<PAGE>
As filed with the Securities and Exchange Commission on March 10, 1999
Registration No. 333-71583
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
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>
<CAPTION>
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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(2)
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<S> <C> <C> <C> <C>
9% Series B Senior Subordinated
Notes
due 2009....................... $200,000,000 100% $200,000,000 $55,600
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
(2) $48,650 of the registration fee was previously paid.
-----------
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>
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
------------
We are offering a total of $200,000,000 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 April 6,
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 18.
------------
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.
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March 9, 1999.
<PAGE>
You should rely only on the information contained and incorporated by
reference in this Prospectus. We have 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.
----------------
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Where You Can Find More Information........................................ 3
Prospectus Summary......................................................... 4
Risk Factors............................................................... 18
Use of Proceeds............................................................ 31
Capitalization............................................................. 32
Selected Consolidated Financial Data....................................... 33
Unaudited Pro Forma Condensed Consolidated Financial Information........... 35
Management................................................................. 39
Description of Other Indebtedness.......................................... 41
The Exchange Offer......................................................... 44
Description of the Notes................................................... 53
Book Entry; Delivery and Form.............................................. 74
Certain Federal Income Tax Considerations.................................. 77
Plan of Distribution....................................................... 77
Legal Matters.............................................................. 78
Experts.................................................................... 78
</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,
December 7, 1998, and March 2, 1999.
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 March 30, 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"), 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
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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 June 1986(8) FOX UHF 121 1 VHF
agreement)........................... 3 UHF(9)
Salinas/Monterey, California (pending
acquisition; interim time brokerage KION 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
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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)In August 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(TV) in Bakersfield, California and WIXT(TV) 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 six 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. Four of our five
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
Preliminary Operating Results for Fiscal Year 1998. Net revenues for the year
ended December 31, 1998 were $256.7 million compared to $271.2 million for the
same period in 1997. On a "same stores" basis, net revenues for the year ended
December 31, 1998 increased in the out-of-home media and broadcasting
8
<PAGE>
segments by 10% and 6%, respectively, compared to the same period in 1997. The
"same stores" basis excludes our airport advertising operations, which we sold
on June 30, 1998, and television stations KVIQ, WIVT and WUTR, which we
acquired in 1997 and 1998. See "--Sale of Airport Advertising Operations" and
"--Acquisition of KVIQ(TV)" below.
Net income for the year ended December 31, 1998 was $19.2 million, or $0.60
per share, compared to $32.9 million, or $1.04 per share, for the same period
in 1997. Income before income taxes and extraordinary items was $39.0 million,
or $1.22 per share, compared to $13.8 million, or $0.44 per share, for the same
period in 1997. Operating Cash Flow (defined as net revenue less operating
expenses plus other income before depreciation, amortization, interest expense,
disposition of assets, stock compensation expense, and litigation expense) in
1998 was $47.6 million compared to $60.4 million for the same period in 1997.
Operating Cash Flow was affected primarily by higher player compensation costs
in the first and second quarters, the sale of our airport advertising
operations at the end of the second quarter, and the recently resolved NBA
lockout, which adversely affected revenue in the fourth quarter. See "--NBA
Lockout" below and "Risk Factors--Sports & Entertainment--NBA Lockout; Labor
Relations in Professional Sports."
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 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, which was originally scheduled to expire on June 30, 2001.
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 were 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. Consequently, the 1998-1999 NBA
season started 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--1999 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),
9
<PAGE>
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.
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. 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 Broadcasting Corporation to operate
KKTV(TV) until closing.
The pending broadcasting 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.
10
<PAGE>
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.
Acquisition of Out-Of-Home Advertising Company in Boston, Massachusetts. On
February 19, 1999, we purchased substantially all of the assets of an out-of-
home advertising company in the Boston/Worcester, Massachusetts market for
approximately $11.0 million. We financed the acquisition with borrowings under
the 1999 Credit Agreement.
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 Indebtedness. 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 was 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. On December 15, 1998, the Company's 11.20%
Senior Subordinated Notes, Series B, due December 15, 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 a required
prepayment of $10.0 million in principal on its 10.48% Senior Subordinated
Notes due December 15, 2000 (the "10.48% Notes" or "Senior Subordinated
Notes").
Proposed Redemption of 10.48% Notes. We plan to prepay the entire $20.0
million outstanding aggregate principal amount of the 10.48% Notes on March 15,
1999. Pursuant to the agreements pursuant to which the 10.48% Notes were issued
and sold (the "Senior Subordinated Note Agreements"), the holders of the 10.48%
Notes would be entitled to receive the unpaid principal, accrued unpaid
interest, and a Make Whole Amount (as defined in the Senior Subordinated Note
Agreements) on the prepayment date. We estimate that the aggregate amount of
such prepayment will be approximately $21.3 million, and intend to finance the
prepayment with borrowings under the 1999 Credit Agreement.
Declaration of Dividend on Common Stock. On February 24, 1999, our Board of
Directors declared a dividend of $.02 per share of Common Stock and Class B
Common Stock payable on April 15, 1999 to shareholders of record as of March
25, 1999. The dividend will result in a charge of $0.6 million.
11
<PAGE>
The Exchange Offer
Registration Rights Agreement...
We issued $175,000,000 aggregate principal
amount of the Initial Notes (the "1998
Notes") on December 14, 1998 to Salomon Smith
Barney, First Union Capital Markets, and
Fleet Securities, Inc. (the "1998 Initial
Purchasers").
In addition, we issued $25,000,000 aggregate
principal amount of the Initial Notes on
February 24, 1999 (the "1999 Notes") to First
Union Capital Markets (the "1999 Initial
Purchaser"). The 1998 Initial Purchasers and
the 1999 Initial Purchasers are referred to
collectively as the "Initial Purchasers" and
the 1998 Notes and the 1999 Notes are
referred to collectively as the "Initial
Notes." 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 these
private placements, 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 $200,000,000
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-
12
<PAGE>
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.
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 April 6, 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 If you wish to accept the Exchange Offer, you
Initial Notes.................. 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 If you wish to tender your Initial Notes and
Procedures..................... 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."
13
<PAGE>
Special Procedure for If you are a beneficial holder whose Initial
Beneficial Holders............. 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 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 1998 Notes
to reduce outstanding borrowings under the
1998 Credit Agreement. We used the proceeds
of the 1999 Notes to reduce outstanding
borrowings under the 1999 Credit Agreement
and for general corporate purposes. See "Use
of Proceeds."
14
<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...................
$200,000,000 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 assuming that the following had
occurred as of September 30, 1998: (i) the
offering of the 1998 Notes and the
application of the net proceeds therefrom to
repay borrowings under the 1998 Credit
Agreement; (ii) the offering of the 1999
Notes and the application of approximately
$10.0 million of the estimated net proceeds
therefrom to repay borrowings under the 1999
Credit Agreement; (iii) the repayment of our
Senior Secured Notes with borrowings under
the 1998 Credit Agreement; and (iv) the
replacement of our 1998 Credit Agreement with
the 1999 Credit Agreement, we would have had
approximately $56.0 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 aggregate principal amount of the
Exchange Notes originally issued remain
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
15
<PAGE>
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. 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.
See "Risk Factors" for a discussion of
Risk Factors.................... factors which should be carefully considered
before deciding to invest in the Exchange
Notes.
16
<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 incorporated by reference in this Prospectus. 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
plus other income 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.
17
<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 the aftereffects 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
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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 (i) the issuance of the 1998 Notes and the 1999 Notes and the
application of the estimated net proceeds therefrom to repay borrowings under
the 1998 and 1999 Credit Agreements, (ii) repayment of the 11.20% Series B
Notes and prepayment of $10.0 million of the 10.48% Notes, and (iii) repayment
of the Senior Secured Notes with borrowings under the 1998 Credit Agreement, as
if such transactions had occurred on that date, we would have had approximately
$276.0 million of outstanding indebtedness 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.
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The stockholders' deficit declined by approximately $38.9 million in fiscal
year 1997 and $23.2 million in the first 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 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 Senior Subordinated Note
Agreements. 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 of 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 $56.0 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, although we may prepay the Senior
Subordinated Notes as early as March 15, 1998. See "Prospectus Summary--Recent
Developments--Proposed Redemption of 10.48% Notes." 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--Change of Control."
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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, own one television station we do not
operate, operate four television stations under time brokerage agreements, and
own and operate four radio stations. License renewal applications for KVOS and
the three New York television stations are currently pending. 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 similar to those discussed in the
preceding paragraph. In addition, the filing by third parties of petitions to
deny,
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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 two television
stations, 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(TV) in Syracuse
and operate WUTR(TV) 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 conditional 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.
Microradio. On January 28, 1999, the FCC proposed to license new 1000 watt
and 100 watt low power FM ("LPFM") radio stations throughout the U.S., and
sought comment on also establishing a third "microradio" class at power levels
from 1-10 watts. The Company cannot predict what effect such LPFM or microradio
stations, if authorized by the FCC, would have on the Company.
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. 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, which was originally scheduled to expire on June 30, 2001. 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 were 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. Consequently, the 1998-99 NBA season
started 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).
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<PAGE>
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 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 may 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 exception. 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.
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<PAGE>
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 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.
28
<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
29
<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.
On March 9, 1999, the Court of Appeals issued an order referring the case to
an 11-judge panel for a new hearing. A date for the new hearing has not been
set.
Van Alstyne v. The Ackerley Group, Inc. On June 7, 1996, a former sales
manager for television station WIXT(TV), 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(TV) and the current and former general managers of
WIXT(TV). 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.
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<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 1998 Notes,
approximately $169.5 million, to repay outstanding indebtedness under the 1998
Credit Agreement. We used the net offering proceeds we received from the
issuance of the 1999 Notes, approximately $25.4 million, to repay outstanding
indebtedness under the 1999 Credit Agreement, and for general corporate
purposes. See "Description of Other Indebtedness--1999 Credit Agreement."
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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 (A) the redemption of the Senior Secured Notes with
borrowings under the 1998 Credit Agreement, (B) repayment of the 11.20% Series
B Notes and prepayment of $10.0 million of the 10.48% Notes, (C) the offering
of the New Notes and the application of $10.0 million of the net proceeds
therefrom to repay borrowings under the 1999 Credit Agreement, and (D) the sale
of the 1998 Notes and the application of the estimated net proceeds therefrom
to repay borrowings under the 1998 Credit Agreement, 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 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 Pro Forma
Actual Financings WOKR
-------- ---------- ---------
(In thousands)
<S> <C> <C> <C>
Long-term debt:
Bank borrowings(1)............................ $ 77,500 $ 35,337 $147,837
11.20% Senior Subordinated Notes, Series B,
due 1998..................................... 2,500 -- --
10.48% Senior Subordinated Notes due 2000..... 30,000 20,000 20,000
10.75% Senior Secured Notes due 2003(2)....... 120,000 -- --
Initial Notes ................................ -- 200,000 200,000
Other......................................... 20,685 20,685 20,685
-------- -------- --------
Total debt................................ 250,685 276,022 388,522
Less current maturities....................... 23,367 1,867 1,867
-------- -------- --------
Total long-term debt...................... $227,318 $274,155 $386,655
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 $252,429 $364,929
======== ======== ========
</TABLE>
- --------
(1) As of February 17, 1999, borrowings of $75.0 million were outstanding under
the 1999 Credit Agreement. The Pro Forma Financings amount assumes that
aggregate net proceeds of $179.5 million from the New Notes and the 1998
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 11.20% Senior Subordinated Notes, Series B, due 1998 were repaid
at maturity on December 15, 1998. The repayment was financed with
borrowings under the 1998 Credit Agreement.
(3) On December 15, 1998, the Company made a required prepayment of $10.0
million aggregate principal amount of the 10.48% Senior Subordinated Notes
due 2000. The prepayment was financed with borrowings under the 1998 Credit
Agreement.
(4) 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 1998 Credit Agreement. See
"Prospectus Summary--Recent Developments."
(5) Does not include shares reserved for issuance under employee and director
benefit plans or certain stock purchase agreements.
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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 incorporated by
reference in this Prospectus 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>
33
<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
plus other income 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.
34
<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.
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.
35
<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>
36
<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>
37
<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 Unaudited Pro Forma Condensed Consolidated Financial Statements
The accompanying Unaudited 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.
38
<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
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
Christopher H. Ackerley................ 29 Executive Vice President, Operations
and Development
</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. 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 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.
39
<PAGE>
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.
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 Media:
Randal G. Swain............................ Senior Vice President, AK Media
Group, Inc.
Broadcasting:
David P. Reid.............................. 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 served as President of the Company's Northwest outdoor
advertising division, AK Media Northwest, from 1993 through 1998. 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 was named President and General Manager of KVOS(TV) in
Bellingham, Washington, on May 1, 1998. Prior to that date, he served as Vice
President and General Manager of KVOS, a position he 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.
40
<PAGE>
DESCRIPTION OF OTHER INDEBTEDNESS
1999 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 1999 Credit 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 February 17, 1999, $65.0 million of borrowings were outstanding under
the Term Loan Facility and $10.0 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. The Term Loan Facility 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 before 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.
41
<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 1999 Credit
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 banks' commitment to provide the Tranche B Term Loans 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
The following is a summary of certain terms of the outstanding 10.48% Notes
(also referred to as "Senior Subordinated Notes") and the related 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 February 17, 1999, $20.0 million in aggregate principal amount of the
10.48% Notes is outstanding. The 10.48% Notes bear interest payable quarterly,
at the stated per annum rate.
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 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
42
<PAGE>
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 plans to
repay the entire outstanding aggregate principal amount of the 10.48% Notes on
March 15, 1999. The Company estimates that the aggregate amount of such
prepayment will be approximately $21.3 million, and intends to finance the
prepayment with borrowings under the 1999 Credit Agreement. If the proposed
prepayment is not made, the Company will be required to make a prepayment 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.
43
<PAGE>
THE EXCHANGE OFFER
Purpose Of The Exchange Offer
We sold the 1998 Notes in a private offering on December 14, 1998, to the
1998 Initial Purchasers pursuant to a purchase agreement dated as of December
9, 1998 by and among the Company and the 1998 Initial Purchasers (the "1998
Purchase Agreement"). We sold the 1999 Notes in a private offering on
February 24, 1999, to the 1999 Initial Purchaser pursuant to a purchase
agreement dated as of February 17, 1999 by and between the Company and the 1999
Initial Purchaser (the "1999 Purchase Agreement" and, together with the 1998
Purchase Agreement, the "Purchase Agreements"). The 1998 Initial Purchasers, in
the case of the 1998 Notes, and the 1999 Initial Purchaser, in the case of the
1999 Notes, subsequently resold such 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 1998 Initial
Purchasers entered into in connection with the private offering of the 1998
Notes, and which we agreed to be bound by in connection with the private
offering of the 1999 Notes, we are required to file, no more than 60 days
following the date the 1998 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
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<PAGE>
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 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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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 $200.0
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
March 10, 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 April 6,
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
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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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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");
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. 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 transmission or facsimile transmission, promptly
followed in writing.
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:
<TABLE>
<C> <S> <C>
By Hand Or Overnight Delivery: Facsimile Transmissions: By Registered Or Certified Mail:
(Eligible Institutions
Only)
The Bank of New York The Bank of New York
101 Barclay Street (212) 815-6339 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Level
Attention: Reorganization Section To Confirm by Telephone Attention: Reorganization Section
Marcia Brown or for Information Call:
(212) 815-3428
</TABLE>
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
is acting 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 is 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 $200,000,000 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
December 14, 1998. 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 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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<PAGE>
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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<PAGE>
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--Limitations
on Purchase of Notes upon a Change of Control" and "Description of Other
Indebtedness--1999 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
55
<PAGE>
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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<PAGE>
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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<PAGE>
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.
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
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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 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.
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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, 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
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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.
"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"
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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 1998 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 an interest in the Global Exchange Note representing the
principal amount of Exchange Notes being transferred.
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<PAGE>
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
75
<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.
76
<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.
77
<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.
78
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO OF THE ACKERLEY GROUP, INC.]
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
March 9, 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
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)
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
99.5 Form of Exchange Agency Agreement
</TABLE>
- --------
* Previously filed as part of this Registration Statement.
(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 March 9, 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
- ------------------------------------- Executive Officer and March 9, 1999
Barry A. Ackerley Director (Principal
Executive Officer)
* Co-Chairman and Co-
- ------------------------------------- President and Director March 9, 1999
Gail A. Ackerley
/s/ Denis M. Curley Co-President and Chief
- ------------------------------------- Financial Officer, March 9, 1999
Denis M. Curley Secretary and
Treasurer (Principal
Financial Officer)
/s/ Keith W. Ritzmann Senior Vice President
- ------------------------------------- and Chief Information March 9, 1999
Keith W. Ritzmann Officer, Assistant
Secretary and
Controller (Principle
Accounting Officer)
* Director
- ------------------------------------- March 9, 1999
Deborah L. Bevier
* Director
- ------------------------------------- March 9, 1999
M. Ian G. Gilchrist
* Director
- ------------------------------------- March 9, 1999
Michel C. Thielen
/s/ Keith W. Ritzmann
*By: ________________________________ March 9, 1999
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
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)
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
99.5 Form of Exchange Agency Agreement
</TABLE>
- --------
* Previously filed as part of this Registration Statement.
(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 5
[LETTERHEAD OF GRAHAM & DUNN PC]
March 8, 1999
The Ackerley Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, Washington 98101
RE: THE ACKERLEY GROUP, INC.;
LEGAL OPINION REGARDING VALIDITY OF SECURITIES OFFERED
Ladies and Gentlemen:
We are acting as counsel for The Ackerley Group, Inc., a Delaware
corporation (the "Company"), in connection the Company's public offering of
$200,000,000 aggregate principal amount of its 9% Series B Senior Subordinated
Notes due 2009 (the "Exchange Notes"). The Exchange Notes are to be issued
pursuant to an exchange offer (the "Exchange Offer") whereby the Exchange Notes
will be issued in exchange for its outstanding 9% Series A Senior Subordinated
Notes under an Indenture dated as of December 14, 1998 (the "Indenture") between
the Company and The Bank of New York, as trustee (the "Trustee"), as
contemplated by the Registration Rights Agreement, dated December 14, 1998 (the
"Registration Rights Agreement"), by and between the Company and the Initial
Purchasers named therein, and the Registration Agreement dated as of February
24, 1999 between the Company and First Union Capital Markets (the "Registration
Agreement" together with the Registration Rights Agreement, the "Registration
Agreements"). This opinion is being furnished in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of
1933, as amended (the "Act").
In connection with the offering of the Shares, we have examined: (i) the
Indenture; (ii) the Registration Agreements; (iii) the Registration Statement on
Form S-4 relating to the Exchange Notes (the "Registration Statement"); (iv)
form of certificate evidencing the Exchange Notes; (v) the Fourth Restated
Certificate of Incorporation of the Company; (vi) the Amended and Restated
Bylaws of the Company; (vii) certain resolutions adopted by the Board relating
to the Exchange Offer, the issuance of the Initial Notes and the Exchange Notes,
the Indenture and related matters; (viii) the Form T-1 of the Trustee filed as
an exhibit to the Registration Statement; and (ix) such other documents as we
have deemed necessary to form the opinion
<PAGE>
The Ackerley Group, Inc.
March 8,1999
Page 2
expressed below. As to various questions of fact material to such opinion, where
relevant facts were not independently established, we have relied upon
statements of officers of Company.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies, the
authenticity of the originals of such latter documents and the completeness and
accuracy as of the date of this opinion letter of the information contained in
such documents. In making our examination of documents executed or to be
executed by parties, we have assumed that such parties other than the Company
had or will have the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such parties
other than the Company of such documents and the validity and binding effect
thereof. As to any facts material to the opinions expressed herein which we
have not independently established or verified, we have relied upon statements
and representations of officers and other representatives of the Company and
others.
Our opinion is limited to the application to the laws of the State of
Washington, the General Corporation Law of the State of Delaware, and the
federal laws of the United States. The Exchange Notes, Indenture, and
Registration Agreements (collectively, the "Note Documents") state that they are
governed by the law of the State of New York. Consequently, we have not
examined the question of what law would govern the interpretation or enforcement
of such documents, and our opinion is based upon the assumption that the laws of
the State of New York are identical to the laws of the State of Washington. To
the extent that our opinion otherwise relates to the laws of any jurisdictions
other than the State of Washington, the General Corporation Law of the State of
Delaware, and the federal laws of the United States, we have assumed that such
laws are in all relevant respects identical to the laws of the State of
Washington. We note that if the Note Documents are not, in fact, valid,
binding, and enforceable under the laws of the State of New York, the Notes may
not be enforced by a State of Washington court under applicable conflict of law
principles. We express no opinion as to whether a court located in the State of
Washington would hold that the State of Washington is a proper forum in which to
enforce the Note Documents. In addition, a Washington court, or federal court
applying Washington law, may consider extrinsic evidence of the circumstances
surrounding the making of a Note Document to ascertain the intent of the parties
using the language employed in such documents, regardless of whether or not the
language used is plain and unambiguous on its face, and may incorporate
additional or supplementary terms into the such documents.
In rendering the opinion set forth below, we have assumed that the
execution, authentication and delivery by the Company of the Exchange Notes do
not and will not violate, conflict
<PAGE>
The Ackerley Group, Inc.
March 8,1999
Page 3
with or constitute a default under (i) any agreement or instrument to which the
Company or its properties is subject (except that we do not make the assumption
set forth in this clause (i) with respect to the Company's Fourth Restated
Certificate of Incorporation, the Company's Amended and Restated Bylaws, the
Indenture, or the Registration Agreements), (ii) any law, rule, or regulation to
which the Company is subject (except that we do not make the assumption set
forth in this clause (ii) with respect to the Delaware General Corporation Law
and those laws, rules and regulations of the State of Washington and the United
States, in each case, which, in our experience, are normally applicable to
transactions of the type contemplated by the Exchange Offer (other than the
United States federal securities laws, state securities or blue sky laws,
antifraud laws and the rules and regulations of the National Association of
Securities Dealers, Inc.), but without our having made any special investigation
with respect to any other laws, rules or regulations), (iii) any judicial or
regulatory order or decree of any governmental authority, or (iv) any consent,
approval, license, authorization or validation of, or filing, recording or
registration with any governmental authority.
Based and subject to the foregoing, we are of the opinion that when the
Exchange Notes have been duly a executed by the Company, authenticated by the
Trustee in accordance with the provisions of the Indenture, and delivered in
exchange for the Initial Notes in accordance with the terms of the Exchange
Offer, the Exchange Notes will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
as enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws relating
to or affecting creditors' rights generally and (2) by general equitable
principles (regardless of whether enforceability is considered in a proceeding
at law or in equity).
Consent is hereby given to the filing of this opinion as an exhibit to the
Registration Statement and to the legal reference to this firm under the caption
"Legal Matters" as having passed upon the validity of the Exchange Notes. In
giving this consent, we do not admit that we are experts within the meaning of
the Act.
Very truly yours,
GRAHAM & DUNN
/s/ Graham & Dunn
<PAGE>
EXHIBIT 10.1
==========================================
CREDIT AGREEMENT
among
THE ACKERLEY GROUP, INC.,
THE LENDERS NAMED HEREIN,
FIRST UNION NATIONAL BANK,
as Administrative 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
$325,000,000 Senior Credit Facilities
Arranged by
FIRST UNION CAPITAL MARKETS CORP.
Dated as of January 22, 1999
==========================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS.................................................................... 1
ARTICLE I
DEFINITIONS
1.1. Defined Terms........................................................ 1
1.2. Accounting Terms..................................................... 22
1.3. Other Terms; Construction............................................ 22
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1. Commitments......................................................... 23
2.2. Borrowings.......................................................... 23
2.3. Disbursements; Funding Reliance; Domicile of Loans.................. 24
2.4. Notes............................................................... 25
2.5. Termination and Reduction of Commitments............................ 26
2.6. Mandatory Payments and Prepayments.................................. 27
2.7. Voluntary Prepayments............................................... 29
2.8. Interest............................................................ 30
2.9. Fees................................................................ 31
2.10. Interest Periods.................................................... 32
2.11. Conversions and Continuations....................................... 33
2.12. Method of Payments; Computations.................................... 34
2.13. Recovery of Payments................................................ 35
2.14. Use of Proceeds..................................................... 35
2.15. Pro Rata Treatment.................................................. 35
2.16. Increased Costs; Change in Circumstances; Illegality; etc........... 36
2.17. Taxes............................................................... 38
2.18. Compensation........................................................ 39
2.19. Optional Increase in Revolving Credit Commitment.................... 40
ARTICLE III
LETTERS OF CREDIT
3.1. Issuance............................................................. 41
3.2. Notices.............................................................. 43
3.3. Participations....................................................... 43
3.4. Reimbursement........................................................ 43
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
3.5. Payment by Revolving Loans........................................... 44
3.6. Payment to Lenders................................................... 44
3.7. Obligations Absolute................................................. 44
3.8. Cash Collateral Account.............................................. 46
3.9. Effectiveness........................................................ 46
ARTICLE IV
CONDITIONS OF BORROWING
4.1. Conditions of Initial Borrowing...................................... 47
4.2 Conditions of Tranche B Term Loans................................... 49
4.3 Conditions of Revolver Increase...................................... 51
4.4 Conditions of All Borrowings......................................... 52
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Corporate Organization and Power.................................... 53
5.2. Authorization; Enforceability....................................... 53
5.3. No Violation........................................................ 53
5.4. Governmental and Third-Party Authorization; Permits and Licenses.... 53
5.5. Litigation.......................................................... 54
5.6. Taxes............................................................... 54
5.7. Subsidiaries........................................................ 54
5.8. Full Disclosure..................................................... 55
5.9. Margin Regulations.................................................. 55
5.10. No Material Adverse Change.......................................... 55
5.11. Financial Matters................................................... 55
5.12. Properties; Assets.................................................. 56
5.13. ERISA............................................................... 56
5.14. Environmental Matters............................................... 57
5.15. Compliance With Laws................................................ 57
5.16. Regulated Industries................................................ 58
5.17. Insurance........................................................... 58
5.18. Material Contracts.................................................. 58
5.19. Security Documents.................................................. 58
5.20. Labor Relations..................................................... 58
5.21. Year 2000 Compatibility............................................. 59
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1. Financial Statements................................................ 59
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
6.2. Other Business and Financial Information............................ 60
6.3. Corporate Existence; Franchises; Maintenance of Properties.......... 62
6.4. Compliance with Laws................................................ 62
6.5. Payment of Obligations.............................................. 62
6.6. Insurance........................................................... 62
6.7. Maintenance of Books and Records; Inspection........................ 63
6.8. Interest Rate Protection............................................ 63
6.9. Permitted Acquisitions.............................................. 63
6.10. Creation or Acquisition of Subsidiaries............................. 64
6.11 Additional Security................................................. 65
6.12. NBA Lockout......................................................... 66
6.12. Year 2000........................................................... 66
6.13. Further Assurances.................................................. 66
ARTICLE VII
FINANCIAL COVENANTS
7.1. Leverage Ratios...................................................... 66
7.2. Interest Coverage Ratio.............................................. 67
7.3. Fixed Charge Coverage Ratio.......................................... 67
7.4 Capital Lease Obligations............................................ 67
ARTICLE VIII
NEGATIVE COVENANTS
8.1. Merger; Consolidation............................................... 68
8.2. Indebtedness........................................................ 68
8.3. Liens............................................................... 70
8.4. Disposition of Assets............................................... 71
8.5. Investments; LMA's.................................................. 72
8.6. Restricted Payments................................................. 72
8.7. Transactions with Affiliates........................................ 73
8.8. Lines of Business................................................... 73
8.9. Certain Amendments.................................................. 73
8.10. Limitation on Certain Restrictions.................................. 74
8.11. No Other Negative Pledges........................................... 74
8.12. Fiscal Year......................................................... 74
8.13. Accounting Changes.................................................. 74
8.14. Waiver of Stay, Extension or Usury Laws............................. 74
8.15. Limitation on Preferred Stock of Subsidiaries....................... 74
8.16. Certain Restrictions................................................ 75
</TABLE>
ARTICLE IX
iii
<PAGE>
EVENTS OF DEFAULT
<TABLE>
<S> <C>
9.1. Events of Default.................................................... 75
9.2. Remedies: Termination of Commitments, Acceleration, etc.............. 78
9.3. Remedies: Set-Off.................................................... 79
ARTICLE X
THE AGENT
10.1. Appointment........................................................ 79
10.2. Nature of Duties................................................... 79
10.3. Exculpatory Provisions............................................. 80
10.4. Reliance by Agent.................................................. 80
10.5. Non-Reliance on Agent and Other Lenders............................ 80
10.6. Notice of Default.................................................. 81
10.7. Indemnification.................................................... 81
10.8. The Agent in its Individual Capacity............................... 82
10.9. Successor Agent.................................................... 82
10.10. Collateral Matters................................................. 82
10.11. Issuing Lender..................................................... 83
ARTICLE XI
MISCELLANEOUS
11.1. Fees and Expenses.................................................. 83
11.2. Indemnification.................................................... 83
11.3. Governing Law; Consent to Jurisdiction............................. 84
11.4. Arbitration; Preservation and Limitation of Remedies............... 85
11.5. Notices............................................................ 86
11.6. Amendments, Waivers, etc........................................... 86
11.7. Assignments, Participations........................................ 87
11.8. No Waiver.......................................................... 89
11.9. Successors and Assigns............................................. 89
11.10. Survival........................................................... 90
11.11. Severability....................................................... 90
11.12. Construction....................................................... 90
11.13. Confidentiality.................................................... 90
11.14. Counterparts; Effectiveness........................................ 90
11.15. Disclosure of Information.......................................... 90
11.16. Entire Agreement................................................... 91
</TABLE>
iv
<PAGE>
EXHIBITS
Exhibit A-1 Form of Tranche A Term Note
Exhibit A-2 Form of Tranche B Term Note
Exhibit A-3 Form of Revolving Note
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Conversion/Continuation
Exhibit B-3 Form of Letter of Credit Notice
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Pledge Agreement
Exhibit F Form of Security Agreement
Exhibit G Form of Subsidiary Guaranty
Exhibit H-1 Form of Opinion of Borrower's Counsel
Exhibit H-2 Form of Opinion of Borrower's FCC Counsel
Exhibit H-3 Form of Opinion of Borrower's Counsel Regarding Tranche B Term
Loans
Exhibit H-4 Form of Opinion of Borrower's FCC Counsel Regarding Tranche B
Term Loans
Exhibit H-5 Form of Opinion of Borrower's Counsel Regarding Revolver Increase
Exhibit H-6 Form of Opinion of Borrower's FCC Counsel Regarding Revolver
Increase
Exhibit H-7 Form of Opinion of Borrower's Counsel Regarding Subsidiary
Guaranty
Exhibit H-8 Form of Opinion of Borrower's FCC Counsel Regarding Subsidiary
Guaranty
Exhibit I Form of Financial Condition Certificate
Exhibit J Form of Lender Addition and Acknowledgment Agreement
SCHEDULES
Schedule 5.4 FCC Licenses
Schedule 5.5 Litigation
Schedule 5.7 Subsidiaries
Schedule 5.17 Insurance
Schedule 5.18 Material Contracts
Schedule 8.2 Indebtedness
Schedule 8.3 Liens
Schedule 8.5 Investments
Schedule 8.7 Transactions with Affiliates
Schedule 8.16 Existing FHS Indebtedness
v
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of the 22nd day of January, 1999 (this
"Agreement"), is made among THE ACKERLEY GROUP, INC., a Delaware corporation
with its principal offices in Seattle, Washington (the "Borrower"), the banks
and financial institutions listed on the signature pages hereto or that become
parties hereto after the date hereof (collectively, the "Lenders"), FIRST UNION
NATIONAL BANK ("First Union"), as Administrative Agent for the Lenders (in such
capacity, the "Administrative Agent"), FLEET BANK, N.A., as documentation agent
("Documentation Agent"), UNION BANK OF CALIFORNIA, N.A., as co-agent and KEYBANK
NATIONAL ASSOCIATION, as co-agent and BANK OF MONTREAL, CHICAGO BRANCH, as co-
agent.
RECITALS
A. The Borrower has requested that the Lenders make available to the
Borrower a term loan facility in the initial aggregate principal amount of
$150,000,000 (consisting of Tranche A Term Loans in an aggregate principal
amount of $65,000,000 to be made on the Closing Date, and Tranche B Term Loans
in an aggregate principal amount of $85,000,000 to be made on the WOKR
Acquisition Date, as defined below) and a reducing revolving credit facility in
the initial aggregate principal amount of $175,000,000 (the amount of which
revolving credit facility may be increased by $75,000,000 under certain
circumstances as provided herein).
B. The Borrower will use the proceeds of these facilities to finance a
portion of the purchase price of the acquisition of substantially all of the
assets associated with station WOKR-TV in Rochester, New York, to refinance
certain existing indebtedness, to pay or reimburse certain fees and expenses in
connection herewith and therewith, to finance capital expenditures, to fund
certain other acquisitions as permitted hereunder, and for working capital and
general corporate purposes, all as more fully described herein.
C. The Lenders are willing to make available to the Borrower the credit
facilities described herein subject to and on the terms and conditions set forth
in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual provisions, covenants and
agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms. For purposes of this Agreement, in addition to the
-------------
terms defined elsewhere herein, the following terms shall have the meanings set
forth below (such meanings to be equally applicable to the singular and plural
forms thereof):
1
<PAGE>
"Account Designation Letter" shall mean a letter from the Borrower to the
Administrative Agent, duly completed and signed by an Authorized Officer and in
form and substance satisfactory to the Administrative Agent, listing any one or
more accounts to which the Borrower may from time to time request the
Administrative Agent to forward the proceeds of any Loans made hereunder.
"Acquired Preferred Stock" means Preferred Stock of any Person or any of
its Subsidiaries at the time such Person becomes a Subsidiary of the Borrower or
at the time it merges or consolidates with the Borrower 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 Capital Stock that is not
Disqualified 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 the Weighted Average Life to Maturity of the Acquired Preferred
Stock being refinanced or replaced.
"Acquisition" shall mean any transaction or series of related transactions,
consummated on or after the date hereof, by which the Borrower directly, or
indirectly through one or more Subsidiaries, (i) acquires any going business, or
all or substantially all of the assets, of any Person, whether through purchase
of assets, merger or otherwise, or (ii) acquires securities or other ownership
interests of any Person having at least a majority of combined voting power of
the then outstanding securities or other ownership interests of such Person.
For purposes of this Agreement, any LMA (except for LMAs undertaken pursuant to
the Monterey LMA Agreement and the Utica LMA Agreement) shall be considered to
be an Acquisition.
"Acquisition Amount" shall mean, with respect to any Acquisition, the sum
(without duplication) of (i) the amount of cash paid by the Borrower and its
Subsidiaries in connection with such Acquisition, (ii) the Fair Market Value of
all Capital Stock of the Borrower issued or given in connection with such
Acquisition, (iii) the amount (determined by using the face amount or the amount
payable at maturity, whichever is greater) of all Indebtedness incurred, assumed
or acquired by the Borrower and its Subsidiaries in connection with such
Acquisition, (iv) all additional purchase price amounts in connection with such
Acquisition in the form of earnouts and other contingent obligations that should
be recorded as a liability on the balance sheet of the Borrower and its
Subsidiaries or expensed, in either event in accordance with GAAP, Regulation S-
X under the Securities Act of 1933, as amended, or any other rule or regulation
of the Securities and Exchange Commission, (v) all amounts paid in respect of
covenants not to compete, consulting agreements and other affiliated contracts
in connection with such Acquisition, (vi) the amount of all transaction fees and
expenses (including without limitation legal, accounting and finders' fees and
expenses) incurred by the Borrower and its Subsidiaries in connection with such
Acquisition and (vii) the aggregate fair market value of all other consideration
given by the Borrower and its Subsidiaries in connection with such Acquisition.
To the extent that consideration paid in connection with an Acquisition has been
applied to the Acquisition Amount in connection with an LMA, such consideration
will not be recounted in the calculation of the Acquisition Amount upon the
consummation of the acquisition ultimately being undertaken in connection with
such LMA.
2
<PAGE>
"Adjusted Base Rate" shall mean, at any time with respect to any Base Rate
Loan, a rate per annum equal to the Base Rate as in effect at such time plus the
Applicable Margin Percentage for Base Rate Loans as in effect at such time.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Loan, a rate per annum equal to the LIBOR Rate as in effect at such time plus
the Applicable Margin Percentage for LIBOR Loans as in effect at such time.
"Affiliate" shall mean, as to any Person, each other Person that directly,
or indirectly through one or more intermediaries, owns or controls, is
controlled by or under common control with, such Person or is a director or
officer of such Person. For purposes of this definition, with respect to any
Person "control" shall mean (i) the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise, or
(ii) the beneficial ownership of securities or other ownership interests of such
Person having 10% or more of the combined voting power of the then outstanding
securities or other ownership interests of such Person ordinarily (and apart
from rights accruing under special circumstances) having the right to vote in
the election of directors or other governing body of such Person.
"Administrative Agent" shall mean First Union, in its capacity as
Administrative Agent appointed under Article X, and its successors and permitted
assigns in such capacity.
"Agreement" shall mean this Credit Agreement, as amended, modified or
supplemented from time to time.
"Applicable Margin Percentage" shall mean, at any time from and after the
Closing Date, the applicable percentage (a) to be added to the Base Rate
pursuant to Section 2.8 for purposes of determining the Adjusted Base Rate, (b)
to be added to the LIBOR Rate pursuant to Section 2.8 for purposes of
determining the Adjusted LIBOR Rate, and (c) to be used in calculating the
commitment fee payable pursuant to Sections 2.9(c) and 2.9(h), in each case as
determined under the following matrix with reference to the Leverage Ratio:
<TABLE>
<CAPTION>
Leverage Ratio
- ------------------------------------- Applicable Margin Applicable Margin Applicable
Percentage for Percentage for Margin
Base Rate Term and LIBOR Term and Percentage for
Revolving Loans Revolving Loans Commitment Fee
--------------- ---------------- --------------
<S> <C> <C> <C>
Greater than or equal to 6.75 to 1.00 2.000% 3.000% 0.500%
Greater than or equal to 6.50 to 1.00
but less than 6.75 to 1.00 1.750% 2.750% 0.500%
Greater than or equal to 6.00 to 1.00
but less than 6.50 to 1.00 1.500% 2.500% 0.500%
Greater than or equal to 5.50 to 1.00
but less than 6.00 to 1.00 1.250% 2.250% 0.500%
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Leverage Ratio
- ------------------------------------- Applicable Margin Applicable Margin Applicable
Percentage for Percentage for Margin
Base Rate Term and LIBOR Term and Percentage for
Revolving Loans Revolving Loans Commitment Fee
--------------- ---------------- --------------
<S> <C> <C> <C>
Greater than or equal to 5.00 to 1.00 1.000% 2.000% 0.500%
but less than 5.50 to 1.00
Greater than or equal to 4.50 to 1.00 0.750% 1.750% 0.375%
but less than 5.00 to 1.00
Less than 4.50 to 1.00 0.500% 1.500% 0.375%
</TABLE>
On each Adjustment Date (as hereinafter defined), the Applicable Margin
Percentage for all Loans and the commitment fee payable pursuant to Sections
2.9(c) and 2.9(h) shall be adjusted effective as of such date (based upon the
calculation of the Leverage Ratio as of the last day of the fiscal period to
which such Adjustment Date relates) in accordance with the above matrix;
provided, however, that, notwithstanding the foregoing or anything else herein
- -------- -------
to the contrary, (a) if at any time the Borrower shall have failed to deliver
the financial statements and a Compliance Certificate as required by Section
6.1(a) or Section 6.1(b), as the case may be, and Section 6.2(a), or if at any
time a Default or Event of Default shall have occurred and be continuing, then
at the election of the Required Lenders, at all times from and including the
date on which such statements and Compliance Certificate are required to have
been delivered (or the date of occurrence of such Default or Event of Default,
as the case may be) to the date on which the same shall have been delivered (or
such Default or Event of Default cured or waived, as the case may be), each
Applicable Margin Percentage shall be determined in accordance with the above
matrix as if the Leverage Ratio were greater than or equal to 6.75 to 1.00
(notwithstanding the actual Leverage Ratio); and (b) for the period commencing
on the Closing Date and ending as of the Adjustment Date (as defined below) in
respect of the fiscal quarter ended March 31, 1999, each Applicable Margin
Percentage shall be determined in accordance with the above matrix as if the
Leverage Ratio were no lower than 6.50 to 1.00. For purposes of this
definition, "Adjustment Date" shall mean, with respect to any fiscal quarter of
the Borrower beginning with the fiscal quarter ending December 31, 1998, the
fifth (5th) day (or, if such day is not a Business Day, on the next succeeding
Business Day) after delivery by the Borrower in accordance with Section 6.1(a)
or Section 6.1(b), as the case may be, of (i) financial statements for the most
recently completed applicable fiscal period and (ii) a duly completed Compliance
Certificate with respect to such fiscal period.
"Asset Disposition" shall mean any sale, assignment, transfer or other
disposition by the Borrower or any of its Subsidiaries to any other Person
(other than to the Borrower or to a Wholly Owned Subsidiary), whether in one
transaction or in a series of related transactions, of any of its assets,
business units or other properties (including any interests in property, whether
tangible or intangible, and including Capital Stock of Subsidiaries), excluding
(i) sales and licenses of inventory and other assets in the ordinary course of
business, and (ii) the sale or exchange of used or obsolete equipment to the
extent the proceeds of such sale are applied towards, or such equipment is
exchanged for, similar replacement equipment.
"Asset Swap" means the execution of a definitive agreement, subject only to
approval of the FCC and other customary closing conditions, that the Borrower in
good faith believes will be satisfied,
4
<PAGE>
for a substantially concurrent purchase and sale, or exchange, of productive
assets between the Borrower or any of its Subsidiaries and another Person or
group of affiliated Persons.
"Assignee" shall have the meaning given to such term in Section 11.7(a).
"Assignment and Acceptance" shall mean an Assignment and Acceptance entered
into between a Lender and an Assignee and accepted by the Administrative Agent
and the Borrower, in substantially the form of Exhibit D.
"Authorized Officer" shall mean, with respect to any action specified
herein, any officer of the Borrower duly authorized by resolution of the board
of directors of the Borrower to take such action on its behalf, and whose
signature and incumbency shall have been certified to the Administrative Agent
by the secretary or an assistant secretary of the Borrower.
"Bankruptcy Code" shall mean 11 U.S.C. (S)(S) 101 et seq., as amended from
-- ---
time to time, and any successor statute.
"Base Rate" shall mean the higher of (i) the per annum interest rate
publicly announced from time to time by First Union in Charlotte, North
Carolina, to be its prime rate (which may not necessarily be its best lending
rate), as adjusted to conform to changes as of the opening of business on the
date of any such change in such prime rate, and (ii) the Federal Funds Rate plus
0.5% per annum, as adjusted to conform to changes as of the opening of business
on the date of any such change in the Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest at
such time at the Adjusted Base Rate.
"Borrower Margin Stock" shall mean shares of capital stock of the Borrower
that are held by the Borrower or any of its Subsidiaries and that constitute
Margin Stock.
"Borrowing" shall mean the incurrence by the Borrower (including as a
result of conversions and continuations of outstanding Loans pursuant to Section
2.11) on a single date of a group of Loans of a single Class and Type and, in
the case of LIBOR Loans, as to which a single Interest Period is in effect.
"Borrowing Date" shall mean, with respect to any Borrowing, the date upon
which such Borrowing is made.
"Business Day" shall mean (i) any day other than a Saturday or Sunday, a
legal holiday or a day on which commercial banks in Charlotte, North Carolina or
New York, New York are required by law to be closed and (ii) in respect of any
determination relevant to a LIBOR Loan, any such day that is also a day on which
tradings are conducted in the London interbank Eurodollar market.
"Capital Expenditures" shall mean, for any period, the aggregate amount
(whether paid in cash or accrued as a liability) that would, in accordance with
GAAP, be included on the consolidated statement of cash flows of the Borrower
and its Subsidiaries for such period as additions to equipment, fixed assets,
real property or improvements or other capital assets (including without
limitation capital lease obligations); provided, however, that Capital
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Expenditures shall not include any such expenditures (i) for replacements and
substitutions for capital assets, to the extent made with the proceeds of
insurance, or (ii) made to consummate any Permitted Acquisitions.
5
<PAGE>
"Capital Lease" shall mean, with respect to the Borrower or any Subsidiary,
any lease of any property by the Borrower or such Subsidiary as lessee that, in
accordance with GAAP, is required to be classified and accounted for as a
capital lease on the consolidated balance sheet of the Borrower and its
Subsidiaries.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease,
the amount of the obligation of the Borrower or any Subsidiary as lessee
thereunder that, in accordance with GAAP, is required to be included on the
consolidated balance sheet of the Borrower and its Subsidiaries as a liability
in respect of such Capital Lease.
"Capital Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights or
options to purchase any of the foregoing.
"Cash Collateral Account" shall have the meaning given to such term in
Section 3.8.
"Cash Equivalents" shall mean (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within 90 days from the date of acquisition, (ii) commercial paper
issued by any Person organized under the laws of the United States of America,
maturing within 90 days from the date of acquisition and, at the time of
acquisition, having a rating of at least A-1 or the equivalent thereof by
Standard & Poor's Ratings Services or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc., (iii) time deposits and certificates of deposit
maturing within 90 days from the date of issuance and issued by a bank or trust
company organized under the laws of the United States of America or any state
thereof that has combined capital and surplus of at least $500,000,000 and that
has (or is a subsidiary of a bank holding company that has) a long-term
unsecured debt rating of at least A or the equivalent thereof by Standard &
Poor's Ratings Services or at least A2 or the equivalent thereof by Moody's
Investors Service, Inc., (iv) repurchase obligations with a term not exceeding
seven (7) days with respect to underlying securities of the types described in
clause (i) above entered into with any bank or trust company meeting the
qualifications specified in clause (iii) above, and (v) money market funds at
least 95% of the assets of which are continuously invested in securities of the
type described in clause (i) above.
"Casualty Event" shall mean, with respect to any property (including any
interest in property) of the Borrower or any of its Subsidiaries, any loss of,
damage to, or condemnation or other taking of, such property for which the
Borrower or such Subsidiary receives insurance proceeds, proceeds of a
condemnation award or other compensation.
"Class" shall have the meaning given to such term in Section 2.2(a).
"Closing Date" shall mean the date upon which the initial extensions of
credit are made pursuant to this Agreement.
"Collateral" shall mean all the assets, property and interests in property
that shall from time to time be pledged or be purported to be pledged as direct
or indirect security for the Obligations pursuant to any one or more of the
Security Documents.
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<PAGE>
"Commitment" shall mean, with respect to any Lender, such Lender's Term
Loan Commitment and Revolving Credit Commitment.
"Communications Act" shall mean the Communications Act of 1934, as amended.
"Compliance Certificate" shall mean a fully completed and duly executed
certificate in the form of Exhibit C, together with a Covenant Compliance
Worksheet.
"Consolidated EBITDA" shall mean, with respect to the Borrower and 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.
For purposes of this Agreement, calculations of Consolidated EBITDA for any
period shall (a) exclude net income from Investments in which the Borrower or a
Subsidiary holds a minority interest and (b) be adjusted with respect to
entities or assets that are acquired or disposed of during such period as
permitted under Sections 6.9, 6.10, 8.1 or 8.4 as if such transaction had
occurred as of the first day of such period (based on a certificate in form and
substance reasonably satisfactory to the Administrative Agent and signed by a
Financial Officer of the Borrower setting forth in reasonable detail the portion
of Consolidated EBITDA during such period attributable to the entity or assets
acquired or disposed of and stating that the assumptions of the Borrower in
respect thereof are reasonable). Notwithstanding the foregoing, the calculation
of Consolidated EBITDA shall exclude the operations and results thereof (whether
positive or negative) of FHS for the period from the Closing Date through the
earlier to occur of the following dates: (a) the end of the fiscal quarter
immediately preceding any fiscal quarter for which FHS EBITDA is greater than
zero; and (b) December 31, 1999 (the earlier of such dates, the "FHS Covenant
Calculation Date"); provided that from and after the FHS Covenant Calculation
--------
Date, FHS EBITDA shall be included in the calculation of Consolidated EBITDA
only as follows: (i) for the fiscal quarter following the fiscal quarter in
which the FHS Covenant Calculation Date occurs, Consolidated EBITDA shall
include FHS EBITDA only for such quarter; (ii) for the next succeeding fiscal
quarter, Consolidated EBITDA shall include FHS EBITDA only for that quarter and
the preceding fiscal quarter; (iii) for the next succeeding fiscal quarter,
Consolidated EBITDA shall include FHS EBITDA only for that quarter and the
preceding two fiscal quarters; and (iv) thereafter, FHS EBITDA shall be treated
in a manner consistent with determining Consolidated EBITDA of the Borrower and
its other Subsidiaries.
"Consolidated Fixed Charges" shall mean, for any period, the aggregate
(without duplication) of the following, all determined on a consolidated basis
for the Borrower and its Subsidiaries in accordance with GAAP for such period:
(a) Consolidated Interest Expense for such period, (b) aggregate cash expense
for federal, state, local and other income taxes for such period, (c) Capital
Expenditures for such period, (d) the aggregate (without duplication) of all
scheduled payments of principal on Consolidated Funded Debt required to have
been made by the Borrower and its Subsidiaries during such period (whether or
not such payments are actually made), including without limitation the aggregate
principal amount of the Term Loans due during such period under Section 2.6(a)
(as such amounts may have been previously adjusted in accordance with the terms
of this Agreement as a result of prior prepayments on the Term Loans, including
adjustments made pursuant to Section 2.6(h) or Section 2.7(b)) and (e) the
amount of any payments made under any LMA Agreements attributable to principal
being paid by the other parties to such LMA Agreements pursuant to their
respective senior credit facilities.
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<PAGE>
Notwithstanding the foregoing, Consolidated Fixed Charges shall not include
amounts of any Capital Expenditures in respect of the Borrower's 1998
acquisition of its Seattle Supersonics corporate jet.
"Consolidated Funded Debt" shall mean Funded Debt of the Borrower and its
Subsidiaries on a consolidated basis as determined in accordance with GAAP.
"Consolidated Interest Expense" shall mean, with respect to any Person and
for any period, the sum (without duplication) 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 Hedge Agreements
(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, (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, and (iii) amounts paid during such period under any LMA
Agreements to the extent such amounts are attributable to interest being paid by
the other parties to such LMA Agreements pursuant to their respective senior
credit facilities, but, notwithstanding the foregoing, excluding any non-current
pay interest expense and the amortization of upfront fees related to the
incurrence of the Obligations and earlier financings.
"Consolidated Net Income" shall mean 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 Dispositions 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).
"Consolidated Senior Funded Debt" shall mean, as of the date of
determination, the amount of Funded Debt of the Borrower and its Subsidiaries on
a consolidated basis as determined in accordance with GAAP, minus the Existing
Subordinated Indebtedness and any other Subordinated Indebtedness that
constitutes Indebtedness.
"Contingent Obligation" shall mean, with respect to any Person, any direct
or indirect liability of such Person with respect to any Indebtedness, liability
or other obligation (the "primary obligation") of another Person (the "primary
obligor"), whether or not contingent, (a) to purchase, repurchase or
8
<PAGE>
otherwise acquire such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or provide funds (i) for the payment
or discharge of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor in respect thereof to make payment of such
primary obligation or (d) otherwise to assure or hold harmless the owner of any
such primary obligation against loss or failure or inability to perform in
respect thereof; provided, however, that, with respect to the Borrower and its
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Subsidiaries, the term Contingent Obligation shall not include (i) endorsements
for collection or deposit in the ordinary course of business or (ii) the pro
rata share (up to a maximum amount equal to $8,000,000 at any time) attributable
to the Borrower or any of its Subsidiaries, as a member of the National
Basketball Association ("NBA") of any advances or contributions required to be
made to the NBA in connection with the NBC or TBS/TNT broadcast contracts.
"Covenant Compliance Worksheet" shall mean a fully completed worksheet in
the form of Attachment A to Exhibit C.
"Credit Documents" shall mean this Agreement, the Notes, the Letters of
Credit, the Fee Letter, the Pledge Agreement, the Security Agreement, the
Subsidiary Guaranty (upon the execution thereof pursuant to Section 6.11(a)),
any other Security Documents, any Hedge Agreement to which the Borrower and any
Lender (or such Lender's Affiliate) are parties and that is permitted or
required to be entered into by the Borrower hereunder, and all other agreements,
instruments, documents and certificates now or hereafter executed and delivered
to the Administrative Agent or any Lender by or on behalf of the Borrower or any
of its Subsidiaries with respect to this Agreement and the transactions
contemplated hereby, in each case as amended, modified, supplemented or restated
from time to time.
"Debt Issuance" shall mean the issuance or sale by the Borrower or any of
its Subsidiaries of any debt securities, whether in a public offering of such
securities or otherwise.
"Default" shall mean any event or condition that, with the passage of time
or giving of notice, or both, would constitute an Event of Default.
"Disqualified Capital Stock" shall mean, with respect to any Person, any
Capital Stock of such Person that, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable), or upon the
happening of any event or otherwise, (i) matures or is mandatorily redeemable or
subject to any mandatory repurchase requirement, pursuant to a sinking fund
obligation or otherwise, (ii) is redeemable or subject to any mandatory
repurchase requirement at the sole option of the holder thereof, or (iii) is
convertible into or exchangeable for (whether at the option of the issuer or the
holder thereof) (a) debt securities or (b) any Capital Stock referred to in (i)
or (ii) above, in each case under (i), (ii) or (iii) above at any time on or
prior to the Term Loan Maturity Date; provided, however, that only the portion
-------- -------
of Capital Stock that so matures or is mandatorily redeemable, is so redeemable
at the option of the holder thereof, or is so convertible or exchangeable on or
prior to such date shall be deemed to be Disqualified Capital Stock.
"Documentation Agent" shall mean Fleet Bank, N.A. and its successors and
assigns.
"Dollars" or "$" shall mean dollars of the United States of America.
9
<PAGE>
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"ERISA Affiliate" shall mean any Person (including any trade or business,
whether or not incorporated) that would be deemed to be under "common control"
with, or a member of the same "controlled group" as, the Borrower or any of its
Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code or Section 4001 of ERISA.
"ERISA Event" shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a complete or partial withdrawal by the Borrower
or any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by the Borrower or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA, (iii) the distribution
by the Borrower or any ERISA Affiliate under Section 4041 or 4041A of ERISA of a
notice of intent to terminate any Plan or the taking of any action to terminate
any Plan, (iv) the commencement of proceedings by the PBGC under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice from any
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of
any Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon the Borrower or any ERISA Affiliate of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, or the imposition or threatened imposition of any Lien upon any
assets of the Borrower or any ERISA Affiliate as a result of any alleged failure
to comply with the Internal Revenue Code or ERISA in respect of any Plan, (vii)
the engaging in or otherwise becoming liable for a nonexempt Prohibited
Transaction by the Borrower or any ERISA Affiliate, (viii) a violation of the
applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit
rule under Section 401(a) of the Internal Revenue Code by any fiduciary of any
Plan for which the Borrower or any of its ERISA Affiliates may be directly or
indirectly liable or (ix) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the trust of which such
Plan is a part if the Borrower or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of such sections.
"Eligible Assignee" shall mean (i) a commercial bank organized under the
laws of the United States or any state thereof and having total assets in excess
of $500,000,000, (ii) a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development or any successor thereto (the "OECD") or a political subdivision of
any such country and having total assets in excess of $500,000,000, provided
--------
that such bank or other financial institution is acting through a branch or
agency located in the United States, in the country under the laws of which it
is organized or in another country that is also a member of the OECD, (iii) the
central bank of any country that is a member of the OECD, (iv) a finance
company, insurance company or other financial institution or fund that is
engaged in making, purchasing or otherwise investing in loans in the ordinary
course of its business and having total assets in excess of $100,000,000, (v)
any Affiliate of an existing Lender or (vi) any other Person approved by the
Agent and the Borrower, which approval shall not be unreasonably withheld or
delayed.
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"Environmental Claims" shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, accusations,
allegations, notices of noncompliance or violation, investigations (other than
internal reports prepared by any Person in the ordinary course of its business
and not in response to any third party action or request of any kind) or
proceedings relating in any way to any actual or alleged violation of or
liability under any Environmental Law or relating to any permit issued, or any
approval given, under any such Environmental Law (collectively, "Claims"),
including, without limitation, (i) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Substances or arising from alleged injury or threat of injury to human health or
the environment.
"Environmental Laws" shall mean any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals, rules of
common law and orders of courts or Governmental Authorities, relating to the
protection of human health or occupational safety or the environment, now or
hereafter in effect and in each case as amended from time to time, including,
without limitation, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Substances.
"Equity Issuance" shall mean the issuance, sale or other disposition by the
Borrower or any of its Subsidiaries of its Capital Stock, any rights, warrants
or options to purchase or acquire any shares of its Capital Stock or any other
security or instrument representing, convertible into or exchangeable for an
equity interest in the Borrower or any of its Subsidiaries; provided, however,
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that the term Equity Issuance shall not include (i) the issuance or sale of
Capital Stock by any of the Subsidiaries of the Borrower to the Borrower or any
other Subsidiary, provided that such Capital Stock is pledged to the
--------
Administrative Agent pursuant to the Pledge Agreement, (ii) any Capital Stock of
the Borrower issued or sold in connection with any Permitted Acquisition and
constituting all or a portion of the applicable purchase price or (iii) any
Capital Stock of the Borrower issued or sold in connection with any director or
employee stock plan or stock purchase agreement.
"Eugene LMA Agreement" shall mean the Time Brokerage Agreement, dated as of
November 30, 1998 by and between Wicks Broadcast Group Limited Partnership and
AK Media Group, Inc., as amended, restated, supplemented or otherwise modified
from time to time.
"Event of Default" shall have the meaning given to such term in Section
9.1.
"Excess Cash Flow" shall mean, for any fiscal year of the Borrower, (a) the
amount of Consolidated EBITDA for such fiscal year, minus (b) the sum (without
-----
duplication) of (i) Consolidated Fixed Charges for such fiscal year to the
extent paid in cash, (ii) optional prepayments on the Term Loans made during
such fiscal year, and (iii) optional prepayments on the Revolving Loans made
during such fiscal year that are accompanied by a corresponding reduction in the
Revolving Credit Commitments.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute, and all rules and regulations from
time to time promulgated thereunder.
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<PAGE>
"Existing Subordinated Indebtedness" shall mean the Indebtedness of the
Borrower incurred pursuant to the Borrower's (i) 10.48% Senior Subordinated
Notes due 2000 and (ii) 9.00% Series A Senior Subordinated Notes due 2009, in
the aggregate principal amount of $175,000,000.
"FCC" shall mean the Federal Communications Commission, or any successor or
replacement commission, bureau, department, agency or other Governmental
Authority.
"FCC Licenses" shall mean all television, radio or other licenses, permits,
certificates of compliance, franchises, approvals or authorizations granted or
issued by the FCC to the Borrower or any of its Subsidiaries.
"FCC Regulations" shall mean the Communications Act of 1934, 47 USC (S)(S)
151 et seq., as amended from time to time, and any successor statute performing
------
the same or substantially the same function, and all regulations and written
policies promulgated thereunder from time to time by the FCC.
"FHS" shall mean Full House Sports and Entertainment, a division of AK
Media Group, Inc. (which is a Subsidiary of the Borrower).
"FHS EBITDA" shall mean, with respect to FHS and for any period, the sum
(without duplication) of (i) net income of FHS, as determined in conformity with
GAAP and (ii) to the extent such consolidated net income has been reduced
thereby, (A) income taxes attributable to FHS that have been paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary or non-recurring gains or losses), (B) the portion, if any, of
Consolidated Interest Expense attributable to FHS, and (C) the portion, if any,
of Consolidated Non-Cash Charges attributable to FHS, all as determined in
conformity with GAAP.
"Fair Market Value" shall mean, with respect to any Capital Stock of the
Borrower given in connection with an Acquisition, the value given to such
Capital Stock for purposes of such Acquisition by the parties thereto, as
determined in good faith pursuant to the relevant acquisition agreement or
otherwise in connection with such Acquisition.
"Federal Funds Rate" shall mean, for any period, a fluctuating per annum
interest rate (rounded upwards, if necessary, to the nearest 1/100 of one
percentage point) equal for each day during such period to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by the Administrative Agent.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fee Letter" shall mean the letter from First Union to the Borrower, dated
November 24, 1998, relating to certain fees payable by the Borrower in respect
of the transactions contemplated by this Agreement, as amended, modified or
supplemented from time to time.
"Financial Condition Certificate" shall mean a fully completed and duly
executed certificate, substantially in the form of Exhibit I, together with the
attachments thereto.
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<PAGE>
"Financial Officer" shall mean, with respect to the Borrower, the chief
financial officer, senior vice president-finance, principal accounting officer
or treasurer of the Borrower.
"Fixed Charge Coverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of (i) Consolidated EBITDA for the period of four consecutive
fiscal quarters then ending to (ii) Consolidated Fixed Charges for such period.
"Funded Debt" shall mean, with respect to any Person (without duplication),
(i) all indebtedness and obligations of such Person for borrowed money or in
respect of loans or advances of any kind, (ii) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (iii) all
reimbursement obligations of such Person with respect to surety bonds, letters
of credit and bankers' acceptances (in each case, whether or not drawn or
matured and in the stated amount thereof), but, in the case of the Borrower and
its Subsidiaries, excluding obligations in respect of performance bonds or
contract performance guarantees the outstanding amount of which do not exceed
$20,000,000 in the aggregate at any time, (iv) all obligations of such Person to
pay the deferred purchase price of property or services, (v) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person, (vi) Capital Lease
Obligations, (vii) all Disqualified Capital Stock issued by such Person, with
the amount of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation preference and
its maximum fixed repurchase price, but excluding accrued dividends, if any (for
purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock that does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Agreement, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the board of directors or other governing body of the issuer of such
Disqualified Capital Stock), (viii) all obligations attributable to guaranties
of Indebtedness of other Persons, (ix) obligations in respect of any earned
deferred compensation for which Person is liable (in the case of the Borrower
and its Subsidiaries, as customarily reflected on the Borrower's regularly
prepared financial statements), and (x) all indebtedness referred to in clauses
(i) through (ix) above secured by any Lien on any property or asset owned or
held by such Person regardless of whether the indebtedness secured thereby shall
have been assumed by such Person or is nonrecourse to the credit of such Person
(except for any Lien granted in connection with any operating lease (as defined
in accordance with GAAP) relating to the Borrower's corporate jet).
"GAAP" shall mean generally accepted accounting principles, as set forth in
the statements, opinions and pronouncements of the Accounting Principles Board,
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained, as in effect
from time to time (subject to the provisions of Section 1.2).
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Harron" shall mean Harron Television of Monterey, a California general
partnership.
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"Hazardous Substances" shall mean any substances or materials (i) that are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) that are
defined by any Environmental Law as toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence of
which require investigation or response under any Environmental Law, (iv) that
constitute a nuisance, trespass or health or safety hazard to Persons or
neighboring properties, (v) that consist of underground or aboveground storage
tanks, whether empty, filled or partially filled with any substance, or (vi)
that contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedge Agreement" shall mean any interest or foreign currency rate swap,
cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Indebtedness" shall mean, with respect to any Person (without
duplication), (i) all indebtedness and obligations of such Person for borrowed
money or in respect of loans or advances of any kind, (ii) all obligations of
such Person evidenced by notes, bonds, debentures or similar instruments, (iii)
all reimbursement obligations of such Person with respect to surety bonds,
letters of credit and bankers' acceptances (in each case, whether or not drawn
or matured and in the stated amount thereof), (iv) all obligations of such
Person to pay the deferred purchase price of property or services, (v) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (vi)
Capital Lease Obligations, (vii) all Disqualified Capital Stock issued by such
Person, with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any (for purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock that does not have a fixed repurchase price shall
be calculated in accordance with the terms of such Disqualified Capital Stock as
if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Agreement, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined
reasonably and in good faith by the board of directors or other governing body
of the issuer of such Disqualified Capital Stock), (viii) the net termination
obligations of such Person under any Hedge Agreements, calculated as of any date
as if such agreement or arrangement were terminated as of such date, (ix) all
Contingent Obligations of such Person and (x) all indebtedness referred to in
clauses (i) through (ix) above secured by any Lien on any property or asset
owned or held by such Person regardless of whether the indebtedness secured
thereby shall have been assumed by such Person or is nonrecourse to the credit
of such Person. For purposes of determining the amount of the Borrower's or any
Subsidiary's Indebtedness as of any date, each Contingent Obligation of the
Borrower and its Subsidiaries required to be included in such determination
shall be valued at the maximum aggregate principal amount (whether or not drawn
or outstanding) of the Indebtedness that is the corresponding "primary
obligation" (as such term is defined in the definition of Contingent Obligation)
as of such date.
"Interest Coverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of
(i) Consolidated EBITDA for the period of four consecutive fiscal quarters then
ending to
(ii) Consolidated Interest Expense of the Borrower for such period.
"Interest Period" shall have the meaning given to such term in Section
2.10.
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"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"Issuing Lender" shall mean (i) First Union in its capacity as issuer of
the Letters of Credit other than the Outstanding Letters of Credit, or (ii)
Fleet Bank, N.A. in its capacity as issuer of any Outstanding Letter of Credit
(but only so long as any such Outstanding Letter of Credit or any Reimbursement
Obligation or other amount owing to Fleet Bank, N.A. with respect thereto
remains outstanding), and their respective successors in such capacities.
"LIBOR Loan" shall mean, at any time, any Loan that bears interest at such
time at the Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each LIBOR Loan comprising part of
the same Borrowing for any Interest Period, an interest rate per annum obtained
by dividing (i) (y) the rate of interest appearing on Telerate Page 3750 or any
successor page (rounded upward, if necessary, to the nearest 1/16 of one
percentage point) or (z) if no such rate is available, the rate of interest
determined by the Administrative Agent to be the rate or the arithmetic mean of
rates (rounded upward, if necessary, to the nearest 1/16 of one percentage
point) at which Dollar deposits in immediately available funds are offered by
First Union to first-tier banks in the London interbank Eurodollar market, in
each case under (y) and (z) above at approximately 11:00 a.m., London time, two
(2) Business Days prior to the first day of such Interest Period for a period
substantially equal to such Interest Period and in an amount substantially equal
to the amount of First Union's LIBOR Loan comprising part of such Borrowing, by
(ii) the amount equal to 1.00 minus the Reserve Requirement (expressed as a
decimal) for such Interest Period.
"LMA" means any management agreement, local marketing agreement, lease
management agreement, time brokerage agreement or similar arrangement relating
to programming or the sale of advertising or broadcast time entered into by
Borrower or any of its Subsidiaries with respect to any radio or television
station whether or not Borrower or such Subsidiary is the managing party
thereunder, and "LMAs" means all such agreements and arrangements collectively.
"LMA Obligations" means all monetary obligations of the Borrower or any
Subsidiary to any other Person with respect to management fees or other
compensation from time to time owed pursuant to LMAs, whether matured or
unmatured, absolute or contingent.
"Lender" shall mean each financial institution signatory hereto and each
other financial institution that becomes a "Lender" hereunder pursuant to
Section 11.7, and their respective successors and assigns.
"Lending Office" shall mean, with respect to any Lender, the office of such
Lender designated as its "Lending Office" on its signature page hereto or in an
Assignment and Acceptance, or such other office as may be otherwise designated
in writing from time to time by such Lender to the Borrower and the
Administrative Agent. A Lender may designate separate Lending Offices as
provided in the foregoing sentence for the purposes of making or maintaining
different Types of Loans, and, with respect to LIBOR Loans, such office may be a
domestic or foreign branch or Affiliate of such Lender.
"Letter of Credit Exposure" shall mean, with respect to any Lender at any
time, such Lender's ratable share (based on the proportion that its Revolving
Credit Commitment bears to the aggregate
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Revolving Credit Commitments at such time) of the sum of (i) the aggregate
Stated Amount of all Letters of Credit outstanding at such time and (ii) the
aggregate amount of all Reimbursement Obligations outstanding at such time.
"Letter of Credit Notice" shall have the meaning given to such term in
Section 3.2.
"Letters of Credit" shall have the meaning given to such term in Section
3.1.
"Leverage Ratio" shall mean at any time the ratio of (i) Consolidated
Funded Debt as of such time to (ii) Consolidated EBITDA for the period of the
most recently ended four consecutive fiscal quarters.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, security
interest, lien (statutory or otherwise), preference, priority, charge or other
encumbrance of any nature, whether voluntary or involuntary, including, without
limitation, the interest of any vendor or lessor under any conditional sale
agreement, title retention agreement, capital lease or any other lease or
arrangement having substantially the same effect as any of the foregoing, other
than interests of lessors under any operating leases (including motor vehicle
leases).
"Loans" shall mean any or all of the Term Loans and the Revolving Loans.
"Margin Stock" shall have the meaning given to such term in Regulation U.
"Material Adverse Change" shall mean a material adverse change in the
condition (financial or otherwise), operations, business, properties or assets
of the Borrower and its Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect upon (i) the
condition (financial or otherwise), operations, business, properties or assets
of the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the
Borrower or any Subsidiary to perform its obligations under this Agreement or
any of the other Credit Documents to which it is a party or (iii) the legality,
validity or enforceability of this Agreement or any of the other Credit
Documents or the rights and remedies of the Administrative Agent and the Lenders
hereunder and thereunder.
"Material Contracts" shall have the meaning given to such term in Section
5.18.
"Monterey Credit Agreement" shall mean that certain Credit Agreement, dated
April 14, 1996, between Harron, First Union and Fleet Bank, N.A., as amended,
restated, replaced or otherwise modified from time to time.
"Monterey LMA Agreement" shall mean the Time Brokerage Agreement, dated
April 24, 1996, between Harron Television of Monterey and Ackerley
Communications Group, Inc., as amended, restated, supplemented or otherwise
modified from time to time, or if this Agreement is terminated in connection
with the Borrower's acquisition of the station and concurrent sale of television
station KCBA in Salinas, California, to Seal Rock Broadcasters, L.L.C., the Time
Brokerage Agreement then entered into between Seal Rock Broadcasters, L.L.C. and
AK Media Group, Inc., as amended, restated, supplemented or otherwise modified
from time to time.
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"Multiemployer Plan" shall mean any "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate
makes, is making or is obligated to make contributions or has made or been
obligated to make contributions.
"Net Cash Proceeds" shall mean (i) in the case of any Equity Issuance or
Debt Issuance, the aggregate cash payments received by the Borrower and its
Subsidiaries less reasonable and customary fees and expenses (including
underwriting discounts and commissions) incurred by the Borrower and its
Subsidiaries in connection therewith, (ii) in the case of any Casualty Event,
the aggregate cash proceeds of insurance, condemnation awards and other
compensation received by the Borrower and its Subsidiaries in respect of such
Casualty Event less (y) reasonable fees and expenses incurred by the Borrower
and its Subsidiaries in connection therewith and (z) contractually required
repayments of Indebtedness to the extent secured by Liens on the property
subject to such Casualty Event and any income or transfer taxes paid or
reasonably estimated by the Borrower to be payable by the Borrower and its
Subsidiaries as a result of such Casualty Event, and (iii) in the case of any
Asset Disposition, the aggregate amount of all cash payments received by the
Borrower and its Subsidiaries in connection with such Asset Disposition less (x)
reasonable fees and expenses incurred by the Borrower and its Subsidiaries in
connection therewith, (y) Indebtedness to the extent the amount thereof is
secured by a Lien on the property that is the subject of such Asset Disposition
and the transferee of (or holder of the Lien on) such Property requires that
such Indebtedness be repaid as a condition to such Asset Disposition, and (z)
any income or transfer taxes paid or reasonably estimated by the Borrower to be
payable by the Borrower and its Subsidiaries as a result of such Asset
Disposition.
"Network Affiliation Agreement" shall mean any network affiliation
agreement to which the Borrower or any Subsidiary is a party.
"Notes" shall mean any or all of the Term Notes and the Revolving Notes.
"Notice of Borrowing" shall have the meaning given to such term in Section
2.2(b).
"Notice of Conversion/Continuation" shall have the meaning given to such
term in Section 2.11(b).
"Obligations" shall mean all principal of and interest (including, to the
greatest extent permitted by law, post-petition interest) on the Loans, all
Reimbursement Obligations and all fees, expenses, indemnities and other
obligations owing, due or payable at any time by the Borrower to the
Administrative Agent, any Lender, the Issuing Lender or any other Person
entitled thereto, under this Agreement or any of the other Credit Documents.
"Outstanding Letter of Credit" shall mean any of the following: (i) that
certain irrevocable letter of credit no. S149902, expiring January 15, 2000,
issued for the account of the Borrower in favor of Sage Realty Corp., (ii) that
certain irrevocable letter of credit no.S149887, expiring June 30, 1999, issued
for the account of the Borrower in favor of Employers Insurance of Wausau, (iii)
that certain irrevocable letter of credit no. S159333, expiring July 15, 1999,
issued for the account of the Borrower in favor of Miller Broadcasting Co., and
(iv) that certain irrevocable letter of credit no. S149900, expiring December
15, 1999, issued for the account of the Borrower in favor of Aetna Casualty &
Surety, all of which letters of credit were issued under the senior credit
facility replaced by the predecessor to this Agreement and treated as having
been issued originally hereunder pursuant to Section 3.1 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
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"Participant" shall have the meaning given to such term in Section 11.7(d).
"Permitted Acquisition" shall mean (a) any Acquisition with respect to
which all of the following conditions are satisfied: (i) each business acquired
shall be within the permitted lines of business described in Section 8.8, (ii)
any Capital Stock given as consideration in connection therewith shall be
Capital Stock of the Borrower, (iii) in the case of an Acquisition involving the
acquisition of control of Capital Stock of any Person, immediately after giving
effect to such Acquisition such Person (or the surviving Person, if the
Acquisition is effected through a merger or consolidation) shall be the Borrower
or a Wholly Owned Subsidiary, (iv) such Acquisition is not hostile in nature,
and (v) all of the conditions and requirements of Sections 6.9 and 6.10
applicable to such Acquisition are satisfied; or (b) any other non-hostile
Acquisition to which the Required Lenders (or the Administrative Agent on their
behalf) shall have given their prior written consent (which consent may be in
their sole discretion and may be given subject to such additional terms and
conditions as the Required Lenders shall establish) and with respect to which
all of the conditions and requirements set forth in this definition and in
Section 6.9, and in or pursuant to any such consent, have been satisfied or
waived in writing by the Required Lenders (or the Administrative Agent on their
behalf).
"Permitted LMA Agreements" shall mean the Eugene LMA Agreement, the Santa
Maria LMA Agreement, the Monterey LMA Agreement and the Utica LMA Agreement and
any other LMA approved from time to time by the Administrative Agent with the
consent of the Required Lenders.
"Permitted Liens" shall have the meaning given to such term in Section 8.3.
"Person" shall mean any corporation, association, joint venture,
partnership, limited liability company, organization, business, individual,
trust, government or agency or political subdivision thereof or any other legal
entity.
"Plan" shall mean any "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA that is subject to the provisions of Title IV of ERISA
(other than a Multiemployer Plan) and to which the Borrower or any ERISA
Affiliate may have any liability.
"Pledge Agreement" shall mean a pledge agreement made by the Borrower and
its Subsidiaries that own Capital Stock of indirect Subsidiaries of the
Borrower, in favor of the Administrative Agent and dated as of the Closing Date,
in substantially the form of Exhibit E, as amended, modified or supplemented
from time to time.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Pro Forma Balance Sheet" shall have the meaning given to such term in
Section 5.11(b).
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or by
reason of a Department of Labor prohibited transaction individual or class
exemption or (ii) Section 4975(c) of the Internal Revenue Code that is not
exempt by reason of Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.
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"Projections" shall have the meaning given to such term in Section 5.11(c),
as may be revised, amended, modified or supplemented in accordance with Section
6.12.
"Register" shall have the meaning given to such term in Section 11.7(b).
"Regulations D, G, T, U and X" shall mean Regulations D, G, T, U and X,
respectively, of the Federal Reserve Board, and any successor regulations.
"Reimbursement Obligation" shall have the meaning given to such term in
Section 3.4.
"Reportable Event" shall mean (i) any "reportable event" within the meaning
of Section 4043(c) of ERISA for which the 30-day notice under Section 4043(a) of
ERISA has not been waived by the PBGC (including any failure to meet the minimum
funding standard of, or timely make any required installment under, Section 412
of the Internal Revenue Code or Section 302 of ERISA, regardless of the issuance
of any waivers in accordance with Section 412(d) of the Internal Revenue Code),
(ii) any such "reportable event" subject to advance notice to the PBGC under
Section 4043(b)(3) of ERISA, (iii) any application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Internal
Revenue Code, and (iv) a cessation of operations described in Section 4062(e) of
ERISA.
"Required Lenders" shall mean the Lenders holding outstanding Loans and
Commitments (or, after the termination of the Revolving Credit Commitments,
outstanding Loans and Letter of Credit Exposure) representing fifty-one percent
or more (51%) of the aggregate at such time of all outstanding Loans and
Commitments (or, after the termination of the Revolving Credit Commitments, the
aggregate at such time of all outstanding Loans and Letter of Credit Exposure).
"Requirement of Law" shall mean, with respect to any Person, the charter,
articles or certificate of organization or incorporation and bylaws or other
organizational or governing documents of such Person, and any statute, law,
treaty, rule, regulation, order, decree, writ, injunction or determination of
any arbitrator or court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject or otherwise pertaining to any or all of the
transactions contemplated by this Agreement and the other Credit Documents,
including without limitation the FCC Regulations.
"Reserve Requirement" shall mean, with respect to any Interest Period, the
reserve percentage (expressed as a decimal) in effect from time to time during
such Interest Period, as provided by the Federal Reserve Board, applied for
determining the maximum reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency reserves) applicable to First Union
under Regulation D with respect to "Eurocurrency liabilities" within the meaning
of Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding.
"Responsible Officer" shall mean, with respect to the Borrower, any co-
president, the chief executive officer, the chief financial officer, any
executive officer, or any other Financial Officer of the Borrower, and any other
officer or similar official thereof responsible for the administration of the
obligations of the Borrower in respect of this Agreement.
"Revolver Increase" shall have the meaning assigned to such term in Section
2.19.
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"Revolving Credit Commitment" shall mean, with respect to any Lender at any
time, the aggregate of the amounts set forth opposite such Lender's name on its
signature page hereto under the caption "Revolving Credit Commitment" or, if
such Lender has entered into one or more Assignment and Acceptances, the amount
set forth for such Lender at such time in the Register maintained by the
Administrative Agent pursuant to Section 11.7(b) as such Lender's "Revolving
Credit Commitment," as such amount may be reduced at or prior to such time
pursuant to the terms hereof.
"Revolving Credit Maturity Date" shall mean December 31, 2005.
"Revolving Credit Termination Date" shall mean the Revolving Credit
Maturity Date or such earlier date of termination of the Revolving Credit
Commitments pursuant to Section 2.5 or Section 9.2.
"Revolving Loans" shall have the meaning given to such term in Section
2.1(b).
"Revolving Notes" shall mean the promissory notes of the Borrower in
substantially the form of Exhibit A-3, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
"Santa Maria LMA Agreement" shall mean the Time Brokerage Agreement, dated
December 30, 1998, by and between Benedek Broadcasting Corporation and AK Media
Group, Inc., as amended, restated, supplemented or otherwise modified from time
to time.
"Security Agreement" shall mean a security agreement made by the Borrower
and the Subsidiaries party thereto in favor of the Agent, in substantially the
form of Exhibit F, as amended, modified or supplemented from time to time.
"Security Documents" shall mean the Pledge Agreement, the Security
Agreement and all other pledge or security agreements, mortgages, deeds of
trust, assignments or other similar agreements or instruments executed and
delivered by the Borrower or any of its Subsidiaries pursuant to Sections 6.10
or 6.11 or otherwise in connection with the transactions contemplated hereby, in
each case as amended, modified or supplemented from time to time.
"Senior Leverage Ratio" shall mean at any time the ratio of (i)
Consolidated Senior Funded Debt as of such time to (ii) Consolidated EBITDA for
the most recently ended four consecutive fiscal quarters.
"Stated Amount" shall mean, with respect to any Letter of Credit at any
time, the aggregate amount available to be drawn thereunder at such time
(regardless of whether any conditions for drawing could then be met).
"Subordinated Indebtedness" shall have the meaning given to such term in
Section 8.2(vi).
"Subsidiary" shall mean, with respect to any Person, any corporation or
other Person of which more than fifty percent (50%) of the outstanding Capital
Stock having ordinary voting power to elect a majority of the board of
directors, board of managers or other governing body of such Person, is at the
time, directly or indirectly, owned or controlled by such Person and one or more
of its other Subsidiaries or a combination thereof (irrespective of whether, at
the time, securities of any other class or classes of any such corporation or
other Person shall or might have voting power by reason of the happening of any
contingency). When used without reference to a parent entity, the term
"Subsidiary" shall be deemed to refer to a Subsidiary of the Borrower.
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"Subsidiary Guaranty" shall mean a subsidiary guaranty agreement made by
the Subsidiaries of the Borrower, in favor of the Administrative Agent, in
substantially the form of Exhibit G, as amended, modified or supplemented from
time to time.
"Term Loan Commitments" shall mean the Tranche A Term Loan Commitments and
the Tranche B Term Loan Commitments, as appropriate.
"Term Loan Maturity Date" shall mean December 31, 2005. Such date shall be
the date of maturity of all Term Loans.
"Term Loans" shall mean the Tranche A Term Loans and the Tranche B Term
Loans, as appropriate.
"Term Notes" shall mean the Tranche A Term Notes and the Tranche B Term
Notes, as appropriate.
"Tranche A Term Loans" shall have the meaning given to such term in Section
2.1(a).
"Tranche A Term Loan Commitment" shall mean, with respect to any Lender at
any time, the amount set forth opposite such Lender's name on its signature page
hereto under the caption "Tranche A Term Loan Commitment" or, if such Lender has
entered into one or more Assignment and Acceptances, the amount set forth for
such Lender at such time in the Register maintained by the Administrative Agent
pursuant to Section 11.7(b) as such Lender's "Tranche A Term Loan Commitment,"
as such amount may be reduced at or prior to such time pursuant to the terms
hereof.
"Tranche A Term Notes" shall mean the promissory notes of the Borrower in
substantially the form of Exhibit A-1, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
"Tranche B Term Loans" shall have the meaning given to them in Section
2.1(a).
"Tranche B Term Loan Commitment" shall mean, with respect to any Lender at
any time, the amount set forth opposite such Lender's name on its signature page
hereto under the caption "Tranche B Term Loan Commitment" or, if such Lender has
entered into one or more Assignment and Acceptances, the amount set forth for
such Lender at such time in the Register maintained by the Administrative Agent
pursuant to Section 11.7(b) as such Lender's "Tranche B Term Loan Commitment,"
as such amount may be reduced at or prior to such time pursuant to the terms
hereof.
"Tranche B Term Loan Commitment Expiration Date" shall mean April 30, 1999,
or such later date agreed to in writing by the Company and the Required Lenders.
"Tranche B Term Notes" shall mean the promissory notes of the Borrower in
substantially the form of Exhibit A-2, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
"Type" shall have the meaning given to such term in Section 2.2(a).
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"Unfunded Pension Liability" shall mean, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.
"Unutilized Revolving Credit Commitments" shall mean, with respect to any
Lender at any time, such Lender's Revolving Credit Commitment at such time less
the sum of (i) the aggregate principal amount of all Revolving Loans made by
such Lender that are outstanding at such time and (ii) such Lender's Letter of
Credit Exposure at such time.
"Utica Credit Agreement" shall mean that certain Credit Agreement, dated as
of June 30, 1997, between Utica Television Partners, L.L.C., First Union and
Fleet Bank, N.A., as amended, restated, replaced or otherwise modified from time
to time.
"Utica LMA Agreement" shall mean the Time Brokerage Agreement, dated as of
June 30, 1997, between Utica Television Partners, L.L.C. and Central NY News,
Inc., as amended, restated, supplemented or otherwise modified from time to
time.
"Weighted Average Life to Maturity" means, when applied to any Preferred
Stock at any date, the number of years obtained by dividing (a) the then
outstanding aggregate liquidation value of such Preferred Stock into (b) the
total of the product obtained by multiplying (i) the amount of each then
remaining coupon, installment, sinking fund, serial maturity, or other required
payment 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" shall mean, with respect to any Subsidiary of any Person,
that 100% of the outstanding Capital Stock of such Subsidiary is owned, directly
or indirectly, by such Person.
"WOKR Acquisition" shall mean the Borrower's acquisition of substantially
all of the assets associated with station WOKR-(TV) in Rochester, New York.
"WOKR Acquisition Date" shall mean the date of closing of the WOKR
Acquisition.
1.2. Accounting Terms. Except as specifically provided otherwise in this
----------------
Agreement, all accounting terms used herein that are not specifically defined
shall have the meanings customarily given them in accordance with GAAP.
Notwithstanding anything to the contrary in this Agreement, for purposes of
calculation of the financial covenants set forth in Article VII, all accounting
determinations and computations hereunder shall be made in accordance with GAAP
as in effect as of the date of this Agreement applied on a basis consistent with
the application used in preparing the most recent financial statements of the
Borrower referred to in Section 5.11(a). In the event that any changes in GAAP
after such date are required to be applied to the Borrower and would affect the
computation of the financial covenants contained in Article VII, such changes
shall be followed only from and after the date this Agreement shall have been
amended to take into account any such changes.
1.3. Other Terms; Construction. Unless otherwise specified or unless the
-------------------------
context otherwise requires, all references herein to sections, annexes,
schedules and exhibits are references to sections, annexes, schedules and
exhibits in and to this Agreement, and all terms defined in this Agreement shall
have the defined meanings when used in any other Credit Document or any
certificate or other document made or delivered pursuant hereto. All references
herein to the Lenders or any of them shall be deemed
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to include the Issuing Lender unless specifically provided otherwise or unless
the context otherwise requires.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1. Commitments. (a) Each Lender severally agrees, subject to and on
-----------
the terms and conditions of this Agreement, to make a loan (each, a "Tranche A
Term Loan," and collectively, the "Tranche A Term Loans") to the Borrower on the
Closing Date in a principal amount not to exceed its Tranche A Term Loan
Commitment. No Tranche A Term Loans shall be made at any time after the Closing
Date. To the extent repaid, Tranche A Term Loans may not be reborrowed. In
addition, each Lender severally agrees, subject to and on the terms and
conditions of this Agreement, to make a loan (each, a "Tranche B Term Loan," and
collectively, the "Tranche B Term Loans," and collectively with the Tranche A
Term Loans, the "Term Loans") to the Borrower on the WOKR Acquisition Date in a
principal amount not to exceed its Tranche B Term Loan Commitment, provided that
--------
such date occurs on or before the Tranche B Term Loan Commitment Expiration Date
(it being understood that all Tranche B Term Loan Commitments shall terminate on
the Tranche B Term Loan Commitment Expiration Date unless the WOKR Acquisition
shall have been consummated as of such date). In the event of the termination
of the Tranche B Term Loan Commitments as provided above, for purposes of this
Agreement all Term Loans shall consist of the Tranche A Term Loans. No Tranche
B Term Loans shall be made at any time after the WOKR Acquisition Date. To the
extent repaid, Tranche B Term Loans may not be reborrowed.
(b) Each Lender severally agrees, subject to and on the terms and
conditions of this Agreement, to make loans (each, a "Revolving Loan," and
collectively, the "Revolving Loans") to the Borrower, from time to time on any
Business Day during the period from and including the Closing Date to but not
including the Revolving Credit Termination Date, in an aggregate principal
amount at any time outstanding not greater than the excess, if any, of its
Revolving Credit Commitment at such time over its Letter of Credit Exposure at
such time, provided that no Borrowing of Revolving Loans shall be made if,
--------
immediately after giving effect thereto, the sum of (x) the aggregate principal
amount of Revolving Loans outstanding at such time and (y) the aggregate Letter
of Credit Exposure of all Lenders at such time would exceed the aggregate
Revolving Credit Commitments at such time. Subject to and on the terms and
conditions of this Agreement, the Borrower may borrow, repay and reborrow
Revolving Loans. Each Lender's obligation to fund its pro rata share of the
Revolver Increase is subject to the conditions set forth in Section 2.19 hereof.
2.2. Borrowings. (a) The Term Loans and the Revolving Loans (each a
----------
"Class" of Loan) shall, at the option of the Borrower and subject to the terms
and conditions of this Agreement, be either Base Rate Loans or LIBOR Loans
(each, a "Type" of Loan), provided that (i) all Loans comprising the same
--------
Borrowing shall, unless otherwise specifically provided herein, be of the same
Type, (ii) the Loans (whether Revolving or Term Loans) made on the Closing Date
shall be made initially as Base Rate Loans and (iii) LIBOR Loans may be made, or
Base Rate Loans may be converted into LIBOR Loans, on the date which is three
(3) Business Days following the Closing Date (so long as proper notice is given
pursuant to Section 2.2(b) or Section 2.11(b)).
(b) The Borrower hereby requests a Borrowing of Tranche A Term Loans on the
Closing Date in an amount equal to the aggregate Tranche A Term Loan
Commitments. In order to make a
23
<PAGE>
Borrowing of Tranche B Term Loans or Revolving Loans (other than Borrowings
involving continuations or conversions of outstanding Loans, which shall be made
pursuant to Section 2.11), the Borrower will give the Administrative Agent
written notice not later than 12:00 noon, Charlotte time, three (3) Business
Days prior to each Borrowing to be comprised of LIBOR Loans and on the date of
each Borrowing to be comprised of Base Rate Loans; provided, however, that
-------- -------
requests for the Borrowing of Revolving Loans to be made on the Closing Date
may, at the discretion of the Administrative Agent, be given later than the
times specified hereinabove. Each such notice (each, a "Notice of Borrowing")
shall be irrevocable, shall be given in the form of Exhibit B-1 and shall
specify (1) the aggregate principal amount, Class and initial Type of the Loans
to be made pursuant to such Borrowing, (2) in the case of a Borrowing of LIBOR
Loans, the initial Interest Period to be applicable thereto, and (3) the
requested date of such Borrowing (the "Borrowing Date"), which shall be a
Business Day. Upon its receipt of a Notice of Borrowing, the Administrative
Agent will promptly notify each Lender of the proposed Borrowing.
Notwithstanding anything to the contrary contained herein:
(i) the aggregate principal amount of the Borrowing of Tranche A
Term Loans shall be in the amount of the aggregate Tranche A Term Loan
Commitments, and the aggregate principal amount of the Borrowing of Tranche
B Term Loans shall be in the amount of the aggregate Tranche B Term Loan
Commitments;
(ii) the aggregate principal amount of each Borrowing comprised of
Base Rate Loans shall not be less than $1,000,000 or, if greater, an
integral multiple of $500,000 in excess thereof (or, in the case of a
Borrowing of Revolving Loans, if less, in the amount of the aggregate
Unutilized Revolving Credit Commitments), and the aggregate principal
amount of each Borrowing comprised of LIBOR Loans shall not be less than
$5,000,000 or, if greater, an integral multiple of $1,000,000 in excess
thereof;
(iii) if the Borrower shall have failed to designate the Type of
Loans comprising a Borrowing, the Borrower shall be deemed to have
requested a Borrowing comprised of Base Rate Loans; and
(iv) if the Borrower shall have failed to select the duration of the
Interest Period to be applicable to any Borrowing of LIBOR Loans, then the
Borrower shall be deemed to have selected an Interest Period with a
duration of one month.
(c) Not later than 1:00 p.m., Charlotte time, on the requested
Borrowing Date (which shall be the Closing Date, in the case of the Term Loans),
each Lender will make available to the Administrative Agent at its office
referred to in Section 11.5 (or at such other location as the Administrative
Agent may designate) an amount, in Dollars and in immediately available funds,
equal to the amount of the Loan or Loans to be made by such Lender. To the
extent the Lenders have made such amounts available to the Administrative Agent
as provided hereinabove, the Administrative Agent will make the aggregate of
such amounts available to the Borrower in accordance with Section 2.3(a) and in
like funds as received by the Administrative Agent.
2.3. Disbursements; Funding Reliance; Domicile of Loans. (a) The
--------------------------------------------------
Borrower hereby authorizes the Administrative Agent to disburse the proceeds of
each Borrowing in accordance with the terms of any written instructions from any
of the Authorized Officers, provided that the Administrative Agent shall not be
--------
obligated under any circumstances to forward amounts to any account not listed
in an Account Designation Letter. The Borrower may at any time deliver to the
Administrative Agent an
24
<PAGE>
Account Designation Letter listing any additional accounts or deleting any
accounts listed in a previous Account Designation Letter.
(b) Unless the Administrative Agent has received, prior to 1:00 p.m.,
Charlotte time, on the relevant Borrowing Date, written notice from a Lender
that such Lender will not make available to the Administrative Agent such
Lender's ratable portion, if any, of the relevant Borrowing, the Administrative
Agent may assume that such Lender has made such portion available to the
Administrative Agent in immediately available funds on such Borrowing Date in
accordance with the applicable provisions of Section 2.2, and the Administrative
Agent may, in reliance upon such assumption, but shall not be obligated to, make
a corresponding amount available to the Borrower on such Borrowing Date. If and
to the extent that such Lender shall not have made such portion available to the
Administrative Agent, and the Administrative Agent shall have made such
corresponding amount available to the Borrower, such Lender, on the one hand,
and the Borrower, on the other, severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount, together with interest
thereon for each day from the date such amount is made available to the Borrower
until the date such amount is repaid to the Administrative Agent, (i) in the
case of such Lender, at the Federal Funds Rate, and (ii) in the case of the
Borrower, at the rate of interest applicable at such time to the Type and Class
of Loans comprising such Borrowing, as determined under the provisions of
Section 2.8. If such Lender shall repay to the Administrative Agent such
corresponding amount, such amount shall constitute such Lender's Loan as part of
such Borrowing for purposes of this Agreement. The failure of any Lender to
make any Loan required to be made by it as part of any Borrowing shall not
relieve any other Lender of its obligation, if any, hereunder to make its Loan
as part of such Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Loan to be made by such other Lender as part of any
Borrowing.
(c) Each Lender may, at its option, make and maintain any Loan at, to
or for the account of any of its Lending Offices, provided that any exercise of
--------
such option shall not affect the obligation of the Borrower to repay such Loan
to or for the account of such Lender in accordance with the terms of this
Agreement.
2.4. Notes. (a) The Loans made by each Lender shall be evidenced
-----
(i) in the case of Term Loans, by a Term Note appropriately completed in
substantially the form of Exhibit A-1 or A-2, as appropriate, and (ii) in the
case of Revolving Loans, by a Revolving Note appropriately completed in
substantially the form of Exhibit A-3.
(b) Each Term Note shall (i) be executed by the Borrower, (ii) be
payable to the order of such Lender, (iii) be dated as of the Closing Date (or
in the case of a Term Note issued after the Closing Date, dated the effective
date of the applicable Assignment and Acceptance or in the case of Tranche B
Term Notes, dated as of the WOKR Acquisition Date), (iv) be in a stated
principal amount equal to such Lender's Tranche A or Tranche B Term Loan
Commitment, as appropriate (or in the case of a Term Note issued after the
Closing Date, in an amount equal to the unpaid principal amount of such Lender's
Term Loan), (v) bear interest in accordance with the provisions of Section 2.8,
as the same may be applicable from time to time to the Term Loan made by such
Lender, and (vi) be entitled to all of the benefits of this Agreement and the
other Credit Documents and subject to the provisions hereof and thereof.
(c) Each Revolving Note shall (i) be executed by the Borrower, (ii) be
payable to the order of such Lender, (iii) be dated as of the Closing Date (or
in the case of a Revolving Note issued after the Closing Date, dated the
effective date of the applicable Assignment and Acceptance), (iv) be in a stated
principal amount equal to such Lender's Revolving Credit Commitment, (v) bear
interest in accordance
25
<PAGE>
with the provisions of Section 2.8, as the same may be applicable from time to
time to the Revolving Loans made by such Lender, and (vi) be entitled to all of
the benefits of this Agreement and the other Credit Documents and subject to the
provisions hereof and thereof.
(d) Each Lender will record on its internal records the amount and
Type of each Loan made by it and each payment received by it in respect thereof
and will, in the event of any transfer of any of its Notes, either endorse on
the reverse side thereof or on a schedule attached thereto (or any continuation
thereof) the outstanding principal amount and Type of the Loans evidenced
thereby as of the date of transfer or provide such information on a schedule to
the Assignment and Acceptance relating to such transfer; provided, however, that
-------- -------
the failure of any Lender to make any such recordation or provide any such
information, or any error therein, shall not affect the Borrower's obligations
under this Agreement or the Notes.
2.5. Termination and Reduction of Commitments. (a) The Tranche A
----------------------------------------
Term Loan Commitments shall be automatically and permanently terminated on the
Closing Date, unless the Tranche A Term Loans have been made in full on or prior
to such date. The Tranche B Term Loan Commitments shall be automatically and
permanently terminated on the Tranche B Term Loan Commitment Expiration Date,
unless the Tranche B Term Loans shall have been made in full on or prior to such
date. The Revolving Credit Commitments shall be automatically and permanently
terminated on the Revolving Credit Termination Date.
(b) The Revolving Credit Commitments shall, on each date upon which a
prepayment of the Loans is required under any provision of Section 2.6 (and
exceeds in amount the aggregate principal amount of Term Loans then outstanding)
or would be required if Term Loans were then outstanding, be automatically and
permanently reduced by the amount, if any, by which the amount of such required
prepayment (determined as if an unlimited amount of Term Loans were then
outstanding) exceeds the aggregate principal amount of Term Loans then actually
outstanding, as more particularly set forth in Section 2.6(h).
(c) At any time and from time to time after the date hereof, upon not
less than five (5) Business Days' prior written notice to the Administrative
Agent, the Borrower may terminate in whole or reduce in part the aggregate
Unutilized Revolving Credit Commitments, provided that any such partial
--------
reduction shall be in an aggregate amount of not less than $5,000,000 or, if
greater, an integral multiple of $1,000,000 in excess thereof. The amount of
any termination or reduction made under this subsection (c) may not thereafter
be reinstated.
(d) The Revolving Credit Commitments shall be permanently reduced on a
quarterly basis (on March 31, June 30, September 30 and December 31 of each
year), beginning March 31, 2001, based on the following annual percentages
(which percentages shall be applied to the aggregate Revolving Credit
Commitments as in effect immediately prior to the first such reduction) for each
of the following years (which quarterly payments for any one year shall be
equally divided among such year's annual percentage):
<TABLE>
<CAPTION>
Year Percentage Reduction
---- --------------------
<S> <C>
2001 10.0%
2002 20.0%
2003 20.0%
2004 25.0%
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Year Percentage Reduction
---- --------------------
<S> <C>
2005 25.0%
</TABLE>
(e) Each reduction of the Revolving Credit Commitments pursuant to this
Section shall be applied ratably among the Lenders according to their respective
Revolving Credit Commitments.
2.6. Mandatory Payments and Prepayments. (a) Except to the extent
----------------------------------
due or paid sooner pursuant to the provisions of this Agreement, the Borrower
will repay the aggregate outstanding principal of the Term Loans made hereunder
on a quarterly basis (on March 31, June 30, September 30 and December 31 of each
year), based on the following annual percentages of the initial amounts of the
Term Loans for each of the following years (which quarterly payments for any one
year shall be equally divided among such year's annual percentage):
<TABLE>
<CAPTION>
Term Loan Payment
Year Amount
---- ----------
<S> <C>
2000 5.0%
2001 10.0%
2002 15.0%
2003 20.0%
2004 25.0%
2005 25.0%
</TABLE>
(b) Except to the extent due or paid sooner pursuant to the provisions
of this Agreement, (i) the aggregate outstanding principal of the Term Loans
shall be due and payable in full on the Term Loan Maturity Date, and (ii) the
aggregate outstanding principal of the Revolving Loans shall be due and payable
in full on the Revolving Credit Maturity Date.
(c) In the event that, at any time, the sum of (x) the aggregate
principal amount of Revolving Loans outstanding at such time and (y) the
aggregate Letter of Credit Exposure at such time shall exceed the aggregate
Revolving Credit Commitments at such time (after giving effect to any concurrent
termination or reduction thereof), the Borrower will immediately prepay the
outstanding principal amount of the Revolving Loans in the amount of such
excess; provided that, to the extent such excess amount is greater than the
--------
aggregate principal amount of Revolving Loans outstanding immediately prior to
the application of such prepayment, the amount so prepaid shall be retained by
the Administrative Agent and held in the Cash Collateral Account as cover for
Letter of Credit Exposure, as more particularly described in Section 3.8, and
thereupon such cash shall be deemed to reduce the aggregate Letter of Credit
Exposure by an equivalent amount.
(d) Promptly upon (and in any event not later than five (5) Business
Days after) its receipt thereof, the Borrower will prepay the outstanding
principal amount of the Loans in an amount equal to 50% of the Net Cash Proceeds
from any Equity Issuance or 100% of the Net Cash Proceeds from any Debt
Issuance, made after the Closing Date (but in any event not including the
Existing Subordinated Indebtedness), and will deliver to the Administrative
Agent, concurrently with such prepayment, a certificate signed by a Financial
Officer of the Borrower in form and substance satisfactory to the Administrative
Agent and setting forth the calculation of such Net Cash Proceeds.
27
<PAGE>
(e) Not later than sixty (60) days after its receipt of any proceeds
of insurance, condemnation award (other than awards respecting any billboards or
similar outdoor advertising structures, which awards in the aggregate do not
exceed, in any fiscal year, an amount equal to $5,000,000, or over the term
hereof, an aggregate amount equal to $12,500,000) or other compensation in
respect of any Casualty Event (and in any event upon its determination not to
repair or replace any property subject to such Casualty Event), the Borrower
will prepay the outstanding principal amount of the Loans in an amount equal to
100% of the Net Cash Proceeds from such Casualty Event (less any amounts
theretofore applied or to be applied within one year after the occurrence of
such Casualty Event to the repair or replacement of property subject to such
Casualty Event) and will deliver to the Administrative Agent, concurrently with
such prepayment, a certificate signed by a Financial Officer of the Borrower in
form and substance satisfactory to the Administrative Agent and setting forth
the calculation of such Net Cash Proceeds; provided, however, that,
-------- -------
notwithstanding the foregoing, (i) nothing in this subsection shall be deemed to
limit or otherwise affect any right of the Administrative Agent herein or in any
of the other Credit Documents to receive and hold such proceeds as loss payee
and to disburse the same to the Borrower upon the terms hereof or thereof, or
any obligation of the Borrower and each of its Subsidiaries herein or in any of
the other Credit Documents to remit any such proceeds to the Administrative
Agent upon its receipt thereof, and (ii) any and all such proceeds received or
held by the Administrative Agent or the Borrower or any of its Subsidiaries
during the continuance of an Event of Default (regardless of any proposed or
actual use thereof for repair or replacement) shall be applied to prepay the
outstanding principal amount of the Loans.
(f) Promptly upon (and in any event not later than five (5) Business
Days after) its receipt thereof, the Borrower will prepay the outstanding
principal amount of the Loans in an amount equal to 100% of the Net Cash
Proceeds from any Asset Disposition (except that with respect to Asset
Dispositions, the Borrower may elect, up to an aggregate cumulative amount of
Net Cash Proceeds of $35,000,000 while this Agreement remains in effect (so long
as, except for any Asset Swaps, no more than ten percent (10%) of gross sales
proceeds in respect thereof consists of non-cash payments and fees and expenses
incurred in connection therewith), to apply such proceeds to amounts of
Revolving Loans without a corresponding reduction to the Revolving Credit
Commitments) and will deliver to the Administrative Agent, concurrently with
such prepayment, a certificate signed by a Financial Officer of the Borrower in
form and substance satisfactory to the Administrative Agent and setting forth
the calculation of such Net Cash Proceeds. Notwithstanding the foregoing,
nothing in this subsection shall be deemed to permit any Asset Disposition not
expressly permitted under Section 8.4.
(g) Concurrently with the delivery of its annual financial statements
after the end of each fiscal year, beginning with the fiscal year ending
December 31, 2000, and in any event not later than one hundred twenty (120) days
after the last day of each such fiscal year, the Borrower will prepay the
outstanding principal amount of the Loans in an amount equal to the percentage
of Excess Cash Flow, if any, set forth below as determined with respect to the
Leverage Ratio as of the end of such fiscal year, and will deliver to the
Administrative Agent, concurrently with such prepayment, a certificate signed by
a Financial Officer of the Borrower in form and substance satisfactory to the
Administrative Agent and setting forth the calculation of such Excess Cash Flow:
<TABLE>
<CAPTION>
Leverage Ratio Corresponding Percentage
-------------- ------------------------
<S> <C>
Greater than or equal to 5.50 to 1.00 50.00%
Greater than or equal to 4.50 to 1.00 but 25.00%
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
less than 5.50 to 1.00
Less than 4.50 to 1.00 0.00%
</TABLE>
(h) Each prepayment of the Loans made pursuant to subsections (d)
through (g) above (each, a "Prepayment Event") shall be applied (i) first, to
reduce the outstanding principal amount of the Term Loans, with such reduction
to be applied to the scheduled principal payments on the Term Loans (as set
forth in subsection (a) above) in inverse order of maturity, (ii) second, to the
extent of any excess remaining after application as provided in clause (i)
above, to reduce the outstanding principal amount of the Revolving Loans, with a
corresponding reduction to the Revolving Credit Commitments as provided in
Section 2.5(c), and (iii) third, to the extent of any excess remaining after
application as provided in clauses (i) and (ii) above, to pay any outstanding
Reimbursement Obligations, and thereafter to cash collateralize Letter of Credit
Exposure pursuant to Section 3.8, and within each Class of Loans shall be
applied first to prepay all Base Rate Loans before any LIBOR Loans are prepaid.
Each payment or prepayment pursuant to the provisions of this Section shall be
applied ratably among the Lenders holding the Loans being prepaid, in proportion
to the principal amount held by each.
(i) In the event and on each occasion that a Prepayment Event occurs,
the Borrower shall give to the Administrative Agent and the Lenders at least
three (3) Business Days' prior written notice of such event, the amount of Loans
anticipated to be prepaid and the application of such prepayment as set forth
above.
(j) Each payment or prepayment of a LIBOR Loan made pursuant to the
provisions of this Section on a day other than the last day of the Interest
Period applicable thereto shall be made together with all amounts required under
Section 2.18 to be paid as a consequence thereof.
2.7. Voluntary Prepayments. (a) At any time and from time to time,
---------------------
the Borrower shall have the right to prepay the Loans, in whole or in part,
without premium or penalty (except as provided in clause (iii) below), upon
written notice given to the Administrative Agent not later than 12:00 noon,
Charlotte time, three (3) Business Days prior to each intended prepayment of
LIBOR Loans and on the date of prepayment with respect to each intended
prepayment of Base Rate Loans, provided that (i) each partial prepayment shall
--------
be in an aggregate principal amount of not less than (A) $5,000,000 or, if
greater, an integral multiple of $1,000,000 in excess thereof in the case of
LIBOR Loans or (B) $1,000,000 or, if greater, an integral multiple of $500,000
in excess thereof in the case of Base Rate Loans, (ii) no partial prepayment of
LIBOR Loans made pursuant to any single Borrowing shall reduce the aggregate
outstanding principal amount of the remaining LIBOR Loans under such Borrowing
to less than $5,000,000 or to any greater amount not an integral multiple of
$1,000,000 in excess thereof, and (iii) unless made together with all amounts
required under Section 2.18 to be paid as a consequence of such prepayment, a
prepayment of a LIBOR Loan may be made only on the last day of the Interest
Period applicable thereto. Each such notice shall specify the proposed date of
such prepayment and the aggregate principal amount, Class and Type of the Loans
to be prepaid (and, in the case of LIBOR Loans, the Interest Period of the
Borrowing pursuant to which made), and shall be irrevocable and shall bind the
Borrower to make such prepayment on the terms specified therein. Revolving
Loans (but not Term Loans) prepaid pursuant to this subsection (a) may be
reborrowed, subject to the terms and conditions of this Agreement.
(b) Each prepayment of the Term Loans made pursuant to subsection (a)
above shall be applied to reduce the outstanding principal amount of the Term
Loans, with such reduction to be applied to the scheduled principal payments on
the Term Loans (as set forth in Section 2.6(a)) in the inverse
29
<PAGE>
order of maturity. Each prepayment of the Loans made pursuant to subsection (a)
above shall be applied ratably among the Lenders holding the Loans being
prepaid, in proportion to the principal amount held by each.
2.8. Interest. (a) The Borrower will pay interest in respect of the
--------
unpaid principal amount of each Loan, from the date of Borrowing thereof until
such principal amount shall be paid in full, (i) at the Adjusted Base Rate
applicable to the Class of such Loan, as in effect from time to time during such
periods as such Loan is a Base Rate Loan, and (ii) at the Adjusted LIBOR Rate
applicable to the Class of such Loan, as in effect from time to time during such
periods as such Loan is a LIBOR Loan.
(b) Upon the occurrence and during the continuance of an Event of
Default as the result of failure by the Borrower to pay any principal of or
interest on any Loan, any fees or other amount hereunder when due (whether at
maturity, pursuant to acceleration or otherwise), and (at the election of the
Required Lenders) upon the occurrence and during the continuance of any other
Event of Default, all outstanding principal amounts of the Loans and, to the
greatest extent permitted by law, all interest accrued on the Loans and all
other accrued and outstanding fees and other amounts hereunder, shall bear
interest at a rate per annum equal to the interest rate applicable from time to
time thereafter to such Loans (whether the Adjusted Base Rate or the Adjusted
LIBOR Rate) plus 2% (or, in the case of fees and other amounts, at the Adjusted
Base Rate plus 2%), and, in each case, such default interest shall be payable on
demand. To the greatest extent permitted by law, interest shall continue to
accrue after the filing by or against the Borrower of any petition seeking any
relief in bankruptcy or under any law pertaining to insolvency or debtor relief.
(c) Accrued (and theretofore unpaid) interest shall be payable as
follows:
(i) in respect of each Base Rate Loan (including any Base Rate Loan
or portion thereof paid or prepaid pursuant to the provisions of Section
2.6, except as provided hereinbelow), in arrears on the last Business Day
of each calendar quarter, beginning with the first such day to occur after
the Closing Date; provided, that in the event the Loans are repaid or
--------
prepaid in full and the Commitments have been terminated, then accrued
interest in respect of all Base Rate Loans shall be payable together with
such repayment or prepayment on the date thereof;
(ii) in respect of each LIBOR Loan (including any LIBOR Loan or
portion thereof paid or prepaid pursuant to the provisions of Section 2.6,
except as provided hereinbelow), in arrears (y) on the last Business Day of
the Interest Period applicable thereto (subject to the provisions of clause
(iv) in Section 2.10) and (z) in addition, in the case of a LIBOR Loan with
an Interest Period having a duration of six months or longer, on each date
on which interest would have been payable under clause (y) above had
successive Interest Periods of three months' duration been applicable to
such LIBOR Loan; provided, that in the event all LIBOR Loans made pursuant
--------
to a single Borrowing are repaid or prepaid in full, then accrued interest
in respect of such LIBOR Loans shall be payable together with such
repayment or prepayment on the date thereof; and
(iii) in respect of any Loan, at maturity (whether pursuant to
acceleration or otherwise) and, after maturity, on demand.
(d) Nothing contained in this Agreement or in any other Credit
Document shall be deemed to establish or require the payment of interest to any
Lender at a rate in excess of the maximum rate
30
<PAGE>
permitted by applicable law. If the amount of interest payable for the account
of any Lender on any interest payment date would exceed the maximum amount
permitted by applicable law to be charged by such Lender, the amount of interest
payable for its account on such interest payment date shall be automatically
reduced to such maximum permissible amount. In the event of any such reduction
affecting any Lender, if from time to time thereafter the amount of interest
payable for the account of such Lender on any interest payment date would be
less than the maximum amount permitted by applicable law to be charged by such
Lender, then the amount of interest payable for its account on such subsequent
interest payment date shall be automatically increased to such maximum
permissible amount, provided that at no time shall the aggregate amount by which
--------
interest paid for the account of any Lender has been increased pursuant to this
sentence exceed the aggregate amount by which interest paid for its account has
theretofore been reduced pursuant to the previous sentence.
(e) The Administrative Agent shall promptly notify the Borrower and
the Lenders upon determining the interest rate for each Borrowing of LIBOR Loans
after its receipt of the relevant Notice of Borrowing or Notice of
Conversion/Continuation, and upon each change in the Base Rate; provided,
--------
however, that the failure of the Administrative Agent to provide the Borrower or
- -------
the Lenders with any such notice shall neither affect any obligations of the
Borrower or the Lenders hereunder nor result in any liability on the part of the
Administrative Agent to the Borrower or any Lender. Each such determination
(including each determination of the Reserve Requirement) shall, absent manifest
error, be conclusive and binding on all parties hereto.
2.9. Fees. The Borrower agrees to pay:
----
(a) To the Arranger, for its own account, on the date of its execution
of this Agreement, the fees described in paragraph 1 of the Fee Letter, in the
amounts set forth therein as due and payable on such date and to the extent not
theretofore paid to the Arranger;
(b) To the Administrative Agent, for the account of each Lender (other
than First Union) on the Closing Date, the fees set forth in paragraph 2 of the
Fee Letter;
(c) To the Administrative Agent, for the account of each Lender with a
Revolving Credit Commitment, a commitment fee for each calendar quarter (or
portion thereof) for the period from the date of this Agreement to the Revolving
Credit Termination Date, at a per annum rate equal to the Applicable Margin
Percentage in effect for such fee from time to time during such quarter, on such
Lender's ratable share (based on the proportion that its Revolving Credit
Commitment bears to the aggregate Revolving Credit Commitments) of the average
daily aggregate Unutilized Revolving Credit Commitments, payable in arrears (i)
on the last Business Day of each calendar quarter, beginning with the first such
day to occur after the Closing Date, and (ii) on the Revolving Credit
Termination Date;
(d) To the Administrative Agent, for the account of each Lender with a
Revolving Credit Commitment, a letter of credit fee for each calendar quarter
(or portion thereof) in respect of all Letters of Credit outstanding during such
quarter, at a per annum rate equal to the Applicable Margin Percentage in effect
from time to time during such quarter for Revolving Loans that are maintained as
LIBOR Loans, on such Lender's ratable share (based on the proportion that its
Revolving Credit Commitment bears to the aggregate Revolving Credit Commitments)
of the daily average aggregate Stated Amount of such Letters of Credit, payable
in arrears (i) on the last Business Day of each calendar quarter, beginning with
the first such day to occur after the Closing Date, and (ii) on the later of the
Revolving Credit Termination Date and the date of termination of the last
outstanding Letter of Credit;
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(e) To the applicable Issuing Lender, for its own account, a facing
fee for each calendar quarter (or portion thereof) in respect of all Letters of
Credit outstanding during such quarter, at a per annum rate of 0.125% on the
daily average aggregate Stated Amount of such Letters of Credit, payable in
arrears (i) on the last Business Day of each calendar quarter, beginning with
the first such day to occur after the Closing Date, and (ii) on the later of the
Revolving Credit Termination Date and the date of termination of the last
outstanding Letter of Credit;
(f) To the Issuing Lender, for its own account, such commissions,
issuance fees, transfer fees and other fees and charges incurred in connection
with the issuance and administration of each Letter of Credit as are customarily
charged from time to time by the Issuing Lender for the performance of such
services in connection with similar letters of credit, or as may be otherwise
agreed to by the Issuing Lender, but without duplication of amounts payable
under subsection (d) above;
(g) To the Administrative Agent, for its own account, the annual
administrative fee described in paragraph 3 of the Fee Letter, on the terms, in
the amount and at the times set forth therein; and
(h) To the Administrative Agent, for the account of each Lender with a
Tranche B Term Loan Commitment, a commitment fee for each calendar quarter (or
portion thereof) for the period from the date of this Agreement to the earlier
of the WOKR Acquisition Date or April 30, 1999 (such earlier date, the "WOKR
Commitment Fee Expiration Date"), at a per annum rate equal to the Applicable
Margin Percentage in effect for such fee from time to time during such quarter,
on such Lender's ratable share (based on the proportion that its Tranche B Term
Loan Commitment bears to the aggregate Tranche B Term Loan Commitments) of the
aggregate of the Lenders' Tranche B Term Loan Commitments, payable in arrears
(i) on the last Business Day of each calendar quarter, beginning with the first
such day to occur after the Closing Date, and (ii) on the WOKR Commitment Fee
Expiration Date.
2.10. Interest Periods. Concurrently with the giving of a Notice of
----------------
Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
(whether in respect of Term Loans or Revolving Loans) comprised of Base Rate
Loans to be converted into, or LIBOR Loans to be continued as, LIBOR Loans, the
Borrower shall have the right to elect, pursuant to such notice, the interest
period (each, an "Interest Period") to be applicable to such LIBOR Loans, which
Interest Period shall, at the option of the Borrower, be a one, two, three or
six-month period; provided, however, that:
-------- -------
(i) all LIBOR Loans comprising a single Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any LIBOR Loan shall commence
on the date of the Borrowing of such LIBOR Loan (including the date of any
continuation of, or conversion into, such LIBOR Loan), and each successive
Interest Period applicable to such LIBOR Loan shall commence on the day on
which the next preceding Interest Period applicable thereto expires;
(iii) LIBOR Loans may not be outstanding under more than seven (7)
separate Interest Periods at any one time (for which purpose Interest
Periods shall be deemed to be separate even if they are coterminous);
(iv) if any Interest Period otherwise would expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day unless such next
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succeeding Business Day falls in another calendar month, in which case such
Interest Period shall expire on the next preceding Business Day;
(v) the Borrower may not select any Interest Period that begins
prior to the Closing Date or that expires (x) after the Term Loan Maturity
Date, with respect to Term Loans that are to be maintained as LIBOR Loans,
or (y) after the Revolving Credit Maturity Date, with respect to Revolving
Loans that are to be maintained as LIBOR Loans;
(vi) no Interest Period may be selected with respect to any Term
Loans that would end after a scheduled date for repayment of principal of
the Term Loans, or with respect to any Revolving Loans that would end after
any date of reduction of the Revolving Credit Commitment, in either case
occurring on or after the first day of such Interest Period unless,
immediately after giving effect to such selection, the aggregate principal
amount of Loans that are Base Rate Loans or that have Interest Periods
expiring on or before such principal repayment date equals or exceeds the
principal amount required to be paid on such principal repayment date;
(vii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month during which such
Interest Period would otherwise expire, such Interest Period shall expire
on the last Business Day of such calendar month; and
(viii) if, upon the expiration of any Interest Period applicable to
a Borrowing of LIBOR Loans, the Borrower shall have failed to elect a new
Interest Period to be applicable to such LIBOR Loans, then the Borrower
shall be deemed to have elected to convert such LIBOR Loans into Base Rate
Loans as of the expiration of the then current Interest Period applicable
thereto.
2.11. Conversions and Continuations. (a) The Borrower shall have
-----------------------------
the right, on any Business Day occurring on or after the Closing Date, to elect
(i) to convert all or a portion of the outstanding principal amount of any Base
Rate Loans of any Class into LIBOR Loans of the same Class, or to convert any
LIBOR Loans of any Class the Interest Periods for which end on the same day into
Base Rate Loans of the same Class, or (ii) to continue all or a portion of the
outstanding principal amount of any LIBOR Loans of any Class the Interest
Periods for which end on the same day for an additional Interest Period,
provided that (x) any such conversion of LIBOR Loans into Base Rate Loans shall
- --------
involve an aggregate principal amount of not less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof; any such conversion
of Base Rate Loans into, or continuation of, LIBOR Loans shall involve an
aggregate principal amount of not less than $5,000,000 or, if greater, an
integral multiple of $1,000,000 in excess thereof; and no partial conversion of
LIBOR Loans made pursuant to a single Borrowing shall reduce the outstanding
principal amount of such LIBOR Loans to less than $5,000,000 or to any greater
amount not an integral multiple of $1,000,000 in excess thereof, (y) except as
otherwise provided in Section 2.16(d), LIBOR Loans may be converted into Base
Rate Loans only on the last day of the Interest Period applicable thereto (and,
in any event, if a LIBOR Loan is converted into a Base Rate Loan on any day
other than the last day of the Interest Period applicable thereto, the Borrower
will pay, upon such conversion, all amounts required under Section 2.18 to be
paid as a consequence thereof), and (z) no conversion of Base Rate Loans into
LIBOR Loans or continuation of LIBOR Loans shall be permitted during the
continuance of a Default or Event of Default.
(b) The Borrower shall make each such election by giving the
Administrative Agent written notice not later than 1:00 p.m., Charlotte time,
three (3) Business Days prior to the intended effective
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date of any conversion of Base Rate Loans into, or continuation of, LIBOR Loans
and on the intended effective date of any conversion of LIBOR Loans into Base
Rate Loans. Each such notice (each, a "Notice of Conversion/Continuation") shall
be irrevocable, shall be given in the form of Exhibit B-2 and shall specify (x)
the date of such conversion or continuation (which shall be a Business Day), (y)
in the case of a conversion into, or a continuation of, LIBOR Loans, the
Interest Period to be applicable thereto, and (z) the aggregate amount, Class
and Type of the Loans being converted or continued. Upon the receipt of a Notice
of Conversion/Continuation, the Administrative Agent will promptly notify each
Lender of the proposed conversion or continuation. In the event that the
Borrower shall fail to deliver a Notice of Conversion/Continuation as provided
herein with respect to any outstanding LIBOR Loans, such LIBOR Loans shall
automatically be converted to Base Rate Loans upon the expiration of the then
current Interest Period applicable thereto (unless repaid pursuant to the terms
hereof). In the event the Borrower shall have failed to select in a Notice of
Conversion/Continuation the duration of the Interest Period to be applicable to
any conversion into, or continuation of, LIBOR Loans, then the Borrower shall be
deemed to have selected an Interest Period with a duration of one month.
2.12. Method of Payments; Computations. (a) All payments by the
--------------------------------
Borrower hereunder shall be made without setoff, counterclaim or other defense,
in Dollars and in immediately available funds to the Administrative Agent, for
the account of the Lenders entitled to such payment (except as otherwise
expressly provided herein as to payments required to be made directly to the
Issuing Lender and the Lenders) at its office referred to in Section 11.5, prior
to 1:00 p.m., Charlotte time, on the date payment is due. Any payment made as
required hereinabove, but after 1:00 p.m., Charlotte time, shall be deemed to
have been made on the next succeeding Business Day. If any payment falls due on
a day that is not a Business Day, then such due date shall be extended to the
next succeeding Business Day (except that in the case of LIBOR Loans to which
the provisions of clause (iv) in Section 2.10 are applicable, such due date
shall be the next preceding Business Day), and such extension of time shall then
be included in the computation of payment of interest, fees or other applicable
amounts.
(b) The Administrative Agent will distribute to the Lenders like
amounts relating to payments made to the Administrative Agent for the account of
the Lenders as follows: (i) if the payment is received by 12:00 noon, Charlotte
time, in immediately available funds, the Administrative Agent will make
available to each relevant Lender on the same date, by wire transfer of
immediately available funds, such Lender's ratable share of such payment (based
on the percentage that the amount of the relevant payment owing to such Lender
bears to the total amount of such payment owing to all of the relevant Lenders),
and (ii) if such payment is received after 12:00 noon, Charlotte time, or in
other than immediately available funds, the Administrative Agent will make
available to each such Lender its ratable share of such payment by wire transfer
of immediately available funds on the next succeeding Business Day (or in the
case of uncollected funds, as soon as practicable after collected). If the
Administrative Agent shall not have made a required distribution to the
appropriate Lenders as required hereinabove after receiving a payment for the
account of such Lenders, the Administrative Agent will pay to each such Lender,
on demand, its ratable share of such payment with interest thereon at the
Federal Funds Rate for each day from the date such amount was required to be
disbursed by the Administrative Agent until the date repaid to such Lender. The
Administrative Agent will distribute to the Issuing Lender like amounts relating
to payments made to the Administrative Agent for the account of the Issuing
Lender in the same manner, and subject to the same terms and conditions, as set
forth hereinabove with respect to distributions of amounts to the Lenders.
(c) Unless the Administrative Agent shall have received written notice
from the Borrower prior to the date on which any payment is due to any Lender
hereunder that such payment will not be made in full, the Administrative Agent
may assume that the Borrower has made such payment in full to
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<PAGE>
the Administrative Agent on such date, and the Administrative Agent may, in
reliance on such assumption, but shall not be obligated to, cause to be
distributed to such Lender on such due date an amount equal to the amount then
due to such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the Administrative Agent, and without limiting the
obligation of the Borrower to make such payment in accordance with the terms
hereof, such Lender shall repay to the Administrative Agent forthwith on demand
such amount so distributed to such Lender, together with interest thereon for
each day from the date such amount is so distributed to such Lender until the
date repaid to the Administrative Agent, at the Federal Funds Rate.
(d) All computations of interest hereunder (including computations of
the Reserve Requirement) shall be made on the basis of a year consisting of (i)
360 days with respect to LIBOR Loans and (ii) 365 days with respect to Base Rate
Loans, in each case based on the actual number of days (including the first day,
but excluding the last day) elapsed. All computations of fees hereunder shall be
made on the basis of a year consisting of 360 days.
2.13. Recovery of Payments. (a) The Borrower agrees that to the
--------------------
extent the Borrower makes a payment or payments to or for the account of the
Administrative Agent, any Lender or the Issuing Lender, which payment or
payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy, insolvency or similar state or
federal law, common law or equitable cause, then, to the extent of such payment
or repayment, the Obligation intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been received.
(b) If any amounts distributed by the Administrative Agent to any
Lender are subsequently returned or repaid by the Administrative Agent to the
Borrower or its representative or successor in interest, whether by court order
or by settlement approved by the Lender in question, such Lender will, promptly
upon receipt of notice thereof from the Administrative Agent, pay the
Administrative Agent such amount. If any such amounts are recovered by the
Administrative Agent from the Borrower or its representative or successor in
interest, the Administrative Agent will redistribute such amounts to the Lenders
on the same basis as such amounts were originally distributed.
2.14. Use of Proceeds. The proceeds of the Loans shall be used (i)
---------------
to finance a portion of the purchase price to be paid by the Borrower in
connection with the WOKR Acquisition, (ii) to refinance the Borrower's existing
senior credit facility, and (iii) to finance Capital Expenditures, working
capital and general corporate purposes and in accordance with the terms and
provisions of this Agreement (including to finance Permitted Acquisitions in
accordance with the terms and provisions of this Agreement, including without
limitation the provisions set forth in Section 6.9).
2.15. Pro Rata Treatment. (a) All fundings, continuations and
------------------
conversions of Loans of any Class shall be made by the Lenders pro rata on the
basis of their respective Commitments to provide Loans of such Class (in the
case of the initial funding of Loans of such Class pursuant to Section 2.2) or
on the basis of their respective outstanding Loans of such Class (in the case of
continuations and conversions of Loans of such Class pursuant to Section 2.11,
and additionally in all cases in the event the Commitments have expired or have
been terminated), as the case may be from time to time. All payments on account
of principal of or interest on any Loans, fees or any other Obligations owing to
or for the account of any one or more Lenders shall be apportioned ratably among
such Lenders in proportion to the amounts of such principal, interest, fees or
other Obligations owed to them respectively.
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(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, or otherwise, other
than pursuant to Section 11.7) applicable to the payment of any of the
Obligations that exceeds its ratable share (according to the proportion of (i)
the amount of such Obligations due and payable to such Lender at such time to
(ii) the aggregate amount of such Obligations due and payable to all Lenders at
such time) of payments on account of such Obligations then or therewith obtained
by all the Lenders to which such payments are required to have been made, such
Lender shall forthwith purchase from the other Lenders such participations in
such Obligations as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them; provided,
--------
however, that if all or any portion of such excess payment is thereafter
- -------
recovered from such purchasing Lender, such purchase from each such other Lender
shall be rescinded and each such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery, together with an
amount equal to such other Lender's ratable share (according to the proportion
of (i) the amount of such other Lender's required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to the provisions of this subsection may, to the
fullest extent permitted by law, exercise any and all rights of payment
(including, without limitation, setoff, banker's lien or counterclaim) with
respect to such participation as fully as if such participant were a direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or similar law, any Lender receives a secured
claim in lieu of a setoff to which this subsection applies, such Lender shall,
to the extent practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Lenders entitled under this
subsection to share in the benefits of any recovery on such secured claim.
2.16. Increased Costs; Change in Circumstances; Illegality; etc. (a)
---------------------------------------------------------
If, at any time after the date hereof and from time to time, the introduction of
or any change in any applicable law, rule or regulation or in the interpretation
or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender with any
guideline or request from any such Governmental Authority (whether or not having
the force of law), shall (i) subject such Lender to any tax or other charge, or
change the basis of taxation of payments to such Lender, in respect of any of
its LIBOR Loans or any other amounts payable hereunder or its obligation to
make, fund or maintain any LIBOR Loans (other than any change in the rate or
basis of tax on the overall net income of such Lender or its applicable Lending
Office), (ii) impose, modify or deem applicable any reserve, special deposit or
similar requirement (but excluding any reserves to the extent actually included
within the Reserve Requirement in the calculation of the LIBOR Rate) against
assets of, deposits with or for the account of, or credit extended by, such
Lender or its applicable Lending Office, or (iii) impose on such Lender or its
applicable Lending Office any other condition, and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining
any LIBOR Loans or issuing or participating in Letters of Credit or to reduce
the amount of any sum received or receivable by such Lender hereunder (including
in respect of Letters of Credit), the Borrower will, promptly upon demand
therefor by such Lender, pay to such Lender such additional amounts as shall
compensate such Lender for such increase in costs or reduction in return.
(b) If, at any time after the date hereof and from time to time, any
Lender shall have reasonably determined that the introduction of or any change
in any applicable law, rule or regulation regarding capital adequacy or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by such Lender
with any guideline or request from any such Governmental Authority (whether or
not having the force of law),
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<PAGE>
has or would have the effect, as a consequence of such Lender's Commitment,
Loans or issuance of or participations in Letters of Credit hereunder, of
reducing the rate of return on the capital of such Lender or any Person
controlling such Lender to a level below that which such Lender or controlling
Person could have achieved but for such introduction, change or compliance
(taking into account such Lender's or controlling Person's policies with respect
to capital adequacy), the Borrower will, promptly upon demand therefor by such
Lender therefor, pay to such Lender such additional amounts as will compensate
such Lender or controlling Person for such reduction in return.
(c) If, on or prior to the first day of any Interest Period, (y) the
Administrative Agent shall have determined that adequate and reasonable means do
not exist for ascertaining the applicable LIBOR Rate for such Interest Period or
(z) the Administrative Agent shall have received written notice from the
Required Lenders of their determination that the rate of interest referred to in
the definition of "LIBOR Rate" upon the basis of which the Adjusted LIBOR Rate
for LIBOR Loans for such Interest Period is to be determined will not adequately
and fairly reflect the cost to such Lenders of making or maintaining LIBOR Loans
during such Interest Period, the Administrative Agent will forthwith so notify
the Borrower and the Lenders. Upon such notice, (i) all then outstanding LIBOR
Loans shall automatically, on the expiration date of the respective Interest
Periods applicable thereto (unless then repaid in full), be converted into Base
Rate Loans, (ii) the obligation of the Lenders to make, to convert Base Rate
Loans into, or to continue, LIBOR Loans shall be suspended (including pursuant
to the Borrowing to which such Interest Period applies), and (iii) any Notice of
Borrowing or Notice of Conversion/Continuation given at any time thereafter with
respect to LIBOR Loans shall be deemed to be a request for Base Rate Loans, in
each case until the Administrative Agent or the Required Lenders, as the case
may be, shall have determined that the circumstances giving rise to such
suspension no longer exist (and the Required Lenders, if making such
determination, shall have so notified the Administrative Agent), and the
Administrative Agent shall have so notified the Borrower and the Lenders.
(d) Notwithstanding any other provision in this Agreement, if, at any
time after the date hereof and from time to time, any Lender shall have
determined in good faith that the introduction of or any change in any
applicable law, rule or regulation or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance with any guideline or request from any
such Governmental Authority (whether or not having the force of law), has or
would have the effect of making it unlawful for such Lender to make or to
continue to make or maintain LIBOR Loans, such Lender will forthwith so notify
the Administrative Agent and the Borrower. Upon such notice, (i) each of such
Lender's then outstanding LIBOR Loans shall automatically, on the expiration
date of the respective Interest Period applicable thereto (or, to the extent any
such LIBOR Loan may not lawfully be maintained as a LIBOR Loan until such
expiration date, upon such notice), be converted into a Base Rate Loan, (ii) the
obligation of such Lender to make, to convert Base Rate Loans into, or to
continue, LIBOR Loans shall be suspended (including pursuant to any Borrowing
for which the Administrative Agent has received a Notice of Borrowing but for
which the Borrowing Date has not arrived), and (iii) any Notice of Borrowing or
Notice of Conversion/Continuation given at any time thereafter with respect to
LIBOR Loans shall, as to such Lender, be deemed to be a request for a Base Rate
Loan, in each case until such Lender shall have determined that the
circumstances giving rise to such suspension no longer exist and shall have so
notified the Administrative Agent, and the Administrative Agent shall have so
notified the Borrower.
(e) Determinations by the Administrative Agent or any Lender for
purposes of this Section of any increased costs, reduction in return, market
contingencies, illegality or any other matter shall, absent manifest error, be
conclusive, provided that such determinations are made in good faith. No
--------
failure by the Administrative Agent or any Lender at any time to demand payment
of any amounts
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payable under this Section shall constitute a waiver of its right
to demand payment of any additional amounts arising at any subsequent time.
Nothing in this Section shall require or be construed to require the Borrower to
pay any interest, fees, costs or other amounts in excess of that permitted by
applicable law.
2.17. Taxes. (a) Any and all payments by the Borrower hereunder or
-----
under any Note shall be made, in accordance with the terms hereof and thereof,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, other than net income and franchise taxes imposed on the
Administrative Agent or any Lender by the United States or by the jurisdiction
under the laws of which the Administrative Agent or such Lender, as the case may
be, is organized or in which its principal office or (in the case of a Lender)
its applicable Lending Office is located, or any political subdivision or taxing
authority thereof (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any Note to the Administrative Agent or
any Lender, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section), the Administrative Agent or such
Lender, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower will make such
deductions, (iii) the Borrower will pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law and (iv)
the Borrower will deliver to the Administrative Agent or such Lender, as the
case may be, evidence of such payment.
(b) The Borrower will indemnify the Administrative Agent and each
Lender for the full amount of Taxes (including, without limitation, any Taxes
imposed by any jurisdiction on amounts payable under this Section) paid by the
Administrative Agent or such Lender, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Administrative
Agent or such Lender, as the case may be, makes written demand therefor.
(c) Each of the Administrative Agent and the Lenders agrees that if it
subsequently recovers, or receives a permanent net tax benefit with respect to,
any amount of Taxes (i) previously paid by it and as to which it has been
indemnified by or on behalf of the Borrower or (ii) previously deducted by the
Borrower (including, without limitation, any Taxes deducted from any additional
sums payable under clause (i) of subsection (a) above), the Administrative Agent
or such Lender, as the case may be, shall reimburse the Borrower to the extent
of the amount of any such recovery or permanent net tax benefit (but only to the
extent of indemnity payments made, or additional amounts paid, by or on behalf
of the Borrower under this Section with respect to the Taxes giving rise to such
recovery or tax benefit); provided, however, that the Borrower, upon the request
-------- -------
of the Administrative Agent or such Lender, agrees to repay to the
Administrative Agent or such Lender, as the case may be, the amount paid over to
the Borrower (together with any penalties, interest or other charges), in the
event the Administrative Agent or such Lender is required to repay such amount
to the relevant taxing authority or other Governmental Authority. The
determination by the Administrative Agent or any Lender of the amount of any
such recovery or permanent net tax benefit shall, in the absence of manifest
error, be conclusive and binding.
(d) If any Lender is incorporated or organized under the laws of a
jurisdiction other than the United States of America or any state thereof (a
"Non-U.S. Lender") and claims exemption from United
38
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States withholding tax pursuant to the Internal Revenue Code, such Non-U.S.
Lender will deliver to each of the Administrative Agent and the Borrower, on or
prior to the Closing Date (or, in the case of a Non-U.S. Lender that becomes a
party to this Agreement as a result of an assignment after the Closing Date, on
the effective date of such assignment), (i) in the case of a Non-U.S. Lender
that is a "bank" for purposes of Section 881(c)(3)(A) of the Internal Revenue
Code, a properly completed Internal Revenue Service Form 4224 or 1001, as
applicable (or successor forms), certifying that such Non-U.S. Lender is
entitled to an exemption from or a reduction of withholding or deduction for or
on account of United States federal income taxes in connection with payments
under this Agreement or any of the Notes, together with a properly completed
Internal Revenue Service Form W-8 or W-9, as applicable (or successor forms),
and (ii) in the case of a Non-U.S. Lender that is not a "bank" for purposes of
Section 881(c)(3)(A) of the Internal Revenue Code, a certificate in form and
substance reasonably satisfactory to the Administrative Agent and the Borrower
and to the effect that (x) such Non-U.S. Lender is not a "bank" for purposes of
Section 881(c)(3)(A) of the Internal Revenue Code, is not subject to regulatory
or other legal requirements as a bank in any jurisdiction, and has not been
treated as a bank for purposes of any tax, securities law or other filing or
submission made to any governmental authority, any application made to a rating
agency or qualification for any exemption from any tax, securities law or other
legal requirements, (y) is not a 10-percent shareholder for purposes of Section
881(c)(3)(B) of the Internal Revenue Code and (z) is not a controlled foreign
corporation receiving interest from a related person for purposes of Section
881(c)(3)(C) of the Internal Revenue Code, together with a properly completed
Internal Revenue Service Form W-8 or W-9, as applicable (or successor forms).
Each such Non-U.S. Lender further agrees to deliver to each of the
Administrative Agent and the Borrower an additional copy of each such relevant
form on or before the date that such form expires or becomes obsolete or after
the occurrence of any event (including a change in its applicable Lending
Office) requiring a change in the most recent forms so delivered by it, in each
case certifying that such Non-U.S. Lender is entitled to an exemption from or a
reduction of withholding or deduction for or on account of United States federal
income taxes in connection with payments under this Agreement or any of the
Notes, unless an event (including, without limitation, any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required, which event renders all such forms inapplicable or the
exemption to which such forms relate unavailable and such Non-U.S. Lender
notifies the Administrative Agent and the Borrower that it is not entitled to
receive payments without deduction or withholding of United States federal
income taxes. Each such Non-U.S. Lender will promptly notify the Administrative
Agent and the Borrower of any changes in circumstances that would modify or
render invalid any claimed exemption or reduction.
(e) If any Lender is entitled to a reduction in (and not a complete
exemption from) the applicable withholding tax, the Borrower and the
Administrative Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If any of the forms or other documentation required under
subsection (d) above are not delivered to the Administrative Agent as therein
required, then the Borrower and the Administrative Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
2.18. Compensation. The Borrower will compensate each Lender upon
------------
demand for all losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by reason of the liquidation or
reemployment of deposits or other funds required by such Lender to fund or
maintain LIBOR Loans) that such Lender may incur or sustain (i) if for any
reason (other than a default by such Lender) a Borrowing or continuation of, or
conversion into, a LIBOR Loan does not occur on a date specified therefor in a
Notice of Borrowing or Notice of Conversion/Continuation, (ii) if any repayment,
prepayment or conversion of any LIBOR Loan occurs on a date other than the last
day of an Interest
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Period applicable thereto (including as a consequence of acceleration of the
maturity of the Loans pursuant to Section 9.2), (iii) if any prepayment of any
LIBOR Loan is not made on any date specified in a notice of prepayment given by
the Borrower or (iv) as a consequence of any other failure by the Borrower to
make any payments with respect to any LIBOR Loan when due hereunder. Calculation
of all amounts payable to a Lender under this Section shall be made as though
such Lender had actually funded its relevant LIBOR Loan through the purchase of
a Eurodollar deposit bearing interest at the LIBOR Rate in an amount equal to
the amount of such LIBOR Loan, having a maturity comparable to the relevant
Interest Period; provided, however, that each Lender may fund its LIBOR Loans in
-------- -------
any manner it sees fit and the foregoing assumption shall be utilized only for
the calculation of amounts payable under this Section. Determinations by any
Lender for purposes of this Section of any such losses, expenses or liabilities
shall, absent manifest error, be conclusive,provided that such determinations
--------
are made in good faith.
2.19. Optional Increase in Revolving Credit Commitment.
------------------------------------------------
(a) Subject to the conditions set forth below, the Borrower may at any
time after the Closing Date but prior to March 31, 2001, upon at least ten (10)
days prior written notice to the Administrative Agent and the Lenders, request
an increase in the total Revolving Credit Commitments by an amount of up to
$75,000,000 (the "Revolver Increase"). Such increase shall be subject to the
following terms and conditions:
(i) No Lender shall be deemed to have committed to lend to the
Borrower any portion of the Revolver Increase or to increase its Revolving
Credit Commitment, it being understood that any Revolver Increase shall be
funded at the discretion of any Lender and pursuant to paragraphs (b) - (d)
below.
(ii) The representations and warranties made by the Borrower and
contained in Article V shall be true and correct on and as of the effective
date of any Revolver Increase with the same effect as if made on and as of
such date (other than those representations and warranties that by their
terms speak as of a particular date, which representations and warranties
shall be true and correct as of such particular date).
(iii) No Default or Event of Default shall have occurred and be
continuing as of the effective date of any such increase.
(iv) First Union's and any other Lender's obligations to consummate
any additional loans in respect of the Revolver Increase shall be subject
to the conditions set forth in Sections 4.3 and 4.4 hereof.
(v) Once consummated, loans made by any Lenders in connection with
any Revolver Increase shall be considered for all purposes to be Revolving
Loans hereunder.
(b) The Revolver Increase may be funded either by one or more financial
institutions that are not theretofore Lenders hereunder ("Outside Lenders") and
that are designated by the Borrower to become Lenders (such designation to be
effective only with the prior written consent of the Administrative Agent, which
consent shall not be unreasonably withheld) or by agreeing with an existing
Lender that such Lender's Revolving Credit Commitment shall be increased (thus
increasing the total Revolving Credit Commitment); provided that:
--------
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(i) any such Outside Lender shall meet the criteria set forth in
the definition of Eligible Assignee;
(ii) the Borrower and the Lender or Outside Lender shall execute
and deliver to the Administrative Agent, for its acceptance and recording
in the Register, a Lender Addition and Acknowledgment Agreement
substantially in the form of Exhibit J attached hereto;
(iii) the allocations of Revolving Loans among the Lenders shall be
deemed to be amended to reflect the revised Revolving Credit Commitments of
the Lenders, and the Borrower shall pay any amount required to be paid
pursuant to Section 2.18 hereof resulting from the reallocation of
Revolving Credit Loans in connection with the increase in the total
Revolving Credit Commitments; and
(iv) the Administrative Agent may request any other documents or
information in its reasonable discretion in connection with the
consummation of the Revolver Increase.
(c) Upon the execution, delivery, acceptance and recording of the Lender
Addition and Acknowledgment Agreement, from and after the effective date
specified therein, such existing Lender shall have a Revolving Credit Commitment
as therein set forth or such other Lender shall become a Lender with a Revolving
Credit Commitment as therein set forth and all the rights and obligations of a
Lender with such a Revolving Credit Commitment hereunder.
(d) Upon its receipt of a properly completed and executed Lender
Addition and Acknowledgment Agreement together with any Note or Notes
subject to such addition and assumption and the written consent to such
addition and assumption, the Administrative Agent shall:
(i) accept such Lender Addition and Acknowledgment Agreement;
(ii) record the information contained therein in the Register; and
(iii) give prompt notice thereof to the Lenders and the Borrower.
ARTICLE III
LETTERS OF CREDIT
3.1. Issuance. Subject to and upon the terms and conditions herein
--------
set forth, so long as no Default or Event of Default has occurred and is
continuing, First Union National Bank, as Issuing Lender, will, at any time and
from time to time on and after the Closing Date and prior to the earlier of (i)
the seventh day prior to the Revolving Credit Maturity Date and (ii) the
Revolving Credit Termination Date, and upon request by the Borrower in
accordance with the provisions of Section 3.2, issue for the account of the
Borrower one or more irrevocable standby letters of credit denominated in
Dollars and in a form customarily used or otherwise approved by such Issuing
Lender, and on the Closing Date Fleet Bank, N.A., as Issuing Lender, shall be
deemed to have issued the Outstanding Letters of Credit (together with all
amendments, modifications and supplements thereto, substitutions therefor and
renewals and restatements thereof, collectively, the "Letters of Credit");
provided, however, that no more than ten (10) Letters of Credit may be
outstanding at any time. The Stated Amount of each Letter of
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Credit shall not be less than such amount as may be acceptable to the Issuing
Lender. Notwithstanding the foregoing:
(a) No Letter of Credit (i) shall have a Stated Amount of less than
$20,000 or (ii) shall be issued the Stated Amount upon issuance of which (A)
when added to the aggregate Letter of Credit Exposure of the Lenders at such
time, would exceed $10,000,000 or (B) when added to the sum of (y) the aggregate
Letter of Credit Exposure of all Lenders at such time and (z) the aggregate
principal amount of all Revolving Loans then outstanding, would exceed the
aggregate Revolving Credit Commitments at such time;
(b) No Letter of Credit shall be issued that by its terms expires
later than the seventh day prior to the Revolving Credit Maturity Date or, in
any event, more than one (1) year after its date of issuance; provided, however,
-------- -------
that a Letter of Credit may, if requested by the Borrower, provide by its terms,
and on terms acceptable to the Issuing Lender, for renewal for successive
periods of one year or less (but not beyond the seventh day prior to the
Revolving Credit Maturity Date), unless and until the Issuing Lender shall have
delivered a notice of nonrenewal to the beneficiary of such Letter of Credit;
and
(c) The Issuing Lender shall be under no obligation to issue any
Letter of Credit if, at the time of such proposed issuance, (i) any order,
judgment or decree of any Governmental Authority or arbitrator shall purport by
its terms to enjoin or restrain the Issuing Lender from issuing such Letter of
Credit, or any Requirement of Law applicable to the Issuing Lender or any
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Issuing Lender shall prohibit,
or request that the Issuing Lender refrain from, the issuance of letters of
credit generally or such Letter of Credit in particular or shall impose upon the
Issuing Lender with respect to such Letter of Credit any restriction or reserve
or capital requirement (for which the Issuing Lender is not otherwise
compensated) not in effect on the Closing Date, or any unreimbursed loss, cost
or expense that was not applicable, in effect or known to the Issuing Lender as
of the Closing Date and that the Issuing Lender in good faith deems material to
it, or (ii) the Issuing Lender shall have actual knowledge, or shall have
received notice from any Lender or the Administrative Agent, prior to the
issuance of such Letter of Credit that one or more of the conditions specified
in Sections 4.1 (if applicable) or 4.4 are not then satisfied (or have not been
waived in writing as required herein) or that the issuance of such Letter of
Credit would violate the provisions of subsection (a) above.
(d) The parties hereto agree that each Outstanding Letter of Credit will
be treated as if it had been originally issued under this Agreement, and as of
the Closing date each Outstanding Letter of Credit shall be deemed to be a
Letter of Credit for all purposes hereunder and under the other Credit
Documents. Specifically, and without limitation of the foregoing or the other
provisions of this Article, (i) the Stated Amount of each Outstanding Letter of
Credit, for so long as the same shall be outstanding, shall be included in
calculating (y) the limit set forth in clause (i) of Section 3.1(a) and (z) the
aggregate Letter of Credit Exposure, (ii) each Lender hereby absolutely and
unconditionally agrees to purchase as of the Closing Date a participation from
Fleet Bank, N.A. in each Outstanding Letter of Credit in accordance with Section
3.3 and to pay to Fleet Bank, N.A., as Issuing Lender, in accordance with
Section 3.5, such Lender's pro rata share of each payment made by such Issuing
Lender under any Outstanding Letter of Credit, together with interest in
accordance with Section 3.5, and (iii) with respect to each Outstanding Letter
of Credit, the Issuing Lender shall have the benefit of all rights, agreements,
covenants and indemnities of an Issuing Lender set forth in this Agreement and
shall comply with all agreements and obligations set forth herein that bind an
Issuing Lender, insofar as the same apply to Letters of Credit generally. The
Borrower agrees to use its reasonable best efforts to cause the
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Outstanding Letters of Credit to be replaced by Letters of Credit to be issued
by First Union National Bank, as Issuing Lender, as soon as reasonably
practicable after the Closing.
3.2. Notices. Whenever the Borrower desires the issuance of a Letter of
-------
Credit (other than any Outstanding Letter of Credit), the Borrower will give the
Issuing Lender written notice with a copy to the Administrative Agent not later
than 1:00 p.m., Charlotte time, three (3) Business Days (or such shorter period
as is acceptable to the Issuing Lender in any given case) prior to the requested
date of issuance thereof. Each such notice (each, a "Letter of Credit Notice")
shall be irrevocable, shall be given in the form of Exhibit B-3 and shall
specify (i) the requested date of issuance, which shall be a Business Day, (ii)
the requested Stated Amount and expiry date of the Letter of Credit, and (iii)
the name and address of the requested beneficiary or beneficiaries of the Letter
of Credit. The Borrower will also complete any application procedures and
documents required by the Issuing Lender in connection with the issuance of any
Letter of Credit. Upon its issuance of any Letter of Credit, the Issuing Lender
will promptly notify the Administrative Agent of such issuance, and the
Administrative Agent will give prompt notice thereof to each Lender.
3.3. Participations. Immediately upon the issuance of any Letter of
--------------
Credit, the Issuing Lender shall be deemed to have sold and transferred to each
Lender, and each Lender shall be deemed irrevocably and unconditionally to have
purchased and received from the Issuing Lender, without recourse or warranty, an
undivided interest and participation, pro rata (based on the percentage of the
aggregate Revolving Credit Commitments represented by such Lender's Revolving
Credit Commitment), in such Letter of Credit, each drawing made thereunder and
the obligations of the Borrower under this Agreement with respect thereto and
any Collateral or other security therefor or guaranty pertaining thereto;
provided, however, that the fee relating to Letters of Credit described in
- -------- -------
Section 2.9(e) or (f) shall be payable directly to the Issuing Lender as
provided therein, and the Lenders shall have no right to receive any portion
thereof. Upon any change in the Revolving Credit Commitments of any of the
Lenders pursuant to Section 11.7(a), with respect to all outstanding Letters of
Credit and Reimbursement Obligations there shall be an automatic adjustment to
the participations pursuant to this Section to reflect the new pro rata shares
of the assigning Lender and the Assignee.
3.4. Reimbursement. The Borrower hereby agrees to reimburse the Issuing
-------------
Lender by making payment to the Administrative Agent, for the account of the
Issuing Lender, in immediately available funds, for any payment made by the
Issuing Lender under any Letter of Credit (each such amount so paid until
reimbursed, together with interest thereon payable as provided hereinbelow, a
"Reimbursement Obligation") immediately after, and in any event within one (1)
Business Day after its receipt of notice of, such payment (provided that any
--------
such Reimbursement Obligation shall be deemed timely satisfied (but nevertheless
subject to the payment of interest thereon as provided hereinbelow) if satisfied
pursuant to a Borrowing of Revolving Loans made on or prior to the next Business
Day following the date of the Borrower's receipt of notice of such payment),
together with interest on the amount so paid by the Issuing Lender, to the
extent not reimbursed prior to 1:00 p.m., Charlotte time, on the date of such
payment or disbursement, for the period from the date of the respective payment
to the date the Reimbursement Obligation created thereby is satisfied, at the
Adjusted Base Rate applicable to Revolving Loans as in effect from time to time
during such period, such interest also to be payable on demand. The Issuing
Lender will provide the Administrative Agent and the Borrower with prompt notice
of any payment or disbursement made under any Letter of Credit, although the
failure to give, or any delay in giving, any such notice shall not release,
diminish or otherwise affect the Borrower's obligations under this Section or
any other provision of this Agreement. The Administrative Agent will promptly
pay to the Issuing Lender any such amounts received by it under this Section.
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3.5. Payment by Revolving Loans. In the event that the Issuing Lender
--------------------------
makes any payment under any Letter of Credit and the Borrower shall not have
timely satisfied in full its Reimbursement Obligation to the Issuing Lender
pursuant to Section 3.4, and to the extent that any amounts then held in the
Cash Collateral Account established pursuant to Section 3.8 shall be
insufficient to satisfy such Reimbursement Obligation in full, the Issuing
Lender will promptly notify the Administrative Agent, and the Administrative
Agent will promptly notify each Lender, of such failure. If the Administrative
Agent gives such notice prior to 11:00 a.m., Charlotte time, on any Business
Day, each Lender will make available to the Administrative Agent, for the
account of the Issuing Lender, its pro rata share (based on the percentage of
the aggregate Revolving Credit Commitments represented by such Lender's
Revolving Credit Commitment) of the amount of such payment on such Business Day
in immediately available funds. If the Administrative Agent gives such notice
after 11:00 a.m., Charlotte time, on any Business Day, each such Lender shall
make its pro rata share of such amount available to the Administrative Agent on
the next succeeding Business Day. If and to the extent any Lender shall not have
so made its pro rata share of the amount of such payment available to the
Administrative Agent, such Lender agrees to pay to the Administrative Agent, for
the account of the Issuing Lender, forthwith on demand such amount, together
with interest thereon at the Federal Funds Rate for each day from such date
until the date such amount is paid to the Administrative Agent. The failure of
any Lender to make available to the Administrative Agent its pro rata share of
any payment under any Letter of Credit shall not relieve any other Lender of its
obligation hereunder to make available to the Administrative Agent its pro rata
share of any payment under any Letter of Credit on the date required, as
specified above, but no Lender shall be responsible for the failure of any other
Lender to make available to the Administrative Agent such other Lender's pro
rata share of any such payment. Each such payment by a Lender under this Section
of its pro rata share of an amount paid by the Issuing Lender shall constitute a
Revolving Loan by such Lender (the Borrower being deemed to have given a timely
Notice of Borrowing therefor) and shall be treated as such for all purposes of
this Agreement; provided that for purposes of determining the aggregate
--------
Unutilized Revolving Credit Commitments immediately prior to giving effect to
the application of the proceeds of such Revolving Loans, the Reimbursement
Obligation being satisfied thereby shall be deemed not to be outstanding at such
time.
3.6. Payment to Lenders. Whenever the Issuing Lender receives a payment
------------------
in respect of a Reimbursement Obligation as to which the Administrative Agent
has received, for the account of the Issuing Lender, any payments from the
Lenders pursuant to Section 3.5, the Issuing Lender will promptly pay to the
Administrative Agent, and the Administrative Agent will promptly pay to each
Lender that has paid its pro rata share thereof, in immediately available funds,
an amount equal to such Lender's ratable share (based on the proportionate
amount funded by such Lender to the aggregate amount funded by all Lenders) of
such Reimbursement Obligation.
3.7. Obligations Absolute. The Reimbursement Obligations of the Borrower
--------------------
and the obligations of the Lenders under Section 3.5 to make payments to the
Administrative Agent, for the account of the Issuing Lender, with respect to
Letters of Credit, shall be irrevocable, shall remain in effect until the
Issuing Lender shall have no further obligations to make any payments or
disbursements under any circumstances with respect to any Letter of Credit, and,
except to the extent resulting from any gross negligence or willful misconduct
on the part of the Issuing Lender, shall be absolute and unconditional, shall
not be subject to counterclaim, setoff or other defense or any other
qualification or exception whatsoever and shall be made in accordance with the
terms and conditions of this Agreement under all circumstances, including,
without limitation, any of the following circumstances:
(a) Any lack of validity or enforceability of this Agreement, any of
the other Credit Documents or any documents or instruments relating to any
Letter of Credit;
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(b) Any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations in respect of any Letter of Credit
or any other amendment, modification or waiver of or any consent to departure
from any Letter of Credit or any documents or instruments relating thereto, in
each case whether or not the Borrower has notice or knowledge thereof;
(c) The existence of any claim, setoff, defense or other right that
the Borrower may have at any time against a beneficiary named in a Letter of
Credit, any transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Administrative Agent, the Issuing Lender, any
Lender or other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated hereby or any unrelated transactions
(including any underlying transaction between the Borrower and the beneficiary
named in any such Letter of Credit);
(d) Any draft, certificate or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect
(provided that such draft, certificate or other document appears on its face to
- ---------
comply with the terms of such Letter of Credit), any errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
telecopier or otherwise, or any errors in translation or in interpretation of
technical terms;
(e) Any defense based upon the failure of any drawing under a Letter
of Credit to conform to the terms of the Letter of Credit (provided that any
--------
draft, certificate or other document presented pursuant to such Letter of Credit
appears on its face to comply with the terms thereof), any nonapplication or
misapplication by the beneficiary or any transferee of the proceeds of such
drawing or any other act or omission of such beneficiary or transferee in
connection with such Letter of Credit;
(f) The exchange, release, surrender or impairment of any Collateral or
other security for the Obligations;
(g) The occurrence of any Default or Event of Default; or
(h) Any other circumstance or event whatsoever, including, without
limitation, any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor.
Any action taken or omitted to be taken by the Issuing Lender under or in
connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall be binding upon the Borrower and
each Lender and shall not create or result in any liability of the Issuing
Lender to the Borrower or any Lender. It is expressly understood and agreed
that, for purposes of determining whether a wrongful payment under a Letter of
Credit resulted from the Issuing Lender's gross negligence or willful
misconduct, (i) the Issuing Lender's acceptance of documents that appear on
their face to comply with the terms of such Letter of Credit, without
responsibility for further investigation, regardless of any notice or
information to the contrary, (ii) the Issuing Lender's exclusive reliance on the
documents presented to it under such Letter of Credit as to any and all matters
set forth therein, including the amount of any draft presented under such Letter
of Credit, whether or not the amount due to the beneficiary thereunder equals
the amount of such draft and whether or not any document presented pursuant to
such Letter of Credit proves to be insufficient in any respect (so long as such
document appears on its face to comply with the terms of such Letter of Credit),
and whether or not any other statement or any other document presented pursuant
to such Letter of Credit proves to be forged or
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invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever, and (iii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall, in
each case, be deemed not to constitute gross negligence or willful misconduct of
the Issuing Lender.
3.8. Cash Collateral Account. At any time and from time to time (i)
-----------------------
after the occurrence and during the continuance of an Event of Default, the
Administrative Agent, at the direction or with the consent of the Required
Lenders, may require the Borrower to deliver to the Administrative Agent such
additional amount of cash as is equal to the aggregate Stated Amount of all
Letters of Credit at any time outstanding (whether or not any beneficiary under
any Letter of Credit shall have drawn or be entitled at such time to draw
thereunder) and (ii) in the event of a prepayment under Section 2.6(c), or to
the extent any amount of a required prepayment under any of Sections 2.6(d)
through 2.6(g) remains after prepayment of all outstanding Loans and
Reimbursement Obligations and termination of the Commitments, as contemplated by
Section 2.6(h), the Administrative Agent will retain such amount as may then be
required to be retained, such amounts in each case under clauses (i) and (ii)
above to be held by the Administrative Agent in a cash collateral account (the
"Cash Collateral Account"). The Borrower hereby grants to the Administrative
Agent, for the benefit of the Issuing Lender and the Lenders, a Lien upon and
security interest in the Cash Collateral Account and all amounts held therein
from time to time as security for Letter of Credit Exposure, and for application
to the Borrower's Reimbursement Obligations as and when the same shall arise.
The Administrative Agent shall have exclusive dominion and control, including
the exclusive right of withdrawal, over such account. Other than any interest
on the investment of such amounts in Cash Equivalents, which investments shall
be made at the direction of the Borrower (unless a Default or Event of Default
shall have occurred and be continuing, in which case the determination as to
investments shall be made at the option and in the discretion of the
Administrative Agent), amounts in the Cash Collateral Account shall not bear
interest. Interest and profits, if any, on such investments shall accumulate in
such account. In the event of a drawing, and subsequent payment by the Issuing
Lender, under any Letter of Credit at any time during which any amounts are held
in the Cash Collateral Account, the Administrative Agent will deliver to the
Issuing Lender an amount equal to the Reimbursement Obligation created as a
result of such payment (or, if the amounts so held are less than such
Reimbursement Obligation, all of such amounts) to reimburse the Issuing Lender
therefor. Any amounts remaining in the Cash Collateral Account after the
expiration of all Letters of Credit and reimbursement in full of the Issuing
Lender for all of its obligations thereunder shall be held by the Administrative
Agent, for the benefit of the Borrower, to be applied against the Obligations in
such order and manner as the Administrative Agent may direct. If the Borrower
is required to provide cash collateral pursuant to Section 2.6(c), such amount
(to the extent not applied as aforesaid) shall be returned to the Borrower on
demand, provided that after giving effect to such return (i) the sum of (y) the
--------
aggregate principal amount of all Revolving Loans outstanding at such time and
(z) the aggregate Letter of Credit Exposure of all Lenders at such time would
not exceed the aggregate Revolving Credit Commitments at such time and (ii) no
Default or Event of Default shall have occurred and be continuing at such time.
If the Borrower is required to provide cash collateral as a result of an Event
of Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower within three (3) Business Days after all Events of
Default have been cured or waived.
3.9. Effectiveness. Notwithstanding any termination of the Revolving
-------------
Credit Commitments or repayment of the Loans, or both, the obligations of the
Borrower under this Article shall remain in full force and effect until the
Issuing Lender and the Lenders shall have no further obligations to make any
payments or disbursements under any circumstances with respect to any Letter of
Credit.
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ARTICLE IV
CONDITIONS OF BORROWING
4.1. Conditions of Initial Borrowing. The obligation of each Lender to
-------------------------------
make Loans in connection with the initial Borrowing hereunder, and the
obligation of the Issuing Lender to issue Letters of Credit hereunder on the
Closing Date, is subject to the satisfaction of the following conditions
precedent:
(a) The Administrative Agent shall have received the following, each
dated as of the Closing Date (unless otherwise specified), and, except for the
Notes, in sufficient copies for each Lender:
(i) A Tranche A Term Note for each Lender that is a party hereto
as of the Closing Date, in the amount of such Lender's Tranche A Term Loan
Commitment; and a Revolving Note for each Lender that is a party hereto as
of the Closing Date, in the amount of such Lender's Revolving Credit
Commitment, in each case duly completed in accordance with the relevant
provisions of Section 2.4 and executed by the Borrower;
(ii) the Security Agreement, duly completed and executed by the
Borrower and each of its Subsidiaries (other than SSI, Inc.); and the
Pledge Agreement, duly completed and executed by the Borrower and each of
its Subsidiaries that owns Capital Stock of another Subsidiary, together
with any certificates evidencing the Capital Stock being pledged thereunder
as of the Closing Date and undated assignments separate from certificate
for any such certificate duly executed in blank.
(iii) the favorable opinions of (A) Graham & Dunn PC, special
counsel to the Borrower, in substantially the form of Exhibit H-1, and (B)
Rubin, Winston, Diercks, Harris & Cooke, L.L.P., FCC counsel to the
Borrower, in substantially the form of Exhibit H-2, in each case addressed
to the Administrative Agent and the Lenders and addressing such other
matters as the Administrative Agent or any Lender may reasonably request.
(b) The Administrative Agent shall have received a certificate, signed
by the president, the chief executive officer or the chief financial officer of
the Borrower, in form and substance satisfactory to the Administrative Agent,
certifying that (i) all representations and warranties of the Borrower contained
in this Agreement and the other Credit Documents are true and correct as of the
Closing Date, both immediately before and after giving effect to the
consummation of the transactions contemplated hereby, the making of the initial
Loans hereunder and the application of the proceeds thereof, (ii) no Default or
Event of Default has occurred and is continuing, both immediately before and
after giving effect to the consummation of the transactions contemplated hereby,
the making of the initial Loans hereunder and the application of the proceeds
thereof, (iii) both immediately before and after giving effect to the
consummation of the transactions contemplated hereby, the making of the initial
Loans hereunder and the application of the proceeds thereof, no Material Adverse
Change has occurred since December 31, 1997, and there exists no event,
condition or state of facts that could reasonably be expected to result in a
Material Adverse Change, and (iv) all conditions to the initial extensions of
credit hereunder set forth in this Section have been satisfied or waived as
required hereunder.
(c) The Administrative Agent shall have received a certificate of the
secretary or an assistant secretary of each of the Borrower and its
Subsidiaries, in form and substance satisfactory to the Administrative Agent,
certifying (i) that attached thereto is a true and complete copy of the articles
or
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certificate of incorporation and all amendments thereto of the Borrower or such
Subsidiary, as the case may be, certified as of a recent date by the Secretary
of State (or comparable Governmental Authority) of its jurisdiction of
organization, and that the same has not been amended since the date of such
certification, (ii) that attached thereto is a true and complete copy of the
bylaws of the Borrower or such Subsidiary, as the case may be, as then in effect
and as in effect at all times from the date on which the resolutions referred to
in clause (iii) below were adopted to and including the date of such
certificate, and (iii) that attached thereto is a true and complete copy of
resolutions adopted by the board of directors of the Borrower or such
Subsidiary, as the case may be, authorizing the execution, delivery and
performance of this Agreement and the other Credit Documents to which it is a
party, and as to the incumbency and genuineness of the signature of each officer
of the Borrower or such Subsidiary executing this Agreement or any of such other
Credit Documents, and attaching all such copies of the documents described
above.
(d) The Administrative Agent shall have received (i) a certificate as
of a recent date of the good standing of each of the Borrower and its
Subsidiaries under the laws of its jurisdiction of organization, from the
Secretary of State (or comparable Governmental Authority) of such jurisdiction,
and (ii) a certificate as of a recent date of the qualification of each of the
Borrower and its Subsidiaries to conduct business as a foreign corporation in
each jurisdiction in which such Person is qualified to do business, from the
Secretary of State (or comparable Governmental Authority) of such jurisdiction.
(e) The Administrative Agent shall have received evidence in form and
substance satisfactory to it that the Borrower shall have received gross cash
proceeds of not less than $175,000,000 from the issuance of its 9.00%
Subordinated Notes due 2009, Series A, which Notes comprise a part of the
Existing Subordinated Indebtedness.
(f) All legal matters, documentation, and corporate or other
proceedings incident to the transactions contemplated hereby shall be
satisfactory in form and substance to the Administrative Agent; all approvals,
permits and consents of any Governmental Authorities or other Persons required
in connection with the execution and delivery of this Agreement and the other
Credit Documents and the consummation of the transactions contemplated hereby
and thereby shall have been obtained, without the imposition of conditions that
are not acceptable to the Administrative Agent, and all related filings, if any,
shall have been made, and all such approvals, permits, consents and filings
shall be in full force and effect and the Administrative Agent shall have
received such copies thereof as it shall have requested; all applicable waiting
periods shall have expired without any adverse action being taken by any
Governmental Authority having jurisdiction; and no action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before, and no order, injunction or decree shall have been entered
by, any court or other Governmental Authority, in each case to enjoin, restrain
or prohibit, to obtain substantial damages in respect of, or that is otherwise
related to or arises out of, this Agreement, any of the other Credit Documents
or the consummation of the transactions contemplated hereby or thereby, or that,
in the opinion of the Administrative Agent, could reasonably be expected to have
a Material Adverse Effect.
(g) The Administrative Agent shall have received certified reports from
an independent search service satisfactory to it listing any judgment or tax
lien filing or Uniform Commercial Code financing statement that names the
Borrower or any of its Subsidiaries as debtor, from each jurisdiction in which
such Person engages in its business, and the results thereof shall be
satisfactory to the Administrative Agent.
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(h) The Administrative Agent shall have received evidence in form and
substance satisfactory to it that all filings, recordings, registrations and
other actions (including without limitation the filing of duly completed and
executed UCC-1 financing statements in each jurisdiction listed on Annex A to
the Security Agreement) necessary, or in the reasonable opinion of the
Administrative Agent desirable, to perfect the Liens created by the Security
Documents shall have been completed, or arrangements satisfactory to the
Administrative Agent for the completion thereof shall have been made.
(i) Since December 31, 1997, both immediately before and after giving
effect to the consummation of the transactions contemplated by this Agreement,
there shall not have occurred any Material Adverse Change or any event,
condition or state of facts that could reasonably be expected to result in a
Material Adverse Change.
(j) The Borrower shall have paid (i) to the Arranger, the unpaid
balance of the fee described in paragraph 1 of the Fee Letter, (ii) to the
Administrative Agent, the initial payment of the annual administrative fee
described in paragraph 3 of the Fee Letter, (iii) to the Administrative Agent,
for the benefit of certain Lenders, the fees set forth in paragraph 2 of the Fee
Letter and (iv) all other fees and expenses of the Administrative Agent, First
Union Capital Markets Corporation and the Lenders required hereunder or under
any other Credit Document to be paid on or prior to the Closing Date (including
fees and expenses of counsel) in connection with this Agreement and the
transactions contemplated hereby.
(k) The Administrative Agent shall have received a Financial Condition
Certificate substantially in the form of Exhibit I, together with the Pro Forma
Balance Sheet and the Projections as described in Sections 5.11(b) and 5.11(c),
all of which shall be in form and substance satisfactory to the Administrative
Agent.
(l) The Administrative Agent shall have received a Covenant Compliance
Worksheet substantially in the form of Attachment A to Exhibit C, duly completed
and certified by the chief financial officer of the Borrower and in form and
substance satisfactory to the Administrative Agent, demonstrating the Borrower's
compliance with the financial covenants set forth in Sections 7.1 through 7.3,
determined on a pro forma basis as of December 31, 1998 after giving effect to
the making of the initial Loans hereunder and the consummation of the
transactions contemplated hereby.
(m) The Administrative Agent shall have received evidence in form and
substance reasonably satisfactory to it that all of the requirements of Section
6.6 and those provisions of the Security Agreement relating to the maintenance
of insurance have been satisfied, including receipt of certificates of insurance
evidencing the insurance coverages described on Schedule 5.17 and all other or
additional coverage required under the Security Agreement and naming the
Administrative Agent as loss payee or additional insured, as its interests may
appear.
(n) The Administrative Agent shall have received an Account
Designation Letter, together with written instructions from an Authorized
Officer, including wire transfer information, directing the payment of the
proceeds of the initial Loans to be made hereunder.
(o) The Administrative Agent and each Lender shall have received such
other documents, certificates, opinions and instruments in connection with the
transactions contemplated hereby as it shall have reasonably requested.
4.2 Conditions of Tranche B Term Loans. The obligation of each Lender
----------------------------------
(including any lender that was not a Lender prior to the execution and
delivery of a Lender Addition and
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Acknowledgment Agreement) to make Tranche B Term Loans on the WOKR Acquisition
Date is subject to the satisfaction of the following additional conditions
precedent:
(a) The Administrative Agent shall have received the following, each
dated as of the WOKR Acquisition Date and, in sufficient copies for each Lender:
(i) A Tranche B Term Note for each Lender, in the amount of such
Lender's Tranche B Term Loan Commitment, duly executed by the Borrower; and
(ii) the favorable opinions of (A) Graham & Dunn, PC, or such
other law firm reasonably acceptable to the Administrative Agent, as
special counsel to the Borrower, in substantially the form of Exhibit H-3,
and (B) Rubin, Winston, Diercks, Harris & Cooke, L.L.P., or such other law
firm reasonably acceptable to the Administrative Agent, as FCC counsel to
the Borrower, in substantially the form of Exhibit H-4, in each case
addressed to the Administrative Agent and the Lenders and addressing such
other matters as the Administrative Agent or any Lender may reasonably
request.
(b) The Administrative Agent shall have received a certificate of the
secretary or an assistant secretary of the Borrower and each Subsidiary of the
Borrower, in form and substance satisfactory to the Administrative Agent,
certifying that subsequent to the delivery of the certificate with respect to
such entity required by Section 4.1(c), there has been no amendment to the
articles or certificate of incorporation or bylaws of such entity.
(c) The Administrative Agent shall have received a certificate as of a
recent date of the good standing of the Borrower and each Subsidiary under the
laws of its jurisdiction of organization, from the Secretary of State (or
comparable Governmental Authority) of such jurisdiction.
(d) The Administrative Agent shall have received evidence in form and
substance satisfactory to it that all filings, recordings, registrations and
other actions (including, without limitation, the filing of duly completed and
executed UCC-1 financing statements, if applicable) as necessary or, in the
reasonable opinion of the Administrative Agent, desirable to perfect the Liens
created by the Security Documents shall have been completed, or arrangements
satisfactory to the Administrative Agent for completion thereof shall have been
made.
(e) The WOKR Acquisition shall have been consummated in accordance with
the definitive documentation therefore, a copy of which has provided to the
Administrative Agent, in compliance with applicable Requirements of Law
(including any necessary stockholder approvals), without being amended, modified
or supplemented, nor any provision thereof waived, in any material respect,
except as shall have been approved in writing by the Administrative Agent; the
Borrower and its Subsidiaries shall have duly complied with and performed in all
material respects all of their agreements and conditions set forth in such
definitive documentation required to be complied with or performed by them on or
prior to the closing date thereunder, and the Administrative Agent shall have
received satisfactory evidence thereof; all of the documents and instruments
executed and delivered in connection with the consummation of the WOKR
Acquisition shall be in full force and effect; and the Borrower will exercise
its commercially reasonable best efforts to provide the Administrative Agent
with a letter from counsel to seller addressed to the Administrative Agent and
the Lenders and in sufficient copies for each Lender, to the effect that the
Administrative Agent and the Lenders are entitled to rely on their opinion
delivered to the Borrower in connection with the WOKR Acquisition as if such
opinion were addressed to them and attaching a copy thereof
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(f) Each of the conditions set forth in Section 4.4 shall have been
satisfied.
4.3 Conditions of Revolver Increase
-------------------------------
The obligation of each Lender (including any lender that was not a Lender
prior to the execution and delivery of a Lender Addition and Acknowledgment
Agreement) to make Revolving Loans in connection with a Borrowing in respect of
the Revolver Increase is subject to the satisfaction of the following additional
conditions precedent:
(a) The Administrative Agent shall have received the following, each
dated as of the effective date of the Revolver Increase and, except for any
certificates or instruments required to be delivered under the Pledge Agreement,
in sufficient copies for each Lender:
(i) An amended and restated Revolving Note for each Lender
participating in the Revolver Increase, in the amount of such Lender's
revised Revolving Credit Commitment (after giving effect to such Lender's
pro rata share of the Revolver Increase) and a new Revolving Note for any
lender who becomes a Lender hereunder pursuant to a Lender Addition and
Acknowledgment Agreement, in the amount of such Lender's Revolving Credit
Commitment, each duly executed by the Borrower; and
(ii) the favorable opinions of (A) Graham & Dunn, PC, or such
other law firm reasonably acceptable to the Administrative Agent, as
special counsel to the Borrower, in substantially the form of Exhibit H-5,
and (B) Rubin, Winston, Diercks, Harris & Cooke, L.L.P., or such other law
firm reasonably acceptable to the Administrative Agent, as FCC counsel to
the Borrower, in substantially the form of Exhibit H-6, in each case
addressed to the Administrative Agent and the Lenders and addressing such
other matters as the Administrative Agent or any Lender may reasonably
request.
(b) The Administrative Agent shall have received a certificate of the
secretary or an assistant secretary of the Borrower and each Subsidiary of the
Borrower, in form and substance satisfactory to the Administrative Agent,
certifying that subsequent to the delivery of the certificate with respect to
such entity required by Section 4.1(c), there has been no amendment to the
articles or certificate of incorporation or bylaws of such entity.
(c) The Administrative Agent shall have received a certificate as of a
recent date of the good standing of the Borrower and each Subsidiary under the
laws of its jurisdiction of organization, from the Secretary of State (or
comparable Governmental Authority) of such jurisdiction.
(d) The Administrative Agent shall have received evidence in form and
substance satisfactory to it that all filings, recordings, registrations and
other actions (including, without limitation, the filing of duly completed and
executed UCC-1 financing statements, if applicable) as necessary or, in the
reasonable opinion of the Administrative Agent, desirable to perfect the Liens
created by the Security Documents shall have been completed, or arrangements
satisfactory to the Administrative Agent for completion thereof shall have been
made.
(e) Each of the conditions set forth in Section 4.4 shall have been
satisfied.
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(f) Each of the Pledge Agreement, the Security Agreement and, to the
extent required to have been executed and delivered pursuant to Section 6.11(a),
the Subsidiary Guaranty shall be in full force and effect.
4.4 Conditions of All Borrowings. The obligation of each Lender to make
----------------------------
any Loans hereunder, including the initial Loans, and the obligation of the
Issuing Lender to issue any Letters of Credit hereunder, is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date or date of issuance:
(a) The Administrative Agent shall have received a Notice of Borrowing
in accordance with Section 2.2(b), or (together with the Issuing Lender) a
Letter of Credit Notice in accordance with Section 3.2, as applicable;
(b) Each of the representations and warranties contained in Article V
and in the other Credit Documents shall be true and correct on and as of such
Borrowing Date (including the Closing Date, in the case of the initial Loans
made hereunder) or date of issuance with the same effect as if made on and as of
such date, both immediately before and after giving effect to the Loans to be
made or Letter of Credit to be issued on such date (except to the extent any
such representation or warranty is expressly stated to have been made as of a
specific date, in which case such representation or warranty shall be true and
correct in all material respects as of such date);
(c) No Default or Event of Default shall have occurred and be continuing
on such date, both immediately before and after giving effect to the Loans to be
made or Letter of Credit to be issued on such date; and
(d) If required to have been executed and delivered pursuant to
Section 6.11(a), the Administrative Agent shall have received, in sufficient
copies for each Lender, the Subsidiary Guaranty duly completed and executed by
each Subsidiary of the Borrower and delivered to the Administrative Agent for
and on behalf of the Lenders, in addition to the favorable opinion of (A) Graham
& Dunn PC, or another law firm reasonably acceptable to the Administrative
Agent, as special counsel to the Borrower, in substantially the form of Exhibit
H-7, and (B) Rubin, Winston, Diercks, Harris & Cooke, L.L.P. or such other law
firm reasonably acceptable to the Administrative Agent, as FCC Counsel to the
Borrower, in substantially the form of Exhibit H-8, in each case addressed to
the Administrative Agent and the Lenders and addressing such other matters as
the Administrative Agent or any Lender may reasonably request.
Each giving of a Notice of Borrowing or a Letter of Credit Notice, and
the consummation of each Borrowing or issuance of a Letter of Credit, shall be
deemed to constitute a representation by the Borrower that the statements
contained in subsections (b) and (c) above are true, both as of the date of such
notice or request and as of the relevant Borrowing Date or date of issuance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to induce the Lenders to extend the credit contemplated hereby,
the Borrower represents and warrants to the Administrative Agent and the Lenders
as follows:
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5.1. Corporate Organization and Power. Each of the Borrower and its
--------------------------------
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (ii) has the
full corporate or other power and authority to execute, deliver and perform the
Credit Documents to which it is or will be a party, to own and hold its property
and to engage in its business as presently conducted, and (iii) is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the nature of its business or the ownership of its
properties requires it to be so qualified, except where the failure to be so
qualified would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect.
5.2. Authorization; Enforceability. Each of the Borrower and its
-----------------------------
Subsidiaries has taken, or on the Closing Date will have taken, all necessary
corporate or other action to execute, deliver and perform each of the Credit
Documents to which it is or will be a party, and has, or on the Closing Date (or
any later date of execution and delivery) will have, validly executed and
delivered each of the Credit Documents to which it is or will be a party. This
Agreement constitutes, and each of the other Credit Documents upon execution and
delivery will constitute, the legal, valid and binding obligation of each of the
Borrower and its Subsidiaries that is a party hereto or thereto, enforceable
against it in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, by general equitable principles or by
principles of good faith and fair dealing.
5.3. No Violation. The execution, delivery and performance by each
------------
of the Borrower and its Subsidiaries of this Agreement and each of the other
Credit Documents to which it is or will be a party, and compliance by it with
the terms hereof and thereof, do not and will not (i) violate any provision of
its articles or certificate of incorporation or bylaws or contravene any other
Requirement of Law applicable to it, (ii) conflict with, result in a breach of
or constitute (with notice, lapse of time or both) a default under any
indenture, agreement or other instrument to which it is a party, by which it or
any of its properties is bound or to which it is subject, or (iii) except for
the Liens granted in favor of the Administrative Agent pursuant to the Security
Documents, result in or require the creation or imposition of any Lien upon any
of its properties or assets. No Subsidiary is a party to any agreement or
instrument or otherwise subject to any restriction or encumbrance that restricts
or limits its ability to make dividend payments or other distributions in
respect of its Capital Stock, to repay Indebtedness owed to the Borrower or any
other Subsidiary, to make loans or advances to the Borrower or any other
Subsidiary, or to transfer any of its assets or properties to the Borrower or
any other Subsidiary, in each case other than such restrictions or encumbrances
existing under or by reason of the Credit Documents or applicable Requirements
of Law.
5.4. Governmental and Third-Party Authorization; Permits and Licenses.
----------------------------------------------------------------
(a) No consent, approval, authorization or other action by, notice to, or
registration or filing with, any Governmental Authority or other Person is or
will be required as a condition to or otherwise in connection with the due
execution, delivery and performance by each of the Borrower and its Subsidiaries
of this Agreement or any of the other Credit Documents to which it is or will be
a party (or any of the transactions contemplated hereby) or the legality,
validity or enforceability hereof or thereof, other than (i) any filings of
Uniform Commercial Code financing statements and other instruments and actions
necessary to perfect the Liens created by the Security Documents, (ii) consents
and filings the failure of which to obtain or make would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) Each of the Borrower and its Subsidiaries has, and is in good
standing with respect to, all governmental approvals, licenses, permits and
authorizations necessary to conduct its business as
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presently conducted and to own or lease and operate its properties (including
without limitation all FCC Licenses), except for those the failure to obtain
which would not be reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect.
(c) Schedule 5.4 attached hereto accurately and completely lists all
material FCC Licenses granted or assigned to the Borrower or any Subsidiary,
including those under which the Borrower and its Subsidiaries have the right to
operate its respective broadcast stations ("Broadcast Stations") covered thereby
(and includes, with respect to each such license, the city of license and the
call letters, frequency and expiration date thereof). The FCC Licenses listed
on such schedule with respect to any Broadcast Station include all material
authorizations, licenses and permits issued by the FCC that are required or
necessary for the operation of such station and the conduct of the business of
the Borrower and its Subsidiaries with respect to such station, as now conducted
or proposed to be conducted. The FCC Licenses listed in such schedule are on
the date hereof validly issued and in full force and effect. The Borrower and
its Subsidiaries will have fulfilled and performed all of their obligations with
respect thereto (including without limitation the filing of all registrations,
applications, reports, and other documents as required by the FCC), except where
the failure to perform such obligations would not reasonably be expected to have
a Material Adverse Effect, and have paid all fees and other amounts required to
be paid under the Communications Act or the FCC Regulations and have full power
and authority to operate thereunder, except for those the failure to pay which
would not be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect. No event has occurred that would be reasonably likely
to result in the revocation, termination or material adverse modification of any
FCC License or affect materially adversely any rights of the Borrower or any
Subsidiary thereunder, and neither the Borrower nor any Subsidiary has any
reason to believe that any FCC License will not be renewed in the ordinary
course of business.
5.5. Litigation. Except as set forth on Schedule 5.5, there are no
----------
actions, investigations, suits or proceedings pending or, to the knowledge of
the Borrower, threatened, at law, in equity or in arbitration, before any court,
other Governmental Authority or other Person, (i) against or affecting the
Borrower, any of its Subsidiaries or any of their respective properties that
would, if adversely determined, be reasonably likely to have a Material Adverse
Effect, or (ii) with respect to this Agreement or any of the other Credit
Documents.
5.6. Taxes. Each of the Borrower and its Subsidiaries has timely
-----
filed all federal, state and local tax returns and reports required to be filed
by it and has paid all taxes, assessments, fees and other charges levied upon it
or upon its properties that are shown thereon as due and payable, other than
those that are being contested in good faith and by proper proceedings and for
which adequate reserves have been established in accordance with GAAP. Such
returns accurately reflect in all material respects all liability for taxes of
the Borrower and its Subsidiaries for the periods covered thereby. There is no
ongoing audit or examination or, to the knowledge of the Borrower, other
investigation by any Governmental Authority of the tax liability of the Borrower
or any of its Subsidiaries, and there is no unresolved claim by any Governmental
Authority concerning the tax liability of the Borrower or any of its
Subsidiaries for any period for which tax returns have been or were required to
have been filed, other than claims for which adequate reserves have been
established in accordance with GAAP. Neither the Borrower nor any of its
Subsidiaries has waived or extended or has been requested to waive or extend the
statute of limitations relating to the payment of any taxes.
5.7. Subsidiaries. Schedule 5.7 sets forth a list, as of the Closing
------------
Date, of all of the Subsidiaries of the Borrower and, as to each such
Subsidiary, the percentage ownership (direct and indirect) of the Borrower in
each class of its Capital Stock and each direct owner thereof. Except for the
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Capital Stock expressly indicated on Schedule 5.7, there are no shares of
capital stock, warrants, rights, options or other equity securities, or other
Capital Stock of any Subsidiary of the Borrower outstanding or reserved for any
purpose. All outstanding Capital Stock of each Subsidiary of the Borrower are
duly and validly issued, fully paid and nonassessable. The Borrower is the sole
legal, record and beneficial owner of, and has good and valid title to, all such
Capital Stock, free and clear of all Liens other than the Liens created pursuant
to any of the Credit Documents.
5.8. Full Disclosure. All factual information heretofore or
---------------
contemporaneously furnished to the Administrative Agent or any Lender in writing
by or on behalf of the Borrower or any of its Subsidiaries for purposes of or in
connection with this Agreement and the transactions contemplated hereby is, and
all other such factual information hereafter furnished to the Administrative
Agent or any Lender in writing by or on behalf of the Borrower or any of its
Subsidiaries will be, true and accurate in all material respects on the date as
of which such information is dated or certified (or, if such information has
been amended or supplemented, on the date as of which any such amendment or
supplement is dated or certified) and not made incomplete by omitting to state a
material fact necessary to make the statements contained therein, in light of
the circumstances under which such information was provided, not misleading.
5.9. Margin Regulations. Neither the Borrower nor any of its
------------------
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock. No proceeds of the Loans will be used, directly or indirectly, to
purchase or carry any Margin Stock, to extend credit for such purpose or for any
other purpose that would violate or be inconsistent with Regulations G, T, U or
X or any provision of the Exchange Act.
5.10. No Material Adverse Change. There has been no Material Adverse
--------------------------
Change since the date of the most recent consolidated financial statements of
the Borrower delivered to the Lenders, and there exists no event, condition or
state of facts that could reasonably be expected to result in a Material Adverse
Change, except as disclosed in any reports filed with the Securities and
Exchange Commission.
5.11. Financial Matters. (a) The Borrower has heretofore furnished
-----------------
to the Administrative Agent copies of (i) the audited consolidated balance
sheets of the Borrower and its Subsidiaries as of December 31, 1997, 1996, and
1995, and the related statements of income and cash flows for the fiscal years
ended December 31, 1997, 1996 and 1995, together with the opinion of Ernst &
Young thereon, and (ii) the unaudited consolidated balance sheet of the Borrower
and its Subsidiaries as of September 30, 1998, and the related statements of
income and cash flows for the nine-month period then ended. Such financial
statements have been prepared in accordance with GAAP and, if applicable,
Regulation S-X under the Exchange Act (subject, with respect to the unaudited
financial statements, to the absence of notes required by GAAP and to normal
year-end adjustments) and present fairly the financial condition of the Borrower
and its Subsidiaries on a consolidated basis as of the respective dates thereof
and the consolidated results of operations of the Borrower and its Subsidiaries
for the respective periods then ended. Except as fully reflected in the most
recent financial statements referred to above and the notes thereto, there are
no material liabilities or obligations with respect to the Borrower or any of
its Subsidiaries of any nature whatsoever (whether absolute, contingent or
otherwise and whether or not due).
(b) The unaudited pro forma balance sheet of the Borrower as of
December 31, 1998, a copy of which has heretofore been delivered to the
Administrative Agent, gives pro forma effect to the consummation of the initial
extensions of credit made under this Agreement, the WOKR Acquisition and the
payment of transaction fees and expenses related to the foregoing, all as if
such events had occurred
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on such date (the "Pro Forma Balance Sheet"). The Pro Forma Balance Sheet has
been prepared in accordance with GAAP (subject to the absence of footnotes
required by GAAP and subject to normal year-end adjustments) and, subject to
stated assumptions made in good faith and having a reasonable basis set forth
therein, presents fairly the financial condition of the Borrower on an unaudited
pro forma basis as of the date set forth therein after giving effect to the
consummation of the transactions described above.
(c) The Borrower has prepared, and has heretofore furnished to the
Administrative Agent a copy of, annual projected balance sheets and statements
of income and cash flows of the Borrower for the eight year period beginning
with the year ended December 31, 1998, giving effect to the initial extensions
of credit made under this Agreement, the WOKR Acquisition and the payment of
transaction fees and expenses related to the foregoing (the "Projections"). In
the opinion of management of the Borrower, the assumptions used in the
preparation of the Projections were fair, complete and reasonable when made and
continue to be fair, complete and reasonable as of the date hereof. The
Projections have been prepared in good faith by the executive and financial
personnel of the Borrower, are complete and represent a reasonable estimate of
the future performance and financial condition of the Borrower, subject to the
uncertainties and approximations inherent in any projections.
(d) Each of the Borrower and its Subsidiaries, after giving effect to
the consummation of the transactions contemplated hereby, (i) has capital
sufficient to carry on its businesses as conducted and as proposed to be
conducted, (ii) has assets with a fair salable value, determined on a going
concern basis, (y) not less than the amount required to pay the probable
liability on its existing debts as they become absolute and matured and (z)
greater than the total amount of its liabilities (including identified
contingent liabilities, valued at the amount that can reasonably be expected to
become absolute and matured), and (iii) does not intend to, and does not believe
that it will, incur debts or liabilities beyond its ability to pay such debts
and liabilities as they mature.
5.12. Properties; Assets. (a) Each of the Borrower and its
------------------
Subsidiaries (i) has good and marketable title to all real property owned by it,
(ii) holds interests as lessee under valid leases in full force and effect with
respect to all material leased real and personal property used in connection
with its business, (iii) possesses or has rights to use licenses, patents,
copyrights, trademarks, service marks, trade names and other assets sufficient
to enable it to continue to conduct its business substantially as heretofore
conducted and without any material conflict with the rights of others, and (iv)
has good title to all of its other properties and assets reflected in the most
recent financial statements referred to in Section 5.11(a) (except as sold or
otherwise disposed of since the date thereof in the ordinary course of
business), in each case under (i), (ii), (iii) and (iv) above free and clear of
all Liens other than Permitted Liens.
(b) All of the properties, equipment and systems of the Borrower and
the Subsidiaries are in good repair, working order and condition (ordinary wear
and tear excepted) and are and will be in compliance with all applicable
standards, rules or requirements imposed by (i) any Governmental Authority
(including, without limitation, the FCC); (ii) any FCC License; and (iii) any
agreements with any radio or television networks including without limitation
the Network Affiliation Agreements, the failure with which to comply would
reasonably be expected to have a Material Adverse Effect.
5.13. ERISA. Each Plan is and has been administered in compliance in
-----
all material respects with all applicable Requirements of Law, including,
without limitation, the applicable provisions of ERISA and the Internal Revenue
Code. No ERISA Event has occurred and is continuing or to the knowledge of the
Borrower, is reasonably expected to occur with respect to any Plan, in either
case that
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would be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect. No Plan has any Unfunded Pension Liability, and neither the
Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA, in either instance where the same
would be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect. Neither the Borrower nor any ERISA Affiliate is required to
contribute to or has, or has at any time had, any liability to a Multiemployer
Plan.
5.14. Environmental Matters. (a) No Hazardous Substances are or have
---------------------
been generated, used, located, released, treated, disposed of or stored by the
Borrower or any of its Subsidiaries or, to the knowledge of the Borrower, by any
other Person (including any predecessor in interest) or otherwise, in, on or
under any portion of any real property, leased or owned, of the Borrower or any
of its Subsidiaries, except in material compliance with all applicable
Environmental Laws, and no portion of any such real property or, to the
knowledge of the Borrower, any other real property at any time leased, owned or
operated by the Borrower or any of its Subsidiaries, has been contaminated by
any Hazardous Substance; and no portion of any real property, leased or owned,
of the Borrower or any of its Subsidiaries has been or is presently the subject
of an environmental audit, assessment or remedial action.
(b) No portion of any real property, leased or owned, of the Borrower
or any of its Subsidiaries has been used by the Borrower or any of its
Subsidiaries or, to the knowledge of the Borrower, by any other Person, as or
for a mine, a landfill, a dump or other disposal facility, a gasoline service
station, or (other than for petroleum substances stored in the ordinary course
of business) a petroleum products storage facility; no portion of such real
property or any other real property at any time leased, owned or operated by the
Borrower or any of its Subsidiaries has, pursuant to any Environmental Law, been
placed on the "National Priorities List" or "CERCLIS List" (or any similar
federal, state or local list) of sites subject to possible environmental
problems; and there are not and have never been any underground storage tanks
situated on any real property, leased or owned, of the Borrower or any of its
Subsidiaries.
(c) All activities and operations of the Borrower and its Subsidiaries
are in compliance with the requirements of all applicable Environmental Laws,
except to the extent the failure so to comply, individually or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect. Each of the
Borrower and its Subsidiaries has obtained all licenses and permits under
Environmental Laws necessary to its respective operations; all such licenses and
permits are being maintained in good standing; and each of the Borrower and its
Subsidiaries is in compliance with all terms and conditions of such licenses and
permits, except for such licenses and permits the failure to obtain, maintain or
comply with which would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. Neither the Borrower nor any of
its Subsidiaries is involved in any suit, action or proceeding, or has received
any notice, complaint or other request for information from any Governmental
Authority or other Person, with respect to any actual or alleged Environmental
Claims that, if adversely determined, would be reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect; and, to the knowledge of
the Borrower, there are no threatened actions, suits, proceedings or
investigations with respect to any such Environmental Claims, nor any basis
therefor.
5.15. Compliance With Laws. Each of the Borrower and its Subsidiaries
--------------------
has timely filed all material reports, documents and other materials required to
be filed by it under all applicable Requirements of Law with any Governmental
Authority, has retained all material records and documents required to be
retained by it under all applicable Requirements of Law, and is otherwise in
compliance with all applicable Requirements of Law in respect of the conduct of
its business and the ownership and
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operation of its properties, except for such Requirements of Law the failure to
comply with which, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect.
5.16. Regulated Industries. Neither the Borrower nor any of its
--------------------
Subsidiaries is (i) an "investment company," a company "controlled" by an
"investment company," or an "investment advisor," within the meaning of the
Investment Company Act of 1940, as amended, or (ii) a "holding company," a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
5.17. Insurance. Schedule 5.17 sets forth a true and complete
---------
summary of all insurance policies or arrangements carried or maintained by the
Borrower and its Subsidiaries as of the Closing Date, indicating in each case
the insurer, policy number, expiration, amount and type of coverage and
deductibles. The assets, properties and business of the Borrower and its
Subsidiaries are insured against such hazards and liabilities, under such
coverages and in such amounts, as are customarily maintained by prudent
companies similarly situated and under policies issued by insurers of recognized
responsibility.
5.18. Material Contracts. Schedule 5.18 lists, as of the Closing
------------------
Date, each "material contract" (within the meaning of Item 601(b)(10) of
Regulation S-K under the Exchange Act) to which the Borrower or any of its
Subsidiaries is a party, by which any of them or their respective properties is
bound or to which any of them is subject (collectively, "Material Contracts").
As of the Closing Date, except as could not reasonably be expected to have a
Material Adverse Effect, (i) each Material Contract is in full force and effect
and is enforceable by the Borrower or the Subsidiary that is a party thereto in
accordance with its terms, and (ii) neither the Borrower nor any of its
Subsidiaries (nor, to the knowledge of the Borrower, any other party thereto) is
in breach of or default under any Material Contract in any material respect or
has given notice of termination or cancellation of any Material Contract.
5.19. Security Documents. The provisions of each of the Security
------------------
Documents (whether executed and delivered prior to or on the Closing Date or
thereafter) are and will be effective to create in favor of the Administrative
Agent, for its benefit and the benefit of the Lenders, a valid and enforceable
security interest in and Lien upon all right, title and interest of each of the
Borrower and its Subsidiaries that is a party thereto in and to the Collateral
purported to be pledged by it thereunder and described therein, and upon (i) the
initial extension of credit hereunder, (ii) the filing of appropriately
completed Uniform Commercial Code financing statements and continuations thereof
in the jurisdictions specified therein, and (iii) if applicable, the filing of
appropriately completed short form assignments in the U.S. Patent and Trademark
Office and the U.S. Copyright Office, and (iv) the possession by the
Administrative Agent of any certificates evidencing the securities pledged
thereby, such security interest and Lien shall constitute a fully perfected and
first priority security interest in and Lien upon such right, title and interest
of the Borrower or such Subsidiary, as applicable, in and to such Collateral, to
the extent that such security interest and Lien can be perfected by such
filings, actions and possession, subject only to Permitted Liens.
5.20. Labor Relations. Neither the Borrower nor any of its
---------------
Subsidiaries is engaged in any unfair labor practice within the meaning of the
National Labor Relations Act of 1947, as amended. There is (i) no unfair labor
practice complaint before the National Labor Relations Board, or grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement, pending or, to the knowledge of the Borrower, threatened, against the
Borrower or any of its Subsidiaries, (ii) no strike, lock-out, slowdown,
stoppage, walkout or other labor dispute pending or, to the knowledge of the
Borrower, threatened, against the Borrower or any of its Subsidiaries, and (iii)
to the knowledge of the
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Borrower, no petition for certification or union election or union organizing
activities taking place with respect to the Borrower or any of its Subsidiaries.
5.21 Year 2000 Compatibility. Any reprogramming required to permit the
-----------------------
proper functioning, before, on and after January 1, 2000, of (i) the Borrowers'
and its Subsidiaries' computer-based systems and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which the Borrowers or any of its Subsidiaries systems interface), and the
testing of all such material systems and equipment, as so reprogrammed, will be
substantially completed by September 30, 1999. The cost to the Borrower and its
Subsidiaries of such reprogramming and testing and of the reasonably foreseeable
consequences of the year 2000 to the Borrower and its Subsidiaries (including,
without limitation, reprogramming errors and the failure of others systems or
equipment) will not result in a Default or Material Adverse Effect. Except for
such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Borrower and
its Subsidiaries are, and with ordinary course upgrading and maintenance will
continue for the term of this Agreement to be, sufficient to permit the Borrower
and its Subsidiaries to conduct their respective businesses without a Material
Adverse Effect.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments, the termination or expiration of all Letters of Credit and the
payment in full of all principal and interest with respect to the Loans and all
Reimbursement Obligations together with all other amounts then due and owing
hereunder:
6.1. Financial Statements. The Borrower will deliver to each Lender:
--------------------
(a) As soon as available and in any event within fifty (50) days after
the end of each of the first three fiscal quarters of each fiscal year,
beginning with the fiscal quarter ending March 31, 1999, unaudited consolidated
balance sheets of the Borrower and its Subsidiaries as of the end of such fiscal
quarter, unaudited consolidated statements of cash flows for the Borrower and
its Subsidiaries and unaudited consolidated statements of income for the
Borrower and its Subsidiaries and unaudited consolidating statements of
Consolidated EBITDA for the fiscal quarter then ended and for that portion of
the fiscal year then ended, in each case setting forth comparative consolidated
(or consolidating) figures as of the end of and for the corresponding period in
the preceding fiscal year, together with comparative budgeted figures for the
fiscal year then ended, all in reasonable detail and prepared in accordance with
GAAP (subject to the absence of notes required by GAAP and subject to normal
year-end adjustments) applied on a basis consistent with that of the preceding
quarter or containing disclosure of the effect on the financial condition or
results of operations of any change in the application of accounting principles
and practices during such quarter; and
(b) As soon as available and in any event within ninety-five (95) days
after the end of each fiscal year, beginning with the fiscal year ending
December 31, 1998, an audited consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year and audited consolidated
statements of income and cash flows for the Borrower and its Subsidiaries for
the fiscal year then ended, including the notes thereto, in each case setting
forth comparative figures as of the end of and for the preceding fiscal year,
all in reasonable detail and certified by the independent certified public
accounting
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firm regularly retained by the Borrower or another independent certified public
accounting firm of recognized national standing reasonably acceptable to the
Required Lenders, together with (y) a report thereon by such accountants that is
not qualified as to going concern or scope of audit and to the effect that such
financial statements present fairly the consolidated financial condition and
results of operations of the Borrower and its Subsidiaries as of the dates and
for the periods indicated in accordance with GAAP applied on a basis consistent
with that of the preceding year or containing disclosure of the effect on the
financial condition or results of operations of any change in the application of
accounting principles and practices during such year, and (z) a report by such
accountants to the effect that, based on and in connection with their
examination of the financial statements of the Borrower and its Subsidiaries,
they obtained no knowledge of the occurrence or existence of any Default or
Event of Default relating to accounting or financial reporting matters, or a
statement specifying the nature and period of existence of any such Default or
Event of Default disclosed by their audit; provided, however, that such
-------- -------
accountants shall not be liable by reason of the failure to obtain knowledge of
any Default or Event of Default that would not be disclosed or revealed in the
course of their audit examination.
6.2. Other Business and Financial Information. The Borrower will
----------------------------------------
deliver to each Lender:
(a) Concurrently with each delivery of the financial statements
described in Section 6.1, a Compliance Certificate in the form of Exhibit C with
respect to the period covered by the financial statements then being delivered,
executed by a Financial Officer of the Borrower, together with a Covenant
Compliance Worksheet in the form of Attachment A to Exhibit C reflecting the
computation of the financial covenants set forth in Sections 7.1 through 7.3 as
of the last day of the period covered by such financial statements;
(b) Concurrently with each delivery of the financial statements
described in Section 6.1(b), and in any event not later than ninety-five (95)
days after the last day of each fiscal year, beginning with the fiscal year
ending December 31, 2000, a certificate executed by a Financial Officer of the
Borrower in form and substance satisfactory to the Administrative Agent and
setting forth the calculation of Excess Cash Flow for such fiscal year;
(c) As soon as available and in any event within 45 days following the
end of each fiscal year, beginning with the fiscal year ending December 31,
1999, a consolidated operating budget for the Borrower and its Subsidiaries for
the succeeding fiscal year (prepared on a quarterly basis), consisting of a
consolidated statement of income, together with a certificate of a Financial
Officer of the Borrower to the effect that such budgets have been prepared in
good faith and are reasonable estimates of the results of operations of the
Borrower and its Subsidiaries for the period covered thereby; and as soon as
available from time to time thereafter, any modifications or revisions to or
restatements of such budget;
(d) Promptly upon receipt thereof, copies of any "management letter"
submitted to the Borrower or any of its Subsidiaries by its certified public
accountants in connection with each annual, interim or special audit, and
promptly upon completion thereof, any response reports from the Borrower or any
such Subsidiary in respect thereof;
(e) Promptly upon the sending, filing or receipt thereof, copies of (i)
all financial statements, reports, notices and proxy statements that the
Borrower or any of its Subsidiaries shall send or make available generally to
its shareholders, (ii) all regular, periodic and special reports, registration
statements and prospectuses (other than on Form S-8) that the Borrower or any of
its Subsidiaries shall render to or file with the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc. or any national
securities exchange, and (iii) all press releases and other statements made
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available generally by the Borrower or any of its Subsidiaries to the public
concerning material developments in the business of the Borrower or any of its
Subsidiaries;
(f) Except as otherwise indicated below, promptly upon (and in any
event within five (5) Business Days after) any Responsible Officer of the
Borrower obtaining knowledge thereof, written notice of any of the following:
(i) the occurrence of any Default or Event of Default, together
with a written statement of a Responsible Officer of the Borrower
specifying the nature of such Default or Event of Default, the period of
existence thereof and the action that the Borrower has taken and proposes
to take with respect thereto;
(ii) the institution or threatened institution of any action,
suit, investigation or proceeding against or affecting the Borrower or any
of its Subsidiaries, including any such investigation or proceeding by any
Governmental Authority (other than routine periodic inquiries,
investigations or reviews), that would be required to be disclosed by the
Company pursuant to the Exchange Act (such disclosure to be made to the
Administrative Agent when required to be disclosed pursuant to such Act),
and any material development in any litigation or other proceeding
previously reported pursuant to Section 5.5 or this subsection;
(iii) the receipt by the Borrower or any Subsidiary from the FCC or
any other Governmental Authority or filing or receipt thereof by the
Borrower or any Subsidiary, (a) a copy of any order or notice of the FCC or
any other Governmental Authority or any court of competent jurisdiction
which designates any material license, permit, or authorization
("Authorization") of the Borrower or any Subsidiary, or any application
therefor, for a hearing, or which refuses renewal or extension of, or
revokes, materially modifies, terminates or suspends any Authorization now
or hereafter held by the Borrower or any Subsidiary which is required to
construct or operate any broadcast station or its other businesses in
compliance with all applicable laws and regulations, (b) a copy of any
competing application filed with respect to any Authorization of the
Borrower or any Subsidiary, or any citation, notice of violation or order
to show cause issued by the FCC or any Governmental Authority with respect
to the Borrower or any Subsidiary which is available to the Borrower or any
Subsidiary and (c) a copy of any notice or application by the Borrower or
any Subsidiary requesting authority to or notifying the FCC of its intent
to cease broadcasting on any broadcast station for any period in excess of
10 days;
(iv) the occurrence of any ERISA Event, together with (x) a
written statement of a Responsible Officer of the Borrower specifying the
details of such ERISA Event and the action that the Borrower has taken and
proposes to take with respect thereto, (y) a copy of any notice with
respect to such ERISA Event that may be required to be filed with the PBGC
and (z) a copy of any notice delivered by the PBGC to the Borrower or such
ERISA Affiliate with respect to such ERISA Event;
(v) the occurrence of any material default under, or any proposed
or threatened termination or cancellation of, any Material Contract the
termination or cancellation of which would be reasonably likely to have a
Material Adverse Effect;
(vi) the occurrence of any of the following: (x) the assertion of
any Environmental Claim against or affecting the Borrower, any of its
Subsidiaries or any of their respective real property, leased or owned; (y)
the receipt by the Borrower or any of its Subsidiaries of notice of
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any alleged violation of or noncompliance with any Environmental Laws; or
(z) the taking of any remedial action by the Borrower, any of its
Subsidiaries or any other Person in response to the actual or alleged
generation, storage, release, disposal or discharge of any Hazardous
Substances on, to, upon or from any real property leased or owned by the
Borrower or any of its Subsidiaries; but in each case under clauses (x),
(y) and (z) above, only to the extent the same would be reasonably likely
to have a Material Adverse Effect;
(vii) any other matter or event that has, or would be reasonably
likely to have, a Material Adverse Effect, together with a written
statement of a Responsible Officer of the Borrower setting forth the nature
and period of existence thereof and the action that the Borrower has taken
and proposes to take with respect thereto; and
(g) As promptly as reasonably possible, such other information about the
business, condition (financial or otherwise), operations or properties of the
Borrower or any of its Subsidiaries (including any Plan and any information
required to be filed under ERISA) as the Administrative Agent or any Lender may
from time to time reasonably request.
6.3. Corporate Existence; Franchises; Maintenance of Properties. The
----------------------------------------------------------
Borrower will, and will cause each of its Subsidiaries to, (i) maintain and
preserve in full force and effect its corporate existence, except as expressly
permitted otherwise by Section 8.1, (ii) obtain, maintain and preserve in full
force and effect all other rights, franchises, licenses, permits,
certifications, approvals and authorizations required by Governmental
Authorities and necessary to the ownership, occupation or use of its properties
or the conduct of its business (including the FCC Licenses), except to the
extent the failure to do so would not be reasonably likely to have a Material
Adverse Effect, and (iii) keep all material properties in good working order and
condition (normal wear and tear excepted) and from time to time make all
necessary repairs to and renewals and replacements of such properties, except to
the extent that any of such properties are obsolete or are being replaced.
6.4. Compliance with Laws. The Borrower will, and will cause each of
--------------------
its Subsidiaries to, comply in all respects with all Requirements of Law
applicable in respect of the conduct of its business and the ownership and
operation of its properties (including, without limitation, the Communications
Act and the FCC Regulations), except to the extent the failure so to comply
would not be reasonably likely to have a Material Adverse Effect.
6.5. Payment of Obligations. The Borrower will, and will cause each
----------------------
of its Subsidiaries to, (i) pay all liabilities and obligations as and when due
(subject to any applicable subordination provisions), except to the extent
failure to do so would not be reasonably likely to have a Material Adverse
Effect, and (ii) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it, upon its income or profits or upon any of its
properties, prior to the date on which penalties would attach thereto, and all
lawful claims that, if unpaid, might become a Lien upon any of the properties of
the Borrower or any of its Subsidiaries; provided, however, that neither the
-------- -------
Borrower nor any of its Subsidiaries shall be required to pay any such tax,
assessment, charge, levy or claim that is being contested in good faith and by
proper proceedings and as to which the Borrower or such Subsidiary is
maintaining adequate reserves with respect thereto in accordance with GAAP.
6.6. Insurance. The Borrower will, and will cause each of its
---------
Subsidiaries to, maintain with financially sound and reputable insurance
companies insurance with respect to its assets, properties and business, against
such hazards and liabilities, of such types and in such amounts, as is
customarily maintained by companies in the same or similar businesses similarly
situated, and maintain such other or
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additional insurance on such terms and subject to such conditions as may be
required under any Security Document.
6.7. Maintenance of Books and Records; Inspection. The Borrower
--------------------------------------------
will, and will cause each of its Subsidiaries to, (i) maintain adequate books,
accounts and records, in which full, true and correct entries shall be made of
all financial transactions in relation to its business and properties, and
prepare all financial statements required under this Agreement, in each case in
accordance with GAAP and in compliance with the requirements of any Governmental
Authority having jurisdiction over it, and (ii) permit employees or agents of
the Administrative Agent or any Lender to inspect its properties and examine or
audit its books, records, working papers and accounts and make copies and
memoranda of them, and to discuss its affairs, finances and accounts with its
officers and employees and, upon notice to the Borrower, the independent public
accountants of the Borrower and its Subsidiaries (and by this provision the
Borrower authorizes such accountants to discuss the finances and affairs of the
Borrower and its Subsidiaries), all at such times and from time to time, upon
reasonable notice and during business hours, as may be reasonably requested.
6.8. Interest Rate Protection. Within ninety (90) days after the
------------------------
Closing Date, the Borrower shall have entered into or obtained, and the Borrower
will thereafter maintain in full force and effect, Hedge Agreements in form and
substance reasonably satisfactory to the Administrative Agent the effect of
which shall be to fix or limit interest rates payable by the Borrower as to at
least fifty percent (50%) of Consolidated Funded Debt for a period of not less
than three (3) years after such date (it being understood that the Hedge
Agreements of the Borrower in place as of the date hereof are deemed to be in
compliance with the foregoing). The Borrower will deliver to the Administrative
Agent, promptly upon receipt thereof, copies of such Hedge Agreements (and any
supplements or amendments thereto), and promptly upon request therefor, any
other information reasonably requested by the Administrative Agent to evidence
its compliance with the provisions of this Section.
6.9. Permitted Acquisitions. (a) Subject to the provisions of
----------------------
subsection (b) below, the provisions of Section 6.10 below and the requirements
contained in the definition of Permitted Acquisition, and subject to the other
terms and conditions of this Agreement, the Borrower may from time to time on or
after the Closing Date effect Permitted Acquisitions, provided that, with
--------
respect to each Permitted Acquisition:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of the consummation of such Permitted Acquisition or
would exist immediately after giving effect thereto;
(ii) if the Leverage Ratio would be greater than 5.5 to 1.0, the
Acquisition Amount with respect thereto (regardless of the form of
consideration) together with the aggregate of the Acquisition Amounts
(regardless of the form of consideration) for all other Permitted
Acquisitions consummated during the same fiscal quarter and the period of
three consecutive fiscal quarters immediately prior thereto, shall not
exceed $100,000,000 without the prior written approval of the Required
Lenders.
(b) Not less than ten (10) Business Days prior to the consummation of
any Permitted Acquisition, the Borrower shall have delivered to the
Administrative Agent and each Lender the following, if such Acquisition
(together with any related transaction or series of related transactions)
involves an Acquisition Amount of $10,000,000 or more:
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(i) a reasonably detailed description of the material terms of
such Permitted Acquisition (including, without limitation, the purchase
price and method and structure of payment) and of each Person or business
that is the subject of such Permitted Acquisition (each, a "Target");
(ii) historical financial statements of the Target (or, if there
are two or more Targets that are the subject of such Permitted Acquisition
and that are part of the same consolidated group, consolidated historical
financial statements for all such Targets) for the most recent fiscal year
available and, if available, for any interim periods since the most recent
fiscal year-end; and
(iii) a certificate, in form and substance reasonably satisfactory
to the Administrative Agent, executed by a Financial Officer of the
Borrower setting forth the Acquisition Amount and further to the effect
that, to the best of such individual's knowledge, (x) the consummation of
such Permitted Acquisition will not result in a violation of any provision
of this Section, and after giving effect to such Permitted Acquisition and
any Borrowings made in connection therewith, the Borrower will be in
compliance with the financial covenants contained in Sections 7.1 through
7.3, such compliance determined with regard to calculations made on a pro
---
forma basis in accordance with GAAP as if each Target had been consolidated
-----
with the Borrower for those periods applicable to such covenants (such
calculations to be attached to the certificate), (y) the Borrower believes
in good faith that it will continue to comply with such financial covenants
for a period of one year following the date of the consummation of such
Permitted Acquisition, and (z) after giving effect to such Permitted
Acquisition and any Borrowings in connection therewith, the Borrower
believes in good faith that it will have sufficient availability under the
Revolving Credit Commitments to meet its ongoing working capital
requirements.
(c) As soon as reasonably practicable after the consummation of any
Permitted Acquisition, the Borrower will deliver to the Administrative Agent and
each Lender a copy of the fully executed acquisition agreement (including
schedules and exhibits thereto) and other material documents and closing papers
delivered in connection therewith.
(d) The consummation of each Permitted Acquisition shall be deemed to be
a representation and warranty by the Borrower that (except as shall have been
approved in writing by the Required Lenders) all conditions thereto set forth in
this Section and in any description furnished under clause (i) of subsection (b)
above have been satisfied, that the same is permitted in accordance with the
terms of this Agreement, and that the matters certified to by the Financial
Officer of the Borrower in the certificate referred to in clause (iii) of
subsection (b) above are, to the best of such individual's knowledge, true and
correct in all material respects as of the date such certificate is given, which
representation and warranty shall be deemed to be a representation and warranty
as of the date thereof for all purposes hereunder, including, without
limitation, for purposes of Sections 4.4 and 9.1.
(e) With respect to the acquisition of television station WOKR in
Rochester, New York, television station KMTR in Eugene, Oregon (and related
television broadcast stations), television station KKTV in Santa Maria,
California, and television station KION in Salinas, California, the
Administrative Agent and each Lender acknowledge their receipt of the
information required to be provided by Borrower under paragraph (b) above and
give their approval as required under clause (a)(ii) above.
6.10. Creation or Acquisition of Subsidiaries. Subject to the
---------------------------------------
provisions of Section 8.5, the Borrower may from time to time create or acquire
new Wholly Owned Subsidiaries in connection with
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Permitted Acquisitions or otherwise, and the Wholly Owned Subsidiaries of the
Borrower may create or acquire new Wholly Owned Subsidiaries, provided that:
--------
(a) Concurrently with (and in any event within ten (10) Business Days
thereafter) the creation or direct or indirect acquisition by the Borrower
thereof, each such new Subsidiary will execute and deliver to the Agent (i) a
joinder to the Subsidiary Guaranty (if then in effect), pursuant to which such
new Subsidiary shall become a party thereto and shall guarantee the payment in
full of the Obligations of the Borrower under this Agreement and the other
Credit Documents, and (ii) a joinder to the Security Agreement, pursuant to
which such new Subsidiary shall become a party thereto and shall grant to the
Agent a first priority Lien upon and security interest in its material personal
property (as determined in good faith by the Administrative Agent) as Collateral
for its obligations under the Subsidiary Guaranty, subject only to Permitted
Liens;
(b) Concurrently with (and in any event within ten (10) Business Days
thereafter) the creation or acquisition of any new Subsidiary all or a portion
of the Capital Stock of which is directly owned by the Borrower, the Borrower
will execute and deliver to the Administrative Agent an amendment or supplement
to the Pledge Agreement, pursuant to which all of the Capital Stock of such new
Subsidiary owned by the Borrower shall be pledged to the Administrative Agent,
together with the certificates evidencing such Capital Stock and undated stock
powers duly executed in blank; and from and after the Closing Date concurrently
with (and in any event within ten (10) Business Days thereafter) the creation or
acquisition of any new Subsidiary all or a portion of the Capital Stock of which
is directly owned by another Subsidiary (the "Parent Subsidiary"), the Parent
Subsidiary will execute and deliver to the Administrative Agent an appropriate
joinder, amendment or supplement to the Pledge Agreement, pursuant to which all
of the Capital Stock of such new Subsidiary owned by such Parent Subsidiary
shall be pledged to the Administrative Agent, together with the certificates
evidencing such Capital Stock and undated stock powers duly executed in blank;
and
(c) As promptly as reasonably possible, the Borrower will deliver any
such other documents, certificates and opinions (including opinions of local
counsel in the jurisdiction of organization of each such new Subsidiary), in
form and substance reasonably satisfactory to the Administrative Agent, as the
Administrative Agent may reasonably request in connection therewith and will
take such other action as the Administrative Agent may reasonably request to
create in favor of the Administrative Agent a perfected security interest in the
Collateral being pledged pursuant to the documents described above.
6.11 Additional Security.
-------------------
(a) Upon the repayment of the 10.48% Subordinated Notes due 2000, which
comprise part of the Existing Subordinated Indebtedness, or in the event such
Notes no longer limit the Borrower's Subsidiaries' ability to guarantee the
Obligations, the Borrower shall cause each of its Subsidiaries (other than SSI,
Inc.) to execute and deliver to the Administrative Agent for and on behalf of
the Lenders the Subsidiary Guaranty and to cause to be delivered to the
Administrative Agent the other documents contemplated by Section 4.4(d).
(b) The Borrower will, and will cause each of its Subsidiaries (other
than SSI, Inc. in respect of the granting of Liens that would require the
approval of the NBA) to, grant to the Administrative Agent from time to time
security interests, mortgages and other Liens in and upon such assets and
properties of the Borrower or such Subsidiary as are not covered by the Security
Documents executed and delivered on the Closing Date or pursuant to Section 6.10
and as may be reasonably requested from
65
<PAGE>
time to time by the Required Lenders (provided, however, that no Required Lender
approval shall be required with respect to grants of Liens on assets acquired by
the Borrower or a Subsidiary in connection with any Permitted Acquisition). Such
security interests, mortgages and Liens shall be granted pursuant to
documentation in form and substance reasonably satisfactory to the
Administrative Agent and shall constitute valid and perfected security interests
and Liens, subject to no Liens other than Permitted Liens. Without limitation of
the foregoing, in connection with the grant of any mortgage or deed of trust
with respect to any interest in real property, the Borrower will, and will cause
each applicable Subsidiary to, at the Borrowers expense, prepare, obtain and
deliver to the Administrative Agent any environmental assessments, appraisals,
surveys, title insurance and other matters or documents as the Administrative
Agent may reasonably request or as may be required under applicable banking laws
and regulations.
6.12. NBA Lockout. If the National Basketball Association lockout in
-----------
effect as of the date of this Agreement shall not have been resolved on or prior
to December 31, 1999, then the Borrower shall deliver to the Administrative
Agent revised projections for the five-year period following such date.
6.13. Year 2000. The Borrower shall take all action necessary to assure
---------
that the Borrower's computer based systems are able to operate and effectively
process data including dates on and after January 1, 2000. At the request of the
Administrative Agent, the Borrower shall provide the Administrative Agent
assurances reasonably acceptable to the Administrative Agent of the Borrower's
Year 2000 capacity.
6.14. Further Assurances. The Borrower will, and will cause each of its
------------------
Subsidiaries to, make, execute, endorse, acknowledge and deliver any amendments,
modifications or supplements hereto and restatements hereof and any other
agreements, instruments or documents, and take any and all such other actions,
as may from time to time be reasonably requested by the Administrative Agent or
the Required Lenders to perfect and maintain the validity and priority of the
Liens granted pursuant to the Security Documents and to effect, confirm or
further assure or protect and preserve the interests, rights and remedies of the
Administrative Agent and the Lenders under this Agreement and the other Credit
Documents.
ARTICLE VII
FINANCIAL COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments, the termination or expiration of all Letters of Credit and the
payment in full of all principal and interest with respect to the Loans and all
Reimbursement Obligations together with all other amounts then due and owing
hereunder:
7.1. Leverage Ratios. (a) Leverage Ratio. The Borrower will not
--------------- --------------
permit the Leverage Ratio as of the last day of any fiscal quarter during the
periods set forth below to be greater than the ratio set forth below opposite
such period:
66
<PAGE>
<TABLE>
<CAPTION>
Date Maximum Leverage Ratio
---- ----------------------
<S> <C>
Closing through March 31, 1999 7.25 : 1.00
June 30, 1999 through September 30, 1999 7.00 : 1.00
December 31, 1999 through March 31, 2000 6.75 : 1.00
June 30, 2000 through September 30, 2000 6.25 : 1.00
December 31, 2000 through March 31, 2001 6.00 : 1.00
Thereafter 5.50 : 1.00
</TABLE>
(b) Senior Leverage Ratio. The Borrower will not permit the Senior
---------------------
Leverage Ratio as of the last day of any fiscal quarter during the periods set
forth below to be greater than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Date Maximum Leverage Ratio
---- ----------------------
<S> <C>
Closing through September 30, 1999 4.50 to 1.00
December 31, 1999 through September 30, 2000 4.25 to 1.00
Thereafter 4.00 : 1.00
</TABLE>
7.2. Interest Coverage Ratio. The Borrower will not permit the Interest
-----------------------
Coverage Ratio as of the last day of any fiscal quarter during the periods set
forth below to be less than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Date Maximum Leverage Ratio
---- ----------------------
<S> <C>
Closing through March 31, 2000 1.60 : 1.00
June 30, 2000 through March 31, 2001 1.75 : 1.00
Thereafter 2.00 : 1.00
</TABLE>
7.3. Fixed Charge Coverage Ratio. The Borrower will not permit the Fixed
---------------------------
Charge Coverage Ratio as of the last day of any fiscal quarter, beginning with
the fiscal quarter ending June 30, 1999, to be less than 1.05 to 1.00.
7.4 Capital Lease Obligations. The Borrower will not, and will not
-------------------------
permit or cause its Subsidiaries to, incur any Capital Lease Obligations if,
after giving effect to such Capital Lease Obligations the aggregate amount of
all Capital Lease Obligations then outstanding at such time would exceed
$15,000,000.
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<PAGE>
ARTICLE VIII
NEGATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments, the termination or expiration of all Letters of Credit and the
payment in full of all principal and interest with respect to the Loans and all
Reimbursement Obligations together with all other amounts then due and owing
hereunder:
8.1. Merger; Consolidation. The Borrower will not, and will not permit
---------------------
or cause any of its Subsidiaries to, liquidate, wind up or dissolve, or enter
into any consolidation, merger or other combination, or agree to do any of the
foregoing; provided, however, that:
-------- -------
(i) the Borrower may merge or consolidate with another Person so
long as (x) the Borrower is the surviving entity, (y) unless such other
Person is a Wholly Owned Subsidiary immediately prior to giving effect
thereto, such merger or consolidation shall constitute a Permitted
Acquisition and the applicable conditions and requirements of Sections 6.9
and 6.10 shall be satisfied, and (z) immediately after giving effect
thereto, no Default or Event of Default would exist;
(ii) any Subsidiary may merge or consolidate with another Person
so long as (x) the surviving entity is the Borrower or a Subsidiary, (y)
unless such other Person is a Wholly Owned Subsidiary immediately prior to
giving effect thereto, such merger or consolidation shall constitute a
Permitted Acquisition and the applicable conditions and requirements of
Sections 6.9 and 6.10 shall be satisfied, and (z) immediately after giving
effect thereto, no Default or Event of Default would exist.
8.2. Indebtedness. The Borrower will not, and will not permit or
------------
cause any of its Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness other than:
(i) Indebtedness incurred under this Agreement, the Notes and the
other Credit Documents;
(ii) Indebtedness existing on the Closing Date and described in
Schedule 8.2;
(iii) accrued expenses (including salaries, accrued vacation and
other compensation), current trade or other accounts payable and other
current liabilities arising in the ordinary course of business and not
incurred through the borrowing of money, provided that the same shall be
--------
paid when due except to the extent being contested in good faith and by
appropriate proceedings;
(iv) loans and advances by the Borrower or any Subsidiary to any
other Subsidiary or by any Subsidiary to the Borrower, provided that any
--------
such loan or advance is subordinated in right and time of payment to the
Obligations;
(v) Indebtedness of the Borrower under Hedge Agreements required
pursuant to, and entered into in accordance with, Section 6.8;
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<PAGE>
(vi) unsecured Indebtedness of the Borrower that is expressly
subordinated and made junior in right and time of payment to the
Obligations and that is evidenced by one or more written agreements or
instruments having terms, conditions and provisions (including without
limitation provisions relating to principal amount, maturity, covenants,
defaults, interest, and subordination) satisfactory in form and substance
to the Required Lenders in their sole discretion and which shall provide,
at a minimum and without limitation, that such Indebtedness (a) shall
mature by its terms no earlier than the second anniversary of the Term Loan
Maturity Date, (b) shall not require any scheduled payment of principal
prior to the first anniversary of the Term Loan Maturity Date, (c) shall
have covenants and undertakings that, taken as a whole, are materially less
restrictive than those contained herein, and (d) shall bear interest at an
overall rate not exceeding 12.5% per annum and, to the extent payable only
in cash, at a rate not exceeding 10.5% per annum (the Indebtedness
described hereinabove, "Subordinated Indebtedness"); provided that, as
--------
further conditions to the issuance of any Subordinated Indebtedness, (1)
immediately after giving effect to the issuance of such Subordinated
Indebtedness, no Default or Event of Default shall exist, (2) all
agreements and instruments evidencing or governing such Subordinated
Indebtedness shall have been approved in writing by the Required Lenders
(or the Administrative Agent on their behalf), and (3) prior to or
concurrently with the issuance of such Subordinated Indebtedness, the
Borrower shall have delivered to each Lender a certificate, signed by a
Financial Officer of the Borrower, satisfactory in form and substance to
the Required Lenders and to the effect that, after giving effect to the
incurrence of such Subordinated Indebtedness, the Borrower is in compliance
with the financial covenants set forth in Sections 7.1 through 7.3, such
compliance being determined with regard to calculations made on a pro forma
basis in accordance with GAAP as of the last day of the fiscal quarter then
most recently ended and as if such Subordinated Indebtedness had been
incurred on the first day of the period applicable to such covenants (such
calculations to be attached to such certificate); and provided further that
-------- -------
the Net Cash Proceeds from the issuance of such Subordinated Indebtedness
shall be applied to prepay the Loans in accordance with, and to the extent
required under, the provisions of Section 2.6(d); notwithstanding the
foregoing limitations, the Existing Subordinated Indebtedness is permitted
to exist subject to the terms of Section 8.9;
(vii) purchase money Indebtedness of the Borrower and its
Subsidiaries incurred solely to finance the payment of all or part of the
purchase price of any equipment, real property or other fixed assets
acquired in the ordinary course of business, and any renewals, refinancings
or replacements thereof (subject to the limitations on the principal amount
thereof set forth in this clause (vii)), which Indebtedness shall not
exceed $5,000,000 in aggregate principal amount outstanding at any time;
(viii) Indebtedness in respect of performance bonds or contract
performance guarantees the outstanding amount of which may not exceed
$20,000,000 in the aggregate at any time;
(ix) Contingent Obligations incurred in connection with time
brokerage agreements, LMA's and similar arrangements, not to exceed
$25,000,000 in the aggregate at any time (in addition to Indebtedness in
respect of performance bonds as described in clause (ix) above;
(x) Capital Lease Obligations not to exceed $15,000,000 at any
time; and
(xi) other unsecured Indebtedness not exceeding $5,000,000 in
aggregate principal amount outstanding at any time.
69
<PAGE>
8.3. Liens. The Borrower will not, and will not permit or cause any of
-----
its Subsidiaries to, directly or indirectly, make, create, incur, assume or
suffer to exist, any Lien upon or with respect to any part of its property or
assets, whether now owned or hereafter acquired, or file or permit the filing
of, or permit to remain in effect, any financing statement or other similar
notice of any Lien with respect to any such property, asset, income or profits
under the Uniform Commercial Code of any state or under any similar recording or
notice statute, or agree to do any of the foregoing, other than the following
(collectively, "Permitted Liens"):
(i) Liens created under the Security Documents;
(ii) Liens in existence on the Closing Date and set forth on
Schedule 8.3;
(iii) Liens imposed by law, such as Liens of carriers,
warehousemen, mechanics, materialmen and landlords, and other similar Liens
incurred in the ordinary course of business for sums not constituting
borrowed money that are not overdue for a period of more than sixty (60)
days 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);
(iv) Liens (other than any Lien imposed by ERISA, the creation or
incurrence of which would result in an Event of Default under Section
9.1(k)) incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure the performance of letters
of credit, bids, tenders, statutory obligations, surety and appeal bonds,
leases, government contracts and other similar obligations (other than
obligations for borrowed money) entered into in the ordinary course of
business;
(v) Liens for taxes, assessments or other governmental charges or
statutory obligations that are not delinquent or remain payable without any
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);
(vi) Liens securing the purchase money Indebtedness permitted
under clause (vii) of Section 8.2, provided that any such Lien (a) shall
attach to such property concurrently with or within ten (10) days after the
acquisition thereof by the Borrower or such Subsidiary, (b) shall not
exceed the lesser of (y) the fair market value of such property or (z) the
cost thereof to the Borrower or such Subsidiary and (c) shall not encumber
any other property of the Borrower or any of its Subsidiaries;
(vii) any attachment or judgment Lien not constituting an Event of
Default under Section 9.1(i) that is being contested in good faith by
appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(viii) Liens arising from the filing, for notice purposes only, of
financing statements in respect of true leases;
(ix) Liens on Borrower Margin Stock, to the extent the fair market
value thereof exceeds 25% of the fair market value of the assets of the
Borrower and its Subsidiaries (including Borrower Margin Stock);
70
<PAGE>
(x) with respect to any real property occupied by the Borrower or
any of its Subsidiaries, all easements, rights of way, licenses and similar
encumbrances on title that do not materially impair the use of such
property for its intended purposes;
(xi) Liens attributable to Capital Lease Obligations permitted under
Section 8.2(x) hereof; and
(xii) other liens securing obligations of the Borrower and its
Subsidiaries not exceeding $5,000,000 in the aggregate amount outstanding
at any time.
8.4. Disposition of Assets. The Borrower will not, and will not permit or
---------------------
cause any of its Subsidiaries to, sell, assign, lease, convey, transfer or
otherwise dispose of (whether in one or a series of transactions) all or any
portion of its assets, business or properties (including, without limitation,
any Capital Stock of any Subsidiary), or enter into any arrangement with any
Person providing for the lease by the Borrower or any Subsidiary as lessee of
any asset that has been sold or transferred by the Borrower or such Subsidiary
to such Person, or agree to do any of the foregoing, except for:
(i) sales of inventory and licenses or leases of intellectual
property and other assets, in each case in the ordinary course of business;
(ii) the sale or exchange of used or obsolete equipment to the
extent (y) the proceeds of such sale are applied towards, or such equipment
is exchanged for, replacement equipment or (z) such equipment is no longer
necessary for the operations of the Borrower or its applicable Subsidiary
in the ordinary course of business;
(iii) the sale or other disposition by the Borrower and its
Subsidiaries of any Borrower Margin Stock to the extent the fair market
value thereof exceeds 25% of the fair market value of the assets of the
Borrower and its Subsidiaries (including Borrower Margin Stock), provided
--------
that fair value is received in exchange therefor;
(iv) the sale, lease or other disposition of assets by a Subsidiary
of the Borrower to the Borrower or to a Subsidiary if, immediately after
giving effect thereto, no Default or Event of Default would exist; and
(v) the sale or disposition of assets outside the ordinary course
of business for fair value, provided that (w) the greater of (1) the fair
--------
market value and (2) the book value, of the assets being disposed of
pursuant to this subsection, when aggregated with such values of assets
disposed of in connection with all other sales and dispositions not
otherwise specifically permitted under this Section that are consummated
during the same fiscal quarter or the period of three consecutive fiscal
quarters immediately prior thereto, does not exceed either (A) $10,000,000
in the aggregate for the Borrower and its Subsidiaries during any period of
four consecutive fiscal quarters, or (B) $25,000,000 in the aggregate for
the Borrower and its Subsidiaries over the term of this Agreement, (x) any
Net Cash Proceeds are delivered to the Administrative Agent promptly after
receipt thereof for application in prepayment of the Loans in accordance
with the provisions of Section 2.6(h); (y) in no event shall the Borrower
or any of its Subsidiaries sell or otherwise dispose of any of the Capital
Stock of any Subsidiary; and (z) immediately after giving effect thereto,
no Default or Event of Default would exist.
71
<PAGE>
8.5. Investments; LMAs'. (a) The Borrower will not, and will not permit
-----------------
or cause any of its Subsidiaries to, directly or indirectly, purchase, own,
invest in or otherwise acquire any Capital Stock, evidence of indebtedness or
other obligation or security or any interest whatsoever in any other Person, or
make or permit to exist any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any other Person, or purchase
or otherwise acquire (whether in one or a series of related transactions) any
portion of the assets, business or properties of another Person (including
pursuant to an Acquisition), or create or acquire any Subsidiary, or become a
partner or joint venturer in any partnership or joint venture (collectively,
"Investments"), or make a commitment or otherwise agree to do any of the
foregoing, other than:
(i) Cash Equivalents;
(ii) Investments consisting of purchases and acquisitions of
inventory, supplies, materials and equipment or licenses or leases of
intellectual property and other assets, in each case in the ordinary course
of business;
(iii) Investments consisting of loans and advances to employees for
reasonable travel, relocation and business expenses in the ordinary course
of business (not to exceed $5,000,000 in the aggregate at any time),
extensions of trade credit in the ordinary course of business, and prepaid
expenses incurred in the ordinary course of business;
(iv) without duplication, Investments consisting of intercompany
Indebtedness permitted under clause (iv) of Section 8.2;
(v) Investments existing on the Closing Date and described on
Schedule 8.5;
(vi) Investments of the Borrower under Hedge Agreements required
pursuant to, and entered into in accordance with, Section 6.8;
(vii) Investments consisting of the making of capital contributions
or the purchase of Capital Stock (a) by the Borrower or any Subsidiary in
any other Wholly Owned Subsidiary that is (or immediately after giving
effect to such Investment will be) a Subsidiary, provided that the Borrower
--------
complies with the provisions of Section 6.10, and (b) by any Subsidiary in
the Borrower; and
(viii) Permitted Acquisitions.
(b) Neither the Borrower nor any of its Subsidiaries will enter into any
LMA or incur any LMA Obligations (except for LMAs pursuant to Permitted LMA
Agreements and except for any other LMAs involving aggregate consideration,
other payments or the incurrence or assumption of liabilities not to exceed
$25,000,000 at any time) without, in either case, the prior written approval of
the Required Lenders (which approval shall not be unreasonably withheld).
8.6. Restricted Payments. (a) The Borrower will not, and will not
-------------------
permit or cause any of its Subsidiaries to, directly or indirectly, declare or
make any dividend payment, or make any other distribution of cash, property or
assets, in respect of any of its Capital Stock or any warrants, rights or
options to acquire its Capital Stock, or purchase, redeem, retire or otherwise
acquire for value any shares of its Capital Stock or any warrants, rights or
options to acquire its Capital Stock, or set aside funds for any of the
foregoing, except that:
72
<PAGE>
(i) the Borrower may declare and make dividend payments or other
distributions payable solely in its common stock;
(ii) each Wholly Owned Subsidiary of the Borrower may declare and
make dividend payments or other distributions to the Borrower or another
Wholly Owned Subsidiary of the Borrower, to the extent not prohibited under
applicable Requirements of Law; and
(iii) the Borrower may declare and make cash dividend payments in
respect of its Capital Stock in an aggregate amount, over the term of this
Agreement, not to exceed the sum of $4,500,000, plus 25% of the Borrower's
cumulative Excess Cash Flow, if any, for each fiscal year of the Borrower
beginning with its fiscal year ending December 31, 1999 as long as no Event
of Default exists as of the time of payment or would result therefrom
(provided, that no such cash dividend payment shall be made prior to the
---------
delivery by the Borrower of the certification of Excess Cash Flow pursuant
to Section 2.6(g) hereof).
(b) The Borrower will not, and will not permit or cause any of its
Subsidiaries to, make (or give any notice in respect of) any voluntary or
optional payment or prepayment of principal on any Subordinated Indebtedness, or
directly or indirectly make any redemption (including pursuant to any change of
control provision), retirement, defeasance or other acquisition for value of any
Subordinated Indebtedness, or make any deposit or otherwise set aside funds for
any of the foregoing purposes.
8.7. Transactions with Affiliates. The Borrower will not, and will
----------------------------
not permit or cause any of its Subsidiaries to, enter into any transaction
(including, without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service) with any officer, director,
stockholder or other Affiliate of the Borrower or any Subsidiary, except in the
ordinary course of its business and upon fair and reasonable terms that are no
less favorable to it than would obtain in a comparable arm's length transaction
with a Person other than an Affiliate of the Borrower or such Subsidiary;
provided, however, that nothing contained in this Section shall prohibit:
- -------- -------
(i) transactions described on Schedule 8.7 or otherwise expressly
permitted under this Agreement; and
(ii) the payment by the Borrower of reasonable and customary fees
to members of its board of directors.
8.8. Lines of Business. The Borrower will not, and will not permit or
-----------------
cause any of its Subsidiaries to, engage in any business other than the
businesses engaged in by it on the date hereof and businesses and activities
reasonably related thereto.
8.9. Certain Amendments. The Borrower will not, and will not permit or
------------------
cause any of its Subsidiaries to, (i) amend, modify or waive, or permit the
amendment, modification or waiver of, any provision of any agreement or
instrument evidencing or governing any Subordinated Indebtedness (including
without limitation the Existing Subordinated Indebtedness), the effect of which
would be to (a) increase the principal amount due thereunder, (b) shorten or
accelerate the time of payment of any amount due thereunder, (c) increase the
applicable interest rate or amount of any fees or costs due thereunder, (d)
amend any of the subordination provisions thereunder (including any of the
definitions relating thereto), (e) make any covenant therein more restrictive or
add any new covenant, or (f) otherwise materially and adversely affect the
Lenders, or breach or otherwise violate any of the
73
<PAGE>
subordination provisions applicable thereto, including, without limitation,
restrictions against payment of principal and interest thereon, (ii) amend,
modify or change any provision of its articles or certificate of incorporation
or bylaws, or the terms of any class or series of its Capital Stock, other than
in a manner that could not reasonably be expected to adversely affect the
Lenders, or (iv) amend, modify or change any provision of any Permitted LMA
Agreement other than in a manner that could not reasonably be expected to
adversely affect the Lenders.
8.10. Limitation on Certain Restrictions. The Borrower will not, and
----------------------------------
will not permit or cause any of its Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any restriction
or encumbrance on (i) the ability of the Borrower and its Subsidiaries to
perform and comply with their respective obligations under the Credit Documents
or (ii) the ability of any Subsidiary of the Borrower to make any dividend
payments or other distributions in respect of its Capital Stock, to repay
Indebtedness owed to the Borrower or any other Subsidiary, to make loans or
advances to the Borrower or any other Subsidiary, or to transfer any of its
assets or properties to the Borrower or any other Subsidiary, in each case other
than such restrictions or encumbrances existing under or by reason of applicable
Requirements of Law.
8.11. No Other Negative Pledges. The Borrower will not, and will not
-------------------------
permit or cause any of its Subsidiaries to, directly or indirectly, enter into
or suffer to exist any agreement or restriction that prohibits or conditions the
creation, incurrence or assumption of any Lien upon or with respect to any part
of its property or assets, whether now owned or hereafter acquired, or agree to
do any of the foregoing, other than as set forth in (i) this Agreement and the
Security Documents, (ii) any agreement or instrument creating a Permitted Lien
(but only to the extent such agreement or restriction applies to the assets
subject to such Permitted Lien), and (iii) operating leases of real or personal
property entered into by the Borrower or any of its Subsidiaries as lessee in
the ordinary course of business.
8.12. Fiscal Year. The Borrower will not, and will not permit or
-----------
cause any of its Subsidiaries to, change the ending date of its fiscal year to a
date other than December 31.
8.13. Accounting Changes. The Borrower will not, and will not permit
------------------
or cause any of its Subsidiaries to, make or permit any material change in its
accounting policies or reporting practices, except as may be required by GAAP.
8.14 Waiver of Stay, Extension or Usury Laws. The Borrower 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 Borrower from paying all or any portion of the principal of or
interest on the Obligations as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the Obligations or the
performance hereunder; and (to the extent that it may lawfully do so) the
Borrower 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 Administrative Agent or the Lenders, but will suffer and
permit the execution of every such power as though no such law had been enacted.
8.15 Limitation on Preferred Stock of Subsidiaries. The Borrower
---------------------------------------------
shall not permit any of its Subsidiaries to issue any Preferred Stock (other
than to the Borrower or to a Wholly-Owned Subsidiary of the Borrower) or permit
any Person (other than the Borrower or a Wholly-Owned Subsidiary of the
Borrower) 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 Borrower or
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merges with the Borrower or any of its Subsidiaries, and after giving effect to
such transaction, the Borrower shall be able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
7.1(a)).
8.16 Certain Restrictions. Notwithstanding any other provision herein to
--------------------
the contrary, until the FHS Covenant Calculation Date (as defined in the
definition of "Consolidated EBITDA"), if any:
(a) the Borrower will not, and will not permit any Subsidiary to, make any
Investment of cash or Cash Equivalents in FHS (or AK Media Group, to
the extent the proceeds thereof are to be used by FHS); and
(b) the Borrower will not permit FHS (or AK Media Group, Inc. on its
behalf) to:
(i) incur, or enter into any agreement with respect to the
incurrence, of any Indebtedness (other than any Indebtedness
(excluding any refinancings thereof) in existence as of the date
hereof as set forth on Schedule 8.16 or Indebtedness in the form
of the Subsidiary Guaranty required hereunder or any subsidiary
guarantee in respect of the Indenture, dated as of December 14,
1998, providing for the issuance of the Borrower's 9.00% Senior
Subordinated Notes due January 15, 2009) or grant any Liens to
secure any Indebtedness;
(ii) merge with any other Person or sell, assign, transfer or
otherwise dispose of any of its assets (except for the sale or
exchange of used or obsolete equipment to the extent (y) the
proceeds of such sale are applied towards, or such equipment is
exchanged for, replacement equipment or (z) such equipment is no
longer necessary for the operations of the such Subsidiary in
the ordinary course of business); and
(iii) make any Investments in or Acquisitions of or enter into any
joint ventures or similar transactions with any other Persons
other than as required by the NBA.
ARTICLE IX
EVENTS OF DEFAULT
9.1. Events of Default. The occurrence of any one or more of the
-----------------
following events shall constitute an "Event of Default":
(a) The Borrower shall fail to pay any principal of any Loan, any
Reimbursement Obligation, any fee or any other Obligation when due or any
interest in respect of any Loan within five (5) Business Days after the date on
which such interest is due;
(b) The Borrower shall fail to observe, perform or comply with any
condition, covenant or agreement contained in any of Sections 2.14, 6.1, 6.2,
6.3(i), 6.8, 6.9, 6.10 or in Article VII or Article VIII;
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(c) The Borrower or any of its Subsidiaries shall fail to observe,
perform or comply with any condition, covenant or agreement contained in this
Agreement or any of the Credit Documents other than those enumerated in
subsections (a) and (b) above, and such failure (i) is deemed by the terms of
the relevant Credit Document to constitute an Event of Default and (ii) shall
continue unremedied for any grace period specifically applicable thereto or, if
no such grace period is applicable, for a period of thirty (30) days after the
earlier of (y) the date on which a Responsible Officer of the Borrower acquires
knowledge thereof and (z) the date on which written notice thereof is delivered
by the Administrative Agent or any Lender to the Borrower;
(d) There shall occur a "Default" under the Monterey Credit Agreement
or the Utica Credit Agreement.
(e) Any representation or warranty made or deemed made by or on behalf
of the Borrower or any of its Subsidiaries in this Agreement, any of the other
Credit Documents or in any certificate, instrument, report or other document
furnished in connection herewith or therewith or in connection with the
transactions contemplated hereby or thereby shall prove to have been false or
misleading in any material respect as of the time made, deemed made or
furnished;
(f) The Borrower or any of its Subsidiaries shall (i) fail to pay when
due (whether by scheduled maturity, acceleration or otherwise and after giving
effect to any applicable grace period) any principal of or interest on any
Funded Debt (other than the Funded Debt incurred pursuant to this Agreement)
having an aggregate principal amount of at least $1,000,000 or other
Indebtedness having an aggregate principal amount of at least $2,000,000, or
(ii) fail to observe, perform or comply with any condition, covenant or
agreement contained in any agreement or instrument evidencing or relating to any
such Funded Debt or Indebtedness, or any other event shall occur or condition
exist in respect thereof, and the effect of such failure, event or condition is
to cause, or permit the holder or holders of such Indebtedness (or a trustee or
Administrative Agent on its or their behalf) to cause (with the giving of
notice, lapse of time, or both), such Indebtedness to become due, or to be
prepaid, redeemed, purchased or defeased, prior to its stated maturity;
(g) The Borrower or any of its Subsidiaries shall (i) file a voluntary
petition or commence a voluntary case seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts or any other
relief under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to controvert in a timely and appropriate manner, any
petition or case of the type described in subsection (g) below, (iii) apply for
or consent to the appointment of or taking possession by a custodian, trustee,
receiver or similar official for or of itself or all or a substantial part of
its properties or assets, (iv) fail generally, or admit in writing its
inability, to pay its debts generally as they become due, (v) make a general
assignment for the benefit of creditors or (vi) take any corporate action to
authorize or approve any of the foregoing;
(h) Any involuntary petition or case shall be filed or commenced
against the Borrower or any of its Subsidiaries seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts, the appointment
of a custodian, trustee, receiver or similar official for it or all or a
substantial part of its properties or any other relief under the Bankruptcy Code
or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, and such petition or case shall continue undismissed and
unstayed for a period of sixty (60) days; or an order, judgment or decree
approving or ordering any of the foregoing shall be entered in any such
proceeding;
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(i) Any one or more money judgments, writs or warrants of attachment,
executions or similar processes involving an aggregate amount (exclusive of
amounts fully bonded or covered by insurance as to which the surety or insurer,
as the case may be, has acknowledged its liability in writing) in excess of
$5,000,000 shall be entered or filed against the Borrower or any of its
Subsidiaries or any of their respective properties and the same shall not be
dismissed, stayed or discharged for a period of thirty (30) days or in any event
later than five days prior to the date of any proposed sale thereunder;
(j) Any Security Document to which the Borrower or any of its
Subsidiaries is now or hereafter a party shall for any reason cease to be in
full force and effect or cease to be effective to give the Administrative Agent
a valid and perfected security interest in and Lien upon the Collateral
purported to be covered thereby, subject to no Liens other than Permitted Liens,
in each case unless any such cessation occurs in accordance with the terms
thereof or is due to any act or failure to act on the part of the Administrative
Agent or any Lender; or the Borrower or any such Subsidiary shall assert any of
the foregoing or any Subsidiary of the Borrower or any Person acting on behalf
of any such Subsidiary shall deny or disaffirm such Subsidiary's obligations
under the Subsidiary Guaranty (after such Subsidiary Guaranty is required to
have been executed and delivered pursuant to Section 6.11(a));
(k) Any ERISA Event shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result thereof, together with all other ERISA
Events then existing, the Borrower and its ERISA Affiliates have incurred or
would be reasonably likely to incur liability to any one or more Plans or
Multiemployer Plans or to the PBGC (or to any combination thereof) in excess of
$1,000,000;
(l) The Borrower or any Subsidiary (a "Credit Party") shall lose, fail
to keep in force, suffer the termination, suspension or revocation of or
terminate, forfeit or suffer an amendment to any license at any time held by it,
the loss, termination, suspension or revocation of which could have a Material
Adverse Effect; any Governmental Authority shall conduct a hearing on the
renewal of any license (with respect to basic qualification issues) held by a
Credit Party, and there shall have been designated against the Credit Party an
issue as to whether such Credit Party possesses the minimum qualifications
required to hold a broadcast license and the Required Lenders reasonably believe
that the result thereof is likely to be the termination, revocation, suspension
or material adverse amendment of such license (it being understood that the
filing of a petition to deny the renewal of any FCC License shall not be
sufficient to invoke the Lenders' rights pursuant to this paragraph); or any
Governmental Authority shall commence an action or proceeding seeking the
termination, suspension, revocation or material adverse amendment of any license
held by any Credit Party, and the result thereof, in the reasonable opinion of
the Required Lenders, is likely to be the termination, suspension, revocation or
material adverse amendment of such license that would have a Material Adverse
Effect;
(m) Any one or more Environmental Claims shall have been asserted
against the Borrower or any of its Subsidiaries (or a reasonable basis shall
exist therefor); the Borrower and its Subsidiaries have incurred or would be
reasonably likely to incur liability as a result thereof; and such liability has
or would be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect; and
(n) The failure of the Ackerley Family to own, of record and
beneficially, with full power to vote, at least 51% of the voting stock of the
Borrower. As used herein, "Ackerley Family" means (i) Barry A. Ackerley and the
spouse and lineal descendants of Barry A. Ackerley, whether by blood or
adoption, (ii) any trusts for the exclusive benefit of the individuals referred
to in clause (i) above or the executor or administrator of the estate of or
other legal representative of the individuals referred to in clause (i) above,
and (iii) any other Person, at least a majority of the outstanding voting stock
of which is owned, of record and beneficially, by any of the Persons referred to
in clause (i) or (ii) above.
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9.2. Remedies: Termination of Commitments, Acceleration, etc. Upon
-------------------------------------------------------
and at any time after the occurrence and during the continuance of any Event of
Default, the Administrative Agent shall at the direction, or may with the
consent, of the Required Lenders, take any or all of the following actions at
the same or different times:
(a) Declare the Commitments and the Issuing Lender's obligation to
issue Letters of Credit, to be terminated, whereupon the same shall terminate
(provided that, upon the occurrence of an Event of Default pursuant to Section
- ---------
9.1(g) or Section 9.1(h), the Commitments and the Issuing Lender's obligation to
issue Letters of Credit shall automatically be terminated);
(b) Declare all or any part of the outstanding principal amount of the
Loans to be immediately due and payable, whereupon the principal amount so
declared to be immediately due and payable, together with all interest accrued
thereon and all other amounts payable under this Agreement, the Notes and the
other Credit Documents, shall become immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice or
legal process of any kind, all of which are hereby knowingly and expressly
waived by the Borrower (provided that, upon the occurrence of an Event of
--------
Default pursuant to Section 9.1(g) or Section 9.1(h), all of the outstanding
principal amount of the Loans and all other amounts described in this subsection
(b) shall automatically become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process
of any kind, all of which are hereby knowingly and expressly waived by the
Borrower);
(c) Direct the Borrower to deposit (and the Borrower hereby agrees,
forthwith upon receipt of notice of such direction from the Administrative
Agent, to deposit) with the Administrative Agent from time to time such
additional amount of cash as is equal to the aggregate Stated Amount of all
Letters of Credit then outstanding (whether or not any beneficiary under any
Letter of Credit shall have drawn or be entitled at such time to draw
thereunder), such amount to be held by the Administrative Agent in the Cash
Collateral Account as security for the Letter of Credit Exposure as described in
Section 3.8; and
(d) Exercise all rights and remedies available to it under this
Agreement, the other Credit Documents and applicable law.
To enforce the provisions of this Section 9.2, the Administrative
Agent is empowered to seek from the FCC and any other Governmental Authority, to
the extent required, consent to or approval of an involuntary transfer of
control of the Borrower or any of its Subsidiaries for the purpose of seeking a
bona fide purchaser to whom control will ultimately be transferred. The
Borrower hereby agrees to authorize and to cause its Subsidiaries to authorize
such an involuntary transfer of control upon the request of the Administrative
Agent after and during the continuation of an Event of Default and, without
limiting any rights of the Administrative Agent under this Agreement, authorize
the Administrative Agent to nominate a trustee or receiver to assume control,
subject only to any required judicial, FCC and other Governmental Authority
consent, in order to effectuate the transactions contemplated hereby. Such
trustee or receiver shall have all the rights and powers as provided to it by
law, court order or to the Administrative Agent under this Agreement. The
Borrower shall cooperate fully and cause its Subsidiaries to cooperate fully in
obtaining the consent of the FCC and the approval or consent of each other
Governmental Authority required to effectuate the foregoing. The Borrower shall
further use its best efforts, and will cause its Subsidiaries to use their best
efforts, to assist in obtaining consent or approval of the FCC and any other
Governmental Authority, if required, for any action or transactions
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contemplated by this Agreement including, without limitation, the preparation,
execution and filing with the FCC of the transferor's portion of any application
or applications for consent to the transfer of control necessary or appropriate
under the FCC's rules and regulations for approval of the transfer or assignment
of any portion of the Collateral. If the Borrower fails to execute or cause the
execution of such applications, requests for consent or other instruments, the
clerk of any court that has jurisdiction over the Credit Documents may execute
and file the same on behalf of the Borrower or its Subsidiaries.
9.3. Remedies: Set-Off. Subject to Section 2.15(b), in addition to
-----------------
all other rights and remedies available under the Credit Documents or applicable
law or otherwise, upon and at any time after the occurrence and during the
continuance of any Event of Default, each Lender may, and each is hereby
authorized by the Borrower, at any such time and from time to time, to the
fullest extent permitted by applicable law, without presentment, demand, protest
or other notice of any kind, all of which are hereby knowingly and expressly
waived by the Borrower, to set off and to apply any and all deposits (general or
special, time or demand, provisional or final) and any other property at any
time held (including at any branches or agencies, wherever located), and any
other indebtedness at any time owing, by such Lender to or for the credit or the
account of the Borrower against any or all of the Obligations to such Lender now
or hereafter existing, whether or not such Obligations may be contingent or
unmatured, the Borrower hereby granting to each Lender a continuing security
interest in and Lien upon all such deposits and other property as security for
such Obligations. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application; provided, however,
-------- -------
that the failure to give such notice shall not affect the validity of such set-
off and application.
ARTICLE X
THE ADMINISTRATIVE AGENT
10.1. Appointment. Each Lender hereby irrevocably appoints and
-----------
authorizes First Union to act as Administrative Agent hereunder and under the
other Credit Documents and to take such actions as Administrative Agent on its
behalf hereunder and under the other Credit Documents, and to exercise such
powers and to perform such duties, as are specifically delegated to the
Administrative Agent by the terms hereof or thereof, together with such other
powers and duties as are reasonably incidental thereto.
10.2. Nature of Duties. The Administrative Agent shall have no
----------------
duties or responsibilities other than those expressly set forth in this
Agreement and the other Credit Documents. The Administrative Agent shall not
have, by reason of this Agreement or any other Credit Document, a fiduciary
relationship in respect of any Lender; and nothing in this Agreement or any
other Credit Document, express or implied, is intended to or shall be so
construed as to impose upon the Administrative Agent any obligations or
liabilities in respect of this Agreement or any other Credit Document except as
expressly set forth herein or therein. The Administrative Agent may execute any
of its duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact that it selects with reasonable
care. The Administrative Agent shall be entitled to consult with legal counsel,
independent public accountants and other experts selected by it with respect to
all matters pertaining to this Agreement and the other Credit Documents and its
duties hereunder and thereunder and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts. The Lenders hereby acknowledge that the
Administrative Agent shall not be under any duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
or any other Credit Document unless it shall be requested in writing to do
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so by the Required Lenders (or, where a higher percentage of the Lenders is
expressly required hereunder, such Lenders).
10.3. Exculpatory Provisions. Neither the Administrative Agent nor
----------------------
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action taken or omitted to be taken by it
or such Person under or in connection with the Credit Documents, except for its
or such Person's own gross negligence or willful misconduct, (ii) responsible in
any manner to any Lender for any recitals, statements, information,
representations or warranties herein or in any other Credit Document or in any
document, instrument, certificate, report or other writing delivered in
connection herewith or therewith, for the execution, effectiveness, genuineness,
validity, enforceability or sufficiency of this Agreement or any other Credit
Document, or for the financial condition of the Borrower, its Subsidiaries or
any other Person, or (iii) required to ascertain or make any inquiry concerning
the performance or observance of any of the terms, provisions or conditions of
this Agreement or any other Credit Document or the existence or possible
existence of any Default or Event of Default, or to inspect the properties,
books or records of the Borrower or any of its Subsidiaries.
10.4. Reliance by Administrative Agent. The Administrative Agent
--------------------------------
shall be entitled to rely, and shall be fully protected in relying, upon any
notice, statement, consent or other communication (including, without
limitation, any thereof by telephone, telecopy, telex, telegram or cable)
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons. The Administrative Agent may deem
and treat each Lender as the owner of its interest hereunder for all purposes
hereof unless and until a written notice of the assignment, negotiation or
transfer thereof shall have been given to the Administrative Agent in accordance
with the provisions of this Agreement. The Administrative Agent shall be
entitled to refrain from taking or omitting to take any action in connection
with this Agreement or any other Credit Document (i) if such action or omission
would, in the reasonable opinion of the Administrative Agent, violate any
applicable law or any provision of this Agreement or any other Credit Document
or (ii) unless and until it shall have received such advice or concurrence of
the Required Lenders (or, where a higher percentage of the Lenders is expressly
required hereunder, such Lenders) as it deems appropriate or it shall first have
been indemnified to its satisfaction by the Lenders against any and all
liability and expense (other than liability and expense arising from its own
gross negligence or willful misconduct) that may be incurred by it by reason of
taking, continuing to take or omitting to take any such action. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against the Administrative Agent as a result of the Administrative Agent's
acting or refraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Lenders (or, where a higher
percentage of the Lenders is expressly required hereunder, such Lenders), and
such instructions and any action taken or failure to act pursuant thereto shall
be binding upon all of the Lenders (including all subsequent Lenders).
10.5. Non-Reliance on Administrative Agent and Other Lenders. Each
------------------------------------------------------
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representation or warranty to it and that no act by the Administrative
Agent or any such Person hereinafter taken, including any review of the affairs
of the Borrower and its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that (i) it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
properties, financial and other condition and creditworthiness of the Borrower
and its Subsidiaries and made its own decision to enter into this
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Agreement and extend credit to the Borrower hereunder, and (ii) it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action hereunder and under the other Credit Documents
and to make such investigation as it deems necessary to inform itself as to the
business, prospects, operations, properties, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries. Except as expressly
provided in this Agreement and the other Credit Documents, the Administrative
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information concerning the
business, prospects, operations, properties, financial or other condition or
creditworthiness of the Borrower, its Subsidiaries or any other Person that may
at any time come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
10.6. Notice of Default. The Administrative Agent shall not be
-----------------
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Administrative Agent shall have received written notice from
the Borrower or a Lender referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default." In the
event that the Administrative Agent receives such a notice, the Administrative
Agent will give notice thereof to the Lenders as soon as reasonably practicable;
provided, however, that if any such notice has also been furnished to the
- -------- -------
Lenders, the Administrative Agent shall have no obligation to notify the Lenders
with respect thereto. The Administrative Agent shall (subject to Sections 10.4
and 11.6) take such action with respect to such Default or Event of Default as
shall reasonably be directed by the Required Lenders; provided that, unless and
--------
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders except
to the extent that this Agreement expressly requires that such action be taken,
or not be taken, only with the consent or upon the authorization of the Required
Lenders or all of the Lenders.
10.7. Indemnification. To the extent the Administrative Agent is not
---------------
reimbursed by or on behalf of the Borrower, and without limiting the obligation
of the Borrower to do so, the Lenders agree (i) to indemnify the Administrative
Agent and its officers, directors, employees, agents, attorneys-in-fact and
Affiliates, ratably in proportion to their respective percentages as used in
determining the Required Lenders as of the date of determination, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
attorneys' fees and expenses) or disbursements of any kind or nature whatsoever
that may at any time (including, without limitation, at any time following the
repayment in full of the Loans and the termination of the Commitments) be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any other Credit Document or any
documents contemplated by or referred to herein or the transactions contemplated
hereby or thereby or any action taken or omitted by the Administrative Agent
under or in connection with any of the foregoing, and (ii) to reimburse the
Administrative Agent upon demand, ratably in proportion to their respective
percentages as used in determining the Required Lenders as of the date of
determination, for any expenses incurred by the Administrative Agent in
connection with the preparation, negotiation, execution, delivery,
administration, amendment, modification, waiver or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any of the other Credit
Documents (including, without limitation, reasonable attorneys' fees and
expenses and compensation of agents paid for services rendered on behalf of the
Lenders); provided, however, that no Lender shall be liable for any portion of
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such liabilities,
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obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent resulting from the gross negligence or
willful misconduct of the party to be indemnified.
10.8. The Administrative Agent in its Individual Capacity. With
---------------------------------------------------
respect to its Commitment, the Loans made by it, the Letters of Credit issued or
participated in by it and the Note or Notes issued to it, the Administrative
Agent in its individual capacity and not as Administrative Agent shall have the
same rights and powers under the Credit Documents as any other Lender and may
exercise the same as though it were not performing the agency duties specified
herein; and the terms "Lenders," "Required Lenders," "holders of Notes" and any
similar terms shall, unless the context clearly otherwise indicates, include the
Administrative Agent in its individual capacity. The Administrative Agent and
its Affiliates may accept deposits from, lend money to, make investments in, and
generally engage in any kind of banking, trust, financial advisory or other
business with the Borrower, any of its Subsidiaries or any of their respective
Affiliates as if the Administrative Agent were not performing the agency duties
specified herein, and may accept fees and other consideration from any of them
for services in connection with this Agreement and otherwise without having to
account for the same to the Lenders.
10.9. Successor Administrative Agent. The Administrative Agent may
------------------------------
resign at any time by giving ten (10) days' prior written notice to the Borrower
and the Lenders. Upon any such notice of resignation, the Required Lenders
will, with the prior written consent of the Borrower (which consent shall not be
unreasonably withheld), appoint from among the Lenders a successor to the
Administrative Agent (provided that the Borrower's consent shall not be required
--------
in the event a Default or Event of Default shall have occurred and be
continuing). If no successor to the Administrative Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within such ten-day period, then the retiring Administrative Agent may, on
behalf of the Lenders and after consulting with the Lenders and the Borrower,
appoint a successor Administrative Agent from among the Lenders. Upon the
acceptance of any appointment as Administrative Agent by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder and under the
other Credit Documents. After any retiring Administrative Agent's resignation
as Administrative Agent, the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent. If no successor to the Administrative Agent has accepted
appointment as Administrative Agent by the thirtieth (30th) day following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall thereafter perform all of the duties of the
Administrative Agent hereunder and under the other Credit Documents until such
time, if any, as the Required Lenders appoint a successor Administrative Agent
as provided for hereinabove.
10.10. Collateral Matters. (a) The Administrative Agent is hereby
------------------
authorized on behalf of the Lenders, without the necessity of any notice to or
further consent from the Lenders, from time to time (but without any obligation)
to take any action with respect to the Collateral and the Security Documents
that may be necessary to perfect and maintain perfected the Liens upon the
Collateral granted pursuant to the Security Documents.
(b) The Lenders hereby authorize the Administrative Agent, at its
option and in its discretion, to release any Lien granted to or held by the
Administrative Agent upon any Collateral (i) upon termination of the
Commitments, termination or expiration of all outstanding Letters of Credit and
payment in full of all of the Obligations, (ii) constituting property sold or to
be sold or disposed of as part of or in connection with any disposition
expressly permitted hereunder or under any other Credit
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Document or to which the Required Lenders have consented or (iii) otherwise
pursuant to and in accordance with the provisions of any applicable Credit
Document. Upon request by the Administrative Agent at any time, the Lenders will
confirm in writing the Administrative Agent's authority to release Collateral
pursuant to this subsection (b).
10.11. Issuing Lender. The provisions of this Article (other than
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Section 10.9) shall apply to the Issuing Lender mutatis mutandis to the same
------- --------
extent as such provisions apply to the Administrative Agent.
10.12. Other Agents. Neither the Documentation Agent nor any of the
------------
Co-Agents named herein shall have any additional administrative duties hereunder
by virtue of such titles, and such titles are nominal in nature.
ARTICLE XI
MISCELLANEOUS
11.1. Fees and Expenses. The Borrower agrees (i) whether or not the
-----------------
transactions contemplated by this Agreement shall be consummated, to pay upon
demand all reasonable out-of-pocket costs and expenses of the Administrative
Agent (including, without limitation, the reasonable fees and expenses of
counsel to the Administrative Agent) in connection with (w) the Administrative
Agent's due diligence investigation in connection with, and the preparation,
negotiation, execution, delivery and syndication of, this Agreement and the
other Credit Documents, and any amendment, modification or waiver hereof or
thereof or consent with respect hereto or thereto, (x) the administration,
monitoring and review of the Loans and the Collateral (including, without
limitation, out-of-pocket expenses for travel, meals, long-distance telephone
calls, wire transfers, facsimile transmissions and copying and with respect to
the engagement of appraisers, consultants, auditors or similar Persons by the
Administrative Agent at any time, whether before or after the Closing, to render
opinions concerning the Borrower's financial condition and the value of the
Collateral), (y) any attempt to inspect, verify, protect, collect, sell,
liquidate or otherwise dispose of any Collateral and (z) the creation,
perfection and maintenance of the perfection of the Administrative Agent's Liens
upon the Collateral, including, without limitation, Lien search, filing and
recording fees, (ii) to pay upon demand all reasonable out-of-pocket costs and
expenses of the Administrative Agent and each Lender (including, without
limitation, reasonable attorneys' fees and expenses) in connection with (y) any
refinancing or restructuring of the credit arrangement provided under this
Agreement, whether in the nature of a "work-out," in any insolvency or
bankruptcy proceeding or otherwise and whether or not consummated, and (z) the
enforcement, attempted enforcement or preservation of any rights or remedies
under this Agreement or any of the other Credit Documents, whether in any
action, suit or proceeding (including any bankruptcy or insolvency proceeding)
or otherwise, and (iii) to pay and hold the Administrative Agent and each Lender
harmless from and against all liability for any intangibles, documentary, stamp
or other similar taxes, fees and excises, if any, including any interest and
penalties, and any finder's or brokerage fees, commissions and expenses (other
than any fees, commissions or expenses of finders or brokers engaged by the
Administrative Agent or any Lender), that may be payable in connection with the
transactions contemplated by this Agreement and the other Credit Documents.
11.2. Indemnification. The Borrower agrees, whether or not the
---------------
transactions contemplated by this Agreement shall be consummated, to indemnify
and hold the Administrative Agent, each Lender and their respective Affiliates
and each of their respective directors, officers, employees, and agents (each,
an
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"Indemnified Person") harmless from and against any and all claims, losses,
damages, obligations, liabilities, penalties, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) of any kind or
nature whatsoever, whether direct, indirect or consequential (collectively,
"Indemnified Costs"), that may at any time be imposed on, incurred by or
asserted against any such Indemnified Person as a result of, arising from or in
any way relating to the preparation, execution, performance or enforcement of
this Agreement or any of the other Credit Documents, any of the transactions
contemplated herein or therein or any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of any Loans or
Letters of Credit (including, without limitation, in connection with the actual
or alleged generation, presence, discharge or release of any Hazardous
Substances on, into or from, or the transportation of Hazardous Substances to or
from, any real property at any time owned or leased by the Borrower or any of
its Subsidiaries, any other Environmental Claims or any violation of or
liability under any Environmental Law), or any action, suit or proceeding
(including any inquiry or investigation) by any Person, whether threatened or
initiated, related to any of the foregoing, and in any case whether or not such
Indemnified Person is a party to any such action, proceeding or suit or a
subject of any such inquiry or investigation; provided, however, that no
-------- -------
Indemnified Person shall have the right to be indemnified hereunder for any
Indemnified Costs to the extent resulting from the gross negligence or willful
misconduct of such Indemnified Person. All of the foregoing Indemnified Costs
of any Indemnified Person shall be paid or reimbursed by the Borrower, as and
when incurred and upon demand.
11.3. Governing Law; Consent to Jurisdiction. THIS AGREEMENT AND THE
--------------------------------------
OTHER CREDIT DOCUMENTS HAVE BEEN EXECUTED, DELIVERED AND ACCEPTED IN, AND SHALL
BE DEEMED TO HAVE BEEN MADE IN, NORTH CAROLINA AND SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA (WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF); PROVIDED
--------
THAT EACH LETTER OF CREDIT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT OR, IF NO
SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICES FOR
DOCUMENTARY CREDITS, INTERNATIONAL CHAMBER OF COMMERCE, AS IN EFFECT FROM TIME
TO TIME (THE "UNIFORM CUSTOMS"), OR, IN RESPECT OF STANDBY LETTERS OF CREDIT,
THE INTERNATIONAL STANDBY PRACTICES RULES ("ISP98"), AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS OR ISP98, THE LAWS OF THE STATE OF NORTH
CAROLINA (WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF). THE
BORROWER HEREBY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE COURT
WITHIN MECKLENBURG COUNTY, NORTH CAROLINA OR ANY FEDERAL COURT LOCATED WITHIN
THE WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA FOR ANY PROCEEDING
INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS, OR ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS, OR
ANY PROCEEDING TO WHICH THE ADMINISTRATIVE AGENT OR ANY LENDER OR THE BORROWER
IS A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION
WITH ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY LENDER OR THE BORROWER.
THE BORROWER IRREVOCABLY AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF
APPEAL) BY ANY JUDGMENT RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES
ANY OBJECTION THAT IT MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE
OR FORUM NON
---------
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CONVENIENS TO THE CONDUCT OF ANY SUCH PROCEEDING. THE BORROWER CONSENTS THAT
- -----------
ALL SERVICE OF PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO IT AT
ITS ADDRESS SET FORTH HEREINBELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY
ADDRESSED. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT OR ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION.
11.4. Arbitration; Preservation and Limitation of Remedies. (a)
----------------------------------------------------
Upon demand of any party hereto, whether made before or after institution of any
judicial proceeding, any dispute, claim or controversy arising out of, connected
with or relating to this Agreement or any other Credit Document ("Disputes")
between or among the Borrower, its Subsidiaries, the Administrative Agent and
the Lenders, or any of them, shall be resolved by binding arbitration as
provided herein. Institution of a judicial proceeding by a party does not waive
the right of that party to demand arbitration hereunder. Disputes may include,
without limitation, tort claims, counterclaims, claims brought as class actions,
claims arising from documents executed in the future, Disputes as to whether a
matter is subject to arbitration, or claims arising out of or connected with the
transactions contemplated by this Agreement and the other Credit Documents.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA"), as in effect from time to time, and the Federal
Arbitration Act, Title 9 of the U.S. Code, as amended. All arbitration hearings
shall be conducted in the city in which the principal office of the
Administrative Agent is located. A hearing shall be held within ninety (90)
days of demand for arbitration and all hearings shall be concluded within one
hundred twenty (120) days of demand for arbitration. These time limitations may
not be extended unless a party shows cause for extension and then no more than a
total of sixty (60) days. The expedited procedures set forth in Rule 51 et seq.
-- ---
of the Arbitration Rules shall be applicable to claims of less than $1,000,000.
All applicable statutes of limitation shall apply to any Dispute. A judgment
upon the award may be entered in any court having jurisdiction. The panel from
which all arbitrators are selected shall be comprised of licensed attorneys
selected from the Commercial Financial Dispute Arbitration Panel of the AAA.
The single arbitrator selected for expedited procedure shall be a retired judge
from the highest court of general jurisdiction, state or federal, of the state
where the hearing will be conducted. Notwithstanding the foregoing, this
arbitration provision does not apply to Disputes under or related to Hedge
Agreements.
(b) Notwithstanding the preceding binding arbitration provisions, the
parties hereto agree to preserve, without diminution, certain remedies that any
party hereto may employ or exercise freely, either alone, in conjunction with or
during a Dispute. Any party hereto shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any Collateral by
exercising a power of sale granted pursuant to any of the Credit Documents or
under applicable law or by judicial foreclosure and sale, including a proceeding
to confirm the sale; (ii) all rights of self-help, including peaceful occupation
of real property and collection of rents, set-off, and peaceful possession of
personal property; (iii) obtaining provisional or ancillary remedies, including
injunctive relief, sequestration, garnishment, attachment, appointment of a
receiver and filing an involuntary bankruptcy proceeding; and (iv) when
applicable, a judgment by confession of judgment. Any claim or controversy with
regard to any party's entitlement to such remedies is a Dispute. Preservation
of these remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute. The parties hereto
agree that no
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party shall have a remedy of punitive or exemplary damages against any other
party in any Dispute, and each party hereby waives any right or claim to
punitive or exemplary damages that it has now or that may arise in the future in
connection with any Dispute, whether such Dispute is resolved by arbitration or
judicially.
The parties acknowledge that by agreeing to binding arbitration, they
have irrevocably waived any right they may have to a jury trial with regard to a
Dispute.
11.5. Notices. All notices and other communications provided for
-------
hereunder shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered to the party to be notified at the following
addresses:
(a) if to the Borrower, to 1301 Fifth Avenue, Suite 4000, Seattle,
Washington 98101, Attention: Denis M. Curley, Telecopy No. (206) 623-7853,
with a copy to Graham & Dunn PC, 1420 Fifth Avenue, Seattle, Washington 98101,
Attention: Carmen L. Smith, Telecopy No. (206) 340-9599;
(b) if to the Administrative Agent, to First Union National Bank, One
First Union Center, TW-10, 301 South College Street, Charlotte, North Carolina
28288-0608, Attention: Syndication Agency Services, Telecopy No. (704) 383-0288;
and
(c) if to any Lender, to it at the address set forth on its signature
page hereto (or if to any Lender not a party hereto as of the date hereof, at
the address set forth in its Assignment and Acceptance);
or in each case, to such other address as any party may designate for itself by
like notice to all other parties hereto. All such notices and communications
shall be deemed to have been given (i) if mailed as provided above by any method
other than overnight delivery service, on the third Business Day after deposit
in the mails, (ii) if mailed by overnight delivery service, telegraphed,
telexed, telecopied or cabled, when delivered for overnight delivery, delivered
to the telegraph company, confirmed by telex answerback, transmitted by
telecopier and confirmed in writing or telephonically by the recipient or
delivered to the cable company, respectively, or (iii) if delivered by hand,
upon delivery; provided that notices and communications to the Administrative
--------
Agent shall not be effective until received by the Administrative Agent.
11.6. Amendments, Waivers, etc. No amendment, modification, waiver
------------------------
or discharge or termination of, or consent to any departure by the Borrower
from, any provision of this Agreement or any other Credit Document, shall be
effective unless in a writing signed by the Required Lenders (or by the
Administrative Agent at the direction or with the consent of the Required
Lenders), and then the same shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no such
-------- -------
amendment, modification, waiver, discharge, termination or consent shall:
(a) unless agreed to by each Lender directly affected thereby, (i)
reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon, or reduce or forgive any fees or other Obligations
(other than fees payable to the Administrative Agent for its own account), (ii)
extend the Term Loan Maturity Date, the Revolving Credit Maturity Date or any
other date (including any scheduled date for a mandatory prepayment or the
mandatory reduction or termination of any Commitments) fixed for the payment of
any principal of or interest on any Loan (other than additional interest payable
under Section 2.8(b) at the election of the Required Lenders, as provided
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therein), any fees (other than fees payable to the Administrative Agent for its
own account) or any other Obligations or extend the expiry date of any Letter of
Credit beyond the seventh day prior to the Revolving Credit Maturity Date or
(iii) waive the closing conditions set forth in Section 4.2;
(b) unless agreed to by all of the Lenders, (i) increase or extend any
Commitment of any Lender (it being understood that a waiver of any Event of
Default, if agreed to by the requisite Lenders hereunder, shall not constitute
such an increase), (ii) change the percentage of the aggregate Commitments or of
the aggregate unpaid principal amount of the Loans, or the number or percentage
of Lenders, that shall be required for the Lenders or any of them to take or
approve, or direct the Administrative Agent to take, any action hereunder
(including as set forth in the definition of "Required Lenders"), (iii) except
as may be otherwise specifically provided in this Agreement or in any other
Credit Document, release all or substantially all of the Collateral or release
any guarantor from its guaranty obligations in respect of the Loans, or (iv)
change any provision of Section 2.15 or this Section; and
(c) unless agreed to by the Issuing Lender or the Administrative Agent
in addition to the Lenders required as provided hereinabove to take such action,
affect the respective rights or obligations of the Issuing Lender or the
Administrative Agent, as applicable, hereunder or under any of the other Credit
Documents;
and provided further that (i) if any amendment, modification, waiver or consent
-------- -------
would adversely affect the holders of Loans of a particular Class (the "affected
Class") relative to holders of Loans of any other Class (including, without
limitation, by way of reducing the relative proportion of any payments,
prepayments or Commitment reductions to be applied for the benefit of holders of
Loans of the affected Class under Sections 2.6(d) through 2.6(h)), then such
amendment, modification, waiver or consent shall require the consent of Lenders
holding fifty-one percent (51%) or more of the aggregate outstanding principal
amount of all Loans of the affected Class, and (ii) the Fee Letter and any Hedge
Agreement to which any Lender (or such Lender's Affiliate) is a party may be
amended or modified, and any rights thereunder waived, in a writing signed by
the parties thereto.
11.7. Assignments, Participations. (a) Each Lender may assign to
---------------------------
one or more other Eligible Assignees (each, an "Assignee") all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Commitments, the outstanding Loans made by it, the Note
or Notes held by it and its participations in Letters of Credit); provided,
--------
however, that (i) any such assignment (other than an assignment to a Lender or
- -------
an Affiliate of a Lender) shall not be made without the prior written consent of
the Administrative Agent and the Borrower (to be evidenced by its
counterexecution of the relevant Assignment and Acceptance), which consent shall
not be unreasonably withheld (provided that the Borrower's consent shall not be
--------
required in the event a Default or Event of Default shall have occurred and be
continuing), (ii) except in the case of an assignment to a Lender or an
Affiliate of a Lender, no such assignment shall be in an aggregate principal
amount (determined as of the date of the Assignment and Acceptance with respect
to such assignment) less than $5,000,000 (or, if less, the full amount of the
aggregate of the assigning Lender's outstanding Term Loans and Revolving Credit
Commitment), and (iii) the parties to each such assignment will execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Note or Notes subject
to such assignment, and will pay a nonrefundable processing fee of $3,000 to the
Administrative Agent for its own account. Upon such execution, delivery,
acceptance and recording of the Assignment and Acceptance, from and after the
effective date specified therein, which effective date shall be at least five
Business Days after the execution thereof (unless the Administrative Agent shall
otherwise agree), (A) the Assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and
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Acceptance, shall have the rights and obligations of the assigning Lender
hereunder with respect thereto and (B) the assigning Lender shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than rights under the
provisions of this Agreement and the other Credit Documents relating to
indemnification or payment of fees, costs and expenses, to the extent such
rights relate to the time prior to the effective date of such Assignment and
Acceptance) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of such assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). The terms and provisions of each
Assignment and Acceptance shall, upon the effectiveness thereof, be incorporated
into and made a part of this Agreement, and the covenants, agreements and
obligations of each Lender set forth therein shall be deemed made to and for the
benefit of the Administrative Agent and the other parties hereto as if set forth
at length herein.
(b) The Administrative Agent will maintain at its address for notices
referred to herein a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitments of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower and
each Lender at any reasonable time and from time to time upon reasonable prior
notice.
(c) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an Assignee and, if required,
counterexecuted by the Borrower, together with the Note or Notes subject to such
assignment and the processing fee referred to in subsection (a) above, the
Administrative Agent will (i) accept such Assignment and Acceptance, (ii) on the
effective date thereof, record the information contained therein in the Register
and (iii) give notice thereof to the Borrower and the Lenders. Within five (5)
Business Days after its receipt of such notice, the Borrower, at its own
expense, will execute and deliver to the Administrative Agent, in exchange for
the surrendered Note or Notes, a new Note or Notes to the order of the Assignee
(and, if the assigning Lender has retained any portion of its rights and
obligations hereunder, to the order of the assigning Lender), prepared in
accordance with the applicable provisions of Section 2.4 as necessary to
reflect, after giving effect to the assignment, the Commitments (or outstanding
Term Loans, as the case may be) of the Assignee and (to the extent of any
retained interests) the assigning Lender, dated the date of the replaced Note or
Notes and otherwise in substantially the form of Exhibits A-1 or A-2 as
applicable. The Administrative Agent will return canceled Notes to the
Borrower.
(d) Each Lender may, without the consent of the Borrower, the
Administrative Agent or any other Lender, sell to one or more other Persons
(each, a "Participant") participations in any portion comprising less than all
of its rights and obligations under this Agreement (including, without
limitation, a portion of its Commitments, the outstanding Loans made by it, the
Note or Notes held by it and its participations in Letters of Credit); provided,
--------
however, that (i) such Lender's obligations under this Agreement shall remain
- -------
unchanged and such Lender shall remain solely responsible for the performance of
such obligations, (ii) no Lender shall sell any participation that, when taken
together with all other participations, if any, sold by such Lender, covers all
of such Lender's rights and obligations under this Agreement, (iii) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and no Lender shall permit any Participant to
have any voting rights or any right to control the vote of such Lender with
respect to any amendment, modification, waiver, consent or other action
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hereunder or under any other Credit Document (except as to actions that would
(x) reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon, or reduce or forgive any fees or other
Obligations, (y) extend the Term Loan Maturity Date, the Revolving Credit
Maturity Date or any other date fixed for the payment of any principal of or
interest on any Loan, any fees or any other Obligations, or (z) increase or
extend any Commitment of any Lender), and (iv) no Participant shall have any
rights under this Agreement or any of the other Credit Documents, each
Participant's rights against the granting Lender in respect of any participation
to be those set forth in the participation agreement, and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not granted
such participation. Notwithstanding the foregoing, each Participant shall have
the rights of a Lender for purposes of Sections 2.16(a), 2.16(b), 2.17, 2.18 and
9.3, and shall be entitled to the benefits thereto, to the extent that the
Lender granting such participation would be entitled to such benefits if the
participation had not been made, provided that no Participant shall be entitled
--------
to receive any greater amount pursuant to any of such Sections than the Lender
granting such participation would have been entitled to receive in respect of
the amount of the participation made by such Lender to such Participant had such
participation not been made.
(e) Nothing in this Agreement shall be construed to prohibit any
Lender from pledging or assigning all or any portion of its rights and interest
hereunder or under any Note to any Federal Reserve Bank as security for
borrowings therefrom; provided, however, that no such pledge or assignment shall
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release a Lender from any of its obligations hereunder.
(f) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section, disclose to the Assignee or Participant or proposed Assignee or
Participant any information relating to the Borrower and its Subsidiaries
furnished to it by or on behalf of any other party hereto, provided that such
--------
Assignee or Participant or proposed Assignee or Participant agrees in writing to
keep such information confidential to the same extent required of the Lenders
under Section 11.13.
11.8. No Waiver. The rights and remedies of the Administrative
---------
Agent and the Lenders expressly set forth in this Agreement and the other Credit
Documents are cumulative and in addition to, and not exclusive of, all other
rights and remedies available at law, in equity or otherwise. No failure or
delay on the part of the Administrative Agent or any Lender in exercising any
right, power or privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude other
or further exercise thereof or the exercise of any other right, power or
privilege or be construed to be a waiver of any Default or Event of Default. No
course of dealing between any of the Borrower and the Administrative Agent or
the Lenders or their agents or employees shall be effective to amend, modify or
discharge any provision of this Agreement or any other Credit Document or to
constitute a waiver of any Default or Event of Default. No notice to or demand
upon the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
right of the Administrative Agent or any Lender to exercise any right or remedy
or take any other or further action in any circumstances without notice or
demand.
11.9. Successors and Assigns. This Agreement shall be binding upon,
----------------------
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, and all references herein to any party shall be
deemed to include its successors and assigns; provided, however, that (i) the
-------- -------
Borrower shall not sell, assign or transfer any of its rights, interests, duties
or obligations under this Agreement without the prior written consent of all of
the Lenders and (ii) any Assignees and Participants shall have such rights and
obligations with respect to this Agreement and the other Credit Documents as are
provided for under and pursuant to the provisions of Section 11.7.
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11.10. Survival. All representations, warranties and agreements made
--------
by or on behalf of the Borrower or any of its Subsidiaries in this Agreement and
in the other Credit Documents shall survive the execution and delivery hereof or
thereof, the making and repayment of the Loans and the issuance and repayment of
the Letters of Credit. In addition, notwithstanding anything herein or under
applicable law to the contrary, the provisions of this Agreement and the other
Credit Documents relating to indemnification or payment of fees, costs and
expenses, including, without limitation, the provisions of Sections 2.16(a),
2.16(b), 2.17, 2.18, 10.7, 11.1 and 11.2, shall survive the payment in full of
all Loans and Letters of Credit, the termination of the Commitments and all
Letters of Credit, and any termination of this Agreement or any of the other
Credit Documents.
11.11. Severability. To the extent any provision of this Agreement
------------
is prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
11.12. Construction. The headings of the various articles, sections
------------
and subsections of this Agreement have been inserted for convenience only and
shall not in any way affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.
11.13. Confidentiality. Each Lender agrees to keep confidential,
---------------
pursuant to its customary procedures for handling confidential information of a
similar nature and in accordance with safe and sound banking practices, all
nonpublic information provided to it by or on behalf of the Borrower or any of
its Subsidiaries in connection with this Agreement or any other Credit Document;
provided, however, that any Lender may disclose such information (i) to its
- -------- -------
directors, employees and agents and to its auditors, counsel and other
professional advisors, (ii) at the demand or request of any bank regulatory
authority, court or other Governmental Authority having or asserting
jurisdiction over such Lender, as may be required pursuant to subpoena or other
legal process, or otherwise in order to comply with any applicable Requirement
of Law, (iii) in connection with any proceeding to enforce its rights hereunder
or under any other Credit Document or any other litigation or proceeding related
hereto or to which it is a party, (iv) to the Administrative Agent or any other
Lender, (v) to the extent the same has become publicly available other than as a
result of a breach of this Agreement and (vi) pursuant to and in accordance with
the provisions of Section 11.7(f).
11.14. Counterparts; Effectiveness. This Agreement may be executed
---------------------------
in any number of counterparts and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto and receipt by the Administrative Agent and the
Borrower of written or telephonic notification of such execution and
authorization of delivery thereof.
11.15. Disclosure of Information. The Borrower agrees and consents
-------------------------
to the Administrative Agent's disclosure of information relating to this
transaction to Gold Sheets and other similar bank trade publications. Such
-----------
information will consist of deal terms and other information customarily found
in such publications.
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11.16. Entire Agreement. THIS AGREEMENT AND THE OTHER DOCUMENTS AND
----------------
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH (A) EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF, (B) SUPERSEDE ANY AND ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL OR WRITTEN, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF, INCLUDING, WITHOUT LIMITATION, THE COMMITMENT
LETTER FROM FIRST UNION TO THE BORROWER DATED NOVEMBER 24, 1998, BUT
SPECIFICALLY EXCLUDING THE FEE LETTER, AND (C) MAY NOT BE AMENDED, SUPPLEMENTED,
CONTRADICTED OR OTHERWISE MODIFIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
91
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
THE ACKERLEY GROUP, INC.
By: _________________________________
Title: _________________________________
(signatures continued)
92
<PAGE>
FIRST UNION NATIONAL BANK, as
Administrative Agent and as a Lender
Revolving Credit By: __________________________________
Commitment:
$_______________
Title: _______________________________
Tranche A Term Loan Commitment:
$_______________
Instructions for wire transfers to the
Administrative Agent:
Tranche B Term Loan Commitment:
$_______________
First Union National Bank
ABA Routing No. 053000219
Charlotte, North Carolina
General Ledger No. 465906, RC No. 5007
Attention: Syndication Agency Services
Re: The Ackerley Group, Inc.
Address for notices as a Lender:
First Union National Bank
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: James W. Wood
Telephone: (704) 374-3242
Telecopy: (704) 374-4092
Lending Office:
First Union National Bank
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: James W. Wood
Telephone: (704) 374-3242
Telecopy: (704) 374-4092
(signatures continued)
93
<PAGE>
FLEET BANK, N.A.
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Address for notices:
Tranche B Term Loan Commitment:
$_______________ Fleet Bank, N.A.
1185 Avenue of the Americas, 16th Floor,
NYNYS16K
New York, New York 10036
Attention: Garret Komjathy, Vice President
Telephone: (212) 819-6043
Telecopy: (212) 819-6202
Lending Office:
Fleet Bank, N.A.
1185 Avenue of the Americas, 16th Floor
NYNYS16K
New York, New York 10036
Attention: Garret Komjathy, Vice President
Telephone: (212) 819-6043
Telecopy: (212) 819-6202
(signatures continued)
94
<PAGE>
BANK OF MONTREAL, CHICAGO BRANCH
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment: Address for notices:
$_______________
Bank of Montreal, Chicago Branch
430 Park Avenue
New York, New York 10022
Attention: Ola Anderssen
Telephone: (212) 605-1453
Telecopy: (212) 605-1648
Lending Office:
Bank of Montreal, Chicago Branch
115 South LaSalle Street
Chicago, Illinois 60603
Attention: Josie Nichols
Telephone: (312) 750-3748
Telecopy: (312) 750-4304
(signatures continued)
95
<PAGE>
<TABLE>
<CAPTION>
KEYBANK NATIONAL ASSOCIATION
<S> <C>
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment; Address for notices:
$_______________
KeyBank National Association
700 Fifth Avenue, 46th Floor, MS-WA-31-10-4612
Seattle, Washington 98104
Attention: Kathleen Johanson, Vice President
Telephone: (206) 684-6308
Telecopy: (206) 684-6035
Lending Office:
KeyBank National Association
700 Fifth Avenue, 46th Floor, MS-WA-31-10-4612
Seattle, Washington 98104
Attention: Kathleen Johanson, Vice President
Telephone: (206) 684-6308
Telecopy: (206) 684-6035
</TABLE>
(signatures continued)
96
<PAGE>
<TABLE>
<CAPTION>
UNION BANK OF CALIFORNIA, N.A.
<S> <C>
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment: Address for notices:
$_______________
Union Bank of California
445 South Figueroa Street, G15-075
Los Angeles, California 90071
Attention: Christine P. Ball, Vice President
Telephone: (213) 236-6176
Telecopy: (213) 236-5747
Lending Office:
Union Bank of California
445 South Figueroa Street, G15-075
Los Angeles, California 90071
Attention: Christine P. Ball, Vice President
Telephone: (213) 236-6176
Telecopy: (213) 236-5747
</TABLE>
(signatures continued)
97
<PAGE>
<TABLE>
<CAPTION>
U.S. BANK NATIONAL ASSOCIATION
<S> <C>
Revolving Credit By: _________________________________
Commitment:
$11,375,000 Title: ______________________________
Tranche A Term Loan Commitment:
$4,225,000
Tranche B Term Loan Commitment: Address for notices:
$5,525,000
U.S. Bank National Association
Media/Telecom Group
1420 5th Avenue, 10th Floor
Seattle, Washington 98101
Attention: Matthew S. Thoreson, Vice President
Telephone: (206) 344-3712
Telecopy: (206) 344-2331
Lending Office:
U.S. Bank National Association
Media/Telecom Group
1420 5th Avenue, 10th Floor
Seattle, Washington 98101
Attention: Matthew S. Thoreson, Vice President
Telephone: (206) 344-3712
Telecopy: (206) 344-2331
</TABLE>
(signatures continued)
98
<PAGE>
BANK OF AMERICA
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment: Address for notices:
$_______________
Bank of America
444 S. Flower Street, 41st Floor
Los Angeles, California 90071
Attention: George V. Hausler
Telephone: (213) 236-4925
Fax: (213) 624-5812
Lending Office:
Bank of America
444 S. Flower Street, 41st Floor
Los Angeles, California 90071
Attention: George V. Hausler
Telephone: (213) 236-4925
Fax: (213) 624-5812
(signatures continued)
99
<PAGE>
THE BANK OF NOVA SCOTIA
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Address for notices:
Tranche B Term Loan Commitment;
$_______________ The Bank of Nova Scotia
One Liberty Plaza
New York, New York 10006
Attention: Ian Hodgart,
Relationship Manager
Telephone: (212) 225-5079
Telecopy: (212) 225-5090
Lending Office:
The Bank of Nova Scotia
One Liberty Plaza
New York, New York 10006
Attention: Ian Hodgart,
Relationship Manager
Telephone: (212) 225-5079
Telecopy: (212) 225-5090
(signatures continued)
100
<PAGE>
<TABLE>
<CAPTION>
DRESDNER BANK AG, NEW YORK & GRAND CAYMAN BRANCHES
<S> <C>
Revolving Credit By:________________________________________
Commitment:
$_______________ Title:_____________________________________
Tranche A Term Loan Commitment:
$_______________ By:________________________________________
Title: ___________________________________
Tranche B Term Loan Commitment:
$_______________
Address for notices:
Dresdner Bank AG
75 Wall Street
New York, New York 10005
Attention: Jane A. Majeski, Vice President
Telephone: (212) 429-2191
Telecopy: (212) 429-4181
Lending Office:
Dresdner Bank AG
75 Wall Street
New York, New York 10005-2889
Attention: Jane A. Majeski, Vice President
Telephone: (212) 429-2191
Telecopy: (212) 429-4181
</TABLE>
(signatures continued)
101
<PAGE>
THE CIT GROUP/EQUIPMENT FINANCING, INC.
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche B Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment: Address for notices:
$_______________
The CIT Group/Equipment Financing, Inc.
900 Ashwood Parkway, Suite 600
Atlanta, Georgia 30338
Attention: UPI Credit Notice
Telephone: (770) 551-7800
Telecopy: (770) 399-9823
Lending Office:
The CIT Group/Equipment Financing, Inc.
900 Ashwood Parkway, Suite 600
Atlanta, Georgia 30338
Attention: Joe O'Laughlin
Telephone: (770) 677-3471
Telecopy: (770) 677-3419
(signatures continued)
102
<PAGE>
BANQUE NATIONALE DE PARIS
Revolving Credit By:__________________________
Commitment:
$7,000,000.00 Title:_______________________
Tranche A Term Loan Commitment:
$2,600,000.00 By:_________________________
Tranche B Term Loan Commitment: Title:______________________
$3,400,000.00 Address for notices:
Banque Nationale de Paris
499 Park Avenue, 9th Floor
New York, New York 10022
Attention: Serge Desrayaud, Vice President
Telephone: (212) 415-9638
Telecopy: (212) 415-9805
Lending Office:
Banque Nationale de Paris
499 Park Avenue, 9th Floor
New York, New York 10022
Attention: Serge Desrayaud, Vice President
Telephone: (212) 415-9638
Telecopy: (212) 415-9805
(signatures continued)
103
<PAGE>
CITY NATIONAL BANK
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment: Address for notices:
$_______________
City National Bank
400 North Roxbury Drive, 3rd Floor
Beverly Hills, California 90210
Attention: Rod P. Bollins, Vice President
Telephone: (310) 888-6149
Telecopy: (310) 888-6152
Lending Office:
City National Bank
400 North Roxbury Drive, 3rd Floor
Beverly Hills, California 90210
Attention: Rod P. Bollins, Vice President
Telephone: (310) 888-6149
Telecopy: (310) 888-6152
(signatures continued)
104
<PAGE>
FIRST HAWAIIAN BANK
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment: Address for notices:
$_______________
First Hawaiian Bank
999 Bishop Street, 11th Floor
Honolulu, Hawaii 96813
Attention: James C. Polk
Telephone: (808) 525-8179
Telecopy: (808) 525-8975
Lending Office:
First Hawaiian Bank
999 Bishop Street, 11th Floor
Honolulu, Hawaii 96813
Attention: James C. Polk
Telephone: (808) 525-8179
Telecopy: (808) 525-8975
(signatures continued)
105
<PAGE>
THE FUJI BANK, LIMITED, LOS ANGELES AGENCY
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment: Address for notices:
$_______________
The Fuji Bank, Limited, Los Angeles Agency
333 South Hope Street, 39th Floor
Los Angeles, California 90071
Attention: Jay Schwartz, Vice President
Telephone: (213) 253-4149
Telecopy: (213) 253-4178
Lending Office:
The Fuji Bank, Limited, Los Angeles Agency
333 South Hope Street, 39th Floor
Los Angeles, California 90071
Attention: Jay Schwartz, Vice President
Telephone: (213) 253-4149
Telecopy: (213) 253-4178
(signatures continued)
106
<PAGE>
STATE STREET BANK AND TRUST COMPANY
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment: Address for notices:
$_______________
State Street Bank and Trust Company
225 Franklin Street, 2nd Floor
Boston, Massachusetts 02110
Attention: Diane Rooney
Telephone: (617) 664-4963
Telecopy: (617) 664-3708
Lending Office:
State Street Bank and Trust Company
225 Franklin Street, 2nd Floor
Boston, Massachusetts 02110
Attention: Diane Rooney
Telephone: (617) 664-4963
Telecopy: (617) 664-3708
(signatures continued)
107
<PAGE>
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment: Address for notices:
$_______________
SunTrust Bank, Central Florida, N.A.
200 South Orange, Tower 10
Orlando, Florida 32801
Attention: Kimberly Evans
Telephone: (407) 237-4311
Telecopy: (407) 237-5126
Lending Office:
SunTrust Bank, Central Florida, N.A.
200 South Orange, Tower 10
Orlando, Florida 32801
Attention: Kimberly Evans
Telephone: (407) 237-4311
Telecopy: (407) 237-5126
(signatures continued)
108
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET DE
l'UNION EUROPEENNE
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment: Address for notices:
$_______________
Compagnie Financiere de CIC et de
l'Union Europeenne
520 Madison Avenue
New York, New York 10286
Attention: Marcus Edwards
Telephone: (212) 715-4427
Telecopy: (212) 715-4535
Lending Office:
Compagnie Financiere de CIC, et de
l'Union Europeenne
520 Madison Avenue
New York, New York 10286
Attention: Marcus Edwards
Telephone: (212) 715-4427
Telecopy: (212) 715-4535
(signatures continued)
109
<PAGE>
MICHIGAN NATIONAL BANK
Revolving Credit By: _________________________________
Commitment:
$_______________ Title:________________________________
Tranche A Term Loan Commitment:
$_______________
Tranche B Term Loan Commitment: Address for notices:
$_______________
Michigan National Bank
27777 Inkster
Specialty Industries 10-36
Farmington Hills, Michigan 48334
Attention: Jeffrey W. Billig
Telephone: (248) 473-4329
Telecopy: (248) 473-4345
Lending Office:
Michigan National Bank
27777 Inkster
Specialty Industries 10-36
Farmington Hills, Michigan 48334
Attention: Jeffrey W. Billig
Telephone: (248) 473-4329
Telecopy: (248) 473-4345
110
<PAGE>
SCHEDULE 5.4
MATERIAL FCC LICECSES
<TABLE>
<CAPTION>
Primary Broadcast City of License
- ----------------- ------- -------
Station License License Frequency Expiration
- --------------- ------- ---------- ----------
<S> <C> <C> <C>
WIXT(TV) Syracuse, NY Ch. No. 9 (186-192 MHz) June 1, 1999
WIVT(TV) Binghamton, NY Ch. No. 34 (590-596 MHz) June 1, 1999
KCBA(TV) Salinas, CA Ch. No. 35 (596-602 MHz) Dec. 1, 1998 /1/
KFTY(TV) Santa Rosa, CA Ch. No. 50 (686-692 MHz) Dec. 1, 2006
KKTV(TV) Colorado Springs, CO Ch. No. 11 (198-204 MHz) April 1, 2006
KVOS(TV) Bellingham, WA Ch. No. 12 (204-210 MHz) Feb. 1, 1999 /2/
KGET(TV) Bakersfield, CA Ch. No. 17 (488-494 MHz) Dec. 1, 2006
KVIQ(TV) Eureka, CA Ch. No. 6 (82-88 MHz) Dec. 1, 2006
KHHO(AM) Tacoma, WA Ch. No. N/A (850 KHz) Feb. 1, 2006
KJR(AM) Seattle, WA Ch. No. N/A (950 KHz) Feb. 1, 2006
KJR-FM Seattle, WA Ch. No. 239C (95.7 MHz) Feb. 1, 2006
KUBE(FM) Seattle, WA Ch. No. 227C (93.3 MHz) Feb. 1, 2006
</TABLE>
/1/ Application for Renewal of License submitted to FCC on July 31, 1998 (File
No. BRCT-980731KS), Public Notice dated August 25, 1998.
/2/ Application for Renewal of License submitted to FCC on October 1, 1998 (File
No. BRCT-981001LL), Public Notice dated October 19, 1998.
<PAGE>
SCHEDULE 5.5
LITIGATION
<TABLE>
<CAPTION>
<C> <S>
1. Van Alstyne v. Ackerley Communications, Inc., et al. Complaint filed June
7, 1996 in the U.S. District Court for the Northern District of New York.
2. Lambert v. Ackerley et al. Complaint filed December 12, 1994 in the U.S.
District Court for the Western District of Washington.
3. RSA Media, Inc. v. AK Media Group, Inc. Complaint filed June 4, 1997 in
the U.S. District Court for the District of Massachusetts.
</TABLE>
<PAGE>
SCHEDULE 5.7
SUBSIDIARIES
Subsidiaries Owned by Borrower
- ------------------------------
<TABLE>
<CAPTION>
<S> <C>
Subsidiary Percentage of Ownership
Ackerley Airport Advertising, Inc. 100%
AK Media Group, Inc. 100%
Central NY News, Inc. 100%
SSI, Inc. 100%
TC Aviation, Inc. 100%
</TABLE>
Subsidiaries Owned by AK Media Group, Inc.
- ------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Subsidiary Percentage of Ownership
Ackerley Communications of Massachusetts, Inc. 100%
(Inactive)
KVOS TV, Ltd. 100%
</TABLE>
<PAGE>
SCHEDULE 5.17
INSURANCE
See attached schedule.
<PAGE>
THE ACKERLEY GROUP
Schedule of Policies
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Effective Expiration
Coverage Description Company Policy Number Date Date Premium
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Property & Inland Marine Commonwealth Insurance Company CICA1246 06/30/98 06/30/99 $286,053
Excess Property & Inland Marine TIG Insurance Company XPT37954061 06/30/98 06/30/99 118,625
Boiler & Machinery Pacific Indemnity Company 76400889 06/01/98 06/01/99 1,206
Auto & General Liability Fidelity & Guaranty Insurance 1CP30030187001 06/30/98 06/30/99 337,094
Workers' Compensation Employers Insurance of Wausau 481900000431 06/30/98 06/30/99 82,127
Workers' Compensation Employers Insurance of Wausau 481902000431 06/30/98 06/30/99 64,041
Workers' Compensation Employers Insurance of Wausau 482900000431 06/30/98 06/30/99 14,000
Commercial Umbrella Federal Insurance Company 79663950 06/30/98 06/30/99 92,700
Broadcasters Liability Employers Reinsurance Company BR04603-3 06/30/98 06/30/99 38,691
Commercial Package Royal Insurance Company of Canada 62324051 06/30/98 06/30/99 3,520
Railroad Protective Liability Fidelity & Guaranty Insurance RPL30000936901 06/30/98 06/30/99 1,200
Aviation American Home Insurance HL338659202 06/29/98 06/29/99 131,395
Aviation United States Aviation Underwriters 400AC40333 06/29/98 06/29/99 134,450
Aviation CIGNA Insurance Company ATA017305 06/29/98 06/29/99 29,863
Aviation Lloyds of London AM9800831 06/29/98 06/29/99 199,786
Aviation Various Subscribing Insurance Cos. 360AC254070 07/16/98 07/16/99 49,346
Aviation Lloyds of London TBD 08/04/98 06/29/99 45,050
Hull War Risk Lloyds of London AM9800832 06/29/98 06/29/99 4,500
Directors & Officers Liability National Union Fire Ins. Co. of PA D07704887 12/30/97 12/30/00 410,750
Excess Directors & Officers Reliance National Insurance Company NDA014328997 12/30/97 12/30/00 191,250
</TABLE>
<PAGE>
SCHEDULE 5.18
MATERIAL CONTRACTS
Note Agreements between the Company and certain insurance companies, dated as of
December 1, 1989.
Amendment No. 1 dated October 18, 1991 to Note Agreements dated December 1,
1989.
Agreements of Waiver and Amendment dated September 30, 1990.
Implementation and Waiver Agreement dated October 18, 1991.
Indenture by and among the Company, various guarantors, and The Bank of New
York, dated December 14, 1998.
Registration Rights Agreement by and among the Company, Salomon Smith Barney,
Inc., First Union Capital Markets, and Fleet Securities, Inc., dated December
14, 1998.
The Company's Employee Stock Option Plan, as amended and restated on June 10,
1998.
Nonemployee-Director's Equity Compensation Plan, amended and restated on March
12, 1997.
Premises Use and Occupancy Agreement between The City of Seattle and SSI, Inc.
dated March 2, 1994.
Asset Purchase Agreement between AK Media Group, Inc. and Harron Television of
Monterey, dated November 3, 1998.
Time Brokerage Agreement between AK Media Group, Inc. and Harron Television of
Monterey, dated April 24, 1996.
<PAGE>
SCHEDULE 5.18
MATERIAL CONTRACTS
Asset Purchase Agreement between AK Media Group, Inc. and Seal Rock
Broadcasters, L.L.C., dated November 2, 1998.
Time Brokerage Agreement between AK Media Group, Inc. and Seal Rock
Broadcasters, L.L.C., dated November 2, 1998.
Guaranty Agreement between The Ackerley Group, Inc. and First Union National
Bank, as agent, dated April 24, 1996.
Time Brokerage Agreement between Central NY News, Inc. and Utica Television
Partners, L.L.C., dated June 30, 1997.
Guaranty Agreement between The Ackerley Group, Inc. and First Union National
Bank, as agent, dated June 30, 1997.
Purchase Agreement by and among AK Media Group, Inc. and Sinclair
Communications, Inc., dated September 25, 1998, regarding television station
WOKR, Rochester, New York.
Acquisition Agreement by and among AK Media Group, Inc. and Wicks Broadcast
Group Limited Partnership, dated November 30, 1998, regarding television station
KMTR, Eugene, Oregon, and related broadcast stations.
Asset Exchange Agreement between AK Media Group, Inc., Benedek Broadcasting
Corporation and Benedek License Corporation, dated December 30, 1998.
Aircraft Lease between TC Aviation, Inc. and Fleet Capital Corporation, dated
July 11, 1996.
Private Carrier Agreement between SS Aviation, Inc. and SSI, Inc., dated June
29, 1990.
<PAGE>
SCHEDULE 8.2
INDEBTEDNESS EXISTING ON THE CLOSING DATE
All Dollars in Thousands (000's)
<TABLE>
<CAPTION>
<S> <C>
Revolver $ 61,813
9% Senior Subordinated Notes 175,000
10.48% Senior Subordinated Notes 20,000
Loans Related to Sonics Aircraft 15,423
Letters of Credits 3,750
Deferred Compensation 2,180
Capital Lease Obligation 5,686
Contingent Obligations Attributable to Guaranties 10,430
Total Indebtedness Existing on Closing Date $294,282
========
</TABLE>
<PAGE>
SCHEDULE 8.3
LIENS
The following are the Borrower's liens in existence on the closing date:
1. Liens related to the Consent to Sublease and Assignment among Fleet
Capital Corporation, TC Aviation, Inc. and AK Media Group, Inc. (formerly
Ackerley Communications Group, Inc.) pledging the sublease as security for the
operating lease of the Company corporate jet.
2. Lien on certain assets of the Key Arena for the Capital Lease Obligation
on Key Arena leasehold assets.
3. Security Agreement and related liens to secure the Promissory Notes in
the aggregate principal amount of $15,000,000 to the order of KeyCorp Leasing
regarding the purchase of the Sonics jet.
<PAGE>
SCHEDULE 8.5
INVESTMENTS EXISTING AT CLOSING DATE
The following are the Borrower's investments in existence on the closing date:
1. Investment in The National Basketball Association (A Joint Venture).
2. Investment in The NBA Market Extension Partnership.
3. Investment in NBA Properties, Inc.
<PAGE>
SCHEDULE 8.7
TRANSACTIONS WITH AFFILIATES
The following are the Borrower's transactions with affiliates:
2. From time to time, the Borrower advances funds to Barry A. Ackerley and
other executive officers for their personal use. For the year ended December
31, 1998, the aggregate outstanding principal amount of loans to Barry
Ackerley was $2,062,339 and to all other officers and directors was
$376,000. Interest on this indebtedness accrues and is imputed at the same
rate as that charged to the Borrower on its senior bank debt./1/
- ---------------------------------
/1/ Loans and advances to the Company's management will not exceed $5 million
in aggregate at any one time.
<PAGE>
SCHEDULE 8.16
EXISTING FHS INDEBTEDNESS
The following are the Borrower's transactions with affiliates:
From time to time, the Borrower advances funds to Barry A. Ackerley and
other executive officers for their personal use. For the year ended
December 31, 1998, the aggregate outstanding principal amount of loans to
Barry Ackerley was $2,062,339 and to all other officers and directors was
$376,000. Interest on this indebtedness accrues and is imputed at the same
rate as that charged to the Borrower on its senior bank debt.1
1 Loans and advances to the Company's management will not exceed $5 million in
aggregate at any one time.
The following is the indebtedness of Full House Sports & Entertainment, a
division of AK Media Group, Inc.:
Indebtedness in the amount of $1,905,848 under certain deferred
compensation agreements.
<PAGE>
EXHIBIT A-1
-----------
Borrower's Taxpayer Identification No. _____________
FORM OF
TRANCHE A TERM NOTE
___________$ January ___, 1999
Charlotte, North Carolina
FOR VALUE RECEIVED, THE ACKERLEY GROUP, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of
______________________________ (the "Lender"), at the offices of FIRST
UNION NATIONAL BANK (the "Agent") located at One First Union Center, 301 South
College Street, Charlotte, North Carolina (or at such other place or places as
the Agent may designate), at the times and in the manner provided in the Credit
Agreement, dated as of January __, 1999 (as amended, modified or supplemented
from time to time, the "Credit Agreement"), among the Borrower, the Lenders from
time to time parties thereto, FLEET BANK, N.A., as Documentation Agent and FIRST
UNION NATIONAL BANK, as Administrative Agent, the principal sum of
__________________________ DOLLARS ($___________), under the terms and
conditions of this promissory note (this "Tranche A Term Note") and the Credit
Agreement. The defined terms in the Credit Agreement are used herein with the
same meaning. The Borrower also unconditionally promises to pay interest on the
aggregate unpaid principal amount of this Tranche A Term Note at the rates
applicable thereto from time to time as provided in the Credit Agreement.
This Tranche A Term Note is one of a series of Tranche A Term Notes
referred to in the Credit Agreement and is issued to evidence the Tranche A Term
Loans made by the Lender pursuant to the Credit Agreement. All of the terms,
conditions and covenants of the Credit Agreement are expressly made a part of
this Tranche A Term Note by reference in the same manner and with the same
effect as if set forth herein at length, and any holder of this Tranche A Term
Note is entitled to the benefits of and remedies provided in the Credit
Agreement and other Credit Documents. Reference is made to the Credit Agreement
for provisions relating to the interest rate, maturity, payment, prepayment and
acceleration of this Tranche A Term Note.
In the event of an acceleration of the maturity of this Tranche A Term
Note, this Tranche A Term Note shall become immediately due and payable, without
presentation, demand, protest or notice of any kind, all of which are hereby
waived by the Borrower.
In the event this Tranche A Term Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
<PAGE>
This Tranche A Term Note shall be governed by and construed in accordance
with the internal laws and judicial decisions of the State of North Carolina.
The Borrower hereby submits to the nonexclusive jurisdiction and venue of the
federal and state courts located in Mecklenburg County, North Carolina, although
the Lender shall not be limited to bringing an action in such courts.
IN WITNESS WHEREOF, the Borrower has caused this Tranche A Term Note to be
executed under seal by its duly authorized corporate officer as of the day and
year first above written.
THE ACKERLEY GROUP, INC.
By: _______________________________
Title: ______________________________
-2-
<PAGE>
EXHIBIT A-2
-----------
Borrower's Taxpayer Identification No. __________
FORM OF
TRANCHE B TERM NOTE
___________$ January ___, 1999
Charlotte, North Carolina
FOR VALUE RECEIVED, THE ACKERLEY GROUP, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of
______________________________ (the "Lender"), at the offices of FIRST
UNION NATIONAL BANK (the "Agent") located at One First Union Center, 301 South
College Street, Charlotte, North Carolina (or at such other place or places as
the Agent may designate), at the times and in the manner provided in the Credit
Agreement, dated as of January __, 1999 (as amended, modified or supplemented
from time to time, the "Credit Agreement"), among the Borrower, the Lenders from
time to time parties thereto, FLEET BANK, N.A., as Documentation Agent and FIRST
UNION NATIONAL BANK, as Administrative Agent, the principal sum of
__________________________ DOLLARS ($___________), under the terms and
conditions of this promissory note (this "Tranche B Term Note") and the Credit
Agreement. The defined terms in the Credit Agreement are used herein with the
same meaning. The Borrower also unconditionally promises to pay interest on the
aggregate unpaid principal amount of this Tranche B Term Note at the rates
applicable thereto from time to time as provided in the Credit Agreement.
This Tranche B Term Note is one of a series of Tranche B Term Notes
referred to in the Credit Agreement and is issued to evidence the Tranche B Term
Loans made by the Lender pursuant to the Credit Agreement. All of the terms,
conditions and covenants of the Credit Agreement are expressly made a part of
this Tranche B Term Note by reference in the same manner and with the same
effect as if set forth herein at length, and any holder of this Tranche B Term
Note is entitled to the benefits of and remedies provided in the Credit
Agreement and other Credit Documents. Reference is made to the Credit Agreement
for provisions relating to the interest rate, maturity, payment, prepayment and
acceleration of this Tranche B Term Note.
In the event of an acceleration of the maturity of this Tranche B Term
Note, this Tranche B Term Note shall become immediately due and payable, without
presentation, demand, protest or notice of any kind, all of which are hereby
waived by the Borrower.
In the event this Tranche B Term Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
<PAGE>
This Tranche B Term Note shall be governed by and construed in accordance
with the internal laws and judicial decisions of the State of North Carolina.
The Borrower hereby submits to the nonexclusive jurisdiction and venue of the
federal and state courts located in Mecklenburg County, North Carolina, although
the Lender shall not be limited to bringing an action in such courts.
IN WITNESS WHEREOF, the Borrower has caused this Tranche B Term Note to be
executed under seal by its duly authorized corporate officer as of the day and
year first above written.
THE ACKERLEY GROUP, INC.
By: _______________________________
Title: ____________________________
-2-
<PAGE>
EXHIBIT A-3
-----------
Borrower's Taxpayer Identification No. _____________
FORM OF
REVOLVING NOTE
___________$ January ___, 1999
Charlotte, North Carolina
FOR VALUE RECEIVED, THE ACKERLEY GROUP, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of
______________________________ (the "Lender"), at the offices of FIRST
UNION NATIONAL BANK (the "Agent") located at One First Union Center, 301 South
College Street, Charlotte, North Carolina (or at such other place or places as
the Agent may designate), at the times and in the manner provided in the Credit
Agreement, dated as of January __, 1999 (as amended, modified or supplemented
from time to time, the "Credit Agreement"), among the Borrower, the Lenders from
time to time parties thereto, FLEET BANK, N.A., as Documentation Agent, and
FIRST UNION NATIONAL BANK, as Administrative Agent, the principal sum of
__________________________ DOLLARS ($___________), or such lesser amount as
may constitute the unpaid principal amount of the Revolving Loans made by the
Lender, under the terms and conditions of this promissory note (this "Revolving
Note") and the Credit Agreement. The defined terms in the Credit Agreement are
used herein with the same meaning. The Borrower also unconditionally promises
to pay interest on the aggregate unpaid principal amount of this Revolving Note
at the rates applicable thereto from time to time as provided in the Credit
Agreement.
This Revolving Note is one of a series of Revolving Notes referred to in
the Credit Agreement and is issued to evidence the Revolving Loans made by the
Lender pursuant to the Credit Agreement. All of the terms, conditions and
covenants of the Credit Agreement are expressly made a part of this Revolving
Note by reference in the same manner and with the same effect as if set forth
herein at length, and any holder of this Revolving Note is entitled to the
benefits of and remedies provided in the Credit Agreement and the other Credit
Documents. Reference is made to the Credit Agreement for provisions relating to
the interest rate, maturity, payment, prepayment and acceleration of this
Revolving Note.
In the event of an acceleration of the maturity of this Revolving Note,
this Revolving Note shall become immediately due and payable, without
presentation, demand, protest or notice of any kind, all of which are hereby
waived by the Borrower.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
<PAGE>
This Revolving Note shall be governed by and construed in accordance with
the internal laws and judicial decisions of the State of North Carolina. The
Borrower hereby submits to the nonexclusive jurisdiction and venue of the
federal and state courts located in Mecklenburg County, North Carolina, although
the Lender shall not be limited to bringing an action in such courts.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed under seal by its duly authorized corporate officer as of the day and
year first above written.
THE ACKERLEY GROUP, INC.
By: _______________________________
Title: ____________________________
-2-
<PAGE>
EXHIBIT B-1
-----------
FORM OF
NOTICE OF BORROWING
[Date]
First Union National Bank, as Administrative Agent
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
The undersigned, THE ACKERLEY GROUP, INC. (the "Borrower"), refers to the
Credit Agreement, dated as of January __, 1999, among the Borrower, certain
banks and other financial institutions from time to time parties thereto (the
"Lenders"), FLEET BANK, N.A. as Documentation Agent and you, as Administrative
Agent for the Lenders (as amended, modified or supplemented from time to time,
the "Credit Agreement," the terms defined therein being used herein as therein
defined), and, pursuant to SECTION 2.2(B) of the Credit Agreement, hereby gives
you, as Administrative Agent, irrevocable notice that the Borrower requests a
Borrowing of [Tranche B Term][Revolving]/1/ Loans under the Credit Agreement,
and to that end sets forth below the information relating to such Borrowing (the
"Proposed Borrowing") as required by SECTION 2.2(B) of the Credit Agreement:
(i) The aggregate principal amount of the Proposed Borrowing is
$_______________./2/
(ii) The Loans comprising the Proposed Borrowing shall be
initially made as [Base Rate Loans] [LIBOR Loans]./3/
(iii) The initial Interest Period for the LIBOR Loans comprising
the Proposed Borrowing shall be [one/two/three/six months]./4/
_______________________
/1/Select the applicable class of Loans.
/2/Amount of Proposed Borrowing must comply with Section 2.2(b) of the Credit
Agreement.
/3/Select the applicable Type of Loans.
/4/Include this clause in the case of a Proposed Borrowing comprised of LIBOR
Loans, and select the applicable Interest Period.
<PAGE>
(iv) The Proposed Borrowing is requested to be made on
__________________ (the "Borrowing Date")./5/
The Borrower hereby certifies that the following statements are true on and
as of the date hereof and will be true on and as of the Borrowing Date:
A. Each of the representations and warranties contained in ARTICLE V
of the Credit Agreement and in the other Credit Documents is and will be
true and correct on and as of each such date, with the same effect as if
made on and as of each such date, both immediately before and after giving
effect to the Proposed Borrowing and to the application of the proceeds
therefrom (except to the extent any such representation or warranty is
expressly stated to have been made as of a specific date, in which case
such representation or warranty shall be true and correct as of such date);
B. No Default or Event of Default has occurred and is continuing or
would result from the Proposed Borrowing or from the application of the
proceeds therefrom; and
C. After giving effect to the Proposed Borrowing, the sum of (i) the
aggregate principal amount of Revolving Loans outstanding, and (ii) the
aggregate Letter of Credit Exposure of all Lenders, will not exceed the
aggregate Revolving Credit Commitments.
Very truly yours,
THE ACKERLEY GROUP, INC.
By: _______________________________
Title: ____________________________
_________________________
/5/Shall be no later than the Business Day of the Borrowing (in the case of
Base Rate Loans) or at least three Business Days after the date hereof (in the
case of LIBOR Loans). In the case of Tranche B Term Loans, the Proposed
Borrowing shall not occur after the Tranche B Term Loan Commitment Expiration
Date.
-2-
<PAGE>
EXHIBIT B-2
-----------
FORM OF
NOTICE OF CONVERSION/CONTINUATION
[Date]
First Union National Bank, as Administrative Agent
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
The undersigned, THE ACKERLEY GROUP, INC. (the "Borrower"), refers to
the Credit Agreement, dated as of January __, 1999, among the Borrower, certain
banks and other financial institutions from time to time parties thereto (the
"Lenders"), FLEET BANK, N.A. as Documentation Agent and you, as Administrative
Agent for the Lenders (as amended, modified or supplemented from time to time,
the "Credit Agreement," the terms defined therein being used herein as therein
defined), and, pursuant to SECTION 2.11(B) of the Credit Agreement, hereby gives
you, as Administrative Agent, irrevocable notice that the Borrower requests a
[conversion] [continuation]/1/ of Loans under the Credit Agreement, and to that
end sets forth below the information relating to such [conversion]
[continuation] (the "Proposed [Conversion] [Continuation]") as required by
SECTION 2.11(B) of the Credit Agreement:
(i) The Proposed [Conversion] [Continuation] is requested to be
made on _______________./2/
(ii) The Proposed [Conversion] [Continuation] involves
$____________/3/ in aggregate principal amount of [Tranche A Term] [Tranche
B Term] [Revolving]/4/ Loans made pursuant to a Borrowing on
________________,/5/ which Loans are presently
___________________________
/1/Insert "conversion" or "continuation" throughout the notice, as
applicable.
/2/Shall be no later than the Business Day of the Conversion (in the case of
any conversion of LIBOR Loans into Base Rate Loans) or at least three Business
Days after the date hereof (in the case of any conversion of Base Rate Loans
into, or continuation of, LIBOR Loans), and additionally, in the case of any
conversion of LIBOR Loans into Base Rate Loans, or continuation of LIBOR Loans,
shall be the last day of the Interest Period applicable to such LIBOR Loans.
/3/Amount of Proposed Conversion or Continuation must comply with Section
2.11(b) of the Credit Agreement.
/4/Select the applicable Class of Loans.
/5/Insert the applicable Borrowing Date for the Loans being converted or
continued.
<PAGE>
maintained as [Base Rate] [LIBOR] Loans and are proposed hereby to be
[converted into Base Rate Loans] [converted into LIBOR Loans] [continued as
LIBOR Loans]./6/
[(iii) The initial Interest Period for the Loans being [converted
into] [continued as] LIBOR Loans pursuant to the Proposed [Conversion]
[Continuation] shall be [one/two/three/six months].]/7/
The Borrower hereby certifies that the following statement is true
both on and as of the date hereof and on and as of the effective date of the
Proposed [Conversion] [Continuation]: no Default or Event of Default has or will
have occurred and is continuing or would result from the Proposed [Conversion]
[Continuation].
Very truly yours,
THE ACKERLEY GROUP, INC.
By: ______________________________
Title: ___________________________
____________________________
/6/Complete with the applicable bracketed language.
/7/Include this clause in the case of a Proposed Conversion or Continuation
involving a conversion of Base Rate Loans into, or continuation of, LIBOR Loans,
and select the applicable Interest Period.
<PAGE>
EXHIBIT B-3
-----------
FORM OF
LETTER OF CREDIT NOTICE
[Date]
First Union National Bank, as Administrative Agent
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
First Union National Bank, as
Issuing Lender
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: _______________________
Ladies and Gentlemen:
The undersigned, THE ACKERLEY GROUP, INC. (the "Borrower"), refers to
the Credit Agreement, dated as of January __, 1999, among the Borrower, certain
banks and other financial institutions from time to time parties thereto (the
"Lenders"), FLEET BANK, N.A. as Documentation Agent and you, as Administrative
Agent for the Lenders (as amended, modified or supplemented from time to time,
the "Credit Agreement," the terms defined therein being used herein as therein
defined), and, pursuant to SECTION 3.2 of the Credit Agreement, hereby gives
you, as Issuing Lender, irrevocable notice that the Borrower requests the
issuance of a Letter of Credit for its account under the Credit Agreement, and
to that end sets forth below the information relating to such Letter of Credit
(the "Requested Letter of Credit") as required by SECTION 3.2 of the Credit
Agreement:
(i) The Business Day on which the Requested Letter of Credit is
requested to be issued is _______________./1/
(ii) The Stated Amount of the Requested Letter of Credit is
$____________.
(iii) The expiry date of the Requested Letter of Credit is
______________.
(iv) The name and address of the beneficiary of the Requested
Letter of Credit is _____________________________________________________
_________________________
/1/Shall be at least three Business Days (or such shorter period as is
acceptable to the Issuing Lender in any given case) after the date hereof.
<PAGE>
The undersigned agrees to complete all application procedures and
documents required by you in connection with the Requested Letter of Credit.
The undersigned hereby certifies that the following statements are true on
the date hereof and will be true on the date of issuance of the Requested Letter
of Credit:
A. Each of the representations and warranties contained in ARTICLE V
of the Credit Agreement and in the other Credit Documents is and will be
true and correct on and as of each such date, with the same effect as if
made on and as of each such date, both immediately before and after giving
effect to the issuance of the Requested Letter of Credit (except to the
extent any such representation or warranty is expressly stated to have been
made as of a specific date, in which case such representation or warranty
shall be true and correct as of such date);
B. No Default or Event of Default has occurred and is continuing or
would result from the issuance of the Requested Letter of Credit;
C. After giving effect to the issuance of the Requested Letter of
Credit, the sum of (i) the aggregate principal amount of Revolving Loans
outstanding and (ii) the aggregate Letter of Credit Exposure of all
Lenders, will not exceed the aggregate Revolving Credit Commitments; and
D. After giving effect to the issuance of the Requested Letter of
Credit, the sum of (i) the aggregate principal amount of Revolving Loans
outstanding and (ii) the aggregate Letter of Credit Exposure of all
Lenders, will not exceed the aggregate Revolving Credit Commitments.
Very truly yours,
THE ACKERLEY GROUP, INC.
By: ______________________________
Title: ___________________________
<PAGE>
EXHIBIT C
---------
FORM OF
COMPLIANCE CERTIFICATE
THIS CERTIFICATE is given pursuant to SECTION 6.2(A) of the Credit
Agreement, dated as of __________, 1999 (as amended, modified or supplemented
from time to time, the "Credit Agreement," the terms defined therein being used
herein as therein defined), among THE ACKERLEY GROUP, INC. (the "Borrower"),
certain banks and other financial institutions from time to time parties thereto
(the "Lenders"), and First Union National Bank, as Administrative Agent for the
Lenders (in such capacity, the "Administrative Agent").
The undersigned hereby certifies that:
1. He is a duly elected Financial Officer of the Borrower.
2. Enclosed with this Certificate are copies of the financial statements
of the Borrower and its Subsidiaries as of _____________, and for the [________-
month period] [year] then ended, required to be delivered under SECTION
[6.1(A)][6.1(B)] of the Credit Agreement. Such financial statements have been
prepared in accordance with GAAP [(subject to the absence of notes required by
GAAP and subject to normal year-end adjustments)]/1/ and fairly present the
financial condition of the Borrower and its Subsidiaries on a consolidated basis
as of the date indicated and the results of operation of the Borrower and its
Subsidiaries on a consolidated basis for the period covered thereby.
3. The undersigned has reviewed the terms of the Credit Agreement and has
made, or caused to be made under the supervision of the undersigned, a review in
reasonable detail of the transactions and condition of the Borrower and its
Subsidiaries during the accounting period covered by such financial statements.
4. The examination described in paragraph 3 above did not disclose, and
the undersigned has no knowledge of the existence of, any Default or Event of
Default during or at the end of the accounting period covered by such financial
statements or as of the date of this Certificate. [, except as set forth below.
Describe here or in a separate attachment any exceptions to paragraph 4 above by
listing, in reasonable detail, the nature of the Default or Event of Default,
the period during which it existed and the action that the Borrower has taken or
proposes to take with respect thereto.]
____________
/1/Insert in the case of quarterly financial statements.
<PAGE>
5. Attached to this Certificate as Attachment A is a covenant compliance
worksheet reflecting the computation of the financial covenants set forth in
ARTICLE VII of the Credit Agreement as of the last day of the period covered by
the financial statements enclosed herewith.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of the _______ day of _____________, ____.
THE ACKERLEY GROUP, INC.
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
2
<PAGE>
ATTACHMENT A
COVENANT COMPLIANCE WORKSHEET
A. LEVERAGE RATIO (SECTION 7.1(A) OF THE CREDIT AGREEMENT)
- --------------------------------------------------------------------------------
(1) Consolidated Funded Debt of the Borrower and its
Subsidiaries as of the date of determination
(without duplication):
- ------------------------------------------------------------------------------
(a) Aggregate indebtedness and obligations of
Borrower and its Subsidiaries for borrowed money
or in respect of loans or advances of any kind as $_______
of the date of determination
- ------------------------------------------------------------------------------
(b) Aggregate obligations of Borrower and its
Subsidiaries evidenced by notes, bonds,
debentures or similar instruments as of the date $_______
of determination
- ------------------------------------------------------------------------------
(c) Aggregate reimbursement obligation of
Borrower and its Subsidiaries with respect to
surety bonds, letters of credit, and bankers'
acceptances as of the date of determination,
excluding obligations in respect of performance
bonds the outstanding amount of which do not $_______
exceed $20,000,000
- ------------------------------------------------------------------------------
(d) Aggregate obligation of Borrower and its
Subsidiaries to pay the deferred purchase price
of property or services as of the date of $_______
determination
- ------------------------------------------------------------------------------
(e) Aggregate indebtedness created or arising
under any conditional sale or other title
retention agreement with respect to property
acquired by the Borrower or its Subsidiaries as
of the date of determination $_______
- ------------------------------------------------------------------------------
i
<PAGE>
- ------------------------------------------------------------------------------
(f) Capital Lease Obligations as of the date of $_______
determination
- ------------------------------------------------------------------------------
(g) All Disqualified Capital Stock issued by the
Borrower or its Subsidiaries to the extent in
excess of the greater of such Disqualified
Capital Stock's voluntary or involuntary
liquidation preference and its maximum fixed $_______
repurchase price (but excluding accrued
dividends) as of the date of determination.
- ------------------------------------------------------------------------------
(h) Aggregate obligations attributable to
guaranties of Indebtedness of other Persons as of $_______
the date of determination
- ------------------------------------------------------------------------------
(i) Aggregate obligations in respect of any
earned deferred compensation for which the
Borrower or its Subsidiaries is liable as of the $_______
date of determination
- ------------------------------------------------------------------------------
(j) Aggregate indebtedness of the Borrower and
its Subsidiaries secured by any Lien on any
property or asset owned or held by the Borrower $_______
or its Subsidiaries as of the date of
determination
- ------------------------------------------------------------------------------
(k) Add Lines 1(a) through 1(j)
$_______
- ------------------------------------------------------------------------------
ii
<PAGE>
- ------------------------------------------------------------------------------
(2) Consolidated EBITDA for the most recently ended
four consecutive fiscal quarters (the
"Measurement Period"*
- ------------------------------------------------------------------------------
(a) Consolidated Net Income during such
Measurement Period $_______
- ------------------------------------------------------------------------------
(b) Aggregate tax expense of Borrower and its
Subsidiaries during such Measurement Period
$_______
- ------------------------------------------------------------------------------
(c) Consolidated Interest Expense during such
Measurement Period $_______
- ------------------------------------------------------------------------------
(d) Aggregate depreciation, amortization, and
other non-cash expenses of the Borrower
and its Subsidiaries reducing Consolidated
Net Income of the Borrower and its $_______
Subsidiaries during the Measurement Period
determined on a consolidated basis in
accordance with GAAP
- ------------------------------------------------------------------------------
(e) Add Lines 2(a) through 2(d) $_______
- ------------------------------------------------------------------------------
(3) Leverage Ratio:
Divide Line 1(k) by Line 2(e)
- ------------------------------------------------------------------------------
(4) Maximum Leverage Ratio as of the date of SEE SECTION
determination 7.1(A) OF CREDIT
AGREEMENT
- ------------------------------------------------------------------------------
___________
* As applicable, adjusted to exclude operating losses of Full House Sports, per
Credit Agreement.
iii
<PAGE>
B. SENIOR LEVERAGE RATIO (SECTION 7.1(B) OF THE CREDIT AGREEMENT)
- --------------------------------------------------------------------------------
(1) Consolidated Senior Funded Debt as of
the date of determination
- --------------------------------------------------------------------------------
(a) Consolidated Funded Debt as of the
date of determination (from A, Line $_________
1(k) above)
- --------------------------------------------------------------------------------
(b) Subordinated Indebtedness of the
Borrower and its Subsidiaries as of $_________
the date of determination
- --------------------------------------------------------------------------------
(c) Subtract Line 1(b) from Line 1(a) $_________
- --------------------------------------------------------------------------------
(2) Consolidated EBITDA for the most
recently ended four consecutive fiscal
quarters (the "Measurement Period")
(from A, Line 2(e))
- --------------------------------------------------------------------------------
(3) Senior Leverage Ratio: Divide Line 1(c)
by Line 2 _________
- --------------------------------------------------------------------------------
(4) Maximum Senior Leverage Ratio as of the date SEE SECTION
of determination 7.1(B) OF
CREDIT
AGREEMENT
- --------------------------------------------------------------------------------
iv
<PAGE>
C. INTEREST COVERAGE RATIO (SECTION 7.2 OF THE CREDIT AGREEMENT)
- --------------------------------------------------------------------------------
(1) Consolidated EBITDA for the period of four
consecutive fiscal quarters ending on the date of $___________
determination (the "Measurement Period") (from A,
Line 2(e))
- --------------------------------------------------------------------------------
(2) Consolidated Interest Expense of the Borrower and
its Subsidiaries for the Measurement Period $___________
(without duplication)
- --------------------------------------------------------------------------------
(3) Interest Coverage Ratio:
Divide Line 1 by Line 2 ____________
- --------------------------------------------------------------------------------
(4) Minimum Interest Coverage Ratio as of the date of SEE SECTION 7.2
determination OF CREDIT
AGREEMENT
- --------------------------------------------------------------------------------
v
<PAGE>
D. FIXED CHARGE COVERAGE RATIO (SECTION 7.3 OF THE CREDIT AGREEMENT)
- --------------------------------------------------------------------------------
(1) Consolidated EBITDA for the period of four
consecutive fiscal quarters then ending (the $___________
"Measurement Period")(from A, Line 2(e) above)
- --------------------------------------------------------------------------------
(2) Consolidated Fixed Charges during such
Measurement Period:
- --------------------------------------------------------------------------------
(a) Consolidated Interest Expense during such
Measurement Period (from C, Line 2) $___________
- --------------------------------------------------------------------------------
(b) Aggregate tax expense of Borrower and its
Subsidiaries during such Measurement Period $___________
- --------------------------------------------------------------------------------
(c) Capital Expenditures for such Measurement $___________
Period
- --------------------------------------------------------------------------------
(d) Aggregate amount of principal payments on
Consolidated Funded Debt scheduled or
required to have been made by Borrower
and its Subsidiaries during such period $___________
including the aggregate principal amount
of the Term Loans due during such
Measurement Period
- --------------------------------------------------------------------------------
(e) Aggregate of all amounts paid by
Borrower or any of its Subsidiaries during
such Measurement Period under any LMA
Agreements attributable to principal being
paid by the other parties to such LMA $___________
Agreements pursuant to their respective
senior credit facilities.
- --------------------------------------------------------------------------------
(f) Add Lines 2(a) through 2(e) $___________
- --------------------------------------------------------------------------------
(3) Fixed Charge Coverage Ratio:
Divide Line 1 by Line 2(f) $___________
- --------------------------------------------------------------------------------
(4) Minimum Fixed Charge Coverage Ratio as of the
date of determination 1.05 : 1.00
- --------------------------------------------------------------------------------
vi
<PAGE>
EXHIBIT D
---------
FORM OF
ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE (this "Assignment and Acceptance") is made this
_____ day of ____________, ____, by and between _________________________ (the
"Assignor") and ________________________ (the "Assignee"). Reference is made to
the Credit Agreement, dated as of January __, 1999 (as amended, modified or
supplemented from time to time, the "Credit Agreement"), among THE ACKERLEY
GROUP, INC. (the "Borrower"), certain banks and other financial institutions
from time to time parties thereto (the "Lenders"), FLEET BANK, N.A. as
Documentation Agent, and FIRST UNION NATIONAL BANK, as Administrative Agent for
the Lenders (the "Administrative Agent"). Unless otherwise defined herein,
capitalized terms used herein without definition shall have the meanings given
to them in the Credit Agreement.
The Assignor and the Assignee hereby agree as follows:
1. Assignment and Assumption. Subject to the terms and conditions hereof,
-------------------------
the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, without recourse to the Assignor and,
except as expressly provided herein, without representation or warranty by the
Assignor, the interest or interests as of the Effective Date (as hereinafter
defined) in and to all of the Assignor's rights and obligations under the Credit
Agreement and the other Credit Documents (in its capacity as a Lender
thereunder) with respect to each Class of Loans represented by the percentage
interest or interests specified with regard to such Class under the heading
"Assigned Share" in Item 4 of Annex I (each such assigned interest, an "Assigned
------ -------
Share"), including, without limitation, (i) in the case of Term Loans, the
relevant Assigned Share of all rights and obligations of the Assignor with
respect to its Term Loan Commitment (unless terminated), Term Note and Term
Loans, and (ii) in the case of Revolving Loans, the relevant Assigned Share of
all rights and obligations of the Assignor with respect to its Revolving Credit
Commitment, Letter of Credit Exposure, Revolving Notes and Revolving Loans.
2. The Assignor. The Assignor (i) represents and warrants that it is the
------------
legal and beneficial owner of each interest being assigned by it hereunder, that
each such interest is free and clear of any adverse claim, and that as of the
date hereof the amount of its Commitments and outstanding Loans of each Class
with regard to which an interest is being assigned hereunder (and Letter of
Credit Exposure, if applicable) is as set forth in Item 4 of Annex I, (ii)
------ -------
except as set forth in clause (i) above, makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement, any other
Credit Document or any other instrument or document furnished pursuant thereto
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement, any other Credit Document or any other
instrument or document furnished pursuant thereto, and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any of its Subsidiaries or the
performance or observance by the Borrower or any of its Subsidiaries of any of
their respective obligations under the Credit Agreement, any other Credit
Document or any other instrument or document furnished pursuant thereto.
<PAGE>
3. The Assignee. The Assignee (i) represents and warrants that it is legally
------------
authorized to enter into this Assignment and Acceptance, (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements most recently required to have been delivered under SECTION
6.1 of the Credit Agreement and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance, (iii) agrees that it will, independently and
without reliance upon the Administrative Agent, the Assignor or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement, (iv) confirms that it is an Eligible
Assignee, (v) appoints and authorizes the Administrative Agent to take such
actions as agent on its behalf under the Credit Agreement and the other Credit
Documents, and to exercise such powers and to perform such duties, as are
specifically delegated to the Administrative Agent by the terms thereof,
together with such other powers and duties as are reasonably incidental thereto,
and (vi) agrees that it will perform in accordance with their respective terms
all of the obligations that by the terms of the Credit Agreement are required to
be performed by it as a Lender. [To the extent legally entitled to do so, the
Assignee will deliver to the Administrative Agent, as and when required to be
delivered under the Credit Agreement, duly completed and executed originals of
the applicable tax withholding forms described in SECTION 2.17(D) of the Credit
Agreement].
4. Effective Date. Following the execution of this Assignment and Acceptance
--------------
by the Assignor and the Assignee, an executed original hereof, together with all
attachments hereto, shall be delivered to each of the Administrative Agent and
the Borrower (and also to the Administrative Agent, the processing fee referred
to in SECTION 11.7(A) of the Credit Agreement). The effective date of this
Assignment and Acceptance (the "Effective Date") shall be the earlier of (i) the
date of acceptance hereof by the Administrative Agent and the Borrower or (ii)
the date, if any, designated as the Effective Date in Item 5 of Annex I (which
---- - -------
date shall be not less than five (5) Business Days after the date of execution
hereof by the Assignor and the Assignee). As of the Effective Date, (y) the
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, shall have the rights and obligations of a
Lender thereunder and under the other Credit Documents, and (z) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights (other than rights under the provisions of the Credit Agreement and the
other Credit Documents relating to indemnification or payment of fees, costs and
expenses, to the extent such rights relate to the time prior to the Effective
Date) and be released from its obligations under the Credit Agreement and the
other Credit Documents.
5. Payments; Settlement. On or prior to the Effective Date, in consideration
--------------------
of the sale and assignment provided for herein and as a condition to the
effectiveness of this Assignment and Acceptance, the Assignee will pay to the
Assignor an amount (to be confirmed between the Assignor and the Assignee) that
represents the Assigned Share of the principal amount of the Loans of each
relevant Class made by the Assignor and outstanding on the Effective Date
(together, if and to the extent the Assignor and the Assignee so elect, with the
Assigned Share of any related accrued but unpaid interest, fees and other
amounts). From and after the Effective Date, the Administrative Agent will make
all payments required to be made by it under the Credit Agreement in respect of
each interest assigned hereunder (including, without limitation, all payments of
principal, interest and fees in respect of the Assigned Share of the Assignor's
Commitments and Loans assigned hereunder) directly
____________
/1/Insert if the Assignee is organized under the laws of a jurisdiction
outside the United States.
2
<PAGE>
to the Assignee. The Assignor and the Assignee shall be responsible for making
between themselves all appropriate adjustments in payments due under the Credit
Agreement in respect of the period prior to the Effective Date. All payments
required to be made hereunder or in connection herewith shall be made in Dollars
by wire transfer of immediately available funds to the appropriate party at its
address for payments designated in Annex I.
-------
6. Governing Law. This Assignment and Acceptance shall be governed by, and
-------------
construed in accordance with, the internal laws of the State of North Carolina
(without regard to the conflicts of laws principles thereof).
7. Entire Credit Agreement. This Assignment and Acceptance, together with the
-----------------------
Credit Agreement and the other Credit Documents, embody the entire agreement and
understanding between the parties hereto and supersede all prior agreements and
understandings of the parties, verbal or written, relating to the subject matter
hereof.
8. Successors and Assigns. This Assignment and Acceptance shall be binding
----------------------
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns.
9. Counterparts. This Assignment and Acceptance may be executed in any
------------
number of counterparts and by different parties hereto on separate counterparts,
each of which, when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment and Acceptance to
be executed by their duly authorized officers as of the date first above
written.
ASSIGNOR:
___________________________________
By: _______________________________
Title: _____________________________
ASSIGNEE:
__________________________________
By: _______________________________
Title: _____________________________
Accepted this _______ day of
______________, 19___:
FIRST UNION NATIONAL BANK, as Administrative Agent
By: __________________________________
Title: _______________________________
Consented and agreed to:
THE ACKERLEY GROUP, INC.
By: __________________________________
Title: _______________________________
4
<PAGE>
ANNEX I
-------
1. Borrower: The Ackerley Group, Inc.
2. Name and Date of Credit Agreement:
Agreement, dated as of January __, 1999, among The Ackerley Group, Inc.,
certain Lenders from time to time parties thereto, Fleet Bank, N.A., as
Documentation Agent and First Union National Bank, as Administrative Agent.
3. Date of Assignment and Acceptance: ________________, 19___.
4. Amounts:
<TABLE>
<CAPTION>
Amount of Aggregate
Aggregate Assigned Assigned for Assignor
for Assignor Share/1/ Share (after assignment)
--------------- --------------- -------------- -------------------
<S> <C> <C> <C> <C>
(a) Term Loan Commitment/2/ $__________ _____% $_________ $___________
(b) Term Loans $__________ _____% $_________ $___________
(c) Revolving Credit Commitment $__________ _____% $_________ $___________
(d) Revolving Credit Loans/3/ $__________ _____% $_________ $___________
(e) Letter of Credit Exposure $__________ _____% $_________ $___________
</TABLE>
5. Effective Date: ___________________, 19___./4/
6. Addresses for Payments:
Assignor: ______________________________
______________________________
Attention: ___________________
Telephone: ___________________
Telecopy: ____________________
Reference: ___________________
______________
/1/Percentage taken to up to ten decimal places, if necessary.
/2/Applicable only to assignments made prior to the Closing Date.
/3/Insert amounts outstanding as of the date of the Assignment and Acceptance.
/4/Shall be a date not less than five Business Days after the date of the
Assignment and Acceptance.
<PAGE>
Assignee: ______________________________
______________________________
Attention: ___________________
Telephone: ___________________
Telecopy: ____________________
Reference: ___________________
7. Addresses for Notices:
Assignor: ______________________________
______________________________
Attention: ___________________
Telephone: ___________________
Telecopy: ____________________
Reference: ___________________
Assignee: ______________________________
______________________________
Attention: ___________________
Telephone: ___________________
Telecopy: ____________________
Reference: ___________________
8. Lending Office of Assignee:
______________________________
______________________________
Attention: ___________________
Telephone: ___________________
Telecopy: ____________________
Reference: ___________________
<PAGE>
EXHIBIT E
---------
PLEDGE AGREEMENT
[FILED AS EXHIBIT 10.3 TO REGISTRATION STATEMENT]
<PAGE>
EXHIBIT F
---------
SECURITY AGREEMENT
[FILED AS EXHIBIT 10.2 TO REGISTRATION STATEMENT]
<PAGE>
EXHIBIT G
---------
FORM OF
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY, dated as of the _____ day of ______________, ____
(this "Guaranty"), is made by each of the undersigned Subsidiaries of THE
ACKERLEY GROUP, INC., a Delaware corporation (the "Borrower"), and each other
Subsidiary of the Borrower that, after the date hereof, executes an instrument
of accession hereto substantially in the form of Exhibit A (a "Guarantor
---------
Accession"; the undersigned and such other Subsidiaries of the Borrower,
collectively, the "Guarantors"), in favor of the Guaranteed Parties (as
hereinafter defined). Capitalized terms used herein without definition shall
have the meanings given to them in the Credit Agreement referred to below.
RECITALS
A. The Borrower, certain banks and other financial institutions
(collectively, the "Lenders"), and First Union National Bank, as agent for the
Lenders (in such capacity, the "Agent"), are parties to a Credit Agreement,
dated as of January ___, 1999 (as amended, modified or supplemented from time to
time, the "Credit Agreement"), providing for the availability of certain credit
facilities to the Borrower upon the terms and conditions set forth therein.
B. It is a condition to the continuing extension of credit to the
Borrower under the Credit Agreement that each Guarantor shall have agreed, by
executing and delivering this Guaranty, to guarantee to the Guaranteed Parties
the payment in full of the Guaranteed Obligations (as hereinafter defined). The
Guaranteed Parties are relying on this Guaranty in their decision to continue to
extend credit to the Borrower under the Credit Agreement, and would not have
entered into the Credit Agreement without the agreement of the Borrower to cause
its subsidiaries to execute and deliver this Guaranty upon the Borrower's
payment in full of its 10.48% Senior Subordinated Notes due 2000.
C. The Borrower and the Guarantors are engaged in related businesses and
undertake certain activities and operations on an integrated basis. As part of
such integrated operations, the Borrower, among other things, will advance to
the Guarantors from time to time certain proceeds of the Loans made to the
Borrower by the Lenders under the Credit Agreement. Each Guarantor will
therefore obtain benefits as a result of the extension of credit to the Borrower
under the Credit Agreement, which benefits are hereby acknowledged, and,
accordingly, desires to execute and deliver this Guaranty.
<PAGE>
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to induce the Guaranteed Parties to enter into the Credit
Agreement and to induce the Lenders to extend credit to the Borrower thereunder,
each Guarantor hereby agrees as follows:
1. Guaranty. (a) Each Guarantor hereby irrevocably, absolutely and
--------
unconditionally, and jointly and severally:
(i) guarantees (a) to the Lenders (including the Issuing Lender in
its capacity as such) and the Agent (collectively, the "Guaranteed
Parties") the full and prompt payment, at any time and from time to time as
and when due (whether at the stated maturity, by acceleration or
otherwise), of all Obligations of the Borrower under the Credit Agreement
and the other Credit Documents, including, without limitation, all
principal of and interest on the Loans, all Reimbursement Obligations in
respect of Letters of Credit, all fees, expenses, indemnities and other
amounts payable by the Borrower under the Credit Agreement or any other
Credit Document (including interest accruing after the filing of a petition
or commencement of a case by or with respect to the Borrower seeking relief
under any Insolvency Laws (as hereinafter defined), whether or not the
claim for such interest is allowed in such proceeding), and all Obligations
that, but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due, and (b) to each applicable Lender in
its capacity as a counterparty to any Hedge Agreement with the Borrower
required or permitted under the Credit Agreement, all obligations of the
Borrower under such Hedge Agreement, in each case under (a) and (b) whether
now existing or hereafter created or arising and whether direct or
indirect, absolute or contingent, due or to become due (all liabilities and
obligations described in this clause (i), collectively, the "Guaranteed
Obligations"); and
(ii) agrees to pay or reimburse upon demand all reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) incurred or paid by (y) any Guaranteed Party in connection with
any suit, action or proceeding to enforce or protect any rights of the
Guaranteed Parties hereunder and (z) the Agent in connection with any
amendment, modification or waiver hereof or consent pursuant hereto, and to
indemnify and hold each Guaranteed Party and its directors, officers,
employees, agents and Affiliates harmless from and against any and all
claims, losses, damages, obligations, liabilities, penalties, costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) of any kind or nature whatsoever, whether direct, indirect or
consequential, that may at any time be imposed on, incurred by or asserted
against any such indemnified party as a result of, arising from or in any
way relating to this Guaranty or the collection or enforcement of the
Guaranteed Obligations; provided, however, that no indemnified party shall
-------- -------
have the right to be indemnified hereunder for any such claims, losses,
costs and expenses to the extent resulting from the gross negligence or
willful misconduct of such indemnified party (all liabilities and
obligations described in
2
<PAGE>
this clause (ii), collectively, the "Other Obligations"; and the Other
Obligations, together with the Guaranteed Obligations, the "Total
Obligations").
(b) Notwithstanding the provisions of subsection (a) above and
notwithstanding any other provisions contained herein or in any other Credit
Document:
(i) no provision of this Guaranty shall require or permit the
collection from any Guarantor of interest in excess of the maximum rate or
amount that such Guarantor may be required or permitted to pay pursuant to
applicable law; and
(ii) the liability of each Guarantor under this Guaranty as of any
date shall be limited to a maximum aggregate amount (the "Maximum
Guaranteed Amount") equal to the greatest amount that would not render such
Guarantor's obligations under this Guaranty subject to avoidance, discharge
or reduction as of such date as a fraudulent transfer or conveyance under
applicable federal and state laws pertaining to bankruptcy, reorganization,
arrangement, moratorium, readjustment of debts, dissolution, liquidation or
other debtor relief, specifically including, without limitation, the
Bankruptcy Code and any fraudulent transfer and fraudulent conveyance laws
(collectively, "Insolvency Laws"), in each instance after giving effect to
all other liabilities of such Guarantor, contingent or otherwise, that are
relevant under applicable Insolvency Laws (specifically excluding, however,
any liabilities of such Guarantor in respect of intercompany indebtedness
to the Borrower or any of its Affiliates to the extent that such
indebtedness would be discharged in an amount equal to the amount paid by
such Guarantor hereunder, and after giving effect as assets to the value
(as determined under applicable Insolvency Laws) of any rights to
subrogation, contribution, reimbursement, indemnity or similar rights of
such Guarantor pursuant to (y) applicable law or (z) any agreement
(including this Guaranty) providing for an equitable allocation among such
Guarantor and other Affiliates of the Borrower of obligations arising under
guaranties by such parties).
(c) The Guarantors desire to allocate among themselves, in a fair and
equitable manner, their obligations arising under this Guaranty. Accordingly, in
the event any payment or distribution is made hereunder on any date by a
Guarantor (a "Funding Guarantor") that exceeds its Fair Share (as hereinafter
defined) as of such date, that Funding Guarantor shall be entitled to a
contribution from each of the other Guarantors in the amount of such other
Guarantor's Fair Share Shortfall (as hereinafter defined) as of such date, with
the result that all such contributions will cause each Guarantor's Aggregate
Payments (as hereinafter defined) to equal its Fair Share as of such date. "Fair
Share" means, with respect to a Guarantor as of any date of determination, an
amount equal to (i) the ratio of (x) the Adjusted Maximum Guaranteed Amount (as
hereinafter defined) with respect to such Guarantor to (y) the aggregate of the
Adjusted Maximum Guaranteed Amounts with respect to all Guarantors, multiplied
by (ii) the aggregate amount paid or distributed on or before such date by all
Funding Guarantors hereunder in respect of the obligations guarantied. "Fair
Share Shortfall" means, with respect to a Guarantor as of any date of
determination, the excess, if any, of the Fair Share of such Guarantor over the
Aggregate Payments of such Guarantor. "Adjusted Maximum Guaranteed Amount"
means, with respect to a Guarantor as of any date of determination, the Maximum
Guaranteed Amount of such
3
<PAGE>
Guarantor, determined in accordance with the provisions of subsection (b) above;
provided that, solely for purposes of calculating the "Adjusted Maximum
- --------
Guaranteed Amount" with respect to any Guarantor for purposes of this subsection
(c), any assets or liabilities arising by virtue of any rights to subrogation,
reimbursement or indemnity or any rights to or obligations of contribution
hereunder shall not be considered as assets or liabilities of such Guarantor.
"Aggregate Payments" means, with respect to a Guarantor as of any date of
determination, the aggregate amount of all payments and distributions made on or
before such date by such Guarantor in respect of this Guaranty (including,
without limitation, in respect of this subsection (c)). The amounts payable as
contributions hereunder shall be determined as of the date on which the related
payment or distribution is made by the applicable Funding Guarantor. Each
Funding Guarantor's right of contribution under this subsection (c) shall be
subject to the provisions of SECTION 4. The allocation among Guarantors of their
obligations as set forth in this subsection (c) shall not be construed in any
way to limit the liability of any Guarantor hereunder to the Guaranteed Parties.
(d) The guaranty of each Guarantor set forth in this Section is a guaranty
of payment as a primary obligor, and not a guaranty of collection. Each
Guarantor hereby acknowledges and agrees that the Guaranteed Obligations, at any
time and from time to time, may exceed the Maximum Guaranteed Amount of such
Guarantor and may exceed the aggregate of the Maximum Guaranteed Amounts of all
Guarantors, in each case without discharging, limiting or otherwise affecting
the obligations of any Guarantor hereunder or the rights, powers and remedies of
any Guaranteed Party hereunder or under any other Credit Document.
2. Guaranty Absolute. Each Guarantor agrees that its obligations
-----------------
hereunder are irrevocable, absolute and unconditional, are independent of the
Guaranteed Obligations and any Collateral or other security therefor or other
guaranty or liability in respect thereof, whether given by such Guarantor or any
other Person, and shall not be discharged, limited or otherwise affected by
reason of any of the following, whether or not such Guarantor has notice or
knowledge thereof:
(i) any change in the time, manner or place of payment of, or in any
other term of, any Guaranteed Obligations or any guaranty or other
liability in respect thereof, or any amendment, modification or supplement
to, restatement of, or consent to any rescission or waiver of or departure
from, any provisions of the Credit Agreement, any other Credit Document or
any agreement or instrument delivered pursuant to any of the foregoing;
(ii) the invalidity or unenforceability of any Guaranteed
Obligations, any guaranty or other liability in respect thereof or any
provisions of the Credit Agreement, any other Credit Document or any
agreement or instrument delivered pursuant to any of the foregoing;
(iii) the addition or release of Guarantors hereunder or the taking,
acceptance or release of other guarantees of any Guaranteed Obligations or
additional Collateral or
4
<PAGE>
other security for any Guaranteed Obligations or for any guaranty or other
liability in respect thereof;
(iv) any discharge, modification, settlement, compromise or other
action in respect of any Guaranteed Obligations or any guaranty or other
liability in respect thereof, including any acceptance or refusal of any
offer or performance with respect to the same or the subordination of the
same to the payment of any other obligations;
(v) any agreement not to pursue or enforce or any failure to pursue
or enforce (whether voluntarily or involuntarily as a result of operation
of law, court order or otherwise) any right or remedy in respect of any
Guaranteed Obligations, any guaranty or other liability in respect thereof
or any Collateral or other security for any of the foregoing; any sale,
exchange, release, substitution, compromise or other action in respect of
any such Collateral or other security; or any failure to create, protect,
perfect, secure, insure, continue or maintain any Liens in any such
Collateral or other security;
(vi) the exercise of any right or remedy available under the Credit
Documents, at law, in equity or otherwise in respect of any Collateral or
other security for any Guaranteed Obligations or for any guaranty or other
liability in respect thereof, in any order and by any manner thereby
permitted, including, without limitation, foreclosure on any such
Collateral or other security by any manner of sale thereby permitted,
whether or not every aspect of such sale is commercially reasonable;
(vii) any bankruptcy, reorganization, arrangement, liquidation,
insolvency, dissolution, termination, reorganization or like change in the
corporate structure or existence of the Borrower or any other Person
directly or indirectly liable for any Guaranteed Obligations;
(viii) any manner of application of any payments by or amounts
received or collected from any Person, by whomsoever paid and howsoever
realized, whether in reduction of any Guaranteed Obligations or any other
obligations of the Borrower or any other Person directly or indirectly
liable for any Guaranteed Obligations, regardless of what Guaranteed
Obligations may remain unpaid after any such application; or
(ix) any other circumstance that might otherwise constitute a legal
or equitable discharge of, or a defense, set-off or counterclaim available
to, the Borrower, any Guarantor or a surety or guarantor generally, other
than the occurrence of all of the following: (x) the payment in full of the
Total Obligations, (y) the termination of the Commitments and the
termination or expiration of all Letters of Credit under the Credit
Agreement, and (z) the termination of, and settlement of all obligations of
the Borrower under, each Hedge Agreement to which the Borrower and any
Lender are parties (the events in clauses (x), (y) and (z) above,
collectively, the "Termination Requirements").
5
<PAGE>
3. Certain Waivers. Each Guarantor hereby knowingly, voluntarily and
---------------
expressly waives:
(i) presentment, demand for payment, demand for performance,
protest and notice of any other kind, including, without limitation, notice
of nonpayment or other nonperformance (including notice of default under
any Credit Document with respect to any Guaranteed Obligations), protest,
dishonor, acceptance hereof, extension of additional credit to the Borrower
and of any of the matters referred to in SECTION 2 and of any rights to
consent thereto;
(ii) any right to require the Guaranteed Parties or any of them, as
a condition of payment or performance by such Guarantor hereunder, to
proceed against, or to exhaust or have resort to any Collateral or other
security from or any deposit balance or other credit in favor of, the
Borrower, any other Guarantor or any other Person directly or indirectly
liable for any Guaranteed Obligations, or to pursue any other remedy or
enforce any other right; and any other defense based on an election of
remedies with respect to any Collateral or other security for any
Guaranteed Obligations of for any guaranty or other liability in respect
thereof, notwithstanding that any such election (including any failure to
pursue or enforce any rights or remedies) may impair or extinguish any
right of indemnification, contribution, reimbursement or subrogation or
other right or remedy of any Guarantor against the Borrower, any other
Guarantor or any other Person directly or indirectly liable for any
Guaranteed Obligations or any such Collateral or other security; and,
without limiting the generality of the foregoing, each Guarantor hereby
specifically waives the benefits of Sections 26-7 through 26-9, inclusive,
of the General Statutes of North Carolina, as amended from time to time,
and any similar statute or law of any other jurisdiction, as the same may
be amended from time to time;
(iii) any right or defense based on or arising by reason of any
right or defense of the Borrower or any other Person, including, without
limitation, any defense based on or arising from a lack of authority or
other disability of the Borrower or any other Person, the invalidity or
unenforceability of any Guaranteed Obligations, any Collateral or other
security therefor or any Credit Document or other agreement or instrument
delivered pursuant thereto, or the cessation of the liability of the
Borrower for any reason other than the satisfaction of the Termination
Requirements;
(iv) any defense based on any Guaranteed Party's acts or omissions
in the administration of the Guaranteed Obligations, any guaranty or other
liability in respect thereof or any Collateral or other security for any of
the foregoing, and promptness, diligence or any requirement that any
Guaranteed Party create, protect, perfect, secure, insure, continue or
maintain any Liens in any such Collateral or other security;
(v) any right to assert against any Guaranteed Party, as a defense,
counterclaim, crossclaim or set-off, any defense, counterclaim, claim,
right of recoupment or set-off that it may at any time have against any
Guaranteed Party (including, without
6
<PAGE>
limitation, failure of consideration, statute of limitations, payment,
accord and satisfaction and usury), other than compulsory counterclaims;
and
(vi) any defense based on or afforded by any applicable law that
limits the liability of or exonerates guarantors or sureties or that may in
any other way conflict with the terms of this Guaranty.
4. Waiver of Subrogation; Subordination. Each Guarantor hereby knowingly,
------------------------------------
voluntarily and expressly waives all claims and rights that it may have against
the Borrower or any other Guarantor at any time as a result of any payment made
under or in connection with this Guaranty or the performance or enforcement
hereof, including all rights of subrogation to the rights of any of the
Guaranteed Parties against the Borrower or any other Guarantor, all rights of
indemnity, contribution or reimbursement against the Borrower or any other
Guarantor (including rights of contribution as set forth in SECTION 1(C)), all
rights to enforce any remedies of any Guaranteed Party against the Borrower or
any other Guarantor, and any benefit of, and any right to participate in, any
Collateral or other security held by any Guaranteed Party to secure payment of
the Guaranteed Obligations, in each case whether such claims or rights arise by
contract, statute (including without limitation the Bankruptcy Code), common law
or otherwise. Each Guarantor agrees that all indebtedness and other obligations,
whether now or hereafter existing, of the Borrower or any other Subsidiary of
the Borrower to such Guarantor, including, without limitation, any such
indebtedness in any proceeding under the Bankruptcy Code and any intercompany
receivables, together with any interest thereon, shall be, and hereby are,
subordinated and made junior in right of payment to the Total Obligations. Each
Guarantor further agrees that if any amount shall be paid to or any distribution
received by any Guarantor (i) on account of any such indebtedness at any time
after the occurrence and during the continuance of an Event of Default, or (ii)
on account of any such rights of subrogation, indemnity, contribution or
reimbursement at any time prior to the satisfaction of the Termination
Requirements, such amount or distribution shall be deemed to have been received
and to be held in trust for the benefit of the Guaranteed Parties, and shall
forthwith be delivered to the Agent in the form received (with any necessary
endorsements in the case of written instruments), to be applied against the
Guaranteed Obligations, whether or not matured, in accordance with the terms of
the applicable Credit Documents and without in any way discharging, limiting or
otherwise affecting the liability of such Guarantor under any other provision of
this Guaranty. Additionally, in the event the Borrower or any Subsidiary of the
Borrower becomes a "debtor" within the meaning of the Bankruptcy Code, the Agent
shall be entitled, at its option, on behalf of the Guaranteed Parties and as
attorney-in-fact for each Guarantor, and is hereby authorized and appointed by
each Guarantor, to file proofs of claim on behalf of each relevant Guarantor and
vote the rights of each such Guarantor in any plan of reorganization, and to
demand, sue for, collect and receive every payment and distribution on any
indebtedness of the Borrower or such Subsidiary to any Guarantor in any such
proceeding, each Guarantor hereby assigning to the Agent all of its rights in
respect of any such claim, including the right to receive payments and
distributions in respect thereof.
7
<PAGE>
5. Representations and Warranties. Each Guarantor hereby represents and
------------------------------
warrants to the Guaranteed Parties as follows:
(a) Such Guarantor is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
the full corporate power and authority to execute, deliver and perform this
Guaranty and the other Credit Documents to which it is or will be a party, to
own and hold its property and to engage in its business as presently conducted.
(b) Such Guarantor has taken all necessary corporate action to execute,
deliver and perform this Guaranty and each of the other Credit Documents to
which it is or will be a party, and has, or on any later date of execution and
delivery will have, validly executed and delivered each of the Credit Documents
to which it is or will be a party. This Guaranty constitutes, and each of such
other Credit Documents upon execution and delivery will constitute, the legal,
valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or by general equitable principles.
(c) The execution, delivery and performance by such Guarantor of this
Guaranty and the other Credit Documents to which it is a party, and compliance
by it with the terms hereof and thereof, do not and will not (i) violate any
provision of its articles or certificate of incorporation or bylaws, (ii)
contravene any Requirement of Law applicable to it, (iii) conflict with, result
in a breach of or constitute (with notice, lapse of time or both) a default
under any indenture, loan agreement, mortgage, deed of trust, lease or other
agreement or instrument to which it is a party, by which it or any of its
properties is bound or to which it is subject, or (iv) result in or require the
creation or imposition of any Lien upon any of its properties, other than Liens
created pursuant to the Credit Documents.
(d) No consent, approval, authorization or other action by, notice to, or
registration or filing with, any Governmental Authority is or will be required
as a condition to or otherwise in connection with the due execution, delivery
and performance by such Guarantor of this Guaranty and the other Credit
Documents to which it is a party or the legality, validity or enforceability
hereof or thereof.
(e) Except as may be disclosed in the Schedules to the Credit Agreement,
there are no actions, investigations, suits or proceedings pending or, to the
knowledge of such Guarantor, threatened, at law, in equity or in arbitration,
before any court, other Governmental Authority or other Person, (i) against or
affecting such Guarantor or any of its properties that would, if adversely
determined, be reasonably likely to have a Material Adverse Effect or (ii) with
respect to this Guaranty or any of the other Credit Documents to which such
Guarantor is a party.
(f) Such Guarantor has been provided with a true and complete copy of the
executed Credit Agreement, as in effect as of the date it became a party hereto,
and its principal officers
8
<PAGE>
are familiar with the contents thereof, particularly insofar as the contents
thereof relate or apply to such Guarantor.
6. Financial Condition of Borrower. Each Guarantor represents that it has
-------------------------------
knowledge of the Borrower's financial condition and affairs and that it has
adequate means to obtain from the Borrower on an ongoing basis information
relating thereto and to the Borrower's ability to pay and perform the Guaranteed
Obligations, and agrees to assume the responsibility for keeping, and to keep,
so informed for so long as this Guaranty is in effect with respect to such
Guarantor. Each Guarantor agrees that the Guaranteed Parties shall have no
obligation to investigate the financial condition or affairs of the Borrower for
the benefit of any Guarantor nor to advise any Guarantor of any fact respecting,
or any change in, the financial condition or affairs of the Borrower that might
become known to any Guaranteed Party at any time, whether or not such Guaranteed
Party knows or believes or has reason to know or believe that any such fact or
change is unknown to any Guarantor, or might (or does) materially increase the
risk of any Guarantor as guarantor, or might (or would) affect the willingness
of any Guarantor to continue as a guarantor of the Guaranteed Obligations.
7. Payments; Application; Set-Off. (a) Each Guarantor agrees that, upon
------------------------------
the failure of the Borrower to pay any Guaranteed Obligations when and as the
same shall become due (whether at the stated maturity, by acceleration or
otherwise), and without limitation of any other right or remedy that any
Guaranteed Party may have at law, in equity or otherwise against such Guarantor,
such Guarantor will, subject to the provisions of SECTION 1(B), forthwith pay or
cause to be paid to the Agent, for the benefit of the Guaranteed Parties, an
amount equal to the amount of the Guaranteed Obligations then due and owing as
aforesaid.
(b) All payments made by each Guarantor hereunder will be made in Dollars
to the Agent, without set-off, counterclaim or other defense and, in accordance
with the Credit Agreement, free and clear of and without deduction for any
Taxes, each Guarantor hereby agreeing to comply with and be bound by the
provisions of the Credit Agreement in respect of all payments made by it
hereunder and the provisions of which Section are hereby incorporated into and
made a part of this Guaranty by this reference as if set forth herein at length.
(c) All payments made hereunder shall be applied upon receipt as follows:
(i) first, to the payment of all Other Obligations owing to the
Agent;
(ii) second, after payment in full of the amounts specified in
clause (i) above, to the ratable payment of all other Total Obligations
owing to the Guaranteed Parties; and
(iii) third, after payment in full of the amounts specified in
clauses (i) and (ii) above, and following the termination of this Guaranty,
to the Guarantors or any other Person lawfully entitled to receive such
surplus.
(d) For purposes of applying amounts in accordance with this Section, the
Agent shall be entitled to rely upon any Guaranteed Party that has entered into
a Hedge Agreement with the
9
<PAGE>
Borrower for a determination (which such Guaranteed Party agrees to provide or
cause to be provided upon request of the Agent) of the outstanding Guaranteed
Obligations owed to such Guaranteed Party under any such Hedge Agreement. Unless
it has actual knowledge (including by way of written notice from any such
Guaranteed Party) to the contrary, the Agent, in acting hereunder, shall be
entitled to assume that no Hedge Agreements or Obligations in respect thereof
are in existence between any Guaranteed Party and the Borrower.
(e) The Guarantors shall remain jointly and severally liable to the extent
of any deficiency between the amount of all payments made hereunder and the
aggregate amount of the sums referred to in clauses (i) and (ii) of subsection
(c) above.
(f) In addition to all other rights and remedies available under the
Credit Documents or applicable law or otherwise, upon and at any time after the
occurrence and during the continuance of any Event of Default, each Guaranteed
Party may, and is hereby authorized by each Guarantor, at any such time and from
time to time, to the fullest extent permitted by applicable law, without
presentment, demand, protest or other notice of any kind, all of which are
hereby knowingly and expressly waived by each Guarantor, to set off and to apply
any and all deposits (general or special, time or demand, provisional or final)
and any other property at any time held (including at any branches or agencies,
wherever located), and any other indebtedness at any time owing, by such
Guaranteed Party to or for the credit or the account of such Guarantor against
any or all of the obligations of such Guarantor to such Guaranteed Party
hereunder now or hereafter existing, whether or not such obligations may be
contingent or unmatured, each Guarantor hereby granting to each Guaranteed Party
a continuing security interest in and Lien upon all such deposits and other
property as security for such obligations. Each Guaranteed Party agrees to
notify any affected Guarantor promptly after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
- -------- -------
validity of such set-off and application.
8. No Waiver. The rights and remedies of the Guaranteed Parties expressly
---------
set forth in this Guaranty and the other Credit Documents are cumulative and in
addition to, and not exclusive of, all other rights and remedies available at
law, in equity or otherwise. No failure or delay on the part of any Guaranteed
Party in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege or be construed to be a waiver of any Default or
Event of Default. No course of dealing between any of the Guarantors and the
Guaranteed Parties or their agents or employees shall be effective to amend,
modify or discharge any provision of this Guaranty or any other Credit Document
or to constitute a waiver of any Default or Event of Default. No notice to or
demand upon any Guarantor in any case shall entitle such Guarantor or any other
Guarantor to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of any Guaranteed Party to
exercise any right or remedy or take any other or further action in any
circumstances without notice or demand.
9. Enforcement. The Guaranteed Parties agree that, except as provided in
-----------
SECTION 7(F), this Guaranty may be enforced only by the Agent, acting upon the
instructions or
10
<PAGE>
with the consent of the Required Lenders as provided for in the Credit
Agreement, and that no Guaranteed Party shall have any right individually to
enforce or seek to enforce this Guaranty or to realize upon any Collateral or
other security given to secure the payment and performance of the Guarantors'
obligations hereunder. The obligations of each Guarantor hereunder are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought against each Guarantor whether or not action is brought against the
Borrower or any other Guarantor and whether or not the Borrower or any other
Guarantor is joined in any such action. Each Guarantor agrees that to the extent
all or part of any payment of the Guaranteed Obligations made by any Person is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid by or on behalf of any Guaranteed Party to a trustee,
receiver or any other party under any Insolvency Laws (the amount of any such
payment, a "Reclaimed Amount"), then, to the extent of such Reclaimed Amount,
this Guaranty shall continue in full force and effect or be revived and
reinstated, as the case may be, as to the Guaranteed Obligations intended to be
satisfied as if such payment had not been received; and each Guarantor
acknowledges that the term "Guaranteed Obligations" includes all Reclaimed
Amounts that may arise from time to time.
10. Amendments, Waivers, etc. No amendment, modification, waiver,
------------------------
discharge or termination of, or consent to any departure by any Guarantor from,
any provision of this Guaranty, shall be effective unless in a writing signed by
the Agent and such of the Lenders as may be required under the provisions of the
Credit Agreement to concur in the action then being taken, and then the same
shall be effective only in the specific instance and for the specific purpose
for which given.
11. Addition, Release of Guarantors. Each Guarantor recognizes that the
-------------------------------
provisions of the Credit Agreement require Persons that become Subsidiaries of
the Borrower and that are not already parties hereto to become Guarantors
hereunder by executing a Guarantor Accession, and agrees that its obligations
hereunder shall not be discharged, limited or otherwise affected by reason of
the same, or by reason of the Agent's actions in effecting the same or in
releasing any Guarantor hereunder, in each case without the necessity of giving
notice to or obtaining the consent of any other Guarantor.
12. Continuing Guaranty; Term; Successors and Assigns; Assignment;
--------------------------------------------------------------
Survival. This Guaranty is a continuing guaranty and covers all of the
- --------
Guaranteed Obligations as the same may arise and be outstanding at any time and
from time to time from and after the date hereof, and shall (i) remain in full
force and effect until satisfaction of all of the Termination Requirements
(provided that the provisions of clause (ii) of SECTION 1(A) shall survive any
- ---------
termination of this Guaranty), (ii) be binding upon and enforceable against each
Guarantor and its successors and assigns (provided, however, that no Guarantor
-------- -------
may sell, assign or transfer any of its rights, interests, duties or obligations
hereunder without the prior written consent of the Lenders) and (iii) inure to
the benefit of and be enforceable by each Guaranteed Party and its successors
and assigns. Without limiting the generality of clause (iii) above, any
Guaranteed Party may, in accordance with the provisions of the Credit Agreement,
assign all or a portion of the Guaranteed Obligations held by it (including by
the sale of participations), whereupon each Person that becomes the holder of
any such Guaranteed Obligations shall (except as may be otherwise agreed
11
<PAGE>
between such Guaranteed Party and such Person) have and may exercise all of the
rights and benefits in respect thereof granted to such Guaranteed Party under
this Guaranty or otherwise. Each Guarantor hereby irrevocably waives notice of
and consents in advance to the assignment as provided above from time to time by
any Guaranteed Party of all or any portion of the Guaranteed Obligations held by
it and of the corresponding rights and interests of such Guaranteed Party
hereunder in connection therewith. All representations, warranties, covenants
and agreements herein shall survive the execution and delivery of this Guaranty
and any Guarantor Accession.
13. Governing Law; Consent to Jurisdiction; Appointment of Borrower as
------------------------------------------------------------------
Representative, Process Agent, Attorney-in-Fact. (a) THIS GUARANTY HAS BEEN
- -----------------------------------------------
EXECUTED, DELIVERED AND ACCEPTED AT, AND SHALL BE DEEMED TO HAVE BEEN MADE IN,
NORTH CAROLINA AND SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE
GUARANTEED PARTIES AND THE GUARANTORS DETERMINED, IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NORTH
CAROLINA. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, EACH
GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE COURT WITHIN
MECKLENBURG COUNTY, NORTH CAROLINA OR ANY FEDERAL COURT LOCATED WITHIN THE
WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA FOR ANY PROCEEDING INSTITUTED
HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS, OR ARISING OUT OF OR IN
CONNECTION WITH THIS GUARANTY OR ANY OF THE OTHER CREDIT DOCUMENTS, OR ANY
PROCEEDING TO WHICH ANY GUARANTEED PARTY OR SUCH GUARANTOR IS A PARTY, INCLUDING
ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
ANY GUARANTEED PARTY OR SUCH GUARANTOR. EACH GUARANTOR IRREVOCABLY AGREES TO BE
BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT RENDERED OR
RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT MAY HAVE BASED
ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT
--------------------
OF ANY SUCH PROCEEDING.
(b) EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES AND APPOINTS THE BORROWER
AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE ON ITS BEHALF ALL SERVICE OF
PROCESS IN ANY ACTION OR PROCEEDING AND ANY OTHER NOTICE OR COMMUNICATION
HEREUNDER, CONSENTS THAT ALL SERVICE OF PROCESS UPON IT MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO THE BORROWER AT ITS ADDRESS SET FORTH
HEREINABOVE (AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) BUSINESS DAYS AFTER DEPOSIT IN
THE UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED),
12
<PAGE>
AND AGREES THAT SERVICE SO MADE SHALL BE EFFECTIVE AND BINDING UPON SUCH
GUARANTOR IN EVERY RESPECT AND THAT ANY OTHER NOTICE OR COMMUNICATION GIVEN TO
THE BORROWER AT THE ADDRESS AND IN THE MANNER SPECIFIED HEREIN SHALL BE
EFFECTIVE NOTICE TO SUCH GUARANTOR. FURTHER, EACH GUARANTOR DOES HEREBY
IRREVOCABLY MAKE, CONSTITUTE AND APPOINT THE BORROWER AS ITS TRUE AND LAWFUL
ATTORNEY-IN-FACT, WITH FULL AUTHORITY IN ITS PLACE AND STEAD AND IN ITS NAME,
THE BORROWER'S NAME OR OTHERWISE, AND WITH FULL POWER OF SUBSTITUTION IN THE
PREMISES, FROM TIME TO TIME IN THE BORROWER'S DISCRETION TO AGREE ON BEHALF OF,
AND SIGN THE NAME OF, SUCH GUARANTOR TO ANY AMENDMENT, MODIFICATION OR
SUPPLEMENT TO, RESTATEMENT OF, OR WAIVER OR CONSENT IN CONNECTION WITH, THIS
GUARANTY, ANY OTHER CREDIT DOCUMENT OR ANY DOCUMENT OR INSTRUMENT PURSUANT
HERETO OR THERETO, AND TO TAKE ANY OTHER ACTION AND DO ALL OTHER THINGS ON
BEHALF OF SUCH GUARANTOR THAT THE BORROWER MAY DEEM NECESSARY OR ADVISABLE TO
CARRY OUT AND ACCOMPLISH THE PURPOSES OF THIS GUARANTY AND THE OTHER CREDIT
DOCUMENTS. THE BORROWER WILL NOT BE LIABLE FOR ANY ACT OR OMISSION NOR FOR ANY
ERROR OF JUDGMENT OR MISTAKE OF FACT UNLESS THE SAME SHALL OCCUR AS A RESULT OF
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE BORROWER. THIS POWER, BEING
COUPLED WITH AN INTEREST, IS IRREVOCABLE BY ANY GUARANTOR FOR SO LONG AS THIS
GUARANTY SHALL BE IN EFFECT WITH RESPECT TO SUCH GUARANTOR. BY ITS SIGNATURE
HERETO, THE BORROWER CONSENTS TO ITS APPOINTMENT AS PROVIDED FOR HEREIN AND
AGREES PROMPTLY TO DISTRIBUTE ALL PROCESS, NOTICES AND OTHER COMMUNICATIONS TO
EACH GUARANTOR.
(c) NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY GUARANTEED PARTY
TO BRING ANY ACTION OR PROCEEDING AGAINST ANY GUARANTOR IN THE COURTS OF ANY
OTHER JURISDICTION.
14. Arbitration; Preservation and Limitation of Remedies. (a) Upon
----------------------------------------------------
demand of any party hereto, whether made before or after institution of any
judicial proceeding, any dispute, claim or controversy arising out of, connected
with or relating to this Guaranty or any other Credit Document ("Disputes")
between or among the Guarantors and the Guaranteed Parties, or any of them,
shall be resolved by binding arbitration as provided herein. Institution of a
judicial proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, claims brought as class actions, claims arising from documents
executed in the future, disputes as to whether a matter is subject to
arbitration, or claims arising out of or connected with the transactions
contemplated by this Guaranty, the Credit Agreement and the other Credit
Documents. Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the
13
<PAGE>
"Arbitration Rules") of the American Arbitration Association (the "AAA"), as in
effect from time to time, and the Federal Arbitration Act, Title 9 of the U.S.
Code, as amended. All arbitration hearings shall be conducted in the city in
which the principal office of the Agent is located. A hearing shall begin within
ninety (90) days of demand for arbitration and all hearings shall be concluded
within 120 days of demand for arbitration. These time limitations may not be
extended unless a party shows cause for extension and then for no more than a
total of sixty (60) days. The expedited procedures set forth in Rule 51 et seq.
-- ---
of the Arbitration Rules shall be applicable to claims of less than $1,000,000.
All applicable statutes of limitation shall apply to any Dispute. A judgment
upon the award may be entered in any court having jurisdiction. The panel from
which all arbitrators are selected shall be comprised of licensed attorneys
selected from the Commercial Financial Dispute Arbitration Panel of the AAA. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted. Notwithstanding the foregoing, this arbitration
provision does not apply to Disputes under or related to any Hedge Agreement.
The parties do not waive applicable federal or state substantive law except as
provided herein.
(b) Notwithstanding the preceding binding arbitration provisions, the
parties hereto agree to preserve, without diminution, certain remedies that any
party hereto may employ or exercise freely, either alone, in conjunction with or
during a Dispute. Any party hereto shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: [(i) all rights to foreclose against any Collateral by
exercising a power of sale granted pursuant to any of the Credit Documents or
under applicable law or by judicial foreclosure and sale, including a proceeding
to confirm the sale;] (ii) all rights of self-help, including peaceful
occupation of real property and collection of rents, set-off, and peaceful
possession of personal property; (iii) obtaining provisional or ancillary
remedies, including injunctive relief, sequestration, garnishment, attachment,
appointment of a receiver and filing an involuntary bankruptcy proceeding; and
(iv) when applicable, a judgment by confession of judgment. Any claim or
controversy with regard to any party's entitlement to such remedies is a
Dispute. Preservation of these remedies does not limit the power of an
arbitrator to grant similar remedies that may be requested by a party in a
Dispute. The parties hereto agree that no party shall have a remedy of punitive
or exemplary damages against any other party in any Dispute, and each party
hereby waives any right or claim to punitive or exemplary damages that it has
now or that may arise in the future in connection with any Dispute, whether such
Dispute is resolved by arbitration or judicially. The parties acknowledge that
by agreeing to binding arbitration they have irrevocably waived any right they
may have to a jury trial with regard to a Dispute.
15. Notices. All notices and other communications provided for hereunder
-------
shall be in writing (including telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed, telecopied, cabled or
delivered (a) if to any Guarantor, in care of the Borrower and at the Borrower's
address for notices set forth in the Credit Agreement and (b) if to any
Guaranteed Party, at its address for notices set forth in the Credit Agreement;
or to such other address as any of the Persons listed above may designate for
itself by like notice to the other Persons listed above; and in each case, with
copies to such other Persons as may be
14
<PAGE>
specified under the provisions of the Credit Agreement. All such notices and
communications shall be deemed to have been given (i) if mailed as provided
above by any method other than overnight delivery service, on the third Business
Day after deposit in the mails, (ii) if mailed by overnight delivery service,
telegraphed, telexed, telecopied or cabled, when delivered for overnight
delivery, delivered to the telegraph company, confirmed by telex answerback,
transmitted by telecopier or delivered to the cable company, respectively, or
(iii) if delivered by hand, upon delivery; provided that notices and
--------
communications to the Agent shall not be effective until received by the Agent.
16. Severability. To the extent any provision of this Guaranty is
------------
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Guaranty in any jurisdiction.
17. Construction. The headings of the various sections and subsections of
------------
this Guaranty have been inserted for convenience only and shall not in any way
affect the meaning or construction of any of the provisions hereof. Unless the
context otherwise requires, words in the singular include the plural and words
in the plural include the singular.
18. Counterparts; Effectiveness. This Guaranty may be executed in any
---------------------------
number of counterparts and by different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. This Guaranty shall
become effective, as to any Guarantor, upon the execution and delivery by such
Guarantor of a counterpart hereof or a Guarantor Accession.
15
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed
by its duly authorized officers as of the date first above written.
ACKERLEY AIRPORT ADVERTISING, INC.
By: ________________________________
Title: ________________________________
ACKERLEY COMMUNICATIONS OF
MASSACHUSETTS, INC.
By: ________________________________
Title: ________________________________
AK MEDIA GROUP, INC.
By: ________________________________
Title: ________________________________
CENTRAL NEW YORK NEWS, INC.
By: ________________________________
Title: ________________________________
(signatures continued)
16
<PAGE>
KJR RADIO, INC.
By: ________________________________
Title: ________________________________
KVOS TV, LTD.
By: ________________________________
Title: ________________________________
(signatures continued)
17
<PAGE>
SSI, INC.
By: ________________________________
Title: ________________________________
TC AVIATION, INC.
By: ________________________________
Title: ________________________________
WIXT TV, INC.
By: ________________________________
Title: ________________________________
WOKR, INC.
By: ________________________________
Title: ________________________________
Accepted and agreed to:
FIRST UNION NATIONAL BANK, as
Agent
By: __________________________________
Title: __________________________________
18
<PAGE>
The Borrower hereby joins in this Guaranty for purposes of evidencing its
consent to, and agreement to perform, the provisions of SECTION 13(B).
THE ACKERLEY GROUP, INC.
By: __________________________________
Title: __________________________________
19
<PAGE>
Exhibit A to Subsidiary Guaranty
First Union National Bank, as Agent
The Ackerley Group, Inc.
___________________________________
GUARANTOR ACCESSION
THIS GUARANTOR ACCESSION (this "Accession"), dated as of _____________,
____, is executed and delivered by [NAME OF NEW GUARANTOR], a ______________
corporation (the "Company"), pursuant to the Subsidiary Guaranty referred to
hereinbelow.
Reference is made to the Credit Agreement, dated as of ________________,
1999, among The Ackerley Group, Inc. (the "Borrower"), the Lenders party
thereto, and the Agent (as amended, modified or supplemented from time to time,
the "Credit Agreement"). In connection with and as a condition to the initial
and continued extensions of credit under the Credit Agreement, the Borrower and
certain of its subsidiaries have executed and delivered a Subsidiary Guaranty,
dated as of ________________, ____ (as amended, modified or supplemented from
time to time, the "Subsidiary Guaranty"), pursuant to which such subsidiaries
have guaranteed the payment in full of the obligations of the Borrower under the
Credit Agreement and the other Credit Documents (as defined in the Credit
Agreement). Capitalized terms used herein without definition shall have the
meanings given to them in the Subsidiary Guaranty.
The Borrower has agreed under the Credit Agreement to cause each of its
future subsidiaries to become a party to the Subsidiary Guaranty as a guarantor
thereunder. The Company is a subsidiary of the Borrower. The Company will obtain
benefits as a result of the continued extension of credit to the Borrower under
the Credit Agreement, which benefits are hereby acknowledged, and, accordingly,
desire to execute and deliver this Accession. Therefore, in consideration of the
foregoing and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and to induce the Lenders to continue to
extend credit to the Borrower under the Credit Agreement, the Company hereby
agrees as follows:
1. The Company hereby joins in and agrees to be bound by each and all of
the provisions of the Subsidiary Guaranty as a Guarantor thereunder. In
furtherance (and without limitation) of the foregoing, pursuant to Section 1 of
the Subsidiary Guaranty, the Company hereby irrevocably, absolutely and
unconditionally, and jointly and severally with each other Guarantor, guarantees
to the Guaranteed Parties the full and prompt payment, at any time and from time
to time as and when due (whether at the stated maturity, by acceleration or
otherwise), of all of the Guaranteed Obligations, and agrees to pay or reimburse
upon demand all Other Obligations, all on the terms and subject to the
conditions set forth in the Subsidiary Guaranty.
2. The Company hereby represents and warrants that after giving effect to
this Accession, each representation and warranty contained in Section 5 of the
Subsidiary Guaranty is true and correct with respect to the Company as of the
date hereof, as if such representations and warranties were set forth at length
herein.
<PAGE>
3. This Accession shall be a Credit Document (within the meaning of such
term under the Credit Agreement), shall be binding upon and enforceable against
the Company and its successors and assigns, and shall inure to the benefit of
and be enforceable by each Guaranteed Party and its successors and assigns.
This Accession and its attachments are hereby incorporated into the Subsidiary
Guaranty and made a part thereof.
IN WITNESS WHEREOF, the Company has caused this Accession to be executed
under seal by its duly authorized officer as of the date first above written.
[NAME OF COMPANY]
By: __________________________________
Title: __________________________________
2
<PAGE>
EXHIBIT H-1
-----------
_____________, 1999
First Union National Bank,
as Administrative Agent,
Fleet Bank, N.A. as Documentation Agent,
and the Lenders as Parties to the
Credit Agreement
RE: THE ACKERLEY GROUP, INC.; CREDIT AGREEMENT
Ladies and Gentlemen:
We are counsel for The Ackerley Group, Inc. ("Borrower"). We have
represented the Borrower in connection with its execution and delivery of a
Credit Agreement dated as of January 22, 1999 ("Agreement") among the Borrower,
the Lenders, First Union National Bank as Administrative Agent ("Agent"), Fleet
Bank, N.A. as Documentation Agent, and Union Bank of California, N.A., KeyBank
National Association and Bank of Montreal, Chicago Branch, as co-agents, and
providing for Loans and Facility Letters of Credit in the aggregate principal
amount of up to $325,000,000. This opinion is being given pursuant to Section
4.1(a)(iii)(A) of the Agreement. All capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to such terms in the
Agreement, except that (a) the term "Credit Documents" shall refer only to those
Credit Documents executed and delivered by the Borrower and its Subsidiaries on
or prior to the Closing Date, (b) the term "State" refers to the State of
Washington, (c) the term "Collateral" has the meaning assigned to such term in
the Security Agreement, and (d) the term "Recording Office" means, with respect
to any county in the State of Washington, the office of such county where a
mortgage on real estate located in the county is required to be filed or
recorded under applicable Washington law.
In rendering the opinions expressed in this letter, we have examined and
relied upon such records, documents, instruments, certificates of public
officials and certificates of officers and employees of and accountants for the
Borrower as we have deemed appropriate, including:
1. The Borrower's Fourth Restated Certificate of Incorporation, as
certified to us by the Secretary of State of Delaware on January 11, 1999;
2. The Borrower's Bylaws, as certified to us by the Borrower's Secretary
as of January 21, 1999;
3. Resolutions of the Borrower's Board of Directors, as adopted at
meetings of the Board and by unanimous consent of the members of the Board, with
specific reference to actions
<PAGE>
Fleet Bank, N.A. & First Union National Bank
January 22, 1999
Page 2
relating to the transactions covered by this opinion, as certified to us by the
Borrower's Secretary as of January 21, 1999;
4. The Credit Documents;
5. Certificates of good standing issued by the Secretaries of State of
the states of incorporation of the Borrower and its Subsidiaries, variously
dated from December 17, 1999 through January 21, 1999.
In reviewing the foregoing, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to or reviewed by us as
originals, and the conformity to the authentic original documents of all other
documents submitted to or examined by us as certified, conformed, or reproduced
copies. As to questions of fact material to these opinions, we have relied upon
certificates of public officials and statements, certificates or
representations, written or oral, of officers or representatives of the Borrower
without seeking to independently establish or otherwise verify them, as stated
on the certificates and documents furnished to us. Except to the extent we are
expressly opining with respect to the Borrower or any of its Subsidiaries having
all requisite power and authority, our opinion assumes that the parties to each
of the documents to which reference is made above have the power and authority
to execute, deliver and perform such documents, and that such documents are
valid as to such parties and binding upon such parties in accordance with their
terms.
Whenever a statement in this opinion is qualified by "known to us," "we are
not aware," "to the best of our knowledge," or a similar phrase, it is intended
to indicate that, during the course of our representation of the Borrower, no
information that would give us current actual knowledge of the inaccuracy of
such statement has come to the attention of those attorneys in this firm who
have rendered legal services in connection with the representation described in
the introductory paragraph of this opinion letter. However, we have not
undertaken any independent investigation to determine the accuracy of such
statement. Any limited inquiry undertaken by us during the preparation of this
opinion letter should not be regarded as such an investigation, and no inference
as to our knowledge of any matters bearing on the accuracy of any such statement
should be drawn from the fact of our representation of the Borrower.
Based upon and subject to the foregoing and the assumptions, limitations
and qualifications set forth below, it is our opinion that:
1. Each of the Borrower and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
2. Each of the Borrower and its Subsidiaries has the full corporate power
and authority to execute, deliver and perform the Credit Documents to which it
is a party, to own and hold its property and to engage in its business as
presently conducted.
<PAGE>
Fleet Bank, N.A. & First Union National Bank
January 22, 1999
Page 3
3. Each of the Borrower and its Subsidiaries has taken all necessary
corporate action to execute, deliver and perform, and has validly executed and
delivered, each Credit Document to which it is a party. Each Credit Document to
which the Borrower or any Subsidiary is a party constitutes the legal, valid and
binding obligation of the Borrower or such Subsidiary, as the case may be,
enforceable against it in accordance with its terms, except to the extent that
the validity, binding nature, and enforceability of each such Credit Document
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the rights of creditors generally.
4. The execution, delivery and performance by each of the Borrower and
its Subsidiaries of the Credit Documents to which it is a party, and compliance
by it with the terms thereof, do not and will not (i) violate any provision of
its articles or certificate of incorporation or bylaws, (ii) contravene any
provisions of any applicable law, rule or regulation of the United States of
America or the State or, to the best of our knowledge, any judgment, order,
writ, injunction or decree to which it is subject, (iii) conflict with, result
in a breach of or constitute (with notice, lapse of time or both) a default
under any indenture, agreement or other instrument to which it is a party, by
which it or any of its properties is bound or to which it is subject, or (iv)
except for the Liens created in favor of the Agent pursuant to the Security
Documents, result in or require the creation or imposition of any Lien upon any
of its property or assets.
5. No consent, approval, authorization, exemption or other action by,
notice to, or registration or filing with, any Governmental Authority of the
United States of America or the State is required in connection with the due
execution, delivery and performance by each of the Borrower and its Subsidiaries
of the Credit Documents to which it is a party, the legality, validity or
enforceability thereof or the consummation of the transactions contemplated
thereby.
6. To the best of our knowledge, there are no actions, investigations,
suits or proceedings pending or threatened, at law, in equity or in arbitration,
before any court, other Governmental Authority or other Person, (i) against or
affecting the Borrower and its Subsidiaries or any of their respective
properties that would, if adversely determined, be reasonably likely to have a
Material Adverse Effect, or (ii) with respect to any of the Credit Documents,
other than as disclosed on Schedule 5.5 to the Credit Agreement.
7. The authorized capital stock of each of the Subsidiaries of the
Borrower, the par value per share and the number of shares issued and
outstanding are as follows:
a. Ackerley Airport Advertising, Inc.: 500 shares of Common Stock,
par value $100.00 per share, 10 shares of which are issued and outstanding;
b. Ackerley Communications of Massachusetts, Inc.: 50,000 shares of
Common Stock, par value $.01 per share, 1,000 shares of which are issued
and outstanding;
<PAGE>
Fleet Bank, N.A. & First Union National Bank
January 22, 1999
Page 4
c. AK Media Group, Inc.: 10,000 shares of Common Stock, par value
$10.00 per share, 1 share of which is issued and outstanding;
d. Central NY News, Inc.: 50,000 shares of Common Stock, par value
$.01 per share, 1,000 shares of which are issued and outstanding;
e. KVOS TV, Ltd.: 10,000 shares of Common Stock, no par value, 1
share of which is issued and outstanding;
f. SSI, Inc.: 50,000 shares of Common Stock, par value $1.00 per
share, 100 shares of which are issued and outstanding;
g. TC Aviation, Inc.: 5,000 shares of Common Stock, par value $1.00
per share, 1,000 shares of which are issued and outstanding;
8. All of the issued and outstanding shares of capital stock of each of
the Subsidiaries of the Borrower are duly authorized, validly issued, fully paid
and nonassessable and are owned of record and beneficially by the Borrower, free
and clear of any Liens or other adverse claims or restrictions on transfer.
9. The provisions of the Pledge Agreement are sufficient to create in
favor of the Agent a valid security interest in all right, title and interest of
the Borrower in and to the Pledged Stock (as defined in the Pledge Agreement)
and the delivery to the Agent of the certificates and instruments evidencing the
Pledged Stock, together with continued possession thereof by the Pledgee, will
be sufficient to perfect such security interest in such Pledged Stock, free of
any adverse claims.
10. Financing statements on Form UCC-1, in the form of Exhibits A-1
through A-6 hereto ("Financing Statements"), have been duly executed by the
Borrower and the Subsidiaries referenced in such statements ("Pledging
Subsidiaries"). To the extent that a security interest in the Collateral can be
perfected under the Uniform Commercial Code of Washington ("Washington UCC") by
the filing of the Financing Statements with the Department of Licensing of the
State of Washington (the "Department of Licensing"), and assuming proper filing
of such Financing Statements with the Department of Licensing, such filings,
together with the execution, delivery and performance of the Security Agreement,
are sufficient to perfect the security interest created in favor of the Agent
under the Security Agreement in all right, title and interest of the Borrower
and the Pledging Subsidiaries in and to the Collateral. To the extent that the
Collateral consists of "fixtures" under the Washington UCC, the proper filing of
financing statements, complying with the Washington UCC, with the Recording
Office of each county in which such fixtures are located would be sufficient to
perfect the security interest created in favor of the Agent under the Security
Agreement in all right, title and interest of the Borrower and the Pledging
Subsidiaries in and to such fixtures.
<PAGE>
Fleet Bank, N.A. & First Union National Bank
January 22, 1999
Page 5
11. Neither the Borrower nor any of its Subsidiaries is (i) an "investment
company," a company "controlled" by an "investment company," or an "investment
advisor," within the meaning of the Investment Borrower Act of 1940, as amended,
or (ii) a "holding company," a "subsidiary company" of a "holding company," or
an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Borrower Act of 1935,
as amended.
12. To the best of our knowledge, neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock. The consummation of the transactions contemplated by the Credit
Agreement will not violate Regulations T, U or X of the Board of Governors of
the Federal Reserve system.
13. If the Credit Documents were governed by the laws of the State of
Washington, the fees, interest and other charges payable under the Credit
Documents would not violate any usury or similar laws of the State of
Washington.
14. No transfer, filing, stamp, privilege, franchise, indebtedness or
other taxes of the State of Washington are required to be paid in connection
with the execution, delivery and performance of the Credit Documents (other than
UCC filing fees) or as a precondition to the enforcement by the Agent and the
Lenders of their rights and remedies under the Credit Documents.
All of the opinions herein expressed are specifically subject to the
following limitations and qualifications:
A. We have assumed (i) that all parties, other than the Borrower and
its Subsidiaries, have complied with all applicable laws,
statutes, and regulations relating to their power and authority
to enter into the Credit Documents and to effect the transactions
contemplated therein, (ii) that the Credit Documents are the
legal, valid, and binding obligations of such parties (other than
the Borrower and its Subsidiaries) enforceable against them in
accordance with their respective terms, (iii) that there are no
agreements or other documents between the parties to the Credit
Documents that are inconsistent with or that modify the Credit
Documents, or would otherwise have an effect on the opinions
expressed in this letter, (iv) that each of the Borrower and the
Subsidiaries have sufficient rights in the Pledged Stock, and
sufficient value has been given, for a security interest in favor
of the Agent to attach to the Pledged Stock, (v) the shares of
Pledged Stock are evidenced by validly executed certificates that
have been delivered and endorsed to, and are in the possession
of, the Pledgee for the benefit of the Pledgee and the Lenders,
pursuant to the Pledge Agreement, (vi) that the Collateral
exists, (vii) each of the Borrower and the Subsidiaries have
sufficient rights in the Collateral,
<PAGE>
Fleet Bank, N.A. & First Union National Bank
January 22, 1999
Page 6
and sufficient value has been given, for a security interest in
favor of the Agent to attach to the Collateral, and (viii) that
there has been no mutual mistake of fact or misunderstanding,
fraud, duress, undue influence, or a breach of any applicable
obligation of good faith and fair dealing.
B. The Credit Documents state that they are governed by North
Carolina law. Consequently, we have not examined the question of
what law would govern the interpretation or enforcement of such
documents, and our opinion is based upon the assumption that the
internal laws of the State of Washington and the federal laws of
the United States would govern the provisions of, and
transactions contemplated by, the Credit Documents. We note that
if the Credit Documents are not, in fact, valid, binding, and
enforceable under the laws of the State of North Carolina, the
Credit Documents may not be enforced by a State of Washington
court under applicable conflict of law principles. We express no
opinion as to whether a court located in the State of Washington
would hold that the State of Washington is a proper forum in
which to enforce the Credit Documents.
C. Our opinion in paragraph 1 regarding the Borrower's and each
Subsidiary's existence and good standing is based solely on
certificates of the Secretaries of State of their respective
states of incorporation, variously dated from January __, 1999
through January __, 1999.
D. Our opinion in paragraph 4 with respect to the violation of any laws
or regulations, and our opinion in paragraph 5 with respect to
authorizations of and other actions by any Governmental Authority,
each is limited to those governmental approvals, filings,
registrations, laws, or regulations applicable to transactions of the
type described in the Credit Documents and to entities engaged in the
types of businesses engaged in by the Borrower and the Subsidiaries,
and specifically excludes any opinion related to federal
communications laws or FCC matters.
E. Our opinions in paragraphs 9 and 10 above are limited to the
application of Article 9 of the Washington UCC, and we have not
attempted to determine the effect on the security interests referenced
in that paragraph of any other law of Washington or the laws of any
other jurisdiction.
F. Our opinions in paragraphs 9 and 10 above are subject to the following
additional requirements: (i) with respect to "proceeds," as such term
is defined in the Washington UCC, compliance with the provisions of
Section 62A.9-306 of the Washington UCC, subject to the limitations
included in that Section; (ii) with respect to a change of name,
identity or corporate structure by the Borrower or
<PAGE>
Fleet Bank, N.A. & First Union National Bank
January 22, 1999
Page 7
any Subsidiary, compliance with Section 62A.9-402(7) of the Washington
UCC; (iii) with respect to a change of location of the Borrower or any
Subsidiary, or the transfer of the Collateral outside of Washington,
compliance with Section 62A.9-103 of the Washington UCC; and (iv) the
timely filing of proper continuation statements under Section 62A.9-
403(2)-(3) of the Washington UCC.
G. Our opinion in paragraph 13 is based on our understanding and
assumption that all proceeds provided under the Credit Documents are
to be used for business and commercial purposes and not for family or
household purposes.
H. Our opinion in paragraph 14 excludes any opinion as to whether any
taxes of the State of Washington would be required to be paid as a
result of any transfer of assets or control of Borrower or any of its
Subsidiaries to the Agent or any Lender pursuant to the terms of any
Credit Document, including pursuant to any remedy sought in law or
equity in connection with an Event of Default.
I. We express no opinion as to (i) the title or ownership of the Pledged
Stock or the Collateral, or (ii) the priority of any lien or security
interest created or purported to be created by the Pledge Agreement,
the Security Agreement or any of the other Credit Documents.
J. We express no opinion as to the enforceability of:
(1) Provisions relating to the waiver of rights, remedies and
defenses;
(2) Any reservation of the right to pursue inconsistent or cumulative
remedies;
(3) Provisions for payment or reimbursement of costs and expenses
(including without limitation attorneys fees) in excess of
statutory limits or amounts determined to be reasonable by any
court or other tribunal, and any provision for payment of
attorneys fees other than to the prevailing party.
(4) Limitations on the liabilities of parties for their own
negligence or misconduct;
(5) Indemnification provisions with respect to applicable securities
laws;
(6) Severability provisions; and
(7) Availability of equitable remedies.
K. Our opinions are limited to matters expressly stated herein, and no
other opinions may be implied or inferred.
<PAGE>
Fleet Bank, N.A. & First Union National Bank
January 22, 1999
Page 8
L. Our opinions expressed in this letter are qualified in their entirety
by the effect, if any, of all matters which may be subject to judicial
discretion or general principles of equity or public policy; provided,
that such requirements should not, in our opinion, materially diminish
or interfere with the practical realization by the Lenders of the
rights and benefits intended to be conferred on them by the Credit
Documents.
The attorneys in this firm are members of the Bar of the State of
Washington. We do not hold ourselves out as being conversant with the laws of
any jurisdiction other than those of the United States of America, the State of
Washington, and the Delaware General Corporation Law. For purposes of this
opinion, we have assumed, without inquiry or investigation, that all applicable
state laws, including the laws of the State of North Carolina under which the
Credit Documents are governed, but excluding the Delaware General Corporation
Law, are identical to the laws of the State of Washington.
The opinions expressed in this letter are solely for the benefit of the
Administrative Agent, the Documentation Agent and the Lenders and their
respective participants, assignees and other transferees. They may not be
relied upon in any manner or for any purpose by any other person or entity
without our express written consent.
Very truly yours,
GRAHAM & DUNN PC
<PAGE>
EXHIBIT H-2
-----------
January 22, 1999
First Union National Bank, as Administrative Agent
One First Union Center
301 South College Street
Charlotte, NC 28288
Re: The Ackerley Group, Inc.: Credit Agreement
Ladies and Gentlemen:
We are special counsel respecting Federal Communications Commission ("FCC")
matters for The Ackerley Group, Inc. (the "Borrower") and the Subsidiaries. We
have represented the Borrower in connection with the execution and delivery of a
Credit Agreement dated as of January 22, 1999 (the "Credit Agreement") among the
Borrower, the Lenders, First Union National Bank, as Administrative Agent, Fleet
Bank, N.A. as Documentation Agent, and Union Bank of California, N.A., Keybank
National Association and Bank of Montreal, Chicago Branch, as Co-Agents,
providing for term loan facilities in the aggregate principal amount of
$150,000,0000 and a reducing revolving credit facility in the initial aggregate
principal amount of $175,000,000 (which may be increased by $75,000,000 under
certain circumstances).
Capitalized terms used herein and not otherwise defined herein shall have
the meanings attributed to such terms in the Credit Agreement, except that for
purposes hereof the term "Credit Documents" shall refer only to those Credit
Documents executed and delivered by the Borrower and its Subsidiaries on or
prior to the Closing Date (including the Tranche A Term Notes, the Revolving
Notes, the Security Agreement and the Pledge Agreement).
In connection with rendering this opinion, we have reviewed originals, or
copies certified or otherwise identified to our satisfaction, of the Credit
Documents and such other documents and matters of fact and law as we have deemed
necessary for purposes of this opinion. In reviewing the foregoing, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to or reviewed by us as originals, and the conformity to the authentic
original documents of all other documents submitted to us or examined by us as
certified, conformed or reproduced copies. As to questions of fact material to
these opinions, we have relied upon certificates of public officials and
statements, certificates or representations, written or oral, of officers or
representatives of the Borrower without seeking to independently establish
<PAGE>
or otherwise verify them, as stated on the certificates and documents furnished
to use. Our opinion assumes that the parties to each of the documents to which
reference is made above have the power and authority to execute, deliver and
perform such documents, and that such documents are valid as to such parties and
binding upon such parties in accordance with their terms.
Based upon and subject to the foregoing and the assumptions, limitations
and qualifications set forth below, it is our opinion that:
1. Exhibit A hereto contains a true, correct and complete list of the primary
broadcast station licenses issued by the Federal Communications Commission
(the "FCC") for the operation of the broadcast stations (the "Broadcast
Stations") owned by the Borrower or its Subsidiaries, indicating, for each
such license, the date of its expiration.
2. The consummation by the Borrower of the transactions contemplated by the
Credit Agreement do not and will not cause a violation of or a default
under any of the licenses, permits, consents, approvals and other
authorizations issued by the FCC for the operation of the Broadcast
Stations owned by the Borrower or its Subsidiaries (the "FCC Licenses"),
and all material authorizations, approvals and consents of the FCC under
the Communications Act required in connection with the Broadcast Stations
have been obtained, are in full force and effect, and have not been
reversed, stayed, enjoined, set aside, annulled or suspended.
3. Each material FCC License, including each primary broadcast station
license, is valid and in full force and effect, and no such license is
subject to any material adverse condition. Each material FCC License has
been granted or issued by an action of the FCC which is not subject to
administrative or judicial appeal, review or reconsideration by any party
or by the FCC on its own motion. We have no reason to believe that any FCC
Licenses will not, subject to the filing of renewal applications and
payment of any applicable filing fees, be renewed for a full term in the
ordinary course.
4. There are (a) no judgments, decrees or orders issued or, to counsel's
knowledge, threatened by the FCC with respect to the Borrower or any of its
Subsidiaries, (b) to counsel's knowledge, no material complaints,
petitions, applications, investigations or other proceedings pending or
threatened before the FCC, including, without limitation, any notice of
violation, notice of apparent liability or order to show cause, and (c) to
counsel's knowledge, no events have occurred that could result in (i) the
termination, revocation or adverse modification of any FCC License, or (ii)
the imposition of any material financial penalty by the FCC upon the
Borrower or any Subsidiary.
<PAGE>
5. The Borrower and its Subsidiaries, to counsel's knowledge, have filed with
the FCC all material reports, documents, instruments, information and
applications required to be filed and have undertaken all other actions
required to be taken pursuant to the Act and the rules promulgated
thereunder or upon the request of the FCC.
6. The execution, delivery and performance by the Borrower under the Credit
Documents (a) do not and will not violate or conflict with any provision of
the Act, or with any rule, regulation or published policy of the FCC; (b) do
not and will not result in the forfeiture or the suspension or termination,
prior to its expiration date, revocation, material impairment, adverse
modification or non-renewal of any FCC License; and (c) do not and will not
require any consent, authorization or approval of, or notice to or filing
with, the FCC.
7. Neither the Agents nor any Lender under the Credit Documents will, solely by
reason of the execution, delivery and performance of any of the Credit
Documents, be subject to the regulation or the control of the FCC.
All of the opinions herein expressed are specifically subject to the
following limitations and qualifications:
A. We have assumed (i) that all parties have complied with all applicable laws,
statutes and regulations relating to their power and authority to enter into
the Credit Documents and to effect the transactions contemplated therein,
(ii) that the Credit Documents are the legal, valid and binding obligations
of such parties enforceable against them in accordance with their respective
terms, (iii) that there are no agreements or other documents between the
parties to the Credit Documents which are inconsistent with or which modify
the Credit Documents, and (iv) there has been no mutual mistake of fact or
misunderstanding, fraud, duress, undue influence, or a breach of any
applicable obligation of good faith and fair dealing;
B. Our representation of the Borrower and the Subsidiaries has been limited to
certain specific matters, and we do not represent the Borrower and the
Subsidiaries in all matters. Other law firms have performed, and continue to
perform, legal services for the Borrower and the Subsidiaries. Accordingly,
this opinion is limited to those specific matters within the scope of
representation that we have undertaken;
C. This opinion is provided to you as a legal opinion only, and not as a
guaranty or warranty of the matters discussed herein. Our opinion is limited
to matters expressly stated herein, and no other opinions may be implied or
inferred;
<PAGE>
D. Our opinions are qualified in their entirety by the effect, if any, of all
matters which may be subject to judicial or administrative discretion or
general principles of equity or public policy, or the effect of any
applicable bankruptcy, exemption, insolvency, fraudulent conveyance,
reorganization or other similar laws, now or hereafter in effect, relating
to creditors rights generally; provided, that such requirements should not,
in our opinion, materially diminish or interfere with the practical
realization by the Lenders of the rights and benefits intended to be
conferred on them by the Credit Documents;
E. Our opinions are qualified in their entirety by any limitations on the
remedies of specific performance, injunction and other forms of equitable
relief, because they are subject to certain standards of equity
jurisdiction, equitable defenses and the discretion of the court; and
F. Our opinions are qualified in their entirety by generally applicable laws
and judicially created doctrines specifying the methods of enforcement of
obligations and/or limiting the availability of certain remedies if a
specified remedy is utilized.
The attorneys in this firm are members of the Bar of the District of
Columbia. We do not hold ourselves out as being conversant with the laws of any
jurisdiction other than those of the United States of America, the District of
Columbia and the laws, rules and regulations of the Federal Communications
Commission. We express no opinion as to any scientific or engineering questions
pertinent to the Stations. We have not conducted a physical inspection of the
Broadcast Stations and this opinion is not based on any condition which might be
revealed by such an inspection.
The opinions expressed in this letter are solely for the benefit of the
Managing Agents and the Lenders and their respective participants, assignees and
other transferees. They may not be relied upon in any manner or by any other
person or entity without our express written consent. We have not been
retained, and render no opinion, with respect to any items or matters not
specifically referred to herein. This opinion is issued as of the date hereof,
and we undertake no obligation to advise you if facts should come to our
attention after the date hereof that might change the opinion rendered herein.
Very truly yours,
Rubin, Winston, Diercks, Harris & Cooke, L.L.P.
<PAGE>
Exhibit A
The Ackerley Group, Inc. (and subsidiaries)
Primary Broadcast Station Licenses
<TABLE>
<CAPTION>
Station License Expiration Date
- --------------- ---------------
<S> <C>
WIXT(TV) June 1, 1999
WIVT(TV) June 1, 1999
KCBA(TV) Dec. 1, 1998(1)
KFTY(TV) Dec. 1, 2006
KKTV(TV) April 1, 2006
KVOS(TV) Feb. 1, 1999(2)
KGET(TV) Dec. 1, 2006
KVIQ(TV) Dec. 1, 2006
KHHO(AM) Feb. 1, 2006
KJR(AM) Feb. 1, 2006
KJR-FM Feb. 1, 2006
KUBE(FM) Feb. 1, 2006
</TABLE>
1. Application for Renewal of License submitted to FCC on July 31, 1998 (File
No. BRCT-980731KS), Public Notice dated August 25, 1998. Comments were filed by
certain local persons in connection with KCBA license renewal application.
2. Application for Renewal of License submitted to FCC on October 1, 1998
(File No. BRCT-981001LL), Public Notice dated October 19, 1998.
<PAGE>
EXHIBIT H-3
-----------
First Union National Bank,
as Administrative Agent,
Fleet Bank, N.A. as Documentation Agent,
and the Lenders as Parties to the
Credit Agreement
RE: THE ACKERLEY GROUP, INC.; CREDIT AGREEMENT
Ladies and Gentlemen:
We are counsel for The Ackerley Group, Inc. ("Borrower"). We have
represented the Borrower in connection with its execution and delivery of a
Credit Agreement dated as of January 22, 1999 ("Agreement") among the Borrower,
the Lenders, First Union National Bank as Administrative Agent ("Agent"), Fleet
Bank, N.A. as Documentation Agent, and Union Bank of California, N.A., KeyBank
National Association and Bank of Montreal, Chicago Branch, as co-agents, and
providing for Loans and Facility Letters of Credit in the aggregate principal
amount of up to $325,000,000. This opinion is being given pursuant to Section
4.2(a)(ii)(A) of the Agreement. All capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to such terms in the
Agreement, except that (a) the term "Credit Documents" refers only to those
Credit Documents executed and delivered by the Borrower and its Subsidiaries on
or prior to the closing date of the Tranche B Term Loans, (b) the term "State"
refers to the State of Washington, (c) the term "Collateral" has the meaning
assigned to such term in the Security Agreement, and (d) the term "Recording
Office" means, with respect to any county in the State of Washington, the office
of such county where a mortgage on real estate located in the county is required
to be filed or recorded under applicable Washington law.
In rendering the opinions expressed in this letter, we have examined and
relied upon such records, documents, instruments, certificates of public
officials and certificates of officers and employees of and accountants for the
Borrower as we have deemed appropriate, including:
1. The Borrower's Fourth Restated Certificate of Incorporation, as
certified to us by the Secretary of State of Delaware on January 11, 1999;
2. The Borrower's Bylaws, as certified to us by the Borrower's Secretary
as of January 21, 1999;
3. Resolutions of the Borrower's Board of Directors, as adopted at
meetings of the Board and by unanimous consent of the members of the Board, with
specific reference to actions
<PAGE>
Page 2
relating to the transactions covered by this opinion, as certified to us by the
Borrower's Secretary as of January 21, 1999;
4. The Credit Documents;
5. Certificates of good standing issued by the Secretaries of State of
the states of incorporation of the Borrower and its Subsidiaries, variously
dated from December 17, 1999 through January 21, 1999.
In reviewing the foregoing, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to or reviewed by us as
originals, and the conformity to the authentic original documents of all other
documents submitted to or examined by us as certified, conformed, or reproduced
copies. As to questions of fact material to these opinions, we have relied upon
certificates of public officials and statements, certificates or
representations, written or oral, of officers or representatives of the Borrower
without seeking to independently establish or otherwise verify them, as stated
on the certificates and documents furnished to us. Except to the extent we are
expressly opining with respect to the Borrower or any of its Subsidiaries having
all requisite power and authority, our opinion assumes that the parties to each
of the documents to which reference is made above have the power and authority
to execute, deliver and perform such documents, and that such documents are
valid as to such parties and binding upon such parties in accordance with their
terms.
Whenever a statement in this opinion is qualified by "known to us," "we are
not aware," "to the best of our knowledge," or a similar phrase, it is intended
to indicate that, during the course of our representation of the Borrower, no
information that would give us current actual knowledge of the inaccuracy of
such statement has come to the attention of those attorneys in this firm who
have rendered legal services in connection with the representation described in
the introductory paragraph of this opinion letter. However, we have not
undertaken any independent investigation to determine the accuracy of such
statement. Any limited inquiry undertaken by us during the preparation of this
opinion letter should not be regarded as such an investigation, and no inference
as to our knowledge of any matters bearing on the accuracy of any such statement
should be drawn from the fact of our representation of the Borrower.
Based upon and subject to the foregoing and the assumptions, limitations
and qualifications set forth below, it is our opinion that:
1. Each of the Borrower and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
2. Each of the Borrower and its Subsidiaries has the full corporate power
and authority to execute, deliver and perform the Credit Documents to which it
is a party, to own and hold its property and to engage in its business as
presently conducted.
<PAGE>
Page 3
3. Each of the Borrower and its Subsidiaries has taken all necessary
corporate action to execute, deliver and perform, and has validly executed and
delivered, each Credit Document to which it is a party. Each Credit Document to
which the Borrower or any Subsidiary is a party constitutes the legal, valid and
binding obligation of the Borrower or such Subsidiary, as the case may be,
enforceable against it in accordance with its terms, except to the extent that
the validity, binding nature, and enforceability of each such Credit Document
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the rights of creditors generally.
4. The execution, delivery and performance by each of the Borrower and
its Subsidiaries of the Credit Documents to which it is a party, and compliance
by it with the terms thereof, do not and will not (i) violate any provision of
its articles or certificate of incorporation or bylaws, (ii) contravene any
provisions of any applicable law, rule or regulation of the United States of
America or the State or, to the best of our knowledge, any judgment, order,
writ, injunction or decree to which it is subject, (iii) conflict with, result
in a breach of or constitute (with notice, lapse of time or both) a default
under any indenture, agreement or other instrument to which it is a party, by
which it or any of its properties is bound or to which it is subject, or (iv)
except for the Liens created in favor of the Agent pursuant to the Security
Documents, result in or require the creation or imposition of any Lien upon any
of its property or assets.
5. No consent, approval, authorization, exemption or other action by,
notice to, or registration or filing with, any Governmental Authority of the
United States of America or the State is required in connection with the due
execution, delivery and performance by each of the Borrower and its Subsidiaries
of the Credit Documents to which it is a party, the legality, validity or
enforceability thereof or the consummation of the transactions contemplated
thereby.
6. To the best of our knowledge, there are no actions, investigations,
suits or proceedings pending or threatened, at law, in equity or in arbitration,
before any court, other Governmental Authority or other Person, (i) against or
affecting the Borrower and its Subsidiaries or any of their respective
properties that would, if adversely determined, be reasonably likely to have a
Material Adverse Effect, or (ii) with respect to any of the Credit Documents,
other than as disclosed on Schedule 5.5 to the Credit Agreement.
All of the opinions herein expressed are specifically subject to the
following limitations and qualifications:
A. We have assumed (i) that all parties, other than the Borrower and its
Subsidiaries, have complied with all applicable laws, statutes, and
regulations relating to their power and authority to enter into the
Credit Documents and to effect the transactions contemplated therein,
(ii) that the Credit Documents are the legal, valid, and binding
obligations of such parties (other than the Borrower and its
Subsidiaries) enforceable against them in accordance with their
respective terms, (iii) that there are no agreements or other
documents between the parties to the
<PAGE>
Page 4
Credit Documents that are inconsistent with or that modify the Credit
Documents, or would otherwise have an effect on the opinions expressed
in this letter, (iv) that each of the Borrower and the Subsidiaries
have sufficient rights in the Pledged Stock, and sufficient value has
been given, for a security interest in favor of the Agent to attach to
the Pledged Stock, (v) the shares of Pledged Stock are evidenced by
validly executed certificates that have been delivered and endorsed
to, and are in the possession of, the Pledgee for the benefit of the
Pledgee and the Lenders, pursuant to the Pledge Agreement, (vi) that
the Collateral exists, (vii) each of the Borrower and the Subsidiaries
have sufficient rights in the Collateral, and sufficient value has
been given, for a security interest in favor of the Agent to attach to
the Collateral, and (viii) that there has been no mutual mistake of
fact or misunderstanding, fraud, duress, undue influence, or a breach
of any applicable obligation of good faith and fair dealing.
B. The Credit Documents state that they are governed by North Carolina
law. Consequently, we have not examined the question of what law would
govern the interpretation or enforcement of such documents, and our
opinion is based upon the assumption that the internal laws of the
State of Washington and the federal laws of the United States would
govern the provisions of, and transactions contemplated by, the Credit
Documents. We note that if the Credit Documents are not, in fact,
valid, binding, and enforceable under the laws of the State of North
Carolina, the Credit Documents may not be enforced by a State of
Washington court under applicable conflict of law principles. We
express no opinion as to whether a court located in the State of
Washington would hold that the State of Washington is a proper forum
in which to enforce the Credit Documents.
C. Our opinion in paragraph 1 regarding the Borrower's and each
Subsidiary's existence and good standing is based solely on
certificates of the Secretaries of State of their respective states of
incorporation, variously dated from December 17, 1999 through January
21, 1999.
D. Our opinion in paragraph 4 with respect to the violation of any laws
or regulations, and our opinion in paragraph 5 with respect to
authorizations of and other actions by any Governmental Authority,
each is limited to those governmental approvals, filings,
registrations, laws, or regulations applicable to transactions of the
type described in the Credit Documents and to entities engaged in the
types of businesses engaged in by the Borrower and the Subsidiaries,
and specifically excludes any opinion related to federal
communications laws or FCC matters.
E. We express no opinion as to (i) the title or ownership of the Pledged
Stock or the Collateral, or (ii) the priority of any lien or security
interest created or purported
<PAGE>
Page 5
to be created by the Pledge Agreement, the Security Agreement or any
of the other Credit Documents.
F. We express no opinion as to the enforceability of:
(1) Provisions relating to the waiver of rights, remedies and
defenses;
(2) Any reservation of the right to pursue inconsistent or cumulative
remedies;
(3) Provisions for payment or reimbursement of costs and expenses
(including without limitation attorneys fees) in excess of
statutory limits or amounts determined to be reasonable by any
court or other tribunal, and any provision for payment of
attorneys fees other than to the prevailing party.
(4) Limitations on the liabilities of parties for their own
negligence or misconduct;
(5) Indemnification provisions with respect to applicable securities
laws;
(6) Severability provisions; and
(7) Availability of equitable remedies.
G. Our opinions are limited to matters expressly stated herein, and no
other opinions may be implied or inferred.
H. Our opinions expressed in this letter are qualified in their entirety
by the effect, if any, of all matters which may be subject to judicial
discretion or general principles of equity or public policy; provided,
that such requirements should not, in our opinion, materially diminish
or interfere with the practical realization by the Lenders of the
rights and benefits intended to be conferred on them by the Credit
Documents.
The attorneys in this firm are members of the Bar of the State of
Washington. We do not hold ourselves out as being conversant with the laws of
any jurisdiction other than those of the United States of America, the State of
Washington, and the Delaware General Corporation Law. For purposes of this
opinion, we have assumed, without inquiry or investigation, that all applicable
state laws, including the laws of the State of North Carolina under which the
Credit Documents are governed, but excluding the Delaware General Corporation
Law, are identical to the laws of the State of Washington.
<PAGE>
Page 6
The opinions expressed in this letter are solely for the benefit of the
Administrative Agent, the Documentation Agent and the Lenders and their
respective participants, assignees and other transferees. They may not be
relied upon in any manner or for any purpose by any other person or entity
without our express written consent.
Very truly yours,
GRAHAM & DUNN PC
<PAGE>
Exhibit H-4
[date]
First Union National Bank, as Administrative Agent
One First Union Center
301 South College Street
Charlotte, NC 28288
Re: The Ackerley Group, Inc.: Credit Agreement
Ladies and Gentlemen:
We are special counsel respecting Federal Communications Commission ("FCC")
matters for The Ackerley Group, Inc. (the "Borrower") and the Subsidiaries. We
have represented the Borrower in connection with the execution and delivery of a
Credit Agreement dated as of January ___, 1999 (the "Credit Agreement") among
the Borrower, the Lenders, First Union National Bank, as Administrative Agent,
Fleet Bank, N.A. as Documentation Agent, and Union Bank of California, N.A.,
Keybank National Association and Bank of Montreal, Chicago Branch, as Co-Agents,
providing for term loan facilities in the aggregate principal amount of
$150,000,0000 and a reducing revolving credit facility in the initial aggregate
principal amount of $175,000,000 (which may be increased by $75,000,000 under
certain circumstances).
Capitalized terms used herein and not otherwise defined herein shall have
the meanings attributed to such terms in the Credit Agreement, except that for
purposes hereof the term "Credit Documents" shall refer only to those Credit
Documents executed and delivered by the Borrower and its Subsidiaries on or
prior to the date of the Tranche B Term Notes.
In connection with rendering this opinion, we have reviewed originals, or
copies certified or otherwise identified to our satisfaction, of the Credit
Documents and such other documents and matters of fact and law as we have deemed
necessary for purposes of this opinion. In reviewing the foregoing, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to or reviewed by us as originals, and the conformity to the authentic
original documents of all other documents submitted to us or examined by us as
certified, conformed or reproduced copies. As to questions of fact material to
these opinions, we have relied upon certificates of public officials and
statements, certificates or representations, written or oral, of officers or
representatives of the Borrower without seeking to independently establish or
otherwise verify them, as stated on the certificates and documents furnished to
use. Our
<PAGE>
First Union National Bank
[date]
Page 2
opinion assumes that the parties to each of the documents to which reference is
made above have the power and authority to execute, deliver and perform such
documents, and that such documents are valid as to such parties and binding upon
such parties in accordance with their terms.
Based upon and subject to the foregoing and the assumptions, limitations
and qualifications set forth below, it is our opinion that:
1. Exhibit A hereto contains a true, correct and complete list of the primary
broadcast station licenses issued by the Federal Communications Commission
(the "FCC") for the operation of the broadcast stations (the "Broadcast
Stations") owned by the Borrower or its Subsidiaries, indicating, for each
such license, the date of its expiration.
2. The consummation by the Borrower of the transactions contemplated by the
Credit Agreement do not and will not cause a violation of or a default
under any of the licenses, permits, consents, approvals and other
authorizations issued by the FCC for the operation of the Broadcast
Stations owned by the Borrower or its Subsidiaries (the "FCC Licenses"),
and all material authorizations, approvals and consents of the FCC under
the Communications Act required in connection with the Broadcast Stations
have been obtained, are in full force and effect, and have not been
reversed, stayed, enjoined, set aside, annulled or suspended.
3. Each material FCC License, including each primary broadcast station
license, is valid and in full force and effect, and no such license is
subject to any material adverse condition. Each material FCC License has
been granted or issued by an action of the FCC which is not subject to
administrative or judicial appeal, review or reconsideration by any party
or by the FCC on its own motion. We have no reason to believe that any FCC
Licenses will not, subject to the filing of renewal applications and
payment of any applicable filing fees, be renewed for a full term in the
ordinary course.
4. There are (a) no judgments, decrees or orders issued or, to counsel's
knowledge, threatened by the FCC with respect to the Borrower or any of its
Subsidiaries, (b) to counsel's knowledge, no material complaints,
petitions, applications, investigations or other proceedings pending or
threatened before the FCC, including, without limitation, any notice of
violation, notice of apparent liability or order to show cause, and (c) to
counsel's knowledge, no events have occurred that could result in (i) the
termination, revocation or adverse modification of any FCC License, or (ii)
the imposition of any material financial penalty by the FCC upon the
Borrower or any Subsidiary.
5. The Borrower and its Subsidiaries, to counsel's knowledge, have filed with
the FCC all material reports, documents, instruments, information and
applications required to be filed and have
<PAGE>
First Union National Bank
[date]
Page 3
undertaken all other actions required to be taken pursuant to the Act and the
rules promulgated thereunder or upon the request of the FCC.
6. The execution, delivery and performance by the Borrower under the Credit
Documents (a) do not and will not violate or conflict with any provision of
the Act, or with any rule, regulation or published policy of the FCC; (b)
do not and will not result in the forfeiture or the suspension or
termination, prior to its expiration date, revocation, material impairment,
adverse modification or non-renewal of any FCC License; and (c) do not and
will not require any consent, authorization or approval of, or notice to or
filing with, the FCC.
7. Neither the Agents nor any Lender under the Credit Documents will, solely
by reason of the execution, delivery and performance of any of the Credit
Documents, be subject to the regulation or the control of the FCC.
All of the opinions herein expressed are specifically subject to the
following limitations and qualifications:
A. We have assumed (i) that all parties have complied with all
applicable laws, statutes and regulations relating to their power
and authority to enter into the Credit Documents and to effect
the transactions contemplated therein, (ii) that the Credit
Documents are the legal, valid and binding obligations of such
parties enforceable against them in accordance with their
respective terms, (iii) that there are no agreements or other
documents between the parties to the Credit Documents which are
inconsistent with or which modify the Credit Documents, and (iv)
there has been no mutual mistake of fact or misunderstanding,
fraud, duress, undue influence, or a breach of any applicable
obligation of good faith and fair dealing;
B. Our representation of the Borrower and the Subsidiaries has been
limited to certain specific matters, and we do not represent the
Borrower and the Subsidiaries in all matters. Other law firms
have performed, and continue to perform, legal services for the
Borrower and the Subsidiaries. Accordingly, this opinion is
limited to those specific matters within the scope of
representation that we have undertaken;
C. This opinion is provided to you as a legal opinion only, and not
as a guaranty or warranty of the matters discussed herein. Our
opinion is limited to matters expressly stated herein, and no
other opinions may be implied or inferred;
<PAGE>
First Union National Bank
[date]
Page 4
D. Our opinions are qualified in their entirety by the effect, if
any, of all matters which may be subject to judicial or
administrative discretion or general principles of equity or
public policy, or the effect of any applicable bankruptcy,
exemption, insolvency, fraudulent conveyance, reorganization or
other similar laws, now or hereafter in effect, relating to
creditors rights generally; provided, that such requirements
should not, in our opinion, materially diminish or interfere with
the practical realization by the Lenders of the rights and
benefits intended to be conferred on them by the Credit
Documents;
E. Our opinions are qualified in their entirety by any limitations
on the remedies of specific performance, injunction and other
forms of equitable relief, because they are subject to certain
standards of equity jurisdiction, equitable defenses and the
discretion of the court; and
F. Our opinions are qualified in their entirety by generally
applicable laws and judicially created doctrines specifying the
methods of enforcement of obligations and/or limiting the
availability of certain remedies if a specified remedy is
utilized.
The attorneys in this firm are members of the Bar of the District of
Columbia. We do not hold ourselves out as being conversant with the laws of
any jurisdiction other than those of the United States of America, the
District of Columbia and the laws, rules and regulations of the Federal
Communications Commission. We express no opinion as to any scientific or
engineering questions pertinent to the Stations. We have not conducted a
physical inspection of the Broadcast Stations and this opinion is not based
on any condition which might be revealed by such an inspection.
The opinions expressed in this letter are solely for the benefit of
the Managing Agents and the Lenders and their respective participants,
assignees and other transferees. They may not be relied upon in any manner
or by any other person or entity without our express written consent. We
have not been retained, and render no opinion, with respect to any items or
matters not specifically referred to herein. This opinion is issued as of
the date hereof, and we undertake no obligation to advise you if facts
should come to our attention after the date hereof that might change the
opinion rendered herein.
Very truly yours,
Rubin, Winston, Diercks, Harris & Cooke, L.L.P.
<PAGE>
First Union National Bank
[date]
Page 5
Exhibit A
The Ackerley Group, Inc. and Subsidiaries
Primary Broadcast Station Licenses
Station License Expiration Date
- --------------- ---------------
<PAGE>
EXHIBIT H-5
-----------
First Union National Bank,
as Administrative Agent,
Fleet Bank, N.A. as Documentation Agent,
and the Lenders as Parties to the
Credit Agreement
RE: THE ACKERLEY GROUP, INC.; CREDIT AGREEMENT
Ladies and Gentlemen:
We are counsel for The Ackerley Group, Inc. ("Borrower"). We have
represented the Borrower in connection with its execution and delivery of a
Credit Agreement dated as of January ___, 1999 ("Agreement") among the Borrower,
the Lenders, First Union National Bank as Administrative Agent ("Agent"), Fleet
Bank, N.A. as Documentation Agent, and Union Bank of California, N.A. and
KeyBank National Association, as co-agents, and providing for Loans and Facility
Letters of Credit in the aggregate principal amount of up to $325,000,000. This
opinion is being given pursuant to Section [4.3(A)(II)(A)] of the Agreement.
All capitalized terms used herein and not otherwise defined herein shall have
the meanings attributed to such terms in the Agreement, except that for purposes
of this opinion the term "Credit Documents" refers only to those Credit
Documents executed and delivered by the Borrower and its Subsidiaries on or
prior to the closing date of the Tranche B Term Loans, and the term "State"
refers to the State of Washington.
In rendering the opinions expressed in this letter, we have examined
and relied upon such records, documents, instruments, certificates of public
officials and certificates of officers and employees of and accountants for the
Borrower as we have deemed appropriate, including:
(1) The Borrower's Fourth Restated Certificate of Incorporation, as
certified to us by the Secretary of State of Delaware on January 11, 1999;
(2) The Borrower's Bylaws, as certified to us by the Borrower's
Secretary as of January, 1999;
(3) Resolutions of the Borrower's Board of Directors, as adopted at
meetings of the Board and by unanimous consent of the members of the Board, with
specific reference to actions
<PAGE>
Page 2
relating to the transactions covered by this opinion, as certified to us by the
Borrower's Secretary as of January, 1999;
4. The Credit Documents;
5. Certificates of good standing issued by the Secretaries of State
of the states of incorporation of the Borrower and its Subsidiaries, variously
dated from December, 17 through January, 21.
In reviewing the foregoing, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to or reviewed by us as
originals, and the conformity to the authentic original documents of all other
documents submitted to or examined by us as certified, conformed, or reproduced
copies. As to questions of fact material to these opinions, we have relied upon
certificates of public officials and statements, certificates or
representations, written or oral, of officers or representatives of the Borrower
without seeking to independently establish or otherwise verify them, as stated
on the certificates and documents furnished to us. Except to the extent we are
expressly opining with respect to the Borrower or any of its Subsidiaries having
all requisite power and authority, our opinion assumes that the parties to each
of the documents to which reference is made above have the power and authority
to execute, deliver and perform such documents, and that such documents are
valid as to such parties and binding upon such parties in accordance with their
terms.
Whenever a statement in this opinion is qualified by "known to us,"
"we are not aware," "to the best of our knowledge," or a similar phrase, it is
intended to indicate that, during the course of our representation of the
Borrower, no information that would give us current actual knowledge of the
inaccuracy of such statement has come to the attention of those attorneys in
this firm who have rendered legal services in connection with the representation
described in the introductory paragraph of this opinion letter. However, we
have not undertaken any independent investigation to determine the accuracy of
such statement. Any limited inquiry undertaken by us during the preparation of
this opinion letter should not be regarded as such an investigation, and no
inference as to our knowledge of any matters bearing on the accuracy of any such
statement should be drawn from the fact of our representation of the Borrower.
Based upon and subject to the foregoing and the assumptions,
limitations and qualifications set forth below, it is our opinion that:
1. Each of the Borrower and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
2. Each of the Borrower and its Subsidiaries has the full corporate
power and authority to execute, deliver and perform the Credit Documents to
which it is a party, to own and hold its property and to engage in its business
as presently conducted.
<PAGE>
Page 3
3. Each of the Borrower and its Subsidiaries has taken all necessary
corporate action to execute, deliver and perform, and has validly executed and
delivered, each Credit Document to which it is a party. Each Credit Document to
which the Borrower or any Subsidiary is a party (including without limitation
each of the Amended and Restated Credit Notes) constitutes the legal, valid and
binding obligation of the Borrower or such Subsidiary, as the case may be,
enforceable against it in accordance with its terms.
4. The execution, delivery and performance by each of the Borrower
and its Subsidiaries of the Credit Documents to which it is a party (including
without limitation each of the Amended and Restated Credit Notes), and
compliance by it with the terms thereof, do not and will not (i) violate any
provision of its articles or certificate of incorporation or bylaws, (ii)
contravene any provisions of any applicable law, rule or regulation of the
United States of America or the State or, to the best of our knowledge, any
judgment, order, writ, injunction or decree to which it is subject, (iii)
conflict with, result in a breach of or constitute (with notice, lapse of time
or both) a default under any indenture, agreement or other instrument to which
it is a party, by which it or any of its properties is bound or to which it is
subject, or (iv) except for the Liens created in favor of the Agent pursuant to
the Security Documents, result in or require the creation or imposition of any
Lien upon any of its property or assets.
5. No consent, approval, authorization, exemption or other action by,
notice to, or registration or filing with, any Governmental Authority of the
United States of America or the State is required in connection with the due
execution, delivery and performance by each of the Borrower and its Subsidiaries
of the Credit Documents to which it is a party, the legality, validity or
enforceability thereof or the consummation of the transactions contemplated
thereby.
6. To the best of our knowledge, there are no actions,
investigations, suits or proceedings pending or threatened, at law, in equity or
in arbitration, before any court, other Governmental Authority or other Person,
(i) against or affecting the Borrower and its Subsidiaries or any of their
respective properties that would, if adversely determined, be reasonably likely
to have a Material Adverse Effect, or (ii) with respect to any of the Credit
Documents.
All of the opinions herein expressed are specifically subject to the
following limitations and qualifications:
A. We have assumed (i) that all parties, other than the Borrower and
its Subsidiaries, have complied with all applicable laws, statutes,
and regulations relating to their power and authority to enter into
the Credit Documents and to effect the transactions contemplated
therein, (ii) that the Credit Documents are the legal, valid, and
binding obligations of such parties (other than the Borrower and
its Subsidiaries) enforceable against them in accordance with their
respective terms, (iii) that there are no agreements or other
documents between the parties to the
<PAGE>
Page 4
Credit Documents that are inconsistent with or that modify the
Credit Documents, or would otherwise have an effect on the opinions
expressed in this letter, (iv) each of the Borrower and the
Subsidiaries have sufficient rights in the Pledged Stock for a
security interest to attach to the Pledged Stock, (v) the shares of
Pledged Stock are evidenced by validly executed certificates that
have been delivered and endorsed to, and are in the possession of,
the Pledgee for the benefit of the Pledgee and the Lenders,
pursuant to the Pledge Agreement, (vi) the Lenders have given value
to the Borrower pursuant to the Credit Documents, and (vii) there
has been no mutual mistake of fact or misunderstanding, fraud,
duress, undue influence, or a breach of any applicable obligation
of good faith and fair dealing.
B. The Credit Documents state that they are governed by North Carolina
law. Consequently, we have not examined the question of what law
would govern the interpretation or enforcement of such documents,
and our opinion is based upon the assumption that the internal laws
of the State of Washington and the federal laws of the United
States would govern the provisions of, and transactions
contemplated by, the Credit Documents. We note that if the Credit
Documents are not, in fact, valid, binding, and enforceable under
the laws of the State of North Carolina, the Credit Documents may
not be enforced by a State of Washington court under applicable
conflict of law principles. We express no opinion as to whether a
court located in the State of Washington would hold that the State
of Washington is a proper forum in which to enforce the Credit
Documents.
C. Our opinion in paragraph 1 regarding the Borrower's and each
Subsidiary's existence and good standing is based solely on
certificates of the Secretaries of State of their respective states
of incorporation, variously dated from December 17, 1999, through
January 21 1999.
D. Our opinion in paragraph 4 with respect to the violation of any
laws or regulations, and our opinion in paragraph 5 with respect to
authorizations of and other actions by any Governmental Authority,
each is limited to those governmental approvals, filings,
registrations, laws, or regulations applicable to transactions of
the type described in the Credit Documents and to entities engaged
in the types of businesses engaged in by the Borrower and the
Subsidiaries, and specifically excludes any opinion related to
federal communications laws or FCC matters.
E. We express no opinion as to (i) the title or ownership of the
Pledged Stock, or (ii) the priority of any lien or security
interest created or purported
<PAGE>
PAGE 5
to be created by the Pledge Agreement, the Security Agreement or
any of the other Credit Documents.
F. We express no opinion as to the enforceability of:
(1) Provisions relating to the waiver of rights, remedies and
defenses;
(2) Any reservation of the right to pursue inconsistent or
cumulative remedies;
(3) Provisions for payment or reimbursement of costs and expenses
(including without limitation attorneys fees) in excess of
statutory limits or amounts determined to be reasonable by any
court other tribunal, and any provision for payment of
attorneys fees other than to the prevailing party.
(4) Limitations on the liabilities of parties for their own
negligence or misconduct;
(5) Indemnification provisions with respect to applicable
securities laws;
(6) Severability provisions; and
(7) Availability of equitable remedies.
G. Our opinions are limited to matters expressly stated herein, and
no other opinions may be implied or inferred.
H. Our opinions expressed in this letter are qualified in their
entirety by the effect, if any, of all matters which may be
subject to judicial discretion or general principles of equity or
public policy; provided, that such requirements should not, in
our opinion, materially diminish or interfere with the practical
realization by the Lenders of the rights and benefits intended to
be conferred on them by the Credit Documents.
The attorneys in this firm are members of the Bar of the State of
Washington. We do not hold ourselves out as being conversant with the laws of
any jurisdiction other than those of the United States of America, the State of
Washington, and the Delaware General Corporation Law. For purposes of this
opinion, we have assumed, without inquiry or investigation, that all applicable
state laws, including the laws of the State of North Carolina under which the
Credit Documents are governed, but excluding the Delaware General Corporation
Law, are identical to the laws of the State of Washington.
<PAGE>
Page 6
The opinions expressed in this letter are solely for the benefit of
the Administrative Agent, the Documentation Agent and the Lenders and their
respective participants, assignees and other transferees. They may not be
relied upon in any manner or for any purpose by any other person or entity
without our express written consent.
Very truly yours,
GRAHAM & DUNN PC
<PAGE>
Exhibit H-6
[date]
First Union National Bank, as Administrative Agent
One First Union Center
301 South College Street
Charlotte, NC 28288
Re: The Ackerley Group, Inc.: Credit Agreement
Ladies and Gentlemen:
We are special counsel respecting Federal Communications Commission ("FCC")
matters for The Ackerley Group, Inc. (the "Borrower") and the Subsidiaries. We
have represented the Borrower in connection with the execution and delivery of a
Credit Agreement dated as of January ___, 1999 (the "Credit Agreement") among
the Borrower, the Lenders, First Union National Bank, as Administrative Agent,
Fleet Bank, N.A. as Documentation Agent, and Union Bank of California, N.A.,
Keybank National Association and Bank of Montreal, Chicago Branch, as Co-Agents,
providing for term loan facilities in the aggregate principal amount of
$150,000,0000 and a reducing revolving credit facility in the initial aggregate
principal amount of $175,000,000 (which may be increased by $75,000,000 under
certain circumstances).
Capitalized terms used herein and not otherwise defined herein shall have
the meanings attributed to such terms in the Credit Agreement, except that for
purposes hereof the term "Credit Documents" shall refer only to those Credit
Documents executed and delivered by the Borrower and its Subsidiaries on or
prior to the date of the Revolver Increase.
In connection with rendering this opinion, we have reviewed originals, or
copies certified or otherwise identified to our satisfaction, of the Credit
Documents and such other documents and matters of fact and law as we have deemed
necessary for purposes of this opinion. In reviewing the foregoing, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to or reviewed by us as originals, and the conformity to the authentic
original documents of all other documents submitted to us or examined by us as
certified, conformed or reproduced copies. As to questions of fact material to
these opinions, we have relied upon certificates of public officials and
statements, certificates or representations, written or oral, of officers or
representatives of the Borrower without seeking to independently establish or
otherwise verify them, as stated on the certificates and documents furnished to
use. Our
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opinion assumes that the parties to each of the documents to which reference is
made above have the power and authority to execute, deliver and perform such
documents, and that such documents are valid as to such parties and binding upon
such parties in accordance with their terms.
Based upon and subject to the foregoing and the assumptions, limitations
and qualifications set forth below, it is our opinion that:
1. Exhibit A hereto contains a true, correct and complete list of the primary
broadcast station licenses issued by the Federal Communications Commission
(the "FCC") for the operation of the broadcast stations (the "Broadcast
Stations") owned by the Borrower or its Subsidiaries, indicating, for each
such license, the date of its expiration.
2. The consummation by the Borrower of the transactions contemplated by the
Credit Agreement do not and will not cause a violation of or a default
under any of the licenses, permits, consents, approvals and other
authorizations issued by the FCC for the operation of the Broadcast
Stations owned by the Borrower or its Subsidiaries (the "FCC Licenses"),
and all material authorizations, approvals and consents of the FCC under
the Communications Act required in connection with the Broadcast Stations
have been obtained, are in full force and effect, and have not been
reversed, stayed, enjoined, set aside, annulled or suspended.
3. Each material FCC License, including each primary broadcast station
license, is valid and in full force and effect, and no such license is
subject to any material adverse condition. Each material FCC License has
been granted or issued by an action of the FCC which is not subject to
administrative or judicial appeal, review or reconsideration by any party
or by the FCC on its own motion. We have no reason to believe that any FCC
Licenses will not, subject to the filing of renewal applications and
payment of any applicable filing fees, be renewed for a full term in the
ordinary course.
4. There are (a) no judgments, decrees or orders issued or, to counsel's
knowledge, threatened by the FCC with respect to the Borrower or any of its
Subsidiaries, (b) to counsel's knowledge, no material complaints,
petitions, applications, investigations or other proceedings pending or
threatened before the FCC, including, without limitation, any notice of
violation, notice of apparent liability or order to show cause, and (c) to
counsel's knowledge, no events have occurred that could result in (i) the
termination, revocation or adverse modification of any FCC License, or (ii)
the imposition of any material financial penalty by the FCC upon the
Borrower or any Subsidiary.
5. The Borrower and its Subsidiaries, to counsel's knowledge, have filed with
the FCC all material reports, documents, instruments, information and
applications required to be filed and have
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undertaken all other actions required to be taken pursuant to the Act and
the rules promulgated thereunder or upon the request of the FCC.
6. The execution, delivery and performance by the Borrower under the Credit
Documents (a) do not and will not violate or conflict with any provision of
the Act, or with any rule, regulation or published policy of the FCC; (b)
do not and will not result in the forfeiture or the suspension or
termination, prior to its expiration date, revocation, material impairment,
adverse modification or non-renewal of any FCC License; and (c) do not and
will not require any consent, authorization or approval of, or notice to or
filing with, the FCC.
7. Neither the Agents nor any Lender under the Credit Documents will, solely
by reason of the execution, delivery and performance of any of the Credit
Documents, be subject to the regulation or the control of the FCC.
All of the opinions herein expressed are specifically subject to the
following limitations and qualifications:
A. We have assumed (i) that all parties have complied with all
applicable laws, statutes and regulations relating to their power
and authority to enter into the Credit Documents and to effect
the transactions contemplated therein, (ii) that the Credit
Documents are the legal, valid and binding obligations of such
parties enforceable against them in accordance with their
respective terms, (iii) that there are no agreements or other
documents between the parties to the Credit Documents which are
inconsistent with or which modify the Credit Documents, and (iv)
there has been no mutual mistake of fact or misunderstanding,
fraud, duress, undue influence, or a breach of any applicable
obligation of good faith and fair dealing;
B. Our representation of the Borrower and the Subsidiaries has been
limited to certain specific matters, and we do not represent the
Borrower and the Subsidiaries in all matters. Other law firms
have performed, and continue to perform, legal services for the
Borrower and the Subsidiaries. Accordingly, this opinion is
limited to those specific matters within the scope of
representation that we have undertaken;
C. This opinion is provided to you as a legal opinion only, and not
as a guaranty or warranty of the matters discussed herein. Our
opinion is limited to matters expressly stated herein, and no
other opinions may be implied or inferred;
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D. Our opinions are qualified in their entirety by the effect, if
any, of all matters which may be subject to judicial or
administrative discretion or general principles of equity or
public policy, or the effect of any applicable bankruptcy,
exemption, insolvency, fraudulent conveyance, reorganization or
other similar laws, now or hereafter in effect, relating to
creditors rights generally; provided, that such requirements
should not, in our opinion, materially diminish or interfere with
the practical realization by the Lenders of the rights and
benefits intended to be conferred on them by the Credit
Documents;
E. Our opinions are qualified in their entirety by any limitations
on the remedies of specific performance, injunction and other
forms of equitable relief, because they are subject to certain
standards of equity jurisdiction, equitable defenses and the
discretion of the court; and
F. Our opinions are qualified in their entirety by generally
applicable laws and judicially created doctrines specifying the
methods of enforcement of obligations and/or limiting the
availability of certain remedies if a specified remedy is
utilized.
The attorneys in this firm are members of the Bar of the District of
Columbia. We do not hold ourselves out as being conversant with the laws of
any jurisdiction other than those of the United States of America, the
District of Columbia and the laws, rules and regulations of the Federal
Communications Commission. We express no opinion as to any scientific or
engineering questions pertinent to the Stations. We have not conducted a
physical inspection of the Broadcast Stations and this opinion is not based
on any condition which might be revealed by such an inspection.
The opinions expressed in this letter are solely for the benefit of
the Managing Agents and the Lenders and their respective participants,
assignees and other transferees. They may not be relied upon in any manner
or by any other person or entity without our express written consent. We
have not been retained, and render no opinion, with respect to any items or
matters not specifically referred to herein. This opinion is issued as of
the date hereof, and we undertake no obligation to advise you if facts
should come to our attention after the date hereof that might change the
opinion rendered herein.
Very truly yours,
Rubin, Winston, Diercks, Harris & Cooke, L.L.P.
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First Union National Bank
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Exhibit A
The Ackerley Group, Inc. and Subsidiaries
Primary Broadcast Station Licenses
Station License Expiration Date
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EXHIBIT H-7
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First Union National Bank,
as Administrative Agent,
Fleet Bank, N.A. as Documentation Agent,
and the Lenders as Parties to the
Credit Agreement
RE: THE ACKERLEY GROUP, INC.; CREDIT AGREEMENT
Ladies and Gentlemen:
We are counsel for The Ackerley Group, Inc. ("Borrower"). We have
represented the Borrower in connection with its execution and delivery of a
Credit Agreement dated as of January 22, 1999 ("Agreement") among the Borrower,
the Lenders, First Union National Bank as Administrative Agent ("Agent"), Fleet
Bank, N.A. as Documentation Agent, and Union Bank of California, N.A., KeyBank
National Association and Bank of Montreal, Chicago Branch, as co-agents, and
providing for Loans and Facility Letters of Credit in the aggregate principal
amount of up to $325,000,000. This opinion is being given pursuant to Section
4.3(d)(A) of the Agreement. All capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to such terms in the
Agreement, except that (a) the term "Credit Documents" refers only to those
Credit Documents executed and delivered by the Borrower and its Subsidiaries on
or prior to the date hereof, (b) the term "State" refers to the State of
Washington, (c) the term "Collateral" has the meaning assigned to such term in
the Security Agreement, and (d) the term "Recording Office" means, with respect
to any county in the State of Washington, the office of such county where a
mortgage on real estate located in the county is required to be filed or
recorded under applicable Washington law.
In rendering the opinions expressed in this letter, we have examined and
relied upon such records, documents, instruments, certificates of public
officials and certificates of officers and employees of and accountants for the
Borrower as we have deemed appropriate, including:
1. The Borrower's Fourth Restated Certificate of Incorporation, as
certified to us by the Secretary of State of Delaware on January 11, 1999;
2. The Borrower's Bylaws, as certified to us by the Borrower's Secretary
as of January 21, 1999;
3. Resolutions of the Borrower's Board of Directors, as adopted at
meetings of the Board and by unanimous consent of the members of the Board, with
specific reference to actions
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relating to the transactions covered by this opinion, as certified to us by the
Borrower's Secretary as of January 21, 1999;
4. The Credit Documents;
5. Certificates of good standing issued by the Secretaries of State of the
states of incorporation of the Borrower and its Subsidiaries, variously dated
from December 17, 1999 through January 21, 1999.
In reviewing the foregoing, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to or reviewed by us as
originals, and the conformity to the authentic original documents of all other
documents submitted to or examined by us as certified, conformed, or reproduced
copies. As to questions of fact material to these opinions, we have relied upon
certificates of public officials and statements, certificates or
representations, written or oral, of officers or representatives of the Borrower
without seeking to independently establish or otherwise verify them, as stated
on the certificates and documents furnished to us. Except to the extent we are
expressly opining with respect to the Borrower or any of its Subsidiaries having
all requisite power and authority, our opinion assumes that the parties to each
of the documents to which reference is made above have the power and authority
to execute, deliver and perform such documents, and that such documents are
valid as to such parties and binding upon such parties in accordance with their
terms.
Whenever a statement in this opinion is qualified by "known to us," "we are
not aware," "to the best of our knowledge," or a similar phrase, it is intended
to indicate that, during the course of our representation of the Borrower, no
information that would give us current actual knowledge of the inaccuracy of
such statement has come to the attention of those attorneys in this firm who
have rendered legal services in connection with the representation described in
the introductory paragraph of this opinion letter. However, we have not
undertaken any independent investigation to determine the accuracy of such
statement. Any limited inquiry undertaken by us during the preparation of this
opinion letter should not be regarded as such an investigation, and no inference
as to our knowledge of any matters bearing on the accuracy of any such statement
should be drawn from the fact of our representation of the Borrower.
Based upon and subject to the foregoing and the assumptions, limitations
and qualifications set forth below, it is our opinion that:
1. Each of the Borrower and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
2. Each of the Borrower and its Subsidiaries has the full corporate power
and authority to execute, deliver and perform the Credit Documents to which it
is a party, to own and hold its property and to engage in its business as
presently conducted.
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3. Each of the Borrower and its Subsidiaries has taken all necessary
corporate action to execute, deliver and perform, and has validly executed and
delivered, each Credit Document to which it is a party. Each Credit Document to
which the Borrower or any Subsidiary is a party constitutes the legal, valid and
binding obligation of the Borrower or such Subsidiary, as the case may be,
enforceable against it in accordance with its terms, except to the extent that
the validity, binding nature, and enforceability of each such Credit Document
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the rights of creditors generally.
4. The execution, delivery and performance by each of the Borrower and its
Subsidiaries of the Credit Documents to which it is a party (including without
limitation the Subsidiary Guaranty), and compliance by it with the terms
thereof, do not and will not (i) violate any provision of its articles or
certificate of incorporation or bylaws, (ii) contravene any provisions of any
applicable law, rule or regulation of the United States of America or the State
or, to the best of our knowledge, any judgment, order, writ, injunction or
decree to which it is subject, (iii) conflict with, result in a breach of or
constitute (with notice, lapse of time or both) a default under any indenture,
agreement or other instrument to which it is a party, by which it or any of its
properties is bound or to which it is subject, or (iv) except for the Liens
created in favor of the Agent pursuant to the Security Documents, result in or
require the creation or imposition of any Lien upon any of its property or
assets.
5. No consent, approval, authorization, exemption or other action by,
notice to, or registration or filing with, any Governmental Authority of the
United States of America or the State is required in connection with the due
execution, delivery and performance by each of the Borrower and its Subsidiaries
of the Credit Documents to which it is a party, the legality, validity or
enforceability thereof or the consummation of the transactions contemplated
thereby.
6. To the best of our knowledge, there are no actions, investigations,
suits or proceedings pending or threatened, at law, in equity or in arbitration,
before any court, other Governmental Authority or other Person, (i) against or
affecting the Borrower and its Subsidiaries or any of their respective
properties that would, if adversely determined, be reasonably likely to have a
Material Adverse Effect, or (ii) with respect to any of the Credit Documents,
other than as disclosed on Schedule 5.5 to the Credit Agreement.
All of the opinions herein expressed are specifically subject to the
following limitations and qualifications:
A. We have assumed (i) that all parties, other than the Borrower and its
Subsidiaries, have complied with all applicable laws, statutes, and
regulations relating to their power and authority to enter into the
Credit Documents and to effect the transactions contemplated therein,
(ii) that the Credit Documents are the legal, valid, and binding
obligations of such parties (other than the Borrower and its
Subsidiaries) enforceable against them in accordance with their
respective terms,
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(iii) that there are no agreements or other documents between the parties
to the Credit Documents that are inconsistent with or that modify the
Credit Documents, or would otherwise have an effect on the opinions
expressed in this letter, (iv) that each of the Borrower and the
Subsidiaries have sufficient rights in the Pledged Stock, and sufficient
value has been given, for a security interest in favor of the Agent to
attach to the Pledged Stock, (v) the shares of Pledged Stock are
evidenced by validly executed certificates that have been delivered and
endorsed to, and are in the possession of, the Pledgee for the benefit of
the Pledgee and the Lenders, pursuant to the Pledge Agreement, (vi) that
the Collateral exists, (vii) each of the Borrower and the Subsidiaries
have sufficient rights in the Collateral, and sufficient value has been
given, for a security interest in favor of the Agent to attach to the
Collateral, and (viii) that there has been no mutual mistake of fact or
misunderstanding, fraud, duress, undue influence, or a breach of any
applicable obligation of good faith and fair dealing.
B. The Credit Documents state that they are governed by North Carolina law.
Consequently, we have not examined the question of what law would govern
the interpretation or enforcement of such documents, and our opinion is
based upon the assumption that the internal laws of the State of
Washington and the federal laws of the United States would govern the
provisions of, and transactions contemplated by, the Credit Documents. We
note that if the Credit Documents are not, in fact, valid, binding, and
enforceable under the laws of the State of North Carolina, the Credit
Documents may not be enforced by a State of Washington court under
applicable conflict of law principles. We express no opinion as to
whether a court located in the State of Washington would hold that the
State of Washington is a proper forum in which to enforce the Credit
Documents.
C. Our opinion in paragraph 1 regarding the Borrower's and each Subsidiary's
existence and good standing is based solely on certificates of the
Secretaries of State of their respective states of incorporation,
variously dated from December 17, 1999 through January 21, 1999.
D. Our opinion in paragraph 4 with respect to the violation of any laws or
regulations, and our opinion in paragraph 5 with respect to
authorizations of and other actions by any Governmental Authority, each
is limited to those governmental approvals, filings, registrations, laws,
or regulations applicable to transactions of the type described in the
Credit Documents and to entities engaged in the types of businesses
engaged in by the Borrower and the Subsidiaries, and specifically
excludes any opinion related to federal communications laws or FCC
matters.
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E. We express no opinion as to (i) the title or ownership of the Pledged
Stock or the Collateral, or (ii) the priority of any lien or security
interest created or purported to be created by the Pledge Agreement,
the Security Agreement or any of the other Credit Documents.
F. We express no opinion as to the enforceability of:
(1) Provisions relating to the waiver of rights, remedies and
defenses;
(2) Any reservation of the right to pursue inconsistent or cumulative
remedies;
(3) Provisions for payment or reimbursement of costs and expenses
(including without limitation attorneys fees) in excess of
statutory limits or amounts determined to be reasonable by any
court or other tribunal, and any provision for payment of
attorneys fees other than to the prevailing party.
(4) Limitations on the liabilities of parties for their own
negligence or misconduct;
(5) Indemnification provisions with respect to applicable securities
laws;
(6) Severability provisions; and
(7) Availability of equitable remedies.
G. Our opinions are limited to matters expressly stated herein, and no
other opinions may be implied or inferred.
H. Our opinions expressed in this letter are qualified in their entirety
by the effect, if any, of all matters which may be subject to judicial
discretion or general principles of equity or public policy; provided,
that such requirements should not, in our opinion, materially diminish
or interfere with the practical realization by the Lenders of the
rights and benefits intended to be conferred on them by the Credit
Documents.
The attorneys in this firm are members of the Bar of the State of
Washington. We do not hold ourselves out as being conversant with the laws of
any jurisdiction other than those of the United States of America, the State of
Washington, and the Delaware General Corporation Law. For purposes of this
opinion, we have assumed, without inquiry or investigation, that all applicable
state laws, including the laws of the State of North Carolina under which the
Credit Documents are governed, but excluding the Delaware General Corporation
Law, are identical to the laws of the State of Washington.
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The opinions expressed in this letter are solely for the benefit of the
Administrative Agent, the Documentation Agent and the Lenders and their
respective participants, assignees and other transferees. They may not be
relied upon in any manner or for any purpose by any other person or entity
without our express written consent.
Very truly yours,
GRAHAM & DUNN PC
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EXHIBIT I
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FINANCIAL CONDITION CERTIFICATE
THIS FINANCIAL CONDITION CERTIFICATE is delivered pursuant to Section
4.1(k) of the Credit Agreement dated as of January __, 1999 (the "Credit
Agreement"), among THE ACKERLEY GROUP, INC., a Delaware corporation (the
"Borrower"), certain banks and other financial institutions from time to time
parties thereto (the "Lenders"), and FIRST UNION NATIONAL BANK, as
administrative agent for the Lenders. Capitalized terms used herein without
definition shall have the meanings given to such terms in the Credit Agreement.
The undersigned hereby certifies for and on behalf of the Borrower as
follows:
1. Capacity. The undersigned is, and at all pertinent times mentioned
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herein has been, the Borrower's duly qualified and acting chief financial
officer (and in such capacity has responsibility for the management of the
Borrower's financial affairs) and senior accounting officer (and in such
capacity has responsibility for the preparation of the Borrower's financial
statements).
2. Procedures. For purposes of this Certificate, the undersigned, or
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officers or other personnel of the Borrower under the direction and supervision
of the undersigned, have, as of or prior to the date hereof, undertaken the
following activities in connection herewith:
2.1 The undersigned has carefully reviewed the following:
(a) the contents of this Certificate;
(b) the Credit Agreement (including the exhibits and schedules
thereto);
(c) the audited consolidated balance sheets of the Borrower and its
subsidiaries for the fiscal years ended December 31, 1997, 1996
and 1995, and the related consolidated statements of income,
stockholders equity and cash flows of the Borrower and its
subsidiaries for the fiscal period ended December 31, 1997, 1996
and 1995;
(d) the unaudited consolidated balance sheet of the Borrower and its
subsidiaries as of September 30, 1998 and the related
consolidated statements of income, stockholders equity and cash
flows of the Borrower and its subsidiaries for the nine-month
period then ended;
(e) the Pro Forma Balance Sheet; and
(f) the Projections.
2.2 The undersigned has made inquiries of certain other officers and
personnel of the Borrower with responsibility for financial and accounting
matters regarding whether the unaudited financial statements described in
paragraph 2.1(d) above and the Pro Forma Balance Sheet are in conformity with
Generally Accepted Accounting Principles applied on a basis substantially
consistent with that of the audited financial statements described in paragraph
2.1(c) above, and whether notes omitted from the unaudited consolidated
financial statements and the Pro Forma Balance Sheet would have disclosed any
new information that would be necessary to make such materials not misleading.
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2.3 With respect to any Contingent Obligations of the Borrower, the
undersigned:
(a) has inquired of certain officers and other personnel of the
Borrower who have responsibility for the legal, financial and
accounting affairs of the Borrower, as to the existence and
estimated amounts of all Contingent Obligations known to them;
(b) has confirmed with senior officers of the Borrower that, to the
best of such officers' knowledge, (i) all appropriate items have
been included in the Contingent Obligations made known to the
undersigned in the course of the inquiry of the undersigned in
connection herewith, and (ii) the amounts relating thereto were
the maximum estimated amounts of liability reasonably likely to
result therefrom as of the date hereof, and
(c) confirms that, to the best of his knowledge, all material
Contingent Obligations that may arise from any pending
litigation, asserted claims and assessments, guarantees,
uninsured risks, and other Contingent Obligations of the Borrower
have been considered in making the certification set forth
herein, and with respect to each such Contingent Obligations the
estimable maximum estimated of liability with respect thereto was
used in making such certification.
2.4 The Pro Forma Balance Sheet and the Projections have been prepared
under the direction of the undersigned, and the undersigned has reexamined the
Pro Forma Balance Sheet and the Projections as of the date hereof and considered
the effect thereon of any changes since the date of the preparation thereof on
the financial condition set forth and the results projected therein.
2.5 The officers and other personnel of the Borrower who were involved in
the preparation of the Projections have relied on historical financial and other
information and upon information with respect to sales, costs and other data
obtained in discussions with the chief executive officer of the Borrower, and
other officers and supervisory personnel directly responsible for the various
operations involved. In the opinion of the undersigned, the assumptions upon
which the Projections are based were fair, complete and reasonable when made,
and continue as of the date hereof to be fair, complete and reasonable.
2.6 The undersigned has inquired of certain officers of the Borrower
having responsibility for financial reporting and accounting matters regarding
whether such persons were aware of any events or conditions that, as of the date
hereof, would cause the statements made in Section 3 below to be untrue.
2.7 The undersigned has conferred with counsel to the Borrower for the
purpose of discussing the meaning of the contents of this Certificate
(including, without limitation, Sections 3.4, 3.5 and 3.6 below).
3. Certifications. Based on the foregoing, the undersigned hereby
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certifies as follows:
3.1 Attached hereto as ANNEX A is a true, correct and complete copy of the
Pro Forma Balance Sheet. Such Pro Forma Balance Sheet gives pro forma effect to
the consummation of the transactions contemplated by the Credit Agreement, the
completion of the initial extensions of credit made under this Credit Agreement,
the WOKR Acquisition and the payment of transaction fees and expenses relating
to the foregoing, all as if such events had occurred on December 31, 1998. The
Pro Forma Balance Sheet has been prepared in good faith and in accordance with
Generally Accepted Accounting Principles (subject to the absence of footnotes
required by Generally Accepted Accounting Principles and subject to normal year-
end adjustments) and, subject to stated assumptions made in good faith and
having a reasonable basis set forth therein, presents fairly the financial
condition of the Borrower on an unaudited pro forma basis as of the date set
forth therein after giving effect to the consummation of the transactions as
described above.
3.2 Attached hereto as ANNEX B is a true, correct and complete copy of the
Projections. Such Projections cover the eight-year period beginning with the
fiscal year ending December 31, 1997 and give effect to the consummation of the
transactions contemplated by the Credit Agreement, initial extensions of credit
made under
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this Credit Agreement, the WOKR Acquisition and the payment of transaction fees
and expenses incident to the foregoing. In the opinion of management of the
Borrower, the assumptions used in the preparation of the Projections were fair,
complete and reasonable when made and continue to be fair, complete and
reasonable as of the date hereof. The Projections have been prepared in good
faith by the executive and financial personnel of the Borrower and represent a
reasonable estimate of the future performance and financial condition of the
Borrower, subject to the uncertainties and approximations inherent in any
projections.
3.3 After giving effect to the transactions contemplated by the Credit
Agreement, all material accounts and other liabilities of the Borrower are
current and not past due.
3.4 The Borrower is not now, nor will the incurrence of the Obligations
pursuant to the Credit Agreement render the Borrower, "insolvent" (as
hereinafter defined). The undersigned understands that, in this context,
"insolvent" means that the present fair saleable value of assets is less than
the amount that will be required to be paid on or in respect of the existing
debts and other liabilities as such debts and liabilities of the Borrower
mature. The undersigned understands that the term "debts" includes any legal
liability, whether matured or unmatured, liquidated or unliquidated, absolute,
fixed or contingent, including any guaranty obligations. The foregoing is
supported by an analysis of the Pro Forma Balance Sheet.
3.5 The undersigned believes that, by incurring the Obligations pursuant
to the Credit Agreement, the Borrower will not incur debts beyond its ability to
pay as such obligations mature (taking into account the timing and amounts of
cash to be payable on or in respect of the Borrower's Indebtedness). The
foregoing conclusion is based in part on the Projections, which demonstrate that
the cash flow of the Borrower, after taking into account all anticipated uses of
the cash of the Borrower, will at all times be sufficient to pay all amounts on
or in respect of Indebtedness of the Borrower when such amounts are required to
be paid (including without limitation scheduled payments pursuant to the Credit
Agreement).
3.6 After giving effect to the consummation of the transactions
contemplated by the Credit Agreement, the assets of the Borrower do not
constitute "unreasonably small capital" (within the meaning of Section 548(a) of
the Bankruptcy Code, 11 U.S.C. Section 548(a)), for the Borrower to carry on its
business as now conducted and as proposed to be conducted (taking into account
the particular capital requirements of the business conducted and to be
conducted by the Borrower and the availability of capital in respect thereof
(with reference to, without limitation, the Projections)).
3.7 The Borrower has not executed the Credit Agreement or any documents
mentioned herein, or made any transfer or incurred any obligations thereunder,
with intent to hinder. delay or defraud either present or future creditors of
the Borrower.
3.8 The undersigned understands that the Lenders have performed their own
review and analysis of the financial condition of the Borrower, but that the
Lenders are relying on the foregoing statements in connection with the extension
of credit to the Borrower pursuant to the Credit Agreement.
<PAGE>
Executed this ___th day of January, 1999.
__________________________________
Chief Financial Officer
The Ackerley Group, Inc.
<PAGE>
FINANCIAL CONDITION CERTIFICATE
ANNEX A
THE ACKERLEY GROUP, INC.
PRO FORMA BALANCE SHEET
[see attached]
<PAGE>
FINANCIAL CONDITION CERTIFICATE
ANNEX B
THE ACKERLEY GROUP, INC.
PROJECTIONS
[see attached]
<PAGE>
EXHIBIT J
---------
FORM OF
LENDER ADDITION
AND
ACKNOWLEDGEMENT AGREEMENT
Reference is made to the Credit Agreement dated as of January ___, 1999 (as
amended, modified or supplemented from time to time, the "Credit Agreement"),
among The Ackerley Group, Inc. (the "Borrower"), certain banks and other
financial institutions from time to time parties thereto (the "Lenders") and
First Union National Bank, as Agent for the Lenders (the "Administrative
Agent"). Unless otherwise defined herein, capitalized terms without definition
shall have the same meanings herein as the Credit Agreement.
The Borrower and __________________________ (the "[New or Current] Lender")
agree as follows:
1. Subject to Section 2.19 of the Credit Agreement and this Lender
Addition and Acknowledgement Agreement, the aggregate of the Lenders' Revolving
Credit Commitments is hereby increased by an amount equal to [$75,000,000].
This Lender Addition and Acknowledgement Agreement memorializes the Revolver
Increase and is entered into pursuant to, and is authorized by, Section 2.19(b)
of the Credit Agreement.
2. The parties hereto acknowledge and agree that, as of the date hereof
and prior to giving effect to any Revolver Increase, (a) the percentage of the
total Revolving Credit Commitments under the Credit Agreement of each Lender,
including, without limitation, the [New or Current] Lender, (b) the Revolving
Credit Commitment under the Credit Agreement of each Lender, including, without
limitation, the [New or Current] Lender, and (c) the outstanding balances of the
Revolving Loans under the Credit Agreement made by each Lender, including,
without limitation, the [New or Current] Lender, are each set forth on Schedule
--------
1 hereto.
- -
3. The parties hereto acknowledge and agree that, as of the Effective Date
(as defined below), and after giving effect to the Revolver Increase, (a) the
percentage of the total Revolving Credit Commitments under the Credit Agreement
of each Lender, including, without limitation, the [New or Current] Lender, (b)
the Revolving Credit Commitment under the Credit Agreement of each Lender,
including, without limitation, the [New or Current] Lender, and (c) the
outstanding balances of the Revolving Loans under the Credit Agreement made by
each Lender, including, without limitation, the [New or Current] Lender, are
each set forth on Schedule 2 hereto.
----------
4. The Borrower acknowledges that it shall ensure that all filings and
recordations that are necessary to perfect the security interests of the Lenders
in the Collateral shall have been
<PAGE>
filed or recorded in all appropriate locations and it shall deliver to the
Administrative Agent evidence satisfactory to the Administrative Agent that such
security interests constitute valid and perfected first priority Liens therein
(including evidence satisfactory that the amount of indebtedness secured
reflects the increase in the aggregate of the Revolving Credit Commitments of
the Lenders and that all necessary tax or other indebtedness has been paid).
5. [The Current Lender is delivering to the Administrative Agent (for
cancellation on behalf of the Borrower) the Revolving Credit Note delivered to
it under the Credit Agreement and requests that the Borrower exchange such Note
for a new Revolving Credit Note payable to the current Lender as follows:
Revolving Note
Payable to the Order of: Principal Amount of Note:
----------------------- ------------------------
________________________ $_____________
OR
The New Lender requests that the Borrower issue a new Revolving Credit Note
payable to the New Lender as follows:
Revolving Note
Payable to the Order of: Principal Amount of Note:
----------------------- ------------------------
________________________ $_____________ ]
6. The [New or Current] Lender (i) represents and warrants that it is
legally authorized to enter into this Lender Addition and Acknowledgement
Agreement; (ii) confirms that it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements delivered pursuant
to Section 6.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Lender Addition and Acknowledgement Agreement; (iii) agrees that it will,
independently and without reliance upon any other Lender or the Administrative
Agent and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iv) confirms that it meets the criteria set
forth in the definition of Eligible Assignee; (v) appoints and authorizes
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Credit Documents as are
delegated to such Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (vi) agrees that it will perform in
accordance with their terms all the obligations which by the terms of the Credit
Agreement and the other Credit Documents are required to be performed by it as a
Lender; and (vii) agrees that it will keep confidential all the information with
respect to the Borrower furnished to it by the Borrower (other than information
required or requested to be disclosed by it pursuant to regulatory requirements
or legal process;
-2-
<PAGE>
information requested by and disclosed to its auditors, accountants and
attorneys, provided that the [New or Current] Lender shall use its best efforts
--------
to have such Persons enter into a confidentiality agreement with respect to such
information; and information generally available to the public or otherwise
available to the [New or Current] Lender on a nonconfidential basis).
7. The effective date for this Lender Addition and Acknowledgement
Agreement shall be _____________ (the "Effective Date"). Following the
execution of this Lender Addition and Acknowledgement Agreement, it will be
delivered to the Administrative Agent for the consent of the Administrative
Agent and acceptance and recording in the Register.
8. Upon such consents, acceptance and recording, from and after the
Effective Date, the [New or Current] Lender shall be a party to the Credit
Agreement and the other Credit Documents to which Lenders are parties and to the
extent provided in this Lender Addition and Acknowledgement Agreement, have the
rights and obligations of a Lender under each such agreement.
9. Upon such consents, acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect of the interest
assigned hereby (including payments of principal, interest, fees and other
amounts) to the [New or Current] Lender.
10. The representations and warranties of the Borrower under the Credit
Agreement and the other Credit Documents are true and correct in all material
respects as of the date hereof, both before and after giving effect to the
Revolver Increase.
11. THIS LENDER ADDITION AND ACKNOWLEDGEMENT AGREEMENT SHALL BE DEEMED TO
BE A CONTRACT UNDER SEAL AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.
THE ACKERLEY GROUP, INC.
By: ________________________________
Name:________________________________
Title:_______________________________
-3-
<PAGE>
[CURRENT LENDER OR NEW LENDER]
Revolving Credit Commitment $________
Percentage of Total Revolving Credit
Commitment ____%
By: ________________________________
Name:________________________________
Title:_______________________________
-4-
<PAGE>
Acknowledged and Consented to:
FIRST UNION NATIONAL BANK, as
Administrative Agent
By: ________________________________
Name: ______________________________
Title: _____________________________
-5-
<PAGE>
Schedule 1
to
Lender Addition and Acknowledgement Agreement
Lenders and Commitments
-----------------------
(as of the date hereof)
A. Revolving Credit Commitment Percentage of Each Lender.
-----------------------------------------------------
<TABLE>
<S> <C>
1. First Union National Bank _________%
2. _________________________ _________%
3. _________________________ _________%
4. [Other] _________%
B. Revolving Credit Commitment of Each Lender.
----------------------------------------------------------
1. First Union National Bank $_________
2. _________________________ $_________
3. _________________________ $_________
4. [Other] $_________
C. Outstanding Balance of the Revolving Loans of Each Lender.
----------------------------------------------------------
1. First Union National Bank $_________
2. _________________________ $_________
3. _________________________ $_________
4. [Other] $_________
</TABLE>
-6-
<PAGE>
Schedule 2
to
Lender Addition and Acknowledgement Agreement
Lenders and Commitments
-----------------------
(as of the Effective Date)
A. Revolving Credit Commitment Percentage of Each Lender.
-----------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
1. First Union National Bank _________%
2. _________________________ _________%
3. _________________________ _________%
4. [Other] _________%
B. Revolving Credit Commitment of Each Lender.
----------------------------------------------------------
1. First Union National Bank $_________
2. _________________________ $_________
3. _________________________ $_________
4. [Other] $_________
C. Outstanding Balance of the Revolving Loans of Each Lender.
----------------------------------------------------------
1. First Union National Bank $_________
2. _________________________ $_________
3. _________________________ $_________
4. [Other] $_________
</TABLE>
-7-
a
<PAGE>
EXHIBIT 10.2
------------
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of the 22nd day of January, 1999 (this
"Agreement"), is made by THE ACKERLEY GROUP, INC., a Delaware corporation (the
"Borrower"), and by each of the undersigned Subsidiaries of the Borrower and
each other Subsidiary that, after the date hereof, executes an instrument of
accession hereto substantially in the form of Exhibit C (a "Pledgor Accession";
---------
the undersigned and such other Subsidiaries, collectively, the "Subsidiary
Pledgors," and together with the Borrower, the "Pledgors"), in favor of FIRST
UNION NATIONAL BANK, as administrative agent for the banks and other financial
institutions (collectively, the "Lenders") party to the Credit Agreement
referred to below (in such capacity, the "Administrative Agent"), for the
benefit of the Secured Parties (as hereinafter defined). Capitalized terms used
herein without definition shall have the meanings given to them in the Credit
Agreement referred to below.
RECITALS
A. The Borrower, the Lenders and the Administrative Agent are parties to a
Credit Agreement, dated as of January 22, 1999 (as amended, modified or
supplemented from time to time, the "Credit Agreement"), providing for the
availability of certain credit facilities to the Borrower upon the terms and
subject to the conditions set forth therein.
B. It is a condition to the extension of credit to the Borrower under the
Credit Agreement, that the Borrower and each of the Subsidiary Pledgors that is
a party to this Agreement as of the date hereof, shall have agreed, by executing
and delivering this Agreement, to secure the payment in full of the Obligations
of the Borrower under the Credit Agreement and the other Credit Documents.
C. Each of the Subsidiaries of the Borrower shall, upon the repayment of
the 10.48% Senior Subordinated Notes due 2000 or in the event such notes no
longer limit the ability of such Subsidiaries to guarantee the Obligations,
enter into a Subsidiary Guaranty pursuant to which such Subsidiaries will
guarantee to the Secured Parties the payment in full of the Obligations of the
Borrower under the Credit Agreement and the other Credit Documents.
D. The Secured Parties are relying on this Agreement in their decision to
extend credit to the Borrower under the Credit Agreement, and would not enter
into the Credit Agreement without the execution and delivery of this Agreement
by the Pledgors.
<PAGE>
E. The Pledgors will obtain benefits as a result of the extension of
credit to the Borrower under the Credit Agreement, which benefits are hereby
acknowledged, and, accordingly, desire to execute and deliver this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to induce the Secured Parties to enter into the Credit Agreement
and to induce the Lenders to extend credit to the Borrower thereunder, each
Pledgor hereby agrees as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement, in addition to the
-------------
terms defined elsewhere herein, the following terms shall have the meanings set
forth below:
"Accounts" shall mean, collectively, all of each Pledgor's accounts, as
defined in the Uniform Commercial Code, including, without limitation, all of
such Pledgor's accounts receivable, all rights to payment for goods sold or
leased or to be sold or to be leased (including all rights to returned or
repossessed goods) or for services rendered at any time or for services to be
rendered (including any rights to stoppage in transit, repossession and
reclamation and other rights of an unpaid vendor or secured party), all rights
under or evidenced by book debts, notes, bills, drafts or acceptances, all
Instruments evidencing or relating to any of the foregoing, and all rights under
security agreements, guarantees, indemnities and other instruments and contracts
securing or otherwise relating to any of the foregoing, in each case whether now
owned or existing or hereafter acquired or arising.
"Collateral" shall have the meaning given to such term in SECTION 2.1.
"Collateral Accounts" shall have the meaning given to such term in SECTION
5.3.
"Concentration Account" shall have the meaning given to such term in
SECTION 4.14.
"Concentration Agreement" shall have the meaning given to such term in
SECTION 4.14.
"Contracts" shall mean, collectively, all rights of each Pledgor under all
leases, contracts and agreements to which such Pledgor is now or hereafter a
party, including, without limitation, all rights, privileges and powers under
Licenses, together with any and all extensions, modifications, amendments and
renewals of such leases, contracts and agreements and all rights of such Pledgor
to receive moneys due or to become due thereunder or pursuant thereto and to
amend, modify, terminate or exercise rights under such leases, contracts and
agreements, but excluding rights under (but not excluding Proceeds of) any
lease, contract or agreement (including, without limitation, any License) that
by the terms thereof, or under applicable law,
2
<PAGE>
cannot be assigned or a security interest granted therein in the manner
contemplated by this Agreement unless consent from the relevant party or parties
has been obtained and under the terms of which lease, contract or agreement any
such assignment or grant of a security interest therein in the absence of such
consent would, or could, result in the termination thereof, but only to the
extent that (y) such rights are subject to such contractual or legal restriction
and (z) such restriction is not, or could not be, rendered ineffective pursuant
to the Uniform Commercial Code of any relevant jurisdiction or any other
applicable law (including the Bankruptcy Code) or principles of equity.
"Copyrights" shall mean, collectively, all of each Pledgor's copyrights,
copyright registrations and applications for copyright registration, whether
under the laws of the United States or any other country or jurisdiction,
including all recordings, supplemental registrations and derivative or
collective work registrations, and all renewals and extensions thereof, in each
case whether now owned or existing or hereafter acquired or arising.
"Copyright Collateral" shall mean, collectively, all Copyrights and
Copyright Licenses to which any Pledgor is or hereafter becomes a party and all
other General Intangibles embodying, incorporating, evidencing or otherwise
relating or pertaining to any Copyright or Copyright License, in each case
whether now owned or existing or hereafter acquired or arising.
"Copyright License" shall mean any agreement now or hereafter in effect
granting any right to any third party under any Copyright now or hereafter owned
by any Pledgor or which any Pledgor otherwise has the right to license, or
granting any right to any Pledgor under any property of the type described in
the definition of Copyright herein now or hereafter owned by any third party,
and all rights of any Pledgor under any such agreement.
"Deposit Accounts" shall mean, collectively, all of each Pledgor's deposit
accounts maintained with the Administrative Agent or any other bank or
depository institution, whether now owned or existing or hereafter acquired or
arising and including, without limitation, all Concentration Accounts and any
Collateral Accounts, together with all funds held from time to time therein and
all certificates and instruments from time to time representing, evidencing or
deposited into such accounts.
"Equipment" shall mean, collectively, all of each Pledgor's equipment, as
defined in the Uniform Commercial Code, including, without limitation, all
machinery, equipment, computer equipment and software, parts, supplies,
appliances, fittings, furniture and fixtures of every kind and nature, wherever
located and whether or not affixed to any real property, all Mobile Goods, and
all accessions, accessories, additions, attachments, improvements, modifications
and upgrades to, replacements of and substitutions for the foregoing, in each
case whether now owned or existing or hereafter acquired.
"General Intangibles" shall mean, collectively, all of each Pledgor's
general intangibles, as defined in the Uniform Commercial Code, including,
without limitation, all Contracts, all Copyright Collateral, all Patent
Collateral, all Trademark Collateral, all inventions, designs, trade secrets,
trade processes, confidential or proprietary technical or business information,
know-how, registrations, licenses, permits and franchises, all rights under or
evidenced by choses in action,
3
<PAGE>
causes of action or Instruments, all indebtedness, obligations and other amounts
at any time owing to such Pledgor from any Person and all interest, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
indebtedness, obligations or other amounts (including, without limitation, all
Intercompany Obligations), all judgments, tax refund claims, claims against
carriers and shippers, claims under liens and insurance policies, all rights
under security agreements, guarantees, indemnities and other instruments and
contracts securing or otherwise relating to any of the foregoing, all invoices,
customer lists, books and records, ledger and account cards, computer tapes,
disks, software, printouts and other corporate or business records relating to
the foregoing, and all other intangible personal property of every kind and
nature, and all accessions, additions, improvements, modifications and upgrades
to, replacements of and substitutions for the foregoing, in each case whether
now owned or existing or hereafter acquired or arising, but excluding Accounts
and excluding leases, contracts and agreements (including, without limitation,
Licenses) to the extent excluded from Contracts under the definition of such
term herein. Without in any way limiting the foregoing, "General Intangibles"
shall specifically include (i) FCC Licenses of the Pledgors (the "FCC
Licenses"), but only to the extent, if any, permitted by applicable law,
including without limitation the Communications Act of 1934, as amended, and FCC
and/or FCC Licenses Rules and Regulations, (ii) all proceeds from the
disposition of any radio or television station owned or operated by any Pledgor,
and (iii) the "going concern value" of such stations.
"Instruments" shall mean, collectively, all instruments, chattel paper or
documents, each as defined in the Uniform Commercial Code, of each Pledgor,
whether now owned or existing or hereafter acquired, including those evidencing,
representing, securing, arising from or otherwise relating to any Accounts,
Intercompany Obligations or other Collateral, including, without limitation, any
promissory notes, drafts, bills of exchange, documents of title and receipts.
"Intercompany Obligations" shall mean, collectively, all indebtedness,
obligations and other amounts at any time owing to any Pledgor from any of its
Subsidiaries or Affiliates and all interest, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness, obligations or
other amounts.
"Investment Agreement" shall mean any partnership agreement, joint venture
agreement, limited liability company operating agreement, stockholders agreement
or other agreement creating, governing or evidencing any equity interests and to
which any Pledgor is now or hereafter becomes a party, as any such agreement may
be amended, modified, supplemented, restated or replaced from time to time.
"Investment Property" shall mean, collectively, all of each Pledgor's
investment property, as defined in the Uniform Commercial Code, including,
without limitation, all certificated securities, uncertificated securities,
security entitlements, securities accounts, commodity contracts and commodity
accounts (as such terms are defined in the Uniform Commercial Code) of or held
by such Pledgor, together with all rights to receive interest, income,
dividends, distributions, returns of capital and other amounts (whether in cash,
securities, property, or a
4
<PAGE>
combination thereof), and all additional stock, warrants, options, securities,
interests and other property, from time to time paid or payable or distributed
or distributable in respect of any of the foregoing; and all other rights,
powers, privileges, interests, claims and other property in any manner arising
out of or relating to any of the foregoing, of whatever kind or character;
together with all certificates, instruments and entries upon the books of
financial intermediaries at any time evidencing any of the foregoing, in each
case whether now owned or existing or hereafter acquired or arising.
"Inventory" shall mean, collectively, all of each Pledgor's inventory, as
defined in the Uniform Commercial Code, including, without limitation, all goods
manufactured, acquired or held for sale or lease, all raw materials, component
materials, work-in-process and finished goods, all supplies, goods and other
items and materials used or consumed in the manufacture, production, packaging,
shipping, selling, leasing or furnishing of such inventory or otherwise in the
operation of the business of such Pledgor, all goods in which such Pledgor now
or at any time hereafter has any interest or right of any kind, and all goods
that have been returned to or repossessed by or on behalf of such Pledgor, in
each case whether or not the same is in transit or in the constructive, actual
or exclusive occupancy or possession of such Pledgor or is held by such Pledgor
or by others for the account of such Pledgor, and in each case whether now owned
or existing or hereafter acquired or arising.
"License" shall mean any Copyright License, Patent License or Trademark
License.
"Mobile Goods" shall mean, collectively, all of each Pledgor's motor
vehicles, tractors, trailers, aircraft, rolling stock and other like property,
whether or not the title thereto is governed by a certificate of title or
ownership, in each case whether now owned or existing or hereafter acquired.
"Patents" shall mean, collectively, all of each Pledgor's letters patent,
whether under the laws of the United States or any other country or
jurisdiction, all recordings and registrations thereof and applications
therefor, including, without limitation, the inventions described therein, all
reissues, continuations, divisions, renewals, extensions, continuations-in-part
thereof, in each case whether now owned or existing or hereafter acquired or
arising.
"Patent Collateral" shall mean, collectively, all Patents and all Patent
Licenses to which any Pledgor is or hereafter becomes a party and all other
General Intangibles embodying, incorporating, evidencing or otherwise relating
or pertaining to any Patent or Patent License, in each case whether now owned or
existing or hereafter acquired or arising.
"Patent License" shall mean any agreement now or hereafter in effect
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any Pledgor or which any Pledgor
otherwise has the right to license, is in existence, or granting to any Pledgor
any right to make, use or sell any invention on which property of the type
described in the definition of Patent herein, now or hereafter owned by any
third party, is in existence, and all rights of any Pledgor under any such
agreement.
"Proceeds" shall have the meaning given to such term in SECTION 2.1.
5
<PAGE>
"Secured Parties" shall mean, collectively, the Lenders (including the
Issuing Lender and including any Lender in its capacity as a counterparty to any
Hedge Agreement with the Borrower) and the Administrative Agent.
"Specified Contracts" shall have the meaning given to such term in SECTION
3.7.
"Trademarks" shall mean, collectively, all of each Pledgor's trademarks,
service marks, trade names, corporate and company names, business names, logos,
trade dress, trade styles, other source or business identifiers, designs and
general intangibles of a similar nature, whether under the laws of the United
States or any other country or jurisdiction, all recordings and registrations
thereof and applications therefor, all renewals and extensions thereof, all
rights corresponding thereto, and all goodwill associated therewith or
symbolized thereby, in each case whether now owned or existing or hereafter
acquired or arising.
"Trademark Collateral" shall mean, collectively, all Trademarks and
Trademark Licenses to which any Pledgor is or hereafter becomes a party and all
other General Intangibles embodying, incorporating, evidencing or otherwise
relating or pertaining to any Trademark or Trademark License, in each case
whether now owned or existing or hereafter acquired or arising.
"Trademark License" shall mean any agreement now or hereafter in effect
granting any right to any third party under any Trademark now or hereafter owned
by any Pledgor or which any Pledgor otherwise has the right to license, or
granting any right to any Pledgor under any property of the type described in
the definition of Trademark herein now or hereafter owned by any third party,
and all rights of any Pledgor under any such agreement.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as the
same may be in effect from time to time in the State of North Carolina; provided
that if, by reason of applicable law, the validity or perfection of any security
interest in any Collateral granted under this Agreement is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than North
Carolina, then as to the validity or perfection, as the case may be, of such
security interest, "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction.
1.2 Other Terms. All terms in this Agreement that are not capitalized
-----------
shall have the meanings provided by the Uniform Commercial Code to the extent
the same are used or defined therein.
ARTICLE II
CREATION OF SECURITY INTEREST
2.1 Pledge and Grant of Security Interest. Each Pledgor hereby pledges,
-------------------------------------
assigns and delivers to the Administrative Agent, for the ratable benefit of the
Secured Parties, and grants to the Administrative Agent, for the ratable benefit
of the Secured Parties, a Lien upon and security interest in, all of such
Pledgor's right, title and interest in and to the following, in each case
whether now owned or existing or hereafter acquired or arising (collectively,
the "Collateral"):
6
<PAGE>
(i) all Accounts;
(ii) all Contracts;
(iii) all Deposit Accounts;
(iv) all Equipment;
(v) all General Intangibles;
(vi) all Inventory;
(vii) all Investment Property;
(viii) all Instruments;
(ix) to the extent not covered or not specifically excluded by
clauses (i) through (viii) above, all of such Pledgor's other personal
property, whether now owned or existing or hereafter arising or acquired;
and
(x) any and all proceeds, as defined in the Uniform Commercial Code,
products, rents and profits of or from any and all of the foregoing and, to
the extent not otherwise included in the foregoing, (w) all payments under
any insurance (whether or not the Administrative Agent is the loss payee
thereunder), indemnity, warranty or guaranty with respect to any of the
foregoing Collateral, (x) all payments in connection with any requisition,
condemnation, seizure or forfeiture with respect to any of the foregoing
Collateral, (y) all claims and rights to recover for any past, present or
future infringement or dilution of or injury to any Copyright Collateral,
Patent Collateral or Trademark Collateral, and (z) all other amounts from
time to time paid or payable under or with respect to any of the foregoing
Collateral (collectively, "Proceeds"). For purposes of this Agreement, the
term "Proceeds" includes whatever is receivable or received when Collateral
or Proceeds are sold, exchanged, collected or otherwise disposed of,
whether voluntarily or involuntarily.
provided, however, for purposes of this Agreement, the term "Collateral" shall
- -------- -------
not include any right, title or interest in any asset of SSI, Inc., the granting
of which Lien would require the approval of the National Basketball Association
(including the Seattle Supersonics NBA franchise).
2.2 Security for Secured Obligations. This Agreement and the Collateral
--------------------------------
secure the full and prompt payment, at any time and from time to time as and
when due (whether at the stated maturity, by acceleration or otherwise), of all
liabilities and obligations of each Pledgor, whether now existing or hereafter
incurred, created or arising and whether direct or indirect, absolute or
contingent, due or to become due, under, arising out of or in connection with
the Credit Agreement, this Agreement, any Subsidiary Guaranty or any of the
other Credit
7
<PAGE>
Documents to which it is or hereafter becomes a party, or any Hedge Agreement to
which the Borrower and any Lender are parties, including, without limitation,
(i) in the case of the Borrower, all Obligations, including, without limitation,
all principal of and interest on the Loans, all fees, expenses, indemnities and
other amounts payable by the Borrower under the Credit Agreement or any other
Credit Document (including interest accruing after the filing of a petition or
commencement of a case by or with respect to the Borrower seeking relief under
any applicable federal and state laws pertaining to bankruptcy, reorganization,
arrangement, moratorium, readjustment of debts, dissolution, liquidation or
other debtor relief, specifically including, without limitation, the Bankruptcy
Code and any fraudulent transfer and fraudulent conveyance laws, whether or not
the claim for such interest is allowed in such proceeding), and all obligations
of the Borrower to any Lender under any Hedge Agreement required or permitted
under the Credit Agreement and to which the Borrower and such Lender are
parties, and (ii) in the case of any Subsidiary Pledgor, all of its liabilities
and obligations as a Guarantor (as defined in the Subsidiary Guaranty), if any,
in respect of the Obligations; and in each case under (i) and (ii) above, (a)
all such liabilities and obligations that, but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, would become due,
and (b) all fees, costs and expenses payable by such Pledgor under SECTION 7.1
(the liabilities and obligations of the Pledgors described in this SECTION 2.2,
collectively, the "Secured Obligations").
2.3 FCC Matters. Notwithstanding anything herein to the contrary, prior
-----------
to the occurrence of an Event of Default and the consent of the FCC and of any
other applicable Governmental Authority to the assignment of any FCC License or
the transfer of control of any Pledgor (as may be required by law), neither this
Agreement, the Credit Agreement, the Credit Documents nor any of the
transactions contemplated hereby and thereby will constitute, create, or have
the effect of constituting or creating, directly or indirectly, actual or
practical ownership of any Pledgor by the Administrative Agent or the Secured
Parties or control, affirmative or negative, direct or indirect, by the
Administrative Agent or the Secured Parties over the management or any other
aspect of the operation of any Pledgor, which ownership and control remain
exclusively and at all times in such Pledgor until such time as the FCC approves
the transfer of such rights to another party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Pledgor represents and warrants as follows:
3.1 Ownership of Collateral. Each Pledgor owns, or has valid rights as a
-----------------------
lessee or licensee with respect to, all Collateral purported to be pledged by it
hereunder, free and clear of any Liens except for the Liens granted to the
Administrative Agent, for the benefit of the Secured Parties, pursuant to this
Agreement, and except for other Permitted Liens. No security agreement,
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any government or public office, and
no Pledgor has filed or consented to the filing of any such statement or notice,
except (i) Uniform Commercial Code
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financing statements naming the Administrative Agent as secured party, (ii)
security instruments filed in the U.S. Copyright Office or the U.S. Patent and
Trademark Office naming the Administrative Agent as secured party and (iii) as
may be otherwise permitted by the Credit Agreement.
3.2 Security Interests; Filings. This Agreement, together with (i) the
---------------------------
filing, with respect to each Pledgor, of duly completed and executed Uniform
Commercial Code financing statements naming such Pledgor as debtor, the
Administrative Agent as secured party, and describing the Collateral, in the
jurisdictions set forth with respect to such Pledgor on Annex A hereto, which
-------
have been duly executed and delivered by the Pledgors and delivered to the
Administrative Agent for filing, (ii) to the extent required by applicable law,
the filing, with respect to each relevant Pledgor, of duly completed and
executed assignments in the forms set forth as Exhibits A and B with the U.S.
---------- -
Copyright Office or the U.S. Patent and Trademark Office, as appropriate, with
regard to registered Copyright Collateral, Patent Collateral and Trademark
Collateral of such Pledgor, as the case may be, (iii) in the case of Investment
Property evidenced by uncertificated securities, compliance with Article 8 of
the applicable Uniform Commercial Code, (iv) upon request of the Administrative
Agent, as to Mobile Goods covered by a certificate of title or ownership, the
notation of the Administrative Agent's security interest therein on the
applicable certificates of title or ownership, and (v) the delivery to the
Administrative Agent of all chattel paper, promissory notes and other
Instruments included in the Collateral (and assuming continued possession
thereof by the Administrative Agent), creates, and at all times shall
constitute, a valid and perfected security interest in and Lien upon the
Collateral in favor of the Administrative Agent, for the benefit of the Secured
Parties, to the extent a security interest therein can be perfected by such
filings or possession, as applicable, superior and prior to the rights of all
other Persons therein (except for Permitted Liens), and no other or additional
filings, registrations, recordings or actions are or shall be necessary or
appropriate in order to maintain the perfection and priority of such Lien and
security interest, other than actions required with respect to Collateral of the
types excluded from Article 9 of the Uniform Commercial Code or from the filing
requirements under such Article 9 by reason of Section 9-104 or 9-302 of the
Uniform Commercial Code and other than continuation statements required under
the Uniform Commercial Code (it being specifically noted that the Administrative
Agent may at its option, but shall not be required to, require that any bank or
other depository institution at which a Deposit Account is maintained enter into
a written agreement or take such other action as may be necessary to perfect the
security interest of the Administrative Agent in such Deposit Account and the
funds therein).
3.3 Locations. Annex B lists, as to each Pledgor, (i) the addresses of
--------- -------
its chief executive office and each other place of business, (ii) the address of
each location of all original invoices, ledgers, chattel paper, Instruments and
other records or information evidencing or relating to the Collateral of such
Pledgor, and (iii) the address of each location at which any Equipment or
Inventory (other than Mobile Goods and goods in transit) owned by such Pledgor
is kept or maintained, in each instance except for any new locations established
in accordance with the provisions of SECTION 4.2. Except as may be otherwise
noted therein, all locations identified in Annex B are leased by the applicable
-------
Pledgor. No Pledgor presently conducts business under any prior or other
corporate or company name or under any trade or fictitious
9
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names, except as indicated beneath its name on Annex B, and no Pledgor has
-------
entered into any contract or granted any Lien within the past five years under
any name other than its legal corporate name or a trade or fictitious name
indicated on Annex B.
-------
3.4 Authorization; Consent. No authorization, consent or approval of, or
----------------------
declaration or filing with, any Governmental Authority (including, without
limitation, any notice filing with state tax or revenue authorities required to
be made by account creditors in order to enforce any Accounts in such state) is
required for the valid execution, delivery and performance by any Pledgor of
this Agreement, the grant by it of the Lien and security interest in favor of
the Administrative Agent provided for herein, or the exercise by the
Administrative Agent of its rights and remedies hereunder, except for (i) the
filings described in SECTION 3.2, and (ii) in the case of Accounts owing from
any federal governmental agency or authority, the filing by the Administrative
Agent of a notice of assignment in accordance with the federal Assignment of
Claims Act of 1940, as amended, and (iii) in the case of Investment Property,
except as may be required in connection with a disposition of any such
collateral by laws affecting the offering and sale of securities, generally.
3.5 No Restrictions. There are no statutory or regulatory restrictions,
---------------
prohibitions or limitations on any Pledgor's ability to grant to the
Administrative Agent a Lien upon and security interest in the Collateral
pursuant to this Agreement or (except for the provisions of the federal Anti-
Assignment Act and Anti-Claims Act, as amended) on the exercise by the
Administrative Agent of its rights and remedies hereunder (including any
foreclosure upon or collection of the Collateral), and there are no contractual
restrictions on any Pledgor's ability so to grant such Lien and security
interest.
3.6 Accounts. Each Account is, or at the time it arises will be, (i) a
--------
bona fide, valid and legally enforceable indebtedness of the account debtor
according to its terms, arising out of or in connection with the sale, lease or
performance of goods or services by the Pledgors or any of them, (ii) subject to
no offsets, discounts, counterclaims, contra accounts or any other defense of
any kind and character, other than warranties and discounts customarily given by
the Pledgors in the ordinary course of business and warranties provided by
applicable law, (iii) to the extent listed on any schedule of Accounts at any
time furnished to the Administrative Agent, a true and correct statement of the
amount actually and unconditionally owing thereunder, maturing as stated in such
schedule and in the invoice covering the transaction creating such Account, and
(iv) not evidenced by any chattel paper or other Instrument; or if so, such
chattel paper or other Instrument (other than invoices and related
correspondence and supporting documentation) shall promptly be duly endorsed to
the order of the Administrative Agent and delivered to the Administrative Agent
to be held as Collateral hereunder. To the knowledge of each Pledgor, there are
no facts, events or occurrences that would in any way impair the validity or
enforcement of any Accounts except as set forth above.
3.7 Specified Contracts. As to each Investment Agreement and each other
-------------------
Material Contract to which any Pledgor is or hereafter becomes a party (the
foregoing, collectively, "Specified Contracts"), (i) such Pledgor is not in
default in any material respect under any such Specified Contracts, and to the
knowledge of such Pledgor, none of the other parties to such
10
<PAGE>
Specified Contracts is in default in any material respect thereunder (except as
shall have been disclosed in writing to the Administrative Agent), (ii) each
such Specified Contract is, or at the time of execution will be, the legal,
valid and binding obligation of all parties thereto, enforceable against such
parties in accordance with the respective terms thereof, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and no defense, offset, deduction or counterclaim
will exist thereunder in favor of any such party, (iii) the performance by such
Pledgor of its obligations under each such Specified Contract in accordance with
its terms will not contravene any Requirement of Law or any contractual
restriction binding on or affecting such Pledgor or any of its properties, and
will not result in or require the creation of any Lien upon or with respect to
any of its properties, and (iv) such Pledgor has (or promptly after the time of
execution will have) furnished the Administrative Agent with a correct and
complete copy of each Specified Contract to which it is a party as then in
effect.
3.8 Intellectual Property. Annexes C, D and E correctly set forth all
--------------------- ------------ -
registered Copyrights, Patents and Trademarks owned by any Pledgor as of the
date hereof and used or proposed to be used in its business. Each such Pledgor
owns or possesses the valid right to use all Copyrights, Patents and Trademarks;
all registrations therefor have been validly issued under applicable law and are
in full force and effect; no claim has been made in writing or, to the knowledge
of such Pledgor, orally, that any of the Copyrights, Patents or Trademarks is
invalid or unenforceable or violates or infringes the rights of any other
Person, and there is no such violation or infringement in existence; and to the
knowledge of such Pledgor, no other Person is presently infringing upon the
rights of such Pledgor with regard to any of the Copyrights, Patents or
Trademarks.
3.9 Documents of Title. No bill of lading, warehouse receipt or other
------------------
document or instrument of title is outstanding with respect to any Collateral
other than Mobile Goods and other than Inventory in transit in the ordinary
course of business to a location set forth on Annex B or to a customer of a
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Pledgor.
ARTICLE IV
COVENANTS
4.1 Use and Disposition of Collateral. So long as no Event of Default
---------------------------------
shall have occurred and be continuing, each Pledgor may, in any lawful manner
not inconsistent with the provisions of this Agreement and the other Credit
Documents, use, control and manage the Collateral in the operation of its
businesses, and receive and use the income, revenue and profits arising
therefrom and the Proceeds thereof, in the same manner and with the same effect
as if this Agreement had not been made; provided, however, that no Pledgor will
-------- -------
sell or otherwise dispose of, grant any option with respect to, or mortgage,
pledge, grant any Lien with respect to or otherwise encumber any of the
Collateral or any interest therein, except for the security interest created in
favor of the Administrative Agent hereunder and except as may be otherwise
expressly permitted in accordance with the terms of this Agreement and the
Credit Agreement (including
11
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any applicable provisions therein regarding delivery of proceeds of sale or
disposition to the Administrative Agent).
4.2 Change of Name, Locations, etc. No Pledgor will (i) change its name,
-------------------------------
identity or corporate structure, (ii) change its chief executive office from the
location thereof listed on Annex B, or (iii) remove any Collateral (other than
-------
Mobile Goods and goods in transit), or any books, records or other information
relating to Collateral, from the applicable location thereof listed on Annex B,
-------
or keep or maintain any Collateral at a location not listed on Annex B, unless
-------
in each case such Pledgor has (1) given reasonable prior written notice to the
Administrative Agent of its intention to do so, together with information
regarding any such new location and such other information in connection with
such proposed action as the Administrative Agent may reasonably request, and (2)
delivered to the Administrative Agent prior to any such change or removal such
documents, instruments and financing statements as may be required by the
Administrative Agent, all in form and substance satisfactory to the
Administrative Agent, paid all necessary filing and recording fees and taxes,
and taken all other actions reasonably requested by the Administrative Agent
(including, at the request of the Administrative Agent, delivery of opinions of
counsel reasonably satisfactory to the Administrative Agent to the effect that
all such actions have been taken), in order to perfect and maintain the Lien
upon and security interest in the Collateral provided for herein in accordance
with the provisions of SECTION 3.2.
4.3 Records; Inspection. (a) Each Pledgor will keep and maintain at its
-------------------
own cost and expense satisfactory and complete records of the Accounts and all
other Collateral, including, without limitation, records of all payments
received, all credits granted thereon, all merchandise returned and all other
documentation relating thereto, and will furnish to the Administrative Agent
from time to time such statements, schedules and reports (including, without
limitation, accounts receivable aging schedules) with regard to the Collateral
as the Administrative Agent may reasonably request.
(b) Each Pledgor shall, from time to time at such times as may be
reasonably requested and upon reasonable notice, (i) make available to the
Administrative Agent for inspection and review at such Pledgor's offices copies
of all invoices and other documents and information relating to the Collateral
(including, without limitation, itemized schedules of all collections of
Accounts, showing the name of each account debtor, the amount of each payment
and such other information as the Administrative Agent shall reasonably
request), and (ii) permit the Administrative Agent or its representatives to
visit its offices or the premises upon which any Collateral may be located,
inspect its books and records and make copies and memoranda thereof, inspect the
Collateral, discuss its finances and affairs with its officers, employees and
independent accountants and take any other actions necessary for the protection
of the interests of the Secured Parties in the Collateral. At the request of
the Administrative Agent, each Pledgor will legend, in form and manner
satisfactory to the Administrative Agent, the books, records and materials
evidencing or relating to the Collateral with an appropriate reference to the
fact that the Collateral has been assigned to the Administrative Agent and that
the Administrative Agent has a security interest therein. The Administrative
Agent shall have the right to make test verifications of Accounts in any
reasonable manner and through any reasonable medium, and each Pledgor
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<PAGE>
agrees to furnish all such reasonable assistance and information as the
Administrative Agent may require in connection therewith.
4.4 Accounts. Unless notified otherwise by the Administrative Agent in
--------
accordance with the terms hereof, each Pledgor shall endeavor to collect its
Accounts and all amounts owing to it thereunder in the ordinary course of its
business consistent with past practices and shall apply forthwith upon receipt
thereof all such amounts as are so collected to the outstanding balances
thereof, and in connection therewith shall, at the request of the Administrative
Agent, take such action as the Administrative Agent may deem necessary or
advisable (within applicable laws) to enforce such collection. No Pledgor
shall, except to the extent done in the ordinary course of its business
consistent with past practices and in accordance with sound business judgment
and provided that no Event of Default shall have occurred and be continuing, (i)
grant any extension of the time for payment of any Account, (ii) compromise or
settle any Account for less than the full amount thereof, (iii) release, in
whole or in part, any Person or property liable for the payment of any Account,
or (iv) allow any credit or discount on any Account. Each Pledgor shall
promptly inform the Administrative Agent of any disputes with any account debtor
or obligor and of any claimed offset and counterclaim that may be asserted with
respect thereto involving, in each case, $1,000,000 or more, where such Pledgor
reasonably believes that the likelihood of payment by such account debtor is
materially impaired, indicating in detail the reason for the dispute, all claims
relating thereto and the amount in controversy.
4.5 Instruments. Each Pledgor agrees that if any Intercompany
-----------
Obligations, Accounts or other Collateral shall at any time be evidenced by a
promissory note, chattel paper or other Instrument, the same shall promptly be
duly endorsed to the order of the Administrative Agent and delivered to the
Administrative Agent to be held as Collateral hereunder.
4.6 Equipment. Each Pledgor will, in accordance with sound business
---------
practices, maintain all Equipment used by it in its business (other than
obsolete Equipment) in good repair, working order and condition (normal wear and
tear excepted) and make all necessary repairs and replacements thereof so that
the value and operating efficiency thereof shall at all times be maintained and
preserved. No Pledgor shall knowingly permit any Equipment to become a fixture
to any real property.
4.7 Inventory. Each Pledgor will, in accordance with sound business
---------
practices, maintain all Inventory held by it or on its behalf in good saleable
or useable condition. Unless notified otherwise by the Administrative Agent in
accordance with the terms hereof, each Pledgor may, in any lawful manner not
inconsistent with the provisions of this Agreement and the other Credit
Documents, process, use and, in the ordinary course of business but not
otherwise, sell its Inventory. Without limiting the generality of the
foregoing, each Pledgor agrees that it shall not permit any Inventory to be in
the possession of any bailee, warehouseman, agent or processor at any time
unless such bailee, warehouseman, agent or processor shall have been notified of
the security interest created by this Agreement and such Pledgor shall have
exercised its reasonable best efforts to obtain, at such Pledgor's sole cost and
expense, a written agreement to hold such Inventory subject to the security
interest created by this Agreement and the instructions of the Administrative
Agent and to waive and release any Lien (whether arising
13
<PAGE>
by operation of law or otherwise) it may have with respect to such Inventory,
such agreement to be in form and substance reasonably satisfactory to the
Administrative Agent.
4.8 Contracts. Each Pledgor will, at its expense, at all times perform
---------
and comply with, in all material respects, all terms and provisions of each
Material Contract to which it is or hereafter becomes a party required to be
performed or complied with by it and enforce the terms and provisions thereof in
accordance with its terms, and will not waive, amend or modify any provision
thereof in any manner other than in the ordinary course of business of such
Pledgor in accordance with past practices and for a valid economic reason
benefiting such Pledgor (provided that in no event may any waiver, amendment or
--------
modification be made that would adversely affect the interests of the
Administrative Agent and the other Secured Parties). Each Pledgor will deliver
copies of each Material Contract to which it is a party and each material
amendment or modification thereof to the Administrative Agent promptly upon the
execution and delivery thereof. With regard to all leases, contracts and
agreements that are excluded from the definition of the term "Contracts," each
Pledgor covenants and agrees to exercise all of its material rights and remedies
under such leases, agreements and contracts to which it is a party in a
commercially reasonable manner consistent with the interests of the
Administrative Agent and the Secured Parties. No Pledgor will enter into any
Material Contract that by its terms prohibits the assignment of such Pledgor's
rights and interest thereunder in the manner contemplated by this Agreement,
other than as may be entered into in the ordinary course of business of such
Pledgor in accordance with past practices and for a valid economic reason
benefiting such Pledgor. Each Pledgor further covenants and agrees to use its
reasonable best efforts to obtain any required consent to the collateral
assignment of any Material Contract, in form and substance reasonably
satisfactory to the Administrative Agent, upon the request of the Administrative
Agent, and will deliver copies thereof to the Administrative Agent promptly upon
execution and delivery thereof. To the extent required under the Credit
Agreement, each Pledgor will notify the Administrative Agent promptly in writing
upon any termination of any Material Contract, in whole or in part, or any
material breach, default or event of default by any party thereunder.
4.9 Taxes. Each Pledgor will pay and discharge (i) all taxes, assessments
-----
and governmental charges or levies imposed upon it, upon its income or profits
or upon any of its properties, prior to the date on which penalties would attach
thereto, and (ii) all lawful claims that, if unpaid, might become a Lien upon
any of its properties; provided, however, that no Pledgor shall be required to
-------- -------
pay any such tax, assessment, charge, levy or claim that is being contested in
good faith and by proper proceedings and as to which such Pledgor has maintained
adequate reserves with respect thereto in accordance with Generally Accepted
Accounting Principles, unless and until any tax lien notice has become effective
with respect thereto or until any Lien resulting therefrom attaches to its
properties and becomes enforceable against its other creditors.
4.10 Insurance. (a) Each Pledgor will maintain and pay for, or cause to
---------
be maintained and paid for, insurance covering commercial general liability,
property and casualty, business interruption and such other risks, and in such
amounts and with such financially sound and reputable insurance companies, as
are usually and customarily carried by companies of similar size engaged in
similar businesses (and in any event, insuring all Inventory and Equipment
14
<PAGE>
against such losses and risks), and will deliver certificates of such insurance
to the Administrative Agent with standard loss payable endorsements naming the
Administrative Agent as loss payee (on property and casualty policies) and
additional insured (on liability policies) as its interests may appear. Each
such policy of insurance shall contain a clause requiring the insurer to give
not less than thirty (30) days' prior written notice to the Administrative Agent
before any cancellation of the policies for any reason whatsoever and shall
provide that any loss shall be payable in accordance with the terms thereof
notwithstanding any act of any Pledgor that might result in the forfeiture of
such insurance.
(b) As and to the extent required by the Credit Agreement, and in any
event upon and during the continuance of an Event of Default, the proceeds
payable under policies of property and casualty insurance covering Collateral
shall be applied as a prepayment of the Loans in the order and manner provided
in the Credit Agreement. Each Pledgor hereby irrevocably makes, constitutes and
appoints the Administrative Agent at all times during the continuance of an
Event of Default, its true and lawful attorney (and Administrative Agent-in-
fact) for the purpose of making, settling and adjusting claims under such
policies of insurance, endorsing its name on any check, draft, instrument or
other item or payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance.
(c) If any Pledgor fails to obtain and maintain any of the policies of
insurance required to be maintained hereunder or to pay any premium in whole or
in part, the Administrative Agent may, without waiving or releasing any
obligation or Default, at the Pledgors' expense, but without any obligation to
do so, procure such policies or pay such premiums. All sums so disbursed by the
Administrative Agent, including reasonable attorneys' fees, court costs,
expenses and other charges related thereto, shall be payable by the Pledgors to
the Administrative Agent on demand and shall be additional Secured Obligations
hereunder, secured by the Collateral.
(d) Each Pledgor will deliver to the Administrative Agent, promptly as
rendered, true copies of all material claims and reports made in any reporting
forms to insurance companies. Not less than 30 days prior to the expiration
date of the insurance policies required to be maintained by any Pledgor
hereunder, such Pledgor will deliver to the Administrative Agent one or more
certificates of insurance evidencing renewal of the insurance coverage required
hereunder plus such other evidence of payment of premiums therefor as the
Administrative Agent may request. Upon the reasonable request of the
Administrative Agent from time to time, each Pledgor will deliver to the
Administrative Agent evidence that the insurance required to be maintained
pursuant to this Section is in effect.
4.11 Intellectual Property. (a) Each applicable Pledgor will, at its own
---------------------
expense, execute, deliver and record, as promptly as possible (but in any event
within 10 days) after the date hereof, fully completed assignments in the forms
of Exhibits A and B, as applicable, in the U.S. Copyright Office or the U.S.
---------- -
Patent and Trademark Office pursuant to 35 U.S.C. (S)261, 15 U.S.C. (S)1060 or
17 U.S.C. (S)205, as applicable, with regard to any Copyright Collateral, Patent
Collateral or Trademark Collateral, as the case may be, described in Annex C, D
------- -
or E hereto. In
-
15
<PAGE>
the event that after the date hereof any Pledgor shall acquire any registered
Copyright, Patent or Trademark, or effect any registration of any Copyright,
Patent or Trademark or file any application for registration thereof, whether
within the United States or any other country or jurisdiction, such Pledgor
shall promptly furnish written notice thereof to the Administrative Agent
together with information sufficient to permit the Administrative Agent, upon
its receipt of such notice, to (and each Pledgor hereby authorizes the
Administrative Agent to) modify this Agreement, as appropriate, by amending
Annexes C, D and E hereto or to add additional exhibits hereto to include any
- --------- - -
Copyright, Patent or Trademark that becomes part of the Collateral under this
Agreement, and such Pledgor shall additionally, at its own expense, execute,
deliver and record, as promptly as possible (but in any event within 10 days)
after the date of such acquisition, registration or application, as applicable,
with regard to United States Patents, Trademarks and Copyrights, fully completed
assignments in the forms of Exhibits A and B, as applicable, in the U.S.
Copyright Office or the U.S. Patent and Trademark Office as more fully described
hereinabove, together in all instances with any other agreements, instruments
and documents that the Administrative Agent may reasonably request from time to
time to further effect and confirm the assignment and security interest created
by this Agreement in such Copyrights, Patents and Trademarks, and each Pledgor
hereby appoints the Administrative Agent its attorney-in-fact to execute,
deliver and record any and all such agreements, instruments and documents for
the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed and such power, being coupled with an interest, shall be irrevocable
for so long as this Agreement shall be in effect with respect to such Pledgor.
(b) Each Pledgor (either itself or through its licensees or its
sublicensees) will, for each Trademark used in the conduct of its business, use
its best efforts to (i) maintain such Trademark in full force and effect, free
from any claim of abandonment or invalidity for non-use, (ii) maintain the
quality of products and services offered under such Trademark, (iii) display
such Trademark with notice of federal registration to the extent required by
applicable law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third-party rights.
(c) Each Pledgor (either itself or through its licensees or sublicensees)
will refrain from committing any act, or omitting any act, whereby any Patent
used in the conduct of such Pledgor's business may become invalidated or
dedicated to the public, and shall continue to mark any products covered by a
Patent with the relevant patent number as required by applicable patent laws.
(d) Each Pledgor (either itself or through its licensees or sublicensees)
will, for each work covered by a Copyright, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
required under applicable copyright laws.
(e) Each Pledgor shall notify the Administrative Agent immediately if it
knows or has reason to know that any Patent, Trademark or Copyright used in the
conduct of its business may become abandoned or dedicated to the public, or of
any adverse determination or development (including the institution of, or any
such determination or development in, any proceeding in the U.S. Patent and
Trademark Office, U.S. Copyright Office or any court) regarding such Pledgor's
16
<PAGE>
ownership of any Patent, Trademark or Copyright, its right to register the same,
or to keep and maintain the same.
(f) Each Pledgor will take all necessary steps that are consistent with
the practice in any proceeding before the U.S. Patent and Trademark Office, U.S.
Copyright Office or any office or agency in any political subdivision of the
United States or in any other country or any political subdivision thereof, to
maintain and pursue each application relating to any Patents, Trademarks or
Copyrights (and to obtain the relevant grant or registration) and to maintain
each registration of any Patents, Trademarks and Copyrights used in the conduct
of such Pledgor's business, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and maintenance fees, and, if
consistent with sound business judgment, to initiate opposition, interference
and cancellation proceedings against third parties.
(g) In the event that any Collateral consisting of a Patent, Trademark or
Copyright used in the conduct of any Pledgor's business is believed infringed,
misappropriated or diluted by a third party, such Pledgor shall notify the
Administrative Agent promptly after it learns thereof and shall, if consistent
with sound business judgment, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as are appropriate
under the circumstances to protect such Collateral.
(h) Upon the occurrence and during the continuance of any Event of
Default, each Pledgor shall use its reasonable best efforts to obtain all
requisite consents or approvals from the licensor of each License included
within the Copyright Collateral, Patent Collateral or Trademark Collateral to
effect the assignment of all of such Pledgor's right, title and interest
thereunder to the Administrative Agent or its designee.
4.12 Mobile Goods. Upon the request of the Administrative Agent at any
------------
time, whether or not an Event of Default shall have occurred and be continuing,
each Pledgor will deliver to the Administrative Agent originals of the
certificates of title or ownership for all Mobile Goods owned by it, together
(in the case of motor vehicles) with the manufacturer's statement of origin with
the Administrative Agent listed as lienholder and odometer statements and
together in all other cases with appropriate instruments or certificates of
transfer and delivery, duly completed and executed, and will take such other
action as the Administrative Agent may deem necessary to perfect the security
interest created by this Agreement in all such Mobile Goods.
4.13 Delivery of Collateral. All certificates or instruments representing
----------------------
or evidencing any Accounts, Intercompany Obligations or other Collateral shall
be delivered to and held by or on behalf of the Administrative Agent pursuant
hereto, shall be in form suitable for transfer by delivery and shall be
delivered together with undated stock powers duly executed in blank, appropriate
endorsements or other necessary instruments of registration, transfer or
assignment, duly executed and in form and substance satisfactory to the
Administrative Agent, and in each case such other instruments or documents as
the Administrative Agent may reasonably request.
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4.14 Deposit and Collection Procedures. Each Pledgor will execute all
---------------------------------
such documents and agreements and take all such actions as are necessary to
ensure that all Proceeds of Accounts remitted to or otherwise received by it are
deposited, promptly upon its receipt thereof, directly into a Deposit Account
maintained by or for the benefit of such Pledgor and that the balances in each
such Deposit Account are transferred not less frequently than daily to a cash
concentration account maintained with the Administrative Agent or with another
bank or depository institution that has, together with the applicable Pledgor,
executed and delivered to the Administrative Agent a duly completed agreement,
in form and substance satisfactory to the Administrative Agent, that among other
things acknowledges the security interest of the Administrative Agent in all
funds, monies, securities and instruments deposited in such account and pursuant
to which such bank or depository institution agrees to transfer such funds,
monies, securities and instruments to the Administrative Agent promptly upon
demand at any time after the occurrence and during the continuance of an Event
of Default (each such account, a "Concentration Account," and each such
agreement, a "Concentration Agreement"). Each Pledgor will provide each bank or
depository institution at which any Deposit Account is maintained from time to
time with such transfer instructions and other information as such bank or
depository institution may require in order to permit such Pledgor to comply
with the provisions of this Section. All costs and expenses incurred in
connection with the establishment and maintenance of such Deposit Accounts and
Concentration Accounts and the transfers of funds therefrom and thereto as
described in this Section shall be for the account of the Pledgors. No Proceeds
of Accounts will be deposited in or at any time transferred to a Deposit Account
other than a Concentration Account or a Deposit Account the balances in which
are transferred not less frequently than weekly (or during the continuance of an
Event of Default, daily) to a Concentration Account. No Pledgor shall cause or
permit any funds or other property not constituting Proceeds of Collateral to be
deposited into any Deposit Account containing Proceeds of Collateral. So long
as no Event of Default shall have occurred and be continuing, the Pledgors shall
have the right to collect, withdraw and direct the disposition of funds on
deposit in the Concentration Accounts in a manner not inconsistent with the
provisions of this Agreement or any of the other Credit Documents; provided,
--------
however, that upon the occurrence and during the continuance of an Event of
- -------
Default and notice thereof from the Administrative Agent to the Borrower, the
Administrative Agent shall have exclusive dominion and control over all
Concentration Accounts, with the powers and rights granted herein and in the
applicable Concentration Agreements with respect thereto, and no Pledgor shall
have any right to collect, withdraw or direct the disposition of funds on
deposit in the Concentration Accounts or to take any action to effect the same.
Any failure by any Pledgor to observe, perform or comply with any provision of
this Section shall constitute an Event of Default under the Credit Agreement.
4.15 Protection of Security Interest. Each Pledgor agrees that it will,
-------------------------------
at its own cost and expense, take any and all actions necessary to warrant and
defend the right, title and interest of the Secured Parties in and to the
Collateral against the claims and demands of all other Persons.
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ARTICLE V
REMEDIES
5.1 Remedies. If an Event of Default shall have occurred and be
--------
continuing, the Administrative Agent shall be entitled to exercise in respect of
the Collateral all of its rights, powers and remedies provided for herein or
otherwise available to it under any other Credit Document, by law, in equity or
otherwise, including all rights and remedies of a secured party under the
Uniform Commercial Code, and shall be entitled in particular, but without
limitation of the foregoing, to exercise the following rights, which each
Pledgor agrees to be commercially reasonable:
(a) To notify any or all account debtors or obligors under any Accounts,
Contracts or other Collateral of the security interest in favor of the
Administrative Agent created hereby and to direct all such Persons to make
payments of all amounts due thereon or thereunder directly to the Administrative
Agent or to an account designated by the Administrative Agent; and in such
instance and from and after such notice, all amounts and Proceeds (including
wire transfers, checks and other instruments) received by any Pledgor in respect
of any Accounts, Contracts or other Collateral shall be received in trust for
the benefit of the Administrative Agent hereunder, shall be segregated from the
other funds of such Pledgor and shall be forthwith deposited into such account
or paid over or delivered to the Administrative Agent in the same form as so
received (with any necessary endorsements or assignments), to be held as
Collateral and applied to the Secured Obligations as provided herein; and by
this provision, each Pledgor irrevocably authorizes and directs each Person who
is or shall be a party to or liable for the performance of any Contract, upon
receipt of notice from the Administrative Agent to the effect that an Event of
Default has occurred and is continuing, to attorn to or otherwise recognize the
Administrative Agent as owner under such Contract and to pay, observe and
otherwise perform the obligations under such Contract to or for the
Administrative Agent or the Administrative Agent's designee as though the
Administrative Agent or such designee were such Pledgor named therein, and to do
so until otherwise notified by the Administrative Agent;
(b) To take possession of, receive, endorse, assign and deliver, in its
own name or in the name of any Pledgor, all checks, notes, drafts and other
instruments relating to any Collateral, including receiving, opening and
properly disposing of all mail addressed to any Pledgor concerning Accounts and
other Collateral; to verify with account debtors or other contract parties the
validity, amount or any other matter relating to any Accounts or other
Collateral, in its own name or in the name of any Pledgor; to accelerate any
indebtedness or other obligation constituting Collateral that may be accelerated
in accordance with its terms; to take or bring all actions and suits deemed
necessary or appropriate to effect collections and to enforce payment of any
Accounts or other Collateral; to settle, compromise or release in whole or in
part any amounts owing on Accounts or other Collateral; and to extend the time
of payment of any and all Accounts or other amounts owing under any Collateral
and to make allowances and adjustments with respect thereto, all in the same
manner and to the same extent as any Pledgor might have done;
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(c) To notify any or all depository institutions with which any Deposit
Accounts are maintained to remit and transfer all monies, securities and other
property on deposit in such Deposit Accounts or deposited or received for
deposit thereafter to the Administrative Agent, for deposit in a Collateral
Account or such other accounts as may be designated by the Administrative Agent,
for application to the Secured Obligations as provided herein;
(d) To execute and file all necessary applications with the FCC and with
any governmental or other authority, and to act on any Pledgor's behalf, at such
Pledgor's cost, in obtaining any orders, consents, approvals, licenses or
certificates required by any Governmental Authority as a prerequisite to any
transfer of such Pledgor's business, operations or facilities relating to any of
the Collateral, to the extent permitted by applicable law;
(e) To transfer to or register in its name or the name of any of its
Administrative Agents or nominees all or any part of the Collateral, without
notice to any Pledgor and with or without disclosing that such Collateral is
subject to the security interest created hereunder;
(f) To assign any Copyright Collateral, Patent Collateral or Trademark
Collateral, for such term or terms, on such conditions and in such manner as the
Administrative Agent shall determine; and to license and (to the extent
permitted by applicable law) sublicense, whether general, or otherwise, and
whether on an exclusive or nonexclusive basis, any Copyright Collateral, Patent
Collateral or Trademark Collateral, throughout the world, for such term or
terms, on such conditions and in such manner as the Administrative Agent shall
determine;
(g) To require any Pledgor to, and each Pledgor hereby agrees that it will
at its expense and upon request of the Administrative Agent forthwith, assemble
all or any part of the Collateral as directed by the Administrative Agent and
make it available to the Administrative Agent at a place designated by the
Administrative Agent;
(h) To enter and remain upon the premises of any Pledgor and take
possession of all or any part of the Collateral, with or without judicial
process; to use the materials, services, books and records of any Pledgor for
the purpose of liquidating or collecting the Collateral, whether by foreclosure,
auction or otherwise; and to remove the same to the premises of the
Administrative Agent or any designated Administrative Agent for such time as the
Administrative Agent may desire, in order to effectively collect or liquidate
the Collateral;
(i) To exercise (i) all voting, consensual and other rights and powers
pertaining to the Investment Property (whether or not transferred into the name
of the Administrative Agent), at any meeting of shareholders, partners, members
or otherwise, and (ii) any and all rights of conversion, exchange, subscription
and any other rights, privileges or options pertaining to the Investment
Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
reclassification, combination of shares or interests, similar rearrangement or
other similar fundamental change in the structure of the applicable issuer, or
upon the exercise by any Pledgor or the Administrative Agent of any right,
privilege or option pertaining to such Investment Property, and in connection
therewith, the right to deposit and deliver any and all of the Investment
Property with any committee, depositary, transfer agent,
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registrar or other designated agency upon such terms and conditions as the
Administrative Agent may determine, and give all consents, waivers and
ratifications in respect of the Investment Property, all without liability
except to account for any property actually received by it, but the
Administrative Agent shall have no duty to exercise any such right, privilege or
option or give any such consent, waiver or ratification and shall not be
responsible for any failure to do so or delay in so doing; and for the foregoing
purposes each Pledgor will promptly execute and deliver or cause to be executed
and delivered to the Administrative Agent, upon request, all such proxies and
other instruments as the Administrative Agent may reasonably request to enable
the Administrative Agent to exercise such rights and powers; AND IN FURTHERANCE
OF THE FOREGOING AND WITHOUT LIMITATION THEREOF, EACH PLEDGOR HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS THE ADMINISTRATIVE AGENT AS THE TRUE AND LAWFUL PROXY
AND ATTORNEY-IN-FACT OF SUCH PLEDGOR, WITH FULL POWER OF SUBSTITUTION IN THE
PREMISES, TO EXERCISE ALL SUCH VOTING, CONSENSUAL AND OTHER RIGHTS AND POWERS TO
WHICH ANY HOLDER OF ANY INVESTMENTS WOULD BE ENTITLED BY VIRTUE OF HOLDING THE
SAME, WHICH PROXY AND POWER OF ATTORNEY, BEING COUPLED WITH AN INTEREST, IS
IRREVOCABLE AND SHALL BE EFFECTIVE FOR SO LONG AS THIS AGREEMENT SHALL BE IN
EFFECT; and
(j) To sell, resell, assign and deliver, in its sole discretion, all or any
of the Collateral, in one or more parcels, with respect to Investment Property,
on any securities exchange on which any Investment Property may be listed, at
public or private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, upon credit or for future delivery, at such time or times
and at such price or prices and upon such other terms as the Administrative
Agent may deem satisfactory. If any of the Collateral is sold by the
Administrative Agent upon credit or for future delivery, the Administrative
Agent shall not be liable for the failure of the purchaser to purchase or pay
for the same and, in the event of any such failure, the Administrative Agent may
resell such Collateral. In no event shall any Pledgor be credited with any part
of the Proceeds of sale of any Collateral until and to the extent cash payment
in respect thereof has actually been received by the Administrative Agent. Each
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right of whatsoever kind, including any equity or right of
redemption of any Pledgor, and each Pledgor hereby expressly waives all rights
of redemption, stay or appraisal, and all rights to require the Administrative
Agent to marshal any assets in favor of such Pledgor or any other party or
against or in payment of any or all of the Secured Obligations, that it has or
may have under any rule of law or statute now existing or hereafter adopted. No
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law, as referred to below), all of which are hereby expressly
waived by each Pledgor, shall be required in connection with any sale or other
disposition of any part of the Collateral. If any notice of a proposed sale or
other disposition of any part of the Collateral shall be required under
applicable law, the Administrative Agent shall give the applicable Pledgor at
least ten (10) days' prior notice of the time and place of any public sale and
of the time after which any private sale or other disposition is to be made,
which notice each Pledgor agrees is commercially reasonable. The Administrative
Agent shall not be obligated to make any sale of Collateral if it shall
determine not to do so, regardless of the fact that notice of sale may have been
given. The Administrative Agent may, without notice or publication, adjourn any
public or
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private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. Upon each
public sale and, to the extent permitted by applicable law, upon each private
sale, the Administrative Agent may purchase all or any of the Collateral being
sold, free from any equity, right of redemption or other claim or demand, and
may make payment therefor by endorsement and application (without recourse) of
the Secured Obligations in lieu of cash as a credit on account of the purchase
price for such Collateral.
To enforce the provisions of this Agreement, the Administrative Agent is
empowered to seek from the FCC and any other Governmental Authority, to the
extent required, consent to or approval of an involuntary transfer of control of
any Pledgor or any of its Subsidiaries for the purpose of seeking a bona fide
purchaser to whom control will ultimately be transferred. Each Pledgor hereby
agrees to authorize and to cause its Subsidiaries to authorize such an
involuntary transfer of control upon the request of the Administrative Agent
after and during the continuation of an Event of Default and, without limiting
any rights of the Administrative Agent under this Agreement, authorize the
Administrative Agent to nominate a trustee or receiver to assume control,
subject only to any required judicial, FCC and other Governmental Authority
consent, in order to effectuate the transactions contemplated hereby. Such
trustee or receiver shall have all the rights and powers as provided to it by
law, court order or to the Administrative Agent under this Agreement. Each
Pledgor shall cooperate fully and cause its Subsidiaries to cooperate fully in
obtaining the consent of the FCC and the approval or consent of each other
Governmental Authority required to effectuate the foregoing. Each Pledgor shall
further use its best efforts, and will cause its Subsidiaries to use their best
efforts, to assist in obtaining consent or approval of the FCC and any other
Governmental Authority, if required, for any action or transactions contemplated
by this Agreement including, without limitation, the preparation, execution and
filing with the FCC of the transferor's portion of any application or
applications for consent to the transfer of control necessary or appropriate
under the FCC's rules and regulations for approval of the transfer or assignment
of any portion of the Collateral. If any Pledgor fails to execute or cause the
execution of such applications, requests for consent or other instruments, the
clerk of any court that has jurisdiction over the Credit Documents may execute
and file the same on behalf of such Pledgor or its Subsidiaries.
5.2 Application of Proceeds. (a) All Proceeds collected by the
-----------------------
Administrative Agent upon any sale, other disposition of or realization upon any
of the Collateral, together with all other moneys received by the Administrative
Agent hereunder, shall be applied as follows:
(i) first, to the payment of all costs and expenses of such sale,
disposition or other realization, including the reasonable costs and
expenses of the Administrative Agent and the reasonable fees and expenses
of its Administrative Agents and counsel, all amounts advanced by the
Administrative Agent for the account of any Pledgor, and all other amounts
payable to the Administrative Agent under SECTION 7.1;
(ii) second, after payment in full of the amounts specified in
clause (i) above, to the ratable payment of all other Secured Obligations
owing to the Secured Parties; and
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(iii) third, after payment in full of the amounts specified in
clauses (i) and (ii) above, and following the termination of this
Agreement, to the Pledgors or any other Person lawfully entitled to receive
such surplus.
(b) For purposes of applying amounts in accordance with this Section, the
Administrative Agent shall be entitled to rely upon any Secured Party that has
entered into a Hedge Agreement with the Borrower for a determination (which such
Secured Party agrees to provide or cause to be provided upon request of the
Administrative Agent) of the outstanding Secured Obligations owed to such
Secured Party under any such Hedge Agreement. Unless it has actual knowledge
(including by way of written notice from any such Secured Party) to the
contrary, the Administrative Agent, in acting hereunder, shall be entitled to
assume that no Hedge Agreements or Secured Obligations in respect thereof are in
existence between any Secured Party and the Borrower.
(c) Each Pledgor shall remain liable to the extent of any deficiency
between the amount of all Proceeds realized upon sale or other disposition of
the Collateral pursuant to this Agreement and the aggregate amount of the sums
referred to in clauses (i) and (ii) of subsection (a) above. Upon any sale of
any Collateral hereunder by the Administrative Agent (whether by virtue of the
power of sale herein granted, pursuant to judicial proceeding, or otherwise),
the receipt of the Administrative Agent or the officer making the sale shall be
a sufficient discharge to the purchaser or purchasers of the Collateral so sold,
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Administrative
Agent or such officer or be answerable in any way for the misapplication
thereof.
5.3 Collateral Accounts. Upon the occurrence and during the continuance of
-------------------
an Event of Default, the Administrative Agent shall have the right to cause to
be established and maintained, at its principal office or such other location or
locations as it may establish from time to time in its discretion, one or more
cash collateral bank accounts (collectively, "Collateral Accounts") for the
collection of cash Proceeds of the Collateral. Such Proceeds, when deposited,
shall continue to constitute Collateral for the Secured Obligations and shall
not constitute payment thereof until applied as herein provided. The
Administrative Agent shall have sole dominion and control over all funds
deposited in any Collateral Account, and such funds may be withdrawn therefrom
only by the Administrative Agent. Upon the occurrence and during the
continuance of an Event of Default, the Administrative Agent shall have the
right to (and, if directed by the Required Lenders pursuant to the Credit
Agreement, shall) apply amounts held in the Collateral Accounts in payment of
the Secured Obligations in the manner provided for in SECTION 5.2.
5.4 Grant of License. For the purpose of enabling the Administrative
----------------
Agent to exercise rights and remedies under SECTION 5.1 at such time as the
Administrative Agent shall be lawfully entitled to exercise such rights and
remedies, each Pledgor hereby grants to the Administrative Agent an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to any Pledgor) to use, license or sublicense any Patent
Collateral, Trademark Collateral or Copyright Collateral now owned or licensed
or hereafter acquired or
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licensed by such Pledgor, wherever the same may be located throughout the world,
for such term or terms, on such conditions and in such manner as the
Administrative Agent shall determine, whether general, special or otherwise, and
whether on an exclusive or nonexclusive basis, and including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license or sublicense by the
Administrative Agent shall be exercised, at the option of the Administrative
Agent, only upon the occurrence and during the continuation of an Event of
Default; provided that any license, sublicense or other transaction entered
--------
into by the Administrative Agent in accordance herewith shall be binding upon
each applicable Pledgor notwithstanding any subsequent cure of an Event of
Default.
5.5 The Pledgors Remain Liable. Notwithstanding anything herein to the
--------------------------
contrary, (i) each Pledgor shall remain liable under all Contracts to which it
is a party included within the Collateral (including, without limitation, all
Investment Agreements) to perform all of its obligations thereunder to the same
extent as if this Agreement had not been executed, (ii) the exercise by the
Administrative Agent of any of its rights or remedies hereunder shall not
release any Pledgor from any of its obligations under any of such Contracts, and
(iii) except as specifically provided for hereinbelow, the Administrative Agent
shall not have any obligation or liability by reason of this Agreement under any
of such Contracts, nor shall the Administrative Agent be obligated to perform
any of the obligations or duties of any Pledgor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder. This Agreement
shall not in any way be deemed to obligate the Administrative Agent, any other
Secured Party or any purchaser at a foreclosure sale under this Agreement to
assume any of a Pledgor's obligations, duties or liabilities under any
Investment Agreement, including, without limitation, any Pledgor's obligations,
if any, to manage the business and affairs of the applicable partnership, joint
venture, limited liability company or other issuer (collectively, the "Partner
Obligations"), unless the Administrative Agent or such other Secured Party or
purchaser otherwise agrees in writing to assume any or all of such Partner
Obligations. In the event of foreclosure by the Administrative Agent hereunder,
then except as provided in the preceding sentence, each applicable Pledgor shall
remain bound and obligated to perform its Partner Obligations and neither the
Administrative Agent nor any other Secured Party shall be deemed to have assumed
any Partner Obligations. In the event the Administrative Agent, any other
Secured Party or any purchaser at a foreclosure sale elects to become a
substitute member in place of a Pledgor, the party making such election shall
adopt in writing such Investment Agreement and agree to be bound by the terms
and provisions thereof; and subject to the execution of such written agreement,
each Pledgor hereby irrevocably consents in advance to the admission of the
Administrative Agent, any other Secured Party or any such purchaser as a
substitute member tot he extent of the Investments acquired pursuant to such
sale, and agrees to execute any documents or instruments and take any other
action as may be necessary or as may be reasonably requested in connection
therewith. The powers, rights and remedies conferred on the Administrative
Agent hereunder are solely to protect its interest and privilege in such
Contracts, as Collateral, and shall not impose any duty upon it to exercise any
such powers, rights or remedies.
5.6 Waivers. Each Pledgor, to the greatest extent not prohibited by
-------
applicable law, hereby (i) agrees that it will not invoke, claim or assert the
benefit of any rule of law or statute
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now or hereafter in effect (including, without limitation, any right to prior
notice or judicial hearing in connection with the Administrative Agent's
possession, custody or disposition of any Collateral or any appraisal,
valuation, stay, extension, moratorium or redemption law), or take or omit to
take any other action, that would or could reasonably be expected to have the
effect of delaying, impeding or preventing the exercise of any rights and
remedies in respect of the Collateral, the absolute sale of any of the
Collateral or the possession thereof by any purchaser at any sale thereof, and
waives the benefit of all such laws and further agrees that it will not hinder,
delay or impede the execution of any power granted hereunder to the
Administrative Agent, but that it will permit the execution of every such power
as though no such laws were in effect, (ii) waives all rights that it has or may
have under any rule of law or statute now existing or hereafter adopted to
require the Administrative Agent to marshal any Collateral or other assets in
favor of such Pledgor or any other party or against or in payment of any or all
of the Secured Obligations, and (iii) waives all rights that it has or may have
under any rule of law or statute now existing or hereafter adopted to demand,
presentment, protest, advertisement or notice of any kind (except notices
expressly provided for herein).
ARTICLE VI
THE ADMINISTRATIVE AGENT
6.1 The Administrative Agent; Standard of Care. The Administrative Agent
------------------------------------------
will hold all items of the Collateral at any time received under this Agreement
in accordance with the provisions hereof. The obligations of the Administrative
Agent as holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement and the other Credit
Documents, are only those expressly set forth in this Agreement and the other
Credit Documents. The Administrative Agent shall act hereunder at the
direction, or with the consent, of the Required Lenders on the terms and
conditions set forth in the Credit Agreement. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest, on behalf of
the Secured Parties, in the Collateral, and shall not impose any duty upon it to
exercise any such powers. Except for treatment of the Collateral in its
possession in a manner substantially equivalent to that which the Administrative
Agent, in its individual capacity, accords its own property of a similar nature,
and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other
rights pertaining to the Collateral. Neither the Administrative Agent nor any
other Secured Party shall be liable to any Pledgor (i) for any loss or damage
sustained by such Pledgor, or (ii) for any loss, damage, depreciation or other
diminution in the value of any of the Collateral that may occur as a result of
or in connection with or that is in any way related to any exercise by the
Administrative Agent or any other Secured Party of any right or remedy under
this Agreement, any failure to demand, collect or realize upon any of the
Collateral or any delay in doing so, or any other act or failure to act on the
part of the Administrative Agent or any other Secured Party, except to the
extent that the same is caused by its own gross negligence or willful
misconduct.
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6.2 Further Assurances; Attorney-in-Fact. (a) Each Pledgor agrees that
------------------------------------
it will join with the Administrative Agent to execute and, at its own expense,
file and refile under the Uniform Commercial Code such financing statements,
continuation statements and other documents and instruments in such offices as
the Administrative Agent may reasonably deem necessary or appropriate, and
wherever required or permitted by law, in order to perfect and preserve the
Administrative Agent's security interest in the Collateral, and hereby
authorizes the Administrative Agent to file financing statements and amendments
thereto relating to all or any part of the Collateral without the signature of
such Pledgor where permitted by law, and agrees to do such further acts and
things (including, without limitation, making any notice filings with state tax
or revenue authorities required to be made by account creditors in order to
enforce any Accounts in such state) and to execute and deliver to the
Administrative Agent such additional conveyances, assignments, agreements and
instruments as the Administrative Agent may reasonably require or deem advisable
to perfect, establish, confirm and maintain the security interest and Lien
provided for herein, to carry out the purposes of this Agreement or to further
assure and confirm unto the Administrative Agent its rights, powers and remedies
hereunder.
(b) Each Pledgor hereby irrevocably appoints the Administrative Agent its
lawful attorney-in-fact, with full authority in the place and stead of such
Pledgor and in the name of such Pledgor, the Administrative Agent or otherwise,
and with full power of substitution in the premises (which power of attorney,
being coupled with an interest, is irrevocable for so long as this Agreement
shall be in effect), from time to time in the Administrative Agent's discretion
after the occurrence and during the continuance of an Event of Default to take
any action and to execute any instruments that the Administrative Agent may deem
necessary or advisable to accomplish the purpose of this Agreement, including,
without limitation:
(i) to sign the name of such Pledgor on any financing statement,
continuation statement, notice or other similar document that, in the
Administrative Agent's opinion, should be made or filed in order to perfect
or continue perfected the security interest granted under this Agreement
(including, without limitation, any title or ownership applications for
filing with applicable state agencies to enable any motor vehicles now or
hereafter owned by the Company to be retitled and the Administrative Agent
listed as lienholder thereon);
(ii) to ask, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral;
(iii) to receive, endorse and collect any checks, drafts,
instruments, chattel paper and other orders for the payment of money made
payable to such Pledgor representing any interest, income, dividend,
distribution or other amount payable in respect of any of the Collateral
and to give full discharge for the same;
(iv) to obtain, maintain and adjust any property or casualty
insurance required to be maintained by such Pledgor under SECTION 4.10 and
direct the payment of proceeds thereof to the Administrative Agent;
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(v) to pay or discharge taxes, Liens or other encumbrances levied
or placed on or threatened against the Collateral, the legality or validity
thereof and the amounts necessary to discharge the same to be determined by
the Administrative Agent in its sole discretion, any such payments made by
the Administrative Agent to become Secured Obligations of the Pledgors to
the Administrative Agent, due and payable immediately and without demand;
(vi) to file any claims or take any action or institute any
proceedings that the Administrative Agent may deem necessary or advisable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral;
and
(vii) to use, sell, assign, transfer, pledge, make any agreement
with respect to or otherwise deal with any and all of the Collateral as
fully and completely as though the Administrative Agent were the absolute
owner of the Collateral for all purposes, and to do from time to time, at
the Administrative Agent's option and the Pledgors' expense, all other acts
and things deemed necessary by the Administrative Agent to protect,
preserve or realize upon the Collateral and to more completely carry out
the purposes of this Agreement.
(c) If any Pledgor fails to perform any covenant or agreement contained
in this Agreement after written request to do so by the Administrative Agent
provided that no such request shall be necessary at any time after the
- --------
occurrence and during the continuance of an Event of Default), the
Administrative Agent may itself perform, or cause the performance of, such
covenant or agreement and may take any other action that it deems necessary and
appropriate for the maintenance and preservation of the Collateral or its
security interest therein, and the reasonable expenses so incurred in connection
therewith shall be payable by the Pledgors under SECTION 7.1.
ARTICLE VII
MISCELLANEOUS
7.1 Indemnity and Expenses. The Pledgors agree jointly and severally:
----------------------
(a) To indemnify and hold harmless the Administrative Agent, each other
Secured Party and each of their respective directors, officers, employees,
Administrative Agents and affiliates from and against any and all claims,
damages, demands, losses, obligations, judgments and liabilities (including,
without limitation, reasonable attorneys' fees and expenses) in any way arising
out of or in connection with this Agreement and the transactions contemplated
hereby, except to the extent the same shall arise as a result of the gross
negligence or willful misconduct of the party seeking to be indemnified; and
(b) To pay and reimburse the Administrative Agent upon demand for all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) that
27
<PAGE>
the Administrative Agent may incur in connection with (i) the custody, use or
preservation of, or the sale of, collection from or other realization upon, any
of the Collateral, including the reasonable expenses of re-taking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, (ii) the exercise or enforcement of any rights or remedies
granted hereunder (including, without limitation, under ARTICLE V), under any of
the other Credit Documents or otherwise available to it (whether at law, in
equity or otherwise), or (iii) the failure by any Pledgor to perform or observe
any of the provisions hereof. The provisions of this Section shall survive the
execution and delivery of this Agreement, the repayment of any of the Secured
Obligations, the termination or expiration of all Letters of Credit under the
Credit Agreement, the termination of the Commitments under the Credit Agreement
and the termination of this Agreement or any other Credit Document.
7.2 No Waiver. The rights and remedies of the Secured Parties expressly
---------
set forth in this Agreement and the other Credit Documents are cumulative and in
addition to, and not exclusive of, all other rights and remedies available at
law, in equity or otherwise. No failure or delay on the part of any Secured
Party in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege or be construed to be a waiver of any Default or
Event of Default. No course of dealing between the Pledgors and the Secured
Parties or their Administrative Agents or employees shall be effective to amend,
modify or discharge any provision of this Agreement or any other Credit Document
or to constitute a waiver of any Default or Event of Default. No notice to or
demand upon any Pledgor in any case shall entitle such Pledgor or any other
Pledgor to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of any Secured Party to
exercise any right or remedy or take any other or further action in any
circumstances without notice or demand.
7.3 Pledgors' Obligations Absolute. Each Pledgor agrees that its
------------------------------
obligations hereunder, and the security interest granted to and all rights,
remedies and powers of the Administrative Agent hereunder, are irrevocable,
absolute and unconditional and shall not be discharged, limited or otherwise
affected by reason of any of the following, whether or not such Pledgor has
knowledge thereof:
(i) any change in the time, manner or place of payment of, or in any
other term of, any Secured Obligations, or any amendment, modification or
supplement to, restatement of, or consent to any rescission or waiver of or
departure from, any provisions of the Credit Agreement, any Subsidiary
Guaranty, any other Credit Document or any agreement or instrument
delivered pursuant to any of the foregoing;
(ii) the invalidity or unenforceability of any Secured
Obligations or any provisions of the Credit Agreement, any Subsidiary
Guaranty, any other Credit Document or any agreement or instrument
delivered pursuant to any of the foregoing;
(iii) the addition or release of Pledgors hereunder or the
taking, acceptance or release of any Secured Obligations or additional
Collateral or other security therefor;
28
<PAGE>
(iv) any sale, exchange, release, substitution, compromise,
nonperfection or other action or inaction in respect of any Collateral or
other direct or indirect security for any Secured Obligations, or any
discharge, modification, settlement, compromise or other action or inaction
in respect of any Secured Obligations;
(v) any agreement not to pursue or enforce or any failure to
pursue or enforce (whether voluntarily or involuntarily as a result of
operation of law, court order or otherwise) any right or remedy in respect
of any Secured Obligations or any Collateral or other security therefor, or
any failure to create, protect, perfect, secure, insure, continue or
maintain any Liens in any such Collateral or other security;
(vi) the exercise of any right or remedy available under the
Credit Documents, at law, in equity or otherwise in respect of any
Collateral or other security for any Secured Obligations, in any order and
by any manner thereby permitted, including, without limitation, foreclosure
on any such Collateral or other security by any manner of sale thereby
permitted, whether or not every aspect of such sale is commercially
reasonable;
(vii) any bankruptcy, reorganization, arrangement, liquidation,
insolvency, dissolution, termination, reorganization or like change in the
corporate structure or existence of the Borrower, any other Pledgor or any
other Person directly or indirectly liable for any Secured Obligations;
(viii) any manner of application of any payments by or amounts
received or collected from any Person, by whomsoever paid and howsoever
realized, whether in reduction of any Secured Obligations or any other
obligations of the Borrower or any other Person directly or indirectly
liable for any Secured Obligations, regardless of what Secured Obligations
may remain unpaid after any such application; or
(ix) any other circumstance that might otherwise constitute a
legal or equitable discharge of, or a defense, set-off or counterclaim
available to, the Borrower, any Pledgor or a surety or guarantor generally,
other than the occurrence of all of the following: (x) the payment in full
of the Secured Obligations, (y) the termination of the Commitments and the
termination or expiration of all Letters of Credit under the Credit
Agreement, and (z) the termination of, and settlement of all obligations of
the Borrower under, each Hedge Agreement to which the Borrower and any
Lender are parties (the events in clauses (x), (y) and (z) above,
collectively, the "Termination Requirements").
7.4 Enforcement. By its acceptance of the benefits of this Agreement,
-----------
each Lender agrees that this Agreement may be enforced only by the
Administrative Agent, acting upon the instructions or with the consent of the
Required Lenders as provided for in the Credit Agreement, and that no Lender
shall have any right individually to enforce or seek to enforce this Agreement
or to realize upon any Collateral or other security given to secure the payment
and performance of the Secured Obligations.
29
<PAGE>
7.5 Amendments, Waivers, etc. No amendment, modification, waiver,
------------------------
discharge or termination of, or consent to any departure by any Pledgor from,
any provision of this Agreement, shall be effective unless in a writing executed
and delivered in accordance with SECTION 11.6 of the Credit Agreement, and then
the same shall be effective only in the specific instance and for the specific
purpose for which given.
7.6 Continuing Security Interest; Term; Successors and Assigns;
-----------------------------------------------------------
Assignment; Termination and Release; Survival. This Agreement shall create a
- ---------------------------------------------
continuing security interest in the Collateral and shall secure the payment and
performance of all of the Secured Obligations as the same may arise and be
outstanding at any time and from time to time from and after the date hereof,
and shall (i) remain in full force and effect until the occurrence of the
Termination Requirements, (ii) be binding upon and enforceable against each
Pledgor and its successors and assigns (provided, however, that no Pledgor may
-------- -------
sell, assign or transfer any of its rights, interests, duties or obligations
hereunder without the prior written consent of the Lenders) and (iii) inure to
the benefit of and be enforceable by each Secured Party and its successors and
assigns. Upon any sale or other disposition by any Pledgor of any Collateral in
a transaction expressly permitted hereunder or under or pursuant to the Credit
Agreement or any other applicable Credit Document, the Lien and security
interest created by this Agreement in and upon such Collateral shall be
automatically released, and upon the satisfaction of all of the Termination
Requirements, this Agreement and the Lien and security interest created hereby
shall terminate; and in connection with any such release or termination, the
Administrative Agent, at the request and expense of the applicable Pledgor, will
execute and deliver to such Pledgor such documents and instruments evidencing
such release or termination as such Pledgor may reasonably request and will
assign, transfer and deliver to such Pledgor, without recourse and without
representation or warranty, such of the Collateral as may then be in the
possession of the Administrative Agent (or, in the case of any partial release
of Collateral, such of the Collateral so being released as may be in its
possession). All representations, warranties, covenants and agreements herein
shall survive the execution and delivery of this Agreement and any Pledgor
Accession.
7.7 Additional Pledgors. Each Pledgor recognizes that the provisions of
-------------------
the Credit Agreement require Persons that become Subsidiaries of the Borrower,
and that are not already parties hereto, to execute and deliver a Pledgor
Accession, whereupon each such Person shall become a Pledgor hereunder with the
same force and effect as if originally a Pledgor hereunder on the date hereof,
and agrees that its obligations hereunder shall not be discharged, limited or
otherwise affected by reason of the same, or by reason of the Administrative
Agent's actions in effecting the same or in releasing any Pledgor hereunder, in
each case without the necessity of giving notice to or obtaining the consent of
such Pledgor or any other Pledgor.
7.8 Notices. All notices and other communications provided for hereunder
-------
shall be given to the parties in the manner and subject to the other notice
provisions set forth in the Credit Agreement.
30
<PAGE>
7.9 Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of North Carolina (without
regard to the conflicts of law provisions thereof).
7.10 Severability. To the extent any provision of this Agreement is
------------
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
7.11 Construction. The headings of the various sections and subsections
------------
of this Agreement have been inserted for convenience only and shall not in any
way affect the meaning or construction of any of the provisions hereof. Unless
the context otherwise requires, words in the singular include the plural and
words in the plural include the singular.
7.12 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
31
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
under seal by their duly authorized officers as of the date first above written.
THE ACKERLEY GROUP, INC.
By: _______________________________
Title: ____________________________
ACKERLEY AIRPORT ADVERTISING, INC.
By: _______________________________
Title: ____________________________
ACKERLEY COMMUNICATIONS OF
MASSACHUSETTS, INC.
By: _______________________________
Title: ____________________________
AK MEDIA GROUP, INC.
By: _______________________________
Title: ____________________________
(Signatures continued on following page)
32
<PAGE>
CENTRAL NEW YORK NEWS, INC.
By: ________________________________
Title: _____________________________
KJR RADIO, INC.
By: ________________________________
Title: _____________________________
KVOS TV, LTD.
By: ________________________________
Title: _____________________________
(Signatures continued on following page)
33
<PAGE>
SSI, INC.
By: ________________________________
Title: _____________________________
TC AVIATION, INC.
By: ________________________________
Title: _____________________________
WIXT TV, INC.
By: ________________________________
Title: _____________________________
WOKR, INC.
By: ________________________________
Title: _____________________________
Accepted and agreed to:
FIRST UNION NATIONAL BANK, as
Administrative Agent
By: _____________________________
Title: __________________________
34
<PAGE>
Annex A to Security Agreement
First Union National Bank, as
Administrative Agent
The Ackerley Group, Inc.
January 22, 1999
____________________________________
FILING LOCATIONS
The Ackerley Group, Inc.
Department of Licensing of Washington
Ackerley Airport Advertising, Inc.
Department of Licensing of Washington
Ackerley Communications of Massachusetts, Inc. (Inactive)
Department of Licensing of Washington
Secretary of State of Massachusetts
AK Media Group, Inc.
Department of Licensing of Washington
Secretary of State of Oregon
Secretary of State of California
Secretary of State of Colorado
Secretary of State of Florida
Secretary of State of Massachusetts
Central New York News, Inc.
Department of Licensing of Washington
Secretary of State of New York
SSI, Inc.
Department of Licensing of Washington
TC Aviation, Inc.
Department of Licensing of Washington
[No local filings necessary]
<PAGE>
Annex B to Security Agreement
First Union National Bank, as Administrative Agent
The Ackerley Group, Inc.
January 22, 1999
____________________________________
<TABLE>
<CAPTION>
LOCATIONS OF CHIEF EXECUTIVE OFFICES,
RECORDS RELATING TO COLLATERAL, AND EQUIPMENT AND INVENTORY
- -------------------------------------------------------------------------------
<S> <C> <C>
Name
Of Chief Executive Offices Records Relating to
Pledgor Collateral
- --------------------------------------------------------------------------------
1301 Fifth Ave. 1301 Fifth Ave.
The Ackerley Group, Inc. Suite 4000 Suite 4000
Seattle, WA 98101 Seattle, WA 98101
- --------------------------------------------------------------------------------
1301 Fifth Ave. 1301 Fifth Ave.
Ackerley Airport Suite 4000 Suite 4000
Advertising, Inc. Seattle, WA 98101 Seattle, WA 98101
- --------------------------------------------------------------------------------
1301 Fifth Ave. 1301 Fifth Ave.
Ackerley Communications Suite 4000 Suite 4000
of Massachusetts, Inc. Seattle, WA 98101 Seattle, WA 98101
- --------------------------------------------------------------------------------
1301 Fifth Ave. 1301 Fifth Ave
AK Media Group, Inc. Suite 4000 Suite 4000
Seattle, WA 98101 Seattle, WA 98101
and (3)
- --------------------------------------------------------------------------------
1301 Fifth Ave. 1301 Fifth Ave.
Central New York News, Suite 4000 Suite 4000
Inc. Seattle, WA 98101 Seattle, WA 98101
and (6)
- --------------------------------------------------------------------------------
KVOS TV Ltd. 1151 Ellis Street N/A
Bellingham, WA 98225
- --------------------------------------------------------------------------------
1301 Fifth Ave. 1301 Fifth Ave.
SSI, Inc. Suite 4000 Suite 4000
Seattle, WA 98101 Seattle, WA 98101
- --------------------------------------------------------------------------------
1301 Fifth Ave. 1301 Fifth Ave.
TC Aviation, Inc. Suite 4000 Suite 4000
Seattle, WA 98101 Seattle, WA 98101
- --------------------------------------------------------------------------------
<CAPTION>
LOCATIONS OF CHIEF EXECUTIVE OFFICES,
RECORDS RELATING TO COLLATERAL, AND EQUIPMENT AND INVENTORY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name Equipment
Of or Other Places Trade/Fictitious/Other
Pledgor Inventory of Corporate Names
Business (Former Corporate or Trade names)
- -----------------------------------------------------------------------------------------------------------------------------------
1301 Fifth Ave. N/A Currently: None
The Ackerley Group, Inc. Suite 4000 Formerly: Ackerley
Seattle, WA 98101 Communications, Inc.;
Incorporated
- ----------------------------------------------------------------------------------------------------------------------------------
1301 Fifth Ave. (1) Currently: None
Ackerley Airport Suite 4000 Formerly: AK Media Airport
Advertising, Inc. Seattle, WA 98101
- ----------------------------------------------------------------------------------------------------------------------------------
(Inactive) (Inactive) None
Ackerley Communications 1301 Fifth Ave. (2)
of Massachusetts, Inc. Suite 4000
Seattle, WA 98101
- ----------------------------------------------------------------------------------------------------------------------------------
1301 Fifth Ave. (3) (4) for current names
AK Media Group, Inc. Suite 4000 (5) for former names
Seattle, WA 98101
and (3)
- ----------------------------------------------------------------------------------------------------------------------------------
1301 Fifth Ave. (6) Currently: WIVT TV;
Central New York News, Suite 4000 WIXT TV
Inc. Seattle, WA 98101 Formerly: WIXT TV, Inc.;
and (6) WIXT TV
- ----------------------------------------------------------------------------------------------------------------------------------
KVOS TV Ltd. N/A N/A None
- ----------------------------------------------------------------------------------------------------------------------------------
1301 Fifth Ave. N/A Currently: Seattle
SSI, Inc. Suite 4000 Supersonics; Supersonics
Seattle, WA 98101 Formerly: Seattle
Supersonics, Inc.
SSI Sports, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
1301 Fifth Ave. N/A None
TC Aviation, Inc. Suite 4000
Seattle, WA 98101
and (7)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Qualified to do business in Alabama, Alaska, Arizona, California, Colorado,
Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri,
Montana, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio,
Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina,
Tennessee, Texas, Utah, Virginia, Wisconsin, Wyoming, but only current activity
is pursuant to a service agreement with the purchaser of Ackerley Airport
advertising assets.
(2) If active, company would also be doing business in Massachusetts.
(3) All other States where AK Media Group is conducting business: Oregon,
California, Colorado, Florida and Massachusetts. See attached list for
addresses.
(4) AK Media Florida; AK Media Massachusetts; AK Media Northwest; Ackerley
Realty; Adshelters; Empire Outdoor Advertising; Empire Outdoor Advertising of
the Northwest; KCBA TV; KCOY TV; KFTY TV; KGET TV; KHHO(AM); KHHO Radio;
KJR(AM); KJR-FM; KJR Radio: -KKTV; KMTR TV; KMTX TV; KMTZ TV; KUBE(FM); KVIQ TV;
KVOS TV; KKTV; Full House Sports and Entertainment; New Century Media; Portland
Antenna Company; Seattle Supersonics; Supersonics.
(5) Ackerley Incorporated; Ackerley Realty, Inc.; Ackerley Communications
Group, Inc.; KJR Radio, Inc.; New Century Seattle Partners, L.P.; Ackerley
Communications of Massachusetts, Inc.; Empire Outdoor Advertising of
Massachusetts, Inc.; Ackerley Communications of Florida, Inc.; Adshelters,
Incorporated; Empire Outdoor Advertising, Inc.; Ackerley Communications of the
Northwest, Inc.; Empire Outdoor Advertising of the Northwest, Inc.; Full House
Sports and Entertainment, Inc.; National Airport Advertising Sales, Inc.;
Northwest Sport Sales, Inc.; Portland Antenna Company, Inc.; Seattle Seadogs,
Inc.; Cypress Broadcasting, Inc.; KGET TV, Inc.; KKTV, Inc.; Northwest Sports
Sales; Seattle Radio; Seattle Seadogs; Ackerley Communications of Florida;
Ackerley Communications of Massachusetts; Ackerley Outdoor Advertising; Ackerley
Communications of the Northwest; Cypress Broadcasting; Eye Street Productions.
(6) In addition, New York. See attached list for address.
(7) Additional equipment/inventory located at Boeing Field in Seattle,
Washington.
<PAGE>
Attachment to Annex B
The Ackerley Group, Inc.
And Subsidiaries
Corporate and Trade Names
- -------------------------
<TABLE>
<S> <C>
The Ackerley Group, Inc. KGET TV
1301 Fifth Avenue (AK Media) 2120 L Street (AK Media)
Suite 4000 P.O. Box 1700
Seattle, WA 98101 Bakersfield, CA 93301
805-283-1700
AK Media Florida KKTV TV
5800 NW 77/th/ Court (AK Media) 3100 North Nevada Avenue
Miami, FL 33166 P.O. Box 2110 (AK Media)
305-592-6250 Colorado Springs, CO 80901
719-634-2844
AK Media Massachusetts KVOS TV
89 Maple Street (AK Media) 1151 Ellis Street (AK Media)
Stoneham, MA 02180 Bellingham, WA 98225
781-438-8880 360-671-1212
AK Media Northwest New Century Media
3601 Sixth Avenue South (AK Media) 190 Queen Anne Avenue North
Seattle, WA 98134 Suite 100 (AK Media)
206-682-3833 Seattle, WA 98109
206-285-2295
Full House Sports & Entertainment KVIQ TV
190 Queen Anne Avenue North 1800 Broadway
Suite 200 (AK Media) Eureka, CA 95501 (AK Media)
Seattle, WA 98109 707-443-3061
206-281-5800
Seattle Supersonics KMTR TV
490 Fifth Avenue North (SSI) P.O. Box 7308
Seattle, WA 98109 Eugene, OR 97401 (AK Media)
206-281-5846 547-746-1600
KCBA TV KCOY TV
1150 Moffett (AK Media) 1211 West McCoy Lane
P.O. Box 3560 Santa Maria, CA 93455 (AK Media)
Salinas, CA 93912
408-422-3500
KFTY TV WIXT TV
533 Mendocina Avenue (AK Media) 5904 Bridge Street, Box 699
P.O. Box 1150 East Syracuse, NY 13057 (Central NY News)
Santa Rosa, CA 95402 315-446-9999
707-526-5050
</TABLE>
<PAGE>
WUTR TV
Smith Hill Road (Central NY News)
Utica, NY 13502
315-797-5220
WIVT TV
203 Ingraham Hill Road (Central NY News)
Binghamton, NY 13903
607-723-7464
<PAGE>
Annex C to Security Agreement
First Union National Bank, as Administrative
Agent
The Ackerley Group, Inc.
January 22, 1999
COPYRIGHTS AND COPYRIGHT APPLICATIONS
<TABLE>
<CAPTION>
Application or Issue or
Pledgor Registration No. Country Filing Date
- ---------------------- ----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
</TABLE>
None
<PAGE>
Annex D to Security Agreement
First Union National Bank, as
The Ackerley Group, Inc.
_____________, 1999
____________________________________
PATENTS AND PATENT APPLICATIONS
<TABLE>
<CAPTION>
Application or Issue or
Pledgor Registration No. Country Inventor Filing Date
- ------------------ ------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
</TABLE>
None
<PAGE>
Annex E to Security Agreement
First Union National Bank, as
The Ackerley Group, Inc.
January 22, 1999
____________________________________
TRADEMARKS AND TRADEMARK APPLICATIONS
<TABLE>
<CAPTION>
Application or Issue or
Pledgor* Mark -------------- Country/State --------
-------- ---- Registration No. ------------- Filing Date
---------------- -----------
<S> <C> <C> <C> <C>
Ackerley Communications, Inc. "Project Hangtime" 1991067 United States Filed June 2, 1995
(and Design) (Federal)
Ackerley Communications of "WBOS" 1714198 United States Filed June 5, 1991
Massachusetts, Inc. (Federal) and Assigned to GCI
Boston, Inc. on
March 30, 1992
Ackerley Communications of "Lights out Tonight" 1578233 United States Filed June 29, 1989
Massachusetts, Inc. (Federal) Cancelled - Section 8
Ackerley Communications of "WBOS Earthwatch" 44065 Massachusetts Registered April
Massachusetts, Inc. 18, 1990 and
Assigned to GCI
Boston, Inc. on
August 28, 1990
Ackerley Communications of "The Odyssey File" 43446 Massachusetts Registered October
Massachusetts, Inc. 11, 1989 and
Assigned to GCI
Boston, Inc. on
August 28, 1992
Ackerley Communications of the "Larger than Life" 19553 Washington Registered February
Northwest, Inc. 23, 1990
Ackerley Communications Group, "Eyestreet Productions" 45341 California Registered December
Inc. (Image) 5, 1995
Ackerley Communications Group, "Kid News" 100745 California Registered December
Inc. (Image) 15, 1995
Ackerley Communications Group, "Kid Video" 45080 California Registered September
Inc. 14, 1995
Ackerley Communications Group, "Slam Jam" 45077 California Registered September
Inc. 14, 1995
Ackerley Communications Group, "17 Health Fair" (and 45480 California Registered January
Inc. Design) 17, 1996
KJR Radio, Inc. "K-Lite" Serial no. United States Filed March 27, 1990
74-043176 (Federal) Abandoned
</TABLE>
(footnote on last page)
<PAGE>
<TABLE>
<CAPTION>
Application or Issue or
Pledgor Mark --------------------- Country/State -------------------
- ---------------------------------- ---------------------------- Registration No. -------------- Filing Date
--------------------- -------------------
<S> <C> <C> <C> <C>
KJR Radio, Inc. "KJR Sports Radio 950 AM" 28385 Washington Registered August
28, 1996
KJR Radio, Inc. "KJR 95.7 FM Greatest Hits 25384 Washington Registered August
of the 70's" 28, 1996
KJR Radio, Inc. "KUBE 93 FM" 25383 Washington Registered August
28, 1996
KJR Radio, Inc. "SUMMER JAM" 25382 Washington Registered August
28, 1996
KJR Radio, Inc. "K-LITE" 19503 Washington Registered January
24, 1990
WIXT TV, Inc. "NEWSCHANNEL 9 Coverage You S15822 New York Registered
Can Count On" September 19, 1997
WIXT TV, Inc. "( NEWS Weather Source" S14046 New York Registered March
25, 1994
Full House Sports and "Jammin' Hoops Camp" Serial no. United States Filed March 8, 1995
Entertainment, Inc. 74-645021 (Federal) Abandoned
Full House Sports and "Jammin' Hoops Camp" 23780 Washington Registered March
Entertainment, Inc. 9, 1995
Full House Sports and "Jammin' Hoops Camp" 23779 Washington Registered March
Entertainment, Inc. 9, 1995
New Century Media "Sports Radio" 27313 Washington Registered
September 1, 1998
New Century Media Limited Partners "The Charlie Claus 26430 Washington Registered October
Foundation" 17, 1997
New Century Media Limited Partners "The Real Charlie Claus" 26429 Washington Registered October
17, 1997
WIXT Television, Inc. "3-D Skytrack" Pending United States Filed November 5,
(75-385381) (Federal) 1997
</TABLE>
(footnote on last page)
<PAGE>
Exhibit A to Security Agreement
First Union National Bank, as Administrative Agent
The Ackerley Group, Inc.
_____________, 1999
__________________________________________________
ASSIGNMENT AND GRANT OF SECURITY INTEREST
IN COPYRIGHTS
WHEREAS, [NAME OF PLEDGOR] (the "Pledgor") is the owner of the copyrights
listed on Schedule A attached hereto, which copyrights are registered or have
----------
pending registrations in the United States Copyright Office as set forth on
Schedule A attached hereto (all such copyrights, registrations and applications,
- ----------
collectively, the "Copyrights"); and
WHEREAS, the Pledgor has entered into a Security Agreement (as amended,
modified, restated or supplemented from time to time, the "Security Agreement"),
dated as of _____________, 1999, in which the Pledgor has agreed with First
Union National Bank, as Administrative Agent (the "Administrative Agent"), with
offices at One First Union Center, 301 South College Street, Charlotte, North
Carolina 28288-0735, to execute this Assignment;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, as security for the payment and
performance of the Secured Obligations (as defined in the Security Agreement),
the Pledgor does hereby assign and grant to the Administrative Agent a security
interest in all of its right, title and interest in and to the Copyrights, and
the use thereof, together with all proceeds and products thereof and the
goodwill of the businesses symbolized by the Copyrights. This Assignment has
been given in conjunction with the assignment and security interest granted to
the Administrative Agent under the Security Agreement, and the provisions of
this Assignment are without prejudice to and in addition to the provisions of
the Security Agreement, which are incorporated herein by this reference.
[NAME OF PLEDGOR]
By: ____________________________________
Title: _________________________________
<PAGE>
Schedule A
----------
COPYRIGHTS AND COPYRIGHT APPLICATIONS
<TABLE>
<CAPTION>
Application or Issue or
Pledgor Registration No. Country Filing Date
------- ---------------- ------- -----------
<S> <C> <C> <C>
</TABLE>
2
<PAGE>
Exhibit B to Security Agreement
First Union National Bank, as Administrative Agent
The Ackerley Group, Inc.
_____________, 1999
__________________________________________________
ASSIGNMENT AND GRANT OF SECURITY INTEREST
IN PATENTS AND TRADEMARKS
WHEREAS, [NAME OF PLEDGOR] (the "Pledgor") is the owner of the trademarks
and service marks listed on Schedule A attached hereto, which marks are
----------
registered or have pending registrations in the United States Patent and
Trademark Office as set forth on Schedule A attached hereto (all such
----------
trademarks, service marks, registrations and applications, collectively, the
"Trademarks") and is the owner of the patents listed on Schedule A attached
----------
hereto, which patents are registered or have pending applications in the United
States Patent and Trademark Office as set forth on Schedule A attached hereto
----------
(all such patents, registrations and applications, collectively, the "Patents");
and
WHEREAS, the Pledgor has entered into a Security Agreement (as amended,
modified, restated or supplemented from time to time, the "Security Agreement"),
dated as of _____________, 1999, in which the Pledgor has agreed with First
Union National Bank, as Administrative Agent (the "Administrative Agent"), with
offices at One First Union Center, 301 South College Street, Charlotte, North
Carolina 28288-0735, to execute this Assignment;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, as security for the payment and
performance of the Secured Obligations (as defined in the Security Agreement),
the Pledgor does hereby assign and grant to the Administrative Agent a security
interest in all of its right, title and interest in and to the Trademarks and
the Patents, and the use thereof, together with all proceeds and products
thereof and the goodwill of the businesses symbolized by the Trademarks and the
Patents. This Assignment has been given in conjunction with the assignment and
security interest granted to the Administrative Agent under the Security
Agreement, and the provisions of this Assignment are without prejudice to and in
addition to the provisions of the Security Agreement, which are incorporated
herein by this reference.
[NAME OF PLEDGOR]
By: ____________________________________
Title: _________________________________
<PAGE>
TRADEMARKS AND TRADEMARK APPLICATIONS
<TABLE>
<CAPTION>
Application or Issue or
Pledgor Mark Registration No. Country Filing Date
------- ---- ---------------- ------- -----------
<S> <C> <C> <C> <C>
</TABLE>
PATENTS AND PATENT APPLICATIONS
<TABLE>
<CAPTION>
Application or Issue or
Pledgor Registration No. Country Inventor Filing Date
------- ---------------- ------- -------- -----------
<S> <C> <C> <C> <C>
</TABLE>
2
<PAGE>
Exhibit C to Security Agreement
First Union National Bank, as Administrative Agent
The Ackerley Group, Inc.
_____________, 1999
__________________________________________________
FORM OF
PLEDGOR ACCESSION
THIS PLEDGOR ACCESSION (this "Accession"), dated as of _____________, ____,
is executed and delivered by ________________________, a ______________
corporation (the "Company"), in favor of First Union National Bank, in its
capacity as Administrative Agent under the Credit Agreement referred to
hereinbelow (in such capacity, the "Administrative Agent"), pursuant to the
Security Agreement referred to hereinbelow.
Reference is made to the Credit Agreement, dated as of ________________,
1999, among The Ackerley Group, Inc. (the "Borrower"), the Lenders party
thereto, and the Administrative Agent (as amended, modified or supplemented from
time to time, the "Credit Agreement"). In connection with and as a condition to
the initial and continued extensions of credit under the Credit Agreement, the
Borrower and certain of its subsidiaries have executed and delivered (i) [a
Subsidiary Guaranty, dated as of ________________, ____ (as amended, modified or
supplemented from time to time, the "Subsidiary Guaranty"), pursuant to which
such subsidiaries have guaranteed the payment in full of the obligations of the
Borrower under the Credit Agreement and the other Credit Documents (as defined
in the Credit Agreement),] and (ii) a Security Agreement, dated as of
________________, 1999 (as amended, modified or supplemented from time to time,
the "Security Agreement"), pursuant to which they have granted in favor of the
Administrative Agent a security interest in and Lien upon the Collateral
described therein as security for their obligations under the Credit Agreement,
the Subsidiary Guaranty and the other Credit Documents. Capitalized terms used
herein without definition shall have the meanings given to them in the Security
Agreement.
The Borrower has agreed under the Credit Agreement to cause each of its
future subsidiaries to become a party to the [Subsidiary Guaranty as a guarantor
thereunder and to the] Security Agreement as a Pledgor thereunder. The Company
is a subsidiary of the Borrower[ and, as required by the Credit Agreement, has
become a guarantor under the Subsidiary Guaranty as of the date hereof.] The
Company will obtain benefits as a result of the continued extension of credit to
the Borrower under the Credit Agreement, which benefits are hereby acknowledged,
and, accordingly, desire to execute and deliver this Accession. Therefore, in
consideration of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and to induce the
Lenders to continue to extend credit to the Borrower under the Credit Agreement,
the Company hereby agrees as follows:
1. The Company hereby joins in and agrees to be bound by each and all of
the provisions of the Security Agreement as a Pledgor thereunder. In
furtherance (and without limitation) of the foregoing, pursuant to Section 2.1
of the Security Agreement, and as security for all of the Secured Obligations,
the Company hereby pledges, assigns and delivers to the
<PAGE>
Administrative Agent, for the ratable benefit of the Secured Parties, and grants
to the Administrative Agent, for the ratable benefit of the Secured Parties, a
Lien upon and security interest in, all of its right, title and interest in and
to the Collateral as set forth in Section 2.1 of the Security Agreement, all on
the terms and subject to the conditions set forth in the Security Agreement.
2. The Company hereby represents and warrants that (i) Schedule 1 hereto
----------
sets forth all information required to be listed on Annexes A, B, C, D and E to
the Security Agreement in order to make each representation and warranty
contained in Sections 3.1 and 3.2 of the Security Agreement true and correct
with respect to the Company as of the date hereof and after giving effect to
this Accession and (ii) after giving effect to this Accession and to the
incorporation into such Annexes, as applicable, of the information set forth in
Schedule 1, each representation and warranty contained in Article III of the
Security Agreement is true and correct with respect to the Company as of the
date hereof, as if such representations and warranties were set forth at length
herein.
3. This Accession shall be a Credit Document (within the meaning of such
term under the Credit Agreement), shall be binding upon and enforceable against
the Company and its successors and assigns, and shall inure to the benefit of
and be enforceable by each Secured Party and its successors and assigns. This
Accession and its attachments are hereby incorporated into the Security
Agreement and made a part thereof.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Accession to be executed
under seal by its duly authorized officer as of the date first above written.
[NAME OF COMPANY]
By: ____________________________________
Title: _________________________________
3
<PAGE>
Schedule 1
----------
Information to be added to Annex A of the Security Agreement:
FILING LOCATIONS
Information to be added to Annex B of the Security Agreement:
LOCATIONS OF CHIEF EXECUTIVE OFFICES,
RECORDS RELATING TO COLLATERAL, AND EQUIPMENT AND INVENTORY
1. Chief executive office:
____________________________
____________________________
____________________________
2. Records relating to Collateral:
____________________________
____________________________
____________________________
3. Equipment or Inventory:
____________________________
____________________________
____________________________
4. Other places of business:
____________________________
____________________________
____________________________
4
<PAGE>
5. Trade/fictitious or prior corporate names
(last five years):
____________________________
Information to be added to [Annexes C/D/E] of the Security Agreement:
[complete as applicable]
5
<PAGE>
EXHIBIT 10.3
------------
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of January 22, 1999 (this "Agreement"), is
made by THE ACKERLEY GROUP, INC., a Delaware corporation (the "Borrower"), and
by each of the undersigned Subsidiaries of the Borrower and each other
Subsidiary of the Borrower that, after the date hereof, executes an instrument
of accession hereto substantially in the form of Exhibit A (a "Pledgor
---------
Accession"; the undersigned Subsidiaries and such other Subsidiaries of the
Borrower, collectively, the "Subsidiary Pledgors," and together with the
Borrower, the "Pledgors"), in favor of FIRST UNION NATIONAL BANK, as
administrative agent for the banks and other financial institutions
(collectively, the "Lenders") party to the Credit Agreement referred to below
(in such capacity, the "Administrative Agent"), for the benefit of the Secured
Parties (as hereinafter defined). Capitalized terms used herein and not defined
elsewhere herein shall have the meanings given to them in the Credit Agreement
referred to below.
RECITALS
A. The Borrower, the Lenders, the Documentation Agent and the
Administrative Agent are parties to a Credit Agreement, dated as of January 22,
1999 (as amended, modified or supplemented from time to time, the "Credit
Agreement"), providing for the availability of certain credit facilities to the
Borrower upon the terms and conditions set forth therein.
B. It is a condition to the making of the Loans to the Borrower on the
Closing Date and thereafter under the Credit Agreement that the Pledgors shall
have agreed, by executing and delivering this Agreement, to secure the payment
in full of the Borrower's obligations under the Credit Agreement and the other
Credit Documents. The Secured Parties are relying on this Agreement in their
decision to extend credit to the Borrower under the Credit Agreement, and would
not enter into the Credit Agreement without the agreement of the parties hereto
to enter into this Agreement.
C. The Subsidiary Pledgors will obtain benefits as a result of the
extension of credit to the Borrower under the Credit Agreement, which benefits
are hereby acknowledged, and, accordingly, desire to execute and deliver this
Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to induce the Secured Parties to enter into the Credit Agreement
and to induce the Lenders to extend credit to the Borrower thereunder, each
Pledgor hereby agrees as follows:
1. Pledge. Each Pledgor hereby grants, pledges, assigns and delivers to
------
the Administrative Agent, for the ratable benefit of the Lenders (including the
Issuing Lender in its
<PAGE>
capacity as such, and including any Lender in its capacity as a counterparty to
any Hedge Agreement with the Borrower) and the Administrative Agent
(collectively, the "Secured Parties"), and grants to the Administrative Agent,
for the ratable benefit of the Secured Parties, a security interest in, all of
such Pledgor's right, title and interest in and to the following, in each case
whether now owned or existing or hereafter acquired or arising (collectively,
the "Collateral"):
(a) all of the issued and outstanding shares of Capital Stock of the
direct Subsidiaries of such Pledgor (except SSI, Inc.) and that are identified
with respect to such Pledgor in Part I of Annex A, all additional shares of, all
-------
warrants, options and other rights to acquire, and all securities convertible
into, Capital Stock of such Subsidiaries (whether now or hereafter existing) of
such Pledgor and that are at any time owned by such Pledgor, including any
securities described in clause (ii) below, and all rights, powers and privileges
relating thereto or arising therefrom, together with all certificates,
instruments and entries upon the books of financial intermediaries at any time
evidencing any of the foregoing (collectively, the "Pledged Stock");
(b) subject to the provisions of SECTION 7, and as described more fully
therein, all interest, dividends, distributions and other amounts due or to
become due, and all additional stock, warrants, options, securities and other
property, paid or payable or distributed or distributable in respect of any
Pledged Investments; and
(c) all Proceeds of any of the foregoing. For purposes of this Agreement,
the term "Proceeds" shall mean and include all cash, securities and other
property of any nature received or receivable upon the sale, exchange or other
disposition of or realization upon any Collateral, whether voluntary or
involuntary, together with all payments and distributions in respect of any
Collateral, including pursuant to any insurance, indemnity or guaranty with
respect to any Collateral and pursuant to any liquidation, reorganization or
similar proceeding with respect to such Pledgor or any issuer of or obligor on
any Collateral.
2. Security for Secured Obligations. This Agreement and the Collateral
--------------------------------
secure the full and prompt payment, at any time and from time to time as and
when due (whether at the stated maturity, by acceleration or otherwise), of all
liabilities and obligations of each Pledgor, whether now existing or hereinafter
incurred, under, arising out of or in connection with the Credit Agreement, this
Agreement or any of the other Credit Documents to which it is a party,
including, without limitation, all Obligations of the Borrower for all principal
of and interest on the Loans, all Reimbursement Obligations in respect of
Letters of Credit, all fees, expenses, indemnities and other amounts payable by
the Borrower under the Credit Agreement or any other Credit Document (including
interest accruing after the filing of a petition or commencement of a case by or
with respect to the Borrower seeking relief under any applicable federal and
state laws pertaining to bankruptcy, reorganization, arrangement, moratorium,
readjustment of debts, dissolution, liquidation or other debtor relief,
specifically including, without limitation, the Bankruptcy Code and any
fraudulent transfer and fraudulent conveyance laws, whether or not the claim for
such interest is allowed in such proceeding), all obligations of the Borrower to
any Lender (or its Affiliate, as applicable) under any Hedge Agreement, all
Obligations that, but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, would become
2
<PAGE>
due, and all fees, costs and expenses payable by each Pledgor under SECTION 13,
in each case whether now existing or hereafter created or arising and whether
direct or indirect, absolute or contingent, due or to become due (the
liabilities and obligations of the Pledgors described in this SECTION 2,
collectively, the "Secured Obligations").
3. Delivery of Collateral. All certificates or instruments representing
----------------------
or evidencing any Collateral shall be delivered to and held by or on behalf of
the Administrative Agent pursuant hereto, shall be in form suitable for transfer
by delivery and shall be delivered together with undated stock powers duly
executed in blank or other necessary instruments of registration, transfer or
assignment duly executed and in form and substance satisfactory to the
Administrative Agent and such other instruments or documents as the
Administrative Agent may reasonably request.
4. Representations and Warranties. Each Pledgor represents and warrants
------------------------------
as follows:
(a) As of the date hereof, (i) Part I of Annex A contains a true and
-------
complete listing of all Subsidiaries the Capital Stock of which is being pledged
hereunder and each direct owner thereof, and (ii) the Pledged Stock consists of
the number and type of shares of the Capital Stock of each such Subsidiary as
described in Part I of Annex A and constitutes 100% of the issued and
-------
outstanding Capital Stock of such Subsidiary.
(b) As to any Pledged Stock required to be pledged at any time after the
date hereof, as of the date so pledged, the Pledged Stock shall consist of the
number and type of shares of the Capital Stock of the relevant Subsidiary as
described in Part I of Annex A to the applicable Pledge Amendment or Pledgor
-------
Accession and, shall, together with all other Pledged Stock of such Subsidiary
constitute 100% of the issued and outstanding Capital Stock of such Subsidiary,
unless otherwise permitted under the Credit Agreement.
(c) Each Pledgor is, or at the time of the pledge hereunder will be, the
sole legal, record and beneficial owner of, and has, or at the time pledged
hereunder will have, good and marketable title to, all Pledged Stock pledged
hereunder by it, free and clear of any Lien whatsoever other than the security
interest created by this Agreement.
(d) All shares of Pledged Stock are, or at the time when pledged hereunder
will be, duly and validly issued, fully paid and nonassessable and not subject
to any preemptive rights, warrants, options or similar rights or restrictions in
favor of third parties or any contractual or other restrictions upon transfer.
(e) No consent, approval, authorization, exemption or other action by,
notice to, or filing with, any Governmental Authority is required in connection
with the due execution, delivery and performance by each Pledgor of this
Agreement, the pledge of the Collateral hereunder or the exercise by the
Administrative Agent of the voting or other rights and remedies in respect of
the Collateral provided for herein, except as may be required in connection with
a disposition of any Collateral by laws affecting the offering and sale of
securities generally.
3
<PAGE>
(f) This Agreement, together with (i) in the case of uncertificated Pledged
Stock, compliance with Section 8-313 (or its successor provision) of the
applicable Uniform Commercial Code, and (ii) the delivery to the Administrative
Agent of all certificates and instruments evidencing Pledged Stock (and assuming
continuous possession thereof by the Administrative Agent), creates, and at all
times will constitute, a valid and perfected security interest in and Lien upon
the Collateral owned by such Pledgor in favor of the Administrative Agent, for
the benefit of the Secured Parties, superior and prior to the rights of all
other Persons therein (except for Permitted Liens), and no other or additional
filings, registrations, recordings or actions are or shall be necessary or
appropriate in order to maintain the perfection and priority of such Lien and
security interest.
5. Additional Collateral; Additional Covenants.
-------------------------------------------
(a) Except as may be permitted under the Credit Agreement, each Pledgor
will cause the Pledged Stock owned by it to constitute at all times 100% of the
Capital Stock of each of the applicable Subsidiaries then outstanding, and will
not cause or permit any of such Subsidiaries to issue or sell any new shares of
its Capital Stock or any warrants, options or rights to acquire its Capital
Stock to any Person other than such Pledgor.
(b) If any Pledgor shall, at any time and from time to time after the date
hereof, acquire any additional Pledged Stock or certificates or instruments
representing or evidencing the same of the type described in clauses (a) and (b)
of SECTION 1, whether from Subsidiaries existing as of the date hereof or
created or acquired hereafter, the same shall be automatically deemed to be
Pledged Stock and to be pledged to the Administrative Agent pursuant to SECTION
1, and such Pledgor will forthwith pledge and deposit such Pledged Stock with
the Administrative Agent and deliver to the Administrative Agent any
certificates or instruments therefor, together with undated stock powers or
other necessary instruments of transfer or assignment, duly executed in blank
and in form and substance satisfactory to the Administrative Agent, together
with such other certificates and instruments as the Administrative Agent may
reasonably request, and will promptly thereafter deliver to the Administrative
Agent a fully completed and duly executed amendment to this Agreement in the
form of Exhibit B (each, a "Pledge Amendment") in respect of such additional
---------
Pledged Stock. Each Pledgor hereby authorizes the Administrative Agent to
attach each Pledge Amendment to this Agreement, and agrees that all such Pledged
Stock listed on any Pledge Amendment shall for all purposes be deemed Collateral
hereunder and shall be subject to the provisions hereof; provided that the
--------
failure of any Pledgor to execute and deliver any Pledge Amendment with respect
to any such additional Pledged Stock as required hereinabove shall not impair
the security interest of the Administrative Agent in such Pledged Stock or
otherwise adversely affect the rights and remedies of the Administrative Agent
hereunder with respect thereto.
(c) Each Pledgor recognizes that the provisions of the Credit Agreement
require Persons that become Wholly Owned Subsidiaries of the Borrower and that
are not already parties hereto (and permit certain other Subsidiaries) to become
Pledgors hereunder by executing a Pledgor Accession, and agrees that its
obligations hereunder shall not be discharged, limited or otherwise affected by
reason of the same, or by reason of the Administrative Agent's actions in
4
<PAGE>
effecting the same or in releasing any Pledgor hereunder, in each case without
the necessity of giving notice to or obtaining the consent of any other Pledgor.
If the Borrower or any of its Subsidiaries shall ever be required or shall ever
elect to pledge pursuant to this Agreement the Capital Stock of any limited
liability company, partnership or other Person that is not a corporation, the
Borrower will, and will cause each applicable Subsidiary to, amend this
Agreement to incorporate such provisions as may be reasonably requested by the
Administrative Agent in order to perfect, establish, confirm and maintain the
security interest and Lien provided for herein with respect to such Capital
Stock and the rights, powers and privileges pertaining thereto.
(d) Notwithstanding anything to the contrary contained herein, if any
Pledged Stock (whether now owned or hereafter acquired) constitutes an
"uncertificated security" within the meaning of the applicable Uniform
Commercial Code or is otherwise not evidenced by any stock certificate or
similar certificate or instrument, each applicable Pledgor will promptly notify
the Administrative Agent thereof and will promptly take and cause to be taken
all actions required under applicable law, including, as applicable, under
Article 8 or 9 of the applicable Uniform Commercial Code, to perfect the
security interest of the Administrative Agent therein.
(e) The Borrower covenants and agrees, in connection with the consummation
of the Revolver Increase upon the request of the Administrative Agent to execute
and deliver to the Administrative Agent any and all documents (including UCC-1
financing statements) necessary or appropriate to perfect the Liens granted
pursuant to Section 1(b) above.
6. Voting Rights. So long as no Event of Default shall have occurred and
-------------
be continuing, each Pledgor shall be entitled to exercise all voting and other
consensual rights pertaining to the Pledged Stock (subject to its obligations
under SECTION 5(B)), and for that purpose the Administrative Agent will execute
and deliver or cause to be executed and delivered to each applicable Pledgor all
such proxies and other instruments as such Pledgor may reasonably request in
writing to enable such Pledgor to exercise such voting and other consensual
rights; provided, however, that no Pledgor will cast any vote, give any consent,
-------- -------
waiver or ratification, or take or fail to take any action, in any manner that
would, or could reasonably be expected to, violate or be inconsistent with any
of the terms of this Agreement, the Credit Agreement or any other Credit
Document, or have the effect of impairing the position or interests of the
Administrative Agent or any other Secured Party.
7. Dividends and Other Distributions. So long as no Event of Default
---------------------------------
shall have occurred and be continuing (or would occur as a result thereof), and
except as provided otherwise herein, all interest, income, dividends,
distributions and other amounts payable in cash in respect of the Pledged Stock
may be paid to and retained by the Pledgors; provided, however, that all such
-------- -------
interest, dividends, distributions and other amounts shall, at all times after
the occurrence and during the continuance of an Event of Default, be paid to the
Administrative Agent and retained by it as part of the Collateral (except to the
extent applied upon receipt to the repayment of the Secured Obligations). The
Administrative Agent shall also be entitled at all times (whether or not during
the continuance of an Event of Default) to receive directly, and to retain as
part of the Collateral, (i) all interest, income, dividends, distributions or
other amounts paid or
5
<PAGE>
payable in cash or other property in respect of any Pledged Investments in
connection with the dissolution, liquidation, recapitalization or
reclassification of the capital of any Subsidiary to the extent representing (in
the reasonable judgment of the Administrative Agent) an extraordinary,
liquidating or other distribution in return of capital, (ii) all additional
Capital Stock, warrants, options or other securities or property (other than
cash) paid or payable or distributed or distributable in respect of any Pledged
Stock in connection with any noncash dividend, distribution, return of capital,
spin-off, split-up, reclassification, combination of interests or similar
rearrangement, and (iii) without affecting any restrictions against such actions
contained in the Credit Agreement, all additional Capital Stock, warrants,
options or other securities or property (including cash) paid or payable or
distributed or distributable in respect of any Pledged Stock in connection with
any consolidation, merger, exchange of securities, liquidation or other
reorganization. All interest, income, dividends, distributions or other amounts
that are received by any Pledgor in violation of the provisions of this Section
shall be received in trust for the benefit of the Administrative Agent, shall be
segregated from other property or funds of the Pledgors and shall be forthwith
delivered to the Administrative Agent as Collateral in the same form as so
received (with any necessary endorsements).
8. Remedies. If an Event of Default shall have occurred and be
--------
continuing, the Administrative Agent shall be entitled to exercise in respect of
the Collateral all of its rights, powers and remedies provided for herein or
otherwise available to it under any other Credit Document, by law, in equity or
otherwise, including all rights and remedies of a secured party under the
Uniform Commercial Code as in effect in each relevant jurisdiction, and shall be
entitled in particular, but without limitation of the foregoing, to exercise the
following rights, which each Pledgor agrees to be commercially reasonable:
(a) To notify the parties obligated on any of the Collateral to make
payment to the Administrative Agent of any amount due or to become due
thereunder and receive all such amounts;
(b) To transfer to or register in its name or the name of any of its agents
or nominees all or any part of the Collateral, without notice to the Pledgors
and with or without disclosing that such Collateral is subject to the security
interest created hereunder;
(c) To exercise (i) all voting, consensual and other rights and powers
pertaining to the Pledged Stock (whether or not transferred into the name of the
Administrative Agent), at any meeting of stockholders or otherwise, and (ii) any
and all rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to the Pledged Stock as if it were the absolute
owner thereof (including, without limitation, the right to exchange at its
discretion any and all of the Pledged Stock of any Subsidiary upon the merger,
consolidation, reorganization, reclassification, combination of interests,
similar rearrangement or other similar fundamental change in the structure of
such Subsidiary, or upon the exercise by any Pledgor or the Administrative Agent
of any right, privilege or option pertaining to such Pledged Stock, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Stock with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Administrative Agent may
determine, and give all consents, waivers and
6
<PAGE>
ratifications in respect of the Pledged Stock, all without liability except to
account for any property actually received by it, but the Administrative Agent
shall have no duty to exercise any such right, privilege or option or give any
such consent, waiver or ratification and shall not be responsible for any
failure to do so or delay in so doing; and for the foregoing purposes each
Pledgor will promptly execute and deliver or cause to be executed and delivered
to the Administrative Agent, upon request, all such proxies and other
instruments as the Administrative Agent may reasonably request to enable the
Administrative Agent to exercise such rights and powers; AND IN FURTHERANCE OF
THE FOREGOING AND WITHOUT LIMITATION THEREOF, EACH PLEDGOR HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS THE ADMINISTRATIVE AGENT AS THE TRUE AND LAWFUL PROXY
AND ATTORNEY-IN-FACT OF SUCH PLEDGOR, WITH FULL POWER OF SUBSTITUTION IN THE
PREMISES, TO EXERCISE ALL SUCH VOTING, CONSENSUAL AND OTHER RIGHTS AND POWERS TO
WHICH ANY HOLDER OF THE PLEDGED STOCK WOULD BE ENTITLED BY VIRTUE OF HOLDING THE
SAME, WHICH PROXY AND POWER OF ATTORNEY, BEING COUPLED WITH AN INTEREST, IS
IRREVOCABLE AND SHALL BE EFFECTIVE FOR SO LONG AS THIS AGREEMENT SHALL BE IN
EFFECT; and
(d) To sell, resell, assign and deliver, in its sole discretion, all or any
of the Collateral, in one or more parcels, on any securities exchange on which
the Pledged Stock or any thereof may be listed, at public or private sale, at
any of the Administrative Agent's offices or elsewhere, for cash, upon credit or
for future delivery, at such time or times and at such price or prices and upon
such other terms as the Administrative Agent may deem satisfactory. If any of
the Collateral is sold by the Administrative Agent upon credit or for future
delivery, the Administrative Agent shall not be liable for the failure of the
purchaser to purchase or pay for the same and, in the event of any such failure,
the Administrative Agent may resell such Collateral. In no event shall the
Pledgors be credited with any part of the Proceeds of sale of any Collateral
until and to the extent cash payment in respect thereof has actually been
received by the Administrative Agent. Each purchaser at any such sale shall
hold the property sold absolutely, free from any claim or right of whatsoever
kind, including any equity or right of redemption of the Pledgors, and each
Pledgor hereby expressly waives all rights of redemption, stay or appraisal, and
all rights to require the Administrative Agent to marshal any assets in favor of
such Pledgor or any other party or against or in payment of any or all of the
Secured Obligations, that it has or may have under any rule of law or statute
now existing or hereafter adopted. No demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law, as
referred to below), all of which are hereby expressly waived by each Pledgor,
shall be required in connection with any sale or other disposition of any part
of the Collateral. If any notice of a proposed sale or other disposition of any
part of the Collateral shall be required under applicable law, the
Administrative Agent shall give the applicable Pledgor at least ten (10) days'
prior notice of the time and place of any public sale and of the time after
which any private sale or other disposition is to be made, which notice each
Pledgor agrees is commercially reasonable. The Administrative Agent shall not
be obligated to make any sale of Collateral if it shall determine not to do so,
regardless of the fact that notice of sale may have been given. The
Administrative Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the
7
<PAGE>
same was so adjourned. Upon each public sale and, to the extent permitted by
applicable law, upon each private sale, the Administrative Agent may purchase
all or any of the Collateral being sold, free from any equity, right of
redemption or other claim or demand, and may make payment therefor by
endorsement and application (without recourse) of the Secured Obligations in
lieu of cash as a credit on account of the purchase price for such Collateral.
To enforce the provisions of this Section 8, the Administrative Agent is
empowered to seek from the FCC and any other Governmental Authority, to the
extent required, consent to or approval of an involuntary transfer of control of
the Borrower or any of its Subsidiaries for the purpose of seeking a bona fide
purchaser to whom control will ultimately be transferred. The Borrower hereby
agrees to authorize and to cause its Subsidiaries to authorize such an
involuntary transfer of control upon the request of the Administrative Agent
after and during the continuation of an Event of Default and, without limiting
any rights of the Administrative Agent under this Agreement, authorize the
Administrative Agent to nominate a trustee or receiver to assume control,
subject only to any required judicial, FCC and other Governmental Authority
consent, in order to effectuate the transactions contemplated hereby. Such
trustee or receiver shall have all the rights and powers as provided to it by
law, court order or to the Administrative Agent under this Agreement. The
Borrower shall cooperate fully and cause its Subsidiaries to cooperate fully in
obtaining the consent of the FCC and the approval or consent of each other
Governmental Authority required to effectuate the foregoing. The Borrower shall
further use its best efforts, and will cause its Subsidiaries to use their best
efforts, to assist in obtaining consent or approval of the FCC and any other
Governmental Authority, if required, for any action or transactions contemplated
by this Agreement including, without limitation, the preparation, execution and
filing with the FCC of the transferor's portion of any application or
applications for consent to the transfer of control necessary or appropriate
under the FCC's rules and regulations for approval of the transfer or assignment
of any portion of the Collateral. If the Borrower fails to execute or cause the
execution of such applications, requests for consent or other instruments, the
clerk of any court that has jurisdiction over the Credit Documents may execute
and file the same on behalf of the Borrower or its Subsidiaries.
Notwithstanding anything herein to the contrary, prior to the occurrence of
an Event of Default and the consent of the FCC and of any other applicable
Governmental Authority to the assignment of any FCC License or the transfer of
control of any Subsidiary (as may be required by law), neither this Agreement,
the Credit Agreement, the Credit Documents nor any of the transactions
contemplated hereby and thereby will constitute, create, or have the effect of
constituting or creating, directly or indirectly, actual or practical ownership
of any Subsidiary by the Administrative Agent or the Secured Parties or control,
affirmative or negative, direct or indirect, by the Administrative Agent or the
Secured Parties over the management or any other aspect of the operation of any
Subsidiary, which ownership and control remain exclusively and at all times in
such Subsidiary until such time as the FCC approves the transfer of such rights
to another party.
8
<PAGE>
9. Application of Proceeds.
-----------------------
(a) All Proceeds collected by the Administrative Agent upon any sale,
other disposition of or realization upon any of the Collateral, together with
all other moneys received by the Administrative Agent hereunder, shall be
applied as follows:
(i) first, to the payment of all costs and expenses of such sale,
disposition or other realization, including the reasonable costs and
expenses of the Administrative Agent and the reasonable fees and expenses
of its agents and counsel, all amounts advanced by the Administrative Agent
for the account of the Pledgors, and all other amounts payable to the
Administrative Agent under SECTION 11;
(ii) second, after payment in full of the amounts specified in
clause (i) above, to the ratable payment of all other Secured Obligations
owing to the Secured Parties, in such order and manner as the
Administrative Agent may elect; and
(iii) third, after payment in full of the amounts specified in
clauses (i) and (ii) above, and following the termination of this
Agreement, to the Pledgors or any other Person lawfully entitled to receive
such surplus.
(b) For purposes of applying amounts in accordance with this Section, the
Administrative Agent shall be entitled to rely upon any Secured Party that has
entered into a Hedge Agreement with the Borrower for a determination (which such
Secured Party agrees to provide or cause to be provided upon request of the
Administrative Agent) of the outstanding Secured Obligations owed to such
Secured Party under any such Hedge Agreement. Unless it has actual knowledge
(including by way of written notice from any such Secured Party) to the
contrary, the Administrative Agent, in acting hereunder, shall be entitled to
assume that no Hedge Agreements or Obligations in respect thereof are in
existence between any Secured Party and the Borrower.
(c) The Pledgors shall remain jointly and severally liable to the extent
of any deficiency between the amount of all Proceeds realized upon sale or other
disposition of the Collateral pursuant to this Agreement and the aggregate
amount of the sums referred to in clauses (i) and (ii) of subsection (a) above.
Upon any sale of any Collateral hereunder by the Administrative Agent (whether
by virtue of the power of sale herein granted, pursuant to judicial proceeding,
or otherwise), the receipt of the Administrative Agent or the officer making the
sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Administrative Agent or such officer or be answerable in any way for the
misapplication thereof.
10. Registration; Private Sales.
---------------------------
(a) If, at any time after the occurrence and during the continuance of an
Event of Default, any Pledgor shall have received from the Administrative Agent
a written request or requests that such Pledgor cause any registration,
qualification or compliance under any federal
9
<PAGE>
or state securities law or laws to be effected with respect to all or any part
of the Pledged Stock, such Pledgor will, as soon as practicable and at its
expense, use its best efforts to cause such registration to be effected and be
kept effective and will use its best efforts to cause such qualification and
compliance to be effected and be kept effective as may be so requested and as
would permit or facilitate the sale and distribution of such Pledged Stock,
including, without limitation, registration under the Securities Act of 1933, as
amended (the "Securities Act"), appropriate qualifications under applicable blue
sky or other state securities laws and appropriate compliance with any other
applicable requirements of Governmental Authorities; provided, that the
--------
Administrative Agent shall furnish to such Pledgor such information regarding
the Administrative Agent as such Pledgor may reasonably request in writing and
as shall be required in connection with any such registration, qualification or
compliance. Such Pledgor will cause the Administrative Agent to be kept
reasonably advised in writing as to the progress of each such registration,
qualification or compliance and as to the completion thereof, will furnish to
the Administrative Agent such number of prospectuses, offering circulars or
other documents incident thereto as the Administrative Agent from time to time
may reasonably request, and will indemnify the Administrative Agent and all
others participating in the distribution of such Pledged Stock against all
claims, losses, damages and liabilities caused by any untrue statement (or
alleged untrue statement) of a material fact contained therein (or in any
related registration statement, notification or the like) or by any omission (or
alleged omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same may have been caused by an untrue statement or omission based upon
information furnished in writing to such Pledgor by the Administrative Agent or
any other Secured Party expressly for use therein.
(b) Each Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws as in
effect from time to time, the Administrative Agent may be compelled, with
respect to any sale of all or any part of the Pledged Stock conducted without
registration or qualification under the Securities Act and such state securities
laws, to limit purchasers to any one or more Persons who will represent and
agree, among other things, to acquire such Pledged Stock for their own account,
for investment and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges that any such private sales may be made in such manner and
under such circumstances as the Administrative Agent may deem necessary or
advisable in its sole and absolute discretion, including at prices and on terms
less favorable than those obtainable through a public sale without such
restrictions (including, without limitation, a public offering made pursuant to
a registration statement under the Securities Act), and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and agrees that the Administrative
Agent shall have no obligation to conduct any public sales and no obligation to
delay the sale of any Pledged Stock for the period of time necessary to permit
its registration for public sale under the Securities Act and applicable state
securities laws, and shall not have any responsibility or liability as a result
of its election so not to conduct any such public sales or delay the sale of any
Pledged Stock, notwithstanding the possibility that a substantially higher price
might be realized if the sale were deferred until after such registration. Each
Pledgor hereby waives any claims against the Administrative Agent or any Secured
Party
10
<PAGE>
arising by reason of the fact that the price at which any Pledged Stock may have
been sold at any private sale was less than the price that might have been
obtained at a public sale or was less than the aggregate amount of the Secured
Obligations, even if the Administrative Agent accepts the first offer received
and does not offer such Pledged Stock to more than one offeree.
(c) Each Pledgor agrees that a breach of any of the covenants contained in
this Section will cause irreparable injury to the Administrative Agent and the
other Secured Parties, that the Administrative Agent and the other Secured
Parties have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section shall be
specifically enforceable against the Pledgors.
11. Indemnity and Expenses. The Pledgors agree jointly and severally:
----------------------
(a) To indemnify and hold harmless the Administrative Agent, each other
Secured Party and each of their respective directors, officers, employees,
agents and affiliates from and against any and all claims, damages, demands,
losses, obligations, judgments and liabilities (including, without limitation,
reasonable attorneys' fees and expenses) in any way arising out of or in
connection with this Agreement and the transactions contemplated hereby, except
to the extent the same shall arise as a result of the gross negligence or
willful misconduct of the party seeking to be indemnified; and
(b) To pay and reimburse the Administrative Agent upon demand for all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) that the Administrative Agent may incur in
connection with (i) the custody, use or preservation of, or the sale of,
collection from or other realization upon, any of the Collateral, including the
reasonable expenses of re-taking, holding, preparing for sale or lease, selling
or otherwise disposing of or realizing on the Collateral, (ii) the exercise or
enforcement of any rights or remedies granted hereunder (including, without
limitation, under SECTION 10), under any of the other Credit Documents or
otherwise available to it (whether at law, in equity or otherwise), or (iii) the
failure by any Pledgor to perform or observe any of the provisions hereof. The
provisions of this SECTION 11 shall survive the execution and delivery of this
Agreement, the repayment of any of the Obligations, the termination of the
Commitments under the Credit Agreement and the termination of this Agreement or
any other Credit Document.
12. Further Assurances; Attorney-in-Fact.
------------------------------------
(a) Each Pledgor agrees that it will join with the Administrative Agent to
execute and, at its own expense, file and refile under any applicable Uniform
Commercial Code such financing statements, continuation statements and other
documents and instruments in such offices as the Administrative Agent may
reasonably deem necessary or appropriate, and wherever required or permitted by
law, in order to perfect and preserve the Administrative Agent's security
interest in the Collateral, and hereby authorizes the Administrative Agent to
file financing statements and amendments thereto relating to all or any part of
the Collateral without the signature of such Pledgor where permitted by law, and
agrees to do such further acts and things and to execute and deliver to the
Administrative Agent such additional conveyances, assignments, agreements and
instruments as the Administrative Agent may reasonably require or
11
<PAGE>
deem advisable to perfect, establish, confirm and maintain the security interest
and Lien provided for herein, to carry out the purposes of this Agreement or to
further assure and confirm unto the Administrative Agent its rights, powers and
remedies hereunder.
(b) Each Pledgor hereby irrevocably appoints the Administrative Agent its
lawful attorney-in-fact, with full authority in the place and stead of such
Pledgor and in the name of such Pledgor, the Administrative Agent or otherwise,
and with full power of substitution in the premises (which power of attorney,
being coupled with an interest, is irrevocable for so long as this Agreement
shall be in effect), from time to time in the Administrative Agent's discretion
after the occurrence and during the continuance of an Event of Default to take
any action and to execute any instruments that the Administrative Agent may deem
necessary or advisable to accomplish the purpose of this Agreement, including,
without limitation:
(i) to sign the name of such Pledgor on any financing statement,
continuation statement, notice or other similar document that, in the
Administrative Agent's opinion, should be made or filed in order to perfect
or continue perfected the security interest granted under this Agreement;
(ii) to ask, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral;
(iii) to receive, endorse and collect any checks, drafts,
instruments, chattel paper and other orders for the payment of money made
payable to such Pledgor representing any interest, dividend, distribution
or other amount payable in respect of any of the Collateral and to give
full discharge for the same;
(iv) to file any claims or take any action or institute any
proceedings that the Administrative Agent may deem necessary or advisable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral;
and
(v) to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with any and all of the Collateral as fully
and completely as though the Administrative Agent were the absolute owner
of the Collateral for all purposes, and to do from time to time, at the
Administrative Agent's option and the Pledgors' expense, all other acts and
things deemed necessary by the Administrative Agent to protect, preserve or
realize upon the Collateral and to more completely carry out the purposes
of this Agreement.
(c) Each Pledgor agrees that it will, at its own cost and expense, take
any and all actions necessary to warrant and defend the right, title and
interest of the Secured Parties in and to the Collateral against the claims and
demands of all other Persons.
(d) If any Pledgor fails to perform any covenant or agreement contained in
this Agreement after written request to do so by the Administrative Agent
(provided that no such
--------
12
<PAGE>
request shall be necessary at any time after the occurrence and during the
continuance of an Event of Default), the Administrative Agent may itself
perform, or cause the performance of, such covenant or agreement and may take
any other action that it deems necessary and appropriate for the maintenance and
preservation of the Collateral or its security interest therein, and the
reasonable expenses so incurred in connection therewith shall be payable by the
Pledgors under SECTION 11.
13. The Administrative Agent; Standard of Care. The Administrative Agent
------------------------------------------
will hold all items of the Collateral at any time received under this Agreement
in accordance with the provisions hereof. The obligations of the Administrative
Agent as holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement and the other Credit
Documents, are only those expressly set forth in this Agreement and the other
Credit Documents. The Administrative Agent shall act hereunder at the
direction, or with the consent, of the Required Lenders on the terms and
conditions set forth in the Credit Agreement. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest, on behalf of
the Secured Parties, in the Collateral, and shall not impose any duty upon it to
exercise any such powers. Except for treatment of the Collateral in its
possession in a manner substantially equivalent to that which the Administrative
Agent, in its individual capacity, accords its own property of a similar nature,
and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other
rights pertaining to the Collateral. Neither the Administrative Agent nor any
other Secured Party shall be liable to any Pledgor (i) for any loss or damage
sustained by such Pledgor, or (ii) for any loss, damage, depreciation or other
diminution in the value of any of the Collateral that may occur as a result of
or in connection with or that is in any way related to any exercise by the
Administrative Agent or any other Secured Party of any right or remedy under
this Agreement, any failure to demand, collect or realize upon any of the
Collateral or any delay in doing so, or any other act or failure to act on the
part of the Administrative Agent or any other Secured Party, except to the
extent that the same is caused by its own gross negligence or willful
misconduct.
14. Certain Actions. No Pledgor will (i) sell or otherwise dispose of,
---------------
grant any options, warrants or other rights with respect to, or mortgage,
pledge, grant any Lien with respect to or otherwise encumber, any Collateral or
any interest therein, except for the security interest created by this
Agreement, (ii) invoke or assert the benefit of any rule of law or statute now
or hereafter in effect, including, without limitation, any right to prior notice
or judicial hearing in connection with the Administrative Agent's possession,
custody or disposition of any Collateral and any appraisal, valuation, stay,
extension, moratorium or redemption law, or take or fail to take any other
action, that would, or could reasonably be expected to, have the effect of
delaying, impeding or preventing the exercise of any rights and remedies in
respect of any Collateral, the absolute sale of any Collateral or the possession
thereof by any purchaser at any sale thereof, and each Pledgor hereby waives the
benefit of all such laws, or (iii) agree to do or cause to be done any of the
foregoing.
15. Security Interest Absolute. Each Pledgor agrees that its obligations,
--------------------------
and the security interest granted to and all rights of the Administrative Agent,
hereunder are irrevocable,
13
<PAGE>
absolute and unconditional and shall not be discharged, limited or otherwise
affected by reason of any of the following, whether or not such Pledgor has
notice or knowledge thereof:
(a) any change in the time, manner or place of payment of, or in any other
term of, any Secured Obligations, or any amendment, modification or supplement
to, restatement of, or consent to any rescission or waiver of or departure from,
any provisions of the Credit Agreement, any other Credit Document or any
agreement or instrument delivered pursuant to any of the foregoing;
(b) the invalidity or unenforceability of any Secured Obligations or any
provisions of the Credit Agreement, any other Credit Document or any agreement
or instrument delivered pursuant to any of the foregoing;
(c) any sale, exchange, release, substitution, compromise, nonperfection
or other action or inaction in respect of any other collateral pledged as direct
or indirect security for any Secured Obligations, or any discharge,
modification, settlement, compromise or other action or inaction in respect of
any guaranty or other direct or indirect liability for any Secured Obligations;
or
(d) any other circumstance that might otherwise constitute a legal or
equitable discharge of, or a defense, set-off or counterclaim available to, any
Pledgor, other than the occurrence of all of the following: (y) the payment in
full of the Secured Obligations and (z) the termination of the Commitments and
the termination or expiration of all Letters of Credit under the Credit
Agreement (the events in clauses (y) and (z) above, collectively, the
"Termination Requirements").
16. No Waiver. The rights and remedies of the Secured Parties expressly
---------
set forth in this Agreement and the other Credit Documents are cumulative and in
addition to, and not exclusive of, all other rights and remedies available at
law, in equity or otherwise. No failure or delay on the part of any Secured
Party in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege or be construed to be a waiver of any Default or
Event of Default. No course of dealing between the Pledgors and the Secured
Parties or their agents or employees shall be effective to amend, modify or
discharge any provision of this Agreement or any other Credit Document or to
constitute a waiver of any Default or Event of Default. No notice to or demand
upon any Pledgor in any case shall entitle such Pledgor or any other Pledgor to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of any Secured Party to exercise any right or
remedy or take any other or further action in any circumstances without notice
or demand.
17. Enforcement. By its acceptance of the benefits of this Agreement,
-----------
each Lender agrees that this Agreement may be enforced only by the
Administrative Agent, acting upon the instructions or with the consent of the
Required Lenders as provided for in the Credit Agreement, and that no Lender
shall have any right individually to enforce or seek to enforce this Agreement
14
<PAGE>
or to realize upon any Collateral or other security given to secure the payment
and performance of the Secured Obligations.
18. Amendments, Waivers, etc. No amendment, modification, waiver,
------------------------
discharge or termination of, or consent to any departure by any Pledgor from,
any provision of this Agreement, shall be effective unless in a writing executed
and delivered in accordance with Section 11.6 of the Credit Agreement, and then
the same shall be effective only in the specific instance and for the specific
purpose for which given.
19. Continuing Security Interest; Term; Successors and Assigns;
-----------------------------------------------------------
Assignment; Termination and Release; Survival. This Agreement shall create a
- ---------------------------------------------
continuing security interest in the Collateral and shall secure the payment and
performance of all of the Secured Obligations as the same may arise and be
outstanding at any time and from time to time from and after the date hereof,
and shall (i) remain in full force and effect until the satisfaction of all of
the Termination Requirements, (ii) be binding upon and enforceable against each
Pledgor and its successors and assigns (provided, however, that no Pledgor may
-------- -------
sell, assign or transfer any of its rights, interests, duties or obligations
hereunder without the prior written consent of the Lenders) and (iii) inure to
the benefit of and be enforceable by each Secured Party and its successors and
assigns. Upon any sale or other disposition by any Pledgor of any Collateral in
a transaction expressly permitted hereunder or under or pursuant to the Credit
Agreement or any other applicable Credit Document, the Lien and security
interest created by this Agreement in and upon such Collateral shall be
automatically released, and upon the satisfaction of all of the Termination
Requirements, this Agreement and the Lien and security interest created hereby
shall terminate; and in connection with any such release or termination, the
Administrative Agent, at the request and expense of the applicable Pledgor, will
execute and deliver to such Pledgor such documents and instruments evidencing
such release or termination as such Pledgor may reasonably request and will
assign, transfer and deliver to such Pledgor, without recourse and without
representation or warranty, such of the Collateral as may then be in the
possession of the Administrative Agent (or, in the case of any partial release
of Collateral, such of the Collateral so being released as may be in its
possession). All representations, warranties, covenants and agreements herein
shall survive the execution and delivery of this Agreement and any Pledge
Amendment or Pledgor Accession.
20. Notices. All notices and other communications provided for hereunder
-------
shall be given to the parties care of the Borrower in the manner and subject to
the other notice provisions set forth in the Credit Agreement.
21. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of North Carolina (without
regard to the conflicts of law provisions thereof).
22. Severability. To the extent any provision of this Agreement is
------------
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or
15
<PAGE>
invalidating such provision in any other jurisdiction or the remaining
provisions of this Agreement in any jurisdiction.
23. Construction. The headings of the various sections and subsections of
------------
this Agreement have been inserted for convenience only and shall not in any way
affect the meaning or construction of any of the provisions hereof. Unless the
context otherwise requires, words in the singular include the plural and words
in the plural include the singular. All terms in this Agreement that are not
capitalized shall have the meanings provided by the applicable Uniform
Commercial Code to the extent the same are used or defined therein.
24. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
16
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
under seal by their duly authorized officers as of the date first above written.
THE ACKERLEY GROUP, INC.
By: ___________________________________
Title: ___________________________________
AK MEDIA GROUP, INC.
By: ___________________________________
Title: ___________________________________
Accepted and agreed to:
FIRST UNION NATIONAL BANK, as
Administrative Agent
By: _____________________________
Title: _____________________________
Pledge Agreement
The Ackerley Group, Inc.
First Union National Bank, as Administrative Agent
(Signatures continued)
17
<PAGE>
ANNEX A
-------
PLEDGED STOCK
-------------
<TABLE>
<CAPTION>
Percentage of
Outstanding
Type of Number of Certificate Shares of
Name of Pledgor Name of Issuing Corporation Shares Shares Number Capital Stock
--------------- --------------------------- ------ ------ ----- -------------
<S> <C> <C> <C> <C> <C>
The Ackerley Group, Inc. Ackerley Airport Advertising, Common 10 1 100%
Inc.
AK Media Group, Inc. Ackerley Communications of Common 1,000 1 100%
Massachusetts, Inc.
The Ackerley Group, Inc. AK Media Group, Inc. Common 1 2 100%
The Ackerley Group, Inc. Central NY News, Inc. Common 1,000 1 100%
AK Media Group, Inc. KVOS TV, Ltd. Common 1 2 100%
The Ackerley Group, Inc. TC Aviation, Inc. Common 1,000 2 100%
</TABLE>
<PAGE>
EXHIBIT A
---------
PLEDGOR ACCESSION
THIS PLEDGOR ACCESSION, dated as of _______________, _____, is delivered by
[NAME OF NEW PLEDGOR] (the "Pledgor") pursuant to SECTION 5 of the Pledge
Agreement referred to hereinbelow.
Reference is hereby made to the Pledge Agreement, dated ________________,
made by The Ackerley Group, Inc. and certain of its Subsidiaries in favor of
First Union National Bank, as Administrative Agent (as amended, modified or
supplemented from time to time, the "Pledge Agreement," capitalized terms
defined therein being used herein as therein defined).
The undersigned is a Subsidiary of The Ackerley Group, Inc. (the
"Borrower"), has created or acquired one or more other Subsidiaries, and is
required or has elected under the terms of the Credit Agreement to enter into
the Pledge Agreement as a pledgor thereunder. The undersigned hereby adopts and
makes for itself, with reference to the information set forth on Annex A hereto,
-------
all of the representations and warranties set forth in SECTION 4 of the Pledge
Agreement as if such representations and warranties were set forth herein at
length.
The undersigned hereby acknowledges that, upon the execution and delivery
of this Pledgor Accession, it will become a party to the Pledge Agreement as a
Pledgor thereunder. The undersigned hereby adopts the terms and provisions of
the Pledge Agreement, agrees to be bound by all of the duties, liabilities and
obligations of the Pledgors set forth in the Pledge Agreement, and agrees that
the Pledged Stock listed on Annex A to this Pledge Accession shall be deemed to
-------
be part of the Pledged Stock within the meaning of the Pledge Agreement and
shall become part of the Collateral and shall secure all of the Secured
Obligations as provided in the Pledge Agreement. This Pledgor Accession and its
attachments are hereby incorporated into the Pledge Agreement and made a part
thereof.
[NAME OF NEW PLEDGOR]
By: _______________________________________
Title: ____________________________________
<PAGE>
ANNEX A TO EXHIBIT A
--------------------
Pledged Stock
- -------------
<TABLE>
<CAPTION>
Percentage of
Outstanding
Name of Name of Type of Number of Certificate Shares of
Pledgor Issuing Corporation Shares Shares Number Capital Stock
------- ------------------- ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT B
---------
PLEDGE AMENDMENT
THIS PLEDGE AMENDMENT, dated as of _______________, _____, is delivered by
___________________________ (the "Pledgor") pursuant to SECTION 5 of the Pledge
Agreement referred to hereinbelow. The Pledgor hereby agrees that this Pledge
Amendment may be attached to the Pledge Agreement, dated as of ____________,
made by The Ackerley Group, Inc. and certain of its Subsidiaries in favor of
First Union National Bank, as Administrative Agent (as amended, modified or
supplemented from time to time, the "Pledge Agreement," capitalized terms
defined therein being used herein as therein defined), and that the Pledged
Stock listed on Annex A to this Pledge Amendment shall be deemed to be part of
-------
the Pledged Stock within the meaning of the Pledge Agreement and shall become
part of the Collateral and shall secure all of the Secured Obligations as
provided in the Pledge Agreement. This Pledge Amendment and its attachments are
hereby incorporated into the Pledge Agreement and made a part thereof.
____________________________________________
By: _______________________________________
Title: ____________________________________
<PAGE>
ANNEX A TO EXHIBIT B
--------------------
Pledged Stock
- -------------
<TABLE>
<CAPTION>
Percentage of
Outstanding
Name of Name of Type of Number of Certificate Shares of
Pledgor Issuing Corporation Shares Shares Number Capital Stock
------- ------------------- ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C>
</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
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 (Amendment No. 1 to Form S-4) and related Prospectus of The Ackerley
Group, Inc., for the registration of $200,000,000 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
/s/ Ernst & Young LLP
Seattle, Washington
March 5, 1999
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
THE ACKERLEY GROUP, INC.
OFFER TO EXCHANGE ALL OF ITS OUTSTANDING
9% SERIES A SENIOR SUBORDINATED NOTES DUE 2009
FOR UP TO $175,000,000 AGGREGATE PRINCIPAL AMOUNT OF ITS
9% SERIES B SENIOR SUBORDINATED NOTES DUE 2009
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME ON APRIL 6, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
The Exchange Agent for the Exchange Offer is: The Bank of New York
<TABLE>
<CAPTION>
By Hand or Overnight Delivery Facsimile Transmissions: By Registered or Certified Mail:
(Eligible Institutions Only)
<S> <C> <C>
The Bank of New York The Bank of New York
101 Barclay Street (212) 815-6339 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Level To confirm by telephone or for Attention: Reorganization Section
Attention: Reorganization Section information call:
Marcia Brown
(212) 815-34-28
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL (THE "LETTER OF TRANSMITTAL") TO AN
ADDRESS, OR TRANSMISSION VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID TENDER OF 9% SERIES A SENIOR SUBORDINATED
NOTES DUE 2009 (THE "INITIAL NOTES") OF THE ACKERLEY GROUP, INC.
The Instructions contained herein should be read carefully before this
Letter of Transmittal is completed and signed. All capitalized terms used herein
and not defined herein shall have the meaning ascribed to them in the Prospectus
dated March 9, 1999 (the "Prospectus") of The Ackerley Group, Inc. (the
"Company").
This Letter of Transmittal is to be used by registered holders of Initial
Notes ("Holders") if: (i) certificates representing Initial Notes are to be
physically delivered to the Exchange Agent by such Holders; (ii) tender of
Initial Notes is to be made by book-entry transfer to the Exchange Agent's
account at The Depository Trust Company ("DTC" or the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in the Prospectus under the
caption "The Exchange Offer--Book-Entry Transfer" by any financial institution
that is a participant in DTC and whose name appears on a security position
listing as the owner of Initial Notes or (iii) delivery of Initial Notes is to
be made according to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer--Guaranteed Delivery
Procedures," and, in each case, instructions are NOT being transmitted through
the DTC's Automated Tender Program ("ATOP"). DELIVERY OF DOCUMENTS TO THE BOOK-
ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
By execution hereof, the undersigned acknowledges receipt of the Prospectus
and this Letter of Transmittal and the instructions hereto, which together
constitute Company's offer to exchange (the "Exchange Offer") $1,000 principal
amount of its 9% Series B Senior Subordinated Notes due 2009 (the "Exchange
Notes"), upon the terms of and subject to the conditions set forth in the
Exchange Offer, for each $1,000 principal amount of its outstanding 9% Series A
Senior Subordinated Notes due 2009 (the "Initial Notes"). Upon the terms and
subject to the conditions of the Exchange Offer, the undersigned hereby tenders
to the Company the principal amount of Initial Notes indicated below. Subject
to, and effective upon, the acceptance for exchange of the Initial Notes
tendered herewith, the undersigned hereby exchanges, assigns and transfers to,
or upon the order of, the Company all right, title and interest in and to such
Initial Notes.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney-in-fact of the undersigned (with
full knowledge that the Exchange Agent also acts as the agent of the Company)
with respect to such Initial Notes with full power of substitution (such power-
of-attorney being deemed to be an irrevocable power coupled with an interest) to
(i) present such Initial Notes and all evidences of transfer and authenticity
to, or transfer ownership of, such Initial Notes on the account books maintained
by the Book-Entry Transfer Facility to, or upon the order of, the Company, (ii)
present such Initial Notes for transfer of ownership on the books of the Company
or the trustee under the Indenture (the "Trustee") and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Initial Notes, all in accordance with the terms and conditions of the Exchange
Offer as described in the Prospectus.
The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Initial Notes tendered
hereby and to acquire Exchange Notes issuable upon the exchange of such tendered
Initial Notes, and that, when the same are accepted for exchange, the Company
will acquire good and unencumbered title to the tendered Initial Notes, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim or right. The undersigned also warrants that it will, upon
request, execute and deliver any additional documents deemed by the Exchange
Agent or the Company to be necessary or desirable to complete the exchange,
assignment and transfer of the Initial Notes tendered hereby or transfer
ownership of such Initial Notes on the account books maintained by the book-
entry transfer facility.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer--Certain Conditions to the
Exchange Offer." The undersigned recognizes that as a result of these conditions
(which may be waived by the Company, in whole or in part, in the reasonable
discretion of the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the Initial Notes tendered
hereby and, in such event, the Initial Notes not exchanged will be returned to
the undersigned at the address shown above.
THE EXCHANGE OFFER IS NOT BEING MADE TO ANY BROKER-DEALER WHO PURCHASED
INITIAL NOTES DIRECTLY FROM THE COMPANY FOR RESALE PURSUANT TO RULE 144A UNDER
THE SECURITIES ACT OR ANY PERSON THAT IS AN "AFFILIATE" OF THE COMPANY WITHIN
THE MEANING OF RULE 405 UNDER THE SECURITIES ACT. THE UNDERSIGNED UNDERSTANDS
AND AGREES THAT THE COMPANY RESERVES THE RIGHT NOT TO ACCEPT TENDERED INITIAL
NOTES FROM ANY TENDERING HOLDER IF THE COMPANY DETERMINES, IN ITS REASONABLE
DISCRETION, THAT SUCH ACCEPTANCE COULD RESULT IN A VIOLATION OF APPLICABLE
SECURITIES LAWS.
The undersigned, if the undersigned is a beneficial holder, or if the
undersigned is a broker, dealer, commercial bank, trust company or other
nominee, represents that it has received representations from the beneficial
owners of the Initial Notes (the "Beneficial Owner") stating) that, (i) the
Exchange Notes to be acquired in connection with the Exchange Offer by the
Holder and each Beneficial Owner of the Initial Notes are being acquired by the
Holder and each such Beneficial Owner in the ordinary course of their
business,(ii) the Holder and each such Beneficial Owner are not engaged in, do
not intend to engage in, and have no arrangement or
<PAGE>
understanding with any person to participate in, a distribution of the Exchange
Notes, (iii) the Holder and each Beneficial Owner acknowledge and agree that any
person participating in the Exchange Offer for the purpose of distributing the
Exchange Notes cannot rely on the interpretations of the staff of the Commission
discussed in the Prospectus under the caption "The Exchange Offer--Effect of the
Exchange Offer" and may only sell the Exchange Notes acquired by such person
pursuant to a registration statement containing the selling security holder
information required by Item507 of Regulation S-K under the Securities Act, (iv)
if the Holder is a broker-dealer that acquired Initial Notes as a result of
market-making activities or other trading activities, it will deliver a
prospectus in connection with any resale of Exchange Notes acquired in the
Exchange Offer (but by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act) and (v) neither the Holder nor any such
Beneficial Owner is an "affiliate," as defined under Rule 405 of the Securities
Act, of the Company or of Parent or is a broker-dealer who purchased Initial
Notes directly from the Company for resale pursuant to Rule 144A under the
Securities Act.
Each broker-dealer who acquired Initial Notes for its own account as a
result of market-making activities or other trading activities (a "participating
broker-dealer"), by tendering such Initial Notes and executing this Letter of
Transmittal, agrees that, upon receipt of notice from the company of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in the prospectus untrue in any material
respect or which causes the prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
therein, in light of the circumstances under which they were made, not
misleading or of the occurrence of certain other events specified in the
registration rights agreement, such participating broker-dealer will suspend the
sale of Exchange Notes pursuant to the prospectus until the company has amended
or supplemented the prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented prospectus to the participating
broker-dealer or the company has given notice that the sale of the Exchange
Notes may be resumed, as the case may be. Each participating broker-dealer
should check the box herein under the caption "for participating broker-dealers
only" in order to receive additional copies of the prospectus, and any
amendments and supplements thereto, for use in connection with resales of the
Exchange Notes, as well as any notices from the company to suspend and resume
use of the prospectus. By tendering its Initial Notes and executing this Letter
of Transmittal, each participating broker-dealer agrees to use its reasonable
best efforts to notify the company or the Exchange Agent when it has sold all of
its Exchange Notes. If no participating broker-dealers check such box, or if all
participating broker-dealers who have checked such box subsequently notify the
company or the Exchange Agent that all their Exchange Notes have been sold, the
company will not be required to maintain the effectiveness of the Exchange Offer
registration statement or to update the prospectus and will not provide any
holders with any notices to suspend or resume use of the prospectus.
The undersigned understands that tenders of the Initial Notes pursuant to
any one of the procedures described under "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company in accordance with the
terms and subject to the conditions of the Exchange Offer. All authority herein
conferred or agreed to be conferred by this Letter of Transmittal and every
obligation of the undersigned hereunder shall be binding upon the heirs, legal
representatives, successors and assigns, executors, administrators and trustees
in bankruptcy of the undersigned and shall survive the death or incapacity of
the undersigned. Tendered Initial Notes may be withdrawn at any time prior
to5:00 p.m. on the Expiration Date in accordance with the terms of the Exchange
Offer.
The undersigned understands that by tendering Initial Notes pursuant to one
of the procedures described under "The Exchange Offer--Procedures for Tendering"
in the Prospectus and the instructions hereto, the tendering Holder will be
deemed to have waived the right to receive any payment in respect of interest on
the Initial Notes accrued up to the date of issuance of the Exchange Notes. The
undersigned also understands and acknowledges that the Company reserves the
right in its sole discretion to purchase or make offers for any Initial Notes
that remain outstanding subsequent to the Expiration Date in the open market, in
privately negotiated transactions, through subsequent exchange offers or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
The undersigned understands that the delivery and surrender of the Initial
Notes is not effective, and the risk of loss of the Initial Notes does not pass
to the Exchange Agent, until receipt by the Exchange Agent of this
<PAGE>
Letter of Transmittal, or a manually signed facsimile hereof, properly completed
and duly executed, with any required signature guarantees, together with all
accompanying evidences of authority and any other required documents in form
satisfactory to the Company. All questions as to form of all documents and the
validity (including time of receipt) and acceptance of tenders and withdrawals
of Initial Notes will be determined by the Company, in its sole discretion,
which determination shall be final and binding.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions," the undersigned hereby requests that any Initial Notes
representing principal amounts not tendered or not accepted for exchange be
issued in the name(s) of the undersigned and that Exchange Notes be issued in
the name(s) of the undersigned (or, in the case of Initial Notes delivered by
book-entry transfer, by credit to the account at the Book-Entry Transfer
Facility). Similarly, unless otherwise indicated herein in the box entitled
"Special Delivery Instructions," the undersigned hereby requests that any
Initial Notes representing principal amounts not tendered or not accepted for
exchange and Exchange Notes be delivered to the undersigned at the
address(es)shown above. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" box or "Special
Delivery Instructions" box to transfer any Initial Notes from the name of the
registered Holder(s) thereof if the Company does not accept for exchange any of
the principal amount of such Initial Notes so tendered.
In order to properly complete this Letter of Transmittal, a Holder must (i)
complete the box entitled "Method of Delivery" by checking one of the three
boxes therein and supplying the appropriate information, (ii) complete the box
entitled "Description of Initial Notes," (iii) if such Holder is a Participating
Broker-Dealer (as defined below) and wishes to receive additional copies of the
Prospectus for delivery in connection with resales of Exchange Notes (as defined
below), check the applicable box, (iv) sign this Letter of Transmittal by
completing the box entitled "Please Sign Here," (v) if appropriate, check and
complete the boxes relating to the "Special Issuance Instructions" and "Special
Delivery Instructions" and (vi) complete the Substitute Form W-9. Each Holder
should carefully read the detailed Instructions below prior to the completing
this Letter of Transmittal. See "The Exchange Offer--Procedures for Tendering"
in the Prospectus.
Holders of Initial Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through ATOP, for which
the transaction will be eligible. DTC participants that are accepting the
Exchange Offer should transmit their acceptance to DTC, which will edit and
verify the acceptance and execute a book-entry delivery to the Exchange Agent's
account at DTC. DTC will then send an Agent's Message to the Exchange Agent for
its acceptance. Delivery of the Agent's Message by DTC will satisfy the terms of
the Exchange Offer as to execution and delivery of a Letter of Transmittal by
the participant identified in the Agent's Message. DTC participants may also
accept the Exchange Offer by submitting a Notice of Guaranteed Delivery through
ATOP.
If Holders desire to tender Initial Notes pursuant to the Exchange Offer
and (i) certificates representing such Initial Notes are not lost but are not
immediately available, (ii) time will not permit this Letter of Transmittal,
certificates representing such Holder's Initial Notes and all other required
documents to reach the Exchange Agent prior to the Expiration Date or (iii) the
procedures for book-entry transfer cannot be completed prior to the Expiration
Date, such Holders may effect a tender of such Initial Notes in accordance with
the guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2 below. A
Holder having Initial Notes registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if they desire to accept
the Exchange Offer with respect to the Initial Notes so registered.
THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS OF INITIAL NOTES
BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY JURISDICTION IN WHICH THE
MAKING OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD NOT BE IN COMPLIANCE WITH THE
LAWS OF SUCH JURISDICTION.
<PAGE>
Your bank or broker can assist you in completing this form. The
instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery
maybe directed to the Exchange Agent, whose address and telephone number appear
on the front cover of this Letter of Transmittal. See Instruction 11 below.
List below the Initial Notes to which this Letter of Transmittal relates.
If the space provided below is inadequate, list the certificate numbers and
principal amounts on a separately signed schedule and affix the schedule to this
Letter of Transmittal.
<TABLE>
<CAPTION>
DESCRIPTION OF INITIAL NOTES
<S> <C> <C> <C>
Name(s) and Address(es) of
Holder(s) Aggregate Principal Aggregate Principal
(Please fill in if blank) Certificate Numbers Amount Represented Amount Tendered
- ------------------------- ------------------- ------------------- -------------------
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
___________________ ___________________ ___________________
Total ___________________ ___________________
</TABLE>
METHOD OF DELIVERY
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED INITIAL NOTES ARE BEING DELIVERED
HEREWITH.
[ ] CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A BOOK-
ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ___________________________________________
Account Number: ________ Transaction Code Number: ________________________
[ ] CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT
PURSUANT TO INSTRUCTION 2 BELOW AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s): ____________________________________________
Window ticket No. (if any): ______________________________________________
Date of Execution of Notice of Guaranteed Delivery: ______________________
Name of Eligible Institution that Guaranteed Delivery: ___________________
If Delivered by Book-Entry Transfer (yes or no): _________________________
Account Number: ________ Transaction Code Number:
FOR PARTICIPATING BROKER-DEALERS ONLY
[ ] Check here and provide the information requested below if you are a
Participating Broker-Dealer (as defined below) and wish to receive 10
additional copies of the Prospectus and, during the nine-month period
following the consummation of the Exchange Offer, 10 copies of any
amendments or supplements thereto, as well as any notices from the Company
to suspend and resume use of the Prospectus. By tendering its Initial Notes
and executing this Letter of Transmittal, each Participating Broker-Dealer
agrees to use its reasonable best efforts to notify the Company or the
Exchange Agent when it has sold all of its Exchange Notes. (If no
Participating Broker-Dealers check this box, or if all Participating
Broker-Dealers who have checked this box subsequently notify the Company or
the Exchange Agent that all their Exchange Notes have been sold, the
Company will not be required to maintain the effectiveness of the Exchange
Offer Registration Statement or to update the Prospectus and will not
provide any notices to any holders to suspend or resume use of the
Prospectus.)
<PAGE>
Provide the name of the individual who should receive, on behalf of the holder,
additional copies of the prospectus, and amendments and supplements thereto, and
any notices to suspend and resume use of the prospectus:
Name: ____________________________________________________________________
Address: _________________________________________________________________
Telephone No.: ___________________________________________________________
Facsimile No.: ___________________________________________________________
PLEASE SIGN HERE (TO BE COMPLETED BY ALL HOLDERS OF INITIAL NOTES REGARDLESS OF
WHETHER INITIAL NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the Holder(s) of Initial Notes
exactly as their name(s) appear(s) on certificate(s) for Initial Notes or, if
delivered by a participant in the Book-Entry Transfer Facility, exactly as such
participant's name appears on a security position listing as the owner of
Initial Notes, or by person(s) authorized to become Holder(s) by endorsements
and documents transmitted with this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below under "Capacity" and submit evidence
satisfactory to the Company of such person's authority so to act. See
Instruction 4 below. If the signature appearing below is not of the record
holder(s) of the Initial Notes, then the record holder(s) must sign a valid bond
power.
X ___________________________________________________________________________
X ___________________________________________________________________________
Signature(s) of Registered Holder(s) or Authorized Signatory
Date: _______________________________________________________________________
Name: _______________________________________________________________________
Capacity: ___________________________________________________________________
Address: ____________________________________________________________________
(include Zip Code)
Area Code and Telephone No.: ________________________________________________
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
[ ] Check here if you are a Broker Dealer who acquired the Initial Notes for
its own account as a result of market-making or other trading activities
and wish to receive additional copies of the Prospectus and copies of any
amendments or supplements thereto.
Name: _______________________________________________________________________
Address: ____________________________________________________________________
<PAGE>
MEDALLION SIGNATURE GUARANTEE (SEE INSTRUCTION 4 BELOW)
(CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION)
Name of Eligible Institution Guaranteeing Signatures:
_______________________________________________________________________
Address (including Zip Code) and Telephone Number (including Area Code) of Firm:
_______________________________________________________________________
Authorized Signature:
_______________________________________________________________________
Printed Name:
_______________________________________________________________________
Title:
_______________________________________________________________________
Date:
________________________________________________________________________________
<PAGE>
<TABLE>
<CAPTION>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3, 4, 5 and 7) (SEE INSTRUCTIONS 4 AND 9)
<S> <C>
To be completed ONLY if Initial Notes in a principal To be completed ONLY if Initial Notes in a principal
amount not tendered or not accepted for exchange are amount not tendered or not accepted for exchange or
to be issued in the name of, or Exchange Notes are to Exchange Notes are to be sent to someone other than the
be issued in the name of, someone other than the person or persons whose signature(s) appear(s) within
persons whose signature(s) appear(s) within this this Letter of Transmittal or to an address different
Letter of Transmittal. from that shown in the box entitled "Description of
Initial Notes" within this Letter of Transmittal.
Issue [ ] Initial Notes Issue [ ] Initial Notes
[ ] Exchange Notes [ ] Exchange Notes
(check as applicable) (check as applicable)
Name ______________________ Name ______________________
(Please Print) (Please Print)
Address_____________________ Address____________________
____________________________ ___________________________
(Include Zip Code) (Include Zip Code)
______________________________
(Tax Identification or Social Security Number)
(SEE SUBSTITUTE FORM W-9 HEREIN)
Credit Initial Notes not tendered or not exchanged by
book-entry transfer to the Book-Entry Transfer
Facility account set below:
__________________________________
(Book-Entry Transfer Facility Account Number)
Credit Exchange Notes to the Book-Entry Transfer
Facility account set below:
_________________________________
(Book-Entry Transfer Facility Account Number)
- ------------------------------------------------------
</TABLE>
<PAGE>
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of This Letter of Transmittal and Certificates For Initial Notes
or Book-Entry Confirmation; Withdrawal of Tenders.
To tender Initial Notes in the Exchange Offer, physical delivery of
certificates for Initial Notes or confirmation of a book-entry transfer into the
Exchange Agent's account with a Book-Entry Transfer Facility of Initial Notes
tendered electronically, as well as a properly completed and duly executed copy
or manually signed facsimile of this Letter of Transmittal, or in the case of a
book-entry transfer, an Agent's Message, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m. New York time on the Expiration
Date. Tenders of Initial Notes in the Exchange Offer may be made prior to the
Expiration Date in the manner described in the preceding sentence and otherwise
in compliance with this Letter of Transmittal.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, CERTIFICATES FOR
INITIAL NOTES AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT, INCLUDING
DELIVERY THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT'S MESSAGE TRANSMITTED
THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE HOLDER TENDERING INITIAL NOTES.
IF SUCH DELIVERY IS MADE BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY
INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED AND THAT SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO ALTERNATIVE, CONDITIONAL OR
CONTINGENT TENDERS OF INITIAL NOTES WILL BE ACCEPTED.
Except as otherwise provided below, the delivery will be made when actually
received by the Exchange Agent. THIS LETTER OF TRANSMITTAL, CERTIFICATES FOR THE
INITIAL NOTES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE
EXCHANGE AGENT, NOT TO THE COMPANY, THE TRUSTEE OR DTC. Initial Notes tendered
pursuant to the Exchange Offer may be withdrawn at any time prior to 5:00 p.m.
New York time on the Expiration Date. In order to be valid, notice of withdrawal
of tendered Initial Notes must comply with the requirements set forth in the
Prospectus under the caption "The Exchange Offer--Withdrawal of Tenders."
2. Guaranteed Delivery Procedures.
If Holders desire to tender Initial Notes pursuant to the Exchange Offer
and (i) certificates representing such Initial Notes are not lost but are not
immediately available, (ii) time will not permit this Letter of Transmittal,
certificates representing such Holder's Initial Notes and all other required
documents to reach the Exchange Agent prior to the Expiration Date or (iii) the
procedures for book-entry transfer cannot be completed prior to the Expiration
Date, such Holders may effect a tender of Initial Notes in accordance with the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures."
Pursuant to the guaranteed delivery procedures: (i) such tender must be
made by or through an Eligible Institution; (ii) prior to the Expiration Date
the Exchange Agent must have received from such Eligible Institution at one of
the addresses set forth on the cover of this Letter of Transmittal a properly
completed and validly executed Notice of Guaranteed Delivery (by manually signed
facsimile transmission, mail or hand delivery) in substantially the form
provided with the Prospectus, setting forth the name(s) and address(es) of the
registered Holder(s) and the principal amount of Initial Notes being tendered
and stating that the tender is being made thereby and guaranteeing that, within
three New York Stock Exchange ("NYSE") trading days from the date of the Notice
of Guaranteed Delivery, the Letter of Transmittal (or a manually signed
facsimile thereof) properly completed and duly executed, or, in the case of a
book-entry transfer an Agent's Message together with certificates representing
the Initial Notes (or confirmation of book-entry transfer of such Initial Notes
into the Exchange Agent's account at a Book-Entry Transfer Facility), and any
other documents required by this Letter of Transmittal and the instructions
thereto, will be deposited by such Eligible Institution with the Exchange Agent;
and (iii) this Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and validly executed with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, together with
certificates for all Initial Notes in proper form for transfer (or a Book-Entry
Confirmation with respect to all tendered Initial Notes), and any other required
<PAGE>
documents must be received by the Exchange Agent within three NYSE trading days
after the date of such Notice of Guaranteed Delivery.
3. Partial Tenders.
If less than the entire principal amount of any Initial Notes evidenced by
a submitted certificate is tendered, the tendering Holder must fill in the
principal amount tendered in the last column of the box entitled "Description of
Initial Notes" herein. The entire principal amount represented by the
certificates for all Initial Notes delivered to the Exchange Agent will be
deemed to have been tendered, unless otherwise indicated. The entire principal
amount of all Initial Notes not tendered or not accepted for exchange will be
sent (or, if tendered by book-entry transfer, returned by credit to the account
at the Book-Entry Transfer Facility designated herein) to the Holder unless
otherwise provided in the "Special Issuance Instructions" or "Special Delivery
Instructions" boxes of this Letter of Transmittal.
4. Signatures on the Letter of Transmittal, Bond Powers and Endorsements;
Guarantee of Signatures.
If this Letter of Transmittal is signed by the Holder(s) of the Initial
Notes tendered hereby the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever. If this Letter of Transmittal is signed by a participant in
one of the Book-Entry Transfer Facilities whose name is shown as the owner of
the Initial Notes tendered hereby, the signature must correspond with the name
shown on the security position listing as the owner of the Initial Notes. If any
of the Initial Notes tendered hereby are registered in the name of two or more
Holders, all such Holders must sign this Letter of Transmittal. If any tendered
Initial Notes are registered in client names on several certificates, it will be
necessary to complete, sign and submit as many separate copies of this Letter of
Transmittal and any necessary accompanying documents as there are different
names in which certificates are held. If this Letter of Transmittal or any
certificates for 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 the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted with
this Letter of Transmittal.
IF THIS LETTER OF TRANSMITTAL IS EXECUTED BY A PERSON OR ENTITY WHO IS NOT
THE REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID BOND POWER
WITH THE SIGNATURE OF SUCH REGISTERED HOLDER GUARANTEED BY A PARTICIPANT IN A
RECOGNIZED MEDALLION SIGNATURE PROGRAM (A "MEDALLION SIGNATURE GUARANTOR"). No
signature guarantee is required if (i) this Letter of Transmittal is signed by
the registered Holder(s) of the Initial Notes tendered herewith (or by a
participant in one of the Book-Entry Transfer Facilities whose name appears on a
security position listing as the owner of Initial Notes) and certificates for
Exchange Notes or for any Initial Notes for principal amounts not tendered or
not accepted for exchange are to be issued directly to such Holder(s) or, if
tendered by a participant in one of the Book-Entry Transfer Facilities, any
Initial Notes for principal amounts not tendered or not accepted for exchange
are to be credited to such participant's account at such Book-Entry Transfer
Facility and neither the "Special Issuance Instructions" box nor the "Special
Delivery Instructions" box of this Letter of Transmittal has been completed
or(ii) such Initial Notes are tendered for the account of an Eligible
Institution. IN ALL OTHER CASES ALL SIGNATURES ON LETTERS OF TRANSMITTAL
ACCOMPANYING INITIAL NOTES MUST BE GUARANTEED BY A MEDALLION SIGNATURE
GUARANTOR. In all such other cases (including if this Letter of Transmittal is
not signed by the Holder), the Holder must either properly endorse the
certificates for Initial Notes tendered or transmit a separate, properly
completed bond power with this Letter of Transmittal (in either case, executed
exactly as the name(s) of the registered Holder(s) appear(s) on such Initial
Notes, and, with respect to a participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Initial Notes,
exactly as the name(s) of the participant(s) appear(s) on such security position
listing), with the signature on the endorsement or bond power guaranteed by a
Medallion Signature Guarantor, unless such certificates or bond powers are
executed by an Eligible Institution. Endorsements on certificates for Initial
Notes and signatures on bond powers provided in accordance with this Instruction
4 by registered Holders not executing this Letter of Transmittal must be
guaranteed by a Medallion Signature Guarantor.
<PAGE>
5. Special Issuance and Special Delivery Instructions.
Tendering Holders should indicate in the applicable box or boxes the name
and address to which Initial Notes for principal amounts not tendered or not
accepted for exchange or certificates for Exchange Notes, if applicable, are to
be issued or sent, if different from the name and address of the Holder signing
this Letter of Transmittal. In the case of payment to a different name, the
taxpayer identification or social security number of the person named must also
be indicated.
6. Taxpayer Identification Number.
Each tendering Holder is required to provide the Exchange Agent with the
Holder's social security or Federal employer identification number, on
Substitute Form W-9 which is provided under "Important Tax Information" below,
or alternatively to establish another basis for exemption from backup
withholding. A Holder must cross out Item (2) in the Certification box in Part
III of Substitute Form W-9 if such Holder is subject to backup withholding.
Failure to provide the information on the form may subject such Holder to
31%Federal backup withholding tax on any payment made to the Holder with respect
to the Exchange Offer. The appropriate box in Part I of Substitute Form W-9
should be checked if the tendering or consenting Holder has not been issued a
Taxpayer Identification Number ("TIN") and has either applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part I of
Substitute Form W-9 is checked, the Holder should also sign the attached
Certification of Awaiting Taxpayer Identification Number. If the Exchange Agent
is not provided with a TIN within 60 days thereafter, the Exchange Agent will
withhold 31% on all such payments of the Exchange Notes until a TIN is provided
to the Exchange Agent.
7. Transfer Taxes.
The Company will pay all transfer taxes applicable to the exchange and
transfer of Initial Notes pursuant to the Exchange Offer, except if
(i)deliveries of certificates for Initial Notes for principal amounts not
tendered or not accepted for exchange are registered or issued in the name of
any person other than the Holder of Initial Notes tendered thereby, (ii)
tendered certificates are registered in the name of any person other than the
person signing this Letter of Transmittal or (iii) a transfer tax is imposed for
any reason other than the exchange of Initial Notes pursuant to the Exchange
Offer, in which case the amount of any transfer taxes (whether imposed on the
registered Holder or any other persons) will be payable by the tendering Holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith the amount of taxes will be billed directly to such tendering
Holder.
8. Irregularities.
All questions as to the form of all documents and the validity (including
time of receipt) and acceptance of all tenders and withdrawals of Initial Notes
will be determined by the Company, in its sole discretion which determination
shall be final and binding. ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF
INITIAL NOTES WILL NOT BE CONSIDERED VALID. The Company reserves the absolute
right to reject any and all tenders of Initial Notes that are not in proper form
or the acceptance of which, in the Company's opinion, would be unlawful. The
Company also reserves the right to waive any defects, irregularities or
conditions of tender as to particular Initial Notes. The Company's
interpretations of the terms and conditions of the Exchange Offer (including the
instructions in this Letter of Transmittal) will be final and binding. Any
defect or irregularity in connection with tenders of Initial Notes must be cured
within such time as the Company determines, unless waived by the Company.
Tenders of Initial Notes shall not be deemed to have been made until all defects
or irregularities have been waived by the Company or cured. A defective tender
(which defect is not waived by the Company or cured by the Holder) will not
constitute a valid tender of Initial Notes and will not entitle the Holder to
Exchange Notes. None of the Company, the Trustee, the Exchange Agent or any
other person will be under any duty to give notice of any defect or irregularity
in any tender or withdrawal of any Initial Notes, or incur any liability to
Holders for failure to give any such notice.
<PAGE>
9. Waiver of Conditions.
The Company reserves the right, in its reasonable discretion, to amend or
waive any of the conditions to the Exchange Offer.
10. Mutilated, Lost, Stolen or Destroyed Certificates For Initial Notes.
Any Holder whose certificates for Initial Notes have been mutilated, lost,
stolen or destroyed should write to or telephone the Trustee at the address or
telephone number set forth on the cover of this Letter of Transmittal for the
Exchange Agent.
11. Requests For Assistance or Additional Copies.
Questions relating to the procedure for tendering Initial Notes and
requests for assistance or additional copies of the Prospectus, this Letter of
Transmittal, the Notice of Guaranteed Delivery or other documents may be
directed to the Exchange Agent, whose address and telephone number appear on the
cover of this Letter of Transmittal.
IMPORTANT TAX INFORMATION
Under Federal income tax laws, a Holder who tenders Initial Notes prior to
receipt of the Exchange Notes is required to provide the Exchange Agent with
such Holder's correct TIN on the Substitute Form W-9 below or otherwise
establish a basis for exemption from backup withholding. If such Holder is an
individual, the TIN is his or her social security number. If the Exchange Agent
is not provided with the correct TIN, a $50 penalty may be imposed by the
Internal Revenue Service ("IRS") and payments, including any Exchange Notes,
made to such Holder with respect to Initial Notes exchanged pursuant to the
Exchange Offer may be subject to backup withholding.
Certain Holders (including among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on the
Substitute Form W-9. A foreign person may qualify as an exempt recipient by
submitting to the Exchange Agent a properly completed IRS Form W-8 signed under
penalties of perjury, attesting to that Holder's exempt status. A Form W-8 can
be obtained from the Exchange Agent. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions. Holders are urged to consult their own tax advisors to
determine whether they are exempt. If backup withholding applies, the Exchange
Agent is required to withhold 31% of any payments made to the Holder or other
payee. Backup withholding is not an additional Federal income tax. Rather, the
Federal income tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the IRS.
Purpose of Substitute Form W-9. To prevent backup withholding on payments,
including any Exchange Notes, made with respect to Initial Notes exchanged
pursuant to the Exchange Offer, the Holder is required to provide the Exchange
Agent with (i) the Holder's correct TIN by completing the form below, certifying
that the TIN provided on the Substitute Form W-9 is correct (or that such Holder
is awaiting a TIN) and that (A) such Holder is exempt from backup withholding,
(B) the Holder has not been notified by the IRS that the Holder is subject to
backup withholding as a result of failure to report all interest or dividends or
(C) the IRS has notified the Holder that the Holder is no longer subject to
backup withholding, and (ii) if applicable, an adequate basis for exemption.
What Number To Give The Exchange Agent. The Holder is required to give the
Exchange Agent the TIN (e.g., social security number or employer identification
number) of the registered Holder. If the Initial Notes are held in more than one
name or are held not in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
<PAGE>
SUBSTITUTE FORM W-9
TO BE COMPLETED BY ALL TENDERING SECURITYHOLDERS
(See Instruction 9)
PAYER'S NAME: THE BANK OF NEW YORK
SUBSTITUTE
Form W-9
Department Of The Treasury
Internal Revenue Service
Payor's Request For
Taxpayer
Identification Number
("TIN")
and Certification
PART 1--PLEASE PROVIDE YOUR TIN ON THE LINE AT RIGHT AND CERTIFY BY SIGNING AND
DATING BELOW
TIN:__________________________________
Social Security Number or
Employer Identification Number
PART 2--TIN Applied For [_]
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me).
(2) I am not subject to backup withholding either because (i) I am exempt from
backup withholding, (ii) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (iii) the IRS has notified
me that I am no longer subject to backup withholding, and
(3) any other information provided on this form is true and correct.
Signature_________________________________ Date________________, 1997
You must cross out item (iii) in Part (2) above if you have been notified by the
IRS that you are subject to backup withholding because of underreporting
interest or dividends on your tax return and you have not been notified by the
IRS that you are no longer subject to backup withholding.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of purjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
payments made to me on account of the Exchange Capital Securities shall be
retained until I provide a taxpayer identification number to the Exchange Agent
and that, if I do not provide my taxpayer identification number within 60 days,
such retained amounts shall be remitted to the Internal Revenue Service as
backup withholding and 31% of all reportable payments made to me thereafter will
be withheld and remitted to the Internal Revenue Service until I provide a
taxpayer identification number.
Signature_______________________________ Date____________, 1997
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY OF
9% SERIES A SENIOR SUBORDINATED NOTES DUE 2009
OF THE ACKERLEY GROUP, INC.
This form, or one substantially equivalent hereto, must be used to accept
the Exchange Offer of The Ackerley Group, Inc. (the "Company") made pursuant to
the Prospectus, dated March 9, 1999 (the "Prospectus"), if certificates for
Initial Notes are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Company prior to 5:00 p.m., New York City time,
on the Expiration Date. This form may be delivered or transmitted by facsimile
transmission, mail or hand delivery to The Bank of New York (the "Exchange
Agent") as set forth below. Capitalized terms not defined herein are defined in
the Prospectus.
Delivery to: The Bank of New York, Exchange Agent
<TABLE>
<CAPTION>
By Hand or Overnight Delivery Facsimile Transmissions: By Registered or Certified Mail:
(Eligible Institutions Only)
<S> <C> <C>
The Bank of New York The Bank of New York
101 Barclay Street (212) 815-6339 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Level To confirm by telephone or for Attention: Reorganization Section
Attention: Reorganization Section information call:
Marcia Brown
(212) 815-34-28
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Initial Notes specified below pursuant to the
guaranteed delivery procedures set forth under the caption "The Exchange Offer--
Guaranteed Delivery Procedures" in the Prospectus. By so tendering, the
undersigned does hereby make, at and as of the date hereof, the representations
and warranties of a tendering Holder of Initial Notes set forth in the Letter of
Transmittal. The undersigned hereby tenders the Initial Notes listed below:
Certificate Number(s) (if available) Principal Amount Tendered
____________________________________ ________________________________
____________________________________ ________________________________
____________________________________ ________________________________
If Initial Notes will be tendered by book-entry transfer, please provide the
following information:
Name of Tendering Institution: Depository Trust Company Account Number:
______________________________ ________________________________________
<PAGE>
PLEASE SIGN HERE
X________________________________________________ ____________________________
Signature(s) of Owner(s) or Authorized Signatory Date
Area Code and Telephone Number: ________________________________________________
Must be signed by the holder(s) of Initial Notes as their Name(s)appear(s) on
certificates for Initial Notes or on a security position listing, or by
person(s) authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s): ___________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Capacity: __________________________________________________________________
Address(es): _______________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, guarantees that the
certificates representing the principal amount of Initial Notes tendered hereby
in proper form for transfer, or timely confirmation of the book-entry transfer
of such Initial Notes into the Exchange Agent's account at The Depository Trust
Company pursuant to the procedures set forth in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus, together with one or more
properly completed and duly executed Letters of Transmittal (or facsimile
thereof or Agent's Message in lieu thereof), and any required signature
guarantee and any other documents required by the Letter of Transmittal, will be
received by the Exchange Agent at the address set forth above, no later than
three New York Stock Exchange trading days after the Expiration Date.
_______________________________________ ________________________________
Name of Firm Authorized Signature
_______________________________________ ________________________________
Street Address Name (please print)
_______________________________________ ________________________________
City, State and Zip Code Title
_______________________________________ ________________________________
Area Code and Telephone Number Date
Do not send certificates for Initial Notes with this form. Actual surrender or
certificates for Initial Notes must be made pursuant to, and be accompanied by,
the executed Letter of Transmittal.
<PAGE>
EXHIBIT 99.3
THE ACKERLEY GROUP, INC.
OFFER TO EXCHANGE ITS
9% SERIES B SENIOR SUBORDINATED NOTES DUE 2009
FOR ANY AND ALL OF ITS OUTSTANDING
9% SENIOR SUBORDINATED NOTES DUE 2009
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON APRIL 6, 1999, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
March 9, 1999
To: Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
The Ackerley Group, Inc., a Delaware corporation (the "Company"), is
offering upon the terms and conditions set forth in the Prospectus, dated
March 9 ,1999 (the "Prospectus"), and the enclosed Letter of Transmittal
(the "Letter of Transmittal"), to exchange (the "Exchange Offer") its 9% Series
B Senior Subordinated Notes due 2009 (the "Exchange Notes") for an equal
principal amount of its outstanding 9% Series A Senior Subordinated Notes due
2009 (the "Initial Notes"). The Exchange Offer is being made in order to
satisfy certain obligations of the Company contained in the Registration Rights
Agreement dated as of December 14, 1998, by and among the Company and the other
signatories thereto.
We are requesting that you contact your clients for whom you hold Initial
Notes regarding the Exchange Offer. For your information and for forwarding to
your clients for whom you hold Initial Notes registered in your name or in the
name of your nominee, or who hold Initial Notes registered in their own names,
we are enclosing the following documents:
1. The Prospectus;
2. The Letter of Transmittal (including Guidelines of the Internal Revenue
Service for Certification of Taxpayer Identification Number on
Substitute Form W-9) for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer
if certificates for Initial Notes are not immediately available or time
will not permit all required documents to reach the Exchange Agent prior
to the time the Exchange Offer expires, or if the procedure for book-
entry transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose accounts
you hold Initial Notes registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions
with regard to The Exchange Offer; and
5. A return envelope addressed to The Bank of New York, The Exchange Agent.
Your prompt action is requested. The Exchange Offer will expire at
5:00p.m., New York City time, on April 6, 1999, unless extended. Initial Notes
tendered pursuant to the Exchange Offer may be withdrawn at any time before the
Exchange Offer expires.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof or an Agent's Message in
lieu thereof), with any required signature guarantees and any other required
documents, should be sent to the Exchange Agent and certificates representing
the Initial Notes should be delivered to the Exchange Agent, all in accordance
with the instructions set forth in the Letter of Transmittal and the Prospectus.
If holders of Initial Notes wish to tender, but it is impracticable for them to
forward their certificates for Initial Notes prior to the expiration of the
Exchange Offer or to comply with the book-entry transfer procedures on a
<PAGE>
timely basis, a tender may be effected by following the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer--Guaranteed
Delivery Procedures."
The Company will not pay any fees or commissions to brokers, dealers or
other persons for soliciting exchanges of Initial Notes pursuant to the Exchange
Offer. The Company will, however, upon request, reimburse you for customary
clerical and mailing expenses incurred by you in forwarding any of the enclosed
materials to your clients. The Company will pay or cause to be paid any stock
transfer taxes payable on the transfer of Initial Notes to it, except as
otherwise provided in Instruction 7 of the Letter of Transmittal.
Questions and requests for assistance with respect to the Exchange Offer or
for additional copies of the Prospectus, Letter of Transmittal and other
enclosed materials may be directed to the Exchange Agent at its address and
telephone number set forth on the front of the Letter of Transmittal.
Very truly yours,
THE ACKERLEY GROUP, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE COMPANY, THE EXCHANGE AGENT, OR ANY
AFFILIATE OF EITHER OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY
STATEMENTS OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE
EXCHANGE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE>
EXHIBIT 99.4
THE ACKERLEY GROUP, INC.
OFFER TO EXCHANGE ITS
9% SERIES B SENIOR SUBORDINATED NOTES DUE 2009
FOR ANY AND ALL OF ITS OUTSTANDING
9% SERIES A SENIOR SUBORDINATED NOTES DUE 2009
- -------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON APRIL 6, 1999, UNLESS EXTENDED.
- -------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration is a Prospectus, dated March 9, 1999
(the "Prospectus"), a Letter of Transmittal (the "Letter of Transmittal")
relating to the offer (the "Exchange Offer") by The AckerleyGroup, Inc. (the
"Company") to exchange its 9% Series B Senior Subordinated Notes due 2009 (the
"Exchange Notes") for an equal principal amount of its outstanding 9% Series A
Senior Subordinated Notes due 2009 (the "Initial Notes"), upon the terms and
subject to the conditions set forth in the Prospectus and the Letter of
Transmittal. The Exchange Offer is being made in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement dated
as of December 14, 1998, by and among the Company and the other signatories
thereto.
These materials are being forwarded to you as the beneficial owner Of
Initial Notes held by us for your account or benefit but not registered in your
name. AN EXCHANGE OF ANY INITIAL NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR INFORMATIONAL PURPOSES ONLY AND MAY NOT BE USED BY YOU TO EXCHANGE
NOTES HELD BY US FOR YOUR ACCOUNT OR BENEFIT. Accordingly, we request
instructions as to whether you wish us to exchange any or all Initial Notes held
by us for your account or benefit, pursuant to the terms and conditions set
forth in the Prospectus and the Letter of Transmittal. Your instructions should
be forwarded to us as promptly as possible in order to permit us to tender the
Initial Notes on your behalf in accordance with the provisions of the Exchange
Offer.
Your attention is directed to the following:
1. The Exchange Offer is for the exchange of $1,000 principal amount of
Exchange Notes for each $1,000 principal amount of Initial Notes, of
which $200,000,000 aggregate principal amount of Initial Notes was
outstanding as of March 9, 1999. The terms of the Exchange Notes are
identical in all material respects to the terms of the Initial Notes,
except for certain transfer restrictions and registration and other
rights relating to the exchange of the Initial Notes for Exchange Notes.
2. The Exchange Offer is subject to certain conditions. See "The Exchange
Offer--Certain Conditions To The Exchange Offer" in the Prospectus.
3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m., New
York City time, on [ ], 1999, unless extended. Any Initial Notes
tendered pursuant to the Exchange Offer may be withdrawn at any time
before The Exchange Offer expires.
4. Any transfer taxes incident to the transfer of Initial Notes from the
tendering holder to the Company will be paid by the Company, except as
otherwise provided in the Prospectus and the Letter of Transmittal. If
you wish us to tender your Initial Notes, please so instruct us by
completing, executing and returning to us the instruction on the back of
this letter. An envelope to return your instructions to us is enclosed.
The Exchange Offer is not being made to, nor will exchanges be accepted
from or on behalf of,
<PAGE>
holders of Initial Notes residing in any jurisdiction in which the
making of the Exchange Offer or acceptance thereof would not be in
compliance with the laws of such jurisdiction.
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned hereby acknowledges receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by The Ackerley
Group, Inc. with respect to its Initial Notes. This will instruct you, as to the
action to be taken by you relating to the Exchange Offer with respect to the
Initial Notes held by you for the account of the undersigned.
The aggregate face amount of the Initial Notes held by you for the account
of the undersigned is (fill in amount): $______________ of the 9% Series A
Senior Subordinated Notes due 2009.
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[ ] To TENDER the following Initial Notes held by you for the account of
the undersigned (insert principal amount of Initial Notes to be
tendered, if any): $______________ of the Series A 9% Senior
Subordinated Notes due 2009. The minimum permitted tender is $1,000 in
principal amount of Initial Notes. All tenders must be in integral
multiples of $1,000 of principal amount.
[ ] NOT to TENDER any Initial Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Initial Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
Beneficial Owner (as defined in the Letter of Transmittal); (b) to make such
agreements, representations and warranties on behalf of the undersigned, as are
set forth in the Letter of Transmittal; and (c) to take such other action as
maybe necessary under the Prospectus or the Letter of Transmittal to effect the
valid tender of such Initial Notes.
________________________________________________________________________________
SIGN HERE
Name of Beneficial Owner(s): ______________________________________________
Signature(s): _____________________________________________________________
Name(s) (please print): ___________________________________________________
Address: __________________________________________________________________
___________________________________________________________________________
Telephone Number:__________________________________________________________
Taxpayer Identification or Social Security Number: ________________________
Date: _____________________________________________________________________
________________________________________________________________________________
None of the Initial Notes held by us for your account will be tendered unless we
receive written instructions from you to do so. Unless a specific contrary
instruction is given in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Initial Notes held by us for
your account.
<PAGE>
EXHIBIT 99.5
EXCHANGE AGENCY AGREEMENT
1. This Agreement is entered into as of March ___, 1999 between The Bank
of New York, a banking corporation organized under the laws of the State of New
York, as Exchange Agent (the "Agent") and The Ackerley Group, Inc., a Delaware
corporation (the "Company").
2. The Company proposes to make an offer to exchange (the "Exchange
Offer") $1,000 principal amounts of the Company's 9% Series B Senior
Subordinated Notes due 2009 (the "Exchange Notes") for equal principal amounts
of the Company's outstanding 9% Series A Senior Subordinated Notes due 2009 (the
"Initial Notes" and, together with the Exchange Notes, the "Notes"), of which
$200,000,000 aggregate principal amount is outstanding, pursuant to the
Prospectus dated March 9, 1999 and the accompanying Letter of Transmittal. The
Exchange Offer will terminate at 5:00 p.m. New York City Time on April 6,
1999,unless extended by the Company in its sole discretion (the "Expiration
Date"). The Exchange Notes are to be issued by the Company pursuant to the terms
of an Indenture dated as of December 14, 1998 (the "Indenture") between the
Company and The Bank of New York, as trustee (the "Trustee").
3. Subject to the provisions hereof, the Company hereby requests, and the
Agent hereby accepts, the appointment of Agent as agent for the purposes of
receiving, accepting for delivery and otherwise acting upon tenders of the
Initial Notes (the "Certificates") in accordance with the form of Letter of
Transmittal attached hereto (the "Letter of Transmittal") and with the terms and
conditions set forth herein and under the caption "The Exchange Offer" in the
Prospectus.
4. The Agent has received the following documents (the "Exchange Offer
Documents") in connection with its appointment and has examined such documents
to the extent necessary to perform its duties hereunder:
(a) Letter of Transmittal;
(b) a form of Notice of Guaranteed Delivery;
(c) the Prospectus;
(d) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees; and
(e) a form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
The Company shall furnish you with additional copies of such documents at your
request.
5. The Agent is authorized and hereby agrees to act as follows:
(a) to establish an account with respect to the Initial Notes at the
Depository Trust Company ("DTC") for purposes of the Exchange Offer
within two business days after the date of this Agreement, and any
financial institution that is a participant in DTC may make book-entry
delivery of the Initial Notes by causing DTC to transfer such Initial
Notes into your account in accordance with DTC's procedures for such
transfer;
<PAGE>
(b) to address, and deliver by hand or next day courier, a complete set of
the Exchange Offer Documents to each person who, prior to the
Expiration Date, becomes a registered holder of, or who appears on a
security position listing for, the Initial Notes, promptly after such
person becomes such a registered holder or appears on such security
position listing, and, upon the request of any Designated Officer, to
furnish copies of such Exchange Offer Documents or such other forms as
may be approved from time to time by the Company, to all persons
requesting such documents and to accept and comply with telephone
requests for information relating to the Exchange Offer, provided that
such information shall relate only to the procedures for accepting (or
withdrawing from) the Exchange Offer;
(c) to receive all tenders of Initial Notes made pursuant to the Exchange
Offer and stamp the Letter of Transmittal and any Notices of
Guaranteed Delivery with the day, month and approximate time of
receipt;
(d) to examine each Letter of Transmittal and Initial Notes (or
confirmations of book-entry transfers into the Agent's account at DTC)
and any Agent's Message or other documents delivered by or for holders
of Initial Notes to determine that all requirements necessary to
constitute a valid tender have been met. The Agent shall be entitled
to rely on the electronic messages sent by DTC regarding ATOP delivery
of the Notes to the Agent's account at DTC from the DTC participants
listed on the DTC position listing provided to the Agent;
(e) to take such actions as are necessary and appropriate to correct any
irregularity or deficiency associated with any tender not in proper
order;
(f) to follow instructions given by any Co-President, the Chief Executive
Officer, the Chief Financial Officer, any Vice President or the
Secretary of the Company, or such other person or persons as they
shall designate in writing(each a "Designated Officer"), or any other
person designated by any Designated Officer in writing, with respect
to the waiver of any irregularities or deficiencies associated with
any tender;
(g) to hold all valid tenders subject to further instructions from a
Designated Officer, or any person designated by any such Designated
Officer in writing;
(h) to render a written report, in the form of Exhibit A attached hereto,
on each business day during the Exchange Offer and promptly confirm,
by telephone, the information contained therein to the Keith W.
Ritzmann, Executive Vice President and Chief Information Officer of
the Company (facsimile number: 206-674-2815; telephone number 206-624-
2888) and to Carmen L. Smith, Esq. (facsimile number: 206-315-9599;
telephone number 206-340-9642);
(i) to follow and act upon any amendments, modifications or supplements to
these instructions and to the Exchange Offer (including any extension
or termination of the Exchange Offer), any of which may be given (if
orally, to be promptly confirmed in writing) to the Agent by a
Designated Officer or such other person or persons as a Designated
Officer shall designate in writing;
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(j) to return to the presenters, in accordance with the provisions of the
Letter of Transmittal, any Initial Notes that were not received in
proper order and as to which the irregularities or deficiencies were
not cured or waived;
(k) in the event the Exchange Offer is consummated, to deliver
authenticated Exchange Notes to tendering Noteholders, in accordance
with the instructions of such Noteholder's specified in the respective
Letter of Transmittal's, as soon as practicable after receipt thereof;
(l) to determine that all endorsements, guarantees, signatures,
authorities, stock transfer taxes (if any) and such other requirements
are fulfilled in connection with any request for issuance of the
Exchange Notes in a name other than that of the registered owner of
the Initial Notes;
(m) to deliver to, or upon the order of, the Company all Initial Notes
received under the Exchange Offer, together with any related
assignment forms and other documents;
(n) to advise the Company with respect to any Initial Notes delivered
subsequent to the Expiration Date and to accept the instructions (if
given orally, to be confirmed in writing) of a Designated Officer with
respect to the disposition of such Notes; and
(o) subject to the other terms and conditions set forth in this Agreement,
to take all other actions reasonable and necessary in the good faith
judgment of the Agent, to effect the foregoing matters.
6. The Agent shall:
(a) have no duties or obligations other than those specifically set forth
herein, in the Letter of Transmittal and in the Prospectus under the
caption "The Exchange Offer";
(b) not be required to refer to any documents for the performance of its
obligations hereunder other than this Agreement, the Letter of
Transmittal and the documents required to be submitted with the Letter
of Transmittal, and under the caption "The Exchange Offer" in the
Prospectus; other than such documents, the Agent will not be
responsible or liable for any terms, directions or information in the
Prospectus or any other document or agreement unless the Agent
specifically agrees thereto in writing;
(c) not be required to and shall make no representations and have no
responsibilities as to the validity, accuracy, value or genuineness of
(i) the Exchange Offer, (ii) any Certificates, Letter of Transmittals
or documents prepared by the Company in connection with the Exchange
Offer or (iii) any signatures or endorsements, other than its own;
(d) not be obligated to take any legal action hereunder that might, in its
reasonable judgment, involve any expense or liability, unless it has
been furnished with reasonable indemnity by the Company;
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(e) be able to rely on and shall be protected in acting in good faith on
the written or oral instructions with respect to any matter relating
to its actions as Agent specifically covered by this Agreement, of any
Designated Officer of the Company authorized to give instructions
under paragraph 5(g) or 5(h) above;
(f) be able to rely on and shall be protected in acting in good faith upon
any certificate, instrument, opinion, notice, letter, telegram or any
other document or security delivered to it and believed by it
reasonably and in good faith to be genuine and to have been signed by
the proper party or parties;
(g) not be responsible for or liable in any respect on account of the
identity, authority or rights of any person (other than a Designated
Officer) executing or delivering or purporting to execute or deliver
any document or property under this Agreement and shall have no
responsibility with respect to the use or application of any property
delivered by it pursuant to the provisions hereof;
(h) be able to consult with counsel satisfactory to it (including counsel
for the Company or staff counsel of the Agent) and the advice or
opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with advice or opinion of
such counsel;
(i) not be called on at any time to advise, and shall not advise, any
person delivering an Letter of Transmittal pursuant to the Exchange
Offer as to the wisdom of tendering Initial Notes in the Exchange
Offer or as to the market value or decline or appreciation in market
value of any Notes nor shall the Agent pay or offer to pay any
concessions, commissions or solicitation fees to any broker, dealer,
bank or other person or to engage or utilize any person to solicit
tenders;
(j) not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own gross negligence,
willful misconduct or bad faith;
(k) not be bound by any notice or demand, or any waiver or modification of
this Agreement or any of the terms hereof, unless evidenced by a
writing delivered to the Agent signed by the proper authority or
authorities and, if the Agent's duties or rights are affected, unless
the Agent shall give its prior written consent thereto;
(l) have no duty to enforce any obligation of any person to make delivery,
or to direct or cause any delivery to be made, or to enforce any
obligation of any person to perform any other act; and
(m) have the right to assume, in the absence of written notice to the
contrary from the proper person or persons, that a fact or an event by
reason of which an action would or might be taken by the Agent does
not exist or has not occurred without incurring liability for any
action taken or omitted in good faith or in the exercise of the
Agent's best judgment, or any action suffered by the Agent to be taken
or omitted, in good
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faith or in the exercise of the Agent's best
judgment, in reliance upon such assumption.
7. The Agent shall be entitled to compensation as set forth in Exhibit B
attached hereto.
8. (a) The Company covenants and agrees to reimburse the Agent for,
indemnify it against, and hold it harmless from any and all reasonable costs and
expenses (including reasonable fees and expenses of counsel and allocated cost
of staff counsel) that may be paid or incurred or suffered by the Agent or to
which the Agent may become subject without gross negligence, willful misconduct
or bad faith on the Agent's part by reason of or as a result of the Agent's
compliance with the instructions set forth herein or with any additional or
supplemental written or oral instructions delivered to it pursuant hereto, or
which may arise out of or in connection with the administration and performance
of its duties under this Agreement. You shall notify the Company in writing of
the assertion of any claim against you; provided, however, that your failure so
to notify the Company shall not excuse the company from its obligations
hereunder except to the extent such failure to notify shall prejudice or cause
damage to the Company.
(b) The Company shall be entitled to participate at its own expense in the
defense of any such claim or other action, and, if the Company so elects, shall
assume the defense of any suit brought to enforce any such claim. In the event
that the Company shall assume the defense of any such suit, it shall not be
liable for the fees and expenses of any additional counsel thereafter retained
by the Agent so long as the Company shall retain counsel reasonably satisfactory
to the Agent to defend such suit. The Agent shall not compromise or settle any
such action or claim without the consent of the Company, provided that the
Company shall not be entitled to assume the defense of any action if
representation of the parties by the same legal counsel would, in the reasonable
opinion of counsel for the Agent, be inappropriate due to actual or potential
conflicting interests between the parties.
(c) Without the prior written consent of the Company (which consent shall
not be unreasonably withheld), the Agent will not settle, compromise or consent
to the entry of judgment in any pending or threatened claim, action, or
proceeding in respect of which indemnification could be sought in accordance
with the indemnification provisions of this Agreement (whether or not the Agent
or the Company or any of its controlling persons is an actual or potential party
to such claim, action or proceeding), unless such settlement, compromise or
consent includes an unconditional release of the Company and its controlling
persons from all liability arising out of such claim, action or proceeding.
9. This Agreement shall be construed and enforced in accordance with the
laws of the State of New York, without regard to conflicts of laws provisions,
and shall inure to the benefit of, and the obligations created hereby shall be
binding upon, the successors and assigns of the parties hereto; provided,
however, that this Agreement may not be assigned by the Agent without the prior
written consent of the Company.
10. Unless otherwise expressly provided herein, all notices, requests,
demands and other communications hereunder shall be in writing, shall be
delivered by hand, facsimile, prepaid
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overnight courier with next business day delivery guaranteed, or by First Class
Mail, postage prepaid, shall be deemed given when received and shall be
addressed to the Agent and the Company at the respective addresses listed below
or to such other addresses as they shall designate from time to time in writing,
forwarded in like manner.
If to the Agent, to:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Reorganization Department
Telephone: (212) 815-6333
Facsimile: (212) 815-3080
If to the Company, to:
The Ackerley Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, Washington 98101
Attn: Keith W. Ritzmann
Telephone: (206) 624-2888
Facsimile: (206) 674-2815
with copies to:
Graham & Dunn PC
1420 Fifth Avenue, 33rd Floor
Seattle, Washington 98101-2390
Attn: Carmen L. Smith, Esq.
Telephone: (206) 340-9642
Facsimile: (206) 340-9599
11. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
12. In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
13. Unless terminated earlier by the parties hereto, this Agreement shall
terminate 90 days following the Expiration Date. Notwithstanding the foregoing,
paragraphs 7 and 8 and any outstanding obligation of the Agent shall survive the
termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized, all as of
the day and year first above written.
THE BANK OF NEW YORK
By:
__________________________________
Name:
Title:
THE ACKERLEY GROUP, INC.
By:
___________________________________
Name:
Title:
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EXHIBIT A SAMPLE REPORT
Date:
___________________________
Report Number:
__________________
As of Date:
_____________________
Ladies & Gentlemen:
As Exchange Agent for the Exchange Offer dated _____________________ ,
1999, we hereby render the following report:
<TABLE>
<S> <C>
Principal Amount previously received: _______________________
Principal Amount received today: _______________________
Principal Amount received against
Guaranteed Deliveries: _______________________
Principal Amount withdrawn today: _______________________
Total principal amount received to date _______________________
Recap of principal amount represented by guarantees
- ----------------------------------------------------
Guarantees previously outstanding: _______________________
Guarantees received today: _______________________
Guarantees settled today: _______________________
Guarantees withdrawn today: _______________________
Guarantees outstanding: _______________________
Total principal amount and
guarantees outstanding: _______________________
</TABLE>
Very truly yours,
The BANK OF NEW YORK
By ______________________________
Name:
Title:
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<PAGE>
EXHIBIT B
COMPENSATION
For serving as the Exchange Agent pursuant to this Agreement, The Bank of
New York shall receive a fee of $_____________, payable upon commencement of the
Exchange Offer, and its out-of-pocket expenses incurred in connection with
completing its duties pursuant to this Agreement.
9
