible risks
that we may face moving into the next millennium, management has identified the
following significant potential risks:
The functions performed by our mission-critical software that are primarily
at risk from Year 2000 challenges generally involve the scheduling of
advertising and programming in our broadcasting and sports & entertainment
segments, the scheduling of advertising in our out-of-home media segment, and
the scheduling of events in our sports & entertainment segment. In all of these
cases, Year 2000 challenges could impact our ability to deliver our product
with the same efficiency as we do now.
Our operations, like those of many other organizations, can be adversely
affected by Year 2000 triggered failures of other companies upon whom we depend
for the functioning of its mission-critical automated systems. As described
above, we have identified our mission-critical vendors and is monitoring their
Year 2000 compliance programs.
We have not yet developed specific contingency plans related to Year 2000
issues, other than those described above. As we continue the testing phase, and
based on future ongoing assessment of the readiness of vendors and service
providers, we will develop appropriate contingency plans. It is possible that
certain circumstances may occur for which there are no satisfactory contingency
plans. As a result, there can be no assurance that Year 2000 issues will not
have a material adverse effect on our business, financial condition, or results
of operations.
USE OF PROCEEDS
We will not receive any proceeds from the Exchange Offer. We used the net
offering proceeds we received from the issuance of the Initial Notes,
approximately $169.5 million, to repay outstanding indebtedness under the 1998
Credit Agreement. See "Description of Other Indebtedness--1999 Credit
Agreement."
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<PAGE>
CAPITALIZATION
The following table sets forth, as of September 30, 1998, the consolidated
capitalization of the Company (i) on an actual basis, (ii) on a pro forma basis
after giving effect to the redemption of the Senior Secured Notes with
borrowings under the 1998 Credit Agreement, and the Offering and the
application of the net proceeds therefrom to repay borrowings as described
under "Use of Proceeds," as if such transactions had occurred on September 30,
1998, and (iii) on a pro forma basis after giving effect to the transactions
described in clause (ii) and the acquisition of substantially all of the assets
of WOKR(TV) and the assumption of certain related liabilities as if such
transactions had occurred on September 30, 1998. This table should be read in
conjunction with, and is qualified in its entirety by reference to, the
Consolidated Financial Statements included and incorporated by reference herein
and the information set forth herein under "Unaudited Pro Forma Condensed
Consolidated Financial Information."
<TABLE>
<CAPTION>
September 30, 1998
--------------------------------
Pro Forma
Redemption Pro Forma
Actual and Offering WOKR
-------- ------------ ---------
(In thousands)
<S> <C> <C> <C>
Long-term debt:
Bank borrowings(1).......................... $ 77,500 $ 32,837 $145,337
11.20% Senior Subordinated Notes, Series B,
due 1998................................... 2,500 2,500 2,500
10.48% Senior Subordinated Notes due 2000... 30,000 30,000 30,000
10.75% Senior Secured Notes due 2003(2)..... 120,000 -- --
Notes offered hereby........................ -- 175,000 175,000
Other....................................... 20,685 20,685 20,685
-------- -------- --------
Total debt.............................. 250,685 261,022 373,522
Less current maturities..................... 23,367 14,367 14,367
-------- -------- --------
Total long-term debt.................... $227,318 $246,655 $359,155
Stockholders' deficiency:
Common stock, $.01 par value per share;
50,000,000 shares authorized, 21,950,636
shares issued, and 20,575,690 shares
outstanding(3)............................. 219 219 219
Class B common stock, $.01 par value per
share; 11,406,510 shares authorized,
11,051,230 shares issued and
outstanding(3)............................. 111 111 111
Capital in excess of par value.............. 10,325 10,325 10,325
Deficit..................................... (22,292) (22,292) (22,292)
Less common stock in treasury, at cost
(1,374,946 shares)......................... (10,089) (10,089) (10,089)
-------- -------- --------
Total stockholders' deficiency.......... (21,726) (21,726) (21,726)
-------- -------- --------
Total capitalization.................. $205,592 $224,929 $337,429
======== ======== ========
</TABLE>
- --------
(1) As of December 4, 1998, borrowings of $207.5 million were outstanding under
the 1998 Credit Agreement. The Pro Forma Redemption and Offering amount
assumes that net proceeds of $169.5 million from the Notes are used to
repay bank borrowings, and the Pro Forma WOKR amount further assumes that
the Company makes additional borrowings under the 1999 Credit Agreement of
$112.5 million for the acquisition of WOKR(TV).
(2) All of the 10.75% Senior Secured Notes due 2003 were redeemed on October 1,
1998. The redemption and approximately $4.8 million of early redemption
fees were financed with borrowings under the Term Loan Facility of the 1998
Credit Agreement. See "Prospectus Summary--Recent Developments."
(3) Does not include shares reserved for issuance under employee and director
benefit plans or certain stock purchase agreements.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following consolidated statement of operations data and consolidated
other data for each of the three years in the period ended December 31, 1997
and the consolidated balance sheet data at December 31, 1997 and 1996 are
derived from the Consolidated Financial Statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 included and
incorporated by reference herein that have been audited by Ernst & Young LLP,
independent auditors, and are qualified by reference to such Consolidated
Financial Statements. The consolidated statement of operations data and
consolidated other data for the years ended December 31, 1994 and 1993 and the
consolidated balance sheet data at December 31, 1995, 1994, and 1993 are
derived from audited financial statements of the Company not included or
incorporated by reference in this Prospectus. The financial data as of and for
the nine-month periods ended September 30, 1998 and 1997 are unaudited but, in
the opinion of the management of the Company, include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the results of such periods. The following data should be read
in conjunction with, and is qualified in its entirety by reference to, the
historical and pro forma financial statements and other historical and pro
forma financial information included and incorporated by reference in this
Prospectus. The results of operations for the nine-month period ended September
30, 1998 are not necessarily indicative of the results to be expected for the
full fiscal year. See "Prospectus Summary--Recent Developments" and "Unaudited
Pro Forma Condensed Consolidated Financial Information."
<TABLE>
<CAPTION>
Nine-Month Period Ended
September 30, Year Ended December 31,
-------------------------- ----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------- ----------- -------- -------- -------- -------- ---------
(unaudited) (unaudited)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenue................. $231,742 $217,372 $306,169 $279,662 $235,820 $211,728 $ 192,958
Less agency commissions
and discount.......... (26,772) (25,106) (34,994) (32,364) (28,423) (25,626) (22,341)
-------- -------- -------- -------- -------- -------- ---------
Net revenue............. 204,970 192,266 271,175 247,298 207,397 186,102 170,617
Expenses (other income):
Operating expenses..... 168,470 151,154 210,752 186,954 156,343 142,812 132,316
Disposition of assets.. (32,770)(1) -- -- -- -- (2,506) 759
Depreciation and
amortization.......... 10,771 9,858 16,103 16,996 13,243 10,883 12,018
Interest expense....... 20,238 19,131 26,219 24,461 25,010 25,909 22,431
Litigation expense
(credit).............. -- (5,000) (5,000) -- 14,200 -- --
Stock compensation
expense............... 437 4,743 9,344 -- -- -- --
-------- -------- -------- -------- -------- -------- ---------
Total expenses and
other income.......... 167,146 179,886 257,418 228,411 208,796 177,098 167,524
-------- -------- -------- -------- -------- -------- ---------
Income (loss) before
income taxes and
extraordinary item..... 37,824 12,380 13,757 18,887 (1,399) 9,004 3,093
Income tax (benefit)
expense................ 14,389 (2,223) (19,172) 2,758 1,515 73 133
Income (loss) before
extraordinary item..... 23,435 14,603 32,929 16,129 (2,914) 8,931 2,960
Extraordinary item...... -- -- -- (355) -- (2,099) (625)
-------- -------- -------- -------- -------- -------- ---------
Net income (loss)....... 23,435 (1) 14,603 (1) 32,929 (1) 15,774 (2,914) 6,832 2,335
======== ======== ======== ======== ======== ======== =========
Other Data:
Segment Operating Cash
Flow(2)................ 47,444 48,797 70,436 68,577 58,571 49,342 42,800
Corporate overhead...... (10,944) (7,685) (10,013) (8,233) (7,517) (6,052) (4,499)
EBITDA(3)............... 36,500 41,112 60,423 60,344 51,054 43,290 38,301
Depreciation and
amortization........... 10,771 9,858 16,103 16,996 13,243 10,883 12,018
Capital expenditures.... 24,207 13,219 17,593 13,124 15,098 8,794 3,478
Interest expense........ 20,238 19,131 26,219 24,461 25,010 25,909 22,431
Ratio of EBITDA to
interest expense....... 1.80x 2.15x 2.30x 2.47x 2.04x 1.67x 1.71x
Ratio of earnings to
fixed charges(4)....... 2.87x 1.65x 1.52x 1.77x 0.94x 1.35x 1.14x
Consolidated Balance
Sheet Data (at end of
period):
Working capital
(deficiency)........... (7,379) 9,089 12,019 11,154 15,110 16,783 7,970
Total assets............ 308,240 243,609 266,385 224,912 189,882 170,783 160,491
Total long-term
debt(5)................ 227,318 221,243 213,294 229,350 215,328 225,613 213,165
Total debt(5)........... 250,685 226,941 229,424 235,141 220,147 228,646 224,080
Stockholders'
deficiency............. (21,726) (64,939) (44,909) (83,839) (99,093) (95,958) (102,852)
</TABLE>
32
<PAGE>
- --------
(1) Disposition of assets reflects the sale of substantially all of the
Company's airport advertising operations on June 30, 1998. See "Prospectus
Summary--Recent Developments." Excluding the sale of the Company's airport
advertising operations, net income would have been $3.0 million for the
nine-month period ended September 30, 1998. The increase in net income in
1997 over 1996 reflects a $19.2 million income tax benefit primarily due to
the recognition of a deferred tax asset and a $5.0 million reduction in an
accrual for litigation expense, offset in part by a $9.3 million charge for
stock compensation expense. Disregarding the impact of this reduction in
the accrual for litigation expense and this stock compensation expense,
income before income taxes and extraordinary items would have been $18.1
million for 1997 compared to $18.9 million for 1996. Net income for the
nine-month period ended September 30, 1997 also reflects such reduction in
the accrual for litigation expense, offset in part by a portion of such
charge for stock compensation expense ($4.7 million). Disregarding the
impact of this reduction in the accrual for litigation expense and this
stock compensation expense, income before income taxes and extraordinary
items would have been $12.1 million for the nine-month period ended
September 30, 1997.
(2) "Operating Cash Flow" is defined as net revenue less operating expenses
before depreciation, amortization, interest expense, disposition of assets
and stock compensation expense. "Segment Operating Cash Flow" is defined as
Operating Cash Flow less corporate overhead. Operating Cash Flow and
Segment Operating Cash Flow are not to be considered as an alternative to
net income (loss) as an indicator of the Company's operating performance or
to cash flow as a measure of the Company's liquidity.
(3) EBITDA means, in general, the sum of consolidated net income (loss),
consolidated depreciation and amortization expense, consolidated interest
expense, consolidated income tax expense (benefit), consolidated noncash
charges and extraordinary or nonrecurring items. EBITDA has been included
solely because the Company understands that it is used by certain investors
and financial analysts as one measure of a Company's historical ability to
service its debt. EBITDA is the same as Operating Cash Flow and is not to
be considered as an alternative to net income (loss) as an indicator of the
Company's operating performance or to cash flow as a measure of the
Company's liquidity.
(4) The ratio of earnings to fixed charges is expressed as the ratio of income
before income taxes plus fixed charges (excluding capitalized interest) to
fixed charges. Fixed charges consist of interest expense including
amortization of financing costs (including capitalized interest) and the
portion of operating rental expense that management believes is
representative of the interest component of rental expense. For the year
ended December 31, 1995, earnings were insufficient to cover fixed charges;
the amount of the deficiency was approximately $1.4 million.
(5) Data as of December 31, 1995, 1994, and 1993 have been restated to conform
to the current presentation.
33
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On June 30, 1998, the Company sold substantially all of the assets of its
wholly-owned subsidiary, Ackerley Airport Advertising, Inc. ("Airport"). The
sale price consisted of a base cash price of $40.0 million, paid on the closing
date of the transaction, and a post-closing Contingent Payment of approximately
$2.9 million, of which $1.2 million was paid in December 1998 and the remainder
was paid in January 1999. See "Prospectus Summary--Recent Developments--Sale of
Airport Advertising Operations." The Company recorded a gain from this
transaction of $35.3 million, before taxes. While the Company believes that it
will receive most, if not all, of the Contingent Payment, there can be no
assurance in this regard. See "Prospectus Summary--Recent Developments."
On September 25, 1998, the Company entered into a purchase agreement with
Sinclair to acquire substantially all of the assets of WOKR(TV), an ABC
affiliate licensed to Rochester, New York, for $125.0 million, subject to
possible adjustments under the terms of the purchase agreement, plus the
assumption of certain liabilities. The Company has paid $12.5 million into an
escrow account, with the balance of the purchase price due at closing. The
purchase price will be financed by borrowings under the 1999 Credit Agreement
subject to customary borrowing conditions. Consummation of the transaction is
subject to a number of conditions, including the acquisition of the station by
Sinclair from Guy Gannett Communications and the receipt of FCC approval.
Either party may terminate the purchase agreement, subject to certain
conditions, if closing has not occurred by September 4, 1999. See "Risk
Factors--Conditions to Acquiring WOKR(TV)" and "--Broadcasting--Approval of
Purchase and Sale Transactions."
The following unaudited pro forma condensed consolidated financial
information of the Company consists of an unaudited pro forma condensed
consolidated balance sheet as of September 30, 1998, and unaudited pro forma
condensed consolidated statements of income for the nine-month period ended
September 30, 1998 and year ended December 31, 1997 and related notes
(collectively, the "Unaudited Pro Forma Condensed Consolidated Financial
Statements"). The pro forma condensed consolidated balance sheet has been
prepared assuming the acquisition of WOKR(TV) occurred on September 30, 1998
and the pro forma condensed consolidated statements of income have been
prepared assuming the acquisition of WOKR(TV) and the sale of Airport both
occurred on the first day of each period. The Unaudited Pro Forma Condensed
Consolidated Financial Statements are subject to a number of estimates,
assumptions and uncertainties and do not purport to reflect the financial
condition or results of operations that would have existed or occurred had such
transactions taken place on the dates indicated, nor do they purport to reflect
the financial condition or results of operations that will exist or occur in
the future. In particular, the Unaudited Pro Forma Condensed Consolidated
Financial Statements assume that the Company will finance the acquisition of
WOKR(TV) with borrowings under the 1999 Credit Agreement and the pro forma
interest expense resulting therefrom is based upon the historical interest rate
on borrowings under the 1998 Credit Agreement. Likewise, the acquisition of
WOKR(TV) will be accounted for using the purchase method of accounting. The
total purchase price will be allocated to the tangible and intangible assets
and liabilities acquired based on their respective fair values. The allocation
of the purchase price reflected in the Unaudited Pro Forma Condensed
Consolidated Financial Statements is preliminary and is subject to adjustment,
upon receipt of, among other things, certain appraisals of the acquired assets
and liabilities. Finally, the accuracy of the Unaudited Pro Forma Condensed
Consolidated Financial Statements depends in large part upon the accuracy of
the historical financial data on which such pro forma financial statements are
based. In that regard, the historical financial data for WOKR(TV) has not been
independently verified by the Company nor has it been separately audited by any
accounting firm. The Unaudited Pro Forma Condensed Consolidated Financial
Statements should be read in conjunction with the Consolidated Financial
Statements incorporated by reference herein.
34
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1998
(In thousands)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
Ackerley Group WOKR Adjustments Ackerley Group
-------------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
Assets
Current assets.......... $ 79,230 $ 4,052 $ (3,309)(a) $ 79,973
Property and equipment,
net.................... 108,124 6,975 -- 115,099
Intangibles, net........ 80,278 45,183 73,309 (a) 198,770
Other assets............ 40,608 674 (12,500)(a) 28,782
-------- ------- -------- --------
Total assets.......... $308,240 $56,884 $ 57,500 $422,624
======== ======= ======== ========
Liabilities and
Stockholders'
Deficiency
Current liabilities..... $ 86,609 $54,262 $(53,565)(a) $ 87,306
Long-term debt, net of
current portion........ 227,318 -- 112,500 (b) 339,818
Other long-term
liabilities............ 16,039 1,277 (90)(a) 17,226
Stockholders' equity
(deficiency)........... (21,726) 1,345 (1,345)(a) (21,726)
-------- ------- -------- --------
Total liabilities and
stockholders' equity
(deficiency)......... $308,240 $56,884 $ 57,500 $422,624
======== ======= ======== ========
</TABLE>
35
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine-Month Period Ended September 30, 1998
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Historical Pro Forma Pro Forma
Ackerley Group WOKR Airport Adjustments Ackerley Group
-------------- ---------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net revenue............. $204,970 $13,022 $ 16,204 $ -- $201,788
Operating expenses...... 168,470 7,373 14,850 -- 160,993
Disposition of assets... (32,770) (32,897) -- 127
Depreciation and
amortization........... 10,771 4,124 921 (2,248)(c) 11,726
Interest expense........ 20,238 -- -- 5,988 (d) 26,226
Stock compensation
expense................ 437 -- -- -- 437
-------- ------- -------- ------- --------
Total expenses........ 167,146 11,497 (17,126) 3,740 199,509
-------- ------- -------- ------- --------
Income before income
taxes.................. 37,824 1,525 33,330 (3,740) 2,279
Income tax (benefit)
expense................ 14,389 580(e) 12,665(e) (1,421)(e) 882
-------- ------- -------- ------- --------
Net income.............. $ 23,435 $ 946 $ 20,665 $(2,319) $ 1,397
======== ======= ======== ======= ========
Earnings per common
share.................. $ 0.74 $ 0.03 $ 0.65 $ (0.07) $ (0.04)
======== ======= ======== ======= ========
Earnings per common
share, assuming
dilution............... $ 0.74 $ 0.03 $ 0.65 $ (0.07) $ (0.04)
======== ======= ======== ======= ========
</TABLE>
36
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1997
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Historical Pro Forma Pro Forma
Ackerley Group WOKR Airport Adjustments Ackerley Group
-------------- ---------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net revenue............. $271,175 $17,323 $29,079 $ -- $259,419
Operating expenses...... 210,752 9,715 25,875 -- 194,592
Depreciation and
amortization........... 16,103 5,253 1,639 (3,243)(c) 16,474
Interest expense........ 26,219 -- 6,773 (d) 32,992
Litigation expense
(credit)............... (5,000) -- -- (5,000)
Stock compensation
expense................ 9,344 -- -- 9,344
-------- ------- ------- ------- --------
Total expenses........ 257,418 14,968 27,514 3,530 248,402
-------- ------- ------- ------- --------
Income before income
taxes.................. 13,757 2,355 1,565 (3,530) 11,017
Income tax (benefit)
expense................ (19,172) 895(e) 595(e) (1,341)(e) (20,213)
-------- ------- ------- ------- --------
Net income.............. $ 32,929 $ 1,460 $ 970 $(2,189) $ 31,230
======== ======= ======= ======= ========
Earnings per common
share.................. $ 1.05 $ 0.05 $ 0.03 $ (0.07) $ 0.99
======== ======= ======= ======= ========
Earnings per common
share, assuming
dilution............... $ 1.04 $ 0.05 $ 0.03 $ (0.07) $ 0.98
======== ======= ======= ======= ========
</TABLE>
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
The accompanying Pro Forma Condensed Consolidated Financial Statements
consist of the consolidated historical financial statements of the Company and
WOKR(TV), less the historical financial statements of Airport, adjusted for
certain pro forma adjustments, as described below:
(a) Balance sheet adjustments give effect to the elimination of the
historical net assets of WOKR(TV) not acquired by the Company and to the
recording of goodwill associated with the acquisition.
(b) Reflects borrowings for the purchase price of WOKR(TV), less $12.5
million in escrow at September 30, 1998.
(c) Represents the change in depreciation and amortization based on the
estimated allocation of the purchase price of WOKR(TV) to tangible and
intangible assets. The estimated useful lives of the assets acquired are as
follows:
<TABLE>
<S> <C>
Building and improvements......................................... 25 years
Broadcast equipment............................................... 10 years
Other equipment................................................... 7 years
Intangible assets................................................. 15 years
</TABLE>
(d) Represents the change in interest expense, assuming cash proceeds of
$42.9 million from the sale of Airport are applied to the reduction of the
Company's borrowings under the 1998 Credit Agreement, and the purchase of
WOKR(TV) for $125.0 million is financed from borrowings under the 1999
Credit Agreement. The impact on interest expense is based on the Company's
historical annual interest rate on borrowings under the 1998 Credit
Agreement.
(e) Represents income tax expense based on the Company's estimated
statutory income tax rate.
37
<PAGE>
MANAGEMENT
Directors and Executive Officers
The following table sets forth the name, age and positions of individuals who
are serving as the directors and executive officers of the Company. Each
director will hold office until the next annual meeting of stockholders or
until his or her successor has been elected and qualified. Executive officers
are elected by, and serve at the discretion of, the Board of Directors.
<TABLE>
<CAPTION>
Name Age Position(s)
---- --- -----------
<S> <C> <C>
Barry A. Ackerley...................... 64 Chairman and Chief Executive Officer
Gail A. Ackerley....................... 60 Co-Chairman and Co-President
Deborah L. Bevier...................... 47 Director
M. Ian G. Gilchrist.................... 49 Director
Michel C. Thielen...................... 64 Director
Christopher H. Ackerley................ 29 Executive Vice President, Operations
and Development
Denis M. Curley........................ 51 Co-President and Chief Financial
Officer, Secretary, and Treasurer
Keith W. Ritzmann...................... 46 Senior Vice President and Chief
Information
Officer, Assistant Secretary, and
Controller
</TABLE>
Mr. Barry A. Ackerley, one of the founders of the Company, assumed the
responsibilities of President and Chief Operating Officer following the
resignation of Donald E. Carter effective March 1991 and served until April
1991. He has been the Chief Executive Officer and a director of the Company and
its predecessor and subsidiary companies since 1975. He also currently serves
as the Company's Chairman.
Ms. Gail A. Ackerley was elected to the Board of Directors in May 1995. She
became Co-Chairman in September 1996, and was elected as one of the Company's
Co-Presidents in November 1997. Ms. Ackerley has served as Chair of Ackerley
Corporate Giving since 1986, supervising the Company's charitable activities.
Ms. Ackerley is the wife of Mr. Barry A. Ackerley.
Ms. Deborah L. Bevier was elected to the Board of Directors effective
December 1, 1998. Ms. Bevier is President and CEO of Laird Norton Trust
Company. She also serves as a member of the Board of Directors of Laird Norton
Trust Company and the Laird Norton Financial Group. Prior to joining Laird
Norton Trust Company in 1996, she served as Chairman and CEO of KeyBank of
Washington and Northwest Region Executive for Key PrivateBank.
Mr. M. Ian G. Gilchrist was elected to the Board of Directors in May 1995. He
is a Managing Director of Salomon Smith Barney Inc., an investment banking firm
and one of the Initial Purchasers. Prior to joining that company in May 1995,
Mr. Gilchrist was a Managing Director of CS First Boston Corporation.
Mr. Michel C. Thielen has served as a director of the Company since 1979. Mr.
Thielen is Chairman and President of Thielen & Associates, an advertising
agency. He is also Vice President of Executive Wings, Inc., an airport
operations company.
Mr. Christopher H. Ackerley joined the Company in 1995. He was elected Vice
President for Marketing and Development in May 1998, and was elected Executive
Vice President, Operations and Development in December 1998.
Mr. Denis M. Curley, who joined the Company in December 1984, was elected as
a Co-President in November 1997. Previously, he served as Executive Vice
President from March 1995 to his election as a Co-President. Before then, he
served as Senior Vice President from January 1990 through the date of his
election
38
<PAGE>
as Executive Vice President. He has served as the Company's Chief Financial
Officer since May 1988. Mr. Curley also presently serves as Secretary and
Treasurer.
Mr. Keith W. Ritzmann was named Senior Vice President and Chief Information
Officer in January 1998. He served as a Vice President from January 1990
through the date of his election as Senior Vice President. He also presently
serves as Assistant Secretary and Controller.
Division Management
The following table sets forth information concerning the senior managers of
certain operating divisions of AK Media Group, Inc., the principal operating
subsidiary of the Company.
<TABLE>
<CAPTION>
Name Position(s)
---- -----------
<C> <S>
Out-of-Home:
Randal G. Swain............................ Senior Vice President, AK Media
Group, Inc., and President, AK
Media Northwest
Broadcasting:
David P. Reid.............................. Vice President and General
Manager of KVOS(TV)
Sports & Entertainment:
John Dresel................................ President, Full House Sports &
Entertainment
Walter F. ("Wally") Walker................. President, Seattle SuperSonics
</TABLE>
Mr. Randal G. Swain was named Senior Vice President of AK Media Group, Inc.
in December 1998. He has served as President of the Company's Northwest outdoor
division, AK Media Northwest, since 1993. Previously, he served as the
division's Vice President of Operations from 1992 and assistant Operations
Manager from 1982. Mr. Swain originally joined the Company in 1976 and has 22
years of industry experience.
Mr. David P. Reid serves as Vice President and General Manager of KVOS(TV) in
Bellingham, Washington, a position he has held since 1985. Prior to joining the
Company, Mr. Reid worked as the General Sales Manager of WSEE(TV) in Erie,
Pennsylvania from 1982 to 1985. He has 21 years of industry experience.
Mr. John Dresel serves as President of Full House Sports & Entertainment, a
position he has held since 1994. Prior to that date he served as General
Manager of KJR(AM), KLTX-FM (now KJR-FM) and the Seattle SuperSonics from 1992
to 1994. Mr. Dresel's affiliation with the Company dates back to 1986, when he
joined the Seattle SuperSonics as Director of Ticket Sales. He has 12 years of
industry experience.
Mr. Walter F. ("Wally") Walker serves as President of the Seattle
SuperSonics, a position he has held since 1994. Prior to joining the Company,
Mr. Walker worked for Goldman, Sachs & Co. for seven years (1987-1994), and in
1992, was certified as a Chartered Financial Analyst. From 1976 to 1984 he
played professional basketball with three different NBA teams, including the
Seattle SuperSonics (1977-1982). Upon his completion of his professional
basketball career, he attended Stanford University's Graduate School of
Business from 1985 to 1987. He has 12 years of industry experience.
39
<PAGE>
DESCRIPTION OF OTHER INDEBTEDNESS
Credit Agreement
On January 22, 1999, the Company entered into the 1999 Credit Agreement with
First Union National Bank, as administrative agent (the "Agent"), Fleet Bank,
N.A., as documentation agent, Union Bank of California, N.A., KeyBank National
Association and Bank of Montreal, Chicago Branch, as co-agents, and the other
institutions party thereto (the "Banks"). The Credit 1999 Agreement provides
for loans of up to $325.0 million. Loans under the 1999 Credit Agreement
consist of (i) a $150.0 million Term Loan Facility, and (ii) a $175.0 million
Revolving Loan Facility (together with the Term Loan Facility, the "Senior
Credit Facility"). The following description of certain provisions of the
Credit Agreement does not purport to be complete and is qualified in its
entirety by reference to the full text of the Credit Agreement, a copy of which
is available from the Company on request.
As of January 25, 1999, $65.0 million of borrowings were outstanding under
the Term Loan Facility and $5.0 million of borrowings were outstanding under
the Revolving Loan Facility.
The Term Loan Facility provides for term loans (the "Term Loans"), which will
mature on December 31, 2005. The Company borrowed $65.0 million of the Tranche
A Term Loans on January 22, 1999 and will borrow the remaining $85.0 million
Tranche B Term Loans in connection with its acquisition of television station
WOKR. The banks commitment to provide such funds, however, terminates April
30,1999. Term Loan Facility consisting of Tranche A Term Loans in the aggregate
principal amount of $65.0 million and Tranche B Term Loans in the aggregate
principal amount of $85.0 million (collectively, the "Term Loans") requires
scheduled annual principal payments, payable quarterly beginning March 31,
2000, based on the following annual percentages for each of the following
years: 5% in 2000; 10% in 2001; 15% in 2002; 20% in 2003; and 25% in each of
2004 and 2005.
The Revolving Loan Facility provides for revolving credit loans (the
"Revolving Loans" and, together with the Term Loans, the "Loans") of up to
$175.0 million (the "Revolving Credit Commitment"), which includes up to $10.0
million in standby letters of credit. The Revolving Credit Facility requires
scheduled annual commitment reductions, with required principal prepayments of
outstanding Revolving Loans in excess of the reduced commitment levels
quarterly beginning March 31, 2001, based on the following annual percentages:
10% in 2001; 20% in each of 2002 and 2003; and 25% in each of 2004 and 2005.
The Revolving Loan Facility matures on December 31, 2005.
On or after March 31, 2001, the Company may request an increase of the
Revolving Credit Commitment of up to $75.0 million. The increase is subject to
several conditions, including the willingness of either an existing bank lender
or qualified additional lender to make any such loan commitment and customary
borrowing conditions.
The Loans bear interest at an annual rate equal to, at the Company's option,
the Base Rate (as defined in the 1999 Credit Agreement) plus an applicable
margin (up to a maximum of 2.000%) or the LIBOR Rate (as defined in the 1999
Credit Agreement) plus an applicable margin (up to a maximum of 3.000%). The
applicable margin is based upon the ratio of the Company's consolidated funded
debt to its consolidated EBITDA (as such terms are defined in the 1999 Credit
Agreement). The Company is required to pay commitment fees to the Banks and the
Agent, including letter of credit commitment fees, and other customary fees.
The 1999 Credit Agreement requires, subject to certain exceptions, that the
Company apply 50% of the Net Cash Proceeds (as defined in the 1999 Credit
Agreement) received by the Company from the sale of its capital stock, 100% of
the Net Cash Proceeds received by the Company from the sale of its debt
securities, 100% of the Net Cash Proceeds in excess of an aggregate of $35.0
million received by the Company from certain asset dispositions, and, under
certain circumstances, either 25% or 50% of its Excess Cash Flow (as defined in
the 1999 Credit Agreement) to repay borrowings thereunder. It further provides
that the amount of borrowings available under the 1999 Credit Agreement will be
reduced by the amount of any such repayments.
40
<PAGE>
All borrowings and other obligations under the 1999 Credit Agreement are
secured by a pledge of substantially all the outstanding stock and material
assets of the Company's subsidiaries. In the event the Ackerley Family (as
defined in the 1999 Credit Agreement) fails to own at least 51% of the voting
power of the Company, lenders holding at least two-thirds of the principal
amount of outstanding loans may together elect to terminate all of the
obligations under the 1999 Credit Agreement and demand immediate repayment of
all outstanding borrowings.
The 1999 Credit Agreement contains certain financial covenants including a
current maximum consolidated leverage ratio, a maximum senior consolidated
leverage ratio, a minimum consolidated interest coverage ratio, and a minimum
consolidated fixed charge coverage ratio. The 1999 Credit Agreement contains
certain other covenants of the Company limiting, among other things, the
Company's ability to incur additional indebtedness or liens, declare and pay
dividends, issue preferred stock of subsidiaries, repurchase shares of Common
Stock and Class B Common Stock, dispose of assets, make investments, enter into
transactions with affiliates, and enter into new lines of business.
The 1999 Credit Agreement contains customary events of default, including
payment and performance defaults under the 1999 Credit Agreement, cross-default
provisions respecting other indebtedness, voluntary or involuntary bankruptcy
or similar procedures, the entry of certain judgments for the payment of money,
the failure to satisfy certain funding standards under ERISA, the failure of
certain security documents to remain in effect, the existence of certain
environmental claims, and the loss of, or the commencement of governmental
action with respect to, certain broadcasting licenses.
In addition, the 1999 Credit Agreement requires that, upon repayment of the
Senior Subordinated Notes, substantially all of the Company's direct and
indirect subsidiaries guarantee all amounts payable under the Agreement.
However, if the Company's subsidiaries were to guarantee amounts under the 1999
Credit Agreement after repayment of the Senior Subordinated Notes, such
subsidiaries (other than Unrestricted Subsidiaries) would be required to
guarantee the Notes on a senior subordinated basis, as described under
"Description of the Notes--Certain Covenants--Guarantees of Certain
Indebtedness."
The ability of the Company to borrow the $85.0 million Tranche B Term Loans
is subject to certain conditions, including the completion of the acquisition
of WOKR(TV) by the Company on terms materially the same as those approved by
the Agent. The Tranche B Term Loan Commitment will automatically expire if the
Company fails to close the acquisition of WOKR(TV) by April 30, 1999, unless
the bank lenders agree to extend the termination date.
Senior Subordinated Notes
In 1988 and 1989, the Company issued $12.5 million of 11.20% Senior
Subordinated Notes, Series B, due December 15, 1998 ("11.20% Series B Notes")
and $30.0 million of 10.48% Senior Subordinated Notes due December 15, 2000
("10.48% Notes") pursuant to the Senior Subordinated Note Agreements. The
following is a summary of certain terms of the Senior Subordinated Notes and
the Senior Subordinated Note Agreements. The summary does not purport to be
complete and is qualified in its entirety by reference to the provisions of the
Senior Subordinated Note Agreements, copies of which are available from the
Company on request.
As of January 25, 1999, $20.0 million in aggregate principal amount of the
10.48% Notes is outstanding. The Senior Subordinated Notes bear interest
payable quarterly, at the stated per annum rates. On December 31, 1998, the
11.20% Series B Notes matured and the Company repaid the entire $2.5 million in
outstanding principal. On that same date, the Company also made the required
prepayment of $10.0 million in principal on the 10.48% Notes.
The Senior Subordinated Notes are unsecured obligations of the Company,
subordinated to all Superior Debt (as defined in the Senior Subordinated Note
Agreements) of the Company, including the obligations under the 1999 Credit
Agreement. However, the subordination provisions of the Senior Subordinated
Note Agreements differ in some material respects from the subordination
provisions of the Indenture and, under
41
<PAGE>
certain circumstances, these differences could result in the holders of the
Notes receiving less, ratably, than the holders of the Senior Subordinated
Notes in the event of bankruptcy, insolvency or similar proceedings with
respect to the Company. Likewise, the Company will be prohibited from making
payments on the Notes upon the occurrence of certain defaults with respect to
its Senior Debt (as defined under "Description of the Notes"), and, although
there are similar payment blockage provisions applicable with respect to the
Senior Subordinated Notes, under certain circumstances the Company would be
prohibited from making payments on the Notes while at the same time being
permitted to make payments on the Senior Subordinated Notes.
The Company has the option of prepaying any or all of the Senior Subordinated
Notes at a price equal to the principal amount of the Senior Subordinated Notes
plus accrued and unpaid interest plus a make whole amount. The Company is
required to make prepayments of principal on the 10.48% Notes in the amount of
$10.0 million on December 15, 1999, with the remaining $10.0 million due at
maturity on December 15, 2000.
In the event of a change of control of the Company, any holder of Senior
Subordinated Notes may require the Company to prepay the Senior Subordinated
Notes it holds at a price equal to the principal amount of the Senior
Subordinated Notes plus accrued and unpaid interest plus a make whole amount. A
change of control is defined as the failure of the Ackerley Family (as defined
in the Senior Subordinated Note Agreements) to own at least 51% of the voting
power of the Company's capital stock.
The Senior Subordinated Note Agreements contain certain financial covenants,
including a maximum consolidated leverage ratio and a minimum consolidated
interest coverage ratio. The Senior Subordinated Note Agreements contain
certain other covenants of the Company limiting, among other things, mergers,
sales of assets, disposition of stock of subsidiaries, incurrence of debt by
subsidiaries, payment of dividends, stock redemptions, investments, changes in
lines of business and transactions with affiliates.
42
<PAGE>
THE EXCHANGE OFFER
Purpose Of The Exchange Offer
We sold the Initial Notes in a private offering on December 14, 1998, to the
Initial Purchasers pursuant to a purchase agreement dated as of December 9,
1998 by and among the Company and the Initial Purchasers (the "Purchase
Agreement"). The Initial Purchasers subsequently resold the Initial Notes to
qualified institutional buyers and non-U.S. persons in reliance, and subject to
the restrictions imposed under, Rule 144A and Regulation S under the Securities
Act.
Under the Registration Rights Agreement which we and the Initial Purchasers
entered into in connection with the private offering of the Initial Notes, we
are required to file, no more than 60 days following the date the Initial Notes
were originally issued (the "Issue Date"), the Registration Statement of which
this Prospectus is a part providing for a registered exchange offer of new
notes identical in all material respects to the Initial Notes, except that such
new notes will be freely transferable and will not have any covenants regarding
exchange and registration rights. Under the Registration Rights Agreement, we
are required to:
. use reasonable best efforts to cause the Registration Statement to be
declared effective no later than 120 days after the Issue Date,
. keep the Exchange Offer open for not less than 20 business days (or
longer if required by applicable law) after the date that notice of the
Exchange Offer is mailed to holders of the Initial Notes, and
. use reasonable best efforts to consummate the Exchange Offer as promptly
as practicable, but no later than 30 days after the Registration
Statement is declared effective.
The Registration Rights Agreement also provides that, under certain
circumstances, we will file with the SEC a shelf registration statement (the
"Shelf Registration Statement") relating to the offer and sale of Transfer
Restricted Notes by holders of Transfer Restricted Notes who satisfy certain
conditions regarding the provision to us of information in connection with the
Shelf Registration Statement. "Transfer Restricted Notes" means each Initial
Note or Exchange Note until:
. the date on which such Initial Note has been exchanged by a person other
than a broker-dealer for an Exchange Note in the Exchange Offer;
. if such Exchange Note is received by a broker-dealer in exchange for an
Initial Note in the Exchange Offer, then the date on which such Exchange
Note is sold to a purchaser who receives from such broker-dealer a copy
of this Prospectus;
. the date on which such Initial Note has been effectively registered under
the Securities Act and disposed of in accordance with the Shelf
Registration Statement; or
. the date on which such Initial Note is distributed to the public pursuant
to Rule 144(k) under the Securities Act (or any similar provision then in
force, but not Rule 144A under the Securities Act;
. such Note shall have been otherwise transferred by the holder thereof and
a new Note not bearing a legend restricting further transfer shall have
been delivered by the Company and subsequent disposition of such Note
shall not require registration or qualification under the Securities Act
or any similar state law then in force; or
. such Note ceases to be outstanding.
The Exchange Offer being made by this Prospectus is intended to satisfy your
exchange and registration rights under the Registration Rights Agreement. If we
fail to fulfill such registration and exchange obligations, you, as a holder of
outstanding Initial Notes, are entitled to receive "Additional Interest" until
we have fulfilled such obligations, in the amount equal to 0.50% per annum of
the principal amount of the Notes. The rate of Additional Interest will
increase by an additional 0.50% per annum of the principal amount of the Notes
for each subsequent 90-day period (or portion thereof) while a registration
default is continuing until all registration defaults have been cured, up to a
maximum amount of 1.50% of the principal amount of the Notes. Following the
cure of a particular registration default, the accrual of Additional Interest
with respect to such
43
<PAGE>
registration default will cease. All amounts of accrued Additional Interest
will be payable in cash on the same interest payment dates as the Notes.
For a more complete understanding of your exchange and registration rights,
you should refer to the Registration Rights Agreement, which is included as an
exhibit to the Registration Statement of which this Prospectus is a part, and
a copy of which is available as set forth under the heading "Where You Can
Find More Information."
Effect Of The Exchange Offer
Based on interpretations by the staff of the SEC set forth in no-action
letters issued to third parties, we believe that you may offer for resale,
resell, and otherwise transfer the Exchange Notes issued to you pursuant to
the Exchange Offer in exchange for your Initial Notes without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that you can represent that:
. you are not an "affiliate" (as defined in Rule 405 of the Securities Act)
of the Company;
. you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of the Exchange Notes;
. you are acquiring the Exchange Notes in the ordinary course of your
business; and
. you are not an Initial Purchaser who acquired Initial Notes directly from
us in the initial offering to resell pursuant to Rule 144A, Regulation S,
or any other available exemption under the Securities Act.
If you are not able to make these representations, you are a "Restricted
Holder." As Restricted Holder, you will not be able to participate in the
Exchange Offer and may only sell your Initial Notes pursuant to a registration
statement containing the selling security holder information required by Item
507 of Regulation S-K under the Securities Act, or pursuant to an exemption
from the registration requirement of the Securities Act.
In addition, each broker-dealer (other than a Restricted Holder) that
receives Exchange Notes for its own account in exchange for Initial Notes,
where such Initial Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities (a "Participating Broker-
Dealer"), must acknowledge in the Letter of Transmittal that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. Based upon interpretations by the staff of
the SEC, we believe that Exchange Notes issued pursuant to the Exchange Offer
to Participating Broker-Dealers may be offered for resale, resold and
otherwise transferred by a Participating Broker-Dealer upon compliance with
the prospectus delivery requirements, but without compliance with the
registration requirements, of the Securities Act. This Prospectus, as it may
be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of Exchange Notes received in
exchange for Initial Notes. The Company has agreed that, for a period of 180
days after the date the Registration Statement is declared effective by the
SEC, it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. By acceptance of this Exchange Offer, each
broker-dealer that receives Exchange Notes pursuant to the Exchange Offer
agrees to notify the Company prior to using this Prospectus in connection with
the sale or transfer of Exchange Notes. See "Plan of Distribution."
To the extent Initial Notes are tendered and accepted in the Exchange Offer,
the principal amount of outstanding Initial Notes will decrease with a
resulting decrease in the liquidity in the market for the Initial Notes.
Initial Notes that are still outstanding following the consummation of the
Exchange Offer will continue to be subject to certain transfer restrictions.
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<PAGE>
Terms Of The Exchange Offer
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, we will accept any and all Initial Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. As of the date of this Prospectus, an aggregate of $175.0
million principal amount of the Initial Notes is outstanding. We will issue
$1,000 principal amount of Exchange Notes in exchange for each $1,000
principal amount of outstanding Initial Notes accepted in the Exchange Offer.
You may tender some or all of your Initial Notes pursuant to the Exchange
Offer. However, Initial Notes may be tendered only in integral multiples of
$1,000.
By tendering Initial Notes in exchange for Exchange Notes and by executing
the Letter of Transmittal, you will be required to represent, among other
things, that:
. you are not an "affiliate" (as defined in Rule 405 of the Securities Act)
of Company;
. you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of the Exchange Notes; and
. you are acquiring the Exchange Notes in the ordinary course of your
business.
Each Participating Broker-Dealer must acknowledge in the Letter of
Transmittal that it will deliver a prospectus in connection with any resale of
such Exchange Notes. See "Plan of Distribution."
The form and terms of the Exchange Notes will be identical in all material
respects to the form and terms of the Initial Notes, except that:
. the offering of the Exchange Notes has been registered under the
Securities Act;
. the Exchange Notes will not be subject to transfer restrictions; and
. the Exchange Notes will be issued free of any covenants regarding
exchange and registration rights (including that they will not provide
for Additional Interest).
The Exchange Notes will evidence the same debt as the Initial Notes and will
be entitled to the benefits of the Indenture under which the Initial Notes
were, and the Exchange Notes will be, issued.
This Prospectus, together with the accompanying Letter of Transmittal, is
initially being sent to all registered holders of Initial Notes on or about
, 1999. The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Initial Notes being tendered. However, the
Exchange Offer is subject to certain customary conditions, which we may waive,
and to the terms and provisions of the Registration Rights Agreement. See "--
Certain Conditions to the Exchange Offer."
You do not have any appraisal or dissenters' rights under law or the
Indenture in connection with the Exchange Offer. We intend to conduct the
Exchange Offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the SEC thereunder.
If we do not accept for exchange any tendered Initial Notes because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Initial Notes will be
returned, without expense to you, as promptly as practicable after the
Expiration Date.
If you tender Initial Notes in the Exchange Offer you 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 Initial
Notes pursuant to the Exchange Offer. We will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer.
See "--Fees and Expenses."
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<PAGE>
Expiration Date; Extensions; Amendments
The term "Expiration Date" means 5:00 p.m., New York City time, on ,
1999, unless we, in our sole discretion, extend the Exchange Offer, in which
case the term "Expiration Date" shall mean the latest date and time to which
the Exchange Offer is extended.
We have the right to delay accepting any Initial Notes, to extend the
Exchange Offer or, if any of the conditions set forth below under "Certain
Conditions to the Exchange Offer" shall not have been satisfied, to terminate
the Exchange Offer, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent. We also have the right to amend the terms
of the Exchange Offer in any manner. If we delay acceptance of any Initial
Notes, or terminate or amend the Exchange Offer, we will make a public
announcement thereof as promptly as practicable. If we believe that we have
made a material amendment of the terms of the Exchange Offer, we will promptly
disclose such amendment in a manner reasonably calculated to inform the holders
of such amendment and we will extend the Exchange Offer to the extent required
by law. We will notify the Exchange Agent of any extension of the Exchange
Offer in writing or orally (which we will promptly confirm in writing). Unless
otherwise required by applicable law or regulation, we will make a public
announcement of any extension of the Expiration Date before 9:00 a.m., New York
City time, on the first business day after the previously-scheduled expiration
date.
Without limiting the manner in which we may choose to make public
announcements of any delay, extension, termination or amendment of the Exchange
Offer, we shall have no obligation to publish, advise or otherwise communicate
any such public announcement, other than by making a timely press release
thereof.
Interest On The Exchange Notes
Interest on the Exchange Notes will accrue from the last interest payment
date on which interest was paid on the Initial Notes surrendered in exchange
therefor or, if no interest has been paid on the Initial Notes, from December
14, 1998. The Exchange Notes will bear interest at a rate of 9% per year.
Interest on the Exchange Notes will be payable semiannually on January 1 and
July 1 of each year, beginning July 1, 1999.
Procedures For Tendering
Each holder of Initial Notes wishing to accept the Exchange Offer must
complete, sign and date the Letter of Transmittal, or a facsimile thereof, have
the signatures thereon guaranteed if required by the Letter of Transmittal, and
mail or otherwise deliver such Letter of Transmittal or such facsimile,
together with the Initial Notes and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date
(unless such tender is being effected pursuant to the procedure for book-entry
transfer described below).
Any financial institution that is a participant in the book-entry transfer
facility system of The Depository Trust Company (the "Depositary" or "DTC") may
make book-entry delivery of the Initial Notes by causing DTC to transfer such
Initial Notes into the Exchange Agent's account and to deliver an Agent's
Message (as described below) on or prior to the Expiration Date in accordance
with DTC's procedures for such transfer and delivery. If delivery of Initial
Notes is effected through book-entry transfer into the Exchange Agent's account
at DTC and an Agent's Message is not delivered, the Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any other
required documents must be transmitted to and received or confirmed by the
Exchange Agent at its addresses set forth herein under "--Exchange Agent" prior
to 5:00 p.m., New York City time, on the Expiration Date. DELIVERY OF DOCUMENTS
TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.
The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a confirmation of the
book-entry tender of Initial Notes into the Exchange Agent's
46
<PAGE>
account at DTC, which states that DTC has received an express acknowledgment
from the tendering participant, which acknowledgment states that such
participant has received and agrees to be bound by, and makes the
representations and warranties contained in, the Letter of Transmittal and
that we may enforce the Letter of Transmittal against such participant.
The tender (as set forth above) by a holder of Initial Notes will constitute
an agreement between such holder and us in accordance with the terms and
subject to the conditions set forth herein and in the Letter of Transmittal.
Delivery of all documents must be made to the Exchange Agent at its address
set forth herein. Holders may also request that their respective brokers,
dealers, commercial banks, trust companies or nominees effect such tender for
the holders.
The method of delivery of Initial Notes, the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holders. Instead of delivery by mail, we recommend that holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery. NO LETTER OF TRANSMITTAL OR INITIAL NOTES
SHOULD BE SENT TO US.
Only a holder of Initial Notes may tender such Initial Notes in the Exchange
Offer. The term "holder" with respect to the Exchange Offer means any person
in whose name Initial Notes are registered on the register maintained by the
Trustee or any other person who has obtained a properly completed bond power
from the registered holder, or any person whose Initial Notes are held of
record by DTC who desires to deliver such Initial Notes by book-entry transfer
at DTC.
Any beneficial holder whose Initial Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial holder wishes to
tender on his own behalf, such beneficial holder must, prior to completing and
executing the Letter of Transmittal and delivering his Initial Notes, either
make appropriate arrangements to register ownership of the Initial Notes in
such holder's name or obtain a properly completed bond power from the
registered holder. The transfer of record ownership may take considerable
time.
Signatures on a Letter of Transmittal or a notice of withdrawal must be
guaranteed by:
. 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 correspondent in
the United States; or
. an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act (an "Eligible Institution")
unless the Initial Notes tendered pursuant thereto are tendered
. by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the Letter
of Transmittal; or
. for the account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the registered
holder of any Initial Notes listed therein, such Initial Notes must be
endorsed or accompanied by appropriate bond powers which authorize such person
to tender the Initial Notes on behalf of the registered holder, and, in either
case, signed as the name of the registered holder or holders appears on the
Initial Notes.
If the Letter of Transmittal or any Initial Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and, unless waived by us,
evidence satisfactory to us of their authority to so act must be submitted
with the Letter of Transmittal.
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<PAGE>
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Initial Notes will be
determined by us in our sole discretion, which determination will be final and
binding. We reserve the absolute right to reject any and all Initial Notes not
properly tendered or any Initial Notes our acceptance of which would, in the
opinion of our counsel, be unlawful. We also reserve the absolute right to
waive any irregularities or conditions of tender as to particular Initial
Notes. Our interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Initial Notes must be cured within such time as we
shall determine. Neither we, the Exchange Agent nor any other person shall be
under any duty to give notification of defects or irregularities with respect
to tenders of Initial Notes nor shall we, the Exchange Agent or any other
person incur any liability for failure to give such notification. Tenders of
Initial Notes will not be deemed to have been made until such irregularities
have been cured or waived. Any Initial Notes received by the Exchange Agent
that are not properly tendered, and as to which the defects or irregularities
have not been cured or waived, will be returned without cost by the Exchange
Agent to the tendering holder of such Initial Notes unless otherwise provided
in the Letter of Transmittal as soon as practicable following the Expiration
Date.
In addition, we reserve the right in our sole discretion to (a) purchase or
make offers for any Initial Notes that remain outstanding subsequent to the
Expiration Date, or, as set forth under "--Certain Conditions to the Exchange
Offer," to terminate the Exchange Offer and (b) to the extent permitted by
applicable law, purchase Initial Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or
offers may differ from the terms of the Exchange Offer.
By tendering, each holder of Initial Notes will represent to us that, among
other things:
. the Exchange Notes acquired pursuant to the Exchange Offer in exchange
for such holder's Initial Notes are being obtained in the ordinary course
of business of the person receiving such Exchange Notes, whether or not
such person is the holder;
. neither the holder nor any other person receiving such Exchange Notes has
an arrangement or understanding with any person to participate in the
distribution of the Exchange Notes; and
. neither the holder nor any such other person receiving such Exchange
Notes is an "affiliate" of ours, within the meaning of Rule 405 under the
Securities Act or, if the holder or such person is an affiliate, then
such holder or such other person will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent
applicable.
Acceptance Of Initial Notes For Exchange; Delivery Of Exchange Notes
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
we will accept, promptly after the Expiration Date, all Initial Notes properly
tendered and will issue the Exchange Notes promptly after acceptance of the
Initial Notes. See "--Certain Conditions to the Exchange Offer." For each
Initial Note accepted for exchange, the holder of such Initial Notes will
receive an Exchange Note having a principal amount equal to that of the
surrendered Initial Note.
For purposes of the Exchange Offer, we shall be deemed to have accepted
properly tendered Initial Notes for exchange when, as and if we have given
oral or written notice thereof to the Exchange Agent, with written
confirmation of any oral notice to be given promptly thereafter.
In all cases, issuance of Exchange Notes for Initial Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Initial Notes and a
properly completed and duly executed Letter of Transmittal and all other
required documents or a timely book-entry confirmation of such Initial Note
into the Exchange Agent's account at DTC. If any tendered Initial Notes are
not accepted for any reason set forth in the terms and conditions of the
Exchange Offer or if Initial Notes are submitted for a greater principal
amount than the holder desired to exchange, such unaccepted
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<PAGE>
or non-exchanged Initial Notes will be returned without expense to the
tendering holder thereof (or, in the case of Initial Notes tendered by book-
entry transfer into the Exchange Agent's account at DTC pursuant to the book-
entry procedures described below, such non-exchanged Initial Notes will be
credited to an account maintained with such book-entry transfer facility) as
promptly as practicable after the Expiration Date.
Book-Entry Transfer
The Exchange Agent will make a request to establish an account with respect
to the Initial Notes at DTC for purposes of the Exchange Offer within two
business days after the date of this Prospectus, and any financial institution
that is a participant in DTC's systems may make book-entry delivery of Initial
Notes by causing DTC to transfer such Initial Notes into the Exchange Agent's
account at DTC in accordance with DTC's procedures for transfer. However,
although delivery of Initial Notes may be effected through book-entry transfer
at DTC, the Letter of Transmittal (or a facsimile thereof or an Agent's Message
in lieu thereof), with any required signature guarantees and any other required
documents, must, in any case, be transmitted to and received by the Exchange
Agent at one of the addresses set forth below under "--Exchange Agent" on or
prior to the Expiration Date or the guaranteed delivery procedures described
below must be complied with.
Guaranteed Delivery Procedures
Holders who wish to tender their Initial Notes and who cannot deliver their
Initial Notes, the Letter of Transmittal, or any other required documents to
the Exchange Agent prior to the Expiration Date, or holders who cannot complete
the procedure for book-entry transfer on a timely basis, may effect a tender
if:
. The tender is made through an Eligible Institution;
. Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the Initial Notes,
the certificate number or numbers of such Initial Notes and the principal
amount of Initial Notes tendered, stating that the tender is being made
thereby, and guaranteeing that, within three business days after the
Expiration Date, the Letter of Transmittal (or facsimile thereof),
together with the certificate(s) representing the Initial Notes to be
tendered in proper form for transfer and any other documents required by
the Letter of Transmittal, will be deposited by the Eligible Institution
with the Exchange Agent; and
. Such properly completed and executed Letter of Transmittal (or facsimile
thereof), together with the certificate(s) representing all tendered
Initial Notes in proper form for transfer (or confirmation of a book-
entry transfer into the Exchange Agent's account at DTC of Initial Notes
delivered electronically) and all other documents required by the Letter
of Transmittal are received by the Exchange Agent within three business
days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Initial Notes according to the
guaranteed delivery procedures set forth above.
Withdrawal Of Tenders
Except as otherwise provided herein, tenders of Initial Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
To withdraw a tender of Initial Notes in the Exchange Offer, a facsimile
transmission or letter notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date. Any such notice of withdrawal must:
. specify the name of the person having deposited the Initial Notes to be
withdrawn (the "Depositor");
49
<PAGE>
. include a statement that the Depositor is withdrawing its election to
have Initial Notes exchanged and identify the Initial Notes to be
withdrawn (including the certificate number or numbers and principal
amount of such Initial Notes);
. be signed by the Depositor in the same manner as the original signature
on the Letter of Transmittal by which such Initial Notes were tendered
(including any required signature guarantees) or be accompanied by
documents of transfer sufficient to permit the Trustee with respect to
the Initial Notes to register the transfer of such Initial Notes into the
name of the Depositor withdrawing the tender; and
. specify the name in which any such Initial Notes are to be registered, if
different from that of the Depositor.
If Initial Notes have been tendered pursuant to the procedures for book-entry
transfer set forth in "--Procedures for Tendering" and "--Book-Entry Transfer,"
the notice of withdrawal must specify the name
and number of the account at DTC to be credited with the withdrawal of Initial
Notes, in which case a notice of withdrawal will be effective if delivered to
the Exchange Agent by written, telegraphic, telex or facsimile transmission.
All questions as to the validity, form and eligibility (including time of
receipt) for such withdrawal notices will be determined by us, and our
determination shall be final and binding on all parties. Any Initial Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Initial Notes so withdrawn are validly re-tendered. Properly withdrawn
Initial Notes may be re-tendered by following one of the procedures described
above under "--Procedures for Tendering" at any time prior to the Expiration
Date.
Certain Conditions To The Exchange Offer
The Exchange Offer is not subject to any conditions, other than that:
. the Exchange Offer does not violate applicable law or any applicable
interpretation of the staff of the SEC; and
. there is no action or proceeding shall have been instituted or threatened
in any court or any governmental agency which might materially impair our
ability to proceed with the Exchange Offer, and
. all governmental approvals which we deem necessary for the consummation
of the Exchange Offer shall have been obtained.
There can be no assurance that any such condition will not occur. Holders of
Initial Notes will have certain rights against us under the Registration Rights
Agreement should we fail to consummate the Exchange Offer. If we determine that
we may terminate the Exchange Offer, as set forth above, we may:
. refuse to accept any Initial Notes and return any Initial Notes that have
been tendered to the holders thereof;
. extend the Exchange Offer and retain all Initial Notes tendered prior to
the Expiration Date, subject to the rights of such holders of tendered
Initial Notes to withdraw their tendered Initial Notes; or
. waive such termination event with respect to the Exchange Offer and
accept all properly tendered Initial Notes that have not been withdrawn.
If such waiver constitutes a material change in the Exchange Offer, we will
disclose such change by means of a supplement to this Prospectus that will be
distributed to each registered holder of Initial Notes, and we will extend the
Exchange Offer for a period of five to ten business days, depending upon the
significance of the waiver and the manner of disclosure to the registered
holders of the Initial Notes, if the Exchange Offer would otherwise expire
during such period.
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Exchange Agent
The Bank of New York, the Trustee under the Indenture, has been appointed as
Exchange Agent for the Exchange Offer. Questions and requests for assistance
and inquiries for additional copies of this Prospectus or of the Letter of
Transmittal should be directed to the Exchange Agent addressed as follows:
By Mail, Overnight Courier or Hand Delivery:
The Bank of New York
101 Barclay Street, 21W
New York, New York 10286
Attention: Corporate Trust Trustee Administration
By Facsimile Transmission [(for Eligible Institutions only)]:
(212) 815-5915
Attention: Corporate Trust Trustee Administration
Confirm by Telephone: (212) 815-
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
Fees And Expenses
We will not make any payments to brokers, dealers or others soliciting
acceptances of the Exchange Offer. We will pay the cash expenses to be incurred
in connection with soliciting tenders pursuant to the Exchange
Offer. Such expenses include fees and expenses of the Exchange Agent and the
Trustee, accounting and legal fees and printing costs, among others.
Transfer Taxes
Holders who tender their Initial Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who
instruct us to register Exchange Notes in the name of, or request that Initial
Notes not tendered or not accepted in the Exchange Offer be returned to, a
person other than the registered tendering holder, will be responsible for the
payment of any applicable transfer tax thereon.
Accounting Treatment
The Exchange Notes will be recorded at the same carrying value as the Initial
Notes on the date of the exchange. Accordingly, we will not recognize any gain
or loss for accounting purposes. The expenses of the Exchange Offer and the
unamortized expenses relating to the issuance of the Initial Notes will be
amortized over the term of the Exchange Notes.
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DESCRIPTION OF THE NOTES
The Initial Notes were, and the Exchange Notes will be, issued under an
indenture, dated as of December 14, 1998 (the "Indenture"), by and among the
Company and The Bank of New York, as trustee (the "Trustee"). A copy of the
Indenture may be obtained from the Company upon written request. The following
summary of all of the provisions of the Indenture considered by the Company to
be material to a prospective investor in the Notes does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Trust Indenture Act of 1939, as amended (the "TIA"), and to all of the
provisions of the Indenture, including the definitions of certain terms
therein, and those terms made a part of the Indenture by reference to the TIA
as in effect on the date of the Indenture. The definitions of certain terms
used in the following summary are set forth below under "--Certain
Definitions." References in this "Description of the Notes" to the "Company"
refer to The Ackerley Group, Inc. individually and not to any of its
Subsidiaries unless specifically indicated or the context so requires.
The Notes will be issued in fully registered form only, without coupons, in
denominations of $1,000 and integral multiples thereof. Initially, the Trustee
will act as paying agent and registrar for the Notes. The Notes may be
presented for registration or transfer and exchange at the offices of the
registrar, which initially will be the Trustee's principal corporate trust
office. The Company may change any paying agent and registrar without notice to
the holders. The Company will pay principal (and premium, if any) on the Notes
at the Trustee's principal corporate trust office in New York, New York. At the
Company's option, interest on the Notes may be paid at the Trustee's principal
corporate trust office or by check mailed to the registered address of the
holders.
Principal, Maturity and Interest
The Notes are limited to $250,000,000 aggregate principal amount of which up
to $175,000,000 aggregate principal amount of Exchange Notes are being offered
hereby in exchange for outstanding Initial Notes. The Notes will mature on
January 15, 2009. Interest on the Notes will accrue at the rate of 9% per
annum, and will be payable semiannually on each January 15 and July 15,
commencing on July 15, 1999, to the persons who are registered holders at the
close of business on January 1 and July 1 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 the
Issue Date. Interest will be computed on the basis of a 360-day year comprised
of twelve 30-day months.
Optional Redemption
The Notes will be redeemable, at the Company's option, in whole at any time
or in part from time to time, on and after January 15, 2004, at the following
redemption prices (expressed as percentages of the principal amount) if
redeemed during the twelve-month period commencing on January 15 of the years
set forth below, plus, in each case, accrued and unpaid interest thereon to the
date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004.............................................................. 104.500%
2005.............................................................. 103.000%
2006.............................................................. 101.500%
2007 and thereafter............................................... 100.000%
</TABLE>
In addition, on or prior to January 15, 2002, the Company may, at its option,
use the net cash proceeds of one or more Public Equity Offerings (as defined)
to redeem the Notes on a pro rata basis, in part, at a redemption price equal
to 109.000% of the principal amount thereof plus accrued and unpaid interest
thereon to the date of redemption; provided, however, that after any such
redemption the aggregate principal amount of the Notes outstanding must equal
at least 66 2/3% of the aggregate principal amount of the Notes originally
issued in the Offering. In order to effect a redemption with proceeds of a
Public Equity Offering, the Company shall send the redemption notice in the
manner specified in the Indenture not later than 30 days after the consummation
of such Public Equity Offering and effect such redemption not later than 90
days after the consummation of such Public Equity Offering.
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Selection. In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Note of $1,000 in original principal amount or less
will be redeemed in part; provided that any partial redemption pursuant to the
second paragraph under "--Optional Redemption" will be made by the Trustee on a
pro rata basis only. If any Note is to be redeemed in part only, the notice of
redemption relating to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof
upon cancellation of the original Note.
Change of Control
The Indenture provides that upon the occurrence of a Change of Control, each
holder may have the right to require that the Company repurchase all or a
portion of such holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price equal to 101% of the principal
amount thereof plus accrued interest, if any, to the date of repurchase.
The Indenture provides that, prior to the mailing of the notice referred to
below, but in any event within 30 days following the date on which a Change of
Control occurs, the Company covenants to (i) repay in full all Indebtedness
under the Credit Agreement (and terminate all commitments thereunder) or offer
to repay in full all such Indebtedness (and terminate all such commitments) and
to repay the Indebtedness owed to (and terminate the commitments of) each
lender which has accepted such offer or (ii) obtain the requisite consents
under the Credit Agreement to permit the repurchase of the Notes as provided
below. The Company will first comply with the covenant in the preceding
sentence before it will be required to repurchase Notes pursuant to the
provisions described below; provided that the Company's failure to comply with
the covenant described in the preceding sentence shall constitute an Event of
Default described under clause (iii) under "--Events of Default."
Within 30 days following the date upon which a Change of Control occurs, the
Company must send, by first class mail, a notice to each holder, with a copy to
the Trustee, which notice shall govern the terms of the Change of Control
Offer. Such notice will state, among other things, the purchase date, which
must be no earlier than 30 days nor later than 45 days from the date such
notice is mailed, other than as may be required by law (the "Change of Control
Payment Date"). Upon compliance by the Company with the covenant described in
the immediately preceding paragraph, the Company's failure to make a Change of
Control Offer in accordance with this "Change of Control" covenant, and, upon
the making of a Change of Control Offer, the failure of the Company to pay, on
or before the Change of Control Payment Date, the purchase price for the Notes
validly tendered pursuant to the Change of Control Offer, shall constitute an
Event of Default described under clauses (iii) and (ii), respectively, under
"--Events of Default." Holders electing to have a Note purchased pursuant to a
Change of Control offer will be required to surrender the Note, properly
endorsed for transfer together with such other customary documents as the
Company may reasonably request, to the paying agent at the address specified in
the notice prior to the close of business on the business day prior to the
Change of Control Payment Date.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes pursuant to a Change of Control Offer.
This covenant is not intended to afford holders of the Notes protection in
the event of certain highly leveraged transactions, reorganizations,
restructurings, mergers and other similar transactions that might adversely
affect the holders of the Notes but would not constitute a Change of Control.
However, the Indenture contains limitations on the ability of the Company to
incur additional Indebtedness and to engage in certain mergers, consolidations
and sales of assets, whether or not a Change of Control is involved. See "--
Certain Covenants--Limitation on Incurrence of Additional Indebtedness," "--
Certain Covenants--Limitation on Asset Sales," and "--Certain Covenants--
Merger, Consolidation, and Sale of Assets."
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If a Change of Control were to occur, there can be no assurance that the
Company would have sufficient funds to pay the purchase price for all Notes
that the Company might be required to purchase. In the event that the Company
were required to purchase Notes pursuant to a Change of Control Offer, the
Company expects that it would need to seek third-party financing to the extent
it does not have available funds to meet its purchase obligations. However,
there can be no assurance that the Company would be able to obtain such
financing on favorable terms, if at all. In addition, the terms of other
indebtedness may restrict the Company's ability to repurchase the Notes,
including pursuant to a Change of Control Offer. See "Risk Factors--Limitation
on Purchase of Notes upon Change of Control" and "Description of Other
Indebtedness--Credit Agreement."
Without the consent of each holder of the Notes affected thereby, after the
mailing of the notice of the Change of Control Offer, no amendment to the
Indenture may, directly or indirectly, affect the Company's obligation to
purchase the Notes or amend, modify or change the obligation of the Company to
consummate a Change of Control Offer or waive any default in the performance
thereof or modify any of the provisions or definitions with respect to any such
offer. In addition, the Trustee may not waive the right of any holder of the
Notes to require the repurchase of his or her Notes upon a Change of Control.
Subordination
The payment of all obligations on the Notes is subordinated and junior in
right of payment to the prior payment in full in cash or Cash Equivalents (or
such payment duly provided for to the satisfaction of the holders of Senior
Debt) of all Obligations on Senior Debt. Upon any payment or distribution of
assets of the Company of any kind or character, whether in cash, property, or
securities, to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors, or marshalling of
assets of the Company or in a bankruptcy, reorganization, insolvency,
receivership, or other similar proceeding relating to the Company or its
property, whether voluntary or involuntary, all Obligations due or to become
due upon all Senior Debt will first be paid in full in cash or Cash Equivalents
(or such payment duly provided for to the satisfaction of the holders of Senior
Debt) before any payment or distribution of any kind or character is made on
account of any Obligations on the Notes, or for the acquisition of any of the
Notes for cash or property or otherwise. If any default occurs and is
continuing in the payment when due, whether at maturity, upon any redemption,
by declaration or otherwise, of any principal of, or interest on, or any other
amounts owing with respect to any Senior Debt, no payment of any kind or
character (except payment in Permitted Securities), will be made by the Company
or any other Person on behalf of the Company with respect to any Obligations on
the Notes or to acquire any of the Notes for cash or property or otherwise. In
addition, if any other event of default occurs and is continuing (or if such an
event of default would occur upon any payment with respect to the Notes or
would arise upon the passage of time as a result of such payment) with respect
to any Designated Senior Debt (as such event of default is defined in the
instrument creating or evidencing such Designated Senior Debt) and such event
of default permits the holders of such Designated Senior Debt then outstanding
to accelerate the maturity thereof and if the Representative for the respective
issue of Designated Senior Debt gives written notice of the event of default to
the Trustee (a "Default Notice"), then, unless and until all such events of
default have been cured or waived or have ceased to exist or the Company and
the Trustee receive notice from the Representative for the respective issue of
Designated Senior Debt terminating the Blockage Period (as defined below),
during the 180 days after the delivery of such Default Notice (the "Blockage
Period"), neither the Company nor any other Person on behalf of the Company
will make any payment of any kind or character (except in Permitted Securities)
with respect to any Obligations on the Notes or acquire any of the Notes for
cash or property or otherwise. Notwithstanding anything herein to the contrary,
in no event will a Blockage Period extend beyond 180 days from the date the
payment on the Notes was due and only one such Blockage Period may be commenced
within any 360 consecutive days. No event of default which existed or was
continuing on the date of the commencement of any Blockage Period with respect
to the Designated Senior Debt initiating such Blockage Period shall be, or be
made, the basis for commencement of a second Blockage Period by the
Representative of such Designated Senior Debt whether or not within a period of
360 consecutive days, unless such event of default has been cured or waived for
a period of not less than 90
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consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such Blockage Period that, in either case, would give rise to
an event of default pursuant to any provision under which an event of default
previously existed or was continuing, shall constitute a new event of default
for this purpose).
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Debt, including
the holders of the Notes, may recover less, ratably, than holders of Senior
Debt. See "Description of Other Indebtedness--Senior Subordinated Notes."
Certain Covenants
The Indenture contains, among others, the following covenants.
Limitation on Incurrence of Additional Indebtedness. The Indenture provides
that neither the Company nor any of its Subsidiaries will, directly or
indirectly, create, incur, assume, guarantee, acquire, or become liable for,
contingently or otherwise (collectively "incur"), any Indebtedness other than
Permitted Indebtedness. Notwithstanding the foregoing limitations, the Company
may incur Indebtedness (including Acquired Indebtedness), and any of the
Company's Subsidiaries may incur Acquired Indebtedness, if, in either case, on
the date of the incurrence of such Indebtedness, after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the Company's Leverage Ratio is less than 7.0 to 1.
For purposes of this "Limitation on Incurrence of Additional Indebtedness"
covenant, Indebtedness outstanding on the Issue Date shall not be deemed to be
an incurrence of Indebtedness.
Limitation on Restricted Payments. The Indenture provides that neither the
Company nor any of its Subsidiaries will, directly or indirectly,
(a) declare or pay any dividend or make any distribution (other than
dividends or distributions payable in Qualified Capital Stock of the
Company) on shares of the Company's Capital Stock,
(b) purchase, redeem or otherwise acquire or retire for value any Capital
Stock of the Company or any warrants, rights, or options to acquire shares
of any class of such Capital Stock, other than the exchange of such Capital
Stock or any warrants, rights, or options to acquire shares of any class of
such Capital Stock for Qualified Capital Stock or warrants, rights, or
options to acquire Qualified Capital Stock,
(c) make any principal payment on, purchase, defease, redeem, prepay,
decrease, or otherwise acquire or retire for value, prior to any scheduled
final maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness of the Company or its Subsidiaries that is subordinate or
junior in right of payment to the Notes, or
(d) make any Investment (other than Permitted Investments)
(each of the foregoing prohibited actions set forth in clauses (a), (b), (c)
and (d) being referred to as a "Restricted Payment"), if, at the time of such
Restricted Payment or immediately after giving effect thereto,
(i) a Default or an Event of Default has occurred and is continuing,
(ii) the Company is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant, or
(iii) the aggregate amount of Restricted Payments made by the Company on
or after the Issue Date, (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as determined by
the Board of Directors of the Company in good faith) exceeds the sum of:
(A) (x) 100% of the aggregate Consolidated EBITDA of the Company from the
Issue Date through the most recent date for which financial information is
available to the Company, taken as one accounting period (or, in the event
that either such Consolidated EBITDA shall be a deficit, minus 100% of such
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deficit), less (y) 1.4 times Consolidated Interest Expense for the Company
and for the same period, plus (B) 100% of the aggregate net proceeds
received by the Company from any Person (other than a Subsidiary of the
Company) from the issuance and sale on or subsequent to the Issue Date of
Qualified Capital Stock of the Company (excluding any net proceeds from
issuances and sales financed directly or indirectly using funds borrowed
from the Company or any Subsidiary of the Company until and to the extent
such borrowing is repaid, but including the proceeds from the issuance and
sale of any securities convertible into or exchangeable for Qualified
Capital Stock to the extent such securities are so converted or exchanged
and including any additional proceeds received by the Company upon such
conversion or exchange), plus (C) without duplication of any amount
included in clause (iii)(B) above, 100% of the aggregate net cash proceeds
received by the Company as a capital contribution on or subsequent to the
Issue Date (excluding the net cash proceeds from one or more Public Equity
Offerings by the Company to the extent used to redeem the Notes on or after
the date of the Indenture), plus (D) $5,000,000.
Notwithstanding the foregoing, these provisions do not prohibit: (1) the
payment of any dividend or the making of any distribution within 60 days after
the date of its declaration if the dividend or distribution would have been
permitted on the date of declaration; (2) the acquisition of Capital Stock or
warrants, options, or other rights to acquire Capital Stock either (i) solely
in exchange for shares of Qualified Capital Stock or warrants, options, or
other rights to acquire Qualified Capital Stock, or (ii) through the
application of the net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of shares of Qualified Capital
Stock or warrants, options or other rights to acquire Qualified Capital Stock;
(3) the acquisition of Indebtedness of the Company that is subordinate or
junior in right of payment to the Notes, either (i) solely in exchange for
shares of Qualified Capital Stock (or warrants, options or other rights to
acquire Qualified Capital Stock) or for Indebtedness of the Company which is
subordinate or junior in right of payment to the Notes, at least to the extent
that the Indebtedness being acquired is subordinated to the Notes and has a
Weighted Average Life to Maturity no less than that of the Indebtedness being
acquired or (ii) through the application of the net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of the Company) of shares
of Qualified Capital Stock (or warrants, options or other rights to acquire
Qualified Capital Stock) or Indebtedness of the Company which is subordinate or
junior in right of payment to the Notes, at least to the extent that the
Indebtedness being acquired is subordinated to the Notes and has a Weighted
Average Life to Maturity no less than that of the Indebtedness being
refinanced; or (4) the making of Restricted Payments in an aggregate amount not
to exceed $5,000,000; provided that no Default or Event of Default shall have
occurred or be continuing at the time of such payment or as a result thereof.
In determining the aggregate amount of Restricted Payments made by the Company
on or subsequent to the Issue Date, amounts expended pursuant to clauses (1),
(2), (3) (but only to the extent that Indebtedness is acquired in exchange for,
or with the net proceeds from, the issuance of Qualified Capital Stock or
warrants, options, or other rights to acquire Qualified Capital Stock), and (4)
shall be included in such calculation.
Limitation on Asset Sales. The Indenture provides that neither the Company
nor any of its Subsidiaries will consummate an Asset Sale unless (i) the
Company or the applicable Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by management of the Company or, if such Asset Sale involves consideration in
excess of $10,000,000 by the Board of Directors, as evidenced by a board
resolution), (ii) at least 75% of the consideration received by the Company or
the Subsidiary, as the case may be, from such Asset Sale is cash or Cash
Equivalents and is received at the time of such disposition, and (iii) upon the
consummation of an Asset Sale, the Company applies, or causes such Subsidiary
to apply, such Net Cash Proceeds within 180 days of receipt thereof either (A)
to repay the principal of any Senior Debt, (B) to reinvest, or to be
contractually committed to reinvest pursuant to a binding agreement, in
Productive Assets and, in the latter case, to have so reinvested within 360
days of the date of receipt of such Net Cash Proceeds, or (C) to purchase Notes
(pro rata among the holders of Notes tendered to the Company for purchase,
based upon the aggregate principal amount of the Notes so tendered) tendered to
the Company for purchase at a price equal to 100% of the principal amount
thereof, plus accrued interest thereon to the date of purchase, pursuant to an
offer to purchase made by the Company as set forth below (a "Net Proceeds
Offer"); provided, that if at
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any time any non-cash consideration received by the Company or any Subsidiary
of the Company, as the case may be, in connection with any Asset Sale is
converted into or sold or otherwise disposed of for cash, then such conversion
or disposition shall be deemed to constitute an Asset Sale hereunder and the
Net Cash Proceeds thereof shall be applied in accordance with clause (iii)
above; provided, further, that the Company may defer making a Net Proceeds
Offer until the aggregate Net Cash Proceeds from Asset Sales to be applied
equals or exceeds $5,000,000.
Subject to the deferral right set forth in the final proviso of the preceding
paragraph, each notice of a Net Proceeds Offer will be mailed, by first class
mail, to holders of Notes as shown on the applicable register of holders of
Notes not more than 180 days after the relevant Asset Sale or, in the event the
Company or a Subsidiary has entered into a binding agreement as provided in (B)
above, within 180 days following the termination of such agreement but in no
event later than 360 days after the relevant Asset Sale. Such notice will
specify, among other things, the purchase date (which will be no earlier than
30 days nor later than 45 days from the date such notice is mailed, except as
otherwise required by law) and will otherwise comply with the procedures set
forth in the Indenture. Upon receiving notice of the Net Proceeds Offer,
holders of Notes may elect to tender their Notes in whole or in part in
integral multiples of $1,000. To the extent holders properly tender Notes in an
amount exceeding the Net Proceeds Offer, subject to the limitations set forth
in the immediately preceding paragraph, the Company shall select the Notes to
be repurchased on a pro rata basis (based upon the aggregate principal amount
of Notes tendered). To the extent that the aggregate principal amount of Notes
tendered pursuant to any Net Proceeds Offer is less than the amount of Net Cash
Proceeds subject to such Net Proceeds Offer, the Company may use any remaining
portion of such Net Cash Proceeds not required to fund the repurchase of
tendered Notes for any purposes otherwise permitted by the Indenture. Upon the
consummation of any Net Proceeds Offer, the amount of Net Cash Proceeds subject
to any future Net Proceeds offer from the Asset Sales giving rise to such Net
Cash Proceeds shall be deemed to be zero.
In addition, the Company will not, and will not permit any Subsidiary to,
engage in any Asset Swaps, unless: (i) at the time of entering into the
agreement to swap assets and immediately after giving effect to the proposed
Asset Swap, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; (ii) the Company would,
after giving pro forma effect to the proposed Asset Swap, have been permitted
to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with the "Limitation on Incurrence of Additional
Indebtedness" covenant; (iii) the respective fair market values of the assets
being acquired and disposed of by the Company or any of its Subsidiaries (as
determined in good faith by the management of the Company or, if such Asset
Swap includes consideration in excess of $10,000,000, by the Board of
Directors, as evidenced by a board resolution) are substantially the same as at
the time of entering into the agreement to swap assets; and (iv) at the time of
the consummation of the proposed Asset Swap, the percentage of any decline in
the fair market value (determined as aforesaid) of the asset or assets being
acquired by the Company or any of its Subsidiaries shall not be significantly
greater than the percentage of any decline in the fair market value (determined
as aforesaid) of the assets being disposed of by the Company or any of its
Subsidiaries, calculated from the time the agreement to swap assets was
entered into.
The Company will comply with the requirements of Rule 14e-l under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer.
Limitations on Transactions with Affiliates. The Indenture provides that
neither the Company nor any of its Subsidiaries will, directly or indirectly,
enter into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease, or exchange of any property or the rendering of any
service) with or for the benefit of any of its Affiliates (other than
transactions between the Company and a Wholly-Owned Subsidiary of the Company
or among Wholly-Owned Subsidiaries of the Company) (an "Affiliate
Transaction"), other than Affiliate Transactions on terms that are no less
favorable than those that might reasonably have been obtained in a comparable
transaction on an arm's-length basis from a person that is not an Affiliate;
provided, that for a transaction or series of related transactions involving
value of $1,000,000 or more, such determination
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will be made in good faith by a majority of members of the Board of Directors
of the Company and by a majority of the disinterested members of the Board of
Directors of the Company, if any; provided, further, that for a transaction or
series of related transactions involving value of $5,000,000 or more, the Board
of Directors of the Company has received an opinion from a nationally
recognized investment banking firm that such Affiliate Transaction is fair,
from a financial point of view, to the Company or such Subsidiary. The
foregoing restrictions do not apply to (i) reasonable and customary directors'
fees, indemnification, and similar arrangements and payments thereunder, (ii)
any Restricted Payment permitted to be paid pursuant to the "--Limitation on
Restricted Payments" covenant, (iii) any issuance of Qualified Stock pursuant
to stock option or stock ownership plans approved by the Board of Directors of
the Company, and (iv) transactions pursuant to agreements in existence on the
Issue Date and any renewal of such agreements on substantially similar terms.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Indenture provides that neither the Company nor any of its
Subsidiaries will, directly or indirectly, create or otherwise cause or permit
to exist or become effective any encumbrance or restriction on the ability of
any Subsidiary to (a) pay dividends or make any other distributions on its
Capital Stock; (b) make loans or advances or pay any Indebtedness or other
obligation owed to the Company or any of its Subsidiaries; or (c) transfer any
of its property or assets to the Company, except for such encumbrances or
restrictions existing under or by reason of: (1) applicable law, (2) customary
non-assignment provisions of any lease governing a leasehold interest of the
Company or any Subsidiary, (3) any instrument governing Acquired Indebtedness,
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property or
assets of the Person, so acquired, (4) an agreement effecting a replacement,
refunding, extension, or renewal of Indebtedness issued, assumed, or incurred
pursuant to an agreement referred to in clause (3) above; provided, that the
provisions relating to such encumbrance or restriction contained in any such
replacement, refunding, extension, or renewal agreement or any such other
agreement are not less favorable to the Company in all material respects as
determined in good faith by the Board of Directors of the Company than the
provisions relating to such encumbrance or restriction contained in agreements
referred to in such clause (3), or (5) restrictions on the transfer of assets
subject to any Lien permitted under the Indenture imposed by the holder of such
Lien.
Prohibition on Incurrence of Senior Subordinated Debt. The Indenture
prohibits the Company and any Guarantor from incurring or suffering to exist
Indebtedness that is senior in right of payment to the Notes or the Guarantee
of any such Guarantor, as the case may be, and is expressly subordinate in
right of payment to any other Indebtedness of the Company or any such
Guarantor, as the case may be.
Limitation on Preferred Stock of Subsidiaries. The Indenture provides that
the Company will not permit any of its Subsidiaries to issue any Preferred
Stock (other than to the Company or to a Wholly-Owned Subsidiary of the
Company) or permit any Person (other than the Company or a Wholly-Owned
Subsidiary of the Company) to own any Preferred Stock of a Subsidiary (other
than Acquired Preferred Stock; provided that at the time the issuer of such
Acquired Preferred Stock becomes a Subsidiary of the Company or merges with the
Company or any of its Subsidiaries, and after giving effect to such
transaction, the Company shall be able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant).
Limitation on Liens. The Indenture provides that neither the Company nor any
of its Subsidiaries will create, incur, assume, or suffer to exist any Liens
upon any of their respective assets, except for (a) Permitted Liens, (b) Liens
to secure Senior Debt or guarantees thereof permitted under the Indenture, (c)
any Liens in favor of the Trustee, (d) Liens to secure Guarantor Senior Debt
permitted under the Indenture, and (e) any Lien to secure the replacement,
refunding, extension, or renewal, in whole or in part, of any Indebtedness
described in the foregoing clauses; provided that, to the extent any such
clause limits the amount secured or the asset subject to such Liens, no
extension or renewal will increase the assets subject to such Liens or the
amount secured thereby beyond the assets or amounts set forth in such clauses.
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Limitation on Sale and Leaseback Transactions. The Indenture provides that
neither the Company nor any of its Subsidiaries will enter into any Sale and
Leaseback Transaction, except that the Company or any Subsidiary may enter into
a Sale and Leaseback Transaction if, immediately prior thereto, and after
giving effect to such Sale and Leaseback Transaction (the Indebtedness
thereunder being equivalent to the Attributable Value thereof) the Company
could incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with the "Limitation on Incurrence of Additional
Indebtedness" covenant.
Guarantees of Certain Indebtedness. The Indenture provides that the Company
will not permit any of its Subsidiaries, directly or indirectly, to guarantee
or otherwise become liable for, or incur any Lien securing, the payment of any
Indebtedness of the Company or any other Guarantor (other than Indebtedness not
to exceed $2,000,000 in aggregate at any one time outstanding as to all of the
Company's Subsidiaries, and other than Liens securing Indebtedness under the
Credit Agreement consisting of pledges of Capital Stock of the Company's
Subsidiaries), unless such Subsidiary, the Company, and the Trustee execute and
deliver a supplemental indenture pursuant to which such Subsidiary becomes a
Guarantor of the Notes and which evidences such Subsidiary's Guarantee of the
Notes, such Guarantee to be a senior subordinated unsecured obligation of such
Subsidiary. Neither the Company 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 Subsidiary
of the Company to incur Indebtedness otherwise prohibited by the "Limitation of
Incurrence of Additional 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 Guarantor Senior Debt (defined with respect to the Indebtedness of a
Guarantor in a similar manner as Senior Debt is defined with respect to the
Company) on terms analogous to those applicable to the Notes. See "--
Subordination."
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 Credit Agreement) 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. Each Guarantor that makes a
payment or distribution under a Guarantee is entitled to a contribution from
each other Guarantor in a pro rata amount based on the Adjusted Net Assets of
each Guarantor.
Any Guarantor may consolidate with or merge into or sell its assets to the
Company 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 the Company or another Guarantor
(whether or not affiliated with the Guarantor). Upon the sale or disposition of
a Guarantor (or all or substantially all of its assets) to a Person (whether or
not an Affiliate of such Guarantor) which is not a Subsidiary of the Company,
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
Credit Agreement, as applicable, and all of its guarantees of, and under all of
its pledges of assets or other security interests which secure, Indebtedness of
the Company shall also terminate upon such release, sale, or transfer;
provided, further, that the consideration received by the Company in connection
with such sale or other disposition shall be applied in accordance with the
Indenture.
Notwithstanding any other provision of this "Guarantees of Certain
Indebtedness" covenant, no Subsidiary of the Company shall be required to
execute and deliver a supplemental indenture pursuant to the first paragraph of
this covenant, or otherwise issue a Guarantee, for so long as any Senior
Subordinated Notes shall remain outstanding.
Limitation on Line of Business. The Indenture provides that for so long as
any Notes are outstanding, the Company and its Subsidiaries will engage solely
in the ownership and operation of Permitted Businesses.
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Merger, Consolidation, and Sale of Assets. The Indenture provides that the
Company may not, and will not permit its Subsidiaries to, in a single
transaction or a series of related transactions, consolidate with or merge with
or into, or sell, assign, transfer, lease, convey, or otherwise dispose of all
or substantially all of the assets of the Company (determined on a consolidated
business) to, another Person or adopt a plan of liquidation unless (i) either
(A) the Company is the survivor of such merger or consolidation or (B) the
surviving or transferee Person is a corporation, partnership, or trust
organized and existing under the laws of the United States, any state thereof
or the District of Columbia and such surviving or transferee Person expressly
assumes by supplemental indenture all of the obligations of the Company under
the Notes and the Indenture and assumes by amendment all of the obligations of
the Company under the Registration Rights Agreement; (ii) immediately after
giving effect to such transaction and the use of proceeds therefrom (on a pro
forma basis, including any Indebtedness incurred or anticipated to be incurred
in connection with such transaction), the Company or the surviving or
transferee Person is able to incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with the "Limitation on Incurrence of
Additional Indebtedness" covenant; (iii) immediately after giving effect to
such transaction (including any Indebtedness incurred or anticipated to be
incurred in connection with the transaction) no Default or Event of Default has
occurred and is continuing; and (iv) the Company has delivered to the Trustee
an Officers' Certificate and Opinion of Counsel, each stating that such
consolidation, merger, or transfer complies with the Indenture, that the
surviving Person agrees by supplemental indenture to be bound thereby, and that
all conditions precedent in the Indenture relating to such transaction have
been satisfied. For purposes of the foregoing, the transfer (by lease,
assignment, sale, or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties and assets of one
or more Subsidiaries, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, will be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
Events of Default
The following events are defined in the Indenture as "Events of Default": (i)
the failure to pay interest on the Notes when the same becomes due and payable
and the Default continues for a period of 30 days (whether or not such payment
is prohibited by the subordination provisions of the Indenture); (ii) the
failure to pay the principal on any Notes, when such principal becomes due and
payable, at maturity, upon redemption, or otherwise (whether or not such
payment is prohibited by the subordination provisions of the Indenture); (iii)
a default in the observance or performance of any other covenant or agreement
contained in the Notes or the Indenture which default continues for a period of
30 days after the Company receives written notice thereof specifying the
default from the Trustee or holders of at least 25% in aggregate principal
amount of outstanding Notes; (iv) the failure to pay at the final stated
maturity (giving effect to any extensions thereof) the principal amount of any
Indebtedness of the Company or any Subsidiary of the Company, or the
acceleration of the final stated maturity of any such Indebtedness, if the
aggregate principal amount of such Indebtedness, together with the aggregate
principal amount of any other such Indebtedness in default for failure to pay
principal at the final stated maturity (giving effect to any extensions
thereof) or which has been accelerated, aggregates $5,000,000 or more at any
time; (v) one or more judgments in an aggregate amount in excess of $5,000,000
(which are not covered by insurance as to which the insurer has not disclaimed
coverage) being rendered against the Company or any of its Subsidiaries and
such judgments remain undischarged or unstayed for a period of 60 days after
such judgment or judgments become final and nonappealable; (vi) any Guarantee
ceases to be in full force and effect (other than as provided in the last
paragraph under the "--Guarantees of Certain Indebtedness" covenant above) or
is declared null and void, or any Guarantor denies that it has any further
liability under any Guarantee, or gives notice to such effect (other than by
reason of the termination of the Indenture or the release of any such Guarantee
in accordance with the Indenture) and such condition shall have continued for a
period of 30 days after the Company receives written notice thereof from the
Trustee or holders of at least 25% in aggregate principal amount of outstanding
Notes; and (vii) certain events of bankruptcy, insolvency, or reorganization
affecting the Company or any of its Significant Subsidiaries.
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Upon the happening of any Event of Default (other than clause (vii) of the
preceding paragraph with respect to the Company or any Significant Subsidiary),
the Trustee may, and the Trustee upon the request of holders of at least 25% in
principal amount of the Notes shall, or the holders of at least 25% in
principal amount of outstanding Notes may, declare the principal of and accrued
but unpaid interest, if any, on all the Notes to be due and payable by notice
in writing to the Company and the Trustee specifying the respective Event of
Default and that it is a "notice of acceleration" (the "Acceleration Notice"),
and the same (i) shall become immediately due and payable or (ii) if there are
any amounts outstanding under the Credit Agreement, will become due and payable
upon the first to occur of an acceleration under the Credit Agreement or five
business days after receipt by the Company and the Representative under the
Credit Agreement of such Acceleration Notice (unless all Events of Default
specified in such Acceleration Notice have been cured or waived). If an Event
of Default under clause (vii) of the preceding paragraph relating to the
Company or any Significant Subsidiary occurs and is continuing, then such
amount will ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of the Notes.
The Indenture provides that, at any time after a declaration of acceleration
with respect to the Notes as described in the preceding paragraph, the holders
of a majority in principal amount of the Notes then outstanding (by notice to
the Trustee) may rescind and cancel such declaration and its consequences if
(i) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction, (ii) all existing Events of Default have been cured or
waived except nonpayment of principal or interest on the Notes that has become
due solely by such declaration of acceleration, (iii) to the extent the payment
of such interest is lawful, interest (at the same rate specified in the Notes)
on overdue installments of interest and overdue payments of principal which has
become due otherwise than by such declaration of acceleration, has been paid,
and (iv) the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements, and advances. The
holders of a majority in principal amount of the Notes may waive any existing
Default or Event of Default under the Indenture, and its consequences, except a
default in the payment of the principal of or interest on any Notes or a
Default or Event of Default arising under any provision of the Indenture which
cannot be modified without the consent of each holder of Notes affected
thereby.
The Company is required to deliver to the Trustee, within 120 days after the
end of the Company's fiscal year, a certificate indicating whether the signing
officers know of any Default or Event of Default that occurred during the
previous year and whether the Company has complied with its obligations under
the Indenture. In addition, the Company will be required to notify the Trustee
of the occurrence and continuation of any Default or Event of Default within
five business days after the Company becomes aware of the same.
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default thereunder should occur and be continuing,
the Trustee will be under no obligation to exercise any of the rights or powers
under the Indenture at the request or direction of any of the holders of the
Notes unless such holders have offered to the Trustee reasonable indemnity or
security against any loss, liability or expense. Subject to such provision for
security or indemnification and certain limitations contained in the Indenture,
the holders of a majority in principal amount of the outstanding Notes have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee.
Satisfaction and Discharge of Indenture; Defeasance
The Company may terminate its obligations under the Indenture at any time,
and the obligations of the Guarantors, if any, with respect thereto shall
terminate, by delivering all outstanding Notes to the Trustee for cancellation
and paying all sums payable by it thereunder. In addition, the Company, at its
option, (i) will be discharged from any and all obligations with respect to the
Notes, and each Guarantor, if any, will be discharged from any and all
obligations with respect to its Guarantee (except for certain obligations of
the Company to register the transfer or exchange of such Notes, replace stolen,
lost or mutilated Notes, maintain paying agencies, and hold moneys for payment
in trust) or (ii) need not comply with certain of the restrictive covenants in
the Indenture, including the Company's obligation to offer to purchase or
purchase Notes upon a
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Change of Control or following an Asset Sale, and will not by such
noncompliance cause a Default or Event of Default under clause (iii) under
"Events of Default," if the Company deposits with the Trustee, in trust, U.S.
Legal Tender or U.S. Government Obligations or a combination thereof which,
through the payment of interest thereon and principal in respect thereof in
accordance with their terms, will be sufficient to pay all the principal of and
interest on the Notes on the dates such payments are due in accordance with the
terms of such Notes as well as the Trustee's fees and expenses. To exercise
either such option, the Company is required to deliver to the Trustee (A) an
opinion of counsel or a private letter ruling issued to the Company by the IRS
to the effect that the holders of the Notes will not recognize income, gain, or
loss for federal income tax purposes as a result of the deposit and related
defeasance and will be subject to federal income tax on the same amounts and in
the same manner and at the same times as would have been the case if such
option had not been exercised and, in the case of an opinion of counsel
furnished in connection with a discharge pursuant to clause (i) above,
accompanied by a private letter ruling issued to the Company by the IRS to such
effect, (B) subject to certain qualifications, an opinion of counsel to the
effect that funds so deposited will not be subject to avoidance under
applicable Bankruptcy Law, and (C) an officers' certificate and an opinion of
counsel to the effect that the Company has complied with all conditions
precedent to the defeasance. Notwithstanding the foregoing, the opinion of
counsel required by clause (A) above need not be delivered if all Notes not
therefore delivered to the Trustee for cancellation (i) have become due and
payable, (ii) will become due and payable on the maturity date within one year,
or (iii) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company.
In the event the Company exercises its option described in clause (ii) of the
second sentence of the preceding paragraph with respect to the Notes and the
Notes are declared due and payable because of the occurrence of any Event of
Default, the amount of U.S. Legal Tender or U.S. Government Obligations
deposited with the Trustee to effect such defeasance may not be sufficient to
pay amounts due on the Notes at the time of an acceleration resulting from such
Event of Default. In any such event, the Company would remain liable to make
payment of such amounts due at the time of any such acceleration.
Reports to Holders
The Company will file with the Trustee and provide to the holders of the
Notes, within 15 days after it files them with the Commission, copies of the
annual reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) which the Company files with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act. In the event the Company is no longer
required to furnish such reports to its securityholders pursuant to the
Exchange Act, the Company will cause its consolidated financial statements,
comparable to those which would have been required to appear in annual or
quarterly reports, to be delivered to the holders of the Notes. During the
period beginning on the latest date of the original issuance of any of the
Notes and the date any Note was acquired from the Company or any Affiliate of
the Company after the Issue Date and ending on the date that is two years from
such latest date, the Company will, during any period in which it is not
subject to Section 13 or 15(d) under the Exchange Act or has not timely filed
the reports and other information required thereby when so subject, make a
available to any holder or beneficial owner of Notes which are Transfer
Restricted Notes (as defined under "Exchange Offer; Registration Rights") in
connection with any sale thereof and any prospective purchaser of Notes from
such holder or beneficial owner the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any holder or
beneficial owner of the Notes and it will take such further action as any
holder or beneficial owner may reasonably require to sell its Notes without
registration under the Securities Act within the limitation of the exemption
provided by Rule 144A.
Modification of the Indenture
From time to time, the Company and the Trustee, together, without the consent
of the holders of the Notes, may amend or supplement the Indenture for certain
specified purposes, including curing ambiguities,
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defects, or inconsistencies. Other modifications and amendments of the
Indenture may be made with the consent of the holders of a majority in
principal amount of the then outstanding Notes, except that, without the
consent of each holder of the Notes affected thereby, no amendment may,
directly or indirectly: (i) reduce the amount of Notes whose holders must
consent to an amendment; (ii) reduce the rate of or change the time for payment
of interest, including defaulted interest, on any Notes; (iii) reduce the
principal of or change the fixed maturity of any Notes, or change the date on
which any Notes may be subject to redemption or repurchase, or reduce the
redemption or repurchase price therefor; (iv) make any Notes payable in money
other than that stated in the Notes; (v) make any change in provisions of the
Indenture protecting the right of each holder of a Note to receive payment of
principal of and interest on such Note on or after the due date thereof or to
bring suit to enforce such payment or permitting holders of a majority in
principal amount of the Notes to waive Defaults or Events of Default;
(vi) after the Company's obligation to purchase the Notes arises under the
Indenture, amend, modify, or change the obligation of the Company to make or
consummate a Change of Control Offer or a Net Proceeds Offer or waive any
default in the performance thereof or modify any of the provisions or
definitions with respect to any such offers; (vii) modify or change any
provision of the Indenture affecting the subordination of the Notes or any
Guarantee in a manner adverse to the holders of the Notes; or (viii) release
any Guarantor from any of its obligations under its Guarantee or the Indenture
other than in compliance with other provisions of the Indenture permitting such
release.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and not incurred by such Person or any of its Subsidiaries in connection
with, or in anticipation or contemplation of, such Person becoming a Subsidiary
of the Company or such acquisition, merger, or consolidation.
"Acquired Preferred Stock" means Preferred Stock of any Person or any of its
Subsidiaries at the time such Person becomes a Subsidiary of the Company or at
the time it merges or consolidates with the Company or any of its Subsidiaries
and not issued by such Person in connection with, or in anticipation or
contemplation of, such acquisition, merger, or consolidation together with any
other Preferred Stock of such Person, the proceeds of which are used to
refinance or replace such Person's Acquired Preferred Stock; provided that
(i) the maximum aggregate liquidation preference of any such refinancing or
replacement Preferred Stock does not exceed the aggregate liquidation
preference of the Acquired Preferred Stock being refinanced or replaced at the
time of such refinancing or replacement and (ii) such refinancing or
replacement Preferred Stock (other than Qualified Capital Stock) (x) shall not
mature or become mandatorily redeemable prior to the maturity of the Acquired
Preferred Stock being refinanced or replaced and (y) shall have a Weighted
Average Life to Maturity greater than either (1) the Weighted Average Life to
Maturity of the Acquired Preferred Stock being refinanced or replaced or
(2) the remaining Weighted Average Life to Maturity of the Notes.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of the
amount by which (x) the fair value of the property of such Guarantor exceeds
the total amount of its liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date), but excluding liabilities under the
Guarantee of such Guarantor at such date, and (y) the present fair salable
value of the assets of such Guarantor at such date exceeds the amount that will
be required to pay the probable liability of such Guarantor on its debts (after
giving effect to all other fixed and contingent liabilities incurred or assumed
on such date and after giving effect to any collection from any Subsidiary of
such Guarantor in respect of the obligations of such Subsidiary under such
Guarantor's Guarantee), excluding debt in respect of the Guarantee, as they
become absolute and matured.
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"Affiliate" of any Person means any other Person who, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Asset Acquisition" means (i) an Investment by the Company or any Subsidiary
of the Company in any other Person pursuant to which such Person shall become a
Subsidiary of the Company or shall be consolidated or merged with the Company
or any Subsidiary of the Company or (ii) the acquisition by the Company or any
Subsidiary of the Company of assets of any Person comprising a division or line
of business of such Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary
course of business), assignment, or other transfer for value, whether in a
single transaction or in a series of related transactions, by the Company or
any of its Subsidiaries to any Person other than the Company or a Wholly-Owned
Subsidiary of the Company (excluding any Sale and Leaseback Transaction or any
pledge of assets or stock by the Company or any of its Subsidiaries) of (i) any
Capital Stock of any Subsidiary of the Company (other than directors'
qualifying shares) or (ii) any other property or assets of the Company or any
Subsidiary of the Company other than in the ordinary course of business;
provided that for purposes of the "Limitation on Asset Sales" covenant, Asset
Sales shall not include (a) a transaction or series of related transactions for
which the Company or its Subsidiaries receive aggregate consideration of less
than $500,000, (b) Asset Swaps made in compliance with the last paragraph of
the "Limitation on Asset Sales" covenant, (c) transactions permitted under the
"Merger, Consolidation, and Sale of Assets" covenant, or (d) any Contract Buy
Out.
"Asset Swap" means the execution of a definitive agreement, subject only to
FCC approval and other customary closing conditions, that the Company in good
faith believes will be satisfied, for a substantially concurrent purchase and
sale, or exchange, of Productive Assets between the Company or any of its
Subsidiaries and another Person or group of affiliated Persons; provided that
any amendment to or waiver of any closing condition which individually or in
the aggregate is material to the Asset Swap shall be deemed to be a new Asset
Swap.
"Attributable Value" in respect of a Sale and Leaseback Transaction of any
property means, as at the time of determination, the greater of (i) the fair
market value of the property subject to such arrangement (as determined in good
faith by the Board of Directors of the Company) or (ii) the present value
(discounted at the interest rate borne by the Notes, compounded annually) of
the total obligations of the lessee for rental payments during the remaining
term of the lease included in such arrangement.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations, or other equivalents (however
designated) of capital stock, including each class of common stock and
Preferred Stock of such Person and (ii) with respect to any Person that is not
a corporation, any and all partnership or other equity interests of such
Person.
"Capitalized Lease Obligation" means, as to any Person, the obligation of
such Person to pay rent or other amounts under a lease to which such Person is
a party that is required to be classified and accounted for as a capital lease
obligation under GAAP and, for purposes of this definition, the amount of such
obligation at any date shall be the capitalized amount of such obligation at
such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc.; (iii) commercial paper maturing no more than one year from the
date of
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creation thereof and, at the time of acquisition, having a rating of at least
A-1 from Standard & Poor's Corporation or at least P-1 from Moody's Investors
Service, Inc.; (iv) certificates of deposit or bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia or any U.S. branch of a foreign bank having
at the date of acquisition thereof combined capital and surplus of not less
than $50,000,000; (v) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (iv)
above; and (vi) investments in money market funds which invest substantially
all their assets in securities of the types described in clauses (i) through
(v) above.
A "Change of Control" of the Company will be deemed to have occurred at such
time as (i) any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act ("Group"), other than Permitted Holders, becomes the
beneficial owner (as defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act), directly or indirectly, of 50%
or more of the total voting power of the Common Stock of the Company, (ii) any
Person or Group, other than Permitted Holders, becomes the beneficial owner,
directly or indirectly, of more than 30% of the total voting power of the
Common Stock of the Company, and the Permitted Holders beneficially own,
directly or indirectly in the aggregate, a lesser percentage of the total
voting power of the Common Stock of the Company than such Person or Group and
do not have the right or ability by voting power, contract, or otherwise to
elect or designate for election a majority of the Board of Directors (or any
analogous governing body) of the Company, (iii) there shall be consummated any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which the Common Stock of
the Company would be converted into cash, securities, or other property, other
than a merger or consolidation of the Company in which the holders of the
Common Stock of the Company outstanding immediately prior to the consolidation
or merger hold, directly or indirectly, at least a majority of the Common Stock
of the surviving corporation immediately after such consolidation or merger, or
(iv) 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 has been
approved by 66 2/3% of the directors then still in office who either were
directors at the beginning of such period or whose election or recommendation
for election was previously so approved) cease to constitute a majority of the
Board of Directors of the Company.
"Common Stock," as used in this Description of the Notes, means, with respect
to any Person, any and all shares, interests, or other participations in, and
other equivalents (however designated and whether voting, super-voting or non-
voting) of, such Person's common stock whether outstanding at the Issue Date or
issued thereafter, and includes, without limitation, all series and classes of
such common stock.
"Consolidated EBITDA" means, with respect to any Person, for any period, the
sum (without duplication) of (i) Consolidated Net Income and (ii) to the extent
Consolidated Net Income has been reduced thereby, (A) all income taxes of such
Person and its Subsidiaries paid or accrued in accordance with GAAP for such
period (other than income taxes attributable to extraordinary or nonrecurring
gains or losses), (B) Consolidated Interest Expense, and (C) Consolidated Non-
Cash Charges, all as determined on a consolidated basis for such Person and its
Subsidiaries in conformity with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, without duplication, the sum of (i) the interest expense of such Person
and its Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including, without limitation, (a) any amortization of
debt discount, (b) the net cost under Interest Swap Obligations (including any
amortization of discounts), (c) the interest portion of any deferred payment
obligation, (d) all commissions, discounts and other fees and charges owed with
respect to letters of credit, bankers' acceptance financing, or similar
facilities, and (e) all accrued interest and (ii) the interest component of
Capitalized Lease Obligations paid or accrued by such Person and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
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"Consolidated Net Income" of any Person means, for any period, the aggregate
net income (or loss) of such Person and its Subsidiaries for such period on a
consolidated basis, determined in accordance with GAAP; provided that there
shall be excluded therefrom, without duplication, (a) gains and losses from
Asset Sales (without regard to the $500,000 limitation set forth in the
definition thereof) or abandonments or reserves relating thereto and the
related tax effects, (b) items classified as extraordinary or nonrecurring
gains and losses, and the related tax effects according to GAAP, (c) the net
income (or loss) of any Person acquired in a pooling of interests transaction
accrued prior to the date it becomes a Subsidiary of such first referred to
Person or is merged or consolidated with it or any of its Subsidiaries, (d) the
net income of any Subsidiary to the extent that the declaration of dividends or
similar distributions by that Subsidiary of that income is restricted by
contract, operation of law, or otherwise, and (e) the net income of any Person,
other than a Subsidiary, except to the extent of the lesser of (x) dividends or
distributions paid to such first referred to Person or its Subsidiary by such
Person and (y) the net income of such Person (but in no event less than zero),
and the net loss of such Person shall be included only to the extent of the
aggregate Investment of the first referred to Person or a consolidated
Subsidiary of such Person.
"Consolidated Non-Cash Charges" means, with respect to any Person for any
period, the aggregate depreciation, amortization, and other non-cash expenses
of such Person and its Subsidiaries reducing Consolidated Net Income of such
Person and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP (excluding any such charges constituting an
extraordinary or nonrecurring item).
"Contract Buy Out" means the involuntary disposition or termination
(including, without limitation, pursuant to a buy out) of a contract between a
media representation company and a client station.
"Credit Agreement" means the Credit Agreement, dated as of January 28, 1998,
among the Company, the lenders thereto and First Union National Bank, a
national banking association, as administrative agent, Fleet Bank, N.A., as
documentation agent, and Union Bank of California, N.A. and KeyBank National
Association, as co-agents, as such agreement may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, refinancing,
replacing, or otherwise restructuring all or any portion of the Indebtedness
under such agreement or any successor or replacement agreement and whether (i)
by the same or any other agent, lender, or group of lenders, (ii) under the
same or different terms, including but without limitation, amounts available
for borrowing, or (iii) effective immediately after or subsequent to any
termination of a previous Credit Agreement.
"Default" means an event or condition the occurrence of which is, or with the
lapse of time or the giving of notice or both would be, an Event of Default.
"Designated Guarantor Senior Debt" means Indebtedness guaranteed by a
Guarantor under or in respect of Designated Senior Debt.
"Designated Senior Debt" means (i) Indebtedness under or in respect of the
Credit Agreement and (ii) any other Indebtedness constituting Senior Debt
which, at the time of determination, has an aggregate principal amount of at
least $50,000,000 and is specifically designated in the instrument evidencing
such Senior Debt as "Designated Senior Debt" by the Company.
"Disqualified Capital Stock" means any Capital Stock which, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof (except, in each case,
upon the occurrence of a Change of Control), in whole or in part, on or prior
to the final maturity date of the Notes.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.
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"GAAP" means generally accepted accounting principles as in effect in the
United States of America as of the Issue Date.
"Guarantee" means any guarantee of the Notes, on a senior subordinated basis,
by a Subsidiary of the Company issued in accordance with the covenant
"Guarantees of Certain Indebtedness."
"Guarantor" means any of the Company's Subsidiaries that in the future
executes a supplemental indenture in which such 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.
"Guarantor Senior Debt" means any Indebtedness of a Guarantor (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law), whether outstanding on
the Issue Date or thereafter created, incurred, or assumed, unless, in the case
of any particular Indebtedness, the instrument creating or evidencing the same
or pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Guarantee of such
Guarantor. Without limiting the generality of the foregoing, "Guarantor Senior
Debt" shall also include the principal of, premium, if any, interest (including
any interest accruing subsequent to the filing of a petition of bankruptcy at
the rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law) on, and all other
amounts owing in respect of, and all monetary obligations of every nature
under, (x) the Credit Agreement, including, without limitation, obligations to
pay principal and interest, reimbursement obligations under letters of credit,
fees, expenses, and indemnities and (y) all Interest Swap Obligations.
Notwithstanding the foregoing, "Guarantor Senior Debt" shall not include any of
the following amounts (whether or not constituting Indebtedness as defined in
the Indenture): (i) any Indebtedness of a Guarantor to a Subsidiary of such
Guarantor; (ii) Indebtedness and other amounts owing to trade creditors
incurred in connection with obtaining goods, materials or services; (iii)
Indebtedness represented by Disqualified Capital Stock; and (iv) any liability
for federal, state, local, or other taxes owed or owing by a Guarantor; and (v)
any Indebtedness which is, by its express terms, subordinated in right of
payment to any other Indebtedness of such Guarantor.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, that is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by notes, debentures, or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables, and other accrued liabilities arising in the
ordinary course of business and accrued expenses) if and to the extent any of
the foregoing indebtedness would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP, and shall also include, to the
extent not otherwise included (i) any Capitalized Lease Obligations, (ii)
obligations secured by a lien to which the property or assets owned or held by
such Person is subject, whether or not the obligation or obligations secured
thereby shall have been assumed, (iii) guarantees of items of other Persons
which would be included within this definition for such other Persons (whether
or not such items would appear upon the balance sheet of the guarantor), (iv)
all obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance, or similar credit transaction, (v) Disqualified Capital
Stock of such Person, and (vi) obligations of any such Person under any
Interest Swap Obligations applicable to any of the foregoing (if and to the
extent such Interest Swap Obligations would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP). The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided that (i) the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the principal amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness at such time as
determined in conformity with GAAP, (ii) Indebtedness shall not include any
liability for federal, state,
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local, or other taxes and (iii) the principal amount of any Indebtedness shall
be reduced by the aggregate amount of Cash Equivalents of such Person and its
Subsidiaries that are pledged to secure, and are required to be applied, solely
to the repayment of the principal of such Indebtedness. Notwithstanding any
other provision of the foregoing definition, any trade payable or broadcast
program liability arising from the purchase of goods or materials or for
programming or services obtained in the ordinary course of business shall not
be deemed to be "Indebtedness" of such Person or any of its Subsidiaries for
purposes of this definition.
"Interest Swap Obligations" means the obligations of any Person under any
interest rate protection agreement, interest rate future, interest rate option,
interest rate swap, interest rate cap, or other interest rate hedge or
arrangement.
"Investment" means (i) any transfer or delivery of cash, stock, or other
property of value in exchange for Indebtedness, stock, or other security or
ownership interest in any Person by way of loan, advance, capital contribution,
guarantee, or otherwise and (ii) an investment deemed to have been made by the
Company at the time any entity which was a Subsidiary of the Company ceases to
be such a Subsidiary in an amount equal to the value of the loans and advances
made, and any remaining ownership interest in, such entity immediately
following such entity ceasing to be a Subsidiary of the Company. The issuance
of Qualified Capital Stock of the Company shall not constitute an Investment.
The amount of any non-cash Investment shall be the fair market value of such
Investment, as determined conclusively in good faith by management of the
Company unless the fair market value of such Investment exceeds $5,000,000, in
which case the fair market value shall be determined conclusively in good faith
by the Board of Directors of the Company at the time such Investment is made.
"Issue Date" means the date of original issuance of the Notes.
"Leverage Ratio" shall mean, as to any Person, the ratio of (i) the sum of
the aggregate outstanding amount of Indebtedness of such Person and its
Subsidiaries as of the date of calculation on a consolidated basis in
accordance with GAAP to (ii) the Consolidated EBITDA of such Person for the
four full fiscal quarters (the "Four Quarter Period") ending on or prior to the
date of determination.
For purposes of this definition, the aggregate outstanding principal amount
of Indebtedness of the Person and its Subsidiaries for which such calculation
is made shall be determined on a pro forma basis as if the Indebtedness giving
rise to the need to perform such calculation had been incurred and the proceeds
therefrom had been applied, and all other transactions in respect of which such
Indebtedness is being incurred had occurred, on the last day of the Four
Quarter Period. In addition to the foregoing, for purposes of this definition,
"Consolidated EBITDA" shall be calculated on a pro forma basis after giving
effect to (i) the incurrence of the Indebtedness of such Person and its
Subsidiaries (and the application of the proceeds therefrom) giving rise to the
need to make such calculation and any incurrence (and the application of the
proceeds therefrom) or repayment of other Indebtedness, other than the
incurrence or repayment of Indebtedness pursuant to working capital facilities,
at any time subsequent to the beginning of the Four Quarter Period and on or
prior to the date of determination, as if such incurrence (and the application
of the proceeds thereof), or the repayment, as the case may be, occurred on the
first day of the Four Quarter Period and (ii) any Asset Sales or Asset
Acquisitions (including, without limitation, any Asset Acquisition giving rise
to the need to make such calculation as a result of such Person or one of its
Subsidiaries (including any Person who becomes a Subsidiary as a result of such
Asset Acquisition) incurring, assuming or otherwise becoming liable for
Indebtedness) at any time on or subsequent to the first day of the Four Quarter
Period and on or prior to the date of determination, as if such Asset Sale or
Asset Acquisition (including the incurrence, assumption, or liability for any
such Indebtedness and also including any Consolidated EBITDA associated with
such Asset Acquisition) occurred on the first day of the Four Quarter Period.
Furthermore, in calculating "Consolidated Interest Expense" for purposes of the
calculation of "Consolidated EBITDA," (i) interest on Indebtedness determined
on a fluctuating basis as of the date of determination (including Indebtedness
actually incurred on the date of the transaction giving rise to the need to
calculate the Leverage Ratio) and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of
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interest on such Indebtedness as in effect on the date of determination and
(ii) notwithstanding (i) above, interest determined on a fluctuating basis, to
the extent such interest is covered by Interest Swap Obligations, shall be
deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge, or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, and any agreement
to give any security interest).
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents (including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents)
received by the Company or any of its Subsidiaries from such Asset Sale net of
(i) reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting, and investment banking fees
and sales commissions, recording fees, title insurance premiums, appraisers
fees, and costs reasonably incurred in preparation of any asset or property for
sale), (ii) taxes paid or reasonably estimated to be payable (calculated based
on the combined state, federal, and foreign statutory tax rates applicable to
the Company or the Subsidiary engaged in such Asset Sale), and (iii) repayment
of Indebtedness secured by assets subject to such Asset Sale; provided that if
the instrument or agreement governing such Asset Sale requires the transferor
to maintain a portion of the purchase price in escrow (whether as a reserve for
adjustment of the purchase price or otherwise) or to indemnify the transferee
for specified liabilities in a maximum specified amount, the portion of the
cash or Cash Equivalents that is actually placed in escrow or segregated and
set aside by the transferor for such indemnification obligation shall not be
deemed to be Net Cash Proceeds until the escrow terminates or the transferor
ceases to segregate and set aside such funds, in whole or in part, and then
only to the extent of the proceeds released from escrow to the transferor or
that are no longer segregated and set aside by the transferor.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages, and other
liabilities payable under the documentation governing, or otherwise relating
to, any Indebtedness.
"Permitted Business" means the businesses engaged in by the Company and its
Subsidiaries on the date of the Indenture and activities reasonably related
thereto.
"Permitted Holders" means (i) Barry A. Ackerley, his immediate family, his
grandchildren, and his heirs (in each case including adopted persons), (ii) any
trusts controlled by or for the exclusive benefit of the individuals referred
to in clause (i) above or the executor or administrator of the estate or other
legal representative of the individuals referred to in clause (i), and (iii)
any other Person of which at least a majority of the outstanding voting stock
is owned, of record and beneficially, by any of the Persons referred to in
clause (i) or (ii) above.
"Permitted Indebtedness" means, without duplication, (i) the Notes originally
issued on the Issue Date and any Exchange Notes issued in exchange therefor;
(ii) additional Indebtedness of the Company incurred pursuant to the Credit
Agreement in an aggregate principal amount not to exceed $100,000,000; (iii)
Interest Swap Obligations; provided that such Interest Swap Obligations are
entered into to protect the Company from fluctuations in interest rates of its
Indebtedness; (iv) Refinancing Indebtedness; (v) Indebtedness owed by the
Company to any Subsidiary or by any Subsidiary to the Company or any Subsidiary
of the Company; (vi) Purchase Money Indebtedness not to exceed $5,000,000 in
aggregate principal amount at any time outstanding; (vii) Capitalized Lease
Obligations not to exceed $15,000,000 in aggregate capitalized amount at any
time outstanding; (viii) Indebtedness of the Company or any Subsidiary incurred
in respect of performance and payment bonds (other than in respect of
Indebtedness); (ix) guarantees by Subsidiaries of any Indebtedness permitted to
be incurred pursuant to the Indenture; (x) guarantees of Indebtedness, not to
exceed $25,000,000 in the aggregate amount at any time outstanding, owing by
Persons who are parties to time brokerage agreements with the Company, in
respect of Indebtedness of such Persons arising in connection with such time
brokerage
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agreements; and (xi) Indebtedness of the Company or any of its Subsidiaries in
addition to the foregoing not to exceed $10,000,000 in principal amount
outstanding at any time (which amount may, but need not, be incurred under the
Credit Agreement).
"Permitted Investments" means (i) Investments received by the Company or its
Subsidiaries as consideration for a sale of assets, including an Asset Sale
effected in compliance with the "Limitation on Asset Sales" covenant, (ii)
Investments by the Company or any Wholly-Owned Subsidiary of the Company in any
Wholly-Owned Subsidiary of the Company (whether existing on the Issue Date or
created thereafter) or any Person that after such Investments, and as a result
thereof, becomes a Wholly-Owned Subsidiary of the Company and Investments in
the Company by any Wholly-Owned Subsidiary of the Company, (iii) cash and Cash
Equivalents, (iv) Investments in securities of trade creditors, wholesalers, or
customers received pursuant to any plan of reorganization or similar
arrangement, (v) Investments consisting of loans and advances to employees in
the ordinary course of business not to exceed an aggregate amount of $5,000,000
at any time outstanding, (vi) extensions of trade credit in the ordinary course
of business, (vii) prepaid expenses incurred in the ordinary course of
business, (viii) Interest Swap Obligations, and (ix) additional Investments in
an aggregate amount not to exceed $5,000,000 at any time outstanding.
"Permitted Liens" means (i) Liens for taxes, assessments, or other
governmental charges or statutory obligations that are not delinquent or remain
payable without penalty or that are being contested in good faith by
appropriate proceedings and for which adequate reserves have been established
in accordance with GAAP (if so required), (ii) Liens of carriers, warehousemen,
mechanics, materialmen, landlords, and other similar Liens imposed by law
incurred in the ordinary course of business for sums not constituting borrowed
money that are not overdue for a period of more than 60 days or that are being
contested in good faith by appropriate proceedings, (iii) pledges or deposits
to secure obligations under workers' compensation, unemployment insurance, or
similar legislation, (iv) Liens to secure performance bonds or other
obligations of a like nature (other than for borrowed money), incurred in the
ordinary course of business, (v) easements, rights-of-way, restrictions, minor
defects or irregularities in title, and other similar charges or encumbrances
incurred in the ordinary course of business not interfering in any material
respect with the business of the Company or its Subsidiaries, (vi) Liens upon
specific items of inventory or other goods and proceeds of any Person securing
such Person's obligations in respect of letters of credit or bankers'
acceptances issued or created for the account of such Person to facilitate the
purchase, shipment, or storage of such inventory or other goods in the ordinary
course of business, (vii) judgment and attachment Liens not giving rise to an
Event of Default, (viii) leases or subleases granted to others in the ordinary
course of business not interfering in any material respect with the business of
the Company or its Subsidiaries, (ix) any interest or title of a lessor in the
property subject to any lease, whether characterized as capitalized or
operating other than any such interest or title resulting from or arising out
of a default by the Company or its Subsidiaries of its obligations under such
lease, (x) Liens arising from filing UCC financing statements for precautionary
purposes in connection with true leases of personal property that are otherwise
permitted under the Indenture and under which the Company or any of its
Subsidiaries is a lessee, (xi) Liens securing Purchase Money Indebtedness
permitted under clause (vi) of the definition of Permitted Indebtedness;
provided that any such Lien (a) shall attach to the property financed by the
underlying Purchase Money Indebtedness (the "Subject Property") concurrently
with or within ten days after the acquisition thereof by the Company or a
Subsidiary, and (b) shall not encumber any property of the Company or any of
its Subsidiaries other than the Subject Property, (xii) Liens attributable to
Capitalized Lease Obligations permitted under clause (vii) of the definition of
Permitted Indebtedness; provided that any such Lien does not extend to any
property other than the property subject to the underlying lease, (xiii) any
other Liens imposed by operation of law which do not materially affect the
Company's or its Subsidiaries' ability to perform their obligations under the
Notes and the Indenture and renewals and extensions thereof which do not extend
to any additional property and do not increase the amount secured, and (xiv)
Liens in existence on the Issue Date and any extension, renewal, or
replacement, in whole or in part, thereof, provided that any such extension,
renewal, or replacement is not materially more restrictive that the Lien being
so extended, renewed, or replaced and does not extend to any property other
than the property encumbered by the original Lien.
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"Permitted Securities" means (i) Qualified Capital Stock issued by the
Company, (ii) securities substantially identical to the Notes issued by the
Company in payment of interest accrued thereon and (iii) securities issued by
the Company which are subordinated to the Senior Debt at least to the same
extent as the Notes and having a Weighted Average Life to Maturity at least
equal to the remaining Weighted Average Life to Maturity of the Notes (the
issuance of such subordinated securities to be consented to by the holders of
at least a majority of the outstanding amount of Senior Debt consisting of each
class of Designated Senior Debt then outstanding, which subordinated securities
will be issued in exchange for outstanding Notes or to pay interest accrued on
outstanding Notes).
"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Productive Assets" means assets of a kind used or usable by the Company and
its Subsidiaries in a Permitted Business.
"Public Equity Offering" means an underwritten, fully registered public
offering of Capital Stock (other than Disqualified Capital Stock) of the
Company pursuant to an effective registration statement filed with the
Commission in accordance with the Securities Act, the gross proceeds of which
are at least $25,000,000.
"Purchase Money Indebtedness" means any Indebtedness incurred by a Person to
finance the cost (including the cost of construction, installation or
improvement) of an item of property, the principal amount of which Indebtedness
does not exceed the sum of (i) the lesser of (A) the fair market value of such
property, as determined conclusively in good faith by management of the Company
unless the fair market value of such property exceeds $5,000,000, in which case
the fair market value of such property shall be determined conclusively in good
faith by the Board of Directors of the Company, or (B) 100% of such cost and
(ii) reasonable fees and expenses of such Person incurred in connection
therewith.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Refinancing Indebtedness" means Indebtedness of the Company and/or any
Subsidiary of the Company to the extent the proceeds thereof are used solely to
refinance (whether by amendment, renewal, extension, refunding, or defeasance)
Indebtedness of the Company and/or any Subsidiary of the Company, in each such
event, incurred in accordance with the "Limitation on Incurrence of Additional
Indebtedness" covenant (other than pursuant to clause (ii), (iii), (v), (vi),
(vii), (viii), (ix), or (x) of the definition of Permitted Indebtedness);
provided that (a) Indebtedness of the Company may not be refinanced with
Indebtedness of any Subsidiary of the Company, (b) the principal amount of
Refinancing Indebtedness incurred pursuant to this definition (or, if such
Refinancing Indebtedness provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration of the
maturity thereof, the accreted value of such Indebtedness) shall not exceed the
principal amount or accreted value, as the case may be, of the Indebtedness
refinanced, plus the amount of any premium required to be paid in connection
with such refinancing pursuant to the terms of such Indebtedness or the amount
of any premium reasonably determined by the Board of Directors as necessary to
accomplish such refinancing by means of a tender offer or privately negotiated
purchase, plus the amount of reasonable expenses in connection therewith, (c)
such Refinancing Indebtedness (x) shall have no scheduled principal payment
prior to the final maturity of the Indebtedness being refinanced and (y) shall
have a Weighted Average Life to Maturity greater than either (1) the Weighted
Average Life to Maturity of the Indebtedness refinanced or (2) the remaining
Weighted Average Life to Maturity of the Notes, and (d) if the Indebtedness to
be refinanced is expressly subordinated in right of payment in any manner to
any other Indebtedness of the Company or a Subsidiary of the Company, as the
case may be, the Indebtedness to be incurred pursuant to this definition shall
also be subordinated on terms no more favorable to the holders of such
Refinancing Indebtedness than the subordination terms of the Indebtedness being
refinanced.
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"Representative" means the indenture trustee or other trustee, agent, or
representative in respect of any Designated Senior Debt; provided that if, and
for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Debt.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Subsidiary of any property, whether owned by the
Company or any Subsidiary at the Issue Date or later acquired, which has been
or is to be sold or transferred by the Company or such Subsidiary to such
Person or to any other Person from whom funds have been or are to be advanced
by such Person on the security of such property; provided that any transaction
which the Company elects to treat as an Asset Sale and to apply the proceeds
therefrom in accordance with the "Limitation on Asset Sales" covenant shall not
be deemed to be a Sale and Leaseback Transaction.
"Securities Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Senior Debt" means any Indebtedness of the Company (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law), whether outstanding on the
Issue Date or thereafter created, incurred or assumed, unless, in the case of
any particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Notes. Without
limiting the generality of the foregoing, "Senior Debt" shall also include the
principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for
in the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other amounts owing in respect
of, and all monetary obligations of every nature under, (x) the Credit
Agreement, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses,
and indemnities, and (y) all Interest Swap Obligations. Notwithstanding the
foregoing, Senior Debt shall not include any of the following amounts (whether
or not constituting Indebtedness as defined in the Indenture): (i) any
Indebtedness of the Company to a Subsidiary of the Company, (ii) Indebtedness
and other amounts owing to trade creditors incurred in connection with
obtaining goods, materials or services, (iii) Indebtedness represented by
Disqualified Capital Stock, (iv) any liability for federal, state, local, or
other taxes owed or owing by the Company, (v) any Indebtedness which is, by its
express terms, subordinated in right of payment to any other Indebtedness of
the Company, including Indebtedness under the Subordinated Note Agreements.
"Significant Subsidiary" means for any Person each Subsidiary of such Person
which (i) for the most recent fiscal year of such Person accounted for more
than 10% of the consolidated net income of such Person or (ii) as at the end of
such fiscal year, was the owner of more than 10% of the consolidated assets of
such Person.
"Subordinated Note Agreements" means the Note Agreement, dated as of December
1, 1988, regarding the 11.20% Senior Subordinated Notes, Series B, due December
15, 1998 by and among the Company and the purchasers named in Schedule I
thereto, as amended, and the Note Agreement, dated as of December 1, 1989,
regarding the 10.48% Senior Subordinated Notes due December 15, 2000, by and
among the Company and the purchasers named in Schedule I thereto, as amended.
"Subsidiary," with respect to any Person, means (i) any corporation of which
the outstanding Capital Stock having at least a majority of the votes entitled
to be cast in the election of directors under ordinary circumstances shall at
the time be owned, directly or indirectly, by such Person or (ii) any other
Person of which at least a majority of the interests entitled to vote in the
election or replacement of directors, managers, or trustees thereof (or other
Person performing similar functions) are at the time, directly or indirectly,
owned by such Person. Notwithstanding anything in the Indenture to the
contrary, all references to the Company and
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its consolidated Subsidiaries or to financial information prepared on a
consolidated basis in accordance with GAAP shall be deemed to include the
Company and its Subsidiaries as to which financial statements are prepared on a
consolidated basis in accordance with GAAP and to financial information
prepared on such a consolidated basis. Notwithstanding anything in the
Indenture to the contrary, an Unrestricted Subsidiary shall not be deemed to be
a Subsidiary for purposes of the Indenture.
"Unrestricted Subsidiary" means a Person who would otherwise be a Subsidiary
of the Company, created after the Issue Date, that has been designated an
Unrestricted Subsidiary by a resolution adopted by the Board of Directors of
the Company, provided that (a) neither the Company nor any of its Subsidiaries
(1) provides any credit support for any Indebtedness of such Unrestricted
Subsidiary (including any undertaking, agreement, or instrument evidencing such
Indebtedness) or (2) is directly or indirectly liable for any Indebtedness of
such Unrestricted Subsidiary, (b) the creditors with respect to Indebtedness
for borrowed money of such Unrestricted Subsidiary, having a principal amount
in excess of $50,000,000, have agreed in writing that they have no recourse,
direct or indirect, to the Company or any Subsidiary of the Company, including,
without limitation, recourse with respect to the payment of principal of or
interest on any Indebtedness of such Unrestricted Subsidiary, and (c) at the
time of designation of such Unrestricted Subsidiary, such Unrestricted
Subsidiary has no property or assets (other than de minimis assets resulting
from the initial capitalization of such Unrestricted Subsidiary). Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by the filing with the Trustee of a certified copy of the resolution of
the Company's Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"U.S. Legal Tender" means United States dollars, or any replacement currency
which shall then be the lawful currency for payment of public and private debts
in the United States of America.
"U.S. Government Obligations" means direct, non-callable obligations of, or
non-callable obligations guaranteed by, the United States of America for the
payment of which guarantee or obligation the full faith and credit of the
United States of America is pledged.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity, or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly-Owned Subsidiary" of any Person means any Subsidiary of such Person
of which all the outstanding voting securities (other than directors'
qualifying shares) which normally have the right to vote in the election of
directors are owned by such Person or any Wholly-Owned Subsidiary of such
Person.
BOOK ENTRY; DELIVERY AND FORM
Except as set forth in the following paragraph, the Exchange Notes will be
initially represented by one global Note (the "Global Exchange Note"). The
Global Exchange Note will be deposited with or on behalf of, The Depository
Trust Company ("DTC") and registered in the name of a nominee of DTC. Investors
may hold their beneficial interests in the Global Exchange 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
Notes" will be issued in definitive form. Upon the transfer of an Exchange Note
in definitive form, such Exchange Note will, unless the Global Exchange Note
has previously been exchanged for Exchange Notes in definitive form, be
exchanged for
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an interest in the Global Exchange Note representing the principal amount of
Exchange Notes being transferred.
The Company expects that pursuant to procedures established by DTC (a) upon
issuance of the Global Exchange Note in exchange for the Initial Notes pursuant
to the Exchange Offer, DTC or its custodian will credit on its internal system
portions of the Global Exchange Note to the respective accounts of persons who
have accounts with DTC and (b) ownership of the Exchange Notes will be shown
on, and the transfer of ownership there will be effected only through, records
maintained by DTC or its nominee (with respect to interests of Participants (as
defined below)) and the records of Participants (with respect to interests of
persons other than Participants). Ownership of beneficial interests in the
Global Exchange Note will be limited to persons who have accounts with DTC
("Participants") or persons who hold interests through Participants in such
system, or indirectly through organizations which are Participants in such
system.
So long as DTC or its nominee is the registered owner or holder of any of the
Exchange Notes, DTC or such nominee will be considered the sole owner or holder
of such Notes represented by such Global Exchange Note for all purposes under
the Indenture. No beneficial owner of an interest in the Global Exchange Note
will be able to transfer such interest except in accordance with the applicable
procedures of DTC in addition to those provided for under the Indenture with
respect to the Exchange Notes.
Payments of the principal of or premium and interest (including Additional
Interest) on the Exchange Notes represented by the Global Exchange Note will be
made to DTC or its nominee, as the case may be, as the registered owner
thereof. None of the Company, the Trustee, or any Paying Agent under the
Indenture will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Exchange Note or for maintaining, supervising, or
reviewing any records relating to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
the principal of or premium and interest (including Additional Interest) on the
Global Exchange Note will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the Global
Exchange Note as shown on the records of DTC or its nominee. The Company also
expects that payments by Participants to owners of beneficial interests in the
Global Exchange Note held through such Participants will be governed by
standing instructions and customary practice as is now the case with securities
held for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such Participants.
Transfers between Participants in DTC will be effected in accordance with DTC
rules and will be settled in immediately available funds. If an owner of a
beneficial interest in the Global Exchange Note requires physical delivery of a
Certificated Security for any reason, including to sell Exchange Notes to
persons in jurisdictions which require physical delivery of such securities or
to pledge such securities, such holder must transfer its interest in the Global
Exchange Note in accordance with the normal procedures of DTC and in accordance
with the procedures set forth in the Indenture. Because the laws of certain
jurisdictions may require that purchasers of securities take physical delivery
of securities in definitive form or that a pledge of securities may only be
effected if the securities are in definitive form, such laws may impair the
ability to transfer and pledge beneficial interests in the Global Exchange
Note.
Interests in the Global Exchange Note will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and the Participants.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more Participants to whose
account at DTC interests in the Global Notes are credited and only in respect
of the aggregate principal amount of Notes as to which such Participant or
Participants has or have given such direction.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the
74
<PAGE>
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its Participants and facilitate the clearance and
settlement of securities transactions between Participants through electronic
book-entry changes in accounts of its Participants, thereby eliminating the
need for physical movement of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations, and
certain other organizations. Indirect access to the DTC system is available to
others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the Global Notes among its participants,
DTC is under no obligation to perform such procedures, and such procedures may
be discontinued at any time. None of the Company, the Trustee or the Paying
Agent will have any responsibility for the performance by DTC or its direct or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
Certificated Securities. Interests in the Global Exchange Note will be
exchanged for Certificated Securities if (i) DTC notifies the Company that it
is unwilling or unable to continue as depositary for the Global Exchange Note,
or DTC ceases to be a "clearing agency" registered under the Exchange Act, and
a successor depositary is not appointed by the Company within 90 days, or (ii)
the Company in its sole discretion determines that the interest in the Global
Exchange Note (in whole but not in part) should be exchanged for Certificated
Securities and delivers a written notice to such effect to the Trustee;
provided that no Event of Default has occurred and is continuing with respect
to the Notes. Upon the occurrence of any of the events described in the
preceding sentence, the Company will cause the appropriate Certificated
Securities to be delivered. Beneficial interests in the Global Exchange Note
may be exchanged for Certificated Securities, and Certificated Securities may
be exchanged for beneficial interests in the Global Exchange Note, subject to
compliance with the procedures and restrictions set forth in the Indenture.
Year 2000. DTC management is aware that some computer applications, systems,
and the like for processing data ("Systems") that are dependent upon calendar
dates, including dates before, on, and after January 1, 2000, may encounter
"Year 2000 problems." DTC has informed its Participants and other members of
the financial community (the "Industry") that it has developed and is
implementing a program so that its Systems, as the same relate to the timely
payment of distributions (including principal and interest payments) to
securityholders, book-entry deliveries, and settlement of trades within DTC
("DTC Services"), continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, the DTC's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as DTC's direct and indirect participants and third party
vendors from whom the DTC licenses software and hardware, and third party
vendors on whom DTC relies for information or the provision of services,
including telecommunications and electrical utility service providers, among
others. DTC has informed the Industry that it is contacting (and will continue
to contact) third party vendors from whom DTC acquires services to (i) impress
upon them the importance of such services being Year 2000 compliant and (ii)
determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate.
According to DTC, the information set forth in the two immediately preceding
paragraphs with respect to DTC has been provided to the Industry for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
The information set forth above concerning DTC and its book-entry system has
been obtained from sources that the Company believes to be reliable, but the
Company does not take responsibility for the accuracy thereof.
75
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the principal United States federal
income tax consequences to holders of Initial Notes who exchange their Initial
Notes for Exchange Notes pursuant to the Exchange Offer. This discussion is
based on currently existing provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), existing, temporary and proposed Treasury regulations
promulgated thereunder, and administrative and judicial interpretations
thereof, all as in effect or proposed on the date hereof and all of which are
subject to change, possibly with retroactive effect, or different
interpretations. This discussion is limited to holders of Initial Notes who
hold the Notes as capital assets, within the meaning of section 1221 of the
Code. Moreover, this discussion is for general information only and does not
address all of the tax consequences that may be relevant to holders of Initial
Notes and Exchange Notes in light of their personal circumstances or to certain
types of holders of Initial Notes and Exchange Notes (such as certain financial
institutions, insurance companies, tax-exempt entities, dealers in securities
or persons who have hedged the risk of owning a Note). In addition, this
discussion does not address any tax consequences arising under the laws of any
state, locality or foreign jurisdiction, or any estate or gift tax
considerations.
Exchange Offer
The exchange of Initial Notes for Exchange Notes pursuant to the Exchange
Offer should not be treated as an exchange or other taxable event for United
States Federal income tax purposes. Accordingly, there should be no United
States Federal income tax consequences to holders who exchange Initial Notes
for Exchange Notes pursuant to the Exchange Offer and any such holder should
have the same adjusted tax basis and holding period in the Exchange Notes as it
had in the Initial Notes immediately before the exchange.
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 New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Initial
Notes where such Initial Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that for a
period one year from the Consummation Deadline (as defined in the Registration
Rights Agreement) or such shorter period as will terminate when all Initial
Notes covered by the Registration Statement of which this Prospectus forms a
part have been said pursuant thereto (such period being hereinafter referred to
as the "Prospectus Delivery Period"), it will make this Prospectus, as amended
or supplemented, available to any broker-dealer for use in connection with any
such resale.
The Company will not receive any proceeds from 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 on any such resale of New
Notes and any commissions or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
76
<PAGE>
During the Prospectus Delivery Period, The Company will promptly send
additional copies of the Prospectus and any amendment or supplement to this
Prospectus to any broker-dealer that requests such document. The Company has
agreed to pay all expenses incident to the Exchange Offer other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters in connection with the sale of the Exchange Notes being
offered, including the validity of the Exchange Notes, will be passed upon for
the Company by Graham & Dunn PC, Seattle, Washington.
EXPERTS
The consolidated financial statements of The Ackerley Group, Inc. at December
31, 1997 and 1996, and for each of the three years in the period ended December
31, 1997 incorporated by reference in this Prospectus have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
incorporated by reference herein and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
77
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Ackerley Group, Inc.
Offer to Exchange
9% Series B Senior Subordinated Notes due 2009
For
9% Series A Senior Subordinated Notes due 2009
--------
PROSPECTUS
, 1999
--------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Under Article SEVENTH of the Company's Certificate of Incorporation and
Section 9.1 of the Company's Bylaws, the Company indemnifies all directors,
officers, employees, agents, and other persons whom it may identify to the full
extent permitted by the Delaware General Corporation Law against any liability
and the expenses incurred in defense of such liability. Nothing contained in
the Company's Certificate of Incorporation shall be deemed to require or make
mandatory the purchase and maintenance of insurance permitted under Section
145(g) of the Delaware General Corporation Law. The Company will pay the
expenses of any director or officer in defense of such liability in advance of
the final disposition of the matter upon receipt of an undertaking by or on
behalf of such director or officer to repay such amounts if it shall ultimately
be determined that such person is not entitled to such indemnification. In
addition, the Underwriting Agreement, a copy of which is filed as Exhibit 1.1
to this Registration Statement, provides that each Underwriter will indemnify
and hold harmless the Company, its directors and its officers who sign this
Registration Statement and each person, if any, who controls the Company within
the meanings of Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against certain specified liabilities and expenses caused by any
untrue statements or omissions in the Registration Statement based upon
information furnished in writing to the Company by such Underwriter expressly
for use therein.
The Company maintains directors' and officers' liability insurance for the
directors and principal officers of the Company.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
------- -------
<C> <S>
3.1 Fourth Restated Certificate of Incorporation (1)
3.2 Amended and Restated Bylaws(2)
4.1 Indenture dated December 14, 1998 between The Ackerley Group, Inc. and
The Bank of New York, as Trustee relating to the 9% Senior
Subordinated Notes due 2009
4.2 Form of 9% Series B Senior Subordinated Note due 2009
4.3 Registration Rights Agreement dated December 14, 1998 among The
Ackerley Group, Inc. and the Initial Purchasers named therein
*5 Opinion of Graham & Dunn PC as to legality of securities
*7 Opinion of Graham & Dunn PC as to certain tax matters
*10.1 Credit Agreement dated January 22, 1999, by and among The Ackerley
Group, Inc., First Union National Bank, Fleet Bank, N.A., Union Bank
of California, N.A., KeyBank National Association and Bank of
Montreal, Chicago Branch
*10.2 Security Agreement dated January 22, 1999 between the Company and
First Union National Bank, as administrative agent
*10.3 Pledge Agreement dated as of January 22, 1999 between the Company and
First Union National Bank, as administrative agent
10.4 Composite Conformed Copy of Note Agreements between the Company and
certain insurance companies, dated as of December 1, 1989(3)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C>
10.5 Amendment No. 1 dated October 18, 1991 to Note Agreements dated December 1, 1989(4)
10.6 Agreements of Waiver and Amendment dated as of September 30, 1990, relating to the Note
Agreements(5)
10.7 Implementation and Waiver Agreement dated October 18, 1991(4)
10.8 The Company's Employee Stock Option Plan, as amended and restated on March 4, 1996(6)
10.9 Nonemployee-Director's Equity Compensation Plan(7)
10.10 Premises Use and Occupancy Agreement between The City of Seattle and SSI Sports, Inc. dated
March 2, 1994(8)
10.11 Purchase and Sale Agreement between Sky Sites, Inc. and Ackerley Airport Advertising, Inc., dated as
of May 19, 1998(9)
10.12 Asset Purchase Agreement between Sinclair Communications, Inc. and The Ackerley Group, Inc. dated
as of September 25, 1998 (relating to WOKR(TV), Rochester, New York)(10)
10.13 Acquisition Agreement between Wicks Broadcast Group Limited Partnership and AK Media Group,
Inc. dated as of November 30, 1998 (relating to KMTR(TV), Eugene, Oregon)
10.14 Asset Exchange Agreement among Benedek Broadcasting Corporation, Benedek License Corporation,
and AK Media Group, Inc. dated December 30, 1998 (relating to KKTV(TV), Colorado Springs,
Colorado, and KCOY(TV), Santa Maria, California)
12 Computation of Ratio of Earnings to Fixed Charges
21 Subsidiaries of the Company
*23.1 Consent of Graham & Dunn PC (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
24 Powers of Attorney for each of Barry A. Ackerley, Gail A. Ackerley, Deborah L. Bevier, M. Ian G.
Gilchrist, Michel C. Thielen, Denis M. Curley, and Keith W. Ritzmann
25 Statement of Eligibility and Qualification of Trustee on Form T-1
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
99.4 Form of Letter to Clients
</TABLE>
- --------
*To be filed by amendment.
(1) Incorporated by reference to Exhibit 3.0 of the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1998.
(2) Incorporated by reference to Exhibit 3.5 to the Company's 1997 Annual
Report on Form 10-K.
(3) Incorporated by reference to Exhibits 10.13 and 10.16, respectively, to
the Company's 1989 Annual Report on Form 10-K.
II-2
<PAGE>
(4) Incorporated by reference to Exhibits 10.9, 10.10, and 10.16,
respectively, to the Company's 1991 Annual Report on Form 10-K.
(5) Incorporated by reference to Exhibit 10.20 to the Company's 1990 Annual
Report on Form 10-K.
(6) Incorporated by reference to Exhibit 10.10 to the Company's 1995 Annual
Report on Form 10-K.
(7) Incorporated by reference to Exhibit 99.1 to the Company's Registration
Statement on Form S-8, filed on May 14, 1996.
(8) Incorporated by reference to Exhibit 10.22 to the Company's 1994 Annual
Report on Form 10-K.
(9) Incorporated by reference to Exhibit 10 to the Company's Current Report
on Form 8-K, filed on July 15, 1998.
(10) Incorporated by reference to Exhibit 10 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1998.
(b) Financial Statement Schedules
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement 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.
(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
Securities Act and is, therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the 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
Securities 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
Items 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
file subsequent to the effective date of the 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 the registration statement when it became effective.
II-3
<PAGE>
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 Seattle, State of
Washington, on February 1, 1999.
The Ackerley Group, Inc.
*
By: _________________________________
Barry A. Ackerley
Chairman and Chief Executive
Officer (Principal Executive
Officer)
Pursuant to the requirements of the Securities Act of 1993, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
* Chairman and Chief February 1, 1999
- ------------------------------------- Executive Officer and
Barry A. Ackerley Director (Principal
Executive Officer)
* Co-Chairman and Co- February 1, 1999
- ------------------------------------- President and Director
Gail A. Ackerley
/s/ Denis M. Curley Co-President and Chief February 1, 1999
- ------------------------------------- Financial Officer,
Denis M. Curley Secretary and
Treasurer (Principal
Financial Officer)
/s/ Keith W. Ritzmann Senior Vice President February 1, 1999
- ------------------------------------- and Chief Information
Keith W. Ritzmann Officer, Assistant
Secretary and
Controller (Principle
Accounting Officer)
* Director February 1, 1999
- -------------------------------------
Deborah L. Bevier
* Director February 1, 1999
- -------------------------------------
M. Ian G. Gilchrist
* Director February 1, 1999
- -------------------------------------
Michel C. Thielen
/s/ Keith W. Ritzmann February 1, 1999
*By: ________________________________
Attorney-In-Fact
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
------- -------
<C> <S>
3.1 Fourth Restated Certificate of Incorporation (1)
3.2 Amended and Restated Bylaws(2)
4.1 Indenture dated December 14, 1998 between The Ackerley Group, Inc. and
The Bank of New York, as Trustee relating to the 9% Senior
Subordinated Notes due 2009
4.2 Form of 9% Series B Senior Subordinated Note due 2009
4.3 Registration Rights Agreement dated December 14, 1998 among The
Ackerley Group, Inc. and the Initial Purchasers named therein
*5 Opinion of Graham & Dunn PC as to legality of securities
*7 Opinion of Graham & Dunn PC as to certain tax matters
*10.1 Credit Agreement dated January 22, 1999, by and among The Ackerley
Group, Inc., First Union National Bank, Fleet Bank, N.A., Union Bank
of California, N.A., KeyBank National Association and Bank of
Montreal, Chicago Branch
*10.2 Security Agreement dated January 22, 1999 between the Company and
First Union National Bank, as administrative agent
*10.3 Pledge Agreement dated as of January 22, 1999 between the Company and
First Union National Bank, as administrative agent
10.4 Composite Conformed Copy of Note Agreements between the Company and
certain insurance companies, dated as of December 1, 1989(3)
10.5 Amendment No. 1 dated October 18, 1991 to Note Agreements dated
December 1, 1989(4)
10.6 Agreements of Waiver and Amendment dated as of September 30, 1990,
relating to the Note Agreements(5)
10.7 Implementation and Waiver Agreement dated October 18, 1991(4)
10.8 The Company's Employee Stock Option Plan, as amended and restated on
March 4, 1996(6)
10.9 Nonemployee-Director's Equity Compensation Plan(7)
10.10 Premises Use and Occupancy Agreement between The City of Seattle and
SSI Sports, Inc. dated March 2, 1994(8)
10.11 Purchase and Sale Agreement between Sky Sites, Inc. and Ackerley
Airport Advertising, Inc., dated as of May 19, 1998(9)
10.12 Asset Purchase Agreement between Sinclair Communications, Inc. and The
Ackerley Group, Inc. dated as of September 25, 1998 relating to
WOKR(TV), Rochester, New York)(10)
10.13 Acquisition Agreement between Wicks Broadcast Group Limited
Partnership and AK Media Group, Inc. dated as of November 30, 1998
10.14 Asset Exchange Agreement among Benedek Broadcasting Corporation,
Benedek License Corporation, and AK Media Group, Inc. dated December
30, 1998
12 Computation of Ratio of Earnings to Fixed Charges
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
------- -------
<C> <S>
21 Subsidiaries of the Company
*23.1 Consent of Graham & Dunn PC (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
24 Powers of Attorney for each of Barry A. Ackerley, Gail A. Ackerley,
Deborah L. Bevier, M. Ian G.
Gilchrist, Michel C. Thielen, Denis M. Curley, and Keith W. Ritzmann
25 Statement of Eligibility and Qualification of Trustee on Form T-1
*99.1 Form of Letter of Transmittal
*99.2 Form of Notice of Guaranteed Delivery
*99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees
*99.4 Form of Letter to Clients
</TABLE>
- --------
* To be filed by amendment.
(1) Incorporated by reference to Exhibit 3.0 of the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998.
(2) Incorporated by reference to Exhibit 3.5 to the Company's 1997 Annual
Report on Form 10-K.
(3) Incorporated by reference to Exhibits 10.13 and 10.16, respectively, to
the Company's 1989 Annual Report on Form 10-K.
(4) Incorporated by reference to Exhibits 10.9, 10.10, and 10.16,
respectively, to the Company's 1991 Annual Report on Form 10-K.
(5) Incorporated by reference to Exhibit 10.20 to the Company's 1990 Annual
Report on Form 10-K.
(6) Incorporated by reference to Exhibit 10.10 to the Company's 1995 Annual
Report on Form 10-K.
(7) Incorporated by reference to Exhibit 99.1 to the Company's Registration
Statement on Form S-8, filed on May 14, 1996.
(8) Incorporated by reference to Exhibit 10.22 to the Company's 1994 Annual
Report on Form 10-K.
(9) Incorporated by reference to Exhibit 10 to the Company's Current Report
on Form 8-K, filed on July 15, 1998.
(10) Incorporated by reference to Exhibit 10 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1998.
<PAGE>
EXHIBIT 4.1
================================================================================
INDENTURE
DATED AS OF DECEMBER 14, 1998
AMONG
THE ACKERLEY GROUP, INC., AS ISSUER
THE GUARANTORS NAMED HEREIN
AND
THE BANK OF NEW YORK, AS TRUSTEE
$250,000,000
9% SENIOR SUBORDINATED NOTES DUE JANUARY 15, 2009
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
- ------------------------------------------------------- --------------------
<S> <C>
310(a)(1)............................................ 7.10
(a)(2)............................................... 7.10
(a)(3)............................................... N.A.
(a)(4)............................................... N.A.
(a)(5)............................................... 7.08; 7.10
(b).................................................. 7.08; 7.10; 12.02
(c).................................................. N.A.
311(a)............................................... 7.11
(b).................................................. 7.11
(c).................................................. N.A.
312(a)............................................... 2.05
(b).................................................. 12.03
(c).................................................. 12.03
313(a)............................................... 7.06
(b)(1)............................................... N.A.
(b)(2)............................................... 7.06
(c).................................................. 7.06; 12.02
(d).................................................. 7.06
314(a)............................................... 4.07; 4.09; 12.02
(b).................................................. N.A.
(c)(1)............................................... 12.04
(c)(2)............................................... 12.04
(c)(3)............................................... N.A.
(d).................................................. N.A.
(e).................................................. 12.12
(f).................................................. N.A
315(a)............................................... 7.01(b)
(b).................................................. 7.05; 12.02
(c).................................................. 7.01(a)
(d).................................................. 7.01(c)
(e).................................................. 6.11
316(a) (last sentence)............................... 2.09
(a)(1)(A)............................................ 6.05
(a)(1)(B)............................................ 6.04
(a)(2)............................................... N.A.
(b).................................................. 6.07
317(a)(1)............................................ 6.08
(a)(2)............................................... 6.09
(b).................................................. 2.04
318(a)............................................... 12.01
(c).................................................. 12.01
</TABLE>
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.............................................. 1
SECTION 1.02. INCORPORATION BY REFERENCE OF TIA........................ 26
SECTION 1.03. RULES OF CONSTRUCTION.................................... 26
ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING.......................................... 27
SECTION 2.02. EXECUTION AND AUTHENTICATION............................. 29
SECTION 2.03. REGISTRAR AND PAYING AGENT............................... 30
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST...................... 31
SECTION 2.05. HOLDER LISTS............................................. 31
SECTION 2.06. TRANSFER AND EXCHANGE.................................... 31
SECTION 2.07. REPLACEMENT SECURITIES................................... 49
SECTION 2.08. OUTSTANDING SECURITIES................................... 50
SECTION 2.09. TREASURY SECURITIES...................................... 50
SECTION 2.10. TEMPORARY SECURITIES..................................... 50
SECTION 2.11. CANCELLATION............................................. 51
SECTION 2.12. DEFAULTED INTEREST....................................... 51
SECTION 2.13. CUSIP NUMBER............................................. 51
SECTION 2.14. DEPOSIT OF MONEYS........................................ 52
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE....................................... 52
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED................... 52
SECTION 3.03. NOTICE OF REDEMPTION..................................... 53
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION........................... 54
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.............................. 54
SECTION 3.06. SECURITIES REDEEMED IN PART.............................. 54
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES.................................... 55
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.......................... 55
SECTION 4.03. LIMITATION ON RESTRICTED PAYMENTS........................ 55
SECTION 4.04. CORPORATE EXISTENCE...................................... 58
SECTION 4.05. PAYMENT OF TAXES AND OTHER CLAIMS........................ 59
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
SECTION 4.06. MAINTENANCE OF PROPERTIES AND INSURANCE.................. 59
SECTION 4.07. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT................ 59
SECTION 4.08. COMPLIANCE WITH LAWS..................................... 60
SECTION 4.09. SEC REPORTS.............................................. 61
SECTION 4.10. WAIVER OF STAY, EXTENSION OR USURY LAWS.................. 62
SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES............... 62
SECTION 4.12. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS...... 63
SECTION 4.13. LIMITATION ON DIVIDEND AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES.................... 63
SECTION 4.14. PROHIBITION ON INCURRENCE OF SENIOR SUBORDINATED
INDEBTEDNESS........................................... 64
SECTION 4.15. CHANGE OF CONTROL........................................ 64
SECTION 4.16. LIMITATION ON ASSET SALES................................ 66
SECTION 4.17. LIMITATION ON PREFERRED STOCK OF SUBSIDIARIES............ 70
SECTION 4.18. LIMITATION ON LIENS...................................... 70
SECTION 4.19. GUARANTEES OF CERTAIN INDEBTEDNESS....................... 70
SECTION 4.20. LIMITATION ON SALE AND LEASEBACK TRANSACTION............. 71
SECTION 4.21. LIMITATION ON LINE OF BUSINESS........................... 71
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. WHEN COMPANY MAY MERGE, ETC.............................. 71
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED........................ 72
ARTICLE 6
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT........................................ 73
SECTION 6.02. ACCELERATION............................................. 74
SECTION 6.03. OTHER REMEDIES........................................... 75
SECTION 6.04. WAIVER OF PAST DEFAULTS.................................. 76
SECTION 6.05. CONTROL BY MAJORITY...................................... 76
SECTION 6.06. LIMITATION ON SUITS...................................... 76
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT..................... 77
SECTION 6.08. COLLECTION SUIT BY TRUSTEE............................... 77
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM......................... 77
SECTION 6.10. PRIORITIES............................................... 78
SECTION 6.11. UNDERTAKING FOR COSTS.................................... 78
</TABLE>
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ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE......................................... 79
SECTION 7.02. RIGHTS OF TRUSTEES........................................ 80
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.............................. 82
SECTION 7.04. TRUSTEE'S DISCLAIMER...................................... 82
SECTION 7.05. NOTICE OF DEFAULT......................................... 82
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS............................. 83
SECTION 7.07. COMPENSATION AND INDEMNITY................................ 83
SECTION 7.08. REPLACEMENT OF TRUSTEE.................................... 84
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.......................... 85
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION............................. 86
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY..... 86
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. TERMINATION OF THE COMPANY'S OBLIGATIONS.................. 86
SECTION 8.02. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE.................... 89
SECTION 8.03. APPLICATION OF TRUST MONEY................................ 89
SECTION 8.04. REPAYMENT TO THE COMPANY.................................. 89
SECTION 8.05. REINSTATEMENT............................................. 90
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDER................................. 90
SECTION 9.02. WITH CONSENT OF HOLDERS................................... 91
SECTION 9.03. COMPLIANCE WITH TIA....................................... 92
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS......................... 92
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES..................... 93
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC........................... 93
ARTICLE 10
SUBORDINATION OF SECURITIES
SECTION 10.01. SECURITIES SUBORDINATED TO SENIOR DEBT.................... 94
SECTION 10.02. NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES......... 94
SECTION 10.03. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC............ 96
SECTION 10.04. PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION................. 97
SECTION 10.05. SUBROGATION............................................... 98
SECTION 10.06. OBLIGATIONS OF THE COMPANY UNCONDITIONAL.................. 98
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SECTION 10.07. NOTICE TO TRUSTEE......................................... 98
SECTION 10.08. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT....................................... 99
SECTION 10.09. TRUSTEE'S RELATION TO SENIOR DEBT......................... 100
SECTION 10.10. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR
OMISSIONS OF THE COMPANY OR HOLDERS OF SENIOR DEBT...... 100
SECTION 10.11. SECURITYHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF SECURITIES............................. 101
SECTION 10.12. THIS ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT.......... 101
SECTION 10.13. TRUSTEE'S COMPENSATION NOT PREJUDICED..................... 102
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TIA CONTROLS.............................................. 102
SECTION 11.02. NOTICES................................................... 102
SECTION 11.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.............. 103
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT........ 103
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE........................ 103
SECTION 11.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR................. 104
SECTION 11.07. LEGAL HOLIDAYS............................................ 104
SECTION 11.08. GOVERNING LAW............................................. 104
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS............. 104
SECTION 11.10. NO RECOURSE AGAINST OTHERS................................ 105
SECTION 11.11. SUCCESSORS................................................ 105
SECTION 11.12. DUPLICATE ORIGINALS....................................... 105
SECTION 11.13. SEVERABILITY.............................................. 105
</TABLE>
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EXHIBITS
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Exhibit A-1 Form of Global Security
Exhibit A-2 Form of Regulation S Temporary Global Security
Exhibit B Form of Certificate of Transfer
Exhibit C Form of Certificate of Exchange
Exhibit D Form of Certificate from Acquiring Institutional Accredited
Investor
Exhibit E Form of Guarantee Provisions
Exhibit F Form of Subsidiary Guarantee
___________________
Note: This Table of Contents shall not, for any purpose, be deemed to be part of
the Indenture.
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INDENTURE, dated as of December 14, 1998, by and between The Ackerley
Group, Inc., a Delaware corporation (the "COMPANY") and The Bank of New York, a
New York banking corporation, as trustee (the "Trustee").
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A GLOBAL SECURITY" means a global security in the form of Exhibit
A-1 hereto bearing the Global Security Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Securities sold in reliance on Rule 144A.
"ACCELERATION NOTICE" has the meaning provided in Section 6.02.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and not incurred by such Person or any of its Subsidiaries in connection
with, or in anticipation or contemplation of, such Person becoming a Subsidiary
of the Company or such acquisition, merger, or consolidation.
"ACQUIRED PREFERRED STOCK" means Preferred Stock of any Person or any
of its Subsidiaries at the time such Person becomes a Subsidiary of the Company
or at the time it merges or consolidates with the Company or any of its
Subsidiaries and not issued by such Person in connection with, or in
anticipation or contemplation of, such acquisition, merger, or consolidation
together with any other Preferred Stock of such Person, the proceeds of which
are used to refinance or replace such Person's Acquired Preferred Stock;
provided that (i) the maximum aggregate liquidation preference of any such
refinancing or replacement Preferred Stock does not exceed the aggregate
liquidation preference of the Acquired Preferred Stock being refinanced or
replaced at the time of such refinancing or replacement and (ii) such
refinancing or replacement Preferred Stock (other than Qualified Capital Stock)
(x) shall not mature or become mandatorily redeemable prior to the maturity of
the Acquired Preferred Stock being refinanced or replaced and (y) shall have a
Weighted Average Life to Maturity greater than
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either (1) the Weighted Average Life to Maturity of the Acquired Preferred Stock
being refinanced or replaced or (2) the remaining Weighted Average Life to
Maturity of the Securities.
"ADJUSTED NET ASSETS" of a Guarantor at any date shall mean the lesser
of the amount by which (x) the fair value of the property of such Guarantor
exceeds the total amount of its liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date), but excluding liabilities under
the Guarantee of such Guarantor at such date, and (y) the present fair salable
value of the assets of such Guarantor at such date exceeds the amount that will
be required to pay the probable liability of such Guarantor on its debts (after
giving effect to all other fixed and contingent liabilities incurred or assumed
on such date and after giving effect to any collection from any Subsidiary of
such Guarantor in respect of the obligations of such Subsidiary under the
Guarantee), excluding debt in respect of such Guarantor's Guarantee, as they
become absolute and matured.
"AFFILIATE" of any Person means any other Person who, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AFFILIATE TRANSACTION" has the meaning provided in Section 4.11.
"AGENT" means any Registrar, Paying Agent or Co-Registrar.
"APPLICABLE PROCEDURES" has the meaning provided in Section 2.01(d).
"ASSET ACQUISITION" means (i) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be consolidated or merged with
the Company or any Subsidiary of the Company or (ii) the acquisition by the
Company or any Subsidiary of the Company of assets of any Person comprising a
division or line of business of such Person.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment, or other transfer for value, whether in a single
transaction or
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in a series of related transactions, by the Company or any of its Subsidiaries
to any Person other than the Company or a Wholly-Owned Subsidiary of the Company
(excluding any Sale and Leaseback Transaction or any pledge of assets or stock
by the Company or any of its Subsidiaries) of the Company of (i) any Capital
Stock of any Subsidiary of the Company (other than directors' qualifying shares)
or (ii) any other property or assets of the Company or any Subsidiary of the
Company other than in the ordinary course of business; provided that for
purposes of Section 4.16, Asset Sales shall not include (a) a transaction or
series of related transactions for which the Company or its Subsidiaries receive
aggregate consideration of less than $500,000, (b) Asset Swaps made in
compliance with the last paragraph of Section 4.16, (c) transactions permitted
under Section 5.01, or (d) any Contract Buy Out.
"ASSET SWAP" means the execution of a definitive agreement, subject
only to approval of the Federal Communications Commission and other customary
closing conditions, that the Company in good faith believes will be satisfied,
for a substantially concurrent purchase and sale, or exchange, of Productive
Assets between the Company or any of its Subsidiaries and another Person or
group of affiliated Persons; provided that any amendment to or waiver of any
closing condition which individually or in the aggregate is material to the
Asset Swap shall be deemed to be a new Asset Swap.
"ATTRIBUTABLE VALUE" in respect of a Sale and Leaseback Transaction of
any property means, as at the time of determination, the greater of (i) the fair
market value of the property subject to such arrangement (as determined in good
faith by the Board of Directors of the Company) or (ii) the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such arrangement.
"BANKRUPTCY LAW" means Title 11, United States Code or any similar
federal, state or foreign law for the relief of debtors.
"BLOCKAGE PERIOD" shall have the meaning provided in Section 10.02.
"BOARD OF DIRECTORS" means, with respect to any Person, the board of
directors (or any other equivalent governing body) of such Person or any
committee of the board of directors of such Person duly authorized, with respect
to any particular
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matter, to exercise the power of the board of directors of such Person.
"BOARD RESOLUTION" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"BUSINESS DAY" means a day that is not a Legal Holiday.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations, or other equivalents
(however designated) of capital stock, including each class of common stock and
Preferred Stock of such Person and (ii) with respect to any Person that is not a
corporation, any and all partnership or other equity interests of such Person.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the obligation
of such Person to pay rent or other amounts under a lease to which such Person
is a party that is required to be classified and accounted for as a capital
lease obligation under GAAP and, for purposes of this definition, the amount of
such obligation at any date shall be the capitalized amount of such obligation
at such date, determined in accordance with GAAP.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc.; (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a rating of at
least A-1 from Standard & Poor's Corporation or at least P-1 from Moody's
Investors Service, Inc.; (iv) certificates of deposit or bankers' acceptances
maturing within one year from the date of acquisition thereof issued by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia or any U.S. branch of a foreign bank
having at the date of acquisition thereof combined capital and surplus of not
less than $50,000,000; (v) repurchase obligations with a term of not more than
seven days for underlying
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securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iv) above; and (vi) investments
in money market funds which invest substantially all their assets in securities
of the types described in clauses (i) through (v) above.
"CEDEL" means Cedel Bank, S.A.
A "CHANGE OF CONTROL" of the Company will be deemed to have occurred
at such time as (i) any Person or group of related Persons for purposes of
Section 13(d) of the Exchange Act ("Group"), other than Permitted Holders,
becomes the beneficial owner (as defined under Rule 13d-3 or any successor rule
or regulation promulgated under the Exchange Act), directly or indirectly, of
50% or more of the total voting power of the Common Stock of the Company, (ii)
any Person or Group, other than Permitted Holders, becomes the beneficial owner,
directly or indirectly, of more than 30% of the total voting power of the Common
Stock of the Company, and the Permitted Holders beneficially own, directly or
indirectly in the aggregate, a lesser percentage of the total voting power of
the Common Stock of the Company than such Person or Group and do not have the
right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors (or any analogous governing
body) of the Company, (iii) there shall be consummated any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which the Common Stock of the Company would be
converted into cash, securities or other property, other than a merger or
consolidation of the Company in which the holders of the Common Stock of the
Company outstanding immediately prior to the consolidation or merger hold,
directly or indirectly, at least a majority of the Common Stock of the surviving
corporation immediately after such consolidation or merger or (iv) 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 has been approved by 66 2/3% of the
directors then still in office who either were directors at the beginning of
such period or whose election or recommendation for election was previously so
approved) cease to constitute a majority of the Board of Directors of the
Company.
"CHANGE OF CONTROL DATE" has the meaning provided in Section 4.15.
"CHANGE OF CONTROL OFFER" has the meaning provided in Section 4.15.
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"CHANGE OF CONTROL PAYMENT DATE" has the meaning provided in Section
4.15.
"COMMON STOCK" means, with respect to any Person, any and all shares,
interests, or other participations in, and other equivalents (however designated
and whether voting, super-voting or non-voting) of, such person's common stock
whether outstanding at the Issue Date or issued thereafter, and includes,
without limitation, all series and classes of such common stock.
"COMPANY" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor and also includes for the purposes of any provision contained herein
and required by the TIA any other obligor on the Securities.
"CONSOLIDATED EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary or
non-recurring gains or losses), (B) Consolidated Interest Expense, and (C)
Consolidated Non-Cash Charges, all as determined on a consolidated basis for
such Person and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for
any period, without duplication, the sum of (i) the interest expense of such
Person and its Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount, (b) the net cost under Interest Swap Obligations
(including any amortization of discounts), (c) the interest portion of any
deferred payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit, bankers , acceptance financing
or similar facilities, and (e) all accrued interest and (ii) the interest
component of Capitalized Lease Obligations paid or accrued by such Person and
its Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED NET INCOME" of any Person means, for any period, the
aggregate net income (or loss) of such Person and its Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; provided
that there shall be excluded therefrom, without duplication, (a) gains and
losses from Asset Sales (without regard to the $500,000 limita-
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tion set forth in the definition thereof) or abandonments or reserves relating
thereto and the related tax effects, (b) items classified as extraordinary or
nonrecurring gains and losses, and the related tax effects according to GAAP,
(c) the net income (or loss) of any Person acquired in a pooling of interests
transaction accrued prior to the date it becomes a Subsidiary of such first
referred to Person or is merged or consolidated with it or any of its
Subsidiaries, (d) the net income of any Subsidiary to the extent that the
declaration of dividends or similar distributions by that Subsidiary of that
income is restricted by contract, operation of law, or otherwise, and (e) the
net income of any Person, other than a Subsidiary, except to the extent of the
lesser of (x) dividends or distributions paid to such first referred to Person
or its Subsidiary by such Person and (y) the net income of such Person (but in
no event less than zero), and the net loss of such Person shall be included only
to the extent of the aggregate Investment of the first referred to Person or a
consolidated Subsidiary of such Person.
"CONSOLIDATED NON-CASH CHARGES" means, with respect to any Person for
any period, the aggregate depreciation, amortization, and other non-cash
expenses of such Person and its Subsidiaries reducing Consolidated Net Income of
such Person and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP (excluding any such charges constituting an
extraordinary or nonrecurring item).
"CONTRACT BUY OUT" means the involuntary disposition or termination
(including, without limitation, pursuant to buy out) of a contract between a
media representation company and a client station.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution and delivery of this
Indenture is located at 101 Barclay Street, Floor 21W, New York, New York 10286.
"CREDIT AGREEMENT" means the Credit Agreement, dated as of January 28,
1998, among the Company, the lenders thereto and First Union National Bank, a
national banking association, as administrative agent, Fleet Bank, N.A., as
documentation agent, and Union Bank of California, N.A. and KeyBank National
Association, as co-agents, as such agreement may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing, or otherwise restructuring all or any portion of the Indebtedness
under such agreement or any successor or replacement agreement
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and whether (i) by the same or any other agent, lender, or group of lenders,
(ii) under the same or different terms, including but without limitation,
amounts available for borrowing, or (iii) effective immediately after or
subsequent to any termination of a previous Credit Agreement.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DEFAULT" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be an Event of
Default.
"DEFAULT NOTICE" shall have the meaning provided in Section 10.02.
"DEFINITIVE SECURITY" means a certificated Security registered in the
name of the Holder thereof and issued in accordance with Section 2.06 hereof, in
the form of Exhibit A-1 hereto except that such Security shall not bear the
Global Security Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Security" attached thereto.
"DEPOSITARY" means, with respect to the Securities issuable or issued
in whole or in part in global form, the Person specified in Section 2.03 hereof
as the Depositary with respect to the Securities, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"DESIGNATED GUARANTOR SENIOR DEBT" means Indebtedness guaranteed by a
Guarantor under or in respect of Indebtedness constituting Guarantor Senior Debt
which, at the time of determination, has an aggregate principal amount of at
least $25,000,000 and is specifically designated in the instrument evidencing
such Guarantor Senior Debt as "Designated Guarantor Senior Debt" by such
Guarantor.
"DESIGNATED SENIOR DEBT" means (i) Indebtedness under or in respect of
the Credit Agreement and (ii) any other Indebtedness constituting Senior Debt
which, at the time of determination, has an aggregate principal amount of at
least $50,000,000 and is specifically designated in the instrument evidencing
such Senior Debt as "Designated Senior Debt" by the Company.
"DISCHARGED" has the meaning provided in Section 8.01.
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"DISQUALIFIED CAPITAL STOCK" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof (except, in each case,
upon the occurrence of a Change of Control), in whole or in part, on or prior to
the final maturity date of the Securities.
"EVENT OF DEFAULT" has the meaning provided in Section 6.01.
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"EXCHANGE OFFER" has the meaning set forth in the Registration Rights
Agreement.
"EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth in
the Registration Rights Agreement.
"EXCHANGE SECURITIES" means the Securities issued in the Exchange
Offer pursuant to Section 2.06(f) hereof.
"FUNDING GUARANTOR" has the meaning provided in Section 12.06 of
Exhibit E attached hereto.
"FUNDS" has the meaning provided in Section 8.01.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America as of the Issue Date.
"GLOBAL SECURITIES" means, individually and collectively, each of the
Restricted Global Securities and the Unrestricted Global Securities, in the form
of Exhibit A-1 and Exhibit A-2 hereto issued in accordance with Section 2.01,
2.06(b)(iv), 2.06(d)(i), 2.06(d)(ii), 2.06(d)(iii) or 2.06(f) hereof.
"GLOBAL SECURITY LEGEND" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Securities issued
under this Indenture.
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"GUARANTEE" means any guarantee of the Securities, on a senior
subordinated basis, by a Subsidiary of the Company issued in accordance with
Section 4.19.
"GUARANTOR" means any of the Company's Subsidiaries that in the future
executes a supplemental indenture in which such Subsidiary agrees to be bound by
the terms of this 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.
"GUARANTOR SENIOR DEBT" means any Indebtedness of a Guarantor
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law), whether
outstanding on the Issue Date or thereafter created, incurred, or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Guarantee of such Guarantor. Without limiting the generality of the foregoing,
Guarantor Senior Debt shall also include the principal of, premium, if any,
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable law)
on, and all other amounts owing in respect of, and all monetary obligations of
every nature under, (x) the Credit Agreement, including, without limitation,
obligations to pay principal and interest, reimbursement obligations under
letters of credit, fees, expenses, and indemnities and (y) all Interest Swap
Obligations. Notwithstanding the foregoing, Guarantor Senior Debt shall not
include any of the following amounts (whether or not constituting Indebtedness
as defined in this Indenture): (i) any Indebtedness of a Guarantor to a
Subsidiary of such Guarantor; (ii) Indebtedness and other amounts owing to trade
creditors incurred in connection with obtaining goods, materials or services;
(iii) Indebtedness represented by Disqualified Capital Stock; (iv) any liability
for federal, state, local or other taxes owed or owing by a Guarantor; and (v)
any Indebtedness which is, by its express terms, subordinated in right of
payment to any other Indebtedness of such Guarantor.
"HOLDER" or "SECURITYHOLDER" means the Person in whose name a Security
is registered on the Registrar's books.
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"INDEBTEDNESS" means (without duplication), with respect to any
Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, that is for borrowed money (whether or not the recourse
of the lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables, and other accrued liabilities arising in the ordinary
course of business and accrued expenses) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and shall also include, to the extent
not otherwise included (i) any Capitalized Lease Obligations, (ii) obligations
secured by a lien to which the property or assets owned or held by such Person
is subject, whether or not the obligation or obligations secured thereby shall
have been assumed, (iii) guarantees of items of other Persons which would be
included within this definition for such other Persons (whether or not such
items would appear upon the balance sheet of the guarantor), (iv) all
obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance, or similar credit transaction, (v) Disqualified Capital
Stock of such Person, and (vi) obligations of any such Person under any Interest
Swap Obligations applicable to any of the foregoing (if and to the extent such
Interest Swap Obligations would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP). The amount of Indebtedness of
any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency giving
rise to the obligation, provided that (i) the amount outstanding at any time of
any Indebtedness issued with original issue discount is the principal amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP, (ii) Indebtedness shall not include any liability for federal, state,
local, or other taxes and (iii) the principal amount of any Indebtedness shall
be reduced by the aggregate amount of Cash Equivalents of such Person and its
Subsidiaries that are pledged to secure, and are required to be applied, solely
to the repayment of the principal of such Indebtedness. Notwithstanding any
other provision of the foregoing definition, any trade payable or broadcast
program liability arising from the purchase of goods or materials or for
programming or services obtained in the ordinary course of business shall not be
deemed
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to be "Indebtedness" of such Person or any of its Subsidiaries for purposes of
this definition.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial interest
in a Global Security through a Participant.
"INITIAL PURCHASERS" means Salomon Smith Barney Inc., First Union
Capital Markets, a division of Wheat First Securities, Inc. and Fleet
Securities, Inc.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"INTEREST PAYMENT DATE" means the stated maturity of an installment of
interest on the Securities.
"INTEREST SWAP OBLIGATIONS" means the obligations of any Person under
any interest rate protection agreement, interest rate future, interest rate
option, interest rate swap, interest rate cap, or other interest rate hedge or
arrangement.
"INVESTMENT" means (i) any transfer or delivery of cash, stock, or
other property of value in exchange for Indebtedness, stock, or other security
or ownership interest in any Person by way of loan, advance, capital
contribution, guarantee, or otherwise and (ii) an investment deemed to have been
made by the Company at the time any entity which was a Subsidiary of the Company
ceases to be such a Subsidiary in an amount equal to the value of the loans and
advances made, and any remaining ownership interest in, such entity immediately
following such entity ceasing to be a Subsidiary of the Company. The issuance
of Qualified Capital Stock of the Company shall not constitute an Investment.
The amount of any non-cash Investment shall be the fair market value of such
Investment, as determined conclusively in good faith by management of the
Company unless the fair market value of such Investment exceeds $5,000,000, in
which case the fair market value shall be determined conclusively in good faith
by the Board of Directors of the Company at the time such Investment is made.
"ISSUE DATE" means the date of original issuance of the Series A
Securities.
"LEGAL HOLIDAY" has the meaning provided in Section 11.07.
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"LEVERAGE RATIO" shall mean, as to any Person, the ratio of (i) the
sum of the aggregate outstanding amount of Indebtedness of such Person and its
Subsidiaries as of the date of calculation on a consolidated basis in accordance
with GAAP to (ii) the Consolidated EBITDA of such Person for the four full
fiscal quarters (the "FOUR QUARTER PERIOD") ending on or prior to the date of
determination.
For purposes of this definition, the aggregate outstanding principal
amount of Indebtedness of the Person and its Subsidiaries for which such
calculation is made shall be determined on a pro forma basis as if the
Indebtedness giving rise to the need to perform such calculation had been
incurred and the proceeds therefrom had been applied, and all other transactions
in respect of which such Indebtedness is being incurred had occurred, on the
last day of the Four Quarter Period. In addition to the foregoing, for purposes
of this definition, "CONSOLIDATED EBITDA" shall be calculated on a pro forma
basis after giving effect to (i) the incurrence of the Indebtedness of such
Person and its Subsidiaries (and the application of the proceeds therefrom)
giving rise to the need to make such calculation and any incurrence (and the
application of the proceeds therefrom) or repayment of other Indebtedness, other
than the incurrence or repayment of Indebtedness pursuant to working capital
facilities, at any time subsequent to the beginning of the Four Quarter Period
and on or prior to the date of determination, as if such incurrence (and the
application of the proceeds thereof), or the repayment, as the case may be,
occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or
Asset Acquisitions (including, without limitation, any Asset Acquisition giving
rise to the need to make such calculation as a result of such Person or one of
its Subsidiaries (including any Person who becomes a Subsidiary as a result of
such Asset Acquisition) incurring, assuming or otherwise becoming liable for
Indebtedness) at any time on or subsequent to the first day of the Four Quarter
Period and on or prior to the date of determination, as if such Asset Sale or
Asset Acquisition (including the incurrence, assumption, or liability for any
such Indebtedness and also including any Consolidated EBITDA associated with
such Asset Acquisition) occurred on the first day of the Four Quarter Period.
Furthermore, in calculating Consolidated Interest Expense, for purposes of the
calculation of Consolidated EBITDA, (i) interest on Indebtedness determined on a
fluctuating basis as of the date of determination (including Indebtedness
actually incurred on the date of the transaction giving rise to the need to
calculate the Leverage Ratio) and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest on such Indebtedness as in effect on the date of
determination and (ii) notwithstanding (i)
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above, interest determined on a fluctuating basis, to the extent such interest
is covered by Interest Swap Obligations, shall be deemed to accrue at the rate
per annum resulting after giving effect to the operation of such agreements.
"LIEN" means any lien, mortgage, deed of trust, pledge, security
interest, charge, or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).
"MATURITY DATE" means January 15, 2009.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents (including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents) received by the Company or any of its Subsidiaries from such Asset
Sale net of (i) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting, and investment
banking fees and sales commissions, recording fees, title insurance premiums,
appraisers fees, and costs reasonably incurred in preparation of any asset or
property for sale), (ii) taxes paid or reasonably estimated to be payable
(calculated based on the combined state, federal, and foreign statutory tax
rates applicable to the Company or the Subsidiary engaged in such Asset Sale),
and (iii) repayment of Indebtedness secured by assets subject to such Asset
Sale; provided that if the instrument or agreement governing such Asset Sale
requires the transferor to maintain a portion of the purchase price in escrow
(whether as a reserve for adjustment of the purchase price or otherwise) or to
indemnify the transferee for specified liabilities in a maximum specified
amount, the portion of the cash or Cash Equivalents that is actually placed in
escrow or segregated and set aside by the transferor for such indemnification
obligation shall not be deemed to be Net Cash Proceeds until the escrow
terminates or the transferor ceases to segregate and set aside such funds, in
whole or in part, and then only to the extent of the proceeds released from
escrow to the transferor or that are no longer segregated and set aside by the
transferor.
"NET PROCEEDS OFFER" has the meaning provided in Section 4.16.
"NON-U.S. PERSON" means a person who is not a U.S. person, as defined
in Regulation S.
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"OBLIGATIONS" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages, and other
liabilities payable under the documentation governing, or otherwise relating to,
any Indebtedness.
"OFFICER" means, with respect to any Person, the Chairman of the
Board, any Co-Chairman, the Chief Executive Officer, the President, any Co-
President, any Vice President, the Chief Financial Officer, the Treasurer, the
Controller, or the Secretary of such Person, or any other officer designated by
the Board of Directors serving in a similar capacity.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by two officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 11.04 and 11.05, as they relate to the making of an
Officers' Certificate.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
11.04 and 11.05, as they relate to the giving of an Opinion of Counsel.
"PARTICIPANT" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"PAYING AGENT" has the meaning provided in Section 2.03, except that,
during the continuance of a Default or Event of Default and for the purposes of
Articles 3 and 8 and Sections 4.15 and 4.16, the Paying Agent shall not be the
Company or any Affiliate of the Company.
"PERMITTED BUSINESS" means the businesses engaged in by the Company
and its Subsidiaries on the date hereof and activities reasonably related
thereto.
"PERMITTED HOLDERS" means (i) Barry A. Ackerley, his immediate family,
his grandchildren, and his heirs (in each case including adopted persons), (ii)
any trusts controlled by or for the exclusive benefit of the individuals
referred to in clause (i) above or the executor or administrator of the estate
or other legal representative of the individuals referred to in clause (i), and
(iii) any other Person of which at least a majority of the outstanding voting
stock is owned, of record and
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beneficially, by any of the Persons referred to in clause (i) or (ii) above.
"PERMITTED INDEBTEDNESS" means, without duplication, (i) the Series A
Securities originally issued on the Issue Date and any Series B Securities
issued in exchange therefore; (ii) additional Indebtedness of the Company
incurred pursuant to the Credit Agreement in an aggregate principal amount not
to exceed $100,000,000; (iii) Interest Swap Obligations; provided that such
Interest Swap Obligations are entered into to protect the Company from
fluctuations in interest rates of its Indebtedness; (iv) Refinancing
Indebtedness; (v) Indebtedness owed by the Company to any Subsidiary or by any
Subsidiary to the Company or any Subsidiary of the Company; (vi) Purchase Money
Indebtedness not to exceed $5,000,000 in aggregate principal amount at any time
outstanding; (vii) Capitalized Lease Obligations not to exceed $15,000,000 in
aggregate capitalized amount at any time outstanding; (viii) Indebtedness of the
Company or any Subsidiary incurred in respect of performance and payment bonds
(other than in respect of Indebtedness); (ix) guarantees by Subsidiaries of any
Indebtedness permitted to be incurred pursuant to this Indenture; (x) guarantees
of Indebtedness, not to exceed $25,000,000 in the aggregate amount at any time
outstanding, owing by Persons who are parties to time brokerage agreements with
the Company, in respect of Indebtedness of such Persons arising in connection
with such time brokerage agreements; and (xi) Indebtedness of the Company or any
of its Subsidiaries in addition to the foregoing not to exceed $10,000,000 in
principal amount outstanding at any time (which amount may, but need not, be
incurred under the Credit Agreement).
"PERMITTED INVESTMENTS" means (i) Investments received by the Company
or its Subsidiaries as consideration for a sale of assets, including an Asset
Sale effected in compliance with Section 4.16, (ii) Investments by the Company
or any Wholly-Owned Subsidiary of the Company in any Wholly-Owned Subsidiary of
the Company (whether existing on the Issue Date or created thereafter) or any
Person that after such Investments, and as a result thereof, becomes a Wholly-
Owned Subsidiary of the Company and Investments in the Company by any Wholly-
Owned Subsidiary of the Company, (iii) cash and Cash Equivalents, (iv)
Investments in securities of trade creditors, wholesalers, or customers received
pursuant to any plan of reorganization or similar arrangement, (v) Investments
consisting of loans and advances to employees in the ordinary course of business
not to exceed an aggregate amount of $5,000,000 at any time outstanding, (vi)
extensions of trade credit in the ordinary course of business, (vii) prepaid
expenses incurred in the ordinary course of business, (viii) Interest Swap
Obligations, and (ix)
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additional Investments in an aggregate amount not to exceed $5,000,000 at any
time outstanding.
"PERMITTED LIENS" means (i) Liens for taxes, assessments, or other
governmental charges or statutory obligations that are not delinquent or remain
payable without penalty or that are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established in accordance
with GAAP (if so required), (ii) Liens of carriers, warehousemen, mechanics,
materialmen, landlords, and other similar Liens imposed by law incurred in the
ordinary course of business for sums not constituting borrowed money that are
not overdue for a period of more than 60 days or that are being contested in
good faith by appropriate proceedings, (iii) pledges or deposits to secure
obligations under workers' compensation, unemployment insurance, or similar
legislation, (iv) Liens to secure performance bonds or other obligations of a
like nature (other than for borrowed money), incurred in the ordinary course of
business, (v) easements, rights-of-way, restrictions, minor defects or
irregularities in title, and other similar charges or encumbrances incurred in
the ordinary course of business not interfering in any material respect with the
business of the Company or its Subsidiaries, (vi) Liens upon specific items of
inventory or other goods and proceeds of any Person securing such Person's
obligations in respect of letters of credit or bankers' acceptances issued or
created for the account of such Person to facilitate the purchase, shipment, or
storage of such inventory or other goods in the ordinary course of business,
(vii) judgment and attachment Liens not giving rise to an Event of Default,
(viii) leases or subleases granted to others in the ordinary course of business
not interfering in any material respect with the business of the Company or its
Subsidiaries, (ix) any interest or title of a lessor in the property subject to
any lease, whether characterized as capitalized or operating other than any such
interest or title resulting from or arising out of a default by the Company or
its Subsidiaries of its obligations under such lease, (x) Liens arising from
filing UCC financing statements for precautionary purposes in connection with
true leases of personal property that are otherwise permitted under this
Indenture and under which the Company or any of its Subsidiaries is a lessee,
(xi) Liens securing Purchase Money Indebtedness permitted under clause (vi) of
the definition of Permitted Indebtedness; provided that any such Lien (a) shall
attach to the property financed by the underlying Purchase Money Indebtedness
(the "Subject Property") concurrently with or within ten days after the
acquisition thereof by the Company or a Subsidiary, and (b) shall not encumber
any property of the Company or any of its Subsidiaries other than the Subject
Property, (xii) Liens
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attributable to Capitalized Lease Obligations permitted under clause (vii) of
the definition of Permitted Indebtedness; provided that any such Lien does not
extend to any property other than the property subject to the underlying lease,
(xiii) any other Liens imposed by operation of law which do not materially
affect the Company's or its Subsidiaries' ability to perform their obligations
under the Securities and this Indenture and renewals and extensions thereof
which do not extend to any additional property and do not increase the amount
secured and (xiv) Liens in existence on the Issue Date and any extension,
renewal, or replacement, in whole or in part, thereof; provided that any such
extension, renewal, or replacement is not materially more restrictive than the
Lien being so extended, renewed, or replaced and does not extend to any property
other than the property encumbered by the original Lien.
"PERMITTED SECURITIES" means (i) Qualified Capital Stock issued by the
Company, (ii) securities substantially identical to the Securities issued by the
Company in payment of interest accrued thereon and (iii) securities issued by
the Company which are subordinated to the Senior Debt at least to the same
extent as the Securities and having a Weighted Average Life to Maturity at least
equal to the remaining Weighted Average Life to Maturity of the Securities (the
issuance of such subordinated securities to be consented to by the holders of at
least a majority of the outstanding amount of Senior Debt consisting of each
class of Designated Senior Debt then outstanding, which subordinated securities
will be issued in exchange for outstanding Securities or to pay interest accrued
on outstanding Securities).
"PERSON" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"PREFERRED STOCK" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"PRINCIPAL" of any Indebtedness (including the Securities) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
2.06(g)(i) to be placed on all Securities issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
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"PROCEEDS PURCHASE DATE" shall have the meaning provided in Section
4.16.
"PRODUCTIVE ASSETS" means assets of a kind used or usable by the
Company and its Subsidiaries in a Permitted Business.
"PUBLIC EQUITY OFFERING" means an underwritten, fully registered
public offering of Capital Stock (other than Disqualified Capital Stock) of the
Company pursuant to an effective registration statement filed with the
Commission in accordance with the Securities Act, the gross proceeds of which
are at least $25,000,000.
"QUALIFIED CAPITAL STOCK" means any Capital Stock that is not
Disqualified Capital Stock.
"QUALIFIED INSTITUTIONAL BUYER" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"REDEMPTION DATE" means, with respect to any Securities, the Maturity
Date of such Security or the earlier date on which such Security is to be
redeemed by the Company pursuant to the terms of the Securities.
"REDEMPTION PRICE" shall have the meaning provided in Section 3.03.
"REFINANCING INDEBTEDNESS" means Indebtedness of the Company and/or
any Subsidiary of the Company to the extent the proceeds thereof are used solely
to refinance (whether by amendment, renewal, extension, refunding, or
defeasance) Indebtedness of the Company and/or any Subsidiary of the Company, in
each such event, incurred in accordance with Section 4.12 (other than pursuant
to clause (ii), (iii), (v), (vi), (vii), (viii), (ix) or (x) of the definition
of Permitted Indebtedness); provided that (a) Indebtedness of the Company may
not be refinanced with Indebtedness of any Subsidiary of the Company, (b) the
principal amount of Refinancing Indebtedness incurred pursuant to this
definition (or, if such Refinancing Indebtedness provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof, the accreted value of such Indebtedness)
shall not exceed the principal amount or accreted value, as the case may be, of
the Indebtedness refinanced, plus the amount of any premium required to be paid
in connection with such refinancing pursuant to the terms of such Indebtedness
or the amount of any premium reasonably determined by the Board of Directors as
necessary to accomplish such refinancing
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by means of a tender offer or privately negotiated purchase, plus the amount of
reasonable expenses in connection therewith, (c) such Refinancing Indebtedness
(x) shall have no scheduled principal payment prior to the final maturity of the
Indebtedness being refinanced and (y) shall have a Weighted Average Life to
Maturity greater than either (1) the Weighted Average Life to Maturity of the
Indebtedness refinanced or (2) the remaining Weighted Average Life to Maturity
of the Securities and (d) if the Indebtedness to be refinanced is expressly
subordinated in right of payment in any manner to any other Indebtedness of the
Company or a Subsidiary of the Company, as the case may be, the Indebtedness to
be incurred pursuant to this definition shall also be subordinated on terms no
more favorable to the holders of such Refinancing Indebtedness than the
subordination terms of the Indebtedness being refinanced.
"REGISTERED EXCHANGE OFFER" means the consummation of the offer to
exchange the Series B Securities for all of the outstanding Series A Securities
in accordance with the Registration Rights Agreement.
"REGISTRAR" has the meaning provided in Section 2.03.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the Issue Date, by and among the Company and the Initial
Purchasers, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"REGULATION S" means Regulation S under the Securities Act.
"REGULATION S GLOBAL SECURITY" means a Regulation S Temporary Global
Security or Regulation S Permanent Global Security, as appropriate.
"REGULATION S PERMANENT GLOBAL SECURITY" means a permanent global
Security in the form of Exhibit A-1 hereto bearing the Global Security Legend
and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Regulation S
Temporary Global Security upon expiration of the Restricted Period.
"REGULATION S TEMPORARY GLOBAL SECURITY" means a temporary global
Security in the form of Exhibit A-2 hereto bearing the Global Security Legend
and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee, issued in a
denomination
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equal to the outstanding principal amount of the Securities initially sold in
reliance on Rule 903 of Regulation S.
"REPRESENTATIVE" means the indenture trustee or other trustee, agent,
or representative in respect of any Designated Senior Debt; provided that if,
and for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times constitute
the holders of a majority in outstanding principal amount of such Designated
Senior Debt.
"RESTRICTED DEFINITIVE SECURITY" means a Definitive Security bearing
the Private Placement Legend.
"RESTRICTED GLOBAL SECURITY" means a Global Security bearing the
Private Placement Legend.
"RESTRICTED PAYMENT" has the meaning provided in Section 4.03.
"RESTRICTED PERIOD" means the "Distribution Compliance Period" as
defined in Regulation S.
"RESTRICTED SECURITY" as defined in Rule 144(a)(3) under the
Securities Act; provided that the Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any Security
constitutes a Restricted Security.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated the Securities Act.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Subsidiary of any property, whether owned by
the Company or any Subsidiary at the Issue Date or later acquired, which has
been or is to be sold or transferred by the Company or such Subsidiary to such
Person or to any other Person from whom funds have been or are to be advanced by
such Person on the security of
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such property; provided that any transaction which the Company elects to treat
as an Asset Sale and to apply the proceeds therefrom in accordance with Section
4.16 shall not be deemed to be a Sale and Leaseback Transaction.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means the Series A Securities and Series B Securities, as
amended or supplemented from time to time in accordance with the terms hereof,
that are issued pursuant to this Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SENIOR DEBT" means any Indebtedness of the Company (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law), whether outstanding on the
Issue Date or thereafter created, incurred or assumed, unless, in the case of
any particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Securities. Without
limiting the generality of the foregoing, Senior Debt shall also include the
principal of premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other amounts owing in respect
of, and all monetary obligations of every nature under, (x) the Credit
Agreement, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses, and
indemnities, and (y) all Interest Swap Obligations. Notwithstanding the
foregoing, Senior Debt shall not include any of the following amounts ( whether
or not constituting Indebtedness as defined in this Indenture): (i) any
Indebtedness of the Company to a Subsidiary of the Company; (ii) Indebtedness
and other amounts owing to trade creditors incurred in connection with obtaining
goods, materials or services; (iii) Indebtedness represented by Disqualified
Capital Stock; (iv) any liability for federal, state, local, or other taxes owed
or owing by the Company; and (v) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of the
Company, including Indebtedness under the Subordinated Note Agreements.
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"SERIES A SECURITIES" means the 9% Series A Senior Subordinated Notes
due January 15, 2009, issued, authenticated and delivered under this Indenture,
as amended or supplemented from time to time pursuant to the terms of this
Indenture.
"SERIES B SECURITIES" means the 9% Series B Senior Subordinated Notes
due January 15, 2009 (the terms of which are identical to the Series A
Securities except that, unless any Series B Securities shall be issued as
Private Exchange Securities (as defined in the Registration Rights Agreement),
the Series B Securities shall be registered under the Securities Act, and shall
not contain the Private Placement Legend on the face of the form of the Series A
Securities), to be issued in exchange for the Series A Securities pursuant to
the Registered Exchange Offer and this Indenture or the Private Exchange (as
defined in the Registration Rights Agreement).
"SHELF REGISTRATION" means the Shelf Registration as defined in the
Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means for any Person each Subsidiary of such
Person which (i) for the most recent fiscal year of such Person accounted for
more than 10% of the consolidated net income of such Person or (ii) as at the
end of such fiscal year, was the owner of more than 10% of the consolidated
assets of such Person.
"SUBORDINATED NOTE AGREEMENTS" means the Note Agreement, dated as of
December 1, 1988, regarding the 11.20% Senior Subordinated Notes, Series B, due
December 15, 1998 by and among the Company and the purchasers named in Schedule
I thereto, as amended, and the Note Agreement, dated as of December 1, 1989,
regarding the 10.48% Senior Subordinated Notes due December 15, 2000, by and
among the Company and the purchasers named in Schedule I thereto, as amended.
"SUBSIDIARY," with respect to any Person, (i) means any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the interests entitled to vote in
the election or replacement of directors, managers or trustees thereof (or other
Person performing similar functions) are at the time, directly or indirectly,
owned by such Person. Notwithstanding anything in this Indenture to the
contrary, all references to the Company and its consolidated Subsidiaries or to
financial information prepared on a consolidated basis in accordance with GAAP
shall be deemed to include the Company and its Subsidiaries as to which
financial
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statements are prepared on a consolidated basis in accordance with GAAP and to
financial information prepared on such a consolidated basis. Notwithstanding
anything in this Indenture to the contrary, an Unrestricted Subsidiary shall not
be deemed to be a Subsidiary for purposes of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-
77bbbb), as amended, as in effect on the date on which this Indenture is
qualified under the TIA, except as otherwise provided in Section 9.03.
"TRUST OFFICER" means (a) any officer within the corporate trust
department of the Trustee, including any vice president, assistant vice
president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and (b) who shall have
direct responsibility for the administration of this Indenture.
"TRUSTEE" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"UNRESTRICTED DEFINITIVE SECURITY" means one or more Definitive
Securities that do not bear and are not required to bear the Private Placement
Legend.
"UNRESTRICTED GLOBAL SECURITY" means a permanent global Security in
the form of Exhibit A-1 attached hereto that bears the Global Security Legend
and that has the "Schedule of Exchanges of Interests in the Global Security"
attached thereto, and that is deposited with or on behalf of and registered in
the name of the Depositary, representing a series of Securities that do not bear
the Private Placement Legend.
"UNRESTRICTED SUBSIDIARY" means a Person who would otherwise be a
Subsidiary of the Company created after the Issue Date, that has been designated
an Unrestricted Subsidiary by a resolution adopted by the Board of Directors of
the Company; provided that (a) neither the Company nor any of its Subsidiaries
(1) provides any credit support for any Indebtedness of such Unrestricted
Subsidiary (including any undertaking, agreement or instrument evidencing such
Indebtedness) or (2) is directly or indirectly liable for any Indebtedness of
such Unrestricted Subsidiary, (b) the creditors with respect to In-
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debtedness for borrowed money of such Unrestricted Subsidiary, having a
principal amount in excess of $50,000,000, have agreed in writing that they have
no recourse, direct or indirect, to the Company or any Subsidiary of the
Company, including, without limitation, recourse with respect to the payment of
principal of or interest on any Indebtedness of such Unrestricted Subsidiary,
and (c) at the time of designation of such Unrestricted Subsidiary, such
Unrestricted Subsidiary has no property or assets (other than de minimis assets
resulting from the initial capitalization of such Unrestricted Subsidiary). Any
such designation by the Board of Directors of the Company shall be evidenced to
the Trustee by the filing with the Trustee of a certified copy of the resolution
of the Company's Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"U.S. LEGAL TENDER" means United States dollars, or any replacement
currency which shall then be the lawful currency for payment of public and
private debts in the United States of America.
"U.S. GOVERNMENT OBLIGATIONS" means direct, non-callable obligations
of, or non-callable obligations guaranteed by, the United States of America for
the payment of which guarantee or obligation the full faith and credit of the
United States of America is pledged.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity, or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"WHOLLY-OWNED SUBSIDIARY" of any Person means any Subsidiary of such
Person of which all the outstanding voting securities (other than directors,
qualifying shares) which normally have the right to vote in the election of
directors are owned by such Person or any Wholly-owned Subsidiary of such
Person.
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SECTION 1.02. INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"COMMISSION" means the SEC.
"INDENTURE SECURITIES" means the Securities.
"INDENTURE SECURITY HOLDER" means a Holder or a Securityholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.
"OBLIGOR" on the indenture securities means the Company or any other
obligor on the Company or any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP as in effect on the Issue Date;
(3) "OR" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) "HEREIN," "HEREOF" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(6) all references herein and in the Securities to "INTEREST" on the
Securities shall be deemed to include
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"ADDITIONAL INTEREST" due and payable pursuant to the Registration Rights
Agreement.
ARTICLE 2.
THE SECURITIES
SECTION 2.01. FORM AND DATING.
(a) General. The Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibits A-1 and A-2
hereto. The Securities may have notations, legends or endorsements required by
law, stock exchange rule or usage. Each Security shall be dated the date of its
authentication. The Securities shall be in denominations of $1,000 and integral
multiples thereof.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Security conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Securities. Securities issued in global form shall be
substantially in the form of Exhibits A-1 or A-2 attached hereto (including the
Global Security Legend thereon and the "Schedule of Exchanges of Interests in
the Global Security" attached thereto). Securities issued in definitive form
shall be substantially in the form of Exhibit A-1 attached hereto (but without
the Global Security Legend thereon and without the "Schedule of Exchanges of
Interests in the Global Security" attached thereto). Each Global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate principal amount of
outstanding Securities from time to time endorsed thereon and that the aggregate
principal amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Securities
represented thereby shall be made by the Trustee or the Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
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(c) Temporary Global Securities. Securities offered and sold in
reliance on Regulation S shall be issued initially in the form of the Regulation
S Temporary Global Security, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Trustee, at its
Corporate Trust office, as custodian for the Depositary, and registered in the
name of the Depositary or the nominee of the Depositary for the accounts of
designated agents holding on behalf of Euroclear or Cedel, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. Anything
herein to the contrary notwithstanding, during the Restricted Period beneficial
interests in the Regulation S Temporary Global Security may only be held by or
for the benefit of, or transferred to or for the benefit of, non-U.S. Persons in
Offshore Transactions in accordance with Regulation S, except that such
beneficial interests may be transferred to or held by the Initial Purchasers.
Following the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Security shall be exchanged for beneficial
interests in Regulation S Permanent Global Securities pursuant to the Applicable
Procedures; provided that the Trustee shall have received written certification
from the Depositary, together with copies of certificates from Euroclear and
Cedel certifying that they have received certification of non-U.S. beneficial
ownership of 100% of the aggregate principal amount of the Regulation S
Temporary Global Security and an Officers' Certificate from the Company.
Simultaneously with the authentication of Regulation S Permanent Global
Securities, the Trustee shall cancel the Regulation S Temporary Global Security
upon written order of the Company signed by an Officer. The aggregate principal
amount of the Regulation S Temporary Global Security and the Regulation S
Permanent Global Securities may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interests as
hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear", and the "General Terms and Conditions of Cedel
Bank" and "Customer Handbook" of Cedel shall be applicable to transfers of
beneficial interests in the Regulation S Temporary Global Security and the
Regulation S Permanent Global Securities that are held by Participants through
Euroclear or Cedel and are referred to herein as the "Applicable Procedures".
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SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Securities for the Company by manual or
facsimile signature. If an Officer whose signature is on a Security no longer
holds that office at the time a Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer (an "Authentication Order"), authenticate (i) Series A Securities for
original issue on the Issue Date in the aggregate principal amount not to exceed
$175,000,000, (ii) on or prior to the date of the Exchange Offer, Series B
Securities from time to time for issue only in exchange for a like principal
amount of Series A Securities and (iii) one or more series of 9% Senior
Subordinated Notes due 2009 for original issue after the Issue Date (such Notes
to be substantially in the form of Exhibits A-1 or A-2, as the case may be) in
an aggregate principal amount not to exceed $175,000,000 (and if in the form of
Series A Securities, the same principal amount of Series B Securities in
exchange therefor upon consummation of a registered exchange offer) in each case
upon written orders of the Company set forth in an Authentication Order. In
each case, the Authentication Order shall specify the amount of Securities to be
authenticated, the date on which the Securities are to be authenticated and the
aggregate principal amount of Securities outstanding on the date of
authentication, whether the Securities are to be Series A Securities, Series B
Securities or Securities issued under clause (iii) of the preceding sentence,
and shall further specify the amount of such Securities to be issued as a Global
Security or Definitive Securities. The aggregate principal amount of Securities
outstanding at any time may not exceed $250,000,000, except as provided in
Section 2.07.
In the event that the Company shall issue and the Trustee shall
authenticate any Securities issued under this Indenture subsequent to the Issue
Date pursuant to clause (ii) or (iii) of the first sentence of the immediately
preceding paragraph, the Company shall use its reasonable efforts to obtain the
same "CUSIP" number for such Securities as is printed on the Securities
outstanding at such time; provided that if any series of Securities issued under
this Indenture subsequent to the Issue Date is either determined, pursuant to an
Opinion of
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Counsel of the Company in a form reasonably satisfactory to the Trustee or
deemed under standard practices to be a different class of security than the
Securities outstanding at such time for federal income tax purposes, the Company
shall obtain a "CUSIP" number for such Securities that is different than the
"CUSIP" number printed on the Securities then outstanding.
Notwithstanding the foregoing, all Securities issued under this
Indenture shall vote and consent together on all matters (as to which any of
such Securities may vote or consent) as one class and no series of Securities
will have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("REGISTRAR") and an
office or agency where Securities may be presented for payment ("PAYING AGENT").
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Securities.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Securities.
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The Company shall, prior to the Record Date, notify the Paying Agent
of any wire transfer instructions for payments that it receives from Holders.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal premium, if any, or interest on the Securities, and will notify the
Trustee of any default by the Company in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all money
held by it to the Trustee. The Company at any time may require a Paying Agent
to pay all money held by it to the Trustee. Upon payment over to the Trustee,
the Paying Agent (if other than the Company or a Subsidiary) shall have no
further liability for the money. If the Company or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee shall serve as
Paying Agent for the Securities.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee five (5) Business
Days before each interest payment date and at such other times as the Trustee
may request in writing, a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of the Holders of Securities
and the Company shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Securities. A Global Security may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Securities will be exchanged by the Company for Definitive Securities if (i) the
Company delivers to the Trustee notice from the Depositary that it is unwilling
or unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a
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successor Depositary is not appointed by the Company within 90 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Securities (in whole but not in part)
should be exchanged for Definitive Securities and delivers a written notice to
such effect to the Trustee; provided that in no event shall the Regulation S
Temporary Global Security be exchanged by the Company for Definitive Securities
prior to (x) the expiration of the Restricted Period and (y) the receipt by the
Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under
the Securities Act and provided, further, there shall be no continuing Default
or Event of Default. Upon the occurrence of either of the preceding events in
(i) or (ii) above, Definitive Securities shall be registered in such names as
the Depositary shall instruct the Trustee, in writing. Global Securities also
may be exchanged or replaced, in whole or in part, as provided in Sections 2.07
and 2.10 hereof. Every Security executed, authenticated and delivered in
exchange for, or in lieu of, a Global Security or any portion thereof, pursuant
to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be executed,
authenticated and delivered in the form of, and shall be, a Global Security. A
Global Security may not be exchanged for another Security other than as provided
in this Section 2.06(a); however, beneficial interests in a Global Security may
be transferred and exchanged as provided in Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Securities. The transfer and exchange of beneficial interests in the Global
Securities shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Securities shall be subject to restrictions
on transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Securities also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) Transfer of Beneficial Interests in the Same Global Security.
Beneficial interests in any Restricted Global Security may be transferred
to Persons who take delivery thereof in the form of a beneficial interest
in the same Restricted Global Security in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided that prior
to the expiration of the Restricted Period and subject to receipt of the
certification required by Rule 903(c)(3)(ii)(B) of Regulation S,
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transfers of beneficial interests in the Temporary Regulation S Global
Security may not be made to a U.S. Person or for the account or benefit of
a U.S. Person (other than an Initial Purchaser). Beneficial interests in
any Unrestricted Global Security may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Security. No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this
Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Securities. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above, the
transferor of such beneficial interest must deliver to the Registrar either
(A) (1) a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing
the Depositary to credit or cause to be credited a beneficial interest in
another Global Security in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Security in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Security shall be registered to effect the
transfer or exchange referred to in (1) above; provided that in no event
shall Definitive Securities be issued upon the transfer or exchange of
beneficial interests in the Regulation S Temporary Global Security prior to
(x) the expiration of the Restricted Period and (y) the receipt by the
Registrar of the certificates required pursuant to Rule 903(c)(3)(ii)(B)
under the Securities Act. Upon consummation of an Exchange Offer by the
Company in accordance with Section 2.06(f) hereof, the requirements of this
Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by
the Registrar of the instructions contained in the Letter of Transmittal
delivered by the Holder of such beneficial interests in the Restricted
Global Securities. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Securities contained
in this Indenture and
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the Securities or otherwise applicable under the Securities Act, the
Trustee shall adjust the principal amount of the relevant Global Securities
pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Security. A beneficial interest in any Restricted Global Security may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Security if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Security, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Security or
the Regulation S Global Security, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; provided that beneficial interests
in the Regulation S Temporary Global Security may not be transferred
to any U.S. Person or for the account or benefit of a U.S. Person
(other than the Initial Purchasers);
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Security for Beneficial Interests in the Unrestricted Global
Security. A beneficial interest in any Restricted Global Security may be
exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Security or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Security if the exchange or transfer complies with the requirements of
Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
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change Securities or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a broker-dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Security proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Security, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Security proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Security, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), an Opinion
of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act; provided that no such
exchange or transfer of a beneficial interest in a Regulation S
Temporary Global Security shall be made prior to (x) the expiration of
the Restricted Period and (y) the receipt by the Registrar of the
certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Security has not yet been issued,
the Company shall issue and,
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upon receipt of an Authentication order in accordance with Section 2.02 hereof,
the Trustee shall authenticate one or more Unrestricted Global Securities in an
aggregate principal amount equal to the aggregate principal amount of beneficial
interests transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Security cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Security.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Securities.
(i) Beneficial Interests in Restricted Global Securities to
Restricted Definitive Securities. If any holder of a beneficial interest
in a Restricted Global Security proposes to exchange such beneficial
interest for a Restricted Definitive Security or to transfer such
beneficial interest to a Person who takes delivery thereof in the form of a
Restricted Definitive Security, then, upon receipt by the Registrar of the
following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Security proposes to exchange such beneficial interest for a
Restricted Definitive Security, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
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(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)(d) thereof:
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Security to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Company shall execute and the Trustee shall authenticate
and deliver to the Person designated in the instructions a Definitive
Security in the Appropriate principal amount. Any Definitive Security
issued in exchange for a beneficial interest in a Restricted Global
Security pursuant to this Section 2.06(c) shall be registered in such name
or names and in such authorized denomination or denominations as the holder
of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Securities to the
Persons in whose names such Securities are so registered. Any Definitive
Security issued in exchange for a beneficial interest in a Restricted
Global Security pursuant to this Section 2.06(c)(i) shall bear the Private
Placement Legend and shall be subject to all restrictions on transfer
contained therein.
(ii) Notwithstanding the foregoing provisions of this Sections
2.06(c), a beneficial interest in the Regulation S Temporary Global
Security may not be exchanged for a Definitive Security or transferred to a
Person who takes delivery thereof in the form of a Definitive Security
prior to (x) the expiration of the Restricted Period and (y) the receipt by
the Registrar of the certificates
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required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act.
(iii) Beneficial Interests in Restricted Global Securities to
Unrestricted Definitive Securities. A holder of a beneficial interest in a
Restricted Global Security may exchange such beneficial interest for an
Unrestricted Definitive Security or may transfer such beneficial interest
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Security only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a broker-
dealer, (2) a Person participating in the distribution of the Exchange
Securities or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a broker-dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Security proposes to exchange such beneficial interest for a Definitive
Security that does not bear the Private Placement Legend, a certificate
from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof ; or
(2) if the holder of such beneficial interest in a Restricted Global
Security proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a Definitive Security that does
not bear the Private Placement Legend, a certificate from such holder in
the form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D) an Opinion of
Counsel in form reasonably acceptable to the
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Registrar to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act; provided that a beneficial
interest in a Regulation S Temporary Global Security may not be exchanged
or transferred as aforesaid prior to (x) the expiration of the Restricted
Period and (y) the receipt by the Registrar of the certificates required
pursuant to Rule 903(c)(3)(ii)(B).
(iv) Beneficial Interests in Unrestricted Global Securities to
Unrestricted Definitive Securities. If any holder of a beneficial interest
in an Unrestricted Global Security proposes to exchange such beneficial
interest for a Definitive Security or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive Security
then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii)
hereof, the Trustee shall cause the aggregate principal amount of the
applicable Global Security to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Security in the appropriate principal amount. Any Definitive
Security issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iv) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Securities to the Persons in whose names such
Securities are so registered. Any Definitive Security issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not
bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Securities for Beneficial
Interests in Global Securities.
(i) Restricted Definitive Securities to Beneficial Interests in
Restricted Global Securities. If any Holder of a Restricted Definitive
Security proposes to exchange such Security for a beneficial interest in a
Restricted Global Security or to transfer such Restricted Definitive
Securities to a Person who takes delivery thereof in the form of a
beneficial interest in a Restricted Global Security, then, upon receipt by
the Registrar of the following documentation:
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(A) if the Holder of such Restricted Definitive Security proposes
to exchange such Security for a beneficial interest in a Restricted
Global Security, a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Security is being transferred
to a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Restricted Definitive Security is being transferred
to a Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (2) thereof;
(D) if such Restricted Definitive Security is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Security is being transferred
to an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item
(3)(d) thereof;
(F) if such Restricted Definitive Security is being transferred
to the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Security is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3) (c) thereof,
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the Trustee shall cancel the Restricted Definitive Security, and
increase or cause to be increased the aggregate principal amount of,
in the case of clause (A) above, the appropriate Restricted Global
Security, in the case of clause (B) above, the 144A Global Security,
and in the case of clause (C) above, the Regulation S Global Security.
(ii) Restricted Definitive Securities to Beneficial Interests in
Unrestricted Global Securities. A Holder of a Restricted Definitive
Security may exchange such Security for a beneficial interest in an
Unrestricted Global Security or transfer such Restricted Definitive
Security to a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Security only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Securities or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a broker-dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Securities proposes to exchange
such Securities for a beneficial interest in the Unrestricted Global
Security, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Securities proposes to transfer
such Securities to a Person who shall take delivery thereof in the form of
a beneficial interest in the Unrestricted Global Security, a certificate
from such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
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and, in each such case set forth in this subparagraph (D) an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Securities and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Security.
(iii) Unrestricted Definitive Securities to Beneficial Interests in
Unrestricted Global Securities. A Holder of an Unrestricted Definitive
Security may exchange such Security for a beneficial interest in an
Unrestricted Global Security or transfer such Definitive Securities to a
Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Security at any time. Upon receipt of a request for
such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Security and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Securities.
If any such exchange or transfer from a Definitive Security to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Security has not yet been
issued, the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Securities in an aggregate principal amount equal to the
principal amount of Definitive Securities so transferred.
(e) Transfer and Exchange of Definitive Securities for Definitive
Securities. Upon request by a Holder of Definitive Securities and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Securities. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Securities duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by its attorney, duly authorized in
writing. In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, re-
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quired pursuant to the following provisions of this Section 2.06(e).
(i) Restricted Definitive Securities to Restricted Definitive
Securities. Any Restricted Definitive Security ma be transferred to and
registered in the name of Persons who take delivery thereof in the form of
a Restricted Definitive Security if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3)(d) thereof.
(ii) Restricted Definitive Securities to Unrestricted Definitive
Securities. Any Restricted Definitive Security may be exchanged by the
Holder thereof for an Unrestricted Definitive Security or transferred to a
Person or Persons who take delivery thereof in the form of an Unrestricted
Definitive Security if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Securities or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration in accordance with the Registration Rights Agreement;
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(C) any such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Securities proposes
to exchange such Securities for an Unrestricted Definitive Security, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Securities proposes
to transfer such Securities to a Person who shall take delivery thereof in
the form of an Unrestricted Definitive Security, a certificate from such
Holder in the form of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (D), Opinion of
Counsel in form reasonably acceptable to the Company to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act; provided that a beneficial interest in a Regulation S
Temporary Global Security may not be exchanged or transferred as aforesaid
prior to (x) the expiration of the Restricted Period and (y) the receipt by
the Registrar of the certificates required pursuant to Rule
903(c)(3)(ii)(B).
(iii) Unrestricted Definitive Securities to Unrestricted Definitive
Securities. A Holder of Unrestricted Definitive Securities may transfer
such Securities to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Security. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted Definitive
Securities pursuant to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Securities in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Securities
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tendered for acceptance by Persons that certify in the applicable Letters of
Transmittal that (x) they are not broker-dealers, (y) they are not participating
in a distribution of the Exchange Securities and (z) they are not affiliates (as
defined in Rule 144) of the Company, and accepted for exchange in the Exchange
Offer and (ii) Definitive Securities in an aggregate principal amount equal to
the principal amount of the Restricted Definitive Securities accepted for
exchange in the Exchange offer. Concurrently with the issuance of such
Securities, the Trustee shall cause the aggregate principal amount of the
applicable Restricted Global Securities to be reduced accordingly, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Securities so accepted
Definitive Securities in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Securities and Definitive Securities issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Security and each Definitive Security (and all Securities issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") AND NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION UNDER THE SECURITIES ACT. THE HOLDER HEREOF, BY ITS
ACCEPTANCE OF THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT
THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE THERETO UNDER RULE
144(k) UNDER THE SECURITIES ACT WHICH IS APPLICABLE TO THIS SECURITY (THE
"RESALE RESTRICTION TERMINATION DATE") OTHER THAN (1) TO THE COMPANY, (2)
SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER
THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE
144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER, IN EACH CASE TO WHOM NOTICE
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IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY IF THIS
SECURITY IS NOT IN BOOK-ENTRY FORM), (3) TO A NON-"U.S. PERSON" IN AN
"OFFSHORE TRANSACTION" (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" (AN "INSTITUTIONAL ACCREDITED INVESTOR") AS DEFINED
IN RULE 501(a)(1), (2) (3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
REVERSE OF THIS SECURITY) WHO CERTIFIES TO THE COMPANY AND THE TRUSTEE THAT
SUCH TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR AND IS ACQUIRING
THIS SECURITY FOR ITS OWN ACCOUNT, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, (5) PURSUANT TO THE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT, IF AVAILABLE, OR (6) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, SUBJECT IN EACH OF THE
FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS
PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL
TIMES WITHIN ITS OR THEIR CONTROL AND THE HOLDER WILL, AND ANY SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT PURCHASER OF THIS SECURITY
FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN THIS PARAGRAPH, IF THEN
APPLICABLE. DURING THE 40 DAY "DISTRIBUTION COMPLIANCE PERIOD" (AS DEFINED
IN REGULATIONS S), BENEFICIAL INTERESTS IN REGULATION S GLOBAL SECURITIES
(AS DEFINED IN THE INDENTURE REFERRED TO BELOW) MAY ONLY BE HELD BY OR FOR
THE BENEFIT OF NON-"U.S. PERSONS" OR TRANSFERRED TO OR FOR THE BENEFIT OF
NON-"U.S. PERSONS" IN "OFFSHORE TRANSACTIONS" (AS SUCH TERMS ARE DEFINED IN
REGULATION S). THE COMPANY OR THE TRUSTEE FOR THE SECURITIES RESERVE THE
RIGHT PRIOR TO ANY SUCH SALE, PLEDGE OR OTHER TRANSFER TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON REQUEST OF
THE HOLDER ON OR AFTER THE RESALE RESTRICTION TERMINATION DATE."
(B) Notwithstanding the foregoing, any Global Security or
Definitive Security issued pursuant to subparagraphs (b)(iv),
(c)(iii), (c)(iv) , (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to
this Section
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2.06 (and all Securities issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) Global Security Legend. Each Global Security shall bear a
legend in substantially the following form:
"THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS
GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO
SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL SECURITY MAY BE
DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Security Legend. The Regulation
S Temporary Global Security shall bear a Legend in substantially the
following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SECURITY,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
SECURITIES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN)."
(h) Cancellation and/or Adjustment of Global Securities. At such
time as all beneficial interests in a particular Global Security have been
exchanged for Definitive Securities or a particular Global Security has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Security shall be returned to or retained and canceled by the Trustee in
accordance with Section 2.11 hereof. At any time prior to such cancellation, if
any beneficial interest in a Global Security is exchanged for or transferred to
a Person who will take delivery thereof in the form of a beneficial interest in
another Global Security or for Definitive Securities, the principal amount of
Securities represented by such Global Security shall be reduced accordingly and
an endorsement shall be made on such Global Security by the Trustee or by the
Depositary at the direction of the Trustee to reflect such reduction; and if the
beneficial interest is being exchanged for or transferred to a Person who will
take delivery thereof in the form of a beneficial interest in another Global
Security, such other Global Security shall be increased accordingly and an
endorsement shall be made on such Global Security by the Trustee or by the
De-
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positary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Securities and
Definitive Securities upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Security or to a Holder of a Definitive Security for
any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06, 4.10, 4.15, 4.16 and 9.05
hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Security selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part.
(iv) All Global Securities and Definitive Securities issued upon any
registration of transfer or exchange of Global Securities or Definitive
Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Global Securities or Definitive Securities surrendered upon such
registration of transfer or exchange.
(v) The Registrar shall not be required (A) to issue, to register
the transfer of or to exchange any Securities during a period beginning at
the opening of business 15 days before the day of any selection of
Securities for redemption under Section 3.02 hereof and ending at the close
of business on the day of selection, (B) to register the transfer of or to
exchange any Security so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part or (C)
to register the transfer of or to exchange a Security between a record date
and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Security, the Trustee, any Agent and
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the Company may deem and treat the Person in whose name any Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Securities and for
all other purposes, and none of the Trustee, any Agent or the Company shall
be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Securities and Definitive
Securities in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
(j) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among Depositary
Participants or beneficial owners of interests in any Global Security) other
than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
SECTION 2.07. REPLACEMENT SECURITIES
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee, shall authenticate a replacement
Security if the Trustee's requirements are met. If required by the Trustee or
the Company, such Holder must provide an indemnity bond or other indemnity
sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee or, any Agent from any loss which any of them may suffer if
a Security is replaced. The Company may charge such Holder for its reasonable,
out of pocket expenses in replacing a Security, including reasonable fees and
expenses of counsel.
Every replacement Security shall constitute an additional obligation
of the Company.
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SECTION 2.08. OUTSTANDING SECURITIES.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those canceled by it, those delivered
to it for cancellation, and those described in this Section as not outstanding.
A Security does not cease to be outstanding because the Company or any of its
Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser.
A mutilated Security ceases to be outstanding upon surrender of such
Security and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Securities payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Securities cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver, consent or notice,
Securities owned by the Company or an Affiliate shall be considered as though
they are not outstanding, except that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction, waiver or
consent, only Securities which a Trust Officer knows are so owned shall be so
considered. The Company shall notify the Trustee, in writing, when it or any of
its Affiliates repurchases or otherwise acquires Securities, of the aggregate
principal amount of such Securities so repurchased or otherwise acquired.
SECTION 2.10. TEMPORARY SECURITIES
Until certificates representing Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate Temporary Securities upon
receipt of a written order of the Company in the form of an Authentication
Order. The Officers Certificate shall specify the amount of, Temporary
Se-
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curities to be authenticated and the date on which the Temporary Securities are
to be authenticated. Temporary Securities shall be substantially in the form of
certificated Securities but may have variations that the Company considers
appropriate for temporary Securities and as shall be reasonably acceptable to
the Trustee. Without unreasonable delay, the Company shall prepare and execute,
and the Trustee shall authenticate upon receipt of a written Authentication
Order definitive Securities in exchange for Temporary Securities, subject, in
the case of Regulation S Temporary Global Securities, to satisfaction of the
conditions set forth elsewhere herein.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for transfer, exchange or payment. The Trustee,
or at the direction of the Trustee, the Registrar or the Paying Agent, and no
one else, shall cancel and, at the written direction of the Company, shall
dispose of all Securities surrendered for transfer exchange, payment or
cancellation. Subject to Section 2.07, the Company may not issue new Securities
to replace Securities that the Company has paid or delivered to the Trustee for
cancellation. If the Company shall acquire any of the Securities, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent lawful) any, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which date shall be the fifteenth day next
preceding the date fixed by the Company for the payment of defaulted interest or
the next succeeding Business Day if such date is not a Business Day. At least
15 days before the subsequent special record date, the Company shall mail to
each Holder, with a copy to the Trustee, a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest, and
interest payable on such defaulted interest, if any, to be paid.
SECTION 2.13. CUSIP NUMBER.
The Company in issuing the Securities may use a "CUSIP" number, and if
so, the Trustee shall use the CUSIP num-
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ber in notices of redemption or exchange as a convenience to Holders; provided
that no representation is hereby deemed to be made by the Trustee as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities. The Company will promptly notify the Trustee
of any change in the CUSIP numbers.
SECTION 2.14. DEPOSIT OF MONEYS.
Prior to 10:00 a.m. New York City time on each Interest Payment Date
and Maturity Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Paying Agent to remit payment to the Holders on such
Interest Payment Date or Maturity Date, as the case may be.
ARTICLE 3.
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Securities pursuant to paragraph 6 of
the Securities, it shall notify the Trustee and the Paying Agent in writing of
the Redemption Date and the principal amount of the Securities to be redeemed
and whether it wants the Trustee to give notice of redemption to the Holders (at
the Company's expense) at least 45 days (unless a shorter notice shall be
satisfactory to the Trustee) but not more than 90 days before the Redemption
Date. Any such notice may be canceled at any time prior to notice of such
redemption being mailed to any Holder and shall thereby be void and of no
effect. In addition, in the case of the Company's election to redeem Securities
using the proceeds of a Public Equity Offering, the Company shall comply with
the provisions of paragraph 7 of the Securities.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED.
If fewer than all of the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed in compliance with the requirements
of the principal national securities exchange, if any, on which the Securities
being redeemed are listed, or, if the Securities are not listed on a national
securities exchange, on a pro rata basis, by lot or in
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such other fair and reasonable manner chosen at the discretion of the Trustee;
provided that a redemption pursuant to the provisions of paragraph 6(b) of the
Securities shall be made on a pro rata basis.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 or less may be redeemed only in
whole. The Trustee may select for redemption portions (equal to $1,000 or any
integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by first-
class mail to each Holder whose Securities are to be redeemed, with a copy to
the Trustee. In addition, in the case of the Company's election to redeem
Securities using the proceeds of a Public Equity Offering the Company shall
comply with the provisions of paragraph 7 of the Securities. At the Company's
request, the Trustee shall give the notice of redemption in the Company's name
and at the Company's expense. Each notice for redemption shall identify the
Securities to be redeemed (including CUSIP numbers) and shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of accrued interest, if any,
to be paid (the "REDEMPTION PRICE");
(3) the paragraph of the Securities pursuant to which the Securities
are being redeemed;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(6) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on and
after the Redemption Date, and the
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only remaining right of the Holders of such Securities is to receive payment of
the Redemption Price upon surrender to the Paying Agent of the Securities
redeemed;
(7) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the Redemption
Date, and upon surrender of such Security, a new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will be
issued; and
(8) if fewer than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be redeemed,
as well as the aggregate principal amount of Securities to be redeemed and the
aggregate principal amount of Securities to be outstanding after such partial
redemption.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price. Upon surrender to the Trustee or Paying Agent,
such Securities called for redemption shall be paid at the Redemption Price.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or before the Redemption Date, the Company shall deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price of all
Securities to be redeemed on that date. The Paying Agent shall promptly return
to the Company any U.S. Legal Tender so deposited which is not required for that
purpose, except with respect to moneys owed as obligations to the Trustee
pursuant to Article 7.
If the Company complies with the preceding paragraphs then, unless the
Company defaults in the payment of such Redemption Price, interest on the
Securities to be redeemed will cease to accrue on and after the applicable
Redemption Date, whether or not such Securities are presented for payment.
SECTION 3.06. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is to be redeemed in part, the
Trustee shall authenticate for the Holder a new Security or Securities equal in
principal amount to the unredeemed portion of the Security surrendered.
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ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES.
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities. An installment of
principal of or interest on the Securities shall be considered paid on the date
it is due if the Trustee or Paying Agent holds on that date U.S. Legal Tender
designated for and sufficient to pay the installment.
Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal or interest payments hereunder.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain the office or agency required under Section
2.03. The Company shall give prior notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 11.02.
SECTION 4.03. LIMITATION ON RESTRICTED PAYMENTS.
Neither the Company nor any of its Subsidiaries will, directly or
indirectly,
(a) declare or pay any dividend or make any distribution (other than
dividends or distributions payable in Qualified Capital Stock of the Company) on
shares of the Company's Capital Stock,
(b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights, or options to acquire
shares of any class of such Capital Stock, other than the exchange of such
Capital Stock or any warrants, rights, or options to acquire shares of any class
of
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such Capital Stock for Qualified Capital Stock or warrants, rights, or options
to acquire Qualified Capital Stock,
(c) make any principal payment on, purchase, defease, redeem, prepay,
decrease, or otherwise acquire or retire for value, prior to any scheduled final
maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness of the Company or its Subsidiaries that is subordinate or junior in
right of payment to the Securities, or
(d) make any Investment (other than Permitted Investments)
(each of the foregoing prohibited actions set forth in clauses (a), (b), (c) and
(d) being referred to as a "RESTRICTED PAYMENT"), if, at the time of such
Restricted Payment or immediately after giving effect thereto,
(i) a Default or an Event of Default has occurred and is continuing,
(ii) the Company is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
4.12, or
(iii) the aggregate amount of Restricted Payments made by the Company
on or after the Issue Date (the amount expended for such purposes, if other than
in cash, being the fair market value of such property as determined by the Board
of Directors of the Company in good faith) exceeds the sum of:
(A) (x) 100% of the aggregate Consolidated EBITDA of the Company
from the Issue Date through the most recent date for which financial
information is available to the Company, taken as one accounting
period (or, in the event that either such Consolidated EBITDA shall be
a deficit, minus 100% of such deficit), less (y) 1.4 times
Consolidated Interest Expense for the Company for the same entities
and for the same period, plus
(B) 100% of the aggregate net proceeds received by the Company
from any Person (other than a Subsidiary of the Company) from the
issuance and sale on or subsequent to the Issue Date of Qualified
Capital Stock of the Company (excluding any net proceeds from
issuances and sales financed directly or indirectly using funds
borrowed from the Company or any Subsidiary of the Company until and
to the extent such borrowing is repaid, but including the proceeds
from the
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issuance and sale of any securities convertible into or exchangeable
for Qualified Capital Stock to the extent such securities are so
converted or exchanged and including any additional proceeds received
by the Company upon such conversion or exchange), plus
(C) without duplication of any amount included in clause
(iii)(B) above, 100% of the aggregate net cash proceeds received by
the Company as a capital contribution on or subsequent to the Issue
Date (excluding the net cash proceeds from one or more Public Equity
Offerings by the Company to the extent used to redeem the Securities
on or after the date of this Indenture), plus
(D) $5,000,000.
Notwithstanding the foregoing, the provisions of this Section 4.03
shall not prohibit:
(1) the payment of any dividend or the making of any distribution
within 60 days after the date of its declaration if the dividend or
distribution would have been permitted on the date of declaration;
(2) the acquisition of Capital Stock or warrants, options, or other
rights to acquire Capital Stock either (i) solely in exchange for shares of
Qualified Capital Stock or warrants, options, or other rights to acquire
Qualified Capital Stock, or (ii) through the application of the net
proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of the Company) of shares of Qualified Capital Stock or
warrants, options or other rights to acquire Qualified Capital Stock;
(3) the acquisition of Indebtedness of the Company that is
subordinate or junior in right of payment to the Securities, either (i)
solely in exchange for shares of Qualified Capital Stock (or warrants,
options or other rights to acquire Qualified Capital Stock) or for
Indebtedness of the Company which is subordinate or junior in right of
payment to the Securities, at least to the extent that the Indebtedness
being acquired is subordinated to the Securities and has a Weighted Average
Life to Maturity no less than that of the Indebtedness being acquired or
(ii) through the application of the net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of the Company) of
shares of Qualified Capital Stock (or warrants, options or other rights to
acquire Qualified Capital Stock) or Indebtedness of the Company
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which is subordinate or junior in right of payment to the Securities, at
least to the extent that the Indebtedness being acquired is subordinated to
the Securities and has a Weighted Average Life to Maturity no less than
that of the Indebtedness being refinanced; or
(4) the making of Restricted Payments in an aggregate amount not to
exceed $5,000,000;
provided that no Default or Event of Default shall have occurred or be
continuing at the time of such payment or as a result thereof.
In determining the aggregate amount of Restricted Payments made by the
Company on or subsequent to the Issue Date, amounts expended pursuant to clauses
(1), (2), (3) (but only to the extent that Indebtedness is acquired in exchange
for, or with the net proceeds from, the issuance of Qualified Capital Stock or
warrants, options, or other rights to acquire Qualified Capital Stock), and (4)
shall be included in such calculation.
Prior to any Restricted Payment under the first paragraph of this
Section 4.03, the Company shall deliver to the Trustee an Officers' Certificate
setting forth the computation by which the amount available for Restricted
Payments pursuant to such paragraph was determined. The Trustee shall have no
duty or responsibility to determine the accuracy or correctness of this
computation and shall be fully protected in relying on such Officers'
Certificate.
SECTION 4.04. CORPORATE EXISTENCE.
Except as otherwise permitted by Article 5, the Company shall do or
cause to be done all things reasonably necessary to preserve and keep in full
force and effect its corporate or other existence and the corporate or other
existence of each of its Significant Subsidiaries in accordance with the
respective organizational documents of each such Significant Subsidiary and the
material rights (charter and statutory) and franchises of the Company and each
such Significant Subsidiary; provided that the Company shall not be required to
preserve, with respect to itself, any material right or franchise and, with
respect to any of its Significant Subsidiaries, any such existence, material
right or franchise, if the Board of Directors of the Company or such Significant
Subsidiary, as the case may be, shall determine that the preservation thereof is
no longer reasonably necessary or desirable in the conduct of the business of
the Company or any such Significant Subsidiary.
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SECTION 4.05. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
properties of it or an of its Subsidiaries and (ii) all material lawful claims
for labor, materials, supplies and services that, if unpaid, might by law become
a Lien upon the property of it or any of its Subsidiaries; provided that there
shall not be required to be paid or discharged any such tax, assessment or
charge, the amount, applicability or validity of which is being contested in
good faith by appropriate proceedings and for which adequate provision has been
made or where the failure to effect such payment or discharge is not adverse in
any material respect to the Holders.
SECTION 4.06. MAINTENANCE OF PROPERTIES AND INSURANCE.
(a) The Company shall, and shall cause each of its Subsidiaries to,
maintain its material properties in normal condition (subject to ordinary wear
and tear) and make all reasonably necessary repairs, renewals or replacements
thereto as in the judgment of the Company may be reasonably necessary to the
conduct of the business of the Company and its Subsidiaries; provided that
nothing in this Section 4.06 shall prevent the Company or any of its
Subsidiaries from discontinuing the operation and maintenance of any of its
properties, if such properties are, in the reasonable and good faith judgment of
the Board of Directors of the Company or the Subsidiary, as the case may be, no
longer reasonably necessary in the conduct of their respective business.
(b) The Company shall provide or cause to be provided, for itself and
each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of the Company, are reasonably adequate and appropriate for the conduct of the
business of the Company and such Subsidiaries.
SECTION 4.07. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of the Company's fiscal year, an Officers' Certificate (signed by the
principal executive officer principal financial officer or principal accounting
officer) stating that a review of its activities and the activities of its
Subsidiaries during the preceding fiscal year has been made
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under the supervision of the signing Officers with a view to determining whether
it has kept, observed, performed and fulfilled its obligations under this
Indenture and further stating, as to each such Officer signing such certificate,
that to the best of his knowledge the Company during such preceding fiscal year
has kept, observed, performed and fulfilled each and every such obligation and
no Default or Event of Default occurred during such year and at the date of such
certificate there is no Default or Event of Default that has occurred and is
continuing or, if such signers do know of such Default or Event of Default, the
certificate shall describe the Default or Event of Default and its status with
particularity. The Officers' Certificate shall also notify the Trustee should
the Company elect to change the manner in which it fixes its fiscal year end.
(b) The copy of the annual report on Form 10-K of the Company as
filed with the SEC or the annual financial statements delivered to the Trustee
pursuant to Section 4.09 shall be accompanied by a written report of the
Company's independent accountants that in conducting their audit of the
financial statements which are a part of such annual report or such annual
financial statements nothing has come to their attention that would lead them to
believe that the Company has violated any provisions of Article 4, 5 or 6
insofar as they relate to accounting matters or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) If any Default or Event of Default has occurred and is continuing
or (ii) if any Holder seeks to exercise any remedy hereunder with respect to a
claimed Default under this Indenture or the Securities, the Company shall
deliver to the Trustee by registered or certified mail or facsimile transmission
followed by hard copy by registered or certified mail an Officers' Certificate
specifying such event, notice or other action as soon as possible and in any
event within five Business Days of its becoming aware of such occurrence.
SECTION 4.08. COMPLIANCE WITH LAWS.
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership
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of their respective properties, except for such noncompliances as are not in the
aggregate reasonably likely to have a material adverse effect on the financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole.
SECTION 4.09. SEC REPORTS.
The Company shall file with the Trustee and provided to the
Securityholders, within 15 days after it files them with the SEC, copies of the
annual reports and of the information, documents, and other reports ( or copies
of such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company files with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. In the event that the Company is no longer required to
furnish such reports to its securityholders pursuant to the Exchange Act, the
Company will cause its consolidated financial statements, comparable to those
which would have been required to appear in annual or quarterly reports, to be
delivered to the Holders of the Securities. During the period beginning on the
latest date of the original issuance of any of the Securities or the date any
Security was acquired from the Company or any Affiliate of the Company after the
Issue Date and ending on the date that is two years from such latest date, the
Company will, during any period in which it is not subject to Section 13 or
15(d) under the Exchange Act or not filing the reports and other information
required thereby when so subject, make a available to any holder or beneficial
owner of Securities which are not registered under the Securities Act in
connection with any sale thereof and any prospective purchaser of Securities
from such holder or beneficial owner the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any holder or beneficial
owner of the Securities and it will take such further action as any holder or
beneficial owner may reasonably require to sell its Securities without
registration under the Securities Act within the limitation of the exemption
provided by Rule 144A.
The Company shall also comply with the other provisions of TIA Section
314(a). Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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SECTION 4.10. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the obligations or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
Neither the Company nor any of its Subsidiaries will, directly or
indirectly enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with or for the benefit of any of its Affiliates
(other than transactions between the Company and a Wholly-Owned Subsidiary of
the Company or among Wholly-Owned Subsidiaries of the Company) (an "AFFILIATE
TRANSACTION"), other than Affiliate Transactions on terms that are no less
favorable than those that might reasonably have been obtained in a comparable
transaction on an arm's-length basis from a Person that is not an Affiliate;
provided that for a transaction or series of related transactions involving
value of $1,000,000 or more, such determination shall be made in good faith by a
majority of the members of the Board of Directors of the Company and by a
majority of the disinterested members of the Board of Directors of the Company,
if any; provided, further, that for a transaction or series of related
transactions involving value of $5,000,000 or more, the Board of Directors of
the Company has received an opinion from a nationally recognized investment
banking firm that such Affiliate Transaction is fair, from a financial point of
view, to the Company or such Subsidiary. The foregoing restrictions will not
apply to (i) reasonable and customary directors' fees, indemnification, and
similar arrangements and payments thereunder, (ii) any Restricted Payment
permitted to be paid pursuant to Section 4.03, (iii) any issuance of Qualified
Capital Stock pursuant to stock option or stock ownership plans approved by the
Board of Directors of the Company, and (iv) transactions pursuant to agreements
in existence on the
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Issue Date and any renewal of such agreements on substantially similar terms.
SECTION 4.12. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
Neither the Company nor any of its Subsidiaries shall, directly, or
indirectly create, incur, assume, guarantee, acquire, or become liable for,
contingently or otherwise, (collectively "incur"), any Indebtedness other than
Permitted Indebtedness. Notwithstanding the foregoing limitations, the Company
may incur Indebtedness (including Acquired Indebtedness) and any of the
Company's Subsidiaries may incur Acquired Indebtedness, if, in either case, on
the date of the incurrence of such Indebtedness, after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the Company's Leverage Ratio is less than 7.0 to 1.
For the purposes of this Section 4.12, Indebtedness outstanding on the
Issue Date shall not be deemed to be an incurrence of Indebtedness.
SECTION 4.13. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, create or otherwise cause or permit to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (a) pay dividends
or make any other distributions on its Capital Stock; (b) make loans or advances
or pay any Indebtedness or other obligation owed to the Company or any of its
Subsidiaries; or (c) transfer any of its property or assets to the Company,
except for such encumbrances or restrictions existing under or by reason of: (1)
applicable law, (2) customary non-assignment provisions of any lease governing a
leasehold interest of the Company or any Subsidiary, (3) any instrument
governing Acquired Indebtedness, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, (4) an
agreement effecting a replacement, refunding, extension or renewal of
Indebtedness issued, assumed, or incurred pursuant to an agreement referred to
in clause (3) above; provided, that the provisions relating to such encumbrance
or restriction contained in any such replacement, refunding, extension, or
renewal agreement or any such other agreement are not less favorable to the
Company in all material respects as determined in good faith by the Board of
Directors of the Company than the
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provisions relating to such encumbrance or restriction contained in agreements
referred to in such clause (3) or (5) restrictions on the transfer of assets
subject to any Lien permitted under this Indenture imposed by the holder of such
Lien.
SECTION 4.14. PROHIBITION ON INCURRENCE OF SENIOR SUBORDINATED INDEBTEDNESS.
None of the Company or any Guarantor shall incur or suffer to exist
any Indebtedness that is senior in right of payment to the Securities or the
Guarantee of any such Guarantor, as the case may be, and is expressly
subordinate in right of payment to any other Indebtedness of the Company or any
such Guarantor, as the case may be.
SECTION 4.15. CHANGE OF CONTROL.
(a) In the event of a Change of Control, the Company shall be
obligated to make an offer to repurchase all outstanding Securities pursuant to
the offer described in paragraph (b) below (the "CHANGE OF CONTROL OFFER"), at a
purchase price equal to 101% of the principal amount thereof plus accrued
interest, if any, to the date of repurchase. Prior to the mailing of the notice
referred to below, but in any event within 30 days following the date on which a
Change of Control occurs, the Company covenants to (i) repay in full all
Indebtedness under the Credit Agreement (and terminate all commitments
thereunder) or offer to repay in full all such Indebtedness (and terminate all
such commitments) and to repay the Indebtedness owed to (and terminate the
commitments of) each lender which has accepted such offer or (ii) obtain the
requisite consents under the Credit Agreement to permit the repurchase of the
Securities as provided below. The Company shall first comply with the covenant
in the preceding sentence before it shall be required to repurchase Securities
pursuant to the provisions described in this Section 4.15; provided that the
Company's failure to comply with such covenant shall constitute an Event of
Default under Section 6.01(3).
(b) Within 30 days following the date upon which a Change of Control
occurs (the "CHANGE OF CONTROL DATE"), the Company shall send, by first class
mail, a notice to each Holder of Securities, with a copy to the Trustee, which
notice shall govern the terms of the Change of Control Offer. The notice to the
Holders shall contain all instructions and materials necessary to enable such
Holders to tender Securities pursuant to the Change of Control Offer. Such
notice shall state:
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(1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Securities validly tendered and not withdrawn
will be accepted for payment;
(2) the purchase price (including the amount of accrued interest, if
any) and the purchase date (which shall be no earlier than 30 days nor
later than 45 days from the date such notice is mailed, other than as may
be required by law) (the "CHANGE OF CONTROL PAYMENT DATE");
(3) that any Security not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor, any
Security accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Security purchased pursuant to a
Change of Control Offer will be required to surrender the Security,
properly endorsed for transfer together with such customary documents as
the Company reasonably may request, to the Paying Agent at the address
specified in the notice prior to the close of business on the Business Day
prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the
Change of Control Payment Date, a telegram, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Securities the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Security purchased;
(7) that Holders whose Securities are purchased only in part will be
issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered; and
(8) the circumstances and relevant facts regarding such Change of
Control.
(c) on or before the Change of Control Payment Date, the Company shall
(i) accept for payment Securities or portions hereof (in integral multiples of
$1,000) validly tendered pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent U.S. Legal Tender sufficient to pay the purchase
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price of all Securities so tendered and (iii) deliver to the Trustee Securities
so accepted together with an Officers' Certificate stating the Securities or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to the Holders of Securities so accepted payment in an amount equal to the
purchase price out of the funds deposited with the Paying Agent in accordance
with the preceding sentence. The Trustee shall promptly authenticate and mail to
such Holders new Securities equal in principal amount to any unpurchased portion
of the Securities surrendered. Upon the payment of the purchase price for the
Securities accepted for purchase, the Trustee shall return the Securities
purchased to the Company for cancellation. Any amounts remaining after the
purchase of Securities pursuant to a Change of Control Offer shall be returned
by the Trustee to the Company.
(d) The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of the Securities pursuant to a Change of Control Offer. To the extent the
provisions of any such rule conflict with the provisions of this Indenture
relating to a Change of Control Offer, the Company shall comply with the
provisions of such rule and be deemed not to have breached its obligations
relating to such Change of Control Offer by virtue thereof.
SECTION 4.16. LIMITATION ON ASSET SALES.
(a) Neither the Company nor any of its Subsidiaries will consummate an
Asset Sale unless (i) the Company or the applicable Subsidiary, as the case may
be, receives consideration at the time of such Asset Sale at least equal to the
fair market value of the assets sold or otherwise disposed of (as determined in
good faith by management of the Company or, if such Asset Sale involves
consideration in excess of $10,000,000, by the Board of Directors of the
Company, as evidenced by a board resolution), (ii) at least 75% of the
consideration received by the Company or the Subsidiary, as the case may be,
from such Asset Sale is cash or Cash Equivalents and is received at the time of
such disposition, and (iii) upon the consummation of an Asset Sale, the Company
applies or causes such Subsidiary to apply, such Net Cash Proceeds within 180
days of receipt thereof either (A) to repay the principal of any Senior Debt,
(B) to reinvest, or to be contractually committed to reinvest pursuant to a
binding agreement, in Productive Assets and, in the latter case, to have so
reinvested within 360 days of the date of receipt of such Net Cash Proceeds, or
(C) to purchase Securities (pro rata among the holders of Securities tendered to
the Company for purchase, based upon the aggregate principal
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amount of the Securities so tendered) tendered to the Company for purchase at a
price equal to 100% of the principal amount thereof, plus accrued interest
thereon to the date of purchase, pursuant to an offer to purchase made by the
Company as set forth below (a "NET PROCEEDS OFFER"); provided that if at any
time any non-cash consideration received by the Company or any Subsidiary of the
Company, as the case may be, in connection with any Asset Sale is converted into
or sold or otherwise disposed of for cash, then such conversion or disposition
shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds
thereof shall be applied in accordance with clause (iii) above; provided,
further that the Company may defer making a Net Proceeds Offer until the
aggregate Net Cash Proceeds from Asset Sales to be applied equals or exceeds
$5,000,000.
(b) Subject to the deferral right set forth in the final proviso of
paragraph (a), each notice of a Net Proceeds Offer pursuant to this Section 4.16
shall be mailed, by first class mail, by the Company to Holders of the
Securities as shown on the applicable register of Holders of the Securities not
more than 180 days after the relevant Asset Sale or, in the event the Company or
a Subsidiary has entered into a binding agreement as provided in (B) above,
within 180 days following the termination of such agreement but in no event
later than 360 days after the relevant Asset Sale, with a copy to the Trustee.
The notice shall contain all instructions and materials necessary to enable such
Holders to tender Securities pursuant to the Net Proceeds Offer and shall state
the following terms:
(1) that the Net Proceeds Offer is being made pursuant to Section 4.16
and that Holders of Securities may elect to tender their Securities in
denominations of less than $1,000 and that all Securities validly tendered
will be accepted for payment; provided that if the aggregate principal
amount of Securities tendered in a Net Proceeds Offer plus accrued interest
at the expiration of such offer exceeds the aggregate amount of the Net
Proceeds Offer, the Company shall expect the Securities to be purchased on
a pro rata basis (based upon the principal amount tendered);
(2) the purchase price (including the amount of accrued interest) and
the purchase date (which shall be no earlier than 30 days nor later than 45
days from the date such notice is mailed, other than as may be required by
law) (the "PROCEEDS PURCHASE DATE");
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(3) that any Security not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor, any
Security accepted for payment pursuant to the Net Proceeds offer shall
cease to accrue interest after the Proceeds Purchase Date;
(5) that Holders electing to have a Security purchased pursuant to a
Net Proceeds Offer will be required to surrender the Security, properly
endorsed for transfer together with such other customary documents as the
Company reasonably may request, to the Paying Agent at the address
specified in the notice prior to the close of business on the Business Day
prior to the Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the
Proceeds Purchase Date, a telegram, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the
Securities the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Security purchased;
(7) that Holders whose Securities are purchased only in part will be
issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered; and
(8) the circumstances and relevant facts regarding such Net Proceeds
Offer.
(c) on or before the Proceeds Purchase Date, the Company shall
(i)accept for payment Securities or portions thereof validly tendered pursuant
to the Net Proceeds Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price of all Securities so tendered and (iii)
deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders of Securities so
accepted payment in an amount equal to the purchase price out of funds deposited
with the Paying Agent in accordance with the preceding sentence. The Trustee
shall promptly authenticate and mail to such Holders new Securities equal in
principal amount to any unpurchased portion of the Securities surrendered. Upon
payment of the purchase price for the Securities accepted for purchase, the
Trustee shall return the Securities purchased to the
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Company for cancellation. Any Securities not so accepted shall be promptly
mailed by the Company to the Holder thereof.
(d) If the aggregate principal amount of Securities validly tendered
pursuant to any Net Proceeds Offer is less than the amount of Net Cash Proceeds
subject to such Net Proceeds Offer, the Company may use any remaining portion of
such Net Cash Proceeds not required to fund the repurchase of tendered
Securities for purposes otherwise permitted by this Indenture. Upon the
consummation of any Net Proceeds Offer, the amount of Net Cash Proceeds subject
to any future Net Proceeds Offer from the Asset Sales giving rise to such Net
Cash Proceeds shall be deemed to be zero.
(e) The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with their
purchase of Securities pursuant to a Net Proceeds Offer. To the extent the
provisions of any such rule conflict with the provisions of this Indenture
relating to a Net Proceeds Offer, the Company shall comply with the provisions
of such rule and be deemed not to have breached its obligations relating to such
Net Proceeds Offer by virtue thereof.
(f) In addition to the foregoing paragraphs (a) through (e), the
Company nor any of its Subsidiaries shall engage in any Asset Swaps, unless:
(i) at the time of entering into the agreement to swap assets and immediately
after giving effect to the proposed Asset Swap, no Default or Event of Default
shall have occurred and be continuing or would occur as a consequence thereof;
(ii) the Company would, after giving pro forma effect to the proposed Asset
Swap, have been permitted to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.12; (iii) the
respective fair market values of the assets being acquired and disposed of by
the Company or any of its Subsidiaries (as determined in good faith by the
management of the Company or, if such Asset Swap includes consideration in
excess of $10,000,000 by the Board of Directors, as evidenced by a Board
Resolution delivered to the Trustee) are substantially the same as at the time
of entering into the agreement to swap assets; and (iv) at the time of the
consummation of the proposed Asset Swap the percentage of any decline in the
fair market value (determined as aforesaid) of the asset or assets being
acquired by the Company or any of its Subsidiaries shall not be significantly
greater than the percentage of any decline in the fair market value (determined
as aforesaid) of the assets being disposed of by the Company or any of its
Subsidiaries, calculated from the time the agreement to swap assets was entered
into.
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SECTION 4.17. LIMITATION ON PREFERRED STOCK OF SUBSIDIARIES.
The Company shall not permit any of its Subsidiaries to issue any
Preferred Stock (other than to the Company or to a Wholly-Owned Subsidiary of
the Company) or permit any Person (other than the Company or a Wholly-Owned
Subsidiary of the Company) to own any Preferred Stock of a Subsidiary (other
than Acquired Preferred Stock; provided that at the time the issuer of such
Acquired Preferred Stock becomes a Subsidiary of the Company or merges with the
Company or any of its Subsidiaries, and after giving effect to such transaction,
the Company shall be able to incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with Section 4.12).
SECTION 4.18. LIMITATION ON LIENS.
Neither the Company nor any of its Subsidiaries shall create, incur,
assume, or suffer to exist any Liens upon any of their respective assets, except
for (a) Permitted Liens, (b) Liens to secure Senior Debt or guarantees thereof
permitted under this Indenture, (c) any Liens in favor of the Trustee, (d) Liens
to secure Guarantor Senior Debt permitted under this Indenture and (e) any Lien
to secure the replacement, refunding, extension, or renewal, in whole or in
part, of any Indebtedness described in the foregoing clauses; provided that, to
the extent any such clause limits the amount secured or the asset subject to
such Liens, no extension or renewal will increase the assets subject to such
Liens or the amount secured thereby beyond the assets or amounts set forth in
such clauses.
SECTION 4.19. GUARANTEES OF CERTAIN INDEBTEDNESS.
The Company shall not permit any of its Subsidiaries, directly or
indirectly, to guarantee or otherwise become liable for, or incur any Lien
securing, the payment of any Indebtedness of the Company or any other Guarantor
(other than Indebtedness not to exceed $2,000,000 in aggregate at any one time
outstanding as to all of the Company's Subsidiaries, and other than Liens
securing Indebtedness under the Credit Agreement consisting of pledges of stock
of the Company's Subsidiaries) unless such Subsidiary, the Company and the
Trustee execute and deliver a supplemental indenture substantially in the form
of Exhibit E hereto pursuant to which such Subsidiary becomes a Guarantor of the
Securities and which evidences such Subsidiary's Guarantee of the Securities,
such Guarantee to be a senior subordinated unsecured obligation of such
Subsidiary. Neither the Company nor any such Guarantor shall be required to
make a notation on the Securities or its Guarantee to reflect any such
subsequent Guarantee. Nothing in this Section 4.19
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shall be construed to permit any Subsidiary of the Company to incur Indebtedness
otherwise prohibited by Section 4.12.
Notwithstanding any other provision of this Section 4.19, no
Subsidiary of the Company shall be required to execute and deliver a
supplemental indenture pursuant to the first paragraph of this Section 4.19, or
otherwise issue a Guarantee, for so long as any Subordinated Note Agreements
shall remain outstanding.
SECTION 4.20. LIMITATION ON SALE AND LEASEBACK TRANSACTION.
Neither the Company nor any of its Subsidiaries shall enter into any
Sale and Leaseback Transaction, except that the Company or any Subsidiary may
enter into a Sale and Leaseback Transaction if, immediately prior thereto, and
after giving effect to such Sale and Leaseback Transaction (the Indebtedness
thereunder being equivalent to the Attributable Value thereof) the Company could
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.12.
SECTION 4.21. LIMITATION ON LINE OF BUSINESS.
For so long as any Securities are outstanding, the Company and its
Subsidiaries shall engage solely in the ownership and operation of Permitted
Businesses.
ARTICLE 5.
SUCCESSOR CORPORATION
SECTION 5.01. WHEN COMPANY MAY MERGE, ETC.
(a) The Company shall not and will not permit its Subsidiaries to, in
a single transaction or through a series of related transactions, consolidate
with or merge with or into, or sell, assign, transfer, lease, convey, or
otherwise dispose of all or substantially all of the assets of the Company
(determined on a consolidated basis) to, another Person or adopt a plan of
liquidation, unless:
(1) either (A) the Company shall be the survivor of such merger or
consolidation or (B) the surviving or transferee Person is a corporation,
partnership, or trust organized and existing under the laws of the United
States, any State thereof or the District of Columbia and such surviving or
transferee Person shall expressly assume by supplemental indenture all the
obligations of the Com-
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pany under the Securities and this Indenture and assumes by amendment all
of the obligations of the Company under the Registration Rights Agreement;
(2) immediately after giving effect to such transaction and the use of
the proceeds therefrom (on a pro forma basis, including any Indebtedness
incurred or anticipated to be incurred in connection with such
transaction), the Company or the surviving or transferee Person is able to
incur $1.00 of additional Indebtedness (other than Permitted Indebtedness)
in compliance with Section 4.12;
(3) immediately after giving effect to such transaction (including any
Indebtedness incurred or anticipated to be incurred in connection with the
transaction) no Default or Event of Default shall have occurred and be
continuing; and
(4) the Company has delivered to the Trustee an Officers' Certificate
and Opinion of Counsel, each stating that such consolidation, merger, or
transfer complies with this Indenture, that the surviving or transferee
Person agrees by supplemental indenture to be bound hereby, and that all
conditions precedent in this Indenture relating to such transaction have
been satisfied.
(b) For purposes of the foregoing, the transfer (by lease, assignment,
sale, or otherwise, in a single transaction or series of related transactions)
of all or substantially all of the properties and assets of one or more
Subsidiaries, the Capital Stock of which constitutes all or substantially all of
the properties and assets of the Company, shall be deemed to be the transfer of
any or substantially all of the properties and assets of the Company.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any transfer of assets in
accordance with Section 5.01, the successor Person formed by such consolidation
or into which the Company is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein. When a successor corporation
assumes all of the obligations of the Company hereunder and under the Securities
and agrees to be bound hereby and thereby, the predecessor shall be released
from such obligations.
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ARTICLE 6.
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" occurs if:
(1) the Company defaults in the payment of interest on the Securities
when the same becomes due and payable and the Default continues for a
period of 30 days (whether or not such payment shall be prohibited by
Article 10); or
(2) the Company defaults in the payment of the principal of any
Securities when the same becomes due and payable, at maturity, upon
redemption, or otherwise (whether or not such payment shall be prohibited
by Article 10); or
(3) the Company fails to observe or perform any other covenant or
agreement contained in the Securities or this Indenture and the Default
continues for a period of 30 days after written notice thereof specifying
such Default has been given to the Company by the Trustee or the Holders of
at least 25% in aggregate principal amount of the outstanding Securities;
or
(4) there shall be a failure to pay at the final stated maturity
(giving effect to any extensions thereof) the principal amount of any
Indebtedness of the Company or any Subsidiary of the Company, or the
acceleration of the final stated maturity (giving effect to any extensions
thereof) of any such Indebtedness, if the aggregate principal amount of
such Indebtedness, together with the aggregate principal amount of any
other such Indebtedness in default for failure to pay principal at the
final stated maturity (giving effect to any extensions thereof) or which
has been accelerated, aggregates $5,000,000 or more at any time; or
(5) one or more judgments in an aggregate amount in excess of
$5,000,000 (which are not covered by insurance as to which the insurer has
not disclaimed coverage) shall have been rendered against the Company or
any of its Subsidiaries and such judgments remain undischarged or unstayed
for a period of 60 days after such judgment or judgments become final and
non-appealable; or
(6) any Guarantee ceases to be in full force and effect (other than as
provided in Article 12) or is declared null and void, or any Guarantor
denies that it has any
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further liability under any Guarantee, or gives notice to such effect
(other than by reason of the termination of this Indenture or the release
of any such Guarantee in accordance with this Indenture) and such condition
shall have continued for a period of 30 days after the Company receives
written notice thereof from the Trustee or Holders of at least 25% in
aggregate principal amount of outstanding Securities; or
(7) The Company or any Significant Subsidiary (A) commences a
voluntary case or proceeding under any Bankruptcy Law with respect to
itself, (B) consents to the entry of a judgment, decree or order for relief
against it in an involuntary case or proceeding under any Bankruptcy Law,
(C) consents to the appointment of a Custodian of it or for substantially
all of its property, (D) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it or (E) makes a general
assignment for the benefit of its creditors; or
(8) a court of competent jurisdiction enters a Judgment, decree or
order for relief in respect of the Company or any Significant Subsidiary in
an involuntary case or proceeding under any Bankruptcy Law, which shall (A)
approve as properly filed a petition seeking reorganization, arrangement,
adjustment or composition in respect of the Company or any Significant
Subsidiary, (B) appoint a Custodian of the Company or any Significant
Subsidiary or for substantially all of its property or (C) order the
winding-up or liquidation of its affairs; and such judgment, decree or
order shall remain unstayed and in effect for a period of 60 consecutive
days.
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
Section 6.01(7) or (8) with respect to the Company or any Significant
Subsidiary) occurs and is continuing and has not been waived pursuant to Section
6.04, the Trustee may, by notice to the Company, or the Holders of at least 25%
in aggregate principal amount of the Securities then outstanding may, by written
notice to the Company and the Trustee, and the Trustee shall, upon the request
of such Holders, declare the aggregate principal amount of the Securities
outstanding, together with accrued but unpaid interest, if any, on all
Securities to be due and payable by notice in writing to the Company and the
Trustee specifying the respective Event of Default and that it is a "notice of
acceleration" (the "ACCELERATION NOTICE"), and the same (i) shall become
immediately due and payable or (ii) if there are any amounts outstanding under
the
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Credit Agreement, shall become due and payable upon the first to occur of an
acceleration under the Credit Agreement or five Business Days after receipt by
the Company and the Representative under the Credit Agreement of such
Acceleration Notice (unless all Events of Default specified in such Acceleration
Notice have been cured or waived). If an Event of Default specified in Section
6.01(7) or (8) occurs and is continuing with respect to the Company or any
Significant Subsidiary, all unpaid principal and accrued interest on the
Securities then outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Securityholder. The Holders of a majority in principal amount of the Securities
then outstanding (by notice to the Trustee) may rescind and cancel a declaration
of acceleration and its consequences if (i) the rescission would not conflict
with any judgment or decree of a court of competent jurisdiction, (ii) all
existing Events of Default have been cured or waived, except non-payment of the
principal or interest on the Securities which have become due solely by such
declaration of acceleration, (iii) to the extent the payment of such interest is
lawful, interest (at the same rate as specified in the Securities) on overdue
installments of interest and overdue payments of principal, which has become due
otherwise than by such declaration of acceleration, has been paid, (iv) the
Company has paid the Trustee its reasonable compensation and reimbursed the
Trustee for its expenses, disbursements, and advances and (v) in the event of
the cure or waiver of a Default or Event of Default of the type described in
Sections 6.01(7) and (8), the Trustee shall have received an Officers'
Certificate and an Opinion of Counsel that such Default or Event of Default has
been cured or waived and the Trustee shall be entitled to conclusively rely upon
such Officers, Certificate and Opinion of Counsel. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of De-
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fault. No remedy is exclusive of any other remedy. All available remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Subject to Sections 6.07 and 9.02, the Holders of a majority in
principal amount of the outstanding Securities by notice to the Trustee may
waive an existing Default or Event of Default and its consequences, except a
Default in the payment of principal of or interest on any Security as specified
in clauses (1) and (2) of Section 6.01 or a Default or Event of Default arising
under any provision of this Indenture which cannot be modified without the
consent of each Holder of Securities affected thereby.
SECTION 6.05. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the outstanding
Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it, including, without limitation, any remedies provided for in
Section 6.03. Subject to Section 7.01, however, the Trustee may, in its
discretion, refuse to follow any direction that conflicts with any law or this
Indenture, that the Trustee determines may be unduly prejudicial to the rights
of another Securityholder, or that may involve the Trustee in personal
liability; provided that the Trustee may take any other action deemed proper by
the Trustee, in its discretion, which is not inconsistent with such direction.
SECTION 6.06. LIMITATION ON SUITS.
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(1) the Holder gives to the Trustee notice of a continuing Event of
Default;
(2) Holders of at least 25% in principal amount of the outstanding
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holders offer to the Trustee reasonably satisfactory to the
Trustee indemnity or security against any loss, liability or expense to be
incurred in compliance with such request;
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(4) the Trustee does not comply with the request within 45 days after
receipt of the request and the offer of satisfactory indemnity or security;
and
(5) during such 45-day period the Holders of a majority in principal
amount of the outstanding Securities do not give the Trustee a direction
which, in the opinion of the Trustee, is inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Security, on or
after the respective due dates expressed in such Security, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default in payment of principal or interest specified
in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Securities for the whole amount of principal
and accrued interest remaining unpaid, together with interest on overdue
principal and, to the extent that payment of such interest is lawful, interest
on overdue installments of interest at the rate set forth in the Securities and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relating to the Company or
any other obligor upon the Securities, any of their respective creditors or any
of their respective property, and shall be entitled and empowered to collect and
receive any Com-
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panies or other property payable or deliverable on an such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Securityholder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, taxes, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07. The Company's payment obligations under this Section 6.09 shall be
secured in accordance with the provisions of Section 7.07. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Securityholder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Securityholder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
First: to the Trustee for amounts due under Sections 6.09 and 7.07;
Second: if the Holders are forced to proceed against the Company any
directly without the Trustee, to Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, with out preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Fourth: to the Company or any other obligor on the Securities, as
their interests may appear, or as a court of competent jurisdiction may
direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Securityholders pursuant to this Section
6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its
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discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorney's fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07, or a suit by a Holder or Holders of more than 10% in principal amount of
the outstanding Securities.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent Person would exercise or use under the circumstances in the
conduct of its own affairs.
(b) Except during the continuance of a Default or an Event of Default:
(1) The Trustee need perform only those duties as are specifically set
forth in this Indenture or the TIA and no duties, covenants,
responsibilities or obligations shall be implied in this Indenture that are
adverse to the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates (including Officers'
Certificates' or opinions (including Opinions of Counsel) furnished to the
Trustee and conforming to the requirements of this Indenture. However, as
to an certificates or opinions which are required by any provision of this
Indenture to be delivered or provided to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein).
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(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)of this
Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability or the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment indemnity against such risk or of such funds or adequate ability is
not reasonably assured to it.
(e) Every provision of this Indenture that in an way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregate from other
assets except to the extent required by law.
(g) In the absence of bad faith, negligence or willful misconduct on
the part of the Trustee, the Trustee shall not be responsible for the
application of any money by any Paying Agent other than the Trustee.
SECTION 7.02. RIGHTS OF TRUSTEES.
Subject to Section 7.01:
(a) The Trustee may conclusively rely and shall be full protected in
acting or refraining from acting upon any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
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(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
which shall conform to Sections 11.04 and 11.05. The Trustee shall not be liable
for and shall be fully protected in respect of any action it takes or omits to
take in good faith in reliance on such Officers' Certificate or Opinion of
Counsel.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent or attorney
appointed with due care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate (including any Officers'
Certificate), statement, instrument, opinion (including any Opinion of Counsel),
notice, request, direction, consent, order, bond, debenture, or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled, upon reasonable notice to the Company, to examine the books, records,
and premises of the Company, personally or by agent or attorney at the sole cost
of the Company and shall incur no liability or additional liability of any kind
by reason of such inquiry or investigation.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders of the Securities pursuant to the provisions of
this Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred by it in compliance with such request, order or direction.
(g) The Trustee may consult with counsel of its selection and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability with respect to any action taken, omitted or suffered
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.
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(h) the Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust Officer has knowledge thereof or unless written
notice of any event which is in fact such a default is received by the Trustee
at the Corporate Trust Office of the Trustee, and such notice references the
Securities and this Indenture; and
(i) the rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, any
Subsidiary or Unrestricted Subsidiary, or their respective Affiliates, with the
same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, and it shall not be accountable for the
Company's use of the proceeds from the Securities, and the recitals contained
herein and in the Securities shall be taken as the statements of the Company and
the Trustee shall not be responsible for any statement of the Company in this
Indenture or the Securities other than the Trustee's certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder, as their
name and address appears in the security register, notice of the uncured Default
or Event of Default within 60 days after such Default or Event of Default
occurs. Except in the case of a Default or an Event of Default in payment of
principal of, or interest on, any Security, including an accelerated payment and
the failure to make payment on the Change of Control Payment Date pursuant to a
Change of Control Offer or on the Proceeds Purchase Date pursuant to a Net
Proceeds Offer and, except in the case of a failure to comply with Article 5,
the Trustee may withhold the notice if and so long as its Board of Directors,
the executive
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committee of its Board of Directors or a committee of its directors and/or Trust
Officers in good faith determines that withholding the notice is in the interest
of the Securityholders. The Trustee shall not be deemed to have knowledge of a
Default or Event of Default other than (i) any Event of Default occurring
pursuant to Section 6.01(l) or 6.01(2) or (ii) any Default or Event of Default
of which a Trust Officer shall have received written notification and such
notice references the Securities and this Indenture or obtained actual
knowledge.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 of each year beginning with May 15,
1999, the Trustee shall, to the extent that any of the events described in TIA
Section 313(a) occurred within the previous twelve months, but not otherwise,
mail to each Securityholder a brief report dated as of such date that complies
with TIA Section 313(a). The Trustee also shall comply with TIA Section 313 (b)
and 313(c)
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
The Company shall promptly notify the Trustee if the Securities become
listed on any stock exchange or any delisting thereof and the Trustee shall
comply with TIA Section 313(d).
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation as may be agreed upon in writing by the Company and the Trustee.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses, disbursements and advances
incurred or made by it in connection with the performance of its duties and the
discharge of its obligations under this Indenture. Such expenses shall include
the reasonable fees and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee and its agents, employees,
officers, stockholders and directors for, and hold them harmless against, any
and all loss, liability, damage, claim or expense including taxes (other than
taxes based upon, measured by or determined by the income of the Trustee),
incurred by them except for such actions to the extent caused by any negligence,
bad faith or willful misconduct on their part, arising out of or in connection
with the accep-
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tance or administration of this trust including the reasonable costs and
expenses of defending themselves against any claim (whether asserted by the
Company, a Holder or any other persons), or liability in connection with the
exercise or performance of any of their rights, powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company shall defend the claim and
the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel; provided that the Company will not be required to pay such fees and
expenses if it assumes the Trustee's defense and there is no conflict of
interest between the Company and the Trustee in connection with such defense as
reasonably determined by the Trustee. The Company need not pay for any
settlement made without its written consent. The Company need not reimburse an
expense or indemnify against any loss or liability to the extent incurred by the
Trustee through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(7) or (8) occurs, such expenses and the
compensation for such services shall be paid to the extent allowed under any
Bankruptcy Law.
The provisions of this Section 7.07 shall survive termination of this
Indenture.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Securities may remove the
Trustee by so notifying the Company and the Trustee and may appoint a successor
trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
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(4) the Trustee becomes incapable of acting.
If the trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Promptly after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee (at the expense of
the Company), the Company or the Holders of at least 10% in principal amount of
the outstanding Securities may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided that such
corporation shall be otherwise qualified and eligible under this Article 7.
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SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA Sections 310(a)(1) and 310(a)(2). The Trustee (or in the
case of a corporation included in a bank holding company system, the related
bank holding company) shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. In addition, if the Trustee a corporation included in a bank holding
company system, the Trustee, independently of such bank holding company shall
meet the capital requirements of TIA Sections 310(a)(2). The Trustee shall
comply with TIA Section 310(b); provided that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities, or certificates of interest or participation in other securities, of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met. The provisions of TIA Section 310 shall apply to
the Company and any other obligor of the Securities.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Company and any
other obligor of the Securities.
ARTICLE 8.
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. TERMINATION OF THE COMPANY'S OBLIGATIONS.
This Indenture shall cease to be of further effect and the obligations
of the Company under the Securities and this Indenture shall terminate and the
obligations of the Guarantors, if any, with respect thereto shall terminate
(except that the obligations under Sections 7.07, 8.04 and 8.05 shall survive
the effect of this Article 8) when all outstanding Securities theretofore
authenticated and issued have been delivered to the Trustee for cancellation and
the Company has paid all sums payable by it hereunder.
In addition, at the Company's option, either (a) the Company shall be
deemed to have been Discharged from any and
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all obligations with respect to the Securities and each Guarantor, if any, will
be discharged from any and all obligations with respect to its Guarantee (except
for certain obligations of the Company to register the transfer or exchange of
such Securities, replace stolen, lost or mutilated Securities, maintain paying
agencies and hold moneys for payment in trust) after the applicable conditions
set forth below have been satisfied or (b) the Company shall cease to be under
any obligation to comply with any term, provision or condition set forth in
Article 4 (except that the Company's obligations under Sections 4.01 and 4.02
shall survive) and Section 5.01, and will not by such noncompliance cause a
Default or Event of Default under Section 6.01(3), after the applicable
conditions set forth below have been satisfied:
(1) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust, specifically pledged
as security for, and dedicated solely to, the benefit of the Holders of the
Securities U.S. Legal Tender or U.S. Government Obligations or a
combination thereof which, through the payment of interest thereon and
principal in respect thereof in accordance with their terms, will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay all the principal of and interest on the Securities
on the dates such installments of interest or principal are due in
accordance with the terms of such Securities, as well as the Trustee's fees
and expenses; provided that no deposits made pursuant to this Section
8.01(l) shall cause the Trustee to have a conflicting interest as defined
in and for purposes of the TIA; provided, further, that from and after the
time of deposit, the Funds deposited shall not be subject to the rights of
holders of Senior Debt pursuant to the provisions of Article 10; and
provided, further, that, as confirmed by an Opinion of Counsel, no such
deposit shall result in the Company, the Trustee or the trust becoming or
being deemed to be an "investment company" under the Investment Company Act
of 1940;
(2) The Company shall have delivered to the Trustee an Opinion of
Counsel or a private letter ruling issued to the Company by the IRS to the
effect that the Holders of the Securities will not recognize income, gain
or loss for federal income tax purposes as a result of the deposit and
related defeasance and will be subject to federal income tax on the same
amounts and in the same manner and at the same times as would have been the
case if such option had
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not been exercised and, in the case of an Opinion of Counsel furnished in
connection with a Discharge pursuant to the foregoing, accompanied by a
private letter ruling issued to the Company by the IRS to such effect;
(3) No Event of Default or Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit after
giving effect to such deposit;
(4) The Company shall have delivered to the Trustee an Opinion of
Counsel, subject to certain qualifications, to the effect that (i) the
Funds will not be subject to any rights of any other holders of
Indebtedness of the Company, and (ii) the Funds so deposited will not be
subject to avoidance under applicable Bankruptcy Law;
(5) The Company shall have paid or duly provided for payment of all
amounts then due to the Trustee pursuant to Section 7.07;
(6) No such deposit will result in a Default under this Indenture or a
breach or violation of, or constitute a default under, any other instrument
or agreement (including, without limitation, the Credit Agreement) to which
the Company or any of its Subsidiaries is a party or by which it or its
property is bound; and
(7) An Officers, Certificate and an Opinion of Counsel to the effect
that all conditions precedent to the defeasance have been complied with.
Notwithstanding the foregoing, the Opinion of Counsel required by
subparagraph 2 above need not be delivered if all Securities not theretofore
delivered to the Trustee for cancellation (i) have become due and payable, (ii)
will become due and payable on the Maturity Date within one year, or (iii) are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company.
"DISCHARGED" means that the Company shall be deemed to have paid and
discharged the entire indebtedness re resented by, and obligations under, the
Securities and to have satisfied all the obligations under this Indenture
relating to the Securities (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same upon compliance by the
Company with the provisions of this Section), except (i) the rights of the
Holders of Securities to receive,
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from the trust fund described in clause (1) above, payment of the principal of
and the interest on such Securities when principal of such payments are due, (i)
the Company's obligations with respect to the Securities under Sections 2.03
through 2.07, 7.07 and 7.08 and (iii) the rights, powers, trusts, duties and
immunities of the Trustee hereunder.
"FUNDS" means the aggregate amount of U.S. Legal Tender and/or U.S.
Government obligations deposited with the Trustee pursuant to this Article 8.
SECTION 8.02. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE.
Subject to Section 8.05, after (i) the conditions of Section 8.01,
have been satisfied and (ii) the Company has delivered to the Trustee an Opinion
of Counsel, stating that all conditions precedent referred to in clause (1)
above relating to the satisfaction and discharge of this Indenture have been
complied with, the Trustee upon written request of the Company shall acknowledge
in writing the discharge of the Company's obligations under this Indenture
except for those surviving obligations specified in this Article 8.
SECTION 8.03. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust Funds deposited with it pursuant to
Section 8.01. It shall apply the Funds through the Paying Agent and in
accordance with this Indenture to the payment of principal and accrued and
unpaid interest on the Securities. The Company shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
U.S. Government obligations deposited pursuant to Section 8.01 or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Securities.
SECTION 8.04. REPAYMENT TO THE COMPANY.
The Trustee and the Paying Agent shall promptly pay to the Company,
upon the Company's written request, any Funds held by them for the payment of
principal or interest that remains unclaimed for one year; provided that the
Trustee or such Paying Agent may, at the expense of the Company, cause to be
published once in a newspaper of general circulation in the City of New York or
mailed to each Holder, notice that such Funds remain unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, any unclaimed balance of such
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Funds then remaining will be repaid to the Company. After payment to the
Company, Holders entitled to the Funds must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
Person and all liability of the Trustee and Paying Agent with respect to such
Funds shall cease.
SECTION 8.05. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any Funds by reason
of any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.01 until such time as the Trustee or Paying Agent is permitted to
apply all such Funds in accordance with Section 8.01; provided that if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from
Funds held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDER.
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; or
(4) to make any other change that does not adversely affect in any
material respect the rights of any Securityholders hereunder;
provided that the Company has delivered to the Trustee an Opinion of Counsel and
an Officers' Certificate, each stating that
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such amendment or supplement complies with the provisions of this Section 9.01.
SECTION 9.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder or
Holders of at least a majority in principal amount of the outstanding Securities
may amend or supplement this Indenture or the Securities, without notice to any
other Securityholders. Subject to Sections 6.04 and 6.07, the Holder or Holders
of a majority in aggregate principal amount of the outstanding Securities may
waive compliance by the Company with any provision of this Indenture or the
Securities without notice to any other Securityholder. No amendment, supplement
or waiver, including a waiver pursuant to Section 6.04, shall, directly or
indirectly, without the consent of each Holder of each Security affected
thereby:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or change the time for payment of interest,
including defaulted interest, on any Securities;
(3) reduce the principal of or change the fixed maturity of any
Securities, or change the date on which any Securities may be subject to
redemption or repurchase, or reduce the redemption or repurchase price
therefor;
(4) make any Securities payable in money other than that stated in
the Securities ;
(5) make any change in provisions of this Indenture protecting the
right of each Holder of a Security to receive payment of principal of and
interest on such Security on or after the due date thereof or to bring suit
to enforce such payment or permitting Holders of a majority in principal
amount of Securities to waive Defaults or Events of Default;
(6) after the Company's obligation to purchase the Securities arises
under Section 4.15 or 4.16, amend, modify or change the obligation of the
Company to consummate a Change of Control Offer or a Net Proceeds Offer or
waive any default in the performance thereof or modify any of the
provisions or definitions with respect to any such offers;
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(7) modify or change any provision of this Indenture affecting the
subordination of the Securities or any Guarantee in a manner adverse to the
Holders of the Securities; or
(8) release any Guarantor from any of its obligations under its
Guarantee or this Indenture other than in compliance with other provisions
of Article 12.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective (as provided in Section 9.04), the Company shall mail to the
Holders affected thereby a notice briefly describing the amendment, supplement
or waiver. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 9.03. COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. Subject to the following paragraph, any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of his Security by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Securities have consented (and not theretofore
revoked such consent) to the amendment, supplement or waiver (at which time such
amendment, supplement or waiver shall become effective).
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those Persons who were Holders
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at such record date (or their duly designated proxies), and only those Persons,
shall be entitled to revoke any consent previously given, whether or not such
Persons continue to be Holders after such record date. No such consent shall be
valid or effective for more than 120 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (6) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to and adopted in accordance with this Article 9; provided
that the Trustee may, but shall not be obligated to, execute any such amendment,
supplement or waiver which affects the Trustee's own rights, duties or
immunities under this Indenture. The Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate each stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article 9 is authorized or permitted by this
Indenture. Such Opinion of Counsel shall not be an expense of the Trustee.
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ARTICLE 10.
SUBORDINATION OF SECURITIES
SECTION 10.01. SECURITIES SUBORDINATED TO SENIOR DEBT.
The Company covenants and agrees and the Trustee and each Holder of
the Securities, by its acceptance thereof, likewise covenants and agrees, that
all Securities shall be issued subject to the provisions of this Article 10; and
the Trustee and each Person holding any Security, whether upon original issue or
upon transfer, assignment or exchange thereof, accepts and agrees that the
payment of all Obligations on the Securities (except for the payment of fees and
expenses of the Trustee and any indemnity under Section 7.07) by the Company
shall, to the extent and in the manner herein set forth, be subordinated and
junior in right of payment to the prior payment in full in cash or Cash
Equivalents (or such payment shall be duly provided for to the satisfaction of
the holders of the Senior Debt) of all Obligations on the Senior Debt; that the
subordination is for the benefit of, and shall be enforceable directly by, the
holders of Senior Debt, and that each holder of Senior Debt whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Senior Debt in reliance upon the covenants and
provisions contained in this Indenture and the Securities.
SECTION 10.02. NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES.
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on or any other amounts owing with respect to any Senior
Debt, no payment of any kind or character (except payment in Permitted
Securities) shall be made by the Company or any other Person on behalf of the
Company with respect to any Obligations on the Securities or to acquire any of
the Securities for cash or property or otherwise. In addition, if any other
event of default occurs and is continuing (or if such an event of default would
occur upon any payment with respect to the Securities or would arise upon the
passage of time as a result of such parent) with respect to any Designated
Senior Debt (as such event of default is defined in the instrument creating or
evidencing such Designated Senior Debt) and such event of default permits the
holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof and if the Representative for the respective issue of
Designated Senior Debt gives written notice of the event of default to the
Company and the Trustee (a "DEFAULT NOTICE"), then, unless and until all events
of de-
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fault have been cured or waived or have ceased to exist or the Company and
the Trustee receive notice from the Representative for the respective issue of
Designated Senior Debt terminating the Blockage Period (as defined below),
during the 180 days after the delivery of such Default Notice (the "BLOCKAGE
PERIOD"), neither the Company nor any other Person on behalf of the Company
shall make any payment of any kind or character (except in Permitted Securities)
with respect to any Obligations on the Securities or to acquire any of the
Securities for cash or property or otherwise. Notwithstanding anything herein
to the contrary, in no event will a Blockage Period extend beyond 180 days from
the date the payment on the Securities was due and only one such Blockage Period
may be commenced within any 360 consecutive days. For all purposes of this
Section 10.02(a), no event of default which existed or was continuing on the
date of the commencement of any Blockage Period with respect to the Designated
Senior Debt initiating such Blockage Period shall be, or be made, the basis for
the commencement of a second Blockage Period by the Representative of such
Designated Senior Debt, whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action,
or any breach of any financial covenants for a period commencing after the date
of commencement of such Blockage Period that, in either case, would give rise to
an event of default pursuant to any provision under which an event of default
previously existed or was continuing shall constitute a new event of default for
this purpose).
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 10.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Debt (pro rata to such
holders on the basis of the respective amount of Senior Debt held by such
holders) or their respective Representatives, as their respective interests may
appear. The Trustee shall be entitled to rely on information regarding amounts
then due and owing on the Senior Debt, if any received from the holders of
Senior Debt (or their Representatives) or, if such information is not received
from such holders or their Representatives, from the Company and only amounts
included in the information provided to the Trustee shall be paid to the holders
of Senior Debt.
Nothing contained in this Article 10 shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Section 6.02 or to pursue any rights or
remedies hereunder;
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provided, that all Senior Debt thereafter due or declared to be due shall first
be paid in full in cash or Cash Equivalents before the Holders are entitled to
receive any payment with respect to Obligations on the Securities.
SECTION 10.03. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors or marshalling of assets of the Company or in a bankruptcy,
reorganization, insolvency, receivership or other similar proceeding relating to
the Company or its property, whether voluntary or involuntary, all Obligations
due or to become due upon all Senior Debt shall first be paid in full in cash or
Cash Equivalents, or such payments duly provided for to the satisfaction of the
holders of the Senior Debt before any payment or distribution of any kind or
character is made on account of any Obligations on the Securities, or for the
acquisition of any of the Securities for cash or property or otherwise. Upon
any such dissolution, winding-up, liquidation, reorganization, receivership or
similar proceeding, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to which the Holders
of the Securities or the Trustee under this Indenture would be entitled (other
than any payments of fees and expenses of the Trustee and any indemnity made
under Section 7.07), except for the provisions hereof, shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, or by the Holders of the
Securities or by the Trustee under this Indenture if received by them, directly
to the holders of Senior Debt (pro rata to such holders on the basis of the
respective amounts of Senior Debt held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt has been paid in full in cash or Cash
Equivalents after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of Senior Debt.
(b) To the extent any payment of Senior Debt (whether by or on behalf
of the Company, as proceeds of security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
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to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or
other similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then, if such payment is recovered by, or paid over
to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person, the Senior Debt or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by Section 10.03(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Debt (pro rata to such holders on the basis of the
respective amount of Senior Debt by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt has been paid in full in cash or Cash
Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.
(d) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article 5 and as long as permitted under the terms of the Senior Debt shall not
be deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Company's obligations
hereunder in accordance with Article 5.
SECTION 10.04. PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.
Nothing contained in this Article 10 or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Sections
10.02 and 10.03, from making payments at any time for the purpose of making
payments of principal of and interest on the Securities, or from depositing with
the Trustee any moneys for such payments, or (ii) in the absence of actual
knowledge by the Trustee that a given payment would be prohibited by Section
10.02 or 10.03, the application by the Trustee of any moneys deposited with it
for the purpose of making such payments of principal of, and interest on, the
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Securities to the Holders entitled thereto unless at least one Business Day
prior to the date upon which such payment would otherwise become due and
payable, the Trustee shall have received the written notice provided for in
Section 10.02(a) or in Section 10.07. The Company shall give prompt written
notice to the Trustee of any dissolution, winding-up, liquidation or
reorganization of the Company.
SECTION 10.05. SUBROGATION.
Subject to the payment in full in cash or Cash Equivalents of all
Senior Debt, the Holders of the Securities shall be subrogated to the rights of
the holders of Senior Debt to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Debt until the
Securities shall be paid in full; and, for the purposes of such subrogation, no
such payments or distributions to the holders of the Senior Debt by or on behalf
of the Company or by or on behalf of the Holders by virtue of this Article 10
which otherwise would have been made to the Holders shall, as between the
Company and the Holders of the Securities, be deemed to be a payment by the
Company to or on account of the Senior Debt, it being understood that the
provisions of this Article 10 are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on the one hand,
and the holders of the Senior Debt, on the other hand.
SECTION 10.06. OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article 10 or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Debt, and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of and any interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders of the Securities and creditors of the Company other than the holders of
the Senior Debt, nor shall anything herein or therein prevent the Holder of any
Security or the Trustee on its behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
SECTION 10.07. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit
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the making of any payment to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article 10. Regardless of anything to the
contrary contained in this Article 10 or elsewhere in this Indenture, the
Trustee shall not be charged with knowledge of the existence of any default or
event of default with respect to any Senior Debt or of any other facts which
would prohibit the making of any payment to or by the Trustee unless and until
the Trust Officer of the Trustee shall have received notice in writing from the
Company, or from a holder of Senior Debt or a Representative therefor, and,
prior to the receipt of any such written notice, the Trustee shall be entitled
to assume (in the absence of actual knowledge to the contrary) that no such
facts exist; provided that if a Trust Officer of the Trustee shall not have
received, at least three Business Days prior to the date upon which, by the
terms hereof, any such money may become payable for any purpose (including,
without limitation, the payment of the Principal Amount, Issue Price, accrued
Original Issue Discount, Redemption Price, Purchase Price, Change in Control
Purchase Price or interest, if any, as the case may be, in respect of any
Security), the notice with respect to such money provided for in this Section
10.07, then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money and to apply
the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within three
Business Days prior to such date.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article 10, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article 10, and if such evidence is not furnished the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 10.08. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee, subject to the provisions of Article 7 hereof,
and the Holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which bank-
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ruptcy, dissolution, winding-up, liquidation or reorganization proceedings are
pending, or upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
delivered to the Trustee or the Holders of the Securities, for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other acts pertinent thereto or to this Article 10.
SECTION 10.09. TRUSTEE'S RELATION TO SENIOR DEBT.
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article 10 with respect to any
Senior Debt which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Debt and nothing in
this Indenture shall deprive the Trustee or any such agent of any of its rights
as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its duties, covenants, responsibilities and
Obligations as are specifically set forth in this Article 10, and no implied
duties, covenants, responsibilities or obligations with respect to the holders
of Senior Debt shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Debt and shall not be liable to any such holders if the Trustee shall in good
faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other person cash, property or securities to which any holders
of Senior Debt shall be entitled by virtue of this Article 10 or otherwise.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may be given
to their Representative, if any.
SECTION 10.10. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE
COMPANY OR HOLDERS OF SENIOR DEBT.
No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture,
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<PAGE>
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee, without incurring responsibility to the
Trustee or the Holders of the Securities and without impairing or releasing the
subordination provided in this Article 10 or the obligations hereunder of the
Holders of the Securities to the holders of the Senior Debt, do any one or more
of the following: (i) change the manner, place or terms of payment or extend
the time of payment of, or renew or alter, Senior Debt, or otherwise amend or
supplement in any manner Senior Debt, or any instrument evidencing the same or
any agreement under which Senior Debt is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt; (iii) release any Person liable in any manner for the
payment or collection of Senior Debt; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 10.11. SECURITYHOLDERS AUTHORIZE TRUSTEE TO
EFFECTUATE SUBORDINATION OF SECURITIES.
Each Holder of Securities by its acceptance of such Security
authorizes and expressly directs the Trustee on such Holder's behalf to take
such action as may be necessary or appropriate to effectuate, as between the
holders of Senior Debt and the Holders of Securities, the subordination provided
in this Article 10, and appoints the Trustee such Holder's attorney-in-fact to
act for and on behalf of each such Holder of Securities for such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending to-wards liquidation of the business and assets
of the Company, the filing of a claim for the unpaid balance of its Securities
and accrued interest in the form required in those proceedings.
SECTION 10.12. THIS ARTICLE 10 NOT TO PREVENT EVENTS OF
DEFAULT.
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of this Article 10 will not be
construed as preventing the occurrence of an Event of Default.
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SECTION 10.13. TRUSTEE'S COMPENSATION NOT PREJUDICED.
Nothing in this Article 10 will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE 11.
MISCELLANEOUS
SECTION 11.01. TIA CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
SECTION 11.02. NOTICES.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by facsimile (with receipt confirmed by the addressee) or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
if to the Company or any Guarantor:
1301 Fifth Avenue
Suite 4000
Seattle, Washington 98101
Facsimile: (206) 623-7853
Attention: Chief Financial Officer
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Facsimile: (212) 815-5915
Attention: Corporate Trust Trustee Administration
The Company, the Guarantors and the Trustee by written notice to each
other may designate additional or different addresses for notices. Any notice or
communication to the Company, any Guarantor or the Trustee shall be deemed to
have been given or made as of the date so delivered if personally delivered;
when receipt is acknowledged, if faxed; and five (5) calendar days after mailing
if sent by registered or certified mail, postage prepaid (except that a notice
of change of ad-
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dress shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT.
Except with respect to the issuance of the series of Securities on the
date of this Indenture, upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company shall furnish to
the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent to be performed by the Company, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company, of
any, provided for in this Indenture relating to the proposed action have
been complied with.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.07, shall include:
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(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 11.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Securityholders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.07. LEGAL HOLIDAYS.
A "LEGAL HOLIDAY" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York, or at such place of payment are not required to be open. If a payment
date is a Legal Holiday at such place, payment may be made at such place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
SECTION 11.08. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
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SECTION 11.10. NO RECOURSE AGAINST OTHERS.
A past, present or future director, officer, employee, stockholder or
incorporator, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creations. Each Securityholder by accepting a Security waives and releases all
such liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
SECTION 11.11. SUCCESSORS.
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
SECTION 11.12. DUPLICATE ORIGINALS.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 11.13. SEVERABILITY.
In case any one or more of the provisions in this Indenture or in the
Securities shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the ful1 extent permitted by law.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed all as of the date first written above.
The Company
THE ACKERLEY GROUP, INC.
By:_______________________________
Name:
Title:
S-1
<PAGE>
The Trustee
THE BANK OF NEW YORK
By:____________________________
Name:
Title:
S-2
<PAGE>
EXHIBIT A-1
(FACE OF SECURITY)
CUSIP: 004532AA5
9% [Series A] [Series B] Senior Subordinated Notes due January 15, 2009
No.: _______________ $_____________
The Ackerley Group, Inc.
promises to pay to____________________________________________________________
or registered assigns,
the principal sum of__________________________________________________________
Dollars on January 15, 2009.
Interest Payment Dates: January 15, and July 15
Record Dates: January 1, and July 1
DATED: _______________, 199__
THE ACKERLEY GROUP, INC.
By:_________________________________
Name:
Title:
This is one of the [Global]
Securities referred to in the
within-mentioned Indenture:
The Bank of New York,
as Trustee
By:.____________________________
Authorized Signatory
<PAGE>
(REVERSE OF SECURITY)
9% SENIOR SUBORDINATED NOTES DUE JANUARY 15, 2009
[INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE
INDENTURE]
(INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS
OF THE INDENTURE]
1. Interest. THE ACKERLEY GROUP, INC., a Delaware corporation (the
"COMPANY"), promises to pay interest on the principal amount of this Security at
the rate per annum shown above. Interest on the Securities will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from December 14, 1998. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing July 15, 1999. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Securities to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Securities (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Securities are canceled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in U.S. Legal Tender. However, the
Company may pay principal and interest by its check payable in such U.S. Legal
Tender. The Company may deliver any such interest payment to the Paying Agent or
to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, The Bank of New York (the
"TRUSTEE") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or Co-Registrar without notice to the Holders. The
Company or any of its Subsidiaries may, subject to certain exceptions, act as
Registrar or Co-Registrar.
4. Indenture. The Company issued the Securities under an indenture,
dated as of December 14, 1998 (the "INDENTURE"), by and between the Company and
the Trustee. This Security is one of a duly authorized issue of Securities of
the Company designated as its 9% Senior Subordinated Notes due
A1-2
<PAGE>
January 15, 2009 (the "SECURITIES"), limited (except as otherwise provided in
the Indenture) in aggregate principal amount to $250,000,000, which may be
issued under the Indenture. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. 77aaa-77bbbb) (the "TIA"), as in effect on the
date of the Indenture. Notwithstanding anything to the contrary herein, the
Securities are subject to all such terms, and Holders of Securities are referred
to the Indenture and the TIA for a statement of them. The Securities are general
unsecured obligations of the Company.
5. Subordination. The Securities are subordinated in right of
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full in cash or Cash Equivalents of all Senior Debt, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. To the extent and in the manner provided in the
Indenture, Senior Debt must be paid before any payment may be made to any Holder
of this Security. Each Holder by his acceptance hereof agrees to be bound by
such provisions and authorizes and expressly directs the Trustee, on his behalf,
to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
6. Optional Redemption. (a) The Securities will be redeemable, at
the Company's option, in whole at any time or in part from time to time, on and
after January 15, 2004, at the following redemption prices (expressed as
percentages of the principal amount) if redeemed during the twelve-month period
commencing on January 15 of the years set forth below, plus, in each case,
accrued and unpaid interest thereon to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004......................................... 104.500%
2005......................................... 103.000%
2006......................................... 101.500%
2007 and thereafter.......................... 100.000%
</TABLE>
(b) In addition, on or prior to January 15, 2002, the Company may, at
its option, use the net cash proceeds of one or more Public Equity Offerings to
redeem the Securities, in part, at a redemption price of 109.000% of the
principal amount thereof, plus accrued and unpaid interest thereon to the date
of redemption; provided that after any such redemption the aggregate principal
amount of the Securities outstanding must
A1-3
<PAGE>
equal at least 66 2/3% of the aggregate principal amount of the Securities
originally issued.
7. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at such Holder's registered address. In
order to effect a redemption with the proceeds of a Public Equity Offering, the
Company shall send the redemption notice in the manner specified in the
Indenture not later than 30 days after the consummation of such Public Equity
offering and effect such redemption not later than 90 days after the
consummation of such Public Equity Offering. Securities in denominations larger
than $1,000 may be redeemed in part.
8. Change of Control Offer. In the event of a Change of Control,
upon the satisfaction of the conditions set forth in the Indenture, the Company
shall be required to offer to repurchase all of the then outstanding Securities
pursuant to a Change of Control Offer at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase. Holders of Securities which are the subject of such an offer to
repurchase shall receive an offer to repurchase and may elect to have such
Securities repurchased in accordance with the provisions of the Indenture
pursuant to and in accordance with the terms of the Indenture.
9. Limitation on Disposition of Assets. Under certain circumstances,
the Company is required to apply the net proceeds from Asset Sales to offer to
repurchase Securities at a price equal to 100% of the aggregate principal amount
thereof, plus accrued and unpaid interest to the date of repurchase.
10. Denominations; Transfer; Exchange. The Securities are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities during a period beginning 15
days before the mailing of a redemption notice for any Securities or portions
thereof selected for redemption.
11. Persons Deemed Owners. The registered Holder of a Security shall
be treated as the owner of it for all purposes.
A1-4
<PAGE>
12. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Company upon written request. After that, all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
13. Discharge Prior to Redemption or Maturity. if the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government obligations
sufficient to pay the principal on and interest on the Securities to redemption
or maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Securities (including certain covenants, but excluding its obligation to
pay the principal of and interest on the Securities).
14. Amendment; Supplement; Waiver. Subject to certain exceptions,
the Indenture or the Securities may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Securities then outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Securities to, among other things,
cure any ambiguity, defect or inconsistency, provide for uncertificated
Securities in addition to or in place of certificated Securities, or comply with
Article 5 of the Indenture, or make any other change that does not adversely
affect in any material respect the rights of any Holder of a Security.
15. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, make payments in respect of its Capital Stock or
certain Indebtedness, engage in certain Asset Swaps, enter into transactions
with Affiliates, create dividend or other payment restrictions affecting
Subsidiaries and merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
16. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Securities and the
Indenture, the predecessor will be released from those obligations.
A1-5
<PAGE>
17. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Securities then outstanding may declare all the Securities to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Securities unless it has been offered indemnity or
security reasonably satisfactory to it. The Indenture permits, subject to
certain limitations therein provided, Holders of a majority in aggregate
principal amount of the Securities then outstanding to direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest) if it determines in good faith that
withholding notice is in their interest.
18. Trustee Dealings. The Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with the Company, its Subsidiaries, Unrestricted
Subsidiaries or their respective Affiliates as if it were not the Trustee.
19. No Recourse Against Others. No past, present or future
stockholder, director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
20. Authentication. This Security shall not be valid until the
Trustee or authenticating agent manually signs the certificate of authentication
on this Security.
21. Governing Law. The laws of the State of New York shall govern
this Security and the Indenture, without regard to principles of conflict of
laws.
22. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Security or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST
(Custodian), and U/G/M7A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification
A1-6
<PAGE>
Procedures, the Company has caused CUSIP numbers to be printed on the Securities
as a convenience to the Holders of the Securities. No representation is made as
to the accuracy of such numbers as printed on the Securities and reliance may be
placed only on the other identification numbers printed hereon.
24. Indenture. Each Holder, by accepting a Security, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time. Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture.
[25. Registration Rights. Pursuant to the Registration Rights
Agreement, the Company will be obligated to consummate an exchange offer
pursuant to which, subject to the terms and conditions of the Registration
Rights Agreement, the Holder of this Security shall have the right to exchange
this Security for Securities of a separate series issued under the Indenture (or
a trust indenture substantially identical to the Indenture in accordance with
the terms of the Registration Rights Agreement) which have been registered under
the Securities Act, in like principal amount and having identical terms as this
Security. The Holders of the Securities shall be entitled to receive certain
additional interest payments in the event such exchange offer is not consummated
and upon certain other conditions, all pursuant to and in accordance with the
terms of the Registration Rights Agreement.]/1/
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture, which has the text of this
Security in larger type. Requests may be made to: THE ACKERLEY GROUP, INC.,
1301 Fifth Avenue, Suite 4000, Seattle, Washington 98101.
___________
/1/ Include only for Series A Security.
A1-7
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and transfer
this Security to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Security on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date: ________________ Your Signature:_________________________
(Sign exactly as your name appears on
the face of this Security)
SIGNATURE GUARANTEE.
___________________________
Participant in a Recognized Signature
Guarantee Medallion Program
A1-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or 4.16 of the Indenture, check the box below:
[ ] Section 4.15 [ ] Section 4.16
If you want to elect to have only part of the Security purchased by
the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased: $_____________
Date: ________________ Your Signature:_________________________
(Sign exactly as your
name appears on the Note)
Tax Identification No.:_________________
SIGNATURE GUARANTEE.
___________________________
Participant in a Recognized Signature
Guarantee Medallion Program
A1-9
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY(L)
The following exchanges of a part of this Global Security for an
interest in another Global Security or for a Definitive Security, or
exchanges of a part of another Global Security or Definitive Security for
an interest in this Global Security, have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this authorized
Principal Principal Global Security officer of
Amount of Amount of following such Trustee or
Date of Exchange this Global Security this Global Security decrease (or increase) Custodian
-------------------- ---------------------- ---------------------- ------------------------ -------------
<S> <C> <C> <C> <C>
</TABLE>
__________________
(1) This should be included only if the Security is issued in global form.
A1-10
<PAGE>
EXHIBIT A-2
(FACE OF REGULATION S TEMPORARY GLOBAL SECURITY)
CUSIP: U00456AA8
9% [Series A] [Series B] Senior Subordinated Notes due January 15, 2009
No.:_______________ $_____________
The Ackerley Group, Inc.
promises to pay to______________________________________________________________
or registered assigns,
the principal sum of____________________________________________________________
Dollars on January 15, 2009.
Interest Payment Dates: January 15, and July 15
Record Dates: January 1, and July 1
DATED: _______________, 199__
THE ACKERLEY GROUP, INC.
By: _______________________________
Name:
Title:
This is one of the [Global]
Securities referre to in the
within-mentioned Indenture:
The Bank of New York,
as Trustee
By:._________________________
Authorized Signatory
A2-1
<PAGE>
(REVERSE OF REGULATION S TEMPORARY GLOBAL SECURITY)
9% SENIOR SUBORDINATED NOTES DUE JANUARY 15, 2009
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SECURITY,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
SECURITIES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
[INSERT THE GLOBAL NOTE LEGEND]
[INSERT THE PRIVATE PLACEMENT LEGEND]
1. Interest. THE ACKERLEY GROUP, INC., a Delaware corporation (the
"COMPANY"), promises to pay interest on the principal amount of this Security at
the rate per annum shown above. Interest on the Securities will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from December 14, 1998. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing July 15, 1999. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Securities to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Securities (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Securities are canceled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in U.S. Legal Tender. However, the
Company may pay principal and interest by its check payable in such U.S. Legal
Tender. The Company may deliver any such interest payment to the Paying Agent or
to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, The Bank of New York (the
"TRUSTEE") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or Co-Registrar without notice to the Holders. The
Company or any of its Subsidiaries may, subject to certain exceptions, act as
Registrar or Co-Registrar.
4. Indenture. The Company issued the Securities under an Indenture,
dated as of December 14, 1998 (the
A2-2
<PAGE>
"INDENTURE"), by and between the Company and the Trustee. This Security is one
of a duly authorized issue of Securities of the Company designated as its 9%
Senior Subordinated Notes due January 15, 2009 (the "SECURITIES"), limited
(except as otherwise provided in the Indenture) in aggregate principal amount to
$250,000,000, which may be issued under the Indenture. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. 77aaa-
77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding
anything to the contrary herein, the Securities are subject to all such terms,
and Holders of Securities are referred to the Indenture and the TIA for a
statement of them. The Securities are general unsecured obligations of the
Company.
5. Subordination. The Securities are subordinated in right of
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full in cash or Cash Equivalents of all Senior Debt, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. To the extent and in the manner provided in the
Indenture, Senior Debt must be paid before any payment may be made to any Holder
of this Security. Each Holder by his acceptance hereof agrees to be bound by
such provisions and authorizes and expressly directs the Trustee, on his behalf,
to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
6. Optional Redemption. (a) The Securities will be redeemable, at
the Company's option, in whole at any time or in part from time to time, on and
after January 15, 2004, at the following redemption prices (expressed as
percentages of the principal amount) if redeemed during the twelve-month period
commencing on January 15 of the years set forth below, plus, in each case,
accrued and unpaid interest thereon to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004......................................... 104.500%
2005......................................... 103.000%
2006......................................... 101.500%
2007 and thereafter.......................... 100.000%
</TABLE>
(b) In addition, on or prior to January 15, 2002, the Company may, at
its option, use the net cash proceeds of one or more Public Equity Offerings to
redeem the Securities, in part, at a redemption price of 109.0% of the principal
amount thereof, plus accrued and unpaid interest thereon to the
A2-3
<PAGE>
date of redemption; provided that after any such redemption the aggregate
principal amount of the Securities outstanding must equal at least 66 2/3% of
the aggregate principal amount of the Securities originally issued.
7. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at such Holder's registered address. In
order to effect a redemption with the proceeds of a Public Equity Offering, the
Company shall send the redemption notice in the manner specified in the
Indenture not later than 30 days after the consummation of such Public Equity
offering and effect such redemption within 90 days after the consummation of
such Public Equity Offering. Securities in denominations larger than $1,000 may
be redeemed in part.
8. Change of Control Offer. In the event of a Change of Control,
upon the satisfaction of the conditions set forth in the Indenture, the Company
shall be required to offer to repurchase all of the then outstanding Securities
pursuant to a Change of Control Offer at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase. Holders of Securities which are the subject of such an offer to
repurchase shall receive an offer to repurchase and may elect to have such
Securities repurchased in accordance with the provisions of the Indenture
pursuant to and in accordance with the terms of the Indenture.
9. Limitation on Disposition of Assets. Under certain
circumstances, the Company is required to apply the net proceeds from Asset
Sales to offer to repurchase Securities at a price equal to 100%. of the
aggregate principal amount thereof, plus accrued and unpaid interest to the date
of repurchase.
10. Denominations; Transfer; Exchange. The Securities are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange
Securities in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay certain transfer taxes or similar governmental charges
payable in connection therewith as permitted by the Indenture. The Registrar
need not register the transfer of or exchange any Securities during a period
beginning 15 days before the mailing of a redemption notice for any Securities
or portions thereof selected for redemption.
A2-4
<PAGE>
11. Persons Deemed Owners. The registered Holder of a Security shall
be treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Company upon written request. After that, all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
13. Discharge Prior to Redemption or Maturity. if the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Securities to redemption
or maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Securities (including certain covenants, but excluding its obligation to
pay the principal of and interest on the Securities).
14. Amendment; Supplement; Waiver. Subject to certain exceptions,
the Indenture or the Securities may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Securities then outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Securities to, among other things,
cure any ambiguity, defect or inconsistency, provide for uncertificated
Securities in addition to or in place of certificated Securities, or comply with
Article 5 of the Indenture, or make any other change that does not adversely
affect in any material respect the rights of any Holder of a Security.
15. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, make payments in respect of its Capital Stock or
certain Indebtedness, engage in certain Asset Swaps, enter into transactions
with Affiliates, create dividend or other payment restrictions affecting
Subsidiaries and merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
A2-5
<PAGE>
16. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Securities and the
Indenture, the predecessor will be released from those obligations.
17. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25%. in aggregate principal
amount of Securities then outstanding may declare the Securities to be due and
payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Securities unless it has been offered indemnity or
security reasonably satisfactory to it. The Indenture permits, subject to
certain limitations therein provided, Holders of a majority in aggregate
principal amount of the Securities then outstanding to direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest) if it determines in good faith that
withholding notice is in their interest.
18. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with the company, its Subsidiaries,
Unrestricted Subsidiaries or their respective Affiliates as if it were not the
Trustee.
19. No Recourse Against Others. No past, present or future
stockholder, director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
20. Authentication. This Security shall not be valid until the
Trustee or authenticating agent manually signs the certificate of authentication
on this Security.
21. Governing Law. The laws of the State of New York shall govern
this Security and the Indenture, without regard to principles of conflict of
laws.
22. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Security or an assignee such as: TEN COM (=
tenants in common), TEN ENT
A2-6
<PAGE>
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (Custodian), and U/G/M7A (=
Uniform Gifts to Minors Act).
23. CUSIP Number. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
24. Indenture. Each Holder, by accepting a Security, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
25. Registration Rights. Pursuant to the Registration Rights
Agreement, the Company will be obligated to consummate an exchange offer
pursuant to which, subject to the terms and conditions of the Registration
Rights Agreement, the Holder of this Security shall have the right to exchange
this Security for Securities of a separate series issued under the Indenture (or
a trust indenture substantially identical to the Indenture in accordance with
the terms of the Registration Rights Agreement) which have been registered under
the Securities Act, in like principal amount and having identical terms as this
Security. The Holders of the Securities shall be entitled to receive certain
additional interest payments in the event such exchange offer is not consummated
and upon certain other conditions, all pursuant to and in accordance with the
terms of the Registration Rights Agreement.
Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture, which has the text of this
Security in larger type. Requests may be made to: THE ACKERLEY GROUP INC., 1301
Fifth Avenue, Suite 4000, Seattle, Washington 98101.
A2-7
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and transfer
this Security to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________________________ to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Date: ________________
Your Signature:____________________
(Sign exactly as your name appears
on the face of this Security)
SIGNATURE GUARANTEE.
___________________________
Participant in a Recognized Signature
Guarantee Medallion Program
A2-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or 4.16 of the Indenture, check the box below:
[ ] Section 4.15 [ ] Section 4.16
If you want to elect to have only part of the Security purchased by
the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased: $_____________
Date: ________________ Your Signature: _________________________
(Sign exactly as your
name appears on the Note)
Tax Identification No.: ________________
SIGNATURE GUARANTEE.
___________________________
Participant in a Recognized Signature
Guarantee Medallion Program
A2-9
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL SECURITY(2)
The following exchanges of a part of this Global Security for an
interest in another Global Security or for a Definitive Security, or exchanges
of a part of another Global Security or Definitive Security for an interest in
this Global Security, have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this authorized
Principal Principal Global Security officer of
Amount of Amount of following such Trustee or
Date of Exchange this Global Security this Global Security decrease (or increase) Custodian
- ---------------- -------------------- -------------------- ---------------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
__________________
(2) This should be included only if the Security is issued in global form.
A2-10
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
The Ackerley Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, Washington 98101
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attn: Corporate Trust Trustee Administration
Re: 9% Series ___ Senior Subordinated Notes due January 15, 2009
Reference is hereby made to the Indenture, dated as of December 14,
1998 (the "INDENTURE"), by and between The Ackerley Group, Inc., as issuer (the
"COMPANY") and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
________________, (the "TRANSFEROR") owns and proposes to transfer the
Security[ies] or interest in such Security[ies] specified in Annex A hereto, in
the principal amount of $_____________ in such Security[ies] or interests (the
"TRANSFER"), to ______________ (the "TRANSFEREE"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies
that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE 144A GLOBAL SECURITY OR A DEFINITIVE SECURITY PURSUANT TO RULE
144A. The Transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the "SECURITIES
ACT"), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Security is being transferred to a Person that
the Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Security for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Transfer is in compliance with any applicable blue sky securities laws of
any state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Security will be subject to the restrictions on
<PAGE>
transfer enumerated in the Private Placement Legend printed on the 144A Global
Security and/or the Definitive Security and in the Indenture and the Securities
Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE TEMPORARY REGULATION S GLOBAL SECURITY, THE REGULATION S GLOBAL
SECURITY OR A DEFINITIVE SECURITY PURSUANT TO REGULATION S. The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that
(i) the Transfer is not being made to a person in the United States and (x) at
the time the buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (y)
the transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the United
States, (ii) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities
Act, (iii) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act and (iv) if the proposed
transfer is being made prior to the expiration of the Restricted Period, the
transfer is not being made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Security will be subject to the restrictions
on Transfer enumerated in the Private Placement Legend printed on the Regulation
S Global Security, the Temporary Regulation S Global Security and/or the
Definitive Security and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE GLOBAL SECURITY OR A DEFINITIVE SECURITY PURSUANT TO
ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Securities and
Restricted Definitive Securities and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies that
(check one):
(a) [ ] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
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(b) [ ] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that it has not engaged in any
general solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Security or Restricted Definitive
Securities and the requirements of the exemption claimed, which certification is
supported by (1) a certificate executed by the Transferee in the form of Exhibit
D to the Indenture and (2) if such Transfer is in respect of a principal amount
of Securities at the time of transfer of less than $250,000, an Opinion of
Counsel provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), to the effect that such Transfer
is in compliance with the Securities Act. Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Security will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the Global
Security and/or the Definitive Securities and in the Indenture and the
Securities Act.
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL SECURITY OR OF AN UNRESTRICTED DEFINITIVE
SECURITY.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Security will no longer be subject to the re-
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strictions on transfer enumerated in the Private Placement Legend printed on the
Restricted Global Securities, on Restricted Definitive Securities and in the
Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Security will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Securities, on Restricted Definitive Securities and in the
Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
Compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Security will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Securities or Restricted Definitive Securities and in the Indenture.
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<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
______________________________
(Insert Name of Transferor)
By: __________________________
Name:
Title:
Dated: ____________, ___
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ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Security (CUSIP ________), or
(ii) [ ] Regulation S Global Security (CUSIP ____), or
(b) [ ] a Restricted Definitive Security.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [____] a beneficial interest in the:
(i) [____] 144A Global Security (CUSIP ________), or
(ii) [____] Regulation S Global Security (CUSIP ________),
or
(iii) [____] Unrestricted Global Security (CUSIP ________),
or
(b) [ ] a Restricted Definitive Security; or
(c) [ ] an Unrestricted Definitive Security, in accordance
with the terms of the Indenture.
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EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
The Ackerley Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, Washington 98101
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attn: Corporate Trust Trustee Administration
Re: 9% Series ____ Senior Subordinated Notes due January 15, 2009
(CUSIP _______________)
Reference is hereby made to the Indenture, dated as of December 14,
1998 (the "INDENTURE"), by and between The Ackerley Group, Inc., as issuer (the
"COMPANY"), and The Bank of New York, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
_______________, (the "OWNER") owns and proposes to exchange the
Security[ies] or interest in such Security[ies] specified herein, in the
principal amount of $____ in such Security[ies] or interests (the "EXCHANGE").
In connection with the Exchange, the owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE SECURITIES OR BENEFICIAL
INTERESTS IN A RESTRICTED GLOBAL SECURITY FOR UNRESTRICTED DEFINITIVE SECURITIES
OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL SECURITY
(a) [____] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL SECURITY TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
SECURITY. In connection with the Exchange of the Owner's beneficial interest in
a Restricted Global Security for a beneficial interest in an Unrestricted Global
Security in an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Global Securities and pursuant to and in
accordance with the United States Securities Act of 1933, as amended (the
"SECURITIES ACT"), (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest in an
Unrestricted Global Security is being acquired in compliance with any appli-
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cable blue sky securities laws of any state of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL SECURITY TO UNRESTRICTED DEFINITIVE SECURITY. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global
Security for an Unrestricted Definitive Security, the Owner hereby certifies
(i)the Definitive Security is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Securities and pursuant to and
in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not expired in
order to maintain compliance with the Securities Act and (iv) the Security is
being acquired in compliance with any appli-cable blue sky securities laws of
any state of the United States.
(c) [____] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE SECURITY TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL SECURITY. In connection with the
Owner's Exchange of a Restricted Definitive Security for a beneficial interest
in an Unrestricted Global Security, the owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to Restricted Definitive Securities and pursuant to and
in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.
(d) [____] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE SECURITY TO
UNRESTRICTED DEFINITIVE SECURITY. In connection with the Owner's Exchange of a
Restricted Definitive Security for an Unrestricted Definitive Security, the
Owner hereby certifies (i) the Unrestricted Definitive Security is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Securities and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive Security
is being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.
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<PAGE>
2. EXCHANGE OF RESTRICTED DEFINITIVE SECURITIES OR BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL SECURITIES FOR RESTRICTED DEFINITIVE SECURITIES
OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL SECURITIES
(a) [____] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL SECURITY TO RESTRICTED DEFINITIVE SECURITY. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global
Security for a Restricted Definitive Security with an equal principal amount,
the Owner hereby certifies that the Restricted Definitive Security is being
acquired for the Owner's own account without transfer. Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Security issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Definitive Security and in the Indenture and the Securities Act.
(b) [____] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE SECURITY TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL SECURITY. In connection with the
Exchange of the Owner's Restricted Definitive Security for a beneficial interest
in the [CHECK ONE] ___ 144A Global Security, ___ Regulation S Global Security
with an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Securities and pursuant to and in accordance
with the Securities Act, and in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the beneficial
interest issued will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the relevant Restricted Global Security
and in the Indenture and the Securities Act.
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<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
_____________________________________________
(Insert Name of owner)
By:__________________________________________
Name:
Title:
Dated: ______________, ______
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<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
The Ackerley Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, Washington 98101
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attn: Corporate Trust Trustee Administration
Re: 9% Series ____ Senior Subordinated Notes due January 15,
2009
Reference is hereby made to the Indenture, dated as of December 14,
1998 (the "INDENTURE"), by and between The Ackerley Group, Inc., as issuer (the
"COMPANY") and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $______ aggregate
principal amount of:
(a) [____] a beneficial interest in a Global Security, or
(b) [____] a Definitive Security,
we confirm that:
1. We understand that any subsequent transfer of the Securities or
any interest therein is subject to certain restrictions and conditions set forth
in the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Securities or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "SECURITIES ACT").
2. We understand that the Securities have not been registered under
the Securities Act of 1933, as amended (the "Securities Act") and neither the
Securities nor any interest or participation therein may be offered, sold,
assigned, transferred, pledged, encumbered or otherwise disposed of in the
absence of such registration or unless such transaction is exempt from, or not
subject to, registration under the Securities Act. We agree for the benefit of
the Company that the Securities may
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<PAGE>
not be offered, sold, pledged or otherwise transferred prior to the expiration
of the holding period applicable thereto under Rule 144(k) under the Securities
Act which is applicable to the Securities (the "Resale Restriction Termination
Date") other than (1) to the Company, (2) so long as the Securities are eligible
for resale pursuant to Rule 144A under the Securities Act ("Rule 144A"), to a
person who is a "Qualified Institutional Buyer" within the meaning of Rule 144A
purchasing for its own account or for the account of a Qualified Institutional
Buyer, in each case to whom notice is given that the resale, pledge or other
transfer is being made in reliance on Rule 144A (as indicated by the box checked
by the transferor on the certificate of transfer on the reverse of the
Securities if the Securities are not in book-entry form), (3) to a non-"U.S.
Person" in an "Offshore Transaction" (as such terms are defined in regulations
under the Securities Act) in accordance with regulations under the Securities
Act (as indicated by the box checked by the transferor on the certificate of
transfer on the reverse of the Securities), (4) to an Institution that is an
"Accredited Investor" (an "Institutional Accredited Investor") as defined in
Rule 501(a)(1), (2) (3) or (7) under the Securities Act (as indicated by the box
checked by the transferor on the certificate of transfer on the reverse of the
Securities) who certifies to the Company and the Trustee that such transferee is
an Institutional Accredited Investor and is acquiring the Securities for its own
account, for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act, (5)
pursuant to any other available exemption from the registration requirements of
the Securities Act, including the exemption provided by Rule 144 under the
Securities Act, if available, or (6) pursuant to an effective Registration
Statement under the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of its property or the property of
such investor account or accounts be at all times within its or their control,
and subject to the right of the Company or the Trustee for the Securities prior
to any such sale, pledge or other transfer pursuant to clause (4) or (5) above
to require the delivery of an opinion of counsel, certifications and/or other
information satisfactory to each of them. We further agree to provide to any
person purchasing the Definitive Security or beneficial interest in a Global
Security from us in a transaction meeting the requirements of clauses (1)
through (5) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any, proposed resale of the Securities or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies
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with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or its investment.
5. We are acquiring the Securities or beneficial interest therein
purchased by us for our own account, for investment purposes and not with a view
to, or for offer or sale in connection with, any distribution in violation of
the Securities Act.
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You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
_____________________________________________
(Insert Name of owner)
By:__________________________________________
Name:
Title:
Dated: ______________, ______
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<PAGE>
EXHIBIT E
FORM OF GUARANTEE PROVISIONS
ARTICLE 12.
GUARANTEES OF THE SECURITIES
SECTION 12.01. GUARANTEES.
Subject to the provisions of this Article 12, each Guarantor hereby
jointly and severally unconditionally guarantees to each Holder of a Security
authenticated and made available for delivery by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
of this Indenture, the Securities or the obligations of the Company or any other
Guarantors to the Holders or the Trustee hereunder, that: (a) the principal of
and interest on the Securities will be duly and punctually paid in full when
due, whether at maturity, by acceleration or otherwise, and interest on the
overdue principal and (to the extent permitted by law) interest, if any, on the
Securities and all other Obligations on the Securities will be promptly paid in
full or performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Securities or any
of such other Obligations on the Securities, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at final stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed, for whatever reason, each
Guarantor will be obligated to pay the same immediately. An Event of Default
under this Indenture or the Securities shall constitute an event of default
under the Guarantees, and shall entitle the Holders of Securities to accelerate
the obligations of the Guarantors hereunder in the same manner and to the same
extent as the obligations of the Company on the Securities.
Each of the Guarantors hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularly or
enforceability of the Securities or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, any release of any other Guarantor,
the recovery of any judgment against the Company, an action to enforce the same,
whether or not a Guarantee is affixed to any particular Security, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each of the Guarantors hereby waives the benefit of
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency
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or bankruptcy of the Company, any right to require a proceeding first against
the Company, protest, notice and all demands whatsoever and covenants that its
Guarantee will not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture and the Guarantee. If
any Holder or the Trustee is required by any court or otherwise to return to the
Company or to any Guarantor, or any custodian, trustee, liquidator or other
similar official acting in relation to the Company or such Guarantor, any amount
paid by the Company or such Guarantor to the Trustee or such Holder, the
Guarantees, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor further agrees that, as between it, on the one
hand, and the Holders of Securities and the Trustee, on the other hand, (a)
subject to this Article 12, the maturity of the obligations guaranteed hereby
may be accelerated as provided in Section 6.02 for the purposes of the
Guarantees, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (b) in
the event of any acceleration of such obligations as provided in Section 6.02,
such obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of the Guarantees.
The Guarantees shall remain in full force and effect and continue to
be effective should any petition be filed by or against the Company for
liquidation or reorganization, should the Company become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's assets, and shall, to
the fullest extent permitted by law, continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the Securities
are, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee on the Securities, whether as a
"voidable preference," "fraudulent transfer" or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Securities shall,
to the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
No stockholder, officer, director, employer or incorporator, past,
present or future, of any Guarantor, as such, shall have any personal liability
under the Guarantees by reason of his, her or its status as such stockholder,
officer, director, employer or incorporator.
The Guarantors shall have the right to seek contribution from any non-
paying Guarantor so long as the exercise of
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such right does not impair the rights of the Holders under the Guarantees.
Each Guarantor, and by its acceptance hereof each Holder, hereby
confirms that it is the intention of all such parties that in no event shall any
Guarantor's obligations under its Guarantee be subject to avoidance under any
applicable fraudulent conveyance or similar law of any relevant jurisdiction.
Therefore, in the event that the Guarantees would, but for this sentence, be
subject to avoidance, then the liability of the Guarantors under the Guarantees
shall be reduced to the extent necessary such that such Guarantees shall not be
subject to avoidance under the applicable fraudulent conveyance or similar law.
Subject to the preceding limitation on liability, the Guarantee of each
Guarantor constitutes a guarantee of payment in full when due and not merely
guarantee of collectibility.
SECTION 12.02. EXECUTION AND DELIVERY OF THE GUARANTEES.
To further evidence the Guarantees set forth in Section 12.01, each
Guarantor hereby agrees that a notation of such Guarantees, substantially in the
form included in Exhibit F hereto, shall be endorsed on each Security
authenticated and made available for delivery by the Trustee. The validity and
enforceability of any Guarantee shall not be affected by the fact that it is not
affixed to any particular Security.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 12.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, such Guarantor's Guarantee of such Security
shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of the Guarantor.
SECTION 12.03. ADDITIONAL GUARANTORS.
Any Person may become a Guarantor by executing and delivering to the
Trustee (a) a supplemental indenture, in form and substance satisfactory to the
Trustee, which subjects such Person to the provisions of this Indenture as a
Guarantor, and
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(b) an Opinion of Counsel to the effect that such supplemental indenture has
been duly authorized and executed by such Person and constitutes the legal,
valid, binding and enforceable obligation of such Person (subject to such
customary exceptions concerning fraudulent conveyance laws, creditors' rights
and equitable principles as may be acceptable to the Trustee in its discretion).
SECTION 12.04. LIMITATION OF GUARANTORS' LIABILITY.
The obligations of each Guarantor are 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 Credit
Agreement) 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 Section 12.06, result in the
obligations of such Guarantor under the Guarantees not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law. Each Guarantor
that makes a payment or distribution under the Guarantees shall be entitled to a
contribution from each other Guarantor in a pro rata amount based on the
Adjusted Net Assets of each Guarantor.
SECTION 12.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Nothing contained in this Indenture or in any of the Securities
shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor or shall prevent any sale or conveyance of the
property of a Guarantor, as an entirety or substantially as an entirety, to the
Company or another Guarantor. Upon any such consolidation, merger, sale or
conveyance, the Guarantee given by such Guarantor shall no longer have any force
or effect.
(b) Nothing contained in this Indenture or in any of the Securities
shall prevent any consolidation or merger of a Guarantor with or into a Person
(provided such Person is a corporation, partnership or trust) other than the
Company or another Guarantor or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to any
such Person (whether or not an Affiliate of the Guarantor). Upon the sale or
disposition of a Guarantor (or all or substantially all of its assets) to a
Person which is not a Subsidiary of the Company, which is otherwise in
compliance with this Indenture (including Section 4.16), such Guarantor shall be
deemed released from all its obligations under this Indenture and its Guarantee
and such Guarantee shall ter-
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minate; provided that any such termination shall occur only to the extent that
all obligations of such Guarantor under the Credit Agreement, and all its
guarantees of, and under all of its pledges of assets or other security
interests which secure, Indebtedness of the Company shall also terminate upon
such release, sale or transfer.
(c) The Trustee shall, at the Company's expense, deliver an
appropriate instrument evidencing such release upon receipt of a request by the
Company accompanied by an Officers' Certificate certifying as to the compliance
with this Section 12.05. Any Guarantor not so released remains liable for the
full amount of principal and interest on the Securities as provided in this
Article 12.
SECTION 12.06. CONTRIBUTION.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter alia, that in the event any payment or
distribution is made by any Guarantor (a "FUNDING GUARANTOR") under the
Guarantees, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company
obligations with respect to the Securities or any other Guarantor's obligations
with respect to the Guarantees; provided that such Funding Guarantor's
contribution right with respect to any such Guarantor shall be subordinated in
right of payment to such Guarantor's Guarantor Senior Debt on the same basis as
its Guarantee is subordinated to Guarantor Senior Debt pursuant to this Article
12.
SECTION 12.07. WAIVER OF SUBROGATION.
Each Guarantor hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Company that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under the Guarantees and this Indenture, including, without limitation, any
right of subrogation, reimbursement, exoneration or indemnification, and any
right to participate in any claim or remedy of any Holder of Securities against
the Company, whether or not such claim, remedy or right arises in equity, or
under contract, statute or common law, including, without limitation , the right
to take or receive from the Company, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to any Guarantor in
violation of the preceding sentence and the Securities shall
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not have been paid in full, such amount shall have been deemed to have been paid
to such Guarantor for the benefit of, and held in trust for the benefit of, the
Holders of the Securities, and shall, subject to the provisions of this Article
12, forthwith be paid to the Trustee for the benefit of such Holders to be
credited and applied upon the Securities, whether matured or unmatured, in
accordance with the terms of this Indenture. Each Guarantor acknowledges that it
will receive direct or indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
12.07 is knowingly made in contemplation of such benefits.
SECTION 12.08. GUARANTEE OBLIGATIONS SUBORDINATED TO GUARANTOR SENIOR DEBT.
Each Guarantor covenants and agrees, and the Trustee and each Holder
of the Securities, by its acceptance thereof, likewise covenants and agrees,
that all Guarantees shall be issued subject to the provisions of this Article
12; and the Trustee and each Person holding any Guarantee, whether upon original
issue or upon transfer, assignment or exchange thereof, accepts and agrees that
the payment of all Obligations on the Securities pursuant to the Guarantees
(except for the payment of fees and expenses of the Trustee under Section 7.07)
made by or on behalf of such Guarantor shall, to the extent and in the manner
herein set forth, be subordinated and junior in right of payment to the prior
payment in full in cash or Cash Equivalents (or such payment shall be duly
provided for to the satisfaction of the holders of the Guarantor Senior Debt of
any Guarantor) of all existing and future Obligations on the Guarantor Senior
Debt of such Guarantor; that the subordination is for the benefit of, and shall
be enforceable directly by the holders of Guarantor Senior Debt of any Guarantor
and that each holder of Guarantor Senior Debt of any Guarantor whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Guarantor Senior Debt of any Guarantor in reliance upon
the covenants and provisions contained in this Indenture and the Guarantees.
This Section 12.08 and the following Sections 12.09 through 12.22 of
this Article 12 shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of, or continue to hold, Guarantor
Senior Debt of any Guarantor and, to the extent set forth in this Section 12.09,
holders of Designated Guarantor Senior Debt; and such provisions are made for
the benefit of the holders of Guarantor Senior Debt of each Guarantor and, to
the extent set forth in Section 12.09, holders of Designated Guarantor Senior
Debt; and such holders (to such extent) are made obligees hereunder and they or
each of them may enforce such provisions.
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SECTION 12.09. NO PAYMENT ON GUARANTEES IN CERTAIN CIRCUMSTANCES.
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on or any other amounts owing with respect to any
Guarantor Senior Debt, no payment of any kind or character (except for
guarantees of Permitted Securities on the same basis as the Guarantees) shall be
made by any Guarantor or any other Person on behalf of such Guarantor with
respect to any Obligations on the Securities or under the Guarantees or to
acquire any of the Securities for cash or property or otherwise. In addition,
if any other event of default occurs and is continuing (or if such an event of
default would occur upon any payment with respect to the Securities or would
arise upon the passage of time as a result of such payment) with respect to an
Designated Guarantor Senior Debt (as such event of default is defined in the
instrument creating or evidencing such Designated Guarantor Senior Debt) and
such event of default permits the holders of such Designated Guarantor Senior
Debt then outstanding to accelerate the maturity thereof and if the
Representative for the respective issue of Designated Guarantor Senior Debt
gives a Default Notice to the Company, the Guarantors and the Trustee, then,
unless and until all events of default have been cured or waived or have ceased
to exist or the Company, the Guarantors and the Trustee receive notice from the
Representative for the respective issue of Designated Guarantor Senior Debt
terminating the Blockage Period, neither the Guarantors nor any other Person on
behalf of the Guarantors shall make any payment of any kind or character (except
for guarantees of Permitted Securities on the same basis as the Guarantees) with
respect to any Obligations of a Guarantor on the Securities or under the
Guarantees or to acquire any of the Securities for cash or property or
otherwise. Notwithstanding anything herein to the contrary, in no event will a
Blockage Period extend beyond 180 days from the date the payment on the
Securities was due and only one such Blockage Period may be commenced within any
360 consecutive days. For all purposes of this Section 12.09(a), no event of
default which existed or was continuing on the date of the commencement of any
Blockage Period with respect to the Designated Guarantor Senior Debt initiating
such Blockage Period shall be, or be made, the basis for the commencement of a
second Blockage Period by the Representative of such Designated Guarantor Senior
Debt, whether or not within a period of 360 consecutive days, unless such event
of default shall have been cured or waived for a period of not less than 90
consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such Blockage Period that in either case, would give rise to an
event of default pursuant to any
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provision under which an event of default previously existed or was continuing
shall constitute a new event of default for this purpose).
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder of a Guarantee when such payment
is prohibited by Section 12.09(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Guarantor
Senior Debt (pro rata to such holders on the basis of the respective amounts of
Guarantor Senior Debt held by such holders) or their respective Representatives,
as their respective interests may appear. The Trustee shall be entitled to rely
on information regarding amounts then due and owing on the Guarantor Senior
Debt, if any, received from the holders of Guarantor Senior Debt (or their
Representatives) or, if such information is not received from such holders or
their Representatives, from the Company or the Guarantors and only amounts
included in the information provided to the Trustee shall be paid to the holders
of Guarantor Senior Debt.
Nothing contained in this Article 12 shall limit the right of the
Trustee or the Holders of Securities to any action to accelerate the maturity of
the Securities pursuant to Section 6.02 or to pursue any rights or remedies
hereunder; provided that all Guarantor Senior Debt thereafter due or declared to
be due shall first be paid in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment with respect to Obligations on the
Guarantees.
SECTION 12.10. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
(a) Upon any payment or distribution of assets of any Guarantor of
any kind or character, whether in cash, property or securities, to creditors
upon any liquidation, dissolution, winding-up, reorganization, assignment for
the benefit of creditors or marshalling of assets of any Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or other similar proceeding
relating to any Guarantor or its property, whether voluntary or involuntary, all
Obligations due or to become due upon ail Guarantor Senior Debt shall first be
paid in full in cash or Cash Equivalents, or such payment duly provided for to
the satisfaction of the holders of the Guarantor Senior Debt, before any payment
or distribution of any kind or character is made on account of any Obligations
of a Guarantor on the Guarantees, or for the acquisition of any of the
Securities for cash or property or otherwise. Upon any such dissolution,
winding-up, liquidation, reorganization, receivership or similar proceeding, any
payment, or distribution of assets of any
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Guarantor of any kind or character, whether in cash, property or securities, to
which the Holders of the Guarantees or the Trustee under this Indenture would be
entitled, except for the provisions hereof, shall be paid by the Guarantors or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, or by the Holders of the Guarantees
or by the Trustee under this Indenture if received by them, directly to the
holders of Guarantor Senior Debt (pro rata to such holders on the basis of the
respective amounts of Guarantor Senior Debt held by such holders) or their
respective Representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Guarantor Senior Debt may have been issued, as
their respective interests may appear, for application to the payment of
Guarantor Senior Debt remaining unpaid until all such Guarantor Senior Debt has
been paid in full in cash or Cash Equivalents after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
Guarantor Senior Debt.
(b) To the extent any payment of Guarantor Senior Debt (whether by or
on behalf of a Guarantor, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to a receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Guarantor Senior Debt or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of a Guarantor of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by Section 12.10(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Guarantor Senior Debt (pro rata to such holders on the basis
of the respective amount of Guarantor Senior Debt held by such holders) or their
respective Representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Guarantor Senior Debt may have been issued, as
their respective interests may appear, for application to the payment of
Guarantor Senior Debt remaining unpaid until all such Guarantor Senior Debt has
been paid in full in cash or Cash Equivalents, after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
such Guarantor Senior Debt.
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(d) The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
any Guarantor following the conveyance or transfer of all or substantially all
of its assets to another corporation upon the terms and conditions provided in
Section 12.05 as if the Guarantor were the Company and as long as permitted
under the terms of the Guarantor Senior Debt shall not be deemed a dissolution,
winding up, liquidation or reorganization for the purposes of this Section 12.10
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, assume such Guarantor's obligations hereunder in
accordance with Section 12.05 as if the Guarantor were the Company.
SECTION 12.11. PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.
Nothing contained in this Article 12 or elsewhere in this Indenture
shall prevent (i) a Guarantor, except under the conditions described in Sections
12.08 and 12.09, from making payments at any time for the purpose of making
payments of principal of and interest on the Securities, or from depositing with
the Trustee any moneys for such payments, or (ii) in the absence of actual
knowledge by the Trustee that a given payment would be prohibited by Sections
12.08 and 12.09, the application by the Trustee of any moneys deposited with it
for the purpose of making such payments of principal on, and interest on, the
Securities to the Holders entitled thereto unless, at least one Business Day
prior to the date upon which such payment would otherwise become due and
Payable, the Trustee shall have actually received the written notice provided
for in Section 12.09(a) or in Section 12.16. The Guarantor shall give prompt
written notice to the Trustee of any dissolution, winding-up, liquidation or
reorganization of any Guarantor.
SECTION 12.12. SUBROGATION.
Subject to the payment in full in cash or Cash Equivalents of all
Guarantor Senior Debt, the Holders of the Guarantees shall be subrogated to the
rights of the holders of Guarantor Senior Debt to receive payments or
distributions of cash, property or securities of a Guarantor applicable to the
Guarantor Senior Debt until the Securities shall be paid in full; and, for the
purposes of such subrogation, no such payments or distributions to the holders
of the Guarantor Senior Debt by or on behalf of any Guarantor or by or on behalf
of the holders of the Guarantees by virtue of this Article 12 which otherwise
would have been made to such holders shall, as between such Guarantor and the
holders of the Guarantees, be deemed to be a payment by such Guarantor to or on
account of the Guarantor Senior Debt.
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SECTION 12.13. GUARANTEE PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The subordination provisions of this Article 12 are and are intended
solely for the purpose of defining the relative rights of the Holders of the
Securities on the one hand and the holders of Guarantor Senior Debt of each
Guarantor and, to the extent set forth in Section 12.09, holders of Designated
Guarantor Senior Debt on the other hand. Nothing contained in this Article 12
or elsewhere in this Indenture or in the Securities is intended to or shall (a)
impair, as among each Guarantor, its creditors other than holders of its
Guarantor Senior Debt and the Holders of the Securities, the obligation of such
Guarantor, which is absolute and unconditional, to make payments to the Holders
in respect of its obligations under its Guarantee as and when the same shall
become due and payable in accordance with their terms; or (b) affect the
relative rights against such Guarantor of the Holders of the Securities and
creditors of such Guarantor other than the holders of the Guarantor Senior Debt
of such Guarantor; or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon a Default or
an Event of Default under this Indenture, subject to the rights, if any, under
the subordination provisions of this Article 12 of the holders of Guarantor
Senior Debt of the Guarantors hereunder and, to the extent set forth in Section
12.09, holders of Designated Guarantor Senior Debt on the other hand (1) in any
case, proceeding, dissolution, liquidation or other winding-up, assignment for
the benefit of creditors or other marshalling of assets and liabilities of the
Guarantor referred to in Section 12.10, to receive, pursuant to and in
accordance with such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the conditions specified
in Section 12.09, to prevent any parent prohibited by such Section or enforce
their rights pursuant to Section 12.09(c).
The failure by any Guarantor to make a payment in respect of its
obligations under this Guarantee by reason of any provision of this Article 12
shall not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.
SECTION 12.14. TRUSTEE TO EFFECTUATE SUBORDINATION OF OBLIGATIONS UNDER THE
GUARANTEE.
Each Holder of a Security by its acceptance of such Security
authorizes and expressly directs the Trustee to take on behalf of such Holder of
Securities such action as may be necessary or appropriate to effectuate as
between the holders of Guarantor Senior Debt and Holders of Guarantees, the
subor-
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dination provided in this Article 12, and appoints the Trustee its
attorney-in-fact to act for it and on its behalf for such purposes, including,
in the event of any dissolution, winding-up, liquidation or reorganization of
any guarantor (whether in bankruptcy, insolvency, receivership, reorganization
or similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of such
Guarantor, the filing of a claim for the unpaid balance of its Guarantees and
accrued interest in the form required in those proceedings.
SECTION 12.15. NO WAIVER OF GUARANTEE SUBORDINATION PROVISIONS.
No right of any present or future holder of any Guarantor Senior Debt
of any Guarantor to enforce subordination as provided herein shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or any Guarantor or by any act or failure to act, in good faith, by
any such holder, or by any non-compliance by the Company or any Guarantor with
the terms of this Indenture, regardless of any knowledge thereof any such holder
may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Guarantor Senior Debt of any Guarantor may, at any time and from
time to time, without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Securities and without
impairing or releasing the subordination provided in this Article 12 or the
obligations hereunder of the Holders of the Guarantees to the holders of such
Guarantor Senior Debt, do any one or more of the following:(1) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Guarantor Senior Debt or any Senior Debt as to which such Guarantor
Senior Debt relates, or otherwise amend or supplement in any manner such
Guarantor Senior Debt or any Senior Debt to which such Guarantor Senior Debt
relates; (2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Guarantor Senior Debt or any
Senior Debt as to which such Guarantor Senior Debt relates; (3) release any
person liable in any manner for the collection or payment of such Guarantor
Senior Debt or any Senior Debt as to which such Guarantor Senior Debt relates;
and (4) exercise or refrain from exercising any rights against such Guarantor
and any other Person.
SECTION 12.16. GUARANTORS TO GIVE NOTICE TO TRUSTEE.
The Company and each Guarantor shall give prompt written notice to the
Trustee of any fact known to such Guaran-
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tor the making of any payment to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article 12. Notwithstanding the subordination
provisions of this Article 12 or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any default or
event of default with respect to any Guarantor Senior Debt or of any other facts
which would prohibit the making of any payment to or by the Trustee unless and
until the Trustee shall have received notice in writing from the Company, such
Guarantor or from a holder of Guarantor Senior Debt or a Representative
therefor, and, prior to the receipt of any such written notice, the Trustee
shall be entitled to assume (in the absence of actual knowledge to the contrary)
that no such facts exist. In the event that the Trustee determines in good faith
that any evidence is required with respect to the right of any Person as a
holder of Guarantor Senior Debt of any Guarantor to participate in any payment
or distribution pursuant to this Article 12, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Guarantor Senior Debt of each Guarantor held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article 12, and if such evidence is not furnished the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
SECTION 12.17. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT
REGARDING DISSOLUTION, ETC., OF GUARANTORS.
Upon an payment or distribution of assets of a Guarantor referred to
in this Article 12, the Trustee, subject to the provisions of Article 7 hereof,
and the Holders shall be entitled to rely upon any order or decree entered by
any court of competent jurisdiction in which such bankruptcy, liquidation,
reorganization, dissolution or winding-up proceeding are pending or, upon a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, delivered to the Trustee or
to the Holders of the Guarantees, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of
Guarantor Senior Debt of such Guarantor and other Indebtedness of such
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other acts pertinent thereto or to this Article 12.
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SECTION 12.18. RIGHTS OF TRUSTEE AS A HOLDER OF GUARANTOR SENIOR DEBT;
PRESERVATION OF TRUSTEE'S RIGHT.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article 12 with respect to any Guarantor Senior Debt of
any Guarantor which may at any time be held by the Trustee, to the same extent
as any other holder of such Guarantor Senior Debt, and nothing in this Indenture
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article 12 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.
SECTION 12.19. NO SUSPENSION OF REMEDIES.
Nothing contained in this Article 12 shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article 6 or to pursue any rights or
remedies hereunder or under applicable law, subject to the rights, if any, under
this Article 12 of the holders, from time to time, of Guarantor Senior Debt of
the Guarantors.
SECTION 12.20. TRUSTEE'S RELATION TO GUARANTOR SENIOR DEBT.
The Trustee and any agent of the Guarantor or the Trustee shall be
entitled to all the rights set forth in this Article 12 with respect to any
Guarantor Senior Debt which may at any time be held by it in its individual or
any other capacity to the same extent as any other holder of the Guarantor
Senior Debt and nothing in this Indenture shall deprive the Trustee or any such
agent of any of its rights as such holder and shall not be liable to any such
holders if the Trustee shall in good faith mistakenly pay over or distribute to
Holders of Securities or to the Company or to any other person cash, property or
securities to which any holders of Guarantor Senior Debt shall be entitled by
virtue of this Article 12 or otherwise.
With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform or to observe only such of its duties, covenants,
responsibilities and obligations as are specifically set forth in this Article
12, and no implied covenants or obligations with respect to the holders of
Guarantor Senior Debt shall be read into this Indenture against the Trustee.
The Trustee shall not be deemed to owe any fiduciary or other duty to the
holders of Guarantor Senior Debt.
Whenever a distribution is to be made or a notice given to holders or
owners of Guarantor Senior Debt, the dis-
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tribution may be made and the notice may be given to their Representative, if
any.
SECTION 12.21. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE
GUARANTORS OR HOLDERS OF GUARANTOR SENIOR DEBT.
No right of any present or future holders of any Guarantor Senior Debt
to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Guarantors or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Guarantors with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Guarantor Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Securities and without
impairing or releasing the subordination provided in this Article 12 or the
obligations hereunder of the Holders of the Securities to the holders of the
Guarantor Senior Debt, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Guarantor Senior Debt, or otherwise amend or supplement in any manner
Guarantor Senior Debt, or any instrument evidencing the same or any agreement
under which Guarantor Senior Debt is outstanding; (ii) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing
Guarantor Senior Debt; (iii) release any Person liable in any manner for the
payment or collection of Guarantor Senior Debt; and (iv) exercise or refrain
from exercising any rights against the Guarantors and any other Person.
SECTION 12.22. THIS ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of this Article 12 will not be
construed as preventing the occurrence of an Event of Default.
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EXHIBIT F
FORM OF GUARANTEE
The undersigned Guarantor has unconditionally guaranteed on a senior
subordinated basis (such guarantee being referred to herein as the "GUARANTEE")
(i) the due and punctual payment of the principal of and interest on the
Securities, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on the overdue principal and interest, if any, on
the Securities, to the extent lawful, and the due and punctual performance of
all other obligations of the Company to the Holders or the Trustee all in
accordance with the terms set forth in Article 12 of the Indenture and (ii) in
case of any extension of time of payment or renewal of any Securities or any of
such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any liability under the Guarantee
by reason of his or its status as such stockholder, officer, director or
incorporator.
GUARANTOR:
[ ]
By: ____________________________
Name:
Title:
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EXHIBIT 4.2
CUSIP: 004532AA5
9% Senior Subordinated Note due January 15, 2009, Series B
No.: 1 $175,000,000
The Ackerley Group, Inc.
promises to pay to CEDE & CO.
or registered assigns,
the principal sum of ONE HUNDRED SEVENTY FIVE MILLION
Dollars on January 15, 2009.
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 1
DATED: ____________, 1999
THE ACKERLEY GROUP, INC.
By: ______________________________
Name:
Title:
This is one of the Global
Securities referred to in the
within-mentioned Indenture:
The Bank of New York,
as Trustee
By:.____________________________
Authorized Signatory
<PAGE>
(REVERSE OF SECURITY)
9% SENIOR SUBORDINATED NOTES DUE JANUARY 15, 2009, SERIES B
THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL SECURITY MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
COMPANY.
1. Interest. THE ACKERLEY GROUP, INC., a Delaware corporation (the
"COMPANY"), promises to pay interest on the principal amount of this Security at
the rate per annum shown above. Interest on the Securities will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from December 14, 1998. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing July 15, 1999. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Securities to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Securities (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Securities are canceled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in U.S. Legal Tender. However, the
Company may pay principal and interest by its check payable in such U.S. Legal
Tender. The Company may deliver any such interest payment to the Paying Agent or
to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, The Bank of New York (the
"TRUSTEE") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or Co-Registrar without notice to the Holders. The
Company or any of its Subsidiaries may, subject to certain exceptions, act as
Registrar or Co-Registrar.
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<PAGE>
4. Indenture. The Company issued the Securities under an indenture,
dated as of December 14, 1998 (the "INDENTURE"), by and between the Company and
the Trustee. This Security is one of a duly authorized issue of Securities of
the Company designated as its 9% Senior Subordinated Notes due January 15, 2009
(the "SECURITIES"), limited (except as otherwise provided in the Indenture) in
aggregate principal amount to $250,000,000, which may be issued under the
Indenture. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture.
Notwithstanding anything to the contrary herein, the Securities are subject to
all such terms, and Holders of Securities are referred to the Indenture and the
TIA for a statement of them. The Securities are general unsecured obligations of
the Company.
5. Subordination. The Securities are subordinated in right of
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full in cash or Cash Equivalents of all Senior Debt, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. To the extent and in the manner provided in the
Indenture, Senior Debt must be paid before any payment may be made to any Holder
of this Security. Each Holder by his acceptance hereof agrees to be bound by
such provisions and authorizes and expressly directs the Trustee, on his behalf,
to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
6. Optional Redemption. (a) The Securities will be redeemable, at
the Company's option, in whole at any time or in part from time to time, on and
after January 15, 2004, at the following redemption prices (expressed as
percentages of the principal amount) if redeemed during the twelve-month period
commencing on January 15 of the years set forth below, plus, in each case,
accrued and unpaid interest thereon to the date of redemption:
Year Percentage
---- ----------
2004..................................... 104.500%
2005..................................... 103.000%
2006..................................... 101.000%
2007 and thereafter...................... 100.000%
(b) In addition, on or prior to January 15, 2002, the Company may, at
its option, use the net cash proceeds of one or more Public Equity Offerings to
redeem the Securities, in part, at a redemption price of 109.000% of the
principal amount thereof, plus accrued and unpaid interest thereon to the
3
<PAGE>
date of redemption; provided that after any such redemption the aggregate
principal amount of the Securities outstanding must equal at least 66 2/3% of
the aggregate principal amount of the Securities originally issued.
7. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at such Holder's registered address. In
order to effect a redemption with the proceeds of a Public Equity Offering, the
Company shall send the redemption notice in the manner specified in the
Indenture not later than 30 days after the consummation of such Public Equity
offering and effect such redemption not later than 90 days after the
consummation of such Public Equity Offering. Securities in denominations larger
than $1,000 may be redeemed in part.
8. Change of Control Offer. In the event of a Change of Control,
upon the satisfaction of the conditions set forth in the Indenture, the Company
shall be required to offer to repurchase all of the then outstanding Securities
pursuant to a Change of Control Offer at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase. Holders of Securities which are the subject of such an offer to
repurchase shall receive an offer to repurchase and may elect to have such
Securities repurchased in accordance with the provisions of the Indenture
pursuant to and in accordance with the terms of the Indenture.
9. Limitation on Disposition of Assets. Under certain circumstances,
the Company is required to apply the net proceeds from Asset Sales to offer to
repurchase Securities at a price equal to 100% of the aggregate principal amount
thereof, plus accrued and unpaid interest to the date of repurchase.
10. Denominations; Transfer; Exchange. The Securities are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities during a period beginning 15
days before the mailing of a redemption notice for any Securities or portions
thereof selected for redemption.
4
<PAGE>
11. Persons Deemed Owners. The registered Holder of a Security shall
be treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Company upon written request. After that, all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
13. Discharge Prior to Redemption or Maturity. if the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government obligations
sufficient to pay the principal on and interest on the Securities to redemption
or maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Securities (including certain covenants, but excluding its obligation to
pay the principal of and interest on the Securities).
14. Amendment; Supplement; Waiver. Subject to certain exceptions, the
Indenture or the Securities may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Securities then outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Securities to, among other things, cure
any ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities, or comply with Article 5 of
the Indenture, or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Security.
15. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, make payments in respect of its Capital Stock or
certain Indebtedness, engage in certain Asset Swaps, enter into transactions
with Affiliates, create dividend or other payment restrictions affecting
Subsidiaries and merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
5
<PAGE>
16. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Securities and the
Indenture, the predecessor will be released from those obligations.
17. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Securities then outstanding may declare all the Securities to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Securities may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Securities unless it has been offered indemnity or security
reasonably satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Securities then outstanding to direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders of Securities
notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines in good faith that
withholding notice is in their interest.
18. Trustee Dealings. The Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with the Company, its Subsidiaries, Unrestricted
Subsidiaries or their respective Affiliates as if it were not the Trustee.
19. No Recourse Against Others. No past, present or future
stockholder, director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
20. Authentication. This Security shall not be valid until the
Trustee or authenticating agent manually signs the certificate of authentication
on this Security.
21. Governing Law. The laws of the State of New York shall govern
this Security and the Indenture, without regard to principles of conflict of
laws.
22. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Security or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with
6
<PAGE>
right of survivorship and not as tenants in common), CUST (Custodian), and
U/G/M7A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
24. Indenture. Each Holder, by accepting a Security, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time. Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture.
25. Registration Rights. Pursuant to the Registration Rights
Agreement, the Company will be obligated to consummate an exchange offer
pursuant to which, subject to the terms and conditions of the Registration
Rights Agreement, the Holder of this Security shall have the right to exchange
this Security for Securities of a separate series issued under the Indenture (or
a trust indenture substantially identical to the Indenture in accordance with
the terms of the Registration Rights Agreement) which have been registered under
the Securities Act, in like principal amount and having identical terms as this
Security. The Holders of the Securities shall be entitled to receive certain
additional interest payments in the event such exchange offer is not consummated
and upon certain other conditions, all pursuant to and in accordance with the
terms of the Registration Rights Agreement.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture, which has the text of this
Security in larger type. Requests may be made to: THE ACKERLEY GROUP, INC., 1301
Fifth Avenue, Suite 4000, Seattle, Washington 98101.
7
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and transfer
this Security to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Security on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date: ________________
Your Signature:_________________________
(Sign exactly as your name appears
on the face of this Security)
SIGNATURE GUARANTEE.
___________________________
Participant in a Recognized Signature
Guarantee Medallion Program
8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or 4.16 of the Indenture, check the box below:
{ } Section 4.15 { } Section 4.16
If you want to elect to have only part of the Security purchased by
the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased: $_____________
Date: ________________ Your Signature:_________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No.:_________________
SIGNATURE GUARANTEE.
___________________________
Participant in a Recognized Signature
Guarantee Medallion Program
9
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY
The following exchanges of a part of this Global Security for an
interest in another Global Security or for a Definitive Security, or
exchanges of a part of another Global Security or Definitive Security for
an interest in this Global Security, have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this authorized
Principal Principal Global Security officer of
Amount of Amount of following such Trustee or
Date of Exchange this Global Security this Global Security decrease (or increase) Custodian
------------------- --------------------- ---------------------- ----------------------- -----------
<S> <C> <C> <C> <C>
</TABLE>
10
<PAGE>
EXHIBIT 4.3
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of December 14, 1998
by and among
THE ACKERLEY GROUP, INC.
and
SALOMON SMITH BARNEY INC.,
FIRST UNION CAPITAL MARKETS, a division of
Wheat First Securities, Inc.
as Initial Purchasers
and
FLEET SECURITIES, INC.
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
---------
entered into as of December 14, 1998 by and among THE ACKERLEY GROUP, INC., a
Delaware corporation (the "Company"), and SALOMON SMITH BARNEY INC. ("Salomon"),
------- -------
FIRST UNION CAPITAL MARKETS, a division of Wheat First Securities, Inc. ("First
-----
Union"), FLEET SECURITIES, INC. ("Fleet" and, together with Salomon and First
- ----- -----
Union, the "Initial Purchasers").
------------------
This Agreement is made pursuant to the Purchase Agreement dated as of
December 14, 1998 by and among the Company and the Initial Purchasers (the
"Purchase Agreement"), which provides for, among other things, the sale by the
- -------------------
Company to the Initial Purchasers of an aggregate of $150,000,000 principal
amount of the Company's 9% Senior Subordinated Notes Due 2009 (the "Notes"). In
-----
order to induce the Initial Purchasers to enter into the Purchase Agreement, the
Company has agreed to provide to the Initial Purchasers and their direct and
indirect transferees the registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the closing under the
Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following capitalized
-----------
defined terms shall have the following meanings:
"Additional Interest" see Section 2(e) hereof.
-------------------
"Advice" see the last paragraph of Section 3 hereof.
------
"Agreement" shall have the meaning set forth in the preamble to this
---------
Agreement.
"Applicable Period" see Section 3(s) hereof.
-----------------
"Business Day" shall mean a day that is not a Saturday, a Sunday, or a
------------
day on which banking institutions in New York, New York are required to be
closed.
"Closing Date" shall mean the Closing Date as defined in the Purchase
------------
Agreement.
<PAGE>
-2-
"Company" shall have the meaning set forth in the preamble to this
-------
Agreement and also includes the Company's successors and permitted assigns.
"Depositary" shall mean The Depository Trust Company, or any other
----------
depositary appointed by the Company pursuant to the applicable provisions
of the Indenture; provided, however, that such depositary must have an
-------- -------
address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" see Section 2(b) hereof.
--------------------
"Effectiveness Target Date" see Section 2(e) hereof.
-------------------------
"Event Date" see Section 2(e) hereof.
----------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended and the rules and regulations of the SEC promulgated thereunder.
"Exchange Notes" shall mean the 9% Senior Subordinated Notes Due 2009,
--------------
Series B issued by the Company under the Indenture containing terms
identical to the Notes (except that (i) interest thereon shall accrue from
the last date on which interest was paid on the Notes or, if no such
interest has been paid, from December 14, 1998, (ii) the transfer
restrictions with respect to the Notes and all registration rights in
respect thereof shall be eliminated and (iii) the provisions relating to
Additional Interest shall be eliminated) to be offered to Holders of Notes
in exchange for Notes pursuant to the Exchange Offer.
"Exchange Offer" shall mean the exchange offer by the Company of
--------------
Exchange Notes for Notes pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
---------------------------
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on Form S-1, S-3 or S-4 (or, if applicable, on
another appropriate form), and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
<PAGE>
-3-
"Exchange Period" see Section 2(a) hereof.
---------------
"Holders" shall mean the Initial Purchasers, for so long as they own
-------
any Transfer Restricted Notes, each of their direct and indirect
successors, assigns and transferees who become registered owners of
Transfer Restricted Notes under the Indenture and each Participating
Broker-Dealer that holds Exchange Notes for so long as such Participating
Broker-Dealer is required to deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of such Exchange Notes.
"Indenture" shall mean the Indenture relating to the Notes dated as of
---------
December 14, 1998 between the Company, and The Bank of New York, as
trustee, as the same may be amended from time to time in accordance with
the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble
------------------
to this Agreement.
"Inspectors" see Section 3(m) hereof.
----------
"Issue Date" shall mean the date of original issuance of the Notes.
----------
"Majority Holders" shall mean the Holders of a majority of the
----------------
aggregate principal amount of outstanding Transfer Restricted Notes.
"Notes" shall have the meaning set forth in the preamble to this
-----
Agreement.
"Participating Broker-Dealer" shall have the meaning set forth in
---------------------------
Section 3(s) hereof.
"Person" shall mean an individual, partnership, corporation, limited
------
liability company, unincorporated organization, trust or joint venture, or
a government or agency or political subdivision thereof.
"Private Exchange" see Section 2(a) hereof.
----------------
"Private Exchange Notes" see Section 2(a) hereof.
----------------------
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by
<PAGE>
-4-
any prospectus supplement, including a prospectus supplement with respect
to the terms of the offering of any portion of the Transfer Restricted
Notes covered by a Shelf Registration Statement, and by all other
amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by
reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
------------------
to this Agreement.
"Records" see Section 3(m) hereof.
-------
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all applicable SEC, stock exchange or National
Association of Securities Dealers, Inc. (the "NASD") registration and
----
filing fees, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws (including reasonable
fees and disbursements of one counsel for Holders that are Initial
Purchasers in connection with blue sky qualification of any of the Exchange
Notes or Transfer Restricted Notes) and compliance with the rules of the
NASD, (iii) all applicable expenses incurred by the Company in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus and any amendments or supplements
thereto, and in preparing or assisting in preparing any other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, if any, (v) the fees and disbursements of counsel for
the Company, (vii) all fees and expenses incurred in connection with the
listing, if any, of any of the Transfer Restricted Notes on any securities
exchange or exchanges, if the Company, in its discretion, elects to make
any such listing; but excluding fees of counsel to the Holders and
underwriting discounts and commissions and transfer taxes, if any, relating
to the sale or disposition of Transfer Restricted Notes by a Holder.
"Registration Statement" shall mean any registration statement
----------------------
(including, without limitation, the Exchange Offer Registration Statement
and the Shelf Registration Statement) of the Company which covers any of
the Exchange Notes or Transfer Restricted Notes pursuant to the provisions
of this Agreement, and all amendments and supplements to any such
Registration Statement, including post-
<PAGE>
-5-
effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
---
"Securities Act" shall mean the Securities Act of 1933, as amended,
--------------
and the rules and regulations of the SEC promulgated thereunder.
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2(b) hereof.
"Shelf Registration Event Date" see Section 2(b).
-----------------------------
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company pursuant to the provisions of Section 2(b) hereof
which covers all of the Transfer Restricted Notes or all of the Private
Exchange Notes, as the case may be, on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the
SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Target Consummation Date" see Section 2(a).
------------------------
"Target Effectiveness Date" see Section 2(a).
-------------------------
"TIA" shall have the meaning set forth in Section 3(k) hereof.
---
"Transfer Restricted Notes" means each Note until (i) the date on
-------------------------
which such has been exchanged by a person other than a broker-dealer for an
Exchange Note in the Exchange Offer, (ii) following the exchange by a
broker-dealer in the Exchange Offer of a Note for an Exchange Note, the
date on which such Exchange Note is sold to a purchaser who receives from
such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii)
the date on which such Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement, (iv) the date on which such Note is distributed to the public
pur-
<PAGE>
-6-
suant to Rule 144(k) under the Securities Act (or any similar provision
then in force, but not Rule 144A under the Securities Act), (v) such Note
shall have been otherwise transferred by the holder thereof and a new Note
not bearing a legend restricting further transfer shall have been delivered
by the Company and subsequent disposition of such Note shall not require
registration or qualification under the Securities Act or any similar state
law then in force or (vi) such Note ceases to be outstanding.
"Trustee" shall mean the trustee with respect to the Notes under the
-------
Indenture or any successor appointed in accordance with the terms thereof.
2. Registration Under the Securities Act.
-------------------------------------
(a) Exchange Offer. The Company shall, for the benefit of the
--------------
Holders, at the Company's cost, (i) unless the Exchange Offer would not be
permitted by applicable law or SEC policy, file with the SEC within 60 days
after the Closing Date an Exchange Offer Registration Statement on an
appropriate form under the Securities Act covering the offer by the Company to
the Holders to exchange all of the Transfer Restricted Notes (other than Private
Exchange Notes (as defined below)) for a like principal amount of Exchange
Notes, (ii) unless the Exchange Offer would not be permitted by applicable law
or SEC policy, use its best efforts to have such Exchange Offer Registration
Statement declared effective under the Securities Act by the SEC not later than
the date which is 120 days after the Closing Date (the "Target Effectiveness
--------------------
Date"), (iii) have such Registration Statement remain effective until the
- ----
closing of the Exchange Offer and (iv) unless the Exchange Offer would not be
permitted by applicable law or SEC policy, commence the Exchange Offer and use
its best efforts to issue, on or prior to the date which is 30 days after the
date on which the Exchange Offer Registration Statement was declared effective
by the SEC (the "Target Consummation Date"), Exchange Notes in exchange for all
------------------------
Notes tendered prior thereto in the Exchange Offer. Upon the effectiveness of
the Exchange Offer Registration Statement, the Company shall promptly commence
the Exchange Offer, it being the objective of such Exchange Offer to enable each
Holder eligible and electing to exchange Transfer Restricted Notes for Exchange
Notes (assuming that such Holder is not an affiliate of the Company within the
meaning of Rule 405 under the Securities Act and is not a broker-dealer
tendering Transfer Restricted Notes acquired directly from the Company for its
own account, acquires the Exchange Notes in the ordinary course of such Holder's
business and has no arrangements
<PAGE>
-7-
or understandings with any Person to participate in the Exchange Offer for the
purpose of distributing (within the meaning of the Securities Act) the Exchange
Notes) and to transfer such Exchange Notes from and after their receipt without
any limitations or restrictions under the Securities Act and under state
securities or blue sky laws.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 20 Business Days after the date notice thereof is mailed to the
Holders (or longer if required by applicable law) (such period referred to
herein as the "Exchange Period");
---------------
(iii) utilize the services of the Depositary for the Exchange Offer;
(iv) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last Business Day of the
Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Notes delivered for exchange, and a
statement that such Holder is withdrawing his election to have such Notes
exchanged; and
(v) otherwise comply in all material respects with all applicable
laws relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer the Initial Purchasers
hold any Notes acquired by them and having the status of an unsold allotment in
the initial distribution, the Company upon the request of any Initial Purchaser
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to such Initial Purchaser in exchange (the "Private
-------
Exchange") for the Notes held by such Initial Purchaser, a like principal amount
- --------
of debt securities of the Company that are identical (except that such
securities shall bear appropriate transfer restrictions and shall provide for
the payment of Additional Interest) to the Exchange Notes (the "Private Exchange
----------------
Notes").
- -----
<PAGE>
-8-
The Exchange Notes and the Private Exchange Notes shall be issued
under (i) the Indenture or (ii) an indenture identical to all material respects
to the Indenture and which, in either case, has been qualified under the TIA or
is exempt from such qualification and shall provide that the Exchange Notes
shall not be subject to the transfer restrictions set forth in the Indenture.
The Indenture or such indenture shall provide that the Exchange Notes, the
Private Exchange Notes and the Notes shall vote and consent together on all
matters as one class and that none of the Exchange Notes, the Private Exchange
Notes or the Notes will have the right to vote or consent as a separate class on
any matter. The Private Exchange Notes shall be of the same series as and the
Company shall use all commercially reasonable efforts to have the Private
Exchange Notes bear the same CUSIP number as the Exchange Notes. The Company
shall not have any liability under this Agreement solely as a result of such
Private Exchange Notes not bearing the same CUSIP number as the Exchange Notes.
The Exchange Offer and the Private Exchange shall not be subject to
any conditions, other than that (i) the Exchange Offer or Private Exchange, as
the case may be, does not violate applicable law or any applicable
interpretation of the staff of the SEC (ii) no action or proceeding shall have
been instituted or threatened in any court or by any governmental agency which
might materially impair the ability of the Company to proceed with the Exchange
Offer or the Private Exchange, and no material adverse development shall have
occurred in any existing action or proceeding with respect to the Company and
(iii) all governmental approvals shall have been obtained, which approvals the
Company deems necessary for the consummation of the Exchange Offer or Private
Exchange. As soon as practicable after the close of the Exchange Offer and/or
the Private Exchange, as the case may be, the Company shall:
(i) accept for exchange all Transfer Restricted Notes or portions
thereof properly tendered and not validly withdrawn pursuant to the
Exchange Offer in accordance with the terms of the Exchange Offer
Registration Statement and the letter of transmittal which is an exhibit
thereto;
(ii) accept for exchange all Notes properly tendered pursuant to the
Private Exchange; and
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation all Transfer Restricted Notes or portions thereof so accepted
for exchange by the Company, and
<PAGE>
-9-
issue, and cause the Trustee under the Indenture to promptly authenticate
and deliver to each Holder, a new Exchange Note or Private Exchange Note,
as the case may be, equal in principal amount to the principal amount of
the Transfer Restricted Notes surrendered by such Holder and accepted for
exchange.
To the extent not prohibited by any law or applicable interpretation
of the staff of the SEC, the Company shall use its best efforts to complete the
Exchange Offer as provided above, and shall comply with the applicable
requirements of the Securities Act, the Exchange Act and other applicable laws
in connection with the Exchange Offer. The Exchange Offer shall not be subject
to any conditions, other than those set forth in the immediately preceding
paragraph. Each Holder of Transfer Restricted Notes who wishes to exchange such
Transfer Restricted Notes for Exchange Notes in the Exchange Offer will be
required to make certain customary representations in connection therewith,
including representations that such Holder is not an affiliate of the Company
within the meaning of Rule 405 under the Securities Act, that any Exchange Notes
to be received by it will be acquired in the ordinary course of business and
that at the time of the commencement of the Exchange Offer it has no arrangement
with any Person to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Notes. The Company shall inform the Initial
Purchasers of the names and addresses of the Holders to whom the Exchange Offer
is made, and the Initial Purchasers shall have the right to contact such Holders
and otherwise facilitate the tender of Transfer Restricted Notes in the Exchange
Offer.
Upon consummation of the Exchange Offer in accordance with this
Section 2(a), the provisions of this Agreement shall continue to apply, mutatis
-------
mutandis, solely with respect to Transfer Restricted Notes that are Private
- --------
Exchange Notes and Exchange Notes held by Participating Broker-Dealers, and the
Company shall have no further obligation to register Transfer Restricted Notes
(other than Private Exchange Notes) pursuant to Section 2(b) hereof.
(b) Shelf Registration. If (i) the Company is not permitted to file
------------------
the Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or SEC policy,
(ii) the Exchange Offer is not for any other reason consummated by the Target
Consummation Date, (iii) any holder of Notes notifies the Company within a
specified time period that (a) due to a change in law or policy, in the opinion
of counsel, it is not
<PAGE>
-10-
entitled to participate in the Exchange Offer, (b) due to a change in law or
policy, in the opinion of counsel, it may not resell the Exchange Notes acquired
by it in the Exchange Offer to the public without delivering a prospectus and
(x) the prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such holder and (y) such prospectus
is not promptly amended or modified in order to be suitable for use in
connection with such resales for such holder and all similarly situated holders
or (c) it is a broker-dealer and owns Notes acquired directly from the Company
or an affiliate of the Company, (iv) the holders of a majority of the Notes may
not resell the Exchange Notes acquired by them in the Exchange Offer to the
public without restriction under the Securities Act and without restriction
under applicable blue sky or state securities laws or (v) the Exchange Offer
shall not have been consummated within 150 days after the Issue Date (the date
of any of (i)-(v), the "Shelf Registration Event Date"), then the Company shall,
-----------------------------
at its cost, use its best efforts to cause to be filed a Shelf Registration
Statement prior to the later of (A) 30 days after the Shelf Registration Event
Date or (B) 120 days after the Issue Date and use its best efforts to cause the
Shelf Registration Statement to be declared effective by the SEC on or prior to
60 days after such obligation arises. Each Holder as to which any Shelf
Registration is being effected agrees to furnish to the Company all information
with respect to such Holder necessary to make any information previously
furnished to the Company by such Holder not materially misleading.
The Company agrees to use its best efforts to keep the Shelf
Registration Statement continuously effective for a period of two years from
the Issue Date (subject to extension pursuant to the last paragraph of Section 3
hereof) (or such shorter period that will terminate when all of the Transfer
Restricted Notes covered by such Shelf Registration Statement have been sold
pursuant thereto) or cease to be outstanding (the "Effectiveness Period");
--------------------
provided, however, that the Effectiveness Period in respect of the Shelf
- -------- -------
Registration Statement shall be extended to the extent required to permit
dealers to comply with the applicable prospectus delivery requirements of Rule
174 under the Securities Act and as otherwise provided herein. The Company
shall not permit any securities other than Transfer Restricted Notes to be
included in the Shelf Registration. The Company further agrees, if necessary,
to supplement or amend the Shelf Registration Statement, if required by the
rules, regulations or instructions applicable to the registration form used by
the Company for such Shelf Registration Statement or by the Securities Act or by
any other rules and
<PAGE>
-11-
regulations thereunder for shelf registrations, and the Company agrees to
furnish to the Holders of Transfer Restricted Notes copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses in
--------
connection with the registration pursuant to Section 2(a) or 2(b) hereof and the
reasonable fees and expenses of one counsel, if any, designated in writing by
the Majority Holders to act as counsel for the Holders of the Transfer
Restricted Notes in connection with a Shelf Registration Statement. Except as
provided in the preceding sentence, each Holder shall pay all expenses of its
counsel, underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Transfer Restricted Notes
pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer Registration
--------------------------------
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
-------- -------
after it has been declared effective, the offering of Transfer Restricted Notes
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not to have been
effective during the period of such interference, until the offering of Transfer
Restricted Notes may legally resume. The Company will be deemed not to have
used its best efforts to cause the Exchange Offer Registration Statement or the
Shelf Registration Statement, as the case may be, to become, or to remain,
effective during the requisite period if it voluntarily takes any action that
would result in any such Registration Statement not being declared effective or
in the Holders of Transfer Restricted Notes covered thereby not being able to
exchange or offer and sell such Transfer Restricted Notes during that period,
unless such action is required by applicable law and except as otherwise
provided in the second paragraph of Section 2(e) below.
(e) Additional Interest. In the event that (i) the applicable
-------------------
Registration Statement is not filed with the SEC on or prior to the date
specified herein for such filing, (ii) the applicable Registration Statement is
not declared effective on or prior to the date specified herein for such
effectiveness after such obligation arises (the "Effectiveness Target Date"),
-------------------------
(iii) if the Exchange Offer is required to be consummated here-
<PAGE>
-12-
under, the Company fails to consummate the Exchange Offer within 30 days of the
date on which the Exchange Offer Registration Statement is declared effective or
(iv) the applicable Registration Statement is filed and declared effective
during the period effectiveness is required by Section 2(e) and 3(a) but shall
thereafter cease to be effective or usable without being succeeded immediately
by an additional Registration Statement covering the Transfer Restricted Notes
which has been filed and declared effective (each such event referred to in
clauses (i) through (iv), a "Registration Default"), then the interest rate on
--------------------
the Transfer Restricted Notes as to which such Registration Default relates will
increase ("Additional Interest"), with respect to the first 90-day period (or
-------------------
portion thereof) while a Registration Default is continuing immediately
following the occurrence of such Registration Default in an amount equal to
0.50% per annum of the principal amount of the Notes. The rate of additional
Interest will increase by an additional 0.50% per annum of the principal amount
of the Notes for each subsequent 90-day period (or portion thereof) while a
Registration Default is continuing until all Registration Defaults have been
cured, up to a maximum amount of 1.50% of the principal amount of the Notes.
Additional Interest shall be computed based on the actual number of days elapsed
during which any such Registration Defaults exist. Following the cure of a
Registration Default, the accrual of Additional Interest with respect to such
Registration Default will cease.
If the Company issues a notice that the Shelf Registration Statement
is unusable due to the pendency of an announcement of a material corporate
transaction, or such notice is required under applicable securities laws to be
issued by the Company, and the aggregate number of days in any consecutive
twelve-month period for which the Shelf Registration Statement shall not be
usable due to all such notices issued or required to be issued exceeds 30 days
in the aggregate, then the interest rate borne by the Notes will be increased by
0.50% per annum of the principal amount of the Notes for the first 90-day period
(or portion thereof) beginning on the 31st such date that such Shelf
Registration Statement ceases to be usable, which rate shall be increased by an
additional 0.50% per annum of the principal amount of the Notes at the beginning
of each subsequent 90-day period, up to a maximum amount of 1.50% of the
principal amount of the Notes. Upon the Shelf Registration Statement once again
becoming usable, the interest rate borne by the Notes will be reduced to the
original interest rate if the Company is otherwise in compliance with this
Agreement at such time. Additional Interest shall be computed based
<PAGE>
-13-
on the actual number of days elapsed in each 90-day period in which the Shelf
Registration Statement is unusable.
The Company shall notify the Trustee within three Business Days after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). Additional Interest shall be
----------
paid by depositing with the Trustee, in trust, for the benefit of the Holders of
Transfer Restricted Notes, on or before the applicable semiannual interest
payment date, immediately available funds in sums sufficient to pay the
Additional Interest then due. The Additional Interest due shall be payable on
each interest payment date to the record Holder of Notes entitled to receive the
interest payment to be paid on such date as set forth in the Indenture. Each
obligation to pay Additional Interest shall be deemed to accrue from and
including the day following the applicable Event Date.
3. Registration Procedures. In connection with the obligations of
-----------------------
the Company with respect to the Registration Statements pursuant to Sections
2(a) and 2(b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which form (i) shall be selected
by the Company, (ii) shall, in the case of a Shelf Registration, be
available for the sale of the Transfer Restricted Notes by the selling
Holders thereof and (iii) shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith; and use their best
efforts to cause such Registration Statement to become effective and remain
effective in accordance with Section 2 hereof. The Company shall not file
any Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must provide information for
inclusion therein without the Holders being afforded an opportunity to
review such documentation a reasonable time prior to the filing of such
document if the Majority Holders or such Participating Broker-Dealer, as
the case may be, their counsel or the managing underwriters, if any, shall
reasonably object;
<PAGE>
-14-
(b) prepare and file with the SEC such amendments and post-
effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement effective for the Effectiveness Period or
the Applicable Period, as the case may be; and cause each Prospectus to be
supplemented by any required prospectus supplement and as so supplemented
to be filed pursuant to Rule 424 (or any similar provision then in force)
under the Securities Act, and comply with the provisions of the Securities
Act, the Exchange Act and the rules and regulations promulgated thereunder
applicable to it with respect to the disposition of all securities covered
by each Registration Statement during the Effectiveness Period or the
Applicable Period, as the case may be, in accordance with the intended
method or methods of distribution by the selling Holders thereof described
in this Agreement (including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder of
Transfer Restricted Notes, at least three Business Days prior to filing,
that a Shelf Registration Statement with respect to the Transfer Restricted
Notes is being filed and advising such Holder that the distribution of
Transfer Restricted Notes will be made in accordance with the method
selected by the Majority Holders; and (ii) furnish to each Holder of
Transfer Restricted Notes, without charge, as many copies of each
Prospectus, and any amendment or supplement thereto and such other
documents as such Holder may reasonably request, in order to facilitate the
disposition of the Transfer Restricted Notes; and (iii) subject to the last
paragraph of Section 3 hereof, hereby consent to the use of the Prospectus
or any amendment or supplement thereto by each of the selling Holders of
Transfer Restricted Notes in connection with the offering and sale of the
Transfer Restricted Notes covered by such Prospectus or any amendment or
supplement thereto subject to the limitations on the use thereof provided
in Sections 2(b) and 2(c);
(d) in the case of a Shelf Registration, use its best efforts to
register or qualify, as may be required by applicable law, the Transfer
Restricted Notes under all applicable state securities or "blue sky" laws
of such jurisdictions by the time the applicable Registration Statement is
declared effective by the SEC as any Holder of Transfer Restricted Notes
covered by a Registration Statement shall reasonably request in advance of
such date of effectiveness, and do any and all other acts and things
<PAGE>
-15-
which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in each such jurisdiction of such Transfer
Restricted Notes owned by such Holder; provided, however, that the Company
-------- -------
shall not be required to (i) qualify as a foreign corporation or as a
broker or dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (ii) file any
general consent to service of process or (iii) subject itself to taxation
in any such jurisdiction if it is not so subject;
(e) in the case of (1) a Shelf Registration or (2) Participating
Broker-Dealers who have notified the Company that they will be utilizing
the Prospectus contained in the Exchange Offer Registration Statement as
provided in Section 3(s) hereof, notify each Holder of Transfer Restricted
Notes, or such Participating Broker-Dealers, as the case may be, their
counsel, if any, promptly and confirm such notice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by
the SEC or any state securities authority for amendments and supplements to
a Registration Statement or Prospectus or for additional information after
the Registration Statement has become effective, (iii) of the issuance by
the SEC or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) if the Company receives any notification
with respect to the suspension of the qualification of the Transfer
Restricted Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction or the initiation of
any proceeding for such purpose, (v) of the happening of any event or the
failure of any event to occur or the discovery of any facts or otherwise,
during the period a Shelf Registration Statement is effective which makes
any statement made in such Registration Statement or the related Prospectus
untrue in any material respect or which causes such Registration Statement
or Prospectus to omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and (vi) the Company's reasonable determination that a
post-effective amendment to the Registration Statement would be
appropriate;
<PAGE>
-16-
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement as soon as
practicable;
(g) in the case of a Shelf Registration, furnish to each Holder of
Transfer Restricted Notes, without charge, at least one conformed copy of
each Registration Statement relating to such Shelf Registration and any
post-effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Transfer Restricted Notes to facilitate the timely preparation
and delivery of certificates not bearing any restrictive legends
representing Notes covered by such Shelf Registration to be sold and
relating to the subsequent transfer of such Notes; and cause such Transfer
Restricted Notes to be in such denominations (consistent with the
provisions of the Indenture) and registered in such names as the selling
Holders may reasonably request at least two Business Days prior to the
closing of any sale of Transfer Restricted Notes;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(iv), 3(e)(v) or 3(e)(vi) hereof, use
their best efforts to prepare a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Transfer Restricted
Notes, such Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and to notify each Holder to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and each
Holder hereby agrees to suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or
omission;
(j) obtain a CUSIP number for all Exchange Notes or Transfer
Restricted Notes, as the case may be, not later than the effective date of
a Registration Statement, and provide the Trustee with certificates for the
Exchange Notes or the Transfer Restricted Notes, as the case may be, in a
form eligible for deposit with the Depositary;
<PAGE>
-17-
(k) cause the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended, (the "TIA") in connection with the registration of
---
the Exchange Notes or Transfer Restricted Notes, as the case may be,
cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and execute, and use its best efforts
to cause the Trustee to execute, all documents as may be required to effect
such changes, and all other forms and documents required to be filed with
the SEC to enable the Indenture to be so qualified in a timely manner;
(l) in the case of a Shelf Registration, enter into such agreements
(including underwriting agreements) and take all such other appropriate
actions as are reasonably requested in order to expedite or facilitate the
registration or the disposition of such Transfer Restricted Notes, and in
such connection, (i) make such representations and warranties to Holders of
such Transfer Restricted Notes with respect to the business of the Company
and its subsidiaries as then conducted and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated
by reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings, and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Company and updates
thereof in form and substance reasonably satisfactory to the Holders of a
majority in principal amount of the Transfer Restricted Notes being sold,
addressed to each selling Holder covering the matters customarily covered
in opinions requested in underwritten offerings and such other matters as
may be reasonably requested by such Holders; (iii) obtain "cold comfort"
letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement, addressed to the selling Holders of Transfer Restricted Notes,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested by
such selling Holders; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no
less favorable than those set
<PAGE>
-18-
forth in Section 4 hereof (or such other provisions and procedures
acceptable to the Company and the Holders of a majority in aggregate
principal amount of Transfer Restricted Notes covered by such Registration
with respect to all parties to be indemnified pursuant to said Section
(including, without limitation, such selling Holders). The above shall be
done at each closing in respect of the sale of Transfer Restricted Notes,
or as and to the extent required thereunder;
(m) if (1) a Shelf Registration is filed pursuant to Section 2(b) or
(2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2(a) is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, make available for inspection
by each such person who would be an "underwriter" as a result of either (i)
the sale by such person of Notes covered by such Shelf Registration
Statement or (ii) the sale during the Applicable Period by a Participating
Broker-Dealer of Exchange Notes (provided that a Participating Broker-
Dealer shall not be deemed to be an underwriter solely as a result of it
being required to deliver a prospectus in connection with any resale of
Exchange Notes) and any attorney, accountant or other agent retained by any
such person (collectively, the "Inspectors"), at the offices where normally
----------
kept, during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably necessary
-------
to enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Company and its
subsidiaries to supply all information in each case reasonably requested by
any such Inspector in connection with such Registration Statement. Records
which the Company determines, in good faith, to be confidential and any
Records which it notifies the Inspectors are confidential shall not be
disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a material misstatement or omission in such
Registration Statement, (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction or (iii) the information in such Records has been made
generally available to the public. Each selling Holder of such Transfer
Restricted Notes and each such Participating Broker-Dealer will be required
to agree that information obtained by it as a re-
<PAGE>
-19-
sult of such inspections shall be deemed confidential and shall not be used
by it as the basis for any market transactions in the securities of the
Company unless and until such is made generally available to the public.
Each selling Holder of such Transfer Restricted Notes and each such
Participating Broker-Dealer will be required to further agree that it will,
upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and allow the Company at
its expense to undertake appropriate action to prevent disclosure of the
Records deemed confidential;
(n) comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 60 days after the end of any 12-month period (or 135 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Transfer Restricted
Notes are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which
statements shall cover said 12-month periods;
(o) upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company addressed to the Trustee for
the benefit of all Holders of Transfer Restricted Notes participating in
the Exchange Offer or the Private Exchange, as the case may be, and which
includes an opinion that (i) the Company has duly authorized, executed and
delivered the Exchange Notes and Private Exchange Notes, and (ii) each of
the Exchange Notes or the Private Exchange Notes, as the case may be,
constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its respective terms (in
each case, with customary exceptions);
(p) if an Exchange Offer or a Private Exchange is to be consummated,
upon proper delivery of the Transfer Restricted Notes by Holders to the
Company (or to such other Person as directed by the Company) in exchange
for the Exchange Notes or the Private Exchange Notes, as the case may be,
the Company shall mark, or cause to be marked, on
<PAGE>
-20-
such Transfer Restricted Notes and on the books of the Trustee, the
Transfer Agent, the Registrar and the Depositary delivered by such Holders
that such Transfer Restricted Notes are being canceled in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be; but in no
event shall such Transfer Restricted Notes be marked as paid or otherwise
satisfied solely as a result of being exchanged for Exchange Notes or
Private Exchange Notes in the Exchange Offer or the Private Exchange, as
the case may be;
(q) cooperate with each seller of Transfer Restricted Notes covered
by any Registration Statement participating in the disposition of such
Transfer Restricted Notes and one counsel acting on behalf of all such
sellers in connection with the filings, if any, required to be made with
the NASD;
(r) use its best efforts to take all other steps necessary to
effect the registration of the Transfer Restricted Notes covered by a
Registration Statement contemplated hereby; and
(s) (A) in the case of the Exchange Offer Registration Statement
(i) include in the Exchange Offer Registration Statement a section entitled
"Plan of Distribution," which section shall be reasonably acceptable to
Salomon, as representative of the Initial Purchasers, and which shall
contain a summary statement of the positions taken or policies made by the
staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer (a "Participating Broker-Dealer") that holds Transfer
---------------------------
Restricted Notes acquired for its own account as a result of market-making
activities or other trading activities and that will be the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes
to be received by such broker-dealer in the Exchange Offer, whether such
positions or policies have been publicly disseminated by the staff of the
SEC or such positions or policies, in the reasonable judgment of Salomon,
as representative of the Initial Purchasers or such other representative,
represent the prevailing views of the staff of the SEC, including a
statement that any such broker-dealer who receives Exchange Notes for
Transfer Restricted Notes pursuant to the Exchange Offer may be deemed a
statutory underwriter and must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes, (ii) furnish to each Participating Broker-
<PAGE>
-21-
Dealer who has delivered to the Company the notice referred to in Section
3(e), without charge, as many copies of each Prospectus included in the
Exchange Offer Registration Statement, and any amendment or supplement
thereto, as such Participating Broker-Dealer may reasonably request; (iii)
hereby consent to the use of the Prospectus forming part of the Exchange
Offer Registration Statement or any amendment or supplement thereto, by any
Person subject to the prospectus delivery requirements of the SEC,
including all Participating Broker-Dealers, in connection with the sale or
transfer of the Exchange Notes covered by the Prospectus or any amendment
or supplement thereto, (iv) use their best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be
lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons
must comply with such requirements in order to resell the Exchange Notes;
provided, however, that such period shall not be required to exceed 90 days
-------- -------
(or such longer period if extended pursuant to the last sentence of Section
3 hereof) (the "Applicable Period"), and (iv) include in the transmittal
-----------------
letter or similar documentation to be executed by an exchange offeree in
order to participate in the Exchange Offer (x) the following provision:
"If the exchange offeree is a broker-dealer holding Transfer
Restricted Notes acquired for its own account as a result of
market-making activities or other trading activities, it
will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of Exchange
Notes received in respect of such Transfer Restricted Notes
pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Transfer Restricted Notes, such broker-
dealer will not be deemed to admit that it is an underwriter within the
meaning of the Securities Act; and
(B) in the case of any Exchange Offer Registration Statement, the
Company agrees to deliver, upon request, to the Trustee or to Participating
Broker-Dealers upon consummation of the Exchange Offer (i) an opinion of
counsel
<PAGE>
-22-
substantially in the form attached hereto as Exhibit A, and (ii) an
officers' certificate containing certifications substantially similar to
those set forth in Section 6(f) of the Purchase Agreement.
The Company may require each seller of Transfer Restricted Notes as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the proposed distribution of such Transfer
Restricted Notes, as the Company may from time to time reasonably request in
writing. The Company may exclude from such registration the Transfer Restricted
Notes of any seller who fails to furnish such information within a reasonable
time (not to exceed 10 Business Days) after receiving such request and shall be
under no obligation to compensate any such seller for any lost income, interest
or other opportunity forgone, or any liability incurred, as a result of the
Company's decision to exclude such seller.
In the case of (1) a Shelf Registration Statement or (2) Participating
Broker-Dealers who have notified the Company that they will be utilizing the
Prospectus contained in the Exchange Offer Registration Statement as provided in
Section 3(t) hereof, that are seeking to sell Exchange Notes and are required to
deliver Prospectuses, each Holder agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
3(e)(ii), 3(e)(iii), 3(e)(v), 3(e)(vi) or 3(e)(vii) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Notes pursuant to a
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof or until
it is advised in writing (the "Advice") by the Company that the use of the
------
applicable Prospectus may be resumed, and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies in such
Holder's possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Transfer Restricted Notes or
Exchange Notes, as the case may be, current at the time of receipt of such
notice. If the Company shall give any such notice to suspend the disposition of
Transfer Restricted Notes or Exchange Notes, as the case may be, pursuant to a
Registration Statement, the Company shall use its best efforts to file and have
declared effective (if an amendment) as soon as practicable an amendment or
supplement to the Registration Statement and, in the case of an amendment, have
such amendment declared effective as soon as practicable and shall extend the
period during which such Registration Statement shall be maintained effective
<PAGE>
-23-
pursuant to this Agreement by the number of days in the period from and
including the date of the giving of such notice to and including the date when
the Company shall have made available to the Holders (x) copies of the
supplemented or amended Prospectus necessary to resume such dispositions or (y)
the Advice.
4. Indemnification and Contribution. (a) The Company shall
--------------------------------
indemnify and hold harmless each Initial Purchaser, each Holder, each
Participating Broker-Dealer, each underwriter who participates in an offering of
Transfer Restricted Notes, their respective affiliates, each Person, if any, who
controls any of such parties within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment or supplement thereto), covering
Transfer Restricted Notes or Exchange Notes, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any court or governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission; provided
--------
that (subject to Sections 4(c) and 4(d) below) any such settlement is
effected with the prior written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred (including
reasonable fees and disbursements of one counsel (in addition to any local
counsel) chosen by Salomon, such Holder, such Participating Broker-Dealer
or any underwriter (except to the extent otherwise expressly pro-
<PAGE>
-24-
vided in Section 4(c) hereof)), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any court or governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent
that any such expense is not paid under subparagraph (i) or (ii) of this
Section 4(a);
provided, however, that this indemnity does not apply to any loss, liability,
- -------- -------
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission (i) made in reliance upon and
in conformity with written information furnished in writing to the Company by or
on behalf of such Initial Purchaser, such Holder, such Participating Broker-
Dealer or any underwriter with respect to such Initial Purchaser, Holder,
Participating Broker-Dealer or underwriter, as the case may be, expressly for
use in the Registration Statement (or any amendment or supplement thereto) or
any Prospectus (or any amendment or supplement thereto) or (ii) contained in any
preliminary prospectus if such Initial Purchaser, such Holder, such
Participating Broker-Dealer or such underwriter failed to send or deliver a copy
of the Prospectus (in the form it was first provided to such parties for
confirmation of sales) to the Person asserting such losses, claims, damages or
liabilities on or prior to the delivery of written confirmation of any sale of
securities covered thereby to such Person in any case where the Company shall
have previously furnished copies thereof to such Initial Purchaser, such Holder,
such Participating Broker-Dealer or such underwriter, as the case may be, in
accordance with this Agreement, at or prior to the written confirmation of the
sale of such Notes to such Person and the untrue statement contained in or the
omission from the preliminary prospectus was corrected in the Final Prospectus
(or any amendment or supplement thereto). Any amounts advanced by the Company
to an indemnified party pursuant to this Section 4 as a result of such losses
shall be returned to the Company if it shall be finally determined by a court of
competent jurisdiction in a judgment not subject to appeal or final review that
such indemnified party was not entitled to indemnification by the Company.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, each Initial Purchaser, each underwriter who
participates in an offering of Transfer Restricted Notes and the other selling
Holders and each of their respective directors and each Person, if any, who
controls any of the Company, any Initial Purchaser, any under-
<PAGE>
-25-
writer or any other selling Holder within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, against any and all loss, liability, claim,
damage and expense whatsoever described in the indemnity contained in Section
4(a) hereof, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment or supplement thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such selling Holder with
respect to such Holder expressly for use in the Registration Statement (or any
supplement thereto), or any such Prospectus (or any amendment thereto);
provided, however, that, in the case of the Shelf Registration Statement, no
- -------- -------
such Holder shall be liable for any claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Transfer Restricted Notes
pursuant to the Shelf Registration Statement; provided, further, however, that
-------- ------- -------
for purposes of Section 4(a)(iii), such counsel shall (subject to Section 4(c)
hereof) be chosen by the Company.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 4(a) above, one counsel to all the
indemnified parties shall be selected by Salomon, and, in the case of parties
indemnified pursuant to Section 4(b) above, counsel to all the indemnified
parties shall be selected by the Company. An indemnifying party may participate
at its own expense in the defense of any such action; provided, however, that
-------- -------
counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. Notwithstanding
the foregoing, if it so elects within a reasonable time after receipt of such
notice, an indemnifying party, jointly with any other indemnifying parties
receiving such notice, may assume the defense of such action with counsel chosen
by it and approved by the indemnified parties defendant in such action (which
approval shall not be unreasonably withheld), unless such indemnified parties
reasonably object to such assumption on the ground that there may be legal
defenses available to them which are different from or in addition to those
available to such indemnifying party. If
<PAGE>
-26-
an indemnifying party assumes the defense of such action, the indemnifying
parties shall not be liable for any fees and expenses of counsel for the
indemnified parties incurred thereafter in connection with such action. In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 4 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes a full and unconditional release of each indemnified party
from all liability arising out of such litigation, investigation, proceeding or
claim and the offer and sale of any Notes and (ii) does not include a statement
as to or an admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees and
expenses of counsel pursuant to Section 4(a)(iii) above, then such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 4(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company, the Initial
Purchasers and the Holders, as applicable, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnity agreement incurred by the Company, the Initial Purchasers and the
Holders; provided, however, that no Person guilty of fraudulent
-------- -------
misrepresentation
<PAGE>
-27-
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person that was not guilty of such fraudulent
misrepresentation. As between the Company and the Initial Purchasers and the
Holders, such parties shall contribute to such aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement in such proportion as shall be appropriate to reflect the relative
fault of the Company on the one hand and of the Holder of Transfer Restricted
Notes, the Participating Broker-Dealer or Initial Purchaser, as the case may be,
on the other hand in connection with the statements or omissions which resulted
in such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative fault of the Company on the one hand and the Holder of
Transfer Restricted Notes, the Participating Broker-Dealer or the Initial
Purchasers, as the case may be, on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, or by the Holder of Transfer
Restricted Notes, the Participating Broker-Dealer or the Initial Purchasers, as
the case may be, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders of the Transfer Restricted Notes and the
Initial Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 4 were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 4.
For purposes of this Section 4, each affiliate of any Person, if any,
who controls a Holder of Transfer Restricted Notes, an Initial Purchaser or a
Participating Broker-Dealer within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such other Person, and each director of the Company, each affiliate of the
Company, each executive officer of the Company who signed the Registration
Statement, and each Person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Company.
<PAGE>
-28-
5. Miscellaneous.
-------------
(a) Rule 144 and Rule 144A. The Company shall provide to each Holder
----------------------
such reports as are required under Section 10.23 of the Indenture and, upon the
request of any Holder of Transfer Restricted Notes (a) make publicly available
such information as is necessary to permit sales pursuant to Rule 144 under the
Securities Act, (b) deliver such information to a prospective purchaser as is
necessary to permit sales pursuant to Rule 144A under the Securities Act and it
will take such further action as any Holder of Transfer Restricted Notes may
reasonably request, and (c) take such further action, if any, that is reasonable
in the circumstances, in each case, to the extent required from time to time to
enable such Holder to sell its Transfer Restricted Notes without registration
under the Securities Act within the limitation of the exemptions provided by (i)
Rule 144 under the Securities Act, as such rule may be amended from time to
time, (ii) Rule 144A under the Securities Act, as such rule may be amended from
time to time, or (iii) any similar rules or regulations hereafter adopted by the
SEC. Upon the reasonable request of any Holder of Transfer Restricted Notes,
the Company will deliver to such Holder a written statement as to whether they
have complied with such requirements.
(b) No Inconsistent Agreements. The rights granted to the Holders
--------------------------
hereunder do not, and will not for the term of this Agreement in any way
conflict with and are not, and will not during the term of this Agreement be
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any other agreements entered into by the
Company.
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of the Company
and the Majority Holders; provided, however, that no amendment, modification, or
-------- -------
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Transfer
Restricted Notes or the Company unless consented to in writing by such Holder of
Transfer Restricted Notes or the Company, as the case may be.
(d) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier,
<PAGE>
-29-
or any courier guaranteeing overnight delivery (i) if to a Holder, at the most
current address given by such Holder to the Company by means of a notice given
in accordance with the provisions of this Section 5(d), which address initially
is, with respect to the Initial Purchasers, the address set forth in the
Purchase Agreement; and (ii) if to the Company, initially at the Company's
address set forth in the Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 5(d).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors, assigns and transferees of the
Initial Purchasers, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
-------- -------
shall be deemed to permit any assignment, transfer or other disposition of
Transfer Restricted Notes in violation of the terms of the Purchase Agreement or
the Indenture. If any transferee of any Holder shall acquire Transfer
Restricted Notes, in any manner, whether by operation of law or otherwise, such
Transfer Restricted Notes shall be held subject to all of the terms of this
Agreement, and by taking and holding such Transfer Restricted Notes, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
(f) Third Party Beneficiary. Each of the Initial Purchasers and each
-----------------------
Holder shall be a third party beneficiary of the agreements made hereunder
between the Company, on the one hand, and the Initial Purchasers, on the other
hand, and shall have the right to enforce such agreements directly to the extent
it deems such enforcement necessary or advisable to protect its rights or the
rights of Holders hereunder.
<PAGE>
-30-
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. SPECIFIED TIMES OF DAY REFER TO
NEW YORK CITY TIME.
(j) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Notes Held by the Company or any of its Affiliates. Whenever the
--------------------------------------------------
consent or approval of Holders of a specified percentage of Transfer Restricted
Notes is required hereunder, Transfer Restricted Notes held by the Company or
any of their affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
[Signature Page Follows]
<PAGE>
S-1
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
THE ACKERLEY GROUP, INC.
By: __________________________________
Name:
Title:
Confirmed and accepted as of
the date first above written:
SALOMON SMITH BARNEY INC.
FIRST UNION CAPITAL MARKETS, a division of
Wheat First Securities, Inc.
FLEET SECURITIES, INC.
By: SALOMON SMITH BARNEY INC.
By: ___________________________
Name:
Title:
<PAGE>
Exhibit A
---------
Form of Opinion of Counsel
--------------------------
1. Each of the Exchange Offer Registration Statement and the
Prospectus (other than the financial statements, notes or schedules thereto and
other financial and statistical information and supplemental schedules included
or referred to therein or omitted therefrom and the Form T-1, as to which such
counsel need express no opinion), complies as to form in all material respects
with the applicable requirements of the Securities Act and the applicable rules
and regulations promulgated under the Securities Act.
2. In the course of such counsel's review and discussion of the
contents of the Exchange Offer Registration Statement and the Prospectus with
certain officers and other representatives of the Company and representatives of
the independent certified public accountants of the Company, but without
independent check or verification or responsibility for the accuracy,
completeness or fairness of the statements contained therein, on the basis of
the foregoing (relying as to materiality to a large extent upon representations
and opinions of officers and other representatives of the Company), no facts
have come to such counsel's attention which cause such counsel to believe that
the Exchange Offer Registration Statement (other than the financial statements,
notes and schedules thereto and other financial and statistical information
contained or referred to therein and the Form T-1, as to which such counsel need
express no belief), at the time the Exchange Offer Registration Statement became
effective and at the time of the consummation of the Exchange Offer, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading, or that the Prospectus (other than the financial
statements, notes and schedules thereto and other financial and statistical
information contained or referred to therein, as to which such counsel need
express no belief) contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading.
<PAGE>
EXHIBIT 10.13
ACQUISITION AGREEMENT
---------------------
This Agreement, dated as of November 30, 1998, by and among Wicks
Broadcast Group Limited Partnership, a Delaware limited partnership (the
"Company"), and AK Media Group, Inc., a Washington corporation ("Buyer").
WHEREAS, the Company and its subsidiary, WBG License Co., L.L.C., a
Delaware limited liability company ("License Co.") (collectively with the
Company, the "Companies") operate those television broadcast stations identified
on Schedule A annexed hereto, serving the respective markets identified therein,
----------
pursuant to FCC Licenses, as hereinafter defined (each such station being
hereinafter referred to as a "Station", and collectively as the "Stations"), and
own assets and properties used exclusively in the operation and business of the
Stations;
WHEREAS, the FCC Licenses may not be transferred without the prior
approval of the FCC;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, and upon the terms and subject
to the conditions hereinafter set forth, the parties hereto hereby agree as
follows:
ARTICLE 1
---------
Purchase and Sale of Assets; Time Brokerage Agreement
-----------------------------------------------------
1.1 Sale and Assignment.
-------------------
(a) Subject to the terms and conditions hereof, at the Closing (as
such term is defined in Section 4.1 below) the Company shall, and shall cause
License Co. to, sell, assign, convey and otherwise transfer to Buyer, and Buyer
shall purchase from the applicable Companies, all right, title and interest of
the Companies in and to the following (the "Purchased Assets") (excluding the
Excluded Assets (as such term is defined in Section 1.2 below)), free and clear
of all Liens (as hereinafter defined) other than Permitted Liens (as hereinafter
defined):
(i) FCC Licenses. All right, title and interest of the
------------
Companies in and to all licenses, permits, variances, franchises,
certifications, approvals, construction permits and authorizations issued or
granted by the FCC for, or used in the operation of
<PAGE>
the Stations (the "FCC Licenses"), together with any applications therefor,
renewals, extensions or modifications thereof and additions thereto.
(ii) Tangible Personal Property. All fixed and tangible
--------------------------
equipment, machinery, vehicles, furniture, transmitting towers, transmitters,
antennae, office materials and supplies, spare parts and other tangible personal
property owned by any of the Companies and used or held for use by the Companies
exclusively by or for any of the Stations or the operation thereof, with all
replacements thereof, additions and alterations thereto, and substitutions
therefor, made between the date hereof and the Closing Date (hereinafter
collectively the "Tangible Personal Property").
(iii) Real Properties. All land, buildings, improvements,
---------------
fixtures, and transmitting towers (to the extent they constitute fixtures or
other interests in real property and not Tangible Personal Property) and other
real property owned by any of the Companies, and all leaseholds and other
interests of any of the Companies in real property and/or buildings and/or
improvements thereon, and all security deposits with respect to any of the
foregoing, in each case used, or held for use, exclusively by or for any of the
Stations.
(iv) Advertising Contracts. All right, title and interest of
---------------------
the Companies in and to all orders and agreements for the sale of advertising
time on the Stations for cash and all trade, barter and similar agreements for
the sale of advertising time on the Stations other than for cash, and all such
orders and agreements for advertising time on the Stations entered into between
the date hereof and the Closing Date, each in the ordinary course of business,
and to the extent the foregoing have not been performed by the Companies as of
the Closing Date, in each case to which any of the Companies or any of the
Stations is a party (hereinafter collectively "Advertising Contracts").
(v) Agreements. All right, title and interest of the
----------
Companies in and to the contracts, agreements and leases, including, without
limitation, program licenses and agreements and contracts to broadcast product
or programs on the Stations, in each case pertaining exclusively to any of the
Stations, any of the Real Properties or any of the Tangible Personal Property,
to which any of the Companies or the Stations is a party, but in all cases other
than the Excluded Contracts (as hereinafter defined) (all of the foregoing
(other than the Excluded Contracts) being hereinafter, together with the
Advertising Contracts, collectively, "Contracts").
(vi) Intangibles. All right, title and interest of the
-----------
Companies in and to: the call letters for the Stations, all original programming
created exclusively for any of the Stations, and all copyrights, trademarks,
trade names, logos, slogans, jingles.
<PAGE>
service marks, applications for any of the foregoing, and other intangible
proprietary property, in each case used, or held for use, by any of the
Companies exclusively for any of the Stations (hereinafter collectively the
"Intangibles").
(vii) Insurance Proceeds. All right, title and interest of the
------------------
Companies in and to insurance proceeds and rights thereto derived from loss,
damage or destruction of or to any properties or assets described in paragraph
(iii) or (iv) above, but only to the extent not utilized prior to the Closing to
repair or replace the lost, damaged or destroyed items included in the Purchased
Assets (collectively "Insurance Proceeds").
(viii) Barter Receivables. All Barter Receivables (as defined
------------------
below) of the Stations.
(ix) Prepaid Items. All right, title and interest of the
-------------
Companies in and to all prepaid items relating exclusively to any of the
Purchased Assets or the operation of any of the Stations (other than unearned
insurance premiums), but only to the extent dollar-for-dollar credit therefor is
given and paid to the Companies pursuant to Section 2.4 hereof.
(x) FCC Logs. All FCC logs and similar records of the
--------
Companies that relate exclusively to the operation of the Stations ("FCC Logs").
(xi) Business Records. All right, title and interest of the
----------------
Companies. in and to all engineering and advertising reports, programming
studies, consulting reports, marketing data, technical equipment information and
specifications, copies of personnel records, mailing lists, lists of vendors or
suppliers, and any other similar information in tangible form, used or held for
use by the Companies exclusively in the business or operation of the Stations
(hereinafter collectively "Business Records").
(xii) Goodwill. All goodwill in and going concern value of the
--------
Stations.
1.2 Excluded Assets. The Purchased Assets shall not include the
---------------
following (the "Excluded Assets"):
(a) All cash, cash equivalents or similar type investments of any of
the Companies, such as certificates of deposit, Treasury bills and other
marketable securities on hand and/or in banks, and unearned insurance premiums
and security deposits, excluding, however, Insurance Proceeds to the extent such
Insurance Proceeds have not been utilized prior to Closing in the manner
contemplated in Section 1.1(a)(vii) hereof;
-3-
<PAGE>
(b) All accounts receivable in respect of air time broadcast on any
of the Stations prior to the Closing Date, other than any of the foregoing in
the nature of barter or trade receivables entitling any of the Companies to
goods or services, or to air time for the broadcast of advertising promoting any
of the Stations ("Barter Receivables"), and other than those in favor of Buyer
under the Time Brokerage Agreement (as hereinafter defined) (the "TBA
Receivables") (such accounts receivable other than Barter Receivables and TBA
Receivables being herein called "Receivables"), and all other accounts and other
amounts receivables of any of the Companies.
(c) All supplies and items of tangible property consumed or disposed
of in the ordinary course of business between the date of this Agreement and the
Closing Date;
(d) All personal effects belonging to personnel of any of the
Stations;
(e) All financial and tax reports, ledgers and books and records,
Tax returns, work sheets related to any of the foregoing, organizational
documents, and books and records pertaining to the organization, existence
and/or capitalization of any of the Companies;
(f) any and all policies of insurance, including, without
limitation, any and all rights thereunder;
(g) all rights of any of the Companies to enforce (i) the
obligations of Buyer to pay, perform or discharge the Assumed Liabilities, and
(ii) all other obligations of Buyer under or in connection with, as well as all
other rights of any of the Companies, under or in connection with, this
Agreement, the Time Brokerage Agreement and/or the Liabilities Undertaking (as
hereinafter defined) and/or any of the other Buyer Documents (as hereinafter
defined);
(h) all rights to claims for refunds of Taxes;
(i) any and all rights necessary to defend against any and all
debts, liabilities and obligations retained by any of the Companies, including,
but not limited to, rights of setoff which any of the Companies may have with
respect to any of such debts, liabilities and obligations;
(j) any and all claims or causes of action against third parties
which may have accrued in favor of any of the Companies prior to the Closing
Date or which may
-4-
<PAGE>
have arisen or may arise out of any one or more events, conditions or
circumstances prior to the Closing Date;
(k) all Excluded Contracts (as hereinafter defined);
(l) any assets of any compensation or benefit plan or arrangement of
any of the Companies in effect as of the Closing Date;
(m) all assets, properties, business and rights of any of the
Companies pertaining or relating to any of the radio broadcast stations, or to
any of the other television broadcast stations (other than the Stations), owned,
operated or managed by any of the Companies;
(n) all shares of capital stock, partner interests and member
interests, and all other equity interests and securities, of or in any of the
Companies or any of the subsidiaries thereof; and
(o) the names Wicks, Wicks Broadcast Group, WBG, Wicks Group and any
and all variations thereof, and all goodwill related thereto.
1.3 Time Brokerage Agreement. Concurrently with the execution and
------------------------
delivery hereof, the Companies and Buyer are entering into a Time Brokerage
Agreement, with respect to the Stations, in the form of Exhibit 1.3 hereto (the
-----------
"Time Brokerage Agreement").
ARTICLE 2
---------
Consideration
-------------
2.1 Purchase Price.
--------------
In consideration of the sale, assignment and transfer of the
Purchased Assets pursuant to Section 1.1 hereof, Buyer (i) shall pay to the
Company an amount (the "Purchase Price") equal to the sum of $26,000,000, and
(ii) shall assume, pay, perform and discharge promptly when due the Assumed
Liabilities (as hereinafter defined).
2.2 Assumed Liabilities.
-------------------
In addition to the Purchase Price payable pursuant to Section 2.1
hereof, effective as of the Closing Date (as such term is defined in Section 4.1
below), Buyer
-5-
<PAGE>
hereby agrees to assume, pay, perform, discharge and otherwise satisfy promptly
when due, and to indemnify and hold harmless the Companies from and against, all
liabilities and obligations of the Companies as shall be set forth or described
in the form of Liabilities Undertaking attached hereto as EXHIBIT 2.2 (the
-----------
"Liabilities Undertaking", and the liabilities and obligations of the Companies
assumed by Buyer thereunder being collectively the "Assumed Liabilities" and
individually an "Assumed Liability"); and, in furtherance of the foregoing, at
the Closing Buyer shall execute and deliver to the Companies a Liabilities
Undertaking in the form of such EXHIBIT 2.2. Except as provided in this
-----------
Agreement or in the Liabilities Undertaking, Buyer shall not assume any debts,
liabilities or obligations of any of the Companies, and all debts, liabilities
and obligations of the Companies not so assumed are herein referred to as the
"Excluded Liabilities".
2.3 Allocation of Purchase Price. The parties hereto agree that the
----------------------------
Purchase Price shall be deemed, for all purposes (e.g., those relating to taxes
----
and tax returns of any kind whatsoever, including, without limitation, Internal
Revenue Service Form 8594), to be allocated in accordance with an allocation
schedule to be established by mutual agreement of the parties, provided,
--------
however, that if the parties are unable to agree on such an allocation schedule
- -------
within sixty (60) days after the date hereof, a third-party appraiser selected
by the Company and reasonable satisfactory to Buyer, the fees of which shall be
borne equally by Buyer and the Company, shall resolve the allocation of the
Purchase Price to any items with respect to which there is a dispute between the
parties.
2.4 Certain Closing Prorations and Adjustments.
------------------------------------------
(a) In all cases, except to the extent any of the following items
shall be required to be paid or assumed, or to be reimbursed to any of the
Companies, by Buyer pursuant to the Time Brokerage Agreement: all utilities
charges, real estate taxes, personal property taxes, monthly rental payments
under real property leases to be assumed by Buyer pursuant to this Agreement and
monthly equipment rental payments under leases of Tangible Personal Property to
be assumed by Buyer pursuant to this Agreement, annual FCC fees, and similar
prepaid items (to the extent included in the Purchased Assets), including any
accrued vacation or sick pay time or any Barter Receivables, shall be prorated
between Buyer and the Companies, as of Midnight on the day immediately preceding
the Closing Date, and the net amount resulting from the foregoing in favor of
Buyer or the Companies, as the case may be, shall then be paid to Buyer or the
Company, as the case may be, at the Closing, or credited against the Purchase
Price in the event the Company is to pay Buyer any such amount. The Company
shall pay to Buyer an amount in respect of advertising time which the Stations
are obligated to air under all orders and agreements in effect on the date
hereof relating to any of the Stations pursuant to which air time for
advertising is exchanged for goods,
-6-
<PAGE>
services or air time for advertising elsewhere ("Barter Agreements"), in all
cases other than any programming Barter Agreements, which remain outstanding on
the Closing Date to the extent of the amount by which the aggregate net negative
barter balance outstanding on the Closing Date exceeds $20,000. Buyer shall pay
to the Company an amount in respect of advertising time which the Stations are
obligated to air under all Barter Agreements, in all cases other than any
programming Barter Agreements, in effect on the date hereof which remain
outstanding on the Closing Date to the extent of the amount by which the
aggregate net positive barter balance outstanding on the Closing Date exceeds
$20,000. If all the apportionments set forth above are not accomplished at the
Closing, then, as soon as practicable thereafter, representatives of the Company
and Buyer shall examine all appropriate books and records in order to make the
determination of said apportionments. Payments in respect thereof shall be made
within ten (10) days after each such determination, provided that if payments
with respect to real or personal property taxes are based in whole or in part on
the previous year's taxes, there shall be a later adjustment to reflect the
current year's taxes when the bills are finally rendered.
(b) In the event of any dispute between the parties as to prorations
or adjustments under this Section 2.4, the amounts not in dispute shall
nonetheless be paid and adjusted for at the Closing and such disputes shall be
promptly presented for resolution to an independent certified public accountant
mutually acceptable to the parties. The accountant's resolution of the dispute
shall be final and binding on the parties and a judgment may be entered thereon,
provided, however, that any such accountant shall have no authority to assess
damages or award attorney's fees or costs. The fees and expenses of such
accountant shall be paid one-half ( 1/2) by the Company and one-half ( 1/2) by
Buyer.
2.5 Nonassignability. Notwithstanding anything to the contrary
----------------
herein or in any document or instrument provided for herein or contemplated
hereby, to the extent that any lease, contract, license, agreement, sales or
purchase order, commitment, property interest or other asset included in the
Purchased Assets, or any claim, right or benefit arising thereunder or resulting
therefrom (each a "Contract Interest") is not capable of being sold, assigned,
transferred or conveyed without the approval, consent or waiver of the issuer
thereof or the other party or parties thereto, or any other third person
(including any government or governmental regulatory agency or authority
("Authority")), this Agreement shall not, in the event any such issuer or third
party shall object to such assignment, constitute a sale, assignment, transfer
or conveyance thereof, or an attempted sale, assignment, transfer or conveyance
thereof, absent such approval, consent or waiver; and none of the Companies
shall be obligated to sell, assign, transfer or convey to Buyer any of its
rights or obligations in or to any of such Contract Interests without first
obtaining all such necessary approvals, consents or waivers; provided, however,
-------- -------
Buyer
-7-
<PAGE>
shall indemnify and hold each of the Companies harmless from and against any and
all costs of any of the Companies in performing any and all such obligations
from and after the Closing Date pursuant to the provisions of Section
10.1(a)(iii) hereof. The Company will request, and Buyer shall cooperate with
the Company to obtain, approvals, consents or waivers necessary to convey to
Buyer any material Contract Interests; provided, however, that none of the
-------- -------
Companies shall be obligated to pay any consideration therefor to any third
party from whom such approval, consent or waiver is requested. To the extent
that any of the approvals, consents or waivers referred to in this Section 2.5
shall not have been obtained as of the Closing, the obligations in connection
with such Contract Interests shall nevertheless be and remain Assumed
Liabilities but only to the extent that the Buyer receives a benefit associated
with such liability, and the Company shall act in good faith, with all costs
related thereto to be borne by Buyer but only to the extent that it receives
benefits through any reasonable and lawful arrangements that actually provide
the benefits of such Contract Interests to Buyer; but none of the Companies
shall have any obligation to expend any sums or incur any costs or liabilities
in connection with such efforts.
2.6 Discharge of Bank Debt Liens. At the Closing, the Company shall
----------------------------
cause all Liens on the Purchased Assets granted pursuant to the credit agreement
of the Company with its lending banks and other institutional lenders, as the
same may be amended from time to time (the "Company Credit Facility"), to be
released and discharged.
2.7 Collection of Receivables. After the Closing, the Company will
-------------------------
deliver to Buyer a schedule of Receivables. Buyer agrees to use commercially
reasonable efforts to collect the Receivables for the benefit of the Company.
From the Closing Date through the one hundred twenty (120) day period following
the Closing (the "Collection Period"), Buyer shall collect the cash proceeds
from the Receivables (the "Collections"). Any collections from any account
debtor who is an account debtor on any of the Receivables shall be credited
against the account of such account debtor in the order the accounts receivable
owing therefrom with respect to any of the Stations were invoiced, except to the
extent a legitimate dispute exists with respect to a particular receivable and
Buyer promptly notifies the Company of such dispute or to the extent that any
account debtor designates in writing to which invoice any payment should be
applied. Within five (5) days after the end of each broadcast month during the
Collection Period, Buyer shall deliver to the Company (i) a statement or report
showing all Collections during such broadcast month, (ii) a wire transfer in an
amount equal to the aggregate amount of the Collections during such broadcast
month, and (iii) all records of uncollected Receivables. Within five (5) days
after the end of the Collection Period, Buyer shall deliver to the Company (i) a
final statement or report showing all Collections made during the Collection
Period, (ii) a wire transfer in an amount equal to any remaining Collections
-8-
<PAGE>
which had not been previously remitted to the Company, and (iii) all records of
uncollected Receivables, and thereafter Buyer shall have no further obligations
with respect thereto, except that Buyer shall promptly remit to the Company all
Collections made or received after the Collection Period. Buyer shall not agree
to any settlement, discount or reduction of any of the Receivables without the
prior written consent of the Company. Buyer's collection obligation under this
Section shall not include any obligation to bring suit or take other legal
action for the collection of the Receivables. Buyer shall not assign, pledge or
grant a security interest in any of the Receivables to any third party or claim
a security interest or right in or to any of the Receivables and Buyer's
obligations to make payment to the Company of the Collections shall not be
subject to any set-off whatsoever.
ARTICLE 3
---------
Application to and Consent By the FCC; HSR Act
----------------------------------------------
3.1 FCC Consent. The Closing (as hereinafter defined) is subject to the
-----------
condition that the FCC shall have issued its approval of the transfer of the FCC
Licenses for the Stations to Buyer (such approval being herein called the
"Initial Order"), and without any conditions materially adverse to Buyer on the
one hand, or any of the Companies, on the other hand, respectively, and such
Initial Order shall have become a Final Order (as hereinafter defined). The
following shall not be deemed to be conditions materially adverse to Buyer (and
are herein referred to as "Permitted Conditions"): any condition or requirement
by the FCC that the Closing not occur until the grant of applications for
renewal of any of the FCC Licenses. For purposes of this Section 3.1, the "FCC"
shall mean the FCC or its staff.
3.2 Application for FCC Consent.
---------------------------
(a) The Company and Buyer agree to proceed expeditiously and with
due diligence and to use their respective best efforts and to cooperate with
each other in seeking and applying for the Initial Order and the Final Order
(the "Application"). Within ten (10) days after the date this Agreement is
executed and delivered, each of the Company and Buyer shall cause to be prepared
and filed with the FCC their respective portions of the Application and all
information, data, exhibits, resolutions, statements, and other materials
necessary and proper, and required to be provided by it, in connection with the
Application. Each of the Company and Buyer further agrees expeditiously to
cause to be prepared any Application amendments whenever such amendments are
required by the FCC or its rules and regulations.
-9-
<PAGE>
(b) Except as otherwise provided herein, the Company, on the one
hand, and Buyer, on the other hand, will be solely responsible for the expenses
incurred by it in the preparation, filing and prosecution of the respective
portions of the Application. All filing fees and grant fees imposed shall be
paid by Buyer.
(c) Buyer and the Company shall use their respective best efforts
to oppose any efforts, before or after the grant or proposed grant of the
Initial Order, to oppose, for reconsideration or judicial review of, the grant
by the FCC of the Initial Order. In furtherance, but not in limitation of the
foregoing, Buyer shall, and shall cause its affiliates to, consent to and
perform any Permitted Conditions.
3.3 Notice of Application. The Company will give notice of the filing
---------------------
of the Application by such means as may be required by the rules and regulations
of the FCC.
3.4 Definition of Final Order. For purposes of this Agreement, the term
-------------------------
"Final Order" shall mean the Initial Order which becomes a final order of the
FCC which is not reversed, stayed, enjoined or set aside, and with respect to
which no timely request for stay, reconsideration, review, rehearing or notice
of appeal or determination to reconsider or review is pending, and as to which
the time for filing any such request, petition or notice of appeal or for review
by the FCC, and for any reconsideration, stay or setting aside by the FCC on its
own motion or initiative, has expired.
3.5 HSR Compliance. Buyer and the Company shall, within ten (10) days
--------------
after the date hereof, file all necessary notifications under the Hart Scott
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with
respect to the transactions contemplated under this Agreement. Buyer and the
Company shall each pay one-half of all filing fees required in connection with
such filing. Buyer and the Company shall promptly comply with any and all
requests by the United States Department of Justice (the "Department of
Justice") or the Federal Trade Commission (the "FTC") for additional documents
or information with respect to the notification filed with the Department and
the FTC pursuant to the HSR Act and shall use their respective best efforts to
obtain prompt termination of the waiting period under the HSR Act. Without
intending to limit the foregoing, Buyer shall, and shall cause its affiliates
to, consent to and comply with any and all Permitted Conditions.
-10-
<PAGE>
ARTICLE 4
---------
Closing; Deliveries; Conditions Precedent
-----------------------------------------
4.1 Closing.
-------
(a) The Closing under this Agreement (the "Closing") shall take
place at the offices of the Company's counsel, no later than 10:00 a.m., local
time, on the third (3rd) day after the issuance of the Initial Order; provided
that if the FCC Application is then being actively contested by a challenger
seeking the revocation or rescission thereof, then on the third (3rd) day after
the Initial Order becomes a Final Order, or, if the parties hereto shall
mutually agree upon another date, then such other mutually agreed upon date.
The date of the Closing is herein called the "Closing Date".
(b) All proceedings to be taken and all documents to be executed and
delivered by the parties at the Closing shall be deemed to have been taken and
executed simultaneously and no proceedings shall be deemed taken nor any
documents executed or delivered until all have been taken, executed and
delivered.
4.2 Company Deliveries. At the Closing, the Company shall deliver to
------------------
Buyer:
(a) complete and correct copies of the Certificate of Limited
Partnership of the Company (the "L/P Certificate"), and the Limited Partnership
Agreement of the Company, as amended (the "Partnership Agreement") and the
Certificate of Formation and Limited Liability Company Agreement of the License
Co.
(b) certificates of good standing with respect to the Companies, as
of a then recent date, by the Secretary of State of the State of Delaware, and
in the case of the Company by the Secretary of State of the State of Oregon;
(c) copies of all resolutions of the corporate general partner of
the Company authorizing the execution and delivery on behalf of the Company of
this Agreement and the consummation of the transactions by the Company
contemplated hereby, certified by an officer of such general partner;
(d) bill(s) of sale and deeds for the Purchased Assets executed by
the appropriate Companies;
(e) evidence of the release of the Purchased Assets from the Liens
granted pursuant to the Company Credit Facility; and
-11-
<PAGE>
(f) all other documents required by the terms of this Agreement to
be delivered by the Company to Buyer at the Closing.
4.3 Buyer's Deliveries. At the Closing, Buyer will deliver:
------------------
(a) the Purchase Price by wire transfer of immediately available
funds to such account(s) as the Company shall specify;
(b) the Liabilities Undertaking, executed by Buyer;
(c) a copy of resolutions of Buyer, authorizing the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, certified by an officer of Buyer;
(d) certificate of good standing with respect to Buyer, issued as of
a then recent date, by the Secretary of State of the State of Washington; and
(e) all other documents required by the terms of this Agreement to
be delivered by Buyer at the Closing.
4.4 Buyer's Conditions Precedent. The obligations of Buyer under this
----------------------------
Agreement to proceed with the Closing are subject, at the option of Buyer, to
the fulfillment of the following conditions at or prior to the Closing:
(a) the representations and warranties of the Company contained in
this Agreement, or any certificate delivered by it at the Closing pursuant to
this Agreement, shall be true and correct when made, except where the failure to
be true and correct would not have a Material Adverse Effect (as hereinafter
defined) or a material adverse effect on the ability of the Company to
consummate the transactions contemplated hereby, and, except for changes
permitted by this Agreement and representations and warranties made as of a
specific, indicated date, shall also be true and correct at the time of the
Closing with the same force and effect as though such representations and
warranties were made at that time, except, in each case where the failure to be
true and correct would not have a Material Adverse Effect or a material adverse
effect on the ability of the Company to consummate the transactions contemplated
hereby, and except in each case for changes or failures to be true and correct
arising out of or in connection with or as a result of any matter or transaction
contemplated by the Time Brokerage Agreement or any act or omission or
instruction by or on behalf of Buyer in the course of its authority or
activities under or in connection with the Time Brokerage Agreement;
-12-
<PAGE>
(b) each covenant, agreement and obligation required by the terms of
this Agreement to be complied with and performed by the Company, at or prior to
the Closing, shall have been complied with and performed, in all material
respects, in each case except for failures arising out of or in connection with
or as a result of any matter or transaction contemplated by the Time Brokerage
Agreement or any act or omission or instruction by or on behalf of Buyer in the
course of its authority or activities under or in connection with the Time
Brokerage Agreement;
(c) the waiting period under the HSR Act shall have expired or been
terminated;
(d) no United States or state governmental authority or other agency
or commission or United States or state court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order which is in effect and has the effect of
making the transactions contemplated by this Agreement illegal or otherwise
restraining or prohibiting consummation of such transactions; provided, however,
-------- -------
that Buyer shall have used its best efforts to have any such order or injunction
vacated;
(e) the Initial Order shall have become a Final Order;
(f) there shall be delivered to and for the benefit of Buyer a
certificate of the Company executed on the Closing Date that the conditions set
forth in subsections (a) and (b) of this Section 4.4 have been fulfilled; and
(g) there shall have been delivered to Buyer an opinion or opinions
of counsel to the Companies in form and substance reasonably satisfactory to
counsel to Buyer.
4.5 The Company's Conditions Precedent. The obligations of the Company
----------------------------------
under this Agreement to proceed with the Closing are subject, at the option of
the Company, to the fulfillment of each of the following conditions at or prior
to the Closing:
(a) the representations and warranties of Buyer contained in this
Agreement, or any certificate delivered by it at the Closing pursuant to this
Agreement, shall be true and correct in all material respects when made, and
shall also be true and correct in all material respects at the time of the
Closing with the same force and effect as though such representations and
warranties were made at that time, except for changes expressly permitted by
this Agreement;
-13-
<PAGE>
(b) each covenant, agreement and obligation required by the terms of
this Agreement to be complied with and performed by Buyer at or prior to the
Closing shall have been duly and properly complied with and performed, in all
material respects;
(c) the Initial Order shall have become a Final Order;
(d) the waiting period under the HSR Act shall have expired or been
terminated;
(e) no United States or state governmental authority or other agency
or commission or United States or state court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order which is in effect and has the effect of
making the transactions contemplated by this Agreement illegal or otherwise
restraining or prohibiting consummation of such transactions; and
(f) there shall be delivered to the Company, a certificate of Buyer
executed on the Closing Date that the conditions set forth in subsections (a)
and (b) of this Section 4.5 have been fulfilled; and
(g) there shall have been delivered to the Companies an opinion or
opinions of counsel to Buyer reasonably satisfactory in form and substance to
counsel to the Companies.
ARTICLE 5
---------
Representations and Warranties of the Company
---------------------------------------------
The Company hereby makes each of the following representations and
warranties:
5.1 Organization, Standing and Qualification; Subsidiaries; Authority.
-----------------------------------------------------------------
(a) The Company is a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Company is duly
qualified to do business and is in good standing as a foreign limited
partnership under the laws of each state where the failure to be so qualified
would result in a Material Adverse Effect. The Company has the requisite
limited partnership power and limited partnership authority to own and lease its
properties and to carry on its business in the places such properties are now
owned or leased or where such business is presently conducted. The copies of
the L/P Certificate and the Partnership Agreement heretofore delivered to Buyer
are complete
-14-
<PAGE>
and correct. WBG Management, Inc., a Delaware corporation ("WBGM"), is the sole
general partner of the Company and is a corporation validly existing and in good
standing under the laws of the State of Delaware. WBGM has the requisite
corporate power and corporate authority to own and lease its properties and to
carry on its business in the places such properties are now owned or leased or
where such business is presently conducted.
(b) Except as listed on Schedule 5.1 (b) of the Disclosure Schedule
----------------
delivered by the Company concurrently with the execution and delivery of this
Agreement (the "Disclosure Schedule"), the Company has no subsidiaries, nor any
interest, direct or indirect, nor has any commitment to purchase any interest,
direct or indirect, in any other corporation, partnership, joint venture or
other business enterprise or entity, in any case which holds any of the
Purchased Assets or engages in any operations pertaining to the Stations. The
entities listed in Schedule 5.1(b) of the Disclosure Schedule (the
---------------
"Subsidiaries", and individually a "Subsidiary") are limited liability
companies, corporations or limited partnerships, validly existing under the laws
of their respective states of formation or incorporation, as indicated in said
Schedule 5.1(b). The Subsidiaries have the requisite limited liability company,
- ---------------
corporate or limited partnership power and limited liability company, corporate
or limited partnership authority to own or lease their respective properties and
to carry on their respective businesses and in the places such respective
properties are now owned or leased and where such respective businesses are
presently conducted. Except as indicated in said Schedule 5.1(b), none of the
business, assets or properties of the Companies relating to any of the Stations
is owned, used or conducted by any partner or affiliate of the Company other
than the Companies.
(c) The Companies have all requisite limited partnership or limited
liability company power and limited partnership or limited liability company
authority to enter into this Agreement and each of the other agreements
(including, without limitation, the Time Brokerage Agreement), certificates and
instruments to be executed and delivered by any of them pursuant hereto
(collectively the "Company Documents") and to carry out the transactions
contemplated hereby and thereby. This Agreement has been duly executed by, and
constitutes the legal, valid and binding obligation of, the Company and each of
the Company Documents, when executed and delivered by such of the Companies as
is party thereto, shall, when so executed and delivered, constitute the legal,
valid and binding obligations of such of the Companies as is party thereto. All
limited partnership and limited liability company proceedings required to be
taken by the Companies relating to the execution, delivery and performance of
this Agreement and the Company Documents and the consummation of the
transactions contemplated hereby have been duly taken.
-15-
<PAGE>
5.2 No Violation. Except for the filing of the Application and the
------------
granting of the Initial Order and the Final Order, and except as may be caused
or made necessary by facts relating solely to Buyer, and except as indicated in
Schedule 5.2 of the Disclosure Schedule: the execution, delivery and
- ------------
performance of this Agreement and the Company Documents by the Companies, and
the consummation by Companies of the transactions contemplated hereby and
thereby, will not conflict with or violate the certificate of limited
partnership or limited partnership agreement, or the certificate of formation or
limited liability company agreement of any of the Companies or any lease,
license, promissory note, conditional sales contract, indenture, mortgage, deed
of trust or other agreement or instrument to which any of Companies is a party,
or any law, rule or regulation to which any of the Companies is subject, which
in any case would have a Material Adverse Effect or violate any court or
administrative order by which any of the Companies is bound, and no approval or
consent of any governmental authority or any third party is necessary for the
execution, delivery and performance by any of the Companies of this Agreement or
any of the Company Documents which, if not obtained, would have a Material
Adverse Effect.
5.3 Financial Statements. Attached as Schedule 5.3 to the Disclosure
-------------------- ------------
Schedule are copies of the following financial statements (the "Financial
Statements"):
(a) audited consolidated balance sheets and related audited
consolidated statements of income and cash flow of the Company and its
subsidiaries as at and for the fiscal years ended December 31, 1996 and December
31, 1997, and the unaudited consolidated balance sheet of the Company and its
subsidiaries as at September 30, 1998 (the "September 30 Balance Sheet"), and
(b) those unaudited statements of operating income for the Stations,
and an unaudited balance sheet for the Stations, as are identified on Schedule
--------
5.3 of the Disclosure Schedule (the "Station Statements").
- ---
Except as indicated in Schedule 5.3 of the Disclosure Schedule, the Financial
------------
Statements have been prepared in accordance with generally accepted accounting
principles ("GAAP") and (other than the Station Statements) fairly present in
all material respects the consolidated financial position of the Company and its
subsidiaries and the consolidated results of operations of the Company and its
subsidiaries as of the respective dates thereof and for the fiscal years covered
thereby, and the Station Statements fairly present in all material respects the
combined operating income of the Stations taken as a whole, for the periods
covered thereby, subject, in the case of all interim period Financial
Statements, to reasonable year-end audit adjustments.
-16-
<PAGE>
5.4 Absence of Undisclosed Liabilities. To the knowledge of the Company,
----------------------------------
neither the Company nor any of the Subsidiaries has any material debt or
liability relating to any of the Stations which would be required in accordance
with GAAP to be set forth or reserved against on a consolidated balance sheet of
the Company and its subsidiaries which has not been set forth on the September
30 Balance Sheet, or referred to in the notes to the most recent audited
consolidated balance sheet included among the Financial Statements, except as
indicated on Schedule 5.4 of the Disclosure Schedule, or on any one or more of
------------
the other Schedules of the Disclosure Schedule, and except for those (i)
incurred after such date in the ordinary course of business, (ii) incurred as a
result of the Time Brokerage Agreement or any act, omission or instruction of
Buyer taken or made under or in connection with the Time Brokerage Agreement or
any activities or transactions in furtherance thereof or in connection
therewith, (iii) covered by insurance, indemnification or comparable
arrangements, or (iv) which would not reasonably be expected to have a Material
Adverse Effect.
5.5 Absence of Certain Changes or Events. Except as set forth in
------------------------------------
Schedule 5.5 of the Disclosure Schedule, or as contemplated or permitted by this
- ------------
Agreement, since September 30, 1998: (i) there has not been any increase in the
rate or terms of salary or bonus payable by the Company or the Subsidiaries to
any of the key employees of the Stations, except increases occurring in the
ordinary course of business in accordance with customary practices, (ii) there
has not been any material increase in the rates or terms of pension and similar
employee benefit plans, except increases occurring in the ordinary course of
business in accordance with the Company's customary practices, (iii) there has
not been any material grant of severance pay by the Company or any of the
Subsidiaries in favor of any present or past employee of the Stations except in
the ordinary course of business in accordance with customary practices, (iv)
there has not been any entry into any material agreement or material transaction
relating to any of the Stations, outside the ordinary course of business, by the
Company or by any of the Subsidiaries, except on reasonable and prudent terms,
(v) there has not been any material change by the Company in its accounting
methods, principles or practices, other than as required by GAAP, (vi) the
Company and the Subsidiaries have not mortgaged, pledged or granted a security
interest on any of their material assets relating to any of the Stations, (vii)
the Company and the Subsidiaries have not sold, transferred, leased to others or
otherwise disposed of any of the material assets or properties relating to any
of the Stations, except in the ordinary course of business, (viii) the Company
and the Subsidiaries have not encountered any labor union organizing activity,
had any actual or threatened employee strike, work stoppage, slow down or
lockout, or had any change in their relations with their employees as a group,
in each case relating to any of the Stations and which has had or is expected to
have a Material Adverse Effect, (ix) prior to the date of this Agreement
-17-
<PAGE>
there has not been a Material Adverse Effect, and (x) neither the Company nor
any of the Subsidiaries has entered into any agreement to effect any of the
foregoing.
5.6 Tax Liabilities. Except as set forth on Schedule 5.6 of the
--------------- ------------
Disclosure Schedule, to the knowledge of the Company: the Companies have paid
or adequately accrued for all material liabilities for Federal, state and local
taxes or similar charges imposed by any taxing authority, including federal,
state, local and foreign income, sales, use, excise, franchise, withholding,
transfer, real property and personal property taxes (collectively, "Taxes") due
and payable by any of the Companies.
5.7 Real Property.
--------------
(a) Schedule 5.7 of the Disclosure Schedule identifies all of the
------------
Company's real property, including fee interests, leasehold interests and
easements necessary to conduct or used in the business or operations of the
Stations ("Real Property").
(b) The Company is the owner of the fee parcel identified on said
Schedule 5.7 of the Disclosure Schedule (the "Fee Parcel"). Except as disclosed
- ------------
in said Schedule 5.7 and except for the Permitted Liens, the Fee Parcel is or at
------------
Closing will be free and clear of all Liens.
(c) The Company is the holder of a valid and subsisting interest as
lessee under the leases listed in Schedule 5.7 of the Disclosure Schedule (the
------------
"Real Property Leases").
(d) Except as indicates in said Schedule 5.7:
------------
The Company is not in default under any lease with respect to
the Real Property Leases listed on said Schedule 5.7, and, to the Company's
------------
knowledge, the other parties to any such leases are not in default thereunder,
in each case except for such defaults that would not have a Material Adverse
Effect. Except as disclosed on said Schedule 5.7 and subject to any consents
------------
required by suchReal Property Leases, and all applicable governmental required
consents and approvals and the expiration of all applicable waiting periods, the
Company has full legal power and authority to assign its rights under the Real
Property Leases listed on said Schedule 5.7 to Buyer in accordance with this
------------
Agreement .
(e) Except as indicated in said Schedule 5.7:
------------
-18-
<PAGE>
Any and all improvements made on the Fee Parcel conform to all
restrictive covenants, building codes, and federal, state and local laws,
regulations and ordinances including without limitation all zoning laws,
regulations and ordinances, in each case except for such nonconformities that
would not have a Material Adverse Effect. To the Company's knowledge, the
improvements on the Fee Parcel are in all material respects in working
condition. There are no pending, or to the Company's knowledge, threatened or
contemplated action to take by eminent domain or otherwise to condemn any part
of the Fee Parcel. To the Company's knowledge, there are no physical or
mechanical defects or deficiencies in the condition of the improvements on the
Fee Parcel, including but not limited to, the transmission facilities, roofs,
exterior walls or structural components of the improvements thereon and the
heating, air conditioning, plumbing, ventilating, elevator, utility, sprinkler
and other mechanical and electrical systems, apparatus and appliances located
in, or servicing, such improvements, in each case except for such defects or
deficiencies that would not have a Material Adverse Effect. To the Company's
knowledge, all operating systems included in the Fee Parcel are in all material
respects in working order. The improvements on the Fee Parcel do not encroach
on any property not included in the Fee Parcel, and to the best of the Company's
knowledge there is no encroachment on the Fee Parcel by improvements located on
property not included in the Fee Parcel, in each case except for such
encroachments that would not have a Material Adverse Effect. The Fee Parcel is
a separate and distinct parcel for tax purposes and is not subject to property
taxes or similar charges against any other land. The improvements on the Fee
Parcel are served by the utilities required for the present use and operation
thereof.
(f) Except as indicated in said Schedule 5.7:
Any improvements of the Company made on property which is the
subject of the Real Property Leases (the "Leased Real Property") conform to all
lease restrictions, restrictive covenants, building codes, and federal, state
and local laws, regulations and ordinances, in each case except for such
nonconformities that would not have a Material Adverse Effect. To the Company's
knowledge, the Company's improvements on the Leased Real Property are, in all
material respects, in working condition. The Company has no knowledge of any
pending, threatened or contemplated action to take by eminent domain or
otherwise to condemn any part of the Leased Real Property. To the Company's
knowledge, there are no physical or mechanical defects or deficiencies in the
condition of the improvements on the Leased Real Property, including but not
limited to, the roofs, exterior walls or structural components of the
improvements thereon and the heating, air conditioning, plumbing, ventilating,
elevator, utility, sprinkler and other mechanical and electrical systems,
apparatus and appliances located in, or servicing, such improvements, in each
case except for such defects or deficiencies that
-19-
<PAGE>
would not have a Material Adverse Effect. To the Company's knowledge, all
operating systems included in the Leased Real Property are, in all material
respects, in working order. To the Company's knowledge, the improvements on the
Leased Real Property do not encroach on any property not included in the Leased
Real Property, and to the best of the Company's knowledge, there is no
encroachment on the Leased Real Property by improvements located on property not
included in the Leased Real Property, in each case except for such encroachments
that would not have a Material Adverse Effect. The improvements on the Leased
Real Property leased by the Companies are served by the utilities required for
the present use and operation thereof.
5.8 Other Tangible Property. Except as set forth on Schedule 5.8 of the
----------------------- ------------
Disclosure Schedule, the books and records of the Company and the Subsidiaries
in all material respects reflect the vehicles, machinery, equipment and other
tangible personal property owned or leased by the Company and the Subsidiaries
and used exclusively for the operations of any of the Stations. Except as set
forth on said Schedule 5.8, no material personal property of the Company and the
------------
Subsidiaries used primarily for the operations of any of the Stations is held
under any lease, security agreement, conditional sales contract, or other title
retention or security arrangement, or is located other than in the possession or
under the control of the Company or any of the Subsidiaries.
5.9 Trade Names, Trademarks and Copyrights. Schedule 5.9 of the
-------------------------------------- ------------
Disclosure Schedule sets forth a list of all registered trade names, trademarks,
service marks and copyrights (and all applications in respect of the foregoing)
owned by the Company or any of the Subsidiaries which are material to the
businesses of the Stations taken as a whole. To the knowledge of the Company,
there is no infringement or alleged infringement by others of any such material
trade name, trademark, service mark or copyright which is reasonably expected to
have a Material Adverse Effect. To the knowledge of the Company, except as set
forth on Schedule 5.9 of the Disclosure Schedule, neither the Company nor any of
------------
the Subsidiaries is infringing on any trade name, trademark, service mark or
copyright of any other person or entity, in each case except for such
infringements which would not have a Material Adverse Effect. Except for
arrangements relating to television network or Station affiliation
relationships, and except for rights to broadcast programming granted to or
obtained by the Company or any Subsidiary in the ordinary course of business,
and, except as set forth on said Schedule 5.9, neither the Company nor any of
------------
the Subsidiaries is, as of the date of this Agreement, a party to any license
agreement or arrangement, whether as licensor, licensee, franchisor, franchisee
or otherwise, with respect to any trademarks, service marks, trade names or
copyrights relating to any of the Stations.
-20-
<PAGE>
5.10 Title to Assets. Except as described in Schedule 5.10 of the
--------------- -------------
Disclosure Schedule, the Companies have or at Closing will have good title to
all Tangible Personal Property (and to all other tangible personal property and
assets to be sold to Buyer hereunder), free and clear of any Lien, except for
Permitted Liens. Except as described in said Schedule 5.10, the Tangible
-------------
Personal Property is in all material respects in operating condition and repair;
and all such Tangible Personal Property is in compliance with the rules and
regulations of the FCC and, to Seller's knowledge, in all material respects with
all other applicable federal, state and local statutes, ordinances, rules and
regulations, in each case except where such noncompliance would not have a
Material Adverse Effect. Except as disclosed in Schedule 5.10 of the Disclosure
Schedule, the Tangible Personal Property includes all such tangible personal
property reasonably necessary to conduct the business and operations of the
Stations as now conducted.
5.11 Insurance Policies. Schedule 5.11 of the Disclosure Schedule sets
------------------ -------------
forth a list of material insurance policies held by the Company and the
Subsidiaries as of the date of this Agreement concerning the operations and
properties of the Stations. Except as set forth in Schedule 5.11, no claim is
-------------
pending under any such policy which would have a Material Adverse Effect.
5.12 Contracts. Schedule 5.12 of the Disclosure Schedule lists or
--------- -------------
describes all Contracts as of the date of this Agreement other than (A)
contracts and agreements in the nature of air time, advertising, barter or
trade, purchase, supply and service orders or arrangements in the ordinary
course of business, (B) retransmission and "must-carry" agreements and
arrangements entered into in the ordinary course of business and not requiring
retransmission fee payments by the Company or the Subsidiaries, (C) any
contracts and agreements relating to the acquisition of any of the Stations or
assets related thereto if the obligations of the Company have been substantially
performed (except for customary assumptions of liabilities of the sellers and
indemnification obligations as to post-closing operations of the acquired
business(es)), (D) any of the agreements referred to in Schedule 5.12(A) of the
----------------
Disclosure Schedule (the "Excluded Contracts"), or (E) agreements not covered in
clauses (A) through (D) above entered into in the ordinary course of business
involving payments by the Companies of less than $10,000 in any single case or
more than $50,000 in the aggregate. The Company has delivered or made available
to Buyer true and complete copies of all Contracts listed on Schedule 5.12 of
the Disclosure Schedule, To the knowledge of the Company, all Contracts set
forth on Schedule 5.12 of the Disclosure Schedule are in full force and effect,
-------------
and no proceedings are pending, or to the knowledge of the Company, threatened
in which the unenforceability of any such Contract has been asserted, in each
case except where the absence of same would not have a Material Adverse Effect.
The Company has complied in all respects with all Contracts and is not in
default under any of the Contracts, in each
-21-
<PAGE>
case except for such noncompliance and defaults that would not have a Material
Adverse Effect. To the knowledge of the Company, no other contracting party is
in default under any of the Contracts, in each case other than defaults that
would not have a Material Adverse Effect. The Contracts listed on said Schedule
--------
5.12, together with those not required to be listed, include all those as of the
- ----
date of this Agreement necessary in all material respects to conduct the
business and operations of the Stations as now conducted. To the knowledge of
the Company, the Company has not received written notice of any intention by any
party to any Contract (i) to terminate the Contract, (ii) to refuse to renew the
Contract upon expiration of its term, or (iii) to renew the Contract upon
expiration only on terms and conditions which are more onerous than those now
existing, in each case other than where the same would not have a Material
Adverse Effect.
5.13 Compliance with Laws. Except as set forth on Schedule 5.13 of the
-------------------- -------------
Disclosure Schedule, to the knowledge of the Company, there is no violation by
the Company or any of the Subsidiaries of any applicable federal, state or local
statute, law or regulation (including, without limitation, any applicable
building, zoning, environmental protection, or other law, ordinance or
regulation) affecting the properties or operations of any of the Stations , in
each case except for such violations that would not have a Material Adverse
Effect.
5.14 Litigation. Except as set forth on Schedule 5.14 of the Disclosure
---------- -------------
Schedule, there is not pending, nor, to the knowledge of the Company,
threatened, any suit, action, arbitration, or legal or administrative
proceeding, against the Company, or any of the Subsidiaries, arising out of the
operations of any of the Stations, or in connection with the transactions
contemplated by this Agreement , in each case which is reasonably expected to
have a Material Adverse Effect or a material adverse effect on the ability of
the Company to consummate the transactions contemplated by this Agreement.
Neither the Company nor any of the Subsidiaries is in violation of any order,
writ, injunction or decree of any federal, state, local or foreign court,
department, agency or instrumentality, in each case except for such violations
that would not have a Material Adverse Effect.
5.15 Authorizations. The Company and the Subsidiaries have all
--------------
governmental authorizations, licenses, franchises and permits necessary to the
operation of the Stations, and the conduct of the business of the Stations,
taken as a whole, in each case except where the failure to have the same, and
the cost of obtaining the same, would not have a Material Adverse Effect
(collectively, the "Authorizations"). The FCC Licenses identified in Schedule
--------
5.15 of the Disclosure Schedule constitute those licenses and permits required
- ----
under the Communications Act of 1934, as amended (the "Communications Act"), or
the rules, regulations, and policies of the FCC, with respect to the operation
of the Stations as currently operated. Except as set forth on Schedule 5.15
-------------
-22-
<PAGE>
of the Disclosure Schedule, the FCC Licenses are in full force and effect and
are unimpaired by any act or omission of the Company or any of the Subsidiaries,
except where the contrary would not have a Material Adverse Effect. Except for
administrative rule making or other proceedings of general applicability to the
broadcast industry and except for the Application, there is no action pending
nor, to the knowledge of the Company, threatened before the FCC to revoke,
refuse to renew, suspend or materially and adversely modify the FCC Licenses, or
to impose any Commission sanction with respect to any Station. To the knowledge
of the Company, except as set forth on Schedule 5.15 of the Disclosure Schedule,
-------------
there is not pending any investigation by or before the FCC, or any order to
show cause, notice of material violation, notice of apparent liability, or
notice of forfeiture or complaint by, before or with the FCC, against the
Station or the Company or any of its Subsidiaries, nor, to the knowledge of the
Company, are any of the foregoing threatened, in each case which would
reasonably be expected to have a Material Adverse Effect. Except as set forth
on Schedule 5.15 of the Disclosure Schedule, the Stations are operating in
-------------
compliance with the FCC Licenses, the Act, and the current rules, regulations,
and policies of the FCC, in each case except where the failure to so comply
would not have a Material Adverse Effect. All material reports, forms and
statements required to be filed with the FCC in connection with the Stations
have been filed with the FCC.
5.16 Employment Contracts and Benefits. (a) Schedule 5.16 of the
--------------------------------- -------------
Disclosure Schedule contains a true and complete list of all persons employed at
the Stations as of the date hereof and a description of all salary, bonus
arrangements and employee benefit plans or arrangements applicable to such. The
Company is not a party to any agreement, written or oral, with salaried or non-
salaried employees at the Stations, except those setting forth terms of at will
employment and except as described on said Schedule 5.16.
-------------
(b) Except as disclosed in said Schedule 5.16, the Company is not a
-------------
party to any Contract or agreement with any labor organization, nor has the
Company 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 the Company's employees at the Stations. The Company has no knowledge of
any organizational effort currently being made or threatened by or on behalf of
any labor union with respect to employees of the Company at the Stations. Except
as set forth on said Schedule 5.16, Seller has no knowledge of any unfair labor
-------------
practice charges pending against the Company with respect to the Stations; there
are no pending or, to the Company's knowledge, threatened strikes or arbitration
proceedings involving labor matters affecting the Company; and the Company has
not experienced any strikes, work stoppage or other significant labor
difficulties of any nature at the Stations in the past two years.
-23-
<PAGE>
(c) The Company has complied with respect to the Stations with all
laws relating to the employment of labor, including, without limitation, those
laws relating to safety, health, wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity and
payment and withholding of taxes, except for such noncompliance that would not
have a Material Adverse Effect.
(d) Except as set forth in said Schedule 5.16, the Company is not a
-------------
party to or bound by any employee benefit plan within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), covering the employees at the Stations, whether or not such plan is
otherwise exempt from the provisions of ERISA, and no employee or spouse of an
employee is entitled to any benefits that would be payable pursuant to any such
plan. The Company has in all material respects administered any plan listed on
said Schedule 5.16 in accordance with all provisions of ERISA, and its otherwise
-------------
complied in all material respects with ERISA. Buyer shall not assume or hereby
become obligated to pay any debt, obligation or liability arising from the
Company's employee benefit plans, or any other employment arrangement, except as
specifically provided in this Agreement and coverage under such plans and
arrangements for employees of the Company shall remain the responsibility of the
Company so long as such employees remain employees of the Company.
5.17 Fees. The Company has not become obligated to pay any fee or
----
commission to any broker, finder or investment banker in connection with the
transactions contemplated by this Agreement except as set forth on Schedule 5.17
-------------
of the Disclosure Schedule.
5.18 Environmental Laws. Except as disclosed on Schedule 5.18 of the
------------------ -------------
Disclosure Schedule: all operations on the Fee Parcel are in material compliance
with all Environmental Laws; the Company has obtained all material environmental
permits necessary for the operation of the Stations, and all such permits are in
full force and effect and the Company is in material compliance with the terms
and conditions of all such permits; there are no outstanding Liens (other than
inchoate statutory liens) on the Company's interest in any of the Real
Properties under any Environmental Laws; the Company has not received any
written notice, and is not aware, of any administrative or judicial
investigations, proceedings or actions with respect to material violations,
alleged or proven, of Environmental Laws by the Company, or any tenants or
subtenants of the Company at, or otherwise involving, any of the Real Properties
or the operations of the Company conducted on any of the Real Properties; no
material amount of Asbestos-Containing Material and no material amount of
Hazardous Substance is present in violation of any Environmental Law in any of
the improvements in the Fee Parcel, or to the Company's knowledge, the Leased
Real Property due to actions of the Company or
-24-
<PAGE>
for which the Company would have liability, except for ordinary quantities of
Hazardous Substances found in consumer or commercial products that are used in
the normal course of broadcast station operations, including grounds and
building operation and maintenance; and the Fee Parcel and, to the Company's
knowledge, the Leased Real Property, and all operations of the Company conducted
on or in the Fee Parcel and, to the Company's knowledge, the Leased Real
Property are in material compliance with all applicable federal and state
statutes and regulations relating to Asbestos and Hazardous Substances. The
operation of the Stations does not exceed in any material respect the
permissible levels of exposure to RF radiation specified in the FCC's applicable
rules, regulations and policies concerning RF radiation.
5.19 Programming. Schedule 5.19 of the Disclosure Schedule sets forth
----------- -------------
certain indicated information, as of approximately the date indicated therein,
with respect to contracts authorizing the broadcast of programming on the
Stations in exchange for cash payments and is accurate in all material respects
as of approximately such date.
5.20 Certain Understandings. Notwithstanding anything to the contrary
----------------------
contained in the Agreement:
(a) For purpose of this Agreement, the terms "knowledge of the
Company", and variations thereof, shall be deemed to refer only to the actual
knowledge of senior management of the Company, including Peter D'Acosta and
Craig B. Klosk.
(b) It is understood and agreed that whenever the Company is
called upon to list any contracts or agreements, there shall be deemed excluded
from the applicable representation or warranty any agreement where the primary
obligations of the parties thereto have been performed or will be performed on
or before the Closing.
(c) Certain matters and items disclosed in any Schedule of the
Disclosure Schedule may not be required to be disclosed therein, but may be
disclosed therein for informational purposes only, and no such disclosure shall
constitute an indication or admission of the materiality thereof or create a
standard of disclosure.
(d) Notwithstanding any cross-referencing which may be undertaken
in the Disclosure Schedule or any Schedule thereof, any matter identified in any
one or more of the Schedules of the Disclosure Schedule shall be deemed
disclosed for purposes of any other Schedule of the Disclosure Schedule.
(e) No representation or warranty in or made pursuant to this
Agreement shall be deemed breached or be deemed untrue or inaccurate if such
representation or
-25-
<PAGE>
warranty ceases to be true or correct or accurate as a result of any matter, or
any act, omission or instruction of Buyer taken, made or arising out of or in
connection with the Time Brokerage Agreement and/or Buyer's activities or
transactions in furtherance thereof or in connection therewith.
5.21 Transactions with Affiliates. All Real Property Leases and
----------------------------
Purchased Assets used or necessary in the business or operations of the Station
are owned, leased, licensed or held by the Companies, and except as disclosed in
Schedule 5.21 of the Disclosure Schedule and except for Excluded Contracts, no
- -------------
affiliate of the Company owns or leases property or is a party to any lease or
agreement directly affecting the operations of the Stations.
5.22 Disclosure. As of the date of this Agreement, no representation or
----------
warranty contained in this Agreement contains any untrue statement of a material
fact.
ARTICLE 6
---------
Representations and Warranties of Buyer
---------------------------------------
Buyer represents and warrants to the Company that:
6.1 Organization and Standing. Buyer is a corporation validly existing
-------------------------
and in good standing under the laws of the State of Washington. Buyer has all
requisite corporate power and corporate authority to own and lease its assets
and properties and to carry on its businesses as and in the places such assets
and properties are now owned or leased and where such businesses are presently
conducted.
6.2 Authority. Buyer has all requisite corporate power and corporate
---------
authority to enter into this Agreement and each other agreement (including,
without limitation, the Time Brokerage Agreement), certificate and instrument to
be executed and delivered by it pursuant to this Agreement (collectively the
"Buyer Documents") and to carry out the transactions contemplated hereby and
thereby. This Agreement has been duly executed by Buyer and constitutes, and
each Buyer Document, when executed and delivered, will constitute, the legal,
valid and binding obligations of Buyer. All corporate proceedings and actions
required to be taken by Buyer relating to the execution, delivery and
performance of this Agreement and the Buyer Documents and the consummation of
the transactions contemplated hereby and thereby have been duly taken.
6.3 Litigation. Except for administrative rule making or other
----------
proceedings of general applicability to the broadcast industry and except for
the Application
-26-
<PAGE>
contemplated by this Agreement and matters pertaining thereto: there is no
action, suit, proceeding, arbitration or investigation pending, or to the
knowledge of Buyer threatened, against Buyer or any of its affiliates, and there
is not outstanding any order, writ, injunction, award or decree of any court or
arbitrator or any federal, state, municipal or other governmental department,
commission, board, agency or instrumentality to which Buyer or any of its
affiliates is subject, which could reasonably be expected to materially
adversely affect the ability of Buyer to consummate the transactions
contemplated by this Agreement and by the Buyer Documents.
6.4 Financing. Buyer has, and at the Effective Time will have, all
---------
funds necessary to consummate the transactions contemplated by this Agreement
and by the Buyer Documents.
6.5 Qualification. Buyer is, and at all times through the Closing will
-------------
be, legally, technically, financially and otherwise qualified under the
Communications Act and all rules, regulations and policies of the FCC
(collectively, Communications Requirements"), and all applicable laws pertaining
to competition and anti-trust matters ("Anti-trust Requirements"), to control,
acquire and operate the Stations. There are no facts or proceedings that could
reasonably be expected to disqualify or restrict Buyer under the Communications
Act, any Communications Requirements, any Anti-trust Requirements or otherwise
from controlling, acquiring or operating any of the Stations or that could
reasonably be expected to cause the FCC not to grant the approvals required, or
cause the Department of Justice or the FTC not to permit the prompt expiration
of all waiting periods under the HSR Act, in connection with the transactions
contemplated by this Agreement and by the Buyer Documents. Buyer has no
knowledge of any fact or circumstance relating to Buyer or any of Buyer's
affiliates that could reasonably be expected to (i) cause the filing with the
FCC of any valid objection to any of the transactions contemplated by this
Agreement and by the Buyer Documents, or (ii) lead to a delay in the processing
by the FCC of the Application, or in the termination of any waiting period under
the HSR Act. No waiver of any FCC rule or policy is necessary to be obtained
for the grant of the Application, nor will processing pursuant to any exception
or rule of general applicability be requested or required in connection with any
of the transactions contemplated by this Agreement and by the Buyer Documents.
Buyer has provided to the Company in writing a list of all media properties in
which Buyer or any of its affiliates, alone or together, has any "attributable
interest" or any "meaningful relationship" under current FCC rules and
regulations.
6.6 No Violation. Except for the filing of the Application and the
------------
granting of the Initial Order and the Final Order and the expiration or
termination of the waiting period under the HSR Act, and except as may be caused
or made necessary by facts
-27-
<PAGE>
relating solely to the Company: (a) the execution, delivery and performance of
this Agreement and Buyer Documents by Buyer and the consummation by it of the
transactions contemplated by this Agreement and by the Buyer Documents will not
(i) conflict with or violate any provision of any of the governing documents of
Buyer, (ii) with or without the giving of notice or the passage of time, or
both, result in a breach of, or violate, or be in conflict with, or constitute a
material default under, or permit the termination of, or cause or permit
acceleration under, any material agreement, instrument, debt or obligation to
which Buyer is a party or to or by which it is subject or bound, or (iii)
violate any material law, rule or regulation or any order, judgment, decree or
award of any court, governmental authority or arbitrator to or by which Buyer is
subject or bound, except as would not reasonably be expected to have a material
adverse effect on the ability of Buyer to consummate the transactions
contemplated by this Agreement and by the Buyer Documents; and (b) no consent,
approval or authorization of, or declaration, filing or registration with, or
notice to, any governmental or regulatory authority or any other third party is
required to be obtained or made by Buyer in connection with the execution,
delivery and performance of this Agreement and the Buyer Documents or the
consummation of the transactions contemplated by this Agreement and by the Buyer
Documents.
6.7 Brokerage or Finder's Fee. No person is entitled to any brokerage
-------------------------
commissions or finder's fees in connection with the transactions contemplated by
this Agreement as a result of any action taken by Buyer or any of the
affiliates, officers, directors or employees thereof.
6.8 Own Investigation; etc. (a) Buyer understands and agrees that
----------------------
THE COMPANY IS NOT MAKING ANY, AND HEREBY DISCLAIMS ALL, REPRESENTATIONS OR
WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ALL
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
EXCEPT AS SPECIFICALLY SET FORTH IN ARTICLE 5 HEREOF.
(b) Buyer acknowledges and agrees that (i) it has made its own
inquiry and investigation into, and, based thereon, has formed an independent
judgment concerning, the Company, the Subsidiaries and the Stations and their
businesses and assets, and (ii) it has been furnished with or been given
adequate access to such information about the Company, the Subsidiaries and the
Stations and their businesses and assets, as it has requested.
(c) In connection with Buyer's investigation of the Company, the
Subsidiaries and the Stations and their businesses and assets, Buyer has
received certain
-28-
<PAGE>
projections and other forecasts, plans and budgets. Buyer acknowledges that
there are uncertainties inherent in attempting to make such projections,
forecasts, plans and budgets, that Buyer is familiar with such uncertainties and
is not relying upon such projections, forecasts, plans or budgets, that Buyer is
taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections, forecasts, plans and budgets so
furnished to it, and that Buyer will not assert or permit to be asserted any
claim against the Company or any partner thereof or any of their respective
directors, officers, employees, agents, stockholders, affiliates, consultants,
counsel, accountants, investment bankers or representatives, or hold the Company
or any partner thereof or any of such persons liable, with respect thereto.
Accordingly, the Company makes no representation or warranty with respect to the
business, operations, assets, liabilities or financial condition of the Company
or any of the Subsidiaries or the Stations other than as specifically set forth
in this Agreement. Buyer has not relied on or is relying on any statement,
representation or warranty not made in this Agreement. To the knowledge of Buyer
or any of its affiliates, employees, representatives or agents that has been
actively involved in the due diligence process associated with this Agreement
and the transactions contemplated by this Agreement, there is no breach of any
of the representations and warranties set forth in Article 5 hereof.
6.9 Disclosure. As of the date of this Agreement no representation or
----------
warranty contained in this Agreement contains any untrue statement of a material
fact.
ARTICLE 7
---------
Certain Covenants
-----------------
7.1 Consents. Each of the Company and Buyer shall use its reasonable
--------
efforts to obtain all consents required of third persons in connection with the
transactions contemplated by this Agreement, including all consents under each
television network affiliation agreement applicable to the respective Stations
(each an "Affiliation Agreement") and each national sales representative
agreement applicable to the respective Stations (each a "Sales Rep Agreement").
Without limiting the generality of the foregoing, Buyer (i) shall provide such
guarantees and financial statements and other financial information with respect
to Buyer as may reasonably be requested, (ii) if requested, shall agree, in
writing in form and substance satisfactory to the other party thereto, as the
case may be, to assume and perform each Affiliation Agreement and each Sales Rep
Agreement, as the case may be, in its entirety, and (iii) shall use all
reasonable efforts, and shall assist the Company in its efforts, to obtain for
the benefit of the
-29-
<PAGE>
Companies, from the other party or parties thereto, the release of the Companies
from all liabilities and obligations under the Contracts assumed or to be
assumed by Buyer accruing or arising on or after Closing Date. The provisions of
this Section 7.1 shall survive the Closing.
7.2 Conduct of Business. During the period from the date of this
-------------------
Agreement until the Closing, the Company shall not, without the prior written
consent of Buyer (such consent not to be unreasonably withheld or delayed), and
shall not permit any of the Companies to:
(a) enter into any agreement or contract which if entered into
prior to the date hereof would have been required to be disclosed on Schedule
--------
5.12 of the Disclosure Schedule pursuant to the representations set forth in
- ----
Section 5.12 hereof, other than agreements or contracts in the nature of
renewals or replacements on substantially similar or then reasonable or
prevailing commercial terms in the ordinary course of business;
(b) intentionally subject to any Lien, other than Permitted
Liens, any material Asset ;
(c) fail to prosecute with diligence any pending application
(other than the Application) with respect to any of the FCC Licenses;
(d) dissolve, liquidate, merge or consolidate or sell, transfer,
lease or otherwise dispose of any material Assets other than in the ordinary
course of business or as otherwise permitted by this Agreement; or
(e) perform any acts or transactions described in any of clauses
(i), (ii), (iii), (iv), (v), (vi) or (vii) of Section 5.5 hereof which would
have been inconsistent with the representations and warranties set forth in
Section 5.5 hereof had the same occurred after September 30, 1998 and prior to
the date hereof.
7.3 Operations. During the period from the date of this Agreement to
----------
the Closing Date, the Companies shall have sole responsibility for the Stations
and during such period the Company shall and shall cause the Companies to use
reasonable commercial efforts to operate the Stations in all material respects
in accordance with the rules and regulations of the FCC and the FCC Licenses,
and file ownership reports, employment reports and other documents required to
be filed with the FCC during such period with respect to the Stations and
maintain and deliver to Buyer true and complete copies of such required filings.
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7.4 Going Off the Air. If any Station goes off the air (other than in
-----------------
the ordinary course of business consistent with past or reasonable commercial
practices) for any engineering reason, or because of any act of God, or for any
other reason, the Company shall promptly notify Buyer.
7.5 Restrictions on Buyer. Nothing contained in this Agreement shall
---------------------
give Buyer any right to control the programming or operations of any of the
Stations prior to the Closing Date and the Companies shall have complete control
of the programming and operation of the Stations between the date hereof and the
Closing Date.
7.6 Access to Information. During the period from the date of this
---------------------
Agreement until the Closing, Buyer and its representatives shall be given
reasonable access upon reasonable prior notice and during times mutually
convenient to Buyer and senior management of the Company to the facilities,
properties, and key management employees, books and records of the Stations as
from time to time may be reasonably requested, and provided the same would not
cause undue disruption of business or activities of any of the Stations.
7.7 No Shop. (a) The Company agrees that, from and after the date
-------
hereof and until the earlier of (i) termination of this Agreement in accordance
with the terms hereof, and (ii) nine months after the date hereof, the Company
will not, nor will it permit any of the Subsidiaries to, sell, transfer or
otherwise dispose of any of the assets, properties, business or rights of any of
the Stations (except for dispositions in the ordinary course of business or as
permitted elsewhere in this Agreement), and the Company will not respond to
inquiries or proposals, or enter into or pursue any negotiations, or enter into
any agreements (oral or written), with respect to, the sale or purchase of any
of the assets, properties, business or rights of any of the Stations (except for
dispositions in the ordinary course of business or as permitted elsewhere in
this Agreement).
(b) Buyer agrees that, from and after the date hereof and until the
earlier of termination of this Agreement in accordance with the terms hereof or
the Closing, neither Buyer nor any of its affiliates will purchase or acquire
the assets of any television or radio broadcasting station with a transmitter
located within the Designated Market Area (as such term is used by Nielson Media
Research) of any of the Stations or assume control of any such station or enter
into a local marketing agreement or other time brokerage agreement with respect
to any such station, or pursue any negotiations or enter into any agreements
(oral or written) with respect to the purchase of any direct or indirect
interest in such station or any of the assets, business or rights relating to
any such station.
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7.8 Buyer's Qualifications. Buyer will not take any action or omit to
----------------------
take any action, or cause to be taken or to occur any action or omission, which
would cause the representation set forth in Section 6.5 hereof to have been
untrue if such action or omission had been taken or occurred prior to the date
hereof.
7.9 Cooperation. From the date hereof until the earlier of the Closing
-----------
or the termination of this Agreement, each of the Company and Buyer shall, at
its own respective expense, (i) use its commercially reasonable efforts to take
any additional action that is necessary or required in connection with any
notices to, filings with, and authorizations, consents and approvals of, any
governmental agency or any third party that it is required to give, make or
obtain in order to effect the transactions contemplated under this Agreement,
and (ii) furnish to the other party hereto such necessary information and
reasonable assistance as such other party may reasonably request in connection
with its preparation of such necessary notices to or filings with or
authorizations, consents and approvals of any such governmental agency or third
party.
7.10 Certain Employee Matters. (a) Subject to Section 7.10(c) below,
------------------------
Buyer may extend offers of employment, effective as of the Closing, to certain
employees of the Stations in Buyer's sole discretion and each such offer shall
be at the same salary and with substantially the same medical and health
insurance benefits as in effect immediately prior to the Closing and such that
no loss of employment would occur for any employee if such employee accepted his
or her respective offer. All employees who accept their respective offers of
employment with Buyer shall immediately be and become employees of Buyer. To
the extent that service is relevant for eligibility, vesting and benefit
accruals under any retirement or employee benefit plan, program or arrangement
established or maintained by Buyer or any of its affiliates for the benefit of
employees of any of the Stations, such plan, program or arrangement shall credit
such employees for service on or prior to the Effective Time with the Company or
any affiliate or predecessor thereof. In addition, Buyer shall cause to be
waived all limitations on benefits relating to any pre-existing conditions and
recognize, for purposes of annual deductible and out-of-pocket limits under its
medical and dental plans, deductible and out-of-pocket expenses paid by
employees and their dependents under the medical and dental plans in which they
participate in the calendar year in which the Closing occurs. The Buyer shall
not be responsible for any severance claims, costs or causes of action of
employees of the Stations to whom Buyer does not offer employment. Except as
provided in this Agreement, nothing herein shall restrict Buyer's ability to
change or terminate the benefits or benefit plans provided to any employees
(including former employees of the Company), nor shall Buyer be required to
provide any employee any of the terms and conditions of employment provided by
the Company.
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(b) The Buyer shall have no responsibility or liability for any
medical, disability or other benefits owed under the Company's benefit plans to
its employees, including without limitation, expenses for health or dental
benefits incurred but not submitted for reimbursement prior to the Closing Date
that are covered under the Company's benefit plans and any incentive bonuses
offered to employees of the Company. The Buyer shall not be responsible for
providing any medical, life and other insurance coverage and benefits, and
disability benefits to which any employee of the Company who retired or was
terminated from service with the Company prior to the Closing Date, or who was
disabled prior to the Closing Date, to which such employee may be entitled under
the Company's benefit plans.
(c) Buyer is not planning or contemplating, and has not made or
taken, and shall not make or take, any decisions or actions concerning the
Stations' employees that would require the service of notice under the Worker
Adjustment and Retraining Notification Act of 1988 (the "WARN Act"), or any
employee notice provision of applicable state law, including, without
limitation, any decision not to offer employment to any employees at the
Stations which would cause a violation of the WARN Act or any such similar state
law.
(d) This Section 7.10 shall operate exclusively for the benefit of
the parties to this Agreement (and their permitted assigns) and not for the
benefit of any other person or entity.
7.11 Environmental Assessment Period. Within thirty (30) days of the date
-------------------------------
of this Agreement, Buyer shall, at Buyer's cost and expense, cause an
environmental consulting firm reasonably acceptable to the Company to perform a
Phase I Environmental Assessment (the "Environmental Assessment") of the Fee
Parcel and the improvements thereon and shall deliver to the Company a report
prepared by such environmental consulting firm (the "Environmental Report").
If the Environmental Assessment shall indicate that the representations
contained in Section 5.18 hereof are not true in any material respect, Buyer
shall have the right to terminate this Agreement provided that (i) the Company
is notified in writing of any such material misrepresentation within 45 days
after the date hereof in order for this termination right to be applicable, and
(ii) the Company does not undertake at its expense to correct the condition
giving rise to such termination right.
7.12 Time Brokerage Agreement. Anything to the contrary contained in this
------------------------
Agreement notwithstanding, the Company shall not be deemed to have breached or
failed to comply with any of its covenants under this Agreement, if such breach
or failure is due
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or caused by the Time Brokerage Agreement or any act, omission or instruction of
Buyer under or in connection with the Time Brokerage Agreement or any activities
or transactions in furtherance thereof or in connection therewith.
ARTICLE 8
---------
Certain Additional Covenants
----------------------------
8.1 Confidential Information.
------------------------
(a) Buyer agrees that from and after the date hereof until and
including the Closing Date:
(i) it shall preserve and maintain all confidential or
proprietary information and trade secrets of or relating to the Company or any
of the Subsidiaries received or obtained in any form by Buyer or any of its
affiliates or representatives from the Company or any of the Subsidiaries or any
of their respective representatives, and shall not disclose any of same to any
person or entity or use any such confidential or proprietary information or
trade secret for personal advantage or to the detriment of the Company or any of
the Subsidiaries or any of the partners, shareholders or members thereof, except
that Buyer shall be free to use and disclose such proprietary information and
trade secrets which (A) was already in Buyer's possession at the time of
disclosure to Buyer or any of its affiliates or representatives by the Company
or any of the Subsidiaries or any of their respective representatives, (B) are a
matter of public knowledge other than as a result of actions taken or
disclosures made by or on behalf of Buyer or any of its affiliates or
representatives, or (C) are lawfully obtained by Buyer from a third person not
under any restriction or duty as to confidentiality.
(b) Nothing contained herein should be deemed to negate or limit
the Company's rights or any obligations of Buyer or any of its affiliates under
that certain letter agreement with the Company (the "Confidentiality
Agreement"). The Confidentiality Agreement shall remain in full force and
effect.
(c) Because the remedy at law for any breach of the provisions of
subsection (a) immediately above would be inadequate, Buyer hereby consents to
the granting by any court of an injunction or other equitable relief, without
the necessity of actual damage or irreparable harm being proved or the posting
of any bond or other security, with respect to any breach or threatened breach
of any of such provisions.
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<PAGE>
(d) The provisions of this Section 8.1 shall survive any
termination of this Agreement. In addition, it is the desire and intent of the
parties hereto that the provisions of this Section 8.1 shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement may be sought. Accordingly, if any particular
provision of this Section 8.1 shall be adjudicated to be invalid, illegal or
unenforceable in any respect, such provision shall be deemed amended to delete
therefrom the portion thus adjudicated to be invalid, illegal or unenforceable,
such deletion to apply only with respect to the operation of such provision in
the particular jurisdiction in which such adjudication is made, and the
remaining provisions contained herein shall not in any way be affected thereby.
Further, if any one or more of the provisions contained in this Section 8.1
shall for any reason be held to be excessively broad as to duration,
geographical scope, activity or subject, such provision(s) shall be construed by
limiting and reducing the same, so as to be enforceable to the maximum extent
under the applicable law as it shall then exist.
8.2 Bulk Sales Laws. Buyer hereby waives compliance by the Company and
---------------
the Subsidiaries with any bulk sales law, including, but not limited to, Article
6 of the Uniform Commercial Code, which may be applicable to any of the
Transactions. The Company agrees to indemnify and hold harmless the Buyer from
and against any and all claims, losses charges or damages resulting from the
failure of the Company to comply with any such bulk sales law except to the
extent any such claim, loss, charge or damage is an Assumed Liability.
8.3 Transactional Taxes. Buyer and the Company shall each pay one-half
-------------------
of any and all sales, transfer, conveyance, or other similar Taxes or
governmental charges imposed by any taxing jurisdiction with respect to the
transfer or assignment of the Purchased Assets or otherwise on account of the
transactions contemplated by this Agreement or any of the Company Documents
(collectively "Transaction Taxes").
8.4 Books and Records.
-----------------
(a On reasonable notice at any time and from time to time after
the Closing Date, Buyer shall permit the Company and its successors, and the
representatives thereof, reasonable access, during normal business hours, to all
correspondence, contracts, agreements and other books and records pertaining to
any of the Stations for purposes of inspection and/or copying. Buyer shall
cause all such materials to be preserved for at least seven (7) years after the
Closing Date and shall not thereafter destroy or otherwise dispose of any such
materials unless they shall have notified the Company and its successors at
least six (6) months before such disposition and give the Company and its
successors the opportunity to remove and retain such materials.
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<PAGE>
(b Without limiting the foregoing, Buyer agrees that, for a period
of seven (7) years after the Closing Date, it shall assist and cooperate with
the Company and its successors in collecting and assembling information relating
to the operations of the Company and/or the Subsidiaries prior to the Closing,
which customarily has been provided or used in connection with the preparation
of any and all Tax returns, information returns or other reports required to be
filed by the Company and/or any of the Subsidiaries, with any taxing authority
and shall make available to the Company and its successors the services of
personnel reasonably necessary to enable any of them or any affiliate or agent
of any of them to prepare and file any and all Tax returns, information returns
or other reports required to be filed with any taxing authority and/or to
respond to and conduct any and all Tax audits or other Tax determinations or
proceedings.
ARTICLE 9
---------
Termination
-----------
9.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing:
(a by mutual written consent of the Company and Buyer;
(b by either Buyer or the Company, if the Closing does not occur
on or before the earlier of (i) nine (9) months after the date of this Agreement
(the "Termination Date"), (ii) the denial or dismissal of the Application, or
(iii) receipt of notice of the Commission's designation of the Application for
hearing;
(c by Buyer, if the Company shall breach or default in
performance of any of its material representations, warranties or obligations
under this Agreement, and either (i) such breach or default in performance is
not capable of being cured or shall not have been cured or waived within thirty
(30) days after written notice thereof from Buyer to the Company, or (ii) the
Company shall not have provided reasonable assurance that such breach or default
in performance shall be cured on or before the then scheduled Closing Date,
except, in any case, such breaches and defaults which would not reasonably be
expected to have a Material Adverse Effect or to affect materially and adversely
the ability of the Company to effect the Closing;
(d by the Company, if Buyer shall breach or default in
performance of any of its material representations, warranties or obligations
under this Agreement, and
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<PAGE>
such breach or default in performance is not capable of being cured or shall not
have been cured or waived within thirty (30) days after notice thereof from the
Company to Buyer;
(e by Buyer, if any of the material conditions set forth in
Section 4.4 of this Agreement shall not have been fulfilled by the Closing Date
(unless the nonfulfillment results from Buyer's breach of any material
representation or warranty or failing to perform any material covenant or
agreement contained in this Agreement);
(f by the Company, if any of the material conditions set forth
in Section 4.5 of this Agreement shall not have been fulfilled by the Closing
Date (unless the nonfulfillment results from the Company breaching any material
representation or warranty or failing to perform any material covenant or
agreement contained in this Agreement); or
(g by the Buyer, if the termination right set forth in Section
7.11 hereof is applicable.
9.2 Effect of Termination. Without intending to limit the provisions of
---------------------
Section 8.1 hereof, if this Agreement shall be terminated pursuant to Section
9.1 above, or otherwise, Buyer shall (i) immediately deliver to the Company all
documents, work papers and other materials furnished to Buyer or any of its
affiliates or representatives, whether obtained before or after the execution of
this Agreement, and (ii) destroy all documents, work papers and other materials
developed by or for Buyer or any of its affiliates, accountants, agents or
employees, which embody proprietary or confidential information or trade secrets
of the Company or any of the Subsidiaries or immediately deliver such documents,
work papers and other materials to the Company.
ARTICLE 10
----------
Indemnification
---------------
10.1 Obligation to Indemnify.
-----------------------
(a From and after the Closing, and subject to the terms and
conditions of this Article 10, Buyer hereby assumes and agrees to save,
indemnify and hold harmless the Companies and their respective partners and
members and all officers, directors, partners and stockholders of any of them
(collectively "Company Indemnitees") from and against:
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<PAGE>
(i any loss, liability or damage suffered or incurred by any
Company Indemnitee(s) by reason of any breach by Buyer of any representation or
warranty of Buyer sets forth in this Agreement;
(ii any loss, liability or damage suffered or incurred by any
Company Indemnitee(s) by reason of the nonfulfillment by Buyer of any covenant
or agreement to be performed or complied with by Buyer under or pursuant to this
Agreement;
(iii any liability or damage suffered or incurred by any Company
Indemnitee(s) with respect to or in connection with any one or more of the
Assumed Liabilities and/or any failure of Buyer to timely comply with the
Liabilities Undertaking;
(iv any liability or damage suffered or incurred by any Company
Indemnitee(s) arising out of or related to the ownership or use of any of the
Purchased Assets and/or the operations, business or activities after the Closing
of any of the Stations or any act, omission or instruction of Buyer under or in
furtherance of the Time Brokerage Agreement, or any of the activities or
transactions in furtherance thereof or in connection therewith; and
(v any actions, suits, proceedings, judgments, costs and expenses,
including reasonable attorneys' fees, incident to any of the foregoing, or
incurred in enforcing any of the obligations under this Section 10.1(a).
(b From and after the Closing, and subject to the terms and
conditions of this Article 10, the Company hereby agrees to save, indemnify and
hold harmless Buyer and Buyer's officers, directors and stockholders
(collectively "Buyer Indemnitees") from and against:
(i any loss, liability or damage suffered or incurred by any Buyer
Indemnitee(s) by reason of any breach by the Company of any representation or
warranty of the Company set forth in this Agreement;
(ii any loss, liability or damage suffered or incurred by Buyer by
reason of the nonfulfillment by the Company of any covenant or agreement to be
performed or complied with by the Company under or pursuant to this Agreement;
(iii any liability suffered or incurred by any Buyer Indemnitee(s)
arising out of claims by third parties against any Buyer Indemnitee(s) for any
Excluded Liabilities; and
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<PAGE>
(iv any actions, suits, proceedings, judgments, costs and expenses,
including reasonable attorneys' fees, incident to any of the foregoing, or
incurred in enforcing any of the obligations under this Section 10.1(b).
10.2 Provisions Regarding Indemnification. In the event any action, suit
------------------------------------
or proceeding is brought, or any claim, demand or assessment is asserted,
against a party entitled to indemnification under Section 10.1 hereof, by reason
thereof (the "indemnified party"), with respect to which an indemnifying party
(the "indemnifying party") may have liability under the indemnity agreements
contained in Section 10.1 hereof, no indemnifying party shall be liable therefor
unless the indemnified party complies with the following provisions, it being
understood that the indemnifying party and the indemnified party shall have the
following rights and obligations in any such event: (i) the indemnified party
shall promptly notify the indemnifying party of such action, suit, proceeding,
claim, demand or assessment (each a "Claim") within 20 days of acquiring
knowledge thereof and shall furnish the indemnifying party with all information
and documents relating thereto within 20 days after the indemnified party's
receipt thereof (or such earlier practicable date as shall be appropriate to
enable the indemnifying party to timely respond thereto and defend the same);
(ii) the indemnifying party shall be entitled to defend the Claim with counsel
selected by it and reasonably acceptable to the indemnified party; (iii) the
indemnified party shall have the right to employ its own counsel in any such
case, but the fees and expenses of such counsel shall be at the indemnified
party's own expense; (iv) the indemnified party shall be kept fully informed of
such Claim whether or not it is so represented; (v) the indemnified party shall
make available to the indemnifying party and its attorneys and accountants all
books and records of the indemnified party relating to such Claim and shall
render such assistance as is reasonably required in order to ensure the proper
and adequate defense of any Claim; and (vi) in the event the indemnifying party
shall be actively defending any Claim, the indemnified party shall not make any
settlement of such Claim without the written consent of the indemnifying party
and shall accept any settlement thereof recommended by the indemnifying party so
long as the amount thereof is paid or discharged in full by the indemnifying
party.
10.3 Survival and Other Matters. Notwithstanding anything to the contrary
--------------------------
contained in this Agreement or any of the Company Documents:
(a Each representation, warranty, indemnity, covenant and agreement
of each of the parties hereto shall survive the Closing; provided, however, that
-------- -------
no party shall be entitled to assert any claim against the other for
misrepresentation or breach of warranty, indemnity, covenant or agreement under
or pursuant to this Agreement unless the party asserting such claim shall notify
the other in writing of such claim, in reasonable
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<PAGE>
detail, during the period ending on the first anniversary of the Closing Date
(the "Survival Period"), in which case the indemnified party's right to
indemnification will survive, but only with respect to the matters so described
in such notice, provided, however, that it is expressly acknowledged that any
-------- -------
claim made pursuant to the provisions of Section 10.1(a)(iii) or Section
10.1(a)(iv) hereof (and/or the provisions of Section 10.1(a)(v) hereof relating
to said Section 10.1(a)(iii) or said Section 10.1(a)(iv)), and Company
Indemnitees' rights and Buyer's obligations thereunder, shall survive
indefinitely and shall not be subject to, or limited by, any aforementioned
Survival Period; provided further that the representations and warranties made
by the Company in Sections 5.6, 5.16 and 5.18 shall survive until the second
anniversary of the Closing Date.
(b The Company shall not have any liability under this Article 10 or
otherwise under this Agreement or any Company Document for any reason or matter
whatsoever, except to the extent that the aggregate amount of all of the
Company's liabilities under this Article 10 or otherwise under this Agreement
(but for this Section 10.3(b)) exceeds One Hundred Thousand Dollars ($100,000);
provided, however, the maximum aggregate liability that the Company shall have
- -------- -------
under or in connection with any and all of this Agreement and the Company
Documents and/or any and all of the transactions contemplated by this Agreement
and/or the Company Documents shall in no event exceed the aggregate sum of
$2,600,000 (the "Cap"). Neither Buyer nor any Buyer Indemnitee shall be
entitled to assert any claim or demand for any amount that in the aggregate,
together with the aggregate amount of all other claims and demands previously
made by Buyer or any Buyer Indemnitee and for which the Company is or was
liable, exceeds or will exceed the Cap.
(c In the event that a misrepresentation or breach of warranty,
agreement or covenant is discovered by Buyer after the Closing, or in the event
of any other claim relating to or arising under this Agreement or any of the
Company Documents or any of the transactions contemplated by this Agreement or
any of the Company Documents, the sole and exclusive rights and remedies of
Buyer shall be as set forth in, and only to the extent expressly provided for
in, this Article 10, and Buyer shall not be entitled to a rescission of this
Agreement.
(d In the event that any misrepresentation or breach of warranty,
agreement or covenant is known to or discovered by Buyer prior to the Closing,
the same shall not affect any right of Buyer to elect not to close the
transactions contemplated by this Agreement, as provided in Section 4.4 hereof,
it being understood, however, that if, despite such right to elect not to close,
Buyer nevertheless elects to close, Buyer shall be deemed to have waived such
misrepresentation or breach and shall have no claim against the Company by
reason of such misrepresentation or breach.
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<PAGE>
(e In the event the effect of any misrepresentation or breach of
warranty or other provision contained in this Agreement or in any Schedule of
the Disclosure Schedule or Exhibit hereto or in any Company Document is that the
amount of assets of the Company or any of the Subsidiaries has been overstated
or the amount of liabilities of the Company or any of the Subsidiaries has been
understated as of the end of any fiscal period, Buyer's damages caused by such
overstatement or understatement shall in no event exceed the net amount by which
such overstated assets and/or understated liabilities reduces the net worth of
the applicable business or Station as of the end of such fiscal period, and
subject further to all other limitations set forth in and the provisions of this
Section 10.3; it being understood, however, that the foregoing is not intended
to affect Buyer's rights under this Article 10 in the event of a breach of the
Company's representations under Section 5.3 hereof, subject, however, to the
limitations set forth in and the provisions of this Section 10.3 (other than
this paragraph (e)).
(f The effect of any misrepresentation, breach of warranty, covenant
or agreement of, or any indemnifiable claim against, the Company under or in
respect of this Agreement or any of the Company Documents, or any of the
transactions contemplated by this Agreement or any of the Company Documents, and
any damages resulting therefrom, shall be determined based solely on actual
damages (1) on a net after-tax basis (that is, with the amount thereof reduced
to reflect the tax benefit resulting therefrom), and (2) net of any amounts
recovered or recoverable by or on behalf of Buyer or any affiliate thereof in
respect thereof or in connection therewith under any one or more policies of
insurance maintained by any party hereto or any third party. NO PARTY SHALL BE
HELD LIABLE HEREUNDER FOR INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES, OR FOR LOST PROFITS OR LOST OPPORTUNITY COSTS, WHETHER OR
NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(g Buyer agrees that the sole liability and obligations of the
Companies and the sole remedy of Buyer for any claim with respect to or in
connection with this Agreement or any of the Company Documents or any of the
transactions contemplated by this Agreement or any of the Company Documents
(including without limitation under Environmental Requirements) shall be limited
to indemnification by the Company under this Article 10, and Buyer hereby waives
any and all statutory and common law rights and remedies (including without
limitation rights of indemnification and contribution) which it has or may
hereafter have. Under no circumstances shall any direct or indirect subsidiary
of the Company or any general or limited partner or member of the Company or any
such subsidiary, or any officer, director, partner, shareholder or principal of
any such partner, member or subsidiary have any liability or obligation under or
in connection
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<PAGE>
with this Agreement, any Company Document or any of the transactions
contemplated hereby or thereby, nor shall Buyer have any recourse against any of
the foregoing persons or entities. Without limiting the generality of the
foregoing, in no event shall Buyer or any Buyer Indemnitee(s) have any right of
set-off against any of, or any right to withhold timely payment and remittance
to the Company of, the proceeds and collections of the Receivables.
ARTICLE 11
----------
Miscellaneous
-------------
11.1 Certain Defined Terms. As used in this Agreement, the following
---------------------
terms shall have the following meanings:
"Affiliate" when used with respect to any person or entity, means any
person or entity which directly or indirectly, alone or together with others,
controls, is controlled by or is under common control with such person or
entity.
"Business Day" means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by law to be closed in the State of
New York.
"Code" means the Internal Revenue Code of 1986, as amended.
"Communications Act" means the Communications Act of 1934, as amended, and
the rules and regulations thereunder.
"Environmental Laws" means all applicable local, state and federal statutes
and regulations relating to the protection of the environment including the
FCC's regulations concerning radio frequency radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FCC" or the "Commission" means the Federal Communications Commission or
any successor entity.
"Hazardous Substance" means any and all hazardous or toxic substances,
materials or wastes as may be defined or listed under the Resource Conservation
and
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Recovery Act, the Toxic Substances Control Act, the Comprehensive Environmental
Response, Compensation and Liability Act or any comparable state statute or any
regulation promulgated under any of such federal or state statutes.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
"Lien" means any security interest, mortgage, deed of trust, pledge, lien
or similar encumbrance.
"Material Adverse Effect" means any change in, or effect on the Company or
the Subsidiaries that has a materially adverse effect on the results of
operations or the financial condition of the Stations, taken as a whole, except
for any such changes or effects affecting the U.S. economy or the television
broadcasting industry in general.
"Permitted Liens" means (i) liens for taxes not yet due and payable; (ii)
easements, rights-of-way, mineral rights or other restrictions or imperfections
of title (governmental or otherwise), which are either of record or which
individually or in the aggregate do not materially and adversely affect or
interfere with the use of such property in the business and operations of the
Stations as presently conducted; (iii) such other liens or encumbrances as
agreed upon by the parties; (iv) Liens referred to on Schedule 5.7 or Schedule
------------ --------
5.10 of the Disclosure Schedule; (v) Liens in favor of the Company's lending
- ----
banks and other institutional lenders from which the Purchased Assets are, as
provided herein, to be released at Closing; and (vi) mechanics', workmens',
landlords' and other statutory liens (or other liens arising by operation of
law) incurred in the ordinary course of business for amounts not in default.
11.2 Binding Agreement. All the terms and provisions of this Agreement
-----------------
shall be binding upon, inure to the benefit of, and be enforceable by, the
parties hereto and their respective heirs, legal representatives, successors and
assigns.
11.3 Assignment. This Agreement and all rights and obligations of Buyer
----------
shall be assignable by Buyer prior to the Closing only with the prior written
consent of the Company, except that after Closing Buyer may assign this
agreement to an affiliate or wholly owned subsidiary of The Ackerley Group, Inc.
No assignment shall relieve the assigning party of its obligations hereunder.
11.4 Public Announcements. No party to this Agreement shall make any
--------------------
public announcement in respect of this Agreement or the transactions
contemplated by this Agreement or otherwise communicate with any news media
without prior notification to
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<PAGE>
the other party, and the parties shall cooperate as to the timing and contents
of any such announcement.
11.5 Law To Govern. This Agreement shall be construed and enforced in
-------------
accordance with the internal laws of the State of New York, without regard to
principles of conflict of laws. Any litigation arising hereunder or related
thereto shall be tried by the United States District Court for the Southern
District of New York, provided that if such litigation shall not be permitted to
be tried by such court then such litigation shall be held in the state courts of
New York sitting in New York City. Each party irrevocably consents to and
confers personal jurisdiction on the United States District Court for the
Southern District of New York, or, if (but only if) the litigation in question
shall not be permitted to be tried by such court, on the state courts of New
York sitting in New York City, and expressly waives any objection to the venue
of such court, as the case may be, and agrees that service of process may be
made on such party by mailing a copy of the pleading or other document by
registered or certified mail, return receipt requested, to its or his addresses
for the giving of notice provided for in Section 11.6 hereof, with service being
deemed to be made five (5) business days after the giving of such notice.
11.6 Notices. All notices shall be in writing and shall be deemed to
-------
have been duly given if delivered personally or when deposited in the mail if
mailed via registered or certified mail, return receipt requested, postage
prepaid to the other party hereto at the following addresses:
if to the Company, to:
c/o The Wicks Group of Companies, Inc.
405 Park Avenue, 7th Floor
New York, New York 10022
Attn: Mr. Craig B. Klosk
with a copy to:
Golenbock, Eiseman, Assor & Bell
437 Madison Avenue
New York, New York 10022
Attn: Nathan E. Assor, Esq.
-44-
<PAGE>
if to Buyer, to:
c/o The Ackerley Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, Washington 98101
Attn: Mr. Denis M. Curley
with a copy to:
Rubin, Winston, Diercks, Harris & Cooke, L.L.P.
1333 New Hampshire Avenue, N.W., Suite 1000
Washington, D.C. 20036
Attn: Eric M. Rubin, Esquire
or to such other addresses as any such party may designate in writing in
accordance with this Section 11.6.
11.7 Entire Agreement. This Agreement sets forth the entire
----------------
understanding of the parties hereto in respect of the subject matter hereof and
may not be modified or amended except by a written agreement specifically
referring to this Agreement signed by all of the parties hereto. This Agreement
supersedes all prior agreements and understandings among the parties with
respect to such subject matter, except that the Confidentiality Agreement dated
shall continue to remain in full force and effect prior to the Closing.
11.8 Waivers. Any failure by any party to this Agreement to comply with
-------
any of its obligations hereunder may be waived by such party. No waiver shall be
effective unless in writing and signed by the party granting such waiver, and no
such waiver shall be deemed a waiver of any subsequent breach or default of the
same or similar nature.
11.9 Severability. Any provision of this Agreement which is rendered
------------
unenforceable by a court of competent jurisdiction shall be ineffective only to
the extent of such prohibition or invalidity and shall not invalidate or
otherwise render ineffective any or all of the remaining provisions of this
Agreement.
11.10 Income Tax Position. No party hereto shall take a position for
-------------------
income Tax purposes which is inconsistent with this Agreement.
11.11 Third-Party Beneficiaries. Nothing herein, express or implied, is
-------------------------
intended or shall be construed to or shall confer upon or give to any person,
firm, corporation or legal entity, other than the parties hereto (and the
respective Company Indemnitees and
-45-
<PAGE>
Buyer Indemnitees to the extent provided in Article 10 hereof), any rights,
remedies or other benefits under or by reason of this Agreement or any documents
executed in connection with this Agreement.
11.12 Time of the Essence. Time is of the essence with respect to each
-------------------
party's respective obligations under or pursuant to this Agreement.
11.13 Waiver of Jury Trial. Each of the parties hereto hereby irrevocably
--------------------
waives, to the fullest extent permitted by law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or any
agreement or instrument executed in connection with this Agreement or any of the
transactions contemplated by this Agreement or any such agreement or instrument.
11.14 Drafting. This Agreement has been drafted and negotiated in the
--------
State of New York. No party shall be deemed to have drafted this Agreement but
rather this Agreement is a collaborative effort of the undersigned parties and
their attorneys.
11.15 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement.
11.16 Headings. The Section and paragraph headings contained herein are
--------
for the purposes of convenience only and are not intended to define or limit the
contents of said Sections and paragraphs.
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
WICKS BROADCAST GROUP LIMITED PARTNERSHIP
By: WBG Management, Inc., general partner
By: _______________________________________
Name:
Title:
AK MEDIA GROUP, INC.
By: ____________________________________________
Name:
Title:
<PAGE>
Schedule A
----------
KMTR-TV, Eugene, Oregon
KMTZ-TV, Coos Bay, Oregon
KMTX-TV, Roseburg, Oregon
KMOR-LP, Eugene, Oregon
<PAGE>
Exhibit 1.3 to Acquisition Agreement
TIME BROKERAGE AGREEMENT
------------------------
THIS TIME BROKERAGE AGREEMENT (the "Agreement") is made as of this
30th day of November, 1998, by and between WICKS BROADCAST GROUP LIMITED
PARTNERSHIP, a Delaware limited partnership ("WBG"), and WBG License Co., L.L.C.
, a Delaware limited liability company ("License Co.", and collectively with
WBG, "Licensee"), and AK MEDIA GROUP, INC., a Washington corporation
("Programmer" or "Broker").
WHEREAS, Licensee is the owner, operator and licensee of television
broadcast stations KMTR-TV, Eugene, Oregon, KMTZ-TV, Coos Bay, Oregon, KMTX,
Roseburg, Oregon and KMOR-LP, Eugene, Oregon (collectively, the "Stations");
WHEREAS, WBG and Programmer have entered into as of the date hereof
that certain Acquisition Agreement (the "Purchase Agreement") relating to the
sale by Licensee and the purchase by Programmer of all licenses, permits and
other authorizations for the Stations (collectively, the "FCC Licenses") issued
by the Federal Communications Commission ("FCC") to Licensee and certain other
assets related to the Stations; and
WHEREAS, Programmer wishes to provide programming for broadcast on the
Stations and Licensee desires to accept and broadcast the programming supplied
by Programmer on the Stations, subject to the terms and conditions hereof.
NOW, THEREFORE, for and in consideration of the mutual covenants
herein contained, the parties hereto have agreed and do agree as follows:
1. Air Time and Transmission Services. (a) Subject to the provisions
----------------------------------
of this Agreement, Licensee agrees to make available to Programmer air time and
transmission capabilities, for the broadcast, on the Stations for up to twenty-
four (24) hours per day, seven (7) days a week of programming provided by
Programmer and conforming to the requirements of this Agreement (the
"Programming"), which may include, without limitation, original programs,
syndicated programs, barter programs, paid-for programs, locally produced
programs and advertising.
(b) Programmer acknowledges that WBG and/or one or more of the
Stations is currently party to and bound by an affiliation agreement with the
NBC Television Network ("the "Affiliation Agreement") and other contracts for
the licensing and broadcast of programming on one or more of the Stations (which
contracts are disclosed or not required to be disclosed
49
<PAGE>
pursuant to the Purchase Agreement (collectively, with the Affiliation
Agreement, the "Programming Contracts"). Programmer shall assume and comply with
all the obligations of WBG and/or the Stations under all Programming Contracts
applicable to the term of this Agreement, and shall incorporate all programming
required to be broadcast pursuant to the Programming Contracts in the
Programming provided by Programmer (and shall not delay the broadcast of any
programming covered by any of the Programming Contracts so as to increase the
broadcasting obligations of WBG or any of the Stations with respect to periods
which could fall outside of the term of this Agreement). Programming covered by
any of the Programming Contracts or developed or produced by WBG or any
affiliate thereof, including without limitation, news and current affairs
programming, is herein called "Licensee Programming".
(c) Programmer shall assure that no contract or commitment for
Programming arranged by Programmer shall give rise to any liability or
obligation of Licensee; provided that Programmer shall promptly inform Licensee
of each such contract and commitment and of the terms thereof and, if WBG shall
elect to assume any such contract or commitment, Programmer shall, in the event
that the Purchase Agreement terminates without a Closing, upon the termination
of the term of this Agreement arrange for the immediate assignment to WBG of
such contract or commitment and for the concurrent consent of each other party
thereto to such assignment.
(d) Programmer shall timely fulfill all orders for advertising on the
Stations applicable to any of the Programming. Programmer shall assure that all
orders for advertising on any of the Stations procured after the date hereof
shall be the sole obligation and responsibility of Programmer and that no such
order shall give rise to any liability or obligation of Licensee. In the event
any such order calls for the placement of any advertising on any of the Stations
after the termination of the term of this Agreement, Programmer shall if, and
only if, and to the extent WBG elects to fulfill such order, cooperate with
Licensee to enable such advertising to be broadcast on the Station in accordance
with the terms of such order and all revenues and accounts receivable relating
to or arising from such orders shall be the sole and exclusive asset of WBG.
(e) Programmer shall not enter into any contract or commitment with
any person or entity which will bind WBG, License Co. or the Station without
WBG's express prior written approval.
50
<PAGE>
2. Payments. As consideration for the rights granted hereunder,
--------
Programmer hereby agrees to pay to WBG the following (collectively "Time
Brokerage Fee") in a timely manner: the Fixed Fee Amount, and all other cost
and expense payments and reimbursements, referred to on Attachment 1 hereto
------------
and/or otherwise provided for in this Agreement, in each case on the dates
specified in said Attachment 1 or where applicable as otherwise provided in this
------------
Agreement. The provisions of Attachment 1 are incorporated herein by reference
------------
as if set forth in full herein.
Anything to the contrary contained in this Agreement notwithstanding, in no
event shall Programmer be entitled to delay payment of, reduce, or set off any
claim against, any amount payable by Programmer under this Agreement, whether by
reason of a breach or default by Licensee or otherwise.
3. Term. The term of this Agreement shall begin on December 1, 1998
----
(the "Commencement Date"), and shall continue in force from that date for a
period of three (3) months, except that it shall be automatically extended if
the Closing (as defined in the Purchase Agreement) on the sale of the Stations
by Licensee has not occurred and the Purchase Agreement has not been terminated,
until the earlier of the occurrence of (i) such Closing or (ii) the termination
of the Purchase Agreement.
4. Programming. Programmer's Programming shall comply with the
-----------
Stations' Policy Guidelines attached on Exhibit A hereto, as the same may be
---------
reasonably amended by Licensee from time to time, and with the provisions of
this Agreement, and, provided such compliance obligations are satisfied, shall
be entertainment programming of Programmer's own selection, together with
commercial matters, news, public service announcements and other programming
suitable for broadcast on the Stations. All actions or activities of Programmer
under this Agreement, and all Programming provided by Programmer shall be in
accordance with (a) the Communications Act of 1934, as amended, (b) the rules,
requirements and policies of the FCC, including, without limitation, the FCC's
rules on children's television programming, plugola/payola, lotteries and
contests, hoaxes, station identification, minimum operating schedule,
sponsorship identification, political programming and political advertising
rates; (c) all applicable federal, state and local laws, regulations and
policies (collectively, "Applicable Government Regulations"); and (d) generally
accepted quality
51
<PAGE>
standards of the television broadcast industry. In the event that Licensee
determines, based on the exercise of Licensee's good faith reasonable business
judgment, that Programmer has failed to comply in any material respect with any
of the standards provided for in this Agreement. Licensee may suspend or cancel
any Programming not in compliance. In the event of any such suspension or
cancellation, Programmer shall retain the right to use the Programming provided
by it (other than any of the Licensee Programming) and to authorize the use of
such Programming (other than any of the Licensee Programming) in any manner and
in any media whatsoever.
Programmer will consult with Licensee prior to any general or primary
election period to set political rates and procedures for handling political
advertisements. In addition, all questions relating to political programming,
political advertisements, "Reasonable Access, " "Equal Time," "Lowest Unit
Charge," political editorials and any broadcast matter involving elected or
appointed government officials shall be immediately directed to Licensee and its
counsel. In addition, Programmer shall deliver to Licensee each week during the
time when the "Lowest Unit Charge" rates are in effect a list of all political
advertisements and sufficient data to demonstrate compliance with the FCC's
"Lowest Unit Charge" rules.
5. Special Events. Licensee reserves the right in its discretion,
--------------
and without liability, to preempt, delay or delete any of the broadcasts of the
Programming and to broadcast in substitution such other programming which, in
Licensee's judgment, is of greater local or national importance. In all such
cases (except for those involving breaking news), Licensee shall use reasonable
efforts to provide Programmer with at least twenty-four (24) hours notice of
Licensee's intention to preempt, delay or delete such Programming. Programmer
agrees to cooperate in the airing of Licensee's substitute programming,
including the use of Programmer's personnel and equipment as reasonably
required.
6. Advertising and Programming Revenues. Programmer shall retain all
------------------------------------
advertising and promotion-related revenues, and all accounts receivable, in
respect thereof, arising from the Programming provided by Programmer, or
utilized by Programmer and arising under those Programming Contracts assumed by
Licensee pursuant to this Agreement, and in fact broadcast during the term
hereof. Programmer shall be responsible for payment of all agency commissions
and the commissions payable to any sales representative engaged by Programmer or
Licensee for the purpose of selling advertising with respect to any of the
Stations. Licensee
52
<PAGE>
shall retain the revenue from the sale of any advertising on the Stations on any
other programs not produced or delivered to Licensee by Programmer. Licensee and
Programmer each shall have the right, at its own expense, to seek copyright
royalty payments for its own programming (and in the case of Licensee, Licensee
Programming). Subject to compliance with applicable laws, Programmer may sell
advertising on the Stations in combination with the sale of advertising on other
television or radio stations.
7. Station Facilities. Subject to the terms and conditions set forth
-------------------
in this Agreement, Licensee hereby agrees to make the facilities of the Stations
that are owned or leased by Licensee ("Licensee Station Facilities") available
to Programmer twenty-four (24) hours a day, seven (7) days per week for
operation and broadcast. Licensee shall pay and Programmer shall promptly
compensate and reimburse Licensee on a dollar-for-dollar basis for all expenses
in connection with operating the Stations and shall perform reasonable and
customary maintenance of all Licensee Station Facilities and equipment and in
furtherance of its obligations to comply with applicable FCC rules, regulations
and policies, and Licensee's obligations set forth in this Paragraph 7. Any
downtime in the Licensee Station Facilities occasioned by any such maintenance
shall not be deemed to be a default or violation by Licensee.
8. Right of Access. Licensee shall provide Programmer with access at
---------------
all times to its owned and leased property used for the Stations' operations to
conduct, at Programmer's expense, all activities for which such property is
currently used and permitted to be used. Licensee shall have access at all
times to its equipment and facilities used in conjunction with the production
and broadcast of the Programming so as to permit Licensee to operate and control
the Stations and to broadcast the Programming and Licensee's own programming as
provided herein. Programmer shall have the right, upon Licensee's express prior
written consent, such consent not to be unreasonably withheld, to install and
maintain at the Licensee Station Facilities, at Programmer's expense, any
microwave studio/transmitter relay equipment, telephone lines, transmitter
remote control, monitoring devices or any other equipment necessary for the
proper transmission of the Programming on the Station, and Licensee and
Programmer shall take, at Programmer's expense, all steps reasonably necessary
to prepare and file any applications with the FCC to effectuate such proper
transmission.
9. Force Majeure. Any failure or impairment of the Licensee Station
-------------
Facilities or any Station equipment or services or any delay or interruption in
the broadcast of the
53
<PAGE>
Programming, or failure at any time by Licensee to furnish the Licensee Station
Facilities, or any station equipment or services, in whole or in part, for the
broadcast of the Programming or otherwise, due to acts of God, strikes, or
threats thereof or force majeure, or due to causes beyond the control of
Licensee, shall not constitute a breach of this Agreement, and Licensee shall
not be liable to Programmer.
10. Equipment. The parties agree that Licensee shall retain title to
---------
all of the Purchased Assets (as such term is defined in the Purchase Agreement)
until the Closing of the Purchase Agreement. Programmer shall hold title to any
new equipment or assets purchased or otherwise acquired by Programmer for the
Stations during the term of this Agreement; provided that in the event the term
of this Agreement shall end and the Closing under the Purchase Agreement shall
not then have occurred, any equipment or asset obtained as a replacement for any
equipment or assets of Licensee without the express written consent of WBG
automatically shall become and hereinafter be deemed owned by WBG, and, in the
case of any such replacement items so consented to, WBG shall have the right to
purchase the same at the net book value thereof, in each case free and clear of
all Liens (as defined in the Purchase Agreement). Programmer shall execute and
deliver to WBG all instruments necessary to effectuate the foregoing.
11. Licensee Control of Station. Notwithstanding anything to the
---------------------------
contrary in this Agreement, Licensee shall have full authority, control and
power over the operation of the Stations during the term of this Agreement.
Licensee shall retain control over the policies, programming, finances,
personnel and operations of the Station, including, without limitation, the
right to accept or reject any Programming or advertisements pursuant to
Paragraphs 4 and 5, and the right to take any other actions necessary for
compliance with Applicable Government Regulations. Licensee's control over the
finances, personnel and operations of the Stations shall be exercised in good
faith. Licensee shall be responsible to the Federal Communications Commission
for the Station's compliance with all Applicable Government Regulations,
including but not limited to FCC requirements with respect to ascertainment of
the problems, needs and interests of the community, public service programming,
children's programming, political broadcasting, main studio staffing,
maintenance of public inspection files, and maintenance of appropriate Emergency
Alert System equipment, in all cases without intending to limit any
compensation, reimbursement or other obligations of Programmer under this
Agreement. Programmer shall provide Licensee with all
54
<PAGE>
necessary information with respect to the Programming that is responsive to the
problems, needs and interests of the community, and shall assist Licensee in all
reasonable respects requested by Licensee in the preparation of information to
enable Licensee to prepare records, reports and logs required by the FCC or
other local, state or federal governmental agencies. All correspondence
(including E-Mail) from members of the public concerning any Station's
programming shall be provided to the Licensee.
12. Responsibility for Employees and Expenses. During this term of
-----------------------------------------
this Agreement, WBG hereby agrees to employ two full-time employees for the
Station, one of whom shall be a management level employee, both of whom shall
report to and be accountable solely to Licensee, and who shall be ultimately
responsible for the day-to-day operations of the Station. WBG shall also be
entitled to retain in its employ all employees of the Stations which it deems
advisable, and Programmer shall not employ or seek to employ any of such
employees without WBG's express written consent. WBG shall be responsible for
paying the salaries, payroll taxes, health insurance and other employment
related costs for all personnel employed by WBG with respect to the Stations,
and Programmer shall compensate WBG on a dollar-for-dollar basis for all such
costs and expenses. Effective the date of this Agreement, Programmer shall
employ and be responsible for all personnel, equipment and facilities used in
the production of the Programming (including, without limitation, salespeople,
traffic personnel and programming staff), except for those personnel whom WBG
elects to employ and who shall be covered by the immediately preceding sentence.
All Programmer personnel shall be subject to the supervision and the direction
of Licensee's designated personnel in connection with the performance of their
duties at the Station. WBG shall be responsible for all expenses of Licensee
related to the operation of the Stations and the Licensee Station Facilities and
the Stations' equipment, and Programmer shall compensate WBG, on a dollar-for-
dollar basis, for all such expenses, including without limitation, all amounts
becoming due and payable under any and all Programming Contracts during or in
respect of the period coinciding with the term of this Agreement. Licensee
shall also be responsible for income taxes relating to Licensee's earnings from
this arrangement. Programmer shall pay promptly when due all copyright fees
attributable to Programming broadcast on the Station during the term of this
Agreement.
13. Compliance with Law. Programmer agrees that, throughout the term
-------------------
of this Agreement, Programmer shall comply with all laws and regulations
applicable to the conduct of Programmer's business and activities, including all
Applicable Government Regulations.
55
<PAGE>
14. Payola/Plugola/EEO. Programmer agrees that it shall not accept,
------------------
and shall not permit any of its employees to accept, any consideration,
compensation, gift or gratuity of any kind whatsoever, regardless of its value
or form, including, but not limited to, a commission, discount, bonus,
materials, supplies or other merchandise, services or labor, whether or not
pursuant to written contracts or agreements between Programmer and merchants or
advertisers, unless the payer is identified in the Programming as having paid
for or furnished such consideration, in accordance with FCC requirements.
Programmer agrees that, on an annual basis, or more frequently at the request of
Licensee, it will execute and provide Licensee with affidavits regarding
payola/plugola compliance in such form and substance as Licensee shall
reasonably require. Programmer shall comply with all equal employment
opportunity regulations and policies (including but not limited to those of the
FCC) to the extent such regulations and policies apply, or may in the future be
deemed to apply, to the employment practices of Programmer's personnel assigned
to duties in connection with the operation of the Stations; and Programmer shall
timely provide Licensee with all information that may be necessary or
appropriate to comply with any reporting obligations of the FCC pursuant to such
regulations or policies.
15. Indemnification. Programmer hereby agrees to indemnify and hold
---------------
harmless each entity comprising Licensee and all members and partners thereof,
and all members, partners, shareholders, directors, officers, agents, employees,
successors, and assigns of any of the foregoing against all liability, damages,
cost and expense (including without limitation reasonable attorney's fees)
suffered or incurred by any of them for, or arising out of, or by reason of (a)
libel, slander, illegal competition or trade practice, infringement of trade
marks, trade names, or program titles, violation of rights of privacy,
infringement of copyrights and proprietary rights and other liabilities
resulting from or relating to the broadcast of any Programming, and (b) all
other matters arising out of or related to Programmer's activities involving any
of the Stations or use of any of the Licensee Station Facilities and/or any
equipment or assets of any of the Stations. Licensee hereby agrees to indemnify
and hold harmless Programmer and its directors, officers, agents, employees,
successors, and assigns against all liability arising out of liabilities of the
type described in clause (a) of the first sentence of this Paragraph 15 that
arise as a result of Licensee's alteration of any Programming prior to broadcast
by Licensee which alteration is not consented to by Programmer. Programmer's
and
56
<PAGE>
Licensee's obligations under this Paragraph 15 shall survive any termination
of this Agreement until the expiration of all applicable statutes of limitation.
16. Events of Default; Cure Periods and Remedies.
--------------------------------------------
16.1. Events of Default. The following shall, after the expiration
-----------------
of the "applicable cure periods," constitute events of default under the
Agreement ("Events of Default"):
16.1.1. Programmer's failure to timely pay any consideration provided
for in this Agreement or any amount then due under this Agreement or the
Purchase Agreement;
16.1.2. The default by any party hereto in the material observance or
performance of any material covenant or agreement contained herein; provided,
that any failure of Licensee to comply with Applicable Government Regulations
shall not be deemed to be a default of a material covenant or agreement by
Licensee if Programmer has failed to provide information or cooperation to
Licensee that could have allowed Licensee to avoid such noncompliance or if
Programmer's Programming or any other act or omission, or any instruction or
request to station personnel, by Programmer is a basis or cause of such failure
to comply with Applicable Government Regulations;
16.1.3. Any party (a) shall make a general assignment for the benefit
of creditors, or (b) files or has filed against it a petition for bankruptcy,
for reorganization, or for the appointment of a receiver, trustee or similar
creditors' representative for the property or assets of such party under any
federal or state insolvency law, which, if filed against such party, has not
been dismissed or discharged within sixty (60) days thereof;
16.1.4. The default by any party hereto (after the expiration of all
applicable cure periods) in the material observance or performance of any
material covenant or agreement contained in the Purchase Agreement which
entitles the other party to terminate the Purchase Agreement.
16.2 Cure Periods. An Event of Default under Section 16.1.2 above
------------
shall not be deemed to have occurred until thirty (30) business days after the
nondefaulting party has
57
<PAGE>
provided the defaulting party with written notice specifying the event or events
that if not cured would constitute an Event of Default. The Event of Default
which is subject to a cure period hereunder shall not be deemed to have occurred
if actions necessary and sufficient to cure are taken during the relevant cure
period.
16.3 Right of Termination. In addition to other remedies available at
--------------------
law or equity, but subject to the requirements and limitations set forth herein,
this Agreement may be terminated as set forth below by either Licensee or
Programmer by written notice to the other upon the occurrence of the following:
(a) this Agreement is declared invalid or illegal in whole or
substantial part by an order or decree of an administrative agency or court of
competent jurisdiction and such order or decree has become final and no longer
subject to further administrative or judicial review;
(b) an Event of Default by the other party has occurred and the party
seeking to terminate is not then in material default or breach hereof;
(c) the termination of the Purchase Agreement;
(d) the mutual consent of all parties; or
(e) there has been a material change in FCC rules, policies or
precedent that would cause this Agreement to be in violation thereof and such
change is in effect and not the subject of a timely appeal or further
administrative review, provided that in such event the parties shall first
negotiate in good faith and attempt to agree on an amendment to this Agreement
that will provide the parties with a valid, binding and enforceable agreement
that conforms to the new FCC rules, policies or precedent.
16.4 Termination Requirements and Procedures. Unless otherwise
---------------------------------------
mutually agreed by Programmer and Licensee, any termination of this Agreement
shall, at the election of Licensee, not become effective until the effective
date specified by Licensee which shall not be more than ninety (90) days after
notice of termination is provided by Programmer or Licensee pursuant to Section
16.3.
58
<PAGE>
16.5. Liabilities Upon Termination. Upon termination of this
----------------------------
Agreement for any reason, Programmer shall be responsible for all liabilities,
debts and obligations of Programmer accrued from the purchase of air time and/or
transmission services and all Programming provided by Programmer, including,
without limitation, accounts payable, barter agreements and unaired
advertisements, but not for Licensee's federal, state, and local tax liabilities
associated with Programmer's payments to Licensee as provided for herein. With
respect to Programmer's obligations to broadcast programming, advertisements and
other material over the Stations after termination hereunder, WBG may propose
compensation to WBG for meeting these obligations, but Licensee shall be under
no duty to propose such compensation or to perform such obligations and
Programmer shall accept any such proposal by WBG which is reasonable and
equitable under the circumstances and cooperate with WBG to effectuate such
performance. In no event shall Licensee be under any obligation to make
available to Programmer any broadcast time or broadcast transmission facilities
and all amounts accrued or payable to Licensee up to the date of termination
which have not been paid shall immediately become due and payable.
16.6 Survival. Anything to the contrary contained in this Agreement
--------
notwithstanding, all obligations under this Agreement accrued or arising prior
to or by reason of the termination of this Agreement shall survive such
termination and the following provisions shall also survive any such
termination: Paragraphs 1(b), (c), (d) and (e) (with respect to periods prior
to the effective date of such termination), 2, 6, 7, 10, 12, 15, 16, 19.3 and
20.
17. Responsive Programming, Programmer and Licensee mutually
----------------------
acknowledge their interest in ensuring that the Stations serve the needs and
interests of the residents of their communities of license, and the surrounding
service areas and agree to cooperate in doing so. Licensee may request, and
Programmer shall provide, information concerning such of Programmer's
Programming that is responsive to community issues so as to assist Licensee in
the satisfaction of its public service programming obligations.
18. Time Brokerage Challenge. If this Agreement is challenged in
------------------------
whole or in part at the FCC or in another administrative or judicial forum,
whether or not in connection with the Station's license renewal application,
counsel for Licensee and counsel for Programmer shall, at Programmer's expense,
jointly defend the Agreement and the parties' performance hereunder throughout
all such proceedings. If portions of this Agreement do not receive the approval
of the FCC's staff, or the Agreement receives such approval with conditions that
are adverse to
59
<PAGE>
Licensee or Programmer, then the parties shall endeavor in good faith to reform
the Agreement as necessary to satisfy the FCC staff's concerns, while preserving
the respective benefits to and without increasing the respective obligations of
the parties, or seek reversal of the staff decision and approval from the full
Commission on appeal.
19.1 Certification. Pursuant to Section 73.3555(a)(2)(ii) of the
-------------
FCC's Rules, Licensee certifies that it will maintain ultimate control over the
Stations' facilities, including control over Station finances, personnel and
programming, and Programmer certifies that the arrangement contemplated by this
Agreement complies with the provisions of Sections 73.3555(e)(1) of the FCC's
Rules.
19.3. Programmer's Representations, Warranties and Covenants.
-------------------------------------------------------
Programmer makes the following additional representations, warranties and
covenants:
19.3.1. Compliance with Applicable Law. Programmer's performance of
------------------------------
its obligations under this Agreement and its furnishing of Programming shall be
in compliance with, and shall not violate or cause Licensee to violate any
applicable laws or any applicable rules, regulations, or orders of the FCC or
any other governmental agency.
19.3.2. Handling of Complaints. Programmer shall promptly advise
----------------------
Licensee of any public or FCC complaint or inquiry that Programmer receives
concerning the Programming and shall cooperate with Licensee and take all
actions as may be reasonably requested by Licensee in responding to any such
complaint or inquiry.
19.3.3. Copyright and Licensing. Programmer shall have throughout
-----------------------
the term of this Agreement the full authority to broadcast the Programming on
the Station, and Programmer shall not broadcast on the Stations any material in
violation of the Copyright Act.
19.3.4. Insurance. Programmer shall maintain throughout the term of
---------
this Agreement general liability insurance and errors and omissions insurance
covering broadcasts made on the Station, and shall name Licensee as an
additional insured on such insurance policies.
60
<PAGE>
19.3.5. Information for FCC Reports. Upon request by Licensee,
---------------------------
Programmer shall provide in a timely manner any such information in its
possession that shall enable Licensee to prepare, file or maintain the records
and reports required by the FCC.
20. Miscellaneous.
-------------
20.1 Certain Limitations. Anything to the contrary contained in
-------------------
the Agreement notwithstanding:
(a) in the event the Closing under the Purchase Agreement shall
occur, Licensee shall have no liability or obligation whatsoever under this
Agreement, whether for matters arising prior to such Closing or otherwise.
(b) Programmer's sole remedy for any breach or default by Licensee
under this Agreement shall be such rights as Programmer may have under the
Purchase Agreement upon the termination thereof.
(c) Nothing herein, express or implied, is intended or shall be
construed to confer upon or give to any person or entity, other than the parties
hereto, any rights, remedies or other benefits under or by reason of this
Agreement.
(d) Programmer acknowledges and agrees that, notwithstanding anything
contained to the contrary in the Agreement, WBG shall be solely and exclusively
responsible and liable for all obligations of License Co. arising under this
Agreement and the transactions contemplated hereby and License Co. shall not
have or incur any liability whatsoever arising out of this Agreement or any of
the transactions contemplated hereby.
20.2. Amendment; Waiver. No modification, amendment or waiver of any
-----------------
provision of this Agreement shall in any event be effected unless the same shall
be in writing and signed by the party adversely affected by the waiver or
modification, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
20.3. No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of Licensee or Programmer in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment
61
<PAGE>
or discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereof or the exercise of any other right or power. Except
as otherwise provided in this Agreement or in the Purchase Agreement, the rights
and remedies of Licensee and Programmer herein provided are cumulative and are
not exclusive of any right or remedy which Licensee or Programmer may otherwise
have.
20.4. Construction. This Agreement shall be construed in accordance
------------
with the laws of the State of New York, excluding the choice of law rules
thereof.
20.5. Headings. The headings contained in this Agreement are
--------
included for convenience only and no such heading shall in any way alter the
meaning of any provision.
20.6. Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement shall be assignable only to the same extent
as and solely in connection with any assignment of the Purchase Agreement
permitted pursuant to the terms thereof.
20.7. Notices. Any notice required hereunder shall be in writing and
-------
any payment, notice or other communication shall be deemed given when delivered
personally, or mailed by certified mail or Federal Express, postage prepaid,
with return receipt requested:
If to Licensee:
c/o The Wicks Group of Companies, Inc.
405 Park Avenue, 7/th/ Floor
New York, NY 10022
Attn: Mr. Craig B. Klosk
With a copy to:
Golenblock, Eiseman, Assor & Bell
437 Madison Avenue
New York, NY 10022
Attn: Nathan E. Assor, Esquire
If to Programmer:
AK Media Group, Inc.
1301 Fifth Avenue, Suite 4000
62
<PAGE>
Seattle, WA 98101
Attn: Mr. Denis M. Curley
With a copy to:
Rubin, Winston, Diercks, Harris & Cooke, LLP
1333 New Hampshire Avenue, N.W., Suite 1000
Washington, D.C. 20036
Attn: James L. Winston, Esq.
20.8. Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement and the Schedules, Attachments and Exhibits hereto and thereto, embody
the entire agreement between the parties and there are no other agreements,
representations, warranties, or understandings, oral or written, between them
with respect to the subject matter hereof.
20.9. Severability. In the event that any of the provisions
------------
contained in this Agreement is held to be invalid, illegal or unenforceable,
this Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had not been contained herein, subject to the termination rights
contained in Paragraph 16 hereof.
20.10. Signatures. This Agreement may be signed in one or more
----------
counterparts, each of which shall be deemed a duplicate original, binding on the
parties hereto notwithstanding that the parties are not signatory to the
original or the same counterpart. This Agreement shall be binding and effective
as of the date on which the executed counterparts are exchanged by the parties.
The parties agree to be bound upon the exchange of signature pages transmitted
by facsimile; provided, however, upon execution of this Agreement, Programmer
agrees to send to Licensee and Licensee agrees to send to Programmer, the
original signature pages via overnight delivery.
63
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Time Brokerage
Agreement as of the date first above written.
Wicks Broadcast Group Limited Partnership
By: WBG Management, Inc., general partner
By:_________________________________
Name:
Title:
WBG License Co., L.L.C.
By: Wicks Broadcast Limited
Partnership, managing member
By: WBG Management, Inc.,
general partner
By:_____________________________
Name:
Title:
AK Media Group, Inc.
By:________________________________
Name:
Title:
64
<PAGE>
Exhibit 2.2 to Acquisition Agreement
LIABILITIES UNDERTAKING
-----------------------
LIABILITIES UNDERTAKING, dated as of ___________________, 1998, by AK
MEDIA GROUP, INC., a Washington corporation ("Buyer"), in favor of WICKS
BROADCAST GROUP LIMITED PARTNERSHIP, a Delaware limited partnership (the
"Company") and WBG License Co., L.L.C., a Delaware limited liability company
(collectively, with the Company, the "Companies").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Buyer are parties to an Agreement, dated as
of ___________________, 1998 (the "Purchase Agreement"); and
WHEREAS, pursuant to the Purchase Agreement, the Companies have
concurrently herewith sold, assigned, conveyed, transferred and delivered to
Buyer the Purchased Assets (as such term is defined in the Purchase Agreement);
WHEREAS, in partial consideration therefor, the Purchase Agreement
requires Buyer to execute and deliver to the Companies this Liabilities
Undertaking;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by Buyer, Buyer hereby agrees for the benefit of the Companies as
follows:
(a Buyer hereby undertakes, assume and agree to pay, perform,
discharge and otherwise satisfy in full promptly as and when due, and agrees to
indemnify and hold harmless the Companies and all Company Indemnitees from and
against the following (the "Assumed Liabilities"): (a) all outstanding
obligations as of the Closing Date incurred by any of the Companies or the
Stations under all Barter Agreements; (b) all accounts payable, accrued expenses
and liabilities for which an adjustment or allocation in favor of Buyer is made
pursuant to Section 2.4 of the Purchase Agreement, (c) all accrued vacation time
and sick pay as of the Closing Date of employees of the respective Stations who
become employees of Buyer or any affiliate of Buyer for which an adjustment is
made in favor of Buyer under Section 2.4, (d) all liabilities and obligations
accruing or arising on or after the Closing Date under all contracts, leases and
agreements, and normal course advertising, supply service and similar orders and
arrangements, of any of the Stations and/or any of the Companies or by which any
of them is bound, entered into exclusively in the course of or exclusively in
connection with the operations or business of any one or more of the Stations,
(e) Buyer's share of the Transaction Taxes, and (f) all liabilities and
obligations incurred or caused by Buyer or which are the responsibility of
Buyer, or for which the Companies are entitled to reimbursement, pursuant to the
Time Brokerage Agreement or any activities or transactions in furtherance
thereof or in connection therewith. Notwithstanding the foregoing the Assumed
Liabilities shall not include any of the following ("Excluded Liabilities"): (i)
any liability for income or franchise Taxes of any of the Companies; (ii) any
liabilities or obligations of the Companies under any of the Excluded Contracts;
(iii) any liabilities or obligations of any of the Companies under the Purchase
65
<PAGE>
Agreement; (iv) any liability owing by any of the Companies to any of the other
Companies or any shareholder or partner thereof; or (v) any liability or
obligation under the Companies' group health insurance plans or 401(k) Profit
Sharing Plan. Except as provided in the Purchase Agreement or in this
Liabilities Undertaking, Buyer shall not assume any debts, liabilities or
obligations of any of the Companies.
(b This Liabilities Undertaking shall inure to the benefit of the
Companies and their respective successors and assigns, and shall be binding upon
Buyer and its respective successors and assigns.
(c This Liabilities Undertaking is irrevocable and may not be
amended or modified without the express written consent of the Companies.
(d Capitalized terms used but not defined herein shall have the
meanings set forth in the Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Liabilities
Undertaking by and through its duly authorized representative as of the date
first above written.
BUYER
AK MEDIA GROUP, INC.
By: ______________________________________
Name:
Title:
66
<PAGE>
EXHIBIT 10.14
ASSET EXCHANGE AGREEMENT
BETWEEN
BENEDEK BROADCASTING CORPORATION
AND
BENEDEK LICENSE CORPORATION
AND
AK MEDIA GROUP, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. Definitions........................................... 1
2. Exchange of Assets.................................... 4
2.1 KKTV Assets.................................... 6
2.2 KCOY Assets.................................... 9
2.3 Excluded KKTV Assets........................... 10
2.4 Excluded KCOY Assets........................... 11
2.5 Transfer of Assets............................. 11
2.6 Non-Assignable Assets.......................... 11
3. Assumption of Liabilities............................. 12
3.1 Assumed Liabilities............................ 12
3.2 Instruments of Assumption...................... 14
3.3 Excluded KKTV Liabilities...................... 14
3.4 Excluded KCOY Liabilities...................... 15
4. Closing Payment; Allocation........................... 16
4.1 Closing Payment................................ 16
4.2 Closing Adjustments............................ 16
4.3 Allocation of Purchase Price................... 16
5. Closing............................................... 17
5.1 Time of Closing................................ 17
5.2 Time Brokerage Agreements...................... 17
6. Governmental Consents................................. 17
6.1 FCC Consent.................................... 17
6.2 Hart-Scott-Rodino.............................. 18
6.3 Other Governmental Consents.................... 19
7. Representations and Warranties of AKMG................ 19
7.1 Organization and Standing...................... 19
7.2 Power and Authority............................ 19
7.3 No Conflicts................................... 20
7.4 Government Approval............................ 20
7.5 Validity....................................... 21
7.6 Financial Statements........................... 21
7.7 No Changes..................................... 21
7.8 Taxes.......................................... 22
7.9 Contracts...................................... 23
7.10 Real Estate.................................... 24
7.11 Personal Property.............................. 26
7.12 Intellectual Property.......................... 27
7.13 Insurance...................................... 27
7.14 Litigation..................................... 28
7.15 Compliance with Law............................ 28
7.16 Labor.......................................... 29
7.17 Employees...................................... 29
7.18 Pension Plans.................................. 30
7.19 Environmental Warranties....................... 31
7.20 Accuracy of Information........................ 33
8. Representations and Warranties of Benedek............. 33
8.1 Organization and Standing...................... 33
8.2 Power and Authority............................ 34
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
8.3 No Conflicts.................................. 34
8.4 Government Approval........................... 35
8.5 Validity...................................... 35
8.6 Financial Statements.......................... 35
8.7 No Changes.................................... 36
8.8 Taxes......................................... 37
8.9 Contracts..................................... 37
8.10 Real Estate................................... 39
8.11 Personal Property............................. 40
8.12 Intellectual Property......................... 41
8.13 Insurance..................................... 41
8.14 Litigation.................................... 42
8.15 Compliance with Law........................... 42
8.16 Labor......................................... 43
8.17 Employees..................................... 43
8.18 Pension Plans................................. 44
8.19 Environmental Warranties...................... 45
8.20 Accuracy of Information....................... 47
9. Certain Covenants and Agreements........................ 47
9.1 Control of the Stations....................... 47
9.2 Access........................................ 47
9.3 Interim Operations............................ 48
9.4 Employees of the Stations..................... 49
9.5 Compliance.................................... 49
9.6 Compliance with Laws.......................... 49
9.7 No Solicitation............................... 50
9.8 Payment of Taxes.............................. 50
9.9 FCC Consent................................... 51
9.10 Time Brokerage Agreements..................... 51
10. Conditions of Closing................................... 51
10.1 Obligation of Benedek to Close............. .. 51
10.1.1 Representations..................... 51
10.1.2 Covenants........................... 51
10.1.3 No Injunction....................... 52
10.1.4 Consents............................ 52
10.1.5 KKTV FCC Licenses................... 52
10.1.6 Governmental Consents............... 52
10.1.7 Instruments of Transfer............. 52
10.1.8 Assumption Agreements.............. 53
10.1.9 Books of Account.................... 53
10.1.10 Resolutions......................... 53
10.1.11 Opinions of Counsel to AKMG......... 53
10.1.12 Hart-Scott-Rodino Compliance........ 53
10.1.13 Environmental Condition............. 54
10.1.14 Further Documents................... 54
10.2 Obligation of AKMG to Close...................... 54
10.2.1 Representations..................... 54
10.2.2 Covenants........................... 55
10.2.3 No Injunction....................... 55
10.2.4 Consents............................ 55
10.2.5 KCOY FCC Licenses................... 55
10.2.6 Governmental Consents............... 55
10.2.7 Instruments of Transfer............. 56
10.2.8 Assumption Agreements............... 56
10.2.9 Books of Account.................... 56
10.2.10 Resolutions......................... 56
10.2.11 Opinion of Counsels to Benedek...... 56
</TABLE>
(ii)
<PAGE>
10.2.12 Hart-Scott-Rodino............................. 56
10.2.13 Environmental Condition....................... 57
10.2.14 Further Documents............................. 57
10.2.15 Receipt of Purchase Price Payable at Closing.. 57
11. Remedies for Breach......................................... 57
11.1 Declining to Close.................................. 57
11.2 Election to Close................................... 57
11.3 Remedies Cumulative................................. 58
12. Termination Rights.......................................... 58
13. Indemnification of the Parties.............................. 59
13.1 Indemnification by AKMG............................. 59
13.2 Indemnification by Benedek.......................... 59
13.3 Procedures.......................................... 60
13.4 Limitation.......................................... 60
13.5 Survival of Representations and Warranties.......... 61
14. Brokers..................................................... 61
15. Miscellaneous............................................... 61
15.1 Entire Agreement.................................... 61
15.2 Notices............................................. 62
15.3 Public Announcement................................. 63
15.4 No Waiver........................................... 63
15.5 Governing Law....................................... 63
15.6 Consent to Jurisdiction............................. 63
15.7 Expenses............................................ 64
15.8 Binding Agreement................................... 64
15.9 Headings............................................ 64
15.10 Counterparts........................................ 64
(iii)
<PAGE>
SCHEDULES
---------
SCHEDULE NUMBER DESCRIPTION
- --------------- -----------
1.9 AKMG's & Benedek's Knowledge
2.1.12 Other KKTV Assets
2.2.12 Other KCOY Assets
2.3 Excluded KKTV Assets
2.4 Excluded KCOY Assets
3.3.7 Excluded KKTV Contracts
3.4.7 Excluded KCOY Contracts
4.3 Allocation
7.3 AKMG Conflicts
7.4 KKTV FCC Licenses
7.6 KKTV Financial Statements
7.7 No Changes
7.8 Taxes
7.9 KKTV Contracts
7.9.4 KKTV Trade-Out Balance
7.10 KKTV Real Property
7.11 KKTV Personal Property
7.12 KKTV Intellectual Property
7.13 KKTV Insurance
7.14 KKTV Litigation
7.16 KKTV Labor
7.17 KKTV Employees
7.18 KKTV Employee Plans
8.3 Benedek Conflicts
(iv)
<PAGE>
8.4 KCOY FCC Licenses
8.6 KCOY Financial Statements
8.7 No Changes
8.8 Taxes
8.9 KCOY Contracts
8.9.4 KCOY Trade-Out Balance
8.10 KCOY Real Property
8.11 KCOY Personal Property
8.12 KCOY Intellectual Property
8.13 KCOY Insurance
8.14 KCOY Litigation
8.16 KCOY Labor
8.17 KCOY Employees
8.18 KCOY Employee Plans
10.1.4 AKMG Required Consents
10.2.4 Benedek Required Consents
(v)
<PAGE>
EXHIBITS
--------
EXHIBIT DESCRIPTION
- ------- -----------
A Form of KKTV Time Brokerage Agreement
B Form of KCOY Time Brokerage Agreement
C-1 Form of Opinion of Counsel to AKMG
C-2 Form of Opinion of FCC Counsel to AKMG
C-3 Form of Opinion of Local Counsel to AKMG
D-1 Form of Opinion of Counsel to Benedek
D-2 Form of Opinion of FCC Counsel to Benedek
D-3 Form of Opinion of Local Counsel to Benedek
(vi)
<PAGE>
INDEX TO DEFINED TERMS
----------------------
TERM LOCATION
- ---- --------
"Affiliate" Section 1.1
"Agreement" Section 1.2
"AKMG" Page 1, paragraph 1
"Assumed KCOY Liabilities" Section 3.1.2
"Assumed KKTV Liabilities" Section 3.1.1
"Benedek" Page 1, paragraph 1
"BLC" Page 1, paragraph 1
"CBS" Section 2.1.4
"CERCLA" Section 7.19.2.1
"CERCLIS" Section 7.19.7
"Closing" Section 5
"Closing Date" Section 5.1
"Closing Payment" Section 4.1
"COBRA" Section 7.18.6
"Code" Page 1, 3rd WHEREAS
"control" Section 1.1.1
"Employee Plans" Section 7.18
"Environmental Laws" Section 7.19.1
"ERISA" Section 1.3
"ERISA Affiliate" Section 1.4
"Excluded KCOY Assets" Section 2.4
"Excluded KCOY Contracts" Section 3.4.7
"Excluded KCOY Records" Section 2.4.3
"Excluded KKTV Assets" Section 2.3
"Excluded KKTV Contracts" Section 3.3.7
"Excluded KKTV Records" Section 2.3.4
"FCC" Page 1, 1st WHEREAS
"FCC Applications" Section 6.1.1
"FCC Consents" Section 1.5
"Final Orders" Section 1.6
"GAAP" Section 1.7
"Hazardous Material" Section 7.19.2
"hazardous substance" Section 7.19.2.1
"hazardous waste" Section 7.19.2.2
"herein" Section 1.2
"hereof" Section 1.2
"hereunder" Section 1.2
"HSR Act" Section 6.2
(vii)
<PAGE>
"including" Section 1.15.4
"Information Technology" Section 1.8
"Injured Party" Section 13.3
"Internal Revenue Service" Section 4.3
"KCOY" Page 1, 1st WHEREAS
"KCOY Assets" Section 2.2
"KCOY Financial Statements" Section 8.6
"KCOY Leases" Section 8.10
"KKTV" Page 1, 2nd WHEREAS
"KKTV Assets" Section 2.1
"KKTV Financial Statements" Section 7.6
"KKTV Leases" Section 7.10
"knowledge" Section 1.9
"Lien" Section 1.10
"Losses" Section 13.1
"Material Adverse Effect" Section 1.12
"or" Section 1.15.3
"Other Party" Section 13.3
"Parties" Page 1, paragraph 1
"Party" Page 1, paragraph 1
"Person" Section 1.13
"Station" Page 1, 2nd WHEREAS
"Stations" Page 1, 2nd WHEREAS
"Time Brokerage Agreement" Section 1.11
"Trade Rights" Section 7.12
"trade-out agreements" Section 3.1.1
"Transferred Assets" Section 2.2
"Year 2000 Compliant" Section 1.14
(viii)
<PAGE>
ASSET EXCHANGE AGREEMENT
------------------------
AGREEMENT dated this 30th day of December, 1998, between BENEDEK
BROADCASTING CORPORATION ("Benedek") and BENEDEK LICENSE CORPORATION ("BLC"),
each a Delaware corporation having its principal place of business at 100 Park
Avenue, Rockford, Illinois 61101, and AK MEDIA GROUP, INC., a Washington
corporation having its principal place of business at 1301 Fifth Avenue, Suite
4000, Seattle, Washington 98101 ("AKMG") (Benedek and AKMG being each referred
to herein as a "Party" and collectively referred to herein as the "Parties").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Benedek and its wholly-owned direct subsidiary BLC own and operate
television station KCOY(TV), Channel 12, Santa Maria, California and its
auxiliary facilities ("KCOY") pursuant to licenses issued by the Federal
Communications Commission (the "FCC"); and
WHEREAS, AKMG owns and operates television station KKTV(TV), Channel 11,
Colorado Springs, Colorado and its auxiliary facilities ("KKTV") pursuant to
licenses issued by the FCC (KCOY and KKTV being each referred to herein as a
"Station" and collectively referred to herein as the "Stations"); and
WHEREAS, Benedek desires to exchange all of the KCOY Assets (as hereinafter
defined) and Assumed KCOY Liabilities (as hereinafter defined) for the KKTV
Assets (as hereinafter defined) and the Assumed KKTV Liabilities (as hereinafter
defined), and AKMG also desires to make such exchange, in each case as a like-
kind exchange under Section 1031 of the Internal Revenue Code of 1986, as
amended (the "Code"), and in each case upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, contemporaneously with the execution of this Agreement, AKMG and
Benedek are entering into Time Brokerage Agreements (as herein defined) with
respect to certain aspects of the operation of the Stations between the date
hereof and the Closing Date (as herein defined).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise stated in this Agreement, the following
-----------
terms shall have the following meanings:
1.1 The term "Affiliate" means, with respect to a Person, any
other Person which, directly or indirectly, is in control of, is controlled by
or is under common control with such Person. For purposes of the foregoing
definition, "control" of a Person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such Person whether by
contract or otherwise.
1.2 The term "Agreement" means this agreement, including the
Schedules and all Exhibits hereto, as the same may be amended
1
<PAGE>
or otherwise modified from time to time, and the terms "herein", "hereof",
"hereunder" and like terms shall be taken as referring to this Agreement in its
entirety and shall not be limited to any particular section or provision hereof.
1.3 The term "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any successor statute thereto and
all final or temporary regulations promulgated thereunder.
1.4 The term "ERISA Affiliate" shall mean with respect to a Party,
all members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control and all other entities which,
together with such Party, are treated as a single employer under any or all of
Sections 414(b), (c), (m) or (o) of the Code.
1.5 The term "FCC Consents" means action by the FCC granting its
consent to the assignment of the KKTV FCC Licenses to BLC and action by the FCC
granting its consent to the assignment of the KCOY FCC Licenses to AKMG, as
contemplated by this Agreement.
1.6 The term "Final Orders" means written actions or orders issued
by the FCC, setting forth the FCC Consents and (a) which have not been reversed,
stayed, enjoined, set aside, annulled or suspended, and (b) with respect to
which no requests have been filed for administrative or judicial review,
reconsideration, appeal or stay and the periods provided by statute or FCC
regulations for filing of any such requests for administrative or judicial
review, reconsideration, appeal or stay or for the FCC to set aside the actions
on its own motion have expired.
1.7 The term "GAAP" means generally accepted accounting principles
set forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
1.8 "Information Technology" means computer software, computer
firmware, computer hardware (whether general or specific purpose) and other
similar or related items of automated, computerized or software system(s) that
are used or relied on by a Party in the conduct of the business of its Station.
2
<PAGE>
1.9 The term "knowledge" or similar words shall be deemed to mean
the actual personal knowledge as of the date specified or if no such date is
specified, as of the Closing Date, of each Party's officers, directors and
employees identified on Schedule 1.9 attached hereto.
1.10 The term "Lien" means any charge, claim, lien, mortgage,
obligation, pledge, security interest or other encumbrance of any nature
whatsoever upon, of or in property or other assets of a Person, whether absolute
or conditional, voluntary or involuntary, whether created pursuant to agreement,
arising by force of statute, by judicial proceedings or otherwise.
1.11 The term "Material Adverse Effect" means, with respect to a
Station, a material adverse effect upon the business, operations, assets or
financial condition of such Station.
1.12 The term "Person" shall include an individual, a partnership,
a joint venture, a corporation, a trust, an estate, an unincorporated
organization or association and a governmental agency.
1.13 The term "Time Brokerage Agreements" means (i) the Time
Brokerage Agreement of even date herewith between AKMG, as owner, and Benedek,
as programmer, with respect to KKTV in the form of Exhibit A annexed hereto and
(ii) the Time Brokerage Agreement of even date herewith between Benedek, as
owner, and AKMG, as programmer, with respect to KCOY in the form of Exhibit B
annexed hereto.
1.14 The term "Year 2000 Compliant" means that Information
Technology is designed to be used prior to, during and after the calendar year
2000 A.D., and that Information Technology used during each such time period
will accurately receive, provide and process date/time data (including, but not
limited to, calculating, comparing and sequencing) from, into and between the
20th and 21st centuries, including the years 1999 and 2000, and leap-year
calculations and will not malfunction, cease to function, or provide invalid or
incorrect results as a result of date/time data.
1.15 Unless the context otherwise requires:
1.15.1 a term has the meaning assigned to it;
1.15.2 an accounting term not otherwise defined has the
meaning assigned to it in accordance GAAP and all accounting
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calculations will be determined in accordance with such principles;
1.15.3 "or" is not exclusive;
1.15.4 "including" means including without limitation; and
1.15.5 words in the singular include the plural and words in
the plural include the singular as the context may require.
2. EXCHANGE OF.
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2.1 KKTV ASSETS. On the terms and subject to the conditions of
-----------
this Agreement, at the Closing AKMG shall transfer, convey, assign and deliver
to Benedek (or, with respect to the assets described in Section 2.1.1 below, to
BLC) all of the right, title and interest in and to all assets, properties and
rights of others, of every nature, kind and description, wherever located,
tangible and intangible, real, personal and mixed exclusively with respect to
KKTV (excluding only the Excluded KKTV Assets as specified in Section 2.3 below)
(the "KKTV Assets"), as the same shall exist at and as of the Closing Date,
including, without limitation, the following:
2.1.1 all rights in and to the licenses, permits and other
authorizations issued by any governmental authority and held by AKMG and used or
intended for exclusive use in the conduct of the business and operation of KKTV,
including the KKTV FCC Licenses listed on Schedule 7.4 annexed hereto, together
with any renewals, extensions or modification thereof and additions thereto
between the date hereof and the Closing Date, the goodwill and other intangible
personal property associated with or related to KKTV or the operation thereof,
the business of KKTV as a going concern, and all of AKMG's rights in and to the
call letters "KKTV";
2.1.2 all land, leaseholds and other interests of every kind
and description in real property, buildings, towers, and antennae, and fixtures
and improvements thereon as of the date hereof and used or held for exclusive
use in connection with the business and operation of KKTV, including, without
limitation, those shown on Schedule 7.10 annexed hereto, and any additions,
improvements, replacements and alterations thereto made between the date of this
Agreement and the Closing Date;
2.1.3 all equipment, cameras, transmitters, antennas, office
furniture and fixtures, office materials and supplies, tools, inventory, spare
parts, and other tangible
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personal property of every kind and description, owned by it and used or
intended for exclusive use in the conduct of the business and operation of KKTV,
including the property listed on Schedule 7.11 annexed hereto, together with, to
the extent permitted by this Agreement, any replacements thereof and additions
thereto made between the date hereof and the Closing Date, and less any
retirements or dispositions thereof made between the date hereof and the Closing
Date which are permitted by this Agreement;
2.1.4 all leases, contracts, licenses, purchase orders,
sales orders, commitments and other agreements pertaining exclusively to KKTV to
which AKMG is a party or in which AKMG has rights, listed on Schedule 7.9
annexed hereto, including the affiliation agreements with CBS Inc. ("CBS"), or
not required by Section 7.9 hereof to be set forth on Schedule 7.9, and those
leases, contracts, licenses, purchase orders, sales orders, commitments and
other agreements pertaining to KKTV entered into between the date hereof and the
Closing Date in accordance with Section 9.3 hereof;
2.1.5 all orders and agreements now existing, or entered
into in the ordinary course of business between the date hereof and the Closing
Date, for the sale of advertising time on KKTV except those which on the Closing
Date have already been filled or cancelled in accordance with Section 9.3 hereof
or have expired;
2.1.6 all programs and programming materials and elements of
whatever form or nature as of the date of this Agreement and used or held for
use in connection with the business and operations of KKTV, whether recorded on
tape or any other substance or intended of live performance, and whether
completed or in production, and all related common-law and statutory copyrights
owned by or licensed to AKMG and used in connection with the business and
operations of KKTV, together with all such programs, materials, elements, and
copyrights acquired by AKMG in connection with the business and operations of
KKTV between the date hereof and the Closing Date, except those that expire or
are cancelled in accordance with Section 9.3 hereof between the date hereof and
the Closing Date;
2.1.7 all rights of AKMG in and to trade names, service
marks, trademarks, trademark registrations and trademark applications,
copyrights, copyright registrations and copyright applications, patents and
patent applications, inventions, trade secrets, logos, slogans, jingles,
proprietary processes, computer software and all other information, know-how and
intellectual property rights and all licenses and other agreements relating to
any of the foregoing to the extent the same relate exclusively to
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the business and operations of KKTV, including those listed on Schedule 7.9
annexed hereto;
2.1.8 all causes of action, judgments, claims, demands and
other rights of AKMG of every kind or nature to the extent the same relate
exclusively to the business and operations of KKTV, including, without
limitation, claims under insurance policies;
2.1.9 all rights of AKMG relating to or arising out of or
under express or implied warranties from suppliers with respect to the KKTV
Assets;
2.1.10 except as provided in the Time Brokerage Agreement
pertaining to KKTV with respect to the proration of income and expenses, all
prepaid expenses, advances and deposits, including prepaid film and programming
expenses (it being understood that the consideration for the KKTV Assets
includes payment for the contracts and commitments AKMG relating to film and
programming and that no further payment to AKMG or proration shall be due in
respect thereof) and all barter receivables arising in connection with trade-out
agreements now existing or hereafter entered into in the ordinary course of
business to the extent the same relate to the business and operations of KKTV;
2.1.11 all books and records, including, but not limited to,
correspondence, employment records, production records, accounting records,
property records, filings with the FCC, mailing lists, customer and vendor lists
and other records and files of or relating exclusively to the business and
operations of KKTV, other than the Excluded KKTV Records (as herein defined);
provided, however, that such books and records shall be maintained in existence
for a period of three years following the Closing Date and shall be made
available for inspection and duplication by Benedek, at its expense, upon
reasonable notice during normal business hours; and
2.1.12 those other assets, properties and rights described on
Schedule 2.1.12 annexed hereto and made a part hereof.
2.2 KCOY ASSETS. On the terms and subject to the conditions of
-----------
this Agreement, at the Closing Benedek shall transfer, convey, assign and
deliver to AKMG all of the right, title and interest in and to all assets,
properties and rights of others, of every nature, kind and description, wherever
located, tangible and intangible, real, personal and mixed exclusively with
respect to the KCOY (excluding only the Excluded KCOY Assets as specified in
Section 2.4 below) (the "KCOY Assets"), as the same shall exist at and as of the
Closing Date, including,
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without limitation, the following (the KCOY Assets and the KKTV Assets being
collectively referred to herein as the "Transferred Assets"):
2.2.1 all rights in and to the licenses, permits and other
authorizations issued by any governmental authority and held by Benedek and BLC
and used or intended for exclusive use in the conduct of the business and
operation of KCOY, including the KCOY FCC Licenses listed on Schedule 8.4
annexed hereto, together with any renewals, extensions or modification thereof
and additions thereto between the date hereof and the Closing Date, the goodwill
and other intangible personal property associated with or related to KCOY or the
operation thereof, the business of KCOY as a going concern, and all of Benedek's
rights in and to the call letters "KCOY";
2.2.2 all land, leaseholds and other interests of every kind
and description in real property, buildings, towers, and antennae, and fixtures
and improvements thereon owned by Benedek as of the date hereof and used or held
for exclusive use in connection with the business and operation of KCOY,
including, without limitation, those shown on Schedule 8.10 annexed hereto, and
any additions, improvements, replacements and alterations thereto made between
the date of this Agreement and the Closing Date;
2.2.3 all equipment, cameras, transmitters, antennas, office
furniture and fixtures, office materials and supplies, tools, inventory, spare
parts, and other tangible personal property of every kind and description, owned
by it and used or intended for exclusive use in the conduct of the business and
operation of KCOY, including the property listed on Schedule 8.11 annexed
hereto, together with, to the extent permitted by this Agreement, any
replacements thereof and additions thereto made between the date hereof and the
Closing Date, and less any retirements or dispositions thereof made between the
date hereof and the Closing Date which are permitted by this Agreement;
2.2.4 all leases, contracts, licenses, purchase orders,
sales orders, commitments and other agreements pertaining exclusively to KCOY to
which Benedek is a party or in which Benedek has rights, listed on Schedule 8.9
annexed hereto, including the affiliation agreements with CBS or not required by
Section 8.9 hereof to be set forth on Schedule 8.9, and those leases, contracts,
licenses, purchase orders, sales orders, commitments and other agreements
pertaining to KCOY entered into by a Party between the date hereof and the
Closing Date in accordance with Section 9.3 hereof;
7
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2.2.5 all orders and agreements now existing, or entered
into in the ordinary course of business between the date hereof and the Closing
Date, for the sale of advertising time on KCOY except those which on the Closing
Date have already been filled or cancelled in accordance with Section 9.3 hereof
or have expired;
2.2.6 all programs and programming materials and elements of
whatever form or nature as of the date of this Agreement and used or held for
exclusive use in connection with the business and operations of KCOY, whether
recorded on tape or any other substance or intended of live performance, and
whether completed or in production, and all related common-law and statutory
copyrights owned by or licensed to Benedek and used in connection with the
business and operations of KCOY, together with all such programs, materials,
elements, and copyrights acquired by Benedek in connection with the business and
operations of KCOY between the date hereof and the Closing Date, except those
that expire or are cancelled in accordance with Section 9.3 hereof between the
date hereof and the Closing Date;
2.2.7 all rights of Benedek in and to trade names, service
marks, trademarks, trademark registrations and trademark applications,
copyrights, copyright registrations and copyright applications, patents and
patent applications, inventions, trade secrets, logos, slogans, jingles,
proprietary processes, computer software and all other information, know-how and
intellectual property rights and all licenses and other agreements relating to
any of the foregoing to the extent the same relate to the business and
operations of KCOY, including those listed on Schedule 8.9 annexed hereto;
2.2.8 all causes of action, judgments, claims, demands and
other rights of Benedek of every kind or nature to the extent the same relate to
the business and operations of KCOY, including, without limitation, claims under
insurance policies;
2.2.9 all rights of Benedek relating to or arising out of or
under express or implied warranties from suppliers with respect to the KCOY
Assets;
2.2.10 except as provided in the Time Brokerage Agreement
pertaining to KCOY with respect to the proration of income and expenses, all
prepaid expenses, advances and deposits, including prepaid film and programming
expenses (it being understood that the consideration for the KCOY Assets
includes payment for the contracts and commitments of Benedek relating to film
and programming and that no further payment to Benedek or proration shall be due
in respect thereof) and all barter
8
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receivables arising in connection with trade-out agreements now existing or
hereafter entered into in the ordinary course of business to the extent the same
relate to the business and operations of KCOY;
2.2.11 all books and records, including, but not limited to,
correspondence, employment records, production records, accounting records,
property records, filings with the FCC, mailing lists, customer and vendor lists
and other records and files of or relating to the business and operations of
KCOY, other than the Excluded KCOY Records (as herein defined); provided,
however, that such books and records shall be maintained in existence for a
period of three years following the Closing Date and shall be made available for
inspection and duplication by AKMG, at its expense, upon reasonable notice
during normal business hours; and
2.2.12 those other assets, properties and rights described on
Schedule 2.2.12 annexed hereto and made a part hereof.
2.3 EXCLUDED KKTV. Anything contained in Section 2.1 above to the
-------------
notwithstanding, AKMG shall not transfer, convey or assign to Benedek and the
KKTV Assets shall not include the following (the "Excluded KKTV Assets"):
2.3.1 the Closing Payment delivered by Benedek to AKMG
pursuant to this Agreement;
2.3.2 any cash or cash equivalents or money market
instruments, including unprocessed checks, savings and checking accounts and
other deposits, certificates of deposits, Treasury bills and other marketable
securities of AKMG;
2.3.3 all of the outstanding accounts receivable of AKMG as
of the date hereof arising out of the sale of advertising time on KKTV for cash;
2.3.4 AKMG's minute books and such other books and records
(other than books and records specifically described in Section 2.1.11 hereof)
as pertain to the organization, existence or ownership of AKMG; provided,
however, that such books and records relating to KKTV shall be maintained in
existence for a period of three years following the Closing Date and shall be
made available for inspection and duplication by Benedek, at its expense, upon
reasonable notice during normal business hours (the "Excluded KKTV Records");
2.3.5 Excluded KKTV Contracts (as herein defined) and
contracts, commitments and agreements of AKMG to the extent
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the same relate solely to Excluded KKTV Assets and not to the operation of KKTV;
2.3.6 assets sold by AKMG after the date hereof and prior to
the Closing Date in accordance with Section 9.3 hereof;
2.3.7 any refunds of Federal, state, local or other taxes,
including, without limitation, income, property or sales taxes, or other taxes
of any kind or description which relate to periods prior to the date hereof; and
2.3.8 those other assets, properties and rights listed on
Schedule 2.3 annexed hereto and made a part hereof.
2.4 EXCLUDED KCOY ASSETS. Anything contained in Section 2.2 above
--------------------
to the contrary notwithstanding, Benedek shall not transfer, convey or assign to
AKMG and the KCOY Assets shall not include the following (the "Excluded KCOY
Assets"):
2.4.1 any cash or cash equivalents or money market
instruments, including unprocessed checks, savings and checking accounts and
other deposits, certificates of deposits, Treasury bills and other marketable
securities of Benedek;
2.4.2 all of the outstanding accounts receivable of Benedek
as of the date hereof arising out of the sale of advertising time on KCOY for
cash;
2.4.3 Benedek's minute books and such other books and records
(other than books and records specifically described in Section 2.2.11 hereof)
as pertain to the organization, existence or ownership of Benedek; provided,
however, that such books and records relating to KCOY shall be maintained in
existence for a period of three years following the Closing Date and shall be
made available for inspection and duplication by AKMG, at its expense, upon
reasonable notice during normal business hours (the "Excluded KCOY Records");
2.4.4 Excluded KCOY Contracts (as herein defined) and
contracts, commitments and agreements of Benedek to the extent the same relate
solely to Excluded KCOY Assets and not to the operation of KCOY;
2.4.5 assets sold by Benedek after the date hereof and prior
to the Closing Date in accordance with Section 9.3 hereof;
2.4.6 any refunds of Federal, state, local or other taxes,
including, without limitation, income, property or sales
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taxes, or other taxes of any kind or description which relate to periods prior
to the date hereof; and
2.4.7 those other assets, properties and rights listed on
Schedule 2.4 annexed hereto and made a part hereof.
2.5 TRANSFER OF ASSETS. The transfer of the Transferred Assets as
------------------
herein contemplated shall be made by the Parties, free and clear of all Liens
other than Liens set forth on Schedules 7.10, 7.11, 8.10 and 8.11 hereto and not
required to be discharged on or prior to the Closing Date pursuant to the terms
of this Agreement and except only those assumed by each Party pursuant to
Section 3 below. The transfer of the Transferred Assets shall be effected by
delivery by the Parties of such bills of sale, endorsements, assignments,
drafts, checks, deeds, affidavits of title and other instruments of transfer,
conveyance and assignment, including customary deeds with respect to real
property to be conveyed hereunder, as shall be necessary or appropriate to
transfer, convey and assign the KCOY Assets to AKMG and the KKTV Assets to
Benedek on the Closing Date as contemplated by this Agreement and as shall be
reasonably requested by the Parties. The conveyancing documents shall be in form
and substance reasonably satisfactory to the Parties. Each Party shall, at any
time and from time to time after the Closing Date, execute and deliver such
other instruments of transfer and conveyance and do all such further acts and
things as may be reasonably requested by the other Party to transfer, convey,
assign and deliver to the other Party or to aid and assist the other Party in
collecting and reducing to possession, any and all of the respective Transferred
Assets, or to vest in each Party good, valid and marketable title to such
Transferred Assets.
2.6 NON-ASSIGNABLE ASSETS. Anything contained in this Agreement to
---------------------
the contrary, this Agreement shall not constitute an agreement or an attempted
agreement to transfer or assign any contract, license, lease, commitment, sales
order, purchase order or other agreement, or any claim or right of any benefit
arising thereunder or resulting therefrom if any such attempted transfer or
assignment thereof, without the consent of any other party thereto, would
constitute a breach thereof or in any way affect the rights of the assignee
Party thereunder. Each Party shall, between the date hereof and the Closing
Date, use their respective best efforts to obtain the consent of any party or
parties to any such contracts, licenses, leases, commitments, sales orders,
purchase orders or other agreements to which it is a party to the transfer or
assignment thereof by such Party to the other Party hereunder in all cases in
which such consent is required for transfer or assignment; provided, that such
efforts shall not require the payment of any consideration by the Parties other
than as expressly provided for in this Agreement. If after
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a Party has used its best efforts to obtain the consent of any such other party
to such contract, license, lease, commitment, sales order, purchase order or
other agreement, such consent shall not be obtained at or prior to the Closing,
or an attempted assignment thereof at the Closing would be ineffective and would
affect the rights of the assignee Party thereunder, the Parties will cooperate
with each other in any reasonable arrangement designed to provide for the
assignee Party the benefits under any such contract, license, lease, commitment,
sales order, purchase order or other agreement, including the enforcement, at
the cost and for the benefit of the assignee Party, of any and all rights of the
transferring Party against such other party thereto arising out of the breach or
cancellation thereof by such other party or otherwise. The foregoing shall not
limit, waive or otherwise affect each Party's right to not close the
transactions contemplated by this Agreement to the extent the receipt of any
consent to the transfer or assignment of any contract, license, lease,
commitment, sales order, purchase order or other agreement is a condition to the
obligation of such Party to close hereunder.
3. ASSUMPTION OF LIABILITIES.
-------------------------
3.1 ASSUMED LIABILITIES. Subject to the terms and conditions of
-------------------
this Agreement and the performance by the parties hereto of their respective
obligations hereunder, on the Closing Date, simultaneously with the transfer,
conveyance and assignment by AKMG to Benedek of the KKTV Assets and the
transfer, conveyance and assignment by Benedek to AKMG of the KCOY Assets:
3.1.1 Benedek shall assume or otherwise be liable for,
subject to the limitations contained herein, the liabilities and obligations of
AKMG (collectively, the "Assumed KKTV Liabilities") under the following items:
(i) contracts, agreements and commitments set forth on Schedule 7.9, other than
Excluded KKTV Contracts, to the extent the liabilities and obligations
thereunder arise on or after the Closing Date, (ii) contracts, agreements and
commitments in existence on the date hereof and not required by Section 7.9
hereof to be set forth on Schedule 7.9, other than Excluded KKTV Contracts, to
the extent the liabilities and obligations thereunder arise on or after the
Closing Date, (iii) contracts, agreements and commitments with customers and
advertising agencies accepted in the ordinary course of business for the sale of
advertising time on KKTV for cash, to the extent the liabilities and obligations
thereunder arise on or after the Closing Date, (iv) contracts, agreements and
commitments of the type set forth in (i), (ii) or (iii) above, to the extent the
liabilities and obligations thereunder arise on or after the Closing Date, to
which AKMG becomes a party in the ordinary course of business subsequent to the
date of this
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Agreement and prior to the Closing Date, which (a) are not performed or
discharged prior to the Closing Date, (b) are permitted to be entered into by
AKMG under the terms and conditions of this Agreement and (c) are effectively
assigned and transferred to Benedek as contemplated herein; provided, however,
that Benedek shall not be obligated to assume any contract, agreement or
commitment with respect to programming for KKTV entered into after the date
hereof without Benedek's prior written consent and, further provided, however,
that Benedek shall not assume any accrued payable in respect of any such
contract, agreement or commitment and (v) agreements with customers and
advertising agencies accepted in the ordinary course of business and reflected
on Schedule 7.9 or entered into after the date hereof in accordance with Section
9.3 hereof for the sale of advertising time in exchange for goods and services
("trade-out agreements") (film and program barter agreements shall not be
included within the definition of trade-out agreements); and
3.1.2 AKMG shall assume or otherwise be liable for,
subject to the limitations contained herein, the liabilities and obligations of
Benedek (collectively, the "Assumed KCOY Liabilities") under the following
items: (i) contracts, agreements and commitments set forth on Schedule 8.9
hereof, other than Excluded KCOY Contracts, to the extent the liabilities and
obligations thereunder arise on or after the Closing Date, (ii) contracts,
agreements and commitments in existence on the date hereof and not required by
Section 8.9 hereof to be set forth on Schedule 8.9, other than Excluded KCOY
Contracts, to the extent the liabilities and obligations thereunder arise on or
after the Closing Date, (iii) contracts, agreements and commitments with
customers and advertising agencies accepted in the ordinary course of business
for the sale of advertising time on KCOY for cash, to the extent the liabilities
and obligations thereunder arise on or after the Closing Date, (iv) contracts,
agreements and commitments of the type set forth in (i), (ii) or (iii) above, to
the extent the liabilities and obligations thereunder arise on or after the
Closing Date, to Benedek becomes a party in the ordinary course of business
subsequent to the date of this Agreement and prior to the Closing Date, which
(a) are not performed or discharged prior to the Closing Date, (b) are permitted
to be entered into by Benedek under the terms and conditions of this Agreement
and (c) are effectively assigned and transferred to AKMG as contemplated herein;
provided, however, that AKMG shall not be obligated to assume any contract,
agreement or commitment with respect to programming for KCOY entered into after
the date hereof without AKMG's prior written consent and, further provided,
however, that AKMG shall not assume any accrued payable in respect of any such
contract, agreement or commitment and (v) trade-out agreements with
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customers and advertising agencies accepted in the ordinary course of business
and reflected on Schedule 8.9 or entered into after the date hereof in
accordance with Section 9.3 hereof.
3.2 INSTRUMENTS OF ASSUMPTION. The assumption by Benedek of the
-------------------------
Assumed KKTV Liabilities and the assumption by AKMG of the Assumed KCOY
Liabilities shall be effected by such instruments of assumption delivered to the
other Party on the Closing Date as shall be reasonably satisfactory to the
Parties. Each Party shall, at any time and from time to time after the Closing
Date, execute and deliver such other instruments of assumption and do all such
further acts and things as may be reasonably requested by the other Party to
implement the assumption of each such liability and obligation. The assumption
by Benedek of the Assumed KKTV Liabilities and the assumption by AKMG of the
Assumed KCOY Liabilities shall in no way expand the rights or remedies of third
parties against such Party as compared to the rights and remedies which the
third parties would have had against the such Party had this Agreement not been
consummated.
3.3 EXCLUDED KKTV LIABILITIES. Benedek does not and shall not
-------------------------
assume, pay, perform or discharge any liabilities or obligations of AKMG, other
than the Assumed KKTV Liabilities and, without limiting the foregoing, it is
expressly agreed by the Parties that Benedek shall not assume or be liable for
any of the following liabilities or obligations of AKMG:
3.3.1 liabilities or obligations of AKMG for borrowed money or
to any of its shareholders or to any Person affiliated or associated therewith;
3.3.2 liabilities or obligations of AKMG incurred with respect
to its entry into this Agreement or its consummation of any of the transactions
contemplated hereunder (including, without limitation, AKMG's legal and
accounting fees);
3.3.3 liabilities or obligations for Federal, state, local or
other taxes, including, without limitation, corporate income taxes, property or
sales or use taxes or reports, or other taxes of any kind or description, in
each case which relate to periods prior to the Closing;
3.3.4 any pension, retirement, profit-sharing plan or trust or
other employee benefit plan of AKMG;
3.3.5 subject to the KKTV Time Brokerage Agreement executed
concurrently herewith, any litigation, proceeding, or claim by any Person to the
extent relating to the business or operation of or otherwise relating to KKTV
prior to the Closing,
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whether or not such litigation, proceeding, or claim is pending, threatened, or
asserted before, on, or after the date hereof, including any litigation,
proceeding or claim listed on Schedule 7.14 hereto and any litigation,
proceeding or claim pending or threatened as of the date hereof.
3.3.6 liabilities or obligations which may arise by reason of
or with respect to the dissolution or liquidation of AKMG;
3.3.7 liabilities or obligations arising under or with respect
to the contracts, agreements and commitments listed on Schedule 3.3.7 hereto
(the "Excluded KKTV Contracts"); and
3.3.8 liabilities or obligations incurred by Benedek which
violate any representation, warranty, covenant or agreement of AKMG contained
herein or made in connection herewith.
3.4 EXCLUDED KCOY LIABILITIES. AKMG does not and shall not assume,
-------------------------
pay, perform or discharge any liabilities or obligations of Benedek, other than
the Assumed KCOY Liabilities and, without limiting the foregoing, it is
expressly agreed by the Parties that AKMG shall not assume or be liable for any
of the following liabilities or obligations of Benedek:
3.4.1 liabilities or obligations of Benedek for borrowed money
or to any of its shareholders or to any Person affiliated or associated
therewith;
3.4.2 liabilities or obligations of Benedek incurred with
respect to its entry into this Agreement or its consummation of any of the
transactions contemplated hereunder (including, without limitation, Benedek's
legal and accounting fees);
3.4.3 liabilities or obligations for Federal, state, local or
other taxes, including, without limitation, corporate income taxes, property or
sales or use taxes or reports, or other taxes of any kind or description, in
each case which relate to periods prior to the Closing;
3.4.4 any pension, retirement, profit-sharing plan or trust or
other employee benefit plan of Benedek;
3.4.5 subject to the KCOY Time Brokerage Agreement executed
concurrently herewith, any litigation, proceeding, or claim by any Person to the
extent relating to the business or operation of or otherwise relating to KCOY
prior to the Closing, whether or not such litigation, proceeding, or claim is
pending,
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threatened, or asserted before, on, or after the Closing, including any
litigation, proceeding or claim listed on Schedule 8.14 hereto and any
litigation, proceeding or claim pending or threatened as of the Closing.
3.4.6 liabilities or obligations which may arise by reason of
or with respect to the dissolution or liquidation of Benedek;
3.4.7 liabilities or obligations arising under or with respect
to the contracts, agreements and commitments listed on Schedule 3.4.7 hereto
(the "Excluded KCOY Contracts"); and
3.4.8 liabilities or obligations incurred by AKMG which violate
any representation, warranty, covenant or agreement of Benedek contained herein
or made in connection herewith.
4. CLOSING PAYMENT; ALLOCATION.
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4.1 CLOSING PAYMENT. AKMG and Benedek agree that the value of
---------------
KKTV exceeds the value of KCOY by an amount equal to the Closing Payment (as
herein defined). In addition to the conveyance of the KCOY Assets and the
assumption of the Assumed KKTV Liabilities, Benedek shall also pay to AKMG the
sum of Nine Million Dollars ($9,000,000) (the "Closing Payment") payable at the
Closing by the wire transfer by Benedek to an account for the sole benefit of
AKMG in immediately available funds.
4.2 CLOSING ADJUSTMENTS. All income and expenses arising from
-------------------
the conduct of the business and operation of the Stations shall be prorated
between the Parties in accordance with the Time Brokerage Agreements.
4.3 ALLOCATION OF PURCHASE PRICE. The Parties agree that they
----------------------------
will use such asset values in calculating gain (if any) recognized under Treas.
Reg. (S) 1.1031(j)-1(b)(3) with respect to each "exchange group" (as defined in
Treas. Reg. (S) 1.1031(j)-1(b)(2)(i)), the "residual group" as (defined in
Treas. Reg. (S) 1.1031(j)-1(b)(2)(iii)) (if any) and any properties transferred
and received that are not within any "exchange group" or the "residual group"
(if any) and will not take any position on any tax return inconsistent
therewith. To the extent required by Section 1060 of the Code, the regulations
thereunder and Treas. Reg. (S) 1.1031(d)-1T, each Party shall allocate, in
accordance with the foregoing provisions, (a) the value of the consideration
transferred by it to the consideration received by it for purposes of
determining the tax basis of the property so received by it and (b) the value of
the consideration received by it to the consideration transferred by it for
purposes of determining
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the gain and loss (if any) with respect to the property so transferred. For
purposes of the preceding sentence, the Parties shall use the value of
properties transferred and received determined in accordance with Schedule 4.3.
To the extent an IRS Form 8594 is required to be filed under Section 1060, the
regulations thereunder and Treas. Reg. (S) 1.1031(d)-1T, the Parties agree to
prepare and file on a timely basis with the Internal Revenue Service ("IRS")
substantially identical IRS Forms 8594 using the values of properties
transferred and received as determined by in accordance with Schedule 4.3, and
shall not take any position on any tax return inconsistent therewith.
5. CLOSING.
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5.1 TIME OF CLOSING. The closing of this Agreement (the
---------------
"Closing") shall take place at 10:00 a.m. Eastern Time on a date within ten days
following (i) the date of public notice of the latter of the two FCC Consents,
unless a petition to deny has been timely filed with respect to either FCC
Application (as herein defined), in which event the date on which the latter of
the two FCC Consents shall have become a Final Order (or if either such date is
a Saturday, Sunday, or Federal holiday, on the next business day thereafter),
and (ii) the date on which all other conditions to the obligations of the
Parties hereunder shall have been satisfied or waived in writing. The Closing
shall take place at the offices of Shack & Siegel, P.C., 530 Fifth Avenue, New
York, New York 10036, or at such other place as may be agreed to by the Parties.
The date of the Closing is hereinafter referred to as the "Closing Date."
5.2 TIME BROKERAGE AGREEMENTS. On the date hereof, the Parties
-------------------------
shall enter into the Time Brokerage Agreements, substantially in the form of
Exhibits A and B attached hereto, with respect to KKTV and KCOY, respectively.
Unless otherwise set forth herein, the Parties agree that the following matters
relating to the Stations shall be governed in accordance with the Time Brokerage
Agreements: (i) employees; (ii) accounts receivables; (iii) prorations and
adjustments of the income and expense of the Stations; and (iv) cash sales and
trade agreements.
6. GOVERNMENTAL CONSENTS.
---------------------
6.1 FCC CONSENT. The exchange of the Station Licenses as
-----------
contemplated by this Agreement is subject to the prior consent of the FCC.
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6.1.1 Promptly after the execution of this Agreement, the
Parties shall proceed to prepare for filing with the FCC appropriate
applications (the "FCC Applications") for consent to (i) the assignment from
AKMG to BLC of the KKTV FCC Licenses and (ii) the assignment from BLC to AKMG of
the KCOY FCC Licenses. The FCC Application for consent to the assignment from
BLC to AKMG of the KCOY FCC Licenses shall include a request for a waiver of the
FCC's duopoly policy, conditioned upon the outcome of the FCC's ownership
proceedings. The FCC Applications shall be filed with the FCC as soon as
practicable but in no event later than 10 days after the date hereof. The
Parties shall thereafter prosecute the FCC Applications with all reasonable
diligence and otherwise use their reasonable best efforts to obtain the grant of
such application as expeditiously as practicable (but no party shall have any
obligation to take any unreasonable steps to satisfy complainants, if any). If
the FCC Consents impose any condition on any party hereto (other than a
conditional waiver of the FCC's duopoly policy with respect to the assignment of
the KCOY Licenses), such party shall use its reasonable best efforts to comply
with such condition unless compliance would be unduly burdensome or would have a
Material Adverse Effect upon it, its constituent partners, its parent
corporation, or any of its or its parent corporation's subsidiaries or
Affiliates, as appropriate. Each Party shall pay 50% of all filing fees payable
with respect to all filings required by the FCC in connection with the
transactions contemplated by this Agreement and made pursuant to this Section
6.1.1.
6.1.2 The transfer of the KKTV Assets and the KCOY Assets
hereunder is expressly conditioned upon the grant of the FCC Consents and
compliance by the Parties hereto with the conditions (if any) imposed in such
consent.
6.2 HART-SCOTT-RODINO. If applicable, the Parties will file as soon as
-----------------
reasonably practicable (but in any event within 30 days after the date of this
Agreement) with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice any required notification
and report forms with respect to the transactions contemplated hereunder
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act"). Such notification and report forms will comply as to form with all
requirements applicable thereto and all of the data and information reported in
such forms shall be true, correct and complete in all material respects. The
parties shall comply as promptly as practicable with all requests if any for
additional information and documentary materials unless, in the reasonable
opinion of counsel, such information or documentation, as the case may be, is
not required to be produced. Such additional information and documentation will
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comply as to form with all requirements applicable thereto and will be true,
correct and complete in all material respects and shall be promptly delivered.
Each Party shall pay 50% of all filing fees payable with respect to all filings
required by the HSR Act in connection with the transactions contemplated by this
Agreement and made pursuant to this Section 6.2.
6.3 OTHER GOVERNMENTAL CONSENTS. Promptly following the
---------------------------
execution of this Agreement, the Parties will proceed to prepare and file with
the appropriate governmental authorities and any other requests for approval or
waiver that are required from governmental authorities in connection with the
transactions contemplated hereby, and shall diligently and expeditiously
prosecute, and shall cooperate fully with each other in the prosecution of, such
requests for approval or waiver and all proceedings necessary to secure such
approvals and waivers.
7. REPRESENTATIONS AND WARRANTIES OF AKMG. In order to induce Benedek to
--------------------------------------
enter into this Agreement and to perform its obligations hereunder, AKMG hereby
makes the following representations and warranties to Benedek:
7.1 ORGANIZATION AND STANDING. AKMG is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the State of
Washington and has all requisite power and authority, corporate or otherwise, to
own, lease, use and operate its properties and assets at and in the places where
such properties and assets are now owned, operated or leased and to transact its
business where and as now conducted. AKMG is duly qualified to do business and
is in good standing in each jurisdiction where it owns, leases or holds real
property or conducts or operates its business, where the nature of its
activities requires such qualification or where the failure to so qualify would
have a Material Adverse Effect on the business or results of operations of KKTV.
AKMG is the successor by merger to KKTV, Inc.
7.2 POWER AND AUTHORITY. AKMG has all requisite power and
-------------------
authority, corporate or otherwise, to enter into this Agreement, the Time
Brokerage Agreements and the documents and instruments contemplated hereby and
thereby and to assume and perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement, the Time Brokerage Agreements and the
documents and instruments contemplated hereby and thereby and the performance by
AKMG of its obligations hereunder and thereunder have been duly and validly
authorized by all necessary corporate action of AKMG and no further action or
approval, corporate or otherwise, is required in order to constitute this
Agreement, the Time
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Brokerage Agreements and the documents and instruments contemplated hereby and
thereby as valid and binding obligations of AKMG, enforceable in accordance with
their terms.
7.3 NO CONFLICTS. Except as set forth on Schedule 7.3 annexed
------------
hereto and made a part hereof, the execution and delivery of this Agreement, the
Time Brokerage Agreements and the documents and instruments contemplated hereby
and thereby, the consummation of the transactions contemplated hereby and the
performance by AKMG of its obligations hereunder and thereunder:
7.3.1 do not and will not conflict with or violate any provision
of the certificate of incorporation or bylaws of AKMG;
7.3.2 do not and will not conflict with or result in any breach of
any condition or provisions of, or constitute a default under or give rise to
any right of termination, cancellation or acceleration or (whether after the
giving of notice or lapse of time or both) result in the creation or imposition
of any Lien on any of the KKTV Assets by reason of the terms of any contract,
mortgage, lien, lease, agreement, indenture, instrument, judgment or decree to
which AKMG is a party or which is or purports to be binding upon AKMG or which
affects or purports to affect any of the KKTV Assets; and
7.3.4 subject to the receipt of any governmental approvals
required in connection with the transfer of the KKTV Assets to Benedek or BLC,
do not and will not conflict with or result in a violation of or default under
(with or without notice of the lapse of time or both) any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge or other
restriction of any court, administrative agency or commission or other
governmental authority or instrumentality.
7.4 GOVERNMENT APPROVAL. AKMG is the holder of the KKTV FCC Licenses
-------------------
as set forth on Schedule 7.4 annexed hereto and made a part hereof, which
constitute all necessary authorizations from the FCC to enable KKTV to broadcast
and transmit the present television programming. Other than FCC rulemaking
procedures of general applicability, there are no fines, forfeitures, notices of
apparent liability, orders to show cause or any other administrative or judicial
orders outstanding nor any proceedings pending or, to AKMG's knowledge,
threatened, the effect of which would be the revocation, cancellation, non-
renewal, suspension or adverse modification of the KKTV FCC Licenses or any
adverse consequence for KKTV, and there does not exist any event which with
notice or the passing of time or both could result in a fine, forfeiture, notice
of apparent liability, order to show cause or any other administrative or
judicial order or proceeding
20
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by the FCC, the effect of which would result in the revocation, cancellation,
non-renewal, suspension or adverse modification of the KKTV FCC Licenses or any
adverse consequences for KKTV. Since the date of its acquisition by AKMG, KKTV,
including, without limitation, the technical equipment owned by AKMG relating to
KKTV, has been operated in conformity with the KKTV FCC Licenses in all material
respects and within the FCC rules, regulations and standards of performance in
all material respects. Except as contemplated in Section 6 hereof, no action,
approval consent, authorization or other action, including, but not limited to,
any action, approval, consent or authorization by or filing with any
governmental or quasi-governmental agency, commission, board, bureau or
instrumentality, is necessary or required as to AKMG for the due execution,
delivery or performance by AKMG of this Agreement or any document or instrument
contemplated hereby or in order to constitute this Agreement as a valid and
binding obligation of AKMG. To the best knowledge of AKMG, there are no facts
which, under the Communications Act of 1934, as amended, or the existing rules
and regulations of the FCC, would disqualify AKMG as an assignee of KCOY FCC
Licenses.
7.5 VALIDITY. This Agreement and the Time Brokerage Agreements
--------
constitute, and the other documents and instruments contemplated hereby and
thereby will, on the due execution and delivery thereof, constitute the legal,
valid and binding obligations of AKMG, enforceable in accordance with their
respective terms.
7.6 FINANCIAL STATEMENTS . Annexed hereto as Schedule 7.6 and made
--------------------
a part hereof are the following internal financial statements of KKTV
(collectively the "KKTV Financial Statements"): balance sheets as of November
30, 1998 and December 31, 1997 and 1996 and related statements of income for the
periods then ended. The KKTV Financial Statements are in accordance with GAAP
and the books and records of AKMG and fairly, completely and accurately present
the financial position of KKTV at the dates specified and the results of
operations for the periods covered.
7.7 NO CHANGES. Except as set forth on Schedule 7.7 annexed hereto
----------
and made a part hereof, since November 30, 1998, AKMG has not with respect to
KKTV:
7.7.1 incurred any damage, destruction or similar loss, whether
or not covered by insurance, adversely affecting the business, assets or
properties of KKTV;
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7.7.2 other than in the ordinary course of business, sold, assigned,
leased, transferred or otherwise disposed of any of the KKTV Assets;
7.7.3 mortgaged, pledged or granted or suffered to exist any Lien on
any of the KKTV Assets;
7.7.4 other than in the ordinary course of business, waived any
rights of material value or cancelled, discharged, satisfied or paid any debt,
claim, lien, encumbrance, liability or obligation, whether absolute, accrued,
contingent or otherwise and whether due or to become due;
7.7.5 incurred any obligation or liability (absolute or contingent,
liquidated or unliquidated, choate or inchoate), except current obligations and
liabilities incurred in the ordinary course of business;
7.7.6 other than in the ordinary course of business, entered into
any lease, contract, license or other agreement, or made any amendment of or
terminated any lease, contract, license or other agreement to which AKMG is a
party;
7.7.7 effected any change in the accounting practices, procedures or
methods of AKMG;
7.7.8 paid, loaned or advanced any amount to or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement, arrangement or transaction of any
nature with any employee of KKTV or any Affiliate of AKMG or any such employee,
except for regular compensation paid to an employee of KKTV;
7.7.9 increased the compensation payable to any KKTV employees or
become obligated to increase any such compensation except in the ordinary course
of business and consistent with AKMG's past practices; or
7.7.10 entered into any other transaction other than in the ordinary
course of business and consistent with past practices.
7.8 TAXES. Except as set forth on Schedule 7.8 annexed hereto and
-----
made a part hereof, AKMG has duly filed all foreign, Federal, state, county and
local income, excise, sales, property, withholding, social security, franchise,
license, information returns and other tax returns and reports required to have
been filed by AKMG to the date hereof with respect to KKTV. Each such return is
true, correct and complete and AKMG has paid all taxes, assessments, amounts,
interest and penalties due to any foreign,
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Federal, state, county, local or other taxing authority with respect to all
periods prior to the date hereof required to have been paid by AKMG with respect
to KKTV and created sufficient reserves or made provision for all thereof
accrued but not yet due and payable by it. No government or governmental
authority is now asserting or threatening to assert any deficiency or assessment
for additional taxes or any interest, penalties or fines with respect to AKMG
that could result in a Lien on the KKTV Assets.
7.9 CONTRACTS.
---------
7.9.1 Except only those contracts, agreements or commitments
listed and described on Schedule 7.9 annexed hereto and made a part hereof
(complete and correct copies of which have been heretofore delivered to
Benedek), the Excluded KKTV Contracts and contracts, agreements or commitments
entered into in the ordinary course of business and (x) involving less than
$25,000 over their term or (y) involving more than $25,000 over their term but
not more than $100,000 in the aggregate for all such contracts, agreements or
commitments or (z) involving sales of advertising time for cash in accordance
with the KKTV's customary rate practices or sales of advertising time pursuant
to trade-out agreements entered into in the ordinary course of business, AKMG is
not a party to nor has any contract, agreement or commitment of any kind or
nature whatsoever pertaining to KKTV, written or oral, formal or informal,
including, without limitation, any (i) license, franchise, agency, or similar
agreement, or any other contract relating to the payment of a commission, (ii)
contract or commitment for the employment of any employee or consultant, (iii)
collective bargaining agreement or other contract with any labor union, (iv)
contract or commitment for services, materials, supplies, merchandise, inventory
or equipment, (v) contract or commitment for the sale or purchase of any of its
services, products or assets, (vi) mortgage, indenture, promissory note, loan
agreement, guaranty or other contract or commitment for the borrowing of money
or for a line or letter of credit, (vii) contract or commitment with any
officer, director or any current or former employee of AKMG which will be in
effect on the Closing Date, (viii) contract or commitment with any government or
agency thereof, (ix) contract pursuant to which its right to compete with any
Person in the conduct of its business anywhere in the world is restrained or
restricted for any reason or in any way, (x) contract or commitment guaranteeing
the performance, liabilities or obligations of any Person, (xi) contract or
commitment for capital improvements or expenditures or with any contractor or
subcontractor for in excess of $10,000, (xii) contract or commitment for
charitable contributions aggregating in excess of $5,000, (xiii) lease or other
agreement or commitment pursuant to
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which it is a lessee of or holds or operates any real property, machinery,
equipment, motor vehicles, office furniture, fixtures or similar personal
property owned by any third party, or (xiv) contract or commitment otherwise
involving in excess of $10,000 in cash over its term (including any periods
covered by any options to renew by any party), whether or not in the ordinary
course of business. Except as set forth on Schedule 7.9, each of the contracts
and commitments referred to therein is valid and existing, in full force and
effect, and enforceable in accordance with its terms and no party thereto is in
default and no claim of default by any party has been made or is now pending,
and no event exists which, with or without the lapse of time or the giving of
notice, or both, would constitute a breach or default, cause acceleration of any
obligation, would permit the termination or excuse the performance by any party
thereto, or would otherwise materially and adversely affect the KKTV Assets.
Except as noted on Schedule 7.9, all contracts and commitments listed thereon
are assignable by AKMG to Benedek without consent of any other Person.
7.9.2 The network signal is delivered to KKTV by virtue of earth receive
stations and AKMG has entered into such contracts, leases and agreements and
made such other arrangements as are necessary for the carriage of the network
signal.
7.9.3 KKTV is currently affiliated with CBS pursuant to the network
affiliation contract described on Schedule 7.9. Said network affiliation
contract is in full force and effect and AKMG is not aware of any state of facts
which would permit the termination for cause of such network affiliation
contract prior to the expiration of the term thereof.
7.9.4 Schedule 7.9.4 sets forth by customer the commercial time owed and
goods and services to be received as of the date hereof pursuant to trade-out
agreements, each of which trade-out agreement has been set forth on Schedule
7.9.4.
7.10 REAL ESTATE.
-----------
7.10.1 Schedule 7.10 annexed hereto and made a part hereof is a complete
and correct list of (i) all real property or
24
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premises owned in whole or in part by AKMG and used by KKTV (other than Excluded
KKTV Assets) and (ii) all real property or premises leased in whole or in part
by AKMG for use by KKTV (the "KKTV Leases"). Complete and correct copies of the
KKTV Leases and all deeds, mortgages, deeds of trust and other documents
specifically concerning real property owned by AKMG for use by KKTV (other than
Excluded KKTV Assets) have been heretofore delivered to Benedek.
7.10.2 Schedule 7.10 annexed hereto and made a part hereof lists all
guarantees of the KKTV Leases by any other Person.
7.10.3 Schedule 7.10 annexed hereto and made a part hereof contains a
brief description of all alterations being made or which are planned in any
premises of KKTV, together with the amounts budgeted for such alterations and
the names of architects and general contractors retained in connection
therewith. All permits and approvals of any government or quasi-governmental
authority and all consents of landlords required in connection with such
alterations being made have been obtained or will be obtained by the Closing
Date. AKMG has all required legal and valid occupancy permits and other licenses
or government approvals for each of the properties and premises demised pursuant
to the KKTV Leases or owned by AKMG for use by KKTV (copies of which have been
heretofore delivered to Benedek other than with respect to Excluded KKTV
Assets).
7.10.4 Each KKTV Lease is legal, valid and binding as between AKMG and
the other party or parties thereto and AKMG is a tenant or possessor in good
standing thereunder, free of any material default or breach by the other party
or parties thereto and quietly enjoys the premises provided for therein. Each
rental and other payment due thereunder has been duly made; each act required to
be performed which, if not performed, would constitute a breach or default
thereof has been duly performed by AKMG; and no act forbidden to be performed
has been performed thereunder by AKMG which would constitute a breach or default
thereof. AKMG has the legal right (without the consent or other approval of any
other party) to possess and quietly enjoy each of such premises and properties
under each of the KKTV Leases. Each KKTV Lease is in full force and effect and
constitutes a legal, valid and binding obligation of AKMG and there is not under
any KKTV Lease any claim of default or event which, with or without notice or
the lapse of time or both, would constitute a breach or default thereunder.
7.10.5 Except as set forth on Schedule 7.10 annexed hereto and made a
part hereof, AKMG has good, marketable and insurable title to all real property
purported to be owned or
25
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occupied by AKMG for use by KKTV (other than Excluded KKTV Assets), free and
clear of all Liens and no party has the right to acquire or use such real
property or any improvements, fixtures or equipment located thereon except as
set forth on Schedule 7.9. Except as set forth on Schedule 7.10 or Schedule
7.11, AKMG has good and marketable title and owns outright, free and clear of
all Liens, claims, easements, rights of way or restrictions (whether zoning or
otherwise), each improvement, fixture and item of equipment located in or on
each of the properties and premises owned, leased, used or occupied by it for
use by KKTV. No improvement, fixture or equipment in or on any such premises and
properties, to the extent owned or occupied by AKMG for use by KKTV, or the
occupation or leasehold with respect thereto, is in violation of any law, rule
or ordinance, including any zoning, building, safety, health or environmental
law and each of such premises and properties is zoned or otherwise lawfully used
for the purposes for which each of such premises or properties is now used by
AKMG.
7.10.6 None of such premises or properties has been condemned or otherwise
taken by any public authority, no condemnation or taking is, to AKMG's
knowledge, threatened or contemplated, and none thereof is, to AKMG's knowledge,
subject to any claim, contract or law which might affect its use or value for
the purposes now made of it, and each thereof is in good condition and repair.
7.11 PERSONAL PROPERTY. Schedule 7.11 annexed hereto and made a part hereof
-----------------
is a true and complete list of (i) all tangible personal property owned by AKMG
for use by KKTV having a book value at the date hereof in excess of $1,000 per
item (other than items of personal property having a value in excess of $1,000
but not in excess of $25,000 in the aggregate) and (ii) all personal property
owned by a third party which is leased or otherwise used by AKMG for use by
KKTV, including, without limitation, leases or other agreements relating to the
use or operation of any machinery, equipment, motor vehicles, office furniture
or fixtures owned by any third party (complete and correct copies of which
leases or other agreements have been heretofore delivered to Benedek). Each such
lease and agreement is in full force and effect and constitutes a legal, valid
and binding obligation of AKMG and there is not under any such lease or other
agreement any default or any claim of default or of an event which, with or
without notice or the lapse of time or both, would constitute a breach or
default thereunder. Except as set forth on Schedule 7.11, all personal property
purported to be owned by AKMG for use by KKTV is owned by it, free and clear of
all Liens, and is in good working condition, subject to normal wear and tear.
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7.12 INTELLECTUAL PROPERTY. Schedule 7.12 annexed hereto and made a part
---------------------
hereof is a complete and correct list, and a brief description (including, if
applicable, date of application, filing or registration, as the case may be, and
the registration or application number) of each patent, invention, trade secret,
copyright, proprietary software or hardware, trade name, trademark, brand name,
service mark, or design, or representation or expression of any thereof or
registration or application therefor ("Trade Rights") relating to KKTV, whether
or not registered in the name of or applied for by AKMG, in which AKMG has any
rights or interests, whether through any contract or otherwise, except for
rights under contracts listed on Schedule 7.9 and rights arising from the direct
or indirect purchase of "off the shelf" software, and in each case a brief
description of the nature of such rights and interests. Except as otherwise
listed on Schedule 7.12, AKMG is not a licensor or a licensee in respect of any
Trade Right relating to KKTV nor does AKMG pay or receive royalty payments to or
from any third party in respect of any Trade Right relating to KKTV. AKMG owns
or has the exclusive right to use each such Trade Right necessary to conduct, or
be used in, its business as now operated and there are no conflicts with or
infringements of the rights of others in respect thereof or any unauthorized use
or misappropriation of any thereof. With respect to each Trade Right relating to
KKTV, such Trade Right is subsisting, has not been adjudged invalid or
unenforceable, in whole or in part, and is valid and enforceable; and AKMG has
made all necessary filings and recordations to protect its interest in such
Trade Rights, including, without limitation, recordations of all its interests
in patents, trademarks and service marks in the United States Patent and
Trademark Office and its claims to copyrights in the United States Copyright
Office. AKMG is the exclusive owner of the entire and unencumbered right, title
and interest in and to the Trade Rights owned by AKMG and which relate to KKTV
and no claim is currently being asserted that the use of any such Trade Right
does or may violate the asserted rights of any third party. The Trade Rights
listed on Schedule 7.12 constitute all of the Trade Rights necessary to operate
KKTV and conduct its business as heretofore conducted by AKMG in all material
respects. To the best knowledge of AKMG, KKTV's Information Technology is Year
2000 Compliant in all material respects.
7.13 INSURANCE. Schedule 7.13 annexed hereto and made a part hereof is a
---------
complete and correct list, and brief description (including name of insurer,
agent, type of coverage, policy number, annual premium, amount of coverage,
expiration date and any material pending claims thereunder) of all insurance
policies, including, without limitation, liability, burglary, theft, fidelity,
life, fire, product liability, workers' compensation, health and other forms of
insurance of any kind
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held by AKMG relating to the KKTV Assets or KKTV; each such policy is valid and
enforceable, outstanding and in full force and effect; except as set forth on
Schedule 7.13 hereto, AKMG is the sole beneficiary of each such policy; no such
policy, or the future proceeds thereof, has been assigned to any other Person;
all premiums and other payments due from AKMG under or on account of any such
policy have been paid; to AKMG's knowledge, there is no act or fact or failure
to act which has or might cause any such policy to be cancelled or terminated;
AKMG has given each notice and presented each claim under each such policy and
taken any other required or appropriate action with respect thereto in due and
timely fashion; and each such policy is adequate for the business in which AKMG
is engaged. No notice of cancellation or non-renewal with respect to, or
disallowance of any material claim under, any insurance policies or binders of
insurance which relate to the KKTV Assets or KKTV has been received by AKMG.
7.14 LITIGATION. Except as set forth on Schedule 7.14 annexed hereto
----------
and made a part hereof, no action, suit, claim, investigation, proceeding or
controversy, whether legal or administrative or in mediation or arbitration, is
pending or, to AKMG's knowledge, threatened, at law or in equity or admiralty,
before or by any court or Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, against or
affecting the KKTV Assets or KKTV or seeking to restrain, prohibit, invalidate,
set aside, rescind, prevent or make unlawful this Agreement or the carrying out
of this Agreement or the transactions contemplated hereby, nor, is there any
basis for any such action, suit, claim, investigation or proceeding. KKTV is not
operating under or subject to, or in default in respect of, any judgment, order,
writ, injunction or decree of any court or any Federal, state, municipal or
other governmental department commission, board, bureau, agency or
instrumentality.
7.15 COMPLIANCE WITH LAW. AKMG has all permits, licenses, orders and
-------------------
approvals of all Federal, state or local governmental regulatory bodies required
for it to conduct the business of KKTV in all material respects as conducted on
the date of this Agreement. All such permits, licenses, orders and approvals are
in full force and effect and no suspension or cancellation of any of them is
pending or threatened. AKMG is in compliance in all material respects with each
law, rule, ordinance, regulation, order and decree applicable to the business of
KKTV, including, without limitation, laws, rules and regulations respecting
occupational safety, environmental protection and employment practices. The
conduct of the business of KKTV and all assets and properties utilized by AKMG
therein are in conformance in all material respects with the requirements
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and regulations of the Occupational Safety and Health Administration.
7.16 LABOR. AKMG is not a party to any representation or labor
-----
contract with respect to employees of KKTV. AKMG has not received any written
notice from any labor union or group of employees that such union or group
represents or believes or claims it represents or intends to represent any of
the employees of AKMG at KKTV; to AKMG's knowledge, no strike or work
interruption by AKMG's employees at KKTV is planned, under consideration,
threatened or imminent; and AKMG has not made any loan or given anything of
value, directly or indirectly, to any officer, official, agent or representative
of any labor union or group of employees at KKTV other than salaries and
ordinary course compensation. At no time since its acquisition of KKTV has AKMG
experienced any threats of strikes, work stoppages or demands for collective
bargaining by any union or labor organization or any other group or other
organization of employees, any grievances, disputes or controversies with any
union or any other group or any other organization of employees at KKTV or any
pending or threatened court or arbitration proceedings involving an employment
grievance, dispute or controversy at KKTV. Except as set forth on Schedule 7.16
annexed hereto and made a part hereof: (i) AKMG is not delinquent in payments to
any of its employees at KKTV for any wages, salaries, commissions, bonuses or
other direct compensation for any services performed by them to the date hereof
or amounts required to be reimbursed to such employees; (ii) in the event of
termination of the employment of any said employees other than termination of
any employee who is a party to an employment agreement with AKMG, neither AKMG
nor Benedek will by reason of anything done prior to the Closing be liable to
any of said employees for so-called "severance pay," "pay in lieu of notice" or
any other payments; (iii) AKMG is in compliance in all material respects with
all Federal, state and local laws and regulations respecting labor, employment
and employment practices, terms and conditions of employment and wages and hours
with respect to its employees at KKTV; and (iv) there is no unfair labor
practice complaint against AKMG pending before the National Labor Relations
Board or any comparable state or local agency with respect to its employees at
KKTV.
7.17 EMPLOYEES. Schedule 7.17 annexed hereto and made a part hereof is
---------
a complete and correct list of the names and current annual salary, bonus and
commission for each current employee of KKTV. Except as set forth on Schedule
7.17, no current or former employee of KKTV or any relative, associate or agent
of such employee has any interest in any property of KKTV, or is a party,
directly or indirectly, to any contract for employment or otherwise or any lease
or has entered into any
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transaction with AKMG, including, without limitation, any contract for the
furnishing of services by, or rental of real or personal property from or to, or
requiring payments to, any such employee or relative, associate or agent.
Complete and correct copies of any such contracts have been delivered to
Benedek. AKMG does not have any contract for the future employment of any
employee of KKTV except as may be listed on Schedule 7.17.
7.18 EMPLOYEE PLANS. Schedule 7.18 annexed hereto and made a part
--------------
hereof is a complete and correct list of all pension, profit sharing agreements
or arrangements, deferred compensation, medical, severance and other employee
benefit and fringe benefit plans ("Employee Plans") maintained or contributed to
by AKMG or any ERISA Affiliate of AKMG with respect to its employees at KKTV,
including any employee benefit plans within the meaning of Section 3(3) of
ERISA. True and complete copies of each such Employee Plan have been heretofore
made available to Benedek. All such Employee Plans, related trust instruments or
annuity contracts (or any other funding instruments) are legal, valid and
binding and are in full force and effect, and each such Employee Plan intended
to be qualified under Section 401(a) of the Code is so qualified and has been so
qualified at all times since its inception. All such Employee Plans have been
maintained, in all material respects, in accordance with the requirements of the
Code and ERISA, or any other applicable statute, regulation or rule. There are
no pending claims against any such Employee Plan (other than routine claims for
benefits in accordance with its terms) nor, to the knowledge of AKMG, has any
claim been threatened in writing by any participant thereof or beneficiary
thereunder.
7.18.1 No Employee Plan with respect to employees at KKTV is
covered by Title IV of ERISA, Section 302 of ERISA or Section 912 of the Code.
7.18.2 With respect to all Employee Plans with respect to
employees at KKTV that are defined contribution plans, AKMG and any ERISA
Affiliate of AKMG have made all contributions due thereunder for plan years
prior to the date hereof.
7.18.3 Neither AKMG nor any ERISA Affiliate of AKMG or any plan
fiduciary of any Employee Plan with respect to employees at KKTV is or has
engaged in any transaction in violation of Section 406(a) or 406(b) of ERISA for
which no exemption exists under ERISA or under applicable sections of the Code.
Neither AKMG nor any ERISA Affiliate of AKMG, or the administering committee or
trustees of any such Employee Plan has received (i) notice from the IRS or the
Department of Labor of the occurrence of a prohibited transaction within the
meaning of Section 406 of ERISA, or (ii) notice of any breach of loyalty,
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prudence, diversification or effectuation within the meaning of Section 404 of
ERISA.
7.18.4 No Employee Plan with respect to employees at KKTV is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA.
7.18.5 All Employee Plans with respect to employees at KKTV are
in material compliance with all applicable reporting, disclosure, filing and
other administrative requirements pertaining to employee benefit plans set forth
in the Code and ERISA and rules and regulation promulgated under either,
including, but not limited, to those set forth in Sections 6057, 6058 and 6059
of the Code and applicable rules and regulations thereunder, and in Sections
101, 102, 103, 104, 105, and 107 of ERISA.
7.18.6 With respect to employees at KKTV, AKMG and any ERISA
Affiliate of AKMG at all times have been in full compliance with all provisions
of the Title X of the Consolidation Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA"), and with the provisions of Part 6 of Title I of ERISA.
7.18.7 During the twelve-consecutive month period prior to the
date of this Agreement, no steps have been taken to terminate any Employee Plan
with respect to employees at KKTV, and no contribution failure has occurred with
respect to any such Employee Plan sufficient to give rise to a lien under
Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to such an Employee Plan which might result in the
incurrence of any material liability, fine or penalty by either AKMG or any
ERISA Affiliate of AKMG. Neither AKMG nor any ERISA Affiliate of AKMG has any
contingent liability with respect to any post-retirement benefit under any
welfare plan with respect to employees at KKTV, as such term is defined in
Section 3(1) of ERISA, other than liability for continuation coverage described
in Part 6 of Title I of ERISA.
7.18.8 The transactions contemplated by this Agreement will not
result in any payment or series of payments by AKMG to any person of a parachute
payment within the meaning of Section 280G of the Code.
7.19 ENVIRONMENTAL WARRANTIES.
------------------------
7.19.1 "Environmental Laws" means all applicable Federal, state
or local statutes laws, ordinances, codes, rules, regulations and guidelines
(including consent decrees and
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and administrative orders) relating to public health and safety and protection
of the environment.
7.19.2 "Hazardous Material" means
7.19.2.1 any "hazardous substance", as defined by the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended ("CERCLA");
7.19.2.2 any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
7.19.2.3 any petroleum product; or
7.19.2.4 any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material or substance within the meaning of any
other applicable Federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic or
dangerous waste, substance or material, all as amended or hereafter amended.
7.19.3 All facilities and property (including underlying
groundwater) owned or leased by AKMG with respect to KKTV have been, and
continue to be, owned or leased by AKMG in material compliance with all
Environmental Laws.
7.19.4 There have been no past, and there are no pending
(i) claims, complaints, notices or requests for information received by AKMG
with respect to KKTV regarding any alleged violation of any Environmental Law,
or (ii) complaints, notices or inquiries to AKMG with respect to KKTV regarding
potential liability under any Environmental Law.
7.19.5 There have been no releases of Hazardous Materials
at, on or under any property now or previously owned or leased by AKMG with
respect to KKTV.
7.19.6 AKMG has been issued and is in material compliance
with all permits, certificates, approvals, licenses, applicable comprehensive
plans and other authorizations relating to environmental matters and necessary
or desirable for the business of KKTV.
7.19.7 To AKMG's knowledge, no property now owned or
leased by AKMG with respect to KKTV is listed or proposed for listing (with
respect to owned property only) on the National Priorities List pursuant to
CERCLA, on the Comprehensive
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Environmental Response Compensation Liability Information System List
("CERCLIS") or on any similar state list of sites requiring investigation or
clean-up.
7.19.8 There are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property now owned
or leased by AKMG with respect to KKTV.
7.19.9 AKMG has not directly transported or directly
arranged for the transportation of any Hazardous Material to any location which
is listed or proposed for listing on the National Priorities List pursuant to
CERCLA, on the CERCLIS or on any similar state list or which is the subject of
Federal, state or local enforcement actions or other investigations which may
lead to claims against AKMG for any remedial work, damage to natural resources
or personal injury, including claims under CERCLA.
7.19.10 There are no polychlorinated biphenyls or friable
asbestos present at any property now or previously owned or leased by AKMG with
respect to KKTV.
7.19.11 No conditions exist at, on or under any property now
owned or leased by AKMG with respect to KKTV which, with the passage of time, or
the giving of notice or both, would give rise to any material liability under
any Environmental Law or would materially adversely affect the use of any such
property.
7.20 ACCURACY OF INFORMATION. Neither this Agreement nor the
-----------------------
representations and warranties by AKMG contained herein or in any documents,
instruments, certificates or schedules furnished pursuant hereto or in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements or fact contained herein and therein not misleading.
8. REPRESENTATIONS AND WARRANTIES OF BENEDEK. In order to induce AKMG to
-----------------------------------------
enter into this Agreement and to perform its obligations hereunder, Benedek
hereby makes the following representations and warranties to AKMG:
8.1 ORGANIZATION AND STANDING. Benedek is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority, corporate or otherwise, to
own, lease, use and operate its properties and assets at and in the places where
such properties and assets are now owned, operated or leased and to transact its
business where and as now conducted. Benedek is
33
<PAGE>
duly qualified to do business and is in good standing in each jurisdiction where
it owns, leases or holds real property or conducts or operates its business,
where the nature of its activities requires such qualification or where the
failure to so qualify would have a Material Adverse Effect on the business or
results of operations of KCOY.
8.2 POWER AND AUTHORITY. Benedek has all requisite power and
-------------------
authority, corporate or otherwise, to enter into this Agreement, the Time
Brokerage Agreements and the documents and instruments contemplated hereby and
thereby and to assume and perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement, the Time Brokerage Agreements and the
documents and instruments contemplated hereby and thereby and the performance by
Benedek of its obligations hereunder and thereunder have been duly authorized by
all necessary corporate action of Benedek and no further action or approval,
corporate or otherwise, is required in order to constitute this Agreement, the
Time Brokerage Agreements and the documents and instruments contemplated hereby
and thereby as valid and binding obligations of Benedek, enforceable in
accordance with their terms.
8.3 NO CONFLICTS. Except as set forth on Schedule 8.3 annexed
------------
hereto and made a part hereof, the execution and delivery of this Agreement, the
Time Brokerage Agreements and the documents and instruments contemplated hereby
and thereby, the consummation of the transactions contemplated hereby and the
performance by Benedek of its obligations hereunder and thereunder:
8.3.1 do not and will not conflict with or violate any
provision of the certificate of incorporation or bylaws of Benedek;
8.3.2 do not and will not conflict with or result in any breach
of any condition or provisions of, or constitute a default under or give rise to
any right of termination, cancellation or acceleration or (whether after the
giving of notice or lapse of time or both) result in the creation or imposition
of any Lien on any of the KCOY Assets by reason of the terms of any contract,
mortgage, lien, lease, agreement, indenture, instrument, judgment or decree to
which Benedek is a party or which is or purports to be binding upon Benedek or
which affects or purports to affect any of the KCOY Assets; and
8.3.3 subject to the receipt of any governmental approvals
required in connection with the transfer of the KCOY Assets to AKMG, do not and
will not conflict with or result in a violation of or default under (with or
without notice of the lapse of time or both) any statute, regulation, rule,
judgment,
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<PAGE>
order, decree, stipulation, injunction, charge or other restriction of any
court, administrative agency or commission or other governmental authority or
instrumentality.
8.4 GOVERNMENT APPROVAL. BLC is the holder of the KCOY FCC
-------------------
Licenses as set forth on Schedule 8.4 annexed hereto and made a part hereof,
which constitute all necessary authorizations from the FCC to enable KCOY to
broadcast and transmit the present television programming. Other than FCC
rulemaking procedures of general applicability, there are no fines, forfeitures,
notices of apparent liability, orders to show cause or any other administrative
or judicial orders outstanding nor any proceedings pending or, to Benedek's
knowledge, threatened, the effect of which would be the revocation,
cancellation, non-renewal, suspension or adverse modification of the KCOY FCC
Licenses or any adverse consequence for KCOY, and there does not exist any event
which with notice or the passing of time or both could result in a fine,
forfeiture, notice of apparent liability, order to show cause or any other
administrative or judicial order or proceeding by the FCC, the effect of which
would result in the revocation, cancellation, non-renewal, suspension or adverse
modification of the KCOY FCC Licenses or any adverse consequences for KCOY.
Since the date of its acquisition by Benedek, KCOY, including, without
limitation, the technical equipment owned by Benedek relating to KCOY, has been
operated in conformity with the KCOY FCC Licenses in all material respects and
within the FCC rules, regulations and standards of performance in all material
respects. Except as contemplated in Section 6 hereof, no action, approval
consent, authorization or other action, including, but not limited to, any
action, approval, consent or authorization by or filing with any governmental or
quasi-governmental agency, commission, board, bureau or instrumentality, is
necessary or required as to Benedek for the due execution, delivery or
performance by Benedek of this Agreement or any document or instrument
contemplated hereby or in order to constitute this Agreement as a valid and
binding obligation of Benedek. To the best knowledge of Benedek, there are no
facts which, under the Communications Act of 1934, as amended, or the existing
rules and regulations of the FCC, would disqualify BLC as an assignee of KKTV
FCC Licenses.
8.5 VALIDITY. This Agreement and the Time Brokerage Agreements
--------
constitute, and the other documents and instruments contemplated hereby and
thereby will, on the due execution and delivery thereof, constitute the legal,
valid and binding obligations of Benedek, enforceable in accordance with their
respective terms.
8.6 FINANCIAL STATEMENTS. Annexed hereto as Schedule 8.6 and made
--------------------
a part hereof are the following internal financial
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<PAGE>
statements of KCOY (collectively the "KCOY Financial Statements"): balance
sheets as of November 30, 1998 and December 31, 1997 and 1996 and related
statements of income for the periods then ended. The KCOY Financial Statements
are in accordance with GAAP and the books and records of KCOY and fairly,
completely and accurately present the financial position of KCOY at the dates
specified and the results of operations for the periods covered.
8.7 NO CHANGES. Except as set forth on Schedule 8.7 annexed hereto
----------
and a made part hereof, since November 30, 1998, Benedek has not with respect to
KCOY:
8.7.1 incurred any damage, destruction or similar loss, whether
or not covered by insurance, adversely affecting the business, assets or
properties of KCOY ;
8.7.2 other than in the ordinary course of business, sold,
assigned, leased, transferred or otherwise disposed of any of the KCOY Assets ;
8.7.3 mortgaged, pledged or granted or suffered to exist any
Lien on any of the KCOY Assets;
8.7.4 other than in the ordinary course of business, waived any
rights of material value or cancelled, discharged, satisfied or paid any debt,
claim, lien, encumbrance, liability or obligation, whether absolute, accrued,
contingent or otherwise and whether due or to become due;
8.7.5 incurred any obligation or liability (absolute or
contingent, liquidated or unliquidated, choate or inchoate), except current
obligations and liabilities incurred in the ordinary course of business;
8.7.6 other than in the ordinary course of business, entered
into any lease, contract, license or other agreement, or made any amendment of
or terminated any lease, contract, license or other agreement to which Benedek
is a party;
8.7.7 effected any change in the accounting practices,
procedures or methods of Benedek;
8.7.8 paid, loaned or advanced any amount to or sold,
transferred or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement, arrangement or
transaction of any nature with any employee of KCOY or any Affiliate of Benedek
or any such employee, except for regular compensation paid to an employee of
KCOY;
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<PAGE>
8.7.9 increased the compensation payable to any KCOY employees
or become obligated to increase any such compensation except in the ordinary
course of business and consistent with Benedek's past practices; or
8.7.10 entered into any other transaction other than in the
ordinary course of business and consistent with past practices.
8.8 TAXES. Except as set forth on Schedule 8.8 annexed hereto and
-----
made a part hereof, Benedek has duly filed all foreign, Federal, state, county
and local income, excise, sales, property, withholding, social security,
franchise, license, information returns and other tax returns and reports
required to have been filed by Benedek to the date hereof with respect to KCOY.
Each such return is true, correct and complete and Benedek has paid all taxes,
assessments, amounts, interest and penalties due to any foreign, Federal, state,
county, local or other taxing authority with respect to all periods prior to the
date hereof required to have been paid by Benedek with respect to KCOY and
created sufficient reserves or made provision for all thereof accrued but not
yet due and payable by it. No government or governmental authority is now
asserting or threatening to assert any deficiency or assessment for additional
taxes or any interest, penalties or fines with respect to Benedek that could
result in a Lien on the KCOY Assets.
8.9 CONTRACTS.
---------
8.9.1 Except only those contracts, agreements or commitments
listed and described on Schedule 8.9 annexed hereto and made a part hereof
(complete and correct copies of which have been heretofore delivered to AKMG),
the Excluded KCOY Contracts and contracts, agreements or commitments entered
into in the ordinary course of business and (x) involving less than $25,000 over
their term or (y) involving more than $25,000 over their term but not more than
$100,000 in the aggregate for all such contracts, agreements or commitments or
(z) involving sales of advertising time for cash in accordance with the KCOY's
customary rate practices or sales of advertising time pursuant to trade-out
agreements entered into in the ordinary course of business, Benedek is not a
party to nor has any contract, agreement or commitment of any kind or nature
whatsoever pertaining to KCOY, written or oral, formal or informal, including,
without limitation, any (i) license, franchise, agency, or similar agreement, or
any other contract relating to the payment of a commission, (ii) contract or
commitment for the employment of any employee or consultant, (iii) collective
bargaining agreement or other contract with any labor union, (iv) contract or
commitment for services, materials, supplies, merchandise, inventory or
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<PAGE>
equipment, (v) contract or commitment for the sale or purchase of any of its
services, products or assets, (vi) mortgage, indenture, promissory note, loan
agreement, guaranty or other contract or commitment for the borrowing of money
or for a line or letter of credit, (vii) contract or commitment with any
officer, director or any current or former employee of Benedek which will be in
effect on the Closing Date, (viii) contract or commitment with any government or
agency thereof, (ix) contract pursuant to which its right to compete with any
Person in the conduct of its business anywhere in the world is restrained or
restricted for any reason or in any way, (x) contract or commitment guaranteeing
the performance, liabilities or obligations of any Person, (xi) contract or
commitment for capital improvements or expenditures or with any contractor or
subcontractor for in excess of $10,000, (xii) contract or commitment for
charitable contributions aggregating in excess of $5,000, (xiii) lease or other
agreement or commitment pursuant to which it is a lessee of or holds or operates
any real property, machinery, equipment, motor vehicles, office furniture,
fixtures or similar personal property owned by any third party, or (xiv)
contract or commitment otherwise involving in excess of $10,000 in cash over its
term (including any periods covered by any options to renew by any party),
whether or not in the ordinary course of business. Except as set forth on
Schedule 8.9, each of the contracts and commitments referred to therein is valid
and existing, in full force and effect, and enforceable in accordance with its
terms and no party thereto is in default and no claim of default by any party
has been made or is now pending, and no event exists which, with or without the
lapse of time or the giving of notice, or both, would constitute a breach or
default, cause acceleration of any obligation, would permit the termination or
excuse the performance by any party thereto, or would otherwise materially and
adversely affect the KCOY Assets. Except as noted on Schedule 8.9, all contracts
and commitments listed thereon are assignable by Benedek to AKMG without consent
of any other Person.
8.9.2 The network signal is delivered to KCOY by virtue of earth
receive stations and Benedek has entered into such contracts, leases and
agreements and made such other arrangements as are necessary for the carriage of
the network signal.
8.9.3 KCOY is currently affiliated with CBS pursuant to the
network affiliation contract described on Schedule 8.9. Said network affiliation
contract is in full force and effect and Benedek is not aware of any state of
facts which would permit the termination for cause of such network affiliation
contract prior to the expiration of the term thereof.
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<PAGE>
8.9.4 Schedule 8.9.4 sets forth by customer the commercial
time owed and goods and services to be received as of the date hereof pursuant
to trade-out agreements, each of which trade-out agreement has been set forth on
Schedule 8.9.4.
8.10 REAL ESTATE.
-----------
8.10.1 Schedule 8.10 annexed hereto and made a part hereof is a
complete and correct list of (i) all real property or premises owned in whole or
in part by Benedek and used by KCOY (other than Excluded KCOY Assets) and (ii)
all real property or premises leased in whole or in part by Benedek for use by
KCOY (the "KCOY Leases"). Complete and correct copies of the KCOY Leases and all
deeds, mortgages, deeds of trust and other documents specifically concerning
real property owned by Benedek for use by KCOY (other than Excluded KCOY Assets)
have been heretofore delivered to AKMG.
8.10.2 Schedule 8.10 annexed hereto and made a part hereof
lists all guarantees of the KCOY Leases by any other Person.
8.10.3 Schedule 8.10 annexed hereto and made a part hereof
contains a brief description of all alterations being made or which are planned
in any premises of KCOY, together with the amounts budgeted for such alterations
and the names of architects and general contractors retained in connection
therewith. All permits and approvals of any government or quasi-governmental
authority and all consents of landlords required in connection with such
alterations being made have been obtained or will be obtained by the Closing
Date. Benedek has all required legal and valid occupancy permits and other
licenses or government approvals for each of the properties and premises demised
pursuant to the KCOY Leases or owned by Benedek for use by KCOY (copies of which
have been heretofore delivered to AKMG other than with respect to Excluded KCOY
Assets).
8.10.4 Each KCOY Lease is legal, valid and binding as between
Benedek and the other party or parties thereto and Benedek is a tenant or
possessor in good standing thereunder, free of any material default or breach by
the other party or parties thereto and quietly enjoys the premises provided for
therein. Each rental and other payment due thereunder has been duly made; each
act required to be performed which, if not performed, would constitute a breach
or default thereof has been duly performed by Benedek; and no act forbidden to
be performed has been performed thereunder by Benedek which would constitute a
breach or default thereof. Benedek has the legal right (without the consent or
other approval of any other party) to possess and quietly enjoy each of such
premises and properties under each of
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the KCOY Leases. Each KCOY Lease is in full force and effect and constitutes a
legal, valid and binding obligation of Benedek and there is not under any KCOY
Lease any claim of default or event which, with or without notice or the lapse
of time or both, would constitute a breach or default thereunder.
8.10.5 Except as set forth on Schedule 8.10 annexed hereto and
made a part hereof, Benedek has good, marketable and insurable title to all real
property purported to be owned or occupied by Benedek for use by KCOY (other
than Excluded KCOY Assets), free and clear of all Liens and no party has the
right to acquire or use such real property or any improvements, fixtures or
equipment located thereon except as set forth on Schedule 8.9. Except as set
forth on Schedule 8.10 or Schedule 8.11, Benedek has good and marketable title
and owns outright, free and clear of all Liens, claims, easements, rights of way
or restrictions (whether zoning or otherwise), each improvement, fixture and
item of equipment located in or on each of the properties and premises owned,
leased, used or occupied by it for use by KCOY. No improvement, fixture or
equipment in or on any such premises and properties, to the extent owned or
occupied by Benedek for use by KCOY, or the occupation or leasehold with respect
thereto, is in violation of any law, rule or ordinance, including any zoning,
building, safety, health or environmental law and each of such premises and
properties is zoned or otherwise lawfully used for the purposes for which each
of such premises or properties is now used by Benedek.
8.10.6 None of such premises or properties has been condemned or
otherwise taken by any public authority, no condemnation or taking is, to
Benedek's knowledge, threatened or contemplated, and none thereof is, to
Benedek's knowledge, subject to any claim, contract or law which might affect
its use or value for the purposes now made of it, and each thereof is in good
condition and repair.
8.11 PERSONAL PROPERTY. Schedule 8.11 annexed hereto and made a part
-----------------
hereof is a true and complete list of (i) all tangible personal property owned
by Benedek for use by KCOY having a book value as of November 30, 1998 in excess
of $1,000 per item (other than items of personal property having a value in
excess of $1,000 but not in excess of $25,000 in the aggregate) and (ii) all
personal property owned by a third party which is leased or otherwise used by
Benedek for use by KCOY, including, without limitation, leases or other
agreements relating to the use or operation of any machinery, equipment, motor
vehicles, office furniture or fixtures owned by any third party (complete and
correct copies of which leases or other agreements have been heretofore
delivered to AKMG). Each such lease and agreement is in full force and effect
and constitutes a legal, valid and
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binding obligation of Benedek and there is not under any such lease or other
agreement any default or any claim of default or of an event which, with or
without notice or the lapse of time or both, would constitute a breach or
default thereunder. Except as set forth on Schedule 8.11, all personal property
purported to be owned by Benedek for use by KCOY is owned by it, free and clear
of all Liens, and is in good working condition, subject to normal wear and tear.
8.12 INTELLECTUAL PROPERTY. Schedule 8.12 annexed hereto and made a part
---------------------
hereof is a complete and correct list, and a brief description (including, if
applicable, date of application, filing or registration, as the case may be, and
the registration or application number) of each Trade Right relating to KCOY,
whether or not registered in the name of or applied for by Benedek, in which
Benedek has any rights or interests, whether through any contract or otherwise,
except for rights under contracts listed on Schedule 8.9 and rights arising from
the direct or indirect purchase of "off the shelf" software, and in each case a
brief description of the nature of such rights and interests. Except as
otherwise listed on Schedule 8.12, Benedek is not a licensor or a licensee in
respect of any Trade Right relating to KCOY nor does Benedek pay or receive
royalty payments to or from any third party in respect of any Trade Right
relating to KCOY. Benedek owns or has the exclusive right to use each such Trade
Right necessary to conduct, or be used in, its business as now operated and
there are no conflicts with or infringements of the rights of others in respect
thereof or any unauthorized use or misappropriation of any thereof. With respect
to each Trade Right relating to KCOY, such Trade Right is subsisting, has not
been adjudged invalid or unenforceable, in whole or in part, and is valid and
enforceable; and Benedek has made all necessary filings and recordations to
protect its interest in such Trade Rights, including, without limitation,
recordations of all its interests in patents, trademarks and service marks in
the United States Patent and Trademark Office and its claims to copyrights in
the United States Copyright Office. Benedek is the exclusive owner of the entire
and unencumbered right, title and interest in and to the Trade Rights owned by
Benedek and which relate to KCOY and no claim is currently being asserted that
the use of any such Trade Right does or may violate the asserted rights of any
third party. The Trade Rights listed on Schedule 8.12 constitute all of the
Trade Rights necessary to operate KCOY and conduct its business as heretofore
conducted by Benedek in all material respects. To the best knowledge of Benedek,
KCOY's Information Technology is Year 2000 Compliant in all material respects.
8.13 INSURANCE. Schedule 8.13 annexed hereto and made a part hereof is a
---------
complete and correct list, and brief description
41
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(including name of insurer, agent, type of coverage, policy number, annual
premium, amount of coverage, expiration date and any material pending claims
thereunder) of all insurance policies, including, without limitation, liability,
burglary, theft, fidelity, life, fire, product liability, workers' compensation,
health and other forms of insurance of any kind held by Benedek relating to the
KCOY Assets or KCOY; each such policy is valid and enforceable, outstanding and
in full force and effect; except as set forth on Schedule 8.13 hereto, Benedek
is the sole beneficiary of each such policy; no such policy, or the future
proceeds thereof, has been assigned to any other Person; all premiums and other
payments due from Benedek under or on account of any such policy have been paid;
to Benedek's knowledge, there is no act or fact or failure to act which has or
might cause any such policy to be cancelled or terminated; Benedek has given
each notice and presented each claim under each such policy and taken any other
required or appropriate action with respect thereto in due and timely fashion;
and each such policy is adequate for the business in which Benedek is engaged.
No notice of cancellation or non-renewal with respect to, or disallowance of any
material claim under, any insurance policies or binders of insurance which
relate to the KCOY Assets or KCOY has been received by Benedek.
8.14 LITIGATION. Except as set forth on Schedule 8.14 annexed hereto
----------
and made apart hereof, no action, suit, claim, investigation, proceeding or
controversy, whether legal or administrative or in mediation or arbitration, is
pending or, to Benedek's knowledge, threatened, at law or in equity or
admiralty, before or by any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
against or affecting the KCOY Assets or KCOY or seeking to restrain, prohibit,
invalidate, set aside, rescind, prevent or make unlawful this Agreement or the
carrying out of this Agreement or the transactions contemplated hereby, nor, is
there any basis for any such action, suit, claim, investigation or proceeding.
KCOY is not operating under or subject to, or in default in respect of, any
judgment, order, writ, injunction or decree of any court or any Federal, state,
municipal or other governmental department commission, board, bureau, agency or
instrumentality.
8.15 COMPLIANCE WITH LAW. Benedek or BLC has all permits, licenses,
-------------------
orders and approvals of all Federal, state or local governmental regulatory
bodies required for it to conduct the business of KCOY in all material respects
as conducted on the date of this Agreement. All such permits, licenses, orders
and approvals are in full force and effect and no suspension or cancellation of
any of them is pending or threatened. Benedek is in compliance in all material
respects with each law, rule,
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ordinance, regulation, order and decree applicable to the business of KCOY,
including, without limitation, laws, rules and regulations respecting
occupational safety, environmental protection and employment practices. The
conduct of the business of KCOY and all assets and properties utilized by
Benedek therein are in conformance in all material respects with the
requirements and regulations of the Occupational Safety and Health
Administration.
8.16 LABOR. Benedek is not a party to any representation or labor
-----
contract with respect to employees of KCOY. Benedek has not received any written
notice from any labor union or group of employees that such union or group
represents or believes or claims it represents or intends to represent any of
the employees of Benedek at KCOY; to Benedek's knowledge, no strike or work
interruption by Benedek's employees at KCOY is planned, under consideration,
threatened or imminent; and Benedek has not made any loan or given anything of
value, directly or indirectly, to any officer, official, agent or representative
of any labor union or group of employees at KCOY other than salaries and
ordinary course compensation. At no time since its acquisition of KCOY has
Benedek experienced any threats of strikes, work stoppages or demands for
collective bargaining by any union or labor organization or any other group or
other organization of employees at KCOY, any grievances, disputes or
controversies with any union or any other group or any other organization of
employees or any pending or threatened court or arbitration proceedings
involving an employment grievance, dispute or controversy at KCOY. Except as set
forth on Schedule 8.16 annexed hereto and made a part hereof: (i) Benedek is not
delinquent in payments to any of its employees at KCOY for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed by
them to the date hereof or amounts required to be reimbursed to such employees;
(ii) in the event of termination of the employment of any said employees other
than termination of any employee who is a party to an employment agreement with
Benedek, neither AKMG nor Benedek will by reason of anything done prior to the
Closing be liable to any of said employees for so-called "severance pay," "pay
in lieu of notice" or any other payments; (iii) Benedek is in compliance in all
material respects with all Federal, state and local laws and regulations
respecting labor, employment and employment practices, terms and conditions of
employment and wages and hours with respect to its employees at KCOY; and (iv)
there is no unfair labor practice complaint against Benedek pending before the
National Labor Relations Board or any comparable state or local agency.
8.17 EMPLOYEES. Schedule 8.17 annexed hereto and made a part hereof
---------
is a complete and correct list of the names and
43
<PAGE>
current annual salary, bonus and commission for each current employee of KCOY.
Except as set forth on Schedule 8.17, no current or former employee of KCOY or
any relative, associate or agent of such employee has any interest in any
property of Benedek, or is a party, directly or indirectly, to any contract for
employment or otherwise or any lease or has entered into any transaction with
Benedek, including, without limitation, any contract for the furnishing of
services by, or rental of real or personal property from or to, or requiring
payments to, any such employee or relative, associate or agent. Complete and
correct copies of any such contracts have been delivered to AKMG. Benedek does
not have any contract for the future employment of any employee of KCOY except
as may be listed on Schedule 8.17.
8.18 EMPLOYEE PLANS. Schedule 8.18 annexed hereto and made a part
--------------
hereof is a complete and correct list of all Employee Plans maintained or
contributed to by Benedek or any ERISA Affiliate of Benedek with respect to its
employees at KCOY, including any employee benefit plans within the meaning of
Section 3(3) of ERISA. True and complete copies of each such Employee Plan have
been heretofore made available to AKMG. All such Employee Plans, related trust
instruments or annuity contracts (or any other funding instruments) are legal,
valid and binding and are in full force and effect, and each such Employee Plan
intended to be qualified under Section 401(a) of the Code is so qualified and
has been so qualified at all times since its inception. All such Employee Plans
have been maintained, in all material respects, in accordance with the
requirements of the Code and ERISA, or any other applicable statute, regulation
or rule. There are no pending claims against any such Employee Plan (other than
routine claims for benefits in accordance with its terms) nor, to the knowledge
of Benedek, has any claim been threatened in writing by any participant thereof
or beneficiary thereunder.
8.18.1 No Employee Plan with respect to employees at KCOY is
covered by Title IV of ERISA, Section 302 of ERISA or Section 912 of the Code.
8.18.2 With respect to all Employee Plans with respect to
employees at KCOY that are defined contribution plans, Benedek and any ERISA
Affiliate of Benedek have made all contributions due thereunder for plan years
prior to the date hereof.
8.18.3 Neither Benedek nor any ERISA Affiliate of Benedek or any
plan fiduciary of any Employee Plan with respect to employees at KCOY is or has
engaged in any transaction in violation of Section 406(a) or 406(b) of ERISA for
which no exemption exists under ERISA or under applicable sections of the
44
<PAGE>
Code. Neither Benedek nor any ERISA Affiliate of Benedek, or the administering
committee or trustees of any such Employee Plan has received (i) notice from the
IRS or the Department of Labor of the occurrence of a prohibited transaction
within the meaning of Section 406 of ERISA, or (ii) notice of any breach of
loyalty, prudence, diversification or effectuation within the meaning of Section
404 of ERISA.
8.18.4 No Employee Plan with respect to employees at KCOY is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA.
8.18.5 All Employee Plans with respect to employees at KCOY are in
material compliance with all applicable reporting, disclosure, filing and other
administrative requirements pertaining to employee benefit plans set forth in
the Code and ERISA and rules and regulation promulgated under either, including,
but not limited, to those set forth in Sections 6057, 6058 and 6059 of the Code
and applicable rules and regulations thereunder, and in Sections 101, 102, 103,
104, 105, and 107 of ERISA.
8.18.6 With respect to employees at KCOY, Benedek and any ERISA
Affiliate of Benedek at all times have been in full compliance with all
provisions of the Title X of COBRA, and with the provisions of Part 6 of Title I
of ERISA.
8.18.7 During the twelve-consecutive month period prior to the date
of this Agreement, no steps have been taken to terminate any Employee Plan with
respect to employees at KCOY, and no contribution failure has occurred with
respect to any such Employee Plan sufficient to give rise to a lien under
Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to such an Employee Plan which might result in the
incurrence of any material liability, fine or penalty by either Benedek or any
ERISA Affiliate of Benedek. Neither Benedek nor any ERISA Affiliate of Benedek
has any contingent liability with respect to any post-retirement benefit under
any welfare plan with respect to employees at KCOY, as such term is defined in
Section 3(1) of ERISA, other than liability for continuation coverage described
in Part 6 of Title I of ERISA.
8.18.8 The transactions contemplated by this Agreement will not
result in any payment or series of payments by Benedek to any person of a
parachute payment within the meaning of Section 280G of the Code.
8.19 ENVIRONMENTAL WARRANTIES.
------------------------
45
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8.19.1 All facilities and property (including underlying groundwater)
owned or leased by Benedek with respect to KCOY have been, and continue to be,
owned or leased by Benedek in material compliance with all Environmental Laws.
8.19.2 There have been no past, and there are no pending (i) claims,
complaints, notices or requests for information received by Benedek with respect
to KCOY regarding any alleged violation of any Environmental Law, or (ii)
complaints, notices or inquiries to Benedek with respect to KCOY regarding
potential liability under any Environmental Law.
8.19.3 There have been no releases of Hazardous Materials at, on or
under any property now or previously owned or leased by Benedek with respect to
KCOY.
8.19.4 Benedek has been issued and is in material compliance with all
permits, certificates, approvals, licenses, applicable comprehensive plans and
other authorizations relating to environmental matters and necessary or
desirable for the business of KCOY.
8.19.5 To Benedek's knowledge, no property now owned or leased by
Benedek with respect to KCOY is listed or proposed for listing (with respect to
owned property only) on the National Priorities List pursuant to CERCLA, on
CERCLIS or on any similar state list of sites requiring investigation or clean-
up.
8.19.6 There are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now owned or leased
by Benedek with respect to KCOY.
8.19.7 Benedek has not directly transported or directly arranged for
the transportation of any Hazardous Material to any location which is listed or
proposed for listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list or which is the subject of Federal, state
or local enforcement actions or other investigations which may lead to claims
against Benedek for any remedial work, damage to natural resources or personal
injury, including claims under CERCLA.
8.19.8 There are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by Benedek with
respect to KCOY.
8.19.9 No conditions exist at, on or under any property now owned or
leased by Benedek with respect to KCOY which, with the passage of time, or the
giving of notice or both,
46
<PAGE>
would give rise to any material liability under any Environmental Law or would
materially adversely affect the use of any such property.
8.20 ACCURACY OF INFORMATION. Neither this Agreement nor the
-----------------------
representations and warranties by Benedek contained herein or under any
documents, instruments, certificates or schedules furnished pursuant hereto or
in connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements of fact contained herein and therein not misleading.
9. CERTAIN COVENANTS AND AGREEMENTS.
--------------------------------
9.1 CONTROL OF THE STATIONS. Prior to Closing, Benedek will have
-----------------------
full authority, power and control of the operations of KCOY and over the persons
working at KCOY. Prior to Closing, AKMG will have full authority, power and
control of the operation of KKTV and over the persons working at KKTV.
9.2 ACCESS. Between the date hereof and the Closing Date, each
------
Party will take all action reasonably necessary to enable to the other, its
counsel, accountants and other representatives to discuss the affairs,
properties, business, operations and records of the Transferred Assets at such
times and as often as the other Party may reasonably request with executives,
independent accountants, engineers and counsel of the such Party and each Party
will cause its officers, directors and employees to furnish to the other Party
and its authorized representatives any and all data and information pertaining
to the business and properties of such Party's Station as the other Party or its
authorized representatives shall from time to time request. Unless and until the
exchange contemplated herein has been consummated, each Party shall hold in
confidence all information obtained pursuant to this Agreement, and if such
exchange is not consummated, each Party shall return to the other all sensitive
documents and other sensitive materials received by it hereunder. Such
obligation of confidentiality shall not extend to any information which is shown
to have been (i) previously known to such Party, (ii) generally known to others
engaged in the trade or business of the Parties, (iii) part of public knowledge
or literature or (iv) lawfully received by the Party from a third party (not
including the other Party or any of its attorneys, consultants, accountants or
other representatives or agents). Any investigation made by a Party or its
representatives shall not affect or otherwise diminish or obviate the
representations and warranties made by the other Party in this Agreement and
such Party's right to rely thereon. If the
47
<PAGE>
acquisition contemplated herein is consummated, each Party covenants and agrees
that it shall preserve and keep the records delivered to it hereunder for a
period of three years after the Closing Date and shall make such records
available to the other Party or its authorized representatives as reasonably
required in connection with any legal proceedings against or governmental
investigation of such Party or in connection with any tax examination of such
Party, provided that the Party shall not be entitled to any such records in
connection with any dispute between such Party and the other Party arising out
of or relating to this Agreement.
9.3 INTERIM OPERATIONS. From the date hereof until the Closing Date,
------------------
except as otherwise consented to or approved in writing by the other Party or as
required by this Agreement, each Party shall conduct the business of the
Stations and use the Transferred Assets only in the ordinary course of business,
consistent with past practices, which shall include compliance in all respects
with all laws, regulations and administrative orders of any Federal, state or
local governmental authority that are applicable to each party with respect to
the Transferred Assets or the operation of the Stations, with the intent of
preserving the ongoing operations of the Stations and the Transferred Assets.
Without limiting the generality of the foregoing, and in each case subject to
the terms of the Time Brokerage Agreements:
9.3.1 Each Party shall: (i) maintain the Transferred Assets
in their present condition (reasonable wear and tear in normal use excepted);
(ii) remove, cure and correct prior to the Closing any violations under
applicable statutes, rules or regulations that render (or if unremedied would
render) inaccurate such Party's representations and warranties contained in this
Agreement or in any certificate delivered by such Party pursuant to this
Agreement; (iii) maintain its existing insurance coverage on the Stations and
the Transferred Assets listed on Schedules 7.13 and 8.13; and (iv) maintain its
books and records in the usual and ordinary manner, on a basis consistent with
prior periods.
9.3.2 Neither Party shall, without the other Party's prior
written consent, create, assume or permit to exist any Lien upon the Transferred
Assets (other than the Liens set forth on Schedules 7.10 and 7.11 or 8.10 and
8.11 hereto and not required to be discharged on or prior to the Closing Date
pursuant to the terms of this Agreement or Liens in existence on the date hereof
which will be removed on or prior to the Closing Date.
9.3.3 Neither Party shall sell or agree to sell or
otherwise dispose of any of the Transferred Assets, unless such
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<PAGE>
sale or disposal occurs in the ordinary course of business, consistent with past
practices and such Transferred Assets are replaced with similar assets of equal
or greater value and utility.
9.3.4 AKMG shall operate KKTV and Benedek shall operate KCOY in
all respects in accordance with the KKTV FCC Licenses and KCOY FCC Licenses,
respectively, and any other material governmental licenses, permits and other
authorizations listed on Schedules 7.4 or 8.4 and will take all reasonable
actions to preclude the suspension, revocation, or adverse modification of such
licenses, permits and other authorizations. The Parties will not take any
action, by commission or omission, which would cause the FCC or any other
governmental authority to institute proceedings for the suspension, revocation
or adverse modification of any of said licenses, permits and authorizations, or
fail to prosecute with due diligence any pending application to any governmental
authority, or take any action within its control which would result in the
Stations being in non-compliance with the requirements of the Communications Act
of 1934, as amended, or the rules and regulations of the FCC material to the
transactions contemplated by this Agreement.
9.4 EMPLOYEES OF THE STATIONS. Except as contemplated by the Time
-------------------------
Brokerage Agreements, for a period commencing on the Commencement Date and
continuing for one year after the Closing Date, neither AKMG nor Benedek will
directly or indirectly solicit for employment any of the employees of KKTV or
KCOY, respectively. AKMG acknowledges that the current general manager of KCOY
may be retained by Benedek during the term of the Time Brokerage Agreements and
after the Closing, and Benedek acknowledges that the current general manager of
KKTV may be retained by AKMG during the term of the Time Brokerage Agreements
and after the Closing.
9.5 COMPLIANCE. Each Party shall use its best efforts to take or
----------
cause to be taken all action and do or cause to be done all things necessary,
proper or advisable to consummate the transactions contemplated by this
Agreement, including, without limitation, to obtain all consents, approvals and
authorizations of third parties and to make all filings with and give all
notices to third parties which may be necessary or required in order to
effectuate the transactions contemplated hereby.
9.6 COMPLIANCE WITH LAWS. Each Party will comply in all material
respects with all rules and regulations of the FCC, and with all other
applicable laws, rules, ordinances and regulations to which it is subject. Upon
receipt of notice of violation of any of such laws, rules, ordinances and
regulations, such Party shall use its reasonable best efforts to contest in good
faith or
49
<PAGE>
to cure such violation prior to the Closing Date. Each Party will file with the
FCC, when due, all ownership reports, renewal applications, financial reports
and other documents required to be filed between the date of this Agreement and
the Closing Date, and all such reports, applications and documents will be true
and correct to the best of such Party's knowledge and will comply with the
Communications Act of 1934, as amended, and the rules and regulations of the
FCC.
9.7 NO SOLICITATION. AKMG shall not, directly or indirectly, (i)
---------------
solicit, elicit, encourage or initiate any discussions or negotiations with or
provide any information to any person (other than Benedek, or representatives or
associates of Benedek) concerning or in connection with sale of the KKTV Assets,
or (ii) except as required by law or in connection with the transactions
contemplated by this Agreement, disclose any information not customarily
disclosed to any Person concerning the business and assets of KKTV, or afford to
any other Person access to the properties, books and records of KKTV or
otherwise assist any Person in connection with any of the foregoing, and AKMG
shall promptly notify Benedek of any substantial proposal, inquiry or offer
relating to any of the foregoing matters. Benedek shall not, directly or
indirectly, (i) solicit, elicit, encourage or initiate any discussions or
negotiations with or provide any information to any person (other than AKMG, or
representatives or associates of AKMG) concerning or in connection with sale of
the KCOY Assets, or (ii) except as required by law or in connection with the
transactions contemplated by this Agreement, disclose any information not
customarily disclosed to any Person concerning the business and assets of KCOY,
or afford to any other Person access to the properties, books and records of
KCOY or otherwise assist any Person in connection with any of the foregoing, and
Benedek shall promptly notify AKMG of any substantial proposal, inquiry or offer
relating to any of the foregoing matters.
9.8 PAYMENT OF TAXES. Except as otherwise provided in the Time
----------------
Brokerage Agreements, AKMG shall be responsible for all Federal, state, county,
local, income, property, sales, use, intangibles and other taxes attributable to
the operation or ownership of KKTV and the KKTV Assets and Benedek shall be
responsible for all Federal, state, county, local, income, property, sales, use,
intangibles and other taxes attributable to the operation or ownership of KCOY
and the KCOY Assets for the period between the date hereof and the Closing. Each
of AKMG and Benedek shall pay or otherwise discharge 50% of all sales and use
taxes and transfer, deed, documentary stamp and other recordation taxes or
charges arising out of the transfer of the KKTV Assets and KCOY Assets,
respectively.
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9.9 FCC CONSENT. The Parties shall diligently prosecute the FCC
-----------
Applications and use all reasonable efforts to obtain the FCC Consents as
promptly and expeditiously as possible. The Parties shall not intentionally take
or omit to take any action that will cause the FCC to deny, delay or fail to
approve the FCC Applications or cause the FCC Consents not to become Final
Orders.
9.10 TIME BROKERAGE AGREEMENTS. Anything to the contrary contained in
-------------------------
this Agreement notwithstanding, neither Party shall be deemed to have breached
or failed to comply with any of its covenants under this Agreement with respect
to the Station owned by it if such breach or failure is due or caused by any
act, omission or instruction of the other Party under or in connection with the
applicable Time Brokerage Agreement or any activities or transactions in
furtherance thereof or in connection therewith.
10. CONDITIONS OF CLOSING.
---------------------
10.1 OBLIGATION OF BENEDEK TO CLOSE. The obligation of Benedek to
------------------------------
close hereunder shall be subject to the fulfillment and satisfaction, prior to
or at the Closing, of the following conditions or the written waiver thereof by
Benedek:
10.1.1 REPRESENTATIONS. The representations and warranties
---------------
of AKMG in this Agreement shall be true and correct when made, except where the
failure to be true and correct would not have a Material Adverse Effect upon
KKTV or upon the ability of AKMG to consummate the transactions contemplated
hereby, and, except for changes permitted by this Agreement and representations
and warranties made as of a specific date, shall also be true and correct on and
as of the Closing Date, except where the failure to be true and correct would
not have a Material Adverse Effect upon KKTV or upon the ability of AKMG to
consummate the transactions contemplated hereby, and except in each case for
changes or failures to be true and correct arising out of in connection with or
as a result of any matter or transaction contemplated by the Time Brokerage
Agreement pertaining to KKTV or any act or omission or instruction by Benedek in
the course of its authority or activities under or in connection with such Time
Brokerage Agreement; and Benedek shall have received a certificate to that
effect dated the Closing Date and executed by an appropriate officer of AKMG.
10.1.2 COVENANTS. Each of the agreements and covenants of
---------
AKMG to be performed under this Agreement at or prior to the Closing Date shall
have been duly performed in all material respects, in each case except for
failures arising out
51
<PAGE>
of, in connection with or as a result of any matter or transaction contemplated
by the Time Brokerage Agreement pertaining to KKTV or any act or omission or
instruction by Benedek in the course of its authority or activities under or in
connection with such Time Brokerage Agreement; and Benedek shall have received a
certificate to that effect dated the Closing Date and executed by an appropriate
officer of AKMG.
10.1.3 NO INJUNCTION. No injunction or restraining order shall
-------------
be in effect to forbid or enjoin the consummation of the transactions
contemplated by this Agreement and no Federal, state or local statute, rule or
regulation shall have been enacted which prohibits, restricts or delays the
consummation hereof.
10.1.4 CONSENTS. All necessary consents of any Persons to the
--------
transfer of AKMG's interest in the contracts, agreements and commitments
constituting Assumed Liabilities that are set forth on Schedule 10.1.4 shall
have been obtained and delivered to Benedek.
10.1.5 KKTV FCC LICENSES. AKMG shall be the holder of the KKTV
-----------------
FCC Licenses and all other material governmental licenses, permits and other
authorizations listed on Schedule 7.4, and there shall not have been any
modification of any of such licenses, permits and other authorizations which has
a Material Adverse Effect on KKTV or the conduct of its business and operations.
No proceeding shall be pending (other than rule making proceedings of general
applicability to the broadcast industry) which seeks or the effect of which
could be to revoke, cancel, fail to renew, suspend or modify materially and
adversely any of the KKTV FCC Licenses or any other material governmental
licenses, permits or other authorizations listed on Schedule 7.4.
10.1.6 GOVERNMENTAL CONSENTS. All consents, authorizations,
---------------------
orders or approvals of, and filings or negotiations with, any Federal, state,
local or foreign governmental agency, commission, board or other regulatory body
(including as contemplated by Section 6) which are required for or in connection
with the execution, delivery and performance of this Agreement by AKMG and the
consummation of the transactions contemplated hereby, and in order to permit or
enable Benedek to conduct after the Closing a business substantially similar to
KKTV as conducted by AKMG as of the date hereof, shall have been duly obtained
or made.
10.1.7 INSTRUMENTS OF TRANSFER. Benedek shall have received the
-----------------------
deeds, bills of sale, endorsements, assignments, drafts, checks and other
documents of transfer, conveyance and
52
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assignment contemplated by Section 2.5 valid to transfer all of AKMG's right,
title and interest in and to the KKTV Assets to Benedek and to vest in Benedek
good, marketable and insurable title to the KKTV Assets, subject only to the
Liens set forth on Schedules 7.10 and 7.11 hereto and not required to be
discharged (in the manner herein provided) on or prior to the Closing Date
pursuant to the terms of this Agreement.
10.1.8 ASSUMPTION AGREEMENTS. AKMG shall have executed and delivered
---------------------
the instruments of assumption contemplated by Section 3.2 hereof.
10.1.9 BOOKS OF ACCOUNT. Benedek shall have received AKMG's books of
----------------
account, records, leases, indentures, contracts, agreements, evidences of
indebtedness, securities, correspondence and other documents pertaining to the
KKTV Assets and KKTV. Unless otherwise requested by Benedek, delivery of the
foregoing shall not be effected by physical delivery at the Closing but by
surrendering access to the premises containing the foregoing to Benedek.
10.1.10 RESOLUTIONS. Benedek shall have received a certified copy of
-----------
resolutions duly adopted by the board of directors of AKMG authorizing and
approving the transfer of the KKTV Assets and performance by AKMG of its
obligations hereunder and the other documents and instruments to be executed and
delivered in connection herewith.
10.1.11 OPINIONS OF COUNSEL TO AKMG. Benedek shall have received
---------------------------
opinions of Graham & Dunn PC, counsel to AKMG, Rubin, Winston, Diercks, Harris &
Cooke, LLP, FCC counsel to AKMG, and local counsel to AKMG in Colorado, dated
the Closing Date, addressed to Benedek and, if so requested by Benedek, to
lenders to Benedek under its Amended and Restated Credit Agreement dated as of
December 17, 1997, covering the matters set forth in Exhibits C-1, C-2 and C-3,
respectively, attached hereto, which opinions shall be in form and substance
acceptable to Benedek's counsel.
10.1.12 HART-SCOTT-RODINO COMPLIANCE. If applicable, the parties shall
----------------------------
have filed with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice complete and accurate
notification and report forms with respect to the transactions contemplated
hereby pursuant to the HSR Act. With respect to the HSR Act, neither such agency
shall have instituted or threatened to institute an action in connection with
the transactions contemplated by this Agreement and all waiting periods required
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to expire under the HSR Act, including any extension thereof, shall have expired
or been terminated prior to the Closing Date.
10.1.13 ENVIRONMENTAL CONDITION. If Benedek elects within 30 days
-----------------------
after the date of this Agreement to conduct an environmental audit of the real
property owned or leased by AKMG with respect to KKTV, Benedek shall have
received from a qualified inspector selected by Benedek, a certification
substantially to the effect that no environmental conditions exist at any of the
real property owned or leased by AKMG with respect to KKTV which could
reasonably be expected to result in remediation costs in excess of $25,000;
provided, however, that in the event that such estimated remediation costs
exceed $25,000, this Section 10.1.13 shall be deemed satisfied if AKMG agrees to
pay any remediation costs in excess of $25,000 and makes arrangements reasonably
satisfactory to Benedek for the payment thereof; and further provided that, with
respect to any real property leased by AKMG which is subject to any such
remediation, AKMG shall have received any required consent of the owner of the
property.
10.1.14 FURTHER DOCUMENTS. Benedek shall have received from AKMG
-----------------
such further certificates and documents relating to KKTV as shall have been
reasonably requested by Benedek.
10.2 OBLIGATION OF AKMG TO CLOSE. The obligation of AKMG to close hereunder
---------------------------
shall be subject to the fulfillment and satisfaction, prior to or at the
Closing, of the following conditions or the written waiver thereof by AKMG:
10.2.1 REPRESENTATIONS. The representations and warranties of Benedek
---------------
in this Agreement shall be true and correct when made, except where the failure
to be true and correct would not have a Material Adverse Effect upon KCOY or
upon the ability of Benedek to consummate the transactions contemplated hereby,
and, except for changes permitted by this Agreement and representations and
warranties made as of a specific date, shall also be true and correct on and as
of the Closing Date, except where the failure to be true and correct would not
have a Material Adverse Effect upon KCOY or upon the ability of Benedek to
consummate the transactions contemplated hereby, and except in each case for
changes or failures to be true and correct arising out of in connection with or
as a result of any matter or transaction contemplated by the Time Brokerage
Agreement pertaining to KCOY or any act or omission or instruction by AKMG in
the course of its authority or activities under or in connection with such Time
Brokerage Agreement; and AKMG shall
54
<PAGE>
have received a certificate to that effect dated the Closing Date and executed
by an appropriate officer of Benedek.
10.2.2 COVENANTS. Each of the agreements and covenants of Benedek to
---------
be performed under this Agreement at or prior to the Closing Date shall have
been duly performed in all material respects, in each case except for failures
arising out of, in connection with or as a result of any matter or transaction
contemplated by the Time Brokerage Agreement pertaining to KCOY or any act or
omission or instruction by AKMG in the course of its authority or activities
under or in connection with such Time Brokerage Agreement; and AKMG shall have
received a certificate to that effect dated the Closing Date and executed by an
appropriate officer of Benedek.
10.2.3 NO INJUNCTION. No injunction or restraining order shall be in
-------------
effect to forbid or enjoin the consummation of the transactions contemplated by
this Agreement and no Federal, state, local or foreign statute, rule or
regulation shall have been enacted which prohibits, restricts or delays the
consummation hereof.
10.2.4 CONSENTS. All necessary consents of any Persons to the
--------
transfer of Benedek's interest in the contracts, agreements and commitments
constituting Benedek Assumed Liabilities that are set forth on Schedule 10.2.4
shall have been obtained and delivered to AKMG.
10.2.5 KCOY FCC LICENSES. BLC shall be the holder of the KCOY FCC
-----------------
Licenses and all other material governmental licenses, permits and other
authorizations listed on Schedule 8.4, and there shall not have been any
modification of any of such licenses, permits and other authorizations which has
a Material Adverse Effect on KCOY or the conduct of its business and operations.
No proceeding shall be pending (other than rule making proceedings of general
applicability to the broadcast industry) which seeks or the effect of which
could be to revoke, cancel, fail to renew, suspend or modify materially and
adversely any of the KCOY FCC Licenses or any other material governmental
licenses, permits or other authorizations listed on Schedule 8.4.
10.2.6 GOVERNMENTAL CONSENTS. All consents, authorizations, orders or
---------------------
approvals of, and filings or negotiations with, any Federal, state, local or
foreign governmental agency, commission, board or other regulatory body
(including as contemplated by Section 6) which are required for or in connection
with the execution, delivery and performance of this Agreement by Benedek and
the consummation of the transactions contemplated hereby, and in order to permit
or
55
<PAGE>
enable AKMG to conduct after the Closing a business substantially similar to
KCOY as conducted by Benedek as of the date hereof, shall have been duly
obtained or made.
10.2.7 INSTRUMENTS OF TRANSFER. AKMG shall have received the
-----------------------
deeds, bills of sale, endorsements, assignments, drafts, checks and other
documents of transfer, conveyance and assignment contemplated by Section 2.5
valid to transfer all of Benedek's right, title and interest in and to the KCOY
Assets to AKMG and to vest in AKMG good, marketable and insurable title to the
KCOY Assets, subject only to the Liens set forth on Schedules 8.10 and 8.11
hereto and not required to be discharged (in the manner herein provided) on or
prior to the Closing Date pursuant to the terms of this Agreement.
10.2.8 ASSUMPTION AGREEMENTS. Benedek shall have executed and
---------------------
delivered the instruments of assumption contemplated by Section 3.2 hereof.
10.2.9 BOOKS OF ACCOUNT. AKMG shall have received Benedek's books
----------------
of account, records, leases, indentures, contracts, agreements, evidences of
indebtedness, securities, correspondence and other documents pertaining to the
KCOY Assets and KCOY. Unless otherwise requested by AKMG, delivery of the
foregoing shall not be effected by physical delivery at the Closing but by
surrendering access to the premises containing the foregoing to AKMG.
10.2.10 RESOLUTIONS. AKMG shall have received a certified copy of
-----------
resolutions duly adopted by the board of directors of Benedek authorizing and
approving the transfer of the KCOY Assets and performance by Benedek of its
obligations hereunder and the other documents and instruments to be executed and
delivered in connection herewith.
10.2.11 OPINION OF COUNSELS TO BENEDEK. AKMG shall have received an
------------------------------
opinion of Shack & Siegel, P.C., counsel to Benedek, Covington & Burling, FCC
counsel to Benedek, and Kirk & Simas, local counsel to Benedek in California,
dated the Closing Date, addressed to AKMG, covering the matters set forth in
Exhibits D-1, D-2 and D-3, respectively, attached hereto, which opinions shall
be in form and substance acceptable to AKMG's counsel.
10.2.12 HART-SCOTT-RODINO. If applicable, the parties shall have
-----------------
filed with the United States Federal Trade Commission and the Antitrust Division
of the United States Department of Justice complete and accurate notification
and report forms with respect to the transactions contemplated hereby
56
<PAGE>
pursuant to the HSR Act. With respect to the HSR Act, neither such agency shall
have instituted or threatened to institute an action in connection with the
transactions contemplated by this Agreement and all waiting periods required to
expire under the HSR Act, including any extension thereof, shall have expired or
been terminated prior to the Closing Date.
10.2.13 ENVIRONMENTAL CONDITION. If AKMG elects within 30 days
-----------------------
after the date of this Agreement to conduct an update to the environmental audit
of the real property owned or leased by Benedek with respect to KCOY, AKMG shall
have received from a qualified inspector selected by AKMG, an update to the
certification done by Professional Service Industries, Inc. substantially to the
effect that no environmental conditions exist at any of the real property owned
or leased by Benedek with respect to KCOY which could reasonably be expected to
result in remediation costs in excess of $25,000; provided, however, that in the
event that such estimated remediation costs exceed $25,000, this Section 10.2.13
shall be deemed satisfied if Benedek agrees to pay any remediation costs in
excess of $25,000 and makes arrangements reasonably satisfactory to AKMG for the
payment thereof; and further provided that, with respect to any real property
leased by Benedek which is subject to any such remediation, Benedek shall have
received any required consent of the owner of the property.
10.2.14 FURTHER DOCUMENTS. AKMG shall have received from Benedek
-----------------
such further certificates and documents relating to KCOY as shall have been
reasonably requested by AKMG.
10.2.15 RECEIPT OF PURCHASE PRICE PAYABLE AT CLOSING. AKMG shall
--------------------------------------------
have received a certified or bank cashier's check or wire transfer in the amount
of the Closing Payment to be paid at the Closing.
11. REMEDIES FOR BREACH.
-------------------
11.1 DECLINING TO CLOSE. If a Party shall be entitled to decline
------------------
to close, and shall decline to close, the transactions contemplated by this
Agreement, such Party shall have no liability to the other Party under or in any
way by reason hereof and such Party shall, subject to the terms and conditions
of this Agreement, have all such rights and remedies against the other Party as
may be available to it in law or equity or otherwise.
11.2 ELECTION TO CLOSE. If a Party shall be entitled to decline
-----------------
to close the transactions contemplated by this Agreement but such Party shall
elect nevertheless to close, such Party shall not be deemed to have waived any
claims of any nature
57
<PAGE>
arising from the failure of the other Party to comply with any of the terms and
conditions of this Agreement and such Party shall, subject to the terms and
conditions of this Agreement, have all such rights and remedies against the
other Party as may be available to it at law or in equity or otherwise. If such
Party elects to close the transactions contemplated by this Agreement and the
other Party wrongfully refuses to do so, or if the other Party fails, or if a
failure by the other Party is threatened, to comply with any of their covenants
and agreements contained in this Agreement, then, in addition to all other
remedies which may be available to it, such Party shall be entitled to
injunctive and other equitable relief, including, without limitation, specific
performance, and shall be entitled to recover from the other Party its loss,
costs and expenses, including reasonable attorneys' fees incurred by such Party
in securing such injunctive or equitable relief.
11.3 REMEDIES CUMULATIVE. Except as otherwise set forth in Section
-------------------
11.3 hereof, the specific remedies to which any party may resort under the terms
of this Agreement are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which such party may lawfully be entitled
in case of any breach, threatened breach or failure of observance or performance
of any representation, warranty, covenant, agreement or commitment made
hereunder or relating hereto or by reason of any such representation, warranty,
covenant, agreement or commitment being untrue or incorrect.
12. TERMINATION RIGHTS. This Agreement may be terminated by either Party,
------------------
if not then in material default, upon written notice to the other upon the
occurrence of any of the following:
12.1 If the exchange of the Transferred Assets pursuant to this
Agreement shall not have been effected within nine months after the date that
the FCC accepts the latter of the two FCC Applications for filing;
12.2 If any Party defaults in any material respect in the
observance or in the due and timely performance of any of its covenants herein
contained other than the obligation to close on the Closing Date; provided,
however, that termination pursuant to this paragraph shall not be effective
unless the terminating party shall have given to the Party in default at least
30 days advance notice of its claim of default so as to afford the other Party
the opportunity to cure; or
12.3 If at the Closing any of the conditions precedent to the
obligations of the Parties set forth in this Agreement have not been satisfied
or waived by the respective Party.
58
<PAGE>
13. INDEMNIFICATION OF THE PARTIES.
------------------------------
13.1 INDEMNIFICATION BY AKMG. AKMG shall defend and promptly
-----------------------
indemnify Benedek, and save and hold it harmless from, against, for and in
respect of and pay any and all damages, losses, obligations, liabilities,
claims, encumbrances, deficiencies, costs and expenses, including, without
limitation, reasonable attorneys' fees and other costs and expenses incident to
any action, investigation, claim or proceeding (all hereinafter collectively
referred to as "Losses") suffered, sustained, incurred or required to be paid by
Benedek by reason of: (i) any and all obligations and liabilities of AKMG, other
than the Assumed KKTV Liabilities; (ii) any breach or failure of observance or
performance of any covenant, agreement or commitment made by AKMG hereunder or
under any document or instrument relating hereto or executed pursuant hereto;
(iii) the operation of KKTV by AKMG for all periods prior to the Closing (other
than the Assumed KKTV Liabilities); (iv) any representation or warranty by AKMG
contained herein being untrue or incorrect in any respect; (v) any act, omission
or instruction by AKMG under or in connection with the Time Brokerage Agreement
pertaining to KCOY or any activities or transactions in furtherance thereof or
in connection therewith; or (vi) any liability or obligation of AKMG for
Federal, state, local or other taxes; provided, however, that AKMG shall be
required to indemnify and hold Benedek harmless under clause (iv) of this
Section 13.1 only if and to the extent the aggregate amount of such Losses
exceeds $100,000. For purposes of determining whether an event under clause (iv)
of this Section 13.1 has occurred for which indemnification may be sought, any
requirement in any representation or warranty contained herein that an event or
fact be material or have a Material Adverse Effect on KKTV in order for such
event or fact to constitute a misrepresentation or a breach of such warranty or
representation shall be disregarded in determining if the aggregate Losses
resulting from all such breaches and misrepresentations exceeds $100,000.
13.2 INDEMNIFICATION BY BENEDEK. Benedek shall defend and promptly
--------------------------
indemnify AKMG, and save and hold it harmless from, against, for and in respect
of and pay any and all Losses suffered, sustained, incurred or required to be
paid by AKMG by reason of: (i) any and all obligations and liabilities of
Benedek, other than the Assumed KCOY Liabilities; (ii) any breach or failure of
observance or performance of any covenant, agreement or commitment made by
Benedek hereunder or under any document or instrument relating hereto or
executed pursuant hereto; (iii) the operation of KCOY by Benedek for all periods
prior to the Closing (other than the Assumed KCOY Liabilities); (iv) any
representation or warranty by Benedek contained herein being untrue or incorrect
in any respect; (v) any act, omission
59
<PAGE>
or instruction by Benedek under or in connection with the Time Brokerage
Agreement pertaining to KKTV or any activities or transactions in furtherance
thereof or in connection therewith; or (vi) any liability or obligation of
Benedek for Federal, state, local or other taxes; provided, however, that
Benedek shall be required to indemnify and hold AKMG harmless under clause (iv)
of this Section 13.2 only if the aggregate amount of such Losses exceeds
$100,000. For purposes of determining whether an event under clause (iv) of this
Section 13.2 has occurred for which indemnification may be sought, any
requirement in any representation or warranty contained herein that an event or
fact be material or have a Material Adverse Effect on KCOY in order for such
event or fact to constitute a misrepresentation or a breach of such warranty or
representation shall be disregarded in determining if the aggregate Losses
resulting from all such breaches and misrepresentations exceeds $100,000.
13.3 PROCEDURES. For purposes of this Section, the Party entitled
----------
to indemnification shall be known as the "Injured Party" and the party required
to indemnify shall be known as the "Other Party." In the event that the Other
Party shall be obligated to the Injured Party pursuant to this Section or in the
event that a suit, action, investigation, claim or proceeding is begun, made or
instituted as a result of which the Other Party may become obligated to the
Injured Party hereunder, the Injured Party shall give prompt written notice to
the Other Party of the occurrence of such event. The Other Party agrees to
defend, contest or otherwise protect against any such suit, action,
investigation, claim or proceeding with counsel chosen by the Other Party at the
Other Party's own cost and expense. The Other Party may settle or compromise any
such suit, action, investigation, claim or proceeding at its sole cost and
expense; provided, that the Other Party shall have obtained from any third party
claimant an unconditional release of the Injured Party. The Injured Party shall
have the right but not the obligation to participate at its own expense in the
defense thereof by counsel of its own choice. In the event that the Other Party
fails timely to defend, contest or otherwise protect against any such suit,
action, investigation, claim or proceeding, the Injured Party shall have the
right to defend, contest or otherwise protect against the same and may make any
compromise or settlement thereof and recover the entire cost thereof from the
Other Party, including, without limitation, reasonable attorneys' fees,
disbursements and all amounts paid as a result of such suit, action,
investigation, claim or proceeding or compromise or settlement thereof.
13.4 LIMITATION. Except for any claim for indemnification arising
----------
from a claim by the United States of America, the State of California, the State
of Colorado, or any
60
<PAGE>
other governmental unit, body or agency with taxing authority relating to taxes
or interest or penalties in connection therewith, no party shall be entitled to
indemnification hereunder with respect to the breach of any representation or,
warranty contained herein unless such claim for indemnification is asserted in
writing to the party from whom indemnification is sought within one year after
the Closing Date.
13.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding any
------------------------------------------
right of a Parties and its representatives fully to investigate the affairs of
the other Party and the Stations and, except as otherwise provided in Section
11.2 hereof, notwithstanding any knowledge of facts determined or determinable
by a Party and its representatives pursuant to such investigation or right of
investigation, each Party has the right to rely fully upon the representations,
warranties, covenants and agreements of the other Party contained in this
Agreement. Subject to Section 13.4 hereof, all such representations warranties,
covenants and agreements shall survive the execution and delivery hereof and the
Closing hereunder.
14. BROKERS. The Parties covenant and represent to each other that they
-------
had no dealings with any broker or finder in connection with this Agreement or
the transactions contemplated hereby and no broker, finder or other Person is
entitled to receive any broker's commissions or finder's fee or similar
compensation in connection with any such transaction. Each of the parties agrees
to defend, indemnify and hold harmless the other from, against, for and in
respect of any and all losses sustained by the other as a result of any
liability or obligation to any broker or finder on the basis of any arrangement,
agreement or acts made by or on behalf of such party with any Person whatsoever.
15. MISCELLANEOUS.
-------------
15.1 ENTIRE AGREEMENT. This Agreement constitutes the entire
----------------
agreement of the parties (and supersedes any prior understanding of the parties)
with respect to the subject matter hereof. The representations, warranties,
covenants and agreements set forth in this Agreement and in any financial
statements, schedules or exhibits delivered pursuant hereto constitute all the
representations, warranties, covenants and agreements of the parties hereto and
upon which the parties have relied and except as may be specifically provided
herein, no change, modification, amendment, addition or termination of this
Agreement or any part thereof shall be valid unless in writing and signed by or
on behalf of the party to be charged therewith.
61
<PAGE>
15.2 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be given or made pursuant to any of the
provisions of this Agreement shall be deemed to have been duly given or made for
all purposes if sent by certified or registered mail, return receipt requested
and postage prepaid, hand delivery or overnight delivery service or sent by
telephone facsimile as follows:
If to Benedek, at:
Benedek Broadcasting Corporation
100 Park Avenue
Rockford, Illinois 61101
Telephone: (815) 987-5350
Facsimile: (815) 987-5335
Attention: President
With a copy to:
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Telephone: (212) 782-0700
Facsimile: (212) 730-1964
Attention: Paul S. Goodman, Esq.
If to AKMG, at:
AK Media Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, Washington 98101
Telephone: (206) 624-2888
Facsimile: (206) 623-7853
Attention: Mr. Denis M. Curley
With a copy to:
Rubin, Winston, Diercks, Harris & Cooke, LLP
1333 New Hampshire Avenue, N.W., Suite 1000
Washington, D.C. 20036
Telephone: (202) 861-0870
Facsimile: (202) 429-0657
Attention: James L. Winston, Esq.
or at such other address as any party may specify by notice given to other party
in accordance with this Section. The date of the
62
<PAGE>
giving of any notice sent by mail shall be three business days following the
date of the posting of the mail, if delivered in person, the date delivered in
person or the next business day following delivery to an overnight delivery
service or the date sent by telephone facsimile.
15.3 PUBLIC ANNOUNCEMENT. Except for any disclosures or
-------------------
announcements which a Party shall be required to make pursuant to the
Communications Act of 1934, as amended, or the rules and regulations of the FCC,
or disclosures or announcements required to be made pursuant to the rules and
regulations of the Securities and Exchange Commission or any other Federal or
state governmental agency, the Parties will jointly prepare and determine the
timing of any press release or other announcement to the public (including any
announcement to the employees of the Stations) concerning the execution of this
Agreement and the transactions contemplated herein. Except as provided for in
the preceding sentence, no Party hereto will issue any press release or make any
other public announcement relating to the execution of this Agreement or the
transactions contemplated herein, except that any party may make any disclosure
required to be made by it under applicable law if it determines in good faith
that it is appropriate to do so and gives prior notice to the other party
hereto.
15.4 NO WAIVER. No waiver of the provisions hereof shall be
---------
effective unless in writing and signed by the party to be charged with such
waiver. No waiver shall be deemed a continuing waiver in respect of any
subsequent breach or default, either of similar or different nature, unless
expressly so stated in writing.
15.5 GOVERNING LAW. This Agreement shall be governed, interpreted
-------------
and construed in accordance with the laws of the State of New York applicable to
contracts to be performed entirely within that State. Should any clause, section
or part of this Agreement be held or declared to be void or illegal for any
reason, all other clauses, sections or parts of this Agreement which can be
effected without such illegal clause, section or part shall nevertheless
continue in full force and effect.
15.6 CONSENT TO JURISDICTION. Each Party hereby consents to the
-----------------------
jurisdiction and venue of the Courts of the State of New York located in the
County of New York, the United States District Court for the Southern District
of New York and the District Court of the District of Columbia with respect to
any matter relating to this Agreement and performance of the parties'
obligations hereunder, the documents and instruments executed and
63
<PAGE>
delivered concurrently herewith or pursuant hereto and performance of the
parties' obligations thereunder and each Party hereby consents to the personal
jurisdiction of such courts and shall subject itself to such personal
jurisdiction. Any action, suit or proceeding relating to such matters shall be
commenced, pursued, defended and resolved only in such courts and any
appropriate appellate court having jurisdiction to hear an appeal from any
judgment entered in such courts. Service of process in any action, suit or
proceeding relating to such matters may be made and served within or outside the
State of New York, County of New York, the Southern District of New York or the
District of Columbia by registered or certified mail to the parties and their
representatives at their respective addresses specified in Section 15.2 hereof,
provided that a reasonable time, not less than 30 days, is allowed for response.
Service of process may also be made in such other manner as may be permissible
under the applicable court rules.
15.7 EXPENSES. Except as otherwise provided herein, the Parties
--------
shall each bear their own costs and expenses in connection with this
transaction.
15.8 BINDING AGREEMENT. This Agreement shall be binding upon and
-----------------
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that no party may assign any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of the other party hereto.
15.9 HEADINGS. The headings or captions under sections of this
--------
Agreement are for convenience and reference only and do not in any way modify,
interpret or construe the intent of the parties or effect any of the provisions
of this Agreement.
15.10 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts each of which when taken together shall constitute one agreement.
64
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed on the date and year first above written.
BENEDEK BROADCASTING CORPORATION
By:_____________________________________
Name: K. James Yager
Title: President
BENEDEK LICENSE CORPORATION
By:_____________________________________
Name: K. James Yager
Title: President
AK MEDIA GROUP, INC.
By:_____________________________________
Name:
Title:
<PAGE>
SCHEDULE 1.9
AKMG'S & BENEDEK'S KNOWLEDGE
BENEDEK
- -------
K. James Yager
A. Richard Benedek
Ronald L. Lindwall
Charles Hogetvedt
AKMG
- ----
Denis M. Curley
James D. Lucas
S-1
<PAGE>
SCHEDULE 2.1.12
OTHER KKTV ASSETS
None.
S-2
<PAGE>
SCHEDULE 2.2.12
OTHER KCOY ASSETS
None.
S-3
<PAGE>
SCHEDULE 2.3
EXCLUDED KKTV ASSETS
None.
S-4
<PAGE>
SCHEDULE 2.4
EXCLUDED KCOY ASSETS
None.
S-5
<PAGE>
SCHEDULE 3.3.7
EXCLUDED KKTV CONTRACTS
None.
S-6
<PAGE>
SCHEDULE 3.4.7
EXCLUDED KCOY CONTRACTS
1. Letter Agreement between Charles Hogetvedt and Benedek Broadcasting
Corporation.
S-7
<PAGE>
SCHEDULE 4.3
ALLOCATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
FIXED ASSETS: KCOY KKTV
<S> <C> <C>
Land 325 500
Studio Building 2,790 3,000
Studio Equipment 2,600 1,200
Tower/Xmitter 1,000 1,400
ENG Trucks 0 800
Furniture/Office Equipment 385 200
Other Vehicles 122 100
------ ------
TOTAL FIXED ASSETS 7,222 7,200
INTANGIBLE ASSETS:
FCC License 10,686 15,462
Network Affiliation 5,729 10,308
Income Leases 138 30
Syndicated Programming 225 0
------ ------
TOTAL INTANGIBLES 16,778 25,800
TOTAL PURCHASE PRICE 24,000 33,000
====== ======
</TABLE>
S-8
<PAGE>
SCHEDULE 7.3
AKMG CONFLICTS
1. Certain agreements to which AKMG is a party and which are applicable to KKTV
require the consent of third parties prior to assignment of said agreements
to Benedek.
S-9
<PAGE>
SCHEDULE 7.4
KKTV FCC LICENSES
KKTV(TV) TV Station, Ch. 11, Colorado Springs, CO.
BROADCAST AUXILIARIES:
----------------------
KBA-28 TV Intercity Relay
KEV-961 R/P Base Mobile System
KEW-437 R/P Automatic Relay
KFB-309 R/P Base Mobile System
KFV-27 TV Intercity Relay
KFV-28 TV Intercity Relay
KFX-75 TV STL
KFX-76 TV Intercity Relay (TSL)
WAJ-434 Television Translator Relay
WAJ-622 Television Translator Relay
WHB-640 TV Intercity Relay (TSL)
KA-59088 TV Pickup
KA-88624 TV Pickup
KC-24173 TV Pickup
KH-8975 TV Pickup
TELEVISION TRANSLATOR STATIONS:
-------------------------------
K57CB UHF Translator Romeo, La Jara, Manassa, Antonito &
Alamosa, CO
K10LI VHF Translator Canon City, CO
PRIVATE OPERATION FIXED MICROWAVE RADIO STATION LICENSES:
---------------------------------------------------------
WNTX913 Microwave Industrial/Business, Temporary Fixed Service
WPNN319 Microwave Industrial/Business, Fixed Service
WPNN320 Microwave Industrial/Business, Fixed Service
S-10
<PAGE>
SCHEDULE 7.6
KKTV FINANCIAL STATEMENTS
1. See attached balance sheet and the related Statements of Income for the 11
periods ended November 30, 1998.
2. See attached balance sheet and the related Statements of Income for the 12
periods ended December 31, 1997.
3. See attached balance sheet and the related Statements of Income for the 12
periods ended December 31, 1996.
S-11
<PAGE>
SCHEDULE 7.7
NO CHANGES
None.
S-12
<PAGE>
SCHEDULE 7.8
TAXES
None.
S-13
<PAGE>
SCHEDULE 7.9
KKTV CONTRACTS/1/
1. Licensing Agreement and Addendum dated April 15, 1997 between FirstCom
Music and Ackerley Communications, Inc., no assignment permitted.
2. Audio Network License Agreement dated September 2, 1998, between IT
Network, Inc. (previously Brite Voice Systems, Inc.) and KKTV-Channel 11
and Renewal of Information Services Agreement Renewal dated June 7, 1994,
between Brite Voice Systems, Inc. and KKTV-TV.
3. Subscription Agreement for Marlin Employee Communication Program dated
January 9, 1995 between The Marlin Company and KKTV Channel 11.
4. S.M.A.R.T. Solution Agreement Amendment dated December 4, 1997 between
Minolta Business Systems, Inc. and KKTV, Inc., unexecuted by Minolta.
5. Equipment Lease Agreement dated February 28, 1997, between Minolta and AK
Media Group d/b/a KKTV, unexecuted by Minolta.(EP 4050 Demo Copier).
6. Equipment Lease Agreement between Minolta and AK Media Group d/b/a KKTV,
unexecuted by Minolta.(EP 6000 CS PRO).
7. Software License/Equipment Sales Agreement dated October 5, 1992 between
Data Center Management, Inc. and KKTV, Inc., consent required.
8. Market Research Agreement dated October 24, 1996, between Leigh Stowell &
Company, Inc. and KKTV.
9. Consulting Agreement dated November 5, 1997, between O'Brien
Communications, Inc. and KKTV, consent required.
____________________
/1/ It has been noted, for the purpose of summarizing in these Schedules,
that consent is required for assignment where clearly expressed in
such document, however AKMG makes no representation with regard to
that issue. Whether consent is required for assignment must be
determined by referring to the agreement itself.
S-14
<PAGE>
10. Nielsen Station Index Service Agreement dated October 14, 1994, between
A.C. Nielsen Company and Ackerley Communications, Inc., as amended April 1,
1997.
11. Service Agreement dated September 28, 1995 between Netlink USA and KKTV,
Inc., consent required.
12. Nextel Mobile Communications Equipment Lease between NFC Financial, and AK
Media Group, Inc.
13. Licensing and Consulting Agreement dated as of November 1, 1998, between
Music Reports, Inc. and KKTV-TV.
14. Lease Extension Agreement dated December 19, 1997, between 200 South
Broadway Limited Partnership and KKTV Channel 11 and Office Lease dated
December 20, 1993 between KKTV and Mass Mutual for 201 W. 8th Street, Suite
460, Pueblo, CO, consent required.
15. Telephone System Business Lease Agreement dated May 10, 1995 between
Graybar Financial Services, Inc. and KKTV, Inc., written consent required.
16. Unexecuted Service Agreement dated December 12, 1995, between Haynes
Mechanical Systems and KKTV, automatically renewed.
17. Program Order (CNN Interactive Local Link) dated November 2, 1998, between
CNN Newsource Sales, Inc. and The Ackerley Media Group, consent required.
18. CNN Newsource Sales License Agreement dated April 9, 1998, between CNN
Newsource Sales, Inc. and the Ackerley Media Group, consent required.
19. CNN Programming Contract Renewal dated December 7, 1998, between CNN-NS and
The Ackerley Media Group (Headline News Programs, Headline News Limited
Excerpting, CNN Limited Excerpting, CNN Live Breaking Coverage, Newsource,
Newsbeam, Imagesource), consent required.
20. Television Licensing Agreement dated February 11, 1998, between Consumers
Union of the United States, Inc. and The Ackerley Media Group (Consumer
Reports TV News), consent required.
21. Program License Agreement dated January 21, 1991, between Columbia Pictures
Television, Inc. and KKTV, Inc. (contract No. 21196) (Married . . . With
Children), consent required.
S-15
<PAGE>
22. Subscriber Agreement dated June 23, 1994, between Advanced Burglar and Fire
Alarms, Inc. and KKTV, Inc., consent required.
S-16
<PAGE>
23. Intentionally omitted.
24. Agreement and Sublease dated June 1, 1980, and Rental Agreement dated May
1, 1984, between Capitol Colorado Corporation and and Pikes Peak
Broadcasting for Turkey Creek microwave site, consent required.
25. Agreement and Sublease dated April 1, 1980, and Rental Agreement dated
April 1, 1985, between Pikes Peak Broadcasting Company and Capitol of
Colorado Corporation for Castle Rock microwave site, consent required.
26. Master Rental Agreement dated March 1, 1981, between Pikes Peak
Broadcasting Company and Capitol of Colorado Corporation for Castle Rock,
Turkey Creek, and Methodist Mountain microwave sites.
27. Lease between Cheyenne Propagation Co. and TV Colorado, Inc. for broadcast
tower site.
28. Deed for conveyance of property dated January 25, 1983, between Capitol
Broadcasting Company and KKTV, Inc.
29. Letter of Agency, undated, on behalf of KKTV authorizing ICG Telecom Group,
Inc. as the local telephone service provider.
30. Retainer Agreement dated August 8, 1997, between James and Cipoletti, LLP
and KKTV for legal services.
31. Representation Agreement, dated December 29, 1980, between the Katz Agency,
Inc. and Capitol of Colorado Corporation, and Amendment dated January 26,
1983 between Katz Communications, Inc. and KKTV, Inc., and Representation
Agreement dated April 25, 1986 between Katz Communications, Inc. and KKTV.
32. Meteorological Services Agreement dated February 24, 1992, between KKTV and
Kavouras, Inc.
33. Lease Agreement dated January 1, 1996, between KKTV and Innovative Lease
Services, Inc. for Reverse Osmosis Coolers, expired, purchased coolers at
end of lease period.
34. Music Performance Blanket License dated March 20, 1998, between Broadcast
Music, Inc. and AK Media Group, Inc., d/b/a KKTV.
S-17
<PAGE>
35. Subscription Agreement dated December 18, 1996 between Ackerley
Communications, Inc., KKTV and Call for Action, Inc.
36. Affiliation Agreement and Letter Agreeement of additional terms both dated
November 29, 1994, between CBS Television Network, a Division of CBS, Inc.,
and KKTV, Inc., consent required.
37. Key Points of NFL Affiliation Contract Amendment and NFL Affiliation
Contract Amendment executed October 16, 1998, between CBS Television
Network, a Division of CBS Inc., and KKTV.
38. Agreement between Browning Ferris Industries of Colorado, Inc. and KKTV
dated February 10, 1993, for waste disposal, consent required,
automatically renewed.
39. License Agreement for Television Motion Picture Exhibition dated November
7, 1994 between King World Productions, Inc. and AK Media Group, Inc.
(Wheel of Fortune, Vol. XVI License Agreement No. WOF-16121/WWF-18115),
consent required.
40. License Agreement for Television Motion Picture Exhibition dated November
21, 1997 between King World Productions, Inc. and AK Media Group, Inc.
(Wheel of Fortune, Vol. XVII) (License Agreement No. WOF-17140/WWF-19133),
consent required.
41. License Agreement for Television Motion Picture Exhibition, unexecuted by
King World Productions, Inc., dated November 21, 1997 between King World
Productions, Inc. and AK Media Group, Inc. (Wheel of Fortune, Vol. XVIII)
(License Agreement No. WOF-18139/WWF-20133), consent required.
42. License Agreement for Television Motion Picture Exhibition, unexecuted by
King World Productions, Inc., dated November 21, 1997 between King World
Productions, Inc. and AK Media Group, Inc. (Wheel of Fortune, Vol. XIX)
(License Agreement No. WOF-19136/WWF-21130), consent required.
43. License Agreement for Television Motion Picture Exhibition and Exclusivity
Contract, both dated November 7, 1994 between King World Productions, Inc.
and KKTV, Inc. (Oprah Winfrey Show, Vol. XIV) (License Agreement No. OWS-
14132), consent required.
S-18
<PAGE>
44. License Agreement for Television Motion Picture Exhibition and Exclusivity
Contract, both dated November 7, 1994 between King World Productions, Inc.
and KKTV, Inc. (Oprah Winfrey Show, Vol. XIII) (License Agreement No. OWS-
13132), consent required.
45. License Agreement for Television dated May 15, 1997 between Ivanhoe
Broadcast, News Inc. and KKTV-TV. (Smart Woman).
46. Subscription Agreement dated May 15, 1998, between KKTV and SportsTicker
Enterprises, L.P., consent required.
47. Syndication Agreement dated August 12, 1998, between The Stephen Arnold
Group, Inc. and KKTV-TV. (Contract #3879).
48. Motor Vehicle Lease Agreement dated January 24, 1996, between Ackerley
Communications, Inc. and Automotive Rentals, Inc., assigned to Corestates
Bank NA Agent (1994 Isuzu)(VIN#:JACDH58V6R7912528).
49. Motor Vehicle Lease Agreement dated January 24, 1996 between The Ackerley
Group and Automotive Rentals, Inc., assigned to Corestates Bank NA Agent
(1997 Volvo)(VIN#:YV1LS5646V2397010).
50. Motor Vehicle Lease Agreement dated January 24, 1996 between The Ackerley
Group and Automotive Rentals, Inc., assigned to Corestates Bank NA Agent
(1998 Jeep/Eagle)(VIN#:1J4FJ28SXWL188424).
51. Motor Vehicle Lease Agreement dated January 24, 1996 between The Ackerley
Group and Automotive Rentals, Inc., assigned to Corestates Bank NA Agent
(1998 Jeep/Eagle)(VIN#:1J4FJ28S1WL188425).
52. Motor Vehicle Lease Agreement dated January 24, 1996 between The Ackerley
Group and Automotive Rentals, Inc., assigned to Corestates Bank NA Agent
(1998 Jeep/Eagle)(VIN#:1J4FJ28S7WL188428).
53. Motor Vehicle Lease Agreement dated January 24, 1996 between The Ackerley
Group and Automotive Rentals, Inc., assigned to Corestates Bank NA Agent
(1998 Jeep/Eagle)(VIN#:1J4FJ28S5WL188427).
54. Motor Vehicle Lease Agreement dated January 24, 1996 between The Ackerley
Group and Automotive Rentals, Inc., assigned to Corestates Bank NA Agent
(1998 Jeep/Eagle)(VIN#:1J4FJ28S3WL188426).
S-19
<PAGE>
55. Motor Vehicle Lease Agreement dated December 14, 1998 between The Ackerley
Group and Automotive Rentals, Inc. (1999 Audi)(VIN#:WUABA24B8XN024649).
56. License Agreement for Television Motion Picture Exhibition and Exclusivity
Contract, both dated November 7, 1994 between King World Productions, Inc.
and KKTV, Inc. (Jeopardy, Vol. XV) (License Agreement No. J-0015111),
consent required.
57. License Agreement for Television Motion Picture Exhibition dated November
7, 1994 between King World Productions, Inc. and KKTV, Inc. (Weekend
Jeopardy, Vol. XV) (License Agreement No. WJ-018054), consent required.
58. License Agreement for Television Motion Picture Exhibition dated November
21, 1997 between King World Productions, Inc. and AK Media Group, Inc.
(Weekend Jeopardy, Vol. XVI) (License Agreement No. WJ-019060), consent
required.
59. License Agreement for Television Motion Picture Exhibition dated November
21, 1997 between King World Productions, Inc. and AK Media Group, Inc.
(Weekend Jeopardy, Vol. XVII) (License Agreement No. WJ-020060), consent
required.
60. License Agreement for Television Motion Picture Exhibition dated November
21, 1997 between King World Productions, Inc. and AK Media Group, Inc.
(Weekend Jeopardy, Vol. XVIII) (License Agreement No. WJ-021061), consent
required.
61. License Agreement for Television Motion Picture Exhibition dated November
21, 1997 between King World Productions, Inc. and AK Media Group, Inc.
(Inside Edition, Vol. XI) (License Agreement No. INS-11088/INW-11078),
consent required.
62. Memorandum of Understanding executed April 24, 1996, between KKTV and
Atkinson Research, Inc. for studies of market position.
63. Equipment and Services Contract dated April 28, 1994, between Automated
Weather Source, Inc. and KKTV, consent required.
64. Membership Agreement for Television dated October 20, 1995, between the
Associated Press and Ackerley Communications Group, d/b/a KKTV-TV, assignee
must apply for membership in AP, Agreement automatically renewed.
65. AP Graphicsbank Supplemental Agreement dated June 9, 1997, between the
Associated Press and KKTV-TV, Inc. and On-Line
S-20
<PAGE>
Service Supplemental Agreement dated May 12, 1998, between the Associated
Press and KKTV-TV, Inc., consent required.
66. Local Station Per Program Television License Election Form, unexecuted,
dated October 21, 1996 and unexecuted Local Station Per Program Television
License between American Society of Composers, Authors and Publishers and
The Ackerley Group, automatically renews.
67. Airport Display Contract dated March 15, 1998 between KKTV and AK
Media/Airport and correspondence reflecting cancellation of advertising as
of January 14, 1999, between KKTV, Inc. and Sky Sites, formerly AK
Media/Airport.
68. Agreement, unexecuted by AccuWeather, dated August 26, 1997, between
AccuWeather, Inc. and Ackerley Media Group, licensee of television station
KKTV, consent required.
69. License Agreement dated January 30, 1998, between Ackerley Media Group,
Inc. and Universal Television Limited, and attached Rider between Ackerley
Media Group, Inc. and Studios USA Television Distribution LLC, successor in
interest to Universal Domestic Television, (Sally Jesse Raphael), consent
required.
70. License Agreement dated June 24, 1997 between Paramount Pictures and KKTV,
Inc.(Real TV 1997/1998 Season), consent required, automatically renewed,
expires September, 1999.
71. Option and Lease Agreement dated September 1, 1994, and Lessee's Notice of
Exercise of the Option dated February 2, 1995, and Memorandum of Option and
Lease Agreement dated September 28, 1994, between KKTV, Inc. and US West
NewVector Group, Inc.
72. Retransmission Consent Agreement dated October 6, 1996, between The
Ackerley Group and Pioneer Cable.
73. Retransmission Consent Agreement dated September 29, 1993, between KKTV,
Inc. and Aguilar TV Club, unexecuted by Aguilar TV Club.
74. Retransmission Consent Agreement dated December 1, 1996, between The
Ackerley Group, and American Rural TV.
75. Retransmission Consent Agreement dated October 30, 1996, between The
Ackerley Group and Cablevision of Canon City, unexecuted by Cablevision of
Canon City.
S-21
<PAGE>
76. Retransmission Consent Agreement dated September 28, 1993, between KKTV,
Inc. and Crown Cable Television.
77. Acknowledgement of extension of Retransmission Agreement between Galaxy
Telecom, L.P. and KKTV and Consent Assignment and Assumption Agreement
dated December 23, 1994, between Vantage Cable Associates, L.P. and Galaxy
Telecom, L.P.
78. Retransmission Consent Agreement dated November 7, 1996, between The
Ackerley Group and TCI West, Inc., unexecuted by TCI West, Inc.
79. Letter of Agreement dated October 4, 1993, between Ackerley Commincations,
Inc. and TCIM for retransmission consent.
80. Employment Agreement dated August 29, 1997, between AK Media Group, Inc.,
on behalf of broadcast television station KKTV, and Melanie Asp, expires
August 31, 1999.
81. Employment Agreement dated September 17, 1997, between AK Media Group,
Inc., on behalf of broadcast television station KKTV, and Melissa Brown,
expires March 23, 1999.
82. Employment Agreement dated September 26, 1998, between AK Media Group,
Inc., on behalf of broadcast television station KKTV, and Heidi Collins,
expires September 30, 1999.
83. Employment Agreement, dated August 22, 1997, between AK Media Group, Inc.,
on behalf of broadcast television station KKTV, and Paula Haddock, expires
August 24, 1999.
84. Employment Agreement dated September 18, 1997, between AK Media Group,
Inc., on behalf of broadcast television station KKTV, and Angela
Holdsworth, expires March 20, 1999.
85. Employment Agreement, dated September 22, 1997, between AK Media Group,
Inc., on behalf of broadcast television station KKTV, and Joelle Hilfers,
expires September 21, 1999.
86. Employment Agreement dated September 25, 1997, between AK Media Group,
Inc., on behalf of broadcast television station KKTV, and John Harding,
expires June 5, 1999.
87. Employment Agreement dated March 25, 1998, between AK Media Group, Inc., on
behalf of broadcast television station KKTV, and Susan Holley, expires
April 26, 2000.
S-22
<PAGE>
88. Employment Agreement dated September 15, 1998, between AK Media Group,
Inc., on behalf of broadcast television station KKTV, and Michael Madson,
expires September 14, 2003.
89. Employment Agreement, dated August 29, 1997, between AK Media Group, Inc.,
on behalf of broadcast television station KKTV, and Ernesto Mourelo,
expires May 26, 1999.
90. Employment Agreement dated September 25, 1997, between AK Media Group,
Inc., on behalf of broadcast television station KKTV, and Kimberly Price-
Rae, expires September 15, 1999.
91. Employment Agreement dated September 29, 1997, between AK Media Group,
Inc., on behalf of broadcast television station KKTV, and Ben Keesee,
expires October 19, 1999.
92. Employment Agreement dated August 22, 1997, between AK Media Group, Inc.,
on behalf of broadcast television station KKTV, and Megan Rushmore, expires
August 31, 1999.
93. Employment Agreement dated December 11, 1997, between AK Media Group, Inc.,
on behalf of broadcast television station KKTV, and Lindsay Radford,
expires December 28, 1999.
94. Employment Agreement dated September 17, 1997, between AK Media Group,
Inc., on behalf of broadcast television station KKTV, and Douglas Schepman,
expires on March 23, 1999.
95. Employment Agreement dated September 29, 1997, between AK Media Group,
Inc., on behalf of broadcast television station KKTV, and Samuel Singer,
expires on September 30, 1999.
96. Employment Agreement dated October 9, 1997, between AK Media Group, Inc.,
on behalf of broadcast television station KKTV, and Jennifer Smith, expires
October 26, 1999.
97. Employment Agreement dated November 19, 1997, between AK Media Group, Inc.,
on behalf of broadcast television station KKTV, and Susan Suh, expires
December 7, 1999.
98. Agreement between Gemstar Development Corp. and The Ackerley Group dated
October 28, 1996, for TV Guide + CBS Affiliation.
99. Special Use Permit dated June 30, 1989, granted to KKTV, Inc. by USDA-
Forest Service and Invoice dated November 27, 1998, for use of Fremont
site.
S-23
<PAGE>
SCHEDULE 7.9.4
KKTV TRADE-OUT BALANCE
1. See attached.
S-24
<PAGE>
SCHEDULE 7.10
KKTV REAL PROPERTY
I. Real Property Owned by AKMG for use by KKTV
Lot at 3100 N. Nevada Ave. purchased by KKTV on January 15, 1983.
Description of Property: Tract commonly known as
3100 N. Nevada Ave as described in the Commitment
for Title Insurance supplied to Benedek. That
portion of the North Half of Section 31 in
Township 13 South, Range 66 West of the 6/th/
P.M., El Paso County, Colorado, described as
follows: Commencing at the Southeast corner of the
Northwest Quarter of said Section 31; thence N 89
degrees 57'52" W on an assumed bearing to which
all others in this description are relative, and
on the South line of said Northwest Quarter,
132.44 feet to the East line of the County Road
between Colorado springs and Pike-view known as
Cascade Avenue, as described in Quit Claim Deed
recorded in Book 602 at page 272 of the Records of
El Paso County, Colorado, under Reception No.
321992 of the said Records; thence N 5 degrees
27'31" E on said East line a distance of 296.29
feet to an angle point thereon; thence N 31
degrees 08'29" W on said East line a distance of
274.22 feet to an angle point thereon; thence N 02
degrees 25'31" E on said line a distance of 96.52
feet; thence S 87 degrees 51'29" E, 10.00 feet to
the most Westerly corner of a tract of land
conveyed in Book 2304 at page 406 of the said
Records; (the following two (2) courses are along
the Northerly line of the last mentioned tract of
land); thence N 87 degrees 37'40" E, 190.59 feet;
thence S 86 degrees 13'03" E, 44.18 feet to the
point of beginning of the tract described hereby;
thence continue S 86 degrees 13'03" E, 388.54
feet; thence N 1 degrees 55'35" W, 261.50 feet;
thence N 89 degrees 24'37" W, 386.99 feet; thence
S 1 degrees 55'35" E, 239.84 feet to the point of
beginning and containing 2.2248 acres, together
with an easement for ingress and egress 20 feet in
width, the south line of which is described as
S-25
<PAGE>
follows: Beginning at the Southeast corner of the
tract of land being conveyed herein; thence S 86
degrees 13'03"E, 91.22 feet; thence S 68 degrees
41'09" E, 83.98 feet to the most Westerly corner
of that tract of land conveyed by that Warranty
Deed recorded in Book 2305 at page 79 of the
records of El Paso County, Colorado; together with
a non-exclusive right to use the right-of-way,
being one for ingress and egress, described in the
said Warranty Deed recorded in Book 2305 at Page
79 of said Records and together with a non-
exclusive 20 foot ingress and egress easement, the
South line of which is described as follows:
Beginning at the Southwest corner of the above
described tract; thence N 86 degrees 13'03" W,
44.18 feet; thence S 87 degrees 37'40" W, 190.59
feet; thence N 87 degrees 51'29" W, 10.00 feet to
the Easterly right-of-way of Cascade Avenue.
Use: Main Studio
Title: The property was acquired by KKTV, Inc. KKTV, Inc. was
subsequently merged into Ackerley Communications Group, Inc. Ackerley
Communications Group, Inc. changed its name to AK Media Group, Inc.
Exceptions to marketable and
insurable title: See attached.
A Commitment for Title Insurance dated December 23, 1998, a copy of
which has been provided to BBC, identified a deed of trust from KKTV,
Inc. to the Public Trustee of El Paso County. The obligation which
this deed of trust secures has been satisfied, and AKMG will obtain
and record a release of the deed of trust prior to closing.
II. Real Property Leased by AK Media for use by KKTV
A. Norwest Bank Building, Suite 460, 201 W. 8/th/ Street, Pueblo, CO
-----------------------------------------------------------------
81003 Property leased to KKTV Channel 11 from 200 South Broadway
-----
Limited Partnership pursuant to lease agreement dated December 17,
1997.
S-26
<PAGE>
Description of Property: Approximately 815
sq. feet of space in
Suite 460
Use: General office purposes
Lease Expiration Date: June 30, 2000
Assignment:
Landlord's prior consent required.
B. Castle Rock Microwave Site/1/
--------------------------
Property leased by KKTV from Pikes Peak Broadcasting Company pursuant
to an Agreement and Sublease dated April 1, 1980.
Description of Property: A tract of land known to
and identified by the said Joe Ray Bain and Norma
J. Bain and the Landlord hereunder by steel
surveyor pins situated at the four corners of the
premises and generally described as a square
tract, each side of which is 50 feet in length,
located in the North half of Section 14, Township
9 South, Range 68 West of the 6th P.M., in Douglas
County, Colorado.
Use: Microwave site
Lease Expiration Date: Month-to-month lease.
Agreement and sublease subject to cancellation by
either party on six months notice.
Assignment: Requires Landlord's prior written consent
required.
C. Turkey Creek Microwave Site
---------------------------
Property leased to KKTV by Pikes Peak Broadcasting Company pursuant to
an "Agreement and Sublease" dated June 1, 1980.
________________________
/1/ The properties leased from Pikes Peak Broadcasting Company were
initially leased to Capitol of Colorado Corporation, and assigned to
KKTV, Inc. on January 25, 1983.
S-27
<PAGE>
Description of Property: That certain tract of
-----------------------
land, being in the shape of a square, each side
thereof being fifty (50) feet in length, to be
enclosed by a fence, which tract of land is
located 110 yards South and 20 yards West of the
Bureau of Reclamation power line, Tower Number
156-5, at the exact geographic location of 104:45
West and 38:25 North, in Pueblo County, Colorado.
Use: Microwave site.
Lease Expiration Date: Month-to-month lease.
Agreement and sublease subject to cancellation by
either party on six months notice.
Assignment: Requires Landlord's prior written consent.
D. Property leased to KKTV for maintenance and construction of broadcast
towers.
Property leased to KKTV by Cheyenne Propagation Co., pursuant to
a "Business Lease."
Description of property: A tract of ground
containing approximately 1800 square feet for the
purpose of constructing Lessee's building as
hereinafter provided, together with sufficient
ground for the construction of Lessee's
broadcasting tower and necessary supporting guy
wires and cables, all located in the Southeast
quarter of the Northwest quarter of Section 14,
Township 15 South, Range 67 West of the 6/th/ P.M.
, which area is near the highest point on the
front range as shown on topographic map, Series of
1950. The polar coordinates of Lessee's
broadcasting tower will be latitude 38 degrees 44'
41.4369 seconds and longitude 104 degrees 51'
40.9290". The lambert grid of said tower shall be:
Y coordinate 331, 959.02; X coordinate
2,182,195.09.
Use: Site for television broadcast equipment.
S-28
<PAGE>
Lease Expiration Date: Initial term of ten (10)
years provided, but with options to extend, term
of lease would total ninety-nine (99) years.
Assignment: No consent required.
SCHEDULE 7.11
KKTV PERSONAL PROPERTY
100. See attached.
S-29
<PAGE>
<TABLE>
<CAPTION>
KKTV Description Location Acquired
<S> <C> <C> <C> <C>
ASSET LIST
QUANTITY
BUILDING
IMPROVEMENTS
Security access doors and burglar alarm system Aug-95
Remodel open Newsroom News Sep-94
Construction of 1200 square foot Sales area Sales Dec-96
Carpeting G&A, Sales and Promotions areas Dec-96
Resurface asphalt May-97
Redesign Anchor Desk Nov-97
Construction of 1100 square foot Promotions work area Promotions Sep-98
Building repaint and logo design Jul-98
Landscaping Jun-98
Carpeting Cityline & Programming area Jan-99
VEHICLES
1986 Dodge van
1981 Chevrolet Suburban Live Truck (IC 11) Rebuilt engine & body 11/98
1984 Ford Bronco
1990 Isuzu Trooper (Courier vehicle)
1993 Isuzu Trooper (Production Truck)
1994 Isuzu Trooper Live Truck (IC 9)
1995 GMC Yukon (Engineering )
</TABLE>
S-30
<PAGE>
<TABLE>
<CAPTION>
KKTV Description Location Acquired
<S> <C> <C> <C> <C>
ASSET LIST
QUANTITY
OFFICE COMPUTERS
22 Pentium PCs Aug-95
13 Pentium PCs Jan-97
10 Pentium PCs Jan-98
3 Pentium PCs Sep-98
2 Laptop PCs Sales Jan-97
1 DCM Newroom Server Aug-98
1 VCI Server Sep-97
1 E-mail Server Aug-98
1 NT Server Sep-97
1 HP Laser Jet 4SI Printer Aug-95
3 HP Laser Jet4 Printers Aug-95
1 OTC Printer Traffic Aug-95
1 Color Bubble Jet Printer Sales Jan-97
1 Corby Access Control computer system Aug-95
1 Decision Data Line Printer prior 1990
OFFICE EQUIPMENT
87 Panasonic Telephones Apr-95
1 Jem Communications telephone system (Pueblo Office) 4 telephones Jan-98
1 Paper Shredder Jan-98
2 Canon fax/ copier machines PC network interfaceable Jun-98
1 Panasonic Fax Machine Jan-97
3 Various Fax Machines & Stand Jan-95
3 Sharp 10 key Machines prior 1990
</TABLE>
S-31
<PAGE>
<TABLE>
<CAPTION>
KKTV Description Location Acquired
<S> <C> <C> <C> <C>
ASSET LIST
QUANTITY
OFFICE FURNITURE
30 Hag Scio Adjustable chairs News Sep-94
12 Control room chairs Technical Aug-94
4 Hag anchor desk stools News Sep-94
27 Hag ergonomic office chairs Sep-95
7 Call For Action office chairs News Aug-98
8 Executive office chairs prior 1990
25 Padded Folding Chairs Dec-98
15 Hon cubical work areas News Sep-94
13 Hon L-shaped cubical work areas Sales Jan-97
4 Hon cubical work areas Promotion Sep-98
1 Hon office desk, bridge and work table G&A May-98
2 4 lateral drawer file cabinets G&A prior 1990
1 IBM Selecric typewriter G&A prior 1990
1 Typing table on rollers G&A May-98
2 Over file cabinet sliding door storage G&A May-98
1 Office chair G&A prior 1990
1 Hon office desk, bridge and work table (News Director) News Nov-96
2 Conference room tables Conference prior 1990
20 Conference room chairs Conference prior 1990
1 Wood Credenza Conference prior 1990
1 Stealth Conference phone Conference Jun-97
2 27" Televisions Conference prior 1990
4 19" Mitsubishi television Promotion prior 1990
2 Hon metal book shelves Promotion Sep-98
1 Desk Promotion prior 1990
</TABLE>
S-32
<PAGE>
<TABLE>
<CAPTION>
KKTV Description Location Acquired
<S> <C> <C> <C> <C>
ASSET LIST
QUANTITY
1 Credenza Promotion prior 1990
3 Stools Promotion prior 1990
3 Office chair Promotion prior 1990
2 4 drawer lateral file cabinets Promotion prior 1990
2 2 door metal storage units Promotion Sep-98
1 Built in desk, dual computer rack and adjustable draft table Promotion Sep-98
(graphic artist's office)
1 Wood Desk w/arm GM prior 1990
1 Credenza GM prior 1990
2 Office Chairs GM prior 1990
1 25" RCA television, VCR and stand GM prior 1990
1 Wood Desk GM Ad Asst prior 1990
1 Office Chairs GM Ad Asst prior 1990
2 4 Drawer Lateral file cabinets GM Ad Asst prior 1990
1 Wood Desk Receptionist prior 1990
1 Credenza Receptionist prior 1990
1 2 drawer upright file cabinet Receptionist prior 1990
1 Console Television Lobby prior 1990
1 Forest green leather Sofa Lobby Oct-96
1 Forest green leather love seat Lobby Oct-96
1 Ivory leather sofa Green Room prior 1990
1 Ivory leather chair Green Room prior 1990
2 Leather and Chrome chairs Green Room prior 1990
1 19" Mitsubishi television Controller prior 1990
2 4 lateral drawer file cabinets Controller prior 1990
1 2 lateral drawer file cabinet Controller prior 1990
1 2 drawer, 2 door wood credenza Controller prior 1990
</TABLE>
S-33
<PAGE>
<TABLE>
<CAPTION>
KKTV Description Location Acquired
<S> <C> <C> <C> <C>
ASSET LIST
QUANTITY
1 Wood desk 3 drawers on left, 1 large drawer and small drawer on right Controller prior 1990
2 Office Chairs Controller prior 1990
1 Wood Desk Chief Eng prior 1990
2 Office Chairs Chief Eng prior 1990
1 4 lateral drawer file cabinet Chief Eng prior 1990
1 2 lateral drawer file cabinet Chief Eng prior 1990
1 Wood Credenza Chief Eng prior 1990
1 Wood desk NSM prior 1990
2 Office Chairs NSM prior 1990
1 19" television and stand NSM prior 1990
1 Wood desk GSM prior 1990
2 Office Chairs GSM prior 1990
1 Wood Credenza GSM prior 1990
1 19" television, VCR and stand GSM prior 1990
1 Computer stand Traffic Sup prior 1990
1 Wood desk Traffic Sup prior 1990
1 2 lateral drawer file cabinet Traffic Sup prior 1990
2 Office Chairs Traffic Sup prior 1990
4 Wood desks w/ arm Traffic Assts prior 1990
2 4 Drawer Lateral file cabinets Traffic Assts prior 1990
1 Office Chair Traffic Sup prior 1990
1 Metal desk Research prior 1990
2 Office Chairs Research prior 1990
10 padded stackable chairs Break Jan-98
3 square tables Break Jan-98
2 Microwave ovens on rolling racks Break Nov-97
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
KKTV DESCRIPTION LOCATION ACQUIRED
ASSET LIST
<S> <C> <C> <C>
QUANTITY
1 Wards 19 Refrigerator Break prior 1990
1 25" RCA television Break prior 1990
1 Sofa Prod Mgr prior 1990
1 Wood Credenza Prod Mgr prior 1990
1 6 shelf bookcase (3') Prod Mgr prior 1990
1 Wood desk Prod Mgr prior 1990
5 Wood Desks Call for Action prior 1990
1 Wood desk Program Mgr prior 1990
1 19" Mitsubishi television Program Mgr prior 1990
1 Office Chair Program Mgr prior 1990
1 3 shelf bookcase Program Mgr prior 1990
1 2 drawer upright file cabinet Program Mgr prior 1990
1 IBM Selectric Typewriter Program Mgr prior 1990
2 Wood desks Cityline prior 1990
3 Office chairs Cityline prior 1990
3 4 drawer lateral file cabinets Cityline prior 1990
2 2 drawer lateral file cabinets Cityline prior 1990
2 6 shelf 4' bookcase Cityline prior 1990
2 Wood desks Directors prior 1990
2 Wood desks Paintbox prior 1990
2 Wood desks Courier prior 1990
2 Wood desks Comm Prod prior 1990
1 Sofa Comm Prod prior 1990
2 Wood desks CRO Sup prior 1990
2 Wood desks Asst Chief Eng prior 1990
</TABLE>
S-35
<PAGE>
<TABLE>
<CAPTION>
KKTV DESCRIPTION LOCATION ACQUIRED
ASSET LIST
<S> <C> <C> <C>
QUANTITY
BROADCAST
EQUIPMENT
1 SCITEK Edit Suite Sep-94
1 Ampex 225 May-92
News Animated Graphics Storage Jun-97
7 DVC PRO cameras & gear
7 Lighting Kits
News Field Editors
Microwave and Licensing
Transmitter fuel storage upgrade
Generator
</TABLE>
S-36
<PAGE>
SCHEDULE 7.12
KKTV INTELLECTUAL PROPERTY
0. Call letters "KKTV".
1. "KKTV.COM"
S-37
<PAGE>
SCHEDULE 7.13
KKTV INSURANCE
See attached.
S-38
<PAGE>
SCHEDULE 7.14
KKTV LITIGATION
1. Ann L. Ervin v. KKTV Channel Eleven/Ackerley Group, EEOC Denver Office,
--------------------------------------------------
EEOC No. 3209611867. In this charge, filed April 11, 1996, Ann L. Ervin, a
former KKTV anchor/reporter, alleges gender discrimination and sexual
harassment. Ms. Ervin alleges that during her employment, she received unequal
wages and compensation in comparison with her male contemporaries at the
station. Ms. Ervin also claims that she endured sexual harassment by co-workers.
Upon learning of Ms. Ervin's allegations, the Company conducted a thorough
investigation at KKTV, and filed a response to the EEOC charge on June 17, 1996,
denying all claims. In December 1996, Ms. Ervin resigned her position at KKTV
and accepted a job at a competing local television station. Other than the EEOC
having recently assigned an investigator to the case, there has been no further
activity on this matter.
2. KOAA(TV)/KTSC(TV) Channel Swap Proceeding, Federal Communication Commission
---------------------------------------------------------------------------
MM Docket No. 93-191. AK Media Group, Inc., as licensee of KKTV(TV), Channel 11,
- --------------------
Colorado Springs, Colorado has opposed the proposal of Sangre de Cristo
Communications, Inc. ("SCC") (licensee of KOAA(TV), Channel 5, Pueblo, Colorado)
and University of Southern Colorado ("USC") (licensee of KTSC(TV), Channel *8,
Pueblo, Colorado) to exchange channel assignments.
Both KOAA(TV) and KTSC(TV) are licensed to Pueblo, Colorado. Both KOAA(TV) and
KTSC(TV) have had authorized transmitter sites on Baculite Mesa near Pueblo,
while KOAA(TV) and KRDO(TV) (licensed to Colorado Springs) have authorized
transmitter sites near Colorado Springs on Cheyenne Mountain. SCC and USC claim
that, because of terrain shadowing, KOAA(TV) and KTSC(TV) provide an inferior
signal to the Colorado Springs area.
The only practical alternative antenna site for either KOAA(TV) or KTSC(TV) to
their current sites on Baculite Mesa near Pueblo is Cheyenne Mountain near
Colorado Springs. SCC cannot move KOAA(TV) to Cheyenne Mountain because of
short-spacing problems. In the past, SCC has unsuccessfully tried alternatives
to moving its transmitter site to Cheyenne Mountain, such as seeking FCC
authorization to operate an unbuilt station as a satellite of KOAA(TV), which
would improve KOAA(TV)'s signal in Colorado Springs.
In 1990, USC obtained FCC permission to move KTSC(TV)'s transmitter site to a
short-spaced site on Cheyenne Mountain. One of the bases given by the FCC for
approving the move was that USC's mission for KTSC(TV) included providing non-
commercial programming to residents of the Colorado Springs area.
S-39
<PAGE>
In 1992, SCC and USC proposed the channel swap, whereby SCC would obtain
KTSC(TV)'s license and its construction permit to build a transmitter on
Cheyenne Mountain (USC has never built the permitted KTSC(TV) transmitter on
Cheyenne Mountain) and USC would obtain KOAA(TV)'s license. AK Media Group, Inc.
and Pikes Peak Broadcasting Company (licensee of KRDO(TV)) opposed the channel
swap.
The FCC's Mass Media Bureau rejected the proposed channel swap in 1995. The FCC
affirmed the Mass Media Bureau's decision in 1996 by denying SCC's and USC's
application for review. In 1998, the United States Court of Appeals for the
District of Columbia Circuit reversed the FCC and remanded the matter to the FCC
for further action. The Court of Appeals held that the FCC had not adequately
explained why it had denied the application for review and rejected the channel
swap.
The matter is now under consideration by the FCC on remand. In August, 1998, the
Mass Media Bureau requested comments on remand from the parties. SCC and USC
filed their joint comments on September 18, 1998. AK Media Group, Inc. and Pikes
Peak Broadcasting Company filed their separate comments October 16, 1998. It is
uncertain what the FCC's next action in this matter will be or when it will take
additional action. AK Media Group, Inc. will not continue its participation in
this proceeding following Closing.
S-40
<PAGE>
SCHEDULE 7.16
KKTV LABOR
None.
S-41
<PAGE>
SCHEDULE 7.17
KKTV EMPLOYEES
See attached.
S-42
<PAGE>
SCHEDULE 7.18
KKTV EMPLOYEE PLANS
1. See AKMG Employee Handbook supplied to Benedek.
S-43
<PAGE>
SCHEDULE 8.3
BENEDEK CONFLICTS
1. Certain agreements to which Benedek is a party and which are applicable to
KCOY require the consent of third parties prior to assignment of said agreements
to AKMG, as set forth in Schedule 8.9.
S-44
<PAGE>
SCHEDULE 8.4
KCOY FCC LICENSES
KCOY-TV TV Station, Ch.
12 Santa Maria, CA/1/
Broadcast Auxiliaries
---------------------
KPH-360 Remote Pickup
Base Mobile
KPH-383 Remote Pickup
Automatic Relay
KPH-974 Remote Pickup
Automatic Relay
KPH-385 Remote Pickup
Automatic Relay
KA-88506 TV Pickup
KNM-95 TV STL
KTZ-90 TV Intercity
Relay
WDD-675 TV Intercity
Relay
WDD-676 TV Intercity
Relay
WHB-969 TV Intercity
Relay
WLN-416 TV Intercity
Relay
WMV-223 TV Intercity
Relay
BLP01193 Low Power
Auxiliary
TV Translator
-------------
K44DN UHF Translator Paso Robles, CA
______________________
/1/ July 1998 license renewal application granted November 30, 1998 for
license term to expire December 1, 2006.
S-45
<PAGE>
SCHEDULE 8.6
KCOY FINANCIAL STATEMENTS
1. See attached balance sheet and the related Results of Operations for the 11
periods ended November 30, 1998.
2. See attached balance sheet and the related Results of Operations for the 12
periods ended December 31, 1997.
3. See attached balance sheet and the related Results of Operations for the 12
periods ended December 31, 1996.
S-46
<PAGE>
SCHEDULE 8.7
NO CHANGES
1. On December 1, 1998, Benedek agreed to and accepted a Letter Agreement dated
September 23, 1998 between CBS Corporation and Benedek which amends that certain
CBS Television and Network Affiliation Agreement dated January 10, 1996 between
CBS Television Network, a division of CBS Inc. and Benedek.
S-47
<PAGE>
SCHEDULE 8.8
TAXES
None.
S-48
<PAGE>
SCHEDULE 8.9
KCOY CONTRACTS/1/
1. Affiliation Agreement dated as of January 31, 1995 between CBS Television
Network, a division of CBS Inc. and Stauffer Communications, Inc., consent
required.
2. Affiliation Agreement dated January 10, 1996 between Benedek Broadcasting
Corporation and CBS Television Network, a division of CBS Inc., consent
required.
3. Letter Agreement dated September 23, 1998 between CBS Corporation and
Benedek Broadcasting Corporation, consent required.
4. Web Affiliation Agreement dated August 15, 1997 between The WB Television
Network and Benedek Broadcasting Corporation re: DMA: Santa Maria,
California Broadcast Station: KCOY-TV.
5. Representation Agreement made as of August 1, 1997 by and between Katz
Communications, Inc. and Benedek Broadcasting Corporation.
6. Master Agreement dated July 28, 1997 between Katz Communications, Inc. and
Benedek Broadcasting Corporation.
7. License Agreement for Television Program Exhibition dated June 8, 1998
between King World Productions, Inc. and Benedek Broadcasting Corporation
(License Agreement No. SQR-01094) (Hollywood Squares Vol. I), consent
required.
8. License Agreement for Television Program Exhibition dated June 8, 1998
between King World Productions, Inc. and Benedek Broadcasting Corporation
(License Agreement No. SQR-02094) (Hollywood Squares Vol. II), consent
required.
9. License Agreement dated January 14, 1997 between Paramount Pictures
Corporation and Benedek Broadcasting (Real TV), as amended January 14,
1997, consent required.
_____________________________
/1/ It has been noted, for the purpose of summarizing in these Schedules, that
consent is required for assignment where clearly expressed in such
document, however, Benedek makes no representation with regard to that
issue. Whether consent is required for assignment must be determined by
referring to the agreement itself.
S-49
<PAGE>
10. License Agreement dated January 14, 1997 between Paramount Pictures
Corporation and Benedek Broadcasting Corporation (Entertainment Tonight),
as amended 1/14/97, consent required.
11. Letter Agreement dated November 5, 1996 between Paramount Pictures and
Benedek Broadcasting Corp. re: Offer for KCOY (The Montel Williams Show
98/00 -Agreement No. 64325), consent required.
12. Interim Agreement dated October 21, 1997 between Twentieth Television and
Benedek Broadcasting Corporation (Access Hollywood).
13. Television Syndication License Agreement dated February 23, 1994 between
Twentieth Television, a division of Twentieth Century Fox Film Corporation
and Stauffer Communications, Inc. (Century 16, Contract No. 5376), consent
required.
14. Interim Agreement between Universal Domestic Television, a division of
Universal Television Enterprises, Inc., now known as Studio USA, and
Benedek Communications, Inc. (Action Pack), consent required.
15. Interim Agreement between Universal Domestic Television, a division of
Universal Television Enterprises, Inc., now known as Studio USA, and
Benedek Communications, Inc. (Hercules, Action Pack and Xena), consent
required.
16. License Agreement dated January 13, 1998 between Eyemark Entertainment and
Benedek Broadcasting Corporation (Martha Stewart Living), consent required.
17. License Agreement dated February 4, 1998 between TJ Sports Television, Inc.
and Benedek Broadcasting Corporation (Golf 2000).
18. Interim Agreement between Universal Domestic Television, a division of
Universal Television Enterprises, Inc., now known as Studio USA, and
Benedek Communications, Inc. (Maury Povich), consent required.
19. Motown Live Deal Memo dated July 15, 1998 between Benedek Broadcasting
Corporation and ITC Distribution, Inc. (Motown Live), consent required and
unexecuted by ITC Distribution, Inc.
20. Deal Memo dated June 16, 1998 between Pearson Television and Benedek
Broadcasting Corporation (Match Game), unexecuted by both parties.
S-50
<PAGE>
21. Barter Series Offer dated October 26, 1996 between Columbia Tristar
Television Distribution and Benedek Broadcasting Corporation (Walker, Texas
Ranger), consent required.
22. Agreement dated June 7, 1993 between MGM/UA Telecommunications, a division
of Metro-Goldwyn-Mayer Inc. and Stauffer Communications, Inc. (Lion's
Pride, Contract No. 93-335), consent required.
23. Retransmission Agreement dated March 10, 1997 between Benedek License
Corporation and Avenue TV Cable Services, Inc.
24. Local Station Blanket Television License dated as of June 7, 1996, between
American Society of Composers, Authors and Publishers and Benedek
Broadcasting Corporation, as amended by Letter Agreement dated May 13,
1998.
25. License Agreement dated as of June 4, 1996 by and between Columbine JDS
Systems, Inc. and Benedek Broadcasting Corporation d/b/a KCOY-TV, Santa
Maria, California, as amended (License Agreement No. 3150), consent
required.
26. Vehicle Contract and Security Agreement dated December 3, 1997 between
Benedek Broadcasting Corporation d/b/a KCOY TV and Santa Maria Ford (1997
Ford), consent required and subject to a Lien in favor of Santa Maria Ford.
27. License Agreement dated as of January 1, 1996 by and between Stauffer
Communications, Inc. and Blackhawk Communications, Inc.
28. Smart Business Lease dated December 18, 1997 between Pitney Bowes Credit
Corporation and KCOY-TV (Postage Meter),consent required and unexecuted by
Pitney Bowes Credit Corporation.
29. Agreement dated July 11, 1996 between AccuWeather, Inc. and Benedek
Broadcasting Corporation, as amended August 19, 1996 (includes AccuWeather
Ready-For-Air Graphics-Satellites-Radars-Images User Agreement,
AccuWeather, Inc. Satellite Delivery System User Agreement and AccuWeather
Product/System Lease Agreement and Lease/Purchase Agreement), consent
required for each agreement.
30. Employment Agreement dated December 13, 1996 by and between Benedek
Broadcasting Corporation-KCOY-TV and Lynda Martin, option to renew
exercised.
31. Employment Agreement dated December 29, 1997 between Benedek Broadcasting
Corporation-KCOY-TV and Scott D. Reiss.
S-51
<PAGE>
32. Official Trade Agreement effective as of March 1, 1997 between KCOY/CBS 12
and GTE Mobilnet of Santa Barbara Limited Partnership by GTE Mobilnet Inc.,
consent required.
33. Communications Use Lease dated May 21, 1997 between the United States
Department of Agriculture Forest Service and Benedek Broadcasting
Corporation (Tepusquet Peak), consent required.
34. Agreement dated May 14, 1996 by and between Mussell Fort and Benedek
Broadcasting Corporation (Tepusquet Peak), license limited to authorized
officers, employees, agents and representatives of Licensee.
35. Lease dated November 8, 1996 between Smith, Helenius & Hayes and Benedek
Broadcasting Corporation dba KCOY TV-12 (Railroad Square), consent
required.
36. Lease Agreement dated June 10, 1986 between Shamrock Broadcasting Company,
Inc. and KCOY-TV/Stauffer Communications and assigned by Stauffer
Communications, Inc. to Benedek by Assignment and Assumption of Lease dated
as of June 6, 1996 (KEYT location Broadcast Peak), consent required and
Lease expired August 31, 1994, but Benedek is occupying the property on a
month to month basis.
37. Transmitter Site License dated June 8, 1995 from Mobile Media
Communications, Inc. to Stauffer Communications, Inc. and assigned by
Stauffer Communications, Inc. to Benedek by Assignment and Assumption of
Lease dated as of June 6, 1996 (Portnoff Hill), consent required and
expired March 31, 1998 and continuing month to month.
38. License Agreement dated January 1, 1996 between Mobile Media
Communications, Inc. and Stauffer Communication, Inc. and assigned by
Stauffer Communications, Inc. to Benedek by Assignment and Assumption of
Lease dated as of June 6, 1996 and assigned by Mobile Media Communications,
Inc. to Pinnacle Towers, Inc. (Tassajera Peak).
39. Oral right of way/access agreements (Tepusquet Peak) between Benedek and
each of the following persons: (i) J. Stoppel, (ii) R. Clay, (iii) Mr.
Martinez; (iv) Mr. and Mrs. Caitco; and (v) Mrs. Hall.
40. Oral agreement between Benedek and Cox Communications (La Cumbre Peak).
41. Employment Agreement dated November 4, 1998 between Benedek Broadcasting
Corporation, d/b/a KCOY-TV and Jeff Powers.
S-52
<PAGE>
42. Employment Agreement dated December 16, 1998 between Benedek Broadcasting
Corporation, d/b/a KCOY-TV and Vivian Tamayo.
43. Employment Agreement dated December 14, 1998 between Benedek Broadcasting
Corporation, d/b/a KCOY-TV and Chera Kimiko.
44. Employment Agreement dated August 24, 1998 between Benedek Broadcasting
Corporation, d/b/a KCOY-TV and Laurie Lavagnino.
45. Employment Agreement dated December 7, 1998 between Benedek Broadcasting
Corporation, d/b/a KCOY-TV and Renee Kohn.
46. Employment Agreement dated 9/8/98 between Benedek Broadcasting Corporation,
d/b/a KCOY-TV and Kofi Jones.
47. Employment Agreement dated September 15, 1998 between Benedek Broadcasting
Corporation, d/b/a KCOY-TV and Rachel Kopiec.
48. Employment Agreement dated July 2, 1998 between Benedek Broadcasting
Corporation, d/b/a KCOY-TV and Steve Villanueva.
49. Employment Agreement dated July 2, 1998 between Benedek Broadcasting
Corporation, d/b/a KCOY-TV and Suzanne Phan.
50. Employment Agreement dated June 30, 1998 between Benedek Broadcasting
Corporation, d/b/a KCOY-TV and Tannya Song Boyd.
51. DCM Software License/Equipment Sales Agreement dated December 2, 1993
between KCOY-TV and Data Center Management, Inc., consent required.
52. DCM Software Support Agreement dated as of November 29, 1993 between Data
Center Management, Inc. and KCOY-TV, a division of Stauffer Communications,
Inc., consent required.
53. Poster Agreement dated February 24, 1998 between KCOY-TV and Outdoor
Systems, unexecuted by Outdoor Systems.
54. Painted Bulletin Agreement dated February 24, 1998 between KCOY-TV and
Outdoor Systems, unexecuted by Outdoor Systems.
55. Agreement dated March 6, 1997 between SLP Productions, Inc. and KCOY-TV,
unexecuted by SLP Productions Inc.
56. FirstCom Library Licensing Agreement dated February 21, 1997 between
FirstCom Music, a division of Jim Long Companies, Inc., A Zomba Company and
Benedek Broadcasting Corporation, consent required.
S-53
<PAGE>
57. SESAC Local Station Blanket Television License Agreement dated March 28,
1997 between SESAC, Inc. and Benedek Broadcasting Corporation, consent
required.
58. BMI Local Television Station Music Performance Blanket License Agreement
dated April 28, 1997 between Broadcast Music, Inc. and Benedek Broadcasting
Corporation, d/b/a KCOY, consent required.
59. Annual Maintenance Agreement commencing November 10, 1995 between Advanced
Office Automation, Inc. and KCOY TV, consent required.
60. Mid-Range Systems Amendment to IBM Maintenance Agreement dated May 5, 1988
between International Business Machines Corporation and KCOY TV.
61. Agreement dated December 23, 1998 between Roger Thompson and KCOY-TV.
62. Copykit Maintenance Agreement dated May 27, 1998 between Chaparral Business
Machines, Inc. and KCOY TV, consent required.
63. Agreement dated May 9, 1997 between Automated Weather Source, Inc. and
KCOY-TV, a Benedek Broadcasting Corporation Company.
64. See Schedule 8.4 regarding licenses issued by the FCC.
65. CNN News Source Sales, Inc. Syndication Agreement dated September 3, 1997
between Benedek Broadcasting Corporation and CNN News Source Sales, Inc.
(Contract No. CN2804), consent required.
66. License Agreement dated September 3 between Millennium Partners and Benedek
Broadcasting Corporation.
67. Nielsen Station(s) Index Service Agreement dated December 24, 1996 between
Nielsen Media Research, Inc. and Benedek Broadcasting Corporation, as
amended February 28, 1997.
68. Lease Agreement dated December 2, 1998 between Iversen Motor Company, Inc.
and Benedek Broadcasting d/b/a KCOY (1998 Jeep Cherokee), consent required.
69. Agreement to Furnish Insurance Policy dated December 2, 1998 between
Iversen Motor Company, Inc. and Benedek Broadcasting d/b/a KCOY-TV.
S-54
<PAGE>
70. Employment Agreement dated December 7, 1998 between Benedek Broadcasting
Corporation d/b/a KCOY-TV and Renee Kohn.
71. Retransmission Agreement dated 9/17/93 between Stauffer Communications,
Inc. and Western Cable Communications, Inc., as amended by letter dated
12/23/96 from KCOY to Western Cable Communications, expired 4/1/97.
72. Letter Agreement dated 7/1/96 between Cable Plus and KCOY TV.
73. Letter Agreement dated 3/3/94 between Pacific Coast Wireless and KCOY TV,
expired 12/31/96.
74. Letter Agreement dated 10/6/93 between Sonic Cable Television of San Luis
Obispo and KCOY, as amended by letter dated 12/23/96 from KCOY to Sonic
Cable of SLO, expired 4/1/97.
75. Retransmission Agreement dated 9/28/93 between Stauffer Communications,
Inc. and San Simeon Cable, as amended by letter dated 12/23/96 from KCOY to
San Simeon Cable.
76. Retransmission Agreement dated 10/6/93 between Stauffer Communications,
Inc. and Creekside Satellite TV, as amended by letter dated 12/23/96 from
KCOY to Creekside Mobile Home Community.
77. Retransmission Consent Agreement dated 8/1/93 between Stauffer
Communications, Inc. and Cox Cable Santa Barbara, Inc., expired 10/6/96.
78. Retransmission Consent Carriage Agreement dated 9/17/93 between Stauffer
Communications, Inc. and Comcast Cable, as amended by letter dated 3/10/97
from KCOY to Comcast Cablevision of Santa Maria, Inc., expired 6/1/97 but
automatically renewed on an bi-monthly basis.
79. Retransmission Agreement dated 9/2/93 between Stauffer Communications, Inc.
and Ameri-Cable International, Inc., as amended by letter dated 12/23/96
from KCOY to Americable International, Inc., expired 4/1/97.
80. Retransmission Agreement dated 8/30/93 between Stauffer Communications,
Inc. and Falcon Cable TV, as amended by letter dated 3/10/97 from KCOY to
Falcon Cable Systems Co., expired 6/1/97 but automatically renewed on an
bi-monthly basis.
81. Notice of Election of Retransmission Consent dated 9/12/96 from KCOY to
Century Cable of Northern CA, Inc.
S-55
<PAGE>
82. Notice of Election of Retransmission Consent dated 9/27/96 from KCOY to Cox
Cable of Santa Barbara.
83. Notice of Election of Retransmission Consent dated 9/12/96 from KCOY to
Americable International, Inc.
84. Notice of Election of Retransmission Consent dated 9/12/96 from KCOY to San
Simeon Community Cable.
85. Notice of Election of Retransmission Consent dated 9/12/96 from KCOY to
Sonic Cable of San Luis Obispo.
86. Notice of Election of Retransmission Consent dated 9/12/96 from KCOY to
Comcast Cable of Lompoc.
87. Notice of Election of Retransmission Consent dated 9/12/96 from KCOY to
Comcast Cablevision of Santa Maria, Inc.
88. Notice of Election of Retransmission Consent dated 9/12/96 from KCOY to
Avenue TV Cable Service, Inc.
89. Notice of Election of Retransmission Consent dated 9/12/96 from KCOY to
Falcon Cable Systems Co.
90. Notice of Election of Retransmission Consent dated 9/12/96 from KCOY to
Cable Plus.
91. Notice of Election of Retransmission Consent dated 9/12/96 from KCOY to
Creekside Mobilehome Community.
92. Letter Agreement dated 11/10/98 between Media Data Services, Inc. and KCOY
TV.
93. Letter Agreement dated 9/19/98 between Media Data Services, Inc. and KCOY
TV.
94. Agreement for Talent Placement Services dated 2/2/98 between Talent
Dynamics LLC and KCOY-TV, unexecuted by Talent Dynamics LLC.
95. Agreement for News Program Development dated 10/26/98 between ASI
Entertainment LLC and KCOY-TV, unexecuted by ASI Entertainment.
96. AP Membership Agreement for Television dated 1/18/95 between The Associated
Press and Stauffer Communications, Inc., as supplemented by Supplemental
Agreement dated 1/29/93 between The Associated Press and Stauffer
Communications, Inc. (NewsDesk Software) and Supplemental Agreement dated
November
S-56
<PAGE>
8, 1995 between The Associated Press and Stauffer Communications, Inc.
(GraphicsBank) and assumed pursuant to Assumption Agreement dated 6/6/96
between The Associated Press and Benedek Broadcasting Corporation, consent
required for each agreement.
97. Software License and Conversion Services Agreement dated 2/5/97 between
Broadcast Management Plus and Benedek Broadcasting KCOY TV as amended 2/5/97
by Addendum to Software License and Conversion Services Agreement between
Columbine JDS Systems, Inc. and Benedek Broadcasting.
98. Employment offer dated April 10, 1998 from KCOY TV to Mark Puckett.
S-57
<PAGE>
SCHEDULE 8.9.4
KCOY TRADE-OUT BALANCE
S-58
<PAGE>
SCHEDULE 8.10
KCOY REAL PROPERTY
I. REAL PROPERTY OWNED BY BENEDEK AND USED BY KCOY
1. 1211 W. McCoy Lane, Santa Maria, CA 93455
------------------------------------------
Property consists of: (i) land of approximately 83,275 sq. ft. on
which is erected a one story building of approximately 13,000 sq. ft.;
and (ii) easement for driveway purposes over the adjacent lot.
Property used for studio and offices.
Title to the property is vested in Benedek. Benedek acquired title by
Corporation Grant Deed from Stauffer Communications, Inc. dated June
6, 1996 and recorded June 14, 1996 under Recorders No. 96-036675,
Santa Barbara County, California.
The property is encumbered by an Open-End Deed of Trust, Fixture
Filing and Assignment of Rents from Benedek to Stewart Title of
Glendale, Trustee for the benefit of Canadian Imperial Bank of
Commerce, New York Agency, dated June 6, 1996 and recorded June 14,
1996 under Recorders No. 96-036676, Santa Barbara County, California,
securing a loan in the original amount of $1,200,000.00, as assigned
to Bankers Trust Company, which will be released on or prior to the
Closing Date.
Exceptions to marketable and insurable title: See attached Schedule B
Exceptions From Coverage.
II. REAL PROPERTY LEASED BY BENEDEK FOR USE BY KCOY
1. 1880 Santa Barbara Street, San Luis Obispo, California 93406 (known as
------------------------------------------------------------
Railroad Square)
Property leased by Benedek from Smith, Helenius and Hayes pursuant to
a lease agreement dated November 8, 1996.
Description of Property: Approximately 1,150 sq. feet of space in
Suite E
Use: Auxiliary Sales Office
Lease Expiration Date: 11/14/99
S-59
<PAGE>
Assignment In order to assign, sublease or authorize
someone else to occupy the Premises, Tenant needs
Landlord's prior consent which may not be
unreasonably withheld.
Lease Guarantee None
Alterations made or planned: None
2. Tepusquet Peak Communications Site, Santa Barbara County, California
--------------------------------------------------------------------
Property leased by Benedek from the United States of America acting
through the Forest Service Department of Agriculture pursuant to a
"Communications Use Lease" dated May 21, 1997.
Description of Property: Section 30, TION, R31W,
MDB&M - Santa Barbara County
Use: Site for television broadcast equipment
Lease Expiration Date: December 31, 2017
Assignment: Permit not transferable
Lease Guaranty: None
Alterations made or planned: None
3. Tepusquet Peak Communications Site, Santa Barbara County, California
--------------------------------------------------------------------
a) Right of Way/Access Agreement by and between Mussell Fort and
Benedek dated May 14, 1996 granting Benedek the right to cross
Mussell Fort's property for the purposes of installing and
maintaining its communication equipment at Tepusquet Peak.
Assignment: License limited to authorized officers, employees,
agents and representatives of Licensee.
b) Right of Way/Access Agreement by and between Benedek and each of
the following persons (i) J. Stoppel, (ii) R. Clay, (iii) Mr.
Martinez, (iv) Mr. & Mrs. Caitco and (v) Mrs. Hall granting
Benedek the right to cross the aforesaid persons' properties for
the purposes of installing and maintaining its equipment at
Tepusquet Peak. These agreements are oral.
4. KEYT location on Broadcast Peak, Santa Barbara County, California
-----------------------------------------------------------------
S-60
<PAGE>
Property leased by Benedek pursuant to a lease agreement dated June
10, 1986 entered into by and between Shamrock Broadcasting Company,
Inc. and KCOY-TV/Stauffer Communications and assigned by Stauffer
Communications, Inc. to Benedek by Assignment and Assumption of Lease
dated as of June 6, 1996.
Description of Property: Space within KEYT's transmitter building
for installation of two rack units of
equipment for microwave transmission and
reception and space on KEYT's transmission
tower for installation of 5 antennas
Use: Microwave site and tower Lease expired
Lease Expiration Date: August 31, 1994, but Benedek is occupying
the property on a month to month basis.
Assignment: No right to assign without the prior written
consent of Landlord. Tenant agrees that it
may not permit others to use the facilities
and/or equipment.
Lease Guaranty: None
Alterations made or planned: None
6. La Cumbre Peak Communications Site, Santa Barbara, California
-------------------------------------------------------------
Oral agreement entered into by and between Benedek and Cox
Communications entitling Benedek to (i) come onto Cox Communications
property and (ii) install electric news gathering equipment in Cox
Communications building.
7. Portnoff Hill, Paso Robles, California
--------------------------------------
Property leased by Benedek from Mobile Media Communications, Inc.
pursuant to a Transmitter Site License dated June 8, 1995 from Mobile
Media Communications, Inc. to Stauffer Communications, Inc. and
assigned by Stauffer Communications, Inc. to Benedek by Assignment and
Assumption of Lease dated as of June 6, 1996 . Lease transferred by
Mobile Media Communications, Inc. to Pinnacle Towers, Inc.
S-61
<PAGE>
Description of Property: Space in licensor's building
Use: TV translator
License Expiration Date: March 31, 1998. Benedek is still occupying
the site on a month to month basis.
Assignment: Prior consent of Landlord is required -
consent may not be unreasonably withheld or
delayed.
Lease Guaranty: None
Alterations made or planned: None
8. Tassajera Peak, Santa Lucia Road, San Luis Obispo County, California
--------------------------------------------------------------------
Property leased by Benedek from Mobile Media Communications, Inc.
pursuant to a License Agreement dated January 1, 1996 entered into by
and between Mobile Media Communications, Inc. and Stauffer
Communications, Inc. and assigned by Stauffer Communications, Inc. to
Benedek by Assignment and Assumption of Lease dated as of June 6, 1996
and assigned by Mobile Media Communications, Inc. to Pinnacle Towers,
Inc.
Description of Property: Space within Mobile Media's transmitter
building.
Use: TV translator
License Expiration Date: December 31, 1997 but extended to December
31, 1999 by 2 letter agreements dated
January 7, 1998 and December 16, 1998,
respectively
Assignment: No provision
Alterations made or planned: None
III. LIENS
1. Benedek Broadcasting Corporation's indebtedness under (i) the Amended
and Restated Credit Agreement dated as of December 17, 1997, as
amended, between Benedek Communications Corporation, Benedek
Broadcasting Corporation, as Borrower, and the Lenders listed therein,
as Lenders, and Bankers Trust Company, as Agent, and (ii) the
Indenture dated as of March 1, 1995, as supplemented, between Benedek,
Benedek License Corporation, as successor by merger to Benedek
Broadcasting Company, LLC and The Bank of New York, are secured by
Liens on both real and personal property
S-62
<PAGE>
with respect to KCOY, all of which Liens will be released on or prior
to the Closing Date.
S-63
<PAGE>
SCHEDULE 8.11
KCOY PERSONAL PROPERTY
1. See attached Fixed Asset Summary Report.
2. There is no personal property owned by a third party which is leased or
otherwise used by Benedek Broadcasting Corporation for use by KCOY, except
as set forth on Schedule 8.9 and except as set forth in items 3 through 7
hereof.
3. Finova Capital leases to Benedek DVC Pro camera equipment as part of a
group lease for multiple stations, which is used by KCOY, and which is also
subject to a Lien, which Lien will be released on or prior to the Closing
Date.
4. Terminal Marketing leases to Benedek virtual recorders as part of a group
lease for multiple stations, which is used by KCOY and which is also
subject to a Lien, which Lien will be released on or prior to the Closing
Date.
5. CIT Group leases to Benedek emergency broadcasting equipment as part of a
group lease for multiple stations, which is used by KCOY, and which is also
subject to a Lien, which Lien will be released on or prior to the Closing
Date.
6. Vehicle Contract and Security Agreement dated 12/3/97 between Benedek
Broadcasting Corporation d/b/a KCOY TV and Santa Maria Ford (1997 Ford),
subject to a Lien in favor of Santa Maria Ford.
7. Benedek Broadcasting Corporation's indebtedness under (i) the Amended and
Restated Credit Agreement dated as of December 17, 1997, as amended,
between Benedek Communications Corporation, Benedek Broadcasting
Corporation, as Borrower, and the Lenders listed therein, as Lenders, and
Bankers Trust Company, as Agent, and (ii) the Indenture dated as of March
1, 1995, as supplemented, between Benedek, Benedek License Corporation, as
successor by merger to Benedek Broadcasting Company, LLC and The Bank of
New York, are secured by Liens on both real and personal property with
respect to KCOY, all of which Liens will be released on or prior to the
Closing Date.
S-64
<PAGE>
SCHEDULE 8.12
KCOY INTELLECTUAL PROPERTY
1. Call letters "KCOY-TV".
S-65
<PAGE>
SCHEDULE 8.13
KCOY INSURANCE
1. See attached KCOY Insurance Schedule, which lists all the insurance
applicable to KCOY. All insurance policies listed cover all Benedek
stations.
S-66
<PAGE>
SCHEDULE 8.14
KCOY LITIGATION
None.
S-67
<PAGE>
SCHEDULE 8.16
KCOY LABOR
1. After a probationary period, employees are entitled to severance as
follows: for any employee with less than five years of service, two weeks
salary; and for any employee with more than five years of service, one week
of salary for each year of service up to a maximum of 26 weeks salary.
2. See Benedek Employee Handbook supplied to AKMG.
S-68
<PAGE>
SCHEDULE 8.17
KCOY EMPLOYEES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
EMPLOYEE NAME ANNUAL WAGES/1/ COMMISSIONS/2/ DEPARTMENT
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Alley, David S. $18,720 News
- ------------------------------------------------------------------------------
Anderson, Amy E. $ 7,878 Production
- ------------------------------------------------------------------------------
Anderson, $21,840 News
Christopher T.
- ------------------------------------------------------------------------------
Biddle, Laurie D. $23,192 Business
- ------------------------------------------------------------------------------
Blackwell, Brooke $23,920 News
A.
- ------------------------------------------------------------------------------
Bornhoft, Dennis $47,580 Technical
- ------------------------------------------------------------------------------
Boyd, Tannya S. $23,005 News
- ------------------------------------------------------------------------------
Cumberland, Judy $22,880 Sales
I.
- ------------------------------------------------------------------------------
Curto, Michael S. $21,965 Production
- ------------------------------------------------------------------------------
Doran, Irene $16,848 Business
- ------------------------------------------------------------------------------
Epling, Cheryle $43,415 Sales
K.
- ------------------------------------------------------------------------------
Fete, David R. $45,372 Production
- ------------------------------------------------------------------------------
Fischel, Jeffrey $21,840 News
R.
- ------------------------------------------------------------------------------
Fish, David W. $50,161 Sales
- ------------------------------------------------------------------------------
Fisher, Victoria $46,351 Sales
L.
- ------------------------------------------------------------------------------
Forsman, Randy W. $ 7,878 Production
- ------------------------------------------------------------------------------
</TABLE>
______________________
1 Annual Wages are comprised of compensation Y-T-D through December 3,
1998 plus an estimation of the two remaining pay periods.
2 Represents commissions for 11 months.
S-69
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
EMPLOYEE NAME ANNUAL WAGES/1/ COMMISSIONS/2/ DEPARTMENT
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
French, Gary L. $33,696 Technical
- ------------------------------------------------------------------------------
Garcia, Raymond $20,883 Production
M.
- ------------------------------------------------------------------------------
Gonzales, Lorena $ 8,034 Production
- ------------------------------------------------------------------------------
Harrison, Dustin $20,800 News
J.
- ------------------------------------------------------------------------------
Hartzell, Jerry $18,720 News
L.
- ------------------------------------------------------------------------------
Hatfield, Mark J. $60,000 News
- ------------------------------------------------------------------------------
Hiramatsu, $25,917 Production
Melissa
- ------------------------------------------------------------------------------
Hogetvedt, $69,000/7/ Administration
Charles A.
- ------------------------------------------------------------------------------
Johnson, Deborah $40,000 Business
O.
- ------------------------------------------------------------------------------
Johnson, Kenneth $17,243 Production
D.
- ------------------------------------------------------------------------------
Jones, Kofialexis $20,800 News
- ------------------------------------------------------------------------------
Justice, Kent C. $37,000 News
- ------------------------------------------------------------------------------
Key, John M. $ 7,878 Production
- ------------------------------------------------------------------------------
Kleiner, Starlyn $21,840 Promotion
R.
- ------------------------------------------------------------------------------
Kopiec, Rachel J. $21,000 News
- ------------------------------------------------------------------------------
Lang, Kristin J. $24,960 News
- ------------------------------------------------------------------------------
Lavagnino, Laurie $35,022 News
A.
- ------------------------------------------------------------------------------
Levins, Kevin J. $ 7,878 Production
- ------------------------------------------------------------------------------
Loicanos, Steven $14,651 Production
Louis
- ------------------------------------------------------------------------------
Martin, Lynda J. $50,024 News
- ------------------------------------------------------------------------------
</TABLE>
7 Annual Wages includes $30,000 bonus.
S-70
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
EMPLOYEE NAME ANNUAL WAGES/1/ COMMISSIONS/2/ DEPARTMENT
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Mason, Brooke M. $ 7,878 Production
- ------------------------------------------------------------------------------
McDonough, $28,028 News
Julieanne
- ------------------------------------------------------------------------------
McPherson, Vicki $22,880 Programming
E.
- ------------------------------------------------------------------------------
McVey, Raymond L. $25,979 Production
- ------------------------------------------------------------------------------
Meehan, Katharine $ 9,427 Sales
E.
- ------------------------------------------------------------------------------
Mignola, Dean D. $34,655 Sales
- ------------------------------------------------------------------------------
Milligan, $35,156 Sales
Catherine E.
- ------------------------------------------------------------------------------
Morales, Thomas $22,360 News
E.
- ------------------------------------------------------------------------------
Murphy, James T. $33,696 Production
- ------------------------------------------------------------------------------
Newark, Sherrill $ 8,034 Production
L.
- ------------------------------------------------------------------------------
Newell, Alan S. $ 7,878 Production
- ------------------------------------------------------------------------------
Oberdeck, Carol $13,533 Production
- ------------------------------------------------------------------------------
Ortiz, Desi R. $30,680 Production
- ------------------------------------------------------------------------------
Parkins-Surles, $19,282 Production
Becky
- ------------------------------------------------------------------------------
Phan, Suzanne V. $21,840 News
- ------------------------------------------------------------------------------
Powers, Jeffrey $28,028 Sales
D.
- ------------------------------------------------------------------------------
Puckett, Mark B. $48,000 Sales
- ------------------------------------------------------------------------------
Pueschel, Thea L. $ 7,878 Production
- ------------------------------------------------------------------------------
Reiss, Scott D. $25,000 News
- ------------------------------------------------------------------------------
Rich, Caroline R. $16,640 News
- ------------------------------------------------------------------------------
Robinson, Denise $27,560 Production
A.
- ------------------------------------------------------------------------------
Saibene, Danielle $24,598 News
A.
- ------------------------------------------------------------------------------
</TABLE>
S-71
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
EMPLOYEE NAME ANNUAL WAGES/1/ COMMISSIONS/2/ DEPARTMENT
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Sandoval, $18,262 Sales
Patricia M.
- ------------------------------------------------------------------------------
Shaw, Timothy $22,818 Production
- ------------------------------------------------------------------------------
Sheley, Garry R. $33,571 Production
- ------------------------------------------------------------------------------
Smith, Robert J. $42,000 News
- ------------------------------------------------------------------------------
Song, Hak Chu $ 7,878 Production
- ------------------------------------------------------------------------------
Sprague, Jimmy E. $39,520 Technical
- ------------------------------------------------------------------------------
Stickler, $ 8,034 Production
Christopher R.
- ------------------------------------------------------------------------------
Stinson, Ralph $28,725 Production
Peter
- ------------------------------------------------------------------------------
Strickland, $50,024 News
Donald L.
- ------------------------------------------------------------------------------
Tharp, Nevette $22,880 Sales
- ------------------------------------------------------------------------------
Thies, Wendy L. $30,014 News
- ------------------------------------------------------------------------------
Thompson, Jazmine $ 7,878 Production
L.
- ------------------------------------------------------------------------------
Treur, Casey E. $ 7,878 Production
- ------------------------------------------------------------------------------
Tribbett, Rachel $ 8,034 News
M.
- ------------------------------------------------------------------------------
Valenzuela, $ 7,878 Production
Adelita V.
- ------------------------------------------------------------------------------
Villanueva, Steve $28,018 News
- ------------------------------------------------------------------------------
Wheeler, Scott D. $22,048 News
- ------------------------------------------------------------------------------
Wilkerson, Jason $ 8,034 Production
B.
- ------------------------------------------------------------------------------
Wilson, Courtney $ 7,878 Production
M.
- ------------------------------------------------------------------------------
</TABLE>
Total of Annual Wages plus Commissions equals $1,998,573.
S-72
<PAGE>
SCHEDULE 8.18
KCOY EMPLOYEE PLANS
1. Benedek Broadcasting Corporation Profit Sharing and Retirement Plan dated
5/13/96.
2. Benedek Broadcasting Employee Benefit Plan.
3. Benedek Broadcasting Corporation Group Long Term Disability Insurance
Program.
4. Benedek Broadcasting Corporation Medical Expense Coverage Prescription
Drugs Mail Order Maintenance Prescription Drugs Group Benefit Plan
Exclusive Provider Plan.
5. See Benedek Employee Handbook supplied to AKMG.
S-73
<PAGE>
SCHEDULE 10.1.4
AKMG REQUIRED CONSENTS
1. Affiliation Agreement dated November 29, 1994 between CBS Television
Network and KKTV, Inc., consent required.
S-74
<PAGE>
SCHEDULE 10.2.4
BENEDEK REQUIRED CONSENTS
1. Consent from CBS Corporation under the following agreements: (i)
Affiliation Agreement dated as of January 31, 1995 between CBS Television
Network, a division of CBS Inc. and Stauffer Communications, Inc; (ii)
Affiliation Agreement dated January 10, 1996 between Benedek Broadcasting
Corporation and CBS Television Network, a division of CBS Inc.; and (iii)
Letter Agreement dated September 23, 1998 between CBS Corporation and
Benedek Broadcasting Corporation.
S-75
<PAGE>
EXHIBIT A
---------
TIME BROKERAGE AGREEMENT
------------------------
THIS TIME BROKERAGE AGREEMENT (the "Agreement") is made as of this
30th day of December, 1998, by and between BENEDEK BROADCASTING CORPORATION, a
Delaware corporation ("Programmer"), and AK MEDIA GROUP, INC., a Washington
corporation ("Licensee").
WHEREAS, Licensee is the owner, operator and licensee of television
broadcast station KKTV(TV), Channel 11, Colorado Springs, Colorado (the
"Station");
WHEREAS, Licensee and Programmer have entered into as of the date
hereof that certain Exchange Agreement (the "Exchange Agreement") relating to
the sale by Licensee and the purchase by Programmer of all licenses, permits and
other authorizations for the Station (collectively, the "FCC Licenses") issued
by the Federal Communications Commission ("FCC") to Licensee and certain other
assets related to the Station as well as the sale by Programmer and the purchase
by Licensee of the FCC Licenses for KCOY, Santa Maria, California; and
WHEREAS, Licensee holds an affiliation agreement authorizing it to
broadcast programming of the CBS Television Network and various syndication
agreements authorizing it to broadcast entertainment and news programming (the
"Programming Agreements") and also provides locally produced news and public
affairs programming for its community of license (collectively, the "Licensee
Programming");
WHEREAS, Programmer wishes to provide programming for broadcast on the
Station, which may include, without limitation, original programs, syndicated
programs, barter programs, paid-for programs, locally produced programs and
advertising (the "Benedek Programming") and related management services, and
Licensee desires to accept and broadcast the programming supplied by Programmer
on the Station and such services, subject to the terms and conditions hereof;
and
WHEREAS, Programmer and Licensee, simultaneously with the execution of
this Agreement, are entering into a Time Brokerage Agreement with respect to
KCOY (the "KCOY TBA").
NOW, THEREFORE, for and in consideration of the mutual covenants
herein contained, the parties hereto have agreed and do agree as follows:
1. Programming and Transmission Services.
-------------------------------------
(a) Subject to the provisions of this Agreement, Licensee agrees to
make available to Programmer air time and transmission capabilities for the
broadcast of Benedek Programming
<PAGE>
on the Station for up to twenty-four (24) hours per day, seven (7) days a week
during periods when Licensee is not broadcasting Licensee Programming. Licensee
may, in its discretion, assign any of the Programming Agreements, individually
or in the aggregate, to Programmer during the term of this Agreement. If any
Programming Agreement is assigned from Licensee to Programmer, programming
provided under that Programming Agreement shall be considered to be part of the
Benedek Programming.
(b) Programmer shall assure that no contract or commitment for
Programming arranged by Programmer shall give rise to any liability or
obligation of Licensee; provided that Programmer shall promptly inform Licensee
of each such contract and commitment and of the terms thereof and, if Licensee
shall elect to assume any such contract or commitment, Programmer shall, in the
event that the Exchange Agreement terminates without a Closing, upon the
termination of the term of this Agreement arrange for the immediate assignment
to Licensee of such contract or commitment and for the concurrent consent of
each other party thereto to such assignment.
2. Advertising Sales. Licensee shall timely fulfill all orders for
------------------
advertising on the Station applicable to any of the Licensee Programming and
Benedek Programming. In the event any such order calls for the placement of any
advertising on the Station after the termination of the term of this Agreement
without the consummation of the Exchange Agreement, Programmer shall if, and
only if, and to the extent Licensee elects to fulfill such order, cooperate with
Licensee to enable such advertising to be broadcast on the Station in accordance
with the terms of such order and all revenues and accounts receivable relating
to or arising from such orders shall be the sole and exclusive asset of
Licensee.
3. Payments. As consideration for the rights granted hereunder,
--------
Programmer hereby agrees to pay to Licensee in a timely manner the amounts
referred to on Attachment I hereto (the "Fee"), in each case on the dates
------------
specified in said Attachment I. Anything to the contrary contained in this
------------
Agreement notwithstanding, in no event shall Programmer be entitled to delay
payment of, reduce, or set off any claim against, any amount payable by
Programmer under this Agreement, whether by reason of a breach or default by
Licensee or otherwise.
4. Term. The term of this Agreement shall begin on January 1, 1999
----
(the "Commencement Date"), and shall continue in force from that date for a
period of three (3) months, except that it shall be automatically extended if
the Closing (as defined in the Exchange Agreement) on the sale of the Station by
Licensee has not occurred and the Exchange Agreement has not been terminated,
until the earlier of the occurrence of (i) such Closing or (ii) the termination
of the Exchange Agreement.
5. Benedek Programming. Benedek Programming shall comply with the
-------------------
Station's Policy Guidelines attached on Exhibit A hereto, as the same may be
---------
reasonably
2
<PAGE>
amended by Licensee from time to time, and with the provisions of this
Agreement, and, provided such compliance obligations are satisfied, shall be
entertainment programming of Programmer's own selection, together with
commercial matters, news, public service announcements and other programming
suitable for broadcast on the Station. All actions or activities of Programmer
under this Agreement, and Benedek Programming shall be in accordance with: (a)
the Communications Act of 1934, as amended; (b) the rules, requirements and
policies of the FCC, including, without limitation, the FCC's rules on
children's television programming, plugola/payola, lotteries and contests,
hoaxes, station identification, minimum operating schedule, sponsorship
identification, political programming and political advertising rates; (c) all
applicable federal, state and local laws, regulations and policies
(collectively, "Applicable Government Regulations"); and (d) generally accepted
quality standards of the television broadcast industry. In the event that
Licensee determines, based on the exercise of Licensee's good faith reasonable
business judgment, that Programmer has failed to comply in any material respect
with any of the standards provided for in this Agreement, Licensee may suspend
or cancel any Benedek Programming not in compliance. In the event of any such
suspension or cancellation, Programmer shall retain the right to use the Benedek
Programming and to authorize the use of such Benedek Programming in any manner
and in any media whatsoever.
6. Preemption. Licensee reserves the right in its discretion, and
----------
without liability, to preempt, delay or delete any of the broadcasts of the
Benedek Programming and to broadcast in substitution such other programming
which, in Licensee's judgment, is of greater local or national importance. In
all such cases (except for those involving breaking news), Licensee shall use
reasonable efforts to provide Programmer with at least twenty-four (24) hours
notice of Licensee's intention to preempt, delay or delete such Programming.
Programmer agrees to cooperate in the airing of Licensee's substitute
programming, including the use of Programmer's personnel and equipment as
reasonably required.
7. Advertising and Programming Revenues. Programmer shall be
------------------------------------
entitled to all advertising and promotion-related revenues, and all accounts
receivable, in respect thereof, arising from the sale of advertising time on the
Benedek Programming and the Licensee Programming, or utilized by Programmer and
arising under those Programming Contracts assumed by Licensee pursuant to this
Agreement, and in fact broadcast during the term hereof. Programmer shall be
responsible for payment of all agency commissions and the commissions payable to
any sales representative engaged by Programmer for the purpose of selling
advertising within the Benedek Programming. Licensee shall collect all
advertising and promotion-related revenues on behalf of Programmer and remit
such revenues to Programmer as specified in Attachment I hereto. Licensee and
------------
Programmer each shall have the right, at its own expense, to seek copyright
royalty payments for its own programming. Subject to compliance with applicable
laws, Programmer may sell advertising on the Station in combination with the
sale of advertising on other television or radio stations.
3
<PAGE>
8. Station Facilities. Subject to the terms and conditions set
-------------------
forth in this Agreement, Licensee hereby agrees to make the facilities of the
Station that are owned or leased by Licensee ("Licensee Station Facilities")
available to Programmer twenty-four (24) hours a day, seven (7) days per week
for operation and broadcast. Licensee shall perform reasonable and customary
maintenance of all Licensee Station Facilities and equipment and in furtherance
of its obligations to comply with applicable FCC rules, regulations and
policies, and Licensee's obligations set forth in this Paragraph. Any downtime
in the Licensee Station Facilities occasioned by any such maintenance shall not
be deemed to be a default or violation by Licensee.
9. Right of Access. Licensee shall provide Programmer with access
---------------
at all times to its owned and leased property used for the Station's operations
to conduct, at Programmer's expense, all activities for which such property is
currently used and permitted to be used. Licensee shall have access at all
times to its equipment and facilities used in conjunction with the production
and broadcast of the Licensee Programming so as to permit Licensee to operate
and control the Station and to broadcast the Benedek Programming and Licensee
Programming as provided herein. Programmer shall have the right, upon
Licensee's express prior written consent, such consent not to be unreasonably
withheld, to install and maintain at the Licensee Station Facilities, at
Programmer's expense, any microwave studio/transmitter relay equipment,
telephone lines, transmitter remote control, monitoring devices or any other
equipment necessary for the proper transmission of the Programming on the
Station, and Licensee and Programmer shall take, at Programmer's expense, all
steps reasonably necessary to prepare and file any applications with the FCC to
effectuate such proper transmission.
10. Force Majeure. Any failure or impairment of the Licensee
-------------
Station Facilities or any Station equipment or services or any delay or
interruption in the broadcast of the Benedek Programming, or failure at any time
by Licensee to furnish the Licensee Station Facilities, or any station equipment
or services, in whole or in part, for the broadcast of the Benedek Programming
or otherwise, due to acts of God, strikes, or threats thereof or force majeure,
or due to causes beyond the control of Licensee, shall not constitute a breach
of this Agreement, and Licensee shall not be liable to Programmer.
11. Equipment. The parties agree that Licensee shall retain title
---------
to all of the KKTV Assets (as such term is defined in the Exchange Agreement)
until the Closing of the Exchange Agreement. Programmer shall hold title to any
new equipment or assets purchased or otherwise acquired by Programmer for the
Station during the term of this Agreement; provided that in the event the term
of this Agreement shall end and the Closing under the Exchange Agreement shall
not then have occurred, any equipment or asset obtained as a replacement for any
equipment or assets of Licensee without the express written consent of Licensee
automatically shall become and hereinafter be deemed owned by Licensee, and, in
the case of any such replacement items so consented to, Licensee shall have the
right to purchase the same at
4
<PAGE>
the net book value thereof, in each case free and clear of all Liens (as defined
in the Exchange Agreement). Programmer shall execute and deliver to Licensee all
instruments necessary to effectuate the foregoing.
12. Licensee Control of Station. Notwithstanding anything to the
---------------------------
contrary in this Agreement, Licensee shall have full authority, control and
power over the operation of the Station during the term of this Agreement.
Licensee shall retain control over the policies, programming, finances,
personnel and operations of the Station, including, without limitation, the
right to accept or reject any Programming or advertisements, and the right to
take any other actions necessary for compliance with Applicable Government
Regulations. Licensee shall be responsible to the Federal Communications
Commission for the Station's compliance with all Applicable Government
Regulations, including but not limited to FCC requirements with respect to
ascertainment of the problems, needs and interests of the community, public
service programming, children's programming, political broadcasting, main
studio staffing, maintenance of public inspection files, and maintenance of
appropriate Emergency Alert System equipment, in all cases without intending to
limit any compensation, reimbursement or other obligations of Programmer under
this Agreement. Programmer shall provide Licensee with all necessary
information with respect to the Benedek Programming that is responsive to the
problems, needs and interests of the community, and shall assist Licensee in all
reasonable respects requested by Licensee in the preparation of information to
enable Licensee to prepare records, reports and logs required by the FCC or
other local, state or federal governmental agencies. All correspondence
(including e-mail) from members of the public concerning the Station's
programming shall be provided to the Licensee.
13. Responsibility for Employees and Expenses. During this term of
-----------------------------------------
this Agreement, Licensee hereby agrees to employ no fewer than two full-time
employees for the Station, one of whom shall be a management level employee,
both of whom shall report to and be accountable solely to Licensee, and who
shall be ultimately responsible for the day-to-day operations of the Station.
Programmer shall not employ or seek to employ any of Licensee's current
employees without Licensee's express written consent. Licensee shall be
responsible for paying the salaries, payroll taxes, health insurance and other
employment related costs for all personnel employed by Licensee with respect to
the Station. Effective the date of this Agreement, Programmer shall employ and
be responsible for all personnel, equipment and facilities used in the
production of the Benedek Programming (including, without limitation,
salespeople, traffic personnel and programming staff), except for those
personnel whom Licensee elects to employ and who shall be covered by the
immediately preceding sentence. All Programmer personnel shall be subject to
the supervision and the direction of Licensee's designated personnel in
connection with the performance of their duties at the Station. Licensee shall
be responsible for all expenses of Licensee related to the operation of the
Station and the Licensee Station Facilities and the Station's equipment.
Licensee shall also be responsible for income taxes relating to Licensee's
earnings from this arrangement. Programmer shall pay
5
<PAGE>
promptly when due all copyright fees attributable to Benedek Programming
broadcast on the Station during the term of this Agreement.
14. Compliance with Law. Programmer agrees that, throughout the term
-------------------
of this Agreement, Programmer shall comply with all laws and regulations
applicable to the conduct of Programmer's business and activities, including all
Applicable Government Regulations.
15. Payola/Plugola/EEO. Programmer agrees that it shall not accept,
------------------
and shall not permit any of its employees to accept, any consideration,
compensation, gift or gratuity of any kind whatsoever, regardless of its value
or form, including, but not limited to, a commission, discount, bonus,
materials, supplies or other merchandise, services or labor, whether or not
pursuant to written contracts or agreements between Programmer and merchants or
advertisers, unless the payer is identified in the Benedek Programming as having
paid for or furnished such consideration, in accordance with FCC requirements.
Programmer agrees that, on an annual basis, or more frequently at the request of
Licensee, it will execute and provide Licensee with affidavits regarding
payola/plugola compliance in such form and substance as Licensee shall
reasonably require. Programmer shall comply with all equal employment
opportunity regulations and policies (including but not limited to those of the
FCC) to the extent such regulations and policies apply, or may in the future be
deemed to apply, to the employment practices of Programmer's personnel assigned
to duties in connection with the operation of the Station; and Programmer shall
timely provide Licensee with all information that may be necessary or
appropriate to comply with any reporting obligations of the FCC pursuant to such
regulations or policies.
16. Political Advertising. Licensee shall retain full responsibility
---------------------
for overseeing compliance with the FCC's political programming policies and
regulations, including setting political advertising rates for the Station and
determining which legally qualified political candidates and races shall have
reasonable access to political advertising on the Station. At least 90 days
prior to the beginning of any primary or general election period, Licensee will
set the rates to be charged legally qualified political candidates to ensure
that the rate conforms with applicable election law and policies. Programmer
agrees to provide Licensee with access to its documentation concerning the
pricing of advertising sold on the Station as is necessary to permit Licensee to
ascertain that the political rate is appropriate. Within 24 hours of any
request to purchase time on the Station on behalf of a legally qualified
candidate, Programmer will report the request and its disposition to Licensee
and obtain Licensee's approval to such disposition, which approval shall not be
unreasonably delayed or conditioned. Licensee shall be responsible for placing
appropriate records in the Station's political file.
17. Indemnification. Programmer hereby agrees to indemnify and hold
---------------
harmless each entity comprising Licensee and all members and partners thereof,
and all members, partners, shareholders, directors, officers, agents, employees,
successors, and assigns
6
<PAGE>
of any of the foregoing against all liability, damages, cost and expense
(including without limitation reasonable attorney's fees) suffered or incurred
by any of them for, or arising out of, or by reason of (a) libel, slander,
illegal competition or trade practice, infringement of trade marks, trade names,
or program titles, violation of rights of privacy, infringement of copyrights
and proprietary rights and other liabilities resulting from or relating to the
broadcast of any Benedek Programming, and (b) all other matters arising out of
or related to Programmer's activities involving the Station or use of any of the
Licensee Station Facilities and/or any equipment or assets of the Station.
Licensee hereby agrees to indemnify and hold harmless Programmer and its
directors, officers, agents, employees, successors, and assigns against all
liability arising out of liabilities of the type described in clause (a) of the
first sentence of this Paragraph that arise as a result of Licensee's alteration
of any Benedek Programming prior to broadcast by Licensee which alteration is
not consented to by Programmer. Programmer's and Licensee's obligations under
this Paragraph 15 shall survive any termination of this Agreement until the
expiration of all applicable statutes of limitation.
18. Events of Default; Cure Periods and Remedies. (a) The following
--------------------------------------------
shall, after the expiration of the "applicable cure periods," constitute events
of default under the Agreement ("Events of Default"):
(1) Programmer's failure to timely pay any consideration provided
for in this Agreement or any amount then due under this Agreement or the
Exchange Agreement;
(2) The default by any party hereto in the material observance or
performance of any material covenant or agreement contained herein;
provided, however, that any failure of Licensee to comply with Applicable
Government Regulations shall not be deemed to be a default of a material
covenant or agreement by Licensee if Programmer has failed to provide
information or cooperation to Licensee concerning Benedek Programming that
could have allowed Licensee to avoid such noncompliance, or any other act
or omission, or any instruction or request to station personnel, by
Programmer is a basis or cause of such failure to comply with Applicable
Government Regulations;
(3) Any party (1) shall make a general assignment for the benefit of
creditors, or (2) files or has filed against it a petition for bankruptcy,
for reorganization, or for the appointment of a receiver, trustee or
similar creditors' representative for the property or assets of such party
under any federal or state insolvency law, which, if filed against such
party, has not been dismissed or discharged within sixty (60) days thereof;
(4) The default by any party hereto (after the expiration of all
applicable cure periods) in the material observance or performance of any
material covenant or agreement contained in the Exchange Agreement which
entitles the other party to terminate the Exchange Agreement.
7
<PAGE>
(b) Cure Periods. An Event of Default under 17(a) above shall not be
------------
deemed to have occurred until thirty (30) business days after the non-defaulting
party has provided the defaulting party with written notice specifying the event
or events that if not cured would constitute an Event of Default. The Event of
Default which is subject to a cure period hereunder shall not be deemed to have
occurred if actions necessary and sufficient to cure are taken during the
relevant cure period.
(c) Right of Termination. In addition to other remedies available at
--------------------
law or equity, but subject to the requirements and limitations set forth herein,
this Agreement may be terminated as set forth below by either Licensee or
Programmer by written notice to the other upon the occurrence of the following:
(1) this Agreement is declared invalid or illegal in whole or
substantial part by an order or decree of an administrative agency or court
of competent jurisdiction and such order or decree has become final and no
longer subject to further administrative or judicial review;
(2) an Event of Default by the other party has occurred and the party
seeking to terminate is not then in material default or breach hereof;
(3) the termination of the Exchange Agreement;
(4) the termination of the KCOY TBA;
(5) the mutual consent of all parties; or
(6) there has been a material change in FCC rules, policies or
precedent that would cause this Agreement to be in violation thereof and
such change is in effect and not the subject of a timely appeal or further
administrative review, provided that in such event the parties shall first
negotiate in good faith and attempt to agree on an amendment to this
Agreement that will provide the parties with a valid, binding and
enforceable agreement that conforms to the new FCC rules, policies or
precedent.
(d) Termination Requirements and Procedures. Unless otherwise
---------------------------------------
mutually agreed by Programmer and Licensee, any termination of this Agreement
shall, at the election of Licensee, not become effective until the effective
date specified by Licensee which shall not be more than ninety (90) days after
notice of termination is provided by Programmer or Licensee.
(e) Liabilities Upon Termination. Upon termination of this
----------------------------
Agreement for any reason, Programmer shall be responsible for all liabilities,
debts and obligations of Programmer accrued from the purchase of air time and/or
transmission services and all Benedek Programming, including, without
limitation, accounts payable, barter agreements and unaired
8
<PAGE>
advertisements, but not for Licensee's federal, state, and local tax liabilities
associated with Programmer's payments to Licensee as provided for herein. With
respect to Programmer's obligations to broadcast programming, advertisements and
other material over the Station after termination hereunder, Licensee may
propose compensation to Licensee for meeting these obligations, but Licensee
shall be under no duty to propose such compensation or to perform such
obligations and Programmer shall accept any such proposal by Licensee which is
reasonable and equitable under the circumstances and cooperate with Licensee to
effectuate such performance. In no event shall Licensee be under any obligation
to make available to Programmer any broadcast time or broadcast transmission
facilities and all amounts accrued or payable to Licensee up to the date of
termination which have not been paid shall immediately become due and payable.
(f) Survival. Anything to the contrary contained in this Agreement
--------
notwithstanding, all obligations under this Agreement accrued or arising prior
to or by reason of the termination of this Agreement shall survive such
termination and the following provisions shall also survive any such
termination: Paragraphs 1(b), (c), (d) and (e) (with respect to periods prior
to the effective date of such termination), 2, 6, 7, 10, 12, 15, 16, 19.3 and
20.
19. Responsive Programming, Programmer and Licensee mutually
----------------------
acknowledge their interest in ensuring that the Station serve the needs and
interests of the residents of their communities of license, and the surrounding
service areas and agree to cooperate in doing so. Licensee may request, and
Programmer shall provide, information concerning such of Benedek Programming
that is responsive to community issues so as to assist Licensee in the
satisfaction of its public service programming obligations.
20. Time Brokerage Challenge. If this Agreement is challenged in
------------------------
whole or in part at the FCC or in another administrative or judicial forum,
whether or not in connection with the Station's license renewal application,
counsel for Licensee and counsel for Programmer shall, at their joint expense,
jointly defend the Agreement and the parties' performance hereunder throughout
all such proceedings. If portions of this Agreement do not receive the approval
of the FCC's staff, or the Agreement receives such approval with conditions that
are adverse to Licensee or Programmer, then the parties shall endeavor in good
faith to reform the Agreement as necessary to satisfy the FCC staff's concerns,
while preserving the respective benefits to and without increasing the
respective obligations of the parties, or seek reversal of the staff decision
and approval from the full Commission on appeal.
21. Programmer's Representations, Warranties and Covenants.
-------------------------------------------------------
Programmer makes the following additional representations, warranties and
covenants:
(a) Compliance with Applicable Law. Programmer's performance of its
------------------------------
obligations under this Agreement and its furnishing of Benedek Programming
shall be in
9
<PAGE>
compliance with, and shall not violate or cause Licensee to violate any
applicable laws or any applicable rules, regulations, or orders of the FCC
or any other governmental agency.
(b) Handling of Complaints. Programmer shall promptly advise
----------------------
Licensee of any public or FCC complaint or inquiry that Programmer receives
concerning the Benedek Programming and shall cooperate with Licensee and
take all actions as may be reasonably requested by Licensee in responding
to any such complaint or inquiry.
(c) Copyright and Licensing. Programmer shall not broadcast on the
-----------------------
Station any material in violation of the Copyright Act.
(d) Insurance. Programmer shall maintain throughout the term of this
---------
Agreement general liability insurance and errors and omissions insurance
covering broadcasts made on the Station, and shall name Licensee as an
additional insured on such insurance policies.
(e) Information for FCC Reports. Upon request by Licensee,
---------------------------
Programmer shall provide in a timely manner any such information in its
possession that shall enable Licensee to prepare, file or maintain the
records and reports required by the FCC.
22. Miscellaneous.
-------------
(a) Certain Limitations. Anything to the contrary contained in the
-------------------
Agreement notwithstanding:
(1) in the event the Closing under the Exchange Agreement shall
occur, Licensee shall have no liability or obligation whatsoever under this
Agreement, whether for matters arising prior to such Closing or otherwise.
(2) Programmer's sole remedy for any breach or default by Licensee
under this Agreement shall be such rights as Programmer may have under the
Exchange Agreement upon the termination thereof.
(3) Nothing herein, express or implied, is intended or shall be
construed to confer upon or give to any person or entity, other than the
parties hereto, any rights, remedies or other benefits under or by reason
of this Agreement.
(b) Amendment; Waiver. No modification, amendment or waiver of any
-----------------
provision of this Agreement shall in any event be effected unless the same shall
be in writing and signed by the party adversely affected by the waiver or
modification, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
10
<PAGE>
(c) No Waiver; Remedies Cumulative. No failure or delay on the part
------------------------------
of Licensee or Programmer in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. Except as otherwise provided in this
Agreement or in the Exchange Agreement, the rights and remedies of Licensee and
Programmer herein provided are cumulative and are not exclusive of any right or
remedy which Licensee or Programmer may otherwise have.
(d) Construction. This Agreement shall be construed in accordance
------------
with the laws of the State of California, excluding the choice of law rules
thereof.
(e) Headings. The headings contained in this Agreement are included
--------
for convenience only and no such heading shall in any way alter the meaning of
any provision.
(f) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement shall be assignable only to the same extent
as and solely in connection with any assignment of the Exchange Agreement
permitted pursuant to the terms thereof.
(g) Notices. Any notice required hereunder shall be in writing and
-------
any payment, notice or other communication shall be deemed given when delivered
personally, or mailed by certified mail or Federal Express, postage prepaid,
with return receipt requested:
If to Licensee:
AK Media Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, WA 98101
Attn: Mr. Denis M. Curley
With a copy to:
Rubin, Winston, Diercks, Harris & Cooke, LLP
1333 New Hampshire Avenue, N.W., Suite 1000
Washington, D.C. 20036
Attn: James L. Winston, Esq.
If to Programmer:
Benedek Broadcasting Corporation
100 Park Avenue
11
<PAGE>
Rockford, Illinois 61101
Attn: President
With a copy to:
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Attn: Paul S. Goodman, Esq.
(h) Entire Agreement. This Agreement, together with the Exchange
----------------
Agreement and the Schedules, Attachments and Exhibits hereto and thereto, embody
the entire agreement between the parties and there are no other agreements,
representations, warranties, or understandings, oral or written, between them
with respect to the subject matter hereof.
(i) Severability. In the event that any of the provisions contained
------------
in this Agreement is held to be invalid, illegal or unenforceable, this
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had not been contained herein, subject to the termination rights
contained in Paragraph 16 hereof.
(j) Signatures. This Agreement may be signed in one or more
----------
counterparts, each of which shall be deemed a duplicate original, binding on the
parties hereto notwithstanding that the parties are not signatory to the
original or the same counterpart. This Agreement shall be binding and effective
as of the date on which the executed counterparts are exchanged by the parties.
The parties agree to be bound upon the exchange of signature pages transmitted
by facsimile; provided, however, upon execution of this Agreement, Programmer
agrees to send to Licensee and Licensee agrees to send to Programmer, the
original signature pages via overnight delivery.
12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Time Brokerage Agreement
as of the date first above written.
BENEDEK BROADCASTING CORPORATION
By:_________________________________
Name: K. James Yager
Title: President
AK MEDIA GROUP, INC.
By:________________________________
Name:
Title:
13
<PAGE>
TIME BROKERAGE AGREEMENT
ATTACHMENT I
1. Programmer shall pay to Licensee during each month of the term of this
Agreement an amount equal to one-twelfth of the Station's actual 1998 broadcast
cash flow (as such term is commonly understood in the broadcasting industry)
(the "Fixed Fee Amount"), plus the following:
a. The amount of all salaries, commissions and other compensation,
payroll, taxes, health insurance and other fringe benefits and other
=
employment-related costs and expenses for or with respect to all employees
of the Station in respect of and/or allocable to the term of this Agreement
(the "Employment Related Amount"); and
b. An amount equal to all costs and expenses incurred by Licensee in
connection with operating the Station (including, without limitation, lease
payments, utilities, taxes, programming fees, sales representatives'
commissions, Programming Agreement charges and all other fees and expenses)
in respect of and/or allocable to the term of this Agreement.
2. The fees, costs and expenses referred to above shall be termed,
collectively, the "Time Brokerage Fee." The Fixed Fee Amount for each calendar
month during the term of this Agreement shall be paid within 10 days after the
end of each such month. The Employment Related Amount for each calendar month
for each calendar month during the term of this Agreement shall be paid in
arrears within 10 days after the end of each such month. Programmer shall pay
all other amounts payable by Programmer as contemplated by this Attachment I
within 10 days of invoicing by Licensee therefor.
3. Licensee shall collect all accounts receivable relating to the Station
and the KKTV Assets (as such term is defined in the Exchange Agreement) and
shall be responsible for the payment of all costs and expenses relating to the
ownership and operation of the Station and the KKTV Assets, in each case, for
the period through December 31, 1998. All such accounts receivable arising out
of operation of the Station and the KKTV Assets prior to 12:01 a.m. Pacific time
on the Commencement Date (the "Licensee's Term") shall belong to the Licensee.
All such accounts receivables arising out of operation of the Station and the
KKTV Assets on or after 12:01 a.m. Pacific time on the Commencement Date through
the expiration of this Agreement (the "TBA Term") shall belong to the
Programmer. Licensee acknowledges that Programmer has granted a security
interest in and lien upon all of its accounts receivables, including the
accounts receivables arising out of the operation of KKTV on or after the
Commencement Date, to Bankers Trust Company, as agent for lenders to Programmer
under an Amended and Restated Credit Agreement dated as of December 17, 1997.
All costs and expenses relating to the operation of the Station and the KKTV
Assets during the Licensee's
<PAGE>
Term shall be borne by Licensee. All costs and expenses relating to the
operation of the Station and the KKTV Assets during the TBA Term shall be borne
by Programmer. Accounts receivable, costs and expenses arising from contracts or
services for periods covering both the Licensee's Term and the TBA Term shall be
prorated according to each term. Such prorations shall include, without
limitation, all ad valorem, real estate and other property taxes, business and
license fees, lease payments, rents, wages and salaries of employees (including
accruals for bonuses, commissions, and vacation pay), workers compensation
premiums, utility expenses, water and sewer use charges, time sales agreements,
pre-paid fees and expenses to the extent Programmer has received a benefit
thereof, and all other income and expenses attributable to the operation of the
Station. Programmer acknowledges, however, that the consideration for the
Station includes payment for the contracts and commitments of Licensee relating
to motion pictures and other programming and for barter receivables arising in
connection with trade-out agreements and that no further payment to Licensee or
proration shall be due in respect thereof, except that Licensee shall be
responsible for all payments relating to such contracts due pursuant to the
contracts therefor prior to the Commencement Date. Within 15 days after the end
of each month after the Closing Date (as such term is defined in the Exchange
Agreement), Licensee will provide Programmer with a written report on account
receivables collections made and costs and expenses paid for such month. On the
Closing Date, Licensee and Programmer shall settle any amounts owed to the
other.
-iii-
<PAGE>
TIME BROKERAGE AGREEMENT
EXHIBIT A
BROADCAST STATION PROGRAMMING POLICY STATEMENT
The following sets forth the policies generally applicable to the presentation
of programming and advertising over Television Station KKTV(TV), Colorado
Springs, Colorado. All programming and advertising broadcast by the Station
must conform to these policies and to the provisions of the Communications Act
of 1934, as amended (the "Act"), and the Rules and Regulations of the Federal
Communications Commission ("FCC").
STATION IDENTIFICATION
The Station must broadcast a Station identification announcement once an hour as
close to the hour as feasible in a natural break in the programming. The
announcement must include (1) the Station's call letters; followed immediately
by (2) the Station's city of license.
BROADCAST OF TELEPHONE CONVERSATIONS
Before recording a telephone conversation for broadcast or broadcasting such a
conversation simultaneously with its occurrence, any party to the call must be
informed that the call will be broadcast or will be recorded for later
broadcast, and the party's consent to such broadcast must be obtained. This
requirement does not apply to calls initiated by the other party which are made
in a context in which it is customary for the Station to broadcast telephone
calls.
SPONSORSHIP IDENTIFICATION
When money, service, or other valuable consideration is eider directly or
indirectly paid or promised as part of an arrangement to transmit any
programming, the Station at the time of broadcast shall announce (1) that the
matter is sponsored, either whole or in part; and (2) by whom or on whose behalf
the matter is sponsored. Products or services furnished to the Station in
consideration for an identification of any person, product, service, trademark
or brand name shall be identified in this manner.
In the case of any political or controversial issue broadcast for which any
material or service is furnished as an inducement for its transmission, an
announcement shall be made at the beginning and conclusion of the broadcast
stating (1) the material or service that has been furnished; and (2) the
person(s) or association(s) on whose behalf the programming is transmitted.
However, if the broadcast is 5 minutes duration or less, the required
announcement need only be made either at its beginning or end.
<PAGE>
Prior to any sponsored broadcast involving political matters or controversial
issues, the Station shall obtain a list of the chief executive officers, members
of the executive committee or board of directors of the sponsoring organization
and shall place this list in the Station's public inspection file.
The station, its personnel, or its programmers shall not accept or agree to
accept from any person any money, service, or other valuable consideration for
the broadcast of any matter unless such fact is disclosed to the Station so that
all required Station identification announcements can be made. All persons
responsible for Station programming must, from time to time, execute such
documents as may be required by Station management to confirm their
understanding of and compliance with the FCC's sponsorship identification
requirements.
REBROADCASTS
The Station shall not rebroadcast the signal of any other broadcast Station
without first obtaining such Station's prior written consent to such
rebroadcast.
FAIRNESS
Station shall seek to afford coverage to contrasting viewpoints concerning
controversial issues of public importance.
PERSONAL ATTACKS
The Station shall not air attacks upon the honesty, character, integrity or like
personal qualities of any identified person or group. If such an attack should
nonetheless occur during the presentation of view on a controversial issue of
public importance, those responsible for programming shall submit a tape or
transcript of the broadcast to Station management and to the person attacked
within 48 hours, and shall offer the person attacked a reasonable opportunity to
respond.
POLITICAL EDITORIALS
Unless specifically authorized by Station management, the Station shall not air
any editorial which either endorses or opposes a legally qualified candidate for
public office.
POLITICAL BROADCASTING
All "uses" of the Station by legally qualified candidates for elective office
shall be in accordance with the Act and the FCC's Rules and policies, including
without limitation, equal opportunities requirements, reasonable access
requirements, lowest unit charge requirements and similar rules and regulations.
-ii-
<PAGE>
OBSCENITY AND INDECENCY
The Station shall not broadcast any obscene material. Material is deemed to be
obscene if the average person, applying contemporary community standards in the
local community, would find that the material, taken as a whole, appeals to the
prurient interest; depicts or describes in a patently offensive way sexual
conduct specifically defined by applicable state law; and taken as a whole,
lacks serious literary artistic, political or scientific value.
The Station shall not broadcast any indecent material outside of the periods of
time prescribed by the Commission. Material is deemed to be indecent if it
includes language or material that, in context, depicts or describes, in terms
patently offensive as measured by contemporary community standards for the
broadcast medium, sexual or excretory activities or organs.
BILLING
No entity which sells advertising for airing on the Station shall knowingly
issue any bill, invoice or other document which contains false information
concerning the amount charged or the broadcast of advertising which is the
subject of the bill or invoice. No entity which sells advertising for airing on
the Station shall misrepresent the nature or content of aired advertising, nor
the quantity, time of day, or day on which such advertising was broadcast.
CONTESTS
Any contests conducted on the Station shall be conducted substantially as
announced or advertised. Advertisements or announcements concerning such
contests shall fully and accurately disclose the contest's material terms. No
contest description shall be false, misleading or deceptive with respect to any
material term.
HOAXES
The Station shall not knowingly broadcast false information concerning a crime
or catastrophe.
EMERGENCY INFORMATION
Any emergency information which is broadcast by the Station shall be transmitted
both aurally and visually or only visually.
LOTTERY
The Station shall not advertise or broadcast any information concerning any
lottery (except any state lottery). The Station may advertise and provide
information about lotteries conducted by non-profit groups, governmental
entities and in certain situations, by commercial organizations,
-iii-
<PAGE>
if and only if there is no state or local restriction or ban on such advertising
or information and the lottery is legal under state or local law. Any and all
lottery advertising must first be approved by Station management.
ADVERTISING
The Station shall comply with all federal, state and local laws concerning
advertising, including without limitation, all laws concerning misleading
advertising, and the advertising of alcoholic beverages.
PROGRAMMING PROHIBITIONS
Knowing broadcast of the following types of programs and announcements is
prohibited:
False Claims. False or unwarranted claims for any product or service.
------------
Unfair Imitation. Infringement of another advertiser's rights through
----------------
plagiarism or unfair imitation of either program idea or copy, or any other
unfair competition.
Commercial Disparagement. Any unfair disparagement of competitors or
------------------------
competitive goods.
Profanity. Any programs or announcements that are slanderous, obscene,
---------
profane, vulgar, repulsive or offensive, as evaluated by Station
management.
Violence. Any programs which are excessively violent.
--------
Unauthenticated Testimonials. Any testimonials which cannot be
----------------------------
authenticated.
-iv-
<PAGE>
EXHIBIT B
---------
TIME BROKERAGE AGREEMENT
------------------------
THIS TIME BROKERAGE AGREEMENT (the "Agreement") is made as of this
30th day of December, 1998, by and between BENEDEK BROADCASTING CORPORATION, a
Delaware corporation ("BBC"), BENEDEK LICENSE CORPORATION, a Delaware
corporation (collectively with BBC, "Licensee"), and AK MEDIA GROUP, INC., a
Washington corporation ("Programmer").
WHEREAS, Licensee is the owner, operator and licensee of television
broadcast station KCOY(TV), Channel 12, Santa Maria, California (the "Station");
WHEREAS, Licensee and Programmer have entered into as of the date
hereof that certain Exchange Agreement (the "Exchange Agreement") relating to
the sale by Licensee and the purchase by Programmer of all licenses, permits and
other authorizations for the Station (collectively, the "FCC Licenses") issued
by the Federal Communications Commission ("FCC") to Licensee and certain other
assets related to the Station as well as the sale by Programmer and the purchase
by Licensee of the FCC Licenses for KKTV, Colorado Springs, Colorado; and
WHEREAS, Licensee holds an affiliation agreement authorizing it to
broadcast programming of the CBS Television Network and various syndication
agreements authorizing it to broadcast entertainment and news programming (the
"Programming Agreements") and also provides locally produced news and public
affairs programming for its community of license (collectively, the "Licensee
Programming");
WHEREAS, Programmer wishes to provide programming for broadcast on the
Station, which may include, without limitation, original programs, syndicated
programs, barter programs, paid-for programs, locally produced programs and
advertising (the "AK Programming") and related management services, and Licensee
desires to accept and broadcast the programming supplied by Programmer on the
Station and such services, subject to the terms and conditions hereof; and
WHEREAS, Programmer and Licensee, simultaneously with the execution of
this Agreement, are entering into a Time Brokerage Agreement with respect to
KKTV (the "KKTV TBA").
NOW, THEREFORE, for and in consideration of the mutual covenants
herein contained, the parties hereto have agreed and do agree as follows:
1. Programming and Transmission Services.
-------------------------------------
(a) Subject to the provisions of this Agreement, Licensee agrees to
make available to Programmer air time and transmission capabilities for the
broadcast of AK Programming on the Station for up to twenty-four (24) hours per
day, seven (7) days a week during periods when
<PAGE>
Licensee is not broadcasting Licensee Programming. Licensee may, in its
discretion, assign any of the Programming Agreements, individually or in the
aggregate, to Programmer during the term of this Agreement. If any Programming
Agreement is assigned from Licensee to Programmer, programming provided under
that Programming Agreement shall be considered to be part of the AK Programming.
(b) Programmer shall assure that no contract or commitment for
Programming arranged by Programmer shall give rise to any liability or
obligation of Licensee; provided that Programmer shall promptly inform Licensee
of each such contract and commitment and of the terms thereof and, if BBC shall
elect to assume any such contract or commitment, Programmer shall, in the event
that the Exchange Agreement terminates without a Closing, upon the termination
of the term of this Agreement arrange for the immediate assignment to BBC of
such contract or commitment and for the concurrent consent of each other party
thereto to such assignment.
2. Advertising Sales. Licensee shall timely fulfill all orders for
------------------
advertising on the Station applicable to any of the Licensee Programming and AK
Programming. In the event any such order calls for the placement of any
advertising on the Station after the termination of the term of this Agreement
without the consummation of the Exchange Agreement, Programmer shall if, and
only if, and to the extent BBC elects to fulfill such order, cooperate with
Licensee to enable such advertising to be broadcast on the Station in accordance
with the terms of such order and all revenues and accounts receivable relating
to or arising from such orders shall be the sole and exclusive asset of BBC.
3. Payments. As consideration for the rights granted hereunder,
--------
Programmer hereby agrees to pay to BBC in a timely manner the amounts referred
to on Attachment I hereto (the "Fee"), in each case on the dates specified in
------------
said Attachment I. Anything to the contrary contained in this Agreement
------------
notwithstanding, in no event shall Programmer be entitled to delay payment of,
reduce, or set off any claim against, any amount payable by Programmer under
this Agreement, whether by reason of a breach or default by Licensee or
otherwise.
4. Term. The term of this Agreement shall begin on January 1, 1999
----
(the "Commencement Date"), and shall continue in force from that date for a
period of three (3) months, except that it shall be automatically extended if
the Closing (as defined in the Exchange Agreement) on the sale of the Station by
Licensee has not occurred and the Exchange Agreement has not been terminated,
until the earlier of the occurrence of (i) such Closing or (ii) the termination
of the Exchange Agreement.
5. AK Programming. AK Programming shall comply with the Station's
--------------
Policy Guidelines attached on Exhibit A hereto, as the same may be reasonably
---------
amended by Licensee from time to time, and with the provisions of this
Agreement, and, provided such
2
<PAGE>
compliance obligations are satisfied, shall be entertainment programming of
Programmer's own selection, together with commercial matters, news, public
service announcements and other programming suitable for broadcast on the
Station. All actions or activities of Programmer under this Agreement, and AK
Programming shall be in accordance with: (a) the Communications Act of 1934, as
amended; (b) the rules, requirements and policies of the FCC, including, without
limitation, the FCC's rules on children's television programming,
plugola/payola, lotteries and contests, hoaxes, station identification, minimum
operating schedule, sponsorship identification, political programming and
political advertising rates; (c) all applicable federal, state and local laws,
regulations and policies (collectively, "Applicable Government Regulations");
and (d) generally accepted quality standards of the television broadcast
industry. In the event that Licensee determines, based on the exercise of
Licensee's good faith reasonable business judgment, that Programmer has failed
to comply in any material respect with any of the standards provided for in this
Agreement, Licensee may suspend or cancel any AK Programming not in compliance.
In the event of any such suspension or cancellation, Programmer shall retain the
right to use the AK Programming and to authorize the use of such AK Programming
in any manner and in any media whatsoever.
6. Preemption. Licensee reserves the right in its discretion, and
----------
without liability, to preempt, delay or delete any of the broadcasts of the AK
Programming and to broadcast in substitution such other programming which, in
Licensee's judgment, is of greater local or national importance. In all such
cases (except for those involving breaking news), Licensee shall use reasonable
efforts to provide Programmer with at least twenty-four (24) hours notice of
Licensee's intention to preempt, delay or delete such Programming. Programmer
agrees to cooperate in the airing of Licensee's substitute programming,
including the use of Programmer's personnel and equipment as reasonably
required.
7. Advertising and Programming Revenues. Programmer shall be
------------------------------------
entitled to all advertising and promotion-related revenues, and all accounts
receivable, in respect thereof, arising from the sale of advertising time on the
AK Programming and the Licensee Programming, or utilized by Programmer and
arising under those Programming Contracts assumed by Licensee pursuant to this
Agreement, and in fact broadcast during the term hereof. Programmer shall be
responsible for payment of all agency commissions and the commissions payable to
any sales representative engaged by Programmer for the purpose of selling
advertising within the AK Programming. Licensee shall collect all advertising
and promotion-related revenues on behalf of Programmer and remit such revenues
to Programmer as specified in Attachment I hereto. Licensee and Programmer each
------------
shall have the right, at its own expense, to seek copyright royalty payments for
its own programming. Subject to compliance with applicable laws, Programmer may
sell advertising on the Station in combination with the sale of advertising on
other television or radio stations.
8. Station Facilities. Subject to the terms and conditions set
-------------------
forth in this Agreement, Licensee hereby agrees to make the facilities of the
Station that are owned or leased
3
<PAGE>
by Licensee ("Licensee Station Facilities") available to Programmer twenty-four
(24) hours a day, seven (7) days per week for operation and broadcast. Licensee
shall perform reasonable and customary maintenance of all Licensee Station
Facilities and equipment and in furtherance of its obligations to comply with
applicable FCC rules, regulations and policies, and Licensee's obligations set
forth in this Paragraph. Any downtime in the Licensee Station Facilities
occasioned by any such maintenance shall not be deemed to be a default or
violation by Licensee.
9. Right of Access. Licensee shall provide Programmer with access
---------------
at all times to its owned and leased property used for the Station's operations
to conduct, at Programmer's expense, all activities for which such property is
currently used and permitted to be used. Licensee shall have access at all
times to its equipment and facilities used in conjunction with the production
and broadcast of the Licensee Programming so as to permit Licensee to operate
and control the Station and to broadcast the AK Programming and Licensee
Programming as provided herein. Programmer shall have the right, upon
Licensee's express prior written consent, such consent not to be unreasonably
withheld, to install and maintain at the Licensee Station Facilities, at
Programmer's expense, any microwave studio/transmitter relay equipment,
telephone lines, transmitter remote control, monitoring devices or any other
equipment necessary for the proper transmission of the Programming on the
Station, and Licensee and Programmer shall take, at Programmer's expense, all
steps reasonably necessary to prepare and file any applications with the FCC to
effectuate such proper transmission.
10. Force Majeure. Any failure or impairment of the Licensee
-------------
Station Facilities or any Station equipment or services or any delay or
interruption in the broadcast of the AK Programming, or failure at any time by
Licensee to furnish the Licensee Station Facilities, or any station equipment or
services, in whole or in part, for the broadcast of the AK Programming or
otherwise, due to acts of God, strikes, or threats thereof or force majeure, or
due to causes beyond the control of Licensee, shall not constitute a breach of
this Agreement, and Licensee shall not be liable to Programmer.
11. Equipment. The parties agree that Licensee shall retain title
---------
to all of the KCOY Assets (as such term is defined in the Exchange Agreement)
until the Closing of the Exchange Agreement. Programmer shall hold title to any
new equipment or assets purchased or otherwise acquired by Programmer for the
Station during the term of this Agreement; provided that in the event the term
of this Agreement shall end and the Closing under the Exchange Agreement shall
not then have occurred, any equipment or asset obtained as a replacement for any
equipment or assets of Licensee without the express written consent of BBC
automatically shall become and hereinafter be deemed owned by BBC, and, in the
case of any such replacement items so consented to, BBC shall have the right to
purchase the same at the net book value thereof, in each case free and clear of
all Liens (as defined in the Exchange Agreement). Programmer shall execute and
deliver to BBC all instruments necessary to effectuate the foregoing.
4
<PAGE>
12. Licensee Control of Station. Notwithstanding anything to the
---------------------------
contrary in this Agreement, Licensee shall have full authority, control and
power over the operation of the Station during the term of this Agreement.
Licensee shall retain control over the policies, programming, finances,
personnel and operations of the Station, including, without limitation, the
right to accept or reject any Programming or advertisements, and the right to
take any other actions necessary for compliance with Applicable Government
Regulations. Licensee shall be responsible to the Federal Communications
Commission for the Station's compliance with all Applicable Government
Regulations, including but not limited to FCC requirements with respect to
ascertainment of the problems, needs and interests of the community, public
service programming, children's programming, political broadcasting, main
studio staffing, maintenance of public inspection files, and maintenance of
appropriate Emergency Alert System equipment, in all cases without intending to
limit any compensation, reimbursement or other obligations of Programmer under
this Agreement. Programmer shall provide Licensee with all necessary
information with respect to the AK Programming that is responsive to the
problems, needs and interests of the community, and shall assist Licensee in all
reasonable respects requested by Licensee in the preparation of information to
enable Licensee to prepare records, reports and logs required by the FCC or
other local, state or federal governmental agencies. All correspondence
(including e-mail) from members of the public concerning the Station's
programming shall be provided to the Licensee.
13. Responsibility for Employees and Expenses. During this term of
-----------------------------------------
this Agreement, BBC hereby agrees to employ no fewer than two full-time
employees for the Station, one of whom shall be a management level employee,
both of whom shall report to and be accountable solely to Licensee, and who
shall be ultimately responsible for the day-to-day operations of the Station.
Programmer shall not employ or seek to employ any of BBC's current employees
without BBC's express written consent. BBC shall be responsible for paying the
salaries, payroll taxes, health insurance and other employment related costs for
all personnel employed by BBC with respect to the Station. Effective the date
of this Agreement, Programmer shall employ and be responsible for all personnel,
equipment and facilities used in the production of the AK Programming
(including, without limitation, salespeople, traffic personnel and programming
staff), except for those personnel whom BBC elects to employ and who shall be
covered by the immediately preceding sentence. All Programmer personnel shall
be subject to the supervision and the direction of Licensee's designated
personnel in connection with the performance of their duties at the Station.
BBC shall be responsible for all expenses of Licensee related to the operation
of the Station and the Licensee Station Facilities and the Station's equipment.
Licensee shall also be responsible for income taxes relating to Licensee's
earnings from this arrangement. Programmer shall pay promptly when due all
copyright fees attributable to AK Programming broadcast on the Station during
the term of this Agreement.
14. Compliance with Law. Programmer agrees that, throughout the
-------------------
term of this Agreement, Programmer shall comply with all laws and regulations
applicable to the
5
<PAGE>
conduct of Programmer's business and activities, including all Applicable
Government Regulations.
15. Payola/Plugola/EEO. Programmer agrees that it shall not accept,
------------------
and shall not permit any of its employees to accept, any consideration,
compensation, gift or gratuity of any kind whatsoever, regardless of its value
or form, including, but not limited to, a commission, discount, bonus,
materials, supplies or other merchandise, services or labor, whether or not
pursuant to written contracts or agreements between Programmer and merchants or
advertisers, unless the payer is identified in the AK Programming as having paid
for or furnished such consideration, in accordance with FCC requirements.
Programmer agrees that, on an annual basis, or more frequently at the request of
Licensee, it will execute and provide Licensee with affidavits regarding
payola/plugola compliance in such form and substance as Licensee shall
reasonably require. Programmer shall comply with all equal employment
opportunity regulations and policies (including but not limited to those of the
FCC) to the extent such regulations and policies apply, or may in the future be
deemed to apply, to the employment practices of Programmer's personnel assigned
to duties in connection with the operation of the Station; and Programmer shall
timely provide Licensee with all information that may be necessary or
appropriate to comply with any reporting obligations of the FCC pursuant to such
regulations or policies.
16. Political Advertising. Licensee shall retain full responsibility
---------------------
for overseeing compliance with the FCC's political programming policies and
regulations, including setting political advertising rates for the Station and
determining which legally qualified political candidates and races shall have
reasonable access to political advertising on the Station. At least 90 days
prior to the beginning of any primary or general election period, Licensee will
set the rates to be charged legally qualified political candidates to ensure
that the rate conforms with applicable election law and policies. Programmer
agrees to provide Licensee with access to its documentation concerning the
pricing of advertising sold on the Station as is necessary to permit Licensee to
ascertain that the political rate is appropriate. Within 24 hours of any
request to purchase time on the Station on behalf of a legally qualified
candidate, Programmer will report the request and its disposition to Licensee
and obtain Licensee's approval to such disposition, which approval shall not be
unreasonably delayed or conditioned. Licensee shall be responsible for placing
appropriate records in the Station's political file.
17. Indemnification. Programmer hereby agrees to indemnify and
---------------
hold harmless each entity comprising Licensee and all members and partners
thereof, and all members, partners, shareholders, directors, officers, agents,
employees, successors, and assigns of any of the foregoing against all
liability, damages, cost and expense (including without limitation reasonable
attorney's fees) suffered or incurred by any of them for, or arising out of, or
by reason of (a) libel, slander, illegal competition or trade practice,
infringement of trade marks, trade names, or program titles, violation of rights
of privacy, infringement of copyrights and proprietary rights and other
liabilities resulting from or relating to the broadcast of any AK
6
<PAGE>
Programming, and (b) all other matters arising out of or related to Programmer's
activities involving the Station or use of any of the Licensee Station
Facilities and/or any equipment or assets of the Station. Licensee hereby
agrees to indemnify and hold harmless Programmer and its directors, officers,
agents, employees, successors, and assigns against all liability arising out of
liabilities of the type described in clause (a) of the first sentence of this
Paragraph that arise as a result of Licensee's alteration of any Benedek
Programming prior to broadcast by Licensee which alteration is not consented to
by Programmer. Programmer's and Licensee's obligations under this Paragraph 15
shall survive any termination of this Agreement until the expiration of all
applicable statutes of limitation.
18. Events of Default; Cure Periods and Remedies. (a) The following
--------------------------------------------
shall, after the expiration of the "applicable cure periods," constitute events
of default under the Agreement ("Events of Default"):
(1) Programmer's failure to timely pay any consideration provided
for in this Agreement or any amount then due under this Agreement or the
Exchange Agreement;
(2) The default by any party hereto in the material observance or
performance of any material covenant or agreement contained herein;
provided, however, that any failure of Licensee to comply with Applicable
Government Regulations shall not be deemed to be a default of a material
covenant or agreement by Licensee if Programmer has failed to provide
information or cooperation to Licensee concerning Benedek Programming that
could have allowed Licensee to avoid such noncompliance, or any other act
or omission, or any instruction or request to station personnel, by
Programmer is a basis or cause of such failure to comply with Applicable
Government Regulations;
(3) Any party (1) shall make a general assignment for the benefit of
creditors, or (2) files or has filed against it a petition for bankruptcy,
for reorganization, or for the appointment of a receiver, trustee or
similar creditors' representative for the property or assets of such party
under any federal or state insolvency law, which, if filed against such
party, has not been dismissed or discharged within sixty (60) days thereof;
(4) The default by any party hereto (after the expiration of all
applicable cure periods) in the material observance or performance of any
material covenant or agreement contained in the Exchange Agreement which
entitles the other party to terminate the Exchange Agreement.
(b) Cure Periods. An Event of Default under 17(a) above shall not be
------------
deemed to have occurred until thirty (30) business days after the non-defaulting
party has provided the defaulting party with written notice specifying the event
or events that if not cured would constitute an Event of Default. The Event of
Default which is subject to a cure period hereunder shall not be deemed to have
occurred if actions necessary and sufficient to cure are taken during the
relevant cure period.
7
<PAGE>
(c) Right of Termination. In addition to other remedies available at
--------------------
law or equity, but subject to the requirements and limitations set forth herein,
this Agreement may be terminated as set forth below by either Licensee or
Programmer by written notice to the other upon the occurrence of the following:
(1) this Agreement is declared invalid or illegal in whole or
substantial part by an order or decree of an administrative agency or court
of competent jurisdiction and such order or decree has become final and no
longer subject to further administrative or judicial review;
(2) an Event of Default by the other party has occurred and the party
seeking to terminate is not then in material default or breach hereof;
(3) the termination of the Exchange Agreement;
(4) the termination of the KCOY TBA;
(5) the mutual consent of all parties; or
(6) there has been a material change in FCC rules, policies or
precedent that would cause this Agreement to be in violation thereof and
such change is in effect and not the subject of a timely appeal or further
administrative review, provided that in such event the parties shall first
negotiate in good faith and attempt to agree on an amendment to this
Agreement that will provide the parties with a valid, binding and
enforceable agreement that conforms to the new FCC rules, policies or
precedent.
(d) Termination Requirements and Procedures. Unless otherwise
---------------------------------------
mutually agreed by Programmer and Licensee, any termination of this Agreement
shall, at the election of Licensee, not become effective until the effective
date specified by Licensee which shall not be more than ninety (90) days after
notice of termination is provided by Programmer or Licensee.
(e). Liabilities Upon Termination. Upon termination of this
----------------------------
Agreement for any reason, Programmer shall be responsible for all liabilities,
debts and obligations of Programmer accrued from the purchase of air time and/or
transmission services and all Benedek Programming, including, without
limitation, accounts payable, barter agreements and unaired advertisements, but
not for Licensee's federal, state, and local tax liabilities associated with
Programmer's payments to Licensee as provided for herein. With respect to
Programmer's obligations to broadcast programming, advertisements and other
material over the Station after termination hereunder, Licensee may propose
compensation to Licensee for meeting these obligations, but Licensee shall be
under no duty to propose such compensation or to perform such obligations and
Programmer shall accept any such proposal by Licensee which is reasonable and
equitable under the
8
<PAGE>
circumstances and cooperate with Licensee to effectuate such performance. In no
event shall Licensee be under any obligation to make available to Programmer any
broadcast time or broadcast transmission facilities and all amounts accrued or
payable to Licensee up to the date of termination which have not been paid shall
immediately become due and payable.
(f) Survival. Anything to the contrary contained in this Agreement
--------
notwithstanding, all obligations under this Agreement accrued or arising prior
to or by reason of the termination of this Agreement shall survive such
termination and the following provisions shall also survive any such
termination: Paragraphs 1(b), (c), (d) and (e) (with respect to periods prior
to the effective date of such termination), 2, 6, 7, 10, 12, 15, 16, 19.3 and
20.
19. Responsive Programming, Programmer and Licensee mutually
----------------------
acknowledge their interest in ensuring that the Station serve the needs and
interests of the residents of their communities of license, and the surrounding
service areas and agree to cooperate in doing so. Licensee may request, and
Programmer shall provide, information concerning such of Benedek Programming
that is responsive to community issues so as to assist Licensee in the
satisfaction of its public service programming obligations.
20. Time Brokerage Challenge. If this Agreement is challenged in
------------------------
whole or in part at the FCC or in another administrative or judicial forum,
whether or not in connection with the Station's license renewal application,
counsel for Licensee and counsel for Programmer shall, at their joint expense,
jointly defend the Agreement and the parties' performance hereunder throughout
all such proceedings. If portions of this Agreement do not receive the approval
of the FCC's staff, or the Agreement receives such approval with conditions that
are adverse to Licensee or Programmer, then the parties shall endeavor in good
faith to reform the Agreement as necessary to satisfy the FCC staff's concerns,
while preserving the respective benefits to and without increasing the
respective obligations of the parties, or seek reversal of the staff decision
and approval from the full Commission on appeal.
21. Programmer's Representations, Warranties and Covenants.
-------------------------------------------------------
Programmer makes the following additional representations, warranties and
covenants:
(a) Compliance with Applicable Law. Programmer's performance of its
------------------------------
obligations under this Agreement and its furnishing of Benedek Programming
shall be in compliance with, and shall not violate or cause Licensee to
violate any applicable laws or any applicable rules, regulations, or orders
of the FCC or any other governmental agency.
(b) Handling of Complaints. Programmer shall promptly advise
----------------------
Licensee of any public or FCC complaint or inquiry that Programmer receives
concerning the Benedek Programming and shall cooperate with Licensee and
take all actions as may be reasonably requested by Licensee in responding
to any such complaint or inquiry.
9
<PAGE>
(c) Copyright and Licensing. Programmer shall not broadcast on the
-----------------------
Station any material in violation of the Copyright Act.
(d) Insurance. Programmer shall maintain throughout the term of this
---------
Agreement general liability insurance and errors and omissions insurance
covering broadcasts made on the Station, and shall name Licensee as an
additional insured on such insurance policies.
(e) Information for FCC Reports. Upon request by Licensee,
---------------------------
Programmer shall provide in a timely manner any such information in its
possession that shall enable Licensee to prepare, file or maintain the
records and reports required by the FCC.
22. Miscellaneous.
-------------
(a) Certain Limitations. Anything to the contrary contained in the
-------------------
Agreement notwithstanding:
(1) in the event the Closing under the Exchange Agreement shall
occur, Licensee shall have no liability or obligation whatsoever under this
Agreement, whether for matters arising prior to such Closing or otherwise.
(2) Programmer's sole remedy for any breach or default by Licensee
under this Agreement shall be such rights as Programmer may have under the
Exchange Agreement upon the termination thereof.
(3) Nothing herein, express or implied, is intended or shall be
construed to confer upon or give to any person or entity, other than the
parties hereto, any rights, remedies or other benefits under or by reason
of this Agreement.
(b) Amendment; Waiver. No modification, amendment or waiver of any
-----------------
provision of this Agreement shall in any event be effected unless the same shall
be in writing and signed by the party adversely affected by the waiver or
modification, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
(c) No Waiver; Remedies Cumulative. No failure or delay on the part
------------------------------
of Licensee or Programmer in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. Except as otherwise provided in this
Agreement or in the Exchange Agreement, the rights and remedies of Licensee and
Programmer herein provided are cumulative and are not exclusive of any right or
remedy which Licensee or Programmer may otherwise have.
10
<PAGE>
(d) Construction. This Agreement shall be construed in accordance
------------
with the laws of the State of California, excluding the choice of law rules
thereof.
(e) Headings. The headings contained in this Agreement are included
--------
for convenience only and no such heading shall in any way alter the meaning of
any provision.
(f) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement shall be assignable only to the same extent as
and solely in connection with any assignment of the Exchange Agreement permitted
pursuant to the terms thereof.
(g) Notices. Any notice required hereunder shall be in writing and
-------
any payment, notice or other communication shall be deemed given when delivered
personally, or mailed by certified mail or Federal Express, postage prepaid,
with return receipt requested:
If to Licensee:
Benedek Broadcasting Corporation
100 Park Avenue
Rockford, Illinois 61101
Attn: President
With a copy to:
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Attn: Paul S. Goodman, Esq.
If to Programmer:
AK Media Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, WA 98101
Attn: Mr. Denis M. Curley
11
<PAGE>
With a copy to:
Rubin, Winston, Diercks, Harris & Cooke, LLP
1333 New Hampshire Avenue, N.W., Suite 1000
Washington, D.C. 20036
Attn: James L. Winston, Esq.
(h) Entire Agreement. This Agreement, together with the Exchange
----------------
Agreement and the Schedules, Attachments and Exhibits hereto and thereto, embody
the entire agreement between the parties and there are no other agreements,
representations, warranties, or understandings, oral or written, between them
with respect to the subject matter hereof.
(i) Severability. In the event that any of the provisions contained
------------
in this Agreement is held to be invalid, illegal or unenforceable, this
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had not been contained herein, subject to the termination rights
contained in Paragraph 16 hereof.
(j) Signatures. This Agreement may be signed in one or more
----------
counterparts, each of which shall be deemed a duplicate original, binding on the
parties hereto notwithstanding that the parties are not signatory to the
original or the same counterpart. This Agreement shall be binding and effective
as of the date on which the executed counterparts are exchanged by the parties.
The parties agree to be bound upon the exchange of signature pages transmitted
by facsimile; provided, however, upon execution of this Agreement, Programmer
agrees to send to Licensee and Licensee agrees to send to Programmer, the
original signature pages via overnight delivery.
12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Time Brokerage Agreement
as of the date first above written.
BENEDEK BROADCASTING CORPORATION
By:_________________________________
Name: K. James Yager
Title: President
BENEDEK LICENSE CORPORATION
By:_________________________________
Name: K. James Yager
Title: President
AK MEDIA GROUP, INC.
By:________________________________
Name:
Title:
13
<PAGE>
TIME BROKERAGE AGREEMENT
ATTACHMENT I
1. Programmer shall pay to Licensee during each month of the term of this
Agreement an amount equal to one-twelfth of the Station's actual 1998 broadcast
cash flow (as such term is commonly understood in the broadcasting industry)
(the "Fixed Fee Amount"), plus the following:
a. The amount of all salaries, commissions and other compensation,
payroll, taxes, health insurance and other fringe benefits and other
employment-related costs and expenses for or with respect to all employees
of the Station in respect of and/or allocable to the term of this Agreement
(the "Employment Related Amount"); and
b. An amount equal to all costs and expenses incurred by Licensee in
connection with operating the Station (including, without limitation, lease
payments, utilities, taxes, programming fees, sales representatives'
commissions, Programming Agreement charges and all other fees and expenses)
in respect of and/or allocable to the term of this Agreement.
2. The fees, costs and expenses referred to above shall be termed,
collectively, the "Time Brokerage Fee." The Fixed Fee Amount for each calendar
month during the term of this Agreement shall be paid within 10 days after the
end of each such month. The Employment Related Amount for each calendar month
for each calendar month during the term of this Agreement shall be paid in
arrears within 10 days after the end of each such month. Programmer shall pay
all other amounts payable by Programmer as contemplated by this Attachment I
within 10 days of invoicing by Licensee therefor.
3. Licensee shall collect all accounts receivable relating to the Station
and the KKTV Assets (as such term is defined in the Exchange Agreement) and
shall be responsible for the payment of all costs and expenses relating to the
ownership and operation of the Station and the KKTV Assets, in each case, for
the period through December 31, 1998. All such accounts receivable arising out
of operation of the Station and the KKTV Assets prior to 12:01 a.m. Pacific time
on the Commencement Date (the "Licensee's Term") shall belong to the Licensee.
All such accounts receivables arising out of operation of the Station and the
KKTV Assets on or after 12:01 a.m. Pacific time on the Commencement Date through
the expiration of this Agreement (the "TBA Term") shall belong to the
Programmer. Licensee acknowledges that Programmer has granted a security
interest in and lien upon all of its accounts receivables, including the
accounts receivables arising out of the operation of KKTV on or after the
Commencement Date, to Bankers Trust Company, as agent for lenders to Programmer
under an Amended and Restated Credit Agreement dated as of December 17, 1997.
All costs and expenses relating to the operation of the Station and the KKTV
Assets during the Licensee's Term shall be borne by Licensee. All costs and
expenses relating to the operation of the Station and the KKTV Assets during the
TBA Term shall be borne by Programmer. Accounts receivable, costs and expenses
arising from contracts or services for periods covering both the Licensee's Term
and the TBA Term shall be prorated according to each term. Such prorations
shall include, without limitation, all ad valorem, real estate and other
property taxes, business and license fees, lease
<PAGE>
payments, rents, wages and salaries of employees (including accruals for
bonuses, commissions, and vacation pay), workers compensation premiums, utility
expenses, water and sewer use charges, time sales agreements, pre-paid fees and
expenses to the extent Programmer has received a benefit thereof, and all other
income and expenses attributable to the operation of the Station. Programmer
acknowledges, however, that the consideration for the Station includes payment
for the contracts and commitments of Licensee relating to motion pictures and
other programming and for barter receivables arising in connection with trade-
out agreements and that no further payment to Licensee or proration shall be due
in respect thereof, except that Licensee shall be responsible for all payments
relating to such contracts due pursuant to the contracts therefor prior to the
Commencement Date. Within 15 days after the end of each month after the Closing
Date (as such term is defined in the Exchange Agreement), Licensee will provide
Programmer with a written report on account receivables collections made and
costs and expenses paid for such month. On the Closing Date, Licensee and
Programmer shall settle any amounts owed to the other.
-iii-
<PAGE>
TIME BROKERAGE AGREEMENT
EXHIBIT A
BROADCAST STATION PROGRAMMING POLICY STATEMENT
The following sets forth the policies generally applicable to the presentation
of programming and advertising over Television Station KKTV(TV), Colorado
Springs, Colorado. All programming and advertising broadcast by the Station
must conform to these policies and to the provisions of the Communications Act
of 1934, as amended (the "Act"), and the Rules and Regulations of the Federal
Communications Commission ("FCC").
STATION IDENTIFICATION
The Station must broadcast a Station identification announcement once an hour as
close to the hour as feasible in a natural break in the programming. The
announcement must include (1) the Station's call letters; followed immediately
by (2) the Station's city of license.
BROADCAST OF TELEPHONE CONVERSATIONS
Before recording a telephone conversation for broadcast or broadcasting such a
conversation simultaneously with its occurrence, any party to the call must be
informed that the call will be broadcast or will be recorded for later
broadcast, and the party's consent to such broadcast must be obtained. This
requirement does not apply to calls initiated by the other party which are made
in a context in which it is customary for the Station to broadcast telephone
calls.
SPONSORSHIP IDENTIFICATION
When money, service, or other valuable consideration is eider directly or
indirectly paid or promised as part of an arrangement to transmit any
programming, the Station at the time of broadcast shall announce (1) that the
matter is sponsored, either whole or in part; and (2) by whom or on whose behalf
the matter is sponsored. Products or services furnished to the Station in
consideration for an identification of any person, product, service, trademark
or brand name shall be identified in this manner.
In the case of any political or controversial issue broadcast for which any
material or service is furnished as an inducement for its transmission, an
announcement shall be made at the beginning and conclusion of the broadcast
stating (1) the material or service that has been furnished; and (2) the
person(s) or association(s) on whose behalf the programming is transmitted.
However, if the broadcast is 5 minutes duration or less, the required
announcement need only be made either at its beginning or end.
<PAGE>
Prior to any sponsored broadcast involving political matters or controversial
issues, the Station shall obtain a list of the chief executive officers, members
of the executive committee or board of directors of the sponsoring organization
and shall place this list in the Station's public inspection file.
The station, its personnel, or its programmers shall not accept or agree to
accept from any person any money, service, or other valuable consideration for
the broadcast of any matter unless such fact is disclosed to the Station so that
all required Station identification announcements can be made. All persons
responsible for Station programming must, from time to time, execute such
documents as may be required by Station management to confirm their
understanding of and compliance with the FCC's sponsorship identification
requirements.
REBROADCASTS
The Station shall not rebroadcast the signal of any other broadcast Station
without first obtaining such Station's prior written consent to such
rebroadcast.
FAIRNESS
Station shall seek to afford coverage to contrasting viewpoints concerning
controversial issues of public importance.
PERSONAL ATTACKS
The Station shall not air attacks upon the honesty, character, integrity or like
personal qualities of any identified person or group. If such an attack should
nonetheless occur during the presentation of view on a controversial issue of
public importance, those responsible for programming shall submit a tape or
transcript of the broadcast to Station management and to the person attacked
within 48 hours, and shall offer the person attacked a reasonable opportunity to
respond.
POLITICAL EDITORIALS
Unless specifically authorized by Station management, the Station shall not air
any editorial which either endorses or opposes a legally qualified candidate for
public office.
POLITICAL BROADCASTING
All "uses" of the Station by legally qualified candidates for elective office
shall be in accordance with the Act and the FCC's Rules and policies, including
without limitation, equal opportunities requirements, reasonable access
requirements, lowest unit charge requirements and similar rules and regulations.
<PAGE>
OBSCENITY AND INDECENCY
The Station shall not broadcast any obscene material. Material is deemed to be
obscene if the average person, applying contemporary community standards in the
local community, would find that the material, taken as a whole, appeals to the
prurient interest; depicts or describes in a patently offensive way sexual
conduct specifically defined by applicable state law; and taken as a whole,
lacks serious literary artistic, political or scientific value.
The Station shall not broadcast any indecent material outside of the periods of
time prescribed by the Commission. Material is deemed to be indecent if it
includes language or material that, in context, depicts or describes, in terms
patently offensive as measured by contemporary community standards for the
broadcast medium, sexual or excretory activities or organs.
BILLING
No entity which sells advertising for airing on the Station shall knowingly
issue any bill, invoice or other document which contains false information
concerning the amount charged or the broadcast of advertising which is the
subject of the bill or invoice. No entity which sells advertising for airing on
the Station shall misrepresent the nature or content of aired advertising, nor
the quantity, time of day, or day on which such advertising was broadcast.
CONTESTS
Any contests conducted on the Station shall be conducted substantially as
announced or advertised. Advertisements or announcements concerning such
contests shall fully and accurately disclose the contest's material terms. No
contest description shall be false, misleading or deceptive with respect to any
material term.
HOAXES
The Station shall not knowingly broadcast false information concerning a crime
or catastrophe.
EMERGENCY INFORMATION
Any emergency information which is broadcast by the Station shall be transmitted
both aurally and visually or only visually.
LOTTERY
The Station shall not advertise or broadcast any information concerning any
lottery (except any state lottery). The Station may advertise and provide
information about lotteries conducted by non-profit groups, governmental
entities and in certain situations, by commercial organizations,
-iii-
<PAGE>
if and only if there is no state or local restriction or ban on such advertising
or information and the lottery is legal under state or local law. Any and all
lottery advertising must first be approved by Station management.
ADVERTISING
The Station shall comply with all federal, state and local laws concerning
advertising, including without limitation, all laws concerning misleading
advertising, and the advertising of alcoholic beverages.
PROGRAMMING PROHIBITIONS
Knowing broadcast of the following types of programs and announcements is
prohibited:
False Claims. False or unwarranted claims for any product or service.
------------
Unfair Imitation. Infringement of another advertiser's rights through
----------------
plagiarism or unfair imitation of either program idea or copy, or any other
unfair competition.
Commercial Disparagement. Any unfair disparagement of competitors or
------------------------
competitive goods.
Profanity. Any programs or announcements that are slanderous, obscene,
---------
profane, vulgar, repulsive or offensive, as evaluated by Station
management.
Violence. Any programs which are excessively violent.
--------
Unauthenticated Testimonials. Any testimonials which cannot be
----------------------------
authenticated.
-iv-
<PAGE>
EXHIBIT C-1
-----------
FORM OF OPINION OF COUNSEL TO AKMG
1. AKMG is a corporation duly organized, validly existing and in good standing
under the laws of the State of Washington and has all requisite corporate power
and authority to enter into the Exchange Agreement, the Time Brokerage
Agreements and the applicable documents and instruments contemplated thereby
(the Exchange Agreement, the Time Brokerage Agreements and the documents
contemplated thereby are collectively referred to as the "Operative Documents")
and to assume and perform its obligations thereunder.
2. The execution and delivery by AKMG of the Operative Documents and the
performance by AKMG of its obligations thereunder have been duly authorized by
all requisite corporate action and no further action or approval is required in
order to constitute the Operative Documents as valid and binding obligations of
AKMG.
3. The execution and delivery by AKMG of Operative Documents and the
performance by AKMG of its obligations thereunder do not and will not conflict
with or violate any provisions of the Certificate of Incorporation or Bylaws of
AKMG.
4. Except with respect to the FCC Consent and any required Hart-Scott-Rodino
Filing, no action, approval, consent or authorization, including, but not
limited to, any action, approval, consent or authorization by any governmental
or quasi-governmental agency, commission, board, bureau or instrumentality is
necessary as to AKMG in order to constitute the Operative Documents as valid and
binding obligations of AKMG.
5. To our knowledge, there are no actions, suits, proceedings or
investigations, whether legal or administrative or in mediation or arbitration,
pending or, to our knowledge, threatened, at law or in equity or admiralty,
against AKMG before or by any court or arbitration tribunal or before or by any
Federal, state, local or other governmental department, commission, board,
bureau, agency or instrumentality, or judgments, decrees or orders entered on a
suit or proceeding against AKMG which seeks to prevent or enjoin the
consummation of the transactions contemplated by the Operative Documents.
6. Each of the Operative Documents has been duly executed and delivered by AKMG
and constitutes the legal, valid and binding obligation of AKMG, enforceable in
accordance with its terms, except as the enforceability of the agreement may be
limited by, or subject to, any bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and except that the remedies of specific
performance, injunction and other forms of equitable relief are subject to
certain
<PAGE>
principles of equity jurisdiction, equitable defenses and the discretion of the
court before which any proceeding therefor may be brought.
7. Except as set forth in the Exchange Agreement, AKMG's execution and delivery
of the Operative Documents and the performance by AKMG of the terms thereof will
not conflict in any respects with or result in any breach of the terms,
conditions or provisions of, or constitute a default under, or result in or
permit the creation or imposition of any lien, charge or encumbrance upon any of
the KCOY Assets (where such lien, charge or encumbrance could be reasonably
expected to have a material adverse effect on AKMG) pursuant to any indenture,
mortgage or other agreement or instrument or any judgment, decree, order or
decision to which AKMG is a party or by which AKMG is bound.
<PAGE>
EXHIBIT C-2
-----------
FORM OF OPINION OF FCC COUNSEL TO AKMG
1. Based upon our above-described review of the FCC's publicly available files
and the certificate of the Station's Chief Engineer: (a) AKMG holds the FCC
Licenses listed in Attachment A; and (b) the FCC Licenses are now due to expire
at the end of the current license term listed in Attachment A.
2. To our knowledge, and based upon our above-described review of the FCC's
publicly available files, there is no FCC proceeding pending or order of the FCC
outstanding against AKMG or to which the FCC Licenses are subject that
reasonably could be expected to result in the suspension, revocation or adverse
modification of any of the FCC Licenses so as to have a material adverse impact
on the operation of the Station, except as may be set forth in Attachment B
hereto and except for proceedings generally applicable to the broadcasting
industry.
3. To our knowledge, and based upon our above-described review of the FCC's
publicly-available files, the FCC has granted all of the consents required from
the FCC for the assignment to Benedek of the FCC Licenses as contemplated by the
Exchange Agreement (the "FCC Consents") and the FCC Consents have become
effective except as may be otherwise indicated on Attachment C hereto.
<PAGE>
EXHIBIT C-3
-----------
FORM OF OPINION OF LOCAL COUNSEL TO AKMG
8. AKMG is duly qualified to do business and is in good standing in each
jurisdiction where it owns, leases or holds real property or conducts or
operates its business with respect to the Station, where the nature of its
activities requires such qualification with respect to the Station or where the
failure to so qualify would have a material adverse effect on the business or
results of operations of the Station.
9. Each of the documents and instruments delivered by AKMG to Benedek in order
to transfer, convey and assign the KKTV Assets have the effect of transferring,
conveying and assigning to and vesting in Benedek all of its respective rights,
title and interest in and to the KKTV Assets.
<PAGE>
Exhibit D-1
-----------
FORM OF OPINION OF COUNSEL TO BENEDEK
10. Benedek and BLC are corporations duly organized, validly existing and in
good standing under the laws of the State of Delaware and have all requisite
corporate power and authority to enter into the Exchange Agreement, the Time
Brokerage Agreements and the applicable documents and instruments contemplated
thereby (the Exchange Agreement, the Time Brokerage Agreements and the documents
contemplated thereby are collectively referred to as the "Operative Documents")
and to assume and perform their obligations thereunder.
11. The execution and delivery by Benedek and BLC of the Operative Documents
and the performance by Benedek and BLC of their obligations thereunder have been
duly authorized by all requisite corporate action and no further action or
approval is required in order to constitute the Operative Documents as valid and
binding obligations of Benedek and BLC.
12. The execution and delivery by Benedek and BLC of Operative Documents and
the performance by Benedek and BLC of their obligations thereunder do not and
will not conflict with or violate any provisions of the Certificate of
Incorporation or Bylaws of Benedek and BLC.
13. Except with respect to the FCC Consent and any required Hart-Scott-Rodino
Filing, no action, approval, consent or authorization, including, but not
limited to, any action, approval, consent or authorization by any governmental
or quasi-governmental agency, commission, board, bureau or instrumentality is
necessary as to Benedek or BLC in order to constitute the Operative Documents as
valid and binding obligations of Benedek and BLC.
14. To our knowledge, there are no actions, suits, proceedings or
investigations, whether legal or administrative or in mediation or arbitration,
pending or, to our knowledge, threatened, at law or in equity or admiralty,
against Benedek or BLC before or by any court or arbitration tribunal or before
or by any Federal, state, local or other governmental department, commission,
board, bureau, agency or instrumentality, or judgments, decrees or orders
entered on a suit or proceeding against Benedek or BLC which seeks to prevent or
enjoin the consummation of the transactions contemplated by the Operative
Documents.
15. Each of the Operative Documents has been duly executed and delivered by
Benedek and BLC and constitutes the legal, valid and binding obligation of
Benedek and BLC, enforceable in accordance with its terms, except as the
enforceability of the agreement may be limited by, or subject to, any
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and except that the remedies of specific performance, injunction and
other forms of equitable relief are subject to
<PAGE>
certain principles of equity jurisdiction, equitable defenses and the discretion
of the court before which any proceeding therefor may be brought.
16. Except as set forth in the Exchange Agreement, Benedek and BLC's execution
and delivery of the Operative Documents and the performance by Benedek and BLC
of the terms thereof will not conflict in any respects with or result in any
breach of the terms, conditions or provisions of, or constitute a default under,
or result in or permit the creation or imposition of any lien, charge or
encumbrance upon any of the KCOY Assets (where such lien, charge or encumbrance
could be reasonably expected to have a material adverse effect on Benedek or
BLC) pursuant to any indenture, mortgage or other agreement or instrument or any
judgment, decree, order or decision to which Benedek or BLC is a party or by
which Benedek or BLC is bound.
<PAGE>
EXHIBIT D-2
-----------
FORM OF OPINION OF FCC COUNSEL TO BENEDEK
17. Based upon our above-described review of the FCC's publicly available files
and the certificate of the Station's Chief Engineer: (a) BLC holds the FCC
Licenses listed in Attachment A; and (b) the FCC Licenses are now due to expire
at the end of the current license term listed in Attachment A.
18. To our knowledge, and based on our above-described review of the FCC's
publicly-available files, there is no FCC proceeding pending or order of the FCC
outstanding against Benedek or BLC or to which the FCC Licenses are subject that
reasonably could be expected to result in the suspension, revocation or adverse
modification of any of the FCC Licenses so as to have a material adverse impact
on the operation of the Station, except as may be set forth in Attachment B
hereto and except for proceedings generally applicable to the broadcasting
industry.
19. To our knowledge, and based upon our above-described review of the FCC's
publicly-available files, the FCC has granted all of the consents required from
the FCC for the assignment to AKMG of the FCC Licenses as contemplated by the
Exchange Agreement (the "FCC Consents") and the FCC Consents have become
effective except as may be otherwise indicated on Attachment C hereto.
<PAGE>
EXHIBIT D-3
-----------
FORM OF OPINION OF LOCAL COUNSEL TO BENEDEK
20. Benedek is duly qualified to do business and is in good standing in each
jurisdiction where it owns, leases or holds real property or conducts or
operates its business with respect to the Station, where the nature of its
activities requires such qualification with respect to the Station or where the
failure to so qualify would have a material adverse effect on the business or
results of operations of the Station.
21. Each of the documents and instruments delivered by Benedek and BLC to AKMG
in order to transfer, convey and assign the KCOY Assets have the effect of
transferring, conveying and assigning to and vesting in AKMG all of its
respective rights, title and interest in and to the KCOY Assets.
<PAGE>
certain principles of equity jurisdiction, equitable defenses and the discretion
of the court before which any proceeding therefor may be brought.
16. Except as set forth in the Exchange Agreement, Benedek and BLC's execution
and delivery of the Operative Documents and the performance by Benedek and BLC
of the terms thereof will not conflict in any respects with or result in any
breach of the terms, conditions or provisions of, or constitute a default under,
or result in or permit the creation or imposition of any lien, charge or
encumbrance upon any of the KCOY Assets (where such lien, charge or encumbrance
could be reasonably excepted to have a material adverse effect on Benedek or
BLC) pursuant to any indenture, mortgage or other agreement or instrument or any
judgment, decree, order or decision to which Benedek or BLC is a party or by
which Benedek or BLC is bound.
<PAGE>
EXHIBIT 12
The Ackerley Group, Inc.
Computation of Ratio of Earnings to Fixed Charges
(Amounts in Thousands)
<TABLE>
<CAPTION>
Nine-Month Period
Ended September 30, Year Ended December 31,
------------------- ----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes and
extraordinary item $37,824 $12,380 $13,757 $18,887 $(1,399) $ 9,004 $ 3,093
Fixed charges: interest expense 20,238 19,131 26,219 24,461 25,010 25,909 22,431
------- ------- ------- ------- ------- ------- -------
Adjusted earnings (loss) and fixed charges $58,062 $31,511 $39,976 $43,348 $23,611 $34,913 $25,524
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges 2.87 1.65 1.52 1.77 0.94 1.35 1.14
======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES
Direct Subsidiaries of The Ackerley Group, Inc.
<TABLE>
<CAPTION>
Jurisdiction of
Subsidiary Incorporation As
<S> <C> <C>
Ackerley Airport Advertising, Inc. Washington AK
Ackerley Communications of Massachusetts, Inc. Washington
AK Media Group, Inc. Washington AK
AK
AK
Fu
No
Se
Se
KV
KG
KC
KF
KK
KH
Central NY News, Inc. Washington No
SSI, Inc. Washington Se
TC Aviation, Inc. Oregon No
WIXT TV, Inc. Washington No
Direct Subsidiaries of AK Media Group, Inc.
<CAPTION>
Jurisdiction of
Subsidiary Incorporation As
<S> <C> <C>
KVOS TV Ltd. British Columbia No
</TABLE>
<PAGE>
Exhibit 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts", "Summary
Financial Data", and "Selected Consolidated Financial Data" in the Registration
Statement (Form S-4) and related Prospectus of The Ackerley Group, Inc., for
the registration of $175,000,000 9% Series B Senior Subordinated Notes due 2009
and to the incorporation by reference therein of our report dated February 27,
1998 (except Note 12, as to which the date is March 23, 1998), with respect to
the consolidated financial statements of The Ackerley Group, Inc., included in
its Annual Report (Form 10-K) for the year ended December 31, 1997, filed with
the Securities and Exchange Commission.
ERNST & YOUNG LLP
Seattle, Washington
February 1, 1999
<PAGE>
POWER OF ATTORNEY
The undersigned Director of The Ackerley Group, Inc. ("Company") appoints
each of Barry A. Ackerley, Denis M. Curley and Keith W. Ritzmann his true and
lawful attorney and agent, in name and on behalf of the undersigned, to do any
and all acts and things and execute any and all instruments which the attorney
and agent may deem necessary or advisable to cause the Registration Statement on
Form S-4 to be filed with the Securities and Exchange Commission, and likewise
to sign any and all amendments (the signing of any such instrument to be
conclusive evidence that the attorney considers such instrument necessary or
desirable), without the other and with full power of substitution and
revocation, and hereby ratifying all that any such attorney or his substitute
may do by virtue hereby.
Pursuant to the requirements of the Securities and Exchange Act of 1933,
this Power of Attorney has been signed by the following person in the capacity
indicated on this 26th day of January, 1999.
/s/ Barry A. Ackerley
----------------------------------
Barry A. Ackerley
<PAGE>
POWER OF ATTORNEY
The undersigned Director of The Ackerley Group, Inc. ("Company") appoints
each of Barry A. Ackerley, Denis M. Curley and Keith W. Ritzmann his true and
lawful attorney and agent, in name and on behalf of the undersigned, to do any
and all acts and things and execute any and all instruments which the attorney
and agent may deem necessary or advisable to cause the Registration Statement on
Form S-4 to be filed with the Securities and Exchange Commission, and likewise
to sign any and all amendments (the signing of any such instrument to be
conclusive evidence that the attorney considers such instrument necessary or
desirable), without the other and with full power of substitution and
revocation, and hereby ratifying all that any such attorney or his substitute
may do by virtue hereby.
Pursuant to the requirements of the Securities and Exchange Act of 1933,
this Power of Attorney has been signed by the following person in the capacity
indicated on this 26th day of January, 1999.
/s/ Gail A. Ackerley
----------------------------------
Gail A. Ackerley
<PAGE>
POWER OF ATTORNEY
The undersigned Director of The Ackerley Group, Inc. ("Company") appoints
each of Barry A. Ackerley, Denis M. Curley and Keith W. Ritzmann his true and
lawful attorney and agent, in name and on behalf of the undersigned, to do any
and all acts and things and execute any and all instruments which the attorney
and agent may deem necessary or advisable to cause the Registration Statement on
Form S-4 to be filed with the Securities and Exchange Commission, and likewise
to sign any and all amendments (the signing of any such instrument to be
conclusive evidence that the attorney considers such instrument necessary or
desirable), without the other and with full power of substitution and
revocation, and hereby ratifying all that any such attorney or his substitute
may do by virtue hereby.
Pursuant to the requirements of the Securities and Exchange Act of 1933,
this Power of Attorney has been signed by the following person in the capacity
indicated on this 26th day of January, 1999.
/s/ Deborah L. Bevier
----------------------------------
Deborah L. Bevier
<PAGE>
POWER OF ATTORNEY
The undersigned Director of The Ackerley Group, Inc. ("Company") appoints
each of Barry A. Ackerley, Denis M. Curley and Keith W. Ritzmann his true and
lawful attorney and agent, in name and on behalf of the undersigned, to do any
and all acts and things and execute any and all instruments which the attorney
and agent may deem necessary or advisable to cause the Registration Statement on
Form S-4 to be filed with the Securities and Exchange Commission, and likewise
to sign any and all amendments (the signing of any such instrument to be
conclusive evidence that the attorney considers such instrument necessary or
desirable), without the other and with full power of substitution and
revocation, and hereby ratifying all that any such attorney or his substitute
may do by virtue hereby.
Pursuant to the requirements of the Securities and Exchange Act of 1933,
this Power of Attorney has been signed by the following person in the capacity
indicated on this 26th day of January, 1999.
/s/ M. Ian G. Gilchrist
----------------------------------
M. Ian G. Gilchrist
<PAGE>
POWER OF ATTORNEY
The undersigned Director of The Ackerley Group, Inc. ("Company") appoints
each of Barry A. Ackerley, Denis M. Curley and Keith W. Ritzmann his true and
lawful attorney and agent, in name and on behalf of the undersigned, to do any
and all acts and things and execute any and all instruments which the attorney
and agent may deem necessary or advisable to cause the Registration Statement on
Form S-4 to be filed with the Securities and Exchange Commission, and likewise
to sign any and all amendments (the signing of any such instrument to be
conclusive evidence that the attorney considers such instrument necessary or
desirable), without the other and with full power of substitution and
revocation, and hereby ratifying all that any such attorney or his substitute
may do by virtue hereby.
Pursuant to the requirements of the Securities and Exchange Act of 1933,
this Power of Attorney has been signed by the following person in the capacity
indicated on this 26th day of January, 1999.
/s/ Michel C. Thielen
----------------------------------
Michel C. Thielen
<PAGE>
========================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
THE ACKERLEY GROUP, INC.
(Exact name of obligor as specified in its charter)
Delaware 91-1043807
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1301 Fifth Avenue
Suite 4000
Seattle, Washington 98101
(Address of principal executive offices) (Zip code)
_____________
9% Series B Senior Subordinated Notes due 2009
(Title of the indenture securities)
========================================================================
<PAGE>
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.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Name Address
- ----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 29th day of January, 1999.
THE BANK OF NEW YORK
By: /s/ VAN K. BROWN
----------------------
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
ASSETS Dollar Amounts
in Thousands
Cash and balances due from depository
institutions:
<S> <C>
Noninterest-bearing balances and currency and
coin........................................... $ 7,301,241
Interest-bearing balances....................... 1,385,944
Securities:
Held-to-maturity securities..................... 1,000,737
Available-for-sale securities................... 4,240,655
Federal funds sold and Securities purchased
under agreements to resell...................... 971,453
Loans and lease financing receivables:
Loans and leases, net of unearned
income............................... 38,788,269
LESS: Allowance for loan and
lease losses.............................632,875
LESS: Allocated transfer risk
reserve........................................0
Loans and leases, net of unearned income,
allowance, and reserve......................... 38,155,394
Assets held in trading accounts.................. 1,307,562
Premises and fixed assets (including capitalized
leases)......................................... 670,445
Other real estate owned.......................... 13,598
Investments in unconsolidated subsidiaries and
associated companies............................ 215,024
Customers' liability to this bank on acceptances
outstanding..................................... 974,237
Intangible assets................................ 1,102,625
Other assets..................................... 1,944,777
-----------
Total assets..................................... $59,283,692
===========
LIABILITIES
Deposits:
In domestic offices............................. 26,930,258
Noninterest-bearing................. 11,579,390
Interest-bearing.................... 15,350,868
In foreign offices, Edge and Agreement
subsidiaries, and IBFs......................... 16,117,854
Noninterest-bearing.................... 187,464
Interest-bearing.................... 15,930,390
Federal funds purchased and Securities sold
under agreements to repurchase.................. 2,170,238
Demand notes issued to the U.S.Treasury.......... 300,000
Trading liabilities.............................. 1,310,867
Other borrowed money:
With remaining maturity of one year or less..... 2,549,479
With remaining maturity of more than one year
through three years............................ 0
With remaining maturity of more than three
years.......................................... 46,654
Bank's liability on acceptances executed and
outstanding..................................... 983,398
Subordinated notes and debentures................ 1,314,000
Other liabilities................................ 2,295,520
Total liabilities................................ 54,018,268
EQUITY CAPITAL
Common stock..................................... 1,135,284
Surplus.......................................... 731,319
Undivided profits and capital reserves........... 3,385,227
Net unrealized holding gains (losses) on
available-for-sale securities................... 51,233
Cumulative foreign currency translation
adjustments..................................... ( 37,639)
-----------
Total equity capital............................. 5,265,424
-----------
Total liabilities and equity capital............. $59,283,692
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
