<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 1996
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------
PARK COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 2711 16-0986694
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER
OF INCORPORATION) INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
CODE NUMBER)
1700 VINE CENTER OFFICE TOWER, 333 WEST VINE STREET, LEXINGTON,
KENTUCKY 40507 (606) 252-7275
(ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
WRIGHT M. THOMAS, PRESIDENT
PARK COMMUNICATIONS, INC.
1700 VINE CENTER OFFICE TOWER
333 WEST VINE STREET
LEXINGTON, KENTUCKY 40507
(606) 252-7275
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
with copies to:
GREGORY A. WEINGART, ESQ.
ECKERT SEAMANS CHERIN & MELLOTT
42ND FLOOR, 600 GRANT STREET
PITTSBURGH, PENNSYLVANIA 15219
(412) 566-6000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING PRICE REGISTRATION
REGISTERED REGISTERED PER NOTE (1) (1) FEE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series B 13 3/4 Senior
Pay-in-Kind $119,500,000
Notes due 2004........ (2) 100% $119,500,000 $41,206.90
- ----------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes up to $39,500,000 in aggregate principal amount of Notes which
may, at the Registrant's option, be issued in lieu of cash interest on
outstanding Notes through May 15, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
================================================================================
<PAGE>
PARK COMMUNICATIONS, INC.
CROSS-REFERENCE SHEET PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATION S-K
SHOWING THE LOCATION IN THE PROSPECTUS OF THE INFORMATION REQUIRED BY
PART I OF FORM S-4
<TABLE>
<CAPTION>
ITEMS IN FORM S-4 LOCATION OR HEADING IN PROSPECTUS
----------------- ---------------------------------
<S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Forepart of Registration Statement; Cross-
Reference Sheet; Outside Front Cover Page
of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front and Outside Back Cover Pages
of Prospectus; Table of Contents; Available
Information
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.............. Prospectus Summary; Risk Factors; The
Company; Selected Historical and Pro Forma
Consolidated Financial Data; The Exchange
Offer
4. Terms of the Transaction................... Prospectus Summary; Description of the
Notes; The Exchange Offer; Certain Federal
Income Tax Consequences
5. Pro Forma Financial Information............ Unaudited Pro Forma Condensed Consolidated
Financial Statements
6. Material Contracts with the Company Being
Acquired................................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters............................ Not Applicable
8. Interests of Named Experts and Counsel..... Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Not Applicable
10. Information with Respect to S-3
Registrants................................ Not Applicable
11. Incorporation of Certain Information by
Reference.................................. Not Applicable
12. Information with Respect to S-2 or S-3
Registrants................................ Not Applicable
13. Incorporation of Certain Information by
Reference.................................. Not Applicable
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants.......... Outside Front Cover Page of Prospectus;
Prospectus Summary; Risk Factors; The
Company; Capitalization; Unaudited Pro
Forma Condensed Consolidated Financial
Data; Selected Historical and Pro Forma
Consolidated Financial Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Securities Ownership
of Certain Beneficial Owners; Description
of Certain Indebtedness; Description of the
Notes; Financial Statements
15. Information with Respect to S-3 Companies.. Not Applicable
16. Information with Respect to S-2 or S-3
Companies.................................. Not Applicable
17. Information with Respect to Companies Other
Than S-2 or S-3 Companies.................. Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited......... Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited, or
in an Exchange Offer....................... Management; Securities Ownership of Certain
Beneficial Owners
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 20, 1996
PROSPECTUS
OFFER TO EXCHANGE
SERIES B 13 3/4% SENIOR PAY-IN-KIND NOTES DUE 2004
FOR ALL OUTSTANDING 13 3/4% SENIOR PAY-IN-KIND NOTES DUE 2004
OF
PARK COMMUNICATIONS, INC.
-----------
The Exchange Offer will expire at 5:00 p.m., New York City time, on ,
1996, unless extended.
Park Communications, Inc., a Delaware corporation (the "Company"), hereby
offers (the "Exchange Offer"), upon the terms and subject to the conditions set
forth in this Prospectus (the "Prospectus") and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange $1,000 principal amount
of its Series B 13 3/4% Senior Pay-in-Kind Notes due 2004 (the "Series B
Notes"), which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement of which
this Prospectus is a part, for each $1,000 principal amount of its outstanding
13 3/4% Senior Pay-in-Kind Notes due 2004 (the "Series A Notes"), of which
$80,000,000 in aggregate principal amount are outstanding on the date hereof.
The form and terms of the Series B Notes are the same as the form and terms of
the Series A Notes (which they replace) except that the Series B Notes will
bear a "Series B" designation and will have been registered under the
Securities Act and, therefore, will not bear legends restricting their
transfer, and holders of the Series B Notes will not be entitled to certain
rights of holders of Series A Notes under the Registration Rights Agreement (as
defined), which rights will terminate upon the consummation of the Exchange
Offer. The Series B Notes will evidence the same debt as the Series A Notes
(which they replace) and will be entitled to the benefits of an Indenture dated
as of May 13, 1996 governing the Series A Notes and the Series B Notes (the
"Indenture"). The Series A Notes and the Series B Notes are sometimes referred
to herein collectively as the "Notes." See "Description of the Notes" and "The
Exchange Offer."
The Notes are redeemable at the option of the Company, in whole or in part,
on or after May 15, 1999, at the redemption prices set forth herein plus
accrued and unpaid interest, if any, to the date of redemption. Prior to
December 31, 1997, the Company may, at its option, redeem all or any portion of
the outstanding Notes with the net proceeds of one or more Public Equity
Offerings (as defined) or Strategic Equity Investments (as defined); provided,
that the proceeds to the Company of the first such offering or investment or
series of substantially concurrent investments are at least $40.0 million, at
112.0% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of redemption (the "First Equity Offering Optional Redemption
Price"). In addition, on or after December 31, 1997 and prior to May 15, 1999,
the Company may, at its option, redeem with the net proceeds of one or more
Public Equity Offerings or Strategic Equity Investments up to 50% of the
aggregate principal amount of the Notes then outstanding; provided, that the
proceeds to the Company of the first such offering or investment or series of
substantially concurrent investments (including any such offering, investment
or series of investments the proceeds of which were used to redeem Notes) are
at least $40.0 million, at 113.0% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of redemption (the "Second Equity
Offering Optional Redemption Price"). In addition, prior to May 15, 1999, the
Company may redeem the Notes, in whole or in part, at a redemption price equal
to the principal amount thereof plus the Applicable Premium (as defined) plus
accrued and unpaid interest, if any, to the date of redemption (the "Optional
Redemption Price"); provided, however, that (i) if such redemption is to be
effected for less than all of the Notes then outstanding, not less than $40.0
million aggregate principal amount of the Notes is outstanding immediately
after giving effect to such redemption and (ii) no redemption (or, on or after
December 31, 1997, partial redemption) of the Notes then outstanding may be
made with the proceeds of any Public Equity Offering or Strategic Equity
Investment pursuant to this sentence if, as of the date of the proposed
redemption, either the First Equity Offering Optional Redemption Price or the
Second Equity Offering Optional Redemption Price (whichever then applicable)
would be greater than the Optional Redemption Price as of such date. See
"Description of the Notes--Redemption--Optional Redemption."
The Company will be obligated to make an offer to repurchase all or a portion
of the Notes then outstanding at a price equal to 112.0% of the aggregate
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase with the net proceeds of any Public Equity Offering or Strategic
Equity Investment consummated on or prior to December 31, 1997 to the extent
that the proceeds therefrom have not been (or will not be pursuant to a notice
of
(Continued on following page)
SEE "RISK FACTORS," WHICH BEGINS ON PAGE 25 OF THIS PROSPECTUS, FOR A
DESCRIPTION OF CERTAIN RISKS TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR
SERIES A NOTES IN THE EXCHANGE OFFER.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-----------
THE DATE OF THIS PROSPECTUS IS , 1996
<PAGE>
redemption given) utilized to effect a redemption of the Notes and the amount
not so utilized exceeds $2.0 million. Upon a Change of Control Triggering Event
(as defined), each holder of the Notes will have the right to require the
Company to offer to purchase such holder's Notes at a price equal to 101% of
the principal amount plus accrued and unpaid interest, if any, to the date of
purchase. In addition, the Company will be obligated to offer to repurchase the
Notes at 100% of their principal amount plus accrued and unpaid interest, if
any, to the date of repurchase in the event of certain asset sales. See
"Description of the Notes--Change of Control" and "Certain Covenants--
Limitation on Asset Sales."
Upon repayment in full of indebtedness under the Senior Credit Facility (as
defined), the Company will be obligated to grant to the holders of the Notes a
first priority security interest in not less than a majority of the capital
stock of Park Broadcasting, Inc. ("Park Broadcasting") and Park Newspapers,
Inc. ("Park Newspapers"). The Notes will rank pari passu in right of payment
with all existing and future unsecured and unsubordinated indebtedness of the
Company; senior to any other indebtedness to the extent of any assets securing
the Notes; and senior in right of payment to all existing and future
subordinated indebtedness of the Company. The Notes will be effectively
subordinated to all secured indebtedness of the Company to the extent of the
assets securing such indebtedness, including indebtedness under the Senior
Credit Facility, and to all existing and future indebtedness and other
obligations of the subsidiaries of the Company (including any subsidiary
guarantee of the Senior Credit Facility). As of December 31, 1995, on a pro
forma basis after giving effect to the sale of Units (as defined) and the other
Refinancing Transactions (as defined) and the application of the net proceeds
therefrom, the Company would have had $58.0 million of secured indebtedness
outstanding and the subsidiaries of the Company would have had $391.4 million
of indebtedness outstanding (excluding guarantees of the Senior Credit
Facility). See "Description of Certain Indebtedness."
Each Series B Note will bear interest from its issuance date. Holders of
Series A Notes that are accepted for exchange will receive accrued interest
thereon to, but not including, the issuance date of the Series B Notes. Such
interest will be paid with the first interest payment on the Series B Notes.
Interest on the Series A Notes accepted for exchange will cease to accrue upon
issuance of the Series B Notes. Through May 15, 1999, interest is payable at
the option of the Company by the issuance of additional Notes (valued at 100%
of the face amount thereof) in lieu of cash interest. After May 15, 1999,
interest on the Notes is payable solely in cash.
The Company will accept for exchange any and all validly tendered Series A
Notes not withdrawn prior to 5:00 p.m., New York City time, on , 1996,
unless extended by the Company in its sole discretion (the "Expiration Date").
Tenders of Series A Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date. The Exchange Offer is subject to
certain customary conditions. See "The Exchange Offer--Conditions." Series A
Notes may be tendered only in integral multiples of $1,000. In the event the
Company terminates the Exchange Offer and does not accept for exchange any
Series A Notes, the Company will promptly return all previously tendered Series
A Notes to the holders thereof.
The Series A Notes were sold by the Company, as part of units consisting of
the Series A Notes and warrants to purchase shares of common stock of the
Company (the "Units"), on May 13, 1996 to the Initial Purchasers (as defined)
in a transaction not registered under the Securities Act in reliance upon an
exemption under the Securities Act. The Initial Purchasers subsequently resold
the Series A Notes to qualified institutional buyers in reliance upon Rule 144A
under the Securities Act and to institutional accredited investors in a manner
exempt from the registration requirements of the Securities Act. Accordingly,
the Series A Notes may not be reoffered, resold or otherwise transferred in the
United States unless registered under the Securities Act or unless an
applicable exemption from the registration requirements of the Securities Act
is available. The Series B Notes are being offered hereunder in order to
satisfy the obligations of the Company under the Registration Rights Agreement.
See "The Exchange Offer."
Based on no-action letters issued by the staff of the Securities and Exchange
Commission (the "Commission") to third parties, the Company believes the Series
B Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by any holder thereof (other than any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Series B Notes
are acquired in the ordinary course of such holder's business and that such
holder does not intend to participate, and has no arrangement or understanding
with any person to participate, in the distribution of such Series B Notes. See
"The Exchange Offer--Purpose and Effect of the Exchange Offer" and "--Resale of
the Series B Notes." Each holder of the Series A Notes (other than certain
specified holders) who wishes to exchange the Series A Notes for Series B Notes
in the Exchange Offer will be required to represent in the Letter of
Transmittal that (i) it is not an affiliate of the Company, (ii) the Series B
Notes to be received by it are being acquired in the ordinary course of its
business and (iii) at the time of commencement of the Exchange Offer, it has no
arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of the Series B Notes. Each broker-dealer (a
"Participating Broker-Dealer") that receives Series B 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 Series B Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of Series B Notes
received in exchange for Series A Notes where such Series A Notes were acquired
by such Participating Broker-Dealer as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of 180 days
after the Expiration Date, it will make this Prospectus available to any
Participating Broker-Dealer for use in connection with any such resale. See
"Plan of Distribution."
(Continued on following page)
<PAGE>
Holders of Series A Notes not tendered and accepted in the Exchange Offer
will continue to hold such Series A Notes and will be entitled to all the
rights and benefits and will be subject to the limitations applicable thereto
under the Indenture and with respect to transfer under the Securities Act. The
Company will pay all the expenses incurred by it incident to the Exchange
Offer. See "The Exchange Offer."
There has been no previous public market for the Series A Notes or the
Series B Notes. The Company does not intend to list the Series B Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active market for the
Series B Notes will develop. See "Risk Factors--Lack of Established Market for
the Securities." Moreover, to the extent that Series A Notes are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Series A Notes could be adversely affected.
The Series B Notes will be available initially only in book-entry form. The
Company expects that the Series B Notes issued pursuant to this Exchange Offer
will be issued in the form of a Global Certificate (as defined), which will be
deposited with, or on behalf of, The Depository Trust Company (the
"Depositary") and registered in its name or in the name of Cede & Co., its
nominee. Beneficial interests in the Global Certificate representing the
Series B Notes will be shown on, and transfers thereof to qualified
institutional buyers will be effected through, records maintained by the
Depositary and its participants. After the initial issuance of the Global
Certificate, Series B Notes in certified form will be issued in exchange for
the Global Certificate only on the terms set forth in the Indenture.
<PAGE>
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER THIS CHAPTER WITH THE STATE OF NEW HAMPSHIRE NOR
THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN
THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE
THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING.
NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE
FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED
IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN
APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR
CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
----------------
As used herein, (i) "Operating Cash Flow" means operating income of the
Company plus depreciation and amortization, additional cash television network
compensation payments received but not recognized as revenue and, for 1995,
approximately $145,000 representing operating losses related to a publication
which was discontinued in 1995; (ii) "Broadcast Cash Flow" means operating
income of the television division of Park Broadcasting plus depreciation and
amortization, additional cash television network compensation payments
received but not recognized as revenue under generally accepted accounting
principles ("GAAP") and certain operating expenses of Park Communications,
Inc. ("Central Corporate Overhead") allocated to the television division of
Park Broadcasting; (iii) "Newspaper Cash Flow" means operating income of Park
Newspapers plus depreciation and amortization, Central Corporate Overhead
allocated to Park Newspapers and, for 1995, approximately $145,000
representing operating losses related to a publication which was discontinued
in 1995; and (iv) "Radio Cash Flow" means operating income of Park
Broadcasting's radio station operations plus depreciation and amortization and
Central Corporate Overhead allocated to Park Broadcasting's radio station
operations. Unless otherwise indicated, all market rank, rank in market,
station audience rating and share, and television household data in this
Prospectus are from the Nielsen Station Index Viewers and Profile dated
November 1995 as prepared by A.C. Nielsen Company ("Nielsen").
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. As used herein, the term "Park Communications"
refers to Park Communications, Inc. and the term "Company" refers to Park
Communications and its wholly-owned subsidiaries Park Broadcasting, Inc. ("Park
Broadcasting") and Park Newspapers, Inc. ("Park Newspapers") and each of their
respective subsidiaries. As of May 6, 1996, the Company had sold its WPAT-AM
and FM radio stations and had entered into definitive agreements providing for
the divestiture of its remaining ten AM and ten FM radio stations (such
remaining stations, collectively, the "Radio Station Assets"). Between May 6,
1996 and June 14, 1996, the Company had sold Radio Station Assets relating to
12 of its radio stations. The operations of WPAT-AM and FM, such 12 radio
stations and the remaining Radio Station Assets are classified in the Company's
financial statements and treated in this Prospectus as discontinued operations.
See "Business--Discontinued Operations." In February 1996, the Company entered
into an agreement to acquire a network television station in Montgomery,
Alabama (the "Montgomery Acquisition"), which is affiliated with the ABC
Television Network ("ABC"). All references to the Company herein, unless
otherwise indicated, exclude the Company's radio station operations and the
Montgomery Acquisition. Since the Company was acquired by Park Acquisitions,
Inc. ("PAI") on May 11, 1995 (the "Acquisition"), the financial information
contained herein, with respect to periods prior to the Acquisition, does not
reflect any changes in the operation or management of the Company that have
been made since the Acquisition or that the Company intends to make in the
future; thus, this financial information is not necessarily indicative of the
results of operations that would have been achieved had the Company been owned
and operated by PAI during all of the periods with respect to which financial
information is presented herein or which may be achieved in the future.
THE COMPANY
The Company is a holding company which through its subsidiaries owns and
operates nine network affiliated television stations and 104 newspapers and
related publications in geographically diverse markets throughout the United
States. The Company's television stations are located in markets ranging from
the 51st to the 177th largest DMA (as defined). Five of these stations are
affiliated with CBS, Inc. ("CBS"), two are affiliated with the NBC Television
Network ("NBC") and two are affiliated with ABC. The Company's 104 newspaper
publications include 28 daily newspapers, 26 non-daily newspapers, and 50
"total market coverage" publications. The Company's newspaper publications
serve readers in 43 counties in 12 states. The Company's daily newspaper
publications range in circulation from approximately 4,000 to 17,000, with a
combined average paid daily circulation of approximately 242,000. For the year
ended December 31, 1995, the Company had net revenue of $144.3 million and
Operating Cash Flow of $59.3 million.
The Company was founded in 1971 by Roy H. Park to consolidate media holdings
which Mr. Park began acquiring in 1962. Mr. Park's strategy was to complete at
least one acquisition per year and to improve Operating Cash Flow by managing
costs rather than increasing revenue. PAI, which is effectively controlled by
Dr. Gary B. Knapp and Donald R. Tomlin, Jr., acquired the Company on May 11,
1995 because Messrs. Knapp and Tomlin believed the Acquisition presented a
unique opportunity to acquire a group of media assets, each with strong local
franchises in the markets in which they operate and potential revenue
enhancement opportunities. Due to the prior owner's operating strategy, the
Company's media properties, both television and newspaper, generally have
captured a smaller relative share of advertising dollars in their respective
markets than their share of viewing audiences or relative positions would
indicate. Messrs. Knapp and Tomlin, along with the Company's experienced
management team, developed and initiated a strategy to take advantage of this
opportunity to increase revenue and Operating Cash Flow, while maintaining
strict control over costs. Collectively, Messrs. Knapp and Tomlin have
significant business, operating and investment experience in media, real estate
and turnaround situations and, in particular, in the fields of television and
radio broadcasting. The management team at the Company and at each of the two
operating subsidiaries have substantial experience in the television and
newspaper industries. Each of the Company's executive officers brings between
18 and 34 years of experience in their respective industries.
3
<PAGE>
PARK BROADCASTING
Park Broadcasting owns and operates nine network affiliated television
stations primarily located in mid-sized southeastern markets. The stations
cover approximately 2.8 million households, or approximately 3.0% of the total
television households in the United States, and are affiliated with three of
the four major networks. The Company believes that operating a geographically
diverse group of stations with a mix of network affiliations reduces the
potential impact on the Company from the performance of any one market or
network. For the year ended December 31, 1995, Park Broadcasting had net
revenue of $65.4 million and Broadcast Cash Flow of $37.1 million.
The following table sets forth certain information for each of the Company's
television stations:
<TABLE>
<CAPTION>
NET REVENUE FOR THE YEAR ENDED
DECEMBER 31, 1995
-----------------------------------
YEAR NETWORK MARKET AMOUNT PERCENTAGE OF
STATION ACQUIRED AFFILIATION MARKET RANK (IN THOUSANDS) TOTAL
- ------- ---------- ----------- -------------------------- ------ ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
WBMG 1973 CBS Birmingham, Alabama 51 $ 6,389 9.8%
WTVR 1965 CBS Richmond, Virginia 54 12,222 18.7
WSLS 1969 NBC Roanoke, Virginia 67 9,070 13.9
WTVQ 1992 ABC Lexington, Kentucky 68 8,365 12.8
WDEF 1964 CBS Chattanooga, Tennessee 82 6,957 10.6
WJHL 1964 CBS Johnson City, Tennessee 93 6,641 10.1
WNCT 1962 CBS Greenville, North Carolina 104 5,632 8.6
WUTR 1970 ABC Utica, New York 166 2,179 3.3
KALB 1993 NBC Alexandria, Louisiana 177 7,953 12.2
------- -----
$65,408 100.0%
======= =====
WHOA Pending(a) ABC Montgomery, Alabama 113 -- --
</TABLE>
- --------
(a) To be acquired pursuant to the Montgomery Acquisition. The 1995 net revenue
of WHOA was approximately $2.5 million.
BUSINESS AND OPERATING STRATEGY. Park Broadcasting's objective is to build
revenue and increase Broadcast Cash Flow from its television stations. Under
previous ownership, the stations were operated with a focus on managing costs,
not on maximizing revenue and Broadcast Cash Flow growth. The prior owner's
strategy resulted in the stations typically capturing a smaller share of
advertising revenue in their respective markets compared to their audience
share. This ratio of advertising revenue share to audience share is indicated
by a station's "power ratio" (as calculated by BIA Publications, Inc.), with a
ratio of one (or greater than one) indicating that a station is achieving its
share (or more than its share) of advertising dollars relative to its share of
viewers. Management believes that the fact that seven of its nine stations have
power ratios less than one and that the weighted average power ratio for the
nine stations is 0.91 provides Park Broadcasting with a significant opportunity
to increase advertising revenue at its stations without a need to increase
audience share. Park Broadcasting has initiated a number of programs since the
Acquisition that are designed to take advantage of this opportunity. See
"Business--Park Broadcasting--Business and Operating Strategy."
Park Broadcasting's business and operating strategy includes the following
key elements:
Strengthen Local Sales and Marketing Development. The Company believes that
each of its television stations has an opportunity to increase its share of
advertising revenue in its market through the implementation of a new and
aggressive local sales development program. Park Broadcasting's emphasis is
to create a more highly trained and knowledgeable sales force. Through
extensive sales training programs on both basic and advanced marketing
techniques developed in conjunction with outside consultants, Park
Broadcasting's sales professionals are beginning to work closely with
targeted advertisers to develop successful advertising campaigns. In
addition, the Company has recently introduced a variety of improved
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marketing techniques such as an increased use of live remote broadcasts
from advertisers' locations, advertising incentives such as trips and
contests for key targeted advertisers, and station-sponsored sales seminars
open to community businesses with nationally known motivational speakers.
Park Broadcasting has also instituted a successful co-op advertising
program. These programs, in conjunction with an increase in promotion of
the stations' local news, programming and special events and increased use
of sophisticated qualitative market research, are designed to position Park
Broadcasting's television stations to gain larger percentages of their
respective market advertising revenue.
Enhance Strong Local Franchises. Since the Acquisition, the Company has
been committed to building local franchises at each of its television
stations. Management believes that local news leadership is the foundation
to building significant audience share in local markets. Due to their high
viewership levels, the time periods before, during and after the local news
are attractive to advertisers and thus command higher advertising rates.
The demographic characteristics of the typical news audience are also
appealing to advertisers. Park Broadcasting has invested in expanding and
improving many of its news operations, including purchasing additional
satellite uplink vehicles, upgrading news studios and technical facilities
and improving weather systems and on-air graphics. In addition to
committing to additional investment in and emphasis on its local news
operations, Park Broadcasting has initiated programs to supplement its
inventory of unique and proprietary programming. Such projects include
VideoKids 2000 (a proprietary Park Children's Television Production focused
on children aged 3-11) and coverage of local sporting events such as high
school and college athletics and local specialty events such as NASCAR
racing and the Kentucky Derby.
Provide High Quality Non-Network Programming. Each of Park Broadcasting's
television stations is focused on improving its syndicated and locally
produced non-network programming to attract audiences with highly valued
demographic characteristics. Examples of such programming include Home
Improvement, Seinfeld, Frasier and Baywatch. Park Broadcasting emphasizes
cost effective programming that has long-term appeal and will be promoted
locally by syndicators. As a result of its ownership of a group of nine
television stations, Park Broadcasting is able to purchase syndicated
programming at a discount (on a per station basis) to the cost that any one
of its stations would incur as an individual purchaser of such programming
and is able to purchase a variety of programming that might otherwise not
be available to a single station.
Maintain Effective Cost Controls. Park Broadcasting has continued to
maintain strict cost controls and disciplined credit and collection
procedures at each of its stations to fully exploit the high degree of
operating leverage associated with television properties. Through a
strategic planning and semi-annual budgeting process, Park Broadcasting
continually seeks to identify areas to reduce expenses and improve
efficiencies. Park Broadcasting relies on its in-house production
capabilities to minimize use of outside firms and consultants and
capitalizes on its critical mass and ownership of a group of nine stations
to realize cost savings through group purchasing of equipment and services.
PARK NEWSPAPERS
Park Newspapers owns and operates 104 geographically diverse newspapers and
related publications which include 28 daily newspapers (of which 16 publish
Sunday editions), 26 non-daily newspapers and 50 "total market coverage"
publications across the United States. Park Newspapers' daily and non-daily
newspapers generally combine news, sports and features with a special emphasis
on local information. These newspaper publications have a total paid daily
circulation of approximately 242,000. The markets which the publications serve
had a combined household count of approximately 545,000 and aggregate retail
sales of approximately $15.2 billion in 1995. The Company believes that
operating a geographically diverse group of newspapers reduces the impact of
the performance of any one newspaper. For the year ended December 31, 1995,
Park Newspapers had revenue of $78.9 million and Newspaper Cash Flow of $25.6
million.
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A major component of Park Newspapers' long-term strategy has been to operate
newspapers having a dominant position in stable, growing communities. Park
Newspapers' dailies have been in existence for an average of 111 years (with
none in existence for less than 46 years), are well established and have a
strong local brand appeal. In most cases, the dailies typically serve a small
or medium population community and are the dominant or only local newspaper in
the market. The Company believes that an added benefit of operating in these
types of communities is the workforce stability which it has experienced.
Park Newspapers' newspaper publications serve readers in 43 counties in 12
states. Demographics USA, 1994 has forecasted that 30 of the counties which
Park Newspapers serves (or approximately 70% of the total number of counties it
serves) will experience retail sales growth during the period from 1994 through
1999 equal to or in excess of the forecast national average of 30.6% over this
period; another 11 of these counties (or approximately 26% of the total number
of counties it serves) are projected to have retail sales growth during this
period of at least 80% of the national average, with most growing at 90% or
more of the national average; and only two of these counties (Columbia and
Niagara Counties in New York) are projected to be "slow-growth" counties.
BUSINESS AND OPERATING STRATEGY. Park Newspapers' operating strategy is to
increase revenue and Newspaper Cash Flow by capitalizing on the strong local
brand recognition of its newspapers. Management believes that its strong brand
recognition combined with the Company's emphasis on producing a high quality
product and improving its sales and marketing efforts will enhance the value of
Park Newspapers' publications to its readers and advertisers and result in
increased circulation, revenue and Newspaper Cash Flow.
Prior to the Acquisition, Park Newspapers focused on improving Newspaper Cash
Flow through cost management rather than generation of incremental revenue.
Industry standards suggest that revenue performance of a community newspaper
equal to 0.70% to 1.25% of total retail sales in a defined market is a
reasonable target for share of market revenue. Park Newspapers ended 1995 with
advertising revenue equal to 0.52% of total retail sales in the aggregate in
the markets served by its publications. The Company believes that through new
sales and marketing programs, continued quality editorial and news leadership
and increased circulation penetration, along with continued strict cost
controls, it can capitalize on the growing markets in which it operates and
improve its share of retail advertising dollars.
Park Newspapers' business and operating strategy includes the following key
elements:
Strengthen Sales and Marketing Development. Since the Acquisition, the
Company has instituted a sales force upgrade and implemented a motivation
program which includes performance-based compensation plans, daily sales
reports to monitor each account executive's development, and on-site
training programs. Park Newspapers has purchased a new
demographic/advertising research program to provide qualitative data to its
sales force to better identify sales opportunities. The Company has also
introduced advertising programs to generate revenue from sources new to
Park Newspapers.
Enhance Quality of Editorial Content, Presentation and Local News. Park
Newspapers' publications are committed to editorial excellence and
providing the best mix of local and national news to effectively serve
their markets. The Company's newspapers generally have the largest local
news gathering resources in their local markets and, through emphasizing
local news, generally have a high degree of reader loyalty among their core
circulation base group. The Company has recently completed a review of its
daily newspapers' layouts and has instituted a layout redesign program for
all of its daily newspapers to ensure that each newspaper offers attractive
layout, design and color enhancement.
Increase Circulation. Prior to the Acquisition, Park Newspapers pursued a
circulation strategy aimed at driving circulation revenue through price
increases. This strategy ultimately adversely impacted circulation
penetration levels. As of December 31, 1995, Park Newspapers had only a 47%
penetration of the occupied households in its defined market areas, a level
which the Company believes offers significant potential for
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improvement. Park Newspapers has launched an aggressive direct marketing
effort with the goal of improving market penetration (in the aggregate) to
70% of the occupied households in its defined markets.
Realize Benefits From Clustering. Park Newspapers has clustered its
publication operations regionally. With the change in strategy from cost
management to revenue maximization and cost containment, the Company has
identified and is implementing programs to enhance revenue available as a
result of its clustering of operations, such as regional sales promotion
programs and other cross-selling techniques. In addition to these revenue
opportunities, consolidating the operations of groups of newspapers affords
both operating and economic efficiencies. These efficiencies include, but
are not limited to, the sharing of management, accounting and production
functions. Management will continue to review its newspaper businesses for
opportunities to merge operations to both enhance revenue and reduce costs.
Maintain Effective Cost Controls. Expenses at each of the Company's
publications are closely monitored to control costs without sacrificing
revenue opportunities. The Company seeks to reduce labor costs through
investment in modern production equipment and through the consolidation of
operations and administrative activities associated with clustering. Park
Newspapers' newsprint costs are approximately 10.4% of its revenue, and it
generally enters into long-term supply contracts to reduce newsprint costs
during periods of short supply. Management believes that Park Newspapers'
newsprint costs as a percentage of revenue are generally lower than many of
the other community newspaper groups. The Company's cost control
initiatives also include group purchasing of materials and aggressive
control of newsprint waste.
Develop Additional Non-Traditional Revenue Sources. Park Newspapers has
recently introduced new informational products and services and advertising
programs to generate revenue from sources other than traditional newspaper
publishing activities. These products, services and programs include voice
personals, audio-text and incentive marketing.
RECENT EVENTS
New Affiliation Agreements. Effective as of January 1, 1995, the Company
entered into new network affiliation agreements with CBS for each of the
Company's five CBS-affiliated stations and new network affiliation agreements
with NBC for each of its two NBC-affiliated stations. Under the new affiliation
agreements with CBS and NBC, approximately $37.4 million of the $52.2 million
in aggregate network compensation payable thereunder will be paid to Park
Broadcasting during the first four years of the ten-year terms of such
agreements. In addition, the Company is currently negotiating new network
affiliation agreements with ABC which would run for ten-year terms. The Company
believes that these new long-term contracts will include an increase in network
compensation, as well as certain news-gathering equipment to be provided by
ABC. See "Business--Park Broadcasting--Network Affiliation Agreements."
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THE REFINANCING TRANSACTIONS
On May 13, 1996, the Company sold the Series A Notes as part of units (the
"Units") consisting of the Series A Notes and Warrants to purchase an aggregate
of 800,000 shares of Common Stock of the Company. The sale of Units was one of
a series of transactions (the "Refinancing Transactions"), the purpose of which
was to refinance the Company's indebtedness under a credit agreement among the
Company, PAI and the lenders thereunder (the "Prior Credit Agreement"). The
Refinancing Transactions consisted of (i) the sale of the Units, (ii) the
establishment of and drawings under the Senior Credit Facility in the amount of
$58.0 million, (iii) the sale, which was completed on May 13, 1996, of $241.0
million in principal amount of 11 3/4% Senior Notes due 2004 of Park
Broadcasting (the "Broadcasting Notes"), (iv) the sale, which was completed on
May 13, 1996, of $155.0 million in principal amount of 11 7/8% Senior Notes due
2004 of Park Newspapers (the "Newspapers Notes") and (v) the sale, which was
completed on March 25, 1996, of the Company's WPAT-AM and FM radio stations for
aggregate gross proceeds of $103.0 million.
The Company is in the process of selling its radio station operations which
have been conducted through Park Broadcasting. The Company decided to divest
such operations to focus on its core television broadcasting and newspaper
publication operations, to raise cash to prepay a portion of its existing
indebtedness and to take advantage of attractive prices (which approximate in
the aggregate 27.7 times Radio Cash Flow in 1995) for which such operations
could be sold.
As of May 6, 1996, Park Broadcasting had entered into definitive agreements
providing for the sale of each of the Radio Station Assets. Between May 6, 1996
and June 14, 1996, the Company had sold its KEZX-AM, KWJZ-FM, WNCT-AM and FM,
WTVR-AM and FM, WNLS-AM, WTNT-FM, WHEN-AM and FM and WNAX-AM and FM radio
stations. Although there can be no assurance that the sale of the remaining
Radio Station Assets will occur, Park Broadcasting currently anticipates that
the sale of four of its eight remaining individual radio stations will be
completed by June 30, 1996, the sale of an additional two of its individual
radio stations will be completed by July 31, 1996 and the sale of its last two
individual radio stations will be completed by August 31, 1996. The proceeds of
sales of radio station operations occurring after May 13, 1996 have been and
will be used to repay the Senior Credit Facility and to pay taxes resulting
from the sale of the radio station operations. For additional information
concerning the sale of the Radio Station Assets, see "Business--Discontinued
Operations."
In addition to the Refinancing Transactions, it is contemplated that Park
Broadcasting and Park Newspapers will have commitments for a senior revolving
credit facility (collectively, the "New Credit Agreements") in an amount not to
exceed $15.0 million and $10.0 million, respectively, for future working
capital and general corporate purposes (the execution and delivery of which
will be subject to negotiation of satisfactory documentation and other
customary conditions). Under the terms of the Senior Credit Facility, Park
Broadcasting will be permitted to borrow not more than $4.0 million under its
New Credit Agreement during the one-year period ending on May 13, 1997, and
Park Newspapers will not be permitted to borrow any funds under its New Credit
Agreement, until such time as all indebtedness under the Senior Credit Facility
has been repaid. See "Description of Certain Indebtedness."
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THE SERIES A NOTES OFFERING
Series A Notes................ The Series A Notes were sold by the Company, as
part of Units consisting of the Series A Notes
and 800,000 Warrants to purchase an aggregate
of 800,000 shares of Common Stock of the
Company (the "Initial Warrants"), on May 13,
1996 to Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Goldman, Sachs & Co. (the
"Initial Purchasers") pursuant to a Purchase
Agreement dated May 6, 1996 (the "Purchase
Agreement"). The Initial Purchasers
subsequently resold the Series A Notes to
qualified institutional buyers in reliance upon
Rule 144A under the Securities Act and to
institutional accredited investors in a manner
exempt from the registration requirements of
the Securities Act.
Registration Rights
Agreement..................... Pursuant to the Purchase Agreement, the Company
and the Initial Purchasers entered into a
Registration Rights Agreement dated May 13,
1996 (the "Registration Rights Agreement"),
which grants the holders of the Series A Notes
certain exchange and registration rights. The
Exchange Offer is intended to satisfy such
exchange rights, which terminate upon the
consummation of the Exchange Offer.
THE EXCHANGE OFFER
Notes Offered................. $80,000,000 aggregate principal amount of
Series B 13 3/4% Senior Pay-in-Kind Notes due
2004.
The Exchange Offer............ $1,000 principal amount of Series B Notes in
exchange for each $1,000 principal amount of
Series A Notes. As of the date hereof,
$80,000,000 aggregate principal amount of
Series A Notes are outstanding. The Company
will issue the Series B Notes to tendering
holders on or promptly after the Expiration
Date.
Based on no-action letters issued by the staff
of the Commission to third parties, the Company
believes the Series B Notes issued pursuant to
the Exchange Offer may be offered for resale,
resold and otherwise transferred by any holder
thereof (other than any such holder that is an
"affiliate" of the Company within the meaning
of Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act,
provided that such Series B Notes are acquired
in the ordinary course of such holder's
business and that such holder does not intend
to participate, and has no arrangement or
understanding with any person to participate,
in the distribution of such Series B Notes.
Each Participating Broker-Dealer that receives
Series B 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 Series B Notes. The Letter
of Transmittal states that by so acknowledging
and by delivering a prospectus, a
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<PAGE>
Participating Broker-Dealer will not be deemed
to admit that it is an "underwriter" within the
meeting of the Securities Act. This Prospectus,
as it may be amended or supplemented from
timeto time, may be used by a Participating
Broker-Dealer in connection with resale of
Series B Notes received in exchange for Series
A Notes where such Series A Notes were acquired
by such Participating Broker-Dealer as a result
of market-making activities or other trading
activities. The Company has agreed that, for a
period of 180 days after the Expiration Date,
it will make this Prospectus available to any
Participating Broker- Dealer for use in
connection with any such resale. See "Plan of
Distribution."
Any holder who tenders in the Exchange Offer
with the intention to participate, or for the
purpose of participating, in a distribution of
the Series B Notes could not rely on the
position of the staff of the Commission
communicated in no-action letters and, in the
absence of an exception therefrom, must comply
with the registration and prospectus delivery
requirements of the Securities Act in
connection with any resale transaction. Failure
to comply with such requirements in such
instance may result in such holder incurring
liability under the Securities Act for which
the holder is not indemnified by the Company.
Expiration Date............... 5:00 p.m., New York City time, on , 1996,
unless the Exchange Offer is extended, in which
case the term "Expiration Date" means the
latest date and time to which the Exchange
Offer is extended.
Accrued Interest on the
Series B Notes and the
Series A Notes............... Each Series B Note will bear interest from its
issuance date. Holders of Series A Notes that
are accepted for exchange will receive accrued
interest thereon to, but not including, the
issuance date of the Series B Notes. Such
interest will be paid with the first interest
payment on the Series B Notes. Interest on the
Series A Notes accepted for exchange will cease
to accrue upon issuance of the Series B Notes.
Conditions to the Exchange
Offer........................ The Exchange Offer is subject to certain
customary conditions, which may be waived by
the Company. See "The Exchange Offer--
Conditions."
Procedures for Tendering
Series........................ Each holder of Series A Notes wishing to accept
the Exchange Offer must complete, sign and date
the accompanying Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with
the Series A Notes and any other required
documentation to the Exchange Agent (as
defined) at the address set forth herein.
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<PAGE>
By executing the Letter of Transmittal, each
holder will represent to the Company that,
among other things, the Series B Notes acquired
pursuant to the Exchange Offer are being
obtained in the ordinary course of business of
the person receiving such Series B Notes,
whether or not such person is the holder, that
neither the holder nor any such other person
has any arrangement or understanding with any
person to participate in the distribution of
such Series B Notes and that neither the holder
nor any such other person is an "affiliate," as
defined under Rule 405 of the Securities Act,
of the Company. See "The Exchange Offer--
Purpose and Effect of the Exchange Offer" and
"--Procedures for Tendering."
Untendered Series A Notes..... Following the consummation of the Exchange
Offer, holders of Series A Notes eligible to
participate in the Exchange Offer but who do
not tender their Series A Notes will not have
any further exchange rights and such Series A
Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the
liquidity of the market for such Series A Notes
could be adversely affected.
Consequences of Failure to
Exchange..................... The Series A Notes that are not exchanged
pursuant to the Exchange Offer will remain
restricted securities. Accordingly, such Series
A Notes may be resold only (i) to the Company,
(ii) pursuant to Rule 144A or Rule 144 under
the Securities Act or pursuant to another
exemption under the Securities Act, (iii)
outside the United States to a foreign person
pursuant to the requirements of Rule 904 under
the Securities Act or (iv) pursuant to an
effective registration statement under the
Securities Act. See "The Exchange Offer--
Consequences of Failure to Exchange."
Shelf Registration Statement.. If any holder of the Series A Notes (other than
any such holder which is an "affiliate" of the
Company within the meaning of Rule 405 under
the Securities Act) is not eligible under
applicable securities laws to participate in
the Exchange Offer, and such holder has
provided information regarding such holder and
the distribution of such holder's Series A
Notes to the Company for use therein, the
Company has agreed to register the Series A
Notes with a shelf registration statement (the
"Shelf Registration Statement") and use its
best efforts to cause it to be declared
effective by the Commission as promptly as
practical on or after the consummation of the
Exchange Offer. The Company has agreed to
maintain the effectiveness of the Shelf
Registration Statement for, under certain
circumstances, a maximum of three years, to
cover resales of the Series A Notes held by any
such holders.
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Special Procedures for
Beneficial Owners............ Any beneficial owner whose Series A Notes are
registered in the name of a 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 such beneficial
owner's behalf. If such beneficial owner wishes
to tender on such owner's own behalf, such
owner must, prior to completing and executing
the Letter of Transmittal and delivering its
Series A Notes, either make appropriate
arrangements to register ownership of the
Series A Notes in such owner's name or obtain a
properly completed bond power from the
registered holder. The transfer of registered
ownership may take considerable time. The
Company will keep the Exchange Offer open for
not less than 30 days in order to provide for
the transfer of registered ownership.
Guaranteed Delivery
Procedures.................... Holders of Series A Notes who wish to tender
their Series A Notes and whose Series A Notes
are not immediately available or who cannot
deliver their Series A Notes, the Letter of
Transmittal or any other documents required by
the Letter of Transmittal to the Exchange Agent
(or comply with the procedures for book-entry
transfer) prior to the Expiration Date must
tender their Series A Notes according to the
guaranteed delivery procedures set forth in
"The Exchange Offer--Guaranteed Delivery
Procedures."
Withdrawal Rights............. Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the
Expiration Date.
Acceptance of Series A Notes
and Delivery of Series B
Notes........................ The Company will accept for exchange any and
all Series A Notes which are properly tendered
in the Exchange Offer prior to 5:00 p.m., New
York City time, on the Expiration Date. The
Series B Notes issued pursuant to the Exchange
Offer will be delivered on or promptly after
the Expiration Date. See "The Exchange Offer--
Terms of the Exchange Offer."
Use of Proceeds............... There will be no cash proceeds to the Company
from the exchange pursuant to the Exchange
Offer.
Exchange Agent................ IBJ Schroder Bank & Trust Company (the
"Exchange Agent").
THE SERIES B NOTES
General....................... The form and terms of the Series B Notes are
the same as the form and terms of the Series A
Notes except that (i) the Series B Notes will
bear a "Series B" designation, (ii) the Series
B Notes will have been registered under the
Securities Act and, therefore, will not bear
legends restricting their transfer and (iii)
the holders
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<PAGE>
of Series B Notes will not be entitled to
certain rights of holders of Series A Notes
under the Registration Rights Agreement,
including the provisions providing for an
increase in the interest rate on the Series A
Notes in certain circumstances relating to the
timing of the Exchange Offer, which rights will
terminate when the Exchange Offer is
consummated. See "The Exchange Offer--Purpose
and Effect of the Exchange Offer." The Series B
Notes will evidence the same debt as the Series
A Notes (which they replace) and will be
entitled to the benefits of the Indenture. See
"Description of the Notes."
Notes Offered................. $80,000,000 aggregate principal amount of
Series B 13 3/4% Senior Pay-in-Kind Notes due
2004.
Separability.................. The Series B Notes and the Initial Warrants
will be separately transferable on the date on
which the Registration Statement of which this
Prospectus is a part is declared effective
under the Securities Act. At such time, the
Units will cease to exist.
Maturity Date................. May 15, 2004.
Interest Payment Dates........ Interest on the Notes is payable semi-annually
in arrears on each May 15 and November 15,
commencing November 15, 1996. Through May 15,
1999, interest is payable at the option of the
Company, in whole but not in part, by the
issuance of additional Notes (valued at 100% of
the face amount thereof) in lieu of cash
interest. Notwithstanding the foregoing,
interest due and payable upon any redemption or
repurchase or in connection with any
acceleration will be payable solely in cash.
After May 15, 1999, interest on the Notes is
payable solely in cash. The Senior Credit
Facility requires that, so long as any
indebtedness is outstanding thereunder, all
interest on the Notes will be payable solely by
the issuance of Notes.
Optional Redemption........... The Notes are redeemable at the option of the
Company, in whole or in part, on or after May
15, 1999, at the redemption prices set forth
herein plus accrued and unpaid interest, if
any, to the date of redemption. Prior to
December 31, 1997, the Company may, at its
option, redeem all or any portion of the
outstanding Notes with the net proceeds of one
or more Public Equity Offerings or Strategic
Equity Investments; provided, however, that the
proceeds to the Company of the first such
offering or investment or series of
substantially concurrent investments are at
least $40.0 million, at 112.0% of the principal
amount thereof plus accrued and unpaid
interest, if any, to the date of redemption
(the "First Equity Offering Optional Redemption
Price"); provided, further, however, that
notice of such redemption is given within 30
days
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of such offering or investment. In addition, on
and after December 31, 1997 and prior to May
15, 1999, the Company may, at its option,
redeem with the net proceeds of one or more
Public Equity Offerings or Strategic Equity
Investments up to 50% of the aggregate
principal amount of the Notes then outstanding;
provided, however, that the proceeds to the
Company of the first such offering or
investment or series of substantially
concurrent investments (including any such
offering, investment or series of investments
the proceeds of which were used to redeem the
Notes) are at least $40.0 million, at 113.0% of
the principal amount thereof plus accrued and
unpaid interest, if any, to the date of
redemption (the "Second Equity Offering
Optional Redemption Price"); provided, further,
however, that notice of such redemption is
given within 30 days of such offering or
investment.
In addition, prior to May 15, 1999, the Company
may redeem the Notes, in whole or in part, at a
redemption price equal to the principal amount
thereof plus the Applicable Premium (as
defined) plus accrued and unpaid interest, if
any, to the date of redemption (the "Optional
Redemption Price"); provided, however, that (i)
if such redemption is to be effected for less
than all of the Notes then outstanding, not
less than $40.0 million aggregate principal
amount of Notes is outstanding immediately
after giving effect to such redemption (other
than any Notes owned by the Company or any of
its affiliates) and (ii) no redemption (or, on
or after December 31, 1997, partial redemption)
of the Notes then outstanding may be made with
the proceeds of any Public Equity Offering or
Strategic Equity Investment pursuant to this
sentence if, as of the date of the proposed
redemption, either the First Equity Offering
Optional Redemption Price or the Second Equity
Offering Optional Redemption Price (whichever
then applicable) would be greater than the
Optional Redemption Price as of such date.
Repurchase on Public Equity
Offering or Strategic Equity
Investment................... The Company will be obligated to make an offer
to repurchase all or a portion of the Notes
then outstanding at a price equal to 112.0% of
the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the
date of repurchase with the net proceeds of any
Public Equity Offering or Strategic Equity
Investment consummated on or prior to December
31, 1997 to the extent that the proceeds
therefrom have not been (or will not be
pursuant to a notice of redemption given)
utilized to effect a redemption of the Notes
and the amount not so utilized exceeds $2.0
million.
Change of Control............. Upon the occurrence of a Change of Control
Triggering Event, each holder of the Notes will
have the right, subject to the terms and
conditions of the Indenture and subject to
repayment in full of amounts outstanding under
the Senior Credit Facility, to require the
Company to offer to purchase such holder's
Notes at
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a price equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if
any, to the date of purchase.
Asset Sales................... In the event of certain asset sales, the
Company will be required to offer to purchase
the Notes at 100% of their principal amount
plus accrued and unpaid interest, if any, to
the date of purchase with the net proceeds of
such asset sales.
Security...................... Upon repayment in full of indebtedness under
the Senior Credit Facility, the Company will be
obligated to grant to the holders of the Notes
a first priority security interest in and lien
on the capital stock of Park Broadcasting and
Park Newspapers owned by the Company whether
outstanding at such time or thereafter issued;
provided, however, that under the Indenture
Park Broadcasting and Park Newspapers may issue
shares of their common stock in public
offerings without being subject to such a lien
so long as, after giving effect to any such
issuance, the Company retains ownership of at
least a majority of the economic interest in
and has the power to vote at least a majority
of the voting power of the outstanding Voting
Stock (as defined) of each such entity.
Ranking....................... The Notes will rank pari passu in right of
payment with all existing and future unsecured
and unsubordinated indebtedness of the Company;
senior to any other indebtedness to the extent
of any assets securing the Notes; and senior in
right of payment to all existing and future
subordinated indebtedness of the Company. The
Notes will be effectively subordinated to all
secured indebtedness of the Company to the
extent of the assets securing such
indebtedness, including indebtedness under the
Senior Credit Facility, and to all existing and
future indebtedness and other obligations of
the subsidiaries of the Company (including any
subsidiary guarantee of the Senior Credit
Facility). As of December 31, 1995, on a pro
forma basis after giving effect to the sale of
Units, the other Refinancing Transactions and
the application of the net proceeds therefrom,
the Company would have had $58.0 million of
secured indebtedness outstanding and the
subsidiaries of the Company would have had
$391.4 million of indebtedness outstanding
(excluding guarantees of the Senior Credit
Facility).
Restrictive Covenants......... The Indenture imposes certain limitations on
the ability of the Company and certain of its
subsidiaries to, among other things, (i) incur
additional indebtedness, (ii) pay dividends or
make certain other restricted payments or make
certain investments, (iii) consummate certain
asset sales, (iv) enter into certain
transactions with affiliates, (v) incur certain
liens, (vi) impose restrictions on the ability
of a Restricted Subsidiary (as defined) to pay
dividends or make certain payments to the
Company, (vii) merge or consolidate with any
other person or (viii) sell, assign,
15
<PAGE>
transfer, lease, convey or otherwise dispose of
all or substantially all of the assets of the
Company. The restrictive covenants are subject
to certain exceptions and qualifications. See
"Description of the Notes--Certain Covenants."
Contingent Warrants........... In the event that the Company does not effect a
Public Equity Offering or one or any series of
substantially concurrent Strategic Equity
Investments on or prior to December 31, 1997
resulting in net proceeds to the Company of at
least $40.0 million, the Company will be
required to issue warrants to the holders of
the Notes exercisable for 3.0% of the Common
Stock of the Company on a fully-diluted basis
as of the date of such issuance after giving
effect to the issuance of such warrants (the
"Contingent Warrants").
THE WARRANTS
Warrants...................... The Initial Warrants entitle the holders
thereof to acquire initially an aggregate of
800,000 shares of Common Stock of the Company
(the "Initial Warrant Shares") which would
collectively represent 7.0% of the outstanding
Common Stock of the Company on a fully-diluted
basis after giving effect to the issuance of
such Initial Warrant Shares. The Contingent
Warrants will, if issued, entitle the holders
thereof to acquire initially such number of
shares of Common Stock of the Company (the
"Contingent Warrant Shares") which would
collectively represent 3.0% of the outstanding
Common Stock of the Company on a fully-diluted
basis as of the date of such issuance after
giving effect to the issuance of such
Contingent Warrant Shares. The Initial Warrant
Shares and the Contingent Warrant Shares are
collectively referred to herein as the "Warrant
Shares." If a Public Equity Offering resulting
in net proceeds to the Company of at least
$40.0 million shall not have occurred on or
prior to May 15, 2001, then, within 60 days
after May 15, 2001, the Company shall deliver
to the holders of the Warrants a valuation of
the Warrants prepared by an independent
investment banking or appraisal firm of
national standing. Such valuation shall be
accompanied by a notice to the holders that
they may, by majority vote of the holders so
responding, elect to require the Company to
either (i) effect the registration of the
offering and resale of the Warrants and/or the
Warrant Shares by the holders of the Warrants
under the Securities Act (including pursuant to
an underwritten offering) within the time frame
provided in the Warrant Registration Rights
Agreement (as defined) (such election, the
"Registration Election" and the date of such
notice the "Registration Election Date") or
(ii) offer to purchase all outstanding Warrants
at a price (the "Warrant Purchase Price") equal
to the fair market value thereof as determined
pursuant to the procedures set forth in the
Warrant Agreement (as defined)
16
<PAGE>
pursuant to an offer that must remain open for
20 business days (or such longer period as
required by law); provided, however that (i)
the Company shall only be obligated to offer to
purchase Warrants (at the Warrant Purchase
Price) to the extent that it is able to do so
in accordance with covenants in the agreements
evidencing its indebtedness, in which event
Warrants shall be purchased from tendering
holders pro rata in accordance with the number
of Warrants tendered by each holder and (ii) to
the extent that tendering holders are not paid
the Warrant Purchase Price for all Warrants
tendered because of such restrictions, the
Company shall repurchase the tendered Warrants
by issuing, pursuant to a registration
statement declared effective under the
Securities Act, Notes (valued at 100% of the
face amount thereof), up to a maximum aggregate
principal amount of Notes so issued equal to
50% of the aggregate Warrant Purchase Price of
all Warrants tendered. If on or prior to each
of May 15, 2002 and May 15, 2003 a Public
Equity Offering resulting in net proceeds of at
least $40.0 million shall not have occurred and
the Company shall not have repurchased for cash
all Warrants tendered pursuant to the
immediately preceding offer to purchase, then
the Company shall be obligated to effect offers
to purchase the outstanding Warrants subject to
the same limitations as set forth above, with
the Warrant Purchase Price to be based on a new
determination of fair market value pursuant to
the procedures set forth in the Warrant
Agreement.
Exercise...................... Each Warrant will entitle the holder thereof to
purchase initially one share of Common Stock of
the Company at an exercise price of $0.01 per
share. After the Separability Date, the
Warrants will be exercisable at any time on or
after the date of the occurrence of the
earliest of: (i) immediately prior to the
occurrence of a Change of Control, (ii) the
180th day (or such fewer number of days as
determined by the Company in its sole
discretion) after the consummation of a Public
Equity Offering, (iii) the 90th day after the
Registration Election Date, (iv) the approval
by the holders of the capital stock of the
Company of any Plan of Liquidation (as defined)
of the Company and (v) the 180th day prior to
May 15, 2004. The number of shares of Common
Stock of the Company for which, and the price
per share at which, a Warrant is exercisable
are subject to adjustment upon the occurrence
of certain events as provided in the Warrant
Agreement.
Expiration of Warrants........ The Warrants will expire on May 15, 2004 (the
"Warrant Expiration Date").
Registration Rights........... The Company will covenant to effect, to the
extent legally possible, immediately prior to
exercisability as a result of a Public Equity
Offering or the Registration Election Date, the
17
<PAGE>
registration under the Securities Act of the
issuance and sale of all Warrant Shares upon
exercise of the Warrants. In addition, the
holders of the Warrants and the Warrant Shares
will be entitled (i) on or after the 180th day
after a Public Equity Offering or (ii) on or
after the 90th day after the Registration
Election Date to give notice requiring the
Company to effect the registration of the offer
and sale of the Warrants and the Warrant Shares
on behalf of the holders of the Warrants
(including pursuant to an underwritten
offering) within the time frames set forth in
the Warrant Registration Rights Agreement (as
defined); provided, however, that in the case
of any such registration due to the occurrence
of a Public Equity Offering, the Company may
comply therewith at any time within 12 months
after notice of such requested registration. In
addition, the holders of the Warrants will be
entitled to certain piggy-back registration
rights in respect of the Warrants and the
Warrant Shares. See "Description of the
Warrants--Registration Rights of Warrant
Holders."
Notice to Investors........... For additional information regarding the Notes
and Warrants, see "Description of the Notes"
and "Description of the Warrants."
RISK FACTORS
Investors should consider all of the information contained in this Prospectus
before tendering their Series A Notes in the Exchange Offer. In particular,
investors should carefully consider the factors set forth under "Risk Factors"
prior to tendering their Series A Notes in the Exchange Offer.
18
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The summary historical consolidated financial data presented below have been
derived from audited financial statements of Park Communications, Park
Broadcasting and Park Newspapers as of and for the years ended December 31,
1991, 1992, 1993, 1994 and 1995 (except in the case of the data for the years
ended December 31, 1991 and 1992 for Park Broadcasting and Park Newspapers,
which have been derived from unaudited financial statements of those entities).
The selected pro forma consolidated financial data as of March 31, 1996 and for
the 12-month period April 1, 1995 to March 31, 1996 presented below have been
derived from unaudited financial statements of Park Communications, Park
Broadcasting and Park Newspapers. The data presented below should be read in
conjunction with the Consolidated Financial Statements of Park Communications,
Inc. and Subsidiaries, Park Broadcasting, Inc. and Subsidiaries and Park
Newspapers, Inc. and Subsidiaries, including the respective notes thereto,
"Unaudited Pro Forma Condensed Consolidated Financial Statements," "Selected
Historical and Pro Forma Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere herein. The unaudited pro forma information does not purport
to represent what the Company's financial position or results of operations
actually would have been if the Acquisition, the Refinancing Transactions and
the sale of the Radio Station Assets (as applicable) had, in fact, occurred on
the dates indicated or to project the Company's financial position or results
of operations at any future date or for any future period.
<TABLE>
<CAPTION>
YEAR ENDED TWELVE
DECEMBER 31, 1995 MONTHS
YEAR ENDED DECEMBER 31, PRO FORMA ENDED
-------------------------------------- -------------------------- MARCH 31,
ACQUISITION TRANSACTIONS 1996
1991 1992 1993 1994 1995 (A) 1995 (B) PRO FORMA (B)
PARK COMMUNICATIONS, INC. -------- -------- -------- -------- ----------- ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue (c).......... $121,172 $129,800 $137,344 $142,431 $144,312 $144,312 $143,962
-------- -------- -------- -------- -------- -------- --------
Operating expenses:
Cost of sales........... 52,895 53,208 55,518 50,380 53,593 53,593 54,751
Selling, general and
administrative (d)..... 35,717 37,752 39,561 37,051 36,069 36,069 37,124
-------- -------- -------- -------- -------- -------- --------
Total operating expenses
(c)..................... 88,612 90,960 95,079 87,431 89,662 89,662 91,875
-------- -------- -------- -------- -------- -------- --------
Operating income before
depreciation and
amortization (c)........ 32,560 38,840 42,265 55,000 54,650 54,650 52,087
Depreciation and
amortization............ 10,214 10,607 11,088 11,037 24,036 24,036 24,024
-------- -------- -------- -------- -------- -------- --------
Operating income......... 22,346 28,233 31,177 43,963 30,614 30,614 28,063
Interest expense......... (542) (337) (233) (279) (65,689) (60,962) (60,962)
Interest income.......... 6,270 5,515 4,952 5,561 1,355 1,355 1,398
Other.................... (464) (455) (431) (2,352) (280) (280) 96
-------- -------- -------- -------- -------- -------- --------
Income/(loss) before
income tax.............. 27,610 32,956 35,465 46,893 (34,000) (29,273) (31,405)
Provision/(benefit) for
income tax.............. 14,218 13,593 14,849 19,519 (10,880) (8,174) (9,069)
-------- -------- -------- -------- -------- -------- --------
Income/(loss) from $(21,099) $(22,336)
continuing operations... 13,392 19,363 20,616 27,374 (23,120) ======== ========
Loss from discontinued
operations (e).......... (1,537) (2,140) (1,836) (69) (6,014)
-------- -------- -------- -------- --------
Net income/(loss) (c).... $ 11,855 $ 17,223 $ 18,780 $ 27,305 $(29,134)
======== ======== ======== ======== ========
Ratio of earnings to
fixed charges (f)....... -- -- --
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets............. $305,891 $324,837 $342,621 $366,786 $782,782 $685,813 $695,662
Total long-term debt,
excluding current
maturities.............. 54,660 54,028 54,367 49,248 581,605(g) 468,173(g) 467,970
Stockholder's equity
(deficit)............... 217,458 234,682 253,606 285,730 (17,428) 51,930 44,189
OTHER FINANCIAL DATA AND
RATIOS:
Operating Cash Flow (h).. $ 32,560 $ 38,840 $ 42,265 $ 55,000 $ 59,344 $ 59,344 $56,724
Operating Cash Flow
margin (i).............. 26.9% 29.9% 30.8% 38.6% 41.1% 41.1% 39.4%
Cash interest expense.... 542 337 233 279 48,289 46,876 46,876
Capital expenditures
(j)..................... 3,556 5,545 4,409 6,661 4,880 4,880 4,855
Ratio of Operating Cash
Flow to cash interest
expense................. -- 1.27x 1.21x
Ratio of Operating Cash
Flow to interest
expense................. -- .97x .93x
Ratio of total long-term
debt to Operating Cash
Flow.................... 9.80x 7.89x 8.25x
</TABLE>
(footnotes begin on next page)
19
<PAGE>
- --------
(a) Presented on a pro forma basis assuming that the Acquisition had occurred
on January 1, 1995. See Note (2) to the Consolidated Financial Statements
of Park Communications, Inc. and Subsidiaries.
(b) Presented on a pro forma basis assuming that the Acquisition, the
Refinancing Transactions and the sale of the Radio Station Assets on the
terms described herein occurred on either December 31, 1995 or March 31,
1996 for balance sheet data and on either January 1, 1995 or April 1, 1995
for all other data. The Warrants have been valued at approximately $2.8
million. Such amounts ascribed to the Warrants serve to reduce long-term
debt and increase additional paid in capital. The amounts of debt discount
resulting from such ascribed amounts will be amortized to interest expense
over the life of the debt using the effective yield method.
(c) On December 31, 1993, the Company sold 33 newspaper publications located in
13 of its smaller markets. The impact of the sale of these publications was
not material to net income in 1993. The results of operations of the 33
newspaper publications are included in the 1991, 1992 and 1993 operating
results as follows:
<TABLE>
<CAPTION>
1991 1992 1993
------- ------- -------
<S> <C> <C> <C>
Net revenue.................. $11,132 $10,812 $10,385
Operating expenses........... 11,304 10,707 10,551
Operating income (loss) be-
fore depreciation and amor-
tization.................... (172) 105 (166)
</TABLE>
(d) Includes Central Corporate Overhead allocated as follows:
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Park Broadcasting............ $ 1,151 $ 1,296 $ 1,280 $1,287 $1,142 $1,298
Park Newspapers.............. 2,191 2,280 2,102 1,988 2,217 2,393
------- ------- ------- ------ ------ ------
Total Central Corporate Over-
head........................ $ 3,342 $ 3,576 $ 3,382 $3,275 $3,359 $3,691
======= ======= ======= ====== ====== ======
</TABLE>
(e) The results of the Company's radio station operations are included in the
single line of the income statement labeled "loss from discontinued
operations." See Note (5) to the Consolidated Financial Statements of Park
Communications, Inc. and Subsidiaries.
(f) For purposes of this ratio, "fixed charges" are defined as interest,
amortization of debt expense and a portion of rental expense representing
the interest factor, and "earnings" are defined as net loss before income
taxes and fixed charges. On a pro forma basis as described in Note (a)
above, earnings were insufficient to cover fixed charges by $34.0 million
for the year ended December 31, 1995. On a pro forma basis as described in
Note (b) above, earnings were insufficient to cover fixed charges by $29.3
million for the year ended December 31, 1995 and by $31.4 million for the
12 months ended March 31, 1996.
(g) Does not include long-term film contract liability totaling $2,480 at
December 31, 1995 and $2,170 at March 31, 1996 as such liability is not
included as Indebtedness as defined in the Indenture.
(h) Operating Cash Flow includes additional cash television network
compensation payments received but not recognized as revenue under GAAP.
The terms of the Company's network affiliation agreements executed during
1995 for seven of its nine television stations provide for the Company to
receive cash payments thereunder in excess of revenue recognized for GAAP
purposes of approximately $4.5 million in each of 1995, 1996 and 1997 and
approximately $2.8 million in 1998. Thereafter, revenue recognized under
GAAP will exceed cash payments received by approximately $2.7 million
annually for 1999 through 2004. The Company has included Operating Cash
Flow data because it understands that such data are used by investors to
measure a company's ability to service its debt and meet certain of its
other obligations. Operating Cash Flow does not purport to represent cash
flows from operating activities determined in accordance with GAAP as
reflected in the historical consolidated financial statements; it is not a
measure of financial performance under GAAP and should not be considered in
isolation or as a substitute for or more important than net income or cash
flows from operating activities.
(i) Defined as Operating Cash Flow divided by net revenue.
(j) Capital expenditures do not include the purchase of the assets of two
television stations, WTVQ in 1992 and KALB in 1993. The amounts for such
asset purchases were $6,135 in 1992 and $8,804 in 1993. In addition,
capital expenditures in 1994 do not include certain operating equipment and
facilities purchased from RHP Incorporated for $4,175, which it had been
leasing. Also not included are capital expenditures resulting from trade
agreements and capital expenditures of the discontinued radio station
operations.
20
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED TWELVE
DECEMBER 31, 1995 MONTHS
YEAR ENDED DECEMBER 31, PRO FORMA ENDED
------------------------------------- -------------------------- MARCH 31,
ACQUISITION TRANSACTIONS 1996
1991 1992 1993 1994 1995 (A) 1995 (B) PRO FORMA (B)
PARK BROADCASTING, INC. ------- -------- -------- -------- ----------- ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue............. $38,972 $ 47,216 $ 52,593 $ 65,621 $ 65,408 $ 65,408 $ 64,976
------- -------- -------- -------- --------- -------- --------
Operating expenses:
Cost of sales.......... 13,451 15,580 16,297 18,016 19,783 19,783 20,400
Selling, general and
administrative (c).... 9,933 11,860 12,406 14,835 14,200 14,200 14,869
------- -------- -------- -------- --------- -------- --------
Total operating expenses
....................... 23,384 27,440 28,703 32,851 33,983 33,983 35,269
------- -------- -------- -------- --------- -------- --------
Operating income before
depreciation and
amortization (c)....... 15,588 19,776 23,890 32,770 31,425 31,425 29,707
Depreciation and
amortization........... 2,573 3,337 4,162 5,187 16,238 16,238 16,091
------- -------- -------- -------- --------- -------- --------
Operating income........ 13,015 16,439 19,728 27,583 15,187 15,187 13,616
Interest expense........ (3) (55) (37) (185) (40,856) (29,794) (29,794)
Interest income......... 1 1 -- -- 327 327 428
Other................... (131) (78) (225) (393) (341) (341) (347)
------- -------- -------- -------- --------- -------- --------
Income/(loss) before
income tax............. 12,882 16,307 19,466 27,005 (25,683) (14,621) (16,097)
Provision/(benefit) for
income tax............. 5,015 6,320 7,370 10,457 (8,335) (3,695) (4,082)
------- -------- -------- -------- --------- -------- --------
Income/(loss) from
continuing operations.. 7,867 9,987 12,096 16,548 (17,348) $(10,926) $(12,015)
======== ========
Loss from discontinued
operations (d)......... (1,537) (2,140) (1,836) (69) (6,014)
------- -------- -------- -------- ---------
Net income/(loss) ...... $ 6,330 $ 7,847 $ 10,260 $ 16,479 $ (23,362)
======= ======== ======== ======== =========
Ratio of earnings to
fixed
charges (e)............ -- -- --
BALANCE SHEET DATA
(AT END OF PERIOD):
Total assets............ $94,368 $106,669 $129,741 $131,662 $550,890 $434,437 $430,674
Total long-term debt,
excluding current
maturities............. 1,873 2,121 3,627 3,537 413,299(f) 235,733(f) 235,649
OTHER FINANCIAL DATA AND
RATIOS:
Broadcast Cash Flow (g). $16,739 $ 21,072 $ 25,170 $ 34,057 $ 37,116 $ 37,116 $ 35,642
Broadcast Cash Flow
margin (h)............. 43.0% 44.6% 47.9% 51.9% 56.7% 56.7% 54.9%
Cash interest expense... 3 55 37 185 28,479 28,384 28,384
Capital expenditures
(i).................... 2,472 3,293 2,897 3,803 2,758 2,758 2,818
Ratio of Broadcast Cash
Flow to cash interest
expense................ -- 1.31x 1.26x
Ratio of Broadcast Cash
Flow to interest
expense................ -- 1.25x 1.20x
Ratio of total long-term
debt to Broadcast Cash
Flow................... 11.14x 6.35x 6.61x
</TABLE>
(footnotes begin on next page)
21
<PAGE>
- --------
(a) Presented on a pro forma basis assuming that the Acquisition had occurred
on January 1, 1995. See Note (2) to the Consolidated Financial Statements
of Park Broadcasting, Inc. and Subsidiaries.
(b) Presented on a pro forma basis assuming that the Acquisition, the
Refinancing Transactions and the sale of the Radio Station Assets on the
terms described herein occurred on either December 31, 1995 or March 31,
1996 for balance sheet data and on either January 1, 1995 or April 1, 1995
for all other data.
(c) Includes an allocation of Central Corporate Overhead from Park
Communications to Park Broadcasting as follows:
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Allocated Central Corporate Overhead..... $1,151 $1,296 $1,280 $1,287 $1,142 $1,298
</TABLE>
Cash payments to Park Communications from Park Broadcasting to satisfy
future allocations of Central Corporate Overhead will be subject to certain
limitations and restrictions under the indenture governing the Broadcasting
Notes.
(d) The results of the Company's radio station operations are included in the
single line of the income statement labeled "loss from discontinued
operations." See Note (5) to the Consolidated Financial Statements of Park
Broadcasting, Inc. and Subsidiaries.
(e) For purposes of this ratio, "fixed charges" are defined as interest,
amortization of debt expense and a portion of rental expense representing
the interest factor, and "earnings" are defined as net loss before income
taxes and fixed charges. On a pro forma basis as described in Note (a)
above, earnings were insufficient to cover fixed charges by $25.7 million
for the year ended December 31, 1995. On a pro forma basis as described in
Note (b) above, earnings were insufficient to cover fixed charges by $14.6
million for the year ended December 31, 1995 and by $16.1 million for the
12 months ended March 31, 1996.
(f) Does not include long-term film contract liability totaling $2,480 at
December 31, 1995 and $2,170 at March 31, 1996 as such liability is not
included as Indebtedness as defined in the Indenture.
(g) Broadcast Cash Flow includes additional cash television network
compensation payments received but not recognized as revenue under GAAP.
Programming expenses are included in television operating expenses. The
terms of the Company's network affiliation agreements executed during 1995
for seven of its nine television stations provide for the Company to
receive cash payments thereunder in excess of revenue recognized for GAAP
purposes of approximately $4.5 million in each of 1995, 1996 and 1997 and
approximately $2.8 million in 1998. Thereafter, revenue recognized under
GAAP will exceed cash payments received by approximately $2.7 million
annually for 1999 through 2004. The Company has included Broadcast Cash
Flow data because it understands that such data are used by investors to
measure a company's ability to service its debt and meet certain of its
other obligations. Broadcast Cash Flow does not purport to represent cash
flows from operating activities determined in accordance with GAAP as
reflected in the historical consolidated financial statements; it is not a
measure of financial performance under GAAP and should not be considered in
isolation or as a substitute for or more important than net income or cash
flows from operating activities.
(h) Defined as Broadcast Cash Flow divided by net revenue.
(i) Capital expenditures do not include the purchase of the assets of two
television stations, WTVQ in 1992 and KALB in 1993. Such amounts were
$6,135 in 1992 and $8,804 in 1993. In addition, capital expenditures in
1994 do not include the purchase for $3,575 of certain operating equipment
and facilities from RHP Incorporated, which the Company had been leasing.
Also not included are capital expenditures resulting from trade agreements
and capital expenditures of the discontinued radio station operations.
22
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED TWELVE
DECEMBER 31, 1995 MONTHS
YEAR ENDED DECEMBER 31, PRO FORMA ENDED
------------------------------------ ------------------------ MARCH 31,
ACQUISITION TRANSACTIONS 1996
1991 1992 1993 1994 1995 (A) 1995 (B) PRO FORMA (B)
PARK NEWSPAPERS, INC. -------- -------- ------- ------- ----------- ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue (c)............. $ 82,200 $ 82,584 $84,751 $76,810 $ 78,904 $ 78,904 $78,987
-------- -------- ------- ------- -------- -------- --------
Operating expenses:
Cost of sales.......... 39,444 37,628 39,221 32,364 33,810 33,810 34,351
Selling, general and
administrative (d).... 25,784 25,892 27,155 22,216 21,869 21,869 22,255
-------- -------- ------- ------- -------- -------- --------
Total operating expenses
(c).................... 65,228 63,520 66,376 54,580 55,679 55,679 56,606
-------- -------- ------- ------- -------- -------- --------
Operating income before
depreciation and
amortization (c)....... 16,972 19,064 18,375 22,230 23,225 23,225 22,381
Depreciation and
amortization........... 7,614 7,247 6,895 5,816 8,167 8,167 8,342
-------- -------- ------- ------- -------- -------- --------
Operating income........ 9,358 11,817 11,480 16,414 15,058 15,058 14,039
Interest expense........ (512) (279) (177) (76) (24,810) (19,144) (19,144)
Interest income......... 29 42 45 11 291 291 321
Other................... (304) (380) (204) (832) (511) (511) (444)
-------- -------- ------- ------- -------- -------- --------
Income/(loss) before
income tax............. 8,571 11,200 11,144 15,517 (9,972) (4,306) (5,228)
Provision/(benefit) for
income tax............. 4,499 5,370 5,335 7,007 (2,792) (946) (1,293)
-------- -------- ------- ------- -------- -------- --------
Net income/(loss) (c)... $ 4,072 $ 5,830 $ 5,809 $ 8,510 $ (7,180) $ (3,360) $(3,935)
======== ======== ======= ======= ======== ======== ========
Ratio of earnings to
fixed charges (e)...... -- -- --
BALANCE SHEET DATA
(AT END OF PERIOD):
Total assets............ $110,705 $115,225 $98,075 $93,060 $219,738 $225,058 $222,294
Total long-term debt,
excluding current
maturities............. 2,792 1,912 746 360 168,305 155,240 155,120
OTHER FINANCIAL DATA AND
RATIOS:
Newspaper Cash Flow (f). $ 19,163 $ 21,344 $20,477 $24,218 $ 25,587 $ 25,587 $24,774
Newspaper Cash Flow
margin (g)............. 23.3% 25.8% 24.2% 31.5% 32.4% 32.4% 31.4%
Cash interest expense... 512 279 177 76 19,768 18,493 18,493
Capital expenditures
(h).................... 1,084 2,252 1,512 2,858 2,122 2,122 2,037
Ratio of Newspaper Cash
Flow to cash interest
expense................ -- 1.38x 1.34x
Ratio of Newspaper Cash
Flow to interest
expense................ -- 1.34x 1.29x
Ratio of total long-term
debt to Newspaper Cash
Flow................... 6.58x 6.07x 6.26x
</TABLE>
(footnotes begin on next page)
23
<PAGE>
- -------
(a) Presented on a pro forma basis assuming that the Acquisition had occurred
on January 1, 1995. See Note (2) to the Consolidated Financial Statements
of Park Newspapers, Inc. and Subsidiaries.
(b) Presented on a pro forma basis assuming that the Acquisition, the
Refinancing Transactions and the sale of the Radio Station Assets on the
terms described herein occurred on either December 31, 1995 or March 31,
1996 for balance sheet data and on either January 1, 1995 or April 1, 1995
for all other data.
(c) On December 31, 1993, the Company sold 33 newspaper publications located
in 13 of its smaller markets. The impact of the sale of these publications
was not material to net income in 1993. The results of operations of the
33 newspaper publications are included in the 1991, 1992 and 1993
operating results as follows:
<TABLE>
<CAPTION>
1991 1992 1993
------- ------- -------
<S> <C> <C> <C>
Revenue......................................... $11,132 $10,812 $10,385
Operating expenses.............................. 11,304 10,707 10,551
Operating income (loss) before depreciation and
amortization................................... (172) 105 (166)
</TABLE>
(d) Includes an allocation of Central Corporate Overhead from Park
Communications to Park Newspapers as follows:
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Allocated Central Corporate Over-
head............................ $2,191 $2,280 $2,102 $1,988 $2,217 $2,393
</TABLE>
Cash payments to Park Communications from Park Newspapers to satisfy future
allocations of Central Corporate Overhead will be subject to certain
limitations and restrictions under the indenture governing the Newspapers
Notes.
(e) For purposes of this ratio, "fixed charges" are defined as interest,
amortization of debt expense and a portion of rental expense representing
the interest factor, and "earnings" are defined as net loss before income
taxes and fixed charges. On a pro forma basis as described in Note (a)
above, earnings were insufficient to cover fixed charges by $10.0 million
for the year ended December 31, 1995. On a pro forma basis as described in
Note (b) above, earnings were insufficient to cover fixed charges by $4.3
million for the year ended December 31, 1995 and by $5.2 million for the
12 months ended March 31, 1996.
(f) The Company has included Newspaper Cash Flow data because it understands
that such data are used by investors to measure a company's ability to
service its debt and meet certain of its obligations. Newspaper Cash Flow
does not purport to represent cash flows from operating activities
determined in accordance with GAAP as reflected in the historical
consolidated financial statements; it is not a measure of financial
performance under GAAP and should not be considered in isolation or as a
substitute for or more important than net income or cash flows from
operating activities.
(g) Defined as Newspaper Cash Flow divided by revenue.
(h) Capital expenditures do not include the purchase in 1994 for $600 of
certain operating equipment and facilities from RHP Incorporated, which
the Company had been leasing.
24
<PAGE>
RISK FACTORS
In addition to the other information set forth in this Prospectus, investors
should carefully review the following risk factors in evaluating whether to
tender their Series A Notes for Series B Notes in the Exchange Offer.
SUBSTANTIAL LEVERAGE
The Company has, and after giving effect to the sale of Units and the other
Refinancing Transactions and the Exchange Offer will continue to have,
consolidated indebtedness that is substantial in relation to its total
stockholder's equity. The Acquisition was financed entirely by borrowings
under the Prior Credit Agreement and existing cash-on-hand at the Company. At
December 31, 1995, the Company had outstanding long-term indebtedness of
approximately $581.6 million, with a total stockholder's deficit of
approximately $17.4 million. After giving pro forma effect to the sale of
Units and the other Refinancing Transactions and the application of the net
proceeds therefrom, the total consolidated long-term indebtedness of the
Company outstanding at December 31, 1995 would have been approximately $526.2
million, as compared to a total stockholder's equity of approximately $15.3
million. On a pro forma basis assuming that the Acquisition had occurred on
January 1, 1995, earnings were insufficient to cover fixed charges by $34.0
million during the year ended December 31, 1995. On a pro forma basis after
giving effect to the sale of Units, the other Refinancing Transactions and the
sale of the Radio Station Assets on the terms described herein and the
application of the net proceeds therefrom, the total consolidated long-term
indebtedness of the Company outstanding at December 31, 1995 would have been
approximately $468.2 million, as compared to a total stockholder's equity of
approximately $51.9 million, and earnings would have been insufficient to
cover fixed charges by approximately $29.3 million for the year ended December
31, 1995. The Company will have significant cash interest expense relating to
its indebtedness, and a significant amount of the Company's consolidated cash
flow will be required for debt service.
The degree to which the Company is leveraged could have important
consequences to holders of the Notes including, but not limited to, the
following: (i) the Company's ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions, general
corporate or other purposes may be limited; (ii) a substantial portion of the
Company's consolidated cash flow from operations will be dedicated to the
payment of the principal of, and interest on, its consolidated debt; (iii) the
agreements governing the Company's long-term debt contain certain restrictive
financial and operating covenants which could limit the Company's ability to
compete, as well as its ability to expand; and (iv) the Company's substantial
leverage may make it more vulnerable to economic downturns, limit its ability
to withstand competitive pressures and reduce its flexibility in responding to
changing business and economic conditions. The ability of the Company to pay
interest and principal on the Notes and to satisfy its debt obligations will
be dependent on the future operating performance of the Company, which could
be affected by changes in economic conditions and other factors, including
factors beyond the control of the Company. A failure to comply with the
covenants and other provisions of its debt instruments could result in events
of default under such instruments, which could permit acceleration of the debt
under such instruments and in some cases acceleration of debt under other
instruments that contain cross-default or cross-acceleration provisions. See
"Description of Certain Indebtedness" and "Description of the Notes--Events of
Default."
If the Company is unable to generate sufficient cash flow to meet its debt
obligations, the Company may be required to renegotiate the terms of the
instruments relating to its long-term debt or to refinance all or a portion of
its long-term debt. However, there can be no assurance that the Company will
be able to successfully renegotiate such terms or refinance its indebtedness,
or, if the Company were able to do so, that the terms available would be
favorable to it. In the event that the Company were unable to refinance its
indebtedness or obtain new financing under these circumstances, the Company
likely would have to consider various other options such as the sale of
certain assets to meet its required debt service, negotiation with its lenders
to restructure applicable indebtedness or other options available to it under
law. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
25
<PAGE>
HOLDING COMPANY STRUCTURE; DEPENDENCE ON CASH FLOW FROM SUBSIDIARIES;
EFFECTIVE SUBORDINATION OF NOTES
The Company's operations are conducted through its direct and indirect
wholly-owned subsidiaries, including Park Broadcasting and Park Newspapers. As
a holding company, the Company owns no significant assets other than the
capital stock of its subsidiaries. Accordingly, the Company's ability to pay
its obligations, including its obligation to pay interest on and principal of
the Notes, whether at maturity, upon a Change of Control Triggering Event or
otherwise, will be dependent primarily upon receiving dividends and other
payments or advances from its subsidiaries or new equity. The subsidiaries are
separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due pursuant to the Notes or to make funds
available therefor. The ability of the subsidiaries to pay dividends or make
other payments or advances to the Company will depend upon their operating
results and will be subject to applicable laws and contractual restrictions.
The indentures pursuant to which the Broadcasting Notes and the Newspapers
Notes were issued impose, and agreements relating to other indebtedness of
Park Broadcasting and Park Newspapers may impose, significant restrictions on
the payment of dividends and the making of loans by Park Broadcasting or Park
Newspapers to the Company. The Senior Credit Facility requires that, so long
as any indebtedness is outstanding thereunder, all interest on the Notes will
be payable solely by the issuance of Notes. See "Description of Certain
Indebtedness."
The Notes will be effectively subordinated to all secured indebtedness of
the Company to the extent of the assets securing such indebtedness, including
indebtedness under the Senior Credit Facility, and to all existing and future
indebtedness and other obligations of subsidiaries of the Company, including
the Broadcasting Notes, the Newspapers Notes and any subsidiary guarantee of
the Senior Credit Facility. The claims of holders of the Notes upon any
distribution of assets of any subsidiary of the Company in the event of the
liquidation or reorganization of such subsidiary will be subordinated to the
prior claims of present and future creditors of such subsidiary. In such an
event, there may not be sufficient assets remaining to pay amounts due on any
or all of the Notes then outstanding. As of December 31, 1995, on a pro forma
basis after giving effect to the sale of Units and the other Refinancing
Transactions and the application of the net proceeds therefrom, the Company
would have had $58.0 million of secured indebtedness outstanding and the
subsidiaries of the Company would have had $391.4 million of indebtedness
outstanding (excluding guarantees of the Senior Credit Facility). See
"Description of Certain Indebtedness."
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The Indenture restricts, among other things, the ability of the Company and
certain of its subsidiaries to, among other things, (i) incur additional
indebtedness, (ii) pay dividends or make certain other restricted payments or
make certain investments, (iii) consummate certain asset sales, (iv) enter
into certain transactions with affiliates, (v) incur certain liens, (vi)
impose restrictions on the ability of a Restricted Subsidiary to pay dividends
or make certain payments to the Company, (vii) merge or consolidate with any
other person or (viii) sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the assets of the Company. The
indentures governing the Broadcasting Notes and the Newspapers Notes contain
similar covenants applicable to Broadcasting and its subsidiaries and
Newspapers and its subsidiaries, respectively. In addition, the Senior Credit
Facility contains other and more restrictive covenants and prohibits the
Company from prepaying its indebtedness, including the Notes, in certain
circumstances. The Senior Credit Facility requires the Company to maintain
specified financial ratios and satisfy certain financial condition tests. The
Company's ability to meet those financial ratios and financial condition tests
can be affected by events beyond its control, and there can be no assurance
that the Company will meet those tests. A breach of any of these covenants
could result in a default under the Senior Credit Facility and/or the
Indenture. In the event of an event of default under the Senior Credit
Facility, the lenders thereunder could elect to declare all amounts
outstanding under the Senior Credit Facility, together with accrued interest,
to be immediately due and payable. If the Company were unable to repay those
amounts, the lenders could proceed against the collateral granted to them to
secure that indebtedness. If the indebtedness under the Senior Credit Facility
were to be accelerated, there can be no assurance that the assets of the
Company would be sufficient to repay in full that indebtedness and the other
indebtedness of the Company, including the Notes. The capital stock of Park
Broadcasting and Park Newspapers is pledged as security
26
<PAGE>
under the Senior Credit Facility. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources," "Description of Certain Indebtedness--Sales of Radio Station
Assets; Senior Credit Facility" and "Description of the Notes--Certain
Covenants."
FULL IMPLEMENTATION OF BUSINESS AND OPERATING STRATEGY
There can be no assurance that the Company will be able to fully implement
its business and operating strategy or that the anticipated results of its
strategy will be realized. In addition, after gaining experience with the
Company's operations under its new operating strategy, the Company and the
management team may decide to alter or discontinue certain aspects of the
operating strategy discussed herein and may adopt alternative or additional
strategies. Implementation of the strategy could also be affected by a number
of factors beyond its control, such as operating difficulties, increased
operating costs, regulatory developments, general economic conditions or
increased competition. Any such failure to implement the operating strategy or
improve the operating results of the Company could affect the ability of the
Company and its subsidiaries to service its indebtedness, including the Notes.
See "Business--Park Broadcasting--Business and Operating Strategy" and "--Park
Newspapers-- Business and Operating Strategy."
FAILURE TO CONSUMMATE SALES OF RADIO STATION ASSETS
As of May 6, 1996, Park Broadcasting had entered into definitive agreements
providing for the divestiture of all of the Radio Station Assets. Between May
6, 1996 and June 14, 1996, the Company had sold Radio Station Assets relating
to 12 of its radio stations. Sales of the remaining Radio Station Assets are
contingent upon the satisfaction of certain conditions, some of which are
beyond the control of the Company, including the approval of transfer of the
broadcasting licenses by the Federal Communications Commission (the "FCC").
The failure to consummate any such sales upon the terms currently in effect
and within the time frames currently anticipated could materially adversely
affect the ability of the Company to repay any amounts outstanding under the
Senior Credit Facility.
The Senior Credit Facility was entered into in anticipation of the sale of
the Radio Station Assets and matures on November 13, 1996, although it may be
extended by the Company for up to an additional six months under certain
circumstances. The Company is required to make mandatory prepayments in
certain situations, including at any time that the definitive agreements
referred to above which are in full force and effect do not provide for either
(i) gross proceeds to be received by the Company of at least 170%, or (ii) Net
Cash Proceeds (as such term is defined in the Senior Credit Facility) of at
least 110%, of the aggregate principal amount of loans outstanding under the
Senior Credit Facility. In such an event, the Company may not have sufficient
funds to make such mandatory prepayments, which would result in an event of
default under the Senior Credit Facility and permit the lenders thereunder to
accelerate the indebtedness outstanding thereunder and foreclose upon any
assets pledged to secure such indebtedness. Such acceleration could result in
an event of default under other indebtedness of the Company and its
subsidiaries. At June 14, 1996, the outstanding principal amount due under the
Senior Credit Facility was $22.2 million. See "Description of Certain
Indebtedness--Sales of Radio Station Assets; Senior Credit Facility."
The divestiture of the radio station operations will result in the Company
and its consolidated subsidiaries being obligated to pay income taxes of
approximately $65.4 million in connection therewith assuming the sale of all
radio station operations is completed on the terms described herein. The
Senior Credit Facility requires the loans outstanding thereunder to be repaid
from the proceeds of the sale of each Radio Station Asset (other than the
Company's KEZX-AM and KWJZ-FM radio stations in Seattle, Washington, the
assets of which are not subject to any liens granted to secure the Senior
Credit Facility) regardless of the taxes owed with respect to such sale until
such loan is repaid in full. In the event that the Company does not consummate
sales of Radio Station Assets in amounts sufficient or in the time frame
necessary to pay the taxes payable on the sales that were consummated (after
repayment of the Senior Credit Facility), the Company may not have available
cash resources to make such tax payments and any such failure to pay taxes
could have a material adverse effect on the Company's financial condition and
liquidity. See "Business--Discontinued Operations" and "Description of Certain
Indebtedness--Sales of Radio Station Assets; Senior Credit Facility."
27
<PAGE>
NETWORK AFFILIATION; RELIANCE ON NETWORK PROGRAMMING
Five of Park Broadcasting's nine television stations are affiliated with the
CBS television network, two each are affiliated with the NBC television
network and the ABC television network. Park Broadcasting is in the process of
acquiring, subject to FCC approval, a tenth television station, the ABC
affiliate in Montgomery, Alabama. Park Broadcasting's television viewership
levels are materially dependent upon programming provided by these major
networks. There can be no assurance that such programming will achieve or
maintain satisfactory viewership levels in the future.
Each of Park Broadcasting's stations is a party to an affiliation agreement
with one of the networks giving the station the right to rebroadcast programs
transmitted by the network. A network pays an affiliated station a fee for
each hour of network programming broadcast by the station in exchange for the
network's right to sell the majority of the commercial announcement time
during such programming.
Each of Park Broadcasting's five affiliation agreements with CBS expires in
December 2004, and each of its two affiliation agreements with NBC expires in
October 2005. Each such agreement is automatically renewable for successive
five-year terms unless prior written notice is provided by either party. Park
Broadcasting's two affiliation agreements with ABC expire in October 1997 and
February 1998. Such agreements are automatically renewable for successive two-
year terms unless prior written notice is provided by either party. The
Company is currently negotiating long-term affiliation agreements with ABC.
Under each affiliation agreement, the network possesses, under certain
circumstances, the right to terminate the agreement on prior written notice.
Although the Company expects that Park Broadcasting will continue to be able
to renew its network affiliation agreements, no assurance can be given that
such renewals will be obtained. The non-renewal or termination of one or more
of the network affiliation agreements could have a material adverse effect on
Park Broadcasting's and the Company's operations and would be an event of
default under the Senior Credit Facility and could lead to an acceleration of
the indebtedness thereunder. See "Business--Park Broadcasting--Network
Affiliation Agreements."
GOVERNMENT REGULATION
Park Broadcasting's television operations are subject to significant
regulation by the FCC under the Communications Act of 1934, as amended (the
"Communications Act"). A television station may not operate without the
authorization of the FCC. Approval of the FCC is required for the issuance,
renewal and transfer of station operating licenses. In particular, Park
Broadcasting's business will be dependent upon its continuing to hold
television broadcasting licenses from the FCC, which generally are issued for
terms of five years, although 1996 legislation has extended the license period
to eight years. The expiration dates for each of Park Broadcasting's FCC
licenses are set forth under the caption "Business--Park Broadcasting--Federal
Regulation of Television Broadcasting--License Grant and Renewal." While in
the vast majority of cases such licenses are renewed by the FCC, there can be
no assurance that Park Broadcasting's licenses will be renewed at their
expiration dates or, if renewed, that the renewal terms will be for five or
more years. The non-renewal or revocation of one or more of Park
Broadcasting's primary FCC licenses could have a material adverse effect on
Park Broadcasting's and the Company's operations and would be an event of
default under the Senior Credit Facility and could lead to an acceleration of
the indebtedness thereunder. The Communications Act prohibits the assignment
of a license or the transfer of control of a licensee without the prior
approval of the FCC. The exercise of the Warrants could require such approval
and there can be no assurance as to the Company's ability to obtain such
approval.
Congress and the FCC currently have under consideration and may in the
future adopt new laws, regulations and policies regarding a wide variety of
matters which could, directly or indirectly, affect the operation and
ownership of Park Broadcasting's broadcast properties. The Company is unable
to predict the impact which any such laws or regulations may have on Park
Broadcasting's operations. See "Business--Park Broadcasting--Federal
Regulation of Television Broadcasting."
28
<PAGE>
TELEVISION INDUSTRY CHARACTERISTICS
The television broadcasting industry has become increasingly competitive in
recent years with the growth of cable television, the Fox television network,
satellite dishes, multichannel multipoint distribution systems, pay-per-view
programs and the proliferation of VCRs and VCR movie rentals. These changes
have fractionalized television viewing audiences, and this trend is likely to
continue in the future. In addition, technological developments such as
"direct broadcast satellite," "high definition" and "interactive" television
may impose additional costs and competitive pressures on Park Broadcasting.
Each of Time Warner, Inc. and Paramount Communications, Inc. (now merged into
Viacom, Inc.) has recently launched a new television network. The Company is
unable to predict the effect, if any, that such existing and additional future
networks and other sources of programming, increased channel capacity,
increased channel offerings and access through the Internet will have on the
future results of Park Broadcasting's operations.
In addition to competing with other media outlets for audience share, Park
Broadcasting's stations also compete for advertising revenue, which comprise
the primary source of revenue for Park Broadcasting's operating subsidiaries.
Park Broadcasting's stations compete for such advertising revenue with other
television stations in their respective markets, as well as with other
advertising media, such as newspapers, radio stations, magazines, outdoor
advertising, transit advertising, yellow page directories, direct mail and
local cable systems.
Park Broadcasting's television stations are located in highly competitive
markets. Accordingly, the Company's results of operations will be dependent
upon the ability of each station to compete successfully in its market, and
there can be no assurance that any one of Park Broadcasting's stations will be
able to maintain or increase its current audience share or revenue share. To
the extent that certain of its competitors have, or may in the future obtain,
greater resources than Park Broadcasting, Park Broadcasting's ability to
compete successfully in its broadcasting markets may be impeded. See
"Business--Park Broadcasting--Competition-Television Broadcasting."
NEWSPAPER INDUSTRY CHARACTERISTICS
Park Newspapers' publishing business is concentrated in newspapers located
in cities or towns of small or medium populations in the United States.
Revenue in the newspaper industry is dependent primarily upon advertising
revenue and paid circulation. Competition for advertising and circulation
revenue comes from local and regional newspapers, radio, broadcast and cable
television, direct mail, and other communications and advertising media. The
extent and nature of such competition is, in large part, determined by the
location and demographics of the markets and the number of media alternatives
in those markets. In Park Newspapers' case, its paid daily newspapers are the
only paid daily newspapers of general circulation published in their
respective cities or towns. There are no broadcast television stations
licensed to any city or town in which Park Newspapers publishes a daily
newspaper, although regional television service is provided by broadcast
television stations licensed to larger nearby communities and by cable
television systems. Other daily newspapers published in nearby locations are
generally circulated in some of Park Newspapers' markets. Some of such
competitors are larger and have greater financial resources than Park
Newspapers. Competition for advertising revenue also arises from radio
stations broadcasting in such markets. See "Business--Park Newspapers--
Competition-Publishing."
In recent years on-line services and other new technologies have also begun
to compete with newspapers. Although it is impossible to predict the extent of
such competition, the Company believes that such technologies are less likely
to represent significant competition in smaller markets where advertisers are
more likely to focus limited budgets on outlets such as local newspapers
having more limited coverage areas. The Company also believes that its news
collection system in the communities served by Park Newspapers' publications
positions Park Newspapers to provide news in future electronic delivery
systems.
NEWSPRINT COSTS
Newsprint represents the single largest raw material expense of Park
Newspapers' business and, together with employee costs, is one of the most
significant operating costs in the newspaper industry. Newsprint costs
29
<PAGE>
increased approximately 40% per metric ton in 1995 on an industry-wide basis
and may continue to increase in 1996, although any such increases in 1996 are
not anticipated to be as significant as the 1995 increases. Newsprint expenses
represented 12%, 12% and 15% of Park Newspapers' total operating costs and
expenses for the years ended December 31, 1993, 1994 and 1995, respectively.
Although Park Newspapers has implemented measures in an attempt to offset the
rise in newsprint prices, such as affording individual newspapers the ability
to purchase newsprint under master supply contracts to avoid reliance on spot
purchases, and total operating expenses, including newsprint costs, in 1995
increased by only 2.0% over 1994, newsprint price increases have had and may
continue to have an adverse effect on the Company's and Park Newspapers'
results of operations.
EFFECT OF NATIONAL AND LOCAL ECONOMIC CONDITIONS
Each of the Company's businesses is cyclical in nature. Because the Company
relies upon sales of advertising at Park Broadcasting's television stations
and Park Newspapers' newspapers for substantially all of its revenue, the
Company's operating results are particularly susceptible to being affected by
prevailing economic conditions. Although the geographic diversity of the
Company's operations reduces the likelihood that local economic fluctuations
could materially affect the Company, it has exposure to changes in regional
and national economic conditions in the United States, particularly as they
may affect advertising expenditures and, with respect to newspapers,
circulation levels. Because of the substantial portion of the Company's
revenue derived from local advertisers, the Company's operating results in
individual markets could be adversely affected by local or regional economic
downturns.
CONTROL BY STOCKHOLDERS
Gary B. Knapp and Donald R. Tomlin, Jr. effectively control the Company.
Messrs. Knapp and Tomlin are the only directors of the Company, each with 50%
of the voting control, and, collectively, are able to control the vote on all
matters submitted to a vote of the Company's stockholder. There can be no
assurance that the interests of Messrs. Knapp and Tomlin will not conflict
with the interests of the holders of the Notes or that a potential "deadlock"
will not arise between Messrs. Knapp and Tomlin which could have a material
adverse effect on the Company and its operations. See "Securities Ownership of
Certain Beneficial Owners."
FRAUDULENT TRANSFER CONSIDERATIONS
Under applicable provisions of the United States Bankruptcy Code or
comparable provisions of state fraudulent transfer and conveyance laws, if the
Company, at the time it issued the Notes, (a) incurred such indebtedness with
the actual intent to hinder, delay or defraud creditors or (b)(i) received
less than reasonably equivalent value or fair consideration therefor and
(ii)(A) was insolvent at the time of such incurrence, (B) was rendered
insolvent by reason of such incurrence (and the application of the proceeds
thereof), (C) was engaged or was about to engage in a business or transaction
for which the assets remaining with the Company constituted unreasonably small
capital to carry on its business or (D) intended to incur, or believed that it
would incur, debts beyond its ability to pay such debts as they mature, then,
in each such case, a court of competent jurisdiction could avoid, in whole or
in part, the Notes or, in the alternative, fashion other equitable relief such
as subordinating the Notes to existing and future indebtedness of the Company.
The measure of insolvency for purposes of the foregoing would likely vary
depending upon the law applied in such case. Generally, however, the Company
would be considered insolvent if the sum of its debts, including contingent
liabilities, was greater than all of its assets at a fair valuation, or if the
present fair-saleable value of its assets was less than the amount that would
be required to pay the probable liabilities on its existing debts, including
contingent liabilities, as such debts become absolute and matured. The
Company's management believes that, for purposes of the United States
Bankruptcy Code and state fraudulent transfer and conveyance laws, the Notes
were issued without the intent to hinder, delay or defraud creditors and for
proper purposes and in good faith; that the Company received reasonably
equivalent value or fair consideration therefor and that, after the issuance
of the Notes and the application of the net proceeds thereof, the Company is
solvent, has sufficient capital for carrying on its business and is able to
pay its debts as they mature. However, there can be no assurance that a court
passing on such issues would agree with the determination of the Company's
management.
30
<PAGE>
LACK OF ESTABLISHED MARKET FOR THE SECURITIES
Prior to the Exchange Offer, there has not been any public market for the
Units, Series A Notes or Initial Warrants. The Series A Notes have not been
registered under the Securities Act and will be subject to restrictions on
transferability to the extent that they are not exchanged for Series B Notes
by holders who are entitled to participate in the Exchange Offer. The holders
of Series A Notes (other than any such holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) who are not
eligible to participate in the Exchange Offer are entitled to certain
registration rights, and the Company is required to file a Shelf Registration
Statement with respect to such Series A Notes. The Series B Notes will
constitute a new issue of securities with no established trading market. The
Company does not intend to list the Series B Notes on any securities exchange
or to seek their admission to trading in any automated quotation system. The
Initial Purchasers have advised the Company that they currently intend to make
a market in the Series B Notes, but they are not obligated to do so and may
discontinue such market-making at any time without notice. In addition, such
market-making activity will be subject to the limits imposed by the Securities
Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and may be limited during the Exchange Offer and the pendency of any Shelf
Registration Statement. Accordingly, no assurance can be given that an active
public or other market will develop for the Series B Notes or as to the
liquidity of the trading market for the Series B Notes. If a trading market
does not develop or is not maintained, holders of the Series B Notes may
experience difficulty in reselling the Series B Notes or may be unable to sell
them at all. If a market for the Series B Notes develops, any such market may
be discontinued at any time.
If a public trading market develops for the Series B Notes, future trading
prices of the Series B Notes will depend on many factors, including, among
other things, prevailing interest rates, the Company's operating results and
the market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Company, the Series B Notes may trade at a discount from
their principal amount.
FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES; CONSEQUENCES OF FAILURE TO
EXCHANGE
Issuance of the Series B Notes in exchange for the Series A Notes pursuant
to the Exchange Offer will be made only after a timely receipt by the Company
of such Series A Notes, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of the Series
A Notes desiring to tender such Series A Notes in exchange for Series B Notes
should allow sufficient time to ensure timely delivery. The Company is under
no duty to give notification of defects or irregularities with respect to the
tenders of Series A Notes for exchange. Series A Notes that are not tendered
or are tendered but not accepted will, following the consummation of the
Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof and, upon consummation of the Exchange Offer, certain
registration rights under the Registration Rights Agreement will terminate. In
addition, any holder of Series A Notes who tenders in the Exchange Offer for
the purpose of participating in a distribution of the Series B Notes 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 transactions. Each holder of the
Series A Notes (other than certain specified holders) who wishes to exchange
the Series A Notes for Series B Notes in the Exchange Offer will be required
to represent in the Letter of Transmittal that (i) it is not an affiliate of
the Company, (ii) the Series B Notes to be received by it are being acquired
in the ordinary course of its business and (iii) at the time of commencement
of the Exchange Offer, it has no arrangement with any person to participate in
the distribution (within the meaning of the Securities Act) of the Series B
Notes. Each Participating Broker-Dealer that receives Series B Notes for its
own account in exchange for Series A Notes, where such Series A Notes were
acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of such Series B Notes. See "Plan
of Distribution." To the extent that Series A Notes are tendered and accepted
in the Exchange Offer, the trading market for untendered and tendered but
unaccepted Series A Notes could be adversely affected. See "The Exchange
Offer."
31
<PAGE>
ORIGINAL ISSUE DISCOUNT
There will be no federal income tax consequences as a result of an exchange
pursuant to the Exchange Offer. Therefore, the same federal income tax
consequences apply to the Series B Notes as are applicable to the Series A
Notes.
The Series A Notes were issued at a discount from their principal amount at
maturity. Original issue discount (the difference between the stated
redemption price at maturity of the Notes and the issue price of the Notes)
will accrue from the issue date of the Series A Notes and generally will be
includable as interest income in the holder's gross income for United States
federal income tax purposes in advance of the cash payments to which the
income is attributable. For a more detailed discussion of the federal income
tax consequences to the holders of the Notes of the purchase, ownership and
disposition of the Notes, see "Certain Federal Income Tax Consequences."
If a bankruptcy case is commenced by or against the Company under the United
States Bankruptcy Code (the "Bankruptcy Code") after the issuance of the
Notes, the claim of a holder of any of the Notes with respect to the principal
amount thereof may be limited to an amount equal to the sum of (i) the initial
offering price allocable to the Notes and (ii) the portion of original issue
discount which is not deemed to constitute "unmatured interest" for purposes
of the Bankruptcy Code. Any original issue discount that was not amortized as
of any such bankruptcy filing would constitute "unmatured interest."
NO DIVIDENDS
The Company does not expect to pay any dividends on the Common Stock in the
foreseeable future.
32
<PAGE>
THE COMPANY
The Company is a holding company which through its subsidiaries owns and
operates nine network affiliated television stations and 104 newspapers and
related publications in geographically diverse markets throughout the United
States. The Company's television stations are located in markets ranging from
the 51st to the 177th largest DMA. Five of these stations are affiliated with
CBS, two are affiliated with NBC and two are affiliated with ABC. The
Company's 104 newspaper publications include 28 daily newspapers, 26 non-daily
newspapers, and 50 "total market coverage" publications. The Company's
newspaper publications serve readers in 43 counties in 12 states. The
Company's daily newspaper publications range in circulation from approximately
4,000 to 17,000, with a combined average paid daily circulation of
approximately 242,000. For the year ended December 31, 1995, the Company had
net revenue of $144.3 million and Operating Cash Flow of $59.3 million.
The Company's principal offices are located at 1700 Vine Center Office
Tower, 333 West Vine Street, Lexington, Kentucky 40507, and its telephone
number is (606) 252-7275.
Park Broadcasting. Park Broadcasting owns and operates nine network
affiliated television stations primarily located in mid-sized southeastern
markets. The stations cover approximately 2.8 million households, or
approximately 3.0% of the total television households in the United States,
and are affiliated with three of the four major networks. The Company believes
that operating a geographically diverse group of stations with a mix of
network affiliations reduces the potential impact on the Company from the
performance of any one market or network. The networks have recently sought
longer terms in their affiliation agreements with local stations and generally
have increased the compensation payable to the local stations in return for
such longer term agreements. Each of the stations has recently renegotiated
its affiliation agreement, all of which provide for ten-year terms at
compensation levels substantially above the levels under the prior agreements.
See "Business--Park Broadcasting--Network Affiliation Agreements." For the
year ended December 31, 1995, Park Broadcasting had net revenue of $65.4
million and Broadcast Cash Flow of $37.1 million.
In February 1996, the Company entered into an agreement to acquire a network
affiliated television station in Montgomery, Alabama for $6.0 million, of
which $4.5 million has already been paid. The station to be acquired, WHOA, is
the ABC affiliate in the market. Consummation of the Montgomery Acquisition is
subject to certain customary conditions, including receipt of FCC approval of
the transfer of the broadcasting license and a related waiver of common
ownership of stations in overlapping markets. While the Company has no reason
to believe FCC approval and the related waiver will not be obtained, there can
be no assurance that approval will be given or that the transaction will be
consummated. An objection to the transfer of the WHOA broadcasting license to
the Company was filed with the FCC during the public comment period relating
to the application for such transfer. The Company does not believe that the
objection states any grounds upon which the FCC could refuse to approve the
transfer application, although such objection may cause such approval to be
delayed. Other than the Montgomery Acquisition, the Company does not presently
have any agreements to acquire or sell any television stations.
Park Newspapers. Park Newspapers owns and operates 104 geographically
diverse newspapers and related publications which include 28 daily newspapers
(of which 16 publish Sunday editions), 26 non-daily newspapers and 50 "total
market coverage" publications across the United States. Park Newspapers' daily
and non-daily newspapers generally combine news, sports and features with a
special emphasis on local information. These newspaper publications serve
readers in 43 counties in 12 states. Park Newspapers' daily newspaper
publications have a total paid daily circulation of approximately 242,000. The
markets which the publications serve, which the Company identifies using
postal ZIP codes, had a combined household count of approximately 545,000 and
aggregate retail sales of approximately $15.2 billion in 1995. The Company
believes that operating a geographically diverse group of newspapers reduces
the impact of the performance of any one newspaper. For the year ended
December 31, 1995, Park Newspapers had revenue of $78.9 million and Newspaper
Cash Flow of $25.6 million.
33
<PAGE>
Sale of Radio Station Assets. The Company is in the process of selling the
remaining Radio Station Assets, the operations of which have been conducted
through Park Broadcasting. The Company decided to divest such operations to
focus on its core television broadcasting and newspaper publication
operations, to raise cash to prepay a portion of its existing indebtedness and
to take advantage of attractive prices (which approximate in the aggregate
27.7 times Radio Cash Flow in 1995) for which such operations could be sold.
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement. The Company will not
receive any cash proceeds from the issuance of the Series B Notes in the
Exchange Offer. The net proceeds to the Company from the issuance of the Units
were approximately $75.6 million. These net proceeds, together with net
proceeds from the issuance of the Broadcasting Notes and the Newspapers Notes,
borrowings under the Senior Credit Facility and net proceeds from the sale of
the Company's WPAT-AM and FM radio stations, were used to repay all
outstanding indebtedness under the Prior Credit Agreement (the "Prior Term
Loan"). See "Summary--The Refinancing Transactions."
34
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1995 and as adjusted to give effect to the sale of Units and the
other Refinancing Transactions and the application of the net proceeds
therefrom, and as further adjusted for the sale of the Radio Station Assets on
the terms described herein and the application of the net proceeds therefrom.
This table should be read in conjunction with the Consolidated Financial
Statements and the notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1995
--------------------------------------
PRO FORMA
HISTORICAL(A) PRO FORMA(B) ADJUSTED(C)
------------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt:
Current portion of
long-term debt.......... $ 465 $ 465 $ 465
-------- -------- --------
Total short-term debt. 465 465 465
-------- -------- --------
Long-term debt, less
current maturities:
Park Communications
Prior Credit Agreement
(d)..................... 580,632 -- --
Senior Credit Facility. -- 58,000 --
Notes.................. -- 77,200 77,200
-------- -------- --------
580,632 135,200 77,200
-------- -------- --------
Park Broadcasting
Broadcasting Notes (e). -- 235,000 235,000
Promissory notes....... 733 733 733
-------- -------- --------
733 235,733 235,733
-------- -------- --------
Park Newspapers
Newspapers Notes....... -- 155,000 155,000
Subordinated notes..... 240 240 240
-------- -------- --------
240 155,240 155,240
-------- -------- --------
Total long-term debt.. 581,605 526,173 468,173
-------- -------- --------
Stockholder's equity:
Common stock........... -- -- --
Additional paid in
capital................. -- 2,800 2,800
Retained earnings
(deficit)............... (17,428) 12,472 49,130
-------- -------- --------
Total stockholder's
equity (deficit)........ (17,428) 15,272 51,930
-------- -------- --------
Total capitalization.... $564,642 $541,910 $520,568
======== ======== ========
</TABLE>
- --------
(a) Film contract liability has been excluded from long-term debt as they are
not included as Indebtedness as defined in the Indenture.
(b) Reflects the pro forma capitalization of the Company at December 31, 1995
after giving effect to the Refinancing Transactions and the application of
the net proceeds therefrom. It is contemplated that the Senior Credit
Facility will be paid in full with proceeds from the sale of the Radio
Station Assets. The Warrants have been valued at approximately $2.8
million. Such amounts ascribed to the Warrants serve to reduce long-term
debt and increase additional paid in capital.
(c) Reflects the pro forma capitalization of the Company at December 31, 1995
after giving effect to the Refinancing Transactions, the sale of all of
the Radio Station Assets on the terms described herein and the application
of the net proceeds therefrom, and the payment in full of the Senior
Credit Facility. The Warrants have been valued at approximately $2.8
million. Such amounts ascribed to the Warrants serve to reduce long-term
debt and increase additional paid in capital.
(d) As of December 31, 1995, due to "push down" accounting, $412,566 and
$168,065 were "pushed down" to the historical balance sheets of Park
Broadcasting and Park Newspapers, respectively, as a result of the Prior
Credit Agreement.
(e) Net of original issue discount of approximately $6.0 million.
35
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Unaudited Pro Forma Condensed Consolidated Statements of Continuing
Operations for the year ended December 31, 1995 and for the 12-month period
April 1, 1995 to March 31, 1996 present the consolidated results of continuing
operations of Park Communications, Inc. and Subsidiaries, Park Broadcasting,
Inc. and Subsidiaries and Park Newspapers, Inc. and Subsidiaries assuming that
the Acquisition and the application of the purchase method of accounting, the
Refinancing Transactions, the sale of the Radio Station Assets on the terms
described herein and the application of the net proceeds therefrom had been
completed as of January 1, 1995 and April 1, 1995, respectively. The Unaudited
Pro Forma Condensed Consolidated Balance Sheets as of December 31, 1995 and
March 31, 1996 are presented assuming the Refinancing Transactions, the sale
of the Radio Station Assets on the terms described herein and the application
of the net proceeds therefrom had been completed on December 31, 1995 and
March 31, 1996, respectively. All material adjustments necessary to reflect
the transactions are presented in the pro forma adjustments columns, which are
further described in the notes to unaudited pro forma condensed consolidated
financial statements.
The unaudited pro forma information does not purport to represent what the
Company's financial position or results of operations actually would have been
if the Acquisition, the Refinancing Transactions, the sale of the Radio
Station Assets on the terms described herein and the application of the net
proceeds therefrom had, in fact, occurred on such date or to project the
Company's financial position or results of operations at any future date or
for any future period. The unaudited pro forma condensed consolidated
financial statements should be read in conjunction with the Consolidated
Financial Statements and related notes thereto included elsewhere herein.
36
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1995 MARCH 31, 1996
--------------------------------------- --------------------------------------
PRO FORMA PRO FORMA
TRANSACTION FOR TRANSACTION FOR
HISTORICAL ADJUSTMENTS TRANSACTIONS HISTORICAL ADJUSTMENTS TRANSACTIONS
---------- ----------- ------------ ---------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash................... $ 19,026 $ 164,400 (a) $ 28,790 $ 63,041 $ 88,800 (d) $ 42,998
452,000 (b) 452,000 (b)
(606,636)(c) (560,843)(c)
Other current assets... 33,370 33,370 30,635 30,635
-------- ---------- -------- -------- --------- --------
Total current assets... 52,396 9,764 62,160 93,676 (20,043) 73,633
Property, plant and
equipment, net.......... 84,395 (19,935)(a) 64,460 78,121 (13,293)(d) 64,828
Intangible assets, net.. 635,447 (103,830)(a) 531,617 581,403 (51,829)(d) 529,574
Film contracts.......... 2,787 2,787 2,346 2,346
Other assets............ 7,757 18,000 (b) 24,789 8,225 18,000 (b) 25,281
(968)(c) (944)(c)
-------- ---------- -------- -------- --------- --------
Total assets........... $782,782 $ (96,969) $685,813 $763,771 $ (68,109) $695,662
======== ========== ======== ======== ========= ========
LIABILITIES AND
STOCKHOLDER'S EQUITY
Total current
liabilities............. $ 47,541 $ (26,391)(c) $ 21,150 $ 87,258 $ (45,850)(c) $ 41,408
Long-term film
contracts............... 2,480 2,480 2,170 2,170
Long-term debt--term
loan.................... 580,632 (580,632)(c) -- 514,993 (514,993)(c) --
Long-term debt--other... 973 973 770 770
Long-term debt--new
debt.................... -- 467,200 (b) 467,200 -- 467,200 (b) 467,200
Consulting/non-compete
contracts............... 2,851 2,851 2,654 2,654
Deferred income taxes... 165,733 (26,504)(a) 139,229 153,976 (16,705)(d) 137,271
-------- ---------- -------- -------- --------- --------
Total liabilities...... 800,210 (166,327) 633,883 761,821 (110,348) 651,473
-------- ---------- -------- -------- --------- --------
Stockholder's equity:
Common stock........... -- -- -- --
Paid in capital........ -- 2,800 (b) 2,800 -- 2,800 (b) 2,800
Retained earnings
(deficit)............. (17,428) 67,139 (a) 49,130 1,950 40,005 (d) 41,389
(581)(c) (566)(c)
-------- ---------- -------- -------- --------- --------
Total stockholder's
equity (deficit)...... (17,428) 69,358 51,930 1,950 42,239 44,189
-------- ---------- -------- -------- --------- --------
Total liabilities and
stockholder's equity.. $782,782 $ (96,969) $685,813 $763,771 $ (68,109) $695,662
======== ========== ======== ======== ========= ========
</TABLE>
- --------
(a) Reflects the sale of the radio station operations for aggregate gross
proceeds of $233.2 million, the incurrence of related selling expenses of
$3.4 million, the recognition of a gain on the sale and the payment of the
resulting income taxes of approximately $65.4 million.
(b) Reflects the issuance of the Notes, the Broadcasting Notes and the
Newspapers Notes and the incurrence of related fees and expenses of $18.0
million. Does not reflect the incurrence of fees and expenses of $2.1
million relating to the Senior Credit Facility. The Warrants have been
valued at approximately $2.8 million. Such amounts ascribed to the
Warrants serve to reduce long-term debt and increase additional paid in
capital.
(c) Reflects the payoff of the Prior Term Loan, accrued interest and write-off
of related debt issue costs.
(d) Reflects the sale of the Radio Station Assets for aggregate gross proceeds
of $130.2 million, the incurrence of related selling expenses of $1.9
million, the recognition of gain on the sale and the payment of resulting
income taxes of approximately $39.5 million. The sale of WPAT-AM and FM
closed in March 1996 and the gain is therefore reflected in the historical
balance sheet for March 31, 1996.
37
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
HISTORICAL
-------------------
NEW PARK OLD PARK
--------- -------- PRO FORMA PRO FORMA
5/11/95- 1/01/95- ACQUISITION FOR TRANSACTION FOR
12/31/95 5/10/95 ADJUSTMENTS ACQUISITION ADJUSTMENTS TRANSACTIONS
--------- -------- ----------- ----------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Gross revenue........... $101,756 $ 53,917 $ 155,673 $ 155,673
Less: commissions....... 7,360 4,001 11,361 11,361
--------- -------- ---------- ----------
Net revenue............. 94,396 49,916 144,312 144,312
--------- -------- ---------- ----------
Operating expenses:
Cost of sales.......... 33,278 20,315 53,593 53,593
Selling, general and
administrative........ 24,561 11,508 36,069 36,069
--------- -------- ---------- ----------
57,839 31,823 89,662 89,662
--------- -------- ---------- ----------
Operating income before
depreciation and
amortization........... 36,557 18,093 54,650 54,650
--------- -------- ---------- ----------
Depreciation............ 5,164 2,499 $ 420 (a) 8,083 8,083
Amortization............ 5,594 786 2,376 (a) 8,756 8,756
Amortization of excess
cost................... 4,598 715 1,884 (a) 7,197 7,197
--------- -------- -------- ---------- ----------
15,356 4,000 4,680 24,036 24,036
--------- -------- -------- ---------- ----------
Operating income........ 21,201 14,093 (4,680) 30,614 30,614
Interest expense........ (41,968) (67) (23,654)(b) (65,689) $ 65,536 (f) (60,962)
(60,809)(g)
Interest income......... 866 3,181 (2,692)(c) 1,355 1,355
Other expense........... (179) (10,693) 10,592 (d) (280) (280)
--------- -------- -------- ---------- -------- ----------
(Loss) income from
continuing operations
before income taxes.... (20,080) 6,514 (20,434) (34,000) 4,727 (29,273)
Provision (benefit) for
income taxes........... (6,494) 5,954 (10,340) (10,880)(e) 2,706 (h) (8,174)
--------- -------- -------- ---------- -------- ----------
(Loss) income from
continuing operations.. $ (13,586) $ 560 $(10,094) $ (23,120) $ 2,021 $ (21,099)
========= ======== ======== ========== ======== ==========
Loss per share.......... $ (2.18) $ (1.99)
========== ==========
Average shares.......... 10,628,571 10,628,571
========== ==========
</TABLE>
- --------
(a) To adjust depreciation and amortization expense to reflect the application
of the purchase method of accounting for the Acquisition as if it occurred
on January 1, 1995.
(b) To record the additional interest expense on the Prior Term Loan as if it
had been incurred on January 1, 1995.
(c) Interest income has been reduced to give effect to the $138.0 million paid
from the Company's existing cash-on-hand to the Company's former
stockholders on the date of the Acquisition as a portion of the
consideration.
(d) To eliminate one-time expenses incurred in selling the Company.
(e) Pro forma income tax benefit has been computed at an overall effective
rate of 32.0%. This rate gives effect to non-deductible goodwill.
(f) To eliminate interest expense incurred on the Prior Term Loan.
(g) To record interest expense attributable to the Notes (principal $80.0
million, stated rate 13.75%), the Broadcasting Notes (principal $241.0
million, stated rate 11.75%) and the Newspapers Notes (principal $155.0
million, stated rate 11.875%), record one year of amortization of the
aggregate new debt issuance costs of $18.0 million and record one year of
amortization of bond discount on the Notes and the Broadcasting Notes
(overall effective rate of approximately 13.6%). Does not reflect the
incurrence of fees and expenses of $2.1 million relating to the Senior
Credit Facility.
(h) Pro forma income tax benefit has been computed at the marginal rate of
57.2% times the pro forma interest adjustment, as further adjusted for
disallowed interest. See "Certain Federal Income Tax Consequences--Tax
Treatment of the Notes--Original Issue Discount--Applicable High Yield
Discount Obligations."
38
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING
OPERATIONSFOR THE TWELVE MONTH PERIOD APRIL 1, 1995 TO MARCH 31, 1996
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------
NEW PARK OLD PARK NEW PARK OLD PARK
-------- -------- -------- -------- PRO FORMA PRO FORMA
5/11/95- 1/01/95- 1/1/96- 1/1/95- ACQUISITION FOR TRANSACTION FOR
12/31/95 5/10/95 3/31/96 3/31/95 ADJUSTMENTS ACQUISITION ADJUSTMENTS TRANSACTIONS
-------- -------- -------- -------- ----------- ----------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross revenue............ $101,756 $ 53,917 $35,397 $35,878 $ 155,192 $ 155,192
Less: commissions........ 7,360 4,001 2,494 2,625 11,230 11,230
-------- -------- ------- ------- ---------- ----------
Net revenue.............. 94,396 49,916 32,903 33,253 143,962 143,962
-------- -------- ------- ------- ---------- ----------
Operating expenses:
Cost of sales........... 33,278 20,315 13,881 12,723 54,751 54,751
Selling, general and
administrative......... 24,561 11,508 10,289 9,234 37,124 37,124
-------- -------- ------- ------- ---------- ----------
57,839 31,823 24,170 21,957 91,875 91,875
-------- -------- ------- ------- ---------- ----------
Operating income before
depreciation and
amortization............ 36,557 18,093 8,733 11,296 52,087 52,087
-------- -------- ------- ------- ---------- ----------
Depreciation............. 5,164 2,499 2,287 1,719 $ 99 (a) 8,330 8,330
Amortization............. 5,594 786 2,096 546 712 (a) 8,642 8,642
Amortization of excess
cost.................... 4,598 715 1,671 514 582 (a) 7,052 7,052
-------- -------- ------- ------- ------ ---------- ----------
15,356 4,000 6,054 2,779 1,393 24,024 24,024
-------- -------- ------- ------- ------ ---------- ----------
Operating income......... 21,201 14,093 2,679 8,517 (1,393) 28,063 28,063
Interest expense......... (41,968) (67) (15,735) (44) (7,120)(b) (64,846) $ 64,693 (f) (60,962)
(60,809)(g)
Interest income.......... 866 3,181 384 2,180 (853)(c) 1,398 1,398
Other expense............ (179) (10,693) (92) (468) 10,592 (d) 96 96
-------- -------- ------- ------- ------ ---------- -------- ----------
(Loss) income from
continuing operations
before income taxes..... (20,080) 6,514 (12,764) 10,185 1,226 (35,289) 3,884 (31,405)
Provision (benefit) for
income taxes............ (6,494) 5,954 (4,638) 4,265 (1,849) (11,292)(e) 2,223 (h) (9,069)
-------- -------- ------- ------- ------ ---------- -------- ----------
(Loss) income from
continuing operations... $(13,586) $ 560 $(8,126) $ 5,920 $3,075 $ (23,997) $ 1,661 $ (22,336)
======== ======== ======= ======= ====== ========== ======== ==========
Loss per share........... $ (2.26) $ (2.10)
========== ==========
Average shares........... 10,628,571 10,628,571
========== ==========
</TABLE>
- --------
(a) To adjust depreciation and amortization expense to reflect the application
of the purchase method of accounting for the Acquisition as if it occurred
on April 1, 1995.
(b) To record the additional interest expense on the Prior Term Loan as if it
had been incurred on April 1, 1995.
(c) Interest income has been reduced to give effect to the $138.0 million paid
from the Company's existing cash-on-hand to the Company's former
stockholders on the date of the Acquisition as a portion of the
consideration.
(d) To eliminate one-time expenses incurred in selling the Company.
(e) Pro forma income tax benefit has been computed at an overall effective
rate of 32.0%. This rate gives effect to non-deductible goodwill.
(f) To eliminate interest expense incurred on the Prior Term Loan.
(g) To record interest expense attributable to the Notes (principal $80.0
million, stated rate 13.75%), the Broadcasting Notes (principal $241.0
million, stated rate 11.75%) and the Newspapers Notes (principal $155.0
million, stated rate 11.875%), record one year of amortization of the
aggregate new debt issuance costs of $18.0 million and record one year of
amortization of bond discount on the Notes and the Broadcasting Notes
(overall effective rate of approximately 13.6%). Does not reflect the
incurrence of fees and expenses of $2.1 million relating to the Senior
Credit Facility.
(h) Pro forma income tax benefit has been computed at the marginal rate of
57.2% times the pro forma interest adjustment, as further adjusted for
disallowed interest. See "Certain Federal Income Tax Consequences--Tax
Treatment of the Notes--Original Issue Discount--Applicable High Yield
Discount Obligations."
39
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1995 MARCH 31, 1996
--------------------------------------- --------------------------------------
PRO FORMA PRO FORMA
TRANSACTION FOR TRANSACTION FOR
HISTORICAL ADJUSTMENTS TRANSACTIONS HISTORICAL ADJUSTMENTS TRANSACTIONS
---------- ----------- ------------ ---------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash................... $ 1,305 $ 162,700 (a) $ 1,305 $ -- $ 88,800 (e) $ --
227,000 (b) 227,000 (b)
(431,041)(c) (379,554)(c)
41,341 (d) 63,754 (d)
Other current assets... 22,751 22,751 20,769 20,769
-------- ---------- -------- -------- -------- --------
Total current assets... 24,056 24,056 20,769 20,769
Property, plant and
equipment, net......... 57,956 (19,935)(a) 38,021 52,203 (13,293)(e) 38,910
Intangible assets, net.. 465,672 (103,830)(a) 361,842 412,698 (51,829)(e) 360,869
Film contracts.......... 2,787 2,787 2,346 2,346
Other assets............ 419 8,000 (b) 7,731 451 8,000 (b) 7,780
(688)(c) (671)(c)
-------- ---------- -------- -------- -------- --------
Total assets........... $550,890 $ (116,453) $434,437 $488,467 $(57,793) $430,674
======== ========== ======== ======== ======== ========
LIABILITIES AND
STOCKHOLDER'S EQUITY
Total current
liabilities............ $ 29,784 $ (18,750)(c) $ 11,034 $ 66,950 $(32,530)(c) $ 34,420
Long-term--film
contracts.............. 2,481 2,481 2,170 2,170
Long-term debt--term
loan................... 412,566 (412,566)(c) -- 347,024 (347,024)(c) --
Long-term debt--other... 733 733 649 649
Long-term debt--new
debt................... -- 235,000 (b) 235,000 -- 235,000 (b) 235,000
Consulting/non-compete
contracts.............. 74 74 58 58
Deferred income taxes... 124,605 (28,204)(a) 96,401 113,790 (16,327)(e) 97,463
-------- ---------- -------- -------- -------- --------
Total liabilities...... 570,243 (224,520) 345,723 530,641 (160,881) 369,760
-------- ---------- -------- -------- -------- --------
Stockholder's equity:
Common stock........... 2,598 2,598 2,598 2,598
Paid in capital........ (2,598) 35,929 (d) 33,331 (2,598) 13,543 (d) 10,945
Intercompany receivable
from parent........... (5,412) 5,412 (d) -- (50,211) 50,211 (d) --
Retained earnings
(deficit)............. (13,941) 67,139 (a) 52,785 8,037 40,005 (e) 47,371
(413)(c) (671)(c)
-------- ---------- -------- -------- -------- --------
Total stockholder's
equity (deficit)...... (19,353) 108,067 88,714 (42,174) 103,088 60,914
-------- ---------- -------- -------- -------- --------
Total liabilities and
stockholder's equity.. $550,890 $ (116,453) $434,437 $488,467 $(57,793) $430,674
======== ========== ======== ======== ======== ========
</TABLE>
- --------
(a) Reflects the sale of the radio station operations for aggregate gross
proceeds of $233.2 million, the incurrence of related selling expenses of
$3.4 million, the recognition of a gain on the sale and the payment of the
resulting income taxes of approximately $67.1 million.
(b) Reflects the issuance of the Broadcasting Notes and the incurrence of
related fees and expenses of $8.0 million.
(c) Reflects the payoff of the Prior Term Loan, accrued interest and write-off
of related debt issue costs.
(d) Reflects the payment of the intercompany receivable and a capital
contribution from Park Communications funded substantially with the
proceeds of the sale of Units.
(e) Reflects the sale of the Radio Station Assets for aggregate gross proceeds
of $130.2 million, the incurrence of related selling expenses of $1.9
million, the recognition of gain on the sale and the payment of resulting
income taxes of approximately $39.5 million. The sale of WPAT-AM and FM
closed in March 1996 and the gain is therefore reflected in the historical
balance sheet for March 31, 1996.
40
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
HISTORICAL
-------------------
NEW PARK OLD PARK
--------- --------
PRO FORMA PRO FORMA
5/11/95- 1/01/95- ACQUISITION FOR TRANSACTION FOR
12/31/95 5/10/95 ADJUSTMENTS ACQUISITION ADJUSTMENTS TRANSACTIONS
--------- -------- ----------- ----------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Gross revenue........... $ 50,034 $26,735 $ 76,769 $ 76,769
Less: commissions....... 7,360 4,001 11,361 11,361
--------- ------- --------- ---------
Net revenue............. 42,674 22,734 65,408 65,408
--------- ------- --------- ---------
Operating expenses:
Cost of sales.......... 12,495 7,288 19,783 19,783
Selling, general and
administrative........ 9,454 4,746 14,200 14,200
--------- ------- --------- ---------
21,949 12,034 33,983 33,983
--------- ------- --------- ---------
Operating income before
depreciation and
amortization........... 20,725 10,700 31,425 31,425
--------- ------- --------- ---------
Depreciation............ 3,552 1,655 $ 353 (a) 5,560 5,560
Amortization............ 3,238 245 1,585 (a) 5,068 5,068
Amortization of excess
cost................... 3,584 68 1,958 (a) 5,610 5,610
--------- ------- -------- --------- ---------
10,374 1,968 3,896 16,238 16,238
--------- ------- -------- --------- ---------
Operating income........ 10,351 8,732 (3,896) 15,187 15,187
Interest expense........ (26,102) (34) (14,720)(b) (40,856) $ 40,790 (f) (29,794)
(29,728)(g)
Interest income......... 209 -- 118 (c) 327 327
Other expense........... (218) (1,117) 994 (d) (341) (341)
--------- ------- -------- --------- -------- ---------
(Loss) income from
continuing operations
before income taxes.... (15,760) 7,581 (17,504) (25,683) 11,062 (14,621)
Provision (benefit) for
income taxes........... (5,661) 3,176 (5,850)(e) (8,335) 4,640 (h) (3,695)
--------- ------- -------- --------- -------- ---------
(Loss) income from
continuing operations.. $ (10,099) $ 4,405 $(11,654) $ (17,348) $ 6,422 $ (10,926)
========= ======= ======== ========= ======== =========
Loss per share.......... $ (667.90) $ (420.65)
========= =========
Average shares.......... 25,974 25,974
========= =========
</TABLE>
- --------
(a) To adjust depreciation and amortization expense to reflect the application
of the purchase method of accounting for the Acquisition as if it occurred
on January 1, 1995.
(b) To record the additional interest expense on the Prior Term Loan as if it
had been incurred on January 1, 1995.
(c) To reflect estimated annualized amounts to be earned on intercompany
advances.
(d) To eliminate one-time expenses incurred in selling the Company.
(e) Pro forma income tax benefit has been computed at an overall effective
rate of 32.0%. This rate gives effect to non-deductible goodwill.
(f) To eliminate interest expense incurred on the Prior Term Loan.
(g) To record interest expense attributable to the Broadcasting Notes:
principal $241.0 million, stated rate 11.75%, record one year of
amortization of new debt issuance costs of $8.0 million and record one
year of amortization of bond discount on the Broadcasting Notes (overall
effective rate of approximately 13.1%).
(h) Pro forma income tax benefit has been computed at the marginal rate of
41.9% times the pro forma interest adjustment.
41
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE TWELVE MONTH PERIOD APRIL 1, 1995 TO MARCH 31, 1996
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------
NEW PARK OLD PARK NEW PARK OLD PARK
-------- -------- -------- --------
PRO FORMA PRO FORMA
5/11/95- 1/01/95- 1/01/96- 1/01/95- ACQUISITION FOR TRANSACTION FOR
12/31/95 5/10/95 3/31/96 3/31/95 ADJUSTMENTS ACQUISITION ADJUSTMENTS TRANSACTIONS
-------- -------- -------- -------- ----------- ----------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross revenue........... $ 50,034 $26,735 $ 17,055 $17,618 $ 76,206 $ 76,206
Less: commissions....... 7,360 4,001 2,494 2,625 11,230 11,230
-------- ------- -------- ------- -------- --------
Net revenue............. 42,674 22,734 14,561 14,993 64,976 64,976
-------- ------- -------- ------- -------- --------
Operating expenses:
Cost of sales.......... 12,495 7,288 5,297 4,680 20,400 20,400
Selling, general and
administrative........ 9,454 4,746 4,263 3,594 14,869 14,869
-------- ------- -------- ------- -------- --------
21,949 12,034 9,560 8,274 35,269 35,269
-------- ------- -------- ------- -------- --------
Operating income before
depreciation and
amortization........... 20,725 10,700 5,001 6,719 29,707 29,707
-------- ------- -------- ------- -------- --------
Depreciation............ 3,552 1,655 1,485 1,142 $ 92 (a) 5,642 5,642
Amortization............ 3,238 245 1,196 170 476 (a) 4,985 4,985
Amortization of excess
cost................... 3,584 68 1,270 9 551 (a) 5,464 5,464
-------- ------- -------- ------- ------- -------- --------
10,374 1,968 3,951 1,321 1,119 16,091 16,091
-------- ------- -------- ------- ------- -------- --------
Operating income........ 10,351 8,732 1,050 5,398 (1,119) 13,616 13,616
Interest expense........ (26,102) (34) (10,044) (21) (4,430)(b) (40,589) $ 40,523 (f) (29,794)
(29,728)(g)
Interest income......... 209 -- 190 7 36 (c) 428 428
Other expense........... (218) (1,117) 52 58 994 (d) (347) (347)
-------- ------- -------- ------- ------- -------- -------- --------
(Loss) income from
continuing operations
before income taxes.... (15,760) 7,581 (8,752) 5,442 (4,519) (26,892) 10,795 (16,097)
Provision (benefit) for
income taxes........... (5,661) 3,176 (3,226) 2,137 (757)(e) (8,605) 4,523 (h) (4,082)
-------- ------- -------- ------- ------- -------- -------- --------
(Loss) income from
continuing operations.. $(10,099) $ 4,405 $ (5,526) $ 3,305 $(3,762) $(18,287) $ 6,272 $(12,015)
======== ======= ======== ======= ======= ======== ======== ========
Loss per share.......... $(414.20) $(272.14)
======== ========
Average shares.......... 25,974 25,974
======== ========
</TABLE>
- --------
(a) To adjust depreciation and amortization expense to reflect the application
of the purchase method of accounting for the Acquisition as if it occurred
on April 1, 1995.
(b) To record the additional interest expense on the Prior Term Loan as if it
had been incurred on April 1, 1995.
(c) To reflect estimated annualized amounts to be earned on intercompany
advances.
(d) To eliminate one-time expenses incurred in selling the Company.
(e) Pro forma income tax benefit has been computed at an overall effective
rate of 32.0%. This rate gives effect to non-deductible goodwill.
(f) To eliminate interest expense incurred on the Prior Term Loan.
(g) To record interest expense attributable to the Broadcasting Notes:
principal $241.0 million, stated rate 11.75%, record one year of
amortization of new debt issuance costs of $8.0 million and record one
year of amortization of bond discount on the Broadcasting Notes (overall
effective rate of approximately 13.1%).
(h) Pro forma income tax benefit has been computed at the marginal rate of
41.9% times the pro forma interest adjustment.
42
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1995 MARCH 31, 1996
-------------------------------------- --------------------------------------
PRO FORMA PRO FORMA
TRANSACTION FOR TRANSACTION FOR
HISTORICAL ADJUSTMENTS TRANSACTIONS HISTORICAL ADJUSTMENTS TRANSACTIONS
---------- ----------- ------------ ---------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash................... $ 710 $ 149,400 (a) $ 710 $ 762 $149,400 (a) $ 762
(175,595)(b) (181,289)(b)
26,195 (c) 31,889 (c)
Other current assets... 9,564 9,564 8,372 8,372
-------- --------- -------- -------- -------- --------
Total current assets... 10,274 10,274 9,134 9,134
Property, plant and
equipment, net.......... 26,231 26,231 25,672 25,672
Intangible assets, net.. 183,029 183,029 181,857 181,857
Other assets............ 204 5,600 (a) 5,524 304 5,600 (a) 5,631
(280)(b) (273)(b)
-------- --------- -------- -------- -------- --------
Total assets........... $219,738 $ 5,320 $225,058 $216,967 $ 5,327 $222,294
======== ========= ======== ======== ======== ========
LIABILITIES AND
STOCKHOLDER'S EQUITY
Total current
liabilities............. $ 13,684 $ (7,642)(b) $ 6,042 $ 19,748 $(13,320)(b) $ 6,428
Long-term debt-term
loan.................... 168,065 (168,065)(b) -- 167,969 (167,969)(b) --
Long-term debt-other.... 240 240 120 120
Long-term debt-new
debt.................... -- 155,000 (a) 155,000 -- 155,000 (a) 155,000
Consulting/non-compete
contracts............... 2,778 2,778 2,596 2,596
Deferred income taxes... 41,972 41,972 42,011 42,011
-------- --------- -------- -------- -------- --------
Total liabilities...... 226,739 (20,707) 206,032 232,444 (26,289) 206,155
-------- --------- -------- -------- -------- --------
Stockholder's equity:
Common stock........... 4,150 4,150 4,150 4,150
Paid in capital........ (4,150) 22,840 (c) 18,690 (4,150) 22,549 (c) 18,399
Intercompany
receivables from
parent................ (3,355) 3,355 (c) -- (9,340) (9,340)(c) --
Retained earnings
(deficit)............. (3,646) (168)(b) (3,814) (6,137) (273)(b) (6,410)
-------- --------- -------- -------- -------- --------
Total stockholder's
equity (deficit)...... (7,001) 26,027 19,026 (15,477) 31,616 16,139
-------- --------- -------- -------- -------- --------
Total liabilities and
stockholder's equity.. $219,738 $ 5,320 $225,058 $216,967 $ 5,327 $222,294
======== ========= ======== ======== ======== ========
</TABLE>
- --------
(a) Reflects the issuance of the Newspapers Notes and the incurrence of
related fees and expenses of $5.6 million.
(b) Reflects the payoff of the Prior Term Loan, accrued interest and write-off
of related debt issue costs.
(c) Reflects the payment of the intercompany receivable and a capital
contribution from Park Communications funded substantially with the
proceeds of the sale of Units.
43
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
HISTORICAL
------------------
NEW PARK OLD PARK
-------- -------- PRO FORMA PRO FORMA
5/11/95- 1/01/95- ACQUISITION FOR TRANSACTION FOR
12/31/95 5/10/95 ADJUSTMENTS ACQUISITION ADJUSTMENTS TRANSACTIONS
-------- -------- ----------- ----------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Newspaper revenue....... $ 51,723 $27,181 $ 78,904 $ 78,904
-------- ------- -------- --------
Operating expenses:
Cost of sales.......... 20,783 13,027 33,810 33,810
Selling, general and
administrative........ 15,107 6,762 21,869 21,869
-------- ------- -------- --------
35,890 19,789 55,679 55,679
-------- ------- -------- --------
Operating income before
depreciation and
amortization........... 15,833 7,392 23,225 23,225
-------- ------- -------- --------
Depreciation............ 1,621 833 $ 83 (a) 2,537 2,537
Amortization............ 2,356 524 808 (a) 3,688 3,688
Amortization of excess
cost................... 1,241 664 37 (a) 1,942 1,942
-------- ------- ------- -------- --------
5,218 2,021 928 8,167 8,167
-------- ------- ------- -------- --------
Operating income........ 10,615 5,371 (928) 15,058 15,058
Interest expense........ (15,851) (23) (8,936)(b) (24,810) $ 24,723 (e) (19,144)
(19,057)(f)
Interest income......... 186 3 102 (c) 291 291
Other expense........... (26) (485) (511) (511)
-------- ------- ------- -------- -------- --------
(Loss) income from
continuing operations
before income taxes.... (5,076) 4,866 (9,762) (9,972) 5,666 (4,306)
Provision (benefit) for
income taxes........... (1,430) 2,222 (3,584)(d) (2,792) 1,846 (g) (946)
-------- ------- ------- -------- -------- --------
(Loss) income from
continuing operations.. $ (3,646) $ 2,644 $(6,178) $ (7,180) $ 3,820 $ (3,360)
-------- ------- ------- -------- -------- --------
Loss per share.......... $(162.63) $ (76.10)
======== ========
Average shares.......... 44,150 44,150
======== ========
</TABLE>
- --------
(a) To adjust depreciation and amortization expense to reflect the application
of the purchase method of accounting for the Acquisition as if it occurred
on January 1, 1995.
(b) To record the additional interest expense on the Prior Term Loan as if it
had been incurred on January 1, 1995.
(c) To reflect estimated annualized amounts to be earned on intercompany
advances.
(d) Pro forma income tax benefit has been computed at an overall effective rate
of 28.0%. This rate gives effect to non-deductible goodwill.
(e) To eliminate interest expense incurred on the Prior Term Loan.
(f) To record interest expense attributable to the Newspapers Notes: principal
$155.0 million, stated rate 11.875%, and record one year of amortization of
new debt issuance costs of $5.6 million (overall effective rate of
approximately 12.8%).
(g) Pro forma income tax benefit has been computed at the marginal rate of
32.6% times the pro forma interest adjustment.
44
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE TWELVE MONTH PERIOD APRIL 1, 1995 TO MARCH 31, 1996
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------------
NEW PARK OLD PARK NEW PARK OLD PARK
--------- -------- -------- -------- PRO FORMA PRO FORMA
5/11/95- 1/01/95- 1/1/96- 1/1/95- ACQUISITION FOR TRANSACTION FOR
12/31/95 5/10/95 3/31/96 3/31/95 ADJUSTMENTS ACQUISITION ADJUSTMENTS TRANSACTIONS
--------- -------- -------- -------- ----------- ----------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Newspaper revenue....... $ 51,723 $27,181 $18,342 $18,259 $ 78,987 $ 78,987
--------- ------- ------- ------- --------- ---------
Operating expenses:
Cost of sales.......... 20,783 13,027 8,584 8,043 34,351 34,351
Selling, general and
administrative........ 15,107 6,762 6,026 5,640 22,255 22,255
--------- ------- ------- ------- --------- ---------
35,890 19,789 14,610 13,683 56,606 56,606
--------- ------- ------- ------- --------- ---------
Operating income before
depreciation and
amortization........... 15,833 7,392 3,732 4,576 22,381 22,381
--------- ------- ------- ------- --------- ---------
Depreciation............ 1,621 833 789 553 2,690 2,690
Amortization............ 2,356 524 900 375 $ 252 (a) 3,657 3,657
Amortization of
excess cost............ 1,241 664 482 392 1,995 1,995
--------- ------- ------- ------- ------- --------- ---------
5,218 2,021 2,171 1,320 252 8,342 8,342
--------- ------- ------- ------- ------- --------- ---------
Operating income........ 10,615 5,371 1,561 3,256 (252) 14,039 14,039
Interest expense........ (15,851) (23) (5,685) (17) (2,692)(b) (24,234) $24,147 (e) (19,144)
(19,057)(f)
Interest income......... 186 3 103 1 30 (c) 321 321
Other expense........... (26) (485) 82 15 (444) (444)
--------- ------- ------- ------- ------- --------- ------- ---------
(Loss) income from
continuing operations
before income taxes.... (5,076) 4,866 (3,939) 3,255 (2,914) (10,318) 5,090 (5,228)
Provision (benefit) for
income taxes........... (1,430) 2,222 (1,448) 1,473 (760)(d) (2,889) 1,596 (g) (1,293)
--------- ------- ------- ------- ------- --------- ------- ---------
(Loss) income from
continuing operations.. $ (3,646) $ 2,644 $(2,491) $ 1,782 $(2,154) $ (7,429) $ 3,494 $ (3,935)
========= ======= ======= ======= ======= ========= ======= =========
Loss per share.......... $ (168.27) $ (89.13)
========= =========
Average shares.......... 44,150 44,150
========= =========
</TABLE>
- --------
(a) To adjust depreciation and amortization expense to reflect the application
of the purchase method of accounting for the Acquisition as if it occurred
on April 1, 1995.
(b) To record the additional interest expense on the Prior Term Loan as if it
had been incurred on April 1, 1995.
(c) To reflect estimated annualized amounts to be earned on intercompany
advances.
(d) Pro forma income tax benefit has been computed at an overall effective rate
of 28.0%. This rate gives effect to non-deductible goodwill.
(e) To eliminate interest expense incurred on the Prior Term Loan.
(f) To record interest expense attributable to the Newspapers Notes: principal
$155.0 million, stated rate 11.875%, and record one year of amortization of
new debt issuance costs of $5.6 million (overall effective rate of
approximately 12.8%).
(g) Pro forma income tax benefit has been computed at the marginal rate of
31.4% times the pro forma interest adjustment.
45
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The selected historical consolidated financial data presented below have
been derived from audited financial statements of Park Communications, Park
Broadcasting and Park Newspapers as of and for the years ended December 31,
1991, 1992, 1993, 1994 and 1995 (except in the case of the data for the years
ended December 31, 1991 and 1992 for Park Broadcasting and Park Newspapers,
which have been derived from unaudited financial statements for those
entities). The selected pro forma consolidated financial data as of March 31,
1996 and for the 12-month period April 1, 1995 to March 31, 1996 presented
below have been derived from unaudited financial statements of Park
Communications, Park Broadcasting and Park Newspapers. The data presented
below should be read in conjunction with the Consolidated Financial Statements
of Park Communications, Inc. and Subsidiaries, Park Broadcasting, Inc. and
Subsidiaries and Park Newspapers, Inc. and Subsidiaries, including the
respective notes thereto, "Unaudited Pro Forma Condensed Consolidated
Financial Statements" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere herein. The unaudited
pro forma information does not purport to represent what the Company's
financial position or results of operations actually would have been if the
Acquisition, the Refinancing Transactions and the sale of the Radio Station
Assets (as applicable) had, in fact, occurred on the dates indicated or to
project the Company's financial position or results of operations at any
future date or for any future period.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
YEAR ENDED DECEMBER 31, PRO FORMA TWELVE MONTHS
-------------------------------------- -------------------------- ENDED
ACQUISITION TRANSACTIONS MARCH 31, 1996
1991 1992 1993 1994 1995 (A) 1995 (B) PRO FORMA (B)
PARK COMMUNICATIONS, INC. -------- -------- -------- -------- ----------- ------------ --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue (c).......... $121,172 $129,800 $137,344 $142,431 $144,312 $144,312 $143,962
-------- -------- -------- -------- -------- -------- --------
Operating expenses:
Cost of sales........... 52,895 53,208 55,518 50,380 53,593 53,593 54,751
Selling, general and
administrative (d)..... 35,717 37,752 39,561 37,051 36,069 36,069 37,124
-------- -------- -------- -------- -------- -------- --------
Total operating expenses
(c)..................... 88,612 90,960 95,079 87,431 89,662 89,662 91,875
-------- -------- -------- -------- -------- -------- --------
Operating income before
depreciation and
amortization (c)........ 32,560 38,840 42,265 55,000 54,650 54,650 52,087
Depreciation and
amortization............ 10,214 10,607 11,088 11,037 24,036 24,036 24,024
-------- -------- -------- -------- -------- -------- --------
Operating income......... 22,346 28,233 31,177 43,963 30,614 30,614 28,063
Interest expense......... (542) (337) (233) (279) (65,689) (60,962) (60,962)
Interest income.......... 6,270 5,515 4,952 5,561 1,355 1,355 1,398
Other.................... (464) (455) (431) (2,352) (280) (280) 96
-------- -------- -------- -------- -------- -------- --------
Income/(loss) before
income tax.............. 27,610 32,956 35,465 46,893 (34,000) (29,273) (31,405)
Provision/(benefit) for
income tax.............. 14,218 13,593 14,849 19,519 (10,880) (8,174) (9,069)
-------- -------- -------- -------- -------- -------- --------
Income/(loss) from
continuing operations... 13,392 19,363 20,616 27,374 (23,120) $(21,099) $(22,336)
======== ========
Loss from discontinued
operations (e).......... (1,537) (2,140) (1,836) (69) (6,014)
-------- -------- -------- -------- --------
Net income/(loss) (c).... $ 11,855 $ 17,223 $ 18,780 $ 27,305 $(29,134)
======== ======== ======== ======== ========
Ratio of earnings to
fixed charges (f)....... -- -- --
BALANCE SHEET DATA
(AT END OF PERIOD):
Total assets............. $305,891 $324,837 $342,621 $366,786 $782,782 $685,813 $695,662
Total long-term debt,
excluding current
maturities.............. 54,660 54,028 54,367 49,248 581,605(g) 468,173(g) 467,970
Stockholder's equity
(deficit)............... 217,458 234,682 253,606 285,730 (17,428) 51,930 44,189
OTHER FINANCIAL DATA AND
RATIOS:
Operating Cash Flow (h).. $ 32,560 $ 38,840 $ 42,265 $ 55,000 $ 59,344 $ 59,344 $ 56,724
Operating Cash Flow
margin (i).............. 26.9% 29.9% 30.8% 38.6% 41.1% 41.1% 39.4%
Cash interest expense.... 542 337 233 279 48,289 46,876 46,876
Capital expenditures
(j)..................... 3,556 5,545 4,409 6,661 4,880 4,880 4,855
Ratio of Operating Cash
Flow to cash interest
expense................. -- 1.27x 1.21x
Ratio of Operating Cash
Flow to interest
expense................. -- .97x .93x
Ratio of total long-term
debt to Operating Cash
Flow.................... 9.80x 7.89x 8.25x
</TABLE>
(footnotes begin on next page)
46
<PAGE>
- --------
(a) Presented on a pro forma basis assuming that the Acquisition had occurred
on January 1, 1995. See Note (2) to the Consolidated Financial Statements
of Park Communications, Inc. and Subsidiaries.
(b) Presented on a pro forma basis assuming that the Acquisition, the
Refinancing Transactions and the sale of the Radio Station Assets on the
terms described herein occurred on either December 31, 1995 or March 31,
1996 for balance sheet data and on either January 1, 1995 or April 1, 1995
for all other data. The Warrants have been valued at approximately $2.8
million. Such amounts ascribed to the Warrants serve to reduce long-term
debt and increase additional paid in capital. The amounts of debt discount
resulting from such ascribed amounts will be amortized to interest expense
over the life of the debt using the effective yield method.
(c) On December 31, 1993, the Company sold 33 newspaper publications located
in 13 of its smaller markets. The impact of the sale of these publications
was not material to net income in 1993. The results of operations of the
33 newspaper publications are included in the 1991, 1992 and 1993
operating results as follows:
<TABLE>
<CAPTION>
1991 1992 1993
------- ------- -------
<S> <C> <C> <C>
Net revenue.................. $11,132 $10,812 $10,385
Operating expenses........... 11,304 10,707 10,551
Operating income (loss) be-
fore depreciation and amor-
tization.................... (172) 105 (166)
</TABLE>
(d) Includes Central Corporate Overhead allocated as follows:
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Park Broadcasting............ $ 1,151 $ 1,296 $ 1,280 $1,287 $1,142 $1,298
Park Newspapers.............. 2,191 2,280 2,102 1,988 2,217 2,393
------- ------- ------- ------ ------ ------
Total Central Corporate Over-
head........................ $ 3,342 $ 3,576 $ 3,382 $3,275 $3,359 $3,691
======= ======= ======= ====== ====== ======
</TABLE>
(e) The results of the Company's radio station operations are included in the
single line of the income statement labeled "loss from discontinued
operations." See Note (5) to the Consolidated Financial Statements of Park
Communications, Inc. and Subsidiaries.
(f) For purposes of this ratio, "fixed charges" are defined as interest,
amortization of debt expense and a portion of rental expense representing
the interest factor, and "earnings" are defined as net loss before income
taxes and fixed charges. On a pro forma basis as described in Note (a)
above, earnings were insufficient to cover fixed charges by $34.0 million
for the year ended December 31, 1995. On a pro forma basis as described in
Note (b) above, earnings were insufficient to cover fixed charges by $29.3
million for the year ended December 31, 1995 and by $31.4 million for the
12 months ended March 31, 1996.
(g) Does not include long-term film contract liability totaling $2,480 at
December 31, 1995 and $2,170 at March 31, 1996 as such liability is not
included as Indebtedness as defined in the Indenture.
(h) Operating Cash Flow includes additional cash television network
compensation payments received but not recognized as revenue under GAAP.
The terms of the Company's network affiliation agreements executed during
1995 for seven of its nine television stations provide for the Company to
receive cash payments thereunder in excess of revenue recognized for GAAP
purposes of approximately $4.5 million in each of 1995, 1996 and 1997 and
approximately $2.8 million in 1998. Thereafter, revenue recognized under
GAAP will exceed cash payments received by approximately $2.7 million
annually for 1999 through 2004. The Company has included Operating Cash
Flow data because it understands that such data are used by investors to
measure a company's ability to service its debt and meet certain of its
other obligations. Operating Cash Flow does not purport to represent cash
flows from operating activities determined in accordance with GAAP as
reflected in the historical consolidated financial statements; it is not a
measure of financial performance under GAAP and should not be considered
in isolation or as a substitute for or more important than net income or
cash flows from operating activities.
(i) Defined as Operating Cash Flow divided by net revenue.
(j) Capital expenditures do not include the purchase of the assets of two
television stations, WTVQ in 1992 and KALB in 1993. The amounts for such
asset purchases were $6,135 in 1992 and $8,804 in 1993. In addition,
capital expenditures in 1994 do not include certain operating equipment
and facilities purchased from RHP Incorporated for $4,175, which it had
been leasing. Also not included are capital expenditures resulting from
trade agreements and capital expenditures of the discontinued radio
station operations.
47
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
YEAR ENDED DECEMBER 31, PRO FORMA TWELVE MONTHS
------------------------------------- -------------------------- ENDED
ACQUISITION TRANSACTIONS MARCH 31, 1996
1991 1992 1993 1994 1995 (A) 1995 (B) PRO FORMA (B)
PARK BROADCASTING, INC. ------- -------- -------- -------- ----------- ------------ --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue............. $38,972 $ 47,216 $ 52,593 $ 65,621 $ 65,408 $ 65,408 $ 64,976
------- -------- -------- -------- --------- -------- --------
Operating expenses:
Cost of sales.......... 13,451 15,580 16,297 18,016 19,783 19,783 20,400
Selling, general and
administrative (c).... 9,933 11,860 12,406 14,835 14,200 14,200 14,869
------- -------- -------- -------- --------- -------- --------
Total operating expenses
....................... 23,384 27,440 28,703 32,851 33,983 33,983 35,269
------- -------- -------- -------- --------- -------- --------
Operating income before
depreciation and
amortization (c)....... 15,588 19,776 23,890 32,770 31,425 31,425 29,707
Depreciation and
amortization........... 2,573 3,337 4,162 5,187 16,238 16,238 16,091
------- -------- -------- -------- --------- -------- --------
Operating income........ 13,015 16,439 19,728 27,583 15,187 15,187 13,616
Interest expense........ (3) (55) (37) (185) (40,856) (29,794) (29,794)
Interest income......... 1 1 -- -- 327 327 428
Other................... (131) (78) (225) (393) (341) (341) (347)
------- -------- -------- -------- --------- -------- --------
Income/(loss) before
income tax............. 12,882 16,307 19,466 27,005 (25,683) (14,621) (16,097)
Provision/(benefit) for
income tax............. 5,015 6,320 7,370 10,457 (8,335) (3,695) (4,082)
------- -------- -------- -------- --------- -------- --------
Income/(loss) from
continuing operations.. 7,867 9,987 12,096 16,548 (17,348) $(10,926) $(12,015)
======== ========
Loss from discontinued
operations (d)......... (1,537) (2,140) (1,836) (69) (6,014)
------- -------- -------- -------- ---------
Net income/(loss) ...... $ 6,330 $ 7,847 $ 10,260 $ 16,479 $ (23,362)
======= ======== ======== ======== =========
Ratio of earnings to
fixed charges (e)...... -- -- --
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets............ $94,368 $106,669 $129,741 $131,662 $550,890 $434,437 $430,674
Total long-term debt,
excluding current
maturities............. 1,873 2,121 3,627 3,537 413,299(f) 235,733(f) 235,649
OTHER FINANCIAL DATA AND
RATIOS:
Broadcast Cash Flow (g). $16,739 $ 21,072 $ 25,170 $ 34,057 $ 37,116 $ 37,116 $ 35,642
Broadcast Cash Flow
margin (h)............. 43.0% 44.6% 47.9% 51.9% 56.7% 56.7% 54.9%
Cash interest expense... 3 55 37 185 28,479 28,384 28,384
Capital expenditures(i). 2,472 3,293 2,897 3,803 2,758 2,758 2,818
Ratio of Broadcast Cash
Flow to cash interest
expense................ -- 1.31x 1.26x
Ratio of Broadcast Cash
Flow to interest
expense................ -- 1.25x 1.20x
Ratio of total long-term
debt to Broadcast Cash
Flow................... 11.14x 6.35x 6.61x
</TABLE>
(footnotes begin on next page)
48
<PAGE>
- --------
(a) Presented on a pro forma basis assuming that the Acquisition had occurred
on January 1, 1995. See Note (2) to the Consolidated Financial Statements
of Park Broadcasting, Inc. and Subsidiaries.
(b) Presented on a pro forma basis assuming that the Acquisition, the
Refinancing Transactions and the sale of the Radio Station Assets on the
terms described herein occurred on either December 31, 1995 or March 31,
1996 for balance sheet data and on either January 1, 1995 or April 1, 1995
for all other data.
(c) Includes an allocation of Central Corporate Overhead from Park
Communications to Park Broadcasting as follows:
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Allocated Central Corporate Overhead.... $1,151 $1,296 $1,280 $1,287 $1,142 $1,298
</TABLE>
Cash payments to Park Communications from Park Broadcasting to satisfy
future allocations of Central Corporate Overhead will be subject to certain
limitations and restrictions under the indenture governing the Broadcasting
Notes.
(d) The results of the Company's radio station operations are included in the
single line of the income statement labeled "loss from discontinued
operations." See Note (5) to the Consolidated Financial Statements of Park
Broadcasting, Inc. and Subsidiaries.
(e) For purposes of this ratio, "fixed charges" are defined as interest,
amortization of debt expense and a portion of rental expense representing
the interest factor, and "earnings" are defined as net loss before income
taxes and fixed charges. On a pro forma basis as described in Note (a)
above, earnings were insufficient to cover fixed charges by $25.7 million
for the year ended December 31, 1995. On a pro forma basis as described in
Note (b) above, earnings were insufficient to cover fixed charges by $14.6
million for the year ended December 31, 1995 and by $16.1 million for the
12 months ended March 31, 1996.
(f) Does not include long-term film contract liability totaling $2,480 at
December 31, 1995 and $2,170 at March 31, 1996 as such liability is not
included as Indebtedness as defined in the Indenture.
(g) Broadcast Cash Flow includes additional cash television network
compensation payments received but not recognized as revenue under GAAP.
Programming expenses are included in television operating expenses. The
terms of the Company's network affiliation agreements executed during 1995
for seven of its nine television stations provide for the Company to
receive cash payments thereunder in excess of revenue recognized for GAAP
purposes of approximately $4.5 million in each of 1995, 1996 and 1997 and
approximately $2.8 million in 1998. Thereafter, revenue recognized under
GAAP will exceed cash payments received by approximately $2.7 million
annually for 1999 through 2004. The Company has included Broadcast Cash
Flow data because it understands that such data are used by investors to
measure a company's ability to service its debt and meet certain of its
other obligations. Broadcast Cash Flow does not purport to represent cash
flows from operating activities determined in accordance with GAAP as
reflected in the historical consolidated financial statements; it is not a
measure of financial performance under GAAP and should not be considered
in isolation or as a substitute for or more important than net income or
cash flows from operating activities.
(h) Defined as Broadcast Cash Flow divided by net revenue.
(i) Capital expenditures do not include the purchase of the assets of two
television stations, WTVQ in 1992 and KALB in 1993. Such amounts were
$6,135 in 1992 and $8,804 in 1993. In addition, capital expenditures in
1994 do not include the purchase for $3,575 of certain operating equipment
and facilities from RHP Incorporated, which the Company had been leasing.
Also not included are capital expenditures resulting from trade agreements
and capital expenditures of the discontinued radio station operations.
49
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
YEAR ENDED DECEMBER 31, PRO FORMA TWELVE MONTHS
------------------------------------ ------------------------ ENDED
ACQUISITION TRANSACTIONS MARCH 31, 1996
1991 1992 1993 1994 1995 (A) 1995 (B) PRO FORMA (B)
PARK NEWSPAPERS, INC. -------- -------- ------- ------- ----------- ------------ --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue (c)............. $ 82,200 $ 82,584 $84,751 $76,810 $ 78,904 $ 78,904 $ 78,987
-------- -------- ------- ------- -------- -------- --------
Operating expenses:
Cost of sales.......... 39,444 37,628 39,221 32,364 33,810 33,810 34,351
Selling, general and
administrative (d).... 25,784 25,892 27,155 22,216 21,869 21,869 22,255
-------- -------- ------- ------- -------- -------- --------
Total operating expenses
(c).................... 65,228 63,520 66,376 54,580 55,679 55,679 56,606
-------- -------- ------- ------- -------- -------- --------
Operating income before
depreciation and
amortization (c)....... 16,972 19,064 18,375 22,230 23,225 23,225 22,381
Depreciation and
amortization........... 7,614 7,247 6,895 5,816 8,167 8,167 8,342
-------- -------- ------- ------- -------- -------- --------
Operating income........ 9,358 11,817 11,480 16,414 15,058 15,058 14,039
Interest expense........ (512) (279) (177) (76) (24,810) (19,144) (19,144)
Interest income......... 29 42 45 11 291 291 321
Other................... (304) (380) (204) (832) (511) (511) (444)
-------- -------- ------- ------- -------- -------- --------
Income/(loss) before
income tax............. 8,571 11,200 11,144 15,517 (9,972) (4,306) (5,228)
Provision/(benefit) for
income tax............. 4,499 5,370 5,335 7,007 (2,792) (946) (1,293)
-------- -------- ------- ------- -------- -------- --------
Net income/(loss) (c)... $ 4,072 $ 5,830 $ 5,809 $ 8,510 $ (7,180) $ (3,360) $ (3,935)
======== ======== ======= ======= ======== ======== ========
Ratio of earnings to
fixed charges (e)...... -- -- --
BALANCE SHEET DATA
(AT END OF PERIOD):
Total assets............ $110,705 $115,225 $98,075 $93,060 $219,738 $225,058 $222,294
Total long-term debt,
excluding current
maturities............. 2,792 1,912 746 360 168,305 155,240 155,120
OTHER FINANCIAL DATA
AND RATIOS:
Newspaper Cash Flow (f). $ 19,163 $ 21,344 $20,477 $24,218 $ 25,587 $ 25,587 $ 24,774
Newspaper Cash Flow
margin (g)............. 23.3% 25.8% 24.2% 31.5% 32.4% 32.4% 31.4%
Cash interest expense... 512 279 177 76 19,768 18,493 18,493
Capital expenditures
(h).................... 1,084 2,252 1,512 2,858 2,122 2,122 2,037
Ratio of Newspaper Cash
Flow to cash interest
expense................ -- 1.38x 1.34x
Ratio of Newspaper Cash
Flow to interest
expense................ -- 1.34x 1.29x
Ratio of total long-term
debt to Newspaper Cash
Flow................... 6.58x 6.07x 6.26x
</TABLE>
(footnotes begin on next page)
50
<PAGE>
- --------
(a) Presented on a pro forma basis assuming that the Acquisition had occurred
on January 1, 1995. See Note (2) to the Consolidated Financial Statements
of Park Newspapers, Inc. and Subsidiaries.
(b) Presented on a pro forma basis assuming that the Acquisition, the
Refinancing Transactions and the sale of the Radio Station Assets on the
terms described herein occurred on either December 31, 1995 or March 31,
1996 for balance sheet data and on either January 1, 1995 or April 1, 1995
for all other data.
(c) On December 31, 1993, the Company sold 33 newspaper publications located
in 13 of its smaller markets. The impact of the sale of these publications
was not material to net income in 1993. The results of operations of the
33 newspaper publications are included in the 1991, 1992 and 1993
operating results as follows:
<TABLE>
<CAPTION>
1991 1992 1993
------- ------- -------
<S> <C> <C> <C>
Revenue......................................... $11,132 $10,812 $10,385
Operating expenses.............................. 11,304 10,707 10,551
Operating income (loss) before depreciation and
amortization................................... (172) 105 (166)
</TABLE>
(d) Includes an allocation of Central Corporate Overhead from Park
Communications to Park Newspapers as follows:
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Allocated Central Corporate
Overhead....................... $ 2,191 $2,280 $2,102 $1,988 $2,217 $2,393
</TABLE>
Cash payments to Park Communications from Park Newspapers to satisfy future
allocations of Central Corporate Overhead will be subject to certain
limitations and restrictions under the indenture governing the Newspapers
Notes.
(e) For purposes of this ratio, "fixed charges" are defined as interest,
amortization of debt expense and a portion of rental expense representing
the interest factor, and "earnings" are defined as net loss before income
taxes and fixed charges. On a pro forma basis as described in Note (a)
above, earnings were insufficient to cover fixed charges by $10.0 million
for the year ended December 31, 1995. On a pro forma basis as described in
Note (b) above, earnings were insufficient to cover fixed charges by $4.3
million for the year ended December 31, 1995 and by $5.2 million for the
12 months ended March 31, 1996.
(f) The Company has included Newspaper Cash Flow data because it understands
that such data are used by investors to measure a company's ability to
service its debt and meet certain of its obligations. Newspaper Cash Flow
does not purport to represent cash flows from operating activities
determined in accordance with GAAP as reflected in the historical
consolidated financial statements; it is not a measure of financial
performance under GAAP and should not be considered in isolation or as a
substitute for or more important than net income or cash flows from
operating activities.
(g) Defined as Newspaper Cash Flow divided by revenue.
(h) Capital expenditures do not include the purchase in 1994 for $600 of
certain operating equipment and facilities from RHP Incorporated, which
the Company had been leasing.
51
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
INTRODUCTION
The Company's results of operations have been affected by: (i) the
acquisition of the Company from the estate of Roy H. Park, its original owner,
by PAI on May 11, 1995, (ii) the development and implementation of new
operating strategies and initiatives by PAI, (iii) the entry during 1995 into
new long-term network affiliation agreements with CBS and NBC covering seven
of the nine television stations, (iv) the decision to divest the radio station
operations, (v) the sale of 33 publications in December 1993 for $6.3 million
and (vi) the acquisition of KALB-TV in November 1993 for $22.7 million. In
addition, the Company has agreed to acquire an additional television station
for $6.0 million (of which $4.5 million has been paid). As a result, period-
to-period historical and future comparisons may be difficult without the
following overview.
The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1995 presents the consolidated results of
operations of the Company assuming the Acquisition and the application of the
purchase method of accounting had been completed as of January 1, 1995. All
material adjustments necessary to reflect the Acquisition as if it had
occurred on such date are included in the 1995 pro forma column. Such
adjustments are described further in the notes to unaudited pro forma
condensed consolidated financial statements. The unaudited pro forma
information does not purport to represent what the Company's financial
position or results of operations actually would have been if the Acquisition
had, in fact, occurred on such date or to project the Company's financial
position or results of operations at any future date or for any future period.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the Consolidated Financial Statements and related
notes thereto included elsewhere herein.
PAI acquired the Company from the estate of Roy H. Park on May 11, 1995 for
$711.4 million. PAI financed the Acquisition with borrowings under the Prior
Credit Agreement and existing cash-on-hand at the Company. The Acquisition was
accounted for under purchase accounting and involved, among other things, the
write-up of certain assets. As a result of the Acquisition, interest income
was reduced and interest expense and depreciation and amortization expense
increased substantially. See "Unaudited Pro Forma Condensed Consolidated
Financial Statements."
Mr. Park had operated the businesses with a primary focus on improving
Operating Cash Flow by managing costs rather than on increasing revenue. The
Company's management believes the television stations and newspaper
publications, under ownership by Mr. Park, had underperformed relative to
industry standards. Under new ownership, the Company has focused on revenue
and cash flow generation. In particular, the Company (i) hired new senior
management for Park Newspapers, (ii) is substantially upgrading its sales
force at both Park Broadcasting and Park Newspapers, (iii) invested in
information systems to better equip its sales force and (iv) enhanced its
marketing and promotional efforts. Certain of these strategies have been
implemented gradually since the Acquisition. In many cases, the costs of these
strategies have been incurred without sufficient time for the revenue benefits
to be recognized. The Company has designed these strategies in an effort to
increase revenue and Operating Cash Flow to levels more comparable to industry
standards.
Effective as of January 1, 1995, the Company entered into long-term
affiliation agreements with each of CBS and NBC, which run for terms expiring
December 2004 (in the case of each CBS agreement) and October 2005 (in the
case of each NBC agreement). The affiliation agreements are automatically
renewable for successive five-year terms unless prior written notice of
termination is given by Park Broadcasting or the network. Pursuant to the
terms of the long-term affiliation agreements, CBS and NBC agreed to an
accelerated payment schedule of the network compensation due Park Broadcasting
under such agreements. Under the new affiliation agreements with CBS and NBC,
approximately $37.4 million of the $52.2 million in aggregate network
compensation payable thereunder will be paid to Park Broadcasting during the
first four years of the ten-year terms of such agreements. In accordance with
GAAP, the Company is accounting for payments received from the networks on a
straight-line basis. As a result, in 1995, the cash received from the networks
pursuant to the
52
<PAGE>
affiliation agreements exceeded the revenue recognized in the results of
operations pursuant to GAAP by approximately $4.5 million. Cash payments to be
received from the networks will also exceed the revenue recognized pursuant to
GAAP by approximately $4.5 million in 1996, approximately $4.5 million in 1997
and approximately $2.8 million in 1998. Thereafter, revenue recognized under
GAAP will exceed cash payments received from the networks by approximately
$2.7 million annually from 1999 through 2004.
The Company is in the process of divesting all of its remaining Radio
Station Assets. The radio station operations had net revenue of $33.1 million
and Radio Cash Flow of $8.4 million for the fiscal year ended December 31,
1995. As of May 6, 1996, the Company had entered into definitive agreements
for the sale of all of its radio station operations for aggregate gross
proceeds of $233.2 million, of which $103.0 million of gross proceeds had been
received pursuant to the sale of its WPAT-AM and FM radio stations. Between
May 6, 1996 and June 14, 1996, the Company had sold its KEZX-AM, KWJZ-FM,
WNCT-AM and FM, WTVR-AM and FM, WNLS-AM, WTNT-FM, WHEN-AM and FM and WNAX-AM
and FM radio stations for aggregate gross proceeds of $62.0 million. Income
taxes due as a result of the above mentioned sales are estimated to be $42.4
million. Although there can be no assurance that the sale of the remaining
Radio Station Assets will occur, Park Broadcasting currently anticipates that
the sale of four of its eight remaining individual radio stations will be
completed by June 30, 1996, the sale of an additional two of its individual
radio stations will be completed by July 31, 1996 and the sale of its last two
individual radio stations will be completed by October 31, 1996. The financial
information with respect to the Company's radio broadcasting operations are
presented herein as discontinued operations. See "Business--Discontinued
Operations." Proceeds from the sale of the Radio Station Assets occurring
after May 13, 1996 have been and will be used to repay in full the Senior
Credit Facility and to pay taxes resulting from the sale of the radio station
operations. The Company decided to divest such operations to focus on its core
television broadcasting and newspaper publication operations, to raise cash to
prepay a portion of its existing indebtedness, and to take advantage of
attractive prices (which approximate in the aggregate 27.7 times Radio Cash
Flow in 1995) for which such operations could be sold.
In December 1993, the Company sold 33 publications for gross proceeds of
$6.3 million. The 33 publications contributed $10.4 million to revenue and
($0.2) million to Newspaper Cash Flow for the year ended December 31, 1993. In
November 1993, the Company purchased KALB-TV, an NBC affiliate, in Alexandria,
Louisiana for $22.7 million. KALB contributed $1.3 million to net revenue and
$0.7 million to Broadcast Cash Flow for the year ended December 31, 1993. As a
result, comparisons between periods prior to and after the divestiture and the
acquisition may be difficult.
OVERVIEW OF OPERATIONS
The Company is a holding company that owns 100% of the common stock of its
two subsidiaries, Park Broadcasting and Park Newspapers. Park Broadcasting
owns and operates nine network affiliated television stations: five CBS
affiliates, two NBC affiliates and two ABC affiliates. The Company has entered
into a definitive purchase agreement to acquire an additional ABC affiliate in
Montgomery, Alabama for $6.0 million; $4.5 million of such amount has been
paid. Park Newspapers owns and operates 104 community newspapers and related
publications.
Park Communications. Park Communications incurs certain expenses associated
with providing management supervisory functions, internal auditing,
consolidated financial statement and tax preparation, centralized cash
management services, benefits administration and other corporate services to
Park Broadcasting and Park Newspapers. Historically, Park Broadcasting and
Park Newspapers have made payments to Park Communications for their respective
allocation of the costs associated with providing such services. Park
Broadcasting and Park Newspapers intend to continue to make such payments to
Park Communications for the provision of such services, subject to certain
limitations and restrictions, including those pursuant to the terms of the
indentures governing the Broadcasting Notes and the Newspapers Notes.
Park Broadcasting. The net revenue of Park Broadcasting is derived primarily
from local and national advertising revenue, and to a much lesser extent, from
compensation paid by the networks to the stations for broadcasting network
programs. The primary operating expenses involved in owning and operating
television
53
<PAGE>
stations are employee compensation, programming, news gathering, production,
promotion and the solicitation of advertising.
In general, television stations receive revenue for advertising sold for
placement within and adjoining their locally originated programming and
adjoining national programming. Advertising is sold in time increments and is
priced primarily on the basis of a program's popularity among the specific
audience an advertiser desires to reach, as measured principally by quarterly
audience surveys. In addition, advertising rates are affected by the number of
advertisers competing for the available time, the size and demographic makeup
of the markets served and the availability of alternative advertising media in
the market area. Rates are highest during the most desirable viewing hours
(generally during local news programming and prime time) with corresponding
reductions during other hours.
Most advertising contracts are short-term and generally run for only a few
weeks. In the year ended December 31, 1995, no one contract or advertiser
accounted for 5% or more of Park Broadcasting's advertising revenue. Over 52%
of Park Broadcasting's revenue is generated from local and regional
advertising, which is sold primarily by Park Broadcasting sales personnel, who
receive a commission. The remainder of the advertising revenue represents
national advertising, which is sold by independent national advertising sales
representatives who also receive a commission. In addition, Park Broadcasting
generally pays commissions to advertising agencies for local, regional and
national advertising for placing the advertising with its stations.
Park Newspapers. The revenue of Park Newspapers is derived primarily from
advertising revenue and, to a lesser extent, from paid circulation and
commercial print jobs. The primary operating expenses involved in owning and
operating newspaper publications are employee compensation, newsprint,
circulation delivery costs, news gathering and the solicitation of
advertising.
Newspaper advertising rates and rate structures are generally based on
circulation and type of advertising, such as classified or display and
national or retail. Substantially all of Park Newspapers' total publication
advertising revenue is derived from local retailers and classified
advertisers. Advertisements in community newspapers such as Park Newspapers'
publications are generally less expensive to advertisers than larger, non-
local publications or electronic media. Local and regional advertising is sold
by regional sales representatives who receive a commission.
Circulation revenue is primarily derived from home delivery sales of paid
daily and non-daily newspapers to subscribers and through single-copy sales
made through retailers and vending racks. Over 80% of Park Newspapers'
circulation revenue is derived from subscription sales.
The Company's newsprint costs are approximately 10.4% of revenue, which the
Company believes compares favorably to other community newspaper groups. The
Company believes that its group purchasing of newsprint and attention to
efficiency and waste control are responsible for this favorable comparison.
Seasonality/Cyclicality of the Business. The Company's advertising revenue
is generally the highest in the second and fourth quarters of each year. The
increase is due to increased advertising in the spring and in the periods
leading up to and including the Christmas holiday season. In addition,
political advertising increases the Company's revenue during election years
and is typically heaviest during the fourth quarters of those years. However,
management believes that fluctuations in its political advertising revenue are
tempered by the levels of political activity in the areas in which it
operates.
54
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain financial
items and percentage relationships:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, QUARTER ENDED MARCH 31,
-------------------------------------------------- ------------------------------
1995
1993 % 1994 % PRO FORMA % 1995 % 1996 %
-------- ----- -------- ----- --------- ----- ------- ----- ------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PARK COMMUNICATIONS
Revenue:
Broadcasting........................... $ 62,460 42.4% $ 77,749 50.3% $ 76,769 49.3% $17,619 49.1% $17,055 48.2%
Newspapers............................. 84,751 57.6 76,810 49.7 78,904 50.7 18,259 50.9 18,342 51.8
Less: Agency and national
representative commissions............ (9,867) (12,128) (11,361) (2,625) (2,494)
-------- -------- -------- ------- -------
Net revenue............................ $137,344 100.0% $142,431 100.0% $144,312 100.0% $33,253 100.0% $32,903 100.0%
======== ======== ======== ======= =======
Operating income before depreciation and
amortization:
Broadcasting........................... $ 23,890 56.5% $ 32,770 59.6% $ 31,425 57.5% $ 6,719 59.5% $ 5,001 57.3%
Newspapers............................. 18,375 43.5 22,230 40.4 23,225 42.5 4,576 40.5 3,732 42.7
-------- -------- -------- ------- -------
Total.................................. $ 42,265 100.0% $ 55,000 100.0% $ 54,650 100.0% $11,295 100.0% $ 8,733 100.0%
======== ======== ======== ======= =======
Operating income:
Broadcasting........................... $ 19,728 63.3% $ 27,583 62.7% $ 15,187 49.6% $ 5,398 63.4% $ 1,050 39.2%
Newspapers............................. 11,480 36.7 16,414 37.3 15,058 49.2 3,256 38.2 1,561 58.3
Other.................................. (31) -- (34) -- 369 1.2 (137) (1.6) 68 2.5
-------- -------- -------- ------- -------
Total.................................. $ 31,177 100.0% $ 43,963 100.0% $ 30,614 100.0% $ 8,517 100.0% $ 2,679 100.0%
======== ======== ======== ======= =======
PARK BROADCASTING
Revenue:
Local.................................. $ 34,163 54.7% $ 41,165 52.9% $ 40,548 52.8% $ 9,396 53.3% $ 8,692 51.0%
National............................... 23,807 38.1 27,353 35.2 27,180 35.4 6,457 36.7 6,411 37.6
Network compensation................... 2,741 4.4 3,035 3.9 5,671 7.4 1,396 7.9 1,410 8.3
Political.............................. 787 1.3 4,685 6.0 1,812 2.4 23 0.1 130 0.7
Production and other................... 962 1.5 1,511 2.0 1,558 2.0 347 2.0 412 2.4
-------- -------- -------- ------- -------
Total.................................. 62,460 100.0% 77,749 100.0% 76,769 100.0% 17,619 100.0% 17,055 100.0%
Agency and national representative
commissions........................... (9,867) 15.8 (12,128) 15.6 (11,361) 14.8 (2,625) 14.9 (2,494) 14.6
-------- -------- -------- ------- -------
Net revenue............................ 52,593 65,621 65,408 14,993 14,561
-------- -------- -------- ------- -------
Operating expenses:
Costs of sales......................... 16,297 26.1% 18,016 23.2% 19,783 25.8% 4,680 26.6% 5,297 31.1%
Selling, general and administrative.... 12,406 19.9 14,835 19.1 14,200 18.5 3,594 20.4 4,263 25.0
-------- -------- -------- ------- -------
Total.................................. 28,703 32,851 33,983 8,274 9,560
-------- -------- -------- ------- -------
Depreciation and amortization........... 4,162 6.7 5,187 6.7 16,238 21.1 1,321 7.5 3,951 23.2
-------- -------- -------- ------- -------
Operating income....................... $ 19,728 31.5% $ 27,583 35.4% $ 15,187 19.8% $ 5,398 30.6% $ 1,050 6.2%
======== ======== ======== ======= =======
PARK NEWSPAPERS
Revenue:
Local.................................. $ 26,846 31.7% $ 24,890 32.4% $ 25,394 32.2% $ 5,793 31.7% $ 5,626 30.7%
Circulation............................ 19,373 22.9 17,281 22.5 18,726 23.7 4,470 24.5 4,677 25.5
Classified............................. 11,832 14.0 11,978 15.6 12,455 15.8 2,941 16.1 2,928 16.0
Preprint............................... 5,817 6.9 5,743 7.5 5,838 7.4 1,243 6.8 1,206 6.6
National............................... 799 0.9 575 0.7 523 0.7 107 0.6 145 0.8
Political.............................. 222 0.3 577 0.8 215 0.3 22 0.1 19 0.1
Other (includes nondailies and
shoppers)............................. 19,862 23.3 15,766 20.5 15,753 19.9 3,683 20.2 3,741 20.3
-------- -------- -------- ------- -------
Total.................................. 84,751 100.0% 76,810 100.0% 78,904 100.0% 18,259 100.0% 18,342 100.0%
-------- -------- -------- ------- -------
Operating expenses:
Costs of sales......................... 39,221 46.3% 32,364 42.1% 33,810 42.8% 8,043 44.0% 8,584 46.8%
Selling, general and administrative.... 27,155 32.0 22,216 28.9 21,869 27.7 5,640 30.9 6,026 32.9
-------- -------- -------- ------- -------
Total.................................. 66,376 54,580 55,679 13,683 14,610
-------- -------- -------- ------- -------
Depreciation and amortization........... 6,895 8.1 5,816 7.6 8,167 10.4 1,320 7.2 2,171 11.8
-------- -------- -------- ------- -------
Operating income....................... $ 11,480 13.6% $ 16,414 21.4% $ 15,058 19.1% $ 3,256 17.8% $ 1,561 8.5%
======== ======== ======== ======= =======
</TABLE>
55
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QUARTER ENDED MARCH 31, 1996 (UNAUDITED) COMPARED WITH QUARTER ENDED MARCH 31,
1995 (UNAUDITED)
REVENUE
Broadcasting. Gross revenue for the quarter ended March 31, 1996 was $17.1
million compared to $17.6 million for the quarter ended March 31, 1995, a
decrease of $0.5 million, or 2.8%. Revenue for the first quarter of 1996 was
adversely affected by severe winter weather in many of the markets the Company
serves and by continued rebuilding and training of the sales staffs at two of
the Company's television stations.
Newspapers. Gross revenue for each of the quarters ended March 31, 1996 and
March 31, 1995 was $18.3 million. Revenue for the first quarter of 1996 was
adversely affected by severe winter weather in many of the markets the Company
serves.
OPERATING EXPENSES
Broadcasting. Operating expenses (excluding depreciation and amortization)
for the quarter ended March 31, 1996 were $9.6 million compared to $8.3
million for the quarter ended March 31, 1995, an increase of $1.3 million, or
15.7%. As a percentage of gross broadcast revenue, operating expenses
(excluding depreciation and amortization) were 56.1% for the quarter ended
March 31, 1996 compared to 47.0% for the quarter ended March 31, 1995. This
expense increase resulted from a number of factors that were a result of the
implementation of the Company's business and operating strategy, including
approximately $0.2 million from the cost of upgrading the news staff and
operations of WBMG-TV in Birmingham, Alabama and approximately $0.5 million in
increased television station promotion and programming costs.
Newspapers. Operating expenses (excluding depreciation and amortization) for
the quarter ended March 31, 1996 were $14.6 million compared to $13.7 million
for the quarter ended March 31, 1995, an increase of $0.9 million, or 6.6%. As
a percentage of newspaper revenue, operating expenses (excluding depreciation
and amortization) were 79.7% for the quarter ended March 31, 1996 compared to
74.9% for the quarter ended March 31, 1995. The dollar increase was primarily
due to increased newsprint costs and increased costs related to upgrading the
sales staff compensation plans.
Newsprint expenses for the quarter ended March 31, 1996 were $2.2 million
compared to $1.7 million for the quarter ended March 31, 1995, an increase of
$0.5 million, or 29.4%. As a percentage of newspaper revenue, newsprint
expenses were 12.2% for the quarter ended March 31, 1996 compared to 9.3% for
the quarter ended March 31, 1995. The increase was primarily a result of
industry-wide higher newsprint prices. Newsprint prices have stabilized
recently and management anticipates that prices will decrease slightly during
the latter part of 1996.
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (EBITDA)
Broadcasting. EBITDA for the quarter ended March 31, 1996 was $5.0 million
compared to $6.7 million for the quarter ended March 31, 1995, a decrease of
$1.7 million, or 25.4%. As a percentage of gross broadcast revenue, EBITDA was
29.3% for the quarter ended March 31, 1996 compared to 38.1% for the quarter
ended March 31, 1995. The decrease was a result of the decrease in revenue and
increase in operating expenses described above. EBITDA includes $0.5 million
and $0.3 million of allocated Central Corporate Overhead for the quarters
ended March 31, 1996 and March 31, 1995, respectively. EBITDA for the quarters
ended March 31, 1996 and March 31, 1995 does not include $1.1 million of cash
network compensation received pursuant to the Company's affiliation
agreements, but not recognized as revenue.
Newspapers. EBITDA for the quarter ended March 31, 1996 was $3.7 million
compared to $4.6 million for the quarter ended March 31, 1995, a decrease of
$0.9 million, or 19.6%. As a percentage of newspaper revenue, EBITDA was 20.3%
for the quarter ended March 31, 1996 compared to 25.1% for the quarter ended
March 31, 1995. The decrease was a result of expenses increasing more than
operating revenue as described above. EBITDA includes $0.8 million and $0.6
million of allocated Central Corporate Overhead for the quarters ended March
31, 1996 and March 31, 1995, respectively.
56
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DEPRECIATION AND AMORTIZATION.
Broadcasting. Depreciation and amortization for the quarter ended March 31,
1996 was $4.0 million compared to $1.3 million for the quarter ended March 31,
1995, an increase of $2.7 million, or 207.7%. As a percentage of gross
broadcast revenue, depreciation and amortization was 23.2% for the quarter
ended March 31, 1996 compared to 7.5% for the quarter ended March 31, 1995.
The increase was primarily due to the write-up of assets as a result of the
Acquisition.
Newspapers. Depreciation and amortization for the quarter ended March 31,
1996 was $2.2 million compared to $1.3 million for the quarter ended March 31,
1995, an increase of $0.9 million, or 69.2%. As a percentage of newspaper
revenue, depreciation and amortization was 11.8% for the quarter ended March
31, 1996 compared to 7.2% for the quarter ended March 31, 1995. The increase
was primarily due to the write-up of assets as a result of the Acquisition.
INTEREST EXPENSE
Broadcasting. Interest expense for the quarter ended March 31, 1996 was
$10.0 million. There was minimal interest expense for the quarter ended March
31, 1995. The increase was due to the increase in total debt as a result of
the financing for the Acquisition.
Newspapers. Interest expense for the quarter ended March 31, 1996 was $5.7
million. There was minimal interest expense for the quarter ended March 31,
1995. The increase was due to the increase in total debt as a result of the
financing for the Acquisition.
INCOME TAXES
Broadcasting. Income taxes (benefit) for the quarter ended March 31, 1996
were ($3.2) million compared to $2.1 million for the quarter ended March 31,
1995, a decrease of $5.3 million. The decrease was due to the decrease in
taxable income, primarily the result of the increase in depreciation and
amortization and interest expense resulting from the Acquisition. The
effective tax rate for the quarter ended March 31, 1996 reflects a tax benefit
rate of 37%, compared to an effective tax expense rate of 39% for the quarter
ended March 31, 1995. The change in the effective rate is due to the increase
in the amortization of nondeductible goodwill resulting from purchase
accounting adjustments.
Newspapers. Income taxes (benefit) for the quarter ended March 31, 1996 were
($1.4) million compared to $1.5 million for the quarter ended March 31, 1995,
a decrease of $2.9 million. The decrease was due to the decrease in taxable
income as a result of the increase in depreciation and amortization and
interest expense resulting from the Acquisition. The effective tax rate for
the quarter ended March 31, 1996 reflects a tax benefit rate of 37%, compared
to an effective tax expense rate of 45% for the quarter ended March 31, 1995.
The change in the effective rate is due to the increase in the amortization of
nondeductible goodwill resulting from purchase accounting adjustments.
INCOME (LOSS) FROM CONTINUING OPERATIONS
Broadcasting. Income (loss) from continuing operations for the quarter ended
March 31, 1996 was ($5.5) million compared to $3.3 million for the quarter
ended March 31, 1995, a decrease of $8.8 million. The decrease was primarily
due to the increase in depreciation and amortization and interest expense as a
result of the Acquisition.
Newspapers. Income (loss) from continuing operations for the quarter ended
March 31, 1996 was ($2.5) million compared to $1.8 million for the quarter
ended March 31, 1995, a decrease of $4.3 million. The decrease was primarily
due to the increase in depreciation and amortization and interest expense as a
result of the Acquisition.
57
<PAGE>
DISCONTINUED OPERATIONS
The discontinued operations consist of the Company's radio station
operations. Net (loss) income for the radio station operations for the quarter
ended March 31, 1996 was ($2.4) million compared to $0.3 million for the
quarter ended March 31, 1995. On December 26, 1995, the Company announced its
intention to divest all of its radio station operations on an individual
basis. The segment has produced operating profits before interest expense,
depreciation and amortization, and the Company believes that each of its radio
station operations will generate operating profit before interest expense,
depreciation and amortization through its date of disposition. The results of
operations of the radio station operations are included in the single line of
the income statement labeled "(loss) income from discontinued operations." In
March 1996, the Company sold its WPAT-AM and WPAT-FM radio stations resulting
in a gain, net of taxes, of $29.9 million. This amount is included in the
single line of the income statement labeled "gain from sale of discontinued
operations."
YEAR ENDED DECEMBER 31, 1995 (PRO FORMA UNAUDITED) COMPARED WITH YEAR ENDED
DECEMBER 31, 1994
REVENUE
Broadcasting. Gross revenue for the year ended December 31, 1995 was $76.8
million compared to $77.7 million for the year ended December 31, 1994, a
decrease of $0.9 million, or 1.2%. The decrease was primarily due to a
reduction in political advertising revenue of $2.9 million in 1995, partially
offset by an increase in network revenue of $2.6 million. The increase in
network compensation revenue was due to long-term affiliation agreements
entered into between Park Broadcasting and each of CBS and NBC.
Local advertising revenue for the year ended December 31, 1995 was $40.5
million compared to $41.2 million for the year ended December 31, 1994, a
decrease of $0.7 million, or 1.7%. The decrease was primarily due to a $1.4
million reduction in local advertising at WTVR in Richmond, Virginia, which
management believes was attributable to a management change in December 1994.
This reduction was offset by increases at other stations.
National revenue for the year ended December 31, 1995 was $27.2 million
compared to $27.4 million for the year ended December 31, 1994, a decrease of
$0.2 million, or 0.7%.
Newspapers. Gross revenue for the year ended December 31, 1995 was $78.9
million compared to $76.8 million for the year ended December 31, 1994, an
increase of $2.1 million, or 2.7%. The increase was primarily due to an
increase in circulation revenue of $1.4 million resulting from price
increases, partially offset by a reduction in political advertising revenue of
$0.4 million.
Local advertising revenue for the year ended December 31, 1995 was $25.4
million compared to $24.9 million for the year ended December 31, 1994, an
increase of $0.5 million, or 2.0%.
Classified revenue for the year ended December 31, 1995 was $12.5 million
compared to $12.0 million for the year ended December 31, 1994, an increase of
$0.5 million, or 4.1%. The increase was the result of several initiatives by
the Company to increase classified revenue.
OPERATING EXPENSES
Broadcasting. Operating expenses (excluding depreciation and amortization)
for the year ended December 31, 1995 were $34.0 million compared to $32.9
million for the year ended December 31, 1994, an increase of $1.1 million, or
3.3%. As a percentage of gross broadcast revenue, operating expenses
(excluding depreciation and amortization) were 44.3% in 1995 compared to 42.3%
in 1994. The dollar increase was primarily due to increased compensation
expense of $0.8 million and increased advertising/promotional expenditures of
$0.4 million. The compensation expense increase was a result of the Company's
strategy to upgrade its sales force. The advertising/promotional expense
increase was the result of enhanced marketing techniques.
Newspapers. Operating expenses (excluding depreciation and amortization) for
the year ended December 31, 1995 were $55.7 million compared to $54.6 million
for the year ended December 31, 1994, an increase of
58
<PAGE>
$1.1 million, or 2.0%. As a percentage of newspaper revenue, operating
expenses (excluding depreciation and amortization) were 70.5% in 1995 compared
to 71.0% in 1994. The dollar increase was primarily due to increased newsprint
costs, partially offset by reductions in other operating expenses of $0.8
million which were primarily due to a decrease in consulting/non-compete
expense, since no value was assigned to these contracts after the Acquisition,
and the effect of the consolidation of five production facilities.
Newsprint expenses for the year ended December 31, 1995 were $8.2 million
compared to $6.3 million for the year ended December 31, 1994, an increase of
$1.9 million or 29.4%. As a percentage of newspaper revenue, newsprint
expenses were 10.4% in 1995 compared to 8.3% in 1994. The increase was
primarily a result of industry-wide higher newsprint prices.
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (EBITDA)
Broadcasting. EBITDA for the year ended December 31, 1995 was $31.4 million
compared to $32.8 million for the year ended December 31, 1994, a decrease of
$1.4 million, or 4.3%. As a percentage of gross broadcast revenue, EBITDA was
40.9% in 1995 compared to 42.1% in 1994. The decrease was a result of the
decrease in revenue and increase in operating expenses described above. EBITDA
includes $1.1 million and $1.3 million of allocated Central Corporate Overhead
for 1995 and 1994, respectively. EBITDA for 1995 does not include $4.5 million
of cash network compensation received pursuant to Park Broadcasting's
affiliation agreements, but not recognized as revenue.
Newspapers. EBITDA for the year ended December 31, 1995 was $23.2 million
compared to $22.2 million for the year ended December 31, 1994, an increase of
$1.0 million, or 4.5%. As a percentage of newspaper revenue, EBITDA was 29.4%
in 1995 compared to 28.9% in 1994. The increase was a result of revenue
increasing more than operating expenses as described above. EBITDA includes
$2.2 million and $2.0 million of allocated Central Corporate Overhead for 1995
and 1994, respectively.
DEPRECIATION AND AMORTIZATION
Broadcasting. Depreciation and amortization for the year ended December 31,
1995 was $16.2 million compared to $5.2 million for the year ended December
31, 1994, an increase of $11.0 million, or 211.5%. As a percentage of gross
broadcast revenue, depreciation and amortization was 21.1% in 1995 compared to
6.7% in 1994. The increase was primarily due to the write-up of assets as a
result of the Acquisition.
Newspapers. Depreciation and amortization for the year ended December 31,
1995 was $8.2 million compared to $5.8 million for the year ended December 31,
1994, an increase of $2.4 million, or 41.4%. As a percentage of newspaper
revenue, depreciation and amortization was 10.4% in 1995 compared to 7.6% in
1994. The increase was primarily due to the write-up of assets as a result of
the Acquisition.
INTEREST EXPENSE
Broadcasting. Interest expense for the year ended December 31, 1995 was
$40.9 million compared to $0.2 million for the year ended December 31, 1994,
an increase of $40.7 million. The increase was primarily due to the increase
in total debt as a result of the financing for the Acquisition.
Newspapers. Interest expense for the year ended December 31, 1995 was $24.8
million compared to $0.1 million for the year ended December 31, 1994, an
increase of $24.7 million. The increase was primarily due to the increase in
total debt as a result of the financing for the Acquisition.
INCOME TAXES
Broadcasting. Income taxes for the year ended December 31, 1995 was ($8.3)
million compared to $10.5 million for the year ended December 31, 1994, a
decrease of $18.8 million. The decrease was due to the decrease in taxable
income as a result of the increase in depreciation and amortization and
interest expense resulting from
59
<PAGE>
the Acquisition. The effective tax rate for 1995 reflects a tax benefit rate
of 32%, compared to an effective tax expense rate of 39% for 1994. The change
in the effective rate is due to the increase in the amortization of
nondeductible goodwill resulting from purchase accounting adjustments.
Newspapers. Income taxes for the year ended December 31, 1995 was ($2.8)
million compared to $7.0 million for the year ended December 31, 1994, a
decrease of $9.8 million. The decrease was due to the decrease in taxable
income as a result of the increase in depreciation and amortization and
interest expense resulting from the Acquisition. The effective tax rate for
1995 reflects a tax benefit rate of 28%, compared to an effective tax expense
rate of 45% in 1994. The change in the effective rate is due to the increase
in the amortization of nondeductible goodwill resulting from purchase
accounting adjustments.
INCOME (LOSS) FROM CONTINUING OPERATIONS
Broadcasting. Income (loss) from continuing operations for the year ended
December 31, 1995 was ($17.3) million compared to $16.5 million for the year
ended December 31, 1994, a decrease of $33.8 million. The decrease was
primarily due to the increase in depreciation and amortization and interest
expense as a result of the Acquisition.
Newspapers. Income (loss) from continuing operations for the year ended
December 31, 1995 was ($7.2) million compared to $8.5 million for the year
ended December 31, 1994, a decrease of $15.7 million. The decrease was
primarily due to the increase in depreciation and amortization and interest
expense as a result of the Acquisition.
DISCONTINUED OPERATIONS
The discontinued operations consist of the Company's radio station
operations. Net loss for the radio station operations for the year ended
December 31, 1995 was ($6.0) million compared to ($0.1) million for the year
ended December 31, 1994. On December 26, 1995, the Company announced its
intention to divest all of its radio station operations on an individual
basis. The segment has produced operating profits before interest expense,
depreciation and amortization, and the Company believes that each of its radio
station operations will generate operating profit before interest expense,
depreciation and amortization through its date of disposition. The results of
operations of the radio station operations are included in the single line of
the income statement labeled "(loss) income from discontinued operations."
YEAR ENDED DECEMBER 31, 1994 COMPARED WITH YEAR ENDED DECEMBER 31, 1993
REVENUE
Broadcasting. Gross revenue for the year ended December 31, 1994 was $77.7
million compared to $62.5 million for the year ended December 31, 1993, an
increase of $15.2 million, or 24.3%. The increase was primarily due to the
acquisition in November of 1993 of KALB-TV in Alexandria, Louisiana, which
added $6.6 million in revenue, and an increase in political advertising
revenue of $3.9 million.
Local advertising revenue for the year ended December 31, 1994 was $41.1
million compared to $34.2 million for the year ended December 31, 1993, an
increase of $6.9 million, or 20.2%. The increase was primarily due to the
acquisition of KALB-TV which added $4.0 million in local advertising revenue.
National revenue for the year ended December 31, 1994 was $27.4 million
compared to $23.8 million for the year ended December 31, 1993, an increase of
$3.6 million, or 15.1%. The increase was primarily due to the acquisition of
KALB-TV which added $2.1 million in national advertising revenue.
Newspapers. Gross revenue for the year ended December 31, 1994 was $76.8
million compared to $84.8 million for the year ended December 31, 1993, a
decrease of $8.0 million, or 9.4%. The decrease was primarily due to the sale
of 33 publications in December 1993 which was responsible for $10.4 million in
decreased revenue, partially offset by an increase in political advertising
revenue of $0.4 million.
60
<PAGE>
Local advertising revenue for the year ended December 31, 1994 was $24.9
million compared to $26.8 million for the year ended December 31, 1993, a
decrease of $1.9 million, or 7.1%, primarily because of the sale of 33
publications in December 1993.
Classified revenue for the year ended December 31, 1994 was $12.0 million
compared to $11.8 million for the year ended December 31, 1993, an increase of
$0.2 million, or 1.7%.
OPERATING EXPENSES
Broadcasting. Operating expenses (excluding depreciation and amortization)
for the year ended December 31, 1994 were $32.9 million compared to $28.7
million for the year ended December 31, 1993, an increase of $4.2 million, or
14.6%. As a percentage of gross broadcast revenue, operating expenses
(excluding depreciation and amortization) were 42.3% in 1994 compared to 46.0%
in 1993. The dollar increase in operating expenses (excluding depreciation and
amortization) was primarily due to the purchase of KALB-TV in November 1993
which contributed $3.0 million of the increase. The remainder of the increase
was due to an increase in compensation and local sales commissions of $0.8
million.
Newspapers. Operating expenses (excluding depreciation and amortization) for
the year ended December 31, 1994 were $54.6 million compared to $66.4 million
for the year ended December 31, 1993, a decrease of $11.8 million, or 17.8%.
As a percentage of newspaper revenue, operating expenses (excluding
depreciation and amortization) were 71.0% in 1994 compared to 78.3% in 1993.
Of the decrease, $10.6 million resulted from the sale of 33 publications. The
remainder was principally a result of the effectiveness of the Company's cost
control programs and decreases in newsprint expense of $0.3 million and in
insurance expense of $0.3 million.
Newsprint expenses for the year ended December 31, 1994 were $6.3 million
compared to $7.6 million for the year ended December 31, 1993, a decrease of
$1.3 million, or 17.1%. As a percentage of newspaper revenue, newsprint
expenses were 8.3% in 1994 compared to 9.0% in 1993. The decrease was
primarily due to the sale of 33 publications in December 1993.
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (EBITDA)
Broadcasting. EBITDA for the year ended December 31, 1994 was $32.8 million
compared to $23.9 million for the year ended December 31, 1993, an increase of
$8.9 million, or 37.2%. As a percentage of gross broadcast revenue, EBITDA was
42.1% in 1994 compared to 38.2% in 1993. The increase was a result of the
increase in revenue partially offset by the increase in operating expenses as
described above. EBITDA includes $1.3 million of allocated Central Corporate
Overhead for each of 1994 and 1993.
Newspapers. EBITDA for the year ended December 31, 1994 was $22.2 million
compared to $18.4 million for the year ended December 31, 1993, an increase of
$3.8 million, or 20.7%. As a percentage of newspaper revenue, EBITDA was 29.0%
in 1994 compared to 21.7% in 1993. The increase was a result of operating
expenses decreasing more than revenue as described above. EBITDA includes $2.0
million and $2.1 million of allocated Central Corporate Overhead for 1994 and
1993, respectively.
DEPRECIATION AND AMORTIZATION
Broadcasting. Depreciation and amortization for the year ended December 31,
1994 was $5.2 million compared to $4.2 million for the year ended December 31,
1993, an increase of $1.0 million, or 23.8%, as a result of the acquisition of
KALB-TV. As a percentage of gross broadcast revenue, depreciation and
amortization was 6.7% in each of 1994 and 1993.
Newspapers. Depreciation and amortization for the year ended December 31,
1994 was $5.8 million compared to $6.9 million for the year ended December 31,
1993, a decrease of $1.1 million, or 15.9%. As a percentage of newspaper
revenue, depreciation and amortization was 7.6% in 1994 compared to 8.1% in
1993, a decrease caused, in part, by the sale of 33 publications in December
1993.
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<PAGE>
INTEREST EXPENSE
Broadcasting. Interest expense for the year ended December 31, 1994 was $0.2
million. There was no interest expense for the year ended December 31, 1993.
Newspapers. Interest expense for the year ended December 31, 1994 was $0.1
million compared to $0.2 million for the year ended December 31, 1993.
INCOME TAXES
Broadcasting. Income taxes for the year ended December 31, 1994 were $10.5
million compared to $7.4 million for the year ended December 31, 1993, an
increase of $3.1 million, or 41.9%.
Newspapers. Income taxes for the year ended December 31, 1994 were $7.0
million compared to $5.3 million for the year ended December 31, 1993, an
increase of $1.7 million, or 32.1%.
INCOME FROM CONTINUING OPERATIONS
Broadcasting. Income from continuing operations for the year ended December
31, 1994 was $16.5 million compared to $12.1 million for the year ended
December 31, 1993, an increase of $4.4 million, or 36.4%.
Newspapers. Income from continuing operations for the year ended December
31, 1994 was $8.5 million compared to $5.8 million for the year ended December
31, 1993, an increase of $2.7 million, or 46.6%.
DISCONTINUED OPERATIONS
The discontinued operations consist of the Company's radio station
operations. Net loss for the radio station operations for the year ended
December 31, 1994 was ($0.1) million compared to ($1.8) million for the year
ended December 31, 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company is a holding company and therefore derives substantially all of
its cash flow from its subsidiaries. The Company's primary sources of
liquidity in the future will be dividends from its subsidiaries and tax
sharing payments pursuant to a tax sharing agreement among the Company and its
subsidiaries. The Company's subsidiaries' principal source of liquidity is net
cash provided by operating activities. Net cash provided by operating
activities of Park Broadcasting decreased from $20.0 million for the year
ended December 31, 1994 to $18.7 million for the year ended December 31, 1995.
Net cash provided by operating activities of Park Newspapers decreased from
$9.8 million for the year ended December 31, 1994 to $9.3 million for the year
ended December 31, 1995. The Company believes that it will have sufficient
liquidity to meet its future capital expenditure and working capital
requirements, debt service and other obligations.
Capital expenditures of Park Broadcasting decreased from $9.0 million for
the year ended December 31, 1994 to $6.0 million for the year ended December
31, 1995. Capital expenditures in 1994 included the purchase of property from
RHP Incorporated, a company owned and operated by the estate of Mr. Park, for
$3.6 million. Capital expenditures for Park Broadcasting in 1996 are expected
to be approximately $6.7 million, of which approximately $2.5 million is
expected to be principally for capital replacement purposes and approximately
$4.2 million is expected to be for expansion of the WBMG facility. Capital
expenditures of Park Newspapers decreased from $3.5 million for the year ended
December 31, 1994 to $2.1 million for the year ended December 31, 1995.
Capital expenditures in 1994 included the purchase of color printing equipment
totaling $1.7 million and the purchase of property from RHP Incorporated for
$0.6 million. Capital expenditures for Park Newspapers in 1996 are expected to
be approximately $1.5 million, including $1.0 million principally for capital
replacement purposes and $0.5 million for consolidation of the Concord and
Kannapolis, North Carolina facilities. Historically, the Company has financed
capital expenditures through internally generated cash flow. The Company
expects to finance capital expenditures in the future through cash flow from
operations and borrowings under the New Credit Agreements. See "Description of
Certain Indebtedness."
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<PAGE>
On May 13, 1996, the Company sold the Series A Notes as part of the Units
consisting of the Series A Notes and the Warrants. The sale of Units was one
of the Refinancing Transactions, the purpose of which was to refinance the
Company's indebtedness under the Prior Credit Agreement. The Refinancing
Transactions consisted of (i) the sale of the Units, (ii) the establishment of
and drawings under the Senior Credit Facility in the amount of $58.0 million,
(iii) the sale, which was completed on May 13, 1996, of $241.0 million in
principal amount of 11 3/4% Senior Notes due 2004 of Park Broadcasting, (iv)
the sale, which was completed on May 13, 1996, of $155.0 million in principal
amount of 11 7/8% Senior Notes due 2004 of Park Newspapers and (v) the sale,
which was completed on March 25, 1996, of the Company's WPAT-AM and FM radio
stations for aggregate gross proceeds of $103.0 million. The terms of the
Broadcasting Notes and the Newspapers Notes impose upon Park Broadcasting and
Park Newspapers certain covenants that restrict the amount of cash that can be
dividended to the Company and limit, among other things, the respective
subsidiaries' ability to incur additional indebtedness and redeploy the
proceeds from the sale of assets. See "Description of Certain Indebtedness"
and "Risk Factors--Substantial Leverage."
It is contemplated that Park Broadcasting and Park Newspapers will each have
commitments for a senior revolving credit facility to be used for future
working capital and general corporate purposes. The New Credit Agreement of
Park Broadcasting (the "Broadcasting Bank Facility") is anticipated to be in
an amount not to exceed $15.0 million. The New Credit Agreement of Park
Newspapers (the "Newspapers Bank Facility") is anticipated to be in an amount
not to exceed $10.0 million. See "Description of Certain Indebtedness."
In February 1996, the Company entered into a definitive agreement to make
the Montgomery Acquisition. The total purchase price of the acquisition is
$6.0 million, of which $4.5 million has been paid. The Company expects to
complete the acquisition by the third quarter of 1996. The remaining financing
for the Montgomery Acquisition will be from net cash provided by operating
activities.
The Company sold two of its radio stations in March 1996. Proceeds of
approximately $66.0 million were utilized to reduce long-term debt. The net
gain on the sale of these stations was $29.9 million. The sale of the
Company's radio station operations will result in the Company and its
consolidated subsidiaries being obligated to pay income taxes of approximately
$65.4 million in connection therewith assuming the sales of all Radio Station
Assets are completed on the terms in effect on the date hereof. In
anticipation of the sale of the Radio Station Assets, the Company entered into
the Senior Credit Facility which will mature on November 13, 1996 (subject to
an additional six-month extension under certain circumstances). The Senior
Credit Facility requires that the loans outstanding thereunder be repaid from
the proceeds of the sale of each of the Radio Station Assets (other than the
KEZX-AM and KWJZ-FM radio stations in Seattle, Washington, the assets of which
are not subject to the lien of the Senior Credit Facility) regardless of the
taxes owed with respect to such sale until such loan is repaid in full. In the
event that the Company does not consummate sales of the Radio Station Assets
in amounts and at times sufficient to pay the amounts due on the Senior Credit
Facility as well as the taxes payable on the sales that are consummated, the
Company may not have available cash resources to make such payments. The
failure to make such payments could have a material adverse effect on the
Company's financial condition and liquidity.
For a further discussion relating to the Company's liquidity, see "Risk
Factors-- Substantial Leverage" and "--Failure to Consummate Sales of Radio
Station Assets."
INCOME TAXES
PAI and its subsidiaries (including the Company) file a consolidated federal
income tax return and separate state or local tax returns as required. See
"Business--Tax Sharing Agreement." On June 17, 1996, the Company made its
required federal estimated tax payment.
63
<PAGE>
BUSINESS
The Company is a holding company which through its subsidiaries owns and
operates nine network affiliated television stations and 104 newspapers and
related publications in geographically diverse markets throughout the United
States. The Company's television stations are located in markets ranging from
the 51st to the 177th largest DMA. Five of these stations are affiliated with
CBS, two are affiliated with NBC and two are affiliated with ABC. The
Company's 104 newspaper publications include 28 daily newspapers, 26 non-daily
newspapers and 50 "total market coverage" publications. The Company's
newspaper publications serve readers in 43 counties in 12 states and range in
circulation from approximately 4,000 to 17,000, with a combined average paid
daily circulation of approximately 242,000. For the year ended December 31,
1995, the Company had net revenue of $144.3 million and Operating Cash Flow of
$59.3 million.
The Company was founded in 1971 by Roy H. Park to consolidate media holdings
which Mr. Park began acquiring in 1962. Mr. Park's strategy was to complete at
least one acquisition per year and to improve Operating Cash Flow by managing
costs rather than increasing revenue. PAI, which is effectively controlled by
Gary B. Knapp and Donald R. Tomlin, Jr., acquired the Company on May 11, 1995.
Messrs. Knapp and Tomlin believed the Acquisition presented a unique
opportunity to acquire a group of media assets, each with strong local
franchises in the markets in which they operate and potential revenue
enhancement opportunities. Due to the prior owner's operating strategy, the
Company's media properties, both television and newspaper, generally have
captured a smaller relative share of advertising dollars in their respective
markets than their share of viewing audiences or relative positions would
indicate. Messrs. Knapp and Tomlin, along with the Company's experienced
management team, developed and initiated a strategy to take advantage of this
opportunity to increase revenue and Operating Cash Flow, while maintaining
strict control over costs. Collectively, Messrs. Knapp and Tomlin have
significant business, operating and investment experience in media, real
estate and turnaround situations and, in particular, in the field of
television and radio broadcasting. The management team at the Company and at
each of the two operating subsidiaries have substantial experience in the
television and newspaper industries. Each of the Company's executive officers
brings between 18 and 34 years of experience in their respective industries.
PARK BROADCASTING
Park Broadcasting owns and operates nine network affiliated television
stations primarily located in mid-sized southeastern markets. The stations
cover approximately 2.8 million households, or approximately 3.0% of the total
television households in the United States, and are affiliated with three of
the four major networks. The Company believes that operating a geographically
diverse group of stations with a mix of network affiliations reduces the
potential impact on the Company from the performance of any one market or
network. The networks have recently sought longer term affiliation agreements
with local stations and generally have increased the compensation payable to
the local stations in return for such longer term agreements. Each of the
stations has recently renegotiated its affiliation agreement, all of which
provide for ten-year terms at compensation levels substantially above the
levels under the prior agreements. See "Network Affiliation Agreements" below.
For the year ended December 31, 1995, Park Broadcasting had revenue of $65.4
million and Broadcast Cash Flow of $37.1 million.
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<PAGE>
The following table sets forth certain information for each of the Company's
television stations.
<TABLE>
<CAPTION>
NET REVENUE FOR THE YEAR ENDED
DECEMBER 31, 1995
-----------------------------------
YEAR NETWORK MARKET AMOUNT PERCENTAGE OF
STATION ACQUIRED AFFILIATION MARKET RANK (IN THOUSANDS) TOTAL
- ------- ---------- ------------ -------------------------- ------ ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
WBMG-TV 1973 CBS Birmingham, Alabama 51 $ 6,389 9.8%
WTVR-TV 1965 CBS Richmond, Virginia 54 12,222 18.7
WSLS-TV 1969 NBC Roanoke, Virginia 67 9,070 13.9
WTVQ-TV 1992 ABC Lexington, Kentucky 68 8,365 12.8
WDEF-TV 1964 CBS Chattanooga, Tennessee 82 6,957 10.6
WJHL-TV 1964 CBS Johnson City, Tennessee 93 6,641 10.1
WNCT-TV 1962 CBS Greenville, North Carolina 104 5,632 8.6
WUTR-TV 1970 ABC Utica, New York 166 2,179 3.3
KALB-TV 1993 NBC Alexandria, Louisiana 177 7,953 12.2
------- -----
$65,408 100.0%
======= =====
WHOA-TV Pending(a) ABC Montgomery, Alabama 113 -- --
</TABLE>
- --------
(a) To be acquired pursuant to the Montgomery Acquisition. The 1995 net
revenue of WHOA-TV was approximately $2.5 million.
BUSINESS AND OPERATING STRATEGY
Park Broadcasting's objective is to build revenue and increase Broadcast
Cash Flow from its television stations. Under previous management, the
stations were operated with a focus on managing costs, not on maximizing
revenue and Broadcast Cash Flow growth. The prior owner's strategy resulted in
the stations typically capturing a smaller share of advertising revenue in
their respective markets compared to their audience share. This ratio of
advertising revenue share to audience share is indicated by a station's "power
ratio," with a ratio of one (or greater than one) indicating that a station is
achieving its share (or more than its share) of advertising dollars relative
to its share of viewers. The following table, derived from Investing in
Television, 1996 Market Report, published by BIA Publications, Inc. ("BIA"),
illustrates the opportunity for almost all of Park Broadcasting's stations to
increase advertising revenue without the need to achieve ratings growth.
<TABLE>
<CAPTION>
ADVERTISING LOCAL
REVENUE COMMERCIAL
STATION MARKET SHARE (A) SHARE (B) POWER RATIO (C)
------- -------------------------- ----------- ---------- ---------------
<C> <S> <C> <C> <C>
WBMG-TV Birmingham, Alabama 11% 13% 0.82
WTVR-TV Richmond, Virginia 26 32 0.80
WSLS-TV Roanoke, Virginia 24 24 1.01
WTVQ-TV Lexington, Kentucky 22 23 0.95
WDEF-TV Chattanooga, Tennessee 24 26 0.91
WJHL-TV Johnson City, Tennessee 30 34 0.90
WNCT-TV Greenville, North Carolina 29 35 0.84
WUTR-TV Utica, New York 29 30 0.96
KALB-TV Alexandria, Louisiana 75 70 1.07
</TABLE>
- --------
(a) Represents station gross advertising revenue (including total time sales,
network compensation, national/regional advertising, local advertising and
political advertising), as estimated by BIA, as a percentage of the gross
advertising revenue for the entire market, as estimated by BIA.
(b) Represents the average share for the four rating periods, November 1994
through July 1995, adjusted for lost viewing to out-of-market and non-
commercial stations.
(c) Advertising revenue share divided by local commercial share.
The Company's business and operating strategy of achieving both increased
revenue and Broadcast Cash Flow at each of its television stations includes
the following key elements:
Strengthen Local Sales and Marketing Development. The Company believes
that each of its television stations has an opportunity to increase its
share of advertising revenue in its market through the implementation of a
new and aggressive local sales development program. Park Broadcasting's
emphasis is
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to create a more highly trained and knowledgeable sales force. Through
extensive sales training programs on both basic and advanced marketing
techniques developed in conjunction with outside consultants, Park
Broadcasting's sales professionals are beginning to work closely with
targeted advertisers to develop successful advertising campaigns. Park
Broadcasting has also recently equipped its sales force with laptop
computers capable of linking with Park Broadcasting's sophisticated
pricing, inventory, traffic and research programs to respond to
advertisers' needs with real-time information and thereby maximize sales
opportunities. These systems also assist sales professionals in creating
unique sales presentations that more effectively demonstrate advertising
opportunities at Park Broadcasting's television stations. In addition, the
Company has recently introduced a variety of improved marketing techniques
such as an increased use of live remote broadcasts from advertisers'
locations, advertising incentives such as trips and contests for key
targeted advertisers, and station-sponsored sales seminars open to
community businesses with nationally known motivational speakers. Park
Broadcasting has also instituted a successful co-op advertising program.
One of the primary reasons for local advertisers declining to participate
in co-op programs is the complicated administrative and collection
procedures generally associated with obtaining such co-op dollars. Park
Broadcasting has established co-op directors at most of its stations to
eliminate this administrative burden for the local advertisers. These
programs, in conjunction with an increase in promotion of the stations'
local news, programming and special events and increased use of
sophisticated qualitative market research, are designed to position Park
Broadcasting's television stations to gain larger percentages of their
respective market advertising revenue.
Enhance Strong Local Franchises. Since the Acquisition, the Company has
been committed to building local franchises at each of its television
stations. Management believes that local news leadership is the foundation
to building significant audience share in local markets. Due to their high
viewership levels, the time periods before, during and after the local news
are attractive to advertisers and thus command higher advertising rates.
The demographic characteristics of the typical news audience are also
appealing to advertisers. Park Broadcasting has invested in expanding and
improving many of its news operations, including purchasing additional
satellite uplink vehicles, upgrading news studios and technical facilities
and improving weather systems and on-air graphics. In one market (CBS
affiliated WNCT-TV, Greenville, North Carolina), Park Broadcasting is
utilizing its news production capabilities to generate additional revenue
by providing local news programming to a Fox affiliated station which did
not previously air local news programming. Park Broadcasting will seek
additional such opportunities to generate incremental revenue from the
Company's core strengths in the area of news production. In addition to
committing to additional investment in and emphasis on its local news
operations, Park Broadcasting has initiated programs to supplement its
inventory of unique and proprietary programming. Such projects include
VideoKids 2000 (a proprietary Park Children's Television Production focused
on children aged 3-11) and coverage of local sporting events such as high
school and college athletics and local specialty events such as NASCAR
racing and the Kentucky Derby.
Provide High Quality Non-Network Programming. Each of Park Broadcasting's
television stations is focused on improving its syndicated and locally
produced non-network programming to attract audiences with highly valued
demographic characteristics during dayparts which are not programmed by a
station's network. An important element in determining advertising rates is
the station's share among a particular demographic group which an
advertiser may be targeting. The Company believes that through an
interactive approach to programming, the Company can generate incremental
revenue by adjusting programming to capture viewers of certain targeted
demographics that meet the needs of valued advertisers. Park Broadcasting
focuses on purchasing cost-effective programming that will have long-term
audience appeal and will be supported by syndicators with local promotion
of the shows. Examples of such programming include Home Improvement,
Seinfeld, Frasier and Baywatch. As a result of its ownership of a group of
nine television stations, Park Broadcasting is able to purchase syndicated
programming at a discount (on a per station basis) to the cost that any one
of its stations would incur as an individual purchaser of such programming
and is able to purchase a variety of programming that might otherwise not
be available to a single station.
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<PAGE>
Maintain Effective Cost Controls. Park Broadcasting has continued to
maintain strict cost controls and disciplined credit and collection
procedures at each of its stations to fully exploit the high degree of
operating leverage associated with television properties. Through a
strategic planning and semi-annual budgeting process, Park Broadcasting
continually seeks to identify areas to reduce expenses and improve
efficiencies. Park Broadcasting relies on its in-house production
capabilities to minimize use of outside firms and consultants and
capitalizes on its critical mass and ownership of a group of nine stations
to realize cost savings through group purchasing of equipment and services.
TELEVISION INDUSTRY BACKGROUND
Commercial television broadcasting began in the United States on a regular
basis in the 1940s. Currently, there are a limited number of channels
available for broadcasting in any one geographic area, and the license to
operate a television station is granted by the FCC. Television stations which
broadcast over the very high frequency ("VHF") band (channels 2-13) of the
spectrum generally have a competitive advantage over television stations which
broadcast over the ultra-high frequency ("UHF") band (channels above 13) of
the spectrum because the former usually have better signal coverage and
operate at a lower transmission cost. However, specific market characteristics
such as population density, geographic features or other factors may reduce
the VHF signal advantage, in addition to the improvement of UHF transmitters
and receivers, the complete elimination from the marketplace of VHF-only
receivers and the expansion of cable television systems.
All television stations in the country are grouped by Nielsen into
approximately 210 generally recognized television markets that are ranked in
size according to various formulas based upon actual or potential audience.
Nielsen periodically publishes data on estimated audiences for the television
stations in the various television markets throughout the country. The
estimates are expressed in terms of the percentage of the total potential
audience in the market viewing a station (the station's "rating") and of the
percentage of the audience actually watching television (the station's
"share"). Nielsen provides such data on the basis of total television
households and selected demographic groupings in the market. Nielsen uses two
methods of determining a station's ability to attract viewers. In larger
geographic markets, ratings are determined by a combination of meters
connected directly to selected television sets and weekly diaries of
television viewing, while in smaller markets only weekly diaries are
completed. None of Park Broadcasting's markets is metered at this time.
As used herein, "designated market area" ("DMA") is defined as a geographic
market designated by Nielsen for the sale of national "spot" and local
advertising time sales. As used herein, (1) "Market revenue" data are based on
the unaudited total broadcast television revenue, net of agency commissions,
in a DMA, unless otherwise indicated, as compiled by independent accounting
firms in each market based upon data provided to such firms by each television
broadcast station in such market, or from BIA; (2) "Market rank (DMA)" is
based on the Nielsen Station Index for November of the years indicated; (3)
"Total commercial competitors in market" is the total number of commercial
broadcast television stations in the DMA with an audience rating of at least
1% in the 7:00 a.m. to 1:00 a.m., Sunday through Saturday time period; (4)
"Station rank in market" is the station's rank in the market based on its
share of total viewing of commercial broadcast television stations in the
market for the time periods referenced or, if no time period is indicated,
such rank is based on 7:00 a.m. to 1:00 a.m., Sunday through Saturday; and (5)
"station's audience share" is a station's share of total viewing of commercial
broadcast television stations in the market for the time periods referenced
or, if no time period is indicated, such share is based on 7:00 a.m. to 1:00
a.m., Sunday through Saturday.
Historically, three major broadcast networks--ABC, NBC and CBS--dominated
broadcast television. In recent years, Fox has effectively evolved into the
fourth major network, although fewer hours of network programming are produced
by Fox for its affiliates than are produced by the other three major networks.
In addition, each of Time Warner, Inc. ("Time Warner") and Paramount
Communications, Inc. (now merged into Viacom, Inc.) ("Paramount") has recently
launched a new television network, WB and UPN, respectively.
The affiliation of a station with one of the four major networks has a
significant impact on the composition of the station's revenue, expenses and
operations. A typical network affiliate receives approximately nine to ten
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<PAGE>
hours of each day's programming from the network. This programming, along with
cash payments ("network compensation"), is provided to the affiliate by the
network in exchange for a substantial majority of the advertising time during
network programs. The network then sells this advertising time and retains the
revenue. The affiliate retains the revenue from time sold during breaks in and
between network programs and programs the affiliate produces or purchases from
non-network sources. In addition, a television station may acquire programming
through barter arrangements. Under barter arrangements, which are becoming
increasingly popular with both network affiliates and independents, a national
program distributor may receive advertising time in exchange for the
programming it supplies with the station paying no fee or a reduced fee for
such programming. Each of Park Broadcasting's stations participates in barter
arrangements on a dollar-for-dollar basis with maximum terms generally of one
year.
An affiliate of WB or UPN receives a smaller portion of each day's
programming from its network compared to an affiliate of ABC, CBS, NBC or Fox.
Currently, WB and UPN provide eight and six hours of programming per week,
respectively, to their affiliates. As a result of the smaller amount of
programming provided by their network, affiliates of WB or UPN must purchase
or produce a greater amount of their programming, resulting in generally
higher programming costs. These stations, however, retain a larger portion of
the inventory of advertising time and the revenue obtained therefrom compared
to stations affiliated with the major networks, which may partially offset
their higher programming costs.
A fully independent station purchases or produces all of the programming
which it broadcasts, resulting in generally higher programming costs. The
independent station is, in theory, able to retain its entire inventory of
advertising and all of the revenue obtained therefrom. However, barter
arrangements are increasingly popular with independents, as well as network
affiliates.
Park Broadcasting's television station revenue is primarily derived from
local, regional and national advertising and, to a lesser extent, from network
compensation and revenue from tower rental and commercial production
activities. Advertising rates are based upon a variety of factors, including a
program's popularity among the viewers an advertiser wishes to attract, the
number of advertisers competing for the available time, the size and
demographic makeup of the market served by the station, and the availability
of alternative advertising media in the market area. Rates are also determined
by a station's overall ratings and share in its market, as well as the
station's ratings and share among particular demographic groups which an
advertiser may be targeting. Because broadcast television stations rely on
advertising revenue, declines in advertising budgets, particularly in
recessionary periods, adversely affect the broadcast industry, and as a result
may contribute to a decrease in the revenue of broadcast television stations.
Advertising is sold in time increments. A time sale may involve all or part
of a program, or spot announcements within or between programs. Local news
programming accounts for a significant portion of each station's advertising
revenue.
Approximately 53% of the gross revenue of Park Broadcasting's stations in
1995 came from local and regional advertisers. Local and regional advertising
is sold primarily by each station's professional sales staff. Typical local
and regional advertisers include automobile dealerships, retailers, local
grocery chains, soft drink bottlers, state lotteries and restaurants.
Approximately 35% of the gross revenue of Park Broadcasting's stations in
1995 came from national advertisers. Typical national advertisers include
automobile manufacturers, communications companies, fast food franchisors and
direct marketers. National advertising time is sold through representative
agencies retained by Park Broadcasting. The stations' national sales
coordinators actively assist their national sales representatives to induce
national advertisers to increase their national spot expenditures designated
to Park Broadcasting's markets.
For a discussion of additional factors which affect the television
broadcasting industry, see "Competition--Television Broadcasting" and "Federal
Regulation of Television Broadcasting" below.
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THE STATIONS
The following table sets forth general information for each of Park
Broadcasting's television stations and their respective markets:
<TABLE>
<CAPTION>
TELEVISION COMMERCIAL STATION
NETWORK CHANNEL/ MARKET HOUSEHOLDS STATIONS RANK IN DMA
AFFILIATION FREQUENCY MARKET RANK(A) IN DMA(B) IN DMA(C) MARKET(D) SHARE(E)
STATION ----------- --------- ---------------- ------- ---------- ---------- --------- --------
- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WBMG-TV................. CBS 42/UHF Birmingham, AL 51(f) 525,000 5 4 8%
WTVR-TV................. CBS 6/VHF Richmond, VA 54 509,000 5 2 20
WSLS-TV................. NBC 10/VHF Roanoke, VA 67 396,000 4 2 14
WTVQ-TV................. ABC 36/UHF Lexington, KY 68 387,000 5 2 13
WDEF-TV................. CBS 12/VHF Chattanooga, TN 82 328,000 4 3 14
WJHL-TV................. CBS 11/VHF Johnson City, TN 93 284,000 4 2 16
WNCT-TV................. CBS 9/VHF Greenville, NC 104 236,000 4 1 20
WUTR-TV................. ABC 20/UHF Utica, NY 166 98,000 3 2 12
KALB-TV................. NBC 5/VHF Alexandria, LA 177 85,000 3 1 36
WHOA-TV(g).............. ABC 32/UHF Montgomery, AL 113 216,000 4 3 9
</TABLE>
- --------
(a) Refers to the size of the television market or Designated Market Area
("DMA") as used by Nielsen.
(b) Refers to the approximate number of television households in the DMA as
estimated by Nielsen.
(c) Represents the number of television stations ("reportable stations")
designated by Nielsen as "local" to the DMA, excluding public television
stations and stations which do not meet minimum Nielsen reporting
standards (weekly cumulative audience of less than 2.5%) for reporting in
the Sunday through Saturday, 7:00 a.m. to 1:00 a.m. period ("sign-on to
sign-off"). Does not include national cable channels. The number of
reportable stations may change for each reporting period. "Weekly
cumulative audience" measures the total number of different households
tuned to a station at a particular time during the week. "Share"
references used elsewhere herein measure the total daily households tuned
to a station at a particular time during the week.
(d) Station's rank relative to other reportable stations, based upon the DMA
rating as reported by Nielsen sign-on to sign-off during November, 1995.
(e) Represents estimated television households in the DMA tuned to a specific
station or cable service as a percent of the DMA television households
with a set turned on during November 1995, as determined by Nielsen.
(f) The Company believes that Nielsen will redefine the Birmingham DMA to
include Tuscaloosa and Anniston. According to BIA, if such markets were
combined, the resulting market would rank as the nation's 39th largest on
the basis of television households.
(g) Refers to the station to be acquired by Park Broadcasting pursuant to the
Montgomery Acquisition. See "The Company--Park Broadcasting."
The following is a description of each of Park Broadcasting's television
stations and the station to be acquired pursuant to the Montgomery
Acquisition. Market revenue and market revenue growth data are derived from
BIA.
WBMG: BIRMINGHAM, ALABAMA
<TABLE>
<CAPTION>
MARKET/STATION DATA
-------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Market revenue.................... $60,100 $60,000 $64,300 $76,000 $80,000
Market revenue growth over prior
period............................ -- (0.2)% 7.2% 14.0% 6.0%
Market rank (DMA)................. 49 50 51 51 51
Television homes (in thousands)... 511 515 522 530 525
</TABLE>
Market Overview. Birmingham, Alabama is the 51st largest DMA in the nation,
with approximately 525,000 television households covering four counties:
Blount, Jefferson, Shelby and St. Clair. Birmingham is Alabama's most populous
city, and according to a March 1994 The Wall Street Journal, Shelby County
ranks as the sixth fastest growing, wealthiest and most educated county in the
nation. Historically dependent on iron and steel production, the Birmingham
area economic base is now comprised of a diverse group of approximately 20,000
businesses. Additionally, the University of Alabama at Birmingham ("UAB"), a
world-renowned leader
in medical research, recently became the top employer in the four-county area
during the 1980s and is the largest single employer in the state. In 1994, the
average Birmingham metropolitan household EBI (defined by Sales & Marketing
Management as "combined after-tax or disposable personal income") was
approximately $39,000
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and is projected by Sales & Marketing Management to grow by a total of 25.0%
by 1999. From 1985 to 1994, according to Sales & Marketing Management,
Birmingham outperformed the national average for metropolitan retail sales
growth by 16.5%. Sales & Marketing Management also projects Birmingham EBI
growth to continue to outperform the national average by approximately 3.5%
through 1999.
It is anticipated that the Birmingham market will experience major change in
1996. The current market overall ratings and news leader has announced that it
will switch affiliation from ABC to Fox in September, and the current Fox
affiliate has announced that it will become independent. ABC service will be
provided to the market by stations (currently CBS affiliates) licensed to the
adjacent Tuscaloosa and Anniston markets. The addition of Tuscaloosa and
Anniston to the Birmingham market will provide an additional 75,000 cable
households and an additional 25,000 broadcast households that currently have
an allegiance to the local CBS stations. The 100,000 total additional
households will move Birmingham to a market size of approximately 625,000
television households which, based on the National Association of
Broadcasters' market-by-market review and 1993 reported television households,
would make the Birmingham-Tuscaloosa-Anniston market the 39th largest DMA in
the nation. The Company anticipates that Nielsen will redefine the Birmingham
DMA to include Tuscaloosa and Anniston.
Station Performance and Strategy. WBMG, acquired by Park Broadcasting in
1973, began operations in 1965 and is affiliated with CBS. There are currently
five stations in the Birmingham DMA, two of which are VHF and three of which,
including WBMG, are UHF. WBMG's current syndicated programming includes
Designing Women, Jenny Jones, Married with Children and Extra-Entertainment.
The Company believes that WBMG will benefit from the network affiliation
changes that the Birmingham market will experience in 1996. Specifically, the
Company believes WBMG will benefit from the fact that it will be the sole CBS
affiliate in an expanded market and from its planned increase to five million
watts of effective radiated power later this year, making WBMG the market's
most powerful station. The Company believes that WBMG will also benefit from
the move upward in market size from an increase in national advertising
dollars allocated to the market. In addition to the planned increase to five
million watts effective radiated power, the Company intends to take other
steps to prepare for the changes to the Birmingham market in 1996. Park
Broadcasting has begun to hire additional news staff and to upgrade the
information systems at WBMG. In addition, Park Broadcasting expects to expand
WBMG's facility by approximately 4,000 square feet and to make additional
investments in research, consulting, signal delivery and news expansion.
In January 1996, WBMG was selected by CBS for its national "Excellence In
Community Service" award in recognition of the station's series entitled Black
And White In Birmingham. In addition, WBMG has received the "Best Editorial"
award from the Alabama Associated Press in each of the past three years and
has also been named by the Alabama Kidney Foundation for "Best Reporting On
Health Issues."
WTVR: RICHMOND, VIRGINIA
<TABLE>
<CAPTION>
MARKET/STATION DATA
------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Market revenue..................... $51,700 $53,000 $58,600 $62,100 $64,100
Market revenue growth over prior
period............................. -- 2.5% 12.8% 6.5% 5.5%
Market rank (DMA).................. 63 60 54 55 54
Television homes (in thousands).... 480 484 492 502 509
</TABLE>
Market Overview. The Richmond, Virginia market, which includes Petersburg,
Virginia, is the 54th largest DMA in the nation, with approximately 509,000
television households. Richmond is the capital of Virginia and home to
numerous colleges and universities, including the University of Richmond.
Richmond has a significant cultural and arts community including a symphony,
major museums for science and the arts and two major garden venues. Richmond's
economy is based primarily on large manufacturing businesses. Major employers
include Philip Morris Incorporated, Ethyl Corporation, James River Corporation
of Virginia and Allied
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Signal Inc. In addition, a new Motorola chip plant is expected to employ over
5,000. As the state capital, Richmond receives special attention as the state
strives to develop a high tech corridor from Northern Virginia to the
Tidewater region, with Richmond at the center. Estimated 1995 average
household income is $49,445, with EBI expected to grow at an annual rate of 4%
through 1999. Richmond's expanding suburbs, especially in the surrounding
counties, have resulted in major retail expansion in the area, and annual
retail sales growth is projected to average 6% through 1999.
Station Performance and Strategy. WTVR, acquired by Park Broadcasting in
1965, began operations in 1948 and is affiliated with CBS. It is the oldest
television station south of Washington, D.C. There are five stations in the
DMA, three of which (including WTVR) are VHF stations. For the November 1995
ratings period, WTVR was tied with the NBC affiliate for first place, sign-on
to sign-off, with a 31% in-market share. WTVR's noon newscast and prime-time
programming perform especially well, capturing 35% and 22%, respectively, of
the viewing audience. The station's syndicated programming includes Home
Improvement, Entertainment Tonight, Jenny Jones, Rolonda and, the recent
addition, Frasier.
In 1995, the station won the Virginia Association of Broadcasters award for
"Best Event Promotion" with its "Chili Cookoff" spot. The WTVR news department
also was recognized by the Associated Press for "Best News Feature" and for
"Spot News Photography." The station's news department has recently expanded
staff and promotional efforts. In addition, WTVR has a wide range of community
affairs programs, including the WTVR-developed "For Kids Sake," which the
Company believes is the market's most recognized promotion and community
support function. The Company intends to capitalize on the return of college
football to CBS in 1996 and to continue investment in its news product in
order to maintain and improve upon its current position.
WSLS: ROANOKE, VIRGINIA
<TABLE>
<CAPTION>
MARKET/STATION DATA
------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Market revenue..................... $35,100 $36,500 $37,000 $42,000 $44,000
Market revenue growth over prior
period............................. -- 4.0% 1.4% 9.7% 5.0%
Market rank (DMA).................. 68 65 65 66 67
Television homes (in thousands).... 377 384 386 390 396
</TABLE>
Market Overview. The hyphenated central Virginia market comprised of
Roanoke, Lynchburg and Danville is the 67th largest DMA in the nation, with
approximately 396,000 television households. Roanoke is the commerce and
retail hub of western Virginia, at the center of a dynamic, prosperous 24-
county region. Roanoke is best known as a center for banking, transportation
and medical care and is rapidly becoming a major center for high tech research
in the fields of robotics, communication and transportation. Carillon Health
System, the area's largest employer, has over 5,300 employees in the market.
Roanoke also serves as home to various companies engaged in high tech research
and development. Nearby Virginia Polytechnic Institute and State University
(Virginia Tech) is recognized for its leadership in computer and
transportation technology. This DMA had an average household EBI of
approximately $35,000 in 1994 and experienced a 22.4% growth in the number of
households from 1985 to 1994. Retail sales for the metropolitan area grew by
approximately 115.1% from 1985 to 1994 according to Sales and Marketing
Management and are projected to grow by 28.7% from 1994 to 1999.
Station Performance and Strategy. WSLS, acquired by Park Broadcasting in
1969, began operations in 1952 and is affiliated with NBC. There are four
stations in the market, three of which are VHF, including WSLS. The station
focuses on the 18-54 year old audiences which the Company believes many
advertisers prefer and generates the highest revenue. In this demographic
category, WSLS is tied for the lead in the market. The station's syndicated
programming includes Live with Regis & Kathy Lee, Day & Date, Roseanne, Hard
Copy, Real TV, Entertainment Tonight and Dr. Quinn, Medicine Woman.
The importance and priority of local news at WSLS is evidenced by the
recognition given to the station. In 1994, WSLS was named "News Operation of
the Year" by the Virginia Association of Broadcasters along with
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an award for "Outstanding Sports Coverage" and the "Douglas Freeman Award" for
spot news coverage. In 1995, WSLS won "Best Feature Photography" and "Best
Spot News Photography" awards from the Associated Press and was named "Best TV
News" by readers of the Roanoker magazine. In community events and community
service, WSLS is the flagship station for coverage of the prestigious Tour
DuPont bicycle race which airs in more than 100 countries around the world.
WSLS is also the owner and originator of the live broadcast of the Miss
Virginia Pageant which is networked throughout all Virginia markets and
Washington, D.C. In addition, WSLS associates were honored in 1994 by the
American Red Cross for raising funds for flood relief, and in 1995, WSLS
received the "Chairman's Award" from the United Way of the Roanoke Valley.
WTVQ: LEXINGTON, KENTUCKY
<TABLE>
<CAPTION>
MARKET/STATION DATA
------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Market revenue..................... $33,800 $34,900 $38,300 $43,500 $47,500
Market revenue growth over prior
period............................. -- 3.3% 9.7% 10.1% 6.0%
Market rank (DMA).................. 73 74 71 69 68
Television homes (in thousands).... 355 360 379 384 387
</TABLE>
Market Overview. The Lexington, Kentucky market is the 68th largest DMA in
the nation, with approximately 387,000 television households. Lexington is
located in the Bluegrass region of Kentucky, 81 miles south of Cincinnati,
Ohio and 74 miles east of Louisville, Kentucky. Lexington is the state's
second largest city with a metropolitan area population of over 353,000, which
is expected to grow at a rate of 1.1% through the year 2000. This DMA had an
average household EBI of approximately $37,000 in 1994. Lexington is home to
the University of Kentucky which along with Toyota and Lexmark International
are major employers. The Kentucky state capital of Frankfort is part of the
overall Lexington market in which retail sales grew by approximately 7% from
1985 to 1994 and are projected by Sales & Marketing Management to grow by 6%
through 1999.
Station Performance and Strategy. WTVQ was acquired by Park Broadcasting in
1992. The station began operations in 1968 and is one of five stations (all
UHF) serving the Lexington market, which is the third largest all-UHF market
in the country. WTVQ is ranked either first or second in the DMA in all broad
dayparts (Monday-Friday, noon-11:30 p.m.). In afternoon daytime (Monday-
Friday, noon-4:00 p.m.), WTVQ ranks first in the DMA with a 31% in-market
household share and a 3-to-1 ratings advantage in the key demographics of
women ages 18-49 and women ages 25-54. In the revenue critical 4:00 p.m.-8:00
p.m. daypart, a primarily non-network time period from which the station
realizes a substantial portion of its revenue, WTVQ is ranked second in in-
market household viewing with a 25% audience share. In prime time, WTVQ is
tied for second place and trails the NBC affiliate by only 1 share point with
a 29% share of household in-market viewing. WTVQ is tied for the top ranking
in prime-time in the key demographics of persons 18-49 and 25-54 years old. In
Monday-Friday late news, WTVQ ranks second, averaging a 24% in-market share of
household viewing. The station's syndicated programming includes Live with
Regis & Kathy Lee, Maury Povich, Seinfeld, Baywatch, Entertainment Tonight and
Inside Edition.
A centerpiece of WTVQ's annual programming is market-exclusive coverage of
the Kentucky Derby. WTVQ broadcasts over 30 hours of Derby-related
programming, including all of the races live from Churchill Downs on the day
of the Derby. WTVQ is also the "home" station for Park Children's Television,
producer of VideoKids 2000, a monthly television magazine show "by kids and
for kids" which includes features from child reporters in all of Park
Broadcasting's markets. WTVQ has won numerous local and national news awards,
including the "Gold Medal Award" for coverage of the 1995 Bluegrass Games. The
station was also named by AT&T Satellite Operations as the "Satellite Uplink
Facility of the Year" for 1995.
In 1992 and 1993, Park Broadcasting made approximately $2.0 million in
capital improvements at WTVQ for the purpose of upgrading the quality of its
news programming and increasing its advertising revenue. Such improvements
include the purchase and installation of news gathering, news editing and
weather equipment as well as studio cameras and the purchase of a live news
mobile van and laptop computers for the sales staff.
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WDEF: CHATTANOOGA, TENNESSEE
<TABLE>
<CAPTION>
MARKET/STATION DATA
------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Market revenue..................... $27,100 $29,800 $31,000 $37,600 $38,500
Market revenue growth over prior
period............................. -- 10.0% 4.0% 17.8% 2.4%
Market rank (DMA).................. 81 81 82 82 82
Television homes (in thousands).... 304 310 311 318 328
</TABLE>
Market Overview. The Chattanooga, Tennessee market is the 82nd largest DMA
in the nation, with approximately 328,000 television households. Stations in
the Chattanooga television market provide service to residents in four states:
Tennessee, Georgia, Alabama and North Carolina. Major Chattanooga employers
include the Tennessee Valley Authority, Erlanger Medical Center and Provident
Life & Accident Insurance Company. Nearby Dalton, Georgia is considered the
"carpet capital of the world." A number of colleges and universities are
located in the area.
In recent years, tourism has been, and is expected to continue to be, a
major positive economic factor for the region. In the summer of 1996, the
Chattanooga area will host the white water rafting portion of the 1996 Summer
Olympics. The 1995 Chattanooga Area Chamber of Commerce Databook shows the
area with a stable and steady growing economy. The 1995 estimated household
income is $44,756.
Station Performance and Strategy. WDEF, the VHF CBS affiliate, was acquired
by Park Broadcasting in 1964. The station began operations in 1954 and is one
of four stations (three VHF, one UHF) in this market. WDEF's noon newscast is
ranked first in the market with a 30% share. In prime time, WDEF is a very
strong third, with a 17% share. WDEF also performs well in the Monday-Friday,
9:00 a.m.-noon time period (ranked second with a 19% share) and in the Monday-
Friday, noon-3:00 p.m. time period (ranked second with a 22% share).
Syndicated programming includes Heat of The Night, Martin, Roseanne, Married
With Children, Grace Under Fire and Access Hollywood.
The Company believes that the return of college football to CBS presents
significant ratings, revenue and promotional opportunities for WDEF. In 1996,
WDEF intends to produce and air three University of Tennessee football pre-
game shows. The station also has scheduled in 1996 five NASCAR pre-race shows
and a preview show that will air immediately preceding the CBS network
coverage of the annual country music awards show from the Grande Ole Opry in
Nashville.
Recently the station's news department was recognized by the Tennessee
chapter of the Associated Press as "Best News Operation," "Best Spot News,"
"Best Continuing News," "Best Series," "Best Investigative Series," "Best
Public Affairs," "Best Sports Story," "Best Sportscast" and "Best Sports
Video." In addition, in 1994 and 1995 the news department won the prestigious
Scripps Howard national journalism award.
WJHL: JOHNSON CITY, TENNESSEE
<TABLE>
<CAPTION>
MARKET/STATION DATA
-------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Market revenue.................... $21,600 $21,000 $25,000 $29,000 $30,000
Market revenue growth over prior
period............................ -- (3.0)% 19.0% 16.0% 3.4%
Market rank (DMA)................. 84 85 92 93 93
Television homes (in thousands)... 280 281 279 281 284
</TABLE>
Market Overview. Johnson City, Tennessee, along with Kingsport, Tennessee
and Bristol, Virginia/Tennessee, are part of the Tri-Cities, Tennessee-
Virginia market, which is the 93rd largest DMA in the nation, with
approximately 284,000 television households. The market spans eight counties
in southwest
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Virginia, two counties in southeast Kentucky and seven counties in northeast
Tennessee. The Tri-Cities area was ranked 27th of 343 metropolitan areas in
the Places Rated Almanac 1993 in terms of quality of life criteria. Tennessee
Eastman in Kingsport is the area's largest employer with over 11,000
employees. East Tennessee State University with 12,000 students is the largest
of the 11 colleges and universities in the market. According to the September
1995 edition of American Demographics, the Tri-Cities area is one of the
fastest growing retail markets in the nation over the past five years. The
Tri-Cities region's total employment is projected to increase by 5.2% by July
1998 which should have a positive impact on the current $33,543 median
household income. Retail sales in the market grew by approximately 9% from
1985 to 1994 and are projected by Sales & Marketing Management to grow by an
average of 4% annually through 1999.
Station Performance and Strategy. WJHL, acquired by Park Broadcasting in
1964, began operations in 1953 and is affiliated with CBS. WJHL was the first
station in the market. WJHL is one of two VHF network affiliates in the market
which compete with two UHF stations. During the November 1995 ratings, WJHL
ranked second overall with a 30% share of viewing in the market. WJHL's award
winning newscasts are well received in the market and currently the station
programs three hours of news Monday through Friday and one hour of news daily
on Saturday and Sunday. WJHL has the fastest growing morning news in the
market and the station's most recent news expansion at 5:30 p.m. is also
gaining acceptance. Due to the strength of its morning programming, from 9:00
a.m.-noon, Monday-Friday, WJHL ranks first in the market with a 31% share. The
station's syndicated programming includes Live with Regis & Kathy Lee,
Baywatch, Crook and Chase, Andy Griffith, Married with Children, Roseanne and
Coach.
One of WJHL's principal strengths is the station's involvement with the
community. WJHL has taken a leadership role in helping to promote and develop
the Johnson City Senior Citizens Center, the local chapter of the Girl Scouts
of America, the Boys and Girls Club of Johnson City/Washington County,
Tennessee, the Better Hearing Institute and the Childrens Miracle Network, and
the station was a major sponsor of the Black History Scholarship Award given
by the St. Paul A.M.E. Zion Church of Johnson City. In addition, WJHL
dominated the 1995 Tennessee Associated Press awards with a total of 10
separate awards including "Best Feature" and "Best Spot Photo." The station
also was named "Best in the State" by the American Cancer Society and received
special recognition from the United States Air Force Recruiting, the United
States Marine Corps Reserve Toys for Tots, Paralyzed Veterans of America and
the March of Dimes.
WNCT: GREENVILLE, NORTH CAROLINA
<TABLE>
<CAPTION>
MARKET/STATION DATA
------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Market revenue..................... $17,600 $20,200 $20,900 $23,900 $24,900
Market revenue growth over prior
period............................. -- 15.0% 3.5% 14.4% 4.2%
Market rank (DMA).................. 95 104 105 106 104
Television homes (in thousands).... 228 231 229 246 236
</TABLE>
Market Overview. The Greenville-New Bern-Washington, North Carolina market
is the 104th largest DMA in the nation, with approximately 236,000 television
households. Eastern North Carolina is a vital part of North Carolina, the
nation's tenth most populous state. The area's economy is diversified into
manufacturing, retail, government, finance, agriculture, military, medical and
service areas. The area has the distinction of being the home of the world's
first Global Transpark, an integrated multi-model manufacturing and
transportation center. Major manufacturing employers include Glaxo-Wellcome
Pharmaceuticals and Proctor and Gamble. Greenville is the largest city within
this market and the home of East Carolina University and the University School
of Medicine. In April 1995, American Demographics Magazine ranked Greenville
the eighth fastest growing metropolitan area in the United States. In June
1995, World Trade Magazine rated Greenville second on its list of most livable
cities in the United States. In 1994, the average household EBI in the market
was approximately $37,000, and is projected by Sales & Marketing Management to
grow by an average of 4% annually by 1999.
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Station Performance and Strategy. WNCT was Park Broadcasting's first
television station. Acquired in 1962, the station began operations in 1953.
WNCT is a VHF CBS affiliate competing against three other VHF stations in the
market. In the November 1995 ratings, WNCT led the market with an overall 35%
share of the market. WNCT's newscasts also dominate the competition. The
station's syndicated programming includes Live with Regis & Kathy Lee,
Baywatch, Rolonda, Seinfeld and America's Funniest Home Videos.
WNCT is the home of one of the longest running talk shows in the United
States, Carolina Today, a live information and news program which airs from
5:30 to 7:00 a.m. weekdays. WNCT's commitment to news is demonstrated by its
partnership with the Fox station in Morehead City, North Carolina, for which
WNCT produces and retains rights to the first 10:00 p.m. newscast in the area.
To further enhance WNCT's position in the DMA, Nielsen research indicates
that Edgecombe County, with 20,260 households, will move to the Greenville-New
Bern-Washington market from the Raleigh-Durham market effective in 1996. The
addition of Edgecombe County to the DMA would move the market rankings into
the top 100 in the nation. In addition, WNCT is the designated CBS station in
the adjacent Wilmington, North Carolina DMA, which is the 143rd largest in the
nation. WNCT was honored in 1995, with awards from the Associated Press for
"Best Newscast," "Outstanding News Operation" and "Best Sportscast."
Additionally, the station was given the "Outstanding News Media Outlet for
Drunk and Drugged Driving Prevention Award" by the Governor's Safe Highway
Committee.
WUTR: UTICA, NEW YORK
<TABLE>
<CAPTION>
MARKET/STATION DATA
-------------------------------------
1991 1992 1993 1994 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Market revenue.......... $7,300 $8,100 $9,000 $9,600 $9,700
Market revenue growth
over prior period....... -- 11.0% 11.1% 6.7% 1.0%
Market rank (DMA)....... 161 161 163 164 166
Television homes (in
thousands).............. 99 97 97 98 98
</TABLE>
Market Overview. Utica, New York is part of the Utica-Rome market, which is
the 166th largest DMA in the nation, with approximately 98,000 television
households. Utica, the geographic center of New York, is located in the heart
of the Mohawk Valley and is home to 65,000 residents. Located 45 miles from
Syracuse, 90 minutes from the state capital at Albany and close to the
Adirondack Mountains and the Finger Lake region, Utica is home to several
colleges and universities including Hamilton and Utica Colleges. Among the
largest employers are Oneida Silversmiths and the Oneida Indian Nation Casino
which together employ more than 5,000 people. Other important employers with
corporate offices in the Utica-Rome area are the Utica National Insurance
Group, Revere Copper Products and Harden Furniture. Total population of the
Utica-Rome metropolitan area is 316,000 and is expected to grow at a rate of
5.8% through the year 2000. Estimated average household EBI for the area was
approximately $39,500 in 1994.
Station Performance and Strategy. Park Broadcasting built WUTR and placed
the station into service in 1970. WUTR is affiliated with ABC and competes
directly against two VHF stations (an NBC and a CBS affiliate) and one UHF
station (a Fox affiliate) in the DMA. In the November 1995 ratings, WUTR was
second with an overall share of 28%. WUTR's newscasts have grown in popularity
over the past year, particularly among the demographics the Company believes
generate the highest level of advertising revenue. The station's syndicated
programming includes Live with Regis & Kathy Lee, Cops, Hard Copy, Home
Improvement and Married With Children.
WUTR is host to the Children's Miracle Network Telethon which has raised
more than $300,000 to date to benefit children in the Mohawk Valley. WUTR is
also an active partner with ABC in conjunction with the "Children First
Campaign" and has received recognition from the network for its efforts. WUTR
has the distinction of being the first station in the market to offer closed
captioning to its hearing impaired viewers, as well as the first to offer both
a morning and noon news broadcast. WUTR is the only station in the market to
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offer newsbriefs at the top of every hour throughout the day. WUTR is the
official "lottery" station in the market; an agreement with the State of New
York provides that WUTR receives daily numbers first for dissemination to its
viewers. WUTR was recognized in 1995 for its "Outstanding Local Series
Designed For Children" by the New York State Broadcasters Association and
received the Associated Press award for "Best Spot News."
KALB: ALEXANDRIA, LOUISIANA
<TABLE>
<CAPTION>
MARKET/STATION DATA
---------------------------------
1991 1992 1993 1994 1995
---- ---- ------ ------- -------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Market revenue............................... -- -- $9,000 $10,300 $12,000
Market revenue growth over prior period...... -- -- -- 14.4% 16.5%
Market rank (DMA)............................ 166 173 170 171 177
Television homes (in thousands).............. 86 83 83 87 85
</TABLE>
Market Overview. Alexandria, Louisiana is the 177th largest DMA in the
nation, with approximately 85,000 television households. The Alexandria DMA
consists of four parishes, Rapides, Avoyelles, Grant and Vernon, and is
located in the center of a 17-parish region of Louisiana, 180 miles northwest
of New Orleans, 120 miles southeast of Shreveport and 95 miles northeast of
Lake Charles. With an abundant supply of lakes, rivers and bayous, the
Alexandria area is referred to as the "Sportsman's Paradise." Agriculture is
the area's top economic contributor followed by federal and state government
as a result of Alexandria's central location within Louisiana. The largest
employer for the four-parish area is Rapides Regional Medical Center which
employs 1,750 people. In addition, with the expansion of the Regional Medical
Center and five major hospitals, Alexandria is quickly becoming Louisiana's
focal point for health care. The average household EBI in the DMA was
approximately $36,000 in 1994, and retail sales totaled $1,726,000 in 1994.
Retail sales are expected to grow at an average annual rate of 5% through
1999. These figures are expected to increase because of actions being taken
toward "re-use" of a former air force base, the development of the Port of
Alexandria and the completion of Interstate 49, the only north-south
interstate highway in Louisiana.
Station Performance and Strategy. KALB, affiliated with the NBC network, was
acquired by Park Broadcasting in November 1993. Since its inception in 1954,
KALB has been the only VHF commercial television station serving the
Alexandria market. The station dominates the DMA, attaining a 68% share in its
number one time period (6:00-7:00 a.m., Monday-Friday). KALB averages a 35%
share from sign-on to sign-off. In the revenue critical area of news, KALB
ranks first in all demographic categories, with over 85% of the in-market
homes relying on KALB as their main source for local news. With KALB
programming 16 hours of news per week, newscasts are the station's top revenue
producing category of programming. ABC and Fox also serve the market, along
with two VHF competitors (CBS affiliates) from adjacent markets. Syndicated
programming includes Heat of the Night, Ricki Lake, The Oprah Winfrey Show,
Jeopardy, Wheel of Fortune, Roseanne and Real Stories of the Highway Patrol.
In 1994 and 1995, KALB was named "Central Louisiana's Best" television
station in a market-wide survey by the local newspaper ahead of five other
local stations and more than 30 cable channels. The station also received the
"Outstanding Television Media Award" from the Blood Center of Louisiana and
Southeast Texas for its coverage and support. Three employees of the station
were elected as officers of the Central Louisiana Press Club to serve in 1996.
WHOA: MONTGOMERY, ALABAMA
<TABLE>
<CAPTION>
MARKET/STATION DATA
------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Market revenue..................... $19,800 $20,800 $21,500 $25,000 $25,100
Market revenue growth over prior
period............................. -- 5.1% 3.4% 16.3% 0.4%
Market rank (DMA).................. 105 110 110 113 113
Television homes (in thousands).... 208 209 210 214 216
</TABLE>
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Market Overview. Montgomery, Alabama is the nation's 113th largest DMA, with
approximately 216,000 television households. The Montgomery area had an
average household income of approximately $53,500 in 1994. Montgomery is the
capital of Alabama and benefits from the stability of government and related
employment associated with state government centers. The largest employer in
the market is the state government followed by Maxwell Air Force Base/Gunter
Annex, which is also home of the Air Force War College. Three of the ten
largest employers are medical facilities. Montgomery is also a major
distribution center for Winn-Dixie, Rheem Manufacturing and Augat Wiring
Systems. The market is home to several universities, including Alabama State
University and Auburn University at Montgomery. Retail sales for the
Montgomery metropolitan area grew by approximately 6% from 1985 to 1994 and
are projected by Sales and Marketing Management to grow by 5% through 1999.
Station Performance and Strategy. WHOA, which is a UHF station, began
operation in 1964, and competes against two VHF and one other UHF station. In
the November 1995 ratings, WHOA ranked third overall with a 9% share.
Syndicated programming includes Baywatch, Live with Regis & Kathie Lee, Home
Improvement, Jenny Jones and Roseanne.
WHOA participates in a broad spectrum of civic and charitable activities.
The station's promotional efforts include Alabama's Best Citizen, Sunshine
Children's Camp, South Alabama State Fair, Kids Stuff educational series,
CityFest, Phoenix Charity Ball (against drug abuse) and the American Red Cross
I.D. Kids Campaign. The station produces the Easter Seals Telethon and is also
negotiating to produce and air the National Arthritis Foundation Telethon.
COMPETITION--TELEVISION BROADCASTING
Competition in the television industry takes place on several levels:
competition for audience, competition for programming (including news) and
competition for advertisers. Additional factors that are material to a
television station's competitive position include signal coverage and assigned
frequency. The broadcasting industry is continually faced with technological
change and innovation, the possible rise in popularity of competing
entertainment and communications media, and governmental restrictions or
actions of federal regulatory bodies, including the FCC and the Federal Trade
Commission, any of which could have a material effect on Park Broadcasting's
operations.
Audience. Stations compete for audience on the basis of program popularity,
which has a direct effect on advertising rates. A majority of the daily
programming on Park Broadcasting's stations is supplied by the network with
which each station is affiliated. In those periods, the stations are totally
dependent upon the performance of the network programs in attracting viewers.
There can be no assurance that such programming will achieve or maintain
satisfactory viewership levels in the future. Non-network time periods are
programmed by the station with a combination of self-produced local news,
public affairs and other entertainment programming, including syndicated
programs purchased for cash, cash and barter, or barter only. Local news has
been most important to Park Broadcasting's stations' success, and Park
Broadcasting places a growing emphasis on other forms of local programming, as
well as continuing involvement in the local community.
Independent stations, whose number has increased significantly over the past
decade, have also emerged as viable competitors for television viewership
share. Each of Time Warner and Paramount has recently launched a new
television network. The Company is unable to predict the effect, if any, that
such networks and any future networks will have on the future results of Park
Broadcasting's operations. Public broadcasting outlets in most communities
also compete with commercial broadcasters for viewers.
In addition, the development of methods of television transmission of video
programming other than over-the-air broadcasting, and in particular the growth
of cable television, has significantly altered competition for audience in the
television industry. These other transmission methods can increase competition
for a broadcasting station by bringing into its market distant broadcasting
signals not otherwise available to the station's audience and also by serving
as a distribution system for non-broadcast programming originated on the cable
system.
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Through the 1970s, television broadcasting enjoyed virtual dominance in
viewership and television advertising revenue because network-affiliated
stations competed only with each other in most local markets. Beginning in the
1980s, however, this level of dominance began to change as more local stations
were authorized by the FCC and marketplace choices expanded with the growth of
independent stations and cable television services. Although cable television
systems were initially used to retransmit broadcast television programming to
paid subscribers in areas with poor broadcast signal reception, significant
increases in cable television penetration occurred throughout the 1970s and
1980s in areas that did not have signal reception problems. As the technology
of satellite program delivery to cable systems advanced in the late 1970s,
development of programming for cable television accelerated dramatically,
resulting in the emergence of multiple, national-scale program alternatives
and the rapid expansion of cable television and higher subscriber growth
rates. In the aggregate, cable-originated programming has emerged as a
significant competitor for viewers of broadcast television programming,
although no single cable programming network regularly attains audience levels
amounting to more than a small fraction of any single major broadcast network.
Over-the-air broadcasting remains the dominant distribution system for mass
market television advertising. Basic cable penetration (the percentage of
television households which are connected to a cable system) in Park
Broadcasting's television markets ranges from 58% to 76%.
Historically, cable operators have not sought to compete with broadcast
stations for a share of the local news audience. Recently, however, certain
cable operators have elected to compete for such audiences, and the increased
competition could have an adverse effect on Park Broadcasting's audience for
local news, as well as Park Broadcasting's advertising revenue.
Other sources of present and potential competition include pay cable, home
entertainment systems (including video cassette recorder and playback systems,
videodiscs and television game devices), Multichannel Multipoint Distribution
Service ("MMDS" or "Wireless Cable"), satellite master antenna television
systems, low power television ("LPTV"), television translator stations, Local
Multipoint Distribution Service ("LMDS"), direct broadcast satellite ("DBS")
video distribution services which transmit programming directly to homes
equipped with special receiving antennas, and the participation of telephone
companies in the provision of "video dialtone" transmission service for the
delivery of video programming by wire. Some of these competing services have
the potential of providing improved signal reception or increased home
entertainment selection, and they are continuing to develop and expand.
Further advances in technology may increase competition for household
audiences and advertisers. Video compression techniques, now under development
for use with current cable channels or DBSs, are expected to reduce the
bandwidth required for television signal transmission. These compression
techniques, as well as other technological developments, are applicable to all
video delivery systems, including over-the-air broadcasting, and have the
potential to provide vastly expanded programming to highly targeted audiences.
Reduction in the cost of creating additional channel capacity could lower
entry barriers for new channels and encourage the development of increasingly
specialized "niche" programming. This ability to reach very narrowly defined
audiences is expected to alter the competitive dynamics for attracting an
audience and for advertising expenditures. The Company is unable to predict
the effect that these or other technological changes will have on the
broadcast television industry or the future results of Park Broadcasting's
operations.
Programming. Competition for programming involves negotiating with national
program distributors or syndicators which sell first-run and rerun packages of
programming. In acquiring programming to supplement network programming, Park
Broadcasting's stations compete primarily with in-market broadcast stations
for exclusive access to off-network reruns (such as Roseanne and Home
Improvement) and first-run product (such as The Oprah Winfrey Show and Live
with Regis & Kathy Lee) in their respective markets. Cable systems generally
do not compete with local stations for programming, although various national
cable networks from time to time have acquired from producers programs that
would have otherwise been placed in local syndication. Competition for
exclusive news stories and features is also endemic in the television
industry.
Time Warner and Paramount, each of which has recently launched a new
television network, also own or control major production studios. Outside
production studios are the primary source of programming for the
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networks. It is uncertain whether in the future such programming, which is
generally subject to short-term agreements between the studios and the
networks, will be moved to the new networks.
Advertising. Advertising rates are based upon the size of the market in
which the station operates, a program's popularity among the viewers that an
advertiser wishes to attract, the number of advertisers competing for the
available time, the demographic makeup of the market served by the station,
the availability of alternative advertising media in the market area,
aggressive and knowledgeable sales forces, and development of projects,
features and programs that tie advertiser messages to programming. In addition
to competing with other media outlets for audience share, Park Broadcasting's
stations also compete with such media outlets for advertising revenue. Park
Broadcasting's stations compete for such advertising revenue with other
television stations in their respective markets, as well as with other
advertising media, such as newspapers, radio stations, magazines, outdoor
advertising, transit advertising, yellow page directories, direct mail and
local cable systems. Competition for advertising dollars in the broadcasting
industry occurs primarily within individual markets. Generally, a television
broadcasting station in the market does not compete with stations in other
market areas. Park Broadcasting's television stations are located in highly
competitive markets. As discussed under "Audience" above, further advances in
technology may increase competition for advertising.
NETWORK AFFILIATION AGREEMENTS
Each of Park Broadcasting's stations is affiliated with a national
television network under standard affiliation agreements and each has been
affiliated with the same network continuously since its acquisition by the
Company. Each affiliation agreement with CBS and NBC currently runs for a ten-
year term expiring in December 2004 (in the case of each CBS agreement) and
October 2005 (in the case of each NBC agreement), and is renewable for
successive five-year terms unless prior written notice of termination is given
by Park Broadcasting or the network. Each affiliation agreement with ABC
currently runs for a two-year term expiring in October 1997 (in the case of
WTVQ's agreement) and February 1998 (in the case of WUTR's agreement), and is
renewable for successive two-year terms unless prior written notice of
termination is given by Park Broadcasting or the network. The Company is
currently negotiating new contracts with ABC which would run for ten-year
terms. The Company believes that these new long-term contracts will include an
increase in network compensation, as well as certain news-gathering equipment
to be provided by ABC. Under each affiliation agreement, the network
possesses, under certain circumstances, the right to terminate the agreement
on prior written notice. Such circumstances include a transfer of the
broadcasting license or ownership or control of the station or a change in the
station's transmitter location, power, frequency or hours of operation. The
Company believes Park Broadcasting's relationships with the networks to be
good, and the networks have routinely renewed their affiliation agreements
with Park Broadcasting's stations; however, there can be no assurance that
these affiliation agreements will be renewed in the future. See "Risk
Factors--Network Affiliation; Reliance on Network Programming."
Pursuant to the terms of the long-term affiliation agreements entered into
with CBS and NBC, such networks agreed to an accelerated payment schedule of
the network compensation due to Park Broadcasting under such agreements. Under
the new affiliation agreements with CBS and NBC, approximately $37.4 million
of the $52.2 million in aggregate network compensation payable thereunder will
be paid to Park Broadcasting during the first four years of the ten-year terms
of such agreements. In accordance with GAAP, the Company is accounting for
payments received from the networks on a straight-line basis.
Generally, each affiliation agreement provides the station with the right to
rebroadcast all programs transmitted by the network. In exchange, the network
has the right to sell a substantial majority of the advertising time
associated with the network programs and to retain such revenue. For every
hour that the station elects to broadcast network programming, the network
pays the station compensation, as specified in each affiliation agreement,
which varies with the time of day. Typically, "prime time" programming (Monday
through Saturday from 8:00 p.m.-11:00 p.m. and Sunday from 7:00 p.m.-11:00
p.m.) generates the highest hourly rates. Rates are
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subject to increase or decrease by the network during the term of each
affiliation agreement, with provisions for advance notice and right of
termination on behalf of the station in the event of a reduction in rates of
network compensation. See "Risk Factors--Network Affiliation; Reliance on
Network Programming." Management believes that programming costs are generally
lower for network affiliates than for independent television stations and that
prime-time network programs generally achieve higher ratings than non-network
programs.
Under the affiliation agreements, the networks offer Park Broadcasting a
variety of sponsored and unsponsored programs which Park Broadcasting must
refuse before they can be offered to any other television station in the same
market. Each of Park Broadcasting's stations broadcasts approximately 85 hours
of network programs per week between the hours of 7:00 a.m. and 1:30 a.m.
When not carrying network programs, Park Broadcasting's stations broadcast
programs produced by the stations (most of which are news and public affair
programs) and programs such as movies or syndicated programs acquired from
independent sources. The costs of locally produced and purchased syndicated
programming are a significant portion of Park Broadcasting's operating
expenses. Syndicated programming costs are determined based upon largely
uncontrollable market factors, including demand from the independent and
network affiliated stations within the market and in some cases from cable
operations.
FEDERAL REGULATION OF TELEVISION BROADCASTING
Park Broadcasting's television broadcasting operations are subject to the
jurisdiction of the Federal Communications Commission (the "FCC") under the
Communications Act of 1934, as amended (the "Communications Act"). The
Communications Act prohibits the operation of television broadcasting stations
except under a license issued by the FCC and empowers the FCC, among other
things, to issue, revoke and modify broadcast licenses, determine the
locations of stations, regulate the equipment used by stations, adopt
regulations to carry out the provisions of the Communications Act and impose
penalties for violation of such regulations. The Communications Act prohibits
the assignment of a license or the transfer of control of a licensee without
prior approval of the FCC. The exercise of the Warrants offered hereby could
require such approval, and there can be no assurance as to the Company's
ability to obtain such approval. The Telecommunications Act of 1996 ("Telecom
Act"), which amends major provisions of the Communications Act, was enacted on
February 8, 1996. The FCC has not yet implemented certain of the provisions of
the Telecom Act.
License Grant and Renewal. Television broadcasting licenses are generally
granted or renewed for a maximum period of five years, but may be renewed for
a shorter period upon a finding by the FCC that the "public interest,
convenience and necessity" would be served thereby. The Telecom Act extends
the license period for television stations to a maximum of eight years, and
the FCC has initiated a rulemaking proceeding looking toward amendment of its
rules to provide for such a maximum term. At the time an application is filed
for renewal of a television license, parties in interest, as well as members
of the public, may apprise the FCC of the service the station has provided
during the preceding license term and urge the grant or denial of the
application. Under the Telecom Act, a competing application for authority to
operate a station and replace the incumbent licensee may not be filed against
a renewal application and considered by the FCC in deciding whether to grant a
renewal application. The statute modified the license renewal process to
provide for the grant of a renewal application upon a finding by the FCC that
the licensee (i) has served the public interest, convenience and necessity;
(ii) has committed no serious violations of the Communications Act or the
FCC's rules; and (iii) has committed no other violations of the Communications
Act or the FCC's rules which would constitute a pattern of abuse. If the FCC
cannot make such a finding, it may deny a renewal application, and only then
may the FCC accept other applications to operate the station of the former
licensee. In a vast majority of cases, broadcast licenses are renewed by the
FCC even when petitions to deny or competing applications are filed against
broadcast license renewal applications. The main station licenses for Park
Broadcasting's stations expire on the following dates: WBMG, April 1, 1997;
WTVQ, August 1, 1997; KALB, June 1, 1997; WUTR, June 1, 1999; WNCT, December
1, 1996; WDEF, August 1, 1997; WJHL, August 1, 1997; WTVR, October 1, 1996;
and WSLS, October 1, 1996. In an order released February 9, 1995, by the FCC
Mass Media Bureau, the application for renewal of the license of Park
Broadcasting's television station in Birmingham, WBMG, was
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granted on the condition that the station submit annual reports to the FCC
describing the station's affirmative action efforts. Although there can be no
assurance that Park Broadcasting's licenses will be renewed, the Company is
not aware of any facts or circumstances that would prevent the renewal of the
licenses for Park Broadcasting's stations at the end of their respective
license terms. The main station license for the station to be acquired
pursuant to the Montgomery Acquisition expires on April 1, 1997.
Multiple Ownership Restrictions. FCC regulations govern the multiple
ownership of radio and television broadcast stations and certain other media
on a national and local level. The Telecom Act directs the FCC to eliminate or
modify certain rules regarding the multiple ownership of broadcast stations
and other media. The statute eliminates the limit on the number of television
stations that an individual or entity may own or control, provided that the
audience reach of all television stations owned does not exceed 35% of all
U.S. households. The FCC revised its rules consistent with the foregoing
provision on March 8, 1996. The statute also directs the FCC to conduct a
rulemaking proceeding to determine whether to retain, eliminate or modify its
limitations on the number of television stations that an individual or entity
may own within the same geographic market. Though no rulemaking notices have
yet been issued by the FCC pursuant to that direction, a pending rulemaking
addresses substantially the same issues.
FCC rules currently allow an entity to have an attributable interest (as
defined below) in only one television station in a market. In addition, FCC
rules and/or the Communications Act generally prohibit an individual or entity
from having an attributable interest in a television station and a radio
station or daily newspaper that is located in the same local market area
served by the television station. The Telecom Act does not eliminate the FCC's
rules restricting the common ownership of a radio station and a television
station in the same geographic market ("one-to-a-market rule") and the common
ownership of a daily newspaper and a broadcast station located in the same
geographic market. The statute, however, does relax the FCC's one-to-a-market
rule by directing the FCC to extend its waiver policy to stations located in
the 50 largest television markets. The statute eliminates the FCC's
restriction on the common ownership of a cable system and a television
network. The Telecom Act also eliminates the statutory prohibition on the
common ownership of a cable television system and a television station located
in the same geographic market, though an FCC rule restricting such ownership
remains in effect. Furthermore, the Telecom Act authorizes the FCC to permit
the common ownership of multiple television networks under certain
circumstances, and the FCC on March 7, 1996, adopted rules implementing that
provision. The statute also directs the FCC to review all of its ownership
rules to determine whether they continue to serve the public interest.
Under current rules, none of the Company, Park Broadcasting or Park
Newspapers may be permitted to acquire any daily newspapers or broadcast
properties (other than low power television (LPTV) or television translator
(repeater) stations) in a market in which any now own one or more FCC
regulated properties or daily newspapers. Except as discussed below, these
rules do not require any change in Park Broadcasting's or Park Newspapers'
present ownership of broadcast stations and newspapers. PAI, the Company, Park
Broadcasting and Park Newspapers, through attribution rules, own three radio-
television- station combinations (AM-FM-TV) that have been "grandfathered"--
i.e., allowed to continue notwithstanding the one-to-a-market rule--because
their acquisition by the Company or Park Broadcasting predated the
promulgation of the rule. These stations are located in Greenville, North
Carolina, Richmond, Virginia, and Chattanooga, Tennessee. Grandfathering
rights are not ordinarily transferrable, absent a waiver. In approving PAI's
acquisition of the Company, the FCC ordered PAI to divest itself of the six
affected radio stations within one year after closing of the Acquisition which
is May 11, 1996. At the time of PAI's acquisition of the Company, it was not
PAI's intention to sell the six affected radio stations, but rather to seek a
permanent waiver from the FCC requirement. Management believed it was probable
that a permanent waiver would be granted. In December 1995, the Company
decided, due to favorable market conditions at such time, to divest the entire
radio station operations. Due to the Company's decision to sell the entire
radio station operations, it did not further pursue the permanent waiver from
the FCC. Although it is not expected that the divestitures will be completed
by May 11, 1996, in light of the fact that the divestitures are in progress
PAI does not expect to encounter difficulty in obtaining an extension of the
divestiture deadline from the FCC.
Expansion of Park Broadcasting's broadcast operations in particular areas
and nationwide will continue to be subject to the FCC's ownership rules and
any changes the agency or Congress may adopt. At the same time,
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relaxation of the FCC's ownership rules may increase the level of competition
in one or more of the markets in which Park Broadcasting's stations are
located, particularly to the extent that Park Broadcasting's competitors may
have greater resources and thereby be in a better position to capitalize on
any such changes.
Under the FCC's ownership rules, if a purchaser of the common stock of the
Company acquires an "attributable" interest in the Company and has an
attributable interest in other broadcast stations or a daily newspaper, a
violation of the Communications Act or FCC regulations could result depending
on the number and location of the other broadcasting stations or daily
newspapers attributable to such purchaser. In the case of corporations,
ownership of television licenses generally is "attributed" to all officers and
directors of a licensee, as well as to stockholders who own 5% or more of the
outstanding voting stock of a licensee, except that certain institutional
investors who exert no control or influence over a licensee may own up to 10%
of such outstanding voting stock before attribution results. Under current FCC
regulations, debt instruments, non-voting stock and certain limited
partnership interests (provided the licensee certifies that the limited
partners are not "materially involved" in the management or operation of the
subject media property) and voting stock held by minority stockholders where
there is a single majority stockholder generally will not result in
attribution. Though the beneficiary of a trust can avoid an attributable
interest under certain circumstances, where, as in the case of the trust that
is a stockholder of PAI, there is a familial relationship between the trustee
and the beneficiary, FCC policy is to deem the beneficiary's interest
attributable. In addition, the FCC's cross-interest policy, which precludes an
individual or entity from having an attributable interest in one media
property and a "meaningful" (but not attributable) interest in a broadcast or
newspaper property in the same area, may be invoked in certain circumstances
to reach interests not expressly covered by the multiple ownership rules.
Alien Ownership Restrictions. The Communications Act restricts the ability
of foreign entities to own or hold interests in broadcast licenses. Foreign
governments, representatives of foreign governments, non-citizens,
representatives of non-citizens, and corporations or partnerships organized
under the laws of a foreign nation are barred from holding broadcast licenses.
Non-citizens, collectively, may directly or indirectly own up to 20% of the
capital stock of a licensee and up to 25% of the capital stock of a United
States corporation that, in turn, owns a controlling interest in a licensee.
In addition, a broadcast license may not be granted to or held by any
corporation that is controlled, directly or indirectly, by any other
corporation of which more than one-fourth of the capital stock is owned or
voted by non-citizens or their representatives, by foreign governments or
their representatives, or by non-U.S. corporations, if the FCC finds that the
public interest will be served by the refusal or revocation of such license.
Under the Telecom Act, non-citizens may serve as officers and directors of a
broadcast licensee and any corporation controlling, directly or indirectly,
such licensee. The Company, which serves as a holding company for operating
broadcast subsidiaries, therefore may be restricted from having more than one-
fourth of its capital stock owned directly or indirectly by non-citizens,
foreign governments or foreign corporations.
Children's Programming. Pursuant to the Children's Television Act of 1990
and regulations adopted by the FCC pursuant thereto, television stations are
subject to specific limitations on the amount of commercial matter that may be
presented within programming directed primarily to children 12 years of age
and under. Television stations are also required through their programming to
serve the educational and informational needs of children 16 years of age and
under. While no quantitative programming requirements have been promulgated by
the FCC, there have been calls from the Administration, from a number of
members of Congress, and from certain FCC Commissioners for imposition of
quantitative requirements. The Company can not predict whether any such
quantitative requirements will be adopted or whether, when and if adopted,
such requirements will be applied retroactively or only prospectively.
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Other Recent Developments, Proposed Legislation and Regulation. The FCC
recently decided to eliminate the prime time access rule ("PTAR"), effective
August 30, 1996. PTAR currently limits a station's ability to broadcast
network programming (including syndicated programming previously broadcast
over a network) during prime time hours. The elimination of PTAR could
increase the amount of network programming broadcast over a station affiliated
with ABC, NBC or CBS. Such elimination also could result in (i) an increase in
the compensation paid by the network to a station (due to the additional prime
time during which network programming could be aired by a network-affiliated
station) and (ii) increased competition for syndicated network programming
that previously was unavailable for broadcast by network affiliates during
prime time.
The FCC also recently rescinded its remaining financial interest and
syndication ("fin-syn") rules. The fin-syn rules restricted the ability of
ABC, CBS and NBC to obtain financial interests in, or participate in
syndication of, prime-time entertainment programming created by independent
producers for airing during the networks' evening schedules. (The FCC
previously had lifted the financial interest rules and restraints on foreign
syndication.)
The FCC has under consideration and the Congress and the FCC in the future
may consider and adopt new or modify existing laws, regulations and policies
regarding a wide variety of matters that could affect, directly or indirectly,
the operation, ownership and profitability of Park Broadcasting's stations,
result in the loss of audience share and advertising revenue for Park
Broadcasting's stations and affect the ability of the Company or Park
Broadcasting to acquire additional stations or finance such acquisitions. Such
matters include: (i) spectrum use or other fees on FCC licensees; (ii) the
FCC's equal employment opportunity rules and other matters relating to
minority and female involvement in the broadcasting industry; (iii) rules
relating to political broadcasting; (iv) technical and frequency allocation
matters; (v) changes in the FCC's cross-interest, multiple ownership and
cross-ownership rules and policies; (vi) changes to broadcast technical
requirements; (vii) limitations on the tax deductibility of advertising
expenses by advertisers; and (viii) changes to the standards governing the
evaluation and regulation of television programming directed towards children,
and violent and indecent programming.
Specifically, and as an example of the above proposed changes, the FCC,
consistent with the Telecom Act, has initiated rulemaking proceedings to
solicit comments on its multiple ownership, attribution and minority ownership
rules, as well as other rules with respect to television broadcasting
generally. More particularly, on January 17, 1995, the FCC released a Further
Notice of Proposed Rulemaking which proposed, among other things, the
following changes regarding television broadcasting: (i) narrowing the
geographic area where common ownership restrictions would be triggered by
limiting it to overlapping "Grade A" contours rather than larger "Grade B"
contours and by permitting (or granting waivers in particular cases or
markets) certain UHF/UHF or UHF/VHF overlaps; (ii) relaxing the rules
prohibiting cross-ownership of radio and television stations in the same
market to allow certain combinations where there remain alternative outlets
and suppliers to ensure diversity; and (iii) treating television Local
Marketing Agreements ("LMAs") the same as radio LMAs, which would currently
preclude certain television LMAs where the programmer owns or has an
attributable interest in another television station in the same market. The
Company cannot predict the outcome of the FCC's rulemaking proceedings or how
FCC changes in its multiple and cross-ownership rules, made in accordance with
the Telecom Act, will affect Park Broadcasting's business.
On January 12, 1995, the FCC released two additional Notices of Proposed
Rulemaking. The first seeks comment on whether the FCC should relax
attribution and other rules to facilitate greater minority and female
ownership. The second seeks comment on whether the FCC should modify its
attribution rules by, among other things, (i) restricting the availability of
the single majority shareholder exemption and (ii) attributing certain non-
equity interests such as non-voting stock, debt and certain holdings by
limited liability corporations. In the context of this latter rulemaking, the
FCC is further examining its cross interest policy and seeking comment on the
appropriate treatment of nonequity financial interests and multiple business
interrelationships between licensees. The Company cannot predict the outcome
of those proceedings or how they will affect Park Broadcasting's business.
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On February 16, 1996, the FCC issued an Order vacating its EEO Policy
Statement which imposed non-binding guidelines for assessing forfeitures based
upon violations of the FCC's equal employment opportunity ("EEO") broadcast
policies. The Policy Statement was developed to encourage the promotion of
programming which reflects the interests of women and minorities. The FCC
maintains its goal of increasing opportunities for minorities and women and is
seeking comments on the establishment of new forfeiture guidelines and the
specific activities broadcasters must engage in to effectuate that goal.
The FCC also has initiated a notice of inquiry proceeding seeking comment on
whether the public interest would be served by establishing limits on the
amount of commercial matter broadcast by television stations. No prediction
can be made at this time as to whether the FCC will impose any limits on
commercials at the conclusion of its deliberation. The imposition of limits on
the commercial matter broadcast by television stations may have an adverse
effect on the Company's and Park Broadcasting's revenue.
The FCC is currently examining or has recently completed review of a number
of rules that govern the relationship between broadcast television networks
and their affiliates and that are applicable to all broadcast television
networks. In particular, the FCC has eliminated the network station ownership
rule prohibiting network ownership of television stations in markets where the
existing television stations are so few or of such unequal desirability that
competition would be substantially restrained. On June 15, 1995, the FCC
initiated a review and update of certain long-standing rules governing the
programming practices of broadcast television networks and their affiliates.
Specifically, the FCC will consider whether to modify, repeal or retain the
following programming-related rules: (1) the right to reject rule which
ensures that a network affiliate retains the right to reject network
programming; (2) the time option rule that currently prohibits a network from
holding an option to use specified amounts of an affiliate's broadcast time;
(3) the exclusive affiliation rule that forbids a network from preventing an
affiliate from broadcasting the programming of another network; and (4) the
network territorial exclusivity rule that prohibits an agreement between a
network and an affiliate that would prevent another station in the same
community from broadcasting a network program not taken by the affiliate and
that prohibits an agreement that would prevent another station located in a
different community from broadcasting any of the network's programs. Moreover,
in a separate but related proceeding initiated on June 14, 1995, the FCC is
considering whether to modify or repeal rules that currently forbid a network
from influencing an affiliate's advertising rates during non-network broadcast
time, and whether to modify or repeal a rule forbidding a network from acting
as an advertising representative for the sale of non-network time.
Other matters which could affect Park Broadcasting's broadcast properties
include technological innovations and developments generally affecting
competition in the mass communications industry, such as the recent initiation
and future expansion of direct broadcast satellite service, the continued
establishment of wireless cable systems and low power television stations.
Distribution of Video Services by Telephone Companies. Prior to the
enactment of the Telecom Act, local telephone companies were prohibited from
providing video programming directly to subscribers in their telephone service
areas. This prohibition was successfully challenged in several Federal courts
before the prohibition was eliminated by the Telecom Act. The Telecom Act
provides that telephone companies may now choose to provide video services as
a cable system, multichannel video programming distributor or through a newly
created "open video" system. An open video system will allow users access to
video programming and interactive services utilizing their existing telephone
service connections. The FCC recently adopted rules implementing the "open
video" system and establishing the qualifications necessary to become an "Open
Video System Operator." In addition, competition in the video services market
is growing. For example, Bell Atlantic's request for permission to transmit
video programming was recently approved by the Federal judge overseeing the
regional Bell companies' entry into new businesses. Bell Atlantic, Nynex and
Pacific Telesis, jointly, are planning to offer movies and television programs
to their telephone customers and hope to ultimately offer more interactive
services. The Company cannot predict how the provision of video services and
other interactive services by local and regional telephone companies could
affect Park Broadcasting's properties, and cannot predict the outcome of the
regulatory proceedings ongoing at the FCC.
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Even prior to the court rulings described in the preceeding paragraph, the
FCC had authorized a broadened role for telephone companies in the video
marketplace in its "video dialtone" ("VDT") decision. VDT is defined by the
FCC as the provision of a basic video platform to multiple video programmers
on a non-discriminatory, common carrier basis. If a local telephone company
provides such a basic platform, it also may provide enhanced and unregulated
services related to the provision of video programming. The FCC has already
approved several applications to construct and operate VDT systems and has
begun processing tariffs filed to govern the rates and terms of VDT offerings
although, most recently, some telephone companies have indicated that they are
reassessing their timetable and possible approach in developing VDT. The
Telecom Act repealed the video dialtone rules; however, video dialtone systems
approved as of the effective date of the Telecom Act will not need to be
terminated.
The 1992 Cable Act. On October 5, 1992, Congress enacted the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act"). Some of its provisions such as signal carriage, retransmission consent
and equal employment opportunity requirements, have a direct effect on
television broadcasting. Other provisions are focused exclusively on the
regulation of cable television but can still be expected to have an indirect
effect on Park Broadcasting because of the competition between over-the-air
television stations and cable systems.
The signal carriage, or "must carry," provisions of the 1992 Cable Act and
FCC rules require cable operators to carry the signals of local commercial and
non-commercial television stations and certain low power television stations.
Systems with twelve or fewer useable activated channels and more than 300
subscribers must carry the signals of at least three local commercial
television stations. A cable system with more than 12 useable activated
channels, regardless of the number of subscribers, must carry the signals of
all local commercial television stations, up to one-third of the aggregate
number of useable activated channels of such system. The 1992 Cable Act also
includes a retransmission consent provision that prohibits cable operators and
other multi-channel video programming providers from carrying broadcast
stations without obtaining their consent in certain circumstances. The must
carry and retransmission consent provisions are related in that television
broadcasters, on a cable system-by-cable system basis, must make a choice once
every three years whether or not to proceed under the must carry rules or to
waive that right to mandatory but uncompensated carriage and negotiate a grant
of retransmission consent to permit the cable system to carry the stations'
signal, in most cases in exchange for some form of consideration from the
cable operator.
Under rules adopted to implement these must carry and retransmission
provisions, local television stations were required to make their initial
elections of must carry or retransmission consent by June 17, 1993. Stations
that failed to elect were deemed to have their signals carried under the must
carry provisions. Other issues addressed in the FCC rules were market
designations, the scope of retransmission consent, and procedural standards
for implementing the signal carriage provisions. In 1993, Park Broadcasting's
stations entered into retransmission consent agreements with the cable systems
under which the cable systems have agreed to purchase advertising time on the
stations. These agreements continue through the end of 1996. All television
stations are required to again make elections of must carry or retransmission
consent by October 1, 1996. The Company currently anticipates that Park
Broadcasting's stations will again enter into retransmission consent
agreements, similar to the current agreements, which would expire in 1999.
On April 8, 1993, a special three-judge panel of the U.S. District Court for
the District of Columbia upheld the constitutionality of the must carry
provisions of the 1992 Act. However, on June 27, 1994, the U.S. Supreme Court,
in a 5-4 decision, vacated the lower court's judgment and remanded the case to
the District Court for further proceedings. Although the Supreme Court found
the must carry rules to be content-neutral and supported by legitimate
governmental interests under appropriate constitutional tests, it also found
that genuine issues of material fact still remained that must be resolved on a
more detailed evidentiary record. On December 12, 1995, the same three-judge
panel of the District Court, in a 2-1 decision, again upheld the
constitutionality of the must carry rules. Another Supreme Court appeal is
underway. In the meantime, however, the FCC's new must carry regulations
implementing the 1992 Cable Act remain in effect. The Company cannot predict
the outcome of such challenges or the effect on the Company's business if the
must carry or retransmission consent provisions of the Cable Act are found to
be unconstitutional or otherwise unlawful.
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The 1992 Cable Act also codified the FCC's basic EEO rule and the use of
certain EEO reporting forms currently filed by television broadcast stations.
In addition, pursuant to the 1992 Cable Act's requirements, the FCC has
adopted new rules providing for a review of the EEO performance of each
television station at the mid-point in its license term (in addition to
renewal time). Such a review gives the FCC an opportunity to evaluate whether
the licensee is in compliance with the FCC's processing criteria and to notify
the licensee of any deficiencies in its employment profile. Among the other
rulemaking proceedings conducted by the FCC to implement provisions of the
1992 Cable Act have been those concerning cable rate regulation, cable
technical standards, cable multiple ownership limits and competitive access to
programming.
Cross Ownership. Although the FCC's rules had limited the extent to which
cross ownership was permitted between cable television systems and television
broadcast networks, the Telecom Act eliminated the restrictions on cross
ownership. The FCC amended its rules on March 15, 1996 to permit a person or
entity to own or control a television network and a cable system. In such
cases, the FCC retains the authority to revise any of the cable regulations,
including such items as carriage, channel positioning and non-discriminatory
treatment of nonaffiliated broadcast stations, as necessary. In addition, the
FCC has amended its rules to conform to the Telecom Act by providing that
cable operators subject to effective competition, as determined by the Telecom
Act, will be allowed to hold licenses for multichannel multipoint distribution
service and may provide satellite master antenna television service, separate
and apart from its franchised cable service, in any portion of the franchise
area served by the operator's system.
Advanced Television Service. The Telecom Act authorizes the FCC to issue
additional licenses for advanced television ("ATV") services only to
individuals or entities that hold an authorization to operate or construct a
television station ("Existing Broadcasters"). ATV is a technology that will
improve the technical quality of television signals receivable by viewers and
will enable broadcasters the flexibility to provide new services, including
high-definition television, simultaneous multiple programs of standard
definition television and data broadcasting. The Telecom Act directs the FCC
to adopt rules to permit Existing Broadcasters to use their ATV channels for
various purposes, including foreign language, niche or other specialized
programming. The statute also authorizes the FCC to collect fees from Existing
Broadcasters who use their ATV channels to provide services for which payment
is received. Prior to the enactment of the Telecom Act, members of Congress
sought assurance from the FCC that it would not implement any plan to award
spectrum for ATV service until additional legislation is enacted to resolve
spectrum issues such as whether broadcasters should be required to pay for ATV
licenses. In response to this request, the FCC stated that it would not award
licenses or construction permits for ATV service until such additional
legislation is enacted to address ATV spectrum issues. Such legislation, if
adopted, may require Existing Broadcasters to pay for ATV licenses. Consistent
with the Telecom Act, the FCC has begun a rulemaking asking for public comment
on proposals to allow licensees to provide ancillary digital services within
the video portion of their broadcast signals. The Company cannot predict
whether these proposals will be enacted and if enacted the effect these
proposal would have on Park Broadcasting.
The FCC has already adopted certain rules and has proposed others to
implement ATV. The FCC has "set aside" channels within the existing television
system for ATV and has limited initial ATV. Existing Broadcasters will have
the exclusive right for three years to apply for ATV channels. The FCC
proposed to allow Existing Broadcasters six months in which to decide whether
to apply for an ATV channel and an additional 2 years to supply the FCC with
the information necessary for the FCC to issue an authorization for the ATV
channel. Existing Broadcasters who file timely applications for ATV channels
will have three years from the expiration of the three-year application filing
period to construct their ATV facilities. The FCC has determined that ATV will
be a digital system incompatible with current television transmitters and
receivers. The rules for phasing in ATV service permit each television station
to provide conventional television service on its regular channel until ATV
service has become the prevalent medium. The FCC is seeking comments on a
timetable for requiring broadcasters to convert to ATV. Broadcasters will have
to convert to ATV by the conversion deadline and surrender one channel back to
the FCC. The FCC also proposed phased in simulcasting requirements during the
transition period under which a broadcaster must simulcast on its ATV channel
the programming that is broadcast on its existing conventional channel. The
FCC also adopted a timetable for periodic review of the simulcasting and
conversion deadlines. The FCC also proposed licensing the ATV and conventional
broadcast channels under a single license. In addition, the FCC is seeking
comments on whether broadcasters should
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provide a minimum amount of free over-the-air television broadcasting on the
ATV channel and to what extent to allow the use of ATV spectrum for services
other than free over-the-air broadcasting. The FCC also is seeking comments on
whether to allow an extension of the six-year application and construction
period under certain circumstances, including circumstances involving
financial hardship and stations serving small or economically disadvantaged
areas. The FCC has further proposed several broad objectives to govern the ATV
channel allotment process and has proposed a number of procedures and specific
technical criteria to be used in allotting ATV channels. The FCC also issued
for public comment a working draft of a proposed ATV Table of Allotments
intended to provide an ATV channel for each existing television station in a
manner that will maximize the coverage for ATV stations while taking into
account interference to existing television stations and between ATV stations.
In addition, the FCC has proposed the adoption of a digital broadcast standard
recommended by committees formed for the purpose of developing, building and
testing a single ATV technology. The proposed standard will purportedly
accommodate a broad range of potential ways to deliver digital data through
packetized transport means. If the FCC adopts a standard for ATV service that
is inferior to the signal quality alternative video technologies provide, such
action could have a negative impact on the audience and revenue for television
stations. Implementation of ATV service will impose substantial additional
costs on television stations to provide the new service, due to increased
equipment costs. It is also possible that advances in technology may permit
Existing Broadcasters to enhance the picture quality of existing systems
without the need to implement ATV service.
There is currently substantial debate regarding whether the spectrum
necessary to provide ATV services should be awarded through an auction
process. Some Congressional lawmakers view the availability of the spectrum
necessary to provide ATV services as an opportunity to raise revenue for the
Federal treasury. The broadcast industry has opposed that approach. The Senate
Commerce Committee has scheduled a series of hearings to explore the issue of
broadcast spectrum auctions.
In the event that an auction process is adopted, there can be no assurance
that the Company will have sufficient resources to be the successful bidder in
any or all of its television markets. Although the Company believes the FCC
will authorize ATV service, the Company cannot predict when or at what cost
such authorization might be given, or the effect such authorization might have
on Park Broadcasting's business or capital expenditures requirements.
Direct Broadcast Satellite Systems. The FCC has authorized the provision of
video programming directly to home subscribers through direct broadcast
satellites ("DBS"). Local broadcast stations are not carried on DBS systems.
In June 1994, Hughes Communications Galaxy ("Hughes"), an affiliate of the
General Motors Company, and United States Satellite Broadcasting Company
("USSB") initiated DBS service. In December 1994, two DBS permittees, EchoStar
Satellite Corporation and Directsat Corporation, merged their DBS
authorizations. Service from these permittees is expected to commence in 1996.
MCI and News Corp., the parent of Fox Video and the 20th Century Fox film
studio, have also formed an alliance to provide information and entertainment
services to businesses and consumers through MCI's newly acquired direct-
broadcast satellite spectrum. Other proposals recently advanced in Congress
include a prohibition on restrictions that inhibit a viewer's ability to
receive video programming through DBS services. Proposed legislation may also
affect state and local taxation of direct-to-home satellite services. The
Company is unable to predict the impact of this new service upon Park
Broadcasting's operations.
PARK NEWSPAPERS
Park Newspapers owns and operates 104 publications which include paid
circulation newspapers, both daily and non-daily, as well as controlled
distribution and other "total market coverage" publications ("shoppers"). Park
Newspapers' daily and non-daily newspapers generally combine news, sports and
features with a special emphasis on local information. The markets which the
publications serve, which Park Newspapers identifies using postal ZIP codes,
had a combined household count of approximately 545,000 and aggregate retail
sales of approximately $15.2 billion in 1995. Park Newspapers has enjoyed a
history of journalistic excellence and effective community relations. For the
year ended December 31, 1995, Park Newspapers had revenue of $78.9 million and
Newspaper Cash Flow of $25.6 million.
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Park Newspapers' newspaper publications serve readers in 43 counties in 12
states. Demographics USA, 1994 has forecasted that 30 of the counties which
Park Newspapers serves (or approximately 70% of the total number of counties
it serves) will experience retail sales growth during the period from 1994
through 1999 equal to or in excess of the forecast national average of 30.6%
over this period; another 11 of these counties (or approximately 26% of the
total number of counties it serves) are projected to have retail sales growth
during this period of at least 80% of the national average, with most growing
at 90% or more of the national average; and only two of these counties
(Columbia and Niagara Counties in New York) are projected to be "slow-growth"
counties.
Park Newspapers publishes 28 daily newspapers in 12 states which range in
circulation from approximately 4,000 to 17,000, with a combined average paid
daily circulation of approximately 242,000 as of March 1, 1996. Of Park
Newspapers' daily newspapers, 16 publish Sunday newspapers. Park Newspapers'
dailies have been in existence for an average of 111 years (with none in
existence for less than 46 years) and are the only paid dailies of general
circulation published in each of their respective cities or towns, which are
generally areas of small or medium populations. The Company believes that an
added benefit of operating in these types of communities is the workforce
stability which it has experienced.
Park Newspapers publishes 26 paid non-daily newspapers one or more times per
week in 12 states. The markets where Park Newspapers publishes non-dailies are
too small to support a daily newspaper. In most cases, such markets are close
to cities or towns where Park Newspapers publishes daily newspapers, and the
non-dailies are printed at Park Newspapers' daily newspaper facilities. In
five locations, several non-dailies share production facilities. Park
Newspapers' paid non-daily newspapers range in circulation from 1,300 to
18,000 and have a total weekly circulation of approximately 77,000.
The newspapers generally provide community news, commentary, sports and
local features and information, such as information about town meetings and
school and social activities. Park Newspapers' daily newspapers also use
Associated Press wire service materials which provide regional, national and
international news and information. Park Newspapers' long-term policy has been
to emphasize local news and to develop strong local news staffs. High levels
of local news content have been emphasized throughout Park Newspapers'
history. Park Newspapers' daily newspapers average 17 pages and are produced
by full-time staffs, including news reporting and editorial staffs, averaging
35 people. Park Newspapers' non-daily newspapers average 23 pages, have small
news reporting and editorial staffs and generally share production and
business staffs with one or more of Park Newspapers' other newspapers. Park
Newspapers believes that its newspapers benefit from good community relations
and strong reader and advertiser loyalty.
In addition to reaching the local population through paid daily and non-
daily community newspapers, Park Newspapers also prints 50 shoppers in 12
states which range in distribution from approximately 13,000 to 45,000.
Shoppers contain certain local and classified advertising with little
originally produced news or editorial comment. Park Newspapers currently
publishes shoppers only in the markets where it also publishes paid
circulation newspapers, and the shoppers are printed at Park Newspapers'
newspaper facilities. Shoppers typically are distributed to both subscribers
and non-subscribers of a Park Newspapers' paid circulation newspaper, allowing
Park Newspapers to cover a significant portion of a market with advertising
contained in its publications. Advertisements in shoppers are generally sold
in combination with parallel advertising in the paid circulation community
paper to afford advertisers the ability to reach the general market area.
Park Newspapers' strategy has been to acquire and operate newspapers having
a dominant position in stable, growing communities, each of which is the only
such publication in the community. In December 1993, Park Newspapers sold 33
of its smaller publications in 13 communities in nine states. The sale of
these publications was designed to allow Park Newspapers to focus its
resources on its larger publications. Park Newspapers may, from time to time,
make strategic targeted newspaper acquisitions, dispositions or tax-free
exchanges. Acquisitions may be made in circumstances in which management
believes that such acquisitions would contribute to Park Newspapers' overall
growth strategy, whether through revenue growth and/or cost-reduction
opportunities. Management's criteria for acquisitions include the ability to
cluster with existing publications,
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markets with good transportation systems, specifically, interstate highway
access, local institutions of higher education, state and federal operations
and a diverse economic base with no one industry dominating the market.
BUSINESS AND OPERATING STRATEGY
Park Newspapers' operating strategy is to increase revenue and Newspaper
Cash Flow by capitalizing on the strong local brand recognition of its
newspapers. Management believes that its strong brand recognition combined
with the Company's emphasis on producing a high quality product and improving
its sales and marketing efforts will enhance the value of Park Newspapers'
publications to its readers and advertisers and result in increased
circulation and Newspaper Cash Flow.
Prior to the Acquisition, Park Newspapers focused on improving Newspaper
Cash Flow through cost management rather than generation of incremental
revenue. Industry standards suggest that revenue performance of a community
newspaper equal to 0.70% to 1.25% of total retail sales in a defined market is
a reasonable target for share of market revenue. Park Newspapers ended 1995
with advertising revenue equal to a 0.52% of total retail sales in the
aggregate in the markets served by its publications. Attainment of 0.70% of
retail sales in its markets would have resulted in a significant increase in
Park Newspapers' 1995 revenue. The Company believes that through new sales and
marketing programs, continued quality editorial and news leadership, increased
circulation penetration, along with continued strict cost controls, it can
capitalize on the growing markets in which it operates and improve its share
of retail advertising dollars.
Park Newspapers' business and operating strategy includes the following key
elements:
Strengthen Sales and Marketing Development. Since the Acquisition, the
Company has instituted a sales force upgrade and implemented a motivation
program which includes performance-based compensation plans, daily sales
reports to monitor each account executive's development, and on-site
training programs. Park Newspapers has purchased a new
demographic/advertising research program to provide qualitative data to its
sales force to better identify sales opportunities. The Company has also
introduced advertising programs to generate revenue from sources new to
Park Newspapers, including category selling, targeted marketing, single
sheet and other free standing insert advertising, along with a top of mind
awareness (TOMA) program. TOMA is a program whereby an advertiser can
develop a cost effective long-term frequency-based advertising program
designed to get the advertiser's name and product or service out in the
market and create top of mind awareness of the advertiser's product or
service.
Enhance Quality of Editorial Content, Presentation and Local News. Park
Newspapers' publications are committed to editorial excellence and
providing the best mix of local and national news to effectively serve
their markets. The Company's newspapers generally have the largest local
news gathering resources in their local markets and, through emphasizing
local news, generally have a high degree of reader loyalty among their core
circulation base group. Park Newspapers' publications are produced on
offset presses, all of which have color capability. The Company has
recently completed a review of its daily newspapers' layouts and has
instituted a layout redesign program for all of its daily newspapers to
ensure that each newspaper offers attractive layout, design and color
enhancement.
Increase Circulation. Prior to the Acquisition, Park Newspapers pursued a
circulation strategy aimed at driving circulation revenue through price
increases. This strategy ultimately adversely impacted circulation
penetration levels. As of December 31, 1995, Park Newspapers had only a 47%
penetration of the occupied households in its defined market areas, a level
which the Company believes offers significant potential for improvement.
Park Newspapers has launched an aggressive direct marketing effort, through
door-to-door marketing, telemarketing, sampling and direct response
marketing programs, with the goal of improving market penetration (in the
aggregate) to 70% of the occupied households in its defined markets.
Realize Benefits From Clustering. Park Newspapers has clustered its
publication operations regionally. With the change in strategy from cost
management to revenue maximization and cost containment, the Company has
identified and is implementing programs to enhance revenue available as a
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result of its clustering of operations, such as regional sales promotion
programs and other cross-selling techniques. In addition to the revenue
opportunities, consolidating the operations of groups of newspapers affords
both operating and economic efficiencies. These efficiencies include, but
are not limited to, the sharing of management, accounting and production
functions. In addition to regional clustering, the Company will also seek
to merge operations where possible, as in progress at Concord/Kannapolis,
North Carolina. Management will continue to review its newspaper businesses
for opportunities to merge operations to both enhance revenue and reduce
costs.
Maintain Effective Cost Controls. Expenses at each of the Company's
publications are closely monitored to control costs without sacrificing
revenue opportunities. The Company seeks to reduce labor costs through
investment in modern production equipment and through the consolidation of
operations and administrative activities associated with clustering. Park
Newspapers' newsprint costs are approximately 10.4% of its revenue, and it
generally enters into long-term supply contracts to reduce newsprint costs
during short supply. Management believes that Park Newspapers' newsprint
costs as a percentage of revenue are generally lower than many of the other
community newspaper groups. The Company's cost control initiatives also
include group purchasing of materials and aggressive control of newsprint
waste.
Develop Additional Non-Traditional Revenue Sources. Park Newspapers has
recently introduced new informational products and services and advertising
programs to generate revenue from sources other than traditional newspaper
publishing activities. These products, services and programs include voice
personals, audio-text and incentive marketing.
As a result of the implementation of these operating strategies, management
believes Park Newspapers is well positioned to achieve internal growth. By
being the leading, and in certain instances the sole, provider of local news
in most of its markets, management believes that Park Newspapers' established
franchises should enable it to respond to and benefit from any changes in the
manner in which information is delivered.
NEWSPAPER INDUSTRY BACKGROUND
Newspaper publishing is the oldest and largest segment of the media
industry, with total advertising expenditures on daily and weekly newspapers
reported at $36.0 billion in 1995 according to Newspaper Association of
America (the "NAA"). Due to a focus on local news, newspapers remain the
dominant medium for local advertising and account for more than 48.1% of all
local media advertising expenditures according to the NAA. Additionally,
newspapers continue to be the preferred medium for retail advertising which
emphasizes the price of goods, in contrast to television which is generally
used for image advertising.
The number of adult readers of daily and Sunday newspapers is reported to
have increased from 115.3 million and 125.9 million, respectively, in 1992 to
115.4 million and 132.2 million, respectively, in 1994. Readers of newspapers
tend to be more highly educated and have higher incomes than non-newspaper
readers. For instance, in 1994, 74% of college graduates and 71% of households
with income of $40,000 or more are reported to read a daily newspaper,
compared to 61% for non-college graduates and 54% of households with income
less than $40,000. Management believes that newspapers continue to be the most
cost-effective means for advertisers to reach this highly targeted demographic
group.
Total morning daily national circulation has increased from 42.4 million in
1992 to 43.1 million in 1995, representing a compounded annual growth rate of
0.6%. Total Sunday national circulation, however, declined from 62.2 million
in 1992 to 61.8 million in 1995. Total reported daily national circulation,
including evening editions, declined from 60.2 million in 1992 to 58.2 million
in 1995, or 0.5% annually. This decrease can be directly attributable to the
declining national circulation of evening newspapers, which is reported to
have decreased from 17.8 million in 1992 to 15.1 million in 1995, or 5.3%
annually, as a result of an inability to compete with existing morning
newspapers and from increased competition by evening broadcast news
programming and specialized cable programming such as CNN and Headline News.
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Advertising and, to a lesser extent, circulation revenues are cyclical and
dependent upon general economic conditions. Historically, increases in
advertising revenues have corresponded with economic recoveries while
decreases, as well as changes in the mix of advertising, have corresponded
with general economic downturns and regional and local economic recessions.
PUBLICATIONS
Park Newspapers has organized its operations into 31 newspaper centers.
Generally each daily newspaper constitutes a separate newspaper center, but in
some cases one or more non-daily newspapers in the same geographic area are
consolidated with a daily newspaper in a single newspaper center. The rest of
Park Newspapers' newspaper centers consist of a group of non-daily newspapers
distributed in the same geographic area. The table below shows the
organization of the publications into newspaper centers.
Park Newspapers has a significant presence in North Carolina which is
forecasted as a high growth area by Demographics USA, 1994, and the revenue
and associated cash flows originate in ten different newspaper centers
dispersed across the state. The ten of Park Newspapers' 31 newspaper centers
which are located in North Carolina generated 38.3% of Park Newspapers'
revenue in 1995. The Concord/Kannapolis, North Carolina newspaper center was
the greatest revenue and Newspaper Cash Flow producer of the newspaper
centers, but only provided 10.2% of Park Newspapers' total revenue and 11.8%
of its total Newspaper Cash Flow, while the average newspaper center accounted
for 3.1% of total revenue and 3.1% of total Newspaper Cash Flow from all
newspaper centers.
The following table identifies the states and communities in which Park
Newspapers publishes its paid newspapers and shoppers, the names of Park
Newspapers' publications and the circulation (paid or free) as of March 1,
1996. Each community shown in boldface type in this table is the location of a
newspaper center. Communities in standard type and indented under a community
shown in boldface type are part of that newspaper center.
<TABLE>
<CAPTION>
STATE AND COMMUNITY PUBLICATION FREQUENCY CIRCULATION
- ------------------- ----------------------- -------------------- -----------
<S> <C> <C> <C>
GEORGIA
WARNER ROBINS The Daily Sun Daily (M-F) 7,791 paid
Sunday Sun Sunday 8,525 paid
Daily Sun Extra 1x week 6,967 free
Robins Rev-up 1x week 25,013 free
IDAHO
BURLEY South Idaho Press Daily (M-F & Sunday) 4,797 paid
The News Review 1x week 11,055 free
The Sunrise Shopper 1x week 4,632 free
Hailey The Wood River Journal 1x week 1,697 paid
9,400 free
Sun Valley Dining Guide 1x year 40,000 free
Minidoka Minidoka County News 1x week 1,146 paid
ILLINOIS
EFFINGHAM Effingham Daily News Daily (M-Sat.) 12,771 paid
The Weekly Advertiser 1x week 9,832 free
MACOMB Macomb Daily Journal Daily (M-F & Sunday) 6,658 paid
Business News 1x week 8,106 free
INDIANA
JEFFERSONVILLE The Evening News Daily (M-Sat.) 10,828 paid
Clark County Journal 1x week 11,341 free
Golden Opportunities 1x week 20,000 free
</TABLE>
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<TABLE>
<CAPTION>
STATE AND COMMUNITY PUBLICATION FREQUENCY CIRCULATION
- ------------------- ----------------------------- -------------------- -----------
<S> <C> <C> <C>
PLYMOUTH The Pilot-News Daily (M-Sat.) 6,449 paid
Bremen Bremen Enquirer 1x week 1,554 paid
Bourbon Bourbon News-Mirror 1x week 1,245 paid
Nappanee Nappanee Advance News 1x week 1,939 paid
Farm and Home News 1x week 18,500 free
KENTUCKY
RUSSELLVILLE News-Democrat & Leader 2x week 6,486 paid
The Logan Advertiser 1x week 7,177 free
The Peddler 1x week 26,000 free
Leitchfield Grayson County News-Gazette 2x week 5,157 paid
The Grayson County Advertiser 1x week 3,069 free
LONDON Sentinel Echo 3x week 5,288 paid
The Laurel Neighbor 1x week 8,097 free
MOREHEAD The Morehead News 2x week 5,048 paid
Carlisle The Carlisle Mercury 1x week 1,503 paid
Mercury Plus 1x week 1,380 free
Frenchburg Menifee County News 3x week 734 paid
Grayson The Grayson Journal-Enquirer 1x week 4,849 paid
Greenup The Greenup County News 1x week 2,748 paid
Olive Hill Shopping News 1x week 19,027 free
SOMERSET Commonwealth Journal Daily (M-F & Sunday) 8,651 paid
McCreary County Record 1x week 4,895 paid
Lake Cumberland Shopper 1x week 31,603 free
MICHIGAN
COLDWATER Coldwater Daily Reporter Daily (M-Sat.) 6,166 paid
The Reporter Extra 1x week 11,500 free
MINNESOTA
BEMIDJI The Pioneer Daily (M-F) 8,296 paid
The Pioneer Sunday 8,797 paid
The Advertiser 1x week 13,073 free
The Mid-Week Advertiser 1x week 8,608 free
Blackduck The American 1x week 1,122 paid
NEW YORK
HUDSON Register-Star Daily (M-F & Sunday) 6,767 paid
Northeast 1x month 13,000 free
Columbia Views 1x week 1,409 free
The Courier 1x week 800 free
Chatham The Chatham Courier 1x week 2,837 paid
LOCKPORT Union-Sun & Journal Daily (M-Sat.) 17,009 paid
Tri-County News 1x week 8,000 free
MEDINA The Journal Register Daily (M-F) 4,554 paid
Eastern Niagra Edition 1x week 6,968 free
Pennysaver 1x week 3,000 free
TV Signals 1x week 9,400 free
Albion Albion Advertiser 1x week 1,792 paid
OGDENSBURG The Journal Daily (M-F) 4,744 paid
Rural News 1x week 5,785 free
The Advance News Sunday 10,606 paid
</TABLE>
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<TABLE>
<CAPTION>
STATE AND COMMUNITY PUBLICATION FREQUENCY CIRCULATION
- ------------------- ---------------------------- -------------------- -----------
<S> <C> <C> <C>
Canton St. Lawrence Plaindealer 1x week 2,195 paid
Massena The Courier-Observer Daily (T-Sat.) 5,225 paid
NORTH CAROLINA
AHOSKIE Advantage 1x week 12,293 free
Scotland Enfield News Review 1x week 1,492 paid
Gates County News Review 1x week 2,052 paid
Jackson News Review 1x week 2,196 paid
News-Herald 3x week 6,494 paid
CLINTON The Sampson Independent Daily (M-F & Sunday) 7,861 paid
Sampson County Shopping
Guide and TV Schedule 1x week 12,826 free
CONCORD/KANNAPOLIS The Concord Tribune Daily (M-F & Sunday) 13,527 paid
The Daily Independent Daily (M-F & Sunday) 8,943 paid
The Cabarrus Observer
Nugget 1x week 3,361 free
The Edge 1x week 19,014 free
Aberdeen Sandhills Living 2x week 15,000 free
The Golf Outlook 1x month 15,000 free
EDEN Daily News Daily (M-F) 5,976 paid
The Virginia Carolina
Beacon 1x week 3,570 free
LUMBERTON The Robesonian Daily 14,125 paid
The Robesonian Sunday Sunday 16,160 paid
The Robesonian Mid-Weekly 1x week 23,595 free
Elizabethtown Bladen Daily Journal 3x week 3,889 paid
The Southeastern Times 1x week 3,850 free
MARION The McDowell News Daily (M-F) 4,206 paid
McDowell Express 1x week 8,250 free
The Old Fort Post 1x week 2,450 free
MOORESVILLE Mooresville Tribune 1x week 6,130 paid
Shoppers Guide 1x week 11,500 free
Davidson Mecklenburg Gazette 1x week 2,195 paid
MORGANTON The News Herald Daily (M-F & Sunday) 11,757 paid
The Burke County Observer 1x week 8,423 free
Valdese News 1x week 15,528 free
ROCKINGHAM The Richmond County Daily
Journal Daily (M-F & Sunday) 8,460 paid
The Journal Advantage 1x week 7,200 free
STATESVILLE Statesville Record &
Landmark Daily (M-F & Sunday) 16,907 paid
Landmark Extra 1x week 9,500 free
NORTH DAKOTA
DEVILS LAKE Devil's Lake Daily Journal Daily (M-F) 4,450 paid
The Country Peddler 1x week 22,500 free
OKLAHOMA
MCALESTER News Capital & Democrat Daily (M-F & Sunday) 12,282 paid
Southeast Oklahoma
Shopping News 1x week 6,045 free
Hartshorne Hartshorne Sun 1x week 1,178 paid
</TABLE>
93
<PAGE>
<TABLE>
<CAPTION>
STATE AND COMMUNITY PUBLICATION FREQUENCY CIRCULATION
- ------------------- --------------------- -------------------- -----------
<S> <C> <C> <C>
SAPULPA Sapulpa Daily Herald Daily (M-F & Sunday) 6,411 paid
Herald Extra 1x week 13,754 free
VIRGINIA
MANASSAS The Journal Messenger Daily (M-Sat.) 7,348 paid
The Journal Reach 1x week 45,000 free
WAYNESBORO The News-Virginian Daily (M-Sat.) 9,391 paid
Shenandoah Shopper 1x week 10,179 free
TOTAL PAID DAILY 242,350
TOTAL PAID NON-DAILY 77,861
TOTAL SHOPPERS 549,087
</TABLE>
The Company believes that the geographic diversity of Park Newspapers'
publications mitigates the effect of regional economic cycles on its business.
No one publication accounted for more than 6.0% of Park Newspapers' revenue or
10.0% of its Newspaper Cash Flow in 1995. The following table shows the
relative proportion by state of Park Newspapers' 1995 revenue and Newspaper
Cash Flow.
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF 1995
STATE 1995 REVENUE NEWSPAPER CASH FLOW
----- ------------- -------------------
<S> <C> <C>
Georgia...................................... 3.2% 3.3%
Idaho........................................ 3.5 3.1
Illinois..................................... 6.5 5.6
Indiana...................................... 5.7 6.1
Kentucky..................................... 9.7 9.8
Michigan..................................... 1.8 1.5
Minnesota.................................... 3.4 3.9
New York..................................... 13.9 11.7
North Carolina............................... 38.3 39.6
North Dakota................................. 2.1 2.0
Oklahoma..................................... 5.4 7.2
Virginia..................................... 6.5 6.2
----- -----
100.0% 100.0%
===== =====
</TABLE>
SOURCES OF REVENUE
Substantially all of Park Newspapers' publishing revenue is derived from
advertising and circulation, with lesser amounts derived from commercial print
jobs and other sources. The following table sets forth the sources and amounts
of Park Newspapers' revenue for the years ended December 31, 1993, 1994 and
1995:
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<PAGE>
REVENUE BY SOURCE--YEAR ENDED DECEMBER 31 (IN THOUSANDS)
<TABLE>
<CAPTION>
1993(A) 1994 1995
------------ ------------ ------------
SOURCE OF REVENUE % AMOUNT % AMOUNT % AMOUNT
- -------------------- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Advertising:
Daily Newspapers....................... 55.0 $40,907 57.0 $43,763 56.3 $44,424
Non-daily Newspapers................... 9.2 6,826 9.2 7,094 9.1 7,226
Shoppers............................... 7.2 5,387 7.2 5,509 6.9 5,411
------- ------- -------
Total Advertising.................... 71.4 53,120 73.4 56,366 72.3 57,061
------- ------- -------
Circulation:
Daily Newspapers....................... 21.0 15,541 20.3 15,624 21.5 16,967
Non-daily Newspapers................... 2.2 1,665 2.2 1,657 2.2 1,759
------- ------- -------
Total Circulation.................... 23.2 17,206 22.5 17,281 23.7 18,726
------- ------- -------
Other.................................... 5.4 4,040 4.1 3,163 4.0 3,117
------- ------- -------
Total.................................... $74,366 $76,810 $78,904
======= ======= =======
</TABLE>
- --------
(a) Excludes revenue from 33 publications sold in November 1993.
Advertising. Advertising rates and rate structures vary among Park
Newspapers' publications and are based, among other things, on circulation and
type of advertising (classified or display, and national or local).
Historically, substantially all of Park Newspapers' total publication
advertising revenue has been derived from local retail and classified
advertising, which management believes are less subject to fluctuation than
national advertising. Many local retailers in the small communities served by
Park Newspapers' publications are unable to advertise in larger non-local
publications or electronic media because of their generally higher advertising
rates. During the year ended December 31, 1995, local and regional advertising
accounted for 67% of advertising revenue, classified advertising accounted for
22% and pre-printed inserts and national advertising accounted for 10% and 1%,
respectively.
Park Newspapers has recently increased its focus on national advertising
programs in an effort to generate increased volume and revenue from pre-
printed inserts and shoppers, although the revenue from such programs is
relatively small, amounting to approximately $523,000, or 0.7% of Park
Newspapers' total revenue, in 1995. Park Newspapers has also recently begun to
offer new regional advertising programs to chain stores. Management believes
that the regional clustering of Park Newspapers' publications parallels an
emerging trend of larger retailers to advertise on a regional basis and
positions Park Newspapers to benefit from this trend.
Park Newspapers has also introduced category selling, single sheet and other
free standing advertising and a top of mind awareness program (TOMA) whereby
an advertiser can develop a cost effective long-term frequency advertising
program designed to get the advertiser's name and product or service out in
the market and create top of mind awareness of the product or service.
Management intends to continue to develop additional advertising revenue
sources such as co-op advertising, national classified advertising and other
targeted advertising.
Shoppers are generally growing faster and have higher margins than daily
newspapers. Management believes there are opportunities to increase Park
Newspapers' revenue through shoppers and has focused on training its sales
force to sell a combination of newspaper and shopper advertising space.
Circulation. Circulation revenue is derived from home delivery sales of Park
Newspapers' paid dailies and non-dailies to subscribers and single copy sales
made through retailers and vending racks. Of circulation revenue for 1995,
over 80% was derived from subscription sales and the balance was derived from
single copy sales. Single copy rates for paid daily and non-daily publications
currently range from 25c to 50c per copy and
95
<PAGE>
from 50c to $1.00 for Sunday newspapers. Subscriptions are generally offered
at a discount from single copy rates. Park Newspapers periodically reviews the
subscription and single copy rates for potential increases.
Park Newspapers' newspapers ended 1995 with an aggregate 47% penetration of
the occupied households in its defined market areas. Park Newspapers has begun
to pursue a strategy targeted at increasing circulation revenue by increasing
aggregate market penetration to 70% of the occupied households in its
newspapers' defined markets, rather than relying on increases in subscription
and single copy rates. Park Newspapers has launched an aggressive marketing
effort to improve market penetration which includes door-to-door marketing,
telemarketing, sampling and direct response marketing programs. The mechanical
mailroom and distribution aspects of circulation have now been separated from
sales and marketing activities to enhance and afford focus to the circulation
sales effort. Mailroom activity will become a function of production, and
management believes that distribution has the capacity to evolve into a
separate source of revenue. See "Production and Distribution" below.
Other Revenue Sources. Commercial printing job revenue is derived from
utilizing available press capacity for printing customers' order for
newspapers, fliers, retail store advertisements and similar products.
Park Newspapers has introduced new informational products and services,
including an audiotext service whereby a customer can call an audiotext line
to access various kinds of information, generally from newspaper databases
(such as weather), but also from other sources (such as the ability to hear a
message from a child's teacher about the day's homework assignments); voice
personals, which generate revenue from a portion of the cost of telephone
calls made in response to free personal ads placed in newspapers; and
incentive marketing such as the printing and distribution of fishing maps. The
Company believes that voice personals will contribute new revenue beginning in
1996, while audiotext and incentive marketing will fully develop as sources of
revenue in 1997 and beyond.
PRODUCTION AND DISTRIBUTION
All of Park Newspapers' publications are produced using photocomposition
technology and printed using an offset method. Automated text editing and
classified advertising systems are in operation at all of the newspapers. As
part of a program to improve operating efficiency and to enhance product
quality, Park Newspapers engages in a continuing process of updating its
printing facilities. Four such upgrades are scheduled to be completed in 1996.
Additionally, the geographic proximity of groups of Park Newspapers'
publications has enabled Park Newspapers to consolidate certain operations in
centralized production plants thereby facilitating quality improvements that
would otherwise be prohibitively expensive for a single publication. For
example, in 1994, Park Newspapers implemented greater process color
capabilities at 17 of its 33 plants where a total of 22 of Park Newspapers'
daily newspapers are printed. These improvements enable Park Newspapers to
offer color ads and editorial materials to advertisers and subscribers.
Additionally, Park Newspapers has recently completed a review of its daily
newspapers' layouts and has instituted a layout redesign program for all of
its daily newspapers to ensure that each newspaper offers attractive layout,
design and color enhancement, while remaining easily readable. The Company
believes that Park Newspapers will be able to continue to improve the quality
of its publications as technological improvements continue to become
economically viable for small publications.
Park Newspapers' daily and non-daily newspapers are published primarily for
home delivery and are generally sold by independent carriers and circulation
dealers. Adults comprise approximately 70% of Park Newspapers' home delivery
network, which management believes enables Park Newspapers to engage in other
home distribution activities on behalf of unaffiliated parties and generate
additional revenue for Park Newspapers. Shoppers are generally distributed
free, on a weekly basis, by various delivery methods, including third-class
mail.
RAW MATERIALS
The basic raw material of newspaper publishing operations is newsprint. The
Company believes that effective management of newsprint costs is an important
factor in the success of Park Newspapers' business.
96
<PAGE>
Newsprint costs increased approximately 40% per metric ton in 1995 on an
industry-wide basis and may continue to increase in 1996, although any such
increases in 1996 are not anticipated to be as significant as the 1995
increases. Newsprint expenses represented 12%, 12% and 15% of Park Newspapers'
total operating costs and expenses for the years ended December 31, 1993, 1994
and 1995, respectively. The Company believes that this compares favorably with
cost of newsprint to other publishers throughout the country.
Park Newspapers currently purchases newsprint from various suppliers in the
United States and Canada. As of May 6, 1996, Park Newspapers was a party to
long-term supply contracts with several such suppliers, the largest of which
will provide approximately 50% of the tonnage used by Park Newspapers in 1996.
In accordance with industry practice, Park Newspapers' newsprint supply
contracts provide for tonnage at prices determined from time to time by the
suppliers. The Company believes that sources of newsprint supply are adequate
for the anticipated needs of Park Newspapers and that there are adequate
alternative sources of supply. See "Regulation of Newspaper Operations" below
for a discussion of state laws which regulate the recycled content of
newsprint.
COMPETITION--PUBLISHING
While Park Newspapers' daily newspapers are the only daily newspapers of
general circulation published in their respective cities or towns, each of
these publications and each of Park Newspapers' non-daily newspapers and
shoppers competes in varying degrees with other newspapers having a regional
or national circulation, as well as with magazines, radio, television, direct
marketing and other advertising media. In addition, certain of Park
Newspapers' daily newspapers compete within their own markets with other daily
newspapers of general circulation published in adjacent or nearby cities and
towns. There are no local television stations in any of Park Newspapers' 28
daily newspaper markets, although each community receives television service
through cable or regional broadcast signals. The Company believes that Park
Newspapers' significant presence in the towns served by its community
publications has enabled it to compete effectively.
Although published in a different location, a competitor has recently begun
publication of a daily newspaper serving the Warner Robins, Georgia market.
The Company is unable to predict the effect that this publication will have on
Park Newspapers' Warner Robins daily newspaper. However, management does not
believe that this competing daily will have a material effect on Park
Newspapers' operations.
Although there can be no assurance that a competitor will not enter one or
more of Park Newspapers' markets and become successful, the Company believes
that entry by a direct competitor in most of Park Newspapers' daily newspaper
markets is likely to be cost prohibitive. Additionally, the prevailing trend
in newspaper publishing has been for consolidation down to one dominant daily
newspaper in a particular community or city. The Company believes that
distribution of Park Newspapers' shoppers in conjunction with community daily
newspapers enhances Park Newspapers' competitive position in such market
areas.
REGULATION OF NEWSPAPER OPERATIONS
Certain rules of the FCC and/or the Communications Act affect Park
Newspapers' publication operations as well as Park Broadcasting's operations
by placing certain limitations on common ownership, operation and other
interests in, among other things, broadcast stations and newspapers serving
the same area. This may affect the number, type and location of newspapers
that Park Newspapers may acquire in the future. See "Federal Regulation of
Television Broadcasting" above. These rules do not currently require any
change in Park Newspapers' present ownership of newspapers.
Additionally, Park Newspapers is required to obtain a permit from, and to
file an annual statement of ownership and circulation with, the U.S. Postal
Service for paid circulation newspapers that are delivered by second class
mail. Certain of Park Newspapers' paid publications are currently delivered by
second class mail. Free circulation publications such as shoppers are
delivered to subscribers and nonsubscribers by mail or in other ways.
97
<PAGE>
Certain states in which Park Newspapers publishes its newspapers have
enacted legislation concerning the percentage of recycled content of
newsprint. Certain of these states mandate that newsprint contain a minimum
amount of recycled material, while others have developed voluntary recycled
content guidelines for newsprint. Newsprint suppliers are not currently able
to deliver the requisite recycled-content newsprint, and there can be no
assurance that the suppliers will be able to supply such newsprint upon
implementation of the various state laws. Park Newspapers, like other
newspaper publishers, is exploring alternative compliance methods permitted
under certain of these laws, including recycling and other programs intended
to divert newspapers from being disposed of in landfills. The Company is
unable to predict the impact that these laws will have on Park Newspapers'
business.
DISCONTINUED OPERATIONS
The Company is in the process of selling the Radio Station Assets, the
operations of which have been conducted through Park Broadcasting. The Company
decided to divest such operations to focus on its core television broadcasting
and newspaper publication operations, to raise cash to prepay a portion of its
existing indebtedness and to take advantage of attractive prices (which
approximate in the aggregate 27.7 times Radio Cash Flow in 1995) for which
such operations could be sold.
Park Broadcasting currently owns and operates four AM/FM combination radio
stations in four states which employ various programming formats adapted to
the characteristics of each market. Park Broadcasting creates its own formats
and purchases formats and programming from various outside sources. In March
1996, Park Broadcasting sold its WPAT-AM and FM radio stations serving the
greater New York City area for aggregate gross proceeds of $103.0 million. In
May 1996, Park Broadcasting sold its KEZX-AM and KWJZ-FM radio stations
serving the Seattle, Washington market for aggregate gross proceeds of $26.0
million, its WTVR-AM and FM radio stations serving the Richmond, Virginia
market for aggregate gross proceeds of $18.0 million and its WNLS-AM and WTNT-
FM radio stations serving the Tallahassee, Florida market for aggregate gross
proceeds of $3.5 million. In June 1996, Park Broadcasting sold its WHEN-AM and
FM radio stations serving the Syracuse, New York market for aggregate gross
proceeds of $4.5 million, its WNCT-AM and FM radio stations serving the
Greenville, North Carolina market for aggregate gross proceeds of $3.0 million
and its WNAX-AM and FM radio stations serving the Yankton, South Dakota market
for aggregate gross proceeds of $7.0 million. Income taxes due as a result of
the above mentioned sales are estimated to be $42.4 million.
As of May 6, 1996, Park Broadcasting had entered into definitive agreements
with prospective purchasers for the sale of all of its remaining radio
stations. The aggregate proceeds from the sale of the remaining Radio Station
Assets are currently expected to be $68.2 million, before deducting related
expenses estimated to be $0.8 million and income taxes resulting from such
sales estimated to be $23.0 million. Although there can be no assurance that
the sale of the Radio Station Assets will occur, Park Broadcasting currently
anticipates that the sale of four of its eight remaining individual radio
stations will be completed by June 30, 1996, the sale of an additional two of
its individual radio stations will be completed by July 31, 1996 and the sale
of its last two individual radio stations will be completed by August 31,
1996. In the event that the Company does not consummate sales of the Radio
Station Assets in amounts and at times sufficient to pay the amounts due on
the Senior Credit Facility as well as the taxes payable on the sales that are
consummated, the Company may not have available cash resources to make such
payments. The failure to make such payments could have a material adverse
effect on the Company's financial condition and liquidity.
98
<PAGE>
The Company is selling its remaining radio stations in four separate sale
transactions, each of which is with a different purchaser. The following table
contains information concerning Park Broadcasting's remaining radio stations
and the anticipated sale transactions:
<TABLE>
<CAPTION>
ANTICIPATED
GROSS SALE ANTICIPATED
MARKET PROCEEDS(A) CLOSING
RADIO STATION SERVED (IN MILLIONS) DATE(B) PURCHASER
- ------------- --------------- ------------- ----------- -------------------------
<S> <C> <C> <C> <C>
KSGS-AM and St. Louis 22.0 June 1996 Nationwide
KMJZ-FM Park, Minnesota Communications, Inc.
KWJJ-AM/FM Portland, 35.0 June 1996 Fisher Broadcasting Inc.
Oregon
KWLO-AM and Waterloo, 3.5 July 1996 KXEL Broadcasting
KFMW-FM Iowa Company, Inc.
WDEF-AM/FM Chattanooga, 7.7 August 1996 Jackson Telecasters,
Tennessee ----- Inc.(c)
$68.2
=====
</TABLE>
- --------
(a) Before deducting expenses related to the sale of all the remaining Radio
Station Assets estimated to be $0.8 million and income taxes resulting
from such sales estimated to be $23.0 million.
(b) As consummation of the sale transactions is subject to the satisfaction of
certain conditions, including the receipt of FCC approval of the transfer
of the broadcasting licenses, there can be no assurance that the sale
transactions will be concluded by the anticipated closing dates. FCC
approval has been received for the transfer of the broadcasting licenses
relating to all of the remaining radio stations.
(c) The entity identified has assigned its rights and delegated its
obligations under the purchase agreement to its subsidiary.
The subsidiaries of Park Broadcasting which own and operate the Radio
Station Assets are the sellers under the definitive agreements, and neither
the Company, Park Broadcasting or any other party is a party to any such
agreement, making any guarantees of the sellers' obligations or providing any
indemnification in connection with such sales. Each of the definitive
agreements relating to the sale of the Radio Station Assets contains
representations and warranties, covenants (including indemnification
obligations), conditions and other material terms. Certain of such definitive
agreements provide that a portion (ranging from $50,000 to $250,000 per
transaction) of the purchase price will be held in escrow for a period of time
(ranging from six to 24 months per transaction) after the closing for use in
satisfying the seller's indemnification obligation. With certain exceptions,
the indemnification obligations of the selling subsidiary under such
definitive agreements survive the closings thereunder for periods of time
ranging from 12 to 24 months. In addition, in certain of the definitive
agreements, the seller's indemnification obligations are capped at amounts
ranging from $100,000 to $4.5 million.
Consummation of each sale under the definitive agreements is subject to the
satisfaction of certain customary conditions, including the receipt of FCC
approval of transfer of the broadcasting licenses and, with respect to certain
of the sale transactions, receipt of satisfactory title and environmental
reports, completion of due diligence investigation by the buyer, receipt of
zoning approvals and expiration of applicable waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended.
ENVIRONMENTAL REGULATION
The Company, like other companies engaged in similar operations, is subject
to a wide variety of federal, state and local laws and regulations, including
those governing the use, storage, handling, generation, treatment, emission,
release, discharge and disposal of certain materials, substances and wastes,
the remediation of contaminated soil and groundwater, and the health and
safety of employees. As such, the nature of the Company's operations exposes
it to the risk of claims with respect to environmental matters, and there can
be no assurance that material costs or liabilities will not be incurred in
connection with such claims. Based upon its
99
<PAGE>
experience to date, the Company believes that the future cost of compliance
with existing environmental laws and regulations, and liability for known
environmental claims, will not have a material adverse effect on the Company's
business or financial position. However, future events, such as changes in
existing laws and regulations or their interpretation, and more vigorous
enforcement policies of regulatory agencies, may give rise to additional
expenditures that could be material.
SEASONALITY
The Company's advertising revenue is generally the highest in the second and
fourth quarters of each year. The increase is due to increased advertising in
the spring and in the period leading up to and including the Christmas holiday
season. In addition, political advertising increases the Company's revenue
during election years and is typically heaviest during the fourth quarters of
those years. However, management believes that fluctuations in its political
advertising revenues are tempered by the levels of political activity in the
areas in which it operates.
EMPLOYEES
As of March 1, 1996, the Company had approximately 2,670 employees, 2,048 of
whom were full-time employees. Of such full-time employees, 608 were in Park
Broadcasting's television operations, 1,175 were in Park Newspapers' newspaper
operations and 265 were in Park Broadcasting's radio operations. Six of the
Company's employees at WBMG-TV in Birmingham, Alabama are represented by Radio
Broadcast Technicians and Engineers Local No. 253 of the International
Brotherhood of Electrical Workers, and six of the Company's employees at KWJJ-
AM/FM in Portland, Oregon are represented by Local Union No. 48 of the
International Brotherhood of Electrical Workers, Radio Broadcast Division. No
other employees of the Company are represented by unions. The Company has
never experienced a strike or work stoppage and believes its relationship with
its employees to be good.
TAX SHARING AGREEMENT
PAI, through its ownership of 100% of the Company, currently beneficially
owns 100% of the stock of Park Broadcasting, Park Newspapers and their
respective subsidiaries. Each such corporation is, for federal income tax
purposes, part of the affiliated group of which PAI is the common parent, and
the results of operations of that affiliated group are reported in PAI's
consolidated federal income tax return. PAI and each member of its affiliated
group are parties to a tax sharing agreement pursuant to which, respectively,
Park Broadcasting and its subsidiaries and Park Newspapers and its
subsidiaries are obligated to make tax sharing payments to the Company in
amounts equal to the federal income taxes which Park Broadcasting and Park
Newspapers would have paid for such taxable year if each of Park Broadcasting
and Park Newspapers were the highest-tier common parent of a group of
includible corporations and filed separate consolidated tax returns for itself
and its subsidiaries. (Each group of companies composed of (i) Park
Broadcasting and its subsidiaries or (ii) Park Newspapers and its subsidiaries
is hereinafter called a "Subgroup," and each of Park Broadcasting and Park
Newspapers is called a "Subparent.") The tax sharing agreement also provides
that if any consolidated or combined state income tax return is filed by PAI
or the Company which includes income of the Park Broadcasting Subgroup or Park
Newspapers Subgroup, then Park Broadcasting and Park Newspapers each will be
obligated to make tax sharing payments to the Company in an amount equal to
the state income taxes which its respective Subgroup would have paid if it as
Subparent filed a consolidated or combined state income tax return for the
Subgroup with the respective state. The Company is permitted and obligated to
pay to PAI, or directly to the relevant taxing authority, the consolidated or
combined income tax liabilities of PAI's affiliated group for the taxable
year. Subject to certain exceptions, the Company may waive the requirement
that payments be made to it under the tax sharing agreement.
Tax sharing payments, to the extent owed and not waived, are required to be
made not later than the tenth day of April, June, September and December, as
well as not later than the fifth day prior to: PAI's filing of any
100
<PAGE>
consolidated or combined income tax return (including an amended return) or
PAI's payment of additional income tax pursuant to (i) an administrative
adjustment agreed with the Internal Revenue Service or applicable state taxing
authority or (ii) an unappealable final determination of a court of competent
jurisdiction.
The Indenture restricts the ability of the Company to amend the tax sharing
agreement.
While the tax sharing agreement will not increase the taxes payable by the
Company, to the extent that the Company receives tax sharing payments from
Park Broadcasting or Park Newspapers in excess of the amount it will be
required to pay to PAI, the Company may be better able to meet its non-tax
obligations, including those in respect of the Notes.
PROPERTIES
The Company's principal executive offices are located in leased premises in
Lexington, Kentucky. The Company owns certain other properties which are not
used in its business operations. These properties are generally leased to
unaffiliated third parties. The Company believes that its properties are
generally adequate for its operations, although opportunities to upgrade
facilities are continuously reviewed.
PARK BROADCASTING OPERATING PROPERTIES
The types of properties required to support each of Park Broadcasting's
television stations include offices, studios and tower and transmitter sites.
The stations transmit from antennas located on towers ranging from 801 feet to
2,320 feet above average terrain. In general, all of the buildings and tower
and transmitter sites are owned by Park Broadcasting.
The following table contains certain information describing the general
character of the properties used in Park Broadcasting's television operations,
including properties to be acquired pursuant to the Montgomery Acquisition:
<TABLE>
<CAPTION>
STATION LOCATION AND USE OWNED OR LEASED APPROXIMATE SIZE(A)
- ------- ----------------- --------------- -------------------
<S> <C> <C> <C>
WBMG-TV Office and Studio Owned 22,258 sq. ft.
Transmission Site Owned 22,258 sq. ft.(b)
Tower Owned 1,381 ft.
WTVR-TV Office and Studio Owned 31,000 sq. ft.
Transmission Site Owned 1,900 sq. ft.
Tower Owned 840 ft.
WSLS-TV Office and Studio Owned 30,000 sq. ft.
Transmission Site Owned 1,800 sq. ft.
Tower Owned 2,001 ft.
WTVQ-TV Office and Studio Owned(c) 20,000 sq. ft.
Transmission Site Owned(c) 20,000 sq. ft.(b)
Tower Owned 1,001 ft.
WDEF-TV Office and Studio Owned 26,812 sq. ft.
Transmission Site Owned 2,646 sq. ft.
Tower Owned 1,260 ft.
WJHL-TV Office and Studio Owned 20,000 sq. ft.
Transmission Site Owned(c) 1,400 sq. ft.
Tower Owned 2,320 ft.
WNCT-TV Office and Studio Owned 14,000 sq. ft.
Transmission Site Owned(c) 2,860 sq. ft.
Tower Owned(d) 1,880 ft.
</TABLE>
101
<PAGE>
<TABLE>
<CAPTION>
STATION LOCATION AND USE OWNED OR LEASED APPROXIMATE SIZE(A)
- ------- ----------------- --------------- -------------------
<S> <C> <C> <C>
WUTR-TV Office and Studio Owned 4,000 sq. ft.
Transmission Site Owned 4,000 sq. ft.(b)
Tower Owned 801 ft.
KALB-TV Office and Studio Owned 15,984 sq. ft.
Transmission Site Owned(c) 2,700 sq. ft.
Tower Owned(c) 1,591 ft.
WHOA-TV Office and Studio Leased 17,500 sq. ft.
Transmission Site Leased 1,960 sq. ft.
Tower Owned 1,788 ft.
</TABLE>
- --------
(a) Size of office and studio and transmission site refers to square footage
of property. Size of tower refers to its height in feet above average
terrain.
(b) Transmission site is located on same property as office and studio.
(c) Land at property is leased.
(d) Tower is owned jointly by Park Broadcasting and another entity in equal
proportions.
PARK NEWSPAPERS OPERATING PROPERTIES
Park Newspapers' daily newspaper operations, both production and
administration, are typically housed in one-story buildings in which the
Company uses from 8,200 to 35,860 square feet. Of the 28 daily newspaper
buildings, 27 are owned and one is leased under a lease expiring in 1998. All
of Park Newspapers' daily newspapers are printed on printing presses owned by
Park Newspapers. Park Newspapers owns and leases various other properties in
connection with its non-daily newspaper and shopper operations.
LEGAL PROCEEDINGS
The Company currently and from time to time is involved in litigation
incidental to the conduct of its business. There are no pending legal
proceedings to which the Company or any of its subsidiaries is a party, or to
which any of their respective properties is subject, which, in the opinion of
Company management, are likely to have a material adverse effect on the
Company's business or financial condition.
102
<PAGE>
MANAGEMENT
The following table sets forth, as of March 28, 1996, the names of the
directors and executive officers of the Company, their ages and their
positions with the Company:
<TABLE>
<CAPTION>
POSITION WITH
NAME AGE THE COMPANY
--------------------- --- ----------------------------
<S> <C> <C>
Ralph J. Martin 42 Vice President--
Newspaper Operations
W. Randall Odil 53 Vice President--
Television Operations
Rick A. Prusator 43 Vice President--Radio
Operations
Randel N. Stair 45 Vice President, Chief
Financial Officer, Treasurer
Wright M. Thomas 60 President and Chief
Operating Officer
Dr. Gary B. Knapp 52 Director
Donald R. Tomlin, Jr. 48 Director
</TABLE>
Each director of the Company holds office until the next annual meeting of
stockholders and until his successor has been elected and qualified. Officers
are elected by the Board of Directors and serve at its discretion.
Ralph J. Martin joined the Company in September 1995 as Vice President--
Newspaper Operations. Prior to joining the Company, Mr. Martin was employed
for 19 years by Thomson Newspapers, Inc., where he held various senior
management positions, including, most recently, President of Thomson
Newspapers/Eastern Group from 1993 to 1995 and Vice President of the Metro
Division from 1990 to 1993.
W. Randall Odil has been Vice President--Television Operations of the
Company since October 1986. From February 1982 to October 1986, he was Vice
President and General Manager of the Company's WSLS-TV station in Roanoke,
Virginia. Prior to February 1982, he was employed by WBKO-TV in Bowling Green,
Kentucky for 20 years in various positions, including Vice President--
Sales/Station Manager from 1978 to February 1982.
Rick A. Prusator has been Vice President--Radio Operations of the Company
since August 1991. From August 1989 to August 1991, he was Vice President of
Park Broadcasting--Western Radio Division. He was Vice President and General
Manager of the Company's WNAX-AM radio station in Yankton, South Dakota, from
February 1985 to August 1991. He was General Manager of KYNT/KKYA in Yankton,
South Dakota, from 1984 to February 1985. Prior to February 1984, he was
employed by Leighton Enterprises, Inc. from 1978 to December 1983, and was its
Vice President of Iowa operations from 1981 to December 1983.
Randel N. Stair has been Chief Financial Officer and Treasurer of the
Company since May 1994, Vice President since 1980. Mr. Stair served as
Controller of the Company from 1980 to 1995. Mr. Stair also serves as
Treasurer of Park Broadcasting and Park Newspapers. Prior to joining Park
Newspapers in 1979, Mr. Stair was employed by Multimedia, Inc. as Assistant
Corporate Controller.
Wright M. Thomas has been President and Chief Operating Officer of the
Company since July 1987. Mr. Thomas also serves as President of Park
Broadcasting and Park Newspapers. Mr. Thomas served as a director of the
Company from 1983 to 1995, Assistant Secretary from 1974 to 1995, Treasurer
from 1983 to 1994, Executive Vice President from 1986 to 1987, Senior Vice
President--Finance from 1979 to 1986, and Vice President--Finance from 1974 to
1979. Prior to joining the Company, he was employed by INA Corporation and
Coopers & Lybrand.
103
<PAGE>
Dr. Gary B. Knapp became a director of each of the Company, Park
Broadcasting and Park Newspapers in May 1995. Dr. Knapp has been a principal
of Knapp Securities, Inc., a firm offering investment advisory and consulting
services, since 1982.
Donald R. Tomlin, Jr. became a director of each of the Company, Park
Broadcasting and Park Newspapers in May 1995. Mr. Tomlin has been president of
Tomlin and Company, Inc., a financial services and asset management firm,
since December 1986.
Messrs. Knapp and Tomlin receive no compensation for serving as directors of
the Company. However, they are reimbursed for expenses incurred in acting in
such capacities.
SIGNIFICANT EMPLOYEES
The following table sets forth, as of March 28, 1996, the name and age of
the General Manager for each of Park Broadcasting's television stations:
<TABLE>
<CAPTION>
YEARS OF EMPLOYMENT POSITION WITH
NAME AGE WITH COMPANY PARK BROADCASTING
-------------------- --- ------------------- --------------------------
<S> <C> <C> <C>
Hoyle S. Broome, Jr. 50 26 Vice President--General
Manager of WBMG-TV,
Birmingham, Alabama
D. Christopher 38 7 Vice President--General
Aldridge Manager of WTVQ-TV,
Lexington, Kentucky
Lesley E. Golmon 53 3 Vice President--General
Manager of KALB-TV,
Alexandria, Louisiana
Paul R. Kennedy 42 12 Vice President--General
Manager of WUTR-TV,
Utica, New York
Edward J. Adams 55 11 Vice President--General
Manager of WNCT-TV,
Greenville, North Carolina
Gary M. Andrich 43 8 Vice President--General
Manager of WDEF-TV,
Chattanooga, Tennessee
Jack D. Dempsey 45 11 Vice President--General
Manager of WJHL-TV,
Johnson City, Tennessee
Marcus G. Keown 55 9 Vice President--General
Manager of WTVR-TV,
Richmond, Virginia
Randall J. Smith 42 4 Vice President--General
Manager of WSLS-TV,
Roanoke, Virginia
</TABLE>
Hoyle S. Broome, Jr. has been Vice President--General Manager of Park
Broadcasting's WBMG-TV station in Birmingham, Alabama since 1981 and was an
Account Executive from 1976 until 1981. He was employed by Park Broadcasting's
WUTR-TV station from 1970 to 1976 in various positions, including Vice
President--Operations and Business Manager.
104
<PAGE>
D. Christopher Aldridge has been Vice President--General Manager of Park
Broadcasting's WTVQ-TV station in Lexington, Kentucky since January 1992 when
the Company purchased the station. From December 1989 to January 1992, he was
General Sales Manager at Park Broadcasting's WDEF-TV station in Chattanooga,
Tennessee. Prior to joining Park Broadcasting, he was General Sales Manager at
WTXL-TV in Tallahassee, Florida from April 1984 to December 1989. Prior to
1989, he was Local Sales Manager at WGGT-TV in Greensboro, North Carolina.
Lesley E. Golmon has been Vice President--General Manager of Park
Broadcasting's KALB-TV station in Alexandria, Louisiana since 1988. He has
been employed at the station since 1961 in various positions, including
Account Executive and Controller.
Paul R. Kennedy has been Vice President--General Manager of Park
Broadcasting's WUTR-TV station in Utica, New York since 1988 and was its
General Sales Manager from 1986 to 1988. He also was an Account Executive at
WUTR-TV from 1984 to 1986.
Edward J. Adams has been Vice President--General Manager of Park
Broadcasting's WNCT-TV station in Greenville, North Carolina since January,
1988. Mr. Adams was Vice President--General Manager of Park Broadcasting's
WUTR-TV station in Utica, New York from 1985 through 1987. Prior to September
1985, he was employed by WFMJ-TV in Youngstown, Ohio for 16 years in various
positions including General Manager from 1981 to 1985.
Gary M. Andrich has been Vice President--General Manager of Park
Broadcasting's WDEF-TV station in Chattanooga, Tennessee since November 1994.
From March 1988 until November 1994, he was General Sales Manager of Park
Broadcasting's WBMG-TV station in Birmingham, Alabama. Prior to joining Park
Broadcasting, he was associated with other television stations, in various
positions.
Jack D. Dempsey has been Vice President--General Manager of Park
Broadcasting's WJHL-TV station in Johnson City, Tennessee, since May 1989 and
was its General Sales Manager from August 1985 to May 1989. Prior to 1985, he
was General Sales Manager at WOWK-TV in Huntington, West Virginia.
Marcus G. Keown has been Vice President--General Manager of Park
Broadcasting's WTVR-TV station in Richmond, Virginia since December 1994. From
April 1987 to November 1994, he was Vice President--General Manager of Park
Broadcasting's WDEF-TV station in Chattanooga, Tennessee. From 1984 to 1987,
he was General Manager of WTXL-TV in Tallahassee, Florida, and from 1980 to
1984 he was the Local Sales Manager and National Sales Manager at WSOC-TV in
Charlotte, North Carolina.
Randall J. Smith has been Vice President--General Manager of Park
Broadcasting's WSLS-TV station in Roanoke, Virginia since October 1994. He
also served as General Sales Manager of WSLS-TV from December 1992 to October
1994. From 1991 to 1992, he was Local Sales Manager at WEAR-TV in Pensacola,
Florida. Prior to such time, he held various positions in the broadcasting
industry since 1980.
The following table sets forth, as of March 28, 1996, the names and ages of
the Regional Managers of Park Newspapers' operations:
<TABLE>
<CAPTION>
YEARS OF EMPLOYMENT POSITION WITH
NAME AGE WITH COMPANY PARK NEWSPAPERS
------------------- --- ------------------- --------------------------
<C> <C> <C> <S>
Tim Dearman 43 33 Mid-Atlantic West Region
Manager
John Kennedy 59 40 Mid-Atlantic East Region
Manager
David E. Thornberry 30 1 Ohio Valley Region Manager
Paul E. Semple 38 17 Mid-Western Region Manager
Thomas N. Ceravolo 64 40 Eastern Region Manager
Charles S. Lake 61 40 Western Region Manager
</TABLE>
105
<PAGE>
Tim Dearman has been General Manager of the Statesville Record & Landmark
since 1985. He started with the newspaper as a paperboy at age 10, and has
since worked in every department. He has been the Mid-Atlantic Western
Regional Manager of Park Newspapers since 1986.
John Kennedy has been General Manager of The Concord Tribune since 1987 and
The Daily Independent of Kannapolis since January 1996. He joined The Concord
Tribune in 1956 and has served in various positions. He has been Mid-Atlantic
Eastern Regional Manager of Park Newspapers since 1986.
David E. Thornberry has been General Manager of The Morehead News and
Regional Manager of the Ohio Valley Group since January 1996. Prior to joining
Park Newspapers, he was Division Publisher of Wyoming Newspapers, Inc. from
1989 to 1995, and also served various management roles for the its parent
company, News Media Corporation from 1985 to 1995.
Paul E. Semple has been General Manager of the Effingham Daily News since
1993 and Mid-Western Regional Manager of Park Newspapers since 1995. He has
been with the paper since 1979, serving as Business Manager from 1979 to 1985
and Controller from 1986 to 1992.
Thomas N. Ceravolo has been with the Lockport Union-Sun & Journal since
1956. He served as General Manager of WUSJ Radio until 1970, and became
Assistant to the Publisher of the paper in 1970. He became General Manager of
Park Newspapers' Lockport paper and Eastern Regional Manager in 1986.
Charles S. Lake has been General Manager of the Sapulpa Daily Herald since
1979. He has been Western Division Manager of Park Newspapers since 1995. Mr.
Lake has been associated with the Sapulpa Daily Herald for 40 years in various
positions.
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for services in all capacities rendered to the Company for the
fiscal years ended December 31, 1995, 1994 and 1993 of (i) Wright M. Thomas,
President and Chief Operating Officer of the Company, (ii) the other three
most highly compensated executive officers of the Company at December 31, 1995
whose aggregate 1995 salary and bonus exceeded $100,000 and (iii) Robert J.
Rossi, who served as Vice President--Newspaper Operations of the Company until
July 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------
NAME AND
PRINCIPAL POSITION YEAR SALARY(A) BONUS
----------------------- ---- ----------- ---------
<S> <C> <C> <C>
Wright M. Thomas 1995 $ 252,226(b) $ 140,125
President and Chief 1994 241,384(b) --
Operating Officer 1993 184,440(b) --
W. Randall Odil 1995 $ 177,492 $ 306,250(c)
Vice President - 1994 165,972 58,911
Television Operations 1993 162,150 25,799
Rick A. Prusator 1995 $ 134,898 $ 157,254(c)
Vice President-- 1994 126,074 21,071
Radio Operations 1993 110,212 3,609
Randel N. Stair 1995 $ 131,306 $ 157,450(c)
Vice President and 1994 126,621 10,000
Chief Financial Officer 1993 122,258 --
Robert J. Rossi 1995 $ 110,296 $ 170,000(c)
Former Vice President-- 1994 162,589 36,999
Newspaper Operations 1993 162,630 --
</TABLE>
106
<PAGE>
- --------
(a) The amounts shown are after voluntary salary reductions associated with
the election to treat health insurance premiums on a pre-tax basis.
(b) Pursuant to a deferred compensation arrangement with the Company, Mr.
Thomas may elect to defer a portion of his annual salary, not to exceed
the greater of $30,000 or 25% of his salary. Such deferred compensation is
payable with interest in installments upon retirement or termination of
employment. Such deferred compensation is included in the amount shown.
(c) The amount shown includes $175,000, $135,000, $134,000 and $170,000 paid
to Messrs. Odil, Prusator, Stair and Rossi, respectively, under the
Company's Retention Incentive Plan following the acquisition of the
Company by PAI in May 1995. See "Employment and Severance Arrangements"
below.
PENSION PLAN
W. Randall Odil was a participant in a pension plan during 1993, 1994 and
1995 of one of the Company's subsidiaries, Roy H. Park Broadcasting of
Roanoke, Inc., where he was formerly employed. The Pension Plan Table below
shows his estimated annual benefits payable under the plan at retirement,
based on estimated levels of the average final salary and years of service.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------
AVERAGE
FINAL SALARY 10 YRS 15 YRS 20 YRS 25 YRS
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 20,000 $ 4,000 $ 6,000 $ 8,000 $10,000
40,000 8,000 12,000 16,000 20,000
60,000 12,000 18,000 24,000 30,000
80,000 16,000 24,000 32,000 40,000
100,000 20,000 30,000 40,000 50,000
120,000 24,000 36,000 48,000 60,000
</TABLE>
The annual pension benefits to be awarded to Mr. Odil under the plan will be
based on Mr. Odil's average annual salary during his employment with the
Company. For purposes of determining Mr. Odil's benefits under the plan, the
average annual salary computation assumes that Mr. Odil would be compensated
as if he were still an employee of Roy H. Park Broadcasting of Roanoke, Inc.,
and is not based upon his compensation as set forth in the Summary
Compensation Table. Based upon the foregoing assumption, his salary would be
$115,209 as of December 31, 1995, and he has 13 years of credited service. The
benefits in the Pension Plan Table are computed based on straight-life annuity
amounts and are not subject to any deductions for Social Security or any other
offset amounts.
The Company is obligated to pay a supplemental retirement benefit to Mr.
Odil in the event of premature termination of his employment before earning a
full retirement benefit. The benefit would be paid in one of three ways, as
elected by Mr. Odil. The cost of the benefit under each method of payment
would be the same and would be approximately $190,000 if Mr. Odil's employment
terminated in 1996.
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
Effective July 1, 1994, the Company entered into an employment agreement
with Wright M. Thomas which provides for (i) an annual salary of $250,000 for
three years and (ii) a non-competition/consulting period commencing on the
earlier of July 1, 1997 or termination of Mr. Thomas' employment for specified
reasons, and ending on June 30, 2000, with a fee of $100,000 per year payable
in monthly increments commencing on the earlier of July 1, 1997 or, following
termination of Mr. Thomas' employment for specified reasons, on the date Mr.
Thomas obtains other employment. In the event of termination of Mr. Thomas'
employment for specified reasons, Mr. Thomas will be paid an amount equal to
his salary under the agreement for the period ending on the earlier June 30,
1997 or the date Mr. Thomas obtains other employment. The specified reasons
for termination of employment include termination by the Company other than
for cause and resignation following a change in circumstances that
significantly diminish Mr. Thomas' position with the Company.
107
<PAGE>
Pursuant to a contingent retirement agreement, Wright M. Thomas is entitled
to receive certain payments in the event of retirement at age 65 if he is then
employed by, or providing consulting services under his employment contract
to, the Company. The annual amount of such payments will be 50% of his average
net salary during the five-year period immediately preceding retirement (not
including any consulting period), less the annual amount of retirement income
payable to him under the federal Social Security Act or any other similar plan
which is a substitute for that Act that may be established under federal law.
Net salary, for this purpose, means Mr. Thomas' annual gross salary less
amounts withheld from such salary for the payment of Social Security and other
federal or state taxes (other than income taxes). Although his future salary
cannot be predicted with certainty, if the payments under this plan would have
been based on his salary during the previous five years, such payments would
be approximately $84,000 per year during his lifetime.
Pursuant to PCI's Retention Incentive Plan, Messrs. Odil, Prusator, Stair
and Rossi received a bonus of $175,000, $135,000, $134,000 and $170,000,
respectively, as a result of their being employed by the Company on the date
PAI acquired the Company. Under this plan, Messrs. Odil and Stair are also
entitled to severance benefits if, prior to May 11, 1997, (i) the officer's
employment is involuntarily terminated other than for cause or (ii) the
officer refuses a position that is not comparable to the officer's current
position. The severance benefit would be the greater of the officer's annual
salary or one-twelfth of his annual salary for each year of service.
In June 1995, the Company and Robert J. Rossi, a former executive officer of
the Company, entered into a consulting and non-competition agreement, under
which Mr. Rossi has agreed to provide up to 50 days of consulting services to
the Company during the 12-month period ending in June 1996, for which the
Company has agreed to pay to Mr. Rossi an aggregate of $50,000, with payments
commencing in January 1996. Under the agreement, the Company has also agreed
to compensate Mr. Rossi at the rate of $1,000 per day for each day worked in
excess of 50 days during the 12-month period.
In December 1995, in connection with the sale of the Radio Station Assets,
the Company entered into a compensation arrangement with Rick A. Prusator,
Vice President--Radio Operations, which provides that, through December 1997,
the Company will continue to (i) pay Mr. Prusator his base salary of $139,000
per year regardless of whether Mr. Prusator remains employed by the Company or
secures other employment and (ii) provide health insurance coverage until Mr.
Prusator secures other employment. The Company has also agreed to purchase Mr.
Prusator's home in Kentucky should Mr. Prusator so elect. Additionally, upon
completion of the sale of the Radio Station Assets, or, at the discretion of
the Company, upon substantial completion of such sale, the Company has agreed
to pay Mr. Prusator a $250,000 bonus. However, Mr. Prusator will not be
entitled to receive such bonus if he retires or resigns prior to substantial
completion of the sale of the Radio Station Assets or his employment is
terminated for cause.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, the following former directors served as members of the
Compensation Committee of the Board of Directors of the Company: John F.
McNair III, former President of Wachovia Bank and Trust Company of North
Carolina, N.A., and the Honorable Senator Harry F. Byrd, Jr. of Virginia. In
addition, Dorothy D. Park, a former director, served as an ex-officio member
of the Compensation Committee. The Board of Directors currently has no
Compensation Committee and compensation matters are decided by the two current
directors. There were no interlocking relationships between members of the
Compensation Committee and directors or officers of the Company.
During the fiscal years ended December 31, 1995, 1994 and 1993, the Company
leased certain operating facilities and equipment from RHP Incorporated
("RHP"), which was wholly owned by the estate of Roy H. Park, by Mr. Park's
widow, Dorothy D. Park, and by a marital trust for the benefit of Mrs. Park.
Until his death in October 1993, Mr. Park was Chairman of the Board, Chief
Executive Officer and the majority stockholder of the Company. In November
1993, Mrs. Park became Chairman of the Board of the Company and, in her
capacity as personal representative of the Estate of Roy H. Park, controlled
the shares of common stock of the Company formerly owned by Mr. Park until May
1995. Each of Mrs. Park, Roy H. Park, Jr. and Wright M. Thomas was a director
and officer of RHP. Such lease payments to RHP were $207,000, $977,000 and
$1,265,000 in 1995, 1994 and 1993, respectively. On November 30, 1994, the
Company purchased ten previously leased properties and one tower from RHP for
$4,415,000. The price paid for these properties was based on independent
appraisals.
108
<PAGE>
In addition, in 1994 and 1993, the Company placed promotional advertising
through Agricultural Advertising and Research, Inc. ("AAR"), which is a
division of RHP. For such placements AAR received the standard advertising
discount given by the media on advertising placed, and refunded up to two-
thirds of the discount to the Company. Such net advertising discounts retained
by RHP were $46,515 and $42,933 in 1994 and 1993, respectively. During 1994,
the Company's radio stations in Syracuse, New York paid $85,298 for
advertising to Park Outdoor Advertising of New York, Inc., a company
controlled by Roy H. Park, Jr.
CERTAIN TRANSACTIONS
In connection with the relocation of the Company's headquarters in 1995 from
New York to Kentucky, the Company purchased the homes of Messrs. Thomas, Odil,
Prusator and Stair in New York for $176,950, $325,425, $126,667 and $175,667,
respectively, and reimbursed such individuals for certain moving expenses
incurred. The purchase price for each of the homes was based on the average of
three independent appraisals of each house. Each of Messrs. Thomas, Odil,
Prusator and Stair also received $5,000 from the Company to assist in locating
and purchasing a new home in Kentucky. Such payments and the reimbursement of
relocation expenses were made available to all Company employees who relocated
to Kentucky and who purchased a home.
PAI and each of its direct subsidiaries (including the Company) are parties
to a management services agreement pursuant to which the Company will pay to
PAI for management advisory services $250,000 (of which $125,000 will be
contributed by each of Park Broadcasting and Park Newspapers and their
respective subsidiaries) on the business day after each semiannual interest
payment date on the Notes; provided that such payments will not be due or made
unless all accrued interest on the Notes, the Broadcasting Notes and the
Newspapers Notes due on such semiannual interest payment date has been paid in
cash and no default or event of default has occurred and is continuing on any
such Notes at the time of such payment.
On June 11, 1996, the Company loaned $300,000 to each of Gary B. Knapp and
the Tomlin Family Trust II, the Company's stockholders. Dr. Knapp and Donald
R. Tomlin, Jr., a trustee of the Tomlin Family Trust II, are directors of the
Company. Such loans are payable in full on demand by the Company and bear
interest at 7.75% per annum.
109
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
PAI owns all of the outstanding Common Stock of the Company. Neither the
Company nor PAI has a class of equity or voting securities other than common
stock. PAI has an authorized class of non-voting common stock. The address of
PAI is 1700 Vine Center Office Tower, 333 West Vine Street, Lexington,
Kentucky 40507. Except as set forth below, no director or executive officer of
the Company beneficially owns or is deemed to beneficially own any shares of
common stock (voting or non-voting) of any of the Company, any subsidiary of
the Company (including Park Broadcasting and Park Newspapers) or PAI.
The following table sets forth information as of June 14, 1996 concerning
the beneficial ownership of the outstanding shares of common stock of PAI:
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
---------------------------- ------------------- ----------------
<S> <C> <C>
Gary B. Knapp(a) 100 50%
333 West Vine Street,
#300
Lexington, KY 40507
Tomlin Family Trust II(b) 100 50%
1401 Main Street, Suite 825
Columbia, SC 29201
</TABLE>
- --------
(a) Mr. Knapp is a director of the Company and a
director and officer of PAI.
(b) Donald R. Tomlin, Jr., 1401 Main Street, Suite 825, Columbia, SC 29201, a
director of the Company and a director and officer of PAI, is a trustee of
the Tomlin Family Trust II.
All of the outstanding shares of common stock of each of Park
Communications, Inc., Park Newspapers, Park Broadcasting and the subsidiaries
of Park Broadcasting (other than the subsidiary which holds the Radio Station
Assets relating to stations KEZX-AM and KWJZ-FM) are pledged to secure
indebtedness under the Senior Credit Facility.
110
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
SALES OF RADIO STATION ASSETS; SENIOR CREDIT FACILITY
Park Broadcasting is in the process of selling the Radio Station Assets and
discontinuing its radio broadcasting operations. As of May 6, 1996, the sale
of two radio stations had been completed resulting in gross proceeds to the
Company of $103.0 million, of which $100.5 million was used to pay principal
and interest on the Prior Term Loan.
As of May 6, 1996, Park Broadcasting had entered into definitive agreements
with prospective purchasers for the sale of all of its remaining Radio Station
Assets. Between May 6, 1996 and June 14, 1996, the Company had sold 12 of its
radio stations (KEZX-AM, KWJZ-FM, WNCT-AM and FM, WTVR-AM and FM, WNLS-AM,
WTNT-FM, WHEN-AM and FM and WNAX-AM and FM) for aggregate gross proceeds to
the Company of $62.0 million, of which $35.8 million was used to pay principal
and interest due under the Senior Credit Facility. The aggregate proceeds from
the sale of the remaining Radio Station Assets are currently expected to be
$68.2 million, before deducting expenses relating to the sale of such
remaining Radio Station Assets estimated to be $0.8 million and income taxes
resulting from such sales estimated to be $23.0 million.
Consummation of the sales of the remaining Radio Station Assets is subject
to the satisfaction of customary conditions, including approval of transfer of
the broadcasting licenses by the FCC. Although there can be no assurance that
the sale of the remaining Radio Station Assets will occur, Park Broadcasting
currently contemplates that the sale of four of its eight remaining individual
radio stations will be completed by June 30, 1996, the sale of an additional
two of its individual radio stations will be completed by July 31, 1996 and
the sale of its last two individual radio stations will be completed by August
31, 1996. In order to permit payment in full of the Prior Term Loan
simultaneously with the closing of the offering of the Units, the Broadcasting
Notes and the Newspapers Notes, certain lenders extended to the Company the
Senior Credit Facility in an amount equal to $58.0 million. The Senior Credit
Facility bears interest at a rate per annum equal, at the Company's option, to
Adjusted LIBOR (as defined in the Senior Credit Facility) plus an applicable
margin or the Alternate Base Rate (as defined in the Senior Credit Facility)
plus an applicable margin. The Senior Credit Facility matures on November 13,
1996 and may be extended for an additional six months on the satisfaction of
certain conditions. At June 14, 1996, the outstanding principal amount due
under the Senior Credit Facility was $22.2 million.
The Senior Credit Facility is guaranteed by Park Broadcasting and each
direct or indirect subsidiary of Park Broadcasting, whether presently existing
or thereafter created or acquired, other than the subsidiary which held the
Radio Station Assets relating to stations KEZX-AM and KWJZ-FM in Seattle,
Washington (such subsidiaries, the "Guarantors"). The Senior Credit Facility
and the guarantee obligations are secured by a lien on the assets of the
Guarantors and by pledges of the capital stock of the Company, Park
Broadcasting, Park Newspapers and the Guarantors. The Senior Credit Facility
provides for the release of any security interest in capital stock or assets
to be sold after May 13, 1996 simultaneously with the consummation of such
sale.
In addition, the Senior Credit Facility contains various covenants that
limit, among other things, mergers, acquisitions and asset sales,
indebtedness, liens, dividends on and issuances of capital stock of the
Company's subsidiaries, creation or acquisition of additional subsidiaries,
amendments to debt or other capitalization documents (including amendments to
the Indenture), prepayments of debt (including prepayments of the Notes), any
cash payments of interest on the Notes, transactions with affiliates and
certain other business activities. The Senior Credit Facility also contains
certain financial covenants, including a Consolidated Total Debt to
Consolidated EBITDA ratio and a Consolidated EBITDA to Consolidated Cash
Interest Expense Ratio (such terms as defined in the Senior Credit Facility)
determined, in each case, for the Company and its Subsidiaries.
The Senior Credit Facility ranks senior to any other indebtedness of the
Company (including the Notes) to the extent of the assets securing the Senior
Credit Facility; pari passu with all existing and future senior unsecured
indebtedness of the Company (including the Notes); and senior in right of
payment to all existing and future subordinated indebtedness of the Company.
111
<PAGE>
Mandatory prepayments are required to be made under the Senior Credit
Facility from the proceeds of any sale or disposition of any assets (other
than KEZX-AM and KWJZ-FM) by the Company or any of its subsidiaries; certain
excess cash flow of the Guarantors; the proceeds of sales or issuances of
equity securities by the Company or any of its subsidiaries and the proceeds
from the incurrence of indebtedness by the Company or its subsidiaries on or
after May 13, 1996 (other than in connection with the Refinancing Transactions
and certain other permitted indebtedness).
The Senior Credit Facility provides for events of default, which include the
termination or renewal on material adverse terms of any broadcast license,
interruption of broadcasting operations, repudiation of any material provision
of any agreement of sale of Radio Station Assets owned by any of the
Guarantors, or an injunction with respect to any sale of Radio Station Assets
owned by any of the Guarantors occurring after May 13, 1996, payment defaults,
breach of representations and warranties, covenant defaults, cross-defaults to
certain other indebtedness, certain events of bankruptcy and insolvency, ERISA
events, judgment defaults, failure of any guaranty or security agreement
supporting the Senior Credit Facility to be in full force and effect and
change of control of the Company.
SENIOR NOTES OF PARK BROADCASTING
Simultaneously with the sale of Units, Park Broadcasting offered and sold
the Broadcasting Notes. The Broadcasting Notes were issued pursuant to an
Indenture dated as of May 13, 1996 between Park Broadcasting and IBJ Schroder
Bank & Trust Company, as Trustee (the "Broadcasting Indenture"). Interest on
the Broadcasting Notes is payable semi-annually at a rate of 11.75% per annum,
and the Broadcasting Notes mature on May 15, 2004. The Broadcasting Notes were
issued at a discount to result in an effective yield to maturity of 12.25%.
The Broadcasting Notes are redeemable on or after May 15, 2001 at a
redemption premium of 6.0% in excess of par, declining ratably to par at
maturity, plus, in each case, accrued and unpaid interest to the date of
redemption. In addition, at any time prior to May 15, 1999, Park Broadcasting
has the right to redeem up to 35% of the original principal amount of the
Broadcasting Notes with the net proceeds of certain public equity offerings or
strategic equity investments at 111.75% of the aggregate principal amount
thereof plus accrued and unpaid interest to the date of redemption; provided
that not less than $155.0 million in principal amount of Broadcasting Notes is
outstanding immediately after giving effect to such redemption (other than
Broadcasting Notes held by Park Broadcasting or any of its affiliates).
The Broadcasting Indenture contains change of control provisions similar to
those applicable to the Notes requiring Park Broadcasting to offer to
repurchase the Broadcasting Notes upon a change of control triggering event,
which includes both a change of control and a rating decline.
Park Broadcasting also is required to offer to repurchase Broadcasting Notes
at 100% of their principal amount plus accrued and unpaid interest to the date
of redemption in the event that the net proceeds of certain asset sales of
Park Broadcasting or its restricted subsidiaries are not used within 360 days
after the occurrence of such sales to permanently reduce senior debt of Park
Broadcasting and/or to make an investment in or acquire assets directly
related to, the same lines of business being conducted by Park Broadcasting or
such restricted subsidiary.
The Broadcasting Indenture imposes certain limitations on the ability of
Park Broadcasting and its restricted subsidiaries to, among other things, (i)
incur additional indebtedness, (ii) pay dividends or make certain other
restricted payments, (iii) restrict the ability of a restricted subsidiary to
pay dividends or make certain payments to Park Broadcasting, (iv) consummate
certain asset sales, (v) enter into certain transactions with affiliates, (vi)
incur liens securing certain indebtedness, (vii) merge or consolidate with any
other person or (viii) sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the assets of Park Broadcasting. In
particular, with respect to restricted payments, the Broadcasting Indenture
provides that, subject to certain exceptions, unless certain conditions are
satisfied, Park Broadcasting and its restricted subsidiaries are not
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permitted to pay any dividend or other distribution on any capital stock
(other than dividends or distributions payable solely in capital stock which
is not disqualified stock); make any payment to acquire or retire for value
any capital stock of Park Broadcasting or any of its affiliates (other than
capital stock owned by Park Broadcasting or any wholly-owned restricted
subsidiary); make any payment to acquire or retire for value any indebtedness
which is subordinated in right of payment to the Broadcasting Notes (other
than certain permitted refinancings); or make certain investments. Such
restricted payments (which would include dividends and distributions to the
Company) are permitted, subject to certain exceptions, only if (i) no default
or event of default has occurred and is continuing under the Broadcasting
Indenture, (ii) Park Broadcasting (x) prior to December 31, 1997 has a debt to
operating cash flow ratio of not more than 6.25:1 and (y) thereafter could
incur at least $1.00 of additional indebtedness in accordance with the
leverage ratio debt incurrence covenant of the Broadcasting Indenture and
(iii) the aggregate amount of all restricted payments made since the date of
original issuance of the Broadcasting Notes does not exceed the sum of (a)
Park Broadcasting's Cumulative Operating Cash Flow less 1.4 times its
Cumulative Consolidated Interest Expense (each as defined in the Broadcasting
Indenture) plus (b) the aggregate net proceeds received by Park Broadcasting
after such date of original issuance from certain issuances of capital stock.
See "Risk Factors--Holding Company Structure; Dependence on Cash Flow from
Subsidiaries; Effective Subordination of the Notes." Payments of principal and
interest on the Senior Credit Facility, whether from the proceeds of asset
sales or otherwise, are, subject to certain conditions, permitted by the
Broadcasting Indenture.
Events of default under the Broadcasting Indenture include, among other
things, payment defaults, covenant defaults, cross-defaults to certain other
indebtedness, judgment defaults and certain events of bankruptcy and
insolvency.
SENIOR NOTES OF PARK NEWSPAPERS
Simultaneously with the sale of Units, Park Newspapers offered and sold the
Newspapers Notes. The Newspapers Notes were issued pursuant to an Indenture
dated as of May 13, 1996 between Park Newspapers and IBJ Schroder Bank & Trust
Company, as Trustee (the "Newspapers Indenture"). Interest on the Newspapers
Notes is payable semi-annually at a rate of 11.875% per annum, and the
Newspapers Notes mature on May 15, 2004.
The Newspapers Notes are redeemable on or after May 15, 2001 at a redemption
premium of 5.938% in excess of par, declining ratably to par at maturity,
plus, in each case accrued and unpaid interest to the date of redemption. In
addition, at any time prior to May 15, 1999, Park Newspapers has the right to
redeem up to $50.0 million of the aggregate principal amount of the Newspapers
Notes with the net proceeds of certain public equity offerings or strategic
equity investments at 111.875% of the aggregate principal amount plus accrued
but unpaid interest to the date of redemption; provided that not less than
$100.0 million in principal amount of Newspapers Notes is outstanding
immediately after giving effect to such redemption (other than Newspapers
Notes held by Park Newspapers or any of its affiliates).
The Newspapers Indenture contains change of control provisions similar to
those applicable to the Notes requiring Park Newspapers to offer to repurchase
the Newspapers Notes upon a change of control triggering event, which includes
both a change of control and a ratings decline.
Park Newspapers also is required to offer to repurchase Newspapers Notes at
100% of their principal amount plus accrued and unpaid interest to the date of
redemption in the event that the net proceeds of certain asset sales of Park
Newspapers or its restricted subsidiaries are not used within 360 days after
the occurrence of such sales to permanently reduce senior debt of Park
Newspapers and/or to make an investment in or acquire assets directly related
to, the same lines of business being conducted by Park Newspapers or such
restricted subsidiary.
The Newspapers Indenture imposes certain limitations on the ability of Park
Newspapers and its restricted subsidiaries to, among other things, (i) incur
additional indebtedness, (ii) pay dividends or make certain
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other restricted payments, (iii) restrict the ability of a restricted
subsidiary to pay dividends or make certain payments to Park Newspapers, (iv)
consummate certain asset sales, (v) enter into certain transactions with
affiliates, (vi) incur liens securing certain indebtedness, (vii) merge or
consolidate with any other person or (viii) sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of the assets of Park
Newspapers. In particular, with respect to restricted payments, the Newspapers
Indenture provides that, subject to certain exceptions, unless certain
conditions are satisfied, Park Newspapers and its restricted subsidiaries are
not permitted to pay any dividend or other distribution on any capital stock
(other than dividends or distributions payable solely in capital stock which
is not disqualified stock); make any payment to acquire or retire for value
any capital stock of Park Newspapers or any of its affiliates (other than
capital stock owned by Park Newspapers or any wholly-owned restricted
subsidiary); make any payment to acquire or retire for value any indebtedness
which is subordinated in right of payment to the Newspapers Notes (other than
certain permitted refinancings); or make certain investments. Such restricted
payments (which would include dividends and distributions to the Company) are
permitted, subject to certain exceptions, only if (i) no default or event of
default has occurred and is continuing under the Newspapers Indenture, (ii)
Park Newspapers could incur at least $1.00 of additional indebtedness in
accordance with the leverage ratio debt incurrence covenant of the Newspapers
Indenture and (iii) the aggregate amount of all restricted payments made since
the date of original issuance of the Newspapers Notes does not exceed the sum
of (a) 50% of Park Newspapers' aggregate cumulative Consolidated Net Income
(as defined in the Newspapers Indenture) plus (b) the aggregate net proceeds
received by Park Newspapers after such date of original issuance from certain
issuances of capital stock. See "Risk Factors--Holding Company Structure;
Dependence on Cash Flow from Subsidiaries; Effective Subordination of the
Notes." Payments of principal and interest on the Senior Credit Facility,
whether from the proceeds of asset sales or otherwise, are, subject to certain
conditions, permitted by the Newspapers Indenture.
Events of default under the Newspapers Indenture include, among other
things, payment defaults, covenant defaults, cross-defaults to certain other
indebtedness, judgment defaults and certain events of bankruptcy and
insolvency.
SENIOR CREDIT FACILITIES OF PARK BROADCASTING AND PARK NEWSPAPERS
It is contemplated that Park Broadcasting and Park Newspapers will each have
commitments for a senior revolving credit facility in an amount not to exceed
$15.0 million and $10.0 million, respectively, for future working capital and
general corporate purposes (the execution and delivery of which will be
subject to negotiation of satisfactory documentation and other customary
conditions). Under the terms of the Senior Credit Facility, Park Broadcasting
will be permitted to borrow not more than $4.0 million under its New Credit
Agreement during the one-year period ending on May 13, 1997, and Park
Newspapers will not be permitted to borrow any funds under its New Credit
Agreement, until such time as all indebtedness under the Senior Credit
Facility has been repaid. Park Broadcasting's revolving loan is expected to
bear interest at a rate per annum equal, at Park Broadcasting's option, to
Adjusted LIBOR plus an applicable margin or the Alternate Base Rate plus an
applicable margin. Park Newspapers' revolving loan is expected to bear
interest at a rate per annum equal, at Park Newspapers' option, to Adjusted
LIBOR plus an applicable margin or the Alternate Base Rate plus an applicable
margin.
The revolving credit facilities are expected to be guaranteed by each of the
direct or indirect subsidiaries of the borrower thereunder (other than, in the
case of Park Broadcasting, the Guarantors which own only Radio Station
Assets). The obligations under the revolving credit facilities are expected to
be secured by a lien on the assets of the respective guarantors thereunder and
by pledges of the capital stock of the guarantors thereunder.
In addition, it is anticipated that the revolving credit facilities will
contain various covenants that limit, among other things, subject to certain
exceptions, restricted payments and investments, mergers, acquisitions and
asset sales, indebtedness, liens, dividends on and issuance of capital stock
of the borrower's subsidiaries, creation or acquisition of additional
subsidiaries, amendments to debt or other capitalization documents,
prepayments of debt, transactions with affiliates and certain other business
activities. The revolving credit facilities will also contain certain
financial covenants, including a Total Debt to EBITDA ratio, an EBITDA to
Fixed Charge Ratio, an EBITDA to Cash Interest Expense ratio and a limit on
the amount of Capital Expenditures which the borrower may make (all such terms
as defined in the respective revolving credit facility).
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Mandatory prepayments will be required to be made under each of the
revolving credit facilities from the net cash proceeds from any sale or
disposition of any assets of the borrower or guarantors thereunder not
reinvested in the business of such borrower within twelve months of such sale
or, with respect to Park Broadcasting, used to repay the Senior Credit
Facility and, following repayment of all obligations under the Senior Credit
Facility, from any sale or issuance of equity by the borrower thereunder.
The revolving credit facilities are expected to provide for events of
default, which may include payment defaults, breach of representations and
warranties, covenant defaults, cross-defaults to certain other indebtedness,
certain events of bankruptcy and insolvency, ERISA events, environmental
events, failure of any guaranty or security agreement supporting the revolving
credit facilities to be in force and effect, change of control of the borrower
thereunder, and, in the case of Park Broadcasting, the termination, or renewal
on material adverse terms, of any broadcast license and interruption of
broadcast operations.
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DESCRIPTION OF THE UNITS
The Units were issued under a Unit Agreement dated as of May 13, 1996 (the
"Unit Agreement") by and between the Company and IBJ Schroder Bank & Trust
Company, as Unit Agent (the "Unit Agent"). Each Unit consists of $1,000
principal amount of Notes and ten Initial Warrants, each Initial Warrant
entitling the holder thereof to purchase initially one share of Common Stock
of the Company. The Notes and Initial Warrants will not be separately
transferable until the Separability Date, which shall be the earliest of (i)
November 15, 1996, (ii) the date on which the Registration Statement of which
this Prospectus is a part is declared effective under the Securities Act,
(iii) the occurrence of an Exercise Event, (iv) the occurrence of an Event of
Default under the Indenture, or (v) such earlier date as determined by Merrill
Lynch, Pierce, Fenner & Smith Incorporated in its discretion. At such time,
the Units will cease to exist.
DESCRIPTION OF THE NOTES
GENERAL
The Series A Notes were, and the Series B Notes will be, issued under an
Indenture (the "Indenture"), dated as of May 13, 1996, by and between the
Company and IBJ Schroder Bank & Trust Company, as trustee (the "Trustee").
Upon the issuance of the Series B Notes, the Indenture will be subject to and
governed by the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). As used in this "Description of the Notes" section, references to the
"Company" means Park Communications, Inc., but not any of its subsidiaries
(unless the context otherwise requires).
The following is a summary of the material provisions of the Notes and the
Indenture. This summary does not purport to be complete and is subject to the
detailed provisions of, and is qualified in its entirety by reference to, the
Trust Indenture Act, the Notes and the Indenture, including the definitions of
certain terms contained therein and including those terms made part of the
Indenture by reference to the Trust Indenture Act. A copy of the Indenture may
be obtained from the Company. The definitions of certain terms used in the
following summary are set forth below under "--Certain Definitions." Reference
is made to the Indenture for the full definition of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
MATURITY AND INTEREST
The Notes are general unsecured unsubordinated obligations of the Company
limited in aggregate principal amount to $80,000,000 (other than (i) Notes
issued in lieu of cash interest on the Notes in accordance with the Indenture
and (ii) Notes issued on repurchase of the Warrants as provided in the
Indenture and the Warrant Agreement) and mature on May 15, 2004. Interest on
the Notes accrues at the rate of 13.75% per annum and is payable semi-annually
in arrears on May 15 and November 15 in each year, commencing on November 15,
1996, to holders of record on the immediately preceding May 1 and November 1,
respectively. Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date
of the original issuance of the Notes (the "Issue Date"). Interest is computed
on the basis of a 360-day year comprised of twelve 30-day months. Through May
15, 1999, interest is payable at the option of the Company, in whole but not
in part, by the issuance of additional Notes (valued at 100% of the face
amount thereof) in lieu of cash interest; provided, however, that in
connection with any redemption or repurchase of the Notes as permitted or
required by the Indenture and upon the acceleration of the Notes, all accrued
interest shall be payable solely in cash. After May 15, 1999, interest is
payable solely in cash.
Principal of, premium, if any, and interest on the Notes is payable at the
office or agency of the Company maintained for such purpose within The City of
New York or, at the option of the Company, payment of interest may be made by
check mailed to the holders of the Notes at their respective addresses as set
forth in the register of holders of Notes. Until otherwise designated by the
Company, the Company's office or agency in The City of New York will be the
office of the Trustee maintained for such purpose. The Series A Notes were,
and the Series B Notes will be, issued in fully registered form, without
coupons, and in denominations of $1,000 and integral multiples thereof (other
than (i) Notes issued in lieu of cash interest on the Notes in accordance with
the Indenture, (ii) Notes issued on repurchase of the Warrants as provided in
the Indenture and the Warrant Agreement and (iii) Notes issued on transfer or
exchange of other Notes to the extent in excess of an integral multiple of
$1,000).
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RANKING
The payment of principal of, premium, if any, and interest on the Notes rank
pari passu with all other unsecured and unsubordinated indebtedness of the
Company; senior to any other indebtedness to the extent of any assets securing
the Notes; and senior in right of payment with respect to all subordinated
indebtedness of the Company. In addition, the Notes are effectively
subordinated to all secured indebtedness of the Company to the extent of the
assets securing such indebtedness and to all indebtedness and preferred stock
of subsidiaries of the Company, including the Newspapers Notes and the
Broadcasting Notes. As of December 31, 1995, on a pro forma basis after giving
effect to the sale of Units and the other Refinancing Transactions and the
application of the proceeds therefrom, the Company would have had $58.0
million of secured indebtedness outstanding and subsidiaries of the Company
would have had $391.4 million of indebtedness outstanding.
SECURITY
Upon repayment in full of indebtedness under the Senior Credit Facility, the
Company is obligated to grant to the holders of the Notes a first priority
lien on and security interest in all of the Capital Stock of Park Broadcasting
and Park Newspapers owned by the Company whether outstanding on the Issue Date
or thereafter issued; provided, however, that Park Broadcasting and Park
Newspapers may issue Common Stock in public offerings free and clear of such
lien so long as the Company retains, in each case, ownership of at least a
majority of the economic interest in and has the power to vote at least a
majority of the voting power of the outstanding Voting Stock of each such
entity. Such lien is not currently in existence, and, in the event that the
Company fails to take actions to grant or perfect such lien upon the repayment
of the Senior Credit Facility, the sole remedy for the holders of the Notes
would be to declare an Event of Default under the Indenture. If and when the
Company grants such lien, other liens may exist that could have priority over
such lien.
REDEMPTION
Mandatory Redemption. The Notes are not subject to any mandatory sinking
fund redemption prior to maturity.
Optional Redemption. The Notes are redeemable at the option of the Company,
in whole or in part, at the redemption prices (expressed as percentages of the
principal amount of the Notes) set forth below plus accrued interest to the
date of redemption, if redeemed during the twelve-month period beginning on
May 15 of the years indicated below.
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1999......................................................... 107.00%
2000......................................................... 105.25
2001......................................................... 103.50
2002......................................................... 101.75
2003 and thereafter.......................................... 100.00
</TABLE>
In addition, at any time prior to December 31, 1997, the Company may, at its
option, redeem all or any portion of the outstanding Notes with the net
proceeds of one or more Public Equity Offerings or Strategic Equity
Investments; provided, however, that the proceeds to the Company of the first
such Public Equity Offering or Strategic Equity Investment or any series of
substantially concurrent Strategic Equity Investments are at least $40.0
million, at 112.0% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of redemption (the "First Equity Offering
Optional Redemption Price"); provided, further, however, that notice of such
redemption is given within 30 days of such offering or investment. In
addition, on and after December 31, 1997 and prior to May 15, 1999, the
Company may, at its option, redeem with the net proceeds of one or more Public
Equity Offerings or Strategic Equity Investments up to 50% of the aggregate
principal amount of the Notes then outstanding; provided, however, that the
proceeds to the Company of the first such Public Equity Offering or Strategic
Equity Investment or series of substantially concurrent Strategic Equity
Investments (including any such offering, investment or series of investments
the proceeds of which were used to redeem Notes) are at least $40.0 million,
at 113.0% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of redemption (the "Second Equity Offering Optional
Redemption Price"); provided, further, however, that notice of such redemption
is given within 30 days of such offering or investment.
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In addition, the Company may at any time prior to May 15, 1999 redeem the
Notes, in whole or in part, at a redemption price equal to the principal
amount thereof plus the Applicable Premium plus accrued and unpaid interest,
if any, to the date of redemption (the "Optional Redemption Price"); provided,
however, that (i) if such redemption is to be effected for less than all of
the Notes then outstanding, not less than $40.0 million of Notes is
outstanding immediately after giving effect to such redemption (other than any
Notes owned by the Company or any of its Affiliates) and (ii) no redemption
(or, on or after December 31, 1997, partial redemption) of the Notes then
outstanding may be made with the proceeds of any Public Equity Offering or
Strategic Equity Investment pursuant to this sentence if, as of the date of
the proposed redemption, either the First Equity Offering Optional Redemption
Price or the Second Equity Offering Optional Redemption Price (whichever then
applicable) would be greater than the Optional Redemption Price as of such
date.
Selection and Notice. If less than all of the Notes are to be redeemed at
any time, selection of the Notes to be redeemed will be made by the Company in
compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not
listed on a securities exchange, on a pro rata basis or by lot; provided,
however, that Notes redeemed in part shall only be redeemed in integral
multiples of $1,000. Notices of any optional or mandatory redemption shall be
mailed by first class mail at least 30 but not more than 60 days before the
redemption date to each holder of Notes to be redeemed at such holder's
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed, and the Trustee shall authenticate and mail to
the holder of the original Note a new Note in principal amount equal to the
unredeemed portion of the original Note promptly after the original Note has
been canceled. On and after the redemption date, interest will cease to accrue
on Notes or portions thereof called for redemption.
OFFER TO PURCHASE ON PUBLIC EQUITY OFFERING
In the event that the Company or PAI shall consummate on or prior to
December 31, 1997 any Public Equity Offering or Strategic Equity Investment,
then the Company shall promptly make an offer to purchase from all Holders (an
"Equity Proceeds Offer") on a date (the "Equity Offer Purchase Date") not
later than the 90th day after the date of consummation (such consummation
date, the "Equity Offer Trigger Date") of such Public Equity Offering or
Strategic Equity Investment (such consummation date to be determined without
regard to the date of the consummation of any over-allotment option granted by
the Company or PAI, as the case may be, to the underwriters, if any) at a
purchase price equal to 112.0% of the aggregate principal amount of Notes to
be repurchased, plus accrued and unpaid interest, if any, to the Equity Offer
Purchase Date, an aggregate principal amount of outstanding Notes equal to the
aggregate net proceeds (after deducting any underwriting discounts and
commissions and any expenses directly related to such Public Equity Offering
or Strategic Equity Investment, but including any aggregate net proceeds (with
the foregoing deductions) received or receivable by the Company or PAI, as the
case may be, from any actual exercise of any over-allotment option granted to
the underwriters, if any) received or receivable by the Company or PAI, as the
case may be, from each such Public Equity Offering or Strategic Equity
Investment to the extent such proceeds shall not have been applied to the
redemption of the Notes pursuant to any redemption pursuant to the second
paragraph under "--Redemption-- Optional Redemption" and the amount not so
applied exceeds $2.0 million. For purposes of this covenant, proceeds of any
Public Equity Offering or Strategic Equity Investment shall be deemed to have
been applied to the extent that a notice of redemption for the Notes has been
given with respect to such proceeds pursuant to the second paragraph under "--
Redemption--Optional Redemption" (unless and to the extent that on the date
fixed for redemption such proceeds are not applied to redeem the Notes).
Notice of an Equity Proceeds Offer shall be mailed by the Company not later
than the 30th day after the related Equity Offer Trigger Date to each holder
of Notes at such holder's registered address, stating: (i) that an Equity
Offer Trigger Date has occurred and that the Company is offering to purchase
an aggregate principal amount of Notes equal to the aggregate net proceeds of
the applicable Public Equity Offering or Strategic Equity Investment, as the
case may be, to be applied to an Equity Proceeds Offer to the extent to be
applied to an offer to purchase Notes (as provided in the immediately
preceding paragraph), at an offer price in cash equal to 112.0%
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of the principal amount thereof, plus accrued and unpaid interest, if any, to
the Equity Offer Purchase Date, which shall be a business day, specified in
such notice, that is not earlier than 30 days or later than 60 days from the
date such notice is mailed, (ii) the amount of accrued and unpaid interest, if
any, as of the Equity Offer Purchase Date, (iii) that any Note not tendered
will continue to accrue interest, (iv) that, unless the Company defaults in
the payment of the purchase price for the Notes payable pursuant to the Equity
Proceeds Offer, any Notes accepted for payment pursuant to the Equity Proceeds
Offer shall cease to accrue interest after the Equity Offer Purchase Date, (v)
the procedures, consistent with the Indenture, to be followed by a holder of
Notes in order to accept an Equity Proceeds Offer or to withdraw such
acceptance, and (vi) such other information as may be required by the
Indenture and applicable laws and regulations.
On the Equity Offer Purchase Date, the Company will (i) accept for payment
the maximum principal amount of Notes or portions thereof tendered pursuant to
the Equity Proceeds Offer that can be purchased out of net proceeds from such
Public Equity Offering or Strategic Equity Investment, as the case may be,
that are to be applied to an Equity Proceeds Offer (to the extent provided in
the second preceding paragraph), (ii) deposit with the Paying Agent an amount
in cash equal to the aggregate purchase price of all Notes or portions thereof
accepted for payment and any accrued and unpaid interest, if any, on such
Notes as of the Equity Offer Purchase Date, and (iii) deliver or cause to be
delivered to the Trustee all Notes tendered pursuant to the Equity Proceeds
Offer. If less than all Notes tendered pursuant to the Equity Proceeds Offer
are accepted for payment by the Company for any reason consistent with the
Indenture, selection of the Notes to be purchased by the Company shall be in
compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not so
listed, on a pro rata basis or by lot; provided, however, that Notes accepted
for payment in part shall only be purchased in integral multiples of $1,000.
The Paying Agent shall promptly mail to each holder of Notes or portions
thereof accepted for payment an amount in cash equal to the purchase price for
such Notes plus any accrued and unpaid interest, if any, thereon, and the
Trustee shall promptly authenticate and mail to such holder of Notes accepted
for payment in part a new Note equal in principal amount to any unpurchased
portion of the Notes, and any Note not accepted for payment in whole or in
part shall be promptly returned to the holder of such Note. On and after an
Equity Offer Purchase Date, interest will cease to accrue on the Notes or
portions thereof accepted for payment, unless the Company defaults in the
payment of the purchase price therefor. The Company will publicly announce the
results of the Equity Proceeds Offer to holders of the Notes on or as soon as
practicable after the Equity Offer Purchase Date.
The Company will comply with the applicable tender offer rules, including
the requirements of Rule 14e-1 under the Exchange Act, and all other
applicable securities laws and regulations in connection with any Equity
Proceeds Offer and will be deemed not to be in violation of any of its
covenants under the Indenture to the extent such compliance is in conflict
with such covenants.
CHANGE OF CONTROL
In the event of a Change of Control Triggering Event, each holder of Notes
will have the right, subject to the terms and conditions of the Indenture, to
require the Company to offer to purchase all or any portion (equal to $1,000
or an integral multiple thereof) of such holder's Notes at a purchase price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase, in accordance with the terms
set forth below (a "Change of Control Offer").
The Senior Credit Facility prohibits the Company from purchasing any Notes
pursuant to a Change of Control Offer prior to repayment in full of the
indebtedness under the Senior Credit Facility. Additionally, the indentures
governing the Broadcasting Notes and the Newspapers Notes each contain change
of control provisions similar to those applicable to the Notes each requiring
Park Broadcasting and Park Newspapers to offer to repurchase the Broadcasting
Notes and the Newspapers Notes, respectively, upon the occurrence of a change
of control triggering event. Such indentures also contain limitations on the
ability of Park Broadcasting and Park Newspapers to pay dividends to the
Company. Such required offers to purchase and dividend restrictions may limit
the amount of funds available to the Company to make a Change of Control
Offer. If a Change of Control Triggering Event were to occur, there can be no
assurance that the Company will have
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sufficient assets to satisfy its obligations under the Senior Credit Facility
or, thereafter, to purchase any of the Notes. Any additional credit agreements
or other agreements relating to unsubordinated indebtedness to which the
Company becomes a party may contain similar restrictions and provisions.
Moreover, the Senior Credit Facility contains a "change of control" provision
that is similar to the provision in the Indenture relating to a Change of
Control, and the occurrence of such a "change of control" would constitute a
default under the Senior Credit Facility.
If the Company is unable to obtain the requisite consents and/or repay all
indebtedness which prohibits the repurchase of the Notes upon the occurrence
of a Change of Control Triggering Event, the Company would remain prohibited
by such indebtedness from purchasing any Notes and, as a result, the Company
could not commence a Change of Control Offer to purchase the Notes within 30
days of the occurrence of the Change of Control Triggering Event, which would
constitute an Event of Default under the Indenture. The Company's failure to
commence such a Change of Control Offer would also constitute an event of
default under the Senior Credit Facility which would permit the lenders
thereunder to accelerate all of the Company's indebtedness under the Senior
Credit Facility. If a Change of Control Triggering Event were to occur, there
can be no assurance that the Company would have sufficient assets to first
satisfy its obligations under the Senior Credit Facility or other agreements
relating to indebtedness, if accelerated, and then to purchase all of the
Notes that might be delivered by holders seeking to accept a Change of Control
Offer.
On or before the 30th day following the occurrence of any Change of Control
Triggering Event, the Company shall mail to each holder of Notes at such
holder's registered address a notice stating: (i) that a Change of Control
Triggering Event has occurred and that such holder has the right to require
the Company to purchase all or a portion (equal to $1,000 or an integral
multiple thereof) of such holder's Notes at a purchase price in cash equal to
101% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase (the "Change of Control Purchase
Date"), which shall be a business day, specified in such notice, that is not
earlier than 30 days or later than 60 days from the date such notice is
mailed, (ii) the amount of accrued and unpaid interest, if any, as of the
Change of Control Purchase Date, (iii) that any Note not tendered will
continue to accrue interest, (iv) that, unless the Company defaults in the
payment of the purchase price for the Notes payable pursuant to the Change of
Control Offer, any Notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Purchase Date, (v) the procedures, consistent with the Indenture, to be
followed by a holder of Notes in order to accept a Change of Control Offer or
to withdraw such acceptance, and (vi) such other information as may be
required by the Indenture and applicable laws and regulations.
On the Change of Control Purchase Date, the Company will (i) accept for
payment all Notes or portions thereof validly tendered pursuant to the Change
of Control Offer, (ii) deposit with the Paying Agent an amount in cash equal
to the aggregate purchase price of all Notes or portions thereof accepted for
payment and any accrued interest on such Notes as of the Change of Control
Purchase Date, and (iii) deliver or cause to be delivered to the Trustee all
Notes tendered pursuant to the Change of Control Offer. The Paying Agent shall
promptly mail to each holder of Notes or portions thereof accepted for payment
an amount in cash equal to the purchase price for such Notes plus accrued and
unpaid interest, if any, thereon, and the Trustee shall promptly authenticate
and mail to each holder of Notes accepted for payment in part a new Note equal
in principal amount to any unpurchased portion of the Notes, and any Note not
accepted for payment in whole or in part shall be promptly returned to the
holder of such Note. On and after a Change of Control Purchase Date, interest
will cease to accrue on the Notes or portions thereof accepted for payment,
unless the Company defaults in the payment of the purchase price therefor. The
Company will announce the results of the Change of Control Offer to holders of
the Notes on or as soon as practicable after the Change of Control Purchase
Date.
The Company will comply with the applicable tender offer rules, including
the requirements of Rule 14e-1 under the Exchange Act, and all other
applicable securities laws and regulations in connection with any Change of
Control Offer and will be deemed not to be in violation of any of its
covenants under the Indenture to the extent such compliance is in conflict
with such covenants.
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CERTAIN COVENANTS
Limitation on Incurrence of Indebtedness. The Indenture provides that the
Company will not, and will not permit any Restricted Subsidiary to, create,
incur, assume or directly or indirectly guarantee or in any other manner
become directly or indirectly liable for ("incur") any Indebtedness (including
Acquired Debt), except that the Company may incur Indebtedness if, at the time
of, and immediately after giving pro forma effect to, such incurrence of
Indebtedness, the Debt to Operating Cash Flow Ratio is not more than 7.0:1.
The foregoing limitations will not apply to the incurrence of any of the
following (collectively, "Permitted Indebtedness"), each of which shall be
given independent effect:
(i)Indebtedness incurred by the Company under the Senior Credit Facility,
not to exceed $58.0 million in aggregate principal amount outstanding at
any time, less any mandatory or optional prepayments thereof actually made
in respect of the Senior Credit Facility, and Indebtedness of Park
Broadcasting or any of its Subsidiaries (other than the Subsidiary which
owns radio stations KEZX-AM and KWJZ-FM) consisting of a guarantee of the
Company's Indebtedness under the Senior Credit Facility, less any mandatory
or optional prepayments thereof actually made in respect of the Senior
Credit Facility;
(ii)Indebtedness of the Company represented by the Notes (including any
Notes issued in accordance with the Indenture in lieu of cash interest on
the Notes);
(iii)Indebtedness owed by any Wholly Owned Restricted Subsidiary to the
Company or to another Wholly Owned Restricted Subsidiary, or owed by the
Company to any Wholly Owned Restricted Subsidiary; provided, however, that
any such Indebtedness shall be at all times held by a Person which is
either the Company or a Wholly Owned Restricted Subsidiary of the Company;
provided, further, however, that upon either (a) the transfer or other
disposition of any such Indebtedness to a Person other than the Company or
another Wholly Owned Restricted Subsidiary or (b) the sale, lease, transfer
or other disposition of shares of Capital Stock (including by consolidation
or merger) of any such Wholly Owned Restricted Subsidiary to a Person other
than the Company or another Wholly Owned Restricted Subsidiary, the
incurrence of such Indebtedness shall be deemed to be an incurrence that is
not permitted by this clause (iii);
(iv)Indebtedness permitted to be incurred by (i) Park Broadcasting and
its Subsidiaries under the indenture governing the Broadcasting Notes and
(ii) Park Newspapers and its Subsidiaries under the indenture governing the
Newspapers Notes, in each case as such indentures are in effect on the
Issue Date;
(v)Indebtedness arising with respect to Interest Rate Agreement
Obligations incurred for the purpose of fixing or hedging interest rate
risk with respect to any floating rate Indebtedness that is permitted by
the terms of the Indenture to be outstanding;
(vi)any Indebtedness incurred in connection with or given in exchange for
the renewal, extension, substitution, refunding, defeasance, refinancing or
replacement (a "refinancing") of any Indebtedness described in clauses (ii)
and (iv) above and (vii) below or incurred under the first paragraph of
this covenant ("Refinancing Indebtedness"); provided, however, that (a) the
principal amount of such Refinancing Indebtedness shall not exceed the
principal amount (or accrued amount, if less) of the Indebtedness so
refinanced (plus the premiums paid in connection therewith (which shall not
exceed the stated amount of any premium or other payment required to be
paid in connection with such a refinancing pursuant to the terms of the
Indebtedness being refinanced) and the reasonable expenses incurred in
connection therewith); (b) such Refinancing Indebtedness shall not require
any scheduled payment of principal or mandatory redemption prior to the
earlier of the final maturity of the Notes or the final maturity of the
Indebtedness being refinanced; (c) such Refinancing Indebtedness shall rank
no more senior, and shall be at least as subordinated, in right of payment
to the Notes as the Indebtedness being refinanced; and (d) the obligor on
such Refinancing Indebtedness shall be the obligor on the Indebtedness
being refinanced or the Company; and
(vii) Indebtedness of the Company represented by Notes issued for the
repurchase of the Warrants pursuant to the Warrant Agreement to the extent
complying with the terms thereof as in effect on the Issue Date.
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Indebtedness of any Person which is outstanding at the time such Person
becomes a Restricted Subsidiary or is merged with or into or consolidated with
the Company or a Restricted Subsidiary shall be deemed to have been incurred
at the time such Person becomes a Restricted Subsidiary or is merged with or
into or consolidated with the Company or a Restricted Subsidiary, and
Indebtedness which is assumed at the time of the acquisition of any asset
shall be deemed to have been incurred at the time of such acquisition.
Limitation on Restricted Payments. The Indenture provides that the Company
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, make any Restricted Payment, unless at the time of and immediately
after giving effect to the proposed Restricted Payment (with the value of any
such Restricted Payment, if other than cash, to be determined reasonably and
in good faith by the Board of Directors of the Company, whose determination
shall be conclusive, and evidenced by (A) a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee and
(B) if the value of any such Restricted Payment is greater than $5.0 million,
an opinion issued by an investment banking or appraisal firm of national
standing), (i) no Default or Event of Default (and no event that, after notice
or lapse of time, or both, would become an "event of default" under the terms
of any Indebtedness of the Company or the Restricted Subsidiaries) shall have
occurred and be continuing or would occur as a consequence thereof, (ii) the
Company could incur at least $1.00 of additional Indebtedness pursuant to the
first paragraph under "--Limitation on Incurrence of Indebtedness" and (iii)
the aggregate amount of all Restricted Payments since the Issue Date shall not
exceed the sum of (a) 50% of the Restricted Payment Basket (or if such
Restricted Payment Basket shall be negative, minus 100% of such negative
amount), plus (b) the aggregate amount of all net cash proceeds received after
the Issue Date by the Company from the issuance and sale (other than to a
Restricted Subsidiary) of Capital Stock (other than Disqualified Stock) to the
extent that such proceeds are not used to redeem, repurchase, retire or
otherwise acquire Capital Stock or any Indebtedness of the Company or any
Restricted Subsidiary pursuant to clause (ii) of the next paragraph.
Notwithstanding the foregoing, no Restricted Payments shall be made unless the
Company has paid all accrued interest due on the Notes on the immediately
preceding interest payment date in cash and prior to making any Restricted
Payment (other than any Permitted Payment set forth in clause (ii), (iii) or
(iv) of the following paragraph), the Company shall first make an offer to
purchase an aggregate principal amount of Notes equal to the amount of such
proposed Restricted Payment at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase in accordance with the procedures set forth in the Indenture.
After the consummation of such offer to purchase, the Company may make a
Restricted Payment in an amount equal to the excess of the aggregate amount of
Notes offered to be purchased over the aggregate amount tendered for purchase
pursuant to such offer; provided, however, that all other conditions set forth
in this covenant for making such Restricted Payment are complied with at such
time. For the purposes of clause (iii) of this paragraph only, any payment
made pursuant to clause (v) under "--Limitation on Transactions with
Affiliates" shall be included as if it were a Restricted Payment in the
calculation of the aggregate amount of all Restricted Payments made since the
Issue Date.
The foregoing provisions will not prohibit, so long as (other than with
respect to clause (i) below) there is no Default or Event of Default
continuing, the following actions (collectively, "Permitted Payments"):
(i)the payment of any dividend within 60 days after the date of
declaration thereof, if at such declaration date such payment would have
been permitted under the Indenture;
(ii)the redemption, repurchase, retirement or other acquisition of any
Capital Stock or any Indebtedness of the Company in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a
Restricted Subsidiary) of Capital Stock of the Company (other than any
Disqualified Stock);
(iii)the repurchase of the Warrants pursuant to the terms of the Warrant
Agreement (as in effect on the Issue Date) through the issuance of Notes;
and
(iv) the payment of cash in lieu of the issuance of fractional shares of
Common Stock upon exercise of the Warrants pursuant to the terms of the
Warrant Agreement as in effect on the Issue Date.
For purposes of clause (iii) of the first paragraph of this covenant,
Permitted Payments made pursuant to clauses (i), (iii) and (iv) of the
immediately preceding paragraph shall be included (as of the date of
declaration in the case of such clause (i)) as Restricted Payments made since
the Issue Date, and Permitted Payments made pursuant to clause (ii) of the
immediately preceding paragraph shall not be included as Restricted Payments.
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Limitation on Asset Sales. The Indenture provides that the Company will not,
and will not permit any Restricted Subsidiary to, make any Asset Sale unless
(i) the Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as evidenced by (A) a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee and (B) if the fair market
value is greater than $5.0 million, an opinion issued by an investment banking
or appraisal firm of national standing) of the assets or other property sold
or disposed of in the Asset Sale, and (ii) at least 85% of such consideration
consists of either (a) cash or Cash Equivalents; provided, however, that for
purposes of this covenant "cash" shall include the amount of any Indebtedness
(other than any Indebtedness that is by its terms subordinated to the Notes)
of the Company or such Restricted Subsidiary that are assumed by the
transferee of any such assets or other property in such Asset Sale (and
excluding any liabilities that are incurred in connection with or in
anticipation of such Asset Sale), but only to the extent that such assumption
is effected on a basis under which there is no further recourse to the Company
or any of the Restricted Subsidiaries with respect to such liabilities or (b)
properties and capital assets (including franchises and licenses required to
own or operate such properties) to be used in the same lines of business being
conducted by the Company or such Restricted Subsidiary on the Issue Date;
provided, further, however, that Park Broadcasting, Park Newspapers and their
respective Subsidiaries may receive such consideration in assets and
properties as and to the extent permitted pursuant to the indenture governing
the Broadcasting Notes and the Newspapers Notes, respectively, as in effect on
the Issue Date.
Within 360 days after any Asset Sale, the Company may elect to apply the Net
Proceeds from such Asset Sale to (a) permanently repay any Indebtedness of
Park Broadcasting, Park Newspapers or their respective Restricted
Subsidiaries, or of the Company or any Restricted Subsidiary under the Senior
Credit Facility, and/or (b) make an investment in, or acquire capital assets
or property directly related to, the television broadcasting or newspaper
publishing business. Pending the final application of any such Net Proceeds,
the Company may temporarily invest such Net Proceeds in any Investments
described under clauses (i) through (iv) of the definition of Permitted
Investments. Any Net Proceeds from an Asset Sale not applied or invested as
provided in the first sentence of this paragraph within 360 days of such Asset
Sale will be deemed to constitute "Excess Proceeds." If the Net Proceeds from
any Asset Sale of Park Broadcasting, Park Newspapers or any of their
respective Restricted Subsidiaries would otherwise constitute Excess Proceeds
and cannot at such time be paid as a dividend to the Company by virtue of the
indentures governing the Broadcasting Notes or the Newspapers Notes, as the
case may be, such Net Proceeds shall not be deemed to constitute Excess
Proceeds until such time as and to the extent that such Net Proceeds are
permitted to be paid as a dividend thereunder. If the Net Proceeds of any
Asset Sale are applied to repay the indebtedness outstanding under the Senior
Credit Facility, the Company shall cause all of its Unrestricted Subsidiaries
which at such time own the Radio Station Assets (other than KEZX-AM or KWJZ-
FM) to execute and deliver a senior unsecured note evidencing their joint and
several obligation to Park Broadcasting in the amount of such Net Proceeds
applied to the Senior Credit Facility (the "Radio Station Note") and bearing
interest (not payable until the Senior Credit Facility has been repaid in
full) at the rate then borne by the Broadcasting Notes. Each Radio Station
Note shall provide by its terms that it shall become immediately due and
payable after the Senior Credit Facility has been repaid in full in an amount
equal to such Radio Station Note's pro rata portion (relative to all Radio
Station Notes) of the net proceeds (after taxes and reasonable expenses) of
each sale of Radio Station Assets (other than KEZX-AM and KWJZ-FM) occurring
after the repayment in full of the Senior Credit Facility. Prior to such time
as the Senior Credit Facility has been repaid in full, the Company will not,
and will not permit any of its Subsidiaries to, sell, transfer or otherwise
dispose of the Radio Station Assets (other than KEZX-AM or KWJZ-FM) unless at
least the net proceeds (after taxes and reasonable expenses) are applied to
the repayment of the Senior Credit Facility. The Company will not permit any
Unrestricted Subsidiary which owns Radio Station Assets to enter into any
agreement other than the Senior Credit Facility which would restrict in any
manner the payment when due of any Radio Station Note.
Each date on which the aggregate amount of Excess Proceeds in respect of
which an Asset Sale Offer has not been made exceeds $5.0 million shall be
deemed an "Asset Sale Offer Trigger Date." Within 30 days of each Asset Sale
Offer Trigger Date, the Company shall commence an offer (an "Asset Sale
Offer") to purchase the maximum principal amount of Notes and other
Indebtedness of the Company that ranks pari passu in right
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of payment with the Notes (to the extent required by the instrument governing
such other Indebtedness) that may be purchased out of the Excess Proceeds. Any
Notes to be purchased pursuant to an Asset Sale Offer shall be purchased pro
rata based on the aggregate principal amount of Notes and all such other
Indebtedness outstanding, and all Notes shall be purchased at an offer price
in cash in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase. To the extent
that any Excess Proceeds remain after completion of an Asset Sale Offer, the
Company may use the remaining amount for general corporate purposes otherwise
permitted by the Indenture. Upon the consummation of any Asset Sale Offer, the
amount of Excess Proceeds from the Asset Sale in question to be the subject of
future Asset Sale Offers shall be deemed to be zero.
Notice of an Asset Sale Offer shall be mailed by the Company not later than
the 30th day after the related Asset Sale Offer Trigger Date to each holder of
Notes at such holder's registered address, stating: (i) that an Asset Sale
Offer Trigger Date has occurred and that the Company is offering to purchase
the maximum principal amount of Notes that may be purchased out of the Excess
Proceeds to the extent to be applied to an offer to purchase Notes (as
provided in the immediately preceding paragraph), at an offer price in cash in
an amount equal to 100% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of the purchase (the "Asset Sale Offer
Purchase Date"), which shall be a business day, specified in such notice, that
is not earlier than 30 days or later than 60 days from the date such notice is
mailed, (ii) the amount of accrued and unpaid interest, if any, as of the
Asset Sale Offer Purchase Date, (iii) that any Note not tendered will continue
to accrue interest, (iv) that, unless the Company defaults in the payment of
the purchase price for the Notes payable pursuant to the Asset Sale Offer, any
Notes accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest after the Asset Sale Offer Purchase Date, (v) the procedures,
consistent with the Indenture, to be followed by a holder of Notes in order to
accept an Asset Sale Offer or to withdraw such acceptance, and (vi) such other
information as may be required by the Indenture and applicable laws and
regulations.
On the Asset Sale Offer Purchase Date, the Company will (i) accept for
payment the maximum principal amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer that can be purchased out of Excess Proceeds
from such Asset Sale that are to be applied to an Asset Sale Offer (to the
extent provided in the second preceding paragraph), (ii) deposit with the
Paying Agent an amount in cash equal to the aggregate purchase price of all
Notes or portions thereof accepted for payment and any accrued and unpaid
interest, if any, on such Notes as of the Asset Sale Offer Purchase Date, and
(iii) deliver or cause to be delivered to the Trustee all Notes tendered
pursuant to the Asset Sale Offer. If less than all Notes tendered pursuant to
the Asset Sale Offer are accepted for payment by the Company for any reason
consistent with the Indenture, selection of the Notes to be purchased by the
Company shall be in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes
are not so listed, on a pro rata basis or by lot; provided, however, that
Notes accepted for payment in part shall only be purchased in integral
multiples of $1,000. The Paying Agent shall promptly mail to each holder of
Notes or portions thereof accepted for payment an amount in cash equal to the
purchase price for such Notes plus any accrued and unpaid interest, if any,
thereon, and the Trustee shall promptly authenticate and mail to such holder
of Notes accepted for payment in part a new Note equal in principal amount to
any unpurchased portion of the Notes, and any Note not accepted for payment in
whole or in part shall be promptly returned to the holder of such Note. On and
after an Asset Sale Offer Purchase Date, interest will cease to accrue on the
Notes or portions thereof accepted for payment, unless the Company defaults in
the payment of the purchase price therefor. The Company will announce the
results of the Asset Sale Offer to holders of the Notes on or as soon as
practicable after the Asset Sale Offer Purchase Date.
The Company will comply with the applicable tender offer rules, including
the requirements of Rule 14e-1 under the Exchange Act, and all other
applicable securities laws and regulations in connection with any Asset Sale
Offer and will be deemed not to be in violation of any of the covenants under
the Indenture to the extent such compliance is in conflict with such
covenants.
Limitation on Liens. The Indenture provides that the Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, create,
incur, assume or suffer to exist (i) any Lien on the Capital Stock of
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Park Broadcasting or Park Newspapers (whether outstanding on the date of the
Indenture or thereafter) required to be owned by the Company under the
Indenture other than Liens securing the Senior Credit Facility and (ii) any
Lien (other than Permitted Liens) on any other property or assets of the
Company or any Restricted Subsidiary (other than the Capital Stock of
Unrestricted Subsidiaries) now owned or hereafter acquired, or any income or
profits therefrom, or assign or convey any right to receive income therefrom
to secure any Indebtedness, unless with respect to this clause (ii) the Notes
are equally and ratably secured thereby.
Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Indenture provides that the Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to (i) pay dividends
or make any other distributions to the Company or any other Restricted
Subsidiary on its Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, or pay any Indebtedness owed to
the Company or any other Restricted Subsidiary, (ii) make loans or advances to
the Company or any other Restricted Subsidiary or guarantee any Indebtedness
of the Company or any other Restricted Subsidiary or (iii) transfer any of its
properties or assets to the Company or any other Restricted Subsidiary, except
for such encumbrances or restrictions existing under or by reason of (a) the
Senior Credit Facility and the indentures governing the Broadcasting Notes and
the Newspapers Notes, in each case as in effect on the Issue Date, and any
amendments, restatements, renewals, replacements or refinancings thereof;
provided, however, that such amendments, restatements, renewals, replacements
or refinancings are no more restrictive with respect to such dividend and
other payment restrictions than those contained in the Senior Credit Facility
or such indentures, as the case may be (or, if more restrictive, than those
contained in the Indenture), immediately prior to any such amendment,
restatement, renewal, replacement or refinancing, (b) applicable law, (c) any
instrument governing Indebtedness or Capital Stock of an Acquired Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition);
provided, however, that (1) such restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Acquired Person, and
(2) the consolidated net income of such Acquired Person for any period prior
to such acquisition shall not be taken into account in determining whether
such acquisition was permitted by the terms of the Indenture, (d) by reason of
customary non-assignment provisions in leases entered into the ordinary course
of business, (e) Purchase Money Indebtedness for property acquired in the
ordinary course of business that only impose restrictions on the property so
acquired, (f) an agreement for the sale or disposition of the Capital Stock or
assets of such Restricted Subsidiary; provided, however, that such restriction
is only applicable to such Restricted Subsidiary or assets, as applicable, and
such sale or disposition otherwise is permitted under "--Limitation on Assets
Sales" above; provided, further, however, that such restriction or encumbrance
shall be effective only for a period from the execution and delivery of such
agreement through a termination date not later than 270 days after such
execution and delivery, (g) Refinancing Indebtedness permitted under the
Indenture; provided, however, that the restrictions contained in the
agreements governing such Refinancing Indebtedness are no more restrictive in
the aggregate than those contained in the agreements governing the
Indebtedness being refinanced immediately prior to such refinancing, (h) the
Indenture or (i) any credit facility of the Restricted Subsidiaries, and any
amendments, restatements, renewals, replacements or refinancings thereof.
Limitation on Transactions with Affiliates. The Indenture provides that the
Company will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, enter into or suffer to exist any transaction or series of
related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or services) with any Affiliate of the
Company (other than the Company or a Wholly Owned Restricted Subsidiary)
unless (1) such transaction or series of transactions is on terms that are no
less favorable to the Company or such Restricted Subsidiary, as the case may
be, than would be available in a comparable transaction in arm's-length
dealings with an unrelated third party, and (2)(a) with respect to any
transaction or series of transactions involving aggregate payments in excess
of $1.0 million, the Company delivers an Officers' Certificate to the Trustee
certifying that such transaction or series of related transactions complies
with clause (1) above and such transaction or series of related transactions
has been approved by a majority of the members of the Board of Directors of
the Company (and approved by a majority of the Independent Directors or, in
the event there is
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only one Independent Director, by such Independent Director), and (b) with
respect to any transaction or series of transactions involving aggregate
payments in excess of $5.0 million or any transaction or series of related
transactions referred to in clause (2)(a) above where there are no Independent
Directors, an opinion as to the fairness to the Company or such Restricted
Subsidiary from a financial point of view issued by an investment banking or
appraisal firm of national standing. Notwithstanding the foregoing, this
covenant will not apply to (i) employment agreements or compensation or
employee benefit arrangements with any officer, director or employee of the
Company entered into in the ordinary course of business (including customary
benefits thereunder (it being understood that benefits of the nature in place
as of the Issue Date shall be deemed permissible hereunder)), (ii) any
transaction entered into by or among the Company or one of its Wholly Owned
Restricted Subsidiaries with one or more Wholly Owned Restricted Subsidiaries
of the Company, (iii) any Restricted Payment made in compliance with "--
Limitation on Restricted Payments," (iv) any Permitted Investments other than
Investments permitted by clause (vii) of the definition of Permitted
Investments, (v) payments to PAI on the business day after each semi-annual
interest payment date for the Notes for the payment of management advisory
fees in an amount not to exceed $250,000 on each such date; provided, however,
that no such payment shall be made unless (A) the Company has paid in cash all
accrued interest on the Notes due on such semi-annual interest payment date
and (B) no Default or Event of Default shall have occurred and be continuing
at the time of such payment, (vi) payments to PAI pursuant to the Tax Sharing
Agreement, (vii) the pledge of Capital Stock of Unrestricted Subsidiaries by
the Company or any Restricted Subsidiary to support such Unrestricted
Subsidiaries' Indebtedness and (viii) transactions involving the Company or
any of the Restricted Subsidiaries on the one hand and any Unrestricted
Subsidiary owning Radio Station Assets on the other relating to general
administrative, corporate, legal and accounting services and similar
intercompany relationships to the extent entered into in the ordinary course
of business and consistent with such transactions and relationships existing
on the Issue Date.
Issuance of Contingent Warrants. The Indenture provides that the Company
will be obligated to issue to holders of the Notes the Contingent Warrants,
exercisable for 3.0% of the Common Stock of the Company on a fully-diluted
basis as of the date of such issuance after giving effect to the issuance of
such warrants in the event that the Company does not effect a Public Equity
Offering or a Strategic Equity Investment (or a series of substantially
concurrent Strategic Equity Investments) on or prior to December 31, 1997
resulting in net proceeds to the Company of at least $40.0 million. Such
warrants will be issued pursuant to the Warrant Agreement and holders will
have the benefits of the Warrant Registration Rights Agreement.
Any Contingent Warrants issued shall be issued to the Holders of the
outstanding Notes as of December 31, 1997 (including any Notes issued in lieu
of cash interest pursuant to the Indenture) pro rata, based upon the aggregate
principal amount of the Notes held by such Holder as of December 31, 1997. For
purposes of the foregoing, Notes held by the Company or any of its Affiliates
as of December 31, 1997 shall not be deemed to be outstanding.
Limitation on Subsidiary Capital Stock. The Indenture provides that the
Company will not permit any Restricted Subsidiary to issue any Capital Stock,
except for (i) Capital Stock issued to and held by the Company or a Wholly
Owned Restricted Subsidiary, (ii) Capital Stock issued by a Person prior to
the time (a) such Person becomes a Restricted Subsidiary, (b) such Person
merges with or into a Restricted Subsidiary or (c) a Restricted Subsidiary
merges with or into such Person; provided, however, that such Capital Stock
was not issued by such Person in anticipation of the type of transaction
contemplated by clauses (a), (b) or (c) and (iii) Common Stock issued by Park
Broadcasting or Park Newspapers in public offerings, in each case, so long as
after giving effect thereto the Company or a Wholly Owned Restricted
Subsidiary owns not less than a majority of the economic interest in and has
the power to vote a majority of the voting power of the outstanding Voting
Stock of such Subsidiary.
Limitation on Lines of Business. The Indenture provides that the Company
will not, and will not permit any Restricted Subsidiary to, engage in any
business other than television broadcasting or newspaper publishing and
businesses directly related thereto; provided, however, that the Company and
the Restricted Subsidiaries may engage in the radio broadcasting business
solely by continuing to operate the Radio Station Assets until the disposition
of all Radio Station Assets.
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Limitation on Amendments to the Tax Sharing Agreement. The Indenture
provides that the Company will not, and will not permit any Restricted
Subsidiary to, (i) amend, supplement or modify the Tax Sharing Agreement,
unless any such amendment, supplement or modification is no less favorable to
the Holders than the terms thereof on the Issue Date or (ii) assign the Tax
Sharing Agreement or the benefits and obligations thereunder to any other
Person.
Pledge of Capital Stock of Park Broadcasting and Park Newspapers. The
Indenture provides that immediately upon repayment in full of all amounts
outstanding under the Senior Credit Facility and the termination of all
commitments thereunder, the Company will execute and deliver a security pledge
agreement substantially in the form attached as an exhibit to the Indenture
(the "Pledge Agreement"). The Company shall take all further actions
reasonably requested by the Trustee to effect a valid perfected first priority
security interest in and lien on all of the Capital Stock of Park Broadcasting
and Park Newspapers owned by the Company, whether outstanding on the Issue
Date or thereafter issued, including the filing of all appropriate instruments
and the delivery of an opinion of counsel to the Trustee. Upon the execution
and delivery of the Pledge Agreement, the Company shall be deemed to represent
and warrant that the Trustee has acquired a valid perfected first priority
security interest in and lien on such Capital Stock.
Provision of Financial Statements. The Indenture provides that, whether or
not the Company is then subject to Section 13(a) or 15(d) of the Exchange Act,
the Company will file with the Commission, so long as the Notes are
outstanding, the annual reports, quarterly reports and other periodic reports
which the Company would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) if the Company were so subject,
commencing with the quarter ended September 30, 1996, and such documents shall
be filed with the Commission on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been required so to
file such documents if the Company were so subject. The Company will also in
any event (i) within 15 days of each Required Filing Date, (a) transmit by
mail to all holders of Notes, as their names and addresses appear in the Note
register, without cost to such holders and (b) file with the Trustee copies of
the annual reports, quarterly reports and other periodic reports which the
Company would have been required to file with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act if the Company were subject to such
Sections and (ii) if filing such documents by the Company with the Commission
is prohibited under the Exchange Act, promptly upon written request and
payment of the reasonable cost of duplication and delivery, supply copies of
such documents to any prospective holder at the Company's cost.
Additional Covenants. The Indenture also contains covenants with respect to
the following matters: (i) payment of principal, premium and interest; (ii)
maintenance of an office or agency in The City of New York; (iii) maintenance
of corporate existence; (iv) payment of taxes and other claims; (v)
maintenance of properties; and (vi) maintenance of insurance.
Certain Exceptions for Capital Contributions. Any other provision of the
Indenture to the contrary notwithstanding, any capital contribution made on
the Issue Date in any Subsidiary of the Company to effect the repayment of the
Prior Credit Agreement from the proceeds of the offering of the Notes and the
consummation of the other financing transactions taking place on the Issue
Date in connection therewith shall not be deemed to be a violation of any
covenant of the Indenture (and the aggregate amount of any such capital
contribution shall not be counted as a Restricted Investment).
MERGER, CONSOLIDATION AND SALE OF ASSETS
The Indenture provides that the Company shall not, in any single transaction
or series of related transactions, consolidate or merge with or into (whether
or not the Company is the Surviving Person), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets to, another Person, and the Company will not permit any Restricted
Subsidiary to enter into any such transaction or series of related
transactions if such transaction or series of related transactions, in the
aggregate, would result in a sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the properties and assets of
the Company and the Restricted Subsidiaries, taken as a whole, to another
Person, unless (i) the Surviving
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Person is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the Surviving
Person (if other than the Company) assumes all the obligations of the Company
under the Notes, the Indenture and, if then in effect, the Registration Rights
Agreement and the Pledge Agreement pursuant to a supplemental indenture or
other written agreement, as the case may be, in a form reasonably satisfactory
to the Trustee; (iii) at the time of and immediately after such Disposition,
no Default or Event of Default shall have occurred and be continuing; and (iv)
the Surviving Person will (A) have Consolidated Net Worth (immediately after
giving effect to the Disposition on a pro forma basis) equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction, and (B) at the time of such Disposition and after giving pro
forma effect thereto, the Surviving Person would be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the first paragraph of the
covenant described under "--Certain Covenants--Limitation on Incurrence of
Indebtedness." The Surviving Person need not comply with clause (iv) (B) of
the immediately preceding sentence in connection with any merger or
consolidation of the Company with or into PAI if (i) since its formation PAI
shall not have incurred any Indebtedness or granted any Liens in respect of
its property or assets (or entered into any agreement to do any of the
foregoing) or conducted any business or operations other than owning the
Capital Stock of the Company and performing its obligations under the Tax
Sharing Agreement and any management agreement with respect to the Company and
its Subsidiaries, except for Indebtedness incurred under the Prior Credit
Agreement and Liens granted in connection therewith and Liens on the Capital
Stock of the Company granted under the Senior Credit Facility, and (ii) all
Indebtedness of PAI under the Prior Credit Agreement shall have been repaid in
full and all Liens granted in connection therewith shall have been released.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraphs
in which the Company is not the Surviving Person and the Surviving Person is
to assume all the obligations of the Company under the Notes, the Indenture
and, if then in effect, the Registration Rights Agreement pursuant to a
supplemental indenture or other written agreement, as the case may be, such
Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of, the Company and the Company would be discharged from
its obligations under the Indenture, the Notes and the Registration Rights
Agreement.
EVENTS OF DEFAULT
The Indenture provides that each of the following constitutes an Event of
Default:
(i) a default for 30 days in the payment when due of interest (including
any "additional interest" (as described below under "The Exchange Offer--
Purpose and Effect of the Exchange Offer")) on any Note;
(ii) a default in the payment when due of principal on any Note, whether
upon maturity, acceleration, redemption, required repurchase or otherwise;
(iii) failure to perform or comply with any covenant, agreement or
warranty in the Indenture or the Pledge Agreement (other than the defaults
specified in clauses (i) and (ii) above) which failure continues (A) in the
case of any such covenant, agreement or warranty described herein under "--
Certain Covenants--Limitation on Incurrence of Indebtedness," "--Certain
Covenants--Limitation on Restricted Payments," "--Certain Covenants--
Limitation on Asset Sales," and "--Merger, Consolidation and Sale of
Assets," for 30 days after written notice thereof has been given to the
Company by the Trustee or to the Company and the Trustee by the holders of
at least 25% in aggregate principal amount of the then outstanding Notes
and (B) in the case of any other such covenant, agreement or warranty
contained in the Indenture, for 60 days after written notice thereof has
been given to the Company by the Trustee or to the Company and the Trustee
by the holders of at least 25% in aggregate principal amount of the then
outstanding Notes;
(iv) the occurrence of one or more defaults under any agreements,
indentures or instruments under which the Company or any Restricted
Subsidiary then has outstanding Indebtedness in excess of $5.0 million
individually or in the aggregate and, if not already matured at its final
maturity in accordance with its terms, such Indebtedness shall have been
accelerated and such Indebtedness shall not have been repaid or such
acceleration rescinded within 20 days;
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(v) one or more judgments, orders or decrees for the payment of money in
excess of $5.0 million, either individually or in the aggregate (net of
amounts covered by a reputable and creditworthy insurance company, or by
bond, surety or similar instrument) shall be entered against the Company or
any Restricted Subsidiary or any of their respective properties and which
judgments, orders or decrees are not paid, discharged, bonded or stayed or
stayed pending appeal for a period of 60 days after their entry;
(vi) there shall have been entered by a court of competent jurisdiction
(a) a decree or order for relief in respect of the Company or any
Restricted Subsidiary in an involuntary case or proceeding under any
applicable Bankruptcy Law or (b) a decree or order adjudging the Company or
any Restricted Subsidiary bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company or
any Restricted Subsidiary under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any Restricted
Subsidiary or of any substantial part of their respective properties, or
ordering the winding up or liquidation of their affairs, and any such
decree or order for relief shall continue to be in effect, or any such
other decree or order shall be unstayed and in effect, for a period of 60
days;
(vii) (a) the Company or any Restricted Subsidiary commences a voluntary
case or proceeding under any applicable Bankruptcy Law or any other case or
proceeding to be adjudicated bankrupt or insolvent, (b) the Company or any
Restricted Subsidiary consents to the entry of a decree or order for relief
in respect of the Company or such Restricted Subsidiary in an involuntary
case or proceeding under any applicable Bankruptcy Law or to the
commencement of any bankruptcy or insolvency case or proceeding against it,
(c) the Company or any Restricted Subsidiary files a petition or answer or
consent seeking reorganization or relief under any applicable federal or
state law, (d) the Company or any Restricted Subsidiary (x) consents to the
filing of such petition or the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or such Restricted Subsidiary or of any
substantial part of their respective property, (y) makes an assignment for
the benefit of creditors or (z) admits in writing its inability to pay its
debts generally as they become due or (e) the Company or any Restricted
Subsidiary takes any corporate action in furtherance of any such actions in
this paragraph (vii); or
(viii) after the date of execution and delivery thereof, the Pledge
Agreement ceases to be in full force and effect (other than in accordance
with its terms), or ceases to give the Trustee the Liens, rights, powers
and privileges purported to be created thereby (other than in accordance
with its terms), or is declared null and void, or the Company denies any of
its obligations or any collateral purported to be pledged thereunder
becomes subject to any Lien other than the Liens created or permitted by
the Pledge Agreement.
If any Event of Default (other than as specified in clauses (vi) or (vii) of
the preceding paragraph, with respect to the Company) occurs and is
continuing, the Trustee or the holders of at least 25% in aggregate principal
amount of the then outstanding Notes may, and the Trustee at the request of
such holders shall, declare all the Notes to be due and payable immediately by
notice in writing to the Company, and to the Company and the Trustee if by the
holders, specifying the respective Event of Default and that such notice is a
"notice of acceleration," and the Notes shall become immediately due and
payable. Notwithstanding the foregoing, in the case of an Event of Default
arising from the events specified in clauses (vi) or (vii) of the preceding
paragraph with respect to the Company, the principal of, premium, if any, and
any accrued interest on all outstanding Notes shall ipso facto become
immediately due and payable without further action or notice. Holders of the
Notes may not enforce the Indenture or the Notes except as provided in the
Indenture.
The holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except (i) a continuing Default or Event of Default in the
payment of the principal of, or premium, if any, or interest on, the Notes
(which may only be waived with the consent of each holder of Notes affected),
or (ii) in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each Note
outstanding. Subject to certain limitations, holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of
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any trust or power. The Trustee may withhold from holders of the Notes notice
of any continuing Default or Event of Default (except a Default or Event of
Default relating to the payment of principal, premium or interest) if it
determines that withholding notice is in their interest.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
The Indenture provides that no director, officer, employee, incorporator or
stockholder of the Company shall have any liability for any obligation of the
Company under the Indenture or the Notes or for any claim based on, in respect
of, or by reason of, any such obligation or the creation of any such
obligation. Each holder by accepting a Note waives and releases such Persons
from all such liability and such waiver and release is part of the
consideration for the issuance of the Notes.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Company may, at its option and at any time, elect to have the
obligations of the Company discharged with respect to the outstanding Notes
("defeasance"). Such defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by the outstanding
Notes and to have satisfied all other obligations under the Notes and the
Indenture except for (i) the rights of holders of the outstanding Notes to
receive, solely from the trust fund described below, payments in respect of
the principal of, premium, if any, and interest on such Notes when such
payments are due, (ii) the Company's obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes, and the maintenance of an office or agency
for payment and money for security payments held in trust, (iii) the rights,
powers, trusts, duties and immunities of the Trustee under the Indenture, and
(iv) the defeasance provisions of the Indenture. In addition, the Company may,
at its option and at any time, elect to have the obligations of the Company
released with respect to certain covenants that are described in the Indenture
("covenant defeasance") and any omission to comply with such obligations shall
not constitute a Default or an Event of Default with respect to the Notes. In
the event that a covenant defeasance occurs, certain events (not including
non-payment, bankruptcy and insolvency events) described under "--Events of
Default" will no longer constitute Events of Default with respect to the
Notes.
In order to exercise either defeasance or covenant defeasance, (i) the
Company shall irrevocably deposit with the Trustee, as trust funds in trust,
for the benefit of the holders of the Notes, cash in United States dollars,
U.S. Government Obligations (as defined in the Indenture), or a combination
thereof, in such amounts as will be sufficient, in the report of a nationally
recognized firm of independent public accountants or a nationally recognized
investment banking firm, to pay and discharge the principal of, premium, if
any, and interest on the outstanding Notes to redemption or maturity; (ii) the
Company shall have delivered to the Trustee an opinion of counsel in the
United States to the effect that the holders of the outstanding Notes will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance or covenant defeasance, as the case may be, and will be
subject to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance or covenant
defeasance, as the case may be, had not occurred (in the case of defeasance,
such opinion must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable Federal income tax laws); (iii) no Default
or Event of Default shall have occurred and be continuing on the date of such
deposit or insofar as clauses (vi) and (vii) under the first paragraph under
"--Events of Default" is concerned, at any time during the period ending on
the 91st day after the date of deposit; (iv) such defeasance or covenant
defeasance shall not result in a breach or violation of, or constitute a
Default under, the Indenture or any other agreement or instrument to which the
Company is a party or by which it is bound (including without limitation the
Warrant Agreement); (v) the Company shall have delivered to the Trustee an
opinion of counsel to the effect that (A) the trust funds will not be subject
to any
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rights of holders of Indebtedness (other than holders of the Notes) and (B)
after the 91st day following the deposit, the trust funds will not be subject
to the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally; and (vi) the Company shall
have delivered to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that all conditions precedent under the Indenture to
either defeasance or covenant defeasance, as the case may be, have been
complied with and that no violations under agreements governing any other
outstanding Indebtedness would result therefrom.
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of the Notes, as expressly
provided for in the Indenture) as to all outstanding Notes when (i) either (a)
all the Notes theretofore authenticated and delivered (except lost, stolen or
destroyed Notes which have been replaced or paid) have been delivered to the
Trustee for cancellation or (b) all Notes not theretofore delivered to the
Trustee for cancellation have become due and payable and the Company has
irrevocably deposited or caused to be deposited with the Trustee an amount in
United States dollars sufficient to pay and discharge the entire indebtedness
on the Notes not theretofore delivered to the Trustee for cancellation, for
the principal of, premium, if any, and interest to the date of deposit; (ii)
the Company has paid or caused to be paid all other sums payable under the
Indenture by the Company; (iii) the satisfaction and discharge of the
Indenture shall not result in a breach or violation of, or constitute a
Default or Event of Default under, the Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound (including
without limitation the Warrant Agreement); and (iv) the Company has delivered
to the Trustee an Officers' Certificate and an opinion of counsel each stating
that all conditions precedent under the Indenture relating to the satisfaction
and discharge of the Indenture have been complied with.
TRANSFER AND EXCHANGE
The registered holder of a Note will be treated as the owner of it for all
purposes. A holder may transfer or exchange Notes in accordance with the
Indenture. The Registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture. Neither the Company nor the Registrar shall be
required to issue, register the transfer of or exchange any Note (i) during a
period beginning at the opening of business on the day that the Trustee
receives notice of any redemption from the Company and ending at the close of
business on the day the notice of redemption is sent to holders, (ii) selected
for redemption, in whole or in part, except the unredeemed portion of any Note
being redeemed in part may be transferred or exchanged, and (iii) during a
Change of Control Offer or an Asset Sale Offer if such Note is tendered
pursuant to such Change of Control Offer or Asset Sale Offer and not
withdrawn.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two paragraphs, the Indenture or the Notes
may be amended or supplemented with the written consent of the holders of at
least a majority in aggregate principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange
offer for the Notes), and any existing Default or Event of Default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender
offer or exchange offer for Notes).
Without the consent of each holder affected, an amendment or waiver shall
not: (i) reduce the principal amount of the Notes whose holders must consent
to an amendment, supplement or waiver, (ii) reduce the principal of or change
the fixed maturity of any Note, or alter the provisions with respect to the
redemption or repurchase of the Notes in a manner adverse to the holders of
the Notes, (iii) reduce the rate of or change the time for payment of interest
on any Notes, (iv) waive a Default or Event of Default in the payment of
principal of, premium, if any, or interest on the Notes (except that holders
of at least a majority in aggregate principal
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amount of the then outstanding Notes may (a) rescind an acceleration of the
Notes that resulted from a non-payment default, and (b) waive the payment
default that resulted from such acceleration), (v) make any Note payable in
money other than that stated in the Notes, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults (other than
to add sections of the Indenture subject thereto) or the rights of holders of
Notes to receive payments of principal of, or premium, if any, or interest on,
the Notes, (vii) waive a redemption payment with respect to any Note, (viii)
make any change in the obligation of the Company to make and consummate (a) a
Change of Control Offer in the event of a Change of Control Triggering Event,
(b) an Equity Proceeds Offer as and when required by "--Offer to Purchase on
Public Equity Offering," (c) an Asset Sale Offer as and when required by "--
Certain Covenants--Limitation on Asset Sales" or (d) an offer to purchase
Notes as and when required by "--Certain Covenants--Limitation on Restricted
Payments" or amend or modify any of the definitions relating to any thereof,
or (ix) make any change in the foregoing amendment and waiver provisions
(except to increase the percentage of outstanding Notes required for such
actions or to provide that certain other provisions of the Indenture cannot be
modified or waived without the consent of the holder of each Note affected
thereby).
Notwithstanding the foregoing, without the consent of any holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
(i) to cure any ambiguity, defect or inconsistency; provided, however, that
such amendment or supplement does not adversely affect the rights of any
holder, (ii) to comply with "--Merger, Consolidation and Sale of Assets,"
(iii) to provide for uncertificated Notes in addition to or in place of
certificated Notes, (iv) to make any change that would provide any additional
rights or benefits to the holders of the Notes or that does not adversely
affect the rights of any such holder, (v) to comply with requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act, (vi) to add to the covenants of the Company for
the benefit of the holders, or to surrender any right or power herein
conferred upon the Company, or (vii) to secure the Notes as provided in "--
Certain Covenants--Limitation on Liens."
THE TRUSTEE
In the event that the Trustee becomes a creditor of the Company, the
Indenture contains certain limitations on the rights of the Trustee to obtain
payment of claims in certain cases or to realize on certain property received
in respect of any such claim as security or otherwise. The Trustee will be
permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue as Trustee, or resign.
The holders of a majority in aggregate principal amount of the then
outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that, in case an Event of Default
has occurred and has not been cured, the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. The Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
holder of Notes, unless such holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for the definition of all other terms used in the
Indenture.
"Acquired Debt" means, with respect to any specified Person, Indebtedness of
any other Person (the "Acquired Person") existing at the time the Acquired
Person merges with or into, or becomes a Restricted Subsidiary of, such
specified Person, including Indebtedness incurred in connection with, or in
contemplation of, the Acquired Person merging with or into, or becoming a
Restricted Subsidiary of, such specified Person.
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"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with") of any Person
means the possession, directly or indirectly, 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 agreement or otherwise.
"Applicable Premium" means, with respect to a Note, the greater of (i) (a)
the present value of all remaining required interest and principal payments
due on such Note and all premium payments relating thereto assuming a
redemption date of May 15, 1999, computed using a discount rate equal to the
Treasury Rate plus 75 basis points minus (b) the then outstanding principal
amount of such Note minus (c) accrued interest paid on the date of redemption
and (ii) the redemption price applicable to the twelve-month period beginning
May 15, 1999.
"Asset Sale" means (i) any sale, lease, conveyance or other disposition by
the Company or any Restricted Subsidiary of any assets (including by way of a
sale-and-leaseback) other than in the ordinary course of business or (ii) the
issuance or sale of Capital Stock of any Restricted Subsidiary (but not the
Capital Stock of any Unrestricted Subsidiary), in the case of each of (i) and
(ii), whether in a single transaction or a series of related transactions, to
any Person (other than to the Company or a Wholly Owned Restricted
Subsidiary); provided, however, that for purposes of the covenant described
under "--Certain Covenants--Limitation on Asset Sales" above, Asset Sales
shall not include: (a) a transaction or series of related transactions for
which the Company or the applicable Restricted Subsidiary receives aggregate
consideration of less than $500,000 in any fiscal year; (b) transactions
complying with the covenant described under "--Merger, Consolidation and Sale
of Assets" above; (c) any Lien securing Indebtedness to the extent that such
Lien is granted in compliance with the covenant described under "--Certain
Covenants--Limitation on Liens" above; (d) any Restricted Payment (or
Permitted Investment) permitted by the covenant described under "--Certain
Covenants--Limitation on Restricted Payments" above; and (e) any disposition
of assets or property to the extent such property or assets are obsolete, worn
out or no longer useful in the Company's or any Restricted Subsidiary's
business; provided, however, that the fair market value (determined reasonably
and in good faith by the Board of Directors of the Company) of any assets or
property so disposed shall not exceed $500,000 in the aggregate in any given
year. Notwithstanding anything herein or in the Indenture to the contrary, (A)
no sale, lease, conveyance or other disposition of all or any portion of the
Radio Station Assets or dividend from the operations of, or from any sale or
disposition of, any Radio Station Assets (unless received in repayment of a
Radio Station Note) and (B) no sale, lease, conveyance or other disposition of
all or any portion of the property or assets used in or related to television
station WUTR (including by way of sale of the Capital Stock of the Subsidiary
owning such property or assets) shall be deemed an Asset Sale, provided that
any transaction (or series of transactions) described in this clause (B) is in
the aggregate for fair market value.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding up, liquidation, reorganization
or relief of debtors, or any amendment to, succession to or change in any such
law.
"Broadcasting Notes" means the $241.0 million aggregate principal amount of
11 3/4% Senior Notes due 2004 of Park Broadcasting issued under an indenture
dated May 13, 1996 between Park Broadcasting and IBJ Schroder Bank & Trust
Company, as trustee, including the Series B 11 3/4% Senior Notes due 2004 of
Park Broadcasting issued in exchange therefor.
"Capital Lease Obligation" of any Person means, at the time any
determination thereof is to be made, the amount of the liability in respect of
a capital lease for property leased by such Person that would at such time be
required to be capitalized on the balance sheet of such Person in accordance
with GAAP.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
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participations, including partnership interests, whether general or limited,
of such Person, including any Preferred Stock.
"Cash Equivalents" means (a) securities with maturities of one year or less
from the date of acquisition issued, fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit, time
deposits, overnight bank deposits, bankers' acceptances and repurchase
agreements issued by a Qualified Issuer having maturities of 270 days or less
from the date of acquisition, (c) commercial paper of an issuer rated at least
A-2 by Standard & Poor's Corporation or at least P-2 by Moody's Investors
Service, Inc., or carrying an equivalent rating by a nationally recognized
rating agency if both of the two named rating agencies cease publishing
ratings of investments, and having maturities of 270 days or less from the
date of acquisition, and (d) money market accounts or funds with or issued by
Qualified Issuers.
"Change of Control" means the occurrence of any of the following events: (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act), other than Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall be deemed to have beneficial ownership of all shares that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of 50%
or more of the voting power of the total outstanding Voting Stock of the
Company or PAI, as the case may be; (ii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board
of Directors of the Company or PAI, as the case may be (together with any new
directors whose election to such Board of Directors, or whose nomination for
election by the stockholders of the Company or PAI, as the case may be, was
approved by a vote of the Permitted Holders who at the time of the vote are
stockholders of the Company or PAI, as the case may be, or either (A) 66 2/3%
or (B) all remaining members of the Board of Directors of the Company or PAI,
as the case may be, then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved), cease for any reason to constitute a majority of such
Board of Directors of the Company or PAI, as the case may be, then in office;
(iii) the sale or other disposition of all or substantially all of the Capital
Stock or assets of the Company or PAI, as the case may be, to any Person or
Group (as defined in Rule 13d-5 of the Exchange Act), other than to the
Permitted Holders, as an entirety or substantially as an entirety in a single
transaction or a series of related transactions or (iv) the Company or PAI, as
the case may be, consolidates with or merges with or into another Person, or
any Person consolidates with or merges with or into the Company or PAI, other
than in any such transaction where immediately after such transaction the
"beneficial owners" of the Voting Stock of the Company or PAI, as the case may
be, immediately prior to such transaction or the Permitted Holders own at
least a majority of the voting power of the outstanding Voting Stock of the
Surviving Person immediately after the consummation of such transaction. For
purposes of the foregoing definition of Change of Control, the transfer (by
lease, assignment, sale or otherwise, in a single transaction or series of
related transactions) of all or substantially all of the properties or assets
of one or more Subsidiaries of the Company, the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Company, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Company" means Park Communications, Inc., a Delaware corporation, unless
and until a successor replaces it in accordance with the Indenture and
thereafter means such successor.
"Consolidated Interest Expense" means, with respect to any period, the sum
of (i) the interest expense of the Company and the Restricted Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP
consistently applied, including, without limitation, (a) amortization of debt
discount, (b) the net payments, if any, under Interest Rate Agreement
Obligations (including amortization of discounts), (c) the interest portion of
any deferred payment obligation and (d) accrued interest, plus (ii) the
interest component of all Capital Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by the Company and the
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Restricted Subsidiaries during such period, and all capitalized interest of
the Company and the Restricted Subsidiaries, in each case as determined on a
consolidated basis in accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any period, the net income
(or loss) of the Company and the Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP consistently
applied and adjusted, (i) by adding the amount of management advisory fees
paid by the Company to PAI for such period and deducted in calculating such
net income (or loss) and (ii) to the extent included in calculating such net
income (or loss), by excluding, without duplication, (a) all extraordinary
gains but not losses (less all fees and expenses relating thereto) together
with any related provisions for taxes, (b) the portion of net income (or loss)
of the Company and the Restricted Subsidiaries allocable to interests in
unconsolidated Persons or Unrestricted Subsidiaries, except to the extent of
the amount of dividends or distributions actually paid in cash to the Company
or the Restricted Subsidiaries by such other Person during such period
(subject in the case of any such dividend or distribution to any Restricted
Subsidiary to the limitations set forth in clause (e) below, (c) net income
(or loss) of any Person combined with the Company or any Restricted Subsidiary
on a "pooling of interests" basis attributable to any period prior to the date
of combination, (d) net gains but not losses (less all fees and expenses
relating thereto) in respect of dispositions of assets (including, without
limitation, pursuant to sale-and-leaseback transactions) other than in the
ordinary course of business, together with any related provisions for taxes
and (e) the net income of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by that Restricted
Subsidiary of that income to the Company is not at the time permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders
(regardless of any waiver in respect thereof).
"Consolidated Net Worth" means, with respect to any Person on any date, the
equity of the common and preferred stockholders of such Person and its
Restricted Subsidiaries as of such date, determined on a consolidated basis in
accordance with GAAP consistently applied.
"Cumulative Interest Expense" means, as of any date of determination, the
amount from the Issue Date to the end of the Company's most recently ended
full fiscal quarter prior to such date, taken as a single accounting period of
the sum of (i) the interest expense of the Company for such period, determined
in accordance with GAAP consistently applied, including, without limitation,
(a) amortization of debt discount, (b) the net payments, if any, under
Interest Rate Agreement Obligations (including amortization of discounts), (c)
the interest portion of any deferred payment obligation and (d) accrued
interest, plus (ii) the interest component of all Capital Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by the Company during
such period, and all capitalized interest of the Company, in each case
determined in accordance with GAAP consistently applied.
"Cumulative Operating Cash Flow" means, as of any date of determination,
Operating Cash Flow from the Issue Date to the end of the Company's most
recently ended full fiscal quarter prior to such date, taken as a single
accounting period.
"Debt to Operating Cash Flow Ratio" means, with respect to any date of
determination, the ratio of (i) the aggregate principal amount of all
outstanding Indebtedness of the Company and the Restricted Subsidiaries as of
such date on a consolidated basis, plus the aggregate liquidation preference
or redemption amount of all Disqualified Stock of the Company and the
Restricted Subsidiaries (other than any Disqualified Stock owned by the
Company or any Wholly Owned Restricted Subsidiary) determined in accordance
with GAAP, to (ii) Operating Cash Flow of the Company and the Restricted
Subsidiaries on a consolidated basis for the four most recent full fiscal
quarters ending on or immediately prior to such date, determined on a pro
forma basis (without giving effect to clause (ii)(c) of the definition of
Consolidated Net Income) after giving pro forma effect to (A) the incurrence
of any Indebtedness being incurred on such date of determination and (if
applicable) the application of the net proceeds therefrom, including to
refinance other Indebtedness; (B) in the case of Acquired Debt, the related
acquisition as if such acquisition had occurred at the beginning of such four-
quarter period; and (C) any acquisition or disposition by the Company and the
Restricted Subsidiaries of any company or any
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business or any assets out of the ordinary course of business, or any related
repayment of Indebtedness, in each case since the first day of such four-
quarter period, assuming such acquisition or disposition had been consummated,
with respect to any acquisition, on the first day of, and with respect to any
disposition, immediately prior to the first day of, such four-quarter period.
"Default" means any event that is, or after the giving of notice or passage
of time or both would be, an Event of Default.
"Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such
Person is the Surviving Person) or the sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of such Person's
assets.
"Disqualified Stock" means (i) any Preferred Stock of any Restricted
Subsidiary and (ii) any Capital Stock of the Company that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof, in whole or in part on or
prior to the stated maturity of the Notes; provided, however, that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require the Company to purchase or redeem
such Capital Stock upon the occurrence of a change of control occurring prior
to the final maturity date of the Notes shall not constitute Disqualified
Stock if the change of control provisions applicable to such Capital Stock are
no more favorable to the holders of such Capital Stock than the provisions
described under "--Change of Control" and such Capital Stock specifically
provides that the Company will not purchase or redeem any such Capital Stock
pursuant to such provisions prior to the Company's purchase of the Notes as
are required to be purchased pursuant to the provisions described under "--
Change of Control."
"Dollars" and "$" means lawful money of the United States of America.
"Equity Market Capitalization" of any Person means the aggregate market
value of the outstanding Capital Stock (other than Preferred Stock and
excluding any Capital Stock held in treasury by such Person) of such Person of
a class that is listed or admitted to unlisted trading privileges on a United
States national securities exchange or included for trading on the Nasdaq
National Market System. For purposes of this definition the "market value" of
any such Capital Stock shall be the average of the high and low sale prices,
or if no sales are reported, the average of the high and low bid prices, as
reported on the principal national securities exchange on which such Capital
Stock is listed or admitted to trading or, if such Capital Stock is not listed
or admitted to trading on a national securities exchange, as reported by
Nasdaq, for each trading day in a 20 consecutive trading day period ending not
more than 45 days prior to the date such Person commits to make an investment
in the Capital Stock of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means, as of any date, generally accepted accounting principles in
the United States and not including any interpretations or regulations that
have been proposed but that have not become effective.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Indebtedness" means, with respect to any Person, without duplication, and
whether or not contingent, (i) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services or which is
evidenced by a note, bond, debenture or similar instrument, (ii) all Capital
Lease Obligations of such Person, (iii) all obligations of such Person in
respect of letters of credit or bankers' acceptances issued or created for the
account of such Person, (iv) all Interest Rate Agreement Obligations of such
Person, (v) all liabilities secured by any Lien (other than any Permitted
Lien) on any property owned by such Person even if such Person
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has not assumed or otherwise become liable for the payment thereof to the
extent of the lesser of the amount of the debt secured thereby or the value of
the property subject to such Lien (it being understood that if such debt
exceeds the value of such property, the full amount thereof shall be included
in this definition), (vi) all obligations to purchase, redeem, retire, or
otherwise acquire for value any Capital Stock of such Person, or any warrants,
rights or options to acquire such Capital Stock, now or hereafter outstanding,
(vii) to the extent not included in (vi), all Disqualified Stock issued by
such Person, valued at the greater of its voluntary or involuntary maximum
fixed repurchase price plus accrued dividends thereon, and (viii) to the
extent not otherwise included, any guarantee by such Person of any other
Person's indebtedness or other obligations described in clauses (i) through
(vii) above. "Indebtedness" of the Company and the Restricted Subsidiaries (i)
shall be determined in accordance with GAAP and (ii) shall not include current
trade payables incurred in the ordinary course of business and payable in
accordance with customary practices, film contracts and non-interest bearing
installment obligations and accrued liabilities incurred in the ordinary
course of business which are not more than 90 days past due. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Stock which
does not have a fixed repurchase price shall be calculated in accordance with
the terms of such Disqualified Stock as if such Disqualified Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to the Indenture, and if such price is based upon, or measured by the
fair market value of, such Disqualified Stock, such fair market value is to be
determined reasonably and in good faith by the board of directors of the
issuer of such Disqualified Stock.
"Independent Director" means a director of the Company other than a director
(i) who (apart from being a director of the Company or any Subsidiary) is an
employee, associate or Affiliate of the Company or a Subsidiary or has held
any such position during the previous five years, or (ii) who is a director,
employee, associate or Affiliate of another party (other than the Company or
any of its Subsidiaries) to the transaction in question.
"Insolvency or Liquidation Proceeding" means, with respect to any Person,
any liquidation, dissolution or winding up of such Person, or any bankruptcy,
reorganization, insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"Interest Rate Agreement Obligations" means, with respect to any Person, the
Obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, and (ii) other
agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's
or the equivalent of such ratings by S&P or Moody's or in the event S&P or
Moody's shall cease rating the Notes and the Company shall select any other
Rating Agency, the equivalent of such ratings by such other Rating Agency.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates of such Person) in the form of
loans, Guarantees, advances or capital contributions (excluding commission,
travel and similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Capital Stock or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Issue Date" means May 13, 1996, the date on which the Notes were first
issued under the Indenture.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in any asset and any filing of, or agreement to give, any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Net Proceeds" means, with respect to any Asset Sale by any Person, the
aggregate cash proceeds received by such Person and/or its Affiliates in
respect of such Asset Sale, which amount is equal to the excess, if any, of
(i) the cash received by such Person and/or its Affiliates (including any cash
payments received by way of
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deferred payment pursuant to, or monetization of, a note or installment
receivable or otherwise, but only as and when received) in connection with
such Asset Sale, over (ii) the sum of (a) the amount of any Indebtedness that
is secured by such asset and which is required to be repaid by such Person in
connection with such Asset Sale, plus (b) all fees, commissions and other
expenses incurred by such Person in connection with such Asset Sale, plus (c)
provision for taxes, including income taxes, attributable to the Asset Sale or
attributable to required prepayments or repayments of Indebtedness with the
proceeds of such Asset Sale, plus (d) a reasonable reserve for the after-tax
cost of any indemnification payments (fixed or contingent) attributable to
seller's indemnities to purchaser in respect of such Asset Sale undertaken by
the Company or any of the Restricted Subsidiaries in connection with such
Asset Sale, plus (e) if such Person is a Restricted Subsidiary, any dividends
or distributions payable to holders of minority interests in such Restricted
Subsidiary from the proceeds of such Asset Sale.
"Newspapers Notes" means the $155.0 million aggregate principal amount of 11
7/8% Senior Notes due 2004 of Park Newspapers issued under an indenture dated
May 13, 1996 between Park Newspapers and IBJ Schroder Bank & Trust Company, as
trustee, including the Series B 11 7/8% Senior Notes due 2004 of Park
Newspapers issued in exchange therefor.
"Obligations" means any principal, interest (including, without limitation,
Post-Petition Interest), penalties, fees, indemnifications, reimbursement
obligations, damages and other liabilities payable under the documentation
governing any Indebtedness.
"Operating Cash Flow" means, with respect to any period, the Consolidated
Net Income of the Company and the Restricted Subsidiaries for such period,
plus, without duplication, (i) extraordinary net losses and net losses
realized on any sale or other disposition of assets during such period, to the
extent such losses were deducted in computing Consolidated Net Income, plus
(ii) provision for taxes based on income or profits, to the extent such
provision for taxes was included in computing such Consolidated Net Income,
and any provision for taxes utilized in computing the net losses under clause
(i) hereof, plus (iii) Consolidated Interest Expense of the Company and the
Restricted Subsidiaries for such period, plus (iv) depreciation, amortization
and all other non-cash charges (excluding non-cash charges associated with
changes in working capital and other balance sheet changes in the ordinary
course of business), to the extent such depreciation, amortization and other
non-cash charges were deducted in computing such Consolidated Net Income
(including amortization of goodwill and other intangibles), plus (v) the
difference of (A) the amount of cash payments actually received by the Company
under its network affiliation agreements less (B) the actual amount of revenue
recognized thereunder in accordance with GAAP.
"Permitted Holders" means (i) each of (A) Gary B. Knapp, (B) Donald R.
Tomlin, Jr. and (C) PAI so long as PAI is controlled by Persons who would
otherwise be Permitted Holders hereunder; (ii) the spouse, ancestors,
siblings, descendants (including children or grandchildren by adoption) of (A)
any of the Persons described in clause (i) or (B) any spouse, ancestor,
sibling or descendent (including children or grandchildren by adoption) of any
of the Persons described in clause (i); (iii) in the event of the incompetence
or death of any of the Persons described in clauses (i) and (ii), such
Person's estate, executor, administrator, committee or other personal
representative, in each case who at any particular date shall beneficially own
or have the right to acquire, directly or indirectly, Capital Stock of the
Company; (iv) any trusts created for the benefit of the Persons described in
clause (i), (ii) or (iii) or any trust for the benefit of any such trust; or
(v) any Person controlled by any of the Persons described in clause (i), (ii),
(iii) or (iv). For purposes of this definition, "control," as used with
respect to any Person, shall mean the possession, directly or indirectly, of
the power to elect or appoint not less than a majority of the members of the
Board of Directors of such Person.
"Permitted Investments" means (i) any Investment in the Company or any
Wholly Owned Restricted Subsidiary; (ii) any Investment in Cash Equivalents;
(iii) any Investment in a Person (an "Acquired Person") if, as a result of
such Investment, (a) the Acquired Person becomes a Wholly Owned Restricted
Subsidiary, or (b) the Acquired Person either (1) is merged or consolidated
with or into the Company or any Wholly Owned Restricted Subsidiary and the
Company or such Wholly Owned Restricted Subsidiary is the Surviving Person, or
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(2) transfers or conveys all or substantially all of its assets to, or is
liquidated into, the Company or any Wholly Owned Restricted Subsidiary; (iv)
Investments in accounts and notes receivable acquired in the ordinary course
of business; (v) any securities received in connection with an Asset Sale that
complies with the covenant described under "--Certain Covenants--Limitation on
Asset Sales" above; provided, however, the fair market value of such
securities does not exceeds 15% of the aggregate consideration received at the
time of such Asset Sale; (vi) Interest Rate Agreement Obligations permitted
pursuant to the second paragraph of the covenant described under "--Certain
Covenants--Limitation on Incurrence of Indebtedness" above; (vii) any other
Investments that do not exceed $5.0 million in amount in the aggregate at any
one time outstanding; (viii) Investments for which the sole consideration
provided is Capital Stock (other than Disqualified Stock) of the Company; and
(ix) Investments existing on the Issue Date.
"Permitted Liens" means (i) Liens permitted by the indentures governing the
Broadcasting Notes and the Newspapers Notes as in effect on the Issue Date;
(ii) Liens securing Indebtedness of a Person existing at the time that such
Person is merged into or consolidated with the Company or a Restricted
Subsidiary, provided, however, that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of such Person; (iii) Liens on property acquired by the
Company or a Restricted Subsidiary, provided, however, that such Liens were in
existence prior to the contemplation of such acquisition and do not extend to
any other property; (iv) Liens arising from Capital Lease Obligations
permitted under the Indenture; (v) Liens arising from Purchase Money
Indebtedness permitted under the Indenture; (vi) Liens in respect of Interest
Rate Agreement Obligations permitted under the Indenture; (vii) Liens in favor
of the Company or any Restricted Subsidiary; (viii) Liens incurred, or pledges
and deposits in connection with, workers' compensation, unemployment insurance
and other social security benefits, and leases, appeal bonds and other
obligations of like nature incurred by the Company or any Restricted
Subsidiary in the ordinary course of business; (ix) Liens imposed by law,
including, without limitation, mechanics', carriers', warehousemen's,
materialmen's, suppliers' and vendors' Liens, incurred by the Company or any
Restricted Subsidiary in the ordinary course of business; (x) Liens for ad
valorem, income or property taxes or assessments and similar charges which
either are not delinquent or are being contested in good faith by appropriate
proceedings for which the Company has set aside on its books reserves to the
extent required by GAAP; (xi) easements, reservations, licenses, rights-of-
way, zoning restrictions and other similar charges or encumbrances in respect
of real property not interfering in any material respect with the ordinary
conduct of the business of the Company or any of its Restricted Subsidiaries;
(xii) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to such
letters of credit and products and proceeds thereof; and (xiii) any Lien to
secure the refinancing of any Indebtedness described in the foregoing clauses;
provided, however, that to the extent any such clause limits the amounts
secured or the assets subject to such Liens, no refinancing shall increase the
assets subject to such Liens or the amounts secured thereby beyond the assets
or amounts set forth in such clause.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Post-Petition Interest" means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person
in accordance with and at the contract rate (including, without limitation,
any rate applicable upon default) specified in the agreement or instrument
creating, evidencing or governing such Indebtedness, whether or not, pursuant
to applicable law or otherwise, the claim for such interest is allowed as a
claim in such Insolvency or Liquidation Proceeding.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred
as to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over Capital Stock of any other class of such Person.
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"Public Equity Offering" means an underwritten public offering of Capital
Stock (other than Disqualified Stock) of the Company or PAI, pursuant to an
effective registration statement filed under the Securities Act; provided,
however, that with respect to any such public equity offering by PAI, cash
proceeds from such public equity offering equal to not less than (i) with
respect to any redemption prior to December 31, 1997, 112.0% and (ii) with
respect to any redemption on or after December 31, 1997, 113.0% of the
aggregate principal amount of the Notes to be redeemed is received by the
Company as a capital contribution immediately prior to such redemption and,
with respect to any Public Equity Offering by the Company or PAI, to the
extent that the proceeds therefrom are not used to effect a redemption of the
Broadcasting Notes or the Newspapers Notes.
"Purchase Money Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries incurred in connection with the purchase of property
or assets for the business of the Company and its Restricted Subsidiaries.
"Qualified Issuer" means (A) any lender that is a party to the Senior Credit
Facility; and (B) any commercial bank (i) which has capital and surplus in
excess of $80,000,000, and (ii) the outstanding short-term debt securities of
which are rated at least A-2 by Standard & Poor's Corporation or at least P-2
by Moody's Investors Service, Inc., or carry an equivalent rating by
nationally recognized rating agency if both the two named rating agencies
cease publishing ratings of investments.
"Radio Station Assets" means all property and assets used in the radio
broadcasting operations of Park Broadcasting as of the Issue Date as more
particularly set forth in the indenture governing the Broadcasting Notes.
"Rating Agency" means any of (i) S&P, (ii) Moody's or (iii) if S&P or
Moody's or both shall not make a rating of the Notes publicly available, a
security rating agency or agencies, as the case may be, nationally recognized
in the United States, selected by the Company which shall be substituted for
S&P or Moody's or both, as the case may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories: AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor
categories); (ii) with respect to Moody's, any of the following categories:
Aaa, Aa, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories);
and (iii) the equivalent of any such category of S&P or Moody's used by
another Rating Agency. In determining whether the rating of the Notes has
decreased by one or more gradation, gradations within Rating Categories (+ and
- - for S&P; 1, 2 and 3 for Moody's; or the equivalent gradations for another
Rating Agency) shall be taken into account (e.g., with respect to S&P, a
decline in rating from BB+ to BB, as well as from BB- to B+, will constitute a
decrease of one gradation).
"Rating Decline" means the occurrence on, or within 60 days after, the date
of public notice of the occurrence of a Change of Control or of the intention
of the Company or Persons controlling the Company to effect a Change of
Control (which period shall be extended so long as the rating of the Notes is
under publicly announced consideration for possible downgrade by any of the
Rating Agencies) of the following: (i) if the Notes are rated by either Rating
Agency as Investment Grade immediately prior to the beginning of such period,
the rating of the Notes by both Rating Agencies shall be below Investment
Grade; or (ii) if the Notes are rated below Investment Grade by both Rating
Agencies immediately prior to the beginning of such period, the rating of the
Notes by either (or both) Rating Agency shall be decreased by one or more
gradations (including gradations within Rating Categories as well as between
Rating Categories).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payment" means (i) any dividend or other distribution declared
or paid on any Capital Stock of the Company or any of its Restricted
Subsidiaries (other than dividends or distributions payable solely in Capital
Stock (other than Disqualified Stock) of the Company or such Restricted
Subsidiary or dividends or distributions payable to the Company or any Wholly
Owned Restricted Subsidiary); (ii) any payment to purchase,
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redeem, defease or otherwise acquire or retire for value any Capital Stock of
the Company or any Restricted Subsidiary or other Affiliate of the Company
(other than any Capital Stock owned by the Company or any Wholly Owned
Restricted Subsidiary); (iii) any payment to purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated in
right of payment to the Notes other than a purchase, redemption, defeasance or
other acquisition or retirement for value that is paid for with the proceeds
of Refinancing Indebtedness that is permitted under the covenant described
under "--Certain Covenants--Limitation on Incurrence of Indebtedness"; or (iv)
any Restricted Investment. Notwithstanding anything in the Indenture to the
contrary, any transaction consummated by Park Broadcasting or Park Newspapers
which would otherwise be a Restricted Investment under the Indenture shall not
be prohibited by the Indenture (but shall still count as a Restricted
Investment) if made in accordance with the provisions of the indenture
governing the Broadcasting Notes (with respect to Park Broadcasting) or the
indenture governing Newspapers Notes (with respect to Park Newspapers) as in
effect on the Issue Date.
"Restricted Payment Basket" means as of any date an amount equal to (a) the
cumulative amount of cash dividends received by the Company from its
Subsidiaries since the Issue Date (other than dividends of the proceeds of the
Broadcasting Notes and the Newspapers Notes) minus (b) the sum of (i) the
Cumulative Interest Expense of the Company and (ii) the cumulative amount of
provision for taxes based on income of the Company since the Issue Date.
"Restricted Subsidiary" means each direct or indirect Subsidiary of the
Company other than an Unrestricted Subsidiary.
"Senior Credit Facility" means the Credit Agreement dated as of May 10, 1996
between the Company, the Subsidiaries of the Company named therein and the
lenders named therein, as the same may be amended, modified, renewed,
refunded, replaced or refinanced (collectively, "refinanced") from time to
time, including (i) any related notes, letters of credit, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified or refinanced from time to
time, and (ii) any notes, guarantees, collateral documents, instruments and
agreements executed in connection with any such amendment, modification or
refinancing; provided, however, that (A) no amendment, modification or
refinancing shall be permitted unless the terms thereof require substantially
the same application of the proceeds of the sale or other disposition of the
Radio Station Assets (including amount and timing) to the repayment of
Indebtedness under the Senior Credit Facility (and do not require prepayment
from the sale or other disposition of, or any different restriction (as
compared to the terms in effect in the Issue Date) in respect of, KEZX-AM and
KWJZ-FM) and (B) after such time as the $58.0 million aggregate principal
amount outstanding under the Senior Credit Facility on May 13, 1996 is first
repaid other than through a refinancing, the Senior Credit Facility shall be
deemed not to exist for purposes of any exception to the covenants in the
Indenture.
"Strategic Equity Investment" means the issuance and sale of Capital Stock
(other than Disqualified Stock) of the Company or PAI to a Person
substantially engaged in the television broadcasting or newspaper publishing
business or any other business reasonably related to the Company's business
that has an Equity Market Capitalization of at least $350.0 million; provided,
however, that with respect to any such issuance by PAI, cash proceeds from
such issuance equal to not less than (i) with respect to any redemption prior
to December 31, 1997, 112.0% and (ii) with respect to any redemption on or
after December 31, 1997, 113.0% of the aggregate principal amount of Notes to
be redeemed is received by the Company as a capital contribution immediately
prior to any such redemption and, with respect to any issuance by the Company
or PAI, to the extent that the proceeds therefrom are not used to effect a
redemption of the Broadcasting Notes or the Newspapers Notes.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding voting power of the Voting Stock of which is owned or controlled,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person, or by such Person and one or more other Subsidiaries thereof, or
(ii) any limited partnership of which such Person or any Subsidiary of such
Person is a general partner, or (iii) any other Person (other than a
corporation or limited partnership) in which such Person, or one or more other
Subsidiaries of such
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Person, or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has more than 50% of the outstanding partnership or similar
interests or has the power, by contract or otherwise, to direct or cause the
direction of the policies, management and affairs thereof.
"Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or
the Person to which such Disposition is made.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519)
which has become publicly available at least two business days prior to the
date fixed for redemption (or, if such Statistical Release is no longer
published, any publicly available source of similar market data)) most nearly
equal to the then remaining term to May 15, 1999; provided, however, that if
the then remaining term to May 15, 1999 is not equal to the constant maturity
of a United States Treasury security for which a weekly average yield is
given, the Treasury Rate shall be obtained by linear interpolation (calculated
to the nearest one-twelfth of a year) from the weekly average yields of United
States Treasury securities for which such yields are given, except that if the
then remaining term to May 15, 1999 is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
"Unrestricted Subsidiary" means (a) each Subsidiary listed on an officers'
certificate delivered to the Trustee on the Closing Date and (b) any
Subsidiary of the Company designated as an Unrestricted Subsidiary by the
Board of Directors of the Company; provided, however, that for purposes of
this clause (b) (i) the Subsidiary to be so designated (x) (I) has total
assets with a fair market value at the time of such designation of $1,000 or
less or (II) is being so designated prior to the acquisition by the Company of
such Subsidiary by merger or consolidation with an Unrestricted Subsidiary,
and (y) does not own any Capital Stock of the Company or any Restricted
Subsidiary, (ii) if such Subsidiary is acquired by the Company, such
Subsidiary is designated as an Unrestricted Subsidiary prior to the
consummation of such acquisition, (iii) no Default or Event of Default shall
have occurred and be continuing, (iv) no portion of any Indebtedness or any
other Obligation (contingent or otherwise) of such Subsidiary (a) is
guaranteed by, or is otherwise the subject of credit support provided by the
Company or any of its Restricted Subsidiaries, (b) is recourse to or obligates
the Company or any of its Restricted Subsidiaries in any way, or (c) subjects
any property or asset of the Company or any of its Restricted Subsidiaries
directly or indirectly, contingently or otherwise, to the satisfaction of such
Indebtedness or other obligation, (v) neither the Company nor any of its
Restricted Subsidiaries has any contract, agreement, arrangement or
understanding with such Subsidiary other than on terms as favorable to the
Company or such Restricted Subsidiary as those that might be obtained at the
time from Persons that are not Affiliates of the Company, and (vi) neither the
Company nor any of its Restricted Subsidiaries has any obligations (a) to
subscribe for additional shares of Capital Stock of such Subsidiary, or (b) to
maintain or preserve such Subsidiary's financial condition or to cause such
Subsidiary to achieve certain levels of operating results. Any such
designation by the Company's Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certificate stating that such designation
complies with the foregoing conditions. The Company's Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation, no Default
or Event of Default shall have occurred and be continuing, including, without
limitation, under the covenants described above under the captions "--
Limitation on Incurrence of Indebtedness" and "--Limitation on Liens,"
assuming the incurrence by the Company and its Restricted Subsidiaries at the
time of such designation of all existing Indebtedness and Liens of the
Unrestricted Subsidiary to be so designated as a Restricted Subsidiary. In the
event of any Disposition involving the Company in which the Company is not the
Surviving Person, the Board of Directors of the Surviving Person may (x) prior
to such Disposition, designate any of its Subsidiaries, and any of the
Company's Subsidiaries being acquired pursuant to such Disposition that are
not Restricted Subsidiaries, as Unrestricted Subsidiaries, and (y) after such
Disposition, designate any of its direct or indirect Subsidiaries as an
Unrestricted Subsidiary under the same conditions and in the same manner as
the Company under the terms of the Indenture.
"Voting Stock" of a Person means Capital Stock of such Person of the class
or classes pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the
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board of directors, managers or trustees of such Person (irrespective of
whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).
"Warrant Agreement" means the Warrant Agreement dated as of May 13, 1996
between the Company and IBJ Schroder Bank & Trust Company, as Warrant Agent.
"Warrant Registration Rights Agreement" means the Registration Rights
Agreement dated as of May 13, 1996 between the Company and the Initial
Purchasers.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary with
respect to which all of the outstanding voting securities (other than
directors' qualifying shares) of which are owned, directly or indirectly, by
the Company or a Surviving Person of any Disposition involving the Company, as
the case may be.
DESCRIPTION OF THE WARRANTS
GENERAL
The Initial Warrants were, and the Contingent Warrants will be, issued under
a Warrant Agreement dated as May 13, 1996 (the "Warrant Agreement") between
the Company and IBJ Schroder Bank & Trust Company, as Warrant Agent (the
"Warrant Agent"). The following summaries of certain provisions of the Warrant
Agreement do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the Warrants and the
Warrant Agreement, including the definitions therein of certain terms.
Wherever particular sections or defined terms of the Warrant Agreement are
referred to, such sections or defined terms are incorporated by reference.
Each Warrant will entitle the registered holder thereof, subject to and upon
compliance with the provisions thereof and of the Warrant Agreement, at such
holder's option, after the Exercisability Date and prior to 5:00 p.m., New
York City time, on May 15, 2004 (the "Warrant Expiration Date"), to purchase
at a price of $0.01 per Warrant Share (the "Exercise Price") from the Company
one (or such other number as may result from adjustments as provided in the
Warrant Agreement) share of Common Stock. Each Warrant may be exercised on any
business day on or after the Exercisability Date and on or prior to the
Warrant Expiration Date. Any Warrant not exercised before the close of
business on the Warrant Expiration Date shall become void, and all rights of
the holder under the Warrant Certificate evidencing such Warrant and under the
Warrant Agreement shall cease.
EXERCISE
Warrants may be exercised on or after the Exercisability Date by
surrendering the Warrant Certificate evidencing such Warrants with the form of
election to purchase Common Stock set forth on the reverse side thereof duly
completed and executed by the holder thereof and paying in full the Exercise
Price for such Warrants at the office or agency designated for such purpose,
which will initially be the corporate trust office of the Warrant Agent in New
York, New York. Each Warrant may only be exercised in whole and the Exercise
Price may be paid (i) in cash or by certified or official bank check or (ii)
by the surrender (which surrender shall be evidenced by cancellation of the
number of Warrants represented by any Warrant Certificate presented in
connection with a Cashless Exercise (as defined below)) of a Warrant or
Warrants (represented by one or more relevant Warrant Certificates), and
without the payment of the Exercise Price in cash, for such number of shares
of Common Stock equal to the product of (1) the number of shares of Common
Stock for which such Warrant is exercisable with payment in cash of the
Exercise Price as of the date of exercise and (2) the Cashless Exercise Ratio.
For purposes of the Warrant Agreement, the "Cashless Exercise Ratio" shall
equal a fraction, the numerator of which is the excess of the Current Market
Value (as defined below) per share of Common Stock on the date of exercise
over the Exercise Price Per Share (as defined below) as of the date of
exercise and the denominator of which is the Current Market Value per share of
the Common Stock on the date of exercise (calculated as set forth in the
Warrant Agreement). An exercise of a Warrant in accordance with the
immediately
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preceding sentences is herein called a "Cashless Exercise." Upon surrender of
a Warrant Certificate representing more than one Warrant in connection with
the holder's option to elect a Cashless Exercise, the number of shares of
Common Stock deliverable upon a Cashless Exercise shall be equal to the number
of Warrants that the holder specifies is to be exercised pursuant to a
Cashless Exercise multiplied by the Cashless Exercise Ratio. All provisions of
the Warrant Agreement shall be applicable with respect to an exercise of a
Warrant Certificate pursuant to a Cashless Exercise for less than the full
number of Warrants represented thereby. If, pursuant to the Securities Act,
the Company is not able to effect the registration under the Securities Act of
the sale of the Warrant Shares by the Company to the holders of the Warrants
upon the exercise thereof as required by the Warrant Agreement, the holders of
the Warrants will be required, if the Company is not then able to rely on an
exemption from the registration requirements of the Securities Act in
connection with the sale of the Warrant Shares or exercise of the Warrants, to
effect the exercise of the Warrants solely pursuant to the Cashless Exercise
option to the extent that such Cashless Exercise is not adverse to the
interests of the holders of the Warrants.
The Company shall as soon as practicable after the occurrence of an Exercise
Event send to each holder of Warrants and to each beneficial owner of the
Warrants to the extent that the Warrants are held of record by a depository or
other agent, by first-class mail, at the addresses appearing on the Warrant
Register, a notice of the Exercise Event which has occurred, which notice
shall describe the type of Exercise Event and the date of the occurrence
thereof and the date of expiration of the right to exercise the Warrants
prominently set forth on the face of such notice.
Subject to the terms of the Warrant Agreement, the Warrant Certificates
evidencing the Warrants comprising part of the Units may be surrendered for
exercise or exchange, and the transfer of Warrant Certificates will be
registrable, at the office or agency of the Company maintained for such
purpose, which initially will be the corporate trust office of the Warrant
Agent in New York, New York. The Warrant Certificates will be issued either in
global form or in registered form as definitive Warrant Certificates. No
service charge will be made for any exercise, exchange or registration of
transfer of Warrant Certificates, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
REPURCHASE ELECTION OF HOLDERS
In the event that a Public Equity Offering shall not have occurred on or
prior to May 15, 2001 resulting in net proceeds to the Company of at least
$40.0 million, the Company shall give notice (the "Notice of Election Right")
to the holders of Warrants within 60 days after May 15, 2001 of the holders'
right to the election described herein, with a certificate of election (the
"Certificate of Election") attached thereto describing with reasonable detail
the holders' right to election and the First Valuation Report described below.
Within 60 days after receipt of such Notice of Election Right, the election
(as evidenced by the choice elected in the Notice of Election Right) of the
holders of not less than a majority of Warrants who complete and return their
Certificates of Election to the Warrant Agent (the "Electing Majority
Holders") shall be deemed to be notice (which notice shall be irrevocable)
(such notice, the "Election Notice" and the date the Election Notice is given,
the "Notice Date") to the Company of the holders' election to require the
Company to either (i) offer to purchase all outstanding Warrants at a price
per Warrant (the "Warrant Purchase Price") equal to the fair market value
thereof, as determined in accordance with the procedures described below, on
the Warrant Purchase Date (as defined below) or (ii) effect the registration
(the "Registration Election") of the offering and sale of the Warrants and/or
the Warrant Shares on behalf of the holders of the Warrants pursuant to the
Warrant Agreement and the Warrant Registration Rights Agreement. If such
notice shall be given for the Registration Election, the date of such notice
shall be deemed the "Registration Election Date." If no holder responds by
such 60th day after receipt of such Notice of Election Right or the responding
holders are deadlocked, the Company shall have the option, in its sole
discretion, to deem the election of the holders to have been for the
Registration Election or the repurchase of the Warrants on the terms set forth
herein. The decision of the Electing Majority Holders (or of the Company
pursuant to the immediately preceding sentence) shall bind all holders of
Warrants.
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The Company shall, in connection with sending the Notice of Election Right,
select an independent investment banking or appraisal firm of national
standing (an "Independent Financial Expert") and cause such Independent
Financial Expert to deliver to the Company a written report (the "First
Valuation Report") stating the methods of valuation considered or used and the
fair market value of each of the Warrants as of March 31, 2001 (the "Valuation
Date") and containing a statement as to the nature and scope of the
examination or investigation upon which the determination of fair market value
was made and the factors and bases underlying such determination.
If the Election Notice is for the repurchase of the Warrants, in the
Election Notice, the Electing Majority Holders holding not less than 66 2/3%
of the Warrants held by the Electing Majority Holders may elect to appoint a
second Independent Financial Expert to make a determination of the fair market
value of the Warrants as of the Valuation Date. If they so elect, the Electing
Majority Holders who hold a majority of the Warrants held by the Electing
Majority Holders shall cause such Independent Financial Expert, within 45 days
of such election, to deliver to the Company (with a copy to the Warrant Agent)
a written report (the "Second Valuation Report") of the fair market value of
each of the Warrants as of the Valuation Date substantially similar in content
as to methods, nature and scope of examination and factors and bases
underlying valuation to the First Valuation Report.
The Company shall have ten business days after receipt of the Second
Valuation Report to object to the fair market value of the Warrants as set
forth in the Second Valuation Report. If the Company does not object, such
fair market value shall be the Warrant Purchase Price. If the Company does
object, the majority of the Electing Majority Holders and the Company shall,
within 20 business days after the Company so objects, select a third
Independent Financial Expert mutually acceptable to both parties to prepare a
written report (the "Third Valuation Report") of its determination of the fair
market value of the Warrants as of the Valuation Date, which report shall be
delivered to the Company and the holders (with a copy to the Warrant Agent)
within 30 days after the selection of such Independent Financial Expert. Such
valuation shall contain a statement as to the nature and scope of the
examination or investigation upon which the determination of fair market value
was made and the factors and bases underlying such determination. If the
holders and the Company cannot agree to the selection of an Independent
Financial Expert, the New York office of the following firms (or their
successor firms) shall serve as the Independent Financial Expert in the
following order of priority; provided, however, that such firm has not, for
the prior three years, rendered professional services to the Company or its
Affiliates:
(1) Arthur Andersen & Co.
(2) Price Waterhouse & Co.
(3) Deloitte & Touche
(4) KPMG Peat Marwick
(5) Ernst & Young LLP
(6) Coopers & Lybrand L.L.P.
The fair market value determined in the Third Valuation Report shall
constitute the Warrant Purchase Price; provided, however, that if the Warrant
Purchase Price contained in the Third Valuation Report is more than the higher
of the first two valuations, the higher of the first two valuations shall
constitute the Warrant Purchase Price; provided, further, however, that if the
Warrant Purchase Price contained in the Third Valuation Report is less than
the lower of the first two valuations, the lower of the first two valuations
shall constitute the Warrant Purchase Price. If any Independent Financial
Expert becomes aware of any material changes since the Valuation Date, after
reasonable inquiry with respect thereto, in the business or financial
condition or prospects of the Company and its Subsidiaries, such Independent
Financial Expert shall specify such material changes in its written report and
shall revise its valuation as it deems appropriate. The fees and other costs
of each of the first two Independent Financial Experts shall be borne by the
party appointing such Independent Financial Expert, and the fees and other
costs of the third Independent Financial Expert shall be shared equally by the
Company and the holders of Warrants; provided, however, that all indemnities
in respect of any Independent Financial Expert shall be for the account of the
Company.
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Within 20 business days after the Warrant Purchase Price has been determined
in accordance with the above, the Company shall provide notice of its offer to
purchase (the "Purchase Offer") to the holders of Warrants by mailing by first
class mail a notice of such offer (the "Purchase Notice") to their addresses
as set forth on the Warrant Register. The date of the mailing of the Purchase
Notice is hereafter called the "Purchase Notice Date." The Purchase Offer must
remain open for 20 business days after the Purchase Notice Date (or such
longer period as may be required by law) and the date set for the purchase of
the Warrants shall be the "Warrant Purchase Date."
The Company shall only be obligated to offer to purchase for cash Warrants
(at the Warrant Purchase Price) to the extent that it is able to do so in
accordance with covenants in the agreements evidencing its indebtedness, in
which event Warrants shall be purchased from tendering holders pro rata in
accordance with the number of Warrants tendered by each holder and to the
extent that tendering holders are not paid the Warrant Purchase Price for all
Warrants tendered because of such restrictions, the Company shall repurchase
the tendered Warrants by issuing, pursuant to a registration statement
declared effective under the Securities Act (which shall be filed not later
than the Purchase Notice Date), Notes (valued at 100% of the face amount
thereof), up to a maximum aggregate principal amount of Notes so issued equal
to 50% of the aggregate Warrant Purchase Price of all Warrants tendered. If on
or prior to each of May 15, 2002 and May 15, 2003 a Public Equity Offering
resulting in net proceeds of at least $40.0 million shall not have occurred
and the Company shall not have purchased for cash all Warrants tendered
pursuant to the immediately preceding Purchase Offer, then the Company shall
be obligated to effect offers to purchase the outstanding Warrants on the same
terms and subject to the same limitations as set forth above (such limitation
independently applicable to each such date), with the Warrant Purchase Price
to be based on a new determination of fair market value as of March 31, 2002
or March 31, 2003, as the case may be, pursuant to the procedures set forth in
the Warrant Agreement.
The Company shall not and shall not cause any Subsidiary to directly or
indirectly enter into any agreement or instrument which would prohibit the
Company from issuing Notes to repurchase Warrants, other than the Indenture
and the Senior Credit Facility, each as in effect on the Issue Date.
REGISTRATION OF ISSUANCE OF WARRANT SHARES
Immediately prior to the occurrence of an Exercise Event arising as a result
of a Public Equity Offering or the Registration Election Date, the Company
will, if permitted by applicable law, take all such action as is necessary to
cause the offer and sale by the Company of the shares of Common Stock issuable
upon exercise of the Warrants to be registered or otherwise qualified under
the provisions of the Securities Act and pursuant to all applicable state
securities laws and to provide for the issuance of all shares of Common Stock
delivered upon exercise of the Warrants pursuant to an effective registration
statement under the Securities Act. So long as any unexpired Warrants which
have become exercisable due to the occurrence of such an Exercise Event remain
outstanding, the Company will file such amendments and/or supplements to any
registration statement under the Securities Act or under any state securities
laws covering the issuance of such shares and supplement and keep current any
prospectus forming a part of such registration statement as may be necessary
to permit the Company to deliver to each person exercising a Warrant a
prospectus meeting the requirements of Section 10(a)(3) of the Securities Act
(a "Prospectus") and the regulations of the Commission and otherwise complying
with the Securities Act and regulations thereunder, and as may be necessary to
comply with any applicable state securities laws.
The Company will file the reports required to be filed by it under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations adopted by the Commission
thereunder in a timely manner in accordance with the requirements of the
Securities Act and the Exchange Act, and if at any time the Company is not
required to file such reports, it will, upon the request of any holder or
beneficial owner of Warrants, make available such information as necessary to
permit sales pursuant to Rule 144A under the Securities Act.
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DISTRIBUTION RIGHTS; ADJUSTMENT TO EXERCISE RATE; MERGER OR CONSOLIDATION
In general, holders of Warrants will not be entitled, by virtue of being
such holders, to receive notice of any meetings of shareholders or otherwise
have any right of shareholders of the Company. However, if at any time the
Company grants, issues or sells options, convertible securities, or rights to
purchase stock, warrants or other securities pro rata to the record holders of
the Common Stock of the Company ("Distribution Rights") or,
without duplication, makes any dividend or otherwise makes any distribution
("Distribution") on shares of the Common Stock of the Company, then the
Company shall grant, issue, sell or make to each registered holder of Warrants
the aggregate Distribution Rights or Distribution, as the case may be, which
such holder would have acquired if such holder had held the maximum number of
shares of Common Stock acquirable upon complete exercise of each holder's
Warrants (regardless of whether the Warrants are then exercisable and without
giving effect to the Cashless Exercise option) immediately before the record
date for the grant, issuance or sale of such Distribution Rights or
Distribution, as the case may be, or, if there is no such record date, the
date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Distribution Rights or Distribution, as the
case may be.
The number of shares of Common Stock issuable upon exercise of a Warrant
(the "Exercise Rate") is subject to adjustment from time to time upon the
occurrence of certain events, including (a) certain dividends or distributions
on Common Stock of the Company payable in Common Stock of the Company or
certain other capital stock of the Company; (b) subdivisions, combinations or
certain reclassifications of the Common Stock of the Company; (c) certain
tender offers or exchange offers for the Common Stock of the Company; and (d)
sales by the Company of Common Stock of the Company or of securities
convertible into or exchangeable or exercisable for Common Stock of the
Company at less than the then Current Market Value (other than (1) pursuant to
the exercise of the Warrants, (2) any security convertible into, or
exchangeable or exercisable for, the Common Stock as to which the issuance
thereof has previously been the subject of any required adjustment pursuant to
the Warrant Agreement, and (3) the issuance of Common Stock upon the
conversion, exchange or exercise of convertible, exchangeable or exercisable
securities of the Company outstanding on the date of issuance of the Warrants
(to the extent in accordance with the terms of such securities as in effect on
such date)).
If the Company, in a single transaction or through a series of related
transactions, consolidates with or merges with or into any other person or
sells, assigns, transfers, leases, conveys or otherwise disposes of all or
substantially all of its properties and assets to another person or group of
affiliated persons or is a party to a merger or binding share exchange which
reclassifies or changes its outstanding Common Stock, as a condition to
consummating any such transaction the person formed by or surviving any such
consolidation or merger if other than the Company or the person to whom such
transfer has been made (the "Surviving Person") shall enter into a
supplemental warrant agreement. The supplemental warrant agreement shall
provide that the holder of a Warrant then outstanding may exercise it for the
kind and amount of securities, cash or other assets which such holder would
have received immediately after the consolidation, merger, binding share
exchange or transfer if such holder had exercised the Warrant immediately
before the effective date of the transaction (whether or not the Warrants were
then exercisable and without giving effect to the Cashless Exercise option),
assuming (to the extent applicable) that such holder (i) was not a constituent
person or an affiliate of a constituent person to such transaction; (ii) made
no election with respect thereto; and (iii) was treated alike with the
plurality of non-electing holders. The Surviving Person shall mail to holders
of Warrants at the addresses appearing on the Warrant Register a notice
briefly describing the supplemental warrant agreement. If the issuer of
securities deliverable upon exercise of Warrants is an affiliate of the
Surviving Person, that issuer shall join in the supplemental warrant
agreement.
If, pursuant to the Indenture, any person is required to enter into a
supplemental indenture assuming all of the Company's obligations under the
Notes, then as a condition to entering into such transaction, the Company
shall require such person to enter into a supplemental warrant agreement. Such
supplemental warrant agreement shall provide that such person shall succeed to
and be substituted for every right and obligation of the Company in respect of
the Contingent Warrants.
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In the event of a taxable distribution to holders of Common Stock of the
Company which results in an adjustment to the number of shares of Common Stock
or other consideration for which such a Warrant may be exercised, the holders
of the Warrants may, in certain circumstances, be deemed to have received a
distribution subject to United States federal income tax as a dividend. See
"Certain Federal Income Tax Consequences."
Fractional shares of Common Stock are not required to be issued upon
exercise of Warrants, but in lieu thereof the Company will pay a cash
adjustment.
The Warrant Agreement permits, with certain exceptions, the amendment
thereof and the modification of the rights and obligations of the Company and
the rights of the holders of Warrant Certificates under the Warrant Agreement
at any time by the Company and the Warrant Agent with the consent of the
holders of Warrant Certificates representing a majority in number of then
outstanding Warrants.
CERTAIN DEFINITIONS
"Current Market Value" per share of Common Stock of the Company or any other
security at any date means (i) if the security is not registered under the
Exchange Act, (a) the value of the security, determined in good faith by the
Board of Directors of the Company and certified in a board resolution, based
on the most recently completed arm's-length transaction between the Company
and a person other than an Affiliate of the Company and the closing of which
occurs on such date or shall have occurred within the six-month period
preceding such date, or (b) if no such transaction shall have occurred on such
date or within such six-month period, the value of the security as determined
by an independent financial expert or (ii) if the security is registered under
the Exchange Act, the average of the daily closing bid prices for each
business day during the period commencing 15 business days before such date
and ending on the date one day prior to such date, or if the security has been
registered under the Exchange Act for less than 15 consecutive business days
before such date, then the average of the daily closing bid prices for all of
the business days before such date for which daily closing bid prices are
available. If the closing bid price is not determinable for at least ten
business days in such period, the Current Market Value of the security shall
be determined as if the security were not registered under the Exchange Act.
"Exercisability Date" is defined in the Warrant Agreement as the date on or
after the Separability Date on which there shall have occurred an Exercise
Event.
"Exercise Event" means the date of the occurrence of the earliest of: (1)
immediately prior to the occurrence of a Change of Control (as defined in the
Warrant Agreement, which definition is substantially similar to the definition
of "Change of Control" as set forth in "Description of the Notes--Certain
Definitions"), (2) the 180th day (or such fewer number of days as determined
by the Company in its sole discretion) after the consummation of a Public
Equity Offering, (3) the 90th day after the Registration Election Date, (4)
the approval by the holders of Capital Stock of the Company of any Plan of
Liquidation of the Company and (5) the 180th day prior to May 15, 2004.
"Exercise Price Per Share" means the Exercise Price divided by the number of
shares of Common Stock for which a Warrant is then exercisable (without giving
effect to the Cashless Exercise option). No payment or adjustment shall be
made on account of any dividends on the shares of Common Stock issued upon
exercise of a Warrant.
"Plan of Liquidation" means, with respect to the Company, a plan (including
by operation of law) that provides for, contemplates or the effectuation of
which is preceded or accompanied by (whether or not substantially
contemporaneously) (i) the sale, lease, conveyance or other disposition of all
or substantially all of
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the assets of the Company otherwise than as an entirety or substantially as an
entirety and (ii) the distribution of all or substantially all of the proceeds
of such sale, lease, conveyance or other disposition and all or substantially
all of the remaining assets of the Company to holders of Capital Stock of the
Company.
"Public Equity Offering" means a primary public offering (whether or not
underwritten, but excluding any offering pursuant to Form S-8 under the
Securities Act or any other publicly registered offering pursuant to the
Securities Act pertaining to an issuance of shares of Common Stock or
securities exercisable therefor under any benefit plan, employee compensation
plan, or employee or director stock purchase plan) of capital stock of the
Company pursuant to an effective registration statement under the Securities
Act.
REGISTRATION RIGHTS OF WARRANT HOLDERS
The Company and the Initial Purchasers are parties to an agreement for the
registration of the Warrants and/or the Warrant Shares (the "Warrant
Registration Rights Agreement") pursuant to which the Company has agreed to
provide the holders of the Warrants and/or the Warrant Shares (the "Warrant
Holders") certain registration rights for the Warrants and/or the Warrant
Shares. Under the Warrant Registration Rights Agreement, (i) on or after the
180th day after the consummation of a Public Equity Offering, or (ii) on or
after the 90th day after the Registration Election Date, the holders of at
least 50% of the Warrants and/or Warrant Shares (the "Registrable Securities")
are entitled to request the Company to effect one registration (including
pursuant to an underwritten offering) subject to certain conditions and
limitations; provided, however, that if such holders have requested such
registration and it has been effected prior to issuance of the Contingent
Warrants, then the holders of at least 50% of the Registrable Securities will
be entitled to request the Company to effect one additional registration after
the issuance of the Contingent Warrants. The Company shall have (i) 12 months
after any such request for registration arising as a result of a Public Equity
Offering or (ii) 90 days after any such request for registration arising as a
result of a Registration Election, to effect such registration. In addition,
the Company shall not be required to effect a requested registration for the
period set forth in the Warrant Registration Rights Agreement immediately
following the effective date of a registered offering of securities for its
own account. In the event that the underwriter of any such offering deems it
necessary to reduce the total number of Registrable Securities and other
securities proposed to be included in any such registration (an "underwriter's
cut back"), such other securities shall be reduced to zero before the
Registrable Securities are reduced. In addition, the holders of Registrable
Securities may require the Company on one occasion to register the Registrable
Securities on Form S-3 when such form becomes available to the Company (which
shall not count as a requested registration), provided the aggregate proceeds
of each such registration is reasonably expected to exceed $1,000,000 and
subject to certain other conditions and limitations. Other holders of
securities of the Company may participate in such registration.
If the Company proposes to register any of its equity securities for its own
account or for the account of any of its securityholders (other than a
registration statement on Form S-4 or S-8 (or any other publicly registered
offering pursuant to the Securities Act pertaining to the issuance of shares
of Common Stock or securities exercisable therefor under any benefit plan,
employee compensation plan, or employee or director stock purchase plan) or a
registration statement filed in connection with an offer of securities solely
to existing securityholders), the holders of Registrable Securities will be
entitled to notice of such proposed registration and the opportunity to
include Registrable Securities in such proposed registration (a "Piggy-Back
Registration"); provided, however, in the event an underwriter's cut back is
necessary the number of Registrable Securities requested to be included
therein is subject to reduction, with securities offered for the account of
the Company and securities of any other securityholder initiating such
registration entitled to priority and the Warrant Holders and all of the
holders of securities of the Company being subject to reduction on a pro rata
basis. Under the Warrant Registration Rights Agreement, the Company has agreed
not to cause or permit the public sale of its Common Stock during the 30-day
period prior to and during the 90-day period beginning on the commencement of
any underwritten offering pursuant to a request by the Warrant Holders, or a
Piggy-Back Registration which has been scheduled, prior to the Company
publicly announcing its intention to effect a public offering. Registration
rights will terminate as to any Warrants and/or Warrant Shares when such
Registrable Securities may be sold without limitation under Rule 144.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Series A Notes were originally sold by the Company on May 13, 1996 to
the Initial Purchasers pursuant to the Purchase Agreement. The Initial
Purchasers subsequently resold the Series A Notes to qualified institutional
buyers in reliance on Rule 144A under the Securities Act and to institutional
accredited investors in a manner exempt from the registration requirements of
the Securities Act. As a condition to the Purchase Agreement, the Company and
the Initial Purchasers entered into the Registration Rights Agreement pursuant
to which the Company agreed, for the benefit of the holders, that it would, at
its own cost, (i) use its best efforts to file, within 45 days after May 13,
1996, the original issue date of the Series A Notes (the "Issue Date"), a
registration statement (the "Exchange Offer Registration Statement") with the
Commission with respect to the Exchange Offer for the Series B Notes and (ii)
use its best efforts to cause the Exchange Offer Registration Statement to be
declared effective under the Securities Act within 120 days after the Issue
Date. Upon the Exchange Offer Registration Statement being declared effective,
the Company will offer the Series B Notes in exchange for surrender of the
Series A Notes. The Company will keep the Exchange Offer open for not less
than 30 days (or longer if required by applicable law) after the date notice
of the Exchange Offer is mailed to the holders of the Series A Notes. For each
of the Series A Notes surrendered pursuant to the Exchange Offer, the holder
who surrendered such Series A Note will receive a Series B Note having a
principal amount equal to that of the surrendered Series A Note. Based on no-
action letters issued by the staff of the Commission to third parties, the
Company believes the Series B Notes will be freely transferable by holders
thereof and any person who receives the Series B Notes after the Exchange
Offer without further registration under the Securities Act only if (i) the
Series B Notes were acquired in the ordinary course of business of such holder
or such other person, (ii) neither such holder nor such other person is
engaging in or intends to engage in a distribution of the Series B Notes and
(iii) neither such holder nor such other person has an arrangement or
understanding with any person to participate in the distribution of the Series
B Notes. However, any purchaser of Series A Notes who is an "affiliate" of the
Company or who intends to participate in the Exchange Offer for the purpose of
distributing the Series B Notes (i) will not be able to rely on the position
of the staff of the Commission, (ii) will not be able to tender its Series A
Notes in the Exchange Offer and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or transfer of the Series A Notes, unless such sale or transfer is made
pursuant to an exemption from such requirements.
Each holder of the Series A Notes who wishes to exchange the Series A Notes
for Series B Notes in the Exchange Offer will be required to represent in the
Letter of Transmittal that (i) the Series B Notes are to be acquired by the
holder or the person receiving such Series B Notes, whether or not such person
is the holder, in the ordinary course of business, (ii) the holder or any such
other person (other than a broker-dealer referred to in the next sentence) is
not engaging, and does not intend to engage, in the distribution of the Series
B Notes, (iii) the holder or any such other person has no arrangement or
understanding with any person to participate in the distribution of the Series
B Notes, (iv) neither the holder nor any such other person is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act and (v)
the holder or any such other person acknowledges that if such holder or other
person participates in the Exchange Offer for the purpose of distributing the
Series B Notes it must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale of the Series
B Notes and cannot rely on those no-action letters. As indicated above, in
connection with any resales of Series B Notes, any Participating Broker-Dealer
who acquired the Series A Notes for its own account as a result of market-
making or other trading activities must deliver a prospectus meeting the
requirements of the Securities Act. The Commission has taken the position that
Participating Broker-Dealers may fulfill their prospectus delivery
requirements with respect to the Series B Notes (other than a resale of an
unsold allotment from the original sale of the Series A Notes) with this
Prospectus. Under the Registration Rights Agreement, the Company is required
to allow Participating Broker-Dealers and other persons, if any, subject to
similar prospectus delivery requirements to use this Prospectus in connection
with the resale of such Series B Notes.
In the event that applicable interpretations of the staff of the Commission
do not permit the Company to effect such an Exchange Offer, or, under certain
other circumstances, including if for any other reason the
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Exchange Offer is not consummated within 150 days after the Issue Date, the
Company will, at its cost, (a) use its best efforts to file, as promptly as
practicable and, in any event, within 45 days after such Shelf Registration
Event Date (as defined in the Registration Rights Agreement), a shelf
registration statement covering resales of the Series A Notes (the "Shelf
Registration Statement"), (b) use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act and
(c) use its best efforts to keep effective the Shelf Registration Statement
until the earlier of three years after the Issue Date and such time as all of
the applicable Series A Notes have been sold thereunder. The Company will, in
the event of the filing of the Shelf Registration Statement, provide to each
holder of the Series A Notes copies of the prospectus which is a part of the
Shelf Registration Statement, notify each such holder when the Shelf
Registration Statement has become effective and take certain other actions as
are required to permit unrestricted resales of the Series A Notes. A holder
that sells its Series A Notes pursuant to the Shelf Registration Statement
generally will be required to be named as a selling securityholder in the
related prospectus and to deliver a prospectus to purchasers, will be subject
to certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions of the
Registration Rights Agreement which are applicable to such a holder (including
certain indemnification obligations).
If, on or prior to 45 days following the Issue Date, an Exchange Offer
Registration Statement has not been filed with the Commission, additional
interest will accrue on the Series A Notes from and including the 46th day
following the Issue Date until, but excluding, the date such registration
statement is filed. In addition, if, on or prior to 120 days following the
Issue Date, such Exchange Offer Registration Statement is not declared
effective, additional interest will accrue on the Series A Notes from and
including the 121st day following the Issue Date until, but excluding, the
date such registration statement is declared effective. Further, if, on or
prior to 150 days following the Issue Date, the Exchange Offer is not
consummated, additional interest will accrue on the Series A Notes from and
including the 151st day following the Issue Date until, but excluding, the
date of consummation of the Exchange Offer. If a Shelf Registration Event (as
defined in the Registration Rights Agreement) shall have occurred, and if, by
150 days after the Issue Date, a Shelf Registration Statement is not declared
effective, additional interest will accrue on the Series A Notes not exchanged
as a result of such law or interpretation from and including the 151st day
after the Issue Date, until the effective date of the Shelf Registration
Statement. In each case, additional interest will be payable semi-annually in
arrears, with the first semiannual payment due on the first interest payment
date in respect of the Series A Notes following the date from which additional
interest begins to accrue, and will accrue at a rate per annum equal to an
additional one-quarter of one percent (0.25%) of the principal amount of the
Series A Notes upon the occurrence of each such circumstance, which rate will
increase by one-quarter of one percent (0.25%) for each 90-day period that
such additional interest continues to accrue under any such circumstance, with
an aggregate maximum increase in the interest rate per annum equal to one
percent (1.00%).
If applicable, in the event that the Shelf Registration Statement ceases to
be effective prior to the third anniversary of the Issue Date for a period in
excess of 45 days, whether or not consecutive, in any given year, then the
interest rate borne by the Series A Notes shall increase by an additional one-
quarter of one percent (0.25%) per annum on the 46th day in the applicable
year such Shelf Registration Statement ceases to be effective. Such interest
rate will increase by an additional one-quarter of one percent (0.25%) per
annum for each additional 90 days that such Shelf Registration Statement is
not effective, subject to the same aggregate maximum increase in the interest
rate per annum of one percent (1.00%) referred to above. Upon the filing of
the Exchange Offer Registration Statement, the effectiveness of the Exchange
Offer Registration Statement, or the consummation of the Exchange Offer, as
the case may be, the interest rate borne by the Notes will be reduced by the
full amount of any such increase to the extent that such increase related to
the failure of any such event to have occurred. Upon the effectiveness of a
Shelf Registration Statement, the interest rate borne by the Series A Notes
shall be reduced to the original interest rate of the Series A Notes unless
and until increased as described above.
Any amounts of additional interest due as described above will be payable in
cash or, at the Company's option, by the issuance of additional Notes to the
extent permitted under the Indenture, on the same interest payment dates as
the Series A Notes.
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The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by, all the provisions of the Registration Rights Agreement, a
copy of which filed as an exhibit to the Exchange Offer Registration Statement
of which this Prospectus is a part.
Following the consummation of the Exchange Offer, holders of Series A Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Series A Notes will not have any further registration rights, and such
Series A Notes will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for such Series A Notes
could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Series A
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount
of Series B Notes in exchange for each $1,000 principal amount of outstanding
Series A Notes accepted in the Exchange Offer. Holders may tender some or all
of their Series A Notes pursuant to the Exchange Offer. However, Series A
Notes may be tendered only in integral multiples of $1,000.
The form and terms of the Series B Notes are the same as the form and terms
of the Series A Notes except that (i) the Series B Notes bear a "Series B"
designation and a different CUSIP Number from the Series A Notes, (ii) the
Series B Notes have been registered under the Securities Act and hence will
not bear legends restricting the transfer thereof and (iii) the holders of the
Series B Notes will not be entitled to certain rights under the Registration
Rights Agreement, which rights will terminate when the Exchange Offer is
terminated. The Series B Notes will evidence the same debt as the Series A
Notes and will be entitled to the benefits of the Indenture.
As of the date of this Prospectus, $80,000,000 aggregate principal amount of
Series A Notes were outstanding. The Company has fixed the close of business
on , 1996 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Series A Notes do not have any appraisal or dissenters' rights
under the General Corporation Law of Delaware or the Indenture in connection
with the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Series A Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the Series B Notes from the Company.
If any tendered Series A Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Series A Notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Series A Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Series A
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection
with the Exchange Offer. See "--Fees and Expenses."
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EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1996, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the
registered holders an announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Series A Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "--Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of
the Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral
or written notice thereof to the registered holders.
INTEREST ON THE SERIES B NOTES
The Series B Notes will bear interest from their date of issuance. Holders
of Series A Notes that are accepted for exchange will receive accrued interest
thereon to, but not including, the date of issuance of the Series B Notes.
Such interest will be paid (in cash or, at the option of the Company, by the
issuance of additional Notes) with the first interest payment on the Series B
Notes on November 15, 1996. Interest on the Series A Notes accepted for
exchange will cease to accrue upon issuance of the Series B Notes. Interest on
the Series B Notes is payable semi-annually on each May 15 and November 15,
commencing on November 15, 1996.
PROCEDURES FOR TENDERING
Only a holder of Series A Notes may tender such Series A Notes in the
Exchange Offer. To tender in the Exchange Offer, a holder much 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 Series A Notes and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
To be tendered effectively, the Series A Notes, Letter of Transmittal and
other required documents much be completed and received by the Exchange Agent
at the address set forth below under "--Exchange Agent" prior to 5:00 p.m.,
New York City time, on the Expiration Date. Delivery of the Series A Notes may
be made by book-entry transfer in accordance with the procedures described
below. Confirmation of such book-entry transfer must be received by the
Exchange Agent prior to the Expiration Date.
By executing the Letter of Transmittal, each holder will make to the Company
the representations set forth above in the second paragraph under the heading
"--Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute the agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the
Letter of Transmittal.
THE METHOD OF DELIVERY OF SERIES A NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE
RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR SERIES A NOTES SHOULD BE SENT TO
THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
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Any beneficial owner whose Series A Notes are registered in the name of a
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 such beneficial owner's behalf. See
"Instructions to Registered Holder and/or Book-Entry Transfer Facility
Participant from Beneficial Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Series A Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. In the event that signatures on a Letter of Transmittal
or a notice of withdrawal, as the case may be, are required to be guaranteed,
such guarantee must be by a member firm of the Medallion System (an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Series A Notes listed therein, such Series A Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Series A
Notes with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Series A Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the
Series A Notes at the book-entry transfer facility, The Depository Trust
Company (the "Book-Entry Transfer Facility"), for the purpose of facilitating
the Exchange Offer, and subject to the establishment thereof, any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make book-entry delivery of Series A Notes by causing such Book-Entry
Transfer Facility to transfer such Series A Notes into the Exchange Agent's
account with respect to the Series A Notes in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. Although delivery of the
Series A Notes may be effected through book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility, an appropriate Letter of
Transmittal properly completed and duly executed with any required signature
guarantee and all other required documents must in each case be transmitted to
and received or confirmed by the Exchange Agent at its address set forth below
on or prior to the Expiration Date, or, if the guaranteed delivery procedures
described below are complied with, within the time period provided under such
procedures. Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Series A Notes and withdrawal of tendered
Series A Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Series A Notes not properly tendered or any Series
A Notes the Company's acceptance of which would, in the opinion of counsel for
the Company, be unlawful. The Company also reserves the right in its sole
discretion to waive any defects, irregularities or conditions of tender as to
particular Series A Notes. The Company's 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 Series A Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify holders of defects or irregularities with respect to tenders
of Series A Notes, neither the Company, the Exchange Agent nor any other
person shall incur any liability for failure to give such notification.
Tenders of Series A Notes will not be deemed to have been made until such
defects or irregularities have been cured or waived. Any Series A Notes
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
by the Exchange Agent to the tendering holders, unless otherwise provided in
the Letter of Transmittal, as soon as practicable following the Expiration
Date.
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GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Series A Notes and (i) whose Series A Notes
are not immediately available, (ii) who cannot deliver their Series A Notes,
the Letter of Transmittal or any other required documents to the Exchange
Agent or (iii) who cannot complete the procedures for book-entry transfer,
prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) 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, the certificate number(s)
of such Series A Notes and the principal amount of Series A Notes tendered,
stating that the tender is being made thereby and guaranteeing that, within
five New York Stock Exchange trading days after the Expiration Date, the
Letter of Transmittal (or facsimile thereof) together with the
certificate(s) representing the Series A Notes (or a confirmation of book-
entry transfer of such Series A Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility), and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with
the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Series A Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Series A Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility), and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within five New
York Stock Exchange trading 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 Series A Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Series A 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 Series A Notes in the Exchange Offer, a telegram,
telex, letter or facsimile transmission 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 (i)
specify the name of the person having deposited the Series A Notes to be
withdrawn (the "Depositor"), (ii) identify the Series A Notes to be withdrawn
(including the certificate number(s) and principal amount of such Series A
Notes, or, in the case of Series A Notes transferred by book-entry transfer,
the name and number of the account at the Book-Entry Transfer Facility to be
credited), (iii) be signed by the holder in the same manner as the original
signature on the Letter of Transmittal by which such Series A Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the
Series A Notes register the transfer of such Series A Notes into the name of
the person withdrawing the tender and (iv) specify the name in which any such
Series A Notes are to be registered, if different from that of the Depositor.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Series A Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer, and no Series B Notes will be issued with respect thereto
unless the Series A Notes so withdrawn are validly retendered. Any Series A
Notes which have been tendered but which are not accepted for exchange will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Series A Notes may be retendered by
following one of the procedures described above under "--Procedures for
Tendering" at any time prior to the Expiration Date.
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CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Series B Notes for, any Series
A Notes, and may terminate or amend the Exchange Offer as provided herein
before the acceptance of such Series A Notes, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the reasonable judgment of the Company, might materially impair
the ability of the Company to proceed with the Exchange Offer or any
material adverse development has occurred in any existing action or
proceeding with respect to the Company; or
(b) any law, rule, regulation or interpretation by the staff of the
Commission is proposed, adopted or enacted, which, in the reasonable
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any governmental approval has not been obtained, which approval the
Company shall, in its reasonable discretion, deem necessary for the
consummation of the Exchange Offer and as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Series A Notes and
return all tendered Series A Notes to the tendering holders, (ii) extend the
Exchange Offer and retain all Series A Notes tendered prior to the expiration
of the Exchange Offer, subject, however, to the rights of holders to withdraw
such Series A Notes (see "--Withdrawal of Tenders") or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Series A Notes which have not been withdrawn.
EXCHANGE AGENT
IBJ Schroder Bank & Trust Company has been appointed as Exchange Agent for
the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
For Information by Telephone: (212) 858-2103
By Registered or Certified Mail: IBJ By Hand or Overnight Delivery
Schroder Bank & Trust Company P.O. Service: IBJ Schroder Bank &
Box 84 Bowling Green Station New Trust Company One State Street
York, New York 10274-0084 Attention: New York, New York 10004
Reorganization Operations Department Attention: Securities
Processing Window
Subcellar One (SC-1)
By Facsimile Transmission: (212) 858-2611
(Facsimile Confirmation) (212) 858-2103
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Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand, or by overnight delivery service.
Delivery to an address or transmission of instructions via facsimile other
than as set forth above will not constitute a valid delivery.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses includes fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs,
among others.
ACCOUNTING TREATMENT
The Series B Notes will be recorded at the same carrying value as the Series
A Notes as reflected in the Company's accounting records on the date of
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. The expenses of the Exchange Offer will be
amortized over the term of the Series B Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Series A Notes that are not exchanged for Series B Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Series A
Notes may be resold only (i) to the Company (upon redemption thereof or
otherwise), (ii) so long as the Series A Notes are eligible for resale
pursuant to Rule 144A under the Securities Act, to a person inside the United
States whom the seller reasonably believes is a qualified institutional buyer
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A, (iii) in accordance with Rule 144 under the Securities Act, or
pursuant to another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel reasonably acceptable to
the Company), (iv) outside the United States to a foreign person in a
transaction meeting the requirements of Rule 904 under the Securities Act or
(v) pursuant to an effective registration 220543.1 statement under the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States.
RESALE OF THE SERIES B NOTES
With respect to resales of Series B Notes, based on no-action letters issued
by the staff of the Commission to third parties, the Company believes that a
holder or other person who receives Series B Notes, whether or not such person
is the holder (other than a person that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act), who receives Series
B Notes in exchange for Series A Notes in the ordinary course of business and
who is not participating, does not intend to participate, and has no
arrangement or understanding with any person to participate, in the
distribution of the Series B Notes, will be allowed to resell the Series B
Notes to the public without further registration under the Securities Act and
without delivering to the purchasers of the Series B Notes a prospectus that
satisfies the requirements of Section 10 of the Securities Act. However, if
any holder acquires Series B Notes in the Exchange Offer for the purpose of
distributing or participating in a distribution of the Series B Notes, such
holder cannot rely on the position of the staff of the Commission enunciated
in such no-action letters, and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction, unless an exemption from registration is otherwise
available. Further, each Participating Broker-Dealer that receives Series B
Notes for its own account in exchange
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for Series A Notes, where such Series A Notes were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Series B Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent
to the Company in the Letter of Transmittal that (i) the Series B Notes are to
be acquired by the holder or the person receiving such Series B Notes, whether
or not such person is the holder, in the ordinary course of business, (ii) the
holder or any such other person (other than a broker-dealer referred to in the
next sentence) is not engaging, and does not intend to engage, in the
distribution of the Series B Notes, (iii) the holder or any such other person
has no arrangement or understanding with any person to participate in the
distribution of the Series B Notes, (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act and (v) the holder or any such other person acknowledges
that if such holder or other person participates in the Exchange Offer for the
purpose of distributing the Series B Notes it must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the Series B Notes and cannot rely on those no-
action letters. As indicated above, each Participating Broker-Dealer that
receives a Series B Note for its own account in exchange for Series A Notes
must acknowledge that it will deliver a prospectus in connection with any
resale of such Series B Notes. For a description of the procedures for such
resales by Participating Broker-Dealers, see "Plan of Distribution."
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The federal income tax discussion set forth below is intended only as a
summary and does not purport to be a complete analysis or listing of all
potential tax considerations that may be relevant and is generally limited to
those persons who are original purchasers of the Units, Notes and Initial
Warrants and who hold the Units, Notes and Initial Warrants as capital assets
("Holders"). The discussion does not include special rules that may apply to
certain Holders (including insurance companies, tax-exempt organizations,
financial institutions or broker-dealers, foreign persons and persons in
special situations such as those who hold the Units, Notes and Initial
Warrants as part of a straddle, hedge or conversion transaction), and does not
address the tax consequences of the laws of any state, locality or foreign
jurisdiction. The discussion (including the opinion of counsel described under
"--The Exchange Offer" below) is based upon currently existing provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed Treasury regulations promulgated thereunder and current
administration rulings and court decisions. All of the foregoing are subject
to change and any such change could affect the continuing validity of this
discussion.
THE FOLLOWING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF UNITS, NOTES OR
WARRANTS IN LIGHT OF SUCH HOLDER'S PARTICULAR CIRCUMSTANCES AND INCOME TAX
SITUATION. EACH HOLDER OF UNITS, NOTES OR WARRANTS SHOULD CONSULT SUCH
HOLDER'S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE
OWNERSHIP AND DISPOSITION OF THE UNITS, NOTES OR WARRANTS, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
THE EXCHANGE OFFER
Eckert Seamans Cherin & Mellott, counsel to the Company, has advised the
Company that, in its opinion, the exchange of the Series A Notes for Series B
Notes pursuant to the Exchange Offer will not be treated as an "exchange" for
federal income tax purposes because the Series B Notes will not be considered
to differ materially in kind or extent from the Series A Notes. Rather, the
Series B Notes received by a holder will be treated as a continuation of the
Series A Notes in the hands of such holder. As a result, there will be no
federal income tax consequences to holders exchanging Series A Notes for
Series B Notes pursuant to the Exchange Offer. Therefore, the same tax
consequences apply to the Series B Notes as are applicable to the Series A
Notes.
TAX TREATMENT OF THE NOTES
ORIGINAL ISSUE DISCOUNT
The Series A Notes were issued with original issue discount for federal
income tax purposes. The amount of original issue discount ("OID") on a Note
is the excess of its "stated redemption price at maturity" (the sum of all
payments to be made on the Note, other than "additional interest" and
Contingent Warrants discussed below, whether denominated as interest or
principal) over its "issue price." Each Holder (whether a cash or accrual
method taxpayer) will be required to include in income such OID as it accrues,
in advance of the receipt of some or all of the related cash payments. The
"issue price" of each Note has been determined by allocating the issue price
of the Unit between the Note and the Initial Warrants comprising such Unit
based on their relative fair market values. For this purpose, the issue price
of a Unit is the initial offering price at which a substantial amount of the
Units were sold (not including sales to bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters or
wholesalers). The Company has allocated $965.00 to the Note and $35.00 to the
Initial Warrants comprising each Unit. The Company's allocation reflects its
best judgment as to the relative values of each of those instruments at the
time of issuance, but will not be binding on the Internal Revenue Service. The
Company's allocation will be binding on each Holder of a Unit that does not
explicitly disclose that its allocation of the issue price of the Unit is
different than the Company's allocation. Such disclosure must be made on a
statement attached to such Holder's timely filed federal income tax return for
its taxable year that includes the acquisition date of the Unit.
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The amount of OID includable in income by a Holder is the sum of the "daily
portions" of OID with respect to the Note for each day during the taxable year
or portion of the taxable year on which such Holder held such Note ("accrued
OID"). The daily portion is determined by allocating to each day in any
"accrual period" a pro rata portion of the OID allocable to that accrual
period. The accrual periods for a Note will be periods that are selected by
the Holder that are no longer than one year, provided that each scheduled
payment occurs either on the final day or on the first day of an accrual
period. The amount of OID allocable to any accrual period other than the
initial short accrual period (if any) and the final accrual period is an
amount equal to the product of the Note's "adjusted issue price" at the
beginning of such accrual period and its yield to maturity (determined on the
basis of compounding at the close of each accrual period and properly adjusted
for the length of the accrual period). The amount of OID allocable to the
final accrual period is the difference between the amount payable at maturity
and the adjusted issue price of the Note at the beginning of the final accrual
period. The amount of OID allocable to any initial short accrual period may be
computed under any reasonable method. In general, the adjusted issue price of
the Note at the start of any accrual period is equal to its issue price
increased by the accrued OID for each prior accrual period and, except as
described below under "Treatment of Additional Notes," reduced by any prior
payments, or payments on the first day of the current accrual period (in
either case, other than any payments of "additional interest" or Contingent
Warrants described below) with respect to such Note. The Company is required
to report the amount of OID accrued on Notes held of record by persons other
than corporations and other exempt Holders, which may be based on accrual
periods other than those chosen by the Holder.
Treatment of Additional Notes. The issuance of additional notes ("Additional
Notes") in lieu of cash interest is not treated as a payment of interest.
Instead, the underlying Note and any Additional Notes that may be issued
thereon are treated as a single debt instrument under the OID rules. Moreover,
because the terms of the Additional Notes and underlying Note are identical so
that the two are fungible in all respects, the issuance of an Additional Note
should be treated simply as a division of the underlying Note, so that the
Holder's tax basis and adjusted issue price in the underlying Note should be
allocated between the underlying Note and the Additional Notes in proportion
to their relative principal amounts.
For purposes of determining the stated redemption price at maturity and the
rate at which OID accrues on a Note, applicable regulations require that it be
assumed that the Company will pay interest in the form of Additional Notes to
the maximum extent permitted under the terms of the Notes because doing so
would reduce the yield to maturity on the Notes. If the Company elects to pay
in cash an interest payment payable in cash or Additional Notes, the cash
payment will be treated as a pro rata prepayment on the Notes. As a result,
the Holder generally will recognize gain in an amount equal to the excess of
the cash payment over the portion of the Holder's tax basis that would have
been allocated to such Additional Notes. The Holder's tax basis in the Notes
held would be reduced by such allocated portion of the Holder's tax basis but
would not be reduced by the cash payment in lieu of Additional Notes, and the
issue price of the Notes would be similarly reduced.
Applicable High Yield Discount Obligations. Each Note is to be treated as an
"applicable high yield discount obligation" ("AHYDO") under the rules of
Sections 163(e) and 163(i) of the Code, because the Notes have a maturity date
more than five years from the date of issue, have a yield to maturity more
than five percentage points higher than the applicable Federal rate and bear
"significant OID." The Notes bear significant OID because, assuming (as is
required for this purpose), that the Company issues Additional Notes to the
maximum extent permitted, instead of making cash payments of interest on the
Notes and Additional Notes, as of the close of an accrual period ending more
than five years after issuance the cumulative amount of income includible by a
Holder with respect to a Note (including the Additional Notes derived from the
Note) will exceed the cumulative amount of interest paid to the Holder (in
cash or property other than an obligation or stock of the Company or a related
party) by an amount that is greater than the product of the issue price of the
Note multiplied by its yield to maturity.
A portion of OID accruing on the Note (the "disqualified portion") will be
treated in respect of corporate Holders as a dividend eligible for the
dividends received deduction (provided the Company has adequate current or
accumulated earnings and profits); and the Company will be denied a deduction
for the disqualified portion.
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In addition, the remainder of the OID accruing will not be deductible by the
Company until paid in cash. The disqualified portion of the OID is
proportionate to the portion of the yield to maturity of the Note in excess of
six percentage points over the applicable Federal rate. A Holder of a Note
must include in income all of the OID accruing on the Note, including any
amount paid in Additional Notes rather than in cash.
TAX BASIS
The initial tax basis for a Note is determined by allocating the purchase
price paid for the Unit between the Note and the Initial Warrants comprising
such Unit based on their relative fair market values. In general, the tax
basis of a Note in the hands of the Holder will be increased by the amount of
OID, if any, on the Note that is included in the Holder's income and, except
as described above under "Treatment of Additional Notes," will be decreased by
the amount of any payments (other than payments of "additional interest" or
Contingent Warrants described below) made with respect to the Note.
ADDITIONAL INTEREST PURSUANT TO REGISTRATION RIGHTS AGREEMENT
The Company is obligated to pay additional interest to the Holder under
certain circumstances described under "The Exchange Offer--Purpose and Effect
of the Exchange Offer" above. Any such payments should be treated for tax
purposes as interest, taxable to Holders, in the case of an accrual method
taxpayer as such payments become fixed and determinable and in the case of a
cash method taxpayer, as such amounts are paid or made available to the
taxpayer.
MARKET DISCOUNT
If a Note is acquired at a "market discount," some or all of any gain
realized upon a disposition (including a sale or a taxable exchange, as well
as a cash payment of interest in lieu of the issuance of Additional Notes) or
payment at maturity of such Note may be treated as ordinary income. In
general, "market discount" with respect to a Note is, subject to a de minimis
exception, the excess of (1) the adjusted issue price of the Note disregarding
any adjustments for "acquisition premium," discussed below (the "revised issue
price") over (2) such Holder's tax basis in the Note immediately after its
acquisition. The amount of market discount treated as having accrued will be
determined either on a straight-line basis, or, if the Holder so elects, on a
constant interest method. Upon any subsequent disposition (including a gift or
payment at maturity) of such Note (other than in connection with certain
nonrecognition transactions), the lesser of any gain on such disposition (or
appreciation, in the case of a gift) or the portion of the market discount
that accrued while the Note was held by such Holder will be treated as
ordinary interest income at the time of the disposition. In lieu of including
accrued market discount in income at the time of disposition, a Holder may
elect to include market discount in income currently. Unless a Holder so
elects, such Holder may be required to defer a portion of any interest expense
that may otherwise be deductible on any indebtedness incurred or maintained to
purchase or carry such Note until the Holder disposes of the Note.
ACQUISITION PREMIUM
If a Holder's purchase price for the Note exceeds the "revised issue price"
at the time of acquisition, the excess (referred to as "acquisition premium")
is offset ratably against the amount of OID otherwise includible in such
Holder's taxable income.
DISPOSITION OF NOTES
A Holder generally will recognize gain or loss upon the sale, redemption
(including a deemed redemption on any payment in cash of an interest payment
payable in cash or Additional Notes, as described above), retirement or other
disposition of a Note equal to the difference between the amount realized on
the disposition and the Holder's adjusted tax basis in the Note. Subject to
the market discount rules discussed above, gain or loss recognized will be
long-term capital gain or loss, provided the Note was a capital asset in the
hands of the Holder, and had been held (or treated as held) for longer than
one year.
INTEREST ELECTION
A Holder, subject to certain limitations, may elect to include all interest
that accrues on a Note in gross income under the constant yield-to-maturity
method. For this purpose, interest includes stated and unstated
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interest, acquisition discount, de minimis OID and OID, de minimis market
discount and market discount, as adjusted by any acquisition premium. Such
election, if made in respect of a market discount obligation, will constitute
an election to include market discount in income currently on all market
discount obligations acquired by such Holder on or after the first taxable
year to which the election applies. See "Market Discount" above.
BACKUP WITHHOLDING
A Holder may be subject to backup withholding at the rate of 31% with
respect to interest paid on a Note unless such Holder (a) is a corporation or
other exempt recipient and, when required, demonstrates this fact or (b)
provides, when required, a correct taxpayer identification number, certifies
that backup withholding is not in effect and otherwise complies with
applicable requirements of the backup withholding rules. Furthermore, a Holder
that does not provide the Company with the Holder's correct taxpayer
identification number may be subject to penalties imposed by the IRS. Amounts
withheld as backup withholding generally will be creditable against the
Holder's federal income tax liability.
TAX TREATMENT OF THE WARRANTS
TREATMENT OF CONTINGENT WARRANTS
Although in the absence of applicable final Treasury regulations the
treatment is not free from doubt, the right of Holders of Notes and Additional
Notes to receive Contingent Warrants in certain circumstances should be
treated for tax purposes as a right to receive a contingent payment of
interest, the amount and likelihood of payment of which cannot be estimated
with any reasonable accuracy at the time the Notes are issued. Such contingent
interest should not be included in the stated redemption price at maturity of
the Notes (or Additional Notes) for purposes of determining the amount of OID
on the Notes and the rate at which OID accrues, but upon any issuance of the
Contingent Warrants, such warrants should be treated as interest income to the
Holder in the amount of the fair market value of the Contingent Warrants at
that time. The tax basis of the Contingent Warrants received by a Holder would
equal the fair market value of the Contingent Warrants at the time they are
issued.
EXERCISE OF WARRANTS
Generally, a Holder of a Warrant will not recognize any gain or loss upon
exercise of the Warrant. The tax basis of the Warrant Shares received
generally will be equal to the tax basis, as adjusted, in the Warrant so
exercised, plus the exercise price. Except as discussed below, the holding
period of the Warrant Shares received upon exercise of a Warrant will not
include the period during which the Warrant was held.
Because, among other things, the exercise price of each Warrant is a nominal
amount, a Warrant may be considered to be constructively exercised for federal
income tax purposes on the day on which the Warrant first becomes exercisable,
or possibly on the day of its issuance. In that event, (i) no gain or loss
will be recognized to a Holder upon either such deemed exercise or actual
exercise of the Warrant; (ii) the adjusted tax basis of a Warrant Share deemed
received will be equal to the adjusted tax basis of the Warrant until the
Warrant is actually exercised, at which time the adjusted tax basis of such
Warrant Share would be increased by the exercise price paid; (iii) the holding
period of a Warrant Share deemed received will begin on the day of such
constructive exercise; and (iv) the federal income tax consequences of the
ownership and disposition of a Warrant will be the same as if the Warrant
actually was a Warrant Share.
SALE OR EXCHANGE OF WARRANTS
As described under "Tax Treatment of the Notes--Original Issue Discount"
above, the basis for federal income tax purposes of an Initial Warrant is
determined by reference to the proportion which the fair market value of such
Warrant bears to the fair market value of the Unit. As described under "--
Treatment of Contingent Warrants" above, the basis of a Contingent Warrant
will equal its fair market value at the time the Contingent Warrant is issued.
Upon a sale or exchange of a Warrant (including a purchase by the Company with
Notes), a Holder thereof will recognize long-term or short-term gain or loss,
depending\ upon whether the holding period is one year or more. Such gain or
loss generally will be a capital gain or loss, provided that the Warrant
Shares
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issuable upon exercise of the Warrant would have been capital assets if
acquired by the Holder. The amount of gain or loss will be the difference
between the amount realized and the tax basis, as adjusted, of the Warrant
sold. Any loss realized by a Holder of a Warrant due to the failure to
exercise prior to the expiration date will be treated as a capital loss
provided that the Warrant Shares issuable upon exercise of the Warrant would
have been capital assets if acquired by the Holder. Such capital loss will be
long-term if the Warrant was held for more than one year.
Notwithstanding the above, it is possible that a redemption of a Warrant by
the Company would not be treated as a sale or exchange of a capital asset. For
example, in the event the Warrants are treated as constructively exercised for
federal income tax purposes (as described above under "--Exercise of
Warrants"), the redemption of Warrants by the Company would be governed by the
stock redemption provisions of Section 302 of the Code, and the Holder of a
Warrant might recognize ordinary income or loss on such redemption. See "--
Warrant Shares" below.
WARRANT SHARES
In general, any gain or loss realized on the sale or exchange of Warrant
Shares acquired upon exercise of Warrants will be capital gain or loss
(provided that the Warrant Shares are capital assets in the hands of the
Holder at the time of such sale or exchange), and will be long-term if the
Warrant Shares were held for more than one year. Distributions on Warrant
Shares generally will be taxable to a Holder as ordinary income to the extent
of the Company's current and accumulated earnings and profits. Corporate
Holders may be entitled to a dividends received deduction with respect to such
distributions and are urged to consult their tax advisors in this regard.
A redemption of Warrant Shares by the Company will be treated, under Section
302 of the Code, as a dividend to the Holder taxed as ordinary income to the
extent of the Company's current and accumulated earnings and profits, unless,
taking into account certain constructive ownership rules, the redemption
terminates the Holder's entire equity interest in the Company or the
redemption is "substantially disproportionate" or "not essentially equivalent
to a dividend." In a published ruling, the Internal Revenue Service has
indicated that a holder whose actual and constructive stock ownership in an
issuer was minimal and who exercised no control over corporate affairs was
entitled to capital gain or loss treatment upon the redemption of the holder's
stock so long as the holder's percentage stock ownership was thereby reduced.
WARRANT PURCHASE NOTES
The following summary of the anticipated tax consequences resulting from the
issuance of Notes to purchase Warrants (the "Purchase Notes") will be amended
or supplemented as necessary in the registration statement pursuant to which
the Purchase Notes will be issued. Under applicable authorities, Purchase
Notes should be indebtedness of the Company for federal income tax purposes,
although such determination may be affected by facts in existence at the time
of the purchase. Accordingly, the remainder of the discussion assumes that the
Purchase Notes will constitute indebtedness for federal income tax purposes.
Holders will generally be required to take into account stated interest on
the Purchase Notes in accordance with their usual method of accounting. In
addition, if the principal amount of a Purchase Note exceeds its issue price
by more than a de minimis amount, a portion of such excess will generally be
includable in a holder's gross income as OID, in a manner similar to the
inclusion of OID with respect to the Notes discussed above.
If the Purchase Notes are considered traded on an established securities
market within the 60-day period ending 30 days after the exchange date, the
issue price of the Purchase Notes will be their fair market value as of their
issue date. If the Purchase Notes are not considered traded on an established
securities market, but the Warrants are considered to be traded on such a
market during that 60-day period, then the issue price of the Purchase Notes
will be the fair market value of the Warrants purchased therewith as of the
issue date. If neither the Purchase Notes nor the Warrants are considered to
be publicly traded, the issue price of the Purchase Notes would generally
equal their stated principal amount unless either (i) the Purchase Notes do
not provide "adequate
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stated interest" within the meaning of section 1274 of the Code, which is
unlikely, or (ii) it is determined that the Purchase Notes are issued in a so-
called "potentially abusive situation" as defined in the Treasury Regulations
under section 1274 of the Code (including a situation involving a recent sales
transaction), in which case the issue price of such Purchase Notes will be the
fair market value of the Warrants that are purchased therewith.
The rules applicable to Notes discussed above under "Tax Treatment of the
Notes" in "--Original Issue Discount," "--Tax Basis," "--Market Discount," "--
Acquisition Premium," "--Disposition of Notes," "--Interest Election" and "--
Backup Withholding" are also generally applicable to the Purchase Notes,
except that (i) interest on the Purchase Notes cannot be paid with Additional
Notes, (ii) interest on a Purchase Note will not be included in its stated
redemption price at maturity for purposes of determining the amount of OID,
(iii) in determining the amount of OID accruing during an accrual period, the
product of the adjusted issue price and the yield to maturity will be reduced
by the amount of stated interest on the Purchase Note allocable to the accrual
period, (iv) a holder's tax basis and adjusted issue price in a Purchase Note
will not be reduced by the amounts of the stated interest payments and (v)
whether a Purchase Note is an AHYDO will depend on facts in existence at the
time of its issuance including whether the Purchase Note bears significant
OID. Further, if a holder's tax basis in a Purchase Note exceeds the principal
amount of such Purchase Note, such excess generally will constitute
amortizable bond premium that the holder may elect to amortize under the
constant interest rate method over the period from the acquisition date to the
maturity date of the Purchase Note.
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The authorized capital stock of the Company consists of 15,000,000 shares of
Common Stock, par value $0.0001 per share, of which 10,628,571.43 shares are
issued and outstanding.
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders, including
election of directors, and, except as otherwise required by law or provided in
any resolution adopted by the Board with respect to any other series or class
of capital stock, the holders of such Common Stock will exclusively possess
all voting power. The Company's Certificate of Incorporation does not provide
for cumulative voting for the election of directors. The Common Stock is
neither redeemable nor convertible, and there are no sinking fund provisions.
The holders of Common Stock are entitled to dividends when and as declared
from time to time by the Board of Directors from funds legally available
therefor. Upon liquidation of the Company, holders of Common Stock are
entitled to receive pro rata all assets of the Company legally available for
distribution to all holders of Common Stock. The Company does not expect to
pay any dividends on the Common Stock in the foreseeable future.
WARRANTS
On May 13, 1996, the Company sold, as part of the Units, 800,000 Initial
Warrants to purchase an aggregate of 800,000 shares of Common Stock at an
exercise price of $0.01 per share. In addition, the Company is obligated,
under certain circumstances, to issue Contingent Warrants to the holders of
the Notes exercisable for 3.0% of the Common Stock on a fully-diluted basis as
of the date of such issuance after giving effect to the issuance of the
Contingent Warrants. The number of shares subject to the Warrants is subject
to certain anti-dilution adjustments. The Warrants will be exercisable at any
time on or after the occurrence of an Exercise Event, provided, however, that
the Warrants will expire on May 15, 2004. See "Description of the Warrants."
REGISTRATION RIGHTS
The holders of Warrants are entitled to certain rights with respect to the
registration of their Warrants and/or Warrant Shares under the Securities Act.
If the Company proposes to register any of its equity securities under
164
<PAGE>
the Securities Act, either for its own account or for the account of other
security holders exercising registration rights, such holders are entitled to
notice of such registration and are entitled to include such Warrants and/or
Warrant Shares in such registration statement, subject to certain conditions
and limitations. In addition, the holders benefiting from these rights may
request that the Company on various occasions file a registration statement
under the Securities Act with respect to such Warrants and/or Warrant Shares,
and the Company is required to use its best efforts to effect such
registration subject to certain conditions and limitations. See "Description
of the Warrants--Registration Rights of Warrant Holders."
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Series B 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 Series B Notes. 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 Series B
Notes received in exchange for Series A Notes where such Series A Notes were
acquired as a result of market-making activities or other trading activities.
The Company has agreed that, for a period of 180 days after the date of this
Prospectus, it will make this Prospectus, as amended or supplemented,
available to any Participating Broker-Dealer for use in connection with any
such resale. In addition, until , 1996, all dealers effecting transactions
in the Series B Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sales of Series B Notes
by Participating Broker- Dealers. Series B Notes received by Participating
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
Series B 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 at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such Participating Broker-
Dealer and/or the purchasers of any such Series B Notes. Any Participating
Broker-Dealer that resells the Series B 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 Series B Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of Series B 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 Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that requests
such documents in the Letter of Transmittal.
LEGAL MATTERS
Certain legal matters with respect to the Series B Notes offered hereby will
be passed upon for the Company by Eckert Seamans Cherin & Mellott, Pittsburgh,
Pennsylvania. Stephen I. Burr, a partner in such firm, is the Secretary of
each of PAI, Park Communications, Park Broadcasting and each of its
subsidiaries and Park Newspapers and each of its subsidiaries.
EXPERTS
The consolidated balance sheets as of December 31, 1995 and the consolidated
statements of income and retained earnings and cash flows for the period from
May 11, 1995 to December 31, 1995 and for the period from January 1, 1995 to
May 10, 1995 of Park Communications, Inc. and Subsidiaries, Park Broadcasting,
Inc.
165
<PAGE>
and Subsidiaries and Park Newspapers, Inc. and Subsidiaries, included in this
Prospectus, have been included herein in reliance on the reports, which
include a paragraph explaining certain financial reporting implications
related to the Acquisition, of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
The consolidated financial statements and schedules of Park Communications,
Inc. and Subsidiaries, Park Broadcasting, Inc. and Subsidiaries and Park
Newspapers, Inc. and Subsidiaries as of December 31, 1994 and for the two
years then ended, appearing in this Prospectus and the Registration Statement,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon appearing elsewhere herein, and are included in reliance
upon such reports given upon the authority of such firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (together with all amendments, exhibits and schedules thereto, the
"Registration Statement") under the Securities Act with respect to the Series
B Notes offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission, and to which
reference is hereby made. Statements contained in this Prospectus as to the
contents of any contract, agreement or any other document referred to are not
necessarily complete. With respect to each such contact, agreement or other
document filed as an exhibit to the Registration Statement, reference is made
to such exhibit to the Registration Statement for a more complete description
of the matter involved, and each such statement shall be deemed qualified in
its entirety by such reference.
The Registration Statement can be inspected and copied at the Public
Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20459, and at the Commission's regional offices at Seven
World Trade Center, New York, New York 10048, and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of the
Registration Statement can be obtained from the Public Reference Section of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20459,
at prescribed rates.
The Company intends, and is required by the terms of the Indenture, to
furnish the holders of the Series B Notes with annual reports containing
consolidated financial statements audited by its independent certified public
accountants and with quarterly reports containing unaudited condensed
consolidated financial statements for each of the first three quarters of each
fiscal year.
166
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
Reports of Independent Accountants................................... F-2, 3
Consolidated Balance Sheets as of December 31, 1995 and 1994......... F-4
Consolidated Statements of Income and Retained Earnings for the
period from May 11, 1995 to December 31, 1995, the period from
January 1, 1995 to May 10, 1995 and the years ended December 31,
1994 and 1993....................................................... F-5
Consolidated Statements of Cash Flows for the period from May 11,
1995 to December 31, 1995, the period from January 1, 1995 to May
10, 1995 and the years ended December 31, 1994 and 1993............. F-6
Notes to Consolidated Financial Statements........................... F-7
Unaudited Interim Financial Statements:
Condensed Consolidated Balance Sheets as of March 31, 1996 and
December 31, 1995.................................................. F-18
Condensed Consolidated Statements of Income and Retained Earnings
for the three months ended March 31, 1996 and March 31, 1995....... F-19
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1996 and March 31, 1995............................ F-20
Notes to Condensed Consolidated Unaudited Financial Statements...... F-21
PARK BROADCASTING, INC. AND SUBSIDIARIES
Reports of Independent Accountants................................... F-22, 23
Consolidated Balance Sheets as of December 31, 1995 and 1994......... F-24
Consolidated Statements of Income and Retained Earnings for the
period from May 11, 1995 to December 31, 1995, the period from
January 1, 1995 to May 10, 1995 and the years ended December 31,
1994 and 1993....................................................... F-25
Consolidated Statements of Cash Flows for the period from May 11,
1995 to December 31, 1995, the period from January 1, 1995 to May
10, 1995 and the years ended December 31, 1994 and 1993............. F-26
Notes to Consolidated Financial Statements........................... F-27
Unaudited Interim Financial Statements:
Condensed Consolidated Balance Sheets as of March 31, 1996 and
December 31, 1995.................................................. F-35
Condensed Consolidated Statements of Income and Retained Earnings
for the three months ended March 31, 1996 and March 31, 1995....... F-36
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1996 and March 31, 1995............................ F-37
Notes to Condensed Consolidated Unaudited Financial Statements...... F-38
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
Reports of Independent Accountants................................... F-39, 40
Consolidated Balance Sheets as of December 31, 1995 and 1994......... F-41
Consolidated Statements of Income and Retained Earnings for the
period from May 11, 1995 to December 31, 1995, the period from
January 1, 1995 to May 10, 1995 and the years ended December 31,
1994 and 1993....................................................... F-42
Consolidated Statements of Cash Flows for the period from May 11,
1995 to December 31, 1995, the period from January 1, 1995 to May
10, 1995 and the years ended December 31, 1994 and 1993............. F-43
Notes to Consolidated Financial Statements........................... F-44
Unaudited Interim Financial Statements:
Condensed Consolidated Balance Sheets as of March 31, 1996 and
December 31, 1995.................................................. F-51
Condensed Consolidated Statements of Income and Retained Earnings
for the three months ended March 31, 1996 and March 31, 1995....... F-52
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1996 and March 31, 1995............................ F-53
Notes to Condensed Consolidated Unaudited Financial Statements...... F-54
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Park Communications, Inc.
We have audited the accompanying consolidated balance sheet of Park
Communications, Inc. and Subsidiaries (a wholly-owned subsidiary of Park
Acquisitions, Inc.) as of December 31, 1995 and the related consolidated
statements of income and retained earnings and cash flows for the period from
May 11, 1995 to December 31, 1995 and for the period from January 1, 1995 to
May 10, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
As discussed in Note 2 to the consolidated financial statements, the Company
was acquired by Park Acquisitions, Inc. on May 11, 1995 in a transaction
accounted for as a purchase. The purchase price and an allocable portion of
debt have been "pushed down" to the financial statements of the Company and as
a result, the post-acquisition consolidated financial statements are not
comparable to the pre-acquisition consolidated financial statements.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Park
Communications, Inc. and Subsidiaries as of December 31, 1995 and the
consolidated results of their operations and their cash flows for the period
from May 11, 1995 to December 31, 1995 and for the period from January 1, 1995
to May 10, 1995 in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Lexington, Kentucky
February 2, 1996, except for Note 13, as to which
the date is May 6, 1996
F-2
<PAGE>
REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
Board of Directors
Park Communications, Inc.
We have audited the accompanying consolidated balance sheet of Park
Communications, Inc. and subsidiaries as of December 31, 1994 and the related
consolidated statements of income and retained earnings, and cash flows for
each of the two years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Park
Communications, Inc. and subsidiaries at December 31, 1994 and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the financial statements, in 1993 the Company
changed its method of accounting for income taxes, as required by FASB
Statement No. 109, "Accounting for Income Taxes."
Ernst & Young LLP
Syracuse, New York
January 27, 1995
F-3
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
----------- -----------
NEW PARK OLD PARK
----------- -----------
1995 1994
----------- -----------
<S> <C> <C>
ASSETS (NOTE 6)
Current Assets:
Cash.................................................................................................. $ 19,026 $ 84,069
Short-term investments................................................................................ -- 59,431
Accounts receivable, less allowance for doubtful accounts of $807 in 1995 and $1,598 in 1994.......... 26,544 22,235
Inventory............................................................................................. 1,265 1,170
Film contracts........................................................................................ 2,717 2,446
Consulting/non-compete contracts...................................................................... -- 825
Other................................................................................................. 2,844 3,597
-------- --------
Total current assets................................................................................. 52,396 173,773
-------- --------
Property, Plant & Equipment:
Land and improvements................................................................................. 13,475 13,431
Buildings and leasehold improvements.................................................................. 19,110 31,522
Newspaper equipment................................................................................... 12,037 23,752
Broadcast equipment................................................................................... 37,080 61,455
Furniture and fixtures................................................................................ 6,655 10,535
Autos and trucks...................................................................................... 2,106 3,956
-------- --------
90,463 144,651
Less accumulated depreciation and amortization........................................................ (6,068) (68,909)
-------- --------
84,395 75,742
Intangible assets, net................................................................................. 635,447 109,797
Film contracts......................................................................................... 2,787 2,777
Consulting/non-compete contracts....................................................................... -- 3,390
Other assets........................................................................................... 7,757 1,307
-------- --------
Total assets......................................................................................... $782,782 $366,786
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-term debt.................................................................. $ 465 $ 713
Current maturities of film contracts.................................................................. 2,619 2,521
Accounts payable...................................................................................... 3,313 2,539
Consulting/non-compete contracts...................................................................... 849 877
Interest.............................................................................................. 26,391 944
Income taxes.......................................................................................... 2,124 2,959
Accrued liabilities................................................................................... 4,075 4,027
Deferred income....................................................................................... 7,705 2,909
-------- --------
Total current liabilities............................................................................ 47,541 17,489
Long-term debt......................................................................................... 584,085 49,248
Consulting/non-compete contracts....................................................................... 2,851 3,718
Deferred income taxes.................................................................................. 165,733 10,601
-------- --------
Total liabilities.................................................................................... 800,210 81,056
-------- --------
Commitments
Stockholder's Equity:
Common stock--$0.0001 par value in 1995 and no par value in 1994:
Authorized 15,000,000 shares in 1995 and 32,000,000 shares in 1994
Issued and outstanding 10,628,571 shares in 1995 and 20,961,205 in 1994.............................. -- 3,494
Paid in capital....................................................................................... -- 18,701
Retained earnings..................................................................................... (17,428) 263,535
-------- --------
Total stockholder's equity............................................................................ (17,428) 285,730
-------- --------
Total liabilities and stockholder's equity........................................................... $782,782 $366,786
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA PERIOD YEAR ENDED DECEMBER 31
----------- -------------------- ------------------------
NEW PARK OLD PARK OLD PARK
--------- --------- ------------------------
05/11/95- 01/01/95-
1995 12/31/95 05/10/95 1994 1993
----------- --------- --------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Broadcasting revenue............................................... $ 76,769 $ 50,033 $ 26,736 $ 77,749 $ 62,460
Newspaper revenue.................................................. 78,904 51,723 27,181 76,810 84,751
-------- -------- -------- ----------- -----------
Gross revenue...................................................... 155,673 101,756 53,917 154,559 147,211
Less agency and national representative commissions................ 11,361 7,360 4,001 12,128 9,867
-------- -------- -------- ----------- -----------
Net revenue......................................................... 144,312 94,396 49,916 142,431 137,344
-------- -------- -------- ----------- -----------
Operating expenses:
Cost of sales...................................................... 53,593 33,278 20,315 50,380 55,518
Selling, general and administrative................................ 36,069 24,561 11,508 37,051 39,561
-------- -------- -------- ----------- -----------
89,662 57,839 31,823 87,431 95,079
-------- -------- -------- ----------- -----------
Operating income before depreciation
and amortization................................................. 54,650 36,557 18,093 55,000 42,265
-------- -------- -------- ----------- -----------
Depreciation and amortization:
Depreciation....................................................... 8,083 5,164 2,499 6,524 6,268
Amortization....................................................... 8,756 5,594 786 2,541 2,725
Amortization of excess of cost over net assets acquired............ 7,197 4,598 715 1,972 2,095
-------- -------- -------- ----------- -----------
24,036 15,356 4,000 11,037 11,088
-------- -------- -------- ----------- -----------
Operating income.................................................. 30,614 21,201 14,093 43,963 31,177
Interest expense.................................................... (65,689) (41,968) (67) (279) (233)
Interest income..................................................... 1,355 866 3,181 5,561 4,952
Other expense....................................................... (280) (179) (10,693) (2,352) (431)
-------- -------- -------- ----------- -----------
(Loss) income before income taxes................................. (34,000) (20,080) 6,514 46,893 35,465
Provision (benefit) for income taxes................................ (10,880) (6,494) 5,954 19,519 14,849
-------- -------- -------- ----------- -----------
(Loss) income from continuing operations.......................... (23,120) (13,586) 560 27,374 20,616
(Loss) income from discontinued operations, net of income taxes
(benefit) of $(2,114), $243, $400 and ($597) respectively........ (6,014) (3,842) 125 (69) (1,836)
-------- -------- -------- ----------- -----------
Net (loss) income................................................. $(29,134) (17,428) 685 27,305 18,780
========
Retained earnings, beginning of period.............................. -- 263,535 236,230 217,450
-------- -------- ----------- -----------
Retained earnings, end of period.................................... $(17,428) $264,220 $ 263,535 $ 236,230
======== ======== =========== ===========
Loss per share:
Continuing operations.............................................. $ (2.18) $ (1.28)
Discontinued operations............................................ (0.56) (0.36)
-------- --------
Net loss........................................................... $ (2.74) $ (1.64)
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD YEAR ENDED DECEMBER 31
-------------------- ------------------------
NEW PARK OLD PARK OLD PARK
--------- --------- ------------------------
05/11/95- 01/01/95-
12/31/95 05/10/95 1994 1993
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Operating Activities:
Net (loss) income................................................................ $(17,428) $ 685 $ 27,305 $ 18,780
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:
Depreciation and amortization................................................... 18,678 5,485 14,443 14,787
Amortization of film contract rights and consulting/
non-compete contracts included in operating expenses........................... 1,799 2,352 4,194 3,842
Payments on film contract liabilities........................................... (1,889) (2,117) (2,955) (2,757)
Payments on consulting/non-compete contracts.................................... (544) (351) (932) (1,225)
Provision for losses on accounts receivable..................................... (183) (69) 897 919
Provision for deferred income taxes............................................. (8,591) (369) 982 272
Loss (gain) on sale of property, plant and equipment............................ (30) 856 48 291
Changes in operating assets and liabilities net of effects from the purchase and
disposal of companies:
Accounts receivable............................................................ (1,706) (2,351) (2,126) (1,738)
Inventory and other assets..................................................... (821) 605 181 277
Accounts payable and accrued liabilities....................................... 25,729 (295) (1,055) (1,139)
Deferred income................................................................ 4,464 332 128 169
-------- -------- ----------- ----------
Net cash provided by operating activities...................................... 19,478 4,763 41,110 32,478
-------- -------- ----------- ----------
Investing Activities:
Purchase of short term-investments............................................... (38,400) -- (241,954) (62,586)
Proceeds from short term-investments............................................. 38,400 59,431 277,843 66,929
Purchases of property, plant and equipment....................................... (6,174) (2,000) (12,517) (5,621)
Purchase of acquired companies, net of cash acquired............................. -- (19,184)
Proceeds from sale of property, plant, and equipment............................. 39 -- 448 86
Proceeds from sales of companies................................................. -- 6,336
(Increase) decrease in other assets.............................................. (6,120) 671 455 (464)
-------- -------- ----------- ----------
Net cash provided by (used in) investing activities............................ (12,255) 58,102 24,275 (14,504)
-------- -------- ----------- ----------
Financing Activities:
Additional loan proceeds......................................................... 6,758 -- -- --
Principal payments on long-term debt............................................. (3,622) (267) (2,757) (2,570)
Distribution to parent company................................................... (138,000) -- -- --
Proceeds from issuance of common stock........................................... -- -- 209 144
-------- -------- ----------- ----------
Net cash used in financing activities.......................................... (134,864) (267) (2,548) (2,426)
-------- -------- ----------- ----------
Increase (decrease) in cash.................................................... (127,641) 62,598 62,837 15,548
Cash and cash equivalents, beginning of period.................................... 146,667 84,069 21,232 5,684
-------- -------- ----------- ----------
Cash and cash equivalents, end of period.......................................... $ 19,026 $146,667 $ 84,069 $ 21,232
======== ======== =========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements of Park Communications, Inc. (the
"Company" or "PCI") include the accounts of the Company and its
subsidiaries, all of which are wholly owned. The Company is a wholly owned
subsidiary of Park Acquisitions, Inc. ("Parent" or "PAI") (see Note 2) as
of May 11, 1995. All significant intercompany accounts and transactions
have been eliminated.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions (such as estimated lives of assets and allowance for doubtful
accounts) that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period.
Cash and Cash Equivalents
For purposes of reporting consolidated cash flows, the Company considers
cash, balances with banks, and interest-bearing cash deposits in other
depository institutions with maturities of three months or less to be cash
equivalents.
Inventory Valuation
Inventories, consisting primarily of newsprint, are stated at the lower of
cost (primarily last-in; first-out method) or market. The effect of using
the last-in; first-out method (compared with the first-in; first-out
inventory method) is not considered significant.
Property, Plant, Equipment and Depreciation
Property, plant and equipment are stated at cost. Depreciation for
financial reporting purposes is provided on the straight-line method over
the estimated useful lives of the asset except for leasehold improvements,
which are amortized on the straight-line method over the lease period or
the lives of the improvements, whichever is shorter. Accelerated methods
are used for income tax reporting purposes whenever available. Deferred
income taxes are provided for this temporary difference between financial
and income tax reporting methods.
Investments
Effective January 1, 1994 the Company adopted Statement of Financial
Accounting Standard Board Statements No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS No. 115). SFAS No. 115
requires that all investments in debt securities that management has the
positive intent and ability to hold until maturity be classified as held to
maturity. All other debt securities are classified as available for sale.
Securities classified as available for sale are carried at market value.
Unrealized holding gains and losses for available for sale securities are
reported as a net amount in a separate component of stockholders' equity
until realized. Investments classified as held to maturity are carried at
amortized cost. The Company has analyzed its debt securities portfolio at
December 31, 1994 and based on this analysis has determined to classify all
debt securities as held to maturity due to management's intent and ability
to hold all debt securities so classified until maturity.
Film Contract Rights
Film contract rights and the related liabilities are recorded at full
contract prices when purchased. The costs are charged to operations based
on a straight line basis over the life of the contracts.
F-7
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Consulting/Non-Compete Contracts
Certain subsidiary companies have consulting/non-compete contracts expiring
through 2010. Prior to May 11, 1995, costs were amortized on a straight-
line basis over the terms of the related agreements. In connection with the
Acquisition, separate value was not assigned to those contracts. New Park
would not have entered into such contracts at the date of Acquisition (see
Note 2).
Intangible Assets
Intangible assets are stated at cost and consist primarily of advertising
contracts, subscription lists and excess of cost over net assets acquired.
Intangible assets are being amortized by the straight-line method over
estimated lives ranging primarily from 7 to 40 years.
In the financial statements of Old Park, network contracts ($8,238,000)
acquired prior to October 31, 1970 were assigned a cost upon acquisition
and were not amortized since, in the opinion of management, there had been
no diminution of value of these acquired contracts. Also, excess of cost
($1,214,000) of businesses acquired prior to October 31, 1970 was not
amortized since, in the opinion of management, there had been no diminution
of value of these acquired businesses. Excess of cost incurred since
October 31, 1970 was amortized by the straight-line method over a period of
40 years.
Carrying Value of Long Lived Asset
The carrying value of long lived assets is reviewed if the facts and
circumstances suggest that they may be impaired. If this review indicates
that such assets carrying value will not be recoverable, as determined
based on future expected, undiscounted cash flows, the carrying value is
reduced to fair market value.
Income Taxes
Effective January 1, 1993 the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
FASB Statement No. 109, "Accounting for Income Taxes." The cumulative
effect of the accounting change was not material to net income for 1993.
Deferred Income
Deferred income is recorded on subscriptions prepaid by customers. Such
income is recognized when earned.
2.ACQUISITION AND BASIS OF PRESENTATION
On May 11, 1995, PCI was sold to PAI (the Acquisition), a private
investment concern (organized August 4, 1994) owned by Gary B. Knapp and
the Tomlin Family Trust II, of which Donald R. Tomlin, Jr. is a trustee. A
significant portion of the purchase price was paid from the proceeds of a
$573,427,000 loan. The remainder of the purchase price ($138,000,000) was
derived from existing cash-on-hand at PCI at closing of the Acquisition. On
May 11, 1995, additional loan proceeds of $2,629,000 were utilized to pay
Acquisition related expenses and $2,758,000 was placed in escrow to be
utilized for retirement of other long-term debt.
As a consequence of the change in ownership of PCI, under generally
accepted accounting principles, the Company is deemed, for financial
reporting purposes, to have become a new reporting entity effective with
the change in ownership. The portion of the debt allocable to the Company
has been "pushed down" to the financial statements of the Company, and the
assets and liabilities have been adjusted to reflect their fair market
value as of May 11, 1995.
The accompanying financial statements reflect the operations of PCI prior
to the acquisition on May 11, 1995 (Old Park). Subsequent to that date the
financial statements reflect the operations of the Company utilizing the
new basis accounting (New Park).
The pro forma income statement for 1995 reflects the operations of the
Company under the new basis of accounting and assumes the transaction
closed on January 1, 1995. Depreciation, amortization and interest
F-8
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
expense reflect those costs that would be charged to operations for a full
year based on the revised balance sheet amounts at May 11, 1995 for
property, plant and equipment, intangible assets and the long-term debt
"push down" to PCI. Historical interest income in the pro forma
presentation has been reduced to give effect to the $138,000,000 paid to
PCI stockholders as a portion of the consideration for the Acquisition.
Historical other expenses have been adjusted to eliminate incremental
expenses for selling the Company incurred by Old Park. Pro forma income tax
benefit has been computed at an effective rate of 32%. Following is a
summary of adjustments made to historical costs of the assets and
liabilities of the Company as of May 10, 1995, as a result of applying
"push down" acquisition accounting at that date to arrive at the new basis
for the Company:
<TABLE>
<CAPTION>
MAY 10, 1995
--------------------------------------
PARK COMMUNICATIONS, INC.
--------------------------------------
WITHOUT MERGER MERGER WITH MERGER
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
-------------- ----------- -----------
OLD PARK NEW PARK
-------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets
Cash................................ $146,667 $(135,242) $ 11,425
Accounts receivable, net............ 24,655 -- 24,655
Inventory........................... 1,137 -- 1,137
Film contracts...................... 2,557 -- 2,557
Consulting/non-compete contracts.... 792 (792) --
Other............................... 2,553 -- 2,553
-------- --------- --------
Total current assets............... 178,361 (136,034) 42,327
-------- --------- --------
Property, plant & equipment.......... 135,346 (51,168) 84,178
Less accumulated depreciation and
amortization...................... 61,551 (61,551) --
-------- --------- --------
Net property, plant & equipment..... 73,795 10,383 84,178
Intangible assets, net............... 107,403 540,431 647,834
Film contracts....................... 2,453 -- 2,453
Consulting/non-compete contracts..... 3,110 (3,110) --
Other assets......................... 637 1,000 1,637
-------- --------- --------
Total assets....................... $365,759 $412,670 $778,429
======== ========= ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term
debt............................... $ 1,877 -- $ 1,877
Current maturities of film con-
tracts............................. 2,229 -- 2,229
Accounts payable.................... 3,467 -- 3,467
Consulting/non-compete contracts.... 898 -- 898
Interest............................ 29 -- 29
Income taxes........................ 2,820 $ 1,012 3,832
Accrued liabilities................. 3,276 582 3,858
Deferred income..................... 3,241 -- 3,241
-------- --------- --------
Total current liabilities.......... 17,837 1,594 19,431
Long-term debt....................... 2,467 578,814 581,281
Consulting/non-compete contracts..... 3,346 -- 3,346
Deferred income taxes................ 10,232 164,139 174,371
-------- --------- --------
Total liabilities.................. 33,882 744,547 778,429
-------- --------- --------
</TABLE>
F-9
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
MAY 10, 1995
--------------------------------------
PARK COMMUNICATIONS, INC.
--------------------------------------
WITHOUT MERGER MERGER WITH MERGER
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
-------------- ----------- -----------
OLD PARK NEW PARK
-------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Stockholder's Equity:
Common stock................... $ 3,889 $ (3,889) --
Paid in capital................ 63,768 (63,768) --
Retained earnings.............. 264,220 (264,220) --
-------- -------- --------
Total stockholder's equity...... 331,877 (331,877) --
-------- -------- --------
Total liabilities and stock-
holder's equity.............. $365,759 $412,670 $778,429
======== ======== ========
</TABLE>
3.LOSS PER SHARE
Loss per share of common stock is computed on the weighted average number
of common shares outstanding during each year (dollars and shares in
thousands except per share amounts):
<TABLE>
<CAPTION>
PRO FORMA NEW PARK
----------- ---------
NEW PARK PERIOD
----------- ---------
1995
----------- 05/11/95-
(UNAUDITED) 12/31/95
----------- ---------
<S> <C> <C>
Primary:
Average shares....................................... 10,629 10,629
======== ========
Continuing operations................................ $(23,120) $(13,586)
Discontinued operations.............................. (6,014) (3,842)
-------- --------
Net loss............................................. $(29,134) $(17,428)
======== ========
Loss per share:
Continuing operations................................ $ (2.18) $ (1.28)
Discontinued operations.............................. (0.56) (0.36)
-------- --------
Net loss............................................. $ (2.74) $ (1.64)
======== ========
</TABLE>
Earnings per share has not been shown prior to May 11, 1995 because such
information is not meaningful.
4.INTANGIBLE ASSETS
Intangible assets are comprised of the following (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
----------- -----------
NEW PARK OLD PARK
----------- -----------
1995 1994
----------- -----------
<S> <C> <C>
Advertising contracts and subscription lists......... $289,258 $ 42,240
Network contracts.................................... 14,183 10,688
FCC licenses and other intangibles................... 138,174 30,956
Excess of cost over net assets acquired.............. 206,219 102,813
-------- --------
Total intangibles................................... 647,834 186,697
Less accumulated amortization........................ 12,387 76,900
-------- --------
$635,447 $109,797
======== ========
</TABLE>
F-10
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5.DISPOSITIONS AND DISCONTINUED OPERATIONS
On December 26, 1995, the Company announced its intention to sell all of
its radio station operations on an individual basis. The segment has
produced operating profits before interest expense, depreciation and
amortization, and the Company estimates that the stations will each
generate operating profit before interest expense, depreciation and
amortization through the date of disposition. The Company currently has
signed agreements to sell each of its radio station operations. The Company
will realize gain on the dispositions assuming the contemplated
transactions receive FCC approval and are consummated at the price and
terms as set forth in the definitive agreements/letters of intent which
total approximately $230.0 million net of selling expenses but before
taxes. The Company estimates that all stations will be sold by October 31,
1996. The results of operations of the radio station operations are
included in the single line of the income statement labeled "(loss) income
from discontinued operations." The corporate operating expenses allocated
to radio are $325,676 for the period of 5/11/95--12/31/95, $184,078 for the
period of 1/1/95--5/10/95, $475,338 for 1994 and $403,021 for 1993. The
following is a summary of identifiable assets, liabilities and equity and
the related revenues and operating profits before interest, depreciation
and amortization of the radio station operations (dollars in thousands):
Radio Station Operations:
<TABLE>
<CAPTION>
PERIOD
-------------------
NEW PARK OLD PARK OLD PARK OLD PARK
--------- --------- -------- --------
05/11/95- 01/01/95-
12/31/95 05/10/95 1994 1993
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Revenues.............................. $21,932 $11,137 $30,305 $24,861
======= ======= ======= =======
Operating profits before interest,
depreciation and amortization........ $ 5,506 $ 2,388 $ 7,106 $ 4,801
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
NEW PARK
--------
12/31/95
--------
<S> <C>
Assets:
Current assets..................................................... $ 13,446
Property, plant, and equipment..................................... 19,935
Intangibles, net................................................... 102,830
Other assets....................................................... 9
--------
Total assets........................................................ 136,220
--------
Liabilities:
Current liabilities................................................ 13,299
Long-term debt..................................................... 96,803
Deferred income taxes.............................................. 30,204
--------
Total liabilities................................................... 140,306
--------
Net liabilities..................................................... $ 4,086
========
</TABLE>
On December 31, 1993, the Company sold newspaper publications in 13 of its
smaller markets. Of these, 11 were daily newspapers, all with paid
circulation under 6,000. The impact of the sale of these publications was
not material to net income in 1993. In 1995, the Company discontinued its
Research Triangle Park, Raleigh, North Carolina publication. The operating
losses (before depreciation and amortization) for these newspaper
publications were $145,000 in 1995 (pro forma), $235,000 in 1994 and
$273,000 in 1993.
F-11
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6.LONG-TERM DEBT
The Company's long-term debt is comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
----------- -----------
NEW PARK OLD PARK
----------- -----------
1995 1994
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Existing Credit Agreement........................... $580,632 --
Subordinated notes of certain newspaper subsidiaries
due to former owners................................ 360 $ 744
Promissory notes.................................... 1,077 1,400
6 7/8% Convertible subordinated debentures.......... -- 45,351
Film contracts...................................... 5,100 4,987
-------- --------
Total debt.................................... 587,169 52,482
Less:Current maturities of long-term debt........... 465 713
Current maturities of film contracts.............. 2,619 2,521
-------- --------
Long-term debt...................................... $584,085 $ 49,248
======== ========
</TABLE>
On May 11, 1995, PAI entered into an agreement (Existing Credit Agreement)
to borrow up to $593.8 million the proceeds of which were utilized to
finance the Acquisition and pay related expenses. The loan required that
the debt be directly assumed by PCI and its subsidiary companies and that
they be jointly and severally liable for the loan agreement. PAI, PCI and
PCI's subsidiaries' assets are pledged as collateral for the loan made
pursuant to the Existing Credit Agreement and PCI and its subsidiaries'
cash flow is utilized for debt service. Interest accrues at a base interest
rate (Base Rate) of 9.5% per annum, an additional interest rate (Additional
Rate) of 1.0% per annum, plus a yield maintenance interest rate (YMI) of
3.0% per annum. The Base Rate and Additional Rate interest are payable on
October 1 and April 1. Principal payments are required only to the extent
that PAI's cash balances, as defined in the Existing Credit Agreement,
exceeds $8.0 million (declining to $6.0 million at October 1, 1997) at each
interest payment date through October 1, 1997. Following is a table that
outlines these requirements:
<TABLE>
<CAPTION>
INTEREST
PAYMENT CASH
DATE RESERVE AMOUNT
-------- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
October 1, 1995....... $8,000
April 1, 1996......... 8,000
October 1, 1996....... 7,000
April 1, 1997......... 7,000
October 1, 1997 and
thereafter........... 6,000
</TABLE>
Prepayment, in part or wholly, can be made at any time without penalty.
Ninety percent (90%) of the after tax proceeds as defined in the Existing
Credit Agreement of any asset sales of the Company are required to be
applied to the principal.
The YMI, which the Company is accruing, is payable upon achievement by PAI,
on or prior to May 11, 1998, of a Loan to Value Ratio (LTV) of 70% or less
(as defined in the Existing Credit Agreement). If the Company elects not to
pay the YMI when payable, then PAI would be required to issue to the lender
an exercisable warrant having the right to acquire non-voting common stock
in PAI in a sufficient amount to equal an 80% stockholder's equity
interest. On the earliest date that the Debt Service Coverage Ratio (DSC)
as defined in the Existing Credit Agreement is met, and either the LTV
ratio is met or by reason of non-payment of the YMI, the warrant is
required to be issued, the loan will become fully amortizable in equal
annual amounts over the remaining term ending on a maturity date of April
15, 2015 with interest at 10.5% per annum.
F-12
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Substantially all of the Company's and its subsidiaries' tangible and
intangible assets are collateralized under the Existing Credit Agreement.
The Existing Credit Agreement contains covenants which, among other things,
limit or restrict payment of cash dividends, additional debt, repurchase of
common stock, capital expenditures, sales of the Company's common stock,
mergers, consolidations and sales of the Company's assets.
The subordinated notes are payable in various installments through 1998
with interest primarily from 6% to 9%. The promissory notes are payable in
various installments through 1998 with interest at 8%.
On March 11, 1986, the Company issued $50,000,000 principal amount of 6
7/8% convertible subordinated debentures due March 15, 2011 (the
debentures). The debentures were convertible at anytime prior to maturity,
unless previously redeemed, into shares of common stock of the Company at a
conversion ratio of 52.1739 shares of common stock for each $1,000
principal amount of debentures. The debentures were called for redemption
by the Company on January 9, 1995, and subsequently redeemed.
Cash payments of interest were $24,049,000 for the period of May 11 to
December 31, 1995, $44,000 for the period of January 1 to May 10, 1995,
$3,788,000 in 1994 and $3,787,000 in 1993.
The aggregate annual maturities on long-term debt, assuming the Company
meets the LTV on May 11, 1998, payable over the next five years are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- --------
<S> <C>
1996................................................................ $ 3,084
1997................................................................ 2,074
1998................................................................ 181,006
1999................................................................ 9,985
2000................................................................ 10,969
</TABLE>
The fair value of the Company's long-term debt approximates $628,537,000.
7.INCOME TAXES
The Company determines its income tax expense on the separate return
method. Federal and state income tax expense (benefit) is summarized as
follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DEC
PERIOD 31
------------------- ---------------
NEW PARK OLD PARK OLD PARK
--------- --------- ---------------
05/11/95- 01/01/95-
12/31/95 05/10/95 1994 1993
--------- --------- ------- -------
<S> <C> <C> <C> <C>
Federal:
Current................................ -- $5,176 $15,357 $11,989
Deferred............................... $(5,743) (347) 847 240
------- ------ ------- -------
(5,743) 4,829 16,204 12,229
------- ------ ------- -------
State:
Current................................ -- 1,146 3,119 2,588
Deferred............................... (751) (21) 196 32
------- ------ ------- -------
(751) 1,125 3,315 2,620
------- ------ ------- -------
Total income tax expense................ $(6,494) $5,954 $19,519 $14,849
======= ====== ======= =======
</TABLE>
F-13
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The items comprising the differences in taxes on income computed at the
U.S. statutory rate and the amount provided by the Company are as follows
(dollars in thousands):
<TABLE>
<CAPTION>
NEW PARK OLD PARK OLD PARK
-------- -------- ---------------
05/11/95- 01/01/95-
12/31/95 05/10/95 1994 1993
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Computed tax expense at U.S. statutory
rate.................................... $(7,028) $2,280 $16,485 $12,413
Increase in tax expense resulting from:
State income taxes, net of federal in-
come tax............................. (488) 731 2,155 1,703
Amortization not tax deductible....... 1,022 250 879 733
Non-deductible merger related expense. -- 2,693 -- --
------- ------ ------- -------
Total income tax expense (benefit)... $(6,494) $5,954 $19,519 $14,849
======= ====== ======= =======
</TABLE>
Significant components of the Company's deferred tax liabilities and assets
are as follows (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
----------- -----------
NEW PARK OLD PARK
----------- -----------
1995 1994
----------- -----------
<S> <C> <C>
Components of deferred taxes:
Network revenue..................................... $ (1,820) --
Property, plant & equipment, intangible assets...... 172,933 $ 10,728
Net operating loss carry forwards................... (5,380) --
Allowance for doubtful accounts and other........... (196) (699)
-------- --------
Net deferred tax liabilities....................... $165,537 $ 10,029
======== ========
Classification of deferred taxes:
Non-current liabilities............................. $165,733 $ 10,601
Current assets...................................... (196) (572)
-------- --------
$165,537 $ 10,029
======== ========
</TABLE>
The Company has federal tax loss carryforwards of approximately $16.0
million that expire in 2010. Total cash payments of Federal and state
income taxes were $2,604,000 for the period May 11 to December 31, 1995,
$4,434,000 for the period January 1 to May 10, 1995, $20,011,000 in 1994
and $14,030,000 in 1993.
8.LEASES
Certain operating facilities and equipment (see Note 9) are leased under
noncancellable operating agreements. Certain of the leases require the
Company or its subsidiaries to pay property taxes, insurance and
maintenance costs.
Lease expense related to the above and charged to operations was
approximately $739,000 for the period May 11 through December 31, 1995,
$417,000 for the period January 1 through May 10, 1995, $1,743,000 in 1994
and $2,019,000 in 1993.
F-14
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The aggregate minimum rentals through dates of expiration amount to
approximately $6,179,574 and the amounts payable over the next five years
are as follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------
<S> <C>
1996............................................................... $ 796
1997............................................................... 708
1998............................................................... 660
1999............................................................... 562
2000............................................................... 397
Thereafter......................................................... 3,057
------
$6,180
======
</TABLE>
9.RELATED PARTY TRANSACTIONS
In 1993 and 1994, the Company, in the ordinary course of business, leased
and rented certain operating facilities and equipment from RHP Incorporated
and its subsidiaries. RHP Incorporated is wholly owned by the estate of Roy
H. Park, formerly the Chairman of the Board of PCI, who died on October 25,
1993. Such lease and rent payments were $977,000 in 1994 and $1,265,000 in
1993. In connection with these operating facilities, in 1994 the Company
purchased ten buildings and one tower from RHP Incorporated and its
subsidiaries at the appraised fair market value of $4,415,000 and such
lease and rent payments ceased as of the date of purchase.
Additionally, certain officers of the Company were compensated by RHP
Incorporated for the performance of part-time management services.
During 1994, the Company placed $85,298 of promotional advertising with
Park Outdoor Advertising of New York, Inc. which is controlled by Roy H.
Park, Jr., a Director of the Company prior to May 11, 1995.
10.ACQUISITIONS
In December 1995, the Company entered into an agreement in principle to
purchase WHOA-TV, the ABC affiliate in Montgomery, Alabama. The purchase
price, which will not be material, will be accounted for under the purchase
method, and accordingly, its results of operations will be included in the
Consolidated Financial Statements from the date of acquisition (which is
anticipated in 1996).
11.BUSINESS SEGMENTS
The Company operates in two business segments: television broadcasting and
newspaper publishing. The Company operates a third segment, radio station
operations, which the Company has determined to divest and has presented as
a discontinued operation (see Note 5). Television broadcasting operations
involve the sale of time to advertisers, network revenue and other revenue
arising primarily from programming and production. Newspaper operations
involve the publication and distribution of both paid daily and paid non-
daily newspapers and advertising publications (shoppers) from which revenue
is derived primarily from the sale of advertising lineage and circulation
revenue.
F-15
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following is a summary of information by segment:
<TABLE>
<CAPTION>
PERIOD
--------------------
PRO FORMA NEW PARK OLD PARK OLD PARK OLD PARK
----------- --------- --------- -------- --------
(UNAUDITED) 05/11/95- 01/01/95-
1995 12/31/95 05/10/95 1994 1993
----------- --------- --------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Gross Revenue:
Television broadcast-
ing................... $ 76,769 $ 50,033 $ 26,736 $ 77,749 $ 62,460
Newspaper publishing... 78,904 51,723 27,181 76,810 84,751
-------- -------- -------- -------- --------
$155,673 $101,756 $ 53,917 $154,559 $147,211
======== ======== ======== ======== ========
Operating income before
depreciation
and amortization:
Television
broadcasting.......... $ 31,425 $ 20,724 $ 10,701 $ 32,770 $ 23,890
Newspaper publishing... 23,225 15,833 7,392 22,230 18,375
-------- -------- -------- -------- --------
$ 54,650 $ 36,557 $ 18,093 $ 55,000 $ 42,265
======== ======== ======== ======== ========
Depreciation and
amortization:
Television
broadcasting.......... $ 15,869 $ 10,138 $ 1,979 $ 5,221 $ 4,193
Newspaper publishing... 8,167 5,218 2,021 5,816 6,895
-------- -------- -------- -------- --------
$ 24,036 $ 15,356 $ 4,000 $ 11,037 $ 11,088
======== ======== ======== ======== ========
Additions to property,
plant and equipment:
Television broadcast-
ing................... $ 3,160 $ 2,145 $ 1,015 $ 7,794 $ 11,956
Newspaper publishing... 2,122 1,691 431 3,458 1,512
-------- -------- -------- -------- --------
$ 5,282 $ 3,836 $ 1,446 $ 11,252 $ 13,468
======== ======== ======== ======== ========
Identifiable assets:
Television
broadcasting.......... $430,740 $ 95,146 $ 84,114 $ 81,733
Newspaper publishing... 223,772 167,960 92,653 97,583
Discontinued
operations............ 136,220 46,668 47,446 47,742
Corporate.............. (7,950) 55,985 142,573 115,563
-------- -------- -------- --------
$782,782 $365,759 $366,786 $342,621
======== ======== ======== ========
</TABLE>
Operating income before depreciation and amortization is gross revenue less
agency and national representative commissions and operating expenses.
Interest expense, interest income, income taxes and other income (expense)
have been excluded in computing operating income before depreciation and
amortization. Depreciation and amortization by segment are shown
separately.
Identifiable assets by industry segment represent those assets used in the
Company's operation of that segment. Corporate assets under Old Park
consisted principally of cash, cash equivalents and short-term investments.
F-16
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12.STOCKHOLDER'S EQUITY
Following is a reconciliation of stockholder's equity:
<TABLE>
<CAPTION>
COMMON STOCK
------------------- PAID IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
----------- ------ ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993.. 20,700,167 $3,451 $13,781 $217,450 $234,682
Issue common stock........ 8,810 1 143 -- 144
Net income................ -- -- -- 18,780 18,780
----------- ------ ------- -------- --------
Balance, December 31,
1993..................... 20,708,977 3,452 13,924 236,230 253,606
Issue common stock........ 9,950 2 208 -- 210
Conversion of debentures.. 242,278 40 4,569 -- 4,609
Net income................ -- -- -- 27,305 27,305
----------- ------ ------- -------- --------
Balance, December 31,
1994..................... 20,961,205 3,494 18,701 263,535 285,730
Conversion of debentures.. 2,366,168 395 45,067 -- 45,462
Net income................ -- -- -- 685 685
----------- ------ ------- -------- --------
Balance, May 10, 1995..... 23,327,373 3,889 63,768 264,220 331,877
Merger adjustments (New
Park).................... (23,327,373) (3,889) (63,768) (264,220) (331,877)
Issue common stock........ 10,628,571 -- -- -- --
Net loss.................. -- -- -- (17,428) (17,428)
----------- ------ ------- -------- --------
Balance, December 31,
1995..................... 10,628,571 $ -- $ -- $(17,428) $(17,428)
=========== ====== ======= ======== ========
</TABLE>
13. SUBSEQUENT EVENT
On May 6, 1996, the Company's Board of Directors and sole stockholder
approved an amendment to the Company's certificate of incorporation to
authorize 15,000,000 shares of its Common Stock, and declare a stock split of
106,285.7143 to 1. Such amendment will become effective on May 7, 1996. All
references in the consolidated financial statements to number of shares,
average number of shares outstanding and per share amounts have been restated
to reflect this amendment.
F-17
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1996 1995
-------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................ $ 63,041 $ 19,026
Accounts receivable, less allowance for doubtful
accounts of $870 in 1996
and $807 in 1995................................... 24,099 26,544
Inventory............................................ 1,069 1,265
Film contracts....................................... 2,554 2,717
Other................................................ 2,913 2,844
-------- --------
Total current assets................................ 93,676 52,396
-------- --------
Property, Plant & Equipment:
Property Plant & Equipment........................... 86,623 90,463
Less accumulated depreciation and amortization....... (8,502) (6,068)
-------- --------
78,121 84,395
Intangible assets, net................................ 581,403 635,447
Film contracts........................................ 2,346 2,787
Other assets.......................................... 8,225 7,757
-------- --------
$763,771 $782,782
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-term debt................. $ 465 $ 465
Current maturities of film contracts................. 2,307 2,619
Accounts payable..................................... 3,328 3,313
Consulting/non-compete contracts..................... 837 849
Interest............................................. 45,850 26,391
Income taxes......................................... 21,830 2,124
Accrued liabilities.................................. 3,690 4,075
Deferred income...................................... 8,951 7,705
-------- --------
Total current liabilities........................... 87,258 47,541
Long-term debt........................................ 515,763 581,604
Long-term film contracts.............................. 2,170 2,481
Consulting/non-compete contracts...................... 2,654 2,851
Deferred income taxes................................. 153,976 165,733
-------- --------
Total liabilities................................... 761,821 800,210
-------- --------
Commitments
Stockholder's Equity:
Common Stock--$0.0001 par value:
Authorized 15,000,000 shares; Issued and outstanding
10,628,571 shares..................................... -- --
Retained earnings (deficit).......................... 1,950 (17,428)
-------- --------
Total stockholder's equity............................ 1,950 (17,428)
-------- --------
$763,771 $782,782
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
unaudited financial statements.
F-18
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------
1996 1995
--------- ---------
NEW PARK OLD PARK
--------- ---------
<S> <C> <C>
Revenue:
Broadcasting revenue................................................................................... $ 17,055 $ 17,619
Newspaper revenue...................................................................................... 18,342 18,259
-------- ---------
Gross revenue.......................................................................................... 35,397 35,878
Less agency and national representative commissions.................................................... 2,494 2,625
-------- ---------
Net revenue............................................................................................ 32,903 33,253
Operating expenses:
Cost of sales.......................................................................................... 13,881 12,723
Selling, general and administrative.................................................................... 10,289 9,234
-------- ---------
24,170 21,957
Operating income before depreciation and amortization................................................. 8,733 11,296
-------- ---------
Depreciation and amortization:
Depreciation........................................................................................... 2,287 1,719
Amortization........................................................................................... 2,096 546
Amortization of excess of cost over net assets acquired................................................ 1,671 514
-------- ---------
6,054 2,779
-------- ---------
Operating income...................................................................................... 2,679 8,517
Interest expense........................................................................................ (15,735) (44)
Interest income......................................................................................... 384 2,180
Other expense........................................................................................... (92) (468)
-------- ---------
(Loss) income before income taxes..................................................................... (12,764) 10,185
Provision (benefit) for income taxes.................................................................... (4,638) 4,265
-------- ---------
(Loss) income from continuing operations.............................................................. (8,126) 5,920
(Loss) income from discontinued operations, net of income taxes (benefit)
of $(1,783) in 1996 and $248 in 1995................................................................... (2,397) 268
Gain on sale of discontinued operations, net of income taxes of $14,217 in 1996......................... 29,901
-------- ---------
Net income.............................................................................................. 19,378 6,188
Retained earnings (deficit), beginning of period........................................................ (17,428) 263,535
-------- ---------
Retained earnings, end of period........................................................................ $ 1,950 $ 269,723
======== =========
Earnings (loss) per share:
Continuing operations.................................................................................. $ (0.77)
Discontinued operations................................................................................ 2.59
--------
Net earnings........................................................................................... $ 1.82
========
Average shares.......................................................................................... 10,629
========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
unaudited financial statements.
F-19
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------
1996 1995
--------- ---------
NEW PARK OLD PARK
--------- ---------
<S> <C> <C>
Operating Activities:
Net income............................................................................................. $ 19,378 $ 6,188
Adjustment to reconcile net income to net cash provided by operating activities:
Gain on sale of discontinued operations, exclusive of income tax...................................... (44,118)
Depreciation and amortization......................................................................... 7,552 3,783
Amortization of film contract rights and consulting/non-compete contracts included in operating
expenses........................................................................................... 784 986
Payments on film contract liabilities................................................................. (804) (810)
Payments on consulting/non-compete contracts.......................................................... (209) (228)
Provision for losses on accounts receivable........................................................... 194 (172)
Provision for deferred income taxes................................................................... (11,757) (64)
Loss(gain) on sale of property, plant and equipment................................................... (99) 6
Changes in operating assets and liabilities net of effects from the purchase and disposal of
companies:
Accounts receivable.................................................................................. 2,251 257
Inventory and other assets........................................................................... (1,033) 1,180
Accounts payable and accrued liabilities............................................................. 39,145 1,487
Deferred income...................................................................................... 1,246 1,590
--------- ---------
Net cash provided by operating activities........................................................... 12,530 14,203
--------- ---------
Investing Activities:
Proceeds from short term investments................................................................... -- 59,431
Purchases of property, plant and equipment............................................................. (3,414) (1,310)
Proceeds from sale of property, plant, and equipment................................................... 169 --
Proceeds from sales of discontinued operations, net of selling expenses................................ 101,039 --
Increase in other assets............................................................................... (468) --
--------- ---------
Net cash provided by investing activities........................................................... 97,326 58,121
--------- ---------
Financing Activities:
Principal payments on long-term debt................................................................... (65,841) (203)
--------- ---------
Net cash used in financing activities............................................................... (65,841) (203)
--------- ---------
Increase in cash...................................................................................... 44,015 72,121
Cash and cash equivalents beginning of period........................................................... 19,026 84,069
--------- ---------
Cash and cash equivalents end of period................................................................. $ 63,041 $ 156,190
========= =========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
unaudited financial statements.
F-20
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed interim financial statements are unaudited;
however, in the opinion of the Company's management, all adjustments
(which comprise only normal and recurring accruals) necessary for a fair
presentation of the interim financial results have been included. The
results for the interim periods are not necessarily indicative of results
to be expected for the entire year. These financial statements and notes
should be read in conjunction with the Company's audited annual
consolidated financial statements for the year ended December 31, 1995.
2. DISCONTINUED OPERATIONS
The Company sold two of its radio stations in March 1996. Proceeds of
approximately $66 million were utilized to reduce long-term debt. The net
gain on the sale of these stations was $29.9 million. The Company will
realize gain on the remaining radio station asset dispositions assuming
the contemplated transactions receive FCC approval and are consummated at
the prices and terms as set forth in the agreements, which total
approximately $128 million net of selling expenses but before taxes. The
Company estimates that all radio stations will be sold by October 1996.
The results of the radio division are included in the single line of the
income statement labeled "(Loss) income from discontinued operations."
The gain on the sale is included in the single line on the income
statement labeled "Gain from sale of discontinued operations, net of
tax." The corporate operating expenses allocated to the radio division
are $103,000 for the period of three months ended March 31, 1996 and
$127,000 for the three months ended March 31, 1995. The following is a
summary of revenue and operating profits before interest, depreciation
and amortization, of the radio broadcasting properties for the three
months ended March 31 (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Revenue...................................................... $7,563 $7,458
====== ======
Operating income before depreciation and amortization........ $1,563 $1,975
====== ======
</TABLE>
3. SUBSEQUENT EVENTS
On May 13, 1996, the Company sold $80,000,000 in principal amount of 13
3/4% Senior Pay-in-Kind Notes due 2004 (the "Notes") as part of units
(the "Units") consisting of the Notes and Warrants to purchase an
aggregate of 800,000 shares of Common Stock of the Company. The sale of
Units was one of a series of transactions (the "Refinancing
Transactions"), the purpose of which was to refinance the Company's
indebtedness under a credit agreement among the Company, Park
Acquisitions, Inc. and the lenders thereunder. The Refinancing
Transactions consisted of (i) the sale of the Units, (ii) the
establishment of and drawings under a Senior Credit Facility between the
Company and certain lenders in the amount of $58.0 million, (iii) the
sale, which was completed on May 13, 1996, of $241.0 million in principal
amount of 11 3/4% Senior Notes due 2004 of Park Broadcasting, Inc., (iv)
the sale, which was completed on May 13, 1996, of $155.0 million in
principal amount of 11 7/8% Senior Notes due 2004 of Park Newspapers,
Inc. and (v) the sale, which was completed on March 25, 1996, of the
Company's WPAT-AM and FM radio stations for aggregate gross proceeds of
$103.0 million.
F-21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Park Broadcasting, Inc.
We have audited the accompanying consolidated balance sheet of Park
Broadcasting, Inc. and Subsidiaries (a wholly-owned subsidiary of Park
Communications, Inc.) as of December 31, 1995 and the related consolidated
statements of income and retained earnings and cash flows for the period from
May 11, 1995 to December 31, 1995 and for the period from January 1, 1995 to
May 10, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
As discussed in Note 2 to the consolidated financial statements, the Company
was acquired by Park Acquisitions, Inc. on May 11, 1995 in a transaction
accounted for as a purchase. The purchase price and an allocable portion of
debt have been "pushed down" to the financial statements of the Company and as
a result, the post-acquisition consolidated financial statements are not
comparable to the pre-acquisition consolidated financial statements.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Park
Broadcasting, Inc. and Subsidiaries as of December 31, 1995 and the
consolidated results of their operations and their cash flows for the period
from May 11, 1995 to December 31, 1995 and for the period from January 1, 1995
to May 10, 1995 in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Lexington, Kentucky
February 2, 1996
F-22
<PAGE>
REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
Board of Directors
Park Broadcasting, Inc.
We have audited the accompanying consolidated balance sheet of Park
Broadcasting, Inc. and subsidiaries (a wholly-owned subsidiary of Park
Communications, Inc.) as of December 31, 1994 and the related consolidated
statements of income and retained earnings, and cash flows for each of the two
years in the period ended December 31, 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Park
Broadcasting, Inc. and subsidiaries at December 31, 1994 and the consolidated
results of their operations and their cash flows for each of the two years in
the period ended December 31, 1994 in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the financial statements, in 1993 the Company
changed its method of accounting for income taxes, as required by FASB
Statement No. 109, "Accounting for Income Taxes."
Ernst & Young LLP
Syracuse, New York
January 27, 1995
F-23
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
----------- -----------
NEW PARK OLD PARK
----------- -----------
1995 1994
----------- -----------
<S> <C> <C>
ASSETS (NOTE 6)
Current Assets:
Cash.................................................................................................. $ 1,305 $ 2,373
Accounts receivable, less allowance for doubtful accounts of $544 in 1995
and $1,284 in 1994................................................................................... 18,844 15,544
Film contracts........................................................................................ 2,717 2,446
Consulting/non-compete contracts...................................................................... -- 62
Other................................................................................................. 1,190 1,239
-------- --------
Total current assets................................................................................. 24,056 21,664
-------- --------
Property, plant & equipment:
Land and improvements................................................................................. 9,994 11,162
Buildings and leasehold improvements.................................................................. 9,171 15,791
Broadcast equipment................................................................................... 37,071 61,691
Furniture and fixtures................................................................................ 4,421 7,134
Autos and trucks...................................................................................... 1,657 3,038
-------- --------
Total property, plant and equipment.................................................................. 62,314 98,816
Less accumulated depreciation and amortization........................................................ (4,358) (44,434)
-------- --------
Net property, plant and equipment..................................................................... 57,956 54,382
Intangible assets, net................................................................................. 465,672 52,325
Film contracts......................................................................................... 2,787 2,777
Consulting/non-compete contracts....................................................................... -- 124
Other assets........................................................................................... 419 390
-------- --------
Total assets......................................................................................... $550,890 $131,662
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-term debt.................................................................. $ 339 $ 322
Current maturities of film contracts.................................................................. 2,619 2,521
Accounts payable...................................................................................... 1,129 1,087
Consulting/non-compete contracts...................................................................... 62 62
Interest.............................................................................................. 18,750 12
Income taxes.......................................................................................... 377 2,029
Accrued liabilities................................................................................... 1,959 2,316
Deferred income....................................................................................... 4,549 --
-------- --------
Total current liabilities............................................................................ 29,784 8,349
Long-term debt......................................................................................... 415,780 3,537
Consulting/non-compete contracts....................................................................... 74 136
Deferred income taxes.................................................................................. 124,605 8,521
-------- --------
Total liabilities.................................................................................... 570,243 20,543
-------- --------
Commitments
Stockholder's Equity:
Common stock--no par value:
Authorized 25,974 shares
Issued and outstanding 25,974 shares in 1995 and 1994................................................ 2,598 2,598
Paid in capital....................................................................................... (2,598) --
Intercompany receivables from parent.................................................................. (5,412) (32,109)
Retained earnings..................................................................................... (13,941) 140,630
-------- --------
Total stockholder's equity............................................................................. (19,353) 111,119
-------- --------
Total liabilities and stockholders' equity........................................................... $550,890 $131,662
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-24
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DEC.
PERIOD 31
-------------------- ------------------
PRO FORMA NEW PARK OLD PARK OLD PARK
----------- --------- --------- ------------------
05/11/95- 01/01/95-
1995 12/31/95 05/10/95 1994 1993
----------- --------- --------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Broadcasting revenue..................................................... $ 76,769 $ 50,034 $ 26,735 $ 77,749 $ 62,460
Less: agency and national representative commissions.................... 11,361 7,360 4,001 12,128 9,867
-------- -------- -------- -------- --------
Net revenue.............................................................. 65,408 42,674 22,734 65,621 52,593
-------- -------- -------- -------- --------
Operating expenses:
Cost of sales............................................................ 19,783 12,495 7,288 18,016 16,297
Selling, general and administrative...................................... 14,200 9,454 4,746 14,835 12,406
-------- -------- -------- -------- --------
33,983 21,949 12,034 32,851 28,703
-------- -------- -------- -------- --------
Operating income before depreciation and amortization................... 31,425 20,725 10,700 32,770 23,890
-------- -------- -------- -------- --------
Depreciation and amortization:
Depreciation............................................................. 5,560 3,552 1,655 4,232 3,660
Amortization............................................................. 5,068 3,238 245 765 329
Amortization of excess of cost over net
assets acquired......................................................... 5,610 3,584 68 190 173
-------- -------- -------- -------- --------
16,238 10,374 1,968 5,187 4,162
-------- -------- -------- -------- --------
Operating income........................................................ 15,187 10,351 8,732 27,583 19,728
Interest expense.......................................................... (40,856) (26,102) (34) (185) (37)
Interest income........................................................... 327 209 -- -- --
Other expense............................................................. (341) (218) (1,117) (393) (225)
-------- -------- -------- -------- --------
(Loss) income before income taxes....................................... (25,683) (15,760) 7,581 27,005 19,466
Provision (benefit) for income taxes...................................... (8,335) (5,661) 3,176 10,457 7,370
-------- -------- -------- -------- --------
(Loss) income from continuing operations................................ (17,348) (10,099) 4,405 16,548 12,096
(Loss) income from discontinued operations, net of income taxes (bene-
fit) of $(2,114), $243,$400 and $(597), respectively................... (6,014) (3,842) 125 (69) (1,836)
-------- -------- -------- -------- --------
Net (loss) income......................................................... $(23,362) (13,941) 4,530 16,479 10,260
========
Retained earnings, beginning of period.................................... -- 140,630 124,151 113,891
-------- -------- -------- --------
Retained earnings, end of period.......................................... $(13,941) $145,160 $140,630 $124,151
======== ======== ======== ========
Loss per share:
Continuing operations..................................................... $(667.90) $(388.81)
Discontinued operations................................................... (231.54) (147.92)
-------- --------
Net loss.................................................................. $(899.44) $(536.73)
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-25
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DEC.
PERIOD 31
-------------------- -----------------
NEW PARK OLD PARK OLD PARK
--------- --------- -----------------
05/11/95- 01/01/95-
12/31/95 05/10/95 1994 1993
--------- --------- ------- --------
<S> <C> <C> <C> <C>
Operating Activities:
Net (loss) income...................... $(13,941) $ 4,530 $16,479 $ 10,260
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation and amortization......... 13,695 3,454 8,594 7,861
Amortization of film contract rights
and consulting/non-compete contracts
included in operating expenses....... 1,799 2,062 3,053 2,680
Payments on film contract liabilities. (1,889) (2,117) (2,955) (2,757)
Payments on consulting/non-compete
contracts............................ (31) (31) (62) (50)
Provision for losses on accounts
receivable........................... (311) (153) 605 573
Provision for deferred income taxes... (7,725) (339) 1,788 608
(Gain) loss on sale of property, plant
and equipment........................ (2) 648 (68) 257
Changes in operating assets and
liabilities net of effects from the
purchase and disposal of companies:
Accounts receivable................... (1,386) (1,450) (2,615) (1,209)
Inventory and other assets............ 65 429 (106) (292)
Accounts payable and accrued
liabilities.......................... 15,252 1,589 (4,683) 590
Deferred income....................... 4,549 -- -- --
-------- ------- ------- --------
Net cash provided by operating
activities.......................... 10,075 8,622 20,030 18,521
-------- ------- ------- --------
Investing Activities:
Purchases of property, plant and
equipment............................. (4,483) (1,566) (9,026) (4,082)
Purchases of acquired companies........ -- -- -- (19,184)
Proceeds from sale of property, plant,
and equipment......................... 8 -- 246 72
-------- ------- ------- --------
Net cash used in investing
activities.......................... (4,475) (1,566) (8,780) (23,194)
-------- ------- ------- --------
Financing Activities:
Additional loan proceeds............... 3,378 -- -- --
Principal payments on long-term debt... (2,261) (146) (2,315) (990)
Net intercompany transfers to parent... (5,412) (9,283) (9,674) 6,850
-------- ------- ------- --------
Net cash (used in) provided by
financing activities................ (4,295) (9,429) (11,989) 5,860
-------- ------- ------- --------
Increase (decrease) in cash............ 1,305 (2,373) (739) 1,187
Cash beginning of period................ -- 2,373 3,112 1,925
-------- ------- ------- --------
Cash end of period...................... $ 1,305 $ -- $ 2,373 $ 3,112
======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-26
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Park Broadcasting, Inc. (the Company or PBI), through wholly-owned
subsidiary companies, operates television and radio stations. Substantially
all of the Company's broadcast revenues are derived from advertising.
Advertising rates and rate structures vary among the stations and are
based, among other things, on the market and the time slot the
advertisement is to run.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. The Company, which is
a wholly-owned subsidiary of Park Communications, Inc. (Parent or PCI),
became an indirect wholly owned subsidiary of Park Acquisitions, Inc. (PAI)
(see Note 2) as of May 11, 1995. All significant intercompany accounts and
transactions have been eliminated.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions (such as estimated lives of assets and allowance for doubtful
accounts) that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period.
Property, Plant, Equipment and Depreciation
Property, plant and equipment are stated at cost. Depreciation for
financial reporting purposes is provided on the straight-line method over
the estimated useful lives of the assets except for leasehold improvements,
which are amortized on the straight-line method over the lease period or
the lives of the improvements, whichever is shorter. Accelerated methods
are used for income tax reporting purposes whenever available. Deferred
income taxes are provided for this temporary difference between financial
and income tax reporting methods.
Film Contract Rights
Film contract rights and the related liabilities are recorded at full
contract prices when purchased. The costs are charged to operations based
on a straight-line basis over the life of the contracts.
Consulting/Non-Compete Contracts
Certain subsidiary companies have consulting/non-compete contracts expiring
through 2010. Prior to May 11, 1995, costs were amortized on a straight-
line basis over the terms of the related agreements. In connection with the
Acquisition, separate value was not assigned to those contracts. New Park
would not have entered into such contracts at the date of Acquisition (see
Note 2).
Intangible Assets
Intangible assets are stated at cost and consist primarily of advertising
contracts, subscription lists and excess of cost over net assets acquired.
Intangible assets other than excess of cost over net assets acquired, are
being amortized by the straight-line method over estimated lives ranging
primarily from 7 to 40 years.
In the financial statements of Old Park, network contracts ($8,238,000)
acquired prior to October 31, 1970 were assigned a cost upon acquisition
and were not amortized since, in the opinion of management, there had been
no diminution of value of these acquired contracts. Also, excess of cost
($1,214,000) of businesses acquired prior to October 31, 1970 was not
amortized since, in the opinion of management, there had been
F-27
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
no diminution of value of these acquired businesses. Excess of cost
incurred since October 31, 1970 was amortized by the straight-line method
over a period of 40 years.
Carrying Value of Long Lived Assets
The carrying value of long lived assets is reviewed if the facts and
circumstances suggest that they may be impaired. If this review indicates
that such assets carrying value will not be recoverable, as determined
based on future expected, undiscounted cash flows, the carrying value is
reduced to fair market value.
Income Taxes
Effective January 1, 1993 the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
FASB Statement No. 109, "Accounting for Income Taxes." The cumulative
effect of the accounting change was not material to net income for 1993.
Deferred Income
Deferred income consists of revenue which is prepaid to certain television
stations by CBS and NBC. Such income is recognized on a straight-line
basis, over the 10-year life of the contracts.
Intercompany Accounts
The amount receivable from the Parent included in the balance sheet
represents a net balance as the result of various transactions between the
Company and its Parent. Since May 11, 1995 interest charges have been
associated with the account balance. The balance is primarily the result of
the Company's participation in the Parent's central cash management
program, wherein some of the Company's cash receipts are remitted to the
Parent and some of the cash disbursements are funded by the Parent. Other
transactions include the transfer to the Parent for payment of the
Company's prior year federal income tax liability, and miscellaneous other
administrative expenses incurred by the Parent on behalf of the Company.
Intercompany Expense Allocation
The Company's Parent provides various administrative services to the
Company including legal assistance, acquisitions analysis, and marketing
and advertising services. It is the Parent's policy to charge these
expenses and all other operating expense, on both a direct and indirect
cost basis. These expenses incurred by the Parent and allocated to the
Company (which are included in operating expenses) were $830,000 for the
period May 11 to December 31, 1995 and $312,000 from January 1 to May 10,
1995, $1,287,000 in 1994 and $1,280,000 in 1993.
2.ACQUISITION AND BASIS OF PRESENTATION
On May 11, 1995, the Company's parent, PCI, was sold to PAI (the
Acquisition), a private investment concern (organized August 4, 1994) owned
by Gary B. Knapp and the Tomlin Family Trust II, of which Donald R. Tomlin,
Jr. is a trustee. A significant portion of the purchase price was paid from
the proceeds of a $573,427,000 loan. The remainder of the purchase price
($138,000,000) was derived from existing cash-on-hand at PCI at closing of
the Acquisition.
As a consequence of the change in ownership of PCI, under generally
accepted accounting principles, the Company is deemed for financial
reporting purposes, to have become a new reporting entity effective with
the change in ownership. The portion of the debt allocable to the Company
has been "pushed down" to the financial statements of the Company, and the
assets and liabilities have been adjusted to reflect their fair market
value as of May 11, 1995.
F-28
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The accompanying financial statements reflect the operations of PBI prior
to the acquisition on May 11, 1995 (Old Park). Subsequent to that date the
financial statements reflect the operations of the Company utilizing the
new basis accounting (New Park).
The pro forma income statement for 1995 reflects the operations of the
Company under the new basis of accounting and assumes the transaction
closed on January 1, 1995. Depreciation, amortization and interest expense
reflect those costs that would be charged to operations for equipment,
intangible assets and the long-term debt "push down" to PBI. Pro forma
income tax benefit has been computed at an effective rate of 32%.
Following is a summary of adjustments made to historical costs of the
assets and liabilities of the Company as of May 10, 1995, as a result of
applying "push down" acquisition accounting at that date to arrive at the
new basis for the Company.
<TABLE>
<CAPTION>
MAY 10, 1995
--------------------------------------
PARK BROADCASTING, INC.
--------------------------------------
WITHOUT MERGER WITH MERGER
ADJUSTMENTS ADJUSTMENTS
-------------- MERGER -----------
OLD PARK ADJUSTMENTS NEW PARK
-------------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets
Accounts receivable, net............ $ 17,147 -- $ 17,147
Film contracts...................... 2,557 -- 2,557
Consulting/non-compete contracts.... 62 $ (62) --
Other............................... 782 -- 782
-------- -------- --------
Total current assets.............. 20,548 (62) 20,486
-------- -------- --------
Property, plant & equipment.......... 92,986 (34,974) 58,012
Less accumulated depreciation and
amortization...................... 39,947 (39,947) --
-------- -------- --------
Net property, plant & equipment..... 53,039 4,973 58,012
Intangible assets, net............... 51,133 424,167 475,300
Film contracts....................... 2,453 -- 2,453
Consulting/non-compete contracts..... 101 (101) --
Other assets......................... 418 -- 418
-------- -------- --------
Total assets...................... $127,692 $428,977 $556,669
======== ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term
debt............................... $ 1,247 -- $ 1,247
Current maturities of film con-
tracts............................. 2,229 -- 2,229
Accounts payable.................... 1,829 -- 1,829
Consulting/non-compete contracts.... 62 -- 62
Interest............................ 2 -- 2
Income taxes........................ 3,053 -- 3,053
Accrued liabilities................. 2,079 -- 2,079
-------- -------- --------
Total current liabilities......... 10,501 -- 10,501
Long-term debt....................... 2,468 $411,274 413,742
Consulting/non-compete contracts..... 105 -- 105
Deferred income taxes................ 8,182 124,139 132,321
-------- -------- --------
Total liabilities................. 21,256 535,413 556,669
-------- -------- --------
</TABLE>
F-29
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
MAY 10, 1995
-----------------------------------------------------------
PARK BROADCASTING, INC. PARK BROADCASTING, INC.
WITHOUT MERGER WITH MERGER
ADJUSTMENTS MERGER ADJUSTMENTS
OLD PARK ADJUSTMENTS NEW PARK
----------------------- ----------- -----------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Stockholder's Equity:
Common stock........... $ 2,598 $ (2,598) --
Paid in capital........ -- -- --
Intercompany receiv-
ables from parent..... (41,322) 41,322 --
Retained earnings...... 145,160 (145,160) --
-------- --------- --------
Total stockholder's eq-
uity................... 106,436 (106,436) --
-------- --------- --------
Total liabilities and
stockholder's equi-
ty.................. $127,692 $ 428,977 $556,669
======== ========= ========
</TABLE>
3.LOSS PER SHARE
Loss per share of common stock is computed on the weighted average number
of common shares outstanding during each year (dollars and shares in
thousands except per share amounts):
<TABLE>
<CAPTION>
NEW PARK
---------
PRO FORMA PERIOD
----------- ---------
NEW PARK
----------- 05/11/95-
1995 12/31/95
----------- ---------
(UNAUDITED)
<S> <C> <C>
Primary:
Average shares....................................... 26 26
======== ========
Loss from continuing operations...................... $(17,348) $(10,099)
Loss from discontinued operations.................... (6,014) (3,842)
-------- --------
Net loss............................................. $(23,362) $(13,941)
======== ========
Loss per share:
Continuing operations................................ $(667.90) $(388.81)
Discontinued operations.............................. (231.54) (147.92)
-------- --------
Net loss............................................. $(899.44) $(536.73)
======== ========
</TABLE>
Earnings per share has not been shown prior to May 11, 1995 because such
information is not meaningful.
4.INTANGIBLE ASSETS
Intangible assets are comprised of the following (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
----------- -----------
NEW PARK OLD PARK
----------- -----------
1995 1994
----------- -----------
<S> <C> <C>
Advertising contracts................................ $179,955 $ 7,004
Network contracts.................................... 14,183 10,688
FCC license.......................................... 138,174 11,441
Excess of cost over net assets acquired.............. 142,988 46,142
-------- --------
Total intangibles................................... 475,300 75,275
Less accumulated amortization........................ (9,628) (22,950)
-------- --------
$465,672 $ 52,325
======== ========
</TABLE>
F-30
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5.DISCONTINUED OPERATIONS
On December 26, 1995, the Company announced its intention to sell all of
its radio station operations on an individual basis. The segment has
produced operating profits before interest expense, depreciation and
amortization, and the Company estimates that the stations will each
generate operating profit before interest expense, depreciation and
amortization through the date of disposition. The Company currently has
signed agreements and/or letters of intent to sell each of its radio
station operations. The Company will realize gain on the dispositions
assuming the contemplated transactions receive FCC approval and are
consummated at the price and terms as set forth in the definitive
agreements which total approximately $230.0 million net of selling expenses
but before taxes. The Company estimates that all stations will be sold by
October 31, 1996. The results of the radio station operations are included
in the single line of the income statement labeled "(loss) income from
discontinued operations." The corporate operating expenses allocated to
radio are $325,676 for the period of 5/11/95--12/31/95, $184,078 for the
period of 1/1/95--5/10/95, $475,338 for 1994 and $403,021 for 1993. The
following is a summary of identifiable assets, liabilities and equity and
the related revenues and operating profits before interest, depreciation
and amortization of the radio station operations (dollars in thousands):
Radio Station Operations:
<TABLE>
<CAPTION>
PERIOD
-------------------
NEW PARK OLD PARK OLD PARK
--------- --------- ---------------
05/11/95- 01/01/95-
12/31/95 05/10/95 1994 1993
--------- --------- ------- -------
<S> <C> <C> <C> <C>
Revenues................................ $21,932 $11,137 $30,305 $24,861
======= ======= ======= =======
Operating income before interest, depre-
ciation and amortization............... $ 5,506 $ 2,388 $ 7,106 $ 4,801
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
NEW PARK
--------
12/31/95
--------
<S> <C>
Assets:
Current assets................................................... $ 13,446
Property, plant, and equipment................................... 19,935
Intangibles, net................................................. 102,830
Other assets..................................................... 9
--------
Total assets...................................................... 136,220
--------
Liabilities:
Current liabilities.............................................. 13,299
Long-term debt................................................... 96,803
Deferred income taxes............................................ 30,204
--------
Total liabilities................................................. 140,306
--------
Net liabilities................................................... $ 4,086
========
</TABLE>
F-31
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6.LONG-TERM DEBT
The Company's long-term debt is comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
----------- -----------
NEW PARK OLD PARK
----------- -----------
1995 1994
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Existing Credit Agreement........................... $412,566 --
Promissory notes.................................... 1,072 $ 1,393
Film contracts...................................... 5,100 4,987
-------- -------
Total debt.......................................... 418,738 6,380
Less: Current maturities of long-term debt.......... 339 322
Current maturities of film contracts................ 2,619 2,521
-------- -------
Long-term debt...................................... $415,780 $ 3,537
======== =======
</TABLE>
On May 11, 1995, PAI entered into an agreement (Existing Credit Agreement)
to borrow up to $593.8 million, the proceeds of which were utilized to
finance the Acquisition and pay related expenses. The loan required that
the debt be directly assumed by PCI and its subsidiary companies and that
they be jointly and severally liable for the loan agreement. PAI, PCI and
PCI's subsidiaries' assets are pledged as collateral for the loan made
pursuant to the Existing Credit Agreement and PCI and its subsidiaries'
cash flow is utilized for debt service. Interest accrues at a base interest
rate (Base Rate) of 9.5% per annum, an additional interest rate
("Additional Rate") of 1.0% per annum, plus a yield maintenance interest
rate (YMI) of 3.0% per annum. The Base Rate and Additional Rate interest
are payable on October 1 and April 1. Principal payments are required only
to the extent that PAI's cash balance, as defined in the Existing Credit
Agreement, exceeds $8.0 million (declining to $6.0 million at October 1,
1997) at each interest payment date through October 1, 1997. Following is a
table that outlines these requirements:
<TABLE>
<CAPTION>
INTEREST PAYMENT DATE CASH RESERVE AMOUNT
--------------------- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
October 1, 1995.................................... $8,000
April 1, 1996...................................... 8,000
October 1, 1996.................................... 7,000
April 1, 1997...................................... 7,000
October 1, 1997 and thereafter..................... 6,000
</TABLE>
Prepayment, in part or wholly, can be made at any time without penalty.
Ninety percent (90%) of the after tax proceeds as defined in the Existing
Credit Agreement of any asset sales of the Company are required to be
applied to the principal.
The YMI, which the Company is accruing, is payable upon achievement by PAI,
on or prior to May 11, 1998, of a Loan to Value Ratio (LTV) of 70% or less
(as defined in the Existing Credit Agreement). If the Company elects not to
pay the YMI when payable, then PAI would be required to issue to the lender
an exercisable warrant having the right to acquire non-voting common stock
in PAI in a sufficient amount to equal an 80% shareholder's equity
interest. On the earliest date that the Debt Service Coverage Ratio (DSC)
as defined in the Existing Credit Agreement is met, and either the LTV
ratio is met or by reason of non-payment of the YMI, the warrant is
required to be issued, the loan will become fully amortizable in equal
annual amounts over the remaining term ending on a maturity date of April
15, 2015 with interest at 10.5% per annum.
Substantially all of the Company's and its subsidiaries' tangible and
intangible assets are collateralized under the Existing Credit Agreement.
The Existing Credit Agreement contains covenants which, among
F-32
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
other things, limit or restrict payment of cash dividends, additional debt,
repurchase of common stock, capital expenditures, sales of the Company's
common stock, mergers, consolidations and sales of the Company's assets.
The promissory notes are payable in various installments through 1998 with
interest at 8%.
Cash payments of interest were $15,458,000 for the period of May 11 -
December 31, 1995, $35,000 for the period of January 1 - May 10, 1995,
$3,690,000 in 1994 and $3,602,000 in 1993.
The aggregate annual maturities on long-term debt, assuming the Company
meets the LTV on May 11, 1998, payable over the next five years are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- --------
<S> <C>
1996............................................................. $ 2,958
1997............................................................. 1,954
1998............................................................. 128,851
1999............................................................. 7,127
2000............................................................. 7,803
</TABLE>
The fair value of the Company's long-term debt approximates $448,132,478.
7.INCOME TAXES
The Company determines its income tax expense on the separate return
method. Federal and state income tax expense (benefit) is summarized as
follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD DEC. 31
------------------- --------------
NEW PARK OLD PARK OLD PARK
--------- --------- --------------
05/11/95- 01/01/95-
12/31/95 05/10/95 1994 1993
--------- --------- ------- ------
<S> <C> <C> <C> <C>
Federal:
Current................................. -- $2,836 $ 8,098 $6,080
Deferred................................ $(4,412) (245) 915 524
------- ------ ------- ------
(4,412) 2,591 9,013 6,604
------- ------ ------- ------
State:
Current................................. -- 589 1,243 692
Deferred................................ (1,249) (4) 201 74
------- ------ ------- ------
(1,249) 585 1,444 766
------- ------ ------- ------
Total income tax expense............. $(5,661) $3,176 $10,457 $7,370
======= ====== ======= ======
</TABLE>
The items comprising the differences in taxes on income computed at the
U.S. statutory rate and the amount provided by the Company are as follows
(dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD DEC. 31
------------------- --------------
NEW PARK OLD PARK OLD PARK
--------- --------- --------------
05/11/95- 01/01/95-
12/31/95 05/10/95 1994 1993
--------- --------- ------- ------
<S> <C> <C> <C> <C>
Computed tax expense at U.S. statutory
rate.................................... $(5,516) $2,777 $ 9,451 $6,811
Increase in tax expense resulting from:
State income taxes, net of federal in-
come tax............................... (812) 380 939 498
Amortization not tax deductible......... 667 19 67 61
------- ------ ------- ------
Total income tax expense............. $(5,661) $3,176 $10,457 $7,370
======= ====== ======= ======
</TABLE>
F-33
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Significant components of the Company's deferred tax liabilities and assets
are as follows (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
------------------
NEW PARK OLD PARK
-------- --------
1995 1994
-------- --------
<S> <C> <C>
Components of deferred taxes:
Property, plant & equipment, intangible assets.......... $129,205 $ 8,521
Net operating loss carry forwards....................... (4,600) --
Allowance for doubtful accounts and other............... (105) (96)
-------- -------
Net deferred tax liabilities........................... $124,500 $ 8,425
======== =======
Classification of deferred taxes:
Non-current liabilities................................. $124,605 $ 8,521
Current assets.......................................... (105) (96)
-------- -------
$124,500 $ 8,425
======== =======
</TABLE>
Total cash payments of state income taxes were $443,000 for the period May
11 to December 31, 1995, $282,000 for the period January 1 to May 10, 1995,
$1,528,000 in 1994 and $1,221,000 in 1993. Federal tax payments are made by
the Parent (see Note 1).
8.LEASES
Certain operating facilities and equipment (see Note 9) are leased under
noncancellable operating agreements. Certain of the leases require the
Company or its subsidiaries to pay property taxes, insurance and
maintenance costs.
Lease expense related to the above and charged to operations was
approximately $476,000 for the period May 11 through December 31, 1995,
$269,000 for the period January 1 through May 10, 1995, $463,000 in 1994
and $749,000 in 1993.
The aggregate minimum rentals through dates of expiration amount to
approximately $3,958,000 and the amounts payable over the next five years
are as follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------
<S> <C>
1996............................................................... $ 495
1997............................................................... 440
1998............................................................... 427
1999............................................................... 356
2000............................................................... 191
Thereafter......................................................... 2,049
</TABLE>
9.RELATED PARTY TRANSACTIONS
In 1993 and 1994, the Company, in the ordinary course of business, leased
and rented certain operating facilities and equipment (included in Note 8)
from RHP Incorporated and its subsidiaries. RHP Incorporated is wholly
owned by the estate of Roy H. Park, formerly the Chairman of the Board of
PCI, who died on October 25, 1993. Such lease and rent payments were
$519,000 in 1994 and $558,000 in 1993. In connection with these operating
facilities, in 1994 the Company purchased five buildings and one tower from
RHP Incorporated and its subsidiaries at the appraised fair market value of
$3,815,000 and such lease and rent payments ceased as of the date of
purchase.
Additionally, certain officers of the Company were compensated by RHP
Incorporated for the performance of part-time management services.
During 1994, the Company placed $85,298 of promotional advertising with
Park Outdoor Advertising of New York, Inc. which is controlled by Roy H.
Park, Jr., a Director of the Company prior to May 11, 1995.
F-34
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
-------- -----------
1996 1995
-------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash................................................... $ -- $1,305
Accounts receivable, less allowance for doubtful
accounts of $530 in 1996 and
$544 in 1995.......................................... 17,018 18,844
Film contracts......................................... 2,554 2,717
Other.................................................. 1,197 1,190
-------- --------
Total current assets................................. 20,769 24,056
-------- --------
Property, plant & equipment:
Property, plant and equipment.......................... 58,236 62,314
Less accumulated depreciation and amortization......... (6,033) (4,358)
-------- --------
Net property, plant and equipment...................... 52,203 57,956
Intangible assets, net................................. 412,698 465,672
Film contracts......................................... 2,346 2,787
Other assets........................................... 451 419
-------- --------
$488,467 $550,890
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-term debt................... $ 339 $ 339
Current maturities of film contracts................... 2,307 2,619
Accounts payable....................................... 1,056 1,129
Consulting/non-compete contracts....................... 62 62
Interest............................................... 32,530 18,750
Income taxes........................................... 23,472 377
Accrued liabilities.................................... 2,635 1,959
Deferred income........................................ 4,549 4,549
-------- --------
Total current liabilities.............................. 66,950 29,784
Long-term debt......................................... 347,673 413,299
Long-term film contracts............................... 2,170 2,481
Consulting/non-compete contracts....................... 58 74
Deferred income taxes.................................. 113,790 124,605
-------- --------
Total liabilities.................................... 530,641 570,243
-------- --------
Commitments
Stockholder's Equity:
Common Stock-no par value:
Authorized 25,974 shares
Issued and outstanding 25,974 shares in 1996 and 1995.. 2,598 2,598
Paid in capital........................................ (2,598) (2,598)
Intercompany receivables from Parent................... (50,211) (5,412)
Retained earnings (deficit)............................ 8,037 (13,941)
-------- --------
Total stockholder's equity............................... (42,174) (19,353)
-------- --------
$488,467 $550,890
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
unaudited financial statements.
F-35
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------
1996 1995
--------- ---------
NEW PARK OLD PARK
--------- ---------
<S> <C> <C>
Revenue:
Broadcasting revenue................................... $ 17,055 $ 17,618
Less: agency and national representative commissions... 2,494 2,625
--------- ---------
Net revenue.......................................... 14,561 14,993
--------- ---------
Operating expenses:
Cost of sales.......................................... 5,297 4,680
Selling, general and administrative.................... 4,263 3,594
--------- ---------
9,560 8,274
--------- ---------
Operating income before depreciation and
amortization............................................. 5,001 6,719
--------- ---------
Depreciation and amortization:
Depreciation........................................... 1,485 1,142
Amortization........................................... 1,196 170
Amortization of excess of cost over net assets
acquired................................................. 1,270 9
--------- ---------
3,951 1,321
--------- ---------
Operating income..................................... 1,050 5,398
Interest expense......................................... (10,044) (21)
Interest income.......................................... 190 7
Other income............................................. 52 58
--------- ---------
(Loss) income from continuing operations and before
income taxes............................................. (8,752) 5,442
Provision (benefit) for income taxes..................... (3,226) 2,137
--------- ---------
(Loss) income from continuing operations................. (5,526) 3,305
(Loss) income from discontinued operations, net of income
taxes (benefit) of $(1,783) in 1996 and $270 in 1995... (2,397) 268
Gain from sale of discontinued operations, net of income
taxes of $14,217 in 1996................................. 29,901 --
--------- ---------
Net income............................................... 21,978 3,573
Retained earnings (deficit), beginning of period......... (13,941) 140,630
--------- ---------
Retained earnings, end of period......................... $ 8,037 $144,203
========= =========
Income (loss) per share:
Continuing operations.................................. $(212.75)
Discontinued operations................................ 1,058.90
---------
Net loss............................................... $ 846.15
=========
Average shares......................................... 25,974
=========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
unaudited financial statements.
F-36
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN
THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-------------------
1996 1995
--------- --------
NEW PARK OLD PARK
--------- --------
<S> <C> <C>
Operating Activities:
Net income.............................................................................................. $ 21,978 $ 3,573
Adjustments to reconcile net income to net Gain on sale of discontinued operations, exclusive of
income tax................................................................................................ (44,118) --
Cash provided by operating activities:
Depreciation and amortization......................................................................... 5,449 2,325
Amortization of film contract rights and consulting/non-compete contracts included in operating
expenses.................................................................................................. 784 784
Payments on film contract liabilities................................................................. (804) (810)
Payments on consulting/non-compete contracts.......................................................... (16) (16)
Provision for losses on accounts receivable........................................................... 65 (215)
Provision for deferred income taxes................................................................... (11,950) (135)
Changes in operating assets and liabilities net of effects from the purchase and disposal of
companies:
Accounts receivable................................................................................. 1,761 (251)
Inventory and other assets.......................................................................... (687) 636
Accounts payable and accrued liabilities............................................................ 38,790 8,753
Deferred income..................................................................................... -- 1,137
--------- --------
Net cash provided by operating activities......................................................... 11,252 15,781
--------- --------
Investing Activities:
Purchases of property, plant and equipment.............................................................. (3,131) (958)
Proceeds from sale of discontinued operations, net of selling expenses.................................. 101,039 --
Increase in other assets................................................................................ (33) --
--------- --------
Net cash (used in) provided by investing activities................................................... 97,875 (958)
--------- --------
Financing Activities:
Principal payments on long-term debt.................................................................... (65,625) (79)
Net intercompany transfers to Parent.................................................................... (44,807) (15,372)
--------- --------
Net cash used in financing activities................................................................. (110,432) (15,451)
--------- --------
Decrease in cash........................................................................................ (1,305) (628)
Cash beginning of period................................................................................ 1,305 2,373
--------- --------
Cash end of period...................................................................................... $ -- $ 1,745
========= ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
unaudited financial statements.
F-37
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed interim financial statements are unaudited;
however, in the opinion of the Company's management, all adjustments (which
comprise only normal and recurring accruals) necessary for a fair
presentation of the interim financial results have been included. The
results for the interim periods are not necessarily indicative of results
to be expected for the entire year. These financial statements and notes
should be read in conjunction with the Company's audited annual
consolidated financial statements for the year ended December 31, 1995.
2. DISCONTINUED OPERATIONS
The Company sold two of its radio stations in March 1996. Proceeds of
approximately $66 million were utilized to reduce long-term debt. The net
gain on the sale of these stations was $29.9 million. The Company will
realize gain on the remaining radio station asset dispositions assuming the
contemplated transactions receive FCC approval and are consummated at the
prices and terms as set forth in the agreements, which total approximately
$128 million net of selling expenses but before taxes. The Company
estimates that all radio stations will be sold by October 1996. The results
of the radio division are included in the single line of the income
statement labeled "(Loss) income from discontinued operations." The gain on
the sale is included in the single line on the income statement labeled
"Gain from sale of discontinued operations, net of tax." The corporate
operating expenses allocated to the radio division are $103,000 for the
period of three months ended March 31, 1996, and $127,000 for the three
months ended March 31, 1995. The following is a summary of revenue and
operating profits before interest, depreciation and amortization, of the
radio broadcasting properties for the three months ended March 31 (dollars
in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Revenue........................................................ $7,563 $7,458
====== ======
Operating income before depreciation and amortization.......... $1,563 $1,975
====== ======
</TABLE>
3. SUBSEQUENT EVENTS
The Company sold $241.0 million in principal amount of 11 3/4% Senior Notes
due 2004 (the "Notes") on May 13, 1996 in one of a series of transactions
(the "Refinancing Transactions"), the purpose of which was to refinance the
indebtedness under a credit agreement among Park Communications, Inc.
("Park Communications"), Park Acquisitions, Inc. and the lenders
thereunder, which was guaranteed by the Company. The Refinancing
Transactions consisted of (i) the sale of the Notes, (ii) the establishment
of and drawings under a Senior Credit Facility between Park Communications
and certain lenders in the amount of $58.0 million, (iii) the sale, which
was completed on May 13, 1996, of 80,000 Units consisting of $80.0 million
in principal amount of 13 3/4% Senior Pay-in-Kind Notes due 2004 of Park
Communications and Warrants to purchase 800,000 shares of Common Stock of
Park Communications, (iv) the sale, which was completed on May 13, 1996, of
$155.0 million in principal amount of 11 7/8% Senior Notes due 2004 of Park
Newspapers, Inc. and (v) the sale, which was completed on March 25, 1996,
of the Company's WPAT-AM and FM radio stations for aggregate gross proceeds
of $103.0 million.
F-38
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Park Newspapers, Inc.
We have audited the accompanying consolidated balance sheet of Park
Newspapers, Inc. and Subsidiaries (a wholly-owned subsidiary of Park
Communications, Inc.) as of December 31, 1995 and the related consolidated
statements of income and retained earnings and cash flows for the period from
May 11, 1995 to December 31, 1995 and for the period from January 1, 1995 to
May 10, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
As discussed in Note 2 to the consolidated financial statements, the Company
was acquired by Park Acquisitions, Inc. on May 11, 1995 in a transaction
accounted for as a purchase. The purchase price and an allocable portion of
debt have been "pushed down" to the financial statements of the Company and as
a result, the post-acquisition consolidated financial statements are not
comparable to the pre-acquisition consolidated financial statements.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Park
Newspapers, Inc. and Subsidiaries as of December 31, 1995 and the consolidated
results of their operations and their cash flows for the period from May 11,
1995 to December 31, 1995 and for the period from January 1, 1995 to May 10,
1995 in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Lexington, Kentucky
February 2, 1996
F-39
<PAGE>
REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
Board of Directors
Park Newspapers, Inc.
We have audited the accompanying consolidated balance sheet of Park
Newspapers, Inc. and subsidiaries (a wholly-owned subsidiary of Park
Communications, Inc.) as of December 31, 1994 and the related consolidated
statements of income and retained earnings, and cash flows for each of the two
years in the period ended December 31, 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Park
Newspapers, Inc. and subsidiaries at December 31, 1994 and the consolidated
results of their operations and their cash flows for each of the two years in
the period ended December 31, 1994 in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the financial statements, in 1993 the Company
changed its method of accounting for income taxes, as required by FASB
Statement No. 109, "Accounting for Income Taxes."
Ernst & Young LLP
Syracuse, New York
January 27, 1995
F-40
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
----------- -----------
NEW PARK OLD PARK
----------- -----------
1995 1994
----------- -----------
<S> <C> <C>
ASSETS (NOTE 6)
Current Assets:
Cash.................................................. $ 710 $ 1,937
Accounts receivable, less allowance for doubtful ac-
counts of $289 in 1995
and $314 in 1994..................................... 7,563 6,691
Inventory............................................. 1,089 1,000
Consulting/non-compete contracts...................... -- 763
Other................................................. 912 508
-------- --------
Total current assets................................. 10,274 10,899
-------- --------
Property, Plant & Equipment:
Land and improvements................................. 3,481 2,269
Buildings and leasehold improvements.................. 9,939 15,731
Newspaper equipment................................... 12,045 23,516
Furniture and fixtures................................ 1,879 3,051
Autos and trucks...................................... 449 918
-------- --------
27,793 45,485
Less accumulated depreciation and amortization........ (1,562) (24,266)
-------- --------
26,231 21,219
Intangible assets, net................................. 183,029 57,472
Consulting/non-compete contracts....................... -- 3,267
Other assets........................................... 204 203
-------- --------
Total assets......................................... $219,738 $ 93,060
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-term debt.................. $ 126 $ 392
Accounts payable...................................... 900 718
Consulting/non-compete contracts...................... 787 815
Interest.............................................. 7,642 9
Income taxes.......................................... -- 63
Accrued liabilities................................... 1,072 1,209
Deferred income....................................... 3,157 2,909
-------- --------
Total current liabilities............................ 13,684 6,115
Long-term debt......................................... 168,305 360
Consulting/non-compete contracts....................... 2,778 3,582
Deferred income taxes.................................. 41,972 1,490
-------- --------
Total liabilities.................................... 226,739 11,547
-------- --------
Commitments
Stockholder's Equity:
Common Stock-no par value:
Authorized 44,150 shares
Issued and outstanding 44,150 shares in 1995 and
1994................................................ 4,150 4,150
Paid in capital....................................... (4,150) 46,665
Intercompany receivables from parent.................. (3,355) (47,192)
Retained earnings..................................... (3,646) 77,890
-------- --------
Total stockholder's equity........................... (7,001) 81,513
-------- --------
Total liabilities and stockholder's equity........... $219,738 $ 93,060
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-41
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DEC.
PRO FORMA PERIOD 31
----------- -------------------- ------------------
NEW PARK OLD PARK OLD PARK
--------- --------- ------------------
05/11/95- 01/01/95-
1995 12/31/95 05/10/95 1994 1993
----------- --------- --------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Newspaper revenue......... $ 78,904 $ 51,723 $ 27,181 $ 76,810 $ 84,751
-------- -------- -------- -------- --------
Operating expenses:
Cost of sales............. 33,810 20,783 13,027 32,364 39,221
Selling, general and ad-
ministrative............. 21,869 15,107 6,762 22,216 27,155
-------- -------- -------- -------- --------
55,679 35,890 19,789 54,580 66,376
-------- -------- -------- -------- --------
Operating income before
depreciation
and amortization....... 23,225 15,833 7,392 22,230 18,375
-------- -------- -------- -------- --------
Depreciation and amortiza-
tion:
Depreciation.............. 2,537 1,621 833 2,260 2,577
Amortization.............. 3,688 2,356 524 1,775 2,395
Amortization of excess of
cost over net assets
acquired................. 1,942 1,241 664 1,781 1,923
-------- -------- -------- -------- --------
8,167 5,218 2,021 5,816 6,895
-------- -------- -------- -------- --------
Operating income........ 15,058 10,615 5,371 16,414 11,480
Interest expense........... (24,810) (15,851) (23) (76) (177)
Interest income............ 291 186 3 11 45
Other expense.............. (511) (26) (485) (832) (204)
-------- -------- -------- -------- --------
(Loss) income before in-
come taxes............. (9,972) (5,076) 4,866 15,517 11,144
Provision (benefit) for in-
come taxes................ (2,792) (1,430) 2,222 7,007 5,335
-------- -------- -------- -------- --------
Net (loss) income....... $ (7,180) (3,646) 2,644 8,510 5,809
========
Retained earnings, begin-
ning of period............ -- 77,890 69,380 63,571
-------- -------- -------- --------
Retained earnings, end of
period.................... $ (3,646) $ 80,534 $ 77,890 $ 69,380
======== ======== ======== ========
Loss per share............. $(162.63) $ (82.58)
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-42
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DEC.
PERIOD 31
-------------------- ----------------
NEW PARK OLD PARK OLD PARK
--------- --------- ----------------
05/11/95- 01/01/95-
12/31/95 05/10/95 1994 1993
--------- --------- ------- -------
<S> <C> <C> <C> <C>
Operating Activities:
Net (loss) income...................................................................... $ (3,646) $ 2,644 $ 8,510 $ 5,809
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization......................................................... 5,218 2,021 5,816 6,895
Amortization of consulting/non-compete contracts
included in operating expenses....................................................... -- 292 1,142 1,161
Payments on consulting/non-compete contracts.......................................... (513) (320) (869) (1,175)
Provision for losses on accounts receivable........................................... 127 85 292 347
Provision for deferred income taxes................................................... (1,430) (122) (59) (326)
Loss on sale of property, plant and equipment......................................... -- 199 116 34
Changes in operating assets and liabilities net of effects
from the disposal of companies:
Accounts receivable.................................................................. (182) (902) 488 (524)
Inventory and other assets........................................................... (628) 134 488 625
Accounts payable and accrued liabilities............................................. 5,057 984 (6,214) 995
Deferred income...................................................................... (84) 332 128 169
-------- ------- ------- -------
Net cash provided by operating activities........................................... 3,919 5,347 9,838 14,010
-------- ------- ------- -------
Investing Activities:
Purchases of property, plant and equipment............................................. (1,691) (431) (3,458) (1,512)
Proceeds from sale of property, plant and equipment.................................... 8 -- 202 15
Proceeds from sales of companies....................................................... -- -- -- 6,336
-------- ------- ------- -------
Net cash provided by (used in) investing activities................................. (1,683) (431) (3,256) 4,839
-------- ------- ------- -------
Financing Activities:
Additional loan proceeds............................................................... 1,447 -- -- --
Principal payments on long-term debt................................................... (1,185) (122) (451) (1,580)
Net intercompany transfers to parent................................................... (3,355) (5,164) (6,400) (18,636)
-------- ------- ------- -------
Net cash used in financing activities............................................... (3,093) (5,286) (6,851) (20,216)
-------- ------- ------- -------
Decrease in cash...................................................................... (857) (370) (269) (1,367)
Cash beginning of period................................................................ 1,567 1,937 2,206 3,573
-------- ------- ------- -------
Cash end of period...................................................................... $ 710 $ 1,567 $ 1,937 $ 2,206
======== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-43
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Park Newspapers, Inc. (the Company or PNI), through wholly owned subsidiary
companies, publishes paid circulation newspapers and non-paid controlled
distribution publications (shoppers). Substantially all of the Company's
newspaper revenues are derived from advertising and circulation.
Advertising rates and rate structures vary among the publications and are
based, among other things, on circulation and type of advertising.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. The Company, which is
a wholly owned subsidiary of Park Communications, Inc. (Parent or PCI),
became an indirect wholly owned subsidiary of Park Acquisitions, Inc. (PAI)
(see Note 2) as of May 11, 1995. All significant intercompany accounts and
transactions have been eliminated.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions (such as estimated lives of assets and allowance for doubtful
accounts) that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period.
Inventory Valuation
Inventories, consisting primarily of newsprint, are stated at the lower of
cost (primarily last-in; first-out method) or market. The effect of using
the last-in; first-out method (compared with the first-in; first-out
inventory method) is not considered significant.
Property, Plant, Equipment and Depreciation
Property, plant and equipment are stated at cost. Depreciation for
financial reporting purposes is provided on the straight-line method over
the estimated useful lives of the assets except for leasehold improvements,
which are amortized on the straight-line method over the lease period or
the lives of the improvements, whichever is shorter. Accelerated methods
are used for income tax reporting purposes whenever available. Deferred
income taxes are provided for this temporary difference between financial
and income tax reporting methods.
Consulting/Non-Compete Contracts
Certain subsidiary companies have consulting/non-compete contracts expiring
through 2010. Prior to May 11, 1995, costs were amortized on a straight-
line basis over the terms of the related agreements. In connection with the
Acquisition, separate value was not assigned to those contracts. New Park
would not have entered into such contracts at the date of Acquisition (see
Note 2).
Intangible Assets
Intangible assets are stated at cost and consist primarily of advertising
contracts, subscription lists and excess of cost over net assets acquired.
Intangible assets are being amortized by the straight-line method over
estimated lives ranging primarily from 7 to 40 years.
F-44
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Carrying Value of Long Lived Assets
The carrying value of long lived assets is reviewed if the facts and
circumstances suggest that they may be impaired. If this review indicates
that such assets carrying value will not be recoverable, as determined
based on future expected, undiscounted cash flows, the carrying value is
reduced to fair market value.
Income Taxes
Effective January 1, 1993 the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
FASB Statement No. 109, "Accounting for Income Taxes." The cumulative
effect of the accounting change was not material to net income for 1993.
Deferred Income
Deferred income is recorded on subscriptions prepaid by customers. Such
income is recognized when earned.
Intercompany Accounts
The amount receivable from the Parent included in the balance sheet
represents a net balance as the result of various transactions between the
Company and its Parent. Since May 11, 1995 interest charges have been
associated with the account balance. The balance is primarily the result of
the Company's participation in the Parent's central cash management
program, wherein some of the Company's cash receipts are remitted to the
Parent and some of the cash disbursements are funded by the Parent. Other
transactions include the transfer to the Parent for payment of the
Company's prior year federal income tax liability, and miscellaneous other
administrative expenses incurred by the Parent on behalf of the Company.
Intercompany Expense Allocation
The Company's Parent provides various administrative services to the
Company including legal assistance, acquisitions analysis, and marketing
and advertising services. It is the Parent's policy to charge these
expenses and all other operating expense, on both a direct and indirect
cost basis. These expenses incurred by the Parent and allocated to the
Company (which are included in operating expenses) were $1,416,000 for the
period May 11 to December 31, 1995, $801,000 for the period January 1 to
May 10, 1995, $1,988,000 in 1994 and $2,102,000 in 1993.
2.ACQUISITION AND BASIS OF PRESENTATION
On May 11, 1995, the Company's parent, PCI, was sold to PAI (the
Acquisition), a private investment concern (organized August 4, 1994) owned
by investors Gary B. Knapp and the Tomlin Family Trust II, of which Donald
R. Tomlin, Jr. is a trustee. A significant portion of the purchase price
was paid from the proceeds of a $573,427,000 loan made to the acquiror, the
remainder of the purchase price ($138,000,000) was derived from existing
cash-on-hand at PCI at closing of the Acquisition.
As a consequence of the change in ownership of PCI, under generally
accepted accounting principles, the Company is deemed, for financial
reporting purposes, to have become a new reporting entity effective with
the change in ownership. The portion of the debt allocable to the Company
has been "pushed down" to the financial statements of the Company, and the
assets and liabilities have been adjusted to reflect their fair market
value as of May 11, 1995.
The accompanying financial statements reflect the operations of PNI prior
to the acquisition on May 11, 1995 (Old Park). Subsequent to that date the
financial statements reflect the operations of the Company utilizing the
new basis accounting (New Park).
F-45
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The pro forma income statement for 1995 reflects the operations of the
Company under the new basis of accounting and assumes the transaction
closed on January 1, 1995. Depreciation, amortization and interest expense
reflect those costs that would be charged to operations for a full year
based on the revised balance sheet amounts at May 11, 1995 for property,
plant and equipment, intangible assets and the long-term debt "push down"
to PNI. Pro forma income tax benefit has been computed at an effective rate
of 28%.
Following is a summary of adjustments made to historical costs of the
assets and liabilities of the Company as of May 10, 1995, as a result of
applying "push down" acquisition accounting at that date to arrive at the
new basis for the Company.
<TABLE>
<CAPTION>
MAY 10, 1995
--------------------------------------
PARK NEWSPAPERS, INC.
--------------------------------------
WITHOUT MERGER WITH MERGER
ADJUSTMENTS ADJUSTMENTS
-------------- MERGER -----------
OLD PARK ADJUSTMENTS NEW PARK
-------------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets
Cash................................ $ 1,567 -- $ 1,567
Accounts receivable, net............ 7,508 -- 7,508
Inventory........................... 972 -- 972
Consulting/non-compete contracts.... 730 $ (730) --
Other............................... 406 -- 406
------- -------- --------
Total current assets.............. 11,183 (730) 10,453
------- -------- --------
Property, plant & equipment.......... 42,092 (15,926) 26,166
Less accumulated depreciation and
amortization...................... 21,474 (21,474) --
------- -------- --------
Net property, plant & equipment..... 20,618 5,548 26,166
Intangible assets, net............... 56,269 130,357 186,626
Consulting/non-compete contracts..... 3,009 (3,009) --
Other assets......................... 199 -- 199
------- -------- --------
$91,278 $132,166 $223,444
======= ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term
debt............................... $ 630 -- $ 630
Accounts Payable.................... 1,540 -- 1,540
Consulting/non-compete contracts.... 836 -- 836
Interest............................ 20 -- 20
Income taxes........................ 487 -- 487
Accrued liabilities................. 1,019 -- 1,019
Deferred income..................... 3,241 -- 3,241
------- -------- --------
Total current liabilities.......... 7,773 -- 7,773
Long term debt....................... -- $167,539 167,539
Consulting/non-compete contracts..... 3,241 -- 3,241
Deferred income taxes................ 1,271 43,620 44,891
------- -------- --------
Total liabilities................. 12,285 211,159 223,444
------- -------- --------
Stockholder's Equity:
Common stock........................ 4,150 -- 4,150
Paid in capital..................... 46,665 (50,815) (4,150)
Intercompany receivables from par-
ent................................ (52,356) 52,356 --
Retained earnings................... 80,534 (80,534) --
------- -------- --------
Total stockholder's equity........... 78,993 (78,993) --
------- -------- --------
$91,278 $132,166 $223,444
======= ======== ========
</TABLE>
F-46
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3.LOSS PER SHARE
Earnings per share of common stock is computed on the weighted average
number of common shares outstanding during each period (dollars and shares
in thousands except per share amounts):
<TABLE>
<CAPTION>
PRO FORMA NEW PARK
----------- -----------
NEW PARK PERIOD
----------- -----------
05/10/95-
1995 12/31/95
----------- -----------
(UNAUDITED)
-----------
<S> <C> <C>
Average shares...................................... 44 44
========= ========
Net loss............................................ $ (7,180) $ (3,646)
========= ========
Per share amount.................................... $ (162.63) $ (82.58)
========= ========
Earnings per share has not been shown prior to May 11, 1995 because such
information is not meaningful.
4.INTANGIBLE ASSETS
Intangible assets are comprised of the following (dollars in thousands):
<CAPTION>
DECEMBER 31 DECEMBER 31
----------- -----------
NEW PARK OLD PARK
----------- -----------
1995 1994
----------- -----------
<S> <C> <C>
Advertising contracts and subscription lists........ $ 109,303 $ 35,236
Other intangibles................................... -- 3,960
Excess of cost over net assets acquired............. 77,323 72,226
--------- --------
Total intangibles................................. 186,626 111,422
Less accumulated amortization....................... 3,597 53,950
--------- --------
$ 183,029 $ 57,472
========= ========
5.DISPOSITIONS AND DISCONTINUED PUBLICATION
On December 31, 1993, the Company sold newspaper publications in 13 of its
smaller markets. Of these, 11 were daily newspapers, all with paid
circulation under 6,000. The impact of the sale of these publications was
not material to net income in 1993. In 1995, the Company discontinued its
Research Triangle Park, Raleigh, North Carolina publication. The operating
losses for these newspaper publications (before depreciation and
amortization) were $145,000 in 1995 (pro forma unaudited), $235,000 in 1994
and $273,000 in 1993.
6.LONG-TERM DEBT
The Company's long-term debt is comprised of the following:
<CAPTION>
DECEMBER 31 DECEMBER 31
----------- -----------
NEW PARK OLD PARK
----------- -----------
1995 1994
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Existing Credit Agreement........................... $ 168,065 --
Subordinated notes of certain newspaper subsidiaries
due to former owners............................... 360 $ 744
Promissory notes.................................... 6 8
--------- --------
Total debt.......................................... 168,431 752
Less:Current maturities of long-term debt........... 126 392
--------- --------
Long-term debt...................................... $ 168,305 $ 360
========= ========
</TABLE>
F-47
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
On May 11, 1995, PAI entered into an agreement (Existing Credit Agreement)
to borrow up to $593.8 million, the proceeds of which were utilized to
finance the Acquisition and pay related expenses. The loan required that
the debt be directly assumed by PCI and its subsidiary companies and that
they be jointly and severally liable for the loan agreement. PAI, PCI and
PCI's subsidiaries' assets are pledged as collateral for the loan made
pursuant to the Existing Credit Agreement and PCI and its subsidiaries'
cash flow is utilized for debt service. Interest accrues at a base interest
rate (Base Rate) of 9.5% per annum, an additional interest rate (Additional
Rate) of 1.0% per annum, plus a yield maintenance interest rate (YMI) of
3.0% per annum. The Base Rate and Additional Rate interest are payable on
October 1 and April 1. Principal payments are required only to the extent
that PAI's cash balance, as defined in the Existing Credit Agreement,
exceeds $8.0 million (declining to $6.0 million at October 1, 1997) at each
interest payment date through October 1, 1997. Following is a table that
outlines these requirements:
<TABLE>
<CAPTION>
INTEREST PAYMENT DATE CASH RESERVE AMOUNT
--------------------- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
October 1, 1995................................... $8,000
April 1, 1996..................................... 8,000
October 1, 1996................................... 7,000
April 1, 1997..................................... 7,000
October 1, 1997 and thereafter.................... 6,000
</TABLE>
Prepayment, in part or wholly, can be made at any time without penalty.
Ninety percent (90%) of the after tax proceeds as defined in the Existing
Credit Agreement of any asset sales of the Company are required to be
applied to the principal.
The YMI, which the Company is accruing, is payable upon achievement by PAI,
on or prior to May 11, 1998, of a Loan to Value Ratio (LTV) of 70% or less
(as defined in the Existing Credit Agreement). If the Company elects not to
pay the YMI when payable, then PAI would be required to issue to the lender
an exercisable warrant having the right to acquire non-voting common stock
in PAI in a sufficient amount to equal an 80% shareholders' equity
interest. On the earliest date that the Debt Service Coverage Ratio (DSC)
as defined in the Existing Credit Agreement is met, and either the LTV
ratio is met or by reason of non-payment of the YMI, the warrant is
required to be issued, the loan will become fully amortizable in equal
annual amounts over the remaining term ending on a maturity date of April
15, 2015 with interest at 10.5% per annum.
Substantially all of the Company's and its subsidiaries' tangible and
intangible assets are collateralized under the Existing Credit Agreement.
The Existing Credit Agreement contains covenants which, among other things,
limit or restrict payment of cash dividends, additional debt, repurchase of
common stock, capital expenditures, sales of the Company's common stock,
mergers, consolidations and sales of the Company's assets.
The subordinated notes are payable in various installments through 1998
with interest primarily from 6% to 9%. The promissory notes are payable in
various installments through 1998 with interest at 8%.
Cash payments of interest were $8,255,974 for the period of May 11 to
December 31, 1995, $43,552 for the period of January 1 to May 10, 1995,
$97,930 in 1994 and $185,041 in 1993.
F-48
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The aggregate annual maturities on long-term debt, assuming the Company
meets the LTV on May 11, 1998, payable over the next five years are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- -------
<S> <C>
1996.............................................................. $ 126
1997.............................................................. 120
1998.............................................................. 52,155
1999.............................................................. 2,858
2000.............................................................. 3,166
</TABLE>
The fair value of the Company's long-term debt approximates $180,405,000.
7.INCOME TAXES
The Company determines its income tax expense on the separate return
method. Federal and state income tax expense (benefit) is summarized as
follows (dollars in thousands):
<TABLE>
<CAPTION>
PERIOD YEAR ENDED DEC. 31
------------------- --------------------
NEW PARK OLD PARK OLD PARK
--------- --------- --------------------
05/11/95- 01/01/95-
12/31/95 05/10/95 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Federal:
Current.......................... -- $1,904 $ 5,662 $ 4,466
Deferred......................... $(1,208) (106) (58) (284)
------- ------ --------- ---------
$(1,208) 1,798 5,604 4,182
------- ------ --------- ---------
State:
Current.......................... -- 440 1,404 1,195
Deferred......................... (222) (16) (1) (42)
------- ------ --------- ---------
(222) 424 1,403 1,153
------- ------ --------- ---------
Total income tax expense (bene-
fit)........................... $(1,430) $2,222 $ 7,007 $ 5,335
======= ====== ========= =========
</TABLE>
The items comprising the differences in taxes on income computed at the
U.S. statutory rate and the amount provided by the Company are as follows
(dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DEC.
PERIOD 31
-------------------- ---------------
NEW PARK OLD PARK OLD PARK
--------- --------- ---------------
05/11/95- 01/01/95-
12/31/95 05/10/95 1994 1993
--------- --------- ------- -------
<S> <C> <C> <C> <C>
Computed tax expense at U.S. statutory
rate................................... $ (1,777) $ 1,703 $ 5,431 $ 3,900
Increase in tax expense resulting from:
State income taxes, net of federal in-
come tax.............................. (144) 276 912 749
Amortization not tax deductible........ 434 231 623 673
Miscellaneous, net..................... 57 12 41 13
-------- ------- ------- -------
Total income tax expense (benefit).... $ (1,430) $ 2,222 $ 7,007 $ 5,335
======== ======= ======= =======
</TABLE>
F-49
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Significant components of the Company's deferred tax liabilities and assets
are as follows (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
----------- -----------
NEW PARK OLD PARK
----------- -----------
1995 1994
----------- -----------
<S> <C> <C>
Components of deferred taxes:
Property, plant & equipment, intangible assets...... $ 42,742 $ 1,490
Net operating loss carry forwards................... (770) --
Allowance for doubtful accounts and other........... (77) (96)
-------- -------
Net deferred tax liabilities....................... $ 41,895 $ 1,394
======== =======
Classification of deferred taxes:
Non-current liabilities............................. $ 41,972 $ 1,490
Current assets...................................... (77) (96)
-------- -------
$ 41,895 $ 1,394
======== =======
</TABLE>
Total cash payments of state income taxes were $135,000 for the period May
11 through December 31, 1995, $352,000 for the period January 1 through May
10, 1995, $1,391,143 in 1994 and $1,212,969 in 1993. Federal tax payments
are made by the Parent (see Note 1).
8. LEASES
Certain operating facilities and equipment (see Note 9) are leased under
noncancellable operating agreements. Certain of the leases require the
Company or its subsidiaries to pay property taxes, insurance and
maintenance costs.
Lease expense related to the above and charged to operations was
approximately $135,380 for the period May 11 through December 31, 1995,
$76,519 for the period January 1 through May 10, 1995, $463,000 in 1994 and
$749,000 in 1993.
The aggregate minimum rentals through dates of expiration amount to
approximately $227,076 and the amounts payable over the next five years are
as follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------
<S> <C>
1996.............................................................. $112
1997.............................................................. 76
1998.............................................................. 36
1999.............................................................. 3
2000.............................................................. --
</TABLE>
9. RELATED PARTY TRANSACTIONS
In 1993 and 1994, the Company, in the ordinary course of business, leased
and rented certain operating facilities and equipment (included in Note 8)
from RHP Incorporated and its subsidiaries. RHP Incorporated is wholly
owned by the estate of Roy H. Park, formerly the Chairman of the Board of
PCI, who died on October 25, 1993. Such lease and rent payments were
$271,476 in 1994 and $527,949 in 1993. In connection with these operating
facilities, in 1994 the Company purchased five buildings from RHP
Incorporated and its subsidiaries at the appraised fair market value of
$600,000 and such lease and rent payments ceased as of the date of
purchase.
F-50
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
-------- -----------
1996 1995
-------- -----------
ASSETS
<S> <C> <C>
Current Assets:
Cash.................................................... $ 762 $ 710
Accounts receivable, less allowance for doubtful
accounts of $340 in 1996 and $314 in 1995............. 7,054 7,563
Inventory............................................... 919 1,089
Other................................................... 399 912
-------- --------
Total current assets................................... 9,134 10,274
-------- --------
Property, Plant & Equipment:
Property, plant & equipment............................. 27,988 27,793
Less accumulated depreciation and amortization.......... (2,316) (1,562)
-------- --------
25,672 26,231
Intangible assets, net................................... 181,857 183,029
Other assets............................................. 304 204
-------- --------
$216,967 $219,738
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-term debt.................... $ 126 $ 126
Accounts payable........................................ 1,036 900
Consulting/non-compete contracts........................ 775 787
Interest................................................ 13,320 7,642
Income taxes............................................ 113 --
Accrued liabilities..................................... 1,113 1,072
Deferred income......................................... 3,265 3,157
-------- --------
Total current liabilities.............................. 19,748 13,684
Long-term debt........................................... 168,089 168,305
Consulting/non-compete contracts......................... 2,596 2,778
Deferred income taxes.................................... 42,011 41,972
-------- --------
Total liabilities...................................... 232,444 226,739
-------- --------
Commitments
Stockholder's Equity:
Common Stock--no par value:
Authorized 44,150 shares, issued and outstanding 44,150
shares in
1996 and 1995....................................... 4,150 4,150
Paid in capital......................................... (4,150) (4,150)
Intercompany receivables from Parent.................... (9,340) (3,355)
Retained earnings (deficit)............................. (6,137) (3,646)
-------- --------
Total stockholder's equity............................... (15,477) (7,001)
-------- --------
$216,967 $219,738
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
unaudited financial statements.
F-51
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
---------------------
1996 1995
--------- ---------
NEW PARK OLD PARK
--------- ---------
<S> <C> <C>
Revenue:
Newspaper revenue..................................................................................... $ 18,342 $ 18,259
--------- ---------
Operating expenses:
Cost of sales......................................................................................... 8,584 8,043
Selling, general and administrative................................................................... 6,026 5,640
--------- ---------
14,610 13,683
--------- ---------
Operating income before depreciation and amortization................................................ 3,732 4,576
--------- ---------
Depreciation and amortization:
Depreciation.......................................................................................... 789 553
Amortization.......................................................................................... 900 375
Amortization of excess of cost over net assets acquired............................................... 482 392
--------- ---------
2,171 1,320
--------- ---------
Operating income..................................................................................... 1,561 3,256
Interest expense....................................................................................... (5,685) (17)
Interest income........................................................................................ 103 1
Other income........................................................................................... 82 15
--------- ---------
(Loss) income before income taxes.................................................................... (3,939) 3,255
Provision (benefit) for income taxes................................................................... (1,448) 1,473
--------- ---------
Net (loss) income...................................................................................... (2,491) 1,782
Retained earnings (deficit), beginning of period....................................................... (3,646) 77,890
--------- ---------
Retained earnings (deficit), end of period............................................................. $ (6,137) $ 79,672
========= =========
Loss per share......................................................................................... $ (56.42)
=========
Average shares......................................................................................... 44,150
=========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
unaudited financial statements.
F-52
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN
THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------
1996 1995
--------- ---------
NEW PARK OLD PARK
--------- ---------
<S> <C> <C>
Operating Activities:
Net (loss) income...................................................................................... $ (2,491) $ 1,782
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization......................................................................... 2,171 1,320
Amortization of consulting/non-compete contracts included in operating expenses....................... -- 202
Payments on consulting/non-compete contracts.......................................................... (193) (212)
Provision for losses on accounts receivable........................................................... 129 43
Provision for deferred income taxes................................................................... (378) (121)
Loss (gain) on sale of property, plant and equipment.................................................. (158) 6
Changes in operating assets and liabilities:
Accounts receivable.................................................................................. 380 508
Inventory and other assets........................................................................... 471 227
Accounts payable and accrued liabilities............................................................. 6,385 7,174
Deferred income...................................................................................... 108 453
-------- ---------
Net cash provided by operating activities........................................................... 6,424 11,382
-------- ---------
Investing Activities:
Purchases of property, plant and equipment............................................................. (240) (336)
Proceeds from sale of property, plant, and equipment................................................... 169 --
Increase in long-term other assets..................................................................... (100) --
-------- ---------
Net cash (used in) investing activities............................................................... (171) (336)
-------- ---------
Financing Activities:
Principal payments on long-term debt................................................................... (216) (122)
Net intercompany transfers to Parent................................................................... (5,985) (11,466)
-------- ---------
Net cash (used in) financing activities.............................................................. (6,201) (11,588)
-------- ---------
Increase (decrease) in cash........................................................................... 52 (542)
Cash beginning of period................................................................................ 710 1,937
-------- ---------
Cash end of period...................................................................................... $ 762 $ 1,395
======== =========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
unaudited financial statements.
F-53
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
1.BASIS OF PRESENTATION
The accompanying condensed interim financial statements are unaudited;
however, in the opinion of the Company's management, all adjustments (which
comprise only normal and recurring accruals) necessary for a fair
presentation of the interim financial results have been included. The
results for the interim periods are not necessarily indicative of results
to be expected for the entire year. These financial statements and notes
should be read in conjunction with the Company's audited annual
consolidated financial statements for the year ended December 31, 1995.
2.SUBSEQUENT EVENTS
The Company sold $155.0 million in principal amount of 11 7/8% Senior
Notes due 2004 (the "Notes") on May 13, 1996 in one of a series of
transactions (the "Refinancing Transactions"), the purpose of which was to
refinance the indebtedness under a credit agreement among Park
Communications, Inc. ("Park Communications"), Park Acquisitions, Inc. and
the lenders thereunder, which was guaranteed by the Company. The
Refinancing Transactions consisted of (i) the sale of the Notes, (ii) the
establishment of and drawings under a Senior Credit Facility between Park
Communications and certain lenders in the amount of $58.0 million, (iii)
the sale, which was completed on May 13, 1996, of 80,000 Units consisting
of $80.0 million in principal amount of 13 3/4% Senior Pay-in-Kind Notes
due 2004 of Park Communications and Warrants to purchase 800,000 shares of
Common Stock of Park Communications, (iv) the sale, which was completed on
May 13, 1996, of $241.0 million in principal amount of 11 3/4% Senior Notes
due 2004 of Park Broadcasting, Inc. ("Park Broadcasting") and (v) the sale,
which was completed on March 25, 1996, of Park Broadcasting's WPAT-AM and
FM radio stations for aggregate gross proceeds of $103.0 million.
F-54
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 25
The Company............................................................... 33
Use of Proceeds........................................................... 34
Capitalization............................................................ 35
Unaudited Pro Forma Condensed Consolidated Financial Statements........... 36
Selected Historical and Pro Forma Consolidated Financial Data............. 46
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 52
Business.................................................................. 64
Management................................................................ 103
Securities Ownership of Certain Beneficial Owners......................... 110
Description of Certain Indebtedness....................................... 111
Description of the Units.................................................. 116
Description of the Notes.................................................. 116
Description of the Warrants............................................... 143
The Exchange Offer........................................................ 150
Certain Federal Income Tax Consequences................................... 159
Description of Capital Stock.............................................. 164
Plan of Distribution...................................................... 165
Legal Matters............................................................. 165
Experts................................................................... 165
Available Information..................................................... 166
Index to Financial Statements............................................. F-1
</TABLE>
================================================================================
================================================================================
$80,000,000
[LOGO OF PARK COMMUNICATIONS, INC. APPEARS HERE]
PARK COMMUNICATIONS, INC.
OFFER TO EXCHANGE
SERIES B 13 3/4% SENIOR
PAY-IN-KIND NOTES DUE 2004
FOR ALL OUTSTANDING
13 3/4% SENIOR PAY-IN-KIND
NOTES DUE 2004
-------------------------
PROSPECTUS
-------------------------
, 1996
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
corporation to indemnify any person who was or is a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation), by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation or enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
Section 145 of the DGCL also empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person acted
in any of the capacities set forth above, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted under similar
standards, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
to the corporation unless, and only to the extent that, the Court of Chancery
or the court in which such action was brought shall determine that despite the
adjudication of liability such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 145 of the DGCL further provides that, to the extent that a director
or officer of a corporation has been successful in the defense of any action,
suit or proceeding referred to above or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 of the DGCL shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that the corporation is empowered to purchase and maintain insurance on
behalf of a director or officer of the corporation against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liabilities under Section 145 of the DGCL.
Article Seventh of the Company's Amended and Restated Certificate of
Incorporation, as amended, provides as follows:
The Corporation shall, to the fullest extent permitted by the provisions
of Section 145 of the General Corporation Law of the State of Delaware, as
the same may be amended and supplemented, indemnify any and all persons
whom it shall have power to indemnify under said section from and against
any and all of the expenses, liabilities, or other matters referred to in
or covered by said section, and the indemnification provided for herein
shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Article VII, Section 2(b) of the Company's Bylaws provides as follows:
In addition to mandatory indemnification under Section 145 of the DGCL,
as set forth above, the Corporation shall indemnify the Indemnitees, and
each of them, in each and every situation where, under Section 145 of the
DGCL, the Corporation is not obligated, but is nevertheless permitted or
empowered, to make such indemnification, in such amounts and to the fullest
extent permitted under applicable law.
II-1
<PAGE>
The Company has purchased and maintains insurance to protect persons
entitled to indemnification pursuant to its Bylaws and the DGCL against
expenses, judgments, fines and amounts paid in settlement, to the fullest
extent permitted by the DGCL.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
-------- ----------------------
<C> <S>
2.1 Asset Purchase Agreement dated as of February 14, 1996 among Roy H.
Park Broadcasting of Oregon, Inc., Contemporary FM, Inc. and Fisher
Broadcasting Inc. regarding sale of KWJJ- AM and FM
2.2 Asset Purchase Agreement dated as of February 29, 1996 among Roy H.
Park Broadcasting of Minnesota, Inc., Roy H. Park Broadcasting of the
Lake Country, Inc. and Nationwide Communications Inc. regarding sale
of KSGS-AM and KMJZ-FM
2.3 Asset Purchase Agreement dated as of March 27, 1996 between Park
Radio of Iowa, Inc. and KXEL Broadcasting Company, Inc. regarding
sale of KWLO-AM and KFMW-FM
2.4 Asset Purchase Agreement dated as of March 27, 1996 between Roy H.
Park Broadcasting of Tennessee, Inc. and Jackson Telecasters, Inc.
regarding sale of WDEF-AM and FM
2.5 Asset Purchase Agreement dated as of February 29, 1996 among
Montgomery Alabama Channel 32 Operating Limited Partnership, WHOA-TV,
Inc. and Park of Montgomery I, Inc. regarding acquisition of WHOA-TV
3(i)(a) Amended and Restated Certificate of Incorporation of the Company
3(i)(b) Certificate of Amendment of Certificate of Incorporation of the
Company
3(ii) Bylaws of the Company
4.1 Indenture dated as of May 13, 1996 between the Company and IBJ
Schroder Bank & Trust Company, as Trustee, with the forms of Series A
Note and Series B Note attached thereto
4.2 Warrant Agreement dated as of May 13, 1996 between the Company and
IBJ Schroder Bank & Trust Company, as Warrant Agent, with the form of
Warrant attached thereto
4.3 Unit Agreement dated as of May 13, 1996 between the Company and IBJ
Schroder Bank and Trust Company, as Unit Agent
5.1 Opinion of Eckert Seamans Cherin & Mellott regarding the validity of
the Series B Notes, including consent*
8.1 Opinion of Eckert Seamans Cherin & Mellott regarding certain Federal
income tax matters, including consent*
10.1 Registration Rights Agreement dated as of May 13, 1996 among the
Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Goldman, Sachs & Co.
10.2 Warrant Registration Rights Agreement dated as of May 13, 1996 among
the Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Goldman, Sachs & Co.
10.3 Indenture dated as of May 13, 1996 between Park Broadcasting, Inc.
and IBJ Schroder Bank & Trust Company, as Trustee
10.4 Indenture dated as of May 13, 1996 between Park Newspapers, Inc. and
IBJ Schroder Bank & Trust Company, as Trustee
10.5 Credit Agreement dated as of May 10, 1996 among the Company, Merrill
Lynch & Co., as Arranger and Syndication Agent, First Union National
Bank of North Carolina, as Administrative Agent and Collateral Agent,
and the lending institutions listed therein
10.6 Tax Sharing Agreement executed as of May 13, 1996 among Park
Acquisitions, Inc., the Company, Park Broadcasting, Inc., Park
Newspapers, Inc. and certain of the Company's other subsidiaries.
10.7 Management Services Agreement dated as of May 13, 1996 among Park
Acquisitions, Inc., the Company, Park Broadcasting, Inc. and Park
Newspapers, Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.8 Affiliation Agreement dated as of October 1, 1995 between Roy H. Park
Broadcasting, Inc. and CBS Television Network, a division of CBS Inc.
("CBS")
10.9 Affiliation Agreement dated as of October 1, 1995 between Roy H. Park
Broadcasting of Tennessee, Inc. and CBS
10.10 Affiliation Agreement dated as of October 1, 1995 between Roy H. Park
Broadcasting of the Tri-Cities, Inc. and CBS
10.11 Affiliation Agreement dated as of October 1, 1995 between Roy H. Park
Broadcasting of Virginia, Inc. and CBS
10.12 Affiliation Agreement dated as of October 1, 1995 between Birmingham
Television Corporation and CBS
10.13 Affiliation Agreement dated January 19, 1996 between Park Broadcasting
of Louisiana Inc. and National Broadcasting Company, Inc. ("NBC")
10.14 Affiliation Agreement dated January 19, 1996 between Roy H. Park of
Roanoke, Inc. and NBC
10.15 Affiliation Agreement dated September 11, 1989 between Roy H. Park
Broadcasting of Utica-Rome, Inc. and American Broadcasting Companies,
Inc. ("ABC")
10.16 Affiliation Agreement dated July 25, 1991 between Park Broadcasting of
Kentucky, Inc. and ABC
10.17 Employment Agreement dated July 20, 1994 between the Company and
Wright M. Thomas
10.18 Agreement dated May 1, 1986 between the Company and Wright M. Thomas
regarding deferred compensation arrangement
10.19 Letter Agreement dated February 16, 1979 between the Company and
Wright M. Thomas regarding contingent retirement benefits
10.20 Park Communications, Inc. Retention Incentive Plan
10.21 Park Communications, Inc. Defined Benefit Plan
10.22 Description of Supplemental Retirement Benefit to W. Randall Odil
10.23 Letter dated December 21, 1995 from the Company to Rick Prusator
regarding compensation matters
10.24 Letter Agreement dated June 29, 1995 between the Company and Robert J.
Rossi regarding consulting/non-competition arrangements
12.1 Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Company
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Ernst & Young LLP
23.3 Consents of Eckert Seamans Cherin & Mellott (included in Exhibits 5.1
and 8.1)*
24.1 Power of Attorney (included in the Signature Page)
25.1 Statement of Eligibility on Form T-1 of Trustee
27.1 Financial Data Schedule for 1993 and 1994
27.2 Financial Data Schedule for 1995
27.3 Financial Data Schedule for first quarter of 1995 and 1996
99.1 Form of Letter of Transmittal with respect to the Exchange Offer
99.2 Form of Exchange Agency Agreement between the Company and IBJ Schroder
Bank & Trust Company, as Exchange Agent
</TABLE>
- --------
*To be filed by amendment.
II-3
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules are included in Part II of this
Registration Statement and should be read in conjunction with the Financial
Statements and notes thereto included elsewhere herein.
See Index to Financial Statement Schedules (page S-1).
Financial statement schedules other than those listed above are omitted as
not required or not applicable or because the information is included in the
financial statements or notes thereto.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change of such
information in the Registration Statement;
(2) That, for purposes of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
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.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the registrant undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
II-4
<PAGE>
The undersigned registrant undertakes that every prospectus (i) that is
filed pursuant to the immediately preceding paragraph or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the Registration Statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at the time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) hereunder the Securities Act of 1933 shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post- effective amendment that contains a form of prospectus
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.
II-5
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Wright M.
Thomas his true and lawful attorney-in-fact and agent, acting alone, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-
fact and agent, acting alone, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
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 Lexington, State of
Kentucky on June 20, 1996.
PARK COMMUNICATIONS, INC.
/s/ Wright M. Thomas
By: ________________________________
Wright M. Thomas, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Wright M. Thomas President (principal executive officer)
June 20, 1996
- -------------------------
Wright M. Thomas
/s/ Randel N. Stair Vice President and Chief Financial Officer
(principal financial officer and principal
accounting officer)
June 20, 1996
- -------------------------
Randel N. Stair
/s/ Gary B. Knapp Director June 20, 1996
- -------------------------
Gary B. Knapp
/s/ Donald R. Tomlin, Jr. Director
June 20, 1996
- -------------------------
Donald R. Tomlin, Jr.
II-6
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES*
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION SEQUENTIALLY
NUMBER OF SCHEDULE NUMBERED PAGE
- -------- ----------- -------------
<S> <C> <C>
II. Valuation and Qualifying Accounts:
Reports of Independent Accountants S-2, 3, 4, 5
Park Communications, Inc. and Subsidiaries S-6
Park Broadcasting, Inc. and Subsidiaries S-7
Park Newspapers, Inc. and Subsidiaries S-8
</TABLE>
- --------
* All other schedules are omitted as the required information is inapplicable
or the information is presented in the financial statements or related notes.
S-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
In connection with our audits of the consolidated financial statements of Park
Communications, Inc. and Subsidiaries, Park Broadcasting, Inc. and
Subsidiaries and Park Newspapers, Inc. and Subsidiaries as of December 31,
1995 and for the period from May 11, 1995 to December 31, 1995 and for the
period from January 1, 1995 to May 10, 1995, which financial statements are
included in the Prospectus, we have also audited the financial statement
schedules listed in Item 21(b) herein.
In our opinion, these financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly,
in all material respects, the information required to be included therein.
Coopers & Lybrand L.L.P.
Lexington, Kentucky
February 2, 1996
S-2
<PAGE>
Board of Directors
Park Communications, Inc.
We have audited the consolidated financial statements of Park Communications,
Inc. and Subsidiaries as of December 31, 1994, and for each of the two years
in the period ended December 31, 1994, and have issued our report thereon
dated January 27, 1995 (included elsewhere in this Registration Statement).
Our audits also included the financial statement schedule listed in Item 21(b)
of this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Syracuse, New York
January 27, 1995
S-3
<PAGE>
Board of Directors
Park Broadcasting, Inc.
We have audited the consolidated financial statements of Park Broadcasting,
Inc. and Subsidiaries as of December 31, 1994, and for each of the two years
in the period ended December 31, 1994, and have issued our report thereon
dated January 27, 1995 (included elsewhere in this Registration Statement).
Our audits also included the financial statement schedule listed in Item 21(b)
of this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Syracuse, New York
January 27, 1995
S-4
<PAGE>
Board of Directors
Park Newspapers, Inc.
We have audited the consolidated financial statements of Park Newspapers, Inc.
and Subsidiaries as of December 31, 1994, and for each of the two years in the
period ended December 31, 1994, and have issued our report thereon dated
January 27, 1995 (included elsewhere in this Registration Statement). Our
audits also included the financial statement schedule listed in Item 21(b) of
this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Syracuse, New York
January 27, 1995
S-5
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF COST & END OF
DESCRIPTION PERIOD EXPENSES DEDUCTIONS PERIOD
----------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended Allowance for 1,011,448 919,418 531,716 1,399,150
December 31, 1993 Doubtful Accounts
Year Ended Allowance for 1,399,150 896,917 697,734 1,598,333
December 31, 1994 Doubtful Accounts
Period Ended Allowance for 1,598,333 -- 155,849 1,442,484
May 10, 1995 Doubtful Accounts
Period Ended Allowance for 1,442,484 -- 635,138 807,346
December 31, 1995 Doubtful Accounts
</TABLE>
S-6
<PAGE>
PARK BROADCASTING, INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF COST & END OF
DESCRIPTION PERIOD EXPENSES DEDUCTIONS PERIOD
----------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended Allowance for 662,226 572,847 200,989 1,034,084
December 31, 1993 Doubtful Accounts
Year Ended Allowance for 1,034,084 605,349 355,571 1,283,862
December 31, 1994 Doubtful Accounts
Period Ended Allowance for 1,283,862 -- 169,073 1,114,789
May 10, 1995 Doubtful Accounts
Period Ended Allowance for 1,114,789 -- 570,103 544,686
December 31, 1995 Doubtful Accounts
</TABLE>
S-7
<PAGE>
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF COST & END OF
DESCRIPTION PERIOD EXPENSES DEDUCTIONS PERIOD
----------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended Allowance for 349,222 346,571 330,727 365,066
December 31, 1993 Doubtful Accounts
Year Ended Allowance for 365,066 291,568 342,163 314,471
December 31, 1994 Doubtful Accounts
Period Ended Allowance for 314,471 84,557 71,333 327,695
May 10, 1995 Doubtful Accounts
Period Ended Allowance for 327,695 127,636 192,671 262,660
December 31, 1995 Doubtful Accounts
</TABLE>
S-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBIT NO.
------- ---------------------- ----
<C> <S> <C>
2.1 Asset Purchase Agreement dated as of February 14, 1996 among
Roy H. Park Broadcasting of Oregon, Inc., Contemporary FM, Inc.
and Fisher Broadcasting Inc. regarding sale of KWJJ- AM and FM
2.2 Asset Purchase Agreement dated as of February 29, 1996 among
Roy H. Park Broadcasting of Minnesota, Inc., Roy H. Park
Broadcasting of the Lake Country, Inc. and Nationwide
Communications Inc. regarding sale of KSGS-AM and KMJZ-FM
2.3 Asset Purchase Agreement dated as of March 27, 1996 between
Park Radio of Iowa, Inc. and KXEL Broadcasting Company, Inc.
regarding sale of KWLO-AM and KFMW-FM
2.4 Asset Purchase Agreement dated as of March 27, 1996 between Roy
H. Park Broadcasting of Tennessee, Inc. and Jackson
Telecasters, Inc. regarding sale of WDEF-AM and FM
2.5 Asset Purchase Agreement dated as of February 29, 1996 among
Montgomery Alabama Channel 32 Operating Limited Partnership,
WHOA-TV, Inc. and Park of Montgomery I, Inc. regarding
acquisition of WHOA-TV
3(i)(a) Amended and Restated Certificate of Incorporation of the
Company
3(i)(b) Certificate of Amendment of Certificate of Incorporation of the
Company
3(ii) Bylaws of the Company
4.1 Indenture dated as of May 13, 1996 between the Company and IBJ
Schroder Bank & Trust Company, as Trustee, with the forms of
Series A Note and Series B Note attached thereto
4.2 Warrant Agreement dated as of May 13, 1996 between the Company
and IBJ Schroder Bank & Trust Company, as Warrant Agent, with
the form of Warrant attached thereto
4.3 Unit Agreement dated as of May 13, 1996 between the Company and
IBJ Schroder Bank and Trust Company, as Unit Agent
5.1 Opinion of Eckert Seamans Cherin & Mellott regarding the
validity of the Series B Notes, including consent*
8.1 Opinion of Eckert Seamans Cherin & Mellott regarding certain
Federal income tax matters, including consent*
10.1 Registration Rights Agreement dated as of May 13, 1996 among
the Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Goldman, Sachs & Co.
10.2 Warrant Registration Rights Agreement dated as of May 13, 1996
among the Company, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Goldman, Sachs & Co.
10.3 Indenture dated as of May 13, 1996 between Park Broadcasting,
Inc. and IBJ Schroder Bank & Trust Company, as Trustee
10.4 Indenture dated as of May 13, 1996 between Park Newspapers,
Inc. and IBJ Schroder Bank & Trust Company, as Trustee
10.5 Credit Agreement dated as of May 10, 1996 among the Company,
Merrill Lynch & Co., as Arranger and Syndication Agent, First
Union National Bank of North Carolina, as Administrative Agent
and Collateral Agent, and the lending institutions listed
therein
10.6 Tax Sharing Agreement executed as of May 13, 1996 among Park
Acquisitions, Inc., the Company, Park Broadcasting, Inc., Park
Newspapers, Inc. and certain of the Company's other
subsidiaries.
10.7 Management Services Agreement dated as of May 13, 1996 among
Park Acquisitions, Inc., the Company, Park Broadcasting, Inc.
and Park Newspapers, Inc.
10.8 Affiliation Agreement dated as of October 1, 1995 between Roy
H. Park Broadcasting, Inc. and CBS Television Network, a
division of CBS Inc. ("CBS")
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBIT NO.
------- ---------------------- ----
<C> <S> <C>
10.9 Affiliation Agreement dated as of October 1, 1995 between Roy
H. Park Broadcasting of Tennessee, Inc. and CBS
10.10 Affiliation Agreement dated as of October 1, 1995 between Roy
H. Park Broadcasting of the Tri-Cities, Inc. and CBS
10.11 Affiliation Agreement dated as of October 1, 1995 between Roy
H. Park Broadcasting of Virginia, Inc. and CBS
10.12 Affiliation Agreement dated as of October 1, 1995 between
Birmingham Television Corporation and CBS
10.13 Affiliation Agreement dated January 19, 1996 between Park
Broadcasting of Louisiana Inc. and National Broadcasting
Company, Inc. ("NBC")
10.14 Affiliation Agreement dated January 19, 1996 between Roy H.
Park of Roanoke, Inc. and NBC
10.15 Affiliation Agreement dated September 11, 1989 between Roy H.
Park Broadcasting of Utica-Rome, Inc. and American Broadcasting
Companies, Inc. ("ABC")
10.16 Affiliation Agreement dated July 25, 1991 between Park
Broadcasting of Kentucky, Inc. and ABC
10.17 Employment Agreement dated July 20, 1994 between the Company
and Wright M. Thomas
10.18 Agreement dated May 1, 1986 between the Company and Wright M.
Thomas regarding deferred compensation arrangement
10.19 Letter Agreement dated February 16, 1979 between the Company
and Wright M. Thomas regarding contingent retirement benefits
10.20 Park Communications, Inc. Retention Incentive Plan
10.21 Park Communications, Inc. Defined Benefit Plan
10.22 Description of Supplemental Retirement Benefit to W. Randall
Odil
10.23 Letter dated December 21, 1995 from the Company to Rick
Prusator regarding compensation matters
10.24 Letter Agreement dated June 29, 1995 between the Company and
Robert J. Rossi regarding consulting/non-competition
arrangements
12.1 Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Company
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Ernst & Young LLP
23.3 Consents of Eckert Seamans Cherin & Mellott (included in
Exhibits 5.1 and 8.1)*
24.1 Power of Attorney (included in Signature Page)
25.1 Statement of Eligibility on Form T-1 of Trustee
27.1 Financial Data Schedule for 1993 and 1994
27.2 Financial Data Schedule for 1995
27.3 Financial Data Schedule for first quarter of 1995 and 1996
99.1 Form of Letter of Transmittal with respect to the Exchange
Offer
99.2 Form of Exchange Agency Agreement between the Company and IBJ
Schroder Bank & Trust Company, as Exchange Agent
</TABLE>
- --------
* To be filed by amendment.
<PAGE>
Exhibit 2.1
EXECUTION COPY
RADIO STATIONS KWJJ-AM, KWJJ(FM)
Portland, Oregon
ASSET PURCHASE AGREEMENT
between
ROY H. PARK BROADCASTING OF OREGON, INC.
& CONTEMPORARY FM, INC.
("Sellers")
and
FISHER BROADCASTING INC.
("Buyer")
Date: February 14, 1996
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
PAGE
<C> <S> <C>
SECTION 1. DEFINITIONS....................................................... 1
-----------
1.1. "Accounts Receivable"............................................. 1
1.2. "Assets".......................................................... 1
1.3. "Assumed Contracts"............................................... 1
1.4. "Buyer's Knowledge"............................................... 2
1.5. "Claimant"........................................................ 2
1.6. "Closing"......................................................... 2
1.7. "Closing Date".................................................... 2
1.8. "Consents"........................................................ 2
1.9. "Contracts"....................................................... 2
1.10. "Disclosure Schedule"............................................. 2
1.11. "Effective Time".................................................. 2
1.12. "Escrow Deposit".................................................. 2
1.13. "FCC"............................................................. 2
1.14. "FCC Consent"..................................................... 2
1.15. "FCC Licenses".................................................... 2
1.16. "Final Order"..................................................... 3
1.17. "HSR Act"......................................................... 3
1.18. "Indemnitor"...................................................... 3
1.19. "Intangibles"..................................................... 3
1.20. "Licenses"........................................................ 3
1.21. "Lien"............................................................ 3
1.22. "Permitted Liens"................................................. 3
1.23. "Personal Property"............................................... 3
1.24. "Purchase Price".................................................. 4
1.25. "Real Property"................................................... 4
1.26. "Sellers' Knowledge".............................................. 4
1.27. "Stations"........................................................ 4
SECTION 2. SALE AND PURCHASE OF ASSETS AND OTHER
CONSIDERATION........................................................... 4
2.1. Agreement to Sell and Buy......................................... 4
-------------------------
(a) The Personal Property...................................... 4
(b) The Licenses............................................... 4
(c) The Real Property.......................................... 4
(d) The Assumed Contracts...................................... 4
(e) The Intangibles............................................ 4
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
<C> <S> <C>
2.2. Excluded Assets................................................... 4
2.3. Purchase Price.................................................... 5
2.4. Allocation of Purchase Price...................................... 5
2.5. Payment of Purchase Price......................................... 5
2.6. Assumption of Liabilities and Obligations......................... 6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF Sellers......................... 6
-----------------------------------------
3.1. Organization, Standing, and Authority............................. 6
3.2. Authorization and Binding Obligation.............................. 7
3.3. Absence of Conflicting Agreements and Required Consents........... 7
3.4. Governmental Authorizations....................................... 7
3.5. Title to Property................................................. 7
3.6. Leased Real Property.............................................. 8
3.7. Contracts......................................................... 8
3.8. Consents.......................................................... 8
3.9. Intangibles....................................................... 9
3.10. Profit and Loss Statements........................................ 9
3.11. Personnel......................................................... 9
3.12. Claims and Legal Actions.......................................... 10
3.13. Compliance with Laws.............................................. 10
3.14. Environmental..................................................... 10
3.15. Conduct of Business in Ordinary Course; Adverse Change............ 11
3.16. Taxes............................................................. 11
3.17. Insurance......................................................... 12
3.18. Full Disclosure................................................... 12
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER........................... 12
---------------------------------------
4.1. Organization, Standing, and Authority............................. 12
4.2. Authorization and Binding Obligation.............................. 12
4.3. Absence of Conflicting Agreements and Required Consents........... 12
4.4. Claims and Legal Actions.......................................... 13
4.5. Qualification..................................................... 13
4.6. Full Disclosure................................................... 13
4.7. Reliance.......................................................... 13
SECTION 5. COVENANTS OF SELLERS.............................................. 13
--------------------
5.1. Pre-Closing Covenants............................................. 13
5.2. Closing Covenant.................................................. 15
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
<C> <S> <C>
5.3. Post-Closing Covenants............................................ 15
SECTION 6. COVENANTS OF BUYER................................................ 15
------------------
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS.................................. 15
--------------------------------
7.1. FCC Consent....................................................... 15
7.2. HSR Filings....................................................... 16
7.3. Adjustments and Prorations........................................ 16
7.4. Risk of Loss...................................................... 18
7.5. Confidentiality................................................... 19
7.6. Collection of Accounts Receivable................................. 19
7.7. Intentionally Omitted............................................. 20
7.8. Brokers........................................................... 20
7.9. Cooperation....................................................... 20
7.10. Control of the Stations........................................... 20
7.11. Consultation...................................................... 20
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS.................... 20
----------------------------------------------
8.1. Conditions to Obligations of Buyer................................ 21
8.2. Conditions to Obligations of Sellers.............................. 21
SECTION 9. CLOSING AND CLOSING DELIVERIES.................................... 22
------------------------------
9.1. Closing........................................................... 22
9.2. Deliveries by Sellers............................................. 22
9.3. Deliveries by Buyer............................................... 23
SECTION 10.TERMINATION....................................................... 23
-----------
10.1. Termination Rights................................................ 23
10.2. Disposition of Escrow Deposit..................................... 24
SECTION 11.SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
----------------------------------------------
INDEMNIFICATION................................................... 24
---------------
11.1. Representations and Warranties.................................... 24
11.2. Indemnification by Sellers ....................................... 24
11.3. Indemnification by Buyer.......................................... 25
11.4. Procedure for Indemnification..................................... 25
11.5 Liquidated Damages................................................ 26
11.6 Specific Performance.............................................. 26
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
<C> <S> <C>
11.7 Opportunity to Cure............................................... 27
SECTION 12.MISCELLANEOUS..................................................... 27
-------------
12.1. Fees and Expenses................................................. 27
12.2. Notices........................................................... 27
12.3. Benefit and Binding Effect........................................ 28
12.4. Further Assurances................................................ 28
12.5. Governing Law..................................................... 28
12.6. Headings and References........................................... 28
12.7. Gender and Number................................................. 28
12.8. Entire Agreement.................................................. 28
12.9. Counterparts...................................................... 29
12.10. Attorney's Fees................................................... 29
12.11. Jurisdiction/Venue................................................ 29
</TABLE>
iv
<PAGE>
RADIO STATIONS KWJJ-AM, KWJJ(FM)
Portland, Oregon
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made as of the 14th day of February, 1996,
by and between Roy H. Park Broadcasting of Oregon, Inc. and Contemporary FM,
Inc., both Oregon corporations with offices at 1700 Vine Center Office Tower,
333 West Vine Street, Lexington, Kentucky 40507 (jointly and severally,
"Sellers"), and Fisher Broadcasting Inc., a Washington corporation ("Buyer")
with offices at 100 Fourth Avenue North, Seattle, Washington 98109-4997.
RECITALS
A. Seller Roy H. Park Broadcasting of Oregon, Inc. owns and operates
radio station KWJJ-AM. Seller Contemporary FM, Inc., owns and operates radio
station KWJJ(FM) ("Stations"). Sellers do so pursuant to licenses issued by the
Federal Communications Commission.
B. Sellers desire to sell and Buyer wishes to buy all the assets
used or useful in the operation of the Stations, for the price and on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises contained herein, Buyer and Sellers, intending to
be legally bound hereby, agree as follows:
SECTION 1. DEFINITIONS.
-----------
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
1.1. "Accounts Receivable" means all rights of Sellers to payment for:
(a) the sale of advertising time by the Stations; and (b) services performed by
the Stations.
1.2. "Assets" means the assets of the Stations being sold,
transferred, or otherwise conveyed to Buyer hereunder, as specified in Section
2.1.
1.3. "Assumed Contracts" means: (a) those Contracts listed as Assumed
Contracts in Disclosure Schedule 3.7; (b) all Contracts for the sale of time on
-----------------------
the Stations and all trade or barter agreements which are outstanding on the
Closing Date and which comply with the provisions of Section 3.7; and (c)
Contracts entered into between the date hereof and the Closing Date which comply
with the provisions of Section 5.1(a).
<PAGE>
1.4. "Buyer's Knowledge" (or words of similar import) means any
actual knowledge of those persons listed on Disclosure Schedule 1.4.
-----------------------
1.5. "Claimant" means a party claiming indemnification pursuant to
Section 11.
1.6. "Closing" means the consummation of the transactions contemplated
in this Agreement in accordance with the provisions of Section 9.
1.7. "Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 9.
1.8. "Consents" means the consents, permits, or approvals of third
parties, including governmental authorities, necessary to transfer any of the
Assets to Buyer or otherwise to consummate the transactions contemplated hereby.
1.9. "Contracts" means all contracts, leases, licenses, and other
agreements (including without limitation leases for personal or real property
and employment agreements), written or oral, including any amendments or other
modifications thereto, that relate to the Assets or the operation of each
Station, to which Sellers are a party, including those described in Disclosure
Schedule, together with any additions thereto between the date hereof and the
Closing Date.
1.10. "Disclosure Schedule" means Disclosure Schedule relating to
this Agreement titled "KWJJ-AM, KWJJ(FM) Disclosure Schedule" and heretofore
delivered to Buyer.
1.11. "Effective Time" means 12:01 a.m., Eastern Standard Time on the
Closing Date.
1.12. "Escrow Deposit" means the sum of One Million Seven Hundred
Fifty Thousand U.S. Dollars ($1,750,000) cash which is being deposited by Buyer
with Media Venture Partners (the "Escrow Agent") on the date hereof pursuant to
the terms of an Escrow Agreement among Buyer, Sellers and Escrow Agent, the form
of which is attached hereto as Exhibit A.
1.13. "FCC" means the Federal Communications Commission.
1.14. "FCC Consent" means action by the FCC granting its consent to
the assignment of the FCC Licenses from Sellers to Buyer and granting a waiver
of the provisions of Section 73.3555(c) of the FCC Rules (the "One to a Market
Rule") as contemplated by this Agreement.
1.15. "FCC Licenses" means those Licenses issued by the FCC to
Sellers in connection with the business and operations of the Stations,
including those listed in Disclosure Schedule 1.15, together with any additions
------------------------
or changes thereto between the date
2
<PAGE>
hereof and the Closing Date.
1.16. "Final Order" means an action of the FCC that has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and with respect
to which no timely filed petition for stay, reconsideration or administrative or
judicial appeal or sua sponte action of the FCC with comparable effect is
------
pending and as to which the time for filing any such petition or appeal
(administrative or judicial) or for the taking of any such sua sponte action of
--- ------
the FCC has expired.
1.17. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
1.18. "Indemnitor" means a party from whom indemnification is claimed
pursuant to Section 11.
1.19. "Intangibles" means all copyrights, trademarks, tradenames,
service telephone numbers, marks, service names, licenses, patents, permits, the
call letters "KWJJ-AM and KWJJ(FM)", logos, service marks, computer software,
magnetic media, business and sales lists, program libraries, slogans and
jingles, advertising and promotional materials, privileges, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests applied for, issued
to, or owned by Sellers or under which the Sellers are licensed or franchised
and used or useful in the business and operations of the Stations, including
those listed as Intangibles in Disclosure Schedule 1.19.
-------------------------
1.20. "Licenses" means all licenses, permits, and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration, or any other federal, state, or local governmental
authorities to Sellers in connection with the business and operations of the
Stations, including those listed as Licenses in Disclosure Schedule 2.1(b),
---------------------------
together with any additions thereto between the date hereof and the Closing
Date.
1.21. "Lien" means any mortgage, lease, deed of trust, lien, pledge,
hypothecation, assignment, deposit arrangement, option, right of first refusal,
indenture, license, security interest, encumbrance, right of way, easement,
encroachment or similar arrangement of any kind or nature.
1.22. "Permitted Liens" means: (a) Liens for taxes, assessments, or
similar governmental charges for levies incurred in the ordinary course of
business that are not yet due and payable or as to which any applicable grace
period shall not have expired; and (b) Liens set forth in Disclosure Schedule
-------------------
1.22 and identified as a Permitted Lien.
- ----
1.23. "Personal Property" means the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory
(including all studio and transmission equipment wherever located) and other
tangible personal property used or useful in the operation of the Stations,
including, without limitation, the property identified
3
<PAGE>
and described as Personal Property in Disclosure Schedule 1.23 and all computer
------------------------
discs and tapes, plans, diagrams, blueprints, schematics, and books and records
relating to the operation of the Stations, filings with the FCC and executed
copies of the Contracts, together with any additions thereto between the date
hereof and the Closing Date.
1.24. "Purchase Price" means the purchase price specified in Section
2.3.
1.25. "Real Property" means the interests in real property,
including all leaseholds, easements, licenses, rights to access, and rights of
way, and all improvements thereon, identified and described as Real Property in
Disclosure Schedule 1.25.
- ------------------------
1.26. "Sellers' Knowledge" (or words of similar import) means the
reasonable knowledge of those persons listed as Sellers' representatives in
Disclosure Schedule 1.26.
- -------------------------
1.27. "Stations" means the radio stations described in the first
recital to this Agreement.
SECTION 2. SALE AND PURCHASE OF ASSETS AND OTHER CONSIDERATION.
2.1. Agreement to Sell and Buy. Subject to the terms and conditions
-------------------------
set forth in this Agreement, Sellers hereby agree to sell, transfer and deliver
to Buyer on the Closing Date, and Buyer agrees to purchase, all of the tangible
and intangible assets owned or held by Sellers and used or useful in the
business or operations of the Stations, wherever located, other than the assets
specified in Section 2.2, free and clear of any claims, liabilities, Liens,
conditions, or encumbrances (except for those permitted in accordance with
Sections 3.5 and 3.6 below, and except for any condition that is part of the
express terms of any License or Assumed Contract), including without limitation
the following:
(a) The Personal Property;
(b) The Licenses;
(c) The Real Property;
(d) The Assumed Contracts; and
(e) The Intangibles.
2.2. Excluded Assets. The Assets shall exclude the following assets:
---------------
(a) Sellers' cash on hand and cash equivalents as of the
Effective Time and all other cash and cash equivalents in any of Sellers' bank
accounts, prepaid expenses, any and all insurance policies, bonds, letters of
credit, or other similar items, and any cash surrender value and insurance
proceeds in regard thereto;
4
<PAGE>
(b) All Accounts Receivable of the Stations existing as of the
Effective Time;
(c) All books and records that Sellers are required by law to
retain, and books and records related solely to internal corporate matters;
(d) All claims, rights, and interest in and to any refunds for
federal, state, or local franchise, income, or other taxes or fees of any nature
whatsoever for periods prior to the Effective Time;
(e) Any pension, profit-sharing, or employee benefit plans; and
(f) The items listed as Excluded Assets in Disclosure Schedule
-------------------
2.2.
- ---
2.3. Purchase Price. The purchase price to be paid by Buyer for the
--------------
Assets shall be Thirty-Five Million U.S. Dollars ($35,000,000) plus assumption
of the Assumed Liabilities pursuant to Section 2.6. Prorations of expenses and
revenues shall be made in accordance with Section 7.3.
2.4. Allocation of Purchase Price. At or prior to the Closing, Buyer
----------------------------
and Sellers shall mutually determine the allocation of the Purchase Price in
accordance with Treasury Regulation section 1.1060-1T based upon the approximate
relative fair market values of the Purchased Assets. If Buyer and Seller are
unable to agree on such allocation at or prior to Closing, the allocation shall
be determined promptly after Closing by a nationally recognized appraisal firm
chosen by Buyer and reasonably acceptable by Sellers (it being anticipated that
the Purchase Price will be allocated first to such of the Purchased Assets as
are tangible to the extent of the approximate fair market values thereof on the
Closing Date, with the balance to intangible Purchased Assets). Buyer shall pay
all fees and expenses of such appraisal firm. Sellers and Buyer will report the
federal income tax consequences of the sale and acquisition of the Purchased
Assets under this Agreement in a manner consistent with the foregoing, and will
file Forms 8594 in the manner and at the times required by Treasury Regulation
section 1.1060-1T. Buyer shall prepare drafts of Form 8594 reflecting the
respective Purchase Price allocations determined as provided above in accordance
with Treasury Regulation section 1.1060-1T for Sellers and Buyer, such draft
Forms 8594 to be provided to Sellers within one hundred eighty (180) days
following the Closing Date, but in no event later than the due date, including
extensions, for Sellers' Federal income tax return for the period including the
Closing Date; and Sellers' consent to such drafts shall not be unreasonably
withheld or delayed.
2.5. Payment of Purchase Price. Payment of the Purchase Price for
-------------------------
the Assets shall be made as follows:
(a) Escrow Deposit. The Escrow Deposit shall be held pursuant
--------------
to the Escrow Agreement executed by and among Buyer, Sellers, and Escrow Agent
in the form of Exhibit A hereto. The Escrow Deposit shall be applied toward the
Purchase Price at the time of Closing.
5
<PAGE>
(b) Cash Portion. The balance of the Purchase Price shall be
------------
paid in cash at Closing, by wire transfer of federal funds to an account
designated by Sellers.
(c) Prorations. Prorations of expenses and revenues shall be
----------
made in accordance with Section 7.3.
2.6. Assumption of Liabilities and Obligations.
-----------------------------------------
(a) Assumption. Except as provided in Section 2.6(b), as of
----------
the Effective Time, Buyer shall assume and undertake to pay, discharge, and
perform the following (the "Assumed Liabilities"): (i) insofar as they relate to
the period after the Effective Time, all the obligations and liabilities of
Sellers under the Assumed Contracts; (ii) all obligations and liabilities
arising out of events occurring after the Effective Time related to Buyer's
ownership of the Assets or its operation of the Stations after the Effective
Time; and (iii) any obligations of Sellers assigned to Buyer as part of the
adjustments and prorations pursuant to Section 7.3 of this Agreement. Other than
as specified in this Section 2.6(a), Buyer shall assume no obligations or
liabilities of Sellers.
(b) Limitation. Notwithstanding any provision of this
----------
Agreement to the contrary, Buyer shall not assume: (i) any obligations or
liabilities whether or not under any Contract not included in the Assumed
Contracts; (ii) any obligations or liabilities under the Assumed Contracts
relating to the time period prior to the Effective Time; (iii) any claims or
pending litigation or proceedings relating to any action with respect to the
operation of the Stations prior to the Effective Time; and (iv) any insurance
policies of Sellers. Without limiting the generality of the foregoing, it is
understood and agreed that Buyer is not agreeing to assume any liability or
obligation of Sellers to Sellers' employees, including without limitation, any
liabilities or obligations for wages, salaries, bonuses, accrued vacation, sick
leave or any other form of employee benefit or pay except as specifically set
forth in Section 7.3(b). All such obligations and liabilities shall remain and
be the obligations and liabilities solely of Sellers.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF Sellers.
-----------------------------------------
Sellers represent and warrant to Buyer as follows:
3.1. Organization, Standing, and Authority. Both Sellers are
-------------------------------------
corporations duly organized, validly existing, and in good standing under the
laws of the State of Oregon and each is duly qualified to conduct business and
is in good standing in the State of Oregon. Each Seller has the requisite
corporate power and authority to: (i) own, lease, and use the Assets as now
owned, leased, and used; (ii) conduct the business of operating the Stations as
now conducted; and (iii) execute, deliver, and perform this Agreement and the
documents contemplated hereby according to their respective terms. Sellers have
not been known by or used any other corporate, or any fictitious or other name
in the conduct of the Stations' business or in connection with the use or
operation of the Assets.
6
<PAGE>
3.2. Authorization and Binding Obligation. The execution, delivery,
------------------------------------
and performance of this Agreement by Sellers has been duly authorized by all
necessary corporate actions, including stockholder approval, if required, on the
part of each Seller. This Agreement has been duly executed and delivered by
each Seller and constitutes the legal, valid, and binding obligation of Sellers,
enforceable against Sellers in accordance with its terms except as the
enforceability hereof may be affected by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally.
3.3. Absence of Conflicting Agreements and Required Consents.
-------------------------------------------------------
Subject to obtaining the Consents listed in Disclosure Schedule 3.3 and the FCC
-----------------------
Consent, the execution, delivery, and performance of this Agreement (with or
without the giving of notice, the lapse of time, or both): (i) do not require
the consent of any third party; (ii) will not conflict with any provision of the
Certificate or Articles of Incorporation or By-Laws of each Seller; (iii) will
not conflict with, result in a breach of, or constitute a default under, any
applicable law, judgment, order, ordinance, decree, rule, regulation, or ruling
of any court or governmental instrumentality; (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of, any performance
required by the terms of any Assumed Contract, Permit, financing, debt or equity
agreement or any material agreement, instrument, license, or permit to which
each Seller is a party or by which each Seller may be bound; and (v) will not
create any claim, liability, Lien, charge, or encumbrance upon any of the
Assets.
3.4. Governmental Authorizations. Except as set forth in Disclosure
--------------------------- ----------
Schedule 3.4, each Seller has in effect all the licenses listed on Disclosure
- ------------ ----------
Schedule 1.15, and all other Federal, state, and local governmental approvals,
- -------------
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights ("Permits") necessary for each Seller to own, lease, or operate its
properties and assets and to carry on its business as now conducted, and there
has occurred no default under any such Permit. Except as set forth in
Disclosure Schedule 1.15, the FCC Licenses: (i) constitute all authorizations
- ------------------------
issued to each Seller by the FCC in connection with the operation of the
Stations; (ii) are in full force and effect; (iii) are valid for the balance of
the current license term applicable generally to radio stations licensed in
Oregon; (iv) constitute all authorizations required under the Communications Act
of 1934, as amended, and the rules and regulations of the FCC for the operation
of the Stations substantially as now conducted; (v) are not subject to any
pending or, to Sellers knowledge, threatened FCC investigations or enforcement
or other proceedings which might reasonably be expected to result in the
revocation or non-renewal of such licenses; and (vi) the FCC Licenses are free
and clear of any restrictions which might limit the full operation of the
Stations (other than restrictions under the terms of the licenses themselves and
restrictions imposed by FCC rules). Each Seller is not aware of any reason why
the FCC Licenses would not be renewed in the ordinary course.
3.5. Title to Property. Except as set forth in Disclosure Schedule
-------------------
1.25, each Seller has good and marketable fee simple title to, or valid
- ----
leasehold interests in, all of the Real Property. All of the Real Property is
free and clear of all Liens other than those set forth in Disclosure Schedule
-------------------
1.25 and except for Permitted Liens. Except as set forth in Disclosure Schedule
- ---- -------------------
1.25, each Seller has complied in all respects with the terms of all leases
- ----
7
<PAGE>
to which it is a party and under which it is in occupancy, and all such leases
are in full force and effect, and Sellers enjoy peaceful and undisturbed
possession under all such leases. The Personal Property constitutes all of the
personal property that is used or held by the Sellers or others for use by the
Stations, or necessary to operate each Station as it is now being operated. The
Personal Property is in good operating condition and repair (reasonable wear and
tear excepted), is maintained in compliance with good engineering practice and
is otherwise sufficient to permit the Stations to operate in accordance with the
FCC Licenses, the underlying construction permits of the Stations, and the rules
and regulations of the Commission. To the best of each Seller's knowledge, the
Stations' equipment is type-approved or type-accepted where such type-approval
or type-acceptance is required.
3.6. Leased Real Property. All of the Real Property that is occupied
--------------------
by Sellers pursuant to a lease or license (the "Leased Real Property") is listed
on Disclosure Schedule 1.25 and is held at the rates and for terms ending on the
------------------------
dates shown in said Disclosure Schedule pursuant to the agreements there
described, which are the sole and complete agreements concerning Sellers' use of
Leased Real Property. To each Seller's knowledge: (i) there are no
encroachments upon any Real Property or Leased Real Property; (ii) none of the
buildings, structures or improvements (including without limitation any ground
radials, guy wires or guy anchors) constructed on the Real Property or Leased
Real Property encroach on any adjoining real estate; and (iii) all such
buildings, structures or improvements are constructed in conformity with or are
"grandfathered" with respect to all "setback" lines, easements and other
restrictions or rights of record or that have been established by any applicable
building, safety or zoning code or ordinance. There are no pending, or to each
Seller's knowledge, threatened, condemnation or eminent domain proceedings that
may affect the Real Property or the Lease Real Property.
3.7. Contracts. Except as set forth in Disclosure Schedule 3.7, the
--------- -----------------------
Contracts listed in Disclosure Schedule 3.7 constitute all of the material
-----------------------
agreements which are required to conduct the business of the Stations as it is
presently being conducted except for: (i) contracts with advertisers for the
sale of advertising time on the Stations at the Stations' prevailing rates which
are not prepaid and which may be cancelled by the Stations without penalty on
not more than thirty (30) business days' notice; and (ii) trade or barter
agreements. Except as set forth in Disclosure Schedule 3.7, all Assumed
-----------------------
Contracts material to the operation of the Stations are in full force and effect
and are valid, binding, and enforceable in accordance with their terms, and, to
each Seller's knowledge, there is not under any Assumed Contract material to the
operation of the Stations, any default by any party thereto or any event that,
after notice or lapse of time or both, would constitute a default. Except for
the Consents listed in Disclosure Schedule 3.3 and the FCC Consent, each Seller
-----------------------
has full legal power and authority to assign its rights under the Assumed
Contracts to Buyer in accordance with this Agreement, and the assignment of the
Assumed Contracts to Buyer will not affect the validity, enforceability, or
continuation of any of the Assumed Contracts.
3.8. Consents. Except for compliance with the HSR Act provided for in
--------
Section 7.2, and FCC Consent provided for in Section 7.1 and the other Consents
listed in Disclosure Schedule 3.3, no consent, approval, permit, or
-----------------------
authorization of or declaration to
8
<PAGE>
or filing with any governmental or regulatory authority or any other third party
is required: (i) to consummate this Agreement and the transactions contemplated
hereby; (ii) to permit each Seller to assign or transfer the Assets to Buyer; or
(iii) to enable Buyer to operate the Stations in essentially the same manner as
they are now operated.
3.9. Intangibles. Disclosure Schedule 1.19 lists the Intangibles
----------- ------------------------
registered under Federal or state law as patents, trademarks or service marks
specified in Section 2.1. To each Seller's knowledge, Sellers are not
infringing upon or otherwise acting adversely to any trademarks, tradenames,
service marks, service names, copyrights, patents, patent applications, know-
how, methods, or processes owned by any other person or persons, and there is no
claim or action pending with respect thereto.
3.10. Profit and Loss Statements. Disclosure Schedule 3.10 contains
------------------------
copies of unaudited annual profit and loss statements for the Sellers, for the
fiscal years ending in 1991, 1992, 1993, 1994 and 1995. Except as set forth
thereon, all of such profit and loss statements have been prepared from the
books and records of Sellers in accordance with generally accepted accounting
principles consistently applied and maintained throughout the periods indicated,
to each Seller's knowledge, accurately reflect the books, records, and accounts
of each Seller, and present fairly the financial condition of the Sellers as of
their respective dates and the results of operations for the periods then ended.
3.11. Personnel.
---------
(a) Employees and Compensation. Disclosure Schedule 3.11(a)
-------------------------- ---------------------------
contains: (i) a true and complete list of all persons employed by the Stations
and a description of their compensation; (ii) a description of all employee
benefit plans or arrangements applicable to the employees of the Stations and
all fixed or contingent liabilities or obligations of Sellers with respect to
any person now or formerly employed by Sellers at the Stations, including,
without limitation, pension or thrift plans, individual or supplemental pension
or accrued compensation arrangements, contributions to hospitalization or other
health or life insurance programs, incentive plans, bonus arrangements, and
vacation, sick leave, disability, and termination arrangements or policies,
including worker's compensation policies; and (iii) copies of all applicable
plan documents, trust documents, insurance contracts, contracts with employees,
and summary plan descriptions of the written plans and arrangements described
above. Except as set forth in Disclosure Schedule 3.11(a): (i) all employee
---------------------------
benefits and welfare plans or arrangements described above were established and
have been executed, managed, and administered without material exception in
accordance with all applicable requirements of the Internal Revenue Code, the
Employee Retirement Income Security Act of 1974, as amended, and other
applicable laws; (ii) each Seller is not aware of the existence of any
governmental audit or examination of any of such plans or arrangements or of any
facts that would lead it to believe that any audit or examination is pending or
threatened; and (iii) no action, suit, or claim with respect to any of such
plans or arrangements is pending or, to each Seller's knowledge, threatened.
Except as set forth in Disclosure Schedule 3.11(a), Sellers have not promulgated
---------------------------
any policy or entered into any written agreement relating to the payment of
severance pay to any employee whose employment may be terminated or suspended,
voluntarily or otherwise, by Sellers. Each
9
<PAGE>
Seller has substantially complied with and is not in default in any material
respect under any laws, rules and regulations, relating to employment of labor,
including those relating to wages, hours, equal employment opportunities,
employment of protected minorities (including women and persons over 40 years of
age), collective bargaining and the withholding and payment of taxes and
contributions and has withheld all amounts required or agreed to be withheld
from wages and salaries of its employees, and is not liable for any arrearage of
wages or for any tax or penalty or failure to comply with the foregoing. Each
Seller has not consented to any final decree involving any claim of unfair labor
practice and has not been held in any final judicial proceeding to have
committed any unfair labor practice and there are no material controversies
pending or threatened between Sellers and any of their employees.
(b) Agreements. Except as set forth in Disclosure Schedule
---------- --------------------
3.11(b), each Seller has no contracts of employment with any employee of the
- -------
Stations other than contracts terminable at will or on less than thirty (30)
days notice.
3.12. Claims and Legal Actions. Except as set forth in Disclosure
------------------------ ----------
Schedule 3.12 and except for investigations and rule making proceedings
- -------------
affecting the radio broadcasting industry generally, there is no claim, legal
action, counterclaim, suit, arbitration, governmental investigation, or other
legal, administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or, to each Seller's knowledge, threatened, against or
relating to Sellers, their properties, the Assets, or the business of the
Stations, that, individually or in the aggregate, could reasonably be expected
to: (i) have a material adverse effect on the Sellers or the Stations; (ii)
impair the ability of the Sellers to perform their obligations under this
Agreement; or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement.
3.13. Compliance with Laws. Except as set forth in Disclosure
-------------------- ----------
Schedule 3.13, to each Seller's knowledge Sellers are in compliance with all
- -------------
applicable statutes, laws, ordinances, regulations, rules, judgments, decrees,
or orders of any Governmental Entity, except for possible noncompliance which,
individually or in the aggregate, would not have a material adverse effect on
the Sellers, the Stations or the Assets.
3.14. Environmental. Except as disclosed in Disclosure Schedule
------------- -------------------
3.14:
(a) To each Seller's knowledge, there are no substances or
conditions, in, on, under or emanating from the Real Property, including,
without limitation, surface waters and subsurface waters thereof, which could
support a claim or cause of action under any and all currently applicable
federal, state or local environmental statutes, ordinances, regulations or
guidelines.
(b) To each Seller's knowledge, the Real Property and the
improvements thereon and the use and operations thereof are currently in
compliance with all currently applicable and effective requirements relating to
health, safety, and protection of the environment, and are in compliance with
all permits required thereby, except to the
10
<PAGE>
extent any such noncompliance would not have a material and adverse effect on
the Sellers, the Stations or the Assets.
(c) To each Seller's knowledge, there has been no spillage
or leaks at the Real Property associated with the filling, draining, or use of
any underground storage tanks which requires clean-up or remediation under
currently applicable and effective law.
(d) Each Seller has not generated, treated, stored or disposed
of, nor, in any manner, arranged for disposal or treatment of, any Hazardous
Waste (as defined in the Resource Conservation and Recovery Act 42 U.S.C.
Subsection 6901 et seq.) on the Real Property, and to each Seller's knowledge
-- ---
there is no Hazardous Substance (as hereinafter defined) present on, in or under
the Real Property above any applicable threshold level which now required clean
up or remediation under Section 121 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Subsection 9621. "Hazardous
Substances" for purposes of this Agreement shall mean: (i) hazardous substances
or hazardous wastes, as those terms are defined by the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Subsection
9601 et seq., and/or any other applicable federal, state, or local law,
-- ---
regulation, ordinance or requirement, as in effect on the date hereof; (ii)
petroleum, including but not limited to crude oil or any fraction thereof; (iii)
asbestos in any form or condition; and (iv) any radioactive material, including,
but not limited to, any source, special nuclear or by-product material as
defined at 42 U.S.C. Subsection 2011 et seq., as in effect on the date hereof.
-- ---
(e) Each Seller is not and has not been subject to, or
received any notice of, any private, administrative or judicial action, relating
to the presence or alleged presence of Hazardous Substance in, under, upon or
emanating from the Real Property; and there are no pending or, to each Seller's
knowledge, threatened actions or proceedings from any governmental agency or any
other person or entity regarding any matter relating to health, safety, or
protection of the environment at the Real Property.
(f) To each Seller's knowledge, there are no conditions on
properties adjacent to the Real Property which would reasonably be expected to
prevent continued compliance of the Real Property with any federal, state or
local law, regulation, ordinance or requirement presently in effect relating to
protection of the environment.
(g) To each Seller's knowledge, Sellers do not own, lease,
possess, or control at the Real Property any polychlorinated biphenyls (PCB) or
PCB contaminated fluids or equipment, or any material or substance containing
asbestos.
3.15. Conduct of Business in Ordinary Course; Adverse Change. Except
------------------------------------------------------
as set forth in Disclosure Schedule 3.15, since December 31, 1995, Sellers have
------------------------
conducted the business of the Stations in the ordinary course.
3.16. Taxes. Each Seller has, or by the Closing Date will have, paid
-----
and discharged all taxes, assessments, excises and other levies relating to the
Assets, excepting
11
<PAGE>
such taxes, assessments, and other levies as will not be due until after the
Closing Date and that are to be prorated between Buyer and Sellers hereunder.
3.17. Insurance. Disclosure Schedule 3.17 lists all insurance
--------- ------------------------
policies currently in force and effect relating to the Stations on the Assets.
All premiums are current unless noted on Schedule 3.17.
3.18. Full Disclosure. No representation or warranty made by Sellers
---------------
contained in this Agreement nor any certificate, document, or other instrument
furnished or to be furnished by Sellers pursuant hereto contains or will contain
any untrue statement of material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to Sellers as follows:
4.1. Organization, Standing, and Authority. Buyer is a corporation
-------------------------------------
duly organized, validly existing, and in good standing under the laws of the
State of Washington. Buyer is duly qualified to conduct its business in the
State of Oregon. Buyer has the requisite corporate power and authority to: (i)
own, lease, and use the Assets; (ii) conduct the business of operating the
Stations; and (iii) execute, deliver, and perform this Agreement and the
documents contemplated hereby according to their respective terms.
4.2. Authorization and Binding Obligation. The execution, delivery,
------------------------------------
and performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes a legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3. Absence of Conflicting Agreements and Required Consents.
-------------------------------------------------------
Subject to obtaining the Consents, the execution, delivery, and performance of
this Agreement by Buyer and the documents contemplated hereby (with or without
the giving of notice, the lapse of time, or both): (i) do not require the
consent of any third party; (ii) will not conflict with the Articles of
Incorporation or By-Laws of Buyer; (iii) will not conflict with, result in a
breach of, or constitute a default under, any applicable law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; and (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license or permit to which Buyer is a party or by which
Buyer may be bound, such that Buyer could not acquire or operate the Assets.
12
<PAGE>
4.4. Claims and Legal Actions. There is no action, suit,
------------------------
proceeding, or investigation pending or, to Buyer's knowledge, threatened that,
if decided against Buyer, would materially and adversely affect Buyer's ability
to perform its obligations under this Agreement or the transactions contemplated
thereby.
4.5. Qualification. To Buyer's knowledge, Buyer is qualified
-------------
legally, financially and otherwise to become the assignee of the Licenses,
including the FCC Licenses, under the Communications Act of 1934, as amended
prior to the date of this Agreement, and the rules, regulations and policies of
the FCC as in effect on the date of this Agreement. To Buyer's knowledge, other
than obtaining a waiver by the FCC of the "One to a Market Rule", there are no
facts that could prevent, hinder, discourage, or delay the FCC from issuing the
FCC Consent.
4.6. Full Disclosure. No representation or warranty made by Buyer
---------------
contained in this Agreement nor any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading.
4.7. Reliance. Buyer has not relied on any representation or
--------
statement made by Sellers, or any person acting on Sellers' behalf, except as
specifically provided in this Agreement, the Exhibits and Schedules hereto and
Disclosure Schedule.
SECTION 5. COVENANTS OF SELLERS.
--------------------
5.1. Pre-Closing Covenants. Each Seller covenants and agrees that
---------------------
between the date hereof and the Closing Date, that each Seller will conduct the
business and operations of the Stations diligently in the ordinary course, and,
except as contemplated by this Agreement or with the prior written consent of
Buyer, Sellers will act in accordance with the following:
(a) Contracts. Each Seller will not enter into any contract or
---------
commitment relating to the Stations or the Assets, or amend or terminate any
Assumed Contract (or waive any substantial right thereunder), or incur any
obligation (including obligations relating to the borrowing of money or
guarantee of indebtedness), except in the ordinary course of business and
consistent with the other provisions of this Agreement and the past practices of
the Stations. Sellers will follow their usual and customary policies with
respect to extending credit for sales of time on the Stations and with respect
to collecting accounts receivable arising from such extension of credit.
(b) Encumbrances. Sellers will not create, assume, or permit
------------
to exist any mortgage, pledge, lien, or other charge or encumbrance or rights
affecting any of the Assets, except for those in existence on the date of this
Agreement and disclosed in Disclosure Schedule 1.22 and except for mechanics
------------------------
liens, liens for current taxes which are not yet due and payable, and other
similar liens, which will either be discharged on or before
13
<PAGE>
the Closing or be included in the adjustments and prorations pursuant to Section
7.3 of this Agreement.
(c) Dispositions. Sellers will not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets except: (i) in the ordinary
course of business when such Assets are no longer used or useful in connection
with the operations of the Stations; (ii) in connection with the acquisition of
replacement property of equivalent kind and value; or (iii) dispositions in the
aggregate not in excess of Seventy Five Thousand Dollars ($75,000).
(d) Waivers. Sellers will not waive any material right
-------
relating to the Stations or the Assets, except in the ordinary course of
business.
(e) Licenses. Sellers will not cause or permit, by any act or
--------
failure to act, any of the Licenses to expire or to be surrendered or modified,
or take any action that would cause the FCC or any other governmental authority
to institute proceedings for the suspension, revocation, or adverse modification
of any of the Licenses, or fail to prosecute with due diligence any pending
applications to any governmental authority in connection with the operation of
the Stations, or take any other action within its control that could reasonably
be expected to result in the Stations being in noncompliance in any material
respect with the requirements of the Communications Act of 1934, as amended, or
any other applicable law, or the rules and regulations of the FCC or any other
governmental authority having jurisdiction. Sellers will take all reasonable
steps to defend and protect the integrity of the Stations' signal and service
contours and participate actively in any FCC proceedings of which it becomes
aware (other than those generally affecting the broadcasting industry) which may
reasonably be expected to result in a material adverse affect upon the
operations of the Stations, with the goal of minimizing such effect upon the
Stations.
(f) Consents. Sellers will use best efforts to obtain the
--------
Consents, without any material change in the terms or conditions of any Assumed
Contract that could be materially less advantageous to the Stations than those
pertaining under the Assumed Contract as in effect on the date hereof.
(g) Books. Sellers will maintain the books and records of the
-----
Stations in accordance with prior practice.
(h) Access to Information. Sellers will give to Buyer and its
---------------------
counsel, accountants, engineers, and other authorized representatives reasonable
access to the Assets and to all books and records relating thereto, and will
furnish or cause to be furnished to Buyer and its authorized representatives all
information relating to the Assets that they reasonably request (including any
financial reports and operations reports produced with respect to the Stations).
(i) Maintenance of Assets. Sellers will maintain all of the
---------------------
Stations' property and assets or replacements thereof in their present condition
as represented in this
14
<PAGE>
Agreement, ordinary wear and tear excepted. Sellers will maintain supplies of
inventory and spare parts consistent with past practice.
(j) Compliance with Laws. Sellers will comply in all material
--------------------
respects with all rules and regulations of the FCC, and with all other
applicable laws, rules, and regulations to which it is subject. Upon receipt of
notice of violation of any law, rule, or regulation, Sellers will use reasonable
efforts to contest in good faith or cure the violation prior to the Closing
Date.
(k) Insurance. Sellers will maintain in force the existing
---------
hazard and liability insurance policies, or comparable coverage, for the
Stations and the Assets.
(l) Preservation of Business. Sellers will use its
------------------------
reasonable efforts until the Closing Date to preserve the business and
organization of the Stations intact, to keep available to the Stations their
present employees, and to preserve for the Stations their present relationships
with suppliers and customers and others having business relations with the
Stations.
(m) Title Commitment. Sellers will obtain, at Seller's
----------------
expense, title commitments from Chicago Title Insurance Company on the Multnomah
County Real Property and (from Ticor Title Insurance Company on the Clatsop
County Real Property) to issue owner's standard policies of title insurance
insuring fee simple title to vest in Buyer on Closing to the Real Property
listed in Disclosure Schedule 1.25 containing no exceptions other than as
disclosed in Disclosure Schedule 1.25.
(n) Zoning. Seller will cooperate with and assist Buyer in
------
obtaining the City of Portland's consent to the assignment of Ordinance No.
137657 or in obtaining other action by the City which grants Buyer the continued
right to occupy and carry on business at the Station's studio building as now
conducted, without any modification to the terms thereof that is materially less
advantageous to Buyer. Sellers shall be responsible for all costs incurred in
connection with obtaining such consent or action by the City of Portland.
5.2. Closing Covenant. On the Closing Date, if the conditions set
----------------
forth in Section 8.2 have been satisfied, Sellers will sell, transfer, convey,
assign, and deliver to Buyer the Assets as provided in Section 2 of this
Agreement and make the deliveries provided in Section 9.2 of this Agreement.
5.3. Post-Closing Covenants.
----------------------
(a) Access. Sellers will provide Buyer access and the right
------
to copy for a period of three (3) years from the Closing Date, any books and
records relating to the Assets but not included in the Assets, provided that
such information is kept confidential and is not disclosed by Buyer except as
and to the extent required by applicable law and except as required in the
normal course of Buyer's business.
15
<PAGE>
(b) Further Documents. After the Closing, Sellers will
-----------------
execute and deliver to Buyer any additional bills of sale or other transfer
documents that, in the reasonable opinion of Buyer, may be necessary to ensure,
complete, and evidence the full and effective transfer of the Assets to Buyer
pursuant to this Agreement.
SECTION 6. COVENANTS OF BUYER.
------------------
On the Closing Date, if the conditions set forth in Section 8.1 have
been satisfied, Buyer shall purchase the Assets from Sellers as provided in
Section 2 of this Agreement and shall make the deliveries provided in Section
9.3 of this Agreement.
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS.
--------------------------------
7.1. FCC Consent. The assignment of the FCC Licenses as contemplated
-----------
by this Agreement shall be subject to the prior consent and approval of the FCC.
Promptly upon the execution of this Agreement, Buyer and Sellers shall prepare
for filing with the FCC an appropriate application for FCC Consent, which shall
be filed with the FCC within five (5) business days after the date hereof. All
FCC filing fees shall be paid one-half by Sellers collectively and one-half by
Buyer. The parties shall thereafter prosecute the application with all
reasonable diligence and otherwise use their best efforts to obtain a grant of
the application as expeditiously as practicable. Each party agrees to comply
with any condition imposed on it by the FCC Consent, except that no party shall
be required to comply with a condition if: (i) the condition was imposed on it
as the result of a circumstance the existence of which does not constitute a
breach by such party of any of its representations, warranties, or covenants
hereunder; and (ii) compliance with the condition would have a material adverse
effect upon it (both of which must be present to constitute an "Adverse
Condition"); provided, however, that a condition requiring Buyer to take an
action with respect to the granting of a "One to a Market Rule" and/or to file
periodic reports with the FCC concerning affirmative action and equal employment
opportunity shall not be deemed to have a material adverse effect on Buyer and
therefore be an Adverse Condition. Buyer and Sellers shall oppose any requests
for reconsideration or judicial review of the FCC Consent (but nothing herein
shall be construed to limit any party's right to terminate this Agreement
pursuant to Section 10 of this Agreement). If the Closing shall not have
occurred for any reason within the original effective period of the FCC Consent,
and neither party shall have terminated this Agreement under Section 10.1(c),
the parties shall jointly request an extension of the effective period of the
FCC Consent. No extension of the FCC Consent shall limit the exercise by either
party of its right to terminate the Agreement under Section 10.1.
7.2. HSR Filings. If required for compliance with the HSR Act, as
-----------
soon as possible after the date hereof, but in no event later than thirty (30)
business days after the date hereof, Buyer and Sellers shall prepare and file
all documents with the Federal Trade Commission and the United States Department
of Justice as are required to comply with the HSR Act and shall promptly furnish
all materials thereafter requested by any of the regulatory agencies having
jurisdiction over such filings. Sellers shall pay one-half and Buyer shall pay
one-half of all Hart-Scott-Rodino filing fees.
16
<PAGE>
7.3. Adjustments and Prorations. All revenues arising from the
--------------------------
operation of the Stations up until the Effective Time and all expenses arising
from the operation of the Stations up until the Effective Time, including
business and license fees (including any retroactive adjustments thereof),
utility charges, real and personal property taxes and assessments levied against
the Assets, property and equipment rentals, applicable copyright or other fees,
sales and services charges, and taxes and similar prepaid and deferred items,
shall be prorated between Buyer and Sellers in accordance with the principle
that Sellers shall receive all revenues and be responsible for all expenses,
costs, and liabilities allocable to the period prior to the Effective Time, and
Buyer shall be responsible for all expenses, costs, and obligations allocable to
the period after the Effective Time, subject to the following:
(a) Contracts. There shall be no adjustment and each Seller
---------
shall remain solely liable with respect to any Contracts not included in the
Assumed Contracts, and any other obligation or liability not being assumed by
Buyer in accordance with Section 2.6.
(b) Employee Compensation; Severance. Sellers shall be
--------------------------------
responsible for the payment of all compensation and benefits owed to the
Stations' employees through the Closing Date. Within twenty (20) business days
of the date hereof, Buyer will conduct job interviews with all of the employees
that wish to be interviewed. Within forty-five (45) business days of the date
hereof, Buyer will notify Seller in writing which of the Stations' employees
will be offered positions after the Closing Date. Buyer will be responsible for
the severance costs listed on Disclosure Schedule 3.11 (a), for each of the
----------------------------
Stations' employees interviewed and not offered such employment after the
Closing Date. In no event will the total amount of Buyer's costs associated with
this Paragraph 7.3(b) exceed the total amount listed on Disclosure Schedule
-------------------
3.11(a). Seller is solely responsible for any other termination costs due
- -------
Stations' employees. Seller is free to pay Stations' employees additional
termination or retention benefits as it may see fit, for which Buyer has no
responsibility whatsoever. Buyer shall reimburse Seller, or Seller shall receive
a credit at closing, for severance payments incurred in accordance with
Disclosure Schedule 3.11(a).
- ---------------------------
(c) Trade and Barter. To the extent that the aggregate value
----------------
by which each Station's post-closing obligations under trade, barter or similar
arrangements for the sale of advertising time (with the exception of program
barter agreements) is greater than the aggregate value of the goods, services or
other items to be received by each Station after the Closing, Buyer shall be
entitled to receive the difference; provided, however, that such adjustment or
proration shall not be made unless such difference is more than Ten Thousand
Dollars ($10,000). Sellers shall not enter into any new such arrangements that
cannot be satisfied in full by the Closing without the Buyer's express written
consent. Buyer shall receive a credit for any amount by which the aggregate
amount paid to Sellers under prepaid time sales contracts exceeds the value or
advertising attributable to such payments which is required to be run by the
Stations after the Closing pursuant to the terms of such contracts.
(d) Manner of Determining Prorations. The prorations pursuant
--------------------------------
to this Section 7.3. will be determined in accordance with the following
procedures:
17
<PAGE>
(i) No later than sixty (60) business days after the
Closing Date, Buyer will deliver to Sellers a statement setting forth Buyer's
determination of the settlement prorations pursuant to Section 7.3, which shall
be certified by Buyer to be true and complete as of the Closing Date. If Sellers
dispute the amount of the settlement prorations determined by Buyer, Sellers
shall deliver to Buyer within thirty (30) business days after their receipt of
Buyer's statement a statement setting forth its determination of the amount of
the settlement prorations. If Sellers notify Buyer of their acceptance of
Buyer's statement, or the Sellers fail to deliver their statement within the 30-
day period specified in the preceding sentence, Buyer's determination of the
settlement prorations shall be conclusive and binding on the parties as of the
last day of the 30-day period.
(ii) Buyer and Sellers shall use their good faith
efforts to resolve any dispute involving the determination of the settlement
prorations. Each party shall provide the other party with access and the right
to copy any books and records in its possession relating to its determination of
the settlement prorations. If the parties are unable to resolve the dispute
within fifteen (15) business days following the delivery of Sellers' statement,
the Buyer and the Sellers shall each select an independent certified public
accountant, who shall be knowledgeable and experienced in the operation of radio
broadcasting stations, and the two accountants so chosen shall attempt to
resolve the dispute. If said accountants are not able to do so within forty-five
(45) business days following the delivery of Sellers' statement, the two
accountants shall agree upon a third accountant, and the dispute shall be
resolved by the decision of the majority of the accountants, which shall be
conclusive and binding on the parties. Any fees of the accountants shall be
split equally between the parties.
(e) Payment of Purchase Price and Prorations. The Purchase
----------------------------------------
Price and settlement prorations shall be paid as follows:
(i) Payment of Purchase Price. Buyer shall pay or
-------------------------
cause to be paid to Sellers at the Closing the Purchase Price.
(ii) Payments to Reflect Final Determination of
------------------------------------------
Prorations.
- ----------
(1) If the aggregate of the prorations and
adjustments, as finally determined pursuant to Section 7.3(d)(i) and Section
7.3(d)(ii) (the "Prorations") results in an amount due from Buyer to Sellers,
Buyer shall pay such amount to Sellers, in immediately available funds within
five days after the date on which the Prorations are so determined.
(2) If the Prorations result in an amount due from
Sellers to Buyer, Buyer shall retain an amount equal to such amount from amounts
collected by Buyer pursuant to Section 7.6 with respect to Sellers' accounts
receivable. Any amounts collected by Buyer with respect to Sellers' accounts
receivable and not permitted to be retained pursuant to this paragraph shall be
remitted to Sellers in accordance with Section 7.6. If the amounts of Prorations
due from Sellers to Buyer exceeds the amount of Sellers' accounts receivable
collected by Buyer prior to the date on which the Prorations are
18
<PAGE>
determined, Sellers shall pay to Buyer, in immediately available funds within
five days after the date on which the Prorations are is determined, the
difference between the amount owed to Buyer with respect to the Prorations,
reduced by the amount of Sellers' accounts receivable collected by Buyer which
have not already been remitted to Sellers prior to the date on which the
Prorations are determined. Buyer shall be entitled to retain the amount of
Sellers' accounts receivable collected by Buyer prior to the date on which the
Prorations are determined, and, if Sellers make the payment to Buyer provided
for in this paragraph, Buyer shall remit to Sellers in accordance with Section
7.6 any amounts subsequently collected by Buyer with respect to Sellers'
accounts receivable.
7.4. Risk of Loss. The risk of loss or damage to any of the Assets
------------
from fire or other casualty or cause shall be upon Sellers at all times up to
the Closing on the Closing Date. If material loss or damage to the Assets
occurs, Sellers shall have the option: (i) to repair or cause to be repaired and
to restore the assets to their condition prior to any such loss or damage; or
(ii) subject to the agreement of Buyer, to reduce the Purchase Price by the
amount of insurance proceeds received in connection with such loss or damage.
In the event of any such loss or damage, Sellers shall notify Buyer promptly of
same in writing, specifying with particularity the loss or damage incurred, the
cause thereof, if known or reasonably ascertainable, and the insurance coverage.
The proceeds of any claim for any loss payable under any insurance policy with
respect thereto shall, at the option of Sellers, be used to repair, replace or
restore any such property to its former condition subject to the conditions
stated below. If Sellers have notified Buyer that they elect to repair, replace
or restore the Property and the property is not completely repaired, replaced or
restored on or before the Closing Date specified in Section 9, the Buyer, at its
sole option, may: (i) postpone the Closing until such time as the property has
been completely repaired, replaced or restored, and, if necessary, the parties
shall join in an application or applications requesting the FCC to extend the
effective period of its consent to the assignment application; (ii) consummate
the Closing and accept the property in its then condition, in which event
Sellers shall assign to Buyer all proceeds of insurance covering the property
involved, provided Seller ensures said proceeds are sufficient to repair said
damages.
7.5. Confidentiality. Each party hereto will keep confidential any
---------------
information obtained from the other party in connection with the transactions
contemplated by this Agreement. If this Agreement is terminated and the
purchase and sale contemplated hereby abandoned, each party will return to the
other party all information obtained by it in connection with the transactions
contemplated hereby, and will provide a certificate to that effect. No public
announcement concerning the subject matter of this Agreement shall be made by
either party without the approval of the other as to the announcement's content
and timing, which approval shall not unreasonably be withheld.
7.6. Collection of Accounts Receivable. Buyer agrees to use its
---------------------------------
best efforts to collect Sellers' accounts receivable in the normal and ordinary
course of business as Sellers' agent for collection and will apply all such
amounts collected to the debtor's oldest account receivable (unless and only to
the extent that such debtor disputes that such account receivable is properly
due); provided, however, that such obligation and authority shall not extend to
the institution of litigation, employment of counsel or a collection agency or
any
19
<PAGE>
other extraordinary means of collection unless authorized in writing by Sellers.
Buyer agrees to cooperate fully with Sellers as to any litigation or other
collection efforts instituted by Sellers to collect delinquent accounts
receivable. On or before the 15th day of each month, Buyer shall deliver to
Sellers a statement or report showing all such collections effected since the
last previous report, together with a check or draft for the amount of such
collections. If authorized by Sellers, and at Sellers' expense, Buyer shall
have full power and authority as Sellers' agent for collection to settle
disputes, effect compromises, institute and terminate suits relating thereto and
generally to pursue such collections in accordance with Buyer's customary
collection procedures, including employment of counsel or a collection agency or
any other extraordinary means, in all instances acting as agent for Sellers but
without any necessity to disclose that fact. If necessary or advisable in
Buyer's sole discretion, Buyer may effect any or all such collections and
perform authorized acts relating thereto as agent for an undisclosed principal.
If at any time Buyer determines that any such accounts are uncollectible, Buyer
shall notify Sellers of such determination and upon Sellers' written request
shall furnish or make available to Sellers all records, files and data relating
to such accounts and Buyer's determination of uncollectibility. Except as
expressly provided herein, Buyer shall have no responsibility for any obligation
regarding any of Sellers' accounts receivable. Buyer's obligation to collect
accounts receivable as Sellers' agent shall expire at the end of the fourth full
month following the Closing Date, and, within fifteen (15) days after the end of
such month, Buyer shall render a final statement or report showing accounts
collected and uncollected.
7.7. Intentionally Omitted.
---------------------
7.8. Brokers.
-------
(a) Sellers' Broker. Sellers represent and warrant to Buyer
---------------
that except for its retention of Media Venture Partners (for which Sellers
acknowledge full responsibility) neither they nor any person or entity acting on
their behalf has agreed to pay a commission, finder's fee, or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, nor has it or any person or entity acting on its behalf taken any action
on which a claim for any such payment could be based.
(b) Buyer's Broker. Buyer represents and warrants to Sellers
--------------
that neither it nor any person or entity acting on its behalf has agreed to pay
a commission, finder's fee, or similar payment in connection with this Agreement
or any matter related hereto to any person or entity, nor has it or any person
or entity acting on its behalf taken any action on which a claim for any such
payment could be based. Buyer hereby agrees to indemnify and hold harmless
Sellers and their parent and affiliated corporations from and against any claim
that Buyer or any person or entity acting on its behalf has agreed to pay a
commission, finder's fee, or similar payment in connection with this Agreement
or any matter related hereto to any person or entity.
7.9. Cooperation. Buyer and Sellers shall cooperate fully with each
-----------
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their obligations under this Agreement,
and Buyer and Sellers will use their
20
<PAGE>
best efforts to consummate the transactions contemplated hereby and to fulfill
their obligations hereunder.
7.10. Control of the Stations. Prior to Closing, Buyer shall not,
-----------------------
directly or indirectly, control, supervise, or direct, or attempt to control,
supervise or direct the operations of the Stations; those operations, including
complete control and supervision of all of the Stations' programs, employees,
and policies, shall be the sole responsibility of Sellers.
7.11. Consultation. Subject to the provisions of Section 7.10,
------------
between the date hereof and the Closing, Sellers will consult with Buyer's
management with a view to informing such management as to the operation,
management, and business of the Stations.
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS.
----------------------------------------------
8.1. Conditions to Obligations of Buyer. All obligations of Buyer at
----------------------------------
the Closing hereunder are subject at Buyer's option to the fulfillment prior to
or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
------------------------------
warranties of Sellers contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Sellers shall have performed and
------------------------
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or at
the Closing Date.
(c) FCC Consent. The FCC Consent shall have been granted and
-----------
shall have become a Final Order, without the imposition on Buyer of an Adverse
Condition.
(d) HSR Matters. If applicable, the waiting period (and any
-----------
extension thereof) under the HSR Act shall have expired and there shall not be
outstanding any order of a court restraining the transaction contemplated
hereby.
(e) Deliveries. Sellers shall have made or stand willing to
----------
make all the deliveries to Buyer set forth in Section 9.2.
(f) Consents. Sellers shall have obtained and delivered to
--------
Buyer all necessary consents to the assignment to Buyer of Sellers' rights under
the Assumed Contracts and no Consent relating to an Assumed Contract shall have
as a condition thereof any modification to the terms thereof that is materially
less advantageous to the Stations or require any payment by Buyer to consummate
the assignment thereof.
(g) Title Insurance. Buyer shall have received Chicago Title
---------------
Insurance Company's and Ticor Title Insurance Company's commitments to issue
policies of title insurance on the Real Property as provided in Section 5.1(m).
21
<PAGE>
(h) Zoning. Buyer shall have received the consent or other
------
action of the City of Portland under Section 5.1(n).
8.2. Conditions to Obligations of Sellers. All obligations of
------------------------------------
Sellers at the Closing hereunder are subject at Sellers' option to the
fulfillment prior to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
------------------------------
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have performed and
------------------------
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to and
at the Closing Date.
(c) FCC Consent. The FCC Consent shall have become a Final
-----------
Order without the imposition on Seller of an Adverse Condition.
(d) HSR Act. If applicable, the waiting period (and any
-------
extension thereof) under the HSR Act shall have expired and there shall not be
outstanding any order of a court restraining the transaction contemplated
hereby.
(e) Deliveries. Buyer shall have made or stand willing to make
----------
all the deliveries set forth in Section 9.3.
SECTION 9. CLOSING AND CLOSING DELIVERIES.
------------------------------
9.1. Closing.
-------
(a) Closing Date. The Closing shall take place at 10:00 a.m.
------------
on a date as agreed to by Buyer and Seller within five (5) business days
following the later of: (i) the date upon which the FCC Consent has become a
Final Order; and (ii) the expiration of the waiting period (and any extension
thereof) under the HSR Act.
(b) Closing Place. The Closing shall be held at the offices
-------------
of Eckert Seamans Cherin & Mellott, One International Place, 18th Floor, Boston,
MA 02110, or any other place that is agreed upon by Buyer and Sellers.
9.2. Deliveries by Sellers. Prior to or on the Closing Date,
---------------------
Sellers shall deliver to Buyer the following in form and substance reasonably
acceptable to Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale,
------------------
certificates of title and other transfer documents which shall be sufficient to
vest good title to the Assets in the name of Buyer, free and clear of all
claims, encumbrances and liens other than Permitted Liens.
22
<PAGE>
(b) Consents. A copy of each Consent.
--------
(c) Resolutions. Copies of the by-laws of Seller and the
-----------
resolutions adopted by the Boards of Directors and, if required, stockholders,
of Sellers, authorizing, and approving the execution of this Agreement and the
consummation of the transactions contemplated hereby, certified by the Secretary
each Seller as being true and complete on the Closing Date.
(d) Certificate. A certificate, dated as of the Closing Date,
-----------
executed by an authorized officer of each Seller, certifying: (i) that Seller
has obtained proper corporate authorization, including the consent of
stockholders, necessary to the consummation of this Agreement; (ii) that the
representations and warranties of Seller contained in this Agreement are true
and complete in all material respects as of the Closing Date as though made on
and as of that date; and (iii) that Seller has performed in all material
respects all of its obligations and agreements and complied in all material
respects with all of its covenants set forth in this Agreement to be performed
and complied with on or prior to the Closing Date.
(e) Opinion of Counsel. The opinion of Eckert Seamans Cherin &
------------------
Mellott, counsel to Seller, and Gardner, Carton & Douglas, special FCC counsel
to Sellers, covering those matters customary in transactions of this type.
9.3. Deliveries by Buyer. Prior to or on the Closing Date, Buyer
-------------------
shall deliver to Sellers the following, in form and substance reasonably
satisfactory to Sellers and their counsel:
(a) Purchase Price. The Purchase Price as provided in Section
--------------
2.3.
(b) Assumption Agreement. A duly executed assumption
--------------------
agreement, pursuant to which Buyer will assume and undertake to perform Sellers'
obligations under the Assumed Contracts arising after the Effective Time, to the
extent specified in Section 2.6.
(c) Resolutions. Copies of resolutions adopted by Buyer,
-----------
authorizing and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby, certified by its Secretary as being
true and correct on the Closing Date. and
(d) Certificate. A certificate, dated as of the Closing Date,
-----------
executed on behalf of Buyer by the President of Buyer, certifying: (i) that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of the Closing Date as though made on and
as of that date; and (ii) that Buyer has performed in all material respects all
of its obligations and agreements and complied in all material respects with all
of its covenants set forth in this Agreement to be performed or complied with on
or prior to the Closing Date.
23
<PAGE>
(e) Opinion of Counsel. The opinion of Graham & Dunn,
------------------
counsel for Buyer, covering those matters customary in transactions of this
type.
SECTION 10.TERMINATION.
-----------
10.1. Termination Rights. This Agreement may be terminated by either
------------------
Buyer or Sellers, if the terminating party is not then in material breach or
default, upon written notice to the other party, upon the occurrence of any of
the following:
(a) Conditions. If on the Closing Date any of the conditions
----------
precedent to the obligations of the terminating party set forth in this
Agreement have not been satisfied or waived in writing by the terminating party.
(b) Judgments. If there shall be in effect on the Closing
---------
Date any judgment, decree, or order that would prevent or make unlawful the
Closing of this Agreement.
(c) Upset Date. If the Closing Date shall not have occurred on
----------
or before January 31, 1997.
(d) Breach. If either Buyer or Sellers fail to perform or
------
breaches any of its representations and warranties, obligations or covenants
under this Agreement and such breach is not cured as provided under Section
11.7.
(e) FCC Waiver. In the event Buyer fails to procure a "One
----------
to a Market Rule" waiver from the FCC at any time prior to and including the
Upset Date, (including any time available for Buyer's appeal of such FCC order
prior to but not beyond the Upset Date).
10.2. Disposition of Escrow Deposit. The Escrow Deposit (including
-----------------------------
all earnings thereon) shall be forfeited by Buyer and shall become the property
of Seller in the event: (i) Seller terminates this Agreement pursuant to Section
10.1(d) or (ii) Seller terminates this Agreement pursuant to Section 10.1(e) in
which case fifty percent (50%) of the Escrow Deposit is retained by Sellers with
the remainder returned to Buyer. In all other instances, the Escrow Deposit and
all earnings thereon shall be returned to Buyer.
SECTION 11.SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
----------------------------------------------
INDEMNIFICATION.
---------------
11.1. Representations and Warranties. Except as otherwise
------------------------------
specifically set forth herein, all representations and warranties contained in
this Agreement shall survive the Closing for a period of twelve (12) months.
11.2. Indemnification by Sellers. From and after the Closing, each
--------------------------
Seller hereby agrees, subject to Section 11.4(e), to indemnify and hold Buyer
and its officers,
24
<PAGE>
directors, shareholders and affiliates harmless against and with respect to, and
shall reimburse Buyer for:
(a) Breach. Any and all losses, liabilities, claims, actions,
------
or damages and expenses resulting from any untrue representation, breach of
warranty, or nonfulfillment of any covenant by Sellers contained herein or in
any certificate, document, or instrument delivered to Buyer hereunder.
(b) Obligations. Any and all obligations of Sellers not
-----------
assumed by Buyer pursuant to the terms of this Agreement, including any and all
liabilities arising at any time under any Contract not included in the Assumed
Contracts.
(c) Ownership. Any and all losses, liabilities, or damages
---------
resulting from the operation or ownership of the Stations or the Assets prior to
the Effective Time, including any and all liabilities arising under the Licenses
or the Contracts which relate to events occurring prior to the Effective Time.
(d) Legal Matters. Any and all actions, suits, proceedings,
-------------
claims, demands, assessments, judgments, costs, and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
11.3. Indemnification by Buyer. Notwithstanding the Closing, Buyer
------------------------
hereby agrees to indemnify and hold Sellers and their officers, directors,
shareholders and affiliates harmless against and with respect to, and shall
reimburse Sellers for:
(a) Breach. Any and all losses, liabilities, claims, actions or
------
damages and expenses resulting from any untrue representation, breach of
warranty, or nonfulfillment of any covenant by Buyer contained herein or in any
certificate, document, or instrument delivered to Sellers hereunder.
(b) Ownership. Any and all losses, liabilities, or damages
---------
resulting from the operation or ownership of the Stations on and after the
Effective Time, including any and all liabilities arising under the Licenses or
the Assumed Contracts which relate to events occurring after the Effective Time.
(c) Legal Matters. Any and all actions, suits, proceedings,
-------------
claims, demands, assessments, judgments, costs and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
11.4. Procedure for Indemnification. The procedure for
-----------------------------
indemnification shall be as follows:
(a) Notice. The Claimant shall promptly (but in any event
------
within fifteen (15) business days) give notice to the Indemnitor of any claim,
whether solely
25
<PAGE>
between the parties or brought by a third party, specifying (i) the factual
basis for the claim, and (ii) the amount of the claim.
(b) Investigation. With respect to claims between the parties,
-------------
following receipt of notice from the Claimant of a claim, the Indemnitor shall
have thirty (30) business days to make any investigation of the claim that the
Indemnitor deems necessary or desirable. For the purposes of this
investigation, the Claimant agrees to make available to the Indemnitor and/or
its authorized representatives the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnitor cannot agree as to
the validity and amount of the claim within said 30-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate legal remedy.
(c) Control. With respect to any claim by a third party as to
-------
which the Claimant is entitled to indemnification hereunder, the Indemnitor
shall have the right at its own expense to participate in or assume control of
the defense of the Claim, and the Claimant shall cooperate fully with the
Indemnitor, subject to reimbursement for actual out-of-pocket expenses incurred
by the Claimant as the result of a request by the Indemnitor. If the Indemnitor
elects to assume control of the defense of any third-party claim, the Claimant
shall have the right to participate in the defense of the claim at its own
expense. If the Indemnitor does not elect to assume control or otherwise
participate in the defense of any third party claim within fifteen (15) business
days of notice under Section 11.4(a), it shall be bound by the results obtained
by the Claimant with respect to the claim.
(d) Immediate Action. If a claim, whether between the parties
----------------
or by a third party, requires immediate action, the parties will make every
effort to reach a decision with respect thereto as expeditiously as possible.
(e) Limitations on Indemnification.
------------------------------
(1) Any indemnity payment hereunder shall be limited to
the extent of the actual loss or damage suffered by the Claimant.
(2) No party shall be entitled to indemnification
hereunder except to the extent that the total amount of its claims for
indemnification exceeds Fifty Thousand Dollars ($50,000). No party shall be
entitled to indemnification hereunder for any claim arising from the breach by
the other party of its representations and warranties which is not asserted
against the Indemnitor within twelve (12) months after the Closing Date.
(3) The limitations in Section 11.4(e)(2) shall not
apply to any claim for indemnification for any liability of the Claimant to any
third party, to the adjustments and prorations to be made pursuant to Section
7.3, or to Buyer's obligations with respect to Sellers' Accounts Receivable as
set forth in Section 7.6.
11.5 Liquidated Damages. If this Agreement is terminated by Sellers
------------------
pursuant to Section 10.1(d) or Section 10.1(e), disposition of the Escrow
Deposit shall be made in accordance with Section 10.2. It is agreed that any
Escrow Deposit payments to
26
<PAGE>
Sellers shall be considered as liquidated damages and constitute full payment
for any and all damages suffered by Sellers by reason of Buyer's failure to
close this Agreement. Buyer and Sellers agree in advance that Sellers' actual
damages if Buyer breaches its obligations hereunder would be difficult to
ascertain and that the amount of the Escrow Deposit paid to Sellers is a fair
and equitable amount to reimburse Sellers for damages sustained from the
termination of this Agreement for the reason stated in the first sentence of
this Section 11.5.
11.6 Specific Performance. The parties recognize that if Sellers
--------------------
refuse to Close as and when required under the provisions of this Agreement,
monetary damages will not be adequate to compensate Buyer for its injury. Buyer
shall therefore be entitled, in addition to a right to collect money damages, to
obtain specific performance of the terms of this Agreement. If any action is
brought by Buyer to enforce this Agreement, Sellers shall waive the defense that
there is an adequate remedy at law.
11.7 Opportunity to Cure. Neither party shall have the right to
-------------------
terminate this Agreement as a result of the other party's default unless the
terminating party shall have given the defaulting party written notice
specifying in reasonable detail the nature of the default and shall have
afforded the defaulting party fifteen (15) business days to cure the default.
SECTION 12.MISCELLANEOUS.
-------------
12.1. Fees and Expenses. Sellers shall pay one-half and Buyer shall
-----------------
pay one-half of all HSR Act and FCC filing fees (including any subsequently
instituted tax on the assignment of FCC licenses). Sellers shall bear the cost
of all other filing fees, transfer taxes, sales taxes, document stamps, or other
charges levied by any governmental entity on account of or in connection with
the transfer of the Assets from Sellers to Buyer. Except as otherwise provided
in this Agreement, each party shall pay its own expenses incurred in connection
with the authorization, preparation, execution, and performance of this
Agreement, including, without limitation, all fees and expenses of counsel,
accountants, agents, and representatives.
12.2. Notices. All notices, demands, and requests required or
-------
permitted to be given under the provisions of this Agreement shall be in writing
and shall be deemed to have been duly delivered and received: (i) on the date of
personal delivery; (ii) on the date of receipt (as shown on the return receipt)
if mailed by registered or certified mail, postage prepaid and return receipt
requested; or (iii) on the next business day after delivery to a courier service
that guarantees delivery on the next business day if the conditions to the
courier's guaranty are complied with, in each case addressed as follows:
If to Sellers: Roy H. Park Broadcasting of Oregon, Inc./Contemporary FM,
Inc.
1700 Vine Center Office Tower
333 West Vine Street
Lexington, KY 40507
Attn: Wright M. Thomas, President
27
<PAGE>
with a copy
to: Stephen I. Burr, Esquire
Eckert Seamans Cherin & Mellott
One International Place, 18th Floor
Boston, MA 02110
If to Buyer: Fisher Broadcasting Inc.
100 Fourth Avenue South
Seattle, Washington 98109-4997
Attn: Patrick M. Scott, President and CEO
with a copy
to: Jack G. Strother, Esq.
Graham & Dunn
1420 Fifth Avenue
33rd Floor
Seattle, Washington 98101-2390
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 12.2.
12.3. Benefit and Binding Effect. None of the parties hereto may
--------------------------
assign this Agreement without the prior written consent of the other party
hereto. Any assignment to which a party consents shall not release the
assigning party from its duties and obligations under this Agreement. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
12.4. Further Assurances. The parties shall execute any other
------------------
documents that may be necessary or desirable to the implementation and
consummation of this Agreement.
12.5. Governing Law. This Agreement shall be governed, construed,
-------------
and enforced in accordance with the laws of the State of Oregon (without regard
to the choice of law provisions thereof).
12.6. Headings and References . The headings and table of contents
-----------------------
herein are included for ease of reference only and shall not control or affect
the meaning or
28
<PAGE>
construction of the provisions of this Agreement. For purpose of this
Agreement, the words "hereof", "herein", "hereby", and other words of similar
import refer to this Agreement as a whole, including all Appendices, Annexes and
Schedules hereto. Reference herein to Articles, Sections, Appendices, Annexes
and Schedules unless otherwise designated, shall be to the relevant Articles,
Sections, Appendices, Annexes and Schedules hereof and hereto. All dollar
amounts referred to herein are in United States Dollars.
12.7. Gender and Number. Words used herein, regardless of the gender
-----------------
and number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine, or neuter, and any other number, singular or
plural, as the context requires.
12.8. Entire Agreement. This Agreement, all schedules hereto, and
----------------
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Sellers with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
12.9. Counterparts. This Agreement may be signed in two or more
------------
counterparts, with the same effect as if the signature on each counterpart were
upon the same instrument.
12.10.Attorney's Fees. In the event of any dispute between the
---------------
parties to this Agreement, the prevailing party in any action or proceeding
shall be entitled to recover from the other party its costs and expenses,
including its reasonable attorneys' fees.
12.11.Jurisdiction/Venue. Any litigation instituted to enforce the
------------------
terms of this Agreement shall be venued in the appropriate state or federal
courts in Portland, Oregon, as to which jurisdiction Buyer and Sellers hereby
consent.
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
officers of Buyer and Sellers as of the date first written above.
FISHER BROADCASTING INC.
By: __________________________________
Name: Patrick M. Scott
Title: President and CEO
29
<PAGE>
ROY H. PARK BROADCASTING OF
OREGON, INC.
By:_______________________________________
Name: Wright M. Thomas
Title: President
By: ______________________________________
Name: Gary B. Knapp
Title: Director
By: _____________________________________
Name: Donald R. Tomlin, Jr.
Title: Director
CONTEMPORARY FM, INC.
By: _____________________________________
Name: Wright M. Thomas
Title: President
By: ______________________________________
Name: Gary B. Knapp
Title: Director
By: _______________________________________
Name: Donald R. Tomlin, Jr.
Title: Director
30
<PAGE>
Exhibit 2.2
RADIO STATIONS KSGS-AM, KMJZ-FM
Minneapolis, Minnesota
ASSET PURCHASE AGREEMENT
by and between
ROY H. PARK BROADCASTING OF MINNESOTA, INC.
AND ROY H. PARK BROADCASTING OF THE LAKE COUNTRY, INC. ("Sellers")
and
NATIONWIDE COMMUNICATIONS INC. ("Buyer")
Date: February ___, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. DEFINITIONS ...................................... 1
1.1 "Accounts Receivable" ............................ 1
1.2 "Assets" ......................................... 1
1.3 "Assumed Contracts" .............................. 1
1.4 "Buyer's Knowledge" .............................. 2
1.5 "Claimant" ....................................... 2
1.6 "Closing" ........................................ 2
1.7 "Closing Date" ................................... 2
1.8 "Consents" ....................................... 2
1.9 "Contracts" ...................................... 2
1.10 "Disclosure Schedules" ........................... 2
1.11 "Effective Time" ................................. 2
1.12 "Escrow Deposit" ................................. 2
1.13 "FCC" ............................................ 2
1.14 "FCC Consent" .................................... 3
1.15 "FCC Licenses" ................................... 3
1.16 "Final Order" .................................... 3
1.17 "HSR Act" ........................................ 3
1.18 "Indemnitor" ..................................... 3
1.19 "Intangibles" .................................... 3
1.20 "Leased Real Property" ........................... 3
1.21 "Licenses" ....................................... 3
1.22 "Lien" ........................................... 3
1.23 "Permitted Liens" ................................ 4
1.24 "Personal Property" .............................. 4
1.25 "Purchase Price" ................................. 4
1.26 "Real Property" .................................. 4
1.27 "Required Consents" .............................. 4
1.28 "Sellers' Knowledge" ............................. 4
1.29 "Stations" ....................................... 4
SECTION 2. SALE AND PURCHASE OF ASSETS AND OTHER
CONSIDERATION .................................... 4
2.1 Agreement to Sell and Buy ........................ 4
2.2 Excluded Assets .................................. 5
2.3 Purchase Price ................................... 5
2.4 Allocation of Purchase Price ..................... 5
2.5 Payment of Purchase Price ........................ 6
2.6 Assumption of Liabilities and Obligations ........ 6
</TABLE>
i
<PAGE>
TABLE OF CONTENTS (continued)
-----------------
<TABLE>
Page
----
<C> <S> <C>
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS ......... 7
3.1 Organization, Standing, and Authority ............. 7
3.2 Authorization and Binding Obligation .............. 7
3.3 Absence of Conflicting Agreements
and Required Consents ............................. 7
3.4 Governmental Authorizations ....................... 7
3.5 Title to Property ................................. 8
3.6 Real Property; Leased Real Property ............... 8
3.7 Contracts ......................................... 9
3.8 Consents .......................................... 9
3.9 Intangibles ....................................... 9
3.10 Profit and Loss Statements ........................10
3.11 Personnel .........................................10
3.12 Claims and Legal Actions ..........................11
3.13 Compliance with Laws ..............................11
3.14 Environmental .....................................11
3.15 Conduct of Business in
Ordinary Course; Adverse Change ...................13
3.16 Taxes. ............................................13
3.17 Insurance .........................................13
3.18 Full Disclosure ...................................13
3.19 Public Inspection Files ...........................13
3.20 No Insolvency .....................................13
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER ...........13
4.1 Organization, Standing, and Authority .............13
4.2 Authorization and Binding Obligation ..............14
4.3 Absence of ConflictingAgreements
and Required Consents .............................14
4.4 Claims and Legal Actions ..........................14
4.5 Qualification .....................................14
4.6 Full Disclosure ...................................14
4.7 Reliance ..........................................15
SECTION 5. COVENANTS OF SELLERS ..............................15
5.1 Pre-Closing Covenants .............................15
5.2 Closing Covenant ..................................17
5.3 Post-Closing Covenants ............................17
SECTION 6. COVENANTS OF BUYER ................................18
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS (continued)
-----------------
<TABLE>
<C> <S> <C>
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS ..................18
7.1 FCC Consent .......................................18
7.2 HSR Filings .......................................18
7.3 Adjustments and Prorations ........................18
7.4 Risk of Loss ......................................21
7.5 Confidentiality ...................................21
7.6 Collection of Accounts Receivable .................22
7.7 Covenants Not to Compete ..........................22
7.8 Brokers ...........................................23
7.9 Cooperation .......................................24
7.10 Control of the Stations ...........................24
7.11 Consultation ......................................24
7.12 Removal of Certain Equipment ......................24
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS ....24
8.1 Conditions to Obligations of Buyer ................24
8.2 Conditions to Obligations of Sellers ..............26
SECTION 9. CLOSING AND CLOSING DELIVERIES ....................27
9.1 Closing ...........................................27
9.2 Deliveries by Sellers .............................27
9.3 Deliveries by Buyer ...............................28
SECTION 10. TERMINATION .......................................29
10.1 Termination Rights ................................29
10.2 Disposition of Escrow Deposit .....................29
10.3 Liquidated Damages ................................29
10.4 Specific Performance ..............................29
10.5 Opportunity to Cure ...............................30
SECTION 11. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES AND INDEMNIFICATION ....................30
11.1 Representations and Warranties ....................30
11.2 Indemnification by Sellers ........................30
11.3 Indemnification by Buyer ..........................31
11.4 Procedure for Indemnification .....................31
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS (continued)
-----------------
<TABLE>
PAGE
----
<C> <S> <C>
SECTION 12. MISCELLANEOUS .....................................32
12.1 Fees and Expenses .................................32
12.2 Notices ...........................................32
12.3 Benefit and Binding Effect ........................33
12.4 Further Assurances ................................33
12.5 Governing Law .....................................34
12.6 Headings and References ...........................34
12.7 Gender and Number .................................34
12.8 Entire Agreement ..................................34
12.9 Counterparts ......................................34
12.10 Negotiated Document ...............................34
12.11 Attorneys' Fees ...................................34
12.12 No Waiver .........................................35
</TABLE>
iv
<PAGE>
RADIO STATIONS KSGS-AM, KMJZ-FM
Minneapolis, Minnesota
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made as of the ______ day of February,
1996 by and between ROY H. PARK BROADCASTING OF MINNESOTA, INC. and ROY H. PARK
BROADCASTING OF THE LAKE COUNTRY, INC., both Minnesota corporations with offices
at 1700 Vine Center Office Tower, 333 West Vine Street, Lexington, Kentucky
40507 (individually a "Seller" and collectively, the "Sellers"), and NATIONWIDE
COMMUNICATIONS INC., an Ohio corporation ("Buyer") with offices at One
Nationwide Plaza, Columbus, Ohio 43216.
RECITALS
A. Seller ROY H. PARK BROADCASTING OF MINNESOTA, INC. owns and
operates radio station KSGS-AM. Seller ROY H. PARK BROADCASTING OF THE LAKE
COUNTRY, INC. owns and operates radio station KMJZ-FM (collectively, the
"Stations"), pursuant to licenses issued by the Federal Communications
Commission.
B. Sellers desire to sell and Buyer wishes to buy all the assets
used or useful in the operation of the Stations, for the price and on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises contained herein, Buyer and Sellers, intending to
be legally bound hereby, agree as follows:
SECTION 1. DEFINITIONS.
-----------
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
1.1 "Accounts Receivable" means all rights of Sellers to payment
for: (a) the sale of advertising time by the Stations; and (b) services
performed by the Stations.
1.2 "Assets" means the assets of the Stations being sold,
transferred, or otherwise conveyed to Buyer hereunder, as specified in
Section 2.1.
1.3 "Assumed Contracts" means: (a) those Contracts listed as
Assumed Contracts in Disclosure Schedule 3.7; (b) all Contracts for the sale of
-----------------------
time on the Stations
1
<PAGE>
and all trade or barter agreements which are outstanding on the Closing Date and
which comply with the provisions of Section 37; and (c) Contracts entered into
between the date hereof and the Closing Date which comply with the provisions of
Section 5.1(a).
1.4 "Buyer's Knowledge" (or words of similar import) means any
actual knowledge of those persons listed on Disclosure Schedule 1.4.
-----------------------
1.5 "Claimant" means a party claiming indemnification pursuant to
Section 11.
1.6 "Closing" means the consummation of the transactions
contemplated in this Agreement in accordance with the provisions of Section 9.
1.7 "Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 9.
1.8 "Consents" means the consents, permits, or approvals of third
parties, including governmental authorities, which relate to the day-to-day
operation of the Stations by the Sellers, or are necessary to transfer the
Assets to Buyer, or otherwise to consummate the transactions contemplated
hereby, which Consents are listed on Disclosure Schedule 3.3.
-----------------------
1.9 "Contracts" means all written contracts, leases, licenses, and
other agreements (including without limitation leases for personal or real
property and employment agreements), including any amendments or other
modifications thereto, that relate to the Assets or the operation of each
Station, to which Sellers are a party, including those described in the
Disclosure Schedule, together with any additions thereto between the date hereof
and the Closing Date.
1.10 "Disclosure Schedules" means the Disclosure Schedules of even
date relating to this Agreement titled "KSGS-AM, KMJZ-FM Disclosure Schedules"
and delivered separately to Buyer.
1.11 "Effective Time" means 12:01 a.m., Eastern Standard Time, on
the Closing Date.
1.12 "Escrow Deposit" means the sum of One Million One Hundred
Thousand U.S. Dollars ($1,100,000) cash which is being deposited by Buyer with
Society National Bank, Columbus, Ohio (the "Escrow Agent") on the date hereof
pursuant to the terms of an Escrow Agreement among Buyer, Sellers and Escrow
Agent, the form of which is attached hereto as Exhibit A.
---------
1.13 "FCC" means the Federal Communications Commission.
2
<PAGE>
1.14 "FCC Consent" means action by the FCC granting its consent to
the assignment of the FCC Licenses from Sellers to Buyer as contemplated by this
Agreement.
1.15 "FCC Licenses" means those Licenses issued by the FCC to
Sellers in connection with the business and operations of the Stations,
including those listed in Disclosure Schedule 1.15, together with any additions
------------------------
or changes thereto between the date hereof and the Closing Date.
1.16 "Final Order" means an action of the FCC that has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and with respect
to which no timely filed petition for stay, reconsideration or administrative or
judicial appeal or sua sponte action of the FCC with comparable effect is
--- ------
pending and as to which the time for filing any such petition or appeal
(administrative or judicial) or for the taking of any such sua sponte action of
--- ------
the FCC has expired.
1.17 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
1.18 "Indemnitor" means a party from whom indemnification is claimed
pursuant to Section 11.
1.19 "Intangibles" means all copyrights, trademarks, tradenames,
service marks, service names, licenses, patents, permits, the call letters
"KSGS-AM, and KMJZ-FM" and logos, service marks, computer software, magnetic
media, business and sales lists, program libraries, slogans and jingles,
advertising and promotional materials, privileges, proprietary information,
technical information and data, machinery and equipment warranties, and other
similar intangible property rights and interests applied for, issued to, or
owned by Sellers or under which Sellers are licensed or franchised and used or
useful in the business and operations of the Stations, including those listed as
Intangibles in Disclosure Schedule 1.19.
------------------------
1.20 "Leased Real Property" means all the Real Property that is
occupied pursuant to a lease or a license pursuant to Section 3.6.
1.21 "Licenses" means all licenses, permits, and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration, or any other federal, state, or local governmental
authorities to Sellers in connection with the business and operations of the
Stations, including those listed as Licenses in Disclosure Schedule 1.21,
------------------------
together with any additions thereto between the date hereof and the Closing
Date.
1.22 "Lien" means any mortgage, lease, deed of trust, lien, pledge,
hypothecation, assignment, deposit arrangement, option, right of first refusal,
indenture,
3
<PAGE>
license, security interest, encumbrance, right of way, easement, encroachment or
similar arrangement of any kind or nature.
1.23 "Permitted Liens" means: (a) Liens for taxes, assessments, or
similar governmental charges for levies incurred in the ordinary course of
business that are not yet due and payable or as to which any applicable grace
period shall not have expired; and (b) Liens set forth in Disclosure Schedule
-------------------
1.23 and identified as a Permitted Lien.
- ----
1.24 "Personal Property" means the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, (including
all studio and transmission equipment wherever located) and other tangible
personal property used or useful in the operation of the Stations, and
identified and described as Personal Property in Disclosure Schedule 1.24 and
------------------------
all computer discs and tapes, plans, diagrams, blueprints, schematics, and books
and records relating to the operation of the Stations, filings with the FCC and
executed copies of the Assumed Contracts, together with any additions thereto
between the date hereof and the Closing Date.
1.25 "Purchase Price" means the purchase price specified in Section
2.3.
1.26 "Real Property" means the interests in real property, including
all leaseholds, easements, licenses, rights to access, and rights of way, and
all improvements thereon, identified and described as Real Property in
Disclosure Schedule 1.26.
- ------------------------
1.27 "Required Consents" means those Consents marked with an
asterisk on Disclosure Schedule 3.3, indicating that their receipt is a
-----------------------
condition precedent to Buyer's obligation to close under this Agreement.
1.28 "Sellers' Knowledge" (or words of similar import) means any
actual knowledge of those persons listed as Sellers' representatives in
Disclosure Schedule 1.28.
- ------------------------
1.29 "Stations" means the radio stations described in the first
recital to this Agreement.
SECTION 2. SALE AND PURCHASE OF ASSETS AND OTHER CONSIDERATION.
---------------------------------------------------
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
-------------------------
set forth in this Agreement, Sellers hereby agree to sell, transfer and deliver
to Buyer on the Closing Date, and Buyer agrees to purchase, all of the tangible
and intangible assets owned or held by Sellers and used or useful in the
business or operations of the Stations, wherever located, other than the assets
specified in Section 2.2, free and clear of any claims, liabilities, Liens,
conditions, encumbrances (except for those permitted in accordance with Sections
3.5 and 3.6 below, and except for any condition that is part of the express
terms of any License or Assumed Contract), including without limitation the
following:
4
<PAGE>
(a) The Personal Property;
(b) The Licenses;
(c) The Real Property;
(d) The Assumed Contracts; and
(e) The Intangibles.
2.2 Excluded Assets. The Assets shall exclude the following
---------------
assets:
(a) Sellers' cash on hand and cash equivalents as of the Effective
Time and all other cash and cash equivalents in any of Sellers' bank accounts,
prepaid expenses, any and all insurance policies, bonds, letters of credit, or
other similar items, and any cash surrender value and insurance proceeds in
regard thereto;
(b) All Accounts Receivable of the Stations existing as of the
Effective Time;
(c) All books and records that Sellers are required by law to
retain, and books and records related solely to internal corporate matters;
(d) All claims, rights, and interest in and to any refunds for
federal, state, or local franchise, income, or other taxes or fees of any nature
whatsoever for periods prior to the Effective Time;
(e) Any pension, profit-sharing, or employee benefit plans; and
(f) The items listed as Excluded Assets in Disclosure Schedule
-------------------
2.2.
- ---
2.3 Purchase Price. The purchase price to be paid by Buyer for the
--------------
Assets shall be Twenty-Two Million U.S. Dollars ($22,000,000) plus assumption of
the Assumed Liabilities pursuant to Section 2.6. Prorations of expenses and
revenues shall be made in accordance with Section 7.3.
2.4 Allocation of Purchase Price. At or before the Closing, Buyer
----------------------------
and Sellers shall determine the allocation of the Purchase Price in accordance
with Treasury Regulation section 1.1060-1T based upon the approximate relative
fair market values of the Purchased Assets. If the parties are unable to agree
on the allocation of the Purchase Price, then the allocation shall be as
determined by a nationally recognized appraisal firm chosen by Buyer and
reasonably acceptable by Sellers (it being anticipated that the Purchase Price
will be allocated first to such of the Purchased Assets as are tangible to the
extent of the
5
<PAGE>
approximate fair market values thereof on the Closing Date, with the balance to
intangible Purchased Assets). Buyer shall pay all fees and expenses of such
appraisal firm. Sellers and Buyer will report the federal income tax
consequences of the sale and acquisition of the Purchased Assets under this
Agreement in a manner consistent with the foregoing, and will file Forms 8594 in
the manner and at the times required by Treasury Regulation section 1.1060-1T.
Buyer shall prepare drafts of Form 8594 reflecting the respective Purchase Price
allocations determined as provided above in accordance with Treasury Regulation
section 1.1060-1T for Sellers and Buyer, such draft Form 8594 to be provided to
Sellers within One Hundred Eighty (180) days following the Closing Date, but in
no event later than the due date, including extensions, for Sellers' Federal
income tax return for the period including the Closing Date; and Sellers'
consent to such drafts shall not be unreasonably withheld or delayed.
2.5 Payment of Purchase Price. Payment of the Purchase Price for
-------------------------
the Assets shall be made as follows:
(a) Escrow Deposit. The Escrow Deposit shall be held pursuant
--------------
to the Escrow Agreement executed by and among Buyer, Sellers, and Escrow Agent
in the form of Exhibit A hereto The Escrow Deposit, together with all interest
---------
earned shall be applied toward the Purchase Price at the time of Closing.
(b) Cash Portion. The balance of the Purchase Price shall be
------------
paid in cash at Closing, by wire transfer of federal funds to an account
designated by Sellers.
(c) Prorations. Prorations of expenses and revenues shall be
----------
made in accordance with Section 7.3.
2.6 Assumption of Liabilities and Obligations.
-----------------------------------------
(a) Assumption. Except as provided in Section 2.6(b), as of
----------
the Effective Time, Buyer shall assume and undertake to pay, discharge, and
perform the following (the "Assumed Liabilities"): (i) insofar as they relate to
the period after the Effective Time, all the obligations and liabilities of
Sellers under the Assumed Contracts; (ii) all obligations and liabilities
arising out of events occurring after the Effective Time related to Buyer's
ownership of the Assets or its operation of the Stations after the Effective
Time; and (iii) any obligations of Sellers assigned to Buyer as part of the
adjustments and prorations pursuant to Section 7.3 of this Agreement. Other than
as specified in this Section 2.6(a), Buyer shall assume no obligations or
liabilities of Sellers.
(b) Limitation. Notwithstanding any provision of this
----------
Agreement to the contrary, Buyer shall not assume: (i) any obligations or
liabilities, whether or not under any Contract, not included in the Assumed
Contracts; (ii) any obligations or liabilities under the Assumed Contracts
relating to the time period prior to the Effective Time; (iii) any claims or
pending litigation or proceedings relating to any action with respect
6
<PAGE>
to the operation of the Stations prior to the Effective Time, and (iv) any
insurance policies of Sellers. All such obligations and liabilities shall
remain and be the obligations and liabilities solely of Sellers.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS.
-----------------------------------------
Sellers, jointly and severally, represent and warrant to Buyer as
follows:
3.1 Organization, Standing, and Authority. Both Sellers are
-------------------------------------
corporations duly organized, validly existing, and in good standing under the
laws of the State of Minnesota and are duly qualified to conduct business and in
good standing in the State of Minnesota. Each Seller has the requisite
corporate power and authority to: (i) own, lease, and use the Assets as now
owned, leased, and used; (ii) conduct the business of operating the Stations as
now conducted; and (iii) execute, deliver, and perform this Agreement and the
documents contemplated hereby according to their respective terms. Sellers have
not been known by or used any other corporate, or any fictitious or other name
in the conduct of the Stations' business or in connection with the use or
operation of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery,
------------------------------------
and performance of this Agreement by Sellers has been duly authorized by all
necessary corporate actions, including stockholder approval, if required, on the
part of Sellers. This Agreement has been duly executed and delivered by Sellers
and constitutes the legal, valid, and binding obligation of Sellers, enforceable
against Sellers in accordance with its terms except as the enforceability hereof
may be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally.
3.3 Absence of Conflicting Agreements and Required Consents.
-------------------------------------------------------
Subject to obtaining the Consents listed in Disclosure Schedule 3.3 including
-----------------------
without limitation the FCC Consent, the execution, delivery, and performance of
this Agreement (with or without the giving of notice, the lapse of time, or
both): (i) do not require the consent of any third party; (ii) will not conflict
with any provision of the Certificate or Articles of Incorporation or By-Laws of
each Seller; (iii) will not conflict with, result in a breach of, or constitute
a default under, any applicable law, judgment, order, ordinance, decree, rule,
regulation, or ruling of any court or governmental instrumentality; (iv) will
not conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of, any
performance required by the terms of any financing, debt or equity agreement or
any material agreement, instrument, license, or permit to which each Seller is a
party or by which each Seller may be bound; and (v) will not create any claim,
liability, Lien, charge, or encumbrance upon any of the Assets.
3.4 Governmental Authorizations. Except as set forth in Disclosure
--------------------------- ----------
Schedule 3.4, each Seller has in effect all the Licenses listed on Disclosure
- ------------ ----------
Schedule 1.15 and all other Federal, state, and local governmental approvals,
- -------------
authorizations, certificates,
7
<PAGE>
filings, franchises, licenses, notices, permits and rights ("Permits") necessary
for each Seller to own, lease, or operate its properties and assets and to carry
on its business as now conducted, and there has occurred no default under any
such Permit. Except as set forth in Disclosure Schedule, the FCC Licenses: (i)
constitute all authorizations issued to each Seller by the FCC in connection
with the operation of the Stations; (ii) are in full force and effect; (iii) are
valid for the balance of the current license term applicable generally to radio
stations licensed in Minnesota; (iv) constitute all authorizations required
under the Communications Act of 1934, as amended, and the rules and regulations
of the FCC for the operation of the Stations substantially as now conducted; (v)
to Sellers' knowledge, are not subject to any pending or threatened FCC
investigations or enforcement or other proceedings which might reasonably be
expected to result in the revocation or non-renewal of such licenses; and (vi)
are free and clear of any restrictions which might limit the full operation of
the Stations (other than restrictions under the terms of the licenses themselves
and restrictions imposed by FCC rules). Each Seller is not aware of any reason
why the FCC Licenses would not be renewed in the ordinary course.
3.5 Title to Property. Disclosure Schedule 1.26 represents a true,
----------------- ------------------------
complete and accurate list of all the Real Property used or useful in the
operations of the Stations and owned by Sellers as of the date hereof or to be
owned by Sellers on the Closing Date. Except as set forth in Disclosure
----------
Schedule 3.5, each Seller has good and marketable fee simple title to, or valid
- ------------
leasehold interests in, all of the Real Property, and good and marketable title
to, or valid interests as lessees of, the Personal Property. All such assets
and properties, other than assets and properties in which Sellers have a
leasehold interest, are owned by Sellers free and clear of all Liens other than
those set forth in Disclosure Schedule 3.5 and except for Permitted Liens.
-----------------------
Except as set forth in Disclosure Schedule 3.5, Sellers have complied in all
-----------------------
respects with the terms of all leases to which they are a party and under which
it is in occupancy, and all such leases are in full force and effect, and
Sellers enjoy peaceful and undisturbed possession under all such leases. The
Personal Property constitutes all of the personal property that is used or held
by Sellers or others for use by the Stations, or necessary to operate each
Station as it is now being operated. The Personal Property is in good operating
condition and repair (reasonable wear and tear excepted), is maintained in
compliance with good engineering practice and is otherwise sufficient to permit
the Stations to operate in accordance with the FCC Licenses, the underlying
construction permits of the Stations, and the rules and regulations of the
Commission. The Stations' equipment is type-approved or type-accepted in those
instances where such type-approval or type-acceptance is required.
3.6 Real Property; Leased Real Property. All of the Real Property
-----------------------------------
that is occupied by Sellers pursuant to a lease or license (the "Leased Real
Property") is listed on Disclosure Schedule 1.26 and is held at the rates and
------------------------
for terms ending on the dates shown in Disclosure Schedule 1.26 pursuant to the
------------------------
agreements therein described, which are the sole and complete agreements
concerning Sellers' use of Leased Real Property. To the best of each Seller's
knowledge: (i) there are no encroachments upon any Real Property or Leased Real
Property; (ii) none of the buildings, structures or improvements (including
without
8
<PAGE>
limitation any ground radials, guy wires or guy anchors) constructed on the Real
Property or Leased Real Property encroach on any adjoining real estate; and
(iii) all such buildings, structures or improvements are constructed in
conformity with or are "grandfathered" with respect to all "setback" lines,
easements and other restrictions or rights of record or that have been
established by any applicable building, safety or zoning code or ordinance.
There are no pending, or to each Seller's knowledge, threatened, condemnation or
eminent domain proceedings that may affect the Real Property or the Leased Real
Property.
3.7 Contracts. Except as set forth in Disclosure Schedule 3.7, the
--------- -----------------------
Contracts listed in Disclosure Schedule 3.7 constitute all of the material
-----------------------
agreements which are required to conduct the business of the Stations as it is
presently being conducted including, without limitation, all trade and barter
agreements and similar agreements for the sale of advertising time valued at
more than $10,000 except for contracts with advertisers for the sale of
advertising time on the Stations at the Stations' prevailing rates which are not
prepaid and which may be cancelled by the Stations without penalty on not more
than thirty (30) business days' notice. Except as set forth in Disclosure
----------
Schedule 3.7, all Assumed Contracts material to the operation of the Stations
- ------------
are in full force and effect and are valid, binding, and enforceable in
accordance with their terms, and, to the best of each Seller's knowledge, there
is not under any Assumed Contract material to the operation of the Stations, any
default by any party thereto or any event that, after notice or lapse of time or
both, would constitute a default. Except for the Consents listed in Disclosure
----------
Schedule 3.3, including, without limitation, the FCC Consent, each Seller has
- ------------
full legal power and authority to assign its rights under the Assumed Contracts
to Buyer in accordance with this Agreement, and the assignment of the Assumed
Contracts to Buyer will not affect the validity, enforceability, or continuation
of any of the Assumed Contracts.
3.8 Consents. Except for the compliance with the HSR Act provided
--------
for in Section 7.2, the FCC Consent provided for in Section 7.1 and the other
Consents listed in Disclosure Schedule 3.3, no consent, approval, permit, or
-----------------------
authorization of or declaration to or filing with any governmental or regulatory
authority or any other third party is required: (i) to consummate this Agreement
and the transactions contemplated hereby; (ii) to permit each Seller to assign
or transfer the Assets to Buyer; or (iii) to enable Buyer to operate the
Stations in essentially the same manner as they are now conducted.
3.9 Intangibles. Disclosure Schedule 1.19 contains a true and
----------- ------------------------
complete list of all the Intangibles registered under federal and/or state law
as patents, trademarks or service marks. To Seller's Knowledge, Seller is not
infringing upon or otherwise acting adversely to, and there are no conflicts
with, any trademarks, tradenames, service marks, service names, copyrights,
patents, patent applications, know-how, methods, or processes owned by any
person or persons other than Sellers, and there is no claim or action pending
with respect thereto. To the Sellers' Knowledge, Sellers have not taken any
action which would permit any party other than Sellers, their agents, officers
or employees to use, license, sublicense or operate under any of the
Intangibles. To the Sellers' Knowledge, there is not
9
<PAGE>
now and there has not been any infringement, dilution, or misappropriation of
any of the Intangibles.
3.10 Profit and Loss Statements. Disclosure Schedule 3.10 contains
-------------------------- ------------------------
copies of unaudited profit and loss statements for the Sellers for the fiscal
years ending in 1991, 1992, 1993, 1994 and 1995. Except as set forth thereon,
all of such profit and loss statements have been prepared from the books and
records of Sellers in accordance with generally accepted accounting principles
consistently applied and maintained throughout the periods indicated, to the
best of each Seller's knowledge accurately reflect the books, records, and
accounts of each Seller, and present fairly the financial condition of the
Sellers as of their respective dates and the results of operations for the
periods then ended.
3.11 Personnel.
---------
(a) Employees and Compensation. Disclosure Schedule 3.11(a) contains:
-------------------------- ------------------------
(i) a true and complete list of all persons employed by the Stations as of the
date of this Agreement, and a description of their compensation; and (ii) a
description of all employee benefit plans or arrangements applicable to the
employees of the Stations and all fixed or contingent liabilities or obligations
of Sellers with respect to any person now or formerly employed by Sellers at the
Stations. Except as set forth in Disclosure Schedule 3.11(a): (i) all employee
---------------------------
benefits and welfare plans or arrangements described above were established and
have been executed, managed, and administered without material exception in
accordance with all applicable requirements of the Internal Revenue Code, the
Employee Retirement Income Security Act of 1974, as amended, and other
applicable laws; (ii) each Seller is not aware of the existence of any
governmental audit or examination of any of such plans or arrangements or of any
facts that would lead it to believe that any audit or examination is pending or
threatened; and (iii) no action, suit, or claim with respect to any of such
plans or arrangements is pending or, to the best of each Seller's knowledge,
threatened. Except as set forth in Disclosure Schedule 3.11(a), Sellers have not
---------------------------
promulgated any policy or entered into any written agreement relating to the
payment of severance pay to any employee whose employment may be terminated or
suspended, voluntarily or otherwise, by Sellers. Each Seller has substantially
complied with and is not in default in any material respect under any laws,
rules and regulations, relating to employment of labor, including those relating
to wages, hours, equal employment opportunities, employment of protected
minorities (including women and persons over 40 years of age), collective
bargaining and the withholding and payment of taxes and contributions and has
withheld all amounts required or agreed to be withheld from wages and salaries
of its employees, and is not liable for any arrearage of wages or for any tax or
penalty or failure to comply with the foregoing. Each Seller has not consented
to any final decree involving any claim of unfair labor practice and has not
been held in any final judicial proceeding to have committed any unfair labor
practice and there are no material controversies pending or threatened between
Sellers and any of their employees.
10
<PAGE>
(b) Agreements. Except as set forth in Disclosure Schedule
---------- -------------------
3.11(b): (i) neither Seller is a party to or subject to any collective
- -------
bargaining agreements with respect to the Stations; and (ii) neither Seller has
any contracts of employment with any employee of the Stations other than
contracts terminable at will or on less than thirty (30) days notice.
(c) Liabilities. Except as otherwise specifically set forth in
-----------
this Agreement, Buyer will have no obligation or liability due to or because of
any employee benefit plan, past service liability, vested benefits, retirement
plan insolvencies or other obligation under local, state or federal law
(including the Employee Retirement Income Security Act of 1974) resulting from
the purchase of the Stations or from former employees of Seller becoming
employees of Buyer.
(d) Labor Activities. There is no strike, work slowdown,
----------------
picketing or any other labor dispute or disturbance pending or threatened
against Sellers which would adversely affect the business, properties, Assets,
prospects or goodwill of either of the Stations in any material regard, nor have
there been any strikes, work slowdowns, picketing or any other labor disputes or
disturbances involving or affecting either of the Stations within the past 12
months. The employees of Sellers at the Stations are not presently represented
by, and, to the best of either Seller's knowledge, are not seeking
representation through, any union or other collective bargaining agent, and to
the best of either Seller's knowledge there is no union organizational activity
being conducted in connection with the employees of the Stations.
3.12 Claims and Legal Actions. Except as set forth in Disclosure
------------------------ ----------
Schedule 3.12 and except for investigations and rule making proceedings
- -------------
affecting the radio broadcasting industry generally, there is no claim, legal
action, counterclaim, suit, arbitration, governmental investigation, or other
legal, administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or, to the best of each Seller's knowledge, threatened,
against or relating to Sellers, their properties, the Assets, or the business of
the Stations, that, individually or in the aggregate, could reasonably be
expected to: (i) have a material adverse effect on the Sellers or the Stations;
(ii) impair the ability of Sellers to perform their obligations under this
Agreement; or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement.
3.13 Compliance with Laws. Except as set forth in Disclosure
-------------------- ----------
Schedule 3.13, each Seller is in compliance with all applicable statutes, laws,
- -------------
ordinances, regulations, rules, judgments, decrees, or orders of any
Governmental Entity, except for possible noncompliance which, individually or in
the aggregate, would not have a material adverse effect on Sellers, the Stations
or the Assets.
3.14 Environmental. Except as disclosed in Disclosure Schedule
------------- -------------------
3.14:
- ----
11
<PAGE>
(a) To Sellers' Knowledge, there are no substances or conditions, in,
on, under or emanating from the Real Property, including, without limitation,
surface waters and subsurface waters thereof, which could support a claim or
cause of action under any and all currently applicable federal, state or local
environmental statutes, ordinances, regulations or guidelines.
(b) To Sellers' Knowledge, the Real Property and the improvements
thereon and the use and operations thereof are currently in compliance with all
currently applicable and effective requirements relating to health, safety, and
protection of the environment, and are in compliance with all permits required
thereby, except to the extent any such noncompliance would not have a material
and adverse effect on Sellers, the Stations or the Assets.
(c) To Sellers' Knowledge, there has been no spillage or leaks at the
Real Property associated with the filing, draining, or use of any underground
storage tanks which requires clean-up or remediation under currently applicable
and effective law.
(d) Each Seller has not generated, treated, stored or disposed of,
nor, in any manner, arranged for disposal or treatment of, any Hazardous Waste
(as defined in the Resource Conservation and Recovery Act 42 U.S.C. Subsection
6901 et seq.) on the Real Property, and to the reasonable knowledge of Sellers
-- ---
there is no Hazardous Substance (as hereinafter defined) present on, in or under
the Real Property above any applicable threshold level which now requires clean
up or remediation under Section 121 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Subsection 9621 and/or other
applicable federal, state or local law, regulation, ordinance or requirement, as
in effect on the date hereof. "Hazardous Substances" for purposes of this
Agreement shall mean: (i) hazardous substances or hazardous wastes, as those
terms are defined by the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Subsection 9601 et seq., and/or any other applicable
-- ---
federal, state, or local law, regulation, ordinance or requirement, as in effect
on the date hereof; (ii) petroleum, including but not limited to crude oil or
any fraction thereof; (iii) asbestos in any form or condition; and (iv) any
radioactive material, including, but not limited to, any source, special nuclear
or by-product material as defined at 42 U.S.C. Subsection 2011 et seq., as in
-- ---
effect on the date hereof.
(e) Each Seller is not and has not been subject to, or received any
notice of, any private, administrative or judicial action, relating to the
presence or alleged presence of Hazardous Substance in, under, upon or emanating
from the Real Property; and there are no pending or, to Sellers' knowledge,
threatened actions or proceedings from any governmental agency or any other
person or entity regarding any matter relating to health, safety, or protection
of the environment at the Real Property.
(f) To Sellers' Knowledge, there are no conditions on properties
adjacent to the Real Property which would reasonably be expected to prevent
12
<PAGE>
continued compliance of the Real Property with any federal, state or local law,
regulation, ordinance or requirement presently in effect relating to protection
of the environment.
(g) To Sellers' Knowledge, Sellers do not own, lease,
possess, or control, and to Sellers' Knowledge, there are no third parties that
control, at the Real Property any polychlorinated biphenyls (PCB) or PCB
contaminated fluids or equipment, or any material or substance containing
asbestos.
3.15 Conduct of Business in Ordinary Course; Adverse Change. Except
------------------------------------------------------
as set forth in Disclosure Schedule 3.15, since November 30, 1995, Sellers have
------------------------
conducted the business of the Stations in the ordinary course.
3.16 Taxes. Each Seller has, or by the Closing Date will have, paid
-----
and discharged all taxes, assessments, excises and other levies relating to the
Assets, excepting such taxes, assessments, and other levies as will not be due
until after the Closing Date and that are to be prorated between Buyer and
Sellers hereunder.
3.17 Insurance. Disclosure Schedule 3.17 lists all insurance
--------- ------------------------
policies currently in force and effect relating to the Stations or the Assets.
All premiums are current unless noted on Disclosure Schedule 3.17.
------------------------
3.18 Full Disclosure. No representation or warranty made by Sellers
---------------
contained in this Agreement nor any certificate, document, or other instrument
furnished or to be furnished by Sellers pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading.
3.19 Public Inspection Files. The public inspection files for the
-----------------------
Stations are in substantial compliance with the regulations of the FCC relating
thereto.
3.20 No Insolvency. No insolvency proceedings of any character,
-------------
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
either Seller or any of their respective assets or properties are, or within
three years prior to the date hereof, have been pending or, to the best of
either Seller's knowledge, threatened, and, within three years prior to the date
hereof, neither Seller has made an assignment for the benefit of creditors, nor
taken any action with a view to the institution of any such insolvency
proceedings.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to Sellers as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
-------------------------------------
duly organized, validly existing, and in good standing under the laws of the
State of Ohio. Buyer
13
<PAGE>
will be duly qualified to conduct its business in the State of Minnesota on or
prior to the Closing Date. At the Closing Date, Buyer has the requisite
corporate power and authority to: (i) own, lease, and use the Assets; (ii)
conduct the business of operating the Stations; and (iii) execute, deliver, and
perform this Agreement and the documents contemplated hereby according to their
respective terms.
4.2 Authorization and Binding Obligation. The execution, delivery,
------------------------------------
and performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes a legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements and Required Consents.
-------------------------------------------------------
Subject to obtaining the Consents, the execution, delivery, and performance of
this Agreement by Buyer and the documents contemplated hereby (with or without
the giving of notice, the lapse of time, or both): (i) do not require the
consent of any third party; (ii) will not conflict with the Amended Articles of
Incorporation or Amended Code of Regulations of Buyer; (iii) will not conflict
with, result in a breach of, or constitute a default under, any applicable law,
judgment, order, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality; and (iv) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of any performance required by the
terms of, any agreement, instrument, license or permit to which Buyer is a party
or by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Claims and Legal Actions. There is no action, suit,
------------------------
proceeding, or investigation pending or, to Buyer's knowledge, threatened that,
if decided against Buyer, would materially and adversely affect Buyer's ability
to perform its obligations under this Agreement or the transactions contemplated
thereby.
4.5 Qualification. To Buyer's knowledge, Buyer is qualified
-------------
legally, financially and otherwise to become the assignee of the Licenses,
including the FCC Licenses, under the Communications Act of 1934, as amended
prior to the date of this Agreement, and the rules, regulations and policies of
the FCC as in effect on the date of this Agreement. To Buyer's knowledge, there
are no facts that could prevent, hinder, discourage, or delay the FCC from
issuing the FCC Consent.
4.6 Full Disclosure. No representation or warranty made by Buyer
---------------
contained in this Agreement nor any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading.
14
<PAGE>
4.7 Reliance. Buyer has not relied on any representation or
--------
statement made by Sellers, or any person acting on Sellers' behalf, except as
specifically provided in this Agreement, the Exhibits and Schedules hereto and
Disclosure Schedule.
SECTION 5. COVENANTS OF SELLERS.
--------------------
5.1 Pre-Closing Covenants. Each Seller covenants and agrees that,
---------------------
between the date hereof and the Closing Date, each Seller will conduct the
business and operations of the Stations diligently in the ordinary course, and,
except as contemplated by this Agreement or with the prior written consent of
Buyer, Sellers will act in accordance with the following:
(a) Contracts. Neither Seller will enter into any contract or
---------
commitment in an amount greater than $50,000 or for a term exceeding one year
relating to the Stations or the Assets, or amend or terminate any Assumed
Contract in an amount greater than $50,000 or for a term exceeding one year (or
waive any substantial right thereunder), or incur any obligation (including
obligations relating to the borrowing of money or guarantee of indebtedness),
whether or not in the ordinary course of business, without the prior written
consent of Buyer. Sellers will follow its usual and customary policies with
respect to extending credit for sales of time on the Stations and with respect
to collecting accounts receivable arising from such extension of credit.
(b) Encumbrances. Sellers will not create, assume, or permit
------------
to exist any mortgage, pledge, lien, or other charge or encumbrance or rights
affecting any of the Assets, except for those in existence on the date of this
Agreement and disclosed in Disclosure Schedule 5.1(b) and except for mechanics
--------------------------
liens, liens for current taxes which are not yet due and payable, and other
similar liens, which will either be discharged on or before the Closing or be
included in the adjustments and prorations pursuant to Section 7.3 of this
Agreement.
(c) Dispositions. Sellers will not sell, assign, lease, or
------------
otherwise transfer or dispose of any of the Assets except: (i) in the ordinary
course of business when such Assets are no longer used or useful in connection
with the operations of the Stations; (ii) in connection with the acquisition of
replacement property of equivalent kind and value; or (iii) dispositions in the
aggregate not in excess of Seventy-Five Thousand Dollars ($75,000).
(d) Waivers. Sellers will not waive any material right
-------
relating to the Stations or the Assets, except in the ordinary course of
business.
(e) Licenses. Except as set forth in this Agreement, Sellers
--------
will not cause or permit, by any act or failure to act, any of the Licenses to
expire or to be surrendered or modified, or take any action that would cause the
FCC or any other governmental authority to institute proceedings for the
suspension, revocation, or adverse
15
<PAGE>
modification of any of the Licenses, or fail to prosecute with due diligence any
pending applications to any governmental authority in connection with the
operation of the Stations, or take any other action within its control that
could reasonably be expected to result in the Stations being in noncompliance in
any material respect with the requirements of the Communications Act of 1934, as
amended, or any other applicable law, or the rules and regulations of the FCC or
any other governmental authority having jurisdiction. Sellers will take all
reasonable steps to defend and protect the integrity of the Stations' signal and
service contours and participate actively in any FCC proceedings of which it
becomes aware (other than those generally affecting the broadcasting industry)
which may reasonably be expected to result in a material adverse affect upon the
operations of the Stations, with the goal of minimizing such effect upon the
Stations.
(f) Consents. Sellers will use best efforts to obtain the Consents,
--------
without any material change in the terms or conditions of any Assumed Contract
that could be materially less advantageous to the Stations than those pertaining
under the Assumed Contract as in effect on the date hereof.
(g) Books. Sellers will maintain the books and records of the
-----
Stations in accordance with prior practice.
(h) Access to Information. Sellers will give to Buyer and its
---------------------
counsel, accountants, engineers, and other authorized representatives reasonable
access to the Assets and to all books and records relating thereto, and will
furnish or cause to be furnished to Buyer and its authorized representatives all
information relating to the Assets that they reasonably request (including any
financial reports and operations reports produced with respect to the Stations).
Sellers shall provide Buyer with such profit and loss statements and all billing
and other reports describing or affecting the Stations as Sellers normally cause
to be prepared, and complete details of expense line items (excluding payroll)
concerning the operation of the Stations beginning with the month preceding the
execution of this Agreement through the Closing Date which expense line items
are in excess of $25,000. These financial reports shall be prepared and
furnished to Buyer within a reasonable time after the end of each reporting
period, and in any event within thirty days thereof. All statements provided
will fairly present the results of the Stations' operations and financial
conditions for the period and dates indicated.
(i) Maintenance of Assets. Sellers will maintain all of the Stations'
---------------------
property and assets or replacements thereof in their present condition as
represented in this Agreement, ordinary wear and tear excepted. Sellers will
maintain supplies of inventory and spare parts consistent with past practice.
(j) Compliance with Laws. Sellers will comply in all material
--------------------
respects with all rules and regulations of the FCC, and with all other
applicable laws, rules, and regulations to which it is subject. Upon receipt of
notice of violation of any law, rule,
16
<PAGE>
or regulation, Sellers will notify Buyer of such notice of violation and shall
use reasonable efforts to contest in good faith or cure the violation prior to
the Closing Date.
(k) Insurance. Sellers will maintain in force the existing
---------
hazard and liability insurance policies, or comparable coverage, for the
Stations and the Assets.
(l) Preservation of Business. Sellers will use their
------------------------
reasonable efforts until the Closing Date to preserve the business and
organization of the Stations intact, to keep available to the Stations their
present employees, and to preserve for the Stations their present relationships
with suppliers and customers and others having business relations with it.
(m) Access to Employees. Subject to the provisions of
-------------------
applicable law, Sellers shall cause to be given to Buyer and its authorized
representatives access during normal business hours to the employees of the
Stations and to the properties, books and records of the Stations and other
Assets to be transferred and conveyed to Buyer, and furnish Buyer with such
information concerning the same as Buyer may reasonably request and all billing
and other reports describing or affecting the Stations; provided, however, that
--------
in no event shall access be provided more frequently than once every thirty (30)
days, and provided further that such access shall not unreasonably interfere
with the normal, on-going operation of the Stations. Buyer agrees to coordinate
all such access through Sellers or their designated representatives, such access
to be at reasonable times and upon reasonable prior notice to Sellers.
5.2 Closing Covenant. On the Closing Date, if the conditions set
----------------
forth in Section 8.2 have been satisfied, Sellers will sell, transfer, convey,
assign, and deliver to Buyer the Assets as provided in Section 2 of this
Agreement and make the deliveries provided in Section 9.2 of this Agreement.
5.3 Post-Closing Covenants.
----------------------
(a) Access. Sellers will provide Buyer access and the right
------
to copy for a period of three (3) years from the Closing Date, any books and
records relating to the Assets but not included in the Assets, provided that
such information is kept confidential and is not disclosed by Buyer except as
and to the extent required by applicable law and except as required in the
normal course of Buyer's business.
(b) Further Documents. After the Closing, Sellers will
-----------------
execute and deliver to Buyer any additional bills of sale or other transfer
documents that, in the reasonable opinion of Buyer, may be necessary to ensure,
complete, and evidence the full and effective transfer of the Assets to Buyer
pursuant to this Agreement.
17
<PAGE>
SECTION 6. COVENANTS OF BUYER.
------------------
On the Closing Date, if the conditions set forth in Section 8.1 have
been satisfied, Buyer shall purchase the Assets from Sellers as provided in
Section 2 of this Agreement and shall make the deliveries provided in Section
9.3 of this Agreement.
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS.
--------------------------------
7.1 FCC Consent. The assignment of the FCC Licenses as
-----------
contemplated by this Agreement shall be subject to the prior consent and
approval of the FCC. Promptly upon the execution of this Agreement, Buyer and
Sellers shall prepare for filing with the FCC an appropriate application for FCC
Consent, which shall be filed with the FCC within five (5) business days after
the date hereof. All FCC filing fees shall be paid one-half by each of Sellers
and Buyer. The parties shall thereafter prosecute the application with all
reasonable diligence and otherwise use their best efforts to obtain a grant of
the application as expeditiously as practicable. Each party agrees to comply
with any condition imposed on it by the FCC Consent, except that no party shall
be required to comply with a condition if: (i) the condition was imposed on it
as the result of a circumstance the existence of which does not constitute a
breach by such party of any of its representations, warranties, or covenants
hereunder; and (ii) compliance with the condition would have a material adverse
effect upon it; provided, however, that a condition requiring Buyer to file
periodic reports with the FCC concerning affirmative action and equal employment
opportunity shall not be deemed to have a material adverse effect on Buyer.
Buyer and Sellers shall oppose any requests for reconsideration or judicial
review of the FCC Consent (but nothing herein shall be construed to limit any
party's right to terminate this Agreement pursuant to Section 10 of this
Agreement). If the Closing shall not have occurred for any reason within the
original effective period of the FCC Consent, and neither party shall have
terminated this Agreement under Section 10.1(c), the parties shall jointly
request an extension of the effective period of the FCC Consent. No extension of
the FCC Consent shall limit the exercise by either party of its right to
terminate the Agreement under Section 10.1.
7.2 HSR Filings. If required for compliance with the HSR Act, as
-----------
soon as possible after the date hereof, but in no event later than thirty (30)
business days after the date hereof, Buyer and Sellers shall prepare and file
all documents with the Federal Trade Commission and the United States Department
of Justice as are required to comply with the HSR Act and shall promptly furnish
all materials thereafter requested by any of the regulatory agencies having
jurisdiction over such filings. Sellers shall pay one-half and Buyer shall pay
one-half of all Hart-Scott-Rodino filing fees.
7.3 Adjustments and Prorations. All revenues arising from the
--------------------------
operation of the Stations up until the Effective Time and all expenses arising
from the operation of the Stations up until the Effective Time, including
business and license fees (including any retroactive adjustments thereof),
utility charges, real and personal property
18
<PAGE>
taxes and assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and services charges, taxes, and
employee benefits (except as provided in paragraph 7.3(b) below), and similar
prepaid and deferred items, shall be prorated between Buyer and Sellers in
accordance with the principle that Sellers shall receive all revenues and be
responsible for all expenses, costs, and liabilities allocable to the period
prior to the Effective Time, and Buyer shall be responsible for all expenses,
costs, and obligations allocable to the period after the Effective Time, subject
to the following:
(a) Contracts. There shall be no adjustment and each Seller shall
---------
remain solely liable with respect to any Contracts not included in the Assumed
Contracts, and any other obligation or liability not being assumed by Buyer in
accordance with Section 2.6.
(b) Employee Compensation; Severance. Sellers shall be responsible
--------------------------------
for the payment of all compensation owed to the Stations' employees through the
Closing Date. Within thirty (30) days of the date hereof, Buyer will conduct
job interviews with all of the employees that wish to be interviewed. Within
sixty (60) days of the date hereof, Buyer will notify Seller in writing which of
the Stations' employees will be offered positions after the Closing Date. Buyer
will be responsible for the severance costs listed on Disclosure Schedule 3.11,
------------------------
for each of the Stations' employees that will not be offered such employment
after the Closing Date. In no event will the total amount of Buyer's costs
associated with this Section 7.3(b) exceed the amount listed on Disclosure
----------
Schedule 3.11. Seller shall notify those employees who will not be offered
- -------------
positions by Buyer, on or before the Closing Date, and will be solely
responsible for any other termination costs due Stations' employees. Seller is
free to pay Stations' employees additional termination or retention benefits as
it may see fit, for which Buyer has no responsibility whatsoever. Buyer shall
reimburse Sellers, or Sellers shall receive a credit at Closing, for the
severance costs referred to in the Disclosure Schedule.
(c) Trade and Barter. To the extent that the aggregate value by which
----------------
the Stations's post-closing obligations under trade, barter or similar
arrangements for the sale of advertising time (with the exception of program
barter agreements) is greater than the aggregate value of the goods, services or
other items to be received by the Stations after the Closing, Buyer shall be
entitled to receive the difference; provided, however, that such adjustment or
proration shall not be made unless such difference is more than $10,000.
Sellers shall not enter into any new such arrangements that cannot be satisfied
in full by the Closing without Buyer's express written consent. Buyer shall
receive a credit for any amount by which the aggregate amount paid to Sellers
under prepaid time sales contracts exceeds the value or advertising attributable
to such payments which is required to be run by the Stations after the Closing
pursuant to the terms of such contracts. Sellers shall receive a credit for any
pre-Closing Date advertising for which Stations have not received full barter
value prior to the Closing Date.
19
<PAGE>
(d) Manner of Determining Prorations. The prorations pursuant to
--------------------------------
this Section 7.3 will be determined in accordance with the following procedures:
(i) No later than sixty (60) days after the Closing Date,
Buyer will deliver to Sellers a statement setting forth Buyer's determination of
the settlement prorations pursuant to Section 7.3, which shall be certified by
Buyer to be true and complete as of the Closing Date. If Sellers dispute the
amount of the settlement prorations determined by Buyer, it shall deliver to
Buyer within thirty (30) days after its receipt of Buyer's statement a statement
setting forth its determination of the amount of the settlement prorations. If
Sellers notify Buyer of its acceptance of Buyer's statement, or if Sellers fail
to deliver their statement within the 30-day period specified in the preceding
sentence, Buyer's determination of the settlement prorations shall be conclusive
and binding on the parties as of the last day of the 30-day period.
(ii) Buyer and Sellers shall use their good faith efforts to
resolve any dispute involving the determination of the settlement prorations.
Each party shall provide the other party with access and the right to copy any
books and records in its possession relating to its determination of the
settlement prorations. If the parties are unable to resolve the dispute within
thirty (30) days following the delivery of Sellers' statement, each of Buyer and
Sellers shall select an independent certified public accountant, who shall be
knowledgeable and experienced in the operation of radio broadcasting stations,
and the two accountants so chosen shall attempt to resolve the dispute. If they
are not able to do so within forty-five (45) days following the delivery of
Sellers' statement, the two accountants shall agree upon a third accountant, and
the dispute shall be resolved by the decision of the majority of the
accountants, which shall be conclusive and binding on the parties. Any fees of
the accountants shall be split equally between the parties.
(e) Payment of Purchase Price and Prorations. The Purchase
----------------------------------------
Price and settlement prorations shall be paid as follows:
(i) Payment of Purchase Price. Buyer shall pay or cause
-------------------------
to be paid to Sellers at the Closing the Purchase Price.
(ii) Payments to Reflect Final Determination of Prorations.
-----------------------------------------------------
(1) If the aggregate of the prorations and adjustments,
as finally determined pursuant to Section 7.3(d)(i) and Section 7.3(d)(ii)(the
"Prorations") results in an amount due from Buyer to Sellers, Buyer shall pay
such amount to Sellers, in immediately available funds within five days after
the date on which the Prorations are so determined.
(2) If the Prorations result in an amount due from
Sellers to Buyer, Buyer shall retain an amount equal to such amount from amounts
20
<PAGE>
collected by Buyer pursuant to Section 7.6 with respect to Sellers' accounts
receivable. Any amounts collected by Buyer with respect to Sellers' accounts
receivable and not permitted to be retained pursuant to this paragraph shall be
remitted to Sellers in accordance with Section 7.6. If the amounts of
Prorations due from Sellers to Buyer exceeds the amount of Sellers' accounts
receivable collected by Buyer prior to the date on which the Prorations are
determined, Sellers shall pay to Buyer, in immediately available funds within
five days after the date on which the Prorations are determined, the difference
between the amount owed to Buyer with respect to the Prorations, reduced by the
amount of Sellers' accounts receivable collected by Buyer which have not already
been remitted to Sellers prior to the date on which the Prorations are
determined. Buyer shall be entitled to retain the amount of Sellers' accounts
receivable collected by Buyer prior to the date on which the Prorations are
determined, and, if Sellers make the payment to Buyer provided for in this
paragraph, Buyer shall remit to Sellers in accordance with Section 7.6 any
amounts subsequently collected by Buyer with respect to Sellers' accounts
receivable.
7.4 Risk of Loss. The risk of loss or damage to any of the Assets
------------
from fire or other casualty or cause shall be upon Sellers at all times up to
the Closing on the Closing Date. If material loss or damage to the Assets
occurs, Sellers shall have the option: (i) to repair or cause to be repaired and
to restore the assets to their condition prior to any such loss or damage; or
(ii) subject to the agreement of Buyer, to reduce the Purchase Price by the
amount of insurance proceeds received in connection with such loss or damage.
In the event of any such loss or damage, Sellers shall notify Buyer promptly of
same in writing, specifying with particularity the loss or damage incurred, the
cause thereof, if known or reasonably ascertainable, and the insurance coverage.
The proceeds of any claim for any loss payable under any insurance policy with
respect thereto shall, at the option of Sellers, be used to repair, replace or
restore any such property to its former condition subject to the conditions
stated below. If Sellers have notified Buyer that they elect to repair, replace
or restore the Property and the property is not completely repaired, replaced or
restored on or before the Closing Date specified in Section 9, Buyer, at its
sole option, may: (i) postpone the Closing until such time as the property has
been completely repaired, replaced or restored, and, if necessary, the parties
shall join in an application or applications requesting the FCC to extend the
effective period of its consent to the assignment application; (ii) consummate
the Closing and accept the property in its then condition, in which event
Sellers shall assign to Buyer all proceeds of insurance covering the property
involved, provided Sellers ensure said proceeds are sufficient to repair said
damages.
7.5 Confidentiality. Each party hereto will keep confidential any
---------------
information obtained from the other party in connection with the transactions
contemplated by this Agreement. If this Agreement is terminated and the
purchase and sale contemplated hereby abandoned, each party will return to the
other party all information obtained by it in connection with the transactions
contemplated hereby, and will provide a certificate to that effect. No public
announcement concerning the subject matter of this Agreement shall be made by
either party without the approval of the other as to the announcement's content
and timing, which approval shall not unreasonably be withheld.
21
<PAGE>
7.6 Collection of Accounts Receivable. Buyer agrees to use its best
---------------------------------
efforts to collect Sellers' accounts receivable in the normal and ordinary
course of business as Sellers' agent for collection and will apply all such
amounts collected to the debtor's oldest account receivable (unless and only to
the extent that such debtor disputes that such account receivable is properly
due); provided, however, that such obligation and authority shall not extend to
the institution of litigation, employment of counsel or a collection agency or
any other extraordinary means of collection unless authorized in writing by
Sellers. Buyer agrees to cooperate fully with Sellers as to any litigation or
other collection efforts instituted by Sellers to collect delinquent accounts
receivable. On or before the 15th day of each month, Buyer shall deliver to
Sellers a statement or report showing all such collections effected since the
last previous report, together with a check or draft for the amount of such
collections. If authorized by Sellers, and at Sellers' expense, Buyer shall
have full power and authority as Sellers' agent for collection to settle
disputes, effect compromises, institute and terminate suits relating thereto and
generally to pursue such collections in accordance with Buyer's customary
collection procedures, including employment of counsel or a collection agency or
any other extraordinary means, in all instances acting as agent for Sellers but
without any necessity to disclose that fact. If necessary or advisable in
Buyer's sole discretion, Buyer may effect any or all such collections and
perform authorized acts relating thereto as agent for an undisclosed principal.
If at any time Buyer determines that any such accounts are uncollectible, Buyer
shall notify Sellers of such determination and upon Sellers' written request
shall furnish or make available to Sellers all records, files and data relating
to such accounts and Buyer's determination of uncollectibility. Except as
expressly provided herein, Buyer shall have no responsibility for any obligation
regarding any of Sellers' accounts receivable. Buyer's obligation to collect
accounts receivable as Sellers' agent shall expire at the end of the fourth full
month following the Closing Date, and, within fifteen (15) days after the end of
such month, Buyer shall render a final statement or report showing accounts
collected and uncollected.
7.7 Covenants Not to Compete.
------------------------
(a) Sellers covenant and agree that for a period of two (2)
years after the Closing Date (or such period as allowed by law if less than
three years), they will not, directly or indirectly, own, engage in, manage,
operate, control or participate in the ownership, management, operation or
control of, or be connected as a stockholder, director, officer, agent, partner,
joint venturer, consultant or otherwise with, any radio broadcast station
located in the Metro Rating Area for Minneapolis, Minnesota, as that area is
defined by Arbitron Rating Company. Notwithstanding the foregoing, ownership by
either Seller of not more than five percent (5%) of the stock of a company whose
shares are publicly traded shall not constitute a breach of the terms of this
Section 7.7.
(b) Sellers further covenant and agree that for a period of
one year after the Closing Date Sellers will not hire without Buyer's consent,
which consent shall not be unreasonably withheld, or solicit for employment any
former employee of either Seller who was offered employment by Buyer and who
either (i) declined to accept such
22
<PAGE>
employment or (ii) became an employee of Buyer and thereafter voluntarily
terminated such employment.
(c) Sellers and Buyer agree that in the event either Seller
commits a breach of any of the provisions of this Section 7.7, Buyer shall have
the right and remedy to have the provisions of this Section 7.7 specifically
enforced by any court having jurisdiction, it being acknowledged and agreed that
any such breach will cause immediate irreparable injury to Buyer and that money
damages will not provide an adequate remedy at law for any such breach or
threatened breach. Such right and remedy shall be in addition to, and not in
lieu of, any other rights and remedies including damages available to Buyer at
law or in equity.
(d) If any of the provisions of or covenants contained in
this Section 7.7 are hereafter construed to be wholly or to any extent invalid
or unenforceable in any jurisdiction, the same shall be deemed automatically
modified to the minimum extent necessary to make such provision or covenant
enforceable, and the same shall not affect the remainder of the provisions to
the extent not invalid or unenforceable in such jurisdiction or the
enforceability thereof without limitation in any other jurisdiction.
7.8 Brokers.
-------
(a) Sellers' Broker. Sellers represent and warrant to Buyer
---------------
that except for its retention of Media Venture Partners, Inc. (for which Sellers
acknowledge full responsibility) neither they nor any person or entity acting on
their behalf has agreed to pay a commission, finder's fee, or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, nor has it or any person or entity acting on its behalf taken any action
on which a claim for any such payment could be based. Sellers hereby agree to
indemnify and hold harmless Buyer and its parent and affiliated corporations
from and against any claim that Sellers or any person or entity acting on their
behalf has agreed to pay a commission, finder's fee, or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, and Sellers agree to take full responsibility for any such payment.
(b) Buyer's Broker. Buyer hereby represents and warrants to
--------------
Sellers that except for the retention of Gary Stevens & Co., Incorporated (for
which Buyer acknowledges full responsibility) neither it nor any person or
entity acting on its behalf has agreed to pay a commission, finder's fee, or
similar payment in connection with this Agreement or any matter related hereto
to any person or entity, nor has it or any person or entity acting on its behalf
taken any action on which a claim for any such payment could be based. Buyer
hereby agrees to indemnify and hold harmless Sellers and their parent and
affiliated corporations from and against any claim that Buyer or any person or
entity acting on its behalf has agreed to pay a commission, finder's fee, or
similar payment in connection with this Agreement or any matter related hereto
to any person or entity, and Buyer agrees to take full responsibility for any
such payment.
23
<PAGE>
7.9 Cooperation. Buyer and Sellers shall cooperate fully with each
-----------
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their obligations under this Agreement,
and Buyer and Sellers will use their best efforts to consummate the transactions
contemplated hereby and to fulfill their obligations hereunder.
7.10 Control of the Stations. Prior to Closing, Buyer shall not,
-----------------------
directly or indirectly, control, supervise, or direct, or attempt to control,
supervise or direct the operations of the Stations; those operations, including
complete control and supervision of all of the Stations' programs, employees,
and policies, shall be the sole responsibility of Sellers.
7.11 Consultation. Subject to the provisions of Section 7.10,
------------
between the date hereof and the Closing, Sellers will consult with Buyer's
management with a view to informing such management as to the operation,
management, and business of the Stations.
7.12 Removal of Certain Equipment. Prior to the Closing Date,
----------------------------
Sellers shall remove from the Stations and properly dispose of the following
Personal Property which is not currently used or useful in the operation of the
stations: (a) At the FM Station, the CSI transmitter; and (b) at the AM
Station, the old RCA transmitter, neither of which is currently connected or in
use.
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS.
----------------------------------------------
8.1 Conditions to Obligations of Buyer. All obligations of Buyer
----------------------------------
at the Closing hereunder are subject at Buyer's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. Except as otherwise
------------------------------
provided in this Agreement, all representations and warranties of Sellers
contained in this Agreement shall be true and complete in all material respects
at and as of the Closing Date as though made at and as of that time.
(b) Covenants and Conditions. Sellers shall have performed
------------------------
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing Date.
(c) FCC Consent. The FCC Consent shall have been granted and
-----------
shall have become a Final Order and the FCC Licenses shall be assigned and
transferred to Buyer and, except with regard to any conditions as may be set
forth in any FCC Construction Permit PBH-951113IC, shall contain no adverse
modifications of the terms of the Licenses as they presently exist without the
imposition on Buyer of any conditions that need not be complied with by Buyer
under Section 7.1 hereof and Sellers shall have complied with any conditions
imposed on them by the FCC Consent.
24
<PAGE>
(d) Required Consents. In addition to the FCC Consent, the Sellers
-----------------
shall have obtained all of the other Required Consents. Buyer acknowledges,
however, that Sellers shall not be in default under this Agreement if,
notwithstanding their best efforts, they are unable to obtain a Required
Consent.
(e) HSR Matters. If applicable, the waiting period (and any extension
-----------
thereof) under the HSR Act shall have expired and there shall not be outstanding
any order of a court restraining the transaction contemplated hereby.
(f) Deliveries. Sellers shall have made or stand willing to make all
----------
the deliveries to Buyer set forth in Section 9.2.
(g) Antenna Location. Sellers at their sole expense, shall have (i)
----------------
completed construction of the facilities authorized by and in accordance with
the FCC Construction Permit PBH-951113IC; (ii) filed an application to license
those facilities (FCC Form 302-FM), (iii) commenced operation under Program Test
Authority, and (iv) complied with all applicable rules and regulations of the
FCC with regard thereto.
(h) Absence of Litigation. No suit, action or other proceeding
---------------------
against either Seller shall be pending or threatened before any court or
governmental agency of competent jurisdiction in which it is sought to restrain
or prohibit any of the transactions contemplated by this Agreement or to obtain
damages or other relief in connection with this Agreement or the transactions
contemplated hereby.
(i) Shoreview Partnership. Roy H. Park Broadcasting of the Lake
---------------------
Country, Inc. shall assign its general partnership interest in Shoreview FM
Group, a Minnesota general partnership, to Buyer, for no additional
consideration, and the Buyer shall be admitted to the partnership as of the
Closing Date on terms not materially less favorable than those currently
relating to such Seller.
(j) Environmental Report. Sellers shall, within ten (10) business
--------------------
days after the date hereof, at Buyer's expense, provide Buyer with a current
Phase I environmental assessment of the Real Property (the "Phase I Report")
performed by Dames & Moore. If the Phase I Report demonstrates that any of the
Real Property is not in or may not be in, material compliance with all
environmental laws, Buyer may, by written notice received by Sellers within ten
(10) business days of receipt of such report by Buyer, terminate this Agreement.
If Buyer fails to so notify Sellers, Buyer will be deemed to have accepted the
environmental condition of the Real Property, subject to the representations and
warranties of the Sellers. Buyer shall remit to Sellers, within five (5)
business days of receipt of the Dames & Moore invoice, the cost of the Phase I
Report.
(k) Title Commitment. Sellers shall, within ten (10) business days
----------------
after the date hereof, at Buyer's expense, provide to Buyer a current title
insurance commitment (the "Title Commitment") from Chicago Title Insurance
Company. If the Title
25
<PAGE>
Commitment is not reasonably satisfactory to Buyer, Buyer may, by written notice
received by Sellers within ten (10) business days of receipt of such Title
Commitment by Buyer, notify Sellers of Buyer's exceptions to the commitment.
Sellers shall use their best efforts to affect the cure of such defects. It
shall be Sellers' obligation to cure any material defects on or before the
Closing Date, provided however, that if, in Sellers' opinion, any such defect
cannot reasonably be cured by the Closing Date, Sellers shall so notify Buyer in
writing, within twenty (20) business days of receipt of Buyer's notice of such
defects, whereupon, Buyer shall have five (5) business days to either (i)
terminate this Agreement by written notice to Sellers; or (ii) elect to proceed.
If Buyer fails to provide Sellers with written notice of its intent to terminate
this Agreement within the five (5) business day period specified above, Buyer
shall be deemed to have accepted the condition and state of the title to the
Real Property, subject to the representations and warranties of the Sellers
herein. Buyer shall remit to Sellers, within five (5) business days of receipt
of the Chicago Title invoice, the cost of the Title Commitment.
(l) Due Diligence. During the fifteen (15) business day period
-------------
immediately following the date of this Agreement, the Buyer shall have the right
to conduct a due diligence investigation of the business and assets of the
Sellers at Buyer's sole expense. If the results of Buyer's due diligence
investigation are unsatisfactory to Buyer in its reasonable judgment, Buyer may,
by written notice received by Sellers within three (3) business days following
termination of such fifteen (15) business day period terminate this Agreement.
If Buyer fails to so notify Sellers, Buyer shall be deemed to be satisfied with
the results of its due diligence investigation, subject to the representations
and warranties of the Sellers.
(m) No Material Adverse Change. There shall have been no material
--------------------------
adverse change in the assets, finances, or business of the Sellers (considered
as a whole) as of the Closing Date, excluding changes or circumstances affecting
the industry as a whole or facts or circumstances affecting the local economy or
the general region in which the Stations are located.
(n) Satisfaction of Liens. Sellers shall have obtained satisfactory
---------------------
releases of the Liens encumbering the Sellers' Assets shown on Disclosure
----------
Schedule 3.5.
- ------------
8.2 Conditions to Obligations of Sellers. All obligations of
------------------------------------
Sellers at the Closing hereunder are subject at Sellers' option to the
fulfillment prior to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
------------------------------
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
26
<PAGE>
(b) Covenants and Conditions. Buyer shall have performed and
------------------------
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to and
at the Closing Date.
(c) FCC Consent. The FCC Consent shall have become a Final
-----------
Order, subject to the existence of or conditions relating to FCC Construction
Permit PBH-951113IC, but otherwise, without the imposition on Sellers of any
conditions that need not be complied with by Seller under Section 7.1 hereof and
Buyer shall have complied with any conditions imposed on it by the FCC Consent.
(d) HSR Act. If applicable, the waiting period (and any
-------
extension thereof) under the HSR Act shall have expired and there shall not be
outstanding any order of a court restraining the transaction contemplated
hereby.
(e) Deliveries. Buyer shall have made or stand willing to make
----------
all the deliveries set forth in Section 9.3.
SECTION 9. CLOSING AND CLOSING DELIVERIES.
------------------------------
9.1 Closing.
-------
(a) Closing Date. The Closing shall take place at 10:00 a.m. on
------------
a date as agreed to by Buyer and Sellers within ten (10) business days following
the later to occur of any of the conditions to Buyer's obligation to close set
forth in Sections 8.1(c), (d), (e) or (g), but in no event later than the Upset
Date referred to in Section 10.1(c).
(b) Closing Place. The Closing shall be held at the offices of
-------------
Eckert Seamans Cherin & Mellott, One International Place, 18th Floor, Boston, MA
02110, or any other place that is agreed upon by Buyer and Sellers.
9.2 Deliveries by Sellers. Prior to or on the Closing Date,
---------------------
Sellers shall deliver to Buyer the following in form and substance reasonably
acceptable to Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty deeds, bills of
sale, certificates of title, assignments and other transfer documents which
shall be sufficient to vest good title to the Assets in the name of Buyer, free
and clear of all claims, encumbrances and liens other than Permitted Liens.
(b) Consents. A copy of the Consents, without conditions
--------
materially adverse to Buyer.
(c) Resolutions. Copies of the by-laws of each Seller and the
-----------
resolutions adopted by the Boards of Directors and, if required, stockholders,
of each Seller,
27
<PAGE>
authorizing, and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby, certified by the Secretary of each
Seller as being true and complete on the Closing Date.
(d) Certificate. A certificate, dated as of the Closing Date,
-----------
executed by an authorized officer of each Seller, certifying: (i) that Seller
has obtained proper corporate authorization, including the consent of
stockholders, necessary to the consummation of this Agreement; (ii) that the
representations and warranties of Seller contained in this Agreement are true
and complete in all material respects as of the Closing Date as though made on
and as of that date; and (iii) that Seller has performed in all material
respects all of its obligations and agreements and complied in all material
respects with all of its covenants set forth in this Agreement to be performed
and complied with on or prior to the Closing Date.
(e) Opinion of Counsel. The opinion of Eckert Seamans Cherin &
------------------
Mellott, counsel to Sellers, and Gardner, Carton & Douglas, special FCC counsel
to Sellers, covering those matters customary in transactions of this type.
(f) Lien Searches. Copies of all lien searches conducted by
-------------
Sellers and relating to the Assets.
9.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
-------------------
shall deliver to Sellers the following, in form and substance reasonably
satisfactory to Sellers and their counsel:
(a) Purchase Price. The Purchase Price as provided in Section
--------------
2.3.
(b) Assumption Agreement. A duly executed assumption agreement,
--------------------
pursuant to which Buyer will assume and undertake to perform Sellers'
obligations under the Assumed Contracts arising after the Effective Time, to the
extent specified in Section 2.6.
(c) Resolutions. Copies of resolutions adopted by Buyer,
-----------
authorizing and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby, certified by its Secretary or Assistant
Secretary as being true and correct on the Closing Date.
(d) Certificate. A certificate, dated as of the Closing Date,
-----------
executed on behalf of Buyer by an authorized officer of Buyer, certifying: (i)
that the representations and warranties of Buyer contained in this Agreement are
true and complete in all material respects as of the Closing Date as though made
on and as of that date; and (ii) that Buyer has performed in all material
respects all of its obligations and agreements and
28
<PAGE>
complied in all material respects with all of its covenants set forth in this
Agreement to be performed or complied with on or prior to the Closing Date.
(e) Opinion of Counsel. The opinion of Druen, Rath & Dietrich,
------------------
counsel for Buyer, covering those matters customary in transactions of this
type.
SECTION 10. TERMINATION.
-----------
10.1 Termination Rights. This Agreement may be terminated by either
------------------
Buyer or Sellers, if the terminating party is not then in material breach or
default, upon written notice to the other party, upon the occurrence of any of
the following:
(a) Conditions. If on the Closing Date any of the conditions
----------
precedent to the obligations of the terminating party set forth in this
Agreement have not been satisfied or waived in writing by the terminating party.
(b) Judgments. If there shall be in effect on the Closing Date
---------
any judgment, decree, or order that would prevent or make unlawful the Closing
of this Agreement.
(c) Upset Date. If the Closing Date shall not have occurred on
----------
or before January 31, 1997.
10.2 Disposition of Escrow Deposit. The Escrow Deposit shall be
-----------------------------
forfeited by Buyer and shall become the property of Sellers in the event the
transaction fails to close due to a breach of the representations, warranties or
covenants of the Buyer. Otherwise, the Escrow Deposit shall be credited toward
the Purchase Price or returned to Buyer in accordance with the terms of this
Agreement.
10.3 Liquidated Damages. If this Agreement is terminated by Sellers
------------------
due to a breach by Buyer of its representations, warranties, and covenants under
this Agreement, then the Escrow Deposit shall be paid to Sellers as liquidated
damages, it being agreed that the Escrow Deposit shall constitute full payment
for any and all damages suffered by Sellers by reason of Buyer's failure to
close this Agreement. Buyer and Sellers agree in advance that Sellers' actual
damages if Buyer breaches its obligations hereunder would be difficult to
ascertain and that the amount of the Escrow Deposit paid to Sellers is a fair
and equitable amount to reimburse Sellers for damages sustained from the
termination of this Agreement for the reason stated in the first sentence of
this Section 10.3.
10.4 Specific Performance. The parties recognize that if Sellers
--------------------
refuse to Close as and when required under the provisions of this Agreement,
monetary damages will not be adequate to compensate Buyer for its injury. Buyer
shall therefore be entitled, in addition to a right to collect money damages, to
obtain specific performance of the terms of
29
<PAGE>
this Agreement. If any action is brought by Buyer to enforce this Agreement,
Sellers shall waive the defense that there is an adequate remedy at law.
10.5 Opportunity to Cure. Neither party shall have the right to
-------------------
terminate this Agreement as a result of the other party's default unless the
terminating party shall have given the defaulting party written notice
specifying in reasonable detail the nature of the default and shall have
afforded the defaulting party thirty (30) days to cure the default.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
----------------------------------------------
INDEMNIFICATION.
----------------
11.1 Representations and Warranties. Except as otherwise
------------------------------
specifically set forth herein, all representations and warranties contained in
this Agreement shall survive the Closing for a period of twelve (12) months.
11.2 Indemnification by Sellers. From and after the Closing,
--------------------------
each Seller hereby agrees, subject to Section 11.4, to indemnify and hold Buyer
and its officers, directors, shareholders and affiliates harmless against and
with respect to, and shall reimburse Buyer for:
(a) Breach. Any and all losses, liabilities, claims,
------
actions or damages or expenses resulting from any untrue representation, breach
of warranty, or nonfulfillment of any covenant by Sellers contained herein or in
any certificate, document, or instrument delivered to Buyer hereunder.
(b) Obligations. Any and all obligations of Sellers not
-----------
assumed by Buyer pursuant to the terms of this Agreement, including any and all
liabilities arising at any time under any Contract not included in the Assumed
Contracts subject to the condition that Buyer shall have given Sellers prompt
written notice of, and an opportunity to defend, any and all such asserted
liabilities.
(c) Ownership. Any and all losses, liabilities, or damages
---------
resulting from the operation or ownership of the Stations prior to the Effective
Time, including any and all liabilities arising under the Licenses or the
Contracts which relate to events occurring prior to the Effective Time subject
to the condition that Buyer shall have given Sellers prompt written notice of,
and an opportunity to defend, any and all such asserted liabilities.
(d) Legal Matters. Any and all actions, suits, proceedings,
-------------
claims, demands, assessments, judgments, costs, and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
30
<PAGE>
11.3 Indemnification by Buyer. Notwithstanding the Closing, Buyer
------------------------
hereby agrees to indemnify and hold Sellers and their officers, directors,
shareholders and affiliates harmless against and with respect to, and shall
reimburse Sellers for:
(a) Breach. Any and all losses, liabilities, claims, actions or
------
damages and expenses resulting from any untrue representation, breach of
warranty, or nonfulfillment of any covenant by Buyer contained herein or in any
certificate, document, or instrument delivered to Sellers hereunder.
(b) Ownership. Any and all losses, liabilities, or damages
---------
resulting from the operation or ownership of the Stations on and after the
Effective Time, including any and all liabilities arising under the Licenses or
the Assumed Contracts which relate to events occurring after the Effective Time.
(c) Legal Matters. Any and all actions, suits, proceedings,
-------------
claims, demands, assessments, judgments, costs and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
11.4 Procedure for Indemnification. The procedure for
-----------------------------
indemnification shall be as follows:
(a) Notice. The Claimant shall promptly (but in any event
------
within fifteen (15) business days) give notice to the Indemnitor of any claim,
whether solely between the parties or brought by a third party, specifying (i)
the factual basis for the claim, and (ii) the amount of the claim.
(b) Investigation. With respect to claims between the parties,
-------------
following receipt of notice from the Claimant of a claim, the Indemnitor shall
have thirty (30) business days to make any investigation of the claim that the
Indemnitor deems necessary or desirable. For the purposes of this investigation,
the Claimant agrees to make available to the Indemnitor and/or its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnitor cannot agree as to the validity and
amount of the claim within said 30-day period (or any mutually agreed upon
extension thereof), the Claimant may seek appropriate legal remedy.
(c) Control. With respect to any claim by a third party as to
-------
which the Claimant is entitled to indemnification hereunder, the Indemnitor
shall have the right at its own expense to participate in or assume control of
the defense of the Claim, and the Claimant shall cooperate fully with the
Indemnitor, subject to reimbursement for actual out-of-pocket expenses incurred
by the Claimant as the result of a request by the Indemnitor. If the Indemnitor
elects to assume control of the defense of any third-party claim within fifteen
(15) business days of notice under Section 11.4(a), the Claimant shall have the
right to participate in the defense of the claim at its own expense. If the
Indemnitor does not elect
31
<PAGE>
to assume control or otherwise participate in the defense of any third party
claim within fifteen (15) business days of notice under Section 11.4(a), it
shall be bound by the results obtained by the Claimant with respect to the
claim.
(d) Immediate Action. If a claim, whether between the parties
----------------
or by a third party, requires immediate action, the parties will make every
effort to reach a decision with respect thereto as expeditiously as possible.
(e) Limitations on Indemnification.
------------------------------
(i) Any indemnity payment hereunder shall be limited to
the extent of the actual loss or damage suffered by the Claimant and shall be
reduced by the amount of any recovery by the Claimant from any third party,
including any insurer, and by the amount of any tax benefits received.
(ii) No party shall be entitled to indemnification
hereunder except to the extent that the total amount of its claims for
indemnification exceeds Fifty Thousand Dollars ($50,000). In the event the total
amount of bona fide claims for indemnification exceeds Fifty Thousand Dollars
($50,000), all such claims shall be covered under the provisions of Section 1.1,
provided, however, that in no event shall the aggregate amount for which any
party is liable hereunder exceed One Hundred Thousand Dollars ($100,000). No
party shall be entitled to indemnification hereunder for any claim arising from
the breach by the other party of its representations and warranties which is not
asserted against the Indemnitor within twelve (12) months after the Closing
Date.
(iii) The limitations in Section 11.4(e)(ii) shall not
apply to any claim for indemnification for any liability of the Claimant to any
third party, to the adjustments and prorations to be made pursuant to Section
7.3, or to Buyer's obligations with respect to Sellers' Accounts Receivable as
set forth in Section 7.6.
SECTION 12. MISCELLANEOUS.
-------------
12.1 Fees and Expenses. Sellers shall pay one-half and Buyer
-----------------
shall pay one-half of all HSR Act and FCC filing fees (including any
subsequently instituted tax on the assignment of FCC licenses). Sellers shall
bear the cost of all other filing fees, transfer taxes, sales taxes, document
stamps, or other charges levied by any governmental entity on account of or in
connection with the transfer of the Assets from Sellers to Buyer. Except as
otherwise provided in this Agreement, each party shall pay its own expenses
incurred in connection with the authorization, preparation, execution, and
performance of this Agreement, including, without limitation, all fees and
expenses of counsel, accountants, agents, and representatives.
12.2 Notices. All notices, demands, and requests required or
-------
permitted to be given under the provisions of this Agreement shall be in writing
and shall be deemed to
32
<PAGE>
have been duly delivered and received: (i) on the date of personal delivery;
(ii) on the date of receipt (as shown on the return receipt) if mailed by
registered or certified mail, postage prepaid and return receipt requested; or
(iii) on the next business day after delivery to a courier service that
guarantees delivery on the next business day if the conditions to the courier's
guaranty are complied with, in each case addressed as follows:
If to Sellers: Roy H. Park Broadcasting of Minnesota, Inc.
and Roy H. Park Broadcasting of the Lake Country, Inc.
1700 Vine Center Office Tower
333 West Vine Street
Lexington, KY 40507
Attn: Wright M. Thomas, President
with a copy to: Stephen I. Burr, Esquire
Eckert Seamans Cherin & Mellott
One International Place, 18th Floor
Boston, MA 02110
If to Buyer: Nationwide Communications Inc.
One Nationwide Plaza
Columbus, Ohio 43216
Attn: President
with a copy to: Druen Rath & Dietrich
One Nationwide Plaza
Columbus, Ohio 43216
Attn: Roger A. Craig, Esq.
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 12.2.
12.3 Benefit and Binding Effect. This Agreement shall be binding
--------------------------
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, however, neither party hereto may assign this
Agreement without the prior written consent of the other party, which consent
shall not be unreasonably withheld. Notwithstanding the foregoing, Sellers
shall have the absolute right, without consent of Buyer, to assign their rights
hereunder to any subsidiaries or affiliates of either or both Sellers or of Park
Broadcasting, Inc.
12.4 Further Assurances. The parties shall execute any other
------------------
documents that may be necessary or desirable to the implementation and
consummation of this Agreement.
33
<PAGE>
12.5 Governing Law. This Agreement shall be governed, construed, and
-------------
enforced in accordance with the laws of the State of Minnesota (without regard
to the choice of law provisions thereof).
12.6 Headings and References. The headings and table of contents
-----------------------
herein are included for ease of reference only and shall not control or affect
the meaning or construction of the provisions of this Agreement. For purpose of
this Agreement, the words "hereof", "herein", "hereby", and other words of
similar import refer to this Agreement as a whole, including all Appendices,
Annexes and Schedules hereto. Reference herein to Articles, Sections,
Appendices, Annexes and Schedules unless otherwise designated, shall be to the
relevant Articles, Sections, Appendices, Annexes and Schedules hereof and
hereto. All dollar amounts referred to herein are in United States Dollars.
12.7 Gender and Number. Words used herein, regardless of the gender
-----------------
and number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine, or neuter, and any other number, singular or
plural, as the context requires.
12.8 Entire Agreement. This Agreement, all schedules hereto, and
----------------
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Sellers with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
12.9 Counterparts. This Agreement may be signed in two or more
------------
counterparts, with the same effect as if the signature on each counterpart were
upon the same instrument.
12.10 Negotiated Document. The parties hereto executing below
-------------------
acknowledge that the provisions and language of this Agreement have been
negotiated, and agree that no provision of this Agreement shall be construed
against any party by reason of such party having drafted such provision or this
Agreement.
12.11 Attorneys' Fees. In the event of dispute between or among the
---------------
parties hereto arising out of or relating to this Agreement or the
interpretation or enforcement of this Agreement, or the Escrow Agreement, in
addition to any other remedies available at law or in equity, the prevailing
party or parties shall have the right to recover the costs of enforcing their
rights hereunder or thereunder, including such parties' reasonable attorneys'
fees.
34
<PAGE>
12.12 No Waiver. Unless other specifically set forth in this
---------
Agreement, neither the acceptance of payments due nor the acceptance of delivery
of property hereunder, shall constitute a waiver of any covenant,
representation, warranty, agreement, obligation or undertaking of the Sellers or
the Buyer, all of which shall survive for the periods contemplated under this
Agreement.
35
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
officers of Buyer and Sellers as of the date first written above.
NATIONWIDE COMMUNICATIONS INC.
By: __________________________________
Name: __________________________________
Title: __________________________________
ROY H. PARK BROADCASTING
OF MINNESOTA, INC.
By: __________________________________
Wright M. Thomas, President
By: __________________________________
Gary B. Knapp, Director
By: __________________________________
Donald R. Tomlin, Jr., Director
ROY H. PARK BROADCASTING OF THE
LAKE COUNTRY, INC.
By: __________________________________
Wright M. Thomas, President
By: __________________________________
Gary B. Knapp, Director
By: __________________________________
Donald R. Tomlin, Jr., Director
36
<PAGE>
Exhibit 2.3
KWLO AM
KFMW FM
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PARK RADIO OF IOWA, INC. ("Seller")
AND
KXEL BROADCASTING COMPANY, INC. ("Buyer")
Date: March 27, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
SECTION 1. DEFINITIONS................................................ 1
1.1 "Accounts Receivable"...................................... 1
1.2 "Assets"................................................... 1
1.3 "Assumed Contracts"........................................ 1
1.4 "Buyer's Knowledge"........................................ 2
1.5 "Claimant"................................................. 2
1.6 "Closing".................................................. 2
1.7 "Closing Date"............................................. 2
1.8 "Consents"................................................. 2
1.9 "Contracts"................................................ 2
1.10 "Disclosure Schedule"...................................... 2
1.11 "Environmental Condition".................................. 2
1.12 "Environmental Laws"....................................... 2
1.13 "Environmental Liabilities"................................ 3
1.14 "Effective Time"........................................... 3
1.15 "Escrow Deposit"........................................... 3
1.16 "Excluded Assets".......................................... 3
1.17 "FCC"...................................................... 3
1.18 "FCC Consent".............................................. 3
1.19 "FCC Licenses"............................................. 3
1.20 "Final Order".............................................. 4
1.21 "Hazardous Materials"...................................... 4
1.22 "HSR Act".................................................. 4
1.23 "Indemnitor"............................................... 4
1.24 "Intangibles".............................................. 4
1.25 "Leased Real Property"..................................... 4
1.26 "Licenses"................................................. 4
1.27 "Lien"..................................................... 5
1.28 "Permitted Liens".......................................... 5
1.29 "Personal Property"........................................ 5
1.30 "Purchase Price"........................................... 5
1.31 "Real Property"............................................ 5
1.32 "Seller's Knowledge"....................................... 5
1.33 "Stations"................................................. 5
1.34 "Taxes".................................................... 5
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
<C> <S> <C>
SECTION 2. SALE AND PURCHASE OF ASSETS AND
OTHER CONSIDERATION........................................ 5
2.1 Agreement to Sell and Buy.................................. 5
2.2 Excluded Assets............................................ 6
2.3 Purchase Price............................................. 7
2.4 Allocation of Purchase Price............................... 7
2.5 Payment of Purchase Price.................................. 7
2.6 Assumption of Liabilities and Obligations.................. 7
SECTION 3. REPRESENTATIONS AND
WARRANTIES OF SELLER....................................... 8
3.1 Organization, Standing, and Authority...................... 8
3.2 Authorization and Binding Obligation....................... 8
3.3 Absence of Conflicting Agreements and Required Consents.... 9
3.4 Governmental Authorizations................................ 9
3.5 Title to Property.......................................... 9
3.6 Real Property; Leased Real Property........................ 10
3.7 Contracts.................................................. 10
3.8 Consents................................................... 11
3.9 Intangibles................................................ 11
3.10 Financial Statements....................................... 11
3.11 Personnel.................................................. 11
3.12 Claims and Legal Actions................................... 13
3.13 Compliance with Laws....................................... 13
3.14 Environmental.............................................. 13
3.15 Conduct of Business in Ordinary Course; Adverse Change..... 14
3.16 Taxes...................................................... 14
3.17 Insurance.................................................. 14
3.18 Full Disclosure............................................ 15
3.19 Insolvency Proceedings..................................... 15
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.................... 15
4.1 Organization, Standing, and Authority...................... 15
4.2 Authorization and Binding Obligation....................... 15
4.3 Absence of Conflicting Agreements and Required Consents.... 15
4.4 Claims and Legal Actions................................... 16
4.5 Qualification.............................................. 16
4.6 Full Disclosure............................................ 16
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
<C> <S> <C>
4.7 Reliance................................................... 16
SECTION 5. COVENANTS OF SELLER........................................ 16
5.1 Pre-Closing Covenants...................................... 16
5.2 Closing Covenant........................................... 18
5.3 Post-Closing Covenants..................................... 18
SECTION 6. COVENANTS OF BUYER......................................... 19
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS........................... 19
7.1 FCC Consent................................................ 19
7.2 HSR Filings................................................ 19
7.3 Adjustments and Prorations................................. 20
7.4 Risk of Loss............................................... 22
7.5 Confidentiality............................................ 23
7.6 Collection of Accounts Receivable.......................... 23
7.7 Brokers.................................................... 23
7.8 Cooperation................................................ 24
7.9 Control of the Stations.................................... 24
7.10 Consultation............................................... 24
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER.............. 24
8.1 Conditions to Obligations of Buyer......................... 24
8.2 Conditions to Obligations of Seller........................ 26
SECTION 9. CLOSING AND CLOSING DELIVERIES............................. 26
9.1 Closing.................................................... 26
9.2 Deliveries by Seller....................................... 27
9.3 Deliveries by Buyer........................................ 27
SECTION 10. TERMINATION................................................ 28
10.1 Termination Rights......................................... 28
10.2 Disposition of Escrow Deposit.............................. 28
10.3 Liquidated Damages......................................... 29
10.4 Specific Performance....................................... 29
10.5 Opportunity to Cure........................................ 29
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
<C> <S> <C>
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION............................................ 29
11.1 Representations and Warranties............................. 29
11.2 Indemnification by Seller.................................. 29
11.3 Indemnification by Buyer................................... 30
11.4 Procedure for Indemnification.............................. 30
SECTION 12. MISCELLANEOUS.............................................. 32
12.1 Fees and Expenses.......................................... 32
12.2 Notices.................................................... 32
12.3 Benefit and Binding Effect................................. 33
12.4 Further Assurances......................................... 33
12.5 Governing Law.............................................. 33
12.6 Headings and References.................................... 33
12.7 Gender and Number.......................................... 33
12.8 Entire Agreement........................................... 33
12.9 Counterparts............................................... 34
</TABLE>
iv
<PAGE>
KWLO AM
KFMW FM
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made as of the 27th day of March, 1996, by
and between PARK RADIO OF IOWA, INC., an Iowa corporation with offices at 1700
Vine Center Office Tower, 333 West Vine Street, Lexington, Kentucky 40507
("Seller"), and KXEL BROADCASTING COMPANY, INC., an Iowa corporation, with
offices at One Television Place, Charlotte, NC 28205 ("Buyer").
RECITALS
A. Seller owns and operates radio stations KWLO AM and KFMW FM
(the "Stations"), pursuant to licenses issued by the Federal Communications
Commission.
B. Seller desires to sell and Buyer wishes to buy all the assets
used or useful in the operation of the Stations, for the price and on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises contained herein, Buyer and Seller, intending to
be legally bound hereby, agree as follows:
SECTION 1. DEFINITIONS.
-----------
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
1.1 "Accounts Receivable" means all rights of Seller to payment
for: (a) the sale of advertising time by the Stations; and (b) services
performed by the Stations.
1.2 "Assets" means the assets of the Stations being sold,
transferred, or otherwise conveyed to Buyer hereunder, as specified in Section
2.1.
1.3 "Assumed Contracts" means: (a) those Contracts listed as
Assumed Contracts in Disclosure Schedule 3.7; (b) all Contracts for the sale of
-----------------------
time on the Stations and all trade or barter agreements which are outstanding on
the Closing Date and which comply with the provisions of Section 3.7; and (c)
Contracts entered into between the date hereof and the Closing Date which comply
with the provisions of Section 5.1(a).
<PAGE>
1.4 "Buyer's Knowledge" (or words of similar import) means any
actual knowledge of the following: Beverly Bahakel Poston.
1.5 "Claimant" means a party claiming indemnification pursuant to
Section 11.
1.6 "Closing" means the consummation of the transactions
contemplated in this Agreement in accordance with the provisions of Section 9.
1.7 "Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 9.
1.8 "Consents" means the consents, permits, or approvals of third
parties, including governmental authorities, necessary to transfer any of the
Assets to Buyer or otherwise to consummate the transactions contemplated hereby.
1.9 "Contracts" means all contracts, leases, licenses, and other
agreements (including without limitation leases for personal or real property
and employment agreements), written or oral, including any amendments or other
modifications thereto, that relate to the Assets or the operation of the
Stations, to which Seller is a party, including those described in Disclosure
Schedule, together with any additions thereto between the date hereof and the
Closing Date.
1.10 "Disclosure Schedule" means the Disclosure Schedule of even
date relating to this Agreement titled "Radio Stations KWLO-AM and KFMW(FM),
Waterloo, Iowa, Disclosure Schedule," which has been separately delivered to
Buyer.
1.11 "Environmental Condition" means any set of physical
circumstances in, on, under or affecting property that may constitute a threat
to or endangerment to health, safety, property or the environment and which
relate to the presence of any Hazardous Materials.
1.12 "Environmental Laws" means any laws or agreements with any
federal, state or local governmental entity relating to the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous Materials, in
each case as amended from time to time and as now in effect and includes,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the Clean Air Act, the Clean
Water Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Toxic Substances Control Act, and the Safe Drinking Water Act,
each as amended from time to time and as now in effect that may impose liability
or obligation for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Hazardous
2
<PAGE>
Material or providing any right or remedy with respect to the subject matter
covered by any of the above statutes.
1.13 "Environmental Liabilities" means, without limitation, any
claims (including, without limitation, third party claims, whether for personal
injury or real or personal property damage or otherwise), actions,
administrative proceedings (including informal proceedings), judgments, damages
(including, without limitation, any actual, punitive or consequential damages
under any statutory laws, common law cause of action or contractual obligations
or otherwise), civil or criminal fines or penalties, liabilities (including sums
paid in settlement of claims), losses, obligations (including, without
limitation, liabilities or obligations under any lease or other contract),
payment, cleanup costs, remediation, removal or other response costs (which,
without limitation, shall include costs to cause the Assets to come into
compliance with Environmental Laws), investigation costs (including, without
limitation, fees of consultants, counsel and other experts in connection with
any environmental investigation, testing, audits or studies), reasonable
attorneys' and paralegals' fees (including any reasonable fees and expenses
incurred in enforcing this agreement or collecting any sums due hereunder),
reasonable consultants fees and expert fees, together with all reasonable costs
and expenses incurred by Buyer of any kind or nature that derive directly or
indirectly from or in connection with the breach of any representation or
warranty of Seller set forth in Section 3.14.
1.14 "Effective Time" means 12:01 a.m., Eastern Standard Time, on
the Closing Date.
1.15 "Escrow Deposit" means the sum of One Hundred Seventy-Five
Thousand Dollars ($175,000) cash which is being deposited by Buyer with Media
Venture Partners, Inc., a Virginia corporation (the "Escrow Agent") on the date
hereof pursuant to the terms of an Escrow Agreement among Buyer, Seller and
Escrow Agent, the form of which is attached hereto as Exhibit A.
---------
1.16 "Excluded Assets" means those assets of Seller which are
excluded from the sale of the Stations, as specified in Section 2.2.
1.17 "FCC" means the Federal Communications Commission.
1.18 "FCC Consent" means action by the FCC granting its consent to
the assignment of the FCC Licenses from Seller to Buyer as contemplated by this
Agreement.
1.19 "FCC Licenses" means those Licenses issued by the FCC to Seller
in connection with the business and operations of the Stations, including those
listed in Disclosure Schedule 1.19, together with any additions or changes
------------------------
thereto between the date hereof and the Closing Date.
3
<PAGE>
1.20 "Final Order" means an action of the FCC that has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and with respect
to which no timely filed petition for stay, reconsideration or administrative or
judicial appeal or sua sponte action of the FCC with comparable effect is
--- ------
pending and as to which the time for filing any such petition or appeal
(administrative or judicial) or for the taking of any such sua sponte action of
--- ------
the FCC has expired.
1.21 "Hazardous Materials" means any substance, material or waste
presently listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated by or form the basis of
liability under any Environmental Law, whether by type or quantity, and
includes, without limitation, any oil or other petroleum product or by-products
or fractions thereof, any form of natural gas, special waste or petroleum or any
derivative or by-product thereof, radon and other radioactive elements,
radioactive material, electromagnetic field radiation and other radiation,
asbestos, asbestos containing material, urea formaldehyde foam insulation, lead,
polychlorinated biphenyls ("PCBs") and PCB-containing equipment, infectious,
carcinogenic, mutagenic, or etiologic agents, pesticides, defoliants,
explosives, flammables, corrosives and urea formaldehyde foam insulation.
1.22 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
1.23 "Indemnitor" means a party from whom indemnification is claimed
pursuant to Section 11.
1.24 "Intangibles" means all copyrights, trademarks, tradenames,
service marks, service names, licenses, patents, permits, call letters "KWLO AM
and KFMW FM" and logos, service marks, telephone numbers, computer software,
magnetic media, business and sales lists, program libraries, slogans and
jingles, advertising and promotional materials, privileges, proprietary
information, technical information and data, machinery and equipment warranties,
all applications, licenses, and goodwill relating to any of the foregoing, and
other similar intangible property rights and interests applied for, issued to,
or owned by Seller or under which Seller is licensed or franchised and used or
useful in the business and operations of the Stations, including those listed as
Intangibles in Disclosure Schedule 1.24, together with any additions thereto
------------------------
between the date hereof and the Closing Date.
1.25 "Leased Real Property" means all the Real Property that is
occupied pursuant to a lease or a license pursuant to Section 3.6.
1.26 "Licenses" means all licenses, permits, and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration, or any other federal, state, or local governmental
authorities to Seller in connection with the business and operations of the
Stations, including those listed as Licenses in Disclosure
----------
4
<PAGE>
Schedule 1.26, together with any additions thereto between the date hereof and
- -------------
the Closing Date.
1.27 "Lien" means any mortgage, lease, deed of trust, lien, pledge,
hypothecation, assignment, deposit arrangement, option, right of first refusal,
indenture, license, security interest, encumbrance, right of way, easement,
encroachment or similar arrangement of any kind or nature.
1.28 "Permitted Liens" means: (a) Liens for taxes, assessments, or
similar governmental charges for levies incurred in the ordinary course of
business that are not yet due and payable or as to which any applicable grace
period shall not have expired; and (b) Liens set forth in Disclosure Schedule
-------------------
1.28 and identified as a Permitted Lien.
- ----
1.29 "Personal Property" means the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, (including
all studio and transmission equipment wherever located) and other tangible
personal property used or useful in the operation of the Stations, and
identified and described as Personal Property in Disclosure Schedule 1.29 and
------------------------
all computer discs and tapes, plans, diagrams, blueprints, schematics, and books
and records relating to the operation of the Stations, filings with the FCC and
executed copies of the Assumed Contracts, together with any additions thereto
between the date hereof and the Closing Date.
1.30 "Purchase Price" means the purchase price specified in Section
2.3.
1.31 "Real Property" means the interests in real property,
including all leaseholds, easements, licenses, rights to access, and rights of
way, and all improvements thereon, identified and described as Real Property in
Disclosure Schedule 1.31.
- ------------------------
1.32 "Seller's Knowledge" (or words of similar import) means any
actual knowledge of those persons listed as Seller's representatives in
Disclosure Schedule 1.32.
- ------------------------
1.33 "Stations" means the radio station described in the first
recital to this Agreement.
1.34 "Taxes" shall have the meaning ascribed to it in Section 3.16.
SECTION 2. SALE AND PURCHASE OF ASSETS AND OTHER CONSIDERATION.
---------------------------------------------------
2.1 Agreement to Sell and Buy. Subject to the terms and
-------------------------
conditions set forth in this Agreement, Seller hereby agrees to sell, transfer
and deliver to Buyer (or, with regard to the Real Property, a nominee or other
entity designated by and affiliated with Buyer) on the Closing Date, and Buyer
(and, with regard to the Real Property, on behalf of its nominee or other entity
designated by and affiliated with Buyer) agrees to purchase, all of
5
<PAGE>
the tangible and intangible assets owned or held by Seller and used or useful in
the business or operations of the Stations, wherever located, other than the
Excluded Assets, free and clear of any claims, liabilities, Liens, conditions
(except for those permitted in accordance with Sections 3.5 and 3.6 below, and
except for any condition that is part of the express terms of any License or
Assumed Contract), including without limitation the following:
(a) The Personal Property;
(b) The Licenses;
(c) The Real Property;
(d) The Assumed Contracts;
(e) The Intangibles;
(f) All prepaid expenses; and
(g) The business of the Stations as a going concern and all
goodwill related thereto.
2.2 Excluded Assets. The Assets shall exclude the following
---------------
assets:
(a) Seller's cash on hand and cash equivalents as of the
Effective Time and all other cash and cash equivalents in any of Seller's bank
accounts, prepaid expenses, any and all insurance policies, bonds, letters of
credit, or other similar items, and any cash surrender value and insurance
proceeds in regard thereto;
(b) All Accounts Receivable of the Stations existing as of
the Effective Time;
(c) All books and records that Seller is required by law to
retain, and books and records related solely to internal corporate matters;
(d) All claims, rights, and interest in and to any refunds
for federal, state, or local franchise, income, or other taxes or fees of any
nature whatsoever for periods prior to the Effective Time;
(e) Any pension, profit-sharing, or employee benefit plans;
and
(f) Those assets listed on Disclosure Schedule 2.2.
-----------------------
6
<PAGE>
2.3 Purchase Price. The purchase price to be paid by Buyer for the
--------------
Assets shall be Three Million Five Hundred Thousand Dollars ($3,500,000) plus
assumption of the Assumed Liabilities pursuant to Section 2.6. Prorations of
expenses and revenues shall be made in accordance with Section 7.3.
2.4 Allocation of Purchase Price. At or before the Closing, Buyer
----------------------------
and Seller shall determine the allocation of the Purchase Price in accordance
with Treasury Regulation section 1.1060-1T based upon the approximate relative
fair market values of the Purchased Assets, as determined by a nationally
acceptable appraisal firm chosen by Buyer and reasonably acceptable by Seller
(it being anticipated that the Purchase Price will be allocated first to such of
the Purchased Assets as are tangible to the extent of the approximate fair
market values thereof on the Closing Date, with the balance to intangible
Purchased Assets). Buyer shall pay all fees and expenses of such appraisal
firm. Seller and Buyer will report the federal income tax consequences of the
sale and acquisition of the Purchased Assets under this Agreement in a manner
consistent with the foregoing, and will file Forms 8594 in the manner and at the
times required by Treasury Regulation section 1.1060-1T. Buyer shall prepare
drafts of Form 8594 reflecting the respective Purchase Price allocations
determined as provided above in accordance with Treasury Regulation section
1.1060-1T for Seller and Buyer, such draft Form 8594 to be provided to Seller
within 180 days following the Closing Date, but in no event later than the due
date, including extensions, for Seller's Federal income tax return for the
period including the Closing Date; and Seller's written consent to such drafts
shall not be unreasonably withheld or delayed.
2.5 Payment of Purchase Price. Payment of the Purchase Price for
-------------------------
the Assets shall be made as follows:
(a) Escrow Deposit. The Escrow Deposit shall be held pursuant
--------------
to the Escrow Agreement executed by and among Buyer, Seller, and Escrow Agent in
the form of Exhibit A hereto. The Escrow Deposit shall be applied toward the
---------
Purchase Price at the time of Closing.
(b) Cash Portion. The balance of the Purchase Price shall be
------------
paid in cash at Closing, by wire transfer of federal funds to an account
designated by Seller.
(c) Prorations. Prorations of expenses and revenues shall be
----------
made in accordance with Section 7.3.
2.6 Assumption of Liabilities and Obligations.
-----------------------------------------
(a) Assumption. Except as provided in Section 2.6(b), as of
----------
the Effective Time, Buyer shall assume and undertake to pay, discharge, and
perform the following (the "Assumed Liabilities"): (i) insofar as they relate to
the period after the Effective Time, all the obligations and liabilities of
Seller under the Assumed Contracts; (ii)
7
<PAGE>
all obligations and liabilities arising out of events occurring after the
Effective Time related to Buyer's ownership of the Assets or its operation of
the Stations after the Effective Time; and (iii) any obligations of Seller
assigned to Buyer as part of the adjustments and prorations pursuant to Section
7.3 of this Agreement. Other than as specified in this Section 2.6(a), Buyer
shall assume no obligations or liabilities of Seller. Except for liabilities and
obligations being contested in good faith by appropriate proceeding, Seller will
pay, perform, or otherwise discharge, as and when due, all liabilities and
obligations to its employees, suppliers, distributors and other creditors which
are not expressly assumed by Buyer under this Section 2.6(a).
(b) Limitation. Notwithstanding any provision of this
----------
Agreement to the contrary, Buyer shall not assume: (i) any obligations or
liabilities, whether or not under any Contract, not included in the Assumed
Contracts; (ii) any obligations or liabilities under the Assumed Contracts
relating to the time period prior to the Effective Time; (iii) any claims or
pending litigation or proceedings relating to any action with respect to the
operation of the Stations prior to the Effective Time, (iv) any insurance
policies of Seller; and (v) any obligations or liabilities under any trade or
barter arrangement of Seller which have broadcast obligations after the
Effective Time which exceed, in the aggregate, $10,000. All such obligations and
liabilities shall remain and be the obligations and liabilities solely of
Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.
----------------------------------------
Seller represents and warrants to Buyer as of the date hereof and the
Closing Date as follows:
3.1 Organization, Standing, and Authority. Seller is a
-------------------------------------
corporation duly organized, validly existing, and in good standing under the
laws of the State of Iowa and is duly qualified to conduct business and in good
standing in the State of Iowa. Seller has the requisite corporate power and
authority to: (i) own, lease, and use the Assets as now owned, leased, and used;
(ii) conduct the business of operating the Stations as now conducted; and (iii)
execute, deliver, and perform this Agreement and the documents contemplated
hereby according to their respective terms. Seller has not been known by or used
any other corporate, or any fictitious or other name in the conduct of the
Stations' business or in connection with the use or operation of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery,
------------------------------------
and performance of this Agreement by Seller have been duly authorized by all
necessary corporate actions, including stockholder approval, if required, on the
part of Seller. This Agreement has been duly executed and delivered by Seller
and constitutes the legal, valid, and binding obligation of Seller, enforceable
against Seller in accordance with its terms except as the enforceability hereof
may be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally.
8
<PAGE>
3.3 Absence of Conflicting Agreements and Required Consents.
-------------------------------------------------------
Subject to obtaining the Consents listed in Disclosure Schedule 3.3 and the
-----------------------
FCC Consent, the execution, delivery, and performance of this Agreement (with or
without the giving of notice, the lapse of time, or both): (i) does not require
the consent of any third party; (ii) will not conflict with any provision of the
Certificate or Articles of Incorporation or By-Laws of Seller; (iii) will not
conflict with, result in a breach of, or constitute a default under, any
applicable law, judgment, order, ordinance, decree, rule, regulation, or ruling
of any court or governmental instrumentality; (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of, any performance
required by the terms of any financing, debt or equity agreement or any material
Contract, instrument, license, or permit to which Seller is a party or by which
Seller may be bound; and (v) will not create any claim, liability, Lien, charge,
or encumbrance upon any of the Assets.
3.4 Governmental Authorizations. Except as set forth in Disclosure
--------------------------- ----------
Schedule 3.4, Seller has in effect all the Licenses listed on Disclosure
- ------------ ----------
Schedule 1.19 and all other Federal, state, and local governmental approvals,
- -------------
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights ("Permits") necessary for Seller to own, lease, or operate its
properties and assets and to carry on the business of the Stations as now
conducted, and there has occurred no default under any such Permit. Except as
set forth in Disclosure Schedule, the FCC Licenses: (i) constitute all
authorizations issued to Seller by the FCC in connection with the operation of
the Stations; (ii) are in full force and effect; (iii) are valid for the balance
of the current license term applicable generally to radio stations licensed in
the State of Iowa; (iv) constitute all authorizations required under the
Communications Act of 1934, as amended, and the rules and regulations of the FCC
for the operation of the Stations substantially as now conducted; (v) to
Seller's Knowledge, having made diligent inquiry, are not subject to any pending
or threatened FCC investigations or enforcement or other proceedings which might
result in the revocation or non-renewal of or the imposition of any condition on
such licenses; and (vi) are free and clear of any restrictions which might limit
the full operation of the Stations (other than restrictions under the terms of
the licenses themselves and restrictions imposed by FCC rules). Seller is not
aware of any reason why the FCC Licenses would not be renewed in the ordinary
course.
3.5 Title to Property. Except for the Excluded Assets, the Assets
-----------------
constitute all of the assets used or useful in the ordinary operation of the
Stations. Except as set forth in Disclosure Schedule 3.5, Seller has good and
-----------------------
marketable title to, or valid leasehold interests in, all of the Assets
comprised of Real Property and Personal Property. All the Assets and
properties, other than assets and properties in which Seller has a leasehold
interest, are free and clear of all Liens other than those set forth in
Disclosure Schedule 3.5 and except for Permitted Liens. Except as set forth in
- -----------------------
Disclosure Schedule 3.5, Seller has complied in all material respects with the
- -----------------------
terms of all leases to be assigned hereunder, if any, to which it is a party,
and all such leases are in full force and effect, and Seller enjoys peaceful and
undisturbed possession under all such leases. The Personal Property constitutes
9
<PAGE>
all of the personal property that is used or held by Seller or others for use by
the Stations, or necessary to operate the Stations as they are now being
operated. The Personal Property is in good operating condition and repair
(reasonable wear and tear excepted), is maintained in compliance with good
engineering practice, is not in need of repair, and is otherwise sufficient to
permit the Stations to operate in accordance with the FCC Licenses, the
underlying construction permits of the Stations, and the rules and regulations
of the Commission. All Stations' equipment is type-approved or type-accepted
where such type-approval or type-acceptance is required.
3.6 Real Property; Leased Real Property. All of the Real Property
-----------------------------------
that is occupied by Seller pursuant to a lease or license (the "Leased Real
Property"), other than any Leased Real Property which is an Excluded Asset, is
listed on Disclosure Schedule 1.31 and is held at the rates and for terms ending
------------------------
on the dates shown in Disclosure Schedule 1.31 pursuant to the Contracts therein
------------------------
described, which are the sole and complete Contracts concerning Seller's use of
Leased Real Property other than any Leased Real Property which is an Excluded
Asset. With respect to all Real Property, to Seller's Knowledge: (i) there are
no encroachments upon any Real Property; (ii) none of the buildings, structures
or improvements (including without limitation any ground radials, guy wires or
guy anchors) constructed on the Real Property or Leased Real Property encroach
on any adjoining real estate, and all of the Stations' equipment tower(s),
antennae, antenna ground systems, buildings, driveways, parking lots and
Personal Property that are being assigned to Buyer hereunder are located on the
Real Property that is either being assigned to Buyer hereunder or which is the
subject of any Real Property lease(s) being assigned to Buyer hereunder; and
(iii) all such buildings, structures or improvements are constructed in
conformity with or are "grandfathered" with respect to all "setback" lines,
easements and other restrictions or rights of record or that have been
established by any applicable building, safety or zoning code or ordinance.
There are no pending, or to Seller's Knowledge, threatened, condemnation or
eminent domain proceedings that may affect the Real Property. To Seller's
Knowledge, Disclosure Schedule 1.31 specifically sets forth any and all
------------------------
"grandfathered" exceptions to existing setback requirements, easements and other
restrictions or requirements.
3.7 Contracts. Except as set forth in Disclosure Schedule 3.7, the
--------- -----------------------
Contracts listed in the Disclosure Schedule constitute all of the material
Contracts which are required to conduct the business of the Stations as the are
presently being conducted except for (i) contracts entered into in the ordinary
course of Seller's business with advertisers for the sale of advertising time on
the Stations at the Stations' prevailing rates which are not prepaid and which
may be cancelled by the Stations without penalty on not more than thirty (30)
business days' notice; and (ii) trade or barter agreements pertaining to the
Stations, the aggregate value of which does not exceed, in the aggregate,
$10,000. Except as set forth in Disclosure Schedule 3.7, all Assumed Contracts
-----------------------
are in full force and effect and are valid, binding, and enforceable in
accordance with their terms, and there is not under any Assumed Contract any
default by Seller or, to Seller's Knowledge, any other party thereto or any
event that, after notice or lapse of time or both, would constitute a default.
Except for the
10
<PAGE>
Consents listed in Disclosure Schedule 3.3 and the FCC Consent, Seller has full
-----------------------
legal power and authority to assign its rights under the Assumed Contracts to
Buyer in accordance with this Agreement, and the assignment of the Assumed
Contracts to Buyer will not affect the validity, enforceability, or continuation
of any of the Assumed Contracts.
3.8 Consents. Except for the compliance with the HSR Act provided
--------
for in Section 7.2, the FCC Consent provided for in Section 7.1 and the other
Consents listed in Disclosure Schedule 3.3, no consent, approval, permit, or
-----------------------
authorization of or declaration to or filing with any governmental or regulatory
authority or any other third party is required: (i) to consummate this Agreement
and the transactions contemplated hereby; (ii) to permit Seller to assign or
transfer the Assets to Buyer; or (iii) to enable Buyer to operate the Stations
in essentially the same manner as they are now conducted.
3.9 Intangibles. Disclosure Schedule 1.24 contains a true and
----------- ------------------------
complete list of all the Intangibles registered under federal and/or state law
as patents, trademarks or service marks. To Seller's Knowledge, Seller is not
infringing upon or otherwise acting adversely to any trademarks, tradenames,
service marks, service names, copyrights, patents, patent applications, know-
how, methods, or processes owned by any person or persons other than Seller, and
there is no claim or action pending with respect thereto. To the Seller's
Knowledge, Seller has not taken any action which would permit any party other
than Seller, its agents, officers or employees (acting on behalf of Seller) to
use, license, sublicense or operate under any of the Intangibles. To the
Seller's Knowledge, there is not now and there has not been any infringement,
dilution, or misappropriation of any of the Intangibles.
3.10 Financial Statements. Disclosure Schedule 3.10 contains copies
-------------------- ------------------------
of unaudited profit and loss statements and balance sheets for Seller, for the
fiscal years ending in 1991, 1992, 1993, 1994 and 1995. Except as set forth
thereon, all of such profit and loss statements and balance sheets have been
prepared from the books and records of Seller in accordance with generally
accepted accounting principles consistently applied and maintained throughout
the periods indicated, accurately reflect the books, records, and accounts of
Seller, and present fairly the financial condition of Seller as at their
respective dates and the results of operations for the periods then ended.
3.11 Personnel.
---------
(a) Employees and Compensation. Disclosure Schedule 3.11(a)
-------------------------- ---------------------------
contains: (i) a true and complete list of all persons employed by the Stations
and a description of their compensation; (ii) a description of all employee
benefit plans or arrangements applicable to the employees of the Stations and
all fixed or contingent liabilities or obligations of Seller with respect to any
person now or formerly employed by Seller at the Stations, including, without
limitation, pension or thrift plans, individual or supplemental pension or
accrued compensation arrangements, contributions to hospitalization or other
health or life insurance programs, incentive plans, bonus arrangements, and
vacation, sick
11
<PAGE>
leave, disability, and termination arrangements or policies, including worker's
compensation policies; and (iii) copies of all applicable plan documents, trust
documents, insurance contracts, Contracts with employees, and summary plan
descriptions of the written plans and arrangements described above, the most
recent annual report (Form 5500 and all schedules filed therewith) in connection
with each such plan or arrangement, the most recent IRS determination letter, if
any, for each such plan or arrangement which is intended to satisfy Section
401(a) of the Internal Revenue Code of 1986, as amended, and if a plan or
arrangement is funded, the most recent annual and periodic accounting of assets
of such plan or arrangement. Except as set forth on Disclosure Schedule 3.11(a),
---------------------------
Seller does not have or maintain any bonus, stock option, deferred compensation,
pension or profit-sharing plan, or other retirement plan or arrangement, or
other direct or indirect employee compensation fringe benefit or welfare plan,
including, without limitation, any "employee benefit plan" within the meaning of
Section 3(e) of the Employee Retirement Income Security Act of 1974 ("ERISA").
Except as set forth on Disclosure Schedule 3.11(a) Seller does not maintain or
---------------------------
contribute to any employee benefits plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA. Except as set forth in
Disclosure Schedule 3.11(a), to Seller's Knowledge: (i) all employee benefits
- ---------------------------
and welfare plans or arrangements described above were established and have been
executed, managed, and administered without material exception in accordance
with all applicable requirements of the Internal Revenue Code, the Employee
Retirement Income Security Act of 1974, as amended, and other applicable laws;
(ii) Seller is not aware of the existence of any governmental audit or
examination of any of such plans or arrangements; and (iii) no action, suit, or
claim with respect to any of such plans or arrangements is pending or, to
Seller's Knowledge, threatened. Neither Seller nor any business or entity which
is a member of a "controlled group of corporations" under "common control" as
defined in ERISA, or an "affiliated service group" with Seller as defined in
ERISA, or which is required to be aggregated with Seller under ERISA, or is
under "common control" with Seller as defined in ERISA, nor any of their
respective employees, participate in, contribute to, or are required to
contribute to any Multiemployer Plan, as defined in Sections 3(37) and
4001(a)(3) of ERISA. To the extent applicable, all contributions and other
payments customarily made or required to be made by Seller to any benefit plan
or arrangement or under any employment agreement for or on behalf of any of its
employees or former employees have been made or reserves adequate for such
purposes have been set aside therefor and are reflected in Seller's financial
statements in accordance with the terms of each such plan, arrangement or
agreement. Except as set forth in Disclosure Schedule 3.11(a), Seller has not
---------------------------
promulgated any policy or entered into any written agreement relating to the
payment of severance pay to any employee whose employment may be terminated or
suspended, voluntarily or otherwise, by Seller. Seller has substantially
complied with and is not in default in any material respect under any laws,
rules and regulations, relating to employment of labor, including those relating
to wages, hours, equal employment opportunities, employment of protected
minorities (including women and persons over 40 years of age), collective
bargaining and the withholding and payment of taxes and contributions and has
withheld all amounts required or agreed to be withheld from wages and salaries
of its employees, and is not liable for any arrearage of wages or for any
12
<PAGE>
tax or penalty or failure to comply with the foregoing. Seller has not
consented to any final decree involving any claim of unfair labor practice and
has not been held in any final judicial proceeding to have committed any unfair
labor practice and there are no material controversies pending or threatened
between Seller and any of its employees.
(b) Agreements. Except as set forth in Disclosure Schedule 3.11(b):
---------- ---------------------------
(i) Seller is not a party to or subject to any collective bargaining agreements
with respect to the Stations; and (ii) Seller has no contracts of employment
with any employee of the Stations other than contracts terminable at will or on
less than thirty (30) days notice with no liability other than paying the
employee's usual compensation through the date of termination.
3.12 Claims and Legal Actions. Except as set forth in Disclosure
------------------------ ----------
Schedule 3.12 and except for investigations and rule making proceedings
- -------------
affecting the radio broadcasting industry generally, there is no claim, legal
action, counterclaim, suit, arbitration, governmental investigation, or other
legal, administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or, to Seller's Knowledge, threatened, against or relating
to Seller, the Assets, or the Stations.
3.13 Compliance with Laws. Except as set forth in Disclosure
-------------------- ----------
Schedule 3.13, Seller is in compliance with all applicable statutes, laws,
- -------------
ordinances, regulations, rules, judgments, decrees, or orders of any
Governmental Entity, except for possible noncompliance which, individually or in
the aggregate, would not have a material adverse effect on Seller, the Stations
or the Assets.
3.14 Environmental. Except to the extent disclosed on Disclosure
------------- ----------
Schedule 3.14:
- -------------
(a) To the Seller's Knowledge, Seller possesses all permits, licenses,
registrations and other consents which are required with respect to (i) the
Assets, including without limitation, the Real Property now owned, held, leased,
managed or operated in whole or in part by Seller in the operation of the
Stations (collectively, the "Property"); or (ii) the operation of Stations'
under all Environmental Laws (the "Environmental Permits"), and all such
Environmental Permits are in full force and effect.
(b) To Seller's Knowledge (i) Seller and the Property are materially
in compliance with all Environmental Laws, including, without limitation, all
applicable reporting requirements under Environmental Laws; and (ii) there are
no transformers, capacitors or other appliances which contain PCBs, and no
asbestos containing material, in use upon, stored upon or disposed of upon the
Property.
(c) There is no proceeding or investigation pending or, to Seller's
Knowledge, threatened by or before any court, governmental agency or board or
13
<PAGE>
other forum in which Seller has been, or with respect to threatened proceedings,
could reasonably be expected to be, named as a defendant or potentially
responsible party (i) for alleged noncompliance with any Environmental Laws, or
(ii) relating to the release or threatened release into the environment of any
Hazardous Materials.
(d) During the period of current management's ownership of
Seller, Seller has not disposed, released or disseminated Hazardous Materials
in, on, under, from or about the Real Property other than in accordance with
applicable laws.
3.15 Conduct of Business in Ordinary Course; Adverse Change. Except
------------------------------------------------------
as set forth in Disclosure Schedule 3.15, since December 31, 1995, (a) Seller
------------------------
has conducted the business of the Stations in the ordinary course; (b) there has
occurred no change in the business, financial condition, Assets, earnings or
results of operations of the Stations, and no damage, destruction or loss
(whether or not covered by insurance) to any of the Assets, which could
reasonably be expected to have a material adverse effect on Seller, the business
of the Stations, or the transactions contemplated herein; and (c) there has been
no disposition of any Assets except in the ordinary course of business when such
Assets were no longer used or useful in connection with the operations of the
Stations, or in connection with the acquisition of replacement property of
equivalent kind and value. Seller has no knowledge of any condition or
contingency which it could reasonably expect to have a material adverse effect
on Seller, the business of the Stations, or the transactions contemplated
herein, except as disclosed in this Agreement.
3.16 Taxes. Seller has, or by the Closing Date will have, paid and
-----
discharged all taxes, assessments, excises and other levies, including any
interest and penalties due in connection therewith (the "Taxes") relating to the
Assets, excepting such taxes, assessments, and other levies as will not be due
until after the Closing Date and that are to be prorated between Buyer and
Seller hereunder. Seller has paid or will pay when due any and all taxes,
including, but not limited to, federal, state and local income taxes, earnings
taxes, sales taxes, withholding taxes, employment and payroll taxes and
contributions, property or inventory taxes, franchise taxes or other
governmental charges and duties due, or claimed to be due, to any governmental
authority, including any interest and penalties due in connection therewith,
with respect to periods beginning on or before the Closing Date, other than
those contested in good faith by appropriate proceeding. Seller has received no
notification of any pending audit, examination, investigation or other similar
proceeding relating to Taxes due from Seller. There are no pending requests for
rulings from any tax authority with respect to the Assets.
3.17 Insurance. Disclosure Schedule 3.17 lists the type of
--------- ------------------------
insurance policies, the limits of the policies and the deductible amount of the
policies that are currently in force and effect relating to the Stations or the
Assets. All premiums due and payable on such policies have been paid.
14
<PAGE>
3.18 Full Disclosure. No representation or warranty made by Seller
---------------
contained in this Agreement nor any certificate, document, or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading.
3.19 Insolvency Proceedings. Neither Seller nor the Assets are the
----------------------
subject of any pending or, to Seller's Knowledge, threatened insolvency
proceedings, including, without limitation, any bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary. Seller has not made any assignment for the benefit of creditors or
taken any action with a view to or that would constitute a valid basis for the
institution of any such insolvency proceedings.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to Seller as of the date hereof and the
Closing Date as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
-------------------------------------
duly organized, validly existing, and in good standing under the laws of the
State of Iowa. Buyer will be duly qualified to conduct its business in the
State of Iowa. Buyer has the requisite corporate power and authority to: (i)
own, lease, and use the Assets; (ii) conduct the business of operating the
Stations; and (iii) execute, deliver, and perform this Agreement and the
documents contemplated hereby according to their respective terms.
4.2 Authorization and Binding Obligation. The execution, delivery,
------------------------------------
and performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes a legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements and Required Consents.
-------------------------------------------------------
Subject to obtaining the Consents, the execution, delivery, and performance of
this Agreement by Buyer and the documents contemplated hereby (with or without
the giving of notice, the lapse of time, or both): (i) do not require the
consent of any third party; (ii) will not conflict with the Articles of
Incorporation or By-Laws of Buyer; (iii) will not conflict with, result in a
breach of, or constitute a default under, any applicable law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; and (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the
15
<PAGE>
terms of, any agreement, instrument, license or permit to which Buyer is a party
or by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Claims and Legal Actions. There is no action, suit,
------------------------
proceeding, or investigation pending or, to Buyer's Knowledge, threatened that,
if decided against Buyer, would materially and adversely affect Buyer's ability
to perform its obligations under this Agreement or the transactions contemplated
thereby.
4.5 Qualification. To Buyer's Knowledge, Buyer is qualified
-------------
legally, financially and otherwise to become the assignee of the Licenses,
including the FCC Licenses, under the Communications Act of 1934, as amended
prior to the date of this Agreement, and the rules, regulations and policies of
the FCC as in effect on the date of this Agreement. To Buyer's Knowledge, there
are no facts that could prevent, hinder, discourage, or delay the FCC from
issuing the FCC Consent.
4.6 Full Disclosure. No representation or warranty made by Buyer
---------------
contained in this Agreement nor any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading.
4.7 Reliance. Buyer has not relied on any representation or
--------
statement made by Seller, or any person acting on Seller's behalf, except as
specifically provided in this Agreement, the Exhibits and Schedules hereto and
Disclosure Schedule.
SECTION 5. COVENANTS OF SELLER.
-------------------
5.1 Pre-Closing Covenants. Seller covenants and agrees that,
---------------------
between the date hereof and the Closing Date, Seller will conduct the business
and operations of the Stations diligently in the ordinary course, and, except as
contemplated by this Agreement or with the prior written consent of Buyer,
Seller will act in accordance with the following:
(a) Contracts. Seller will not enter into any contract or
---------
commitment relating to the Stations or the Assets, or amend or terminate any
Assumed Contract (or waive any substantial right thereunder), or incur any
obligation (including obligations relating to the borrowing of money or
guarantee of indebtedness), except in the ordinary course of business and
consistent with the other provisions of this Agreement and the past practices of
the Stations. Seller will follow its usual and customary policies with respect
to extending credit for sales of time on the Stations and with respect to
collecting accounts receivable arising from such extension of credit.
(b) Liens. Seller will not create, assume, or permit to exist
-----
any Lien affecting any of the Assets, except for those in existence on the date
of this Agreement and disclosed in Disclosure Schedule 3.5 and except for
-----------------------
mechanics liens, liens for current taxes which are not yet due and payable, and
other similar liens, all of which will either be
16
<PAGE>
discharged on or before the Closing or be included in the adjustments and
prorations pursuant to Section 7.3 of this Agreement.
(c) Dispositions. Seller will not sell, assign, lease, or
------------
otherwise transfer or dispose of any of the Assets except in the ordinary course
of business when such Assets are no longer used or useful in connection with the
operations of the Stations and unless such Assets are replaced with property of
equivalent kind and value, and when such dispositions are, in the aggregate, not
in excess of $7,500.
(d) Waivers. Seller will not waive any material right relating
-------
to the Stations or the Assets.
(e) Licenses. Except as set forth in this Agreement, Seller
--------
will not cause or permit, by any act or failure to act, any of the Licenses to
expire or to be surrendered or modified, or take any action that would cause the
FCC or any other governmental authority to institute proceedings for the
suspension, revocation, or adverse modification of any of the Licenses, or fail
to prosecute with due diligence any pending applications to any governmental
authority in connection with the operation of the Stations, or take any other
action within its control that could reasonably be expected to result in the
Stations being in noncompliance in any material respect with the requirements of
the Communications Act of 1934, as amended, or any other applicable law, or the
rules and regulations of the FCC or any other governmental authority having
jurisdiction. Seller will take all reasonable steps to defend and protect the
integrity of the Stations's signal and service contours and participate actively
in any FCC proceedings of which it becomes aware (other than those generally
affecting the broadcasting industry) which may reasonably be expected to result
in a material adverse affect upon the operations of the Stations, with the goal
of minimizing such effect upon the Stations.
(f) Consents. Seller will use best efforts to obtain the
--------
Consents, without any material change in the terms or conditions of any Assumed
Contract that would be materially less advantageous to the Stations than those
pertaining under the Assumed Contract as in effect on the date hereof.
(g) Books. Seller will maintain the books and records of the
-----
Stations in accordance with prior practice.
(h) Access to Information. Seller will give to Buyer and its
---------------------
counsel, accountants, engineers, and other authorized representatives reasonable
access to the Assets and to all books and records relating thereto, and will
furnish or cause to be furnished to Buyer and its authorized representatives all
information relating to the Assets that they reasonably request (including any
financial reports and operations reports produced with respect to the Stations).
(i) Maintenance of Assets. Seller will maintain all of the
---------------------
Stations's property and assets or replacements thereof in their present
condition as
17
<PAGE>
represented in this Agreement, ordinary wear and tear excepted. Seller will
maintain supplies of inventory and spare parts consistent with past practice.
(j) Compliance with Laws. Seller will comply in all material
--------------------
respects with all rules and regulations of the FCC, and with all other
applicable laws, rules, and regulations to which it is subject. Upon receipt of
notice of violation of any law, rule, or regulation, Seller will use reasonable
efforts to contest in good faith or cure the violation prior to the Closing
Date.
(k) Insurance. Seller will maintain in force the existing
---------
hazard and liability insurance policies, or comparable coverage, for the
Stations and the Assets.
(l) Preservation of Business. Seller will use its reasonable
------------------------
efforts until the Closing Date to preserve the business and organization of the
Stations intact, to keep available to the Stations their present employees, and
to preserve for the Stations their present relationships with suppliers and
customers and others having business relations with it.
(m) No Solicitation. From the date hereof through the Closing
---------------
Date, or such earlier date as this Agreement is terminated, neither Seller nor
any of its officers or directors will discuss or negotiate with any other person
or entity, and they shall not make any offer to sell or accept any offer to
purchase, whether or not solicited, regarding any proposed sale of all of any
material part of the Assets.
(n) Notice of Adverse Change. Seller shall promptly notify
------------------------
Buyer in writing of (i) any material adverse change of which it has actual
knowledge in the financial condition of Assets, revenues, liabilities (whether
absolute, accrued, contingent or otherwise) or operation of the business of the
Stations; and (ii) any governmental or regulatory complaints, investigations or
hearings, or the institution of any litigation involving or relating to the
Assets or the business of the Stations.
5.2 Closing Covenant. On the Closing Date, if the conditions set
----------------
forth in Section 8.2 have been satisfied, Seller will sell, transfer, convey,
assign, and deliver to Buyer the Assets as provided in Section 2 of this
Agreement and make the deliveries provided in Section 9.2 of this Agreement.
5.3 Post-Closing Covenants.
----------------------
(a) Access. Seller will provide Buyer access and the right to
------
copy for a period of three (3) years from the Closing Date, any books and
records relating to the Assets but not included in the Assets, provided that
such information is kept confidential and is not disclosed by Buyer except as
and to the extent required by applicable law and except as required in the
normal course of Buyer's business.
18
<PAGE>
(b) Further Documents. After the Closing, Seller will execute
-----------------
and deliver to Buyer any additional bills of sale or other transfer documents,
and take additional steps, that, in the reasonable opinion of Buyer, may be
necessary to ensure, complete, and evidence the full and effective transfer of
the Assets to Buyer pursuant to this Agreement.
SECTION 6. COVENANTS OF BUYER.
------------------
On the Closing Date, if the conditions set forth in Section 8.1 have
been satisfied, Buyer shall purchase the Assets from Seller as provided in
Section 2 of this Agreement and shall make the deliveries provided in Section
9.3 of this Agreement.
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS.
--------------------------------
7.1 FCC Consent. The assignment of the FCC Licenses as
-----------
contemplated by this Agreement shall be subject to the prior consent and
approval of the FCC. Promptly upon the execution of this Agreement, Buyer and
Seller shall prepare for filing with the FCC an appropriate application for FCC
Consent, which shall be filed with the FCC within ten (10) business days after
the date hereof. All FCC filing fees shall be paid one-half by each of Seller
and Buyer. The parties shall thereafter prosecute the application with all
reasonable diligence and otherwise use their best efforts to obtain a grant of
the application as expeditiously as practicable. Each party agrees to comply
with any condition imposed on it by the FCC Consent, except that no party shall
be required to comply with a condition if: (i) the condition was imposed on it
as the result of a circumstance the existence of which does not constitute a
breach by such party of any of its representations, warranties, or covenants
hereunder; and (ii) compliance with the condition would have a material adverse
effect upon it; provided, however, that a condition requiring Buyer to file
periodic reports with the FCC concerning affirmative action and equal employment
opportunity shall not be deemed to have a material adverse effect on Buyer.
Buyer and Seller shall oppose any requests for reconsideration or judicial
review of the FCC Consent (but nothing herein shall be construed to limit any
party's right to terminate this Agreement pursuant to Section 10 of this
Agreement). If the Closing shall not have occurred for any reason within the
original effective period of the FCC Consent, and neither party shall have
terminated this Agreement under Section 10.1, the parties shall jointly request
an extension of the effective period of the FCC Consent. No extension of the
FCC Consent shall limit the exercise by either party of its right to terminate
the Agreement under Section 10.1.
7.2 HSR Filings. If required for compliance with the HSR Act, as
-----------
soon as possible after the date hereof, but in no event later than thirty (30)
business days after the date hereof, Buyer and Seller shall prepare and file all
documents with the Federal Trade Commission and the United States Department of
Justice as are required to comply with the HSR Act and shall promptly furnish
all materials thereafter requested by any of the regulatory agencies having
jurisdiction over such filings. Each of Seller and Buyer shall pay one-half of
all Hart-Scott-Rodino filing fees.
19
<PAGE>
7.3 Adjustments and Prorations. All revenues arising from the
--------------------------
operation of the Stations up until the Effective Time and all expenses arising
from the operation of the Stations up until the Effective Time, including
business and license fees (including any retroactive adjustments thereof),
utility charges, real and personal property taxes and assessments levied against
the Assets, property and equipment rentals, applicable copyright or other fees,
sales and services charges, taxes, and employee benefits (except as provided in
paragraph 7.3(b) below), and similar prepaid and deferred items, shall be
prorated between Buyer and Seller in accordance with the principle that Seller
shall receive all revenues and be responsible for all expenses, costs, and
liabilities allocable to the period prior to the Effective Time, and Buyer shall
be responsible for all expenses, costs, and obligations allocable to the period
after the Effective Time, subject to the following:
(a) Contracts. There shall be no adjustment and Seller shall
---------
remain solely liable with respect to any Contracts not included in the Assumed
Contracts, and any other obligation or liability not being assumed by Buyer in
accordance with Section 2.6.
(b) Employee Compensation; Severance. Seller shall be
--------------------------------
responsible for the payment of all compensation owed and severance payments due
to the Stations's employees through the Closing Date. Seller shall also be
solely responsible for any other termination costs due Stations' employees.
(c) Trade and Barter. To the extent that the aggregate value
----------------
by which the Stations's post-closing obligations under trade, barter or similar
arrangements for the sale of advertising time (with the exception of program
barter agreements) is greater than the aggregate value of the goods, services or
other items to be received by the Stations after the Closing, Buyer shall be
entitled to receive the difference; provided, however, that such adjustment or
proration shall not be made unless such difference is more than $10,000. Seller
shall not enter into any new such arrangements that cannot be satisfied in full
by the Closing without Buyer's express written consent. Buyer shall receive a
credit for any amount by which the aggregate amount paid to Seller under prepaid
time sales contracts exceeds the value or advertising attributable to such
payments which is required to be run by the Stations after the Closing pursuant
to the terms of such contracts. Seller shall receive a credit for any pre-
Closing Date advertising for which Stations have not received full barter value
prior to the Closing Date.
(d) Manner of Determining Prorations. The prorations pursuant
--------------------------------
to this Section 7.3 will be determined in accordance with the following
procedures:
(i) No later than sixty (60) days after the Closing
Date, Buyer will deliver to Seller a statement setting forth Buyer's
determination of the settlement prorations pursuant to Section 7.3, which shall
be certified by Buyer to be true and complete as of the Closing Date. If Seller
disputes the amount of the settlement prorations determined by Buyer, it shall
deliver to Buyer within thirty (30) business days after its receipt of Buyer's
statement a statement setting forth its determination of the amount
20
<PAGE>
of the settlement prorations. If Seller notifies Buyer of its acceptance of
Buyer's statement, or if Seller fails to deliver its statement within the 30-day
period specified in the preceding sentence, Buyer's determination of the
settlement prorations shall be conclusive and binding on the parties as of the
last day of the 30-day period.
(ii) Buyer and Seller shall use their good faith
efforts to resolve any dispute involving the determination of the settlement
prorations. Each party shall provide the other party with access and the right
to copy any books and records in its possession relating to its determination of
the settlement prorations. If the parties are unable to resolve the dispute
within fifteen (15) business days following the delivery of Seller's statement,
each of Buyer and Seller shall select an independent certified public
accountant, who shall be knowledgeable and experienced in the operation of radio
broadcasting stations, and the two accountants so chosen shall attempt to
resolve the dispute. If they are not able to do so within forty-five (45)
business days following the delivery of Seller's statement, the two accountants
shall agree upon a third accountant, and the dispute shall be resolved by the
decision of the majority of the accountants, which shall be conclusive and
binding on the parties. Any fees of the accountants shall be split equally
between the parties.
(e) Payment of Purchase Price and Prorations. The Purchase
----------------------------------------
Price and settlement prorations shall be paid as follows:
(i) Payment of Purchase Price. Buyer shall pay or
-------------------------
cause to be paid to Seller at the Closing the Purchase Price.
(ii) Payments to Reflect Final Determination of
------------------------------------------
Prorations.
- ----------
(1) If the aggregate of the prorations and
adjustments, as finally determined pursuant to Section 7.3(d)(i) and 7.3(d)(ii)
(the "Prorations") results in an amount due from Buyer to Seller, Buyer shall
pay such amount to Seller, in immediately available funds within five days after
the date on which the Prorations are so determined.
(2) If the Prorations result in an amount due
from Seller to Buyer, Buyer shall retain an amount equal to such amount from
amounts collected by Buyer pursuant to Section 7.6 with respect to Seller's
accounts receivable. Any amounts collected by Buyer with respect to Seller's
accounts receivable and not permitted to be retained pursuant to this paragraph
shall be remitted to Seller in accordance with Section 7.6. If the amounts of
Prorations due from Seller to Buyer exceeds the amount of Seller's accounts
receivable collected by Buyer prior to the date on which the Prorations are
determined, Seller shall pay to Buyer, in immediately available funds within
five days after the date on which the Prorations are determined, the difference
between the amount owed to Buyer with respect to the Prorations, reduced by the
amount of Seller's accounts receivable collected by Buyer which have not already
been remitted to Seller prior to the date on which the Prorations are
determined. Buyer shall be entitled to retain the amount of Seller's
21
<PAGE>
accounts receivable collected by Buyer prior to the date on which the Prorations
are determined, and, if Seller makes the payment to Buyer provided for in this
paragraph, Buyer shall remit to Seller in accordance with Section 7.6 any
amounts subsequently collected by Buyer with respect to Seller's accounts
receivable.
(iii) Holdback. One Hundred Thousand Dollars
--------
($100,000) of the Purchase Price payable at Closing shall be retained by the
Escrow Agent, to be held pursuant to the Escrow Agreement as security for the
obligations of the Seller under Section 11 hereof.
7.4 Risk of Loss.
------------
(a) The risk of loss or damage to the Assets shall be upon
Seller at all times prior to the Closing. In the event of such loss or damage,
Seller shall promptly notify Buyer and shall use its reasonable efforts to
repair, replace or restore the lost or damaged Assets to their former condition
as soon as possible. If material damage has occurred that precludes the
operation of the Stations within the terms of the Station Licenses and the FCC
Rules, and the Assets have not been repaired or restored prior to the Closing
Date, Buyer may, at its option:
(i) elect to consummate the Closing and accept the
Stations "AS IS," in which event Seller shall pay over to Buyer any proceeds of
insurance received by Seller and attributable to damage to the Stations or the
Assets and thereafter Seller shall have no further obligation to repair, replace
or restore the damaged property; or
(ii) elect to postpone the Closing Date for a period of
up to sixty (60) days, with prior consent of the FCC if necessary (which the
parties shall use their reasonable efforts to obtain), to permit Seller to make
such repair, replacement or restoration as is required to restore the lost or
damaged property to the equivalent of its former condition in all material
respects. If Seller cannot complete such repair, replacement or restoration
within such sixty (60) day extension period, Buyer may terminate this Agreement
by giving notice to Seller and the parties shall be released and discharged from
any further obligation hereunder. If the parties disagree whether the property
has been adequately repaired, replaced or restored, or whether the Stations can
be operated within the terms of the Station Licenses, the matter shall be
referred to a mutually-acceptable qualified consulting communications engineer,
who shall be a member of the Association of Federal Communications Consulting
Engineers, whose decision shall be final, and whose fees and expenses shall be
shared equally by Buyer and Seller.
(b) Notwithstanding the foregoing, if any event occurs which
prevents broadcast transmissions in a normal and usual manner in accordance with
the terms of the Station Licenses and the FCC Rules for a period of more than
five (5) consecutive days, then Buyer shall have the right to terminate this
Agreement at any time within fifteen (15) days after the occurrence of such
event without further liability hereunder, or Buyer may proceed in the manner
set forth in this Section 7.4; otherwise Buyer shall remain fully
22
<PAGE>
obligated to consummate the transactions contemplated hereunder (except to the
extent Seller has failed to fulfill its obligations hereunder).
7.5 Confidentiality. Each party hereto will keep confidential any
---------------
information obtained from the other party in connection with the transactions
contemplated by this Agreement. If this Agreement is terminated and the
purchase and sale contemplated hereby abandoned, each party will return to the
other party all information obtained by it in connection with the transactions
contemplated hereby, and will provide a certificate to that effect. No public
announcement concerning the subject matter of this Agreement shall be made by
either party without the approval of the other as to the announcement's content
and timing, which approval shall not unreasonably be withheld.
7.6 Collection of Accounts Receivable. Buyer agrees to use its
---------------------------------
best efforts to collect Seller's accounts receivable in the normal and ordinary
course of business as Seller's agent for collection and will apply all such
amounts collected to the debtor's oldest account receivable (unless and only to
the extent that such debtor disputes that such account receivable is properly
due); provided, however, that such obligation and authority shall not extend to
the institution of litigation, employment of counsel or a collection agency or
any other extraordinary means of collection unless authorized in writing by
Seller. Buyer agrees to cooperate fully with Seller as to any litigation or
other collection efforts instituted by Seller to collect delinquent accounts
receivable. On or before the 15th day of each month, Buyer shall deliver to
Seller a statement or report showing all such collections effected since the
last previous report, together with a check or draft for the amount of such
collections. If authorized by Seller, and at Seller's expense, Buyer shall have
full power and authority as Seller's agent for collection to settle disputes,
effect compromises, institute and terminate suits relating thereto and generally
to pursue such collections in accordance with Buyer's customary collection
procedures, including employment of counsel or a collection agency or any other
extraordinary means, in all instances acting as agent for Seller but without any
necessity to disclose that fact. If necessary or advisable in Buyer's sole
discretion, Buyer may effect any or all such collections and perform authorized
acts relating thereto as agent for an undisclosed principal. If at any time
Buyer determines that any such accounts are uncollectible, Buyer shall notify
Seller of such determination and upon Seller's written request shall furnish or
make available to Seller all records, files and data relating to such accounts
and Buyer's determination of uncollectibility. Except as expressly provided
herein, Buyer shall have no responsibility for any obligation regarding any of
Seller's accounts receivable. Buyer's obligation to collect accounts receivable
as Seller's agent shall expire at the end of the fourth full month following the
Closing Date, and, within fifteen (15) days after the end of such month, Buyer
shall render a final statement or report showing accounts collected and
uncollected.
7.7 Brokers.
-------
(a) Seller's Broker. Seller represents and warrants to Buyer
---------------
that except for its retention of Media Venture Partners, Inc. (for which Seller
acknowledges full responsibility) neither it nor any person or entity acting on
its behalf has agreed to pay a
23
<PAGE>
commission, finder's fee, or similar payment in connection with this Agreement
or any matter related hereto to any person or entity, nor has it or any person
or entity acting on its behalf taken any action on which a claim for any such
payment could be based.
(b) Buyer's Broker. Buyer hereby agrees to indemnify and hold
--------------
harmless Seller and its parent and affiliated corporations from and against any
claim that Buyer or any person or entity acting on its behalf has agreed to pay
a commission, finder's fee, or similar payment in connection with this Agreement
or any matter related hereto to any person or entity, and Buyer agrees to take
full responsibility for any such payment.
7.8 Cooperation. Buyer and Seller shall cooperate fully with each
-----------
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their obligations under this Agreement,
and Buyer and Seller will use their best efforts to consummate the transactions
contemplated hereby and to fulfill their obligations hereunder.
7.9 Control of the Stations. Prior to Closing, Buyer shall not,
-----------------------
directly or indirectly, control, supervise, or direct, or attempt to control,
supervise or direct the operations of the Stations; those operations, including
complete control and supervision of all of the Stations's programs, employees,
and policies, shall be the sole responsibility of Seller.
7.10 Consultation. Subject to the provisions of Section 7.9,
------------
between the date hereof and the Closing, Seller will consult with Buyer's
management with a view to informing such management as to the operation,
management, and business of the Stations.
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER.
---------------------------------------------
8.1 Conditions to Obligations of Buyer. All obligations of Buyer
----------------------------------
at the Closing hereunder are subject at Buyer's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. Except as otherwise
------------------------------
provided in this Agreement, all representations and warranties of Seller
contained in this Agreement shall be true and complete in all material respects
at and as of the Closing Date as though made at and as of that time.
(b) Covenants and Conditions. Seller shall have performed and
------------------------
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or at
the Closing Date.
(c) FCC Consent. The FCC Consent shall have been granted and
-----------
shall have become a Final Order without the imposition on Buyer of any
conditions that need not be complied with by Buyer under Section 7.1 hereof and
Seller shall have complied with any conditions imposed on it by the FCC Consent.
24
<PAGE>
(d) HSR Matters. The waiting period (and any extension
-----------
thereof) under the HSR Act shall have expired and there shall not be outstanding
any order of a court restraining the transaction contemplated hereby.
(e) Deliveries. Seller shall have made or stand willing to
----------
make all the deliveries to Buyer set forth in Section 9.2.
(f) No Litigation. No litigation or proceeding shall have been
-------------
commenced against Buyer or Seller seeking to restrain or prevent the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions and there shall be no Final Order of any nature issued by a
court of competent jurisdiction restraining or prohibiting the consummation of
the transactions contemplated hereby.
(g) Environmental Report. Seller shall, within twenty one
--------------------
(21) days after the date hereof, at Buyer's expense, provide Buyer with a Phase
I environmental assessment of the Real Property (the "Phase I Report") performed
by Dames & Moore. If, in the Buyer's good faith judgment, the Phase I report
fails to indicate that the Real Estate is in material compliance with all
Environmental Laws, Buyer may, by written notice received by Seller within
thirty (30) days of receipt of such report by Buyer, terminate this Agreement.
If Buyer fails to so notify Seller, Buyer will be deemed to have accepted the
Environmental Condition of the Real Property, subject to the representations and
warranties of the Seller. Buyer shall remit to Seller, within five (5) business
days of receipt of the Dames & Moore invoice, the cost of the Phase I Report.
(h) Title Commitment; Survey. Seller shall, within thirty
------------------------
(30) days after the date hereof, at Buyer's expense, provide to Buyer a title
insurance commitment (the "Title Commitment") from Chicago Title Insurance
Company, without a survey exception, and insuring matters customarily included
on title insurance policies in the area in which the Real Property is located.
If the prior survey is not sufficient to permit waiver of the survey exception,
Seller shall arrange for a new survey at Buyer's expense. If the Title
Commitment is not reasonably satisfactory to Buyer, including facts disclosed by
the survey (a) for any encroachments upon the Real Property, (b) showing that
any of the buildings, structures or improvements (including, without limitation,
any ground radials, guy wires or guy anchors) constructed on the Real Property
or Leased Real Property encroaches on any adjoining real estate or (c) showing
that any of the Stations' equipment tower(s), antennae, antenna ground systems,
buildings, driveways, parking lots and Personal Property that are being assigned
to Buyer hereunder are not located on the Real Property that is either being
assigned to Buyer hereunder or which is the subject of any Real Property
lease(s) being assigned to Buyer hereunder, Buyer may, by written notice
received by Seller within fifteen (15) days of receipt of such Title Commitment
by Buyer, notify Seller of Buyer's exceptions to the commitment. Seller shall
use its best efforts to affect the cure of such defects. It shall be Seller's
obligation to cure any such defects on or before the Closing Date, provided
however, that if, in Seller's opinion, any such defect cannot reasonably be
cured by the Closing Date, Seller shall so notify Buyer in writing, within
thirty (30) days of receipt of Buyer's notice of such defects, whereupon, Buyer
shall have fifteen (15) days to either (i)
25
<PAGE>
terminate this Agreement by written notice to Seller; or (ii) elect to proceed.
If Buyer fails to provide Seller with written notice of its intent to terminate
this Agreement within the fifteen (15) day period specified above, Buyer shall
be deemed to have accepted the condition and state of the title to the Real
Property, subject to the representations and warranties of the Seller herein.
Buyer shall remit to Seller, within five (5) business days of receipt of the
Chicago Title invoice, the cost of the Title Commitment.
8.2 Conditions to Obligations of Seller. All obligations of Seller
-----------------------------------
at the Closing hereunder are subject at Seller's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
------------------------------
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have performed and
------------------------
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to and
at the Closing Date.
(c) FCC Consent. The FCC Consent shall have become a Final
-----------
Order, without the imposition on Seller of any conditions that need not be
complied with by Seller under Section 7.1 hereof and Buyer shall have complied
with any conditions imposed on it by the FCC Consent.
(d) HSR Act. The waiting period (and any extension thereof)
-------
under the HSR Act shall have expired and there shall not be outstanding any
order of a court restraining the transaction contemplated hereby.
(e) Deliveries. Buyer shall have made or stand willing to make
----------
all the deliveries set forth in Section 9.3.
SECTION 9. CLOSING AND CLOSING DELIVERIES.
------------------------------
9.1 Closing.
-------
(a) Closing Date. The Closing shall take place at 10:00 a.m.
------------
on a date as agreed to by Buyer and Seller within five (5) business days
following the later of: (i) the date upon which the FCC Consent has become a
Final Order; and (ii) the expiration of the waiting period (and any extension
thereof) under the HSR Act.
(b) Closing Place. The Closing shall be held at the offices
-------------
of Eckert Seamans Cherin & Mellott, One International Place, 18th Floor, Boston,
MA 02110, or any other place that is agreed upon by Buyer and Seller.
26
<PAGE>
9.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
--------------------
shall deliver to Buyer the following in form and substance reasonably acceptable
to Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale, deeds,
------------------
assignments, certificates of title and other transfer documents which shall be
sufficient to vest good title to the Assets in the name of Buyer, free and clear
of all claims, encumbrances and liens other than Permitted Liens.
(b) Consents. Executed original of each Consent.
--------
(c) Resolutions. Copies of the by-laws of Seller and the
-----------
resolutions adopted by the Boards of Directors and, if required, stockholders,
of Seller, authorizing, and approving the execution of this Agreement and the
consummation of the transactions contemplated hereby, certified by the Secretary
of Seller as being true and complete on the Closing Date.
(d) Certificate. A certificate, dated as of the Closing Date,
-----------
executed by an authorized officer of Seller, certifying: (i) that Seller has
obtained proper corporate authorization, including the consent of stockholders,
necessary to the consummation of this Agreement; (ii) that the representations
and warranties of Seller contained in this Agreement are true and complete in
all material respects as of the Closing Date as though made on and as of that
date; and (iii) that Seller has performed in all material respects all of its
obligations and agreements and complied in all material respects with all of its
covenants set forth in this Agreement to be performed and complied with on or
prior to the Closing Date.
(e) Opinion of Counsel. The opinion of Eckert Seamans Cherin &
------------------
Mellott, counsel to Seller, and Gardner, Carton & Douglas, special FCC counsel
to Seller, covering those matters customary in transactions of this type.
9.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
-------------------
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in Section
--------------
2.3, subject to the escrow holdback referred to in Section 7.3(e)(iii).
(b) Assumption Agreement. A duly executed assumption
--------------------
agreement, pursuant to which Buyer will assume and undertake to perform Seller's
obligations under the Assumed Contracts arising after the Effective Time, to the
extent specified in Section 2.6.
(c) Resolutions. Copies of resolutions adopted by Buyer,
-----------
authorizing and approving the execution of this Agreement and the consummation
of the
27
<PAGE>
transactions contemplated hereby, certified by its Secretary as being true and
correct on the Closing Date. and
(d) Certificate. A certificate, dated as of the Closing Date,
-----------
executed on behalf of Buyer by the President of Buyer, certifying: (i) that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of the Closing Date as though made on and
as of that date; and (ii) that Buyer has performed in all material respects all
of its obligations and agreements and complied in all material respects with all
of its covenants set forth in this Agreement to be performed or complied with on
or prior to the Closing Date.
(e) Opinion of Counsel. The opinion of Brooks, Pierce,
------------------
McLendon, Humphrey & Leonard, counsel for Buyer, covering those matters
customary in transactions of this type.
SECTION 10. TERMINATION.
-----------
10.1 Termination Rights. Subject to the provisions of Section 10.5
------------------
below, this Agreement may be terminated by either Buyer or Seller, if the
terminating party is not then in material breach or default, upon written notice
to the other party, upon the occurrence of any of the following:
(a) Conditions. If on the Closing Date any of the conditions
----------
precedent to the obligations of the terminating party set forth in this
Agreement have not been satisfied or waived in writing by the terminating party.
(b) Judgments. If there shall be in effect on the Closing
---------
Date any judgment, decree, or order that would prevent or make unlawful the
Closing of this Agreement.
(c) Loss of Assets. The exercise by Buyer of its right
--------------
pursuant to Section 7.4 to terminate for loss of the Assets.
(d) Upset Date. If the Closing Date shall not have occurred on
----------
or before March 1, 1997.
10.2 Disposition of Escrow Deposit. The Escrow Deposit shall be
-----------------------------
forfeited by Buyer and shall become the property of Seller in the event the
transaction fails to close (i) by reason of a material breach by Buyer of its
representations, warranties and covenants hereunder; or (ii) failure of Buyer to
satisfy the conditions required of Buyer in Section 8.2 of this Agreement; or
(iii) if the FCC shall not have issued a Final Order by March 1, 1997, approving
assignment of the Stations to Buyer and the failure of the FCC to have issued
such Final Order is for reasons solely attributable to Buyer. The Escrow
Deposit shall be returned to Buyer in the event the transaction fails to close
(i) by
28
<PAGE>
reason of a material breach by Seller of its representations, warranties and
covenants hereunder; or (ii) failure of Seller to satisfy the conditions
required of Seller in Section 8.1 of this Agreement; or (iii) if Buyer shall
have timely terminated the Agreement for environmental matters in accordance
with the provisions of Section 8.1 or title matters in accordance with the
provisions of Section 8.1; or (iv) if the FCC shall not have issued a Final
Order by March 1, 1997, approving the assignment of the Stations to Buyer and
the failure of the FCC to have issued such Final Order is for any reason other
than a reason solely attributable to Buyer.
10.3 Liquidated Damages. If this Agreement is terminated by Seller
------------------
due to a breach by Buyer of its representations, warranties, and covenants under
this Agreement, then the Escrow Deposit shall be paid to Seller as liquidated
damages, it being agreed that the Escrow Deposit shall constitute full payment
for any and all damages suffered by Seller by reason of Buyer's failure to close
this Agreement. Buyer and Seller agree in advance that Seller's actual damages
if Buyer breaches its obligations hereunder would be difficult to ascertain and
that the amount of the Escrow Deposit paid to Seller is a fair and equitable
amount to reimburse Seller for damages sustained from the termination of this
Agreement for the reason stated in the first sentence of this Section 10.3.
10.4 Specific Performance. The parties recognize that if Seller
--------------------
refuses to Close as and when required under the provisions of this Agreement,
monetary damages will not be adequate to compensate Buyer for its injury. Buyer
shall therefore be entitled, in addition to a right to collect money damages, to
obtain specific performance of the terms of this Agreement. If any action is
brought by Buyer to enforce this Agreement, Seller shall waive the defense that
there is an adequate remedy at law.
10.5 Opportunity to Cure. Neither party shall have the right to
-------------------
terminate this Agreement as a result of the other party's default unless the
terminating party shall have given the defaulting party written notice
specifying in reasonable detail the nature of the default and shall have
afforded the defaulting party fifteen (15) business days to cure the default.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION.
--------------------------------------------------------------
11.1 Representations and Warranties. Except as otherwise
------------------------------
specifically set forth herein, all representations and warranties contained in
this Agreement shall survive the Closing for a period of twelve (12) months.
11.2 Indemnification by Seller. From and after the Closing, Seller
-------------------------
hereby agrees, subject to Section 11.4(e), to indemnify and hold Buyer and its
officers, directors, shareholders and affiliates harmless against and with
respect to, and shall reimburse Buyer for:
29
<PAGE>
(a) Breach. Any and all losses, liabilities, claims, actions
------
or damages or expenses resulting from any untrue representation, breach of
warranty, or nonfulfillment of any covenant by Seller contained herein or in any
certificate, document, or instrument delivered to Buyer hereunder.
(b) Obligations. Any and all obligations of Seller not assumed
-----------
by Buyer pursuant to the terms of this Agreement, including any and all
liabilities arising at any time under any Contract not included in the Assumed
Contracts subject to the condition that Buyer shall have given Seller timely
written notice of, and an opportunity to defend, any and all such asserted
liabilities.
(c) Ownership. Any and all losses, liabilities, or damages
---------
resulting from the operation or ownership of the Stations prior to the Effective
Time, including any and all liabilities arising under the Licenses or the
Contracts which relate to events occurring prior to the Effective Time subject
to the condition that Buyer shall have given Seller timely written notice of,
and an opportunity to defend, any and all such asserted liabilities.
(d) Legal Matters. Any and all actions, suits, proceedings,
-------------
claims, demands, assessments, judgments, costs, and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
11.3 Indemnification by Buyer. Notwithstanding the Closing, Buyer
------------------------
hereby agrees to indemnify and hold Seller and its officers, directors,
shareholders and affiliates harmless against and with respect to, and shall
reimburse Seller for:
(a) Breach. Any and all losses, liabilities, claims, actions or
------
damages and expenses resulting from any untrue representation, breach of
warranty, or nonfulfillment of any covenant by Buyer contained herein or in any
certificate, document, or instrument delivered to Seller hereunder.
(b) Ownership. Any and all losses, liabilities, or damages
---------
resulting from the operation or ownership of the Stations on and after the
Effective Time, including any and all liabilities arising under the Licenses or
the Assumed Contracts which relate to events occurring after the Effective Time.
(c) Legal Matters. Any and all actions, suits, proceedings,
-------------
claims, demands, assessments, judgments, costs and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
11.4 Procedure for Indemnification. The procedure for
-----------------------------
indemnification shall be as follows:
30
<PAGE>
(a) Notice. The Claimant shall promptly (but in any event
------
within thirty (30) days) give notice to the Indemnitor of any claim, whether
solely between the parties or brought by a third party, specifying (i) the
factual basis for the claim, and (ii) the amount of the claim to the extent
determinable. Notwithstanding the foregoing, a failure of the Claimant to
provide notice within such time period shall not result in a forfeiture of the
indemnification rights provided for herein unless the Indemnitor is materially
prejudiced by such delay.
(b) Investigation. With respect to claims between the parties,
-------------
following receipt of notice from the Claimant of a claim, the Indemnitor shall
have thirty (30) business days to make any investigation of the claim that the
Indemnitor deems necessary or desirable. For the purposes of this
investigation, the Claimant agrees to make available to the Indemnitor and/or
its authorized representatives the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnitor cannot agree as to
the validity and amount of the claim within said 30-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate legal remedy.
(c) Control. With respect to any claim by a third party as to
-------
which the Claimant is entitled to indemnification hereunder, the Indemnitor
shall have the right at its own expense to participate in or assume control of
the defense of the Claim, and the Claimant shall cooperate fully with the
Indemnitor, subject to reimbursement for actual out-of-pocket expenses incurred
by the Claimant as the result of a request by the Indemnitor. If the Indemnitor
elects to assume control of the defense of any third-party claim within fifteen
(15) business days of notice under Section 11.4, the Claimant shall have the
right to participate in the defense of the claim at its own expense. If the
Indemnitor does not elect to assume control or otherwise participate in the
defense of any third party claim, it shall be bound by the results obtained by
the Claimant with respect to the claim.
(d) Immediate Action. If a claim, whether between the parties
----------------
or by a third party, requires immediate action, the parties will make every
effort to reach a decision with respect thereto as expeditiously as possible.
(e) Limitations on Indemnification.
------------------------------
(i) Any indemnity payment hereunder shall be limited
to the extent of the actual loss or damage suffered by the Claimant and shall be
reduced by the amount of any recovery by the Claimant from any third party,
including any insurer, and by the amount of any tax benefits received.
(ii) No party shall be entitled to indemnification here
under except to the extent that the total amount of its claims for
indemnification exceeds $5,000, and in no event shall the aggregate amount for
which any party is liable hereunder exceed $100,000. No party shall be entitled
to indemnification hereunder for any claim arising from the breach by the other
party of its representations and warranties which is not asserted against the
Indemnitor within twelve (12) months after the Closing Date.
31
<PAGE>
(iii) The limitations in Section 11.4(e)(ii) shall not
apply to any claim for indemnification for any liability of the Claimant or the
Indemnitor to any third party, to the adjustments and prorations to be made
pursuant to Section 7.3, or to Buyer's obligations with respect to Seller's
Accounts Receivable as set forth in Section 7.6.
SECTION 12. MISCELLANEOUS.
-------------
12.1 Fees and Expenses. Seller and Buyer shall share equally all
-----------------
HSR Act and FCC filing fees (including any subsequently instituted tax on the
assignment of FCC licenses). Seller shall bear the cost of all other filing
fees, transfer taxes, sales taxes, document stamps, or other charges levied by
any governmental entity on account of or in connection with the transfer of the
Assets from Seller to Buyer. Except as otherwise provided in this Agreement,
each party shall pay its own expenses incurred in connection with the
authorization, preparation, execution, and performance of this Agreement,
including, without limitation, all fees and expenses of counsel, accountants,
agents, and representatives.
12.2 Notices. All notices, demands, and requests required or
-------
permitted to be given under the provisions of this Agreement shall be in writing
and shall be deemed to have been duly delivered and received: (i) on the date of
personal delivery; (ii) on the date of receipt (as shown on the return receipt)
if mailed by registered or certified mail, postage prepaid and return receipt
requested; or (iii) on the next business day after delivery to a courier service
that guarantees delivery on the next business day if the conditions to the
courier's guaranty are complied with, in each case addressed as follows:
If to Seller: Park Radio of Iowa, Inc.
1700 Vine Center Office Tower
333 West Vine Street
Lexington, KY 40507
Attn: Wright M. Thomas, President
with a copy to: Stephen I. Burr, Esquire
Eckert Seamans Cherin & Mellott
One International Place, 18th Floor
Boston, MA 02110
If to Buyer: KXEL Broadcasting Company, Inc.
c/o Bahakel Broadcasting
One Television Place
Charlotte, NC 28205
Attn: Beverly Bahakel Poston
32
<PAGE>
with a copy to: Wade H. Hargrove, Esq.
Brooks, Pierce, McLendon, Humphrey & Leonard
First Union Center, Suite 1600
Raleigh, NC 27601
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 12.2.
12.3 Benefit and Binding Effect. Both parties hereto may assign this
--------------------------
Agreement without the prior written consent of the other party hereto. Such
assignment shall not, however, release such party from its duties and
obligations under this Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, however, neither party hereto may assign this Agreement
without the prior written consent of the other party.
12.4 Further Assurances. The parties shall execute any other
------------------
documents that may be necessary or desirable to the implementation and
consummation of this Agreement.
12.5 Governing Law. This Agreement shall be governed, construed,
-------------
and enforced in accordance with the laws of the State of Iowa (without regard to
the choice of law provisions thereof).
12.6 Headings and References. The headings and table of contents
-----------------------
herein are included for ease of reference only and shall not control or affect
the meaning or construction of the provisions of this Agreement. For purpose of
this Agreement, the words "hereof", "herein", "hereby", and other words of
similar import refer to this Agreement as a whole, including all Appendices,
Annexes and Schedules hereto. Reference herein to Articles, Sections,
Appendices, Annexes and Schedules unless otherwise designated, shall be to the
relevant Articles, Sections, Appendices, Annexes and Schedules hereof and
hereto. All dollar amounts referred to herein are in United States Dollars.
12.7 Gender and Number. Words used herein, regardless of the gender
-----------------
and number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine, or neuter, and any other number, singular or
plural, as the context requires.
12.8 Entire Agreement. This Agreement, all schedules hereto, and
----------------
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by
33
<PAGE>
the party against which enforcement of any such amendment, supplement, or
modification is sought.
12.9 Counterparts. This Agreement may be signed in two or more
------------
counterparts, with the same effect as if the signature on each counterpart were
upon the same instrument.
[Signature Page Follows]
34
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized officers of Buyer and Seller as of the date first written above.
ATTEST: KXEL BROADCASTING COMPANY, INC.
______________________________ By:_____________________________________
Name:___________________________________
Title:__________________________________
ATTEST: PARK RADIO OF IOWA, INC.
_______________________________ By:_____________________________________
Wright M. Thomas, President
_______________________________ By:____________________________________
Gary B. Knapp, Director
_______________________________ By:____________________________________
Donald R. Tomlin, Jr., Director
35
<PAGE>
KWLO AM
KFMW FM
AMENDMENT TO ASSET PURCHASE AGREEMENT
-------------------------------------
This Amendment to Asset Purchase Agreement (this "Amendment") is made as of
the 17th day of May, 1996, by and between PARK RADIO OF IOWA, INC., an Iowa
corporation, with offices at 1700 Vine Center Office Tower, 333 West Vine
Street, Lexington, Kentucky 40507 ("Seller"), and KXEL BROADCASTING COMPANY,
INC., an Iowa corporation, with offices at One Television Place, Charlotte,
North Carolina 28205 ("Buyer"), pursuant to that certain Asset Purchase
Agreement made as of the 27th day of March, 1996 (the "Agreement"). Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Agreement.
WITNESSETH:
WHEREAS, Seller and Buyer are parties to the Agreement; and
WHEREAS, the Agreement provides the Buyer with the right to terminate the
Agreement in the event that Buyer, in its good faith judgment, determines that
the owned Real Property located in Waterloo, Iowa is not in material compliance
with the Environmental Laws, all as more particularly set forth in Section
8.1(g) of the Agreement; and
WHEREAS, the Buyer has requested that additional information be provided in
order to determine whether or not the owned Real Property located in Waterloo,
Iowa meets the standards for material compliance with the Environmental Laws set
forth in Section 8.1(g); and
WHEREAS, the Buyer and Seller desire to extend the time in which the Buyer
has the right to terminate the Agreement in accordance with Section 8.1(g) in
order to allow Buyer an opportunity to further evaluate, in its good faith
judgment, whether the owned Real Property is in material compliance with the
Environmental Laws (as more particularly set forth in Section 8.1(g)), they
hereby agree to modify and amend Section 8.1(g) of the Agreement upon the terms
and conditions more particularly set forth below.
NOW, THEREFORE, the undersigned, for Ten Dollars ($10.00) and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, hereby agree as follows:
1. Seller shall, within fourteen (14) days after the date hereof, at
Seller's expense, provide Buyer with a supplemental environmental assessment of
the owned Real Property located in Waterloo, Iowa listed on Disclosure Schedule
1.31 (the "Supplemental Report") performed by Dames & Moore. The scope of the
work to be performed in the Supplemental Report pertaining to the Waterloo, Iowa
owned Real Property is more particularly set forth on Exhibit A attached hereto.
---------
If, in the Buyer's good faith judgment, the Supplemental Report fails to
indicate that the owned Real Property located in Waterloo, Iowa is in material
compliance with all Environmental Laws, Buyer may, by written notice received by
Seller within twenty (20) days of receipt of the Supplemental Report by Buyer,
terminate this Agreement. If Buyer fails to so notify Seller, Buyer will be
deemed to have accepted the Environmental Condition of the owned Real Property,
subject to the representations and warranties of the Seller.
2. In all other respects, all terms and provisions of the Agreement are
hereby ratified and confirmed, time still being of the essence.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed by the duly authorized
officers of Buyer and Seller as of the date first written above.
ATTEST: KXEL BROADCASTING COMPANY, INC
- --------------------------------------- By:
----------------------------
Name:
--------------------------
Title:
-------------------------
ATTEST: PARK RADIO OF IOWA, INC.
- --------------------------------------- By:
----------------------------
Wright M. Thomas, President
-3-
<PAGE>
Exhibit 2.4
WDEF AM
WDEF FM
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
ROY H. PARK BROADCASTING OF TENNESSEE, INC. ("Seller")
AND
JACKSON TELECASTERS, INC. ("Buyer")
Date: March 27, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
SECTION 1. DEFINITIONS .................................................. 1
1.1 "Accounts Receivable" ........................................ 1
1.2 "Assets" ..................................................... 1
1.3 "Assumed Contracts" .......................................... 1
1.4 "Buyer's Knowledge" .......................................... 1
1.5 "Claimant" ................................................... 2
1.6 "Closing" .................................................... 2
1.7 "Closing Date" ............................................... 2
1.8 "Consents" ................................................... 2
1.9 "Contracts" .................................................. 2
1.10 "Disclosure Schedule" ........................................ 2
1.11 "Environmental Condition" .................................... 2
1.12 "Environmental Laws" ......................................... 2
1.13 "Environmental Liabilities" .................................. 2
1.14 "Effective Time" ............................................. 3
1.15 "Escrow Deposit" ............................................. 3
1.16 "Excluded Assets" ............................................ 3
1.17 "FCC" ........................................................ 3
1.18 "FCC Consent" ................................................ 3
1.19 "FCC Licenses" ............................................... 3
1.20 "Final Order" ................................................ 3
1.21 "Hazardous Materials" ........................................ 4
1.22 "HSR Act" .................................................... 4
1.23 "Indemnitor" ................................................. 4
1.24 "Intangibles" ................................................ 4
1.25 "Leased Real Property" ....................................... 4
1.26 "Licenses" ................................................... 4
1.27 "Lien" ....................................................... 4
1.28 "New Lease" .................................................. 5
1.29 "Permitted Liens" ............................................ 5
1.30 "Personal Property" .......................................... 5
1.31 "Purchase Price" ............................................. 5
1.32 "Real Property" .............................................. 5
1.33 "Seller's Knowledge" ......................................... 5
1.34 "Stations" ................................................... 5
1.35 "Taxes" ...................................................... 5
i
<PAGE>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
SECTION 2. SALE AND PURCHASE OF ASSETS AND
OTHER CONSIDERATION ......................................... 5
2.1 Agreement to Sell and Buy .................................... 5
2.2 Excluded Assets .............................................. 6
2.3 Purchase Price ............................................... 6
2.4 Allocation of Purchase Price ................................. 6
2.5 Payment of Purchase Price .................................... 7
2.6 Assumption of Liabilities and Obligations .................... 7
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER ..................... 8
3.1 Organization, Standing, and Authority ........................ 8
3.2 Authorization and Binding Obligation ......................... 8
3.3 Absence of Conflicting Agreements and Required Consents ...... 8
3.4 Governmental Authorizations .................................. 9
3.5 Title to Property ............................................ 9
3.6 Real Property; Leased Real Property .......................... 9
3.7 Contracts .................................................... 10
3.8 Consents ..................................................... 10
3.9 Intangibles .................................................. 10
3.10 Financial Statements ......................................... 11
3.11 Personnel .................................................... 11
3.12 Claims and Legal Actions ..................................... 12
3.13 Compliance with Laws ......................................... 12
3.14 Environmental ................................................ 13
3.15 Conduct of Business in Ordinary Course; Adverse Change ....... 13
3.16 Taxes ........................................................ 14
3.17 Insurance .................................................... 14
3.18 Full Disclosure .............................................. 14
3.19 Insolvency Proceedings ....................................... 14
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER ...................... 14
4.1 Organization, Standing, and Authority ........................ 14
4.2 Authorization and Binding Obligation ......................... 15
4.3 Absence of Conflicting Agreements and Required Consents ...... 15
4.4 Claims and Legal Actions ..................................... 15
4.5 Qualification ................................................ 15
4.6 Full Disclosure .............................................. 15
4.7 Reliance ..................................................... 15
ii
<PAGE>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
SECTION 5. COVENANTS OF SELLER........................................... 16
5.1 Pre-Closing Covenants......................................... 16
5.2 Closing Covenant.............................................. 18
5.3 Post-Closing Covenants........................................ 18
SECTION 6. COVENANTS OF BUYER............................................ 18
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS.............................. 18
7.1 FCC Consent................................................... 18
7.2 HSR Filings................................................... 19
7.3 Adjustments and Prorations.................................... 19
7.4 Risk of Loss.................................................. 21
7.5 Confidentiality............................................... 22
7.6 Collection of Accounts Receivable............................. 22
7.7 Brokers....................................................... 23
7.8 Cooperation................................................... 23
7.9 Control of the Stations....................................... 24
7.10 Consultation.................................................. 24
7.11 Assignment and Concurrent Use Agreement....................... 24
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER................. 24
8.1 Conditions to Obligations of Buyer............................ 24
8.2 Conditions to Obligations of Seller........................... 26
SECTION 9. CLOSING AND CLOSING DELIVERIES................................ 26
9.1 Closing....................................................... 26
9.2 Deliveries by Seller.......................................... 26
9.3 Deliveries by Buyer........................................... 27
SECTION 10. TERMINATION................................................... 28
10.1 Termination Rights............................................ 28
10.2 Disposition of Escrow Deposit................................. 28
10.3 Liquidated Damages............................................ 29
10.4 Specific Performance.......................................... 29
10.5 Opportunity to Cure........................................... 29
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION.............................................. 29
iii
<PAGE>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
11.1 Representations and Warranties................................ 29
11.2 Indemnification by Seller..................................... 29
11.3 Indemnification by Buyer...................................... 30
11.4 Procedure for Indemnification................................. 30
SECTION 12. MISCELLANEOUS................................................. 31
12.1 Fees and Expenses............................................. 31
12.2 Notices....................................................... 32
12.3 Benefit and Binding Effect.................................... 32
12.4 Further Assurances............................................ 33
12.5 Governing Law................................................. 33
12.6 Headings and References....................................... 33
12.7 Gender and Number............................................. 33
12.8 Entire Agreement.............................................. 33
12.9 Counterparts.................................................. 33
iv
<PAGE>
WDEF AM
WDEF FM
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made as of the 27th day of March, 1996, by
and between ROY H. PARK BROADCASTING OF TENNESSEE, INC., a Tennessee corporation
with offices at 1700 Vine Center Office Tower, 333 West Vine Street, Lexington,
Kentucky 40507 ("Seller"), and JACKSON TELECASTERS, INC., a Tennessee
corporation, with offices at One Television Place, Charlotte, NC 28205
("Buyer").
RECITALS
A. Seller owns and operates radio stations WDEF AM and WDEF FM
(together, the "Stations"), pursuant to licenses issued by the Federal
Communications Commission.
B. Seller desires to sell and Buyer wishes to buy all the assets
used or useful in the operation of the Stations, for the price and on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises contained herein, Buyer and Seller, intending to
be legally bound hereby, agree as follows:
SECTION 1. DEFINITIONS.
-----------
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
1.1 "Accounts Receivable" means all rights of Seller to payment
for: (a) the sale of advertising time by the Stations; and (b) services
performed by the Stations.
1.2 "Assets" means the assets of the Stations being sold,
transferred, or otherwise conveyed to Buyer hereunder, as specified in Section
2.1.
1.3 "Assumed Contracts" means: (a) those Contracts listed as
Assumed Contracts in Disclosure Schedule 3.7; (b) all Contracts for the sale of
-----------------------
time on the Stations and all trade or barter agreements which are outstanding on
the Closing Date and which comply with the provisions of Section 3.7; and (c)
Contracts entered into between the date hereof and the Closing Date which comply
with the provisions of Section 5.1(a).
1.4 "Buyer's Knowledge" (or words of similar import) means any
actual knowledge of the following: Beverly Bahakel Poston.
<PAGE>
1.5 "Claimant" means a party claiming indemnification pursuant to
Section 1.1.
1.6 "Closing" means the consummation of the transactions
contemplated in this Agreement in accordance with the provisions of Section 9.
1.7 "Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 9.
1.8 "Consents" means the consents, permits, or approvals of third
parties, including governmental authorities, necessary to transfer any of the
Assets to Buyer or otherwise to consummate the transactions contemplated hereby.
1.9 "Contracts" means all contracts, leases, licenses, and other
agreements (including without limitation leases for personal or real property
and employment agreements), written or oral, including any amendments or other
modifications thereto, that relate to the Assets or the operation of the
Stations, to which Seller is a party, including those described in Disclosure
Schedule, together with any additions thereto between the date hereof and the
Closing Date.
1.10 "Disclosure Schedule" means the Disclosure Schedule of even
date relating to this Agreement titled "Radio Stations WDEF-AM(FM), Chattanooga,
Tennessee, Disclosure Schedule," which has been separately delivered to Buyer.
1.11 "Environmental Condition" means any set of physical
circumstances in, on, under or affecting property that may constitute a threat
to or endangerment to health, safety, property or the environment and which
relate to the presence of any Hazardous Materials.
1.12 "Environmental Laws" means any laws or agreements with any
federal, state or local governmental entity relating to the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous Materials, in
each case as amended from time to time and as now in effect and includes,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the Clean Air Act, the Clean
Water Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Toxic Substances Control Act, and the Safe Drinking Water Act,
each as amended from time to time and as now in effect that may impose liability
or obligation for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Hazardous Material or providing any right or
remedy with respect to the subject matter covered by any of the above statutes.
1.13 "Environmental Liabilities" means, without limitation, any
claims (including, without limitation, third party claims, whether for personal
injury or real or personal property damage or otherwise), actions,
administrative proceedings (including
2
<PAGE>
informal proceedings), judgments, damages (including, without limitation, any
actual, punitive or consequential damages under any statutory laws, common law
cause of action or contractual obligations or otherwise), civil or criminal
fines or penalties, liabilities (including sums paid in settlement of claims),
losses, obligations (including, without limitation, liabilities or obligations
under any lease or other contract), payment, cleanup costs, remediation, removal
or other response costs (which, without limitation, shall include costs to cause
the Assets to come into compliance with Environmental Laws), investigation costs
(including, without limitation, fees of consultants, counsel and other experts
in connection with any environmental investigation, testing, audits or studies),
reasonable attorneys' and paralegals' fees (including any reasonable fees and
expenses incurred in enforcing this agreement or collecting any sums due
hereunder), reasonable consultants fees and expert fees, together with all
reasonable costs and expenses incurred by Buyer of any kind or nature that
derive directly or indirectly from or in connection with the breach of any
representation or warranty of Seller set forth in Section 3.14.
1.14 "Effective Time" means 12:01 a.m., Eastern Standard Time, on
the Closing Date.
1.15 "Escrow Deposit" means the sum of Three Hundred Eighty-Five
Thousand Dollars ($385,000) cash which is being deposited by Buyer with Media
Venture Partners, Inc., a Virginia corporation (the "Escrow Agent") on the date
hereof pursuant to the terms of an Escrow Agreement among Buyer, Seller and
Escrow Agent, the form of which is attached hereto as Exhibit A.
---------
1.16 "Excluded Assets" means those assets of Seller which are
excluded from the sale of the Stations, as specified in Section 2.2.
1.17 "FCC" means the Federal Communications Commission.
1.18 "FCC Consent" means action by the FCC granting its consent to
the assignment of the FCC Licenses from Seller to Buyer as contemplated by this
Agreement.
1.19 "FCC Licenses" means those Licenses issued by the FCC to Seller
in connection with the business and operations of the Stations, including those
listed in Disclosure Schedule 1.19, together with any additions or changes
------------------------
thereto between the date hereof and the Closing Date.
1.20 "Final Order" means an action of the FCC that has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and with respect
to which no timely filed petition for stay, reconsideration or administrative or
judicial appeal or sua sponte action of the FCC with comparable effect is
--- ------
pending and as to which the time for filing any such petition or appeal
(administrative or judicial) or for the taking of any such sua sponte action of
--- ------
the FCC has expired.
1.21 "Hazardous Materials" means any substance, material or waste
presently listed, defined, designated or classified as hazardous, toxic,
radioactive or
3
<PAGE>
dangerous, or otherwise regulated by or form the basis of liability under any
Environmental Law, whether by type or quantity, and includes, without
limitation, any oil or other petroleum product or by-products or fractions
thereof, any form of natural gas, special waste or petroleum or any derivative
or by-product thereof, radon and other radioactive elements, radioactive
material, electromagnetic field radiation and other radiation, asbestos,
asbestos containing material, urea formaldehyde foam insulation, lead,
polychlorinated biphenyls ("PCBs") and PCB-containing equipment, infectious,
carcinogenic, mutagenic, or etiologic agents, pesticides, defoliants,
explosives, flammables, corrosives and urea formaldehyde foam insulation.
1.22 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
1.23 "Indemnitor" means a party from whom indemnification is claimed
pursuant to Section 1.1.
1.24 "Intangibles" means all copyrights, trademarks, tradenames,
service marks, service names, licenses, patents, permits, subject to the
provisions of Section 7.11, call letters "WDEF AM and WDEF FM" and logos,
service marks, telephone numbers, computer software, magnetic media, business
and sales lists, program libraries, slogans and jingles, advertising and
promotional materials, privileges, proprietary information, technical
information and data, machinery and equipment warranties, all applications,
licenses, and goodwill relating to any of the foregoing, and other similar
intangible property rights and interests applied for, issued to, or owned by
Seller or under which Seller is licensed or franchised and used or useful in the
business and operations of the Stations, including those listed as Intangibles
in Disclosure Schedule 1.24, together with any additions thereto between the
------------------------
date hereof and the Closing Date.
1.25 "Leased Real Property" means all the Real Property that is
occupied pursuant to a lease or a license pursuant to Section 3.6.
1.26 "Licenses" means all licenses, permits, and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration, or any other federal, state, or local governmental
authorities to Seller in connection with the business and operations of the
Stations, including those listed as Licenses in Disclosure Schedule 1.26,
------------------------
together with any additions thereto between the date hereof and the Closing
Date.
1.27 "Lien" means any mortgage, lease, deed of trust, lien, pledge,
hypothecation, assignment, deposit arrangement, option, right of first refusal,
indenture, license, security interest, encumbrance, right of way, easement,
encroachment or similar arrangement of any kind or nature.
1.28 "New Lease" means that certain lease more particularly
described in Section 5.1(o).
<PAGE>
1.29 "Permitted Liens" means: (a) Liens for taxes, assessments, or
similar governmental charges for levies incurred in the ordinary course of
business that are not yet due and payable or as to which any applicable grace
period shall not have expired; and (b) Liens set forth in Disclosure Schedule
-------------------
1.29 and identified as a Permitted Lien.
- ----
1.30 "Personal Property" means the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, (including
all studio and transmission equipment wherever located) and other tangible
personal property used or useful in the operation of the Stations, and
identified and described as Personal Property in Disclosure Schedule 1.30 and
------------------------
all computer discs and tapes, plans, diagrams, blueprints, schematics, and books
and records relating to the operation of the Stations, filings with the FCC and
executed copies of the Assumed Contracts, together with any additions thereto
between the date hereof and the Closing Date.
1.31 "Purchase Price" means the purchase price specified in Section
2.3.
1.32 "Real Property" means the interests in real property, including
all leaseholds, easements, licenses, rights to access, and rights of way, and
all improvements thereon, identified and described as Real Property in
Disclosure Schedule 1.32.
- ------------------------
1.33 "Seller's Knowledge" (or words of similar import) means any
actual knowledge of those persons listed as Seller's representatives in
Disclosure Schedule 1.33.
- ------------------------
1.34 "Stations" means the radio station described in the first
recital to this Agreement.
1.35 "Taxes" shall have the meaning ascribed to it in Section 3.16.
SECTION 2. SALE AND PURCHASE OF ASSETS AND OTHER CONSIDERATION.
---------------------------------------------------
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
-------------------------
set forth in this Agreement, Seller hereby agrees to sell, transfer and deliver
to Buyer (or, with regard to the Real Property, a nominee or other entity
designated by and affiliated with Buyer) on the Closing Date, and Buyer (and,
with regard to the Real Property, on behalf of its nominee or other entity
designated by and affiliated with Buyer) agrees to purchase, all of the tangible
and intangible assets owned or held by Seller and used or useful in the business
or operations of the Stations, wherever located, other than the Excluded Assets,
free and clear of any claims, liabilities, Liens, conditions (except for those
permitted in accordance with Sections 3.5 and 3.6 below, and except for any
condition that is part of the express terms of any License or Assumed Contract),
including without limitation the following:
(a) The Personal Property;
(b) The Licenses;
(c) The Real Property;
<PAGE>
(d) The Assumed Contracts;
(e) The Intangibles;
(f) All prepaid expenses pertaining to the Stations; and
(g) The business of the Stations as a going concern and all
goodwill related thereto.
2.2 Excluded Assets. The Assets shall exclude the following
---------------
assets:
(a) Seller's cash on hand and cash equivalents as of the
Effective Time and all other cash and cash equivalents in any of Seller's bank
accounts, prepaid expenses, any and all insurance policies, bonds, letters of
credit, or other similar items, and any cash surrender value and insurance
proceeds in regard thereto;
(b) All Accounts Receivable of the Stations existing as of
the Effective Time;
(c) All books and records that Seller is required by law to
retain, and books and records related solely to internal corporate matters;
(d) All claims, rights, and interest in and to any refunds
for federal, state, or local franchise, income, or other taxes or fees of any
nature whatsoever for periods prior to the Effective Time;
(e) Any pension, profit-sharing, or employee benefit plans;
and
(f) Those assets listed on Disclosure Schedule 2.2.
-----------------------
2.3 Purchase Price. The purchase price to be paid by Buyer for the
--------------
Assets shall be Seven Million Seven Hundred Thousand Dollars ($7,700,000) plus
assumption of the Assumed Liabilities pursuant to Section 2.6. Prorations of
expenses and revenues shall be made in accordance with Section 7.3.
2.4 Allocation of Purchase Price. At or before the Closing, Buyer
----------------------------
and Seller shall determine the allocation of the Purchase Price in accordance
with Treasury Regulation section 1.1060-1T based upon the approximate relative
fair market values of the Purchased Assets, as determined by a nationally
acceptable appraisal firm chosen by Buyer and reasonably acceptable by Seller
(it being anticipated that the Purchase Price will be allocated first to such of
the Purchased Assets as are tangible to the extent of the approximate fair
market values thereof on the Closing Date, with the balance to intangible
Purchased Assets). Buyer shall pay all fees and expenses of such appraisal
firm. Seller and Buyer will report the federal income tax consequences of the
sale and acquisition of the Purchased Assets under this Agreement in a manner
consistent with the foregoing, and will file Forms 8594 in the manner and at the
times required by Treasury Regulation section 1.1060-1T.
<PAGE>
Buyer shall prepare drafts of Form 8594 reflecting the respective Purchase Price
allocations determined as provided above in accordance with Treasury Regulation
section 1.1060-1T for Seller and Buyer, such draft Form 8594 to be provided to
Seller within 180 days following the Closing Date, but in no event later than
the due date, including extensions, for Seller's Federal income tax return for
the period including the Closing Date; and Seller's written consent to such
drafts shall not be unreasonably withheld or delayed.
2.5 Payment of Purchase Price. Payment of the Purchase Price for
-------------------------
the Assets shall be made as follows:
(a) Escrow Deposit. The Escrow Deposit shall be held
--------------
pursuant to the Escrow Agreement executed by and among Buyer, Seller, and Escrow
Agent in the form of Exhibit A hereto. The Escrow Deposit shall be applied
toward the Purchase Price at the time of Closing.
(b) Cash Portion. The balance of the Purchase Price shall be
------------
paid in cash at Closing, by wire transfer of federal funds to an account
designated by Seller.
(c) Prorations. Prorations of expenses and revenues shall
----------
be made in accordance with Section 7.3.
2.6 Assumption of Liabilities and Obligations.
-----------------------------------------
(a) Assumption. Except as provided in Section 2.6(b), as of
----------
the Effective Time, Buyer shall assume and undertake to pay, discharge, and
perform the following (the "Assumed Liabilities"): (i) insofar as they relate to
the period after the Effective Time, all the obligations and liabilities of
Seller under the Assumed Contracts; (ii) all obligations and liabilities arising
out of events occurring after the Effective Time related to Buyer's ownership of
the Assets or its operation of the Stations after the Effective Time; and (iii)
any obligations of Seller assigned to Buyer as part of the adjustments and
prorations pursuant to Section 7.3 of this Agreement. Other than as specified in
this Section 2.6(a), Buyer shall assume no obligations or liabilities of Seller.
Except for liabilities and obligations being contested in good faith by
appropriate proceeding, Seller will pay, perform, or otherwise discharge, as and
when due, all liabilities and obligations to its employees, suppliers,
distributors and other creditors which are not expressly assumed by Buyer under
this Section 2.6(a).
(b) Limitation. Notwithstanding any provision of this
----------
Agreement to the contrary, Buyer shall not assume: (i) any obligations or
liabilities, whether or not under any Contract, not included in the Assumed
Contracts; (ii) any obligations or liabilities under the Assumed Contracts
relating to the time period prior to the Effective Time; (iii) any claims or
pending litigation or proceedings relating to any action with respect to the
operation of the Stations prior to the Effective Time, (iv) any insurance
policies of Seller; and (v) any obligations or liabilities under any trade or
barter arrangement of Seller which have broadcast obligations after the
Effective Time which exceed, in the aggregate,
<PAGE>
$10,000. All such obligations and liabilities shall remain and be the
obligations and liabilities solely of Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.
----------------------------------------
Seller represents and warrants to Buyer as of the date hereof
and the Closing Date as follows:
3.1 Organization, Standing, and Authority. Seller is a corporation
-------------------------------------
duly organized, validly existing, and in good standing under the laws of the
State of Tennessee and is duly qualified to conduct business and in good
standing in the State of Tennessee. Seller has the requisite corporate power
and authority to: (i) own, lease, and use the Assets as now owned, leased, and
used; (ii) conduct the business of operating the Stations as now conducted; and
(iii) execute, deliver, and perform this Agreement and the documents
contemplated hereby according to their respective terms. Seller has not been
known by or used any other corporate, or any fictitious or other name in the
conduct of the Stations' business or in connection with the use or operation of
the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery,
------------------------------------
and performance of this Agreement by Seller have been duly authorized by all
necessary corporate actions, including stockholder approval, if required, on the
part of Seller. This Agreement has been duly executed and delivered by Seller
and constitutes the legal, valid, and binding obligation of Seller, enforceable
against Seller in accordance with its terms except as the enforceability hereof
may be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally.
3.3 Absence of Conflicting Agreements and Required Consents.
-------------------------------------------------------
Subject to obtaining the Consents listed in Disclosure Schedule 3.3 and the FCC
-----------------------
Consent, the execution, delivery, and performance of this Agreement (with or
without the giving of notice, the lapse of time, or both): (i) does not require
the consent of any third party; (ii) will not conflict with any provision of the
Certificate or Articles of Incorporation or By-Laws of Seller; (iii) will not
conflict with, result in a breach of, or constitute a default under, any
applicable law, judgment, order, ordinance, decree, rule, regulation, or ruling
of any court or governmental instrumentality; (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of, any performance
required by the terms of any financing, debt or equity agreement or any material
Contract, instrument, license, or permit to which Seller is a party or by which
Seller may be bound; and (v) will not create any claim, liability, Lien, charge,
or encumbrance upon any of the Assets.
3.4 Governmental Authorizations. Except as set forth in Disclosure
--------------------------- ----------
Schedule 3.4, Seller has in effect all the Licenses listed on Disclosure
- ------------ ----------
Schedule 1.19 and all other Federal, state, and local governmental approvals,
- -------------
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights ("Permits") necessary for Seller to own, lease, or operate its
properties and assets and to carry on the business of the Stations as now
conducted, and there has occurred no default under any such Permit. Except as
set forth in
<PAGE>
Disclosure Schedule, the FCC Licenses: (i) constitute all authorizations issued
to Seller by the FCC in connection with the operation of the Stations; (ii) are
in full force and effect; (iii) are valid for the balance of the current license
term applicable generally to radio stations licensed in the State of Tennessee;
(iv) constitute all authorizations required under the Communications Act of
1934, as amended, and the rules and regulations of the FCC for the operation of
the Stations substantially as now conducted; (v) to Seller's Knowledge, having
made diligent inquiry, are not subject to any pending or threatened FCC
investigations or enforcement or other proceedings which might result in the
revocation or non-renewal of or the imposition of any condition on such
licenses; and (vi) are free and clear of any restrictions which might limit the
full operation of the Stations (other than restrictions under the terms of the
licenses themselves and restrictions imposed by FCC rules). Seller is not aware
of any reason why the FCC Licenses would not be renewed in the ordinary course.
3.5 Title to Property. Except for the Excluded Assets, the Assets
-----------------
constitute all of the assets used or useful in the ordinary operation of the
Stations. Except as set forth in Disclosure Schedule 3.5, Seller has good and
-----------------------
marketable title to, or valid leasehold interests in, all of the Assets
comprised of Real Property and Personal Property. All the Assets and
properties, other than assets and properties in which Seller has a leasehold
interest, are free and clear of all Liens other than those set forth in
Disclosure Schedule 3.5 and except for Permitted Liens. Except as set forth in
- -----------------------
Disclosure Schedule 3.5, Seller has complied in all material respects with the
- -----------------------
terms of all leases to be assigned hereunder, if any, to which it is a party,
and all such leases are in full force and effect, and Seller enjoys peaceful and
undisturbed possession under all such leases. The Personal Property constitutes
all of the personal property that is used or held by Seller or others for use by
the Stations, or necessary to operate the Stations as they are now being
operated. The Personal Property is in good operating condition and repair
(reasonable wear and tear excepted), is maintained in compliance with good
engineering practice, is not in need of repair, and is otherwise sufficient to
permit the Stations to operate in accordance with the FCC Licenses, the
underlying construction permits of the Stations, and the rules and regulations
of the Commission. All Stations' equipment is type-approved or type-accepted
where such type-approval or type-acceptance is required.
3.6 Real Property; Leased Real Property. All of the Real Property
-----------------------------------
that is occupied by Seller pursuant to a lease or license (the "Leased Real
Property"), other than any Leased Real Property which is an Excluded Asset, is
listed on Disclosure Schedule 1.32 and is held at the rates and for terms ending
------------------------
on the dates shown in Disclosure Schedule 1.32 pursuant to the Contracts therein
------------------------
described, which are the sole and complete Contracts concerning Seller's use of
Leased Real Property other than any Leased Real Property which is an Excluded
Asset. With respect to all Real Property, to Seller's Knowledge: (i) there are
no encroachments upon any Real Property; (ii) none of the buildings, structures
or improvements (including without limitation any ground radials, guy wires or
guy anchors) constructed on the Real Property or Leased Real Property encroach
on any adjoining real estate, and all of the Stations' equipment tower(s),
antennae, antenna ground systems, buildings, driveways, parking lots and
Personal Property that are being assigned to Buyer hereunder are located on the
Real Property that is either being assigned to Buyer hereunder or which is the
subject of any Leased Real Property being assigned to Buyer hereunder; and
<PAGE>
(iii) all such buildings, structures or improvements are constructed in
conformity with or are "grandfathered" with respect to all "setback" lines,
easements and other restrictions or rights of record or that have been
established by any applicable building, safety or zoning code or ordinance.
There are no pending, or to Seller's Knowledge, threatened, condemnation or
eminent domain proceedings that may affect the Real Property. To Seller's
Knowledge, Disclosure Schedule 1.32 specifically sets forth any and all
------------------------
"grandfathered" exceptions to existing setback requirements, easements and other
restrictions or requirements.
3.7 Contracts. Except as set forth in Disclosure Schedule 3.7, the
--------- -----------------------
Contracts listed in the Disclosure Schedule constitute all of the material
Contracts which are required to conduct the business of the Stations as the are
presently being conducted except for (i) contracts entered into in the ordinary
course of Seller's business with advertisers for the sale of advertising time on
the Stations at the Stations' prevailing rates which are not prepaid and which
may be cancelled by the Stations without penalty on not more than thirty (30)
business days' notice; and (ii) trade or barter agreements pertaining to the
Stations, the aggregate value of which does not exceed, in the aggregate,
$10,000. Except as set forth in Disclosure Schedule 3.7, all Assumed Contracts
-----------------------
are in full force and effect and are valid, binding, and enforceable in
accordance with their terms, and there is not under any Assumed Contract any
default by Seller or, to Seller's Knowledge, any other party thereto or any
event that, after notice or lapse of time or both, would constitute a default.
Except for the Consents listed in Disclosure Schedule 3.3 and the FCC Consent,
-----------------------
Seller has full legal power and authority to assign its rights under the Assumed
Contracts to Buyer in accordance with this Agreement, and the assignment of the
Assumed Contracts to Buyer will not affect the validity, enforceability, or
continuation of any of the Assumed Contracts.
3.8 Consents. Except for the compliance with the HSR Act provided
--------
for in Section 7.2, the FCC Consent provided for in Section 7.1 and the other
Consents listed in Disclosure Schedule 3.3, no consent, approval, permit, or
-----------------------
authorization of or declaration to or filing with any governmental or regulatory
authority or any other third party is required: (i) to consummate this Agreement
and the transactions contemplated hereby; (ii) to permit Seller to assign or
transfer the Assets to Buyer; or (iii) to enable Buyer to operate the Stations
in essentially the same manner as they are now conducted.
3.9 Intangibles. Disclosure Schedule 1.24 contains a true and
----------- ------------------------
complete list of all the Intangibles registered under federal and/or state law
as patents, trademarks or service marks. To Seller's Knowledge, Seller is not
infringing upon or otherwise acting adversely to any trademarks, tradenames,
service marks, service names, copyrights, patents, patent applications, know-
how, methods, or processes owned by any person or persons other than Seller, and
there is no claim or action pending with respect thereto. To the Seller's
Knowledge, Seller has not taken any action which would permit any party other
than Seller, its agents, officers or employees (acting on behalf of Seller) to
use, license, sublicense or operate under any of the Intangibles. To the
Seller's Knowledge, there is not now and there has not been any infringement,
dilution, or misappropriation of any of the Intangibles.
3.10 Financial Statements. Disclosure Schedule 3.10 contains copies
-------------------- ------------------------
of unaudited profit and loss statements and balance sheets for Seller, for the
fiscal years ending
<PAGE>
in 1991, 1992, 1993, 1994 and 1995. Except as set forth thereon, all of such
profit and loss statements and balance sheets have been prepared from the books
and records of Seller in accordance with generally accepted accounting
principles consistently applied and maintained throughout the periods indicated,
accurately reflect the books, records, and accounts of Seller, and present
fairly the financial condition of Seller as at their respective dates and the
results of operations for the periods then ended.
3.11 Personnel.
---------
(a) Employees and Compensation. Disclosure Schedule 3.11(a)
-------------------------- ---------------------------
contains: (i) a true and complete list of all persons employed by the Stations
and a description of their compensation; (ii) a description of all employee
benefit plans or arrangements applicable to the employees of the Stations and
all fixed or contingent liabilities or obligations of Seller with respect to any
person now or formerly employed by Seller at the Stations, including, without
limitation, pension or thrift plans, individual or supplemental pension or
accrued compensation arrangements, contributions to hospitalization or other
health or life insurance programs, incentive plans, bonus arrangements, and
vacation, sick leave, disability, and termination arrangements or policies,
including worker's compensation policies; and (iii) copies of all applicable
plan documents, trust documents, insurance contracts, Contracts with employees,
and summary plan descriptions of the written plans and arrangements described
above, the most recent annual report (Form 5500 and all schedules filed
therewith) in connection with each such plan or arrangement, the most recent IRS
determination letter, if any, for each such plan or arrangement which is
intended to satisfy Section 401(a) of the Internal Revenue Code of 1986, as
amended, and if a plan or arrangement is funded, the most recent annual and
periodic accounting of assets of such plan or arrangement. Except as set forth
on Disclosure Schedule 3.11(a), Seller does not have or maintain any bonus,
---------------------------
stock option, deferred compensation, pension or profit-sharing plan, or other
retirement plan or arrangement, or other direct or indirect employee
compensation fringe benefit or welfare plan, including, without limitation, any
"employee benefit plan" within the meaning of Section 3(e) of the Employee
Retirement Income Security Act of 1974 ("ERISA"). Except as set forth on
Disclosure Schedule 3.11(a) Seller does not maintain or contribute to any
- ---------------------------
employee benefits plan which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA. Except as set forth in Disclosure Schedule
-------------------
3.11(a), to
- ----
Seller's Knowledge: (i) all employee benefits and welfare plans or arrangements
described above were established and have been executed, managed, and
administered without material exception in accordance with all applicable
requirements of the Internal Revenue Code, the Employee Retirement Income
Security Act of 1974, as amended, and other applicable laws; (ii) Seller is not
aware of the existence of any governmental audit or examination of any of such
plans or arrangements; and (iii) no action, suit, or claim with respect to any
of such plans or arrangements is pending or, to Seller's Knowledge, threatened.
Neither Seller nor any business or entity which is a member of a "controlled
group of corporations" under "common control" as defined in ERISA, or an
"affiliated service group" with Seller as defined in ERISA, or which is required
to be aggregated with Seller under ERISA, or is under "common control" with
Seller as defined in ERISA, nor any of their respective employees, participate
in, contribute to, or are required to contribute to any Multiemployer Plan, as
defined in Sections 3(37) and 4001(a)(3) of ERISA. To the extent applicable,
all
<PAGE>
contributions and other payments customarily made or required to be made by
Seller to any benefit plan or arrangement or under any employment agreement for
or on behalf of any of its employees or former employees have been made or
reserves adequate for such purposes have been set aside therefor and are
reflected in Seller's financial statements in accordance with the terms of each
such plan, arrangement or agreement. Except as set forth in Disclosure Schedule
-------------------
3.11(a), Seller has not promulgated any policy or entered into any written
- -------
agreement relating to the payment of severance pay to any employee whose
employment may be terminated or suspended, voluntarily or otherwise, by Seller.
Seller has substantially complied with and is not in default in any material
respect under any laws, rules and regulations, relating to employment of labor,
including those relating to wages, hours, equal employment opportunities,
employment of protected minorities (including women and persons over 40 years of
age), collective bargaining and the withholding and payment of taxes and
contributions and has withheld all amounts required or agreed to be withheld
from wages and salaries of its employees, and is not liable for any arrearage of
wages or for any tax or penalty or failure to comply with the foregoing. Seller
has not consented to any final decree involving any claim of unfair labor
practice and has not been held in any final judicial proceeding to have
committed any unfair labor practice and there are no material controversies
pending or threatened between Seller and any of its
employees.
(b) Agreements. Except as set forth in Disclosure Schedule
---------- -------------------
3.11: (i) Seller is not a party to or subject to any collective bargaining
- ----
agreements with respect to the Stations; and (ii) Seller has no contracts of
employment with any employee of the Stations other than contracts terminable at
will or on less than thirty (30) days notice with no liability other than paying
the employee's usual compensation through the date of termination.
3.12 Claims and Legal Actions. Except as set forth in Disclosure
------------------------ ----------
Schedule 3.12 and except for investigations and rule making proceedings
- -------------
affecting the radio broadcasting industry generally, there is no claim, legal
action, counterclaim, suit, arbitration, governmental investigation, or other
legal, administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or, to Seller's Knowledge, threatened, against or relating
to Seller, the Assets, or the Stations.
3.13 Compliance with Laws. Except as set forth in Disclosure
-------------------- ----------
Schedule 3.13, Seller is in compliance with all applicable statutes, laws,
- -------------
ordinances, regulations, rules, judgments, decrees, or orders of any
Governmental Entity, except for possible noncompliance which, individually or in
the aggregate, would not have a material adverse effect on Seller, the Stations
or the Assets.
3.14 Environmental. Except to the extent disclosed on Disclosure
------------- ----------
Schedule 3.14:
- -------------
(a) To the Seller's Knowledge, Seller possesses all permits,
licenses, registrations and other consents which are required with respect to
(i) the Assets, including without limitation, the owned Real Property listed on
Disclosure Schedule 1.32 (collectively, the "Property"); or (ii) the operation
- ------------------------
of Stations under all Environmental Laws
<PAGE>
(the "Environmental Permits"), and all such Environmental Permits are in full
force and effect.
(b) To Seller's Knowledge (i) Seller and the Property are
materially in compliance with all Environmental Laws, including, without
limitation, all applicable reporting requirements under Environmental Laws; and
(ii) there are no transformers, capacitors or other appliances which contain
PCBs, and no asbestos containing material, in use upon, stored upon or disposed
of upon the Property.
(c) There is no proceeding or investigation pending or, to
Seller's Knowledge, threatened by or before any court, governmental agency or
board or other forum in which Seller has been, or with respect to threatened
proceedings, could reasonably be expected to be, named as a defendant or
potentially responsible party (i) for alleged noncompliance with any
Environmental Laws, or (ii) relating to the release or threatened release into
the environment of any Hazardous Materials.
(d) During the period of current management's ownership of
Seller, Seller has not disposed, released or disseminated Hazardous Materials
in, on, under, from or about the owned Real Property other than in accordance
with applicable laws.
3.15 Conduct of Business in Ordinary Course; Adverse Change. Except
------------------------------------------------------
as set forth in Disclosure Schedule 3.15, since December 31, 1995, (a) Seller
------------------------
has conducted the business of the Stations in the ordinary course; (b) there has
occurred no change in the business, financial condition, Assets, earnings or
results of operations of the Stations, and no damage, destruction or loss
(whether or not covered by insurance) to any of the Assets, which could
reasonably be expected to have a material adverse effect on Seller, the business
of the Stations, or the transactions contemplated herein; and (c) there has been
no disposition of any Assets except in the ordinary course of business when such
Assets were no longer used or useful in connection with the operations of the
Stations, or in connection with the acquisition of replacement property of
equivalent kind and value. Seller has no knowledge of any condition or
contingency which it could reasonably expect to have a material adverse effect
on Seller, the business of the Stations, or the transactions contemplated
herein, except as disclosed in this Agreement.
3.16 Taxes. Seller has, or by the Closing Date will have, paid and
-----
discharged all taxes, assessments, excises and other levies, including any
interest and penalties due in connection therewith (the "Taxes") relating to the
Assets, excepting such taxes, assessments, and other levies as will not be due
until after the Closing Date and that are to be prorated between Buyer and
Seller hereunder. Seller has paid or will pay when due any and all taxes,
including, but not limited to, federal, state and local income taxes, earnings
taxes, sales taxes, withholding taxes, employment and payroll taxes and
contributions, property or inventory taxes, franchise taxes or other
governmental charges and duties due, or claimed to be due, to any governmental
authority, including any interest and penalties due in connection therewith,
with respect to periods beginning on or before the Closing Date, other than
those contested in good faith by appropriate proceeding. Seller has received no
notification of any pending audit, examination, investigation or other similar
<PAGE>
proceeding relating to Taxes due from Seller. There are no pending requests for
rulings from any tax authority with respect to the Assets.
3.17 Insurance. Disclosure Schedule 3.17 lists the type of
--------- ------------------------
insurance policies, the limits of the policies and the deductible amount of the
policies that are currently in force and effect relating to the Stations or the
Assets. All premiums due and payable on such policies have been paid.
3.18 Full Disclosure. No representation or warranty made by Seller
---------------
contained in this Agreement nor any certificate, document, or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading.
3.19 Insolvency Proceedings. Neither Seller nor the Assets are the
----------------------
subject of any pending or, to Seller's Knowledge, threatened insolvency
proceedings, including, without limitation, any bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary. Seller has not made any assignment for the benefit of creditors or
taken any action with a view to or that would constitute a valid basis for the
institution of any such insolvency proceedings.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to Seller as of the date hereof and the
Closing Date as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
-------------------------------------
duly organized, validly existing, and in good standing under the laws of the
State of Tennessee. Buyer will be duly qualified to conduct its business in the
State of Tennessee. Buyer has the requisite corporate power and authority to:
(i) own, lease, and use the Assets; (ii) conduct the business of operating the
Stations; and (iii) execute, deliver, and perform this Agreement and the
documents contemplated hereby according to their respective terms.
4.2 Authorization and Binding Obligation. The execution, delivery,
------------------------------------
and performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes a legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements and Required Consents.
-------------------------------------------------------
Subject to obtaining the Consents, the execution, delivery, and performance of
this Agreement by Buyer and the documents contemplated hereby (with or without
the giving of notice, the lapse of time, or both): (i) do not require the
consent of any third party; (ii) will not conflict with the Articles of
Incorporation or By-Laws of Buyer; (iii) will not conflict with, result in
<PAGE>
a breach of, or constitute a default under, any applicable law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; and (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license or permit to which Buyer is a party or by which
Buyer may be bound, such that Buyer could not acquire or operate the Assets.
4.4 Claims and Legal Actions. There is no action, suit,
------------------------
proceeding, or investigation pending or, to Buyer's Knowledge, threatened that,
if decided against Buyer, would materially and adversely affect Buyer's ability
to perform its obligations under this Agreement or the transactions contemplated
thereby.
4.5 Qualification. To Buyer's Knowledge, Buyer is qualified
-------------
legally, financially and otherwise to become the assignee of the Licenses,
including the FCC Licenses, under the Communications Act of 1934, as amended
prior to the date of this Agreement, and the rules, regulations and policies of
the FCC as in effect on the date of this Agreement. To Buyer's Knowledge, there
are no facts that could prevent, hinder, discourage, or delay the FCC from
issuing the FCC Consent.
4.6 Full Disclosure. No representation or warranty made by Buyer
---------------
contained in this Agreement nor any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading.
4.7 Reliance. Buyer has not relied on any representation or
--------
statement made by Seller, or any person acting on Seller's behalf, except as
specifically provided in this Agreement, the Exhibits and Schedules hereto and
Disclosure Schedule.
SECTION 5. COVENANTS OF SELLER.
-------------------
5.1 Pre-Closing Covenants. Seller covenants and agrees that,
---------------------
between the date hereof and the Closing Date, Seller will conduct the business
and operations of the Stations diligently in the ordinary course, and, except as
contemplated by this Agreement or with the prior written consent of Buyer,
Seller will act in accordance with the following:
(a) Contracts. Seller will not enter into any contract or
---------
commitment relating to the Stations or the Assets, or amend or terminate any
Assumed Contract (or waive any substantial right thereunder), or incur any
obligation (including obligations relating to the borrowing of money or
guarantee of indebtedness), except in the ordinary course of business and
consistent with the other provisions of this Agreement and the past practices of
the Stations. Seller will follow its usual and customary policies with respect
to extending credit for sales of time on the Stations and with respect to
collecting accounts receivable arising from such extension of credit.
<PAGE>
(b) Liens. Seller will not create, assume, or permit to
-----
exist any of the Assets, except for those in existence on the date of this
Agreement and disclosed in Disclosure Schedule 3.5 and except for mechanics
liens, liens for current taxes which are not yet due and payable, and other
similar liens, all of which will either be discharged on or before the Closing
or be included in the adjustments and prorations pursuant to Section 7.3 of this
Agreement.
(c) Dispositions. Seller will not sell, assign, lease, or
------------
otherwise transfer or dispose of any of the Assets except in the ordinary course
of business when such Assets are no longer used or useful in connection with the
operations of the Stations and unless such Assets are replaced with property of
equivalent kind and value, and when such dispositions are, in the aggregate, not
in excess of $10,000.
(d) Waivers. Seller will not waive any material right
-------
relating to the Stations or the Assets.
(e) Licenses. Except as set forth in this Agreement, Seller
--------
will not cause or permit, by any act or failure to act, any of the Licenses to
expire or to be surrendered or modified, or take any action that would cause the
FCC or any other governmental authority to institute proceedings for the
suspension, revocation, or adverse modification of any of the Licenses, or fail
to prosecute with due diligence any pending applications to any governmental
authority in connection with the operation of the Stations, or take any other
action within its control that could reasonably be expected to result in the
Stations being in noncompliance in any material respect with the requirements of
the Communications Act of 1934, as amended, or any other applicable law, or the
rules and regulations of the FCC or any other governmental authority having
jurisdiction. Seller will take all reasonable steps to defend and protect the
integrity of the Stations' signal and service contours and participate actively
in any FCC proceedings of which it becomes aware (other than those generally
affecting the broadcasting industry) which may reasonably be expected to result
in a material adverse affect upon the operations of the Stations, with the goal
of minimizing such effect upon the Stations.
(f) Consents. Seller will use best efforts to obtain the
--------
Consents, without any material change in the terms or conditions of any Assumed
Contract that would be materially less advantageous to the Stations than those
pertaining under the Assumed Contract as in effect on the date hereof.
(g) Books. Seller will maintain the books and records of the
-----
Stations in accordance with prior practice.
(h) Access to Information. Seller will give to Buyer and its
---------------------
counsel, accountants, engineers, and other authorized representatives reasonable
access to the Assets and to all books and records relating thereto, and will
furnish or cause to be furnished to Buyer and its authorized representatives all
information relating to the Assets that they reasonably request (including any
financial reports and operations reports produced with respect to the Stations).
<PAGE>
(i) Maintenance of Assets. Seller will maintain all of the
---------------------
Stations' property and assets or replacements thereof in their present condition
as represented in this Agreement, ordinary wear and tear excepted. Seller will
maintain supplies of inventory and spare parts consistent with past practice.
(j) Compliance with Laws. Seller will comply in all material
--------------------
respects with all rules and regulations of the FCC, and with all other
applicable laws, rules, and regulations to which it is subject. Upon receipt of
notice of violation of any law, rule, or regulation, Seller will use reasonable
efforts to contest in good faith or cure the violation prior to the Closing
Date.
(k) Insurance. Seller will maintain in force the existing
---------
hazard and liability insurance policies, or comparable coverage, for the
Stations and the Assets.
(l) Preservation of Business. Seller will use its reasonable
------------------------
efforts until the Closing Date to preserve the business and organization of the
Stations intact, to keep available to the Stations their present employees, and
to preserve for the Stations their present relationships with suppliers and
customers and others having business relations with it.
(m) No Solicitation. From the date hereof through the
---------------
Closing Date, or such earlier date as this Agreement is terminated, neither
Seller nor any of its officers or directors will discuss or negotiate with any
other person or entity, and they shall not make any offer to sell or accept any
offer to purchase, whether or not solicited, regarding any proposed sale of all
of any material part of the Assets.
(n) Notice of Adverse Change. Seller shall promptly notify
------------------------
Buyer in writing of (i) any material adverse change of which it has actual
knowledge in the financial condition of Assets, revenues, liabilities (whether
absolute, accrued, contingent or otherwise) or operation of the business of the
Stations; and (ii) any governmental or regulatory complaints, investigations or
hearings, or the institution of any litigation involving or relating to the
Assets or the business of the Stations.
(o) New Lease. Seller, or an affiliate of Seller, shall cause
there to be executed and delivered to Buyer at Closing a lease (the "New Lease")
of the approximately 3,800 square foot space, being a portion of space currently
occupied by Seller, having an address of 3300 Broad Street, Chattanooga,
Tennessee, which lease shall be for a term of one (1) year, terminable by
Seller upon sixty (60) days prior written notice to Buyer, will provide for
rent payable on a triple net basis equal to $3,483 per month, in advance, and
shall include other commercially reasonable terms reasonable satisfactory to the
parties.
5.2 Closing Covenant. On the Closing Date, if the conditions set
----------------
forth in Section 8.2 have been satisfied, Seller will sell, transfer, convey,
assign, and deliver to Buyer the Assets as provided in Section 2 of this
Agreement and make the deliveries provided in Section 9.2 of this Agreement.
<PAGE>
5.3 Post-Closing Covenants.
----------------------
(a) Access. Seller will provide Buyer access and the right to copy
------
for a period of three (3) years from the Closing Date, any books and records
relating to the Assets but not included in the Assets, provided that such
information is kept confidential and is not disclosed by Buyer except as and to
the extent required by applicable law and except as required in the normal
course of Buyer's business.
(b) Further Documents. After the Closing, Seller will execute and
-----------------
deliver to Buyer any additional bills of sale or other transfer documents, and
take additional steps, that, in the reasonable opinion of Buyer, may be
necessary to ensure, complete, and evidence the full and effective transfer of
the Assets to Buyer pursuant to this Agreement.
SECTION 6. COVENANTS OF BUYER.
------------------
On the Closing Date, if the conditions set forth in Section 8.1 have
been satisfied, Buyer shall purchase the Assets from Seller as provided in
Section 2 of this Agreement and shall make the deliveries provided in Section
9.3 of this Agreement.
<PAGE>
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS.
--------------------------------
7.1 FCC Consent. The assignment of the FCC Licenses as
-----------
contemplated by this Agreement shall be subject to the prior consent and
approval of the FCC. Promptly upon the execution of this Agreement, Buyer and
Seller shall prepare for filing with the FCC an appropriate application for FCC
Consent, which shall be filed with the FCC within ten (10) business days after
the date hereof. All FCC filing fees shall be paid one-half by each of Seller
and Buyer. The parties shall thereafter prosecute the application with all
reasonable diligence and otherwise use their best efforts to obtain a grant of
the application as expeditiously as practicable. Each party agrees to comply
with any condition imposed on it by the FCC Consent, except that no party shall
be required to comply with a condition if: (i) the condition was imposed on it
as the result of a circumstance the existence of which does not constitute a
breach by such party of any of its representations, warranties, or covenants
hereunder; and (ii) compliance with the condition would have a material adverse
effect upon it; provided, however, that a condition requiring Buyer to file
periodic reports with the FCC concerning affirmative action and equal employment
opportunity shall not be deemed to have a material adverse effect on Buyer.
Buyer and Seller shall oppose any requests for reconsideration or judicial
review of the FCC Consent (but nothing herein shall be construed to limit any
party's right to terminate this Agreement pursuant to Section 10 of this
Agreement). If the Closing shall not have occurred for any reason within the
original effective period of the FCC Consent, and neither party shall have
terminated this Agreement under Section 10.1(d), the parties shall jointly
request an extension of the effective period of the FCC Consent. No extension of
the FCC Consent shall limit the exercise by either party of its right to
terminate the Agreement under Section 10.1.
7.2 HSR Filings. If required for compliance with the HSR Act, as
-----------
soon as possible after the date hereof, but in no event later than thirty (30)
business days after the date hereof, Buyer and Seller shall prepare and file all
documents with the Federal Trade Commission and the United States Department of
Justice as are required to comply with the HSR Act and shall promptly furnish
all materials thereafter requested by any of the regulatory agencies having
jurisdiction over such filings. Each of Seller and Buyer shall pay one-half of
all Hart-Scott-Rodino filing fees.
7.3 Adjustments and Prorations. All revenues arising from the
--------------------------
operation of the Stations up until the Effective Time and all expenses arising
from the operation of the Stations up until the Effective Time, including
business and license fees (including any retroactive adjustments thereof),
utility charges, real and personal property taxes and assessments levied against
the Assets, property and equipment rentals, applicable copyright or other fees,
sales and services charges, taxes, and employee benefits (except as provided in
paragraph 7.3(b) below), and similar prepaid and deferred items, shall be
prorated between Buyer and Seller in accordance with the principle that Seller
shall receive all revenues and be responsible for all expenses, costs, and
liabilities allocable to the period prior to the Effective Time, and Buyer shall
be responsible for all expenses, costs, and obligations allocable to the period
after the Effective Time, subject to the following:
<PAGE>
(a) Contracts. There shall be no adjustment and Seller shall remain
---------
solely liable with respect to any Contracts not included in the Assumed
Contracts, and any other obligation or liability not being assumed by Buyer in
accordance with Section 2.6.
(b) Employee Compensation; Severance. Seller shall be responsible for
--------------------------------
the payment of all compensation owed and severance payments due to the Stations'
employees through the Closing Date. Seller shall also be solely responsible for
any other termination costs due Stations' employees.
(c) Trade and Barter. To the extent that the aggregate value by which
----------------
the Stations' post-closing obligations under trade, barter or similar
arrangements for the sale of advertising time (with the exception of program
barter agreements) is greater than the aggregate value of the goods, services or
other items to be received by the Stations after the Closing, Buyer shall be
entitled to receive the difference; provided, however, that such adjustment or
proration shall not be made unless such difference is more than $10,000. Seller
shall not enter into any new such arrangements that cannot be satisfied in full
by the Closing without Buyer's express written consent. Buyer shall receive a
credit for any amount by which the aggregate amount paid to Seller under prepaid
time sales contracts exceeds the value or advertising attributable to such
payments which is required to be run by the Stations after the Closing pursuant
to the terms of such contracts. Seller shall receive a credit for any pre-
Closing Date advertising for which Stations have not received full barter value
prior to the Closing Date.
(d) Manner of Determining Prorations. The prorations pursuant to this
--------------------------------
Section 7.3 will be determined in accordance with the following procedures:
(i) No later than sixty (60) days after the Closing Date, Buyer will
deliver to Seller a statement setting forth Buyer's determination of the
settlement prorations pursuant to Section 7.3, which shall be certified by Buyer
to be true and complete as of the Closing Date. If Seller disputes the amount
of the settlement prorations determined by Buyer, it shall deliver to Buyer
within thirty (30) business days after its receipt of Buyer's statement a
statement setting forth its determination of the amount of the settlement
prorations. If Seller notifies Buyer of its acceptance of Buyer's statement, or
if Seller fails to deliver its statement within the 30-day period specified in
the preceding sentence, Buyer's determination of the settlement prorations shall
be conclusive and binding on the parties as of the last day of the 30-day
period.
(ii) Buyer and Seller shall use their good faith efforts to resolve
any dispute involving the determination of the settlement prorations. Each
party shall provide the other party with access and the right to copy any books
and records in its possession relating to its determination of the settlement
prorations. If the parties are unable to resolve the dispute within fifteen
(15) business days following the delivery of Seller's statement, each of Buyer
and Seller shall select an independent certified public accountant, who shall be
knowledgeable and experienced in the operation of radio broadcasting stations,
and the two accountants so chosen shall attempt to resolve the dispute. If they
are not able
<PAGE>
to do so within forty-five (45) business days following the delivery of Seller's
statement, the two accountants shall agree upon a third accountant, and the
dispute shall be resolved by the decision of the majority of the accountants,
which shall be conclusive and binding on the parties. Any fees of the
accountants shall be split equally between the parties.
(e) Payment of Purchase Price and Prorations. The Purchase
----------------------------------------
Price and settlement prorations shall be paid as follows:
(i) Payment of Purchase Price. Buyer shall pay or cause
-------------------------
to be paid to Seller at the Closing the Purchase Price.
(ii) Payments to Reflect Final Determination of
------------------------------------------
Prorations.
- ----------
(1) If the aggregate of the prorations and adjustments, as finally
determined pursuant to Section 7.3(d)(i) and 7.3(d)(ii) (the "Prorations")
results in an amount due from Buyer to Seller, Buyer shall pay such amount to
Seller, in immediately available funds within five days after the date on which
the Prorations are so determined.
(2) If the Prorations result in an amount due from Seller to Buyer,
Buyer shall retain an amount equal to such amount from amounts collected by
Buyer pursuant to Section 7.6 with respect to Seller's accounts receivable. Any
amounts collected by Buyer with respect to Seller's accounts receivable and not
permitted to be retained pursuant to this paragraph shall be remitted to Seller
in accordance with Section 7.6. If the amounts of Prorations due from Seller to
Buyer exceeds the amount of Seller's accounts receivable collected by Buyer
prior to the date on which the Prorations are determined, Seller shall pay to
Buyer, in immediately available funds within five days after the date on which
the Prorations are determined, the difference between the amount owed to Buyer
with respect to the Prorations, reduced by the amount of Seller's accounts
receivable collected by Buyer which have not already been remitted to Seller
prior to the date on which the Prorations are determined. Buyer shall be
entitled to retain the amount of Seller's accounts receivable collected by Buyer
prior to the date on which the Prorations are determined, and, if Seller makes
the payment to Buyer provided for in this paragraph, Buyer shall remit to Seller
in accordance with Section 7.6 any amounts subsequently collected by Buyer with
respect to Seller's accounts receivable.
(iii) Holdback. One Hundred Thousand Dollars
--------
($100,000) of the Purchase Price payable at Closing shall be retained by the
Escrow Agent, to be held pursuant to the Escrow Agreement as security for the
obligations of the Seller under Section 11 hereof.
7.4 Risk of Loss.
------------
(a) The risk of loss or damage to the Assets shall be upon Seller at
all times prior to the Closing. In the event of such loss or damage, Seller
shall
<PAGE>
promptly notify Buyer and shall use its reasonable efforts to repair, replace or
restore the lost or damaged Assets to their former condition as soon as
possible. If material damage has occurred that precludes the operation of the
Stations within the terms of the Station Licenses and the FCC Rules, and the
Assets have not been repaired or restored prior to the Closing Date, Buyer may,
at its option:
(i) elect to consummate the Closing and accept the Stations "AS IS,"
in which event Seller shall pay over to Buyer any proceeds of insurance received
by Seller and attributable to damage to the Stations or the Assets and
thereafter Seller shall have no further obligation to repair, replace or restore
the damaged property; or
(ii) elect to postpone the Closing Date for a period of up to sixty
(60) days, with prior consent of the FCC if necessary (which the parties shall
use their reasonable efforts to obtain), to permit Seller to make such repair,
replacement or restoration as is required to restore the lost or damaged
property to the equivalent of its former condition in all material respects. If
Seller cannot complete such repair, replacement or restoration within such sixty
(60) day extension period, Buyer may terminate this Agreement by giving notice
to Seller and the parties shall be released and discharged from any further
obligation hereunder. If the parties disagree whether the property has been
adequately repaired, replaced or restored, or whether the Stations can be
operated within the terms of the Station Licenses, the matter shall be referred
to a mutually-acceptable qualified consulting communications engineer, who shall
be a member of the Association of Federal Communications Consulting Engineers,
whose decision shall be final, and whose fees and expenses shall be shared
equally by Buyer and Seller.
(b) Notwithstanding the foregoing, if any event occurs which prevents
broadcast transmissions in a normal and usual manner in accordance with the
terms of the Station Licenses and the FCC Rules for a period of more than five
(5) consecutive days, then Buyer shall have the right to terminate this
Agreement at any time within fifteen (15) days after the occurrence of such
event without further liability hereunder, or Buyer may proceed in the manner
set forth in this Section 7.4; otherwise Buyer shall remain fully obligated to
consummate the transactions contemplated hereunder (except to the extent Seller
has failed to fulfill its obligations hereunder).
7.5 Confidentiality. Each party hereto will keep confidential any
---------------
information obtained from the other party in connection with the transactions
contemplated by this Agreement. If this Agreement is terminated and the
purchase and sale contemplated hereby abandoned, each party will return to the
other party all information obtained by it in connection with the transactions
contemplated hereby, and will provide a certificate to that effect. No public
announcement concerning the subject matter of this Agreement shall be made by
either party without the approval of the other as to the announcement's content
and timing, which approval shall not unreasonably be withheld.
7.6 Collection of Accounts Receivable. Buyer agrees to use its
---------------------------------
best efforts to collect Seller's accounts receivable in the normal and ordinary
course of business as Seller's agent for collection and will apply all such
amounts collected to the debtor's
<PAGE>
oldest account receivable (unless and only to the extent that such debtor
disputes that such account receivable is properly due); provided, however, that
such obligation and authority shall not extend to the institution of litigation,
employment of counsel or a collection agency or any other extraordinary means of
collection unless authorized in writing by Seller. Buyer agrees to cooperate
fully with Seller as to any litigation or other collection efforts instituted by
Seller to collect delinquent accounts receivable. On or before the 15th day of
each month, Buyer shall deliver to Seller a statement or report showing all such
collections effected since the last previous report, together with a check or
draft for the amount of such collections. If authorized by Seller, and at
Seller's expense, Buyer shall have full power and authority as Seller's agent
for collection to settle disputes, effect compromises, institute and terminate
suits relating thereto and generally to pursue such collections in accordance
with Buyer's customary collection procedures, including employment of counsel or
a collection agency or any other extraordinary means, in all instances acting as
agent for Seller but without any necessity to disclose that fact. If necessary
or advisable in Buyer's sole discretion, Buyer may effect any or all such
collections and perform authorized acts relating thereto as agent for an
undisclosed principal. If at any time Buyer determines that any such accounts
are uncollectible, Buyer shall notify Seller of such determination and upon
Seller's written request shall furnish or make available to Seller all records,
files and data relating to such accounts and Buyer's determination of
uncollectibility. Except as expressly provided herein, Buyer shall have no
responsibility for any obligation regarding any of Seller's accounts receivable.
Buyer's obligation to collect accounts receivable as Seller's agent shall expire
at the end of the fourth full month following the Closing Date, and, within
fifteen (15) days after the end of such month, Buyer shall render a final
statement or report showing accounts collected and uncollected.
7.7 Brokers.
-------
(a) Seller's Broker. Seller represents and warrants to Buyer that
---------------
except for its retention of Media Venture Partners, Inc. (for which Seller
acknowledges full responsibility) neither it nor any person or entity acting on
its behalf has agreed to pay a commission, finder's fee, or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, nor has it or any person or entity acting on its behalf taken any action
on which a claim for any such payment could be based.
(b) Buyer's Broker. Buyer hereby agrees to indemnify and hold
--------------
harmless Seller and its parent and affiliated corporations from and against any
claim that Buyer or any person or entity acting on its behalf has agreed to pay
a commission, finder's fee, or similar payment in connection with this Agreement
or any matter related hereto to any person or entity, and Buyer agrees to take
full responsibility for any such payment.
7.8 Cooperation. Buyer and Seller shall cooperate fully with each
-----------
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their obligations under this Agreement,
and Buyer and Seller will use their best efforts to consummate the transactions
contemplated hereby and to fulfill their obligations hereunder.
<PAGE>
7.9 Control of the Stations. Prior to Closing, Buyer shall not,
-----------------------
directly or indirectly, control, supervise, or direct, or attempt to control,
supervise or direct the operations of the Stations; those operations, including
complete control and supervision of all of the Stations' programs, employees,
and policies, shall be the sole responsibility of Seller.
7.10 Consultation. Subject to the provisions of Section 7.9,
------------
between the date hereof and the Closing, Seller will consult with Buyer's
management with a view to informing such management as to the operation,
management, and business of the Stations.
7.11 Assignment and Concurrent Use Agreement. At Closing, Buyer and
---------------------------------------
Seller shall enter into an "Assignment and Concurrent Use Agreement" relating to
the shared use of the call letters "WDEF," which shall be in form substantially
similar to that specified in Exhibit B attached hereto and incorporated herein
---------
by reference.
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER.
---------------------------------------------
8.1 Conditions to Obligations of Buyer. All obligations of Buyer
----------------------------------
at the Closing hereunder are subject at Buyer's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. Except as otherwise provided in
------------------------------
this Agreement, all representations and warranties of Seller contained in this
Agreement shall be true and complete in all material respects at and as of the
Closing Date as though made at and as of that time.
(b) Covenants and Conditions. Seller shall have performed and
------------------------
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or at
the Closing Date.
(c) FCC Consent. The FCC Consent shall have been granted and shall
-----------
have become a Final Order without the imposition on Buyer of any conditions that
need not be complied with by Buyer under Section 7.1 hereof and Seller shall
have complied with any conditions imposed on it by the FCC Consent.
(d) HSR Matters. The waiting period (and any extension thereof) under
-----------
the HSR Act shall have expired and there shall not be outstanding any order of a
court restraining the transaction contemplated hereby.
(e) Deliveries. Seller shall have made or stand willing to
----------
make all the deliveries to Buyer set forth in Section 9.2.
(f) No Litigation. No litigation or proceeding shall have been
-------------
commenced against Buyer or Seller seeking to restrain or prevent the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions and there shall be no Final Order of any nature issued by a
court of competent jurisdiction restraining or prohibiting the consummation of
the transactions contemplated hereby.
<PAGE>
(g) Environmental Report. Seller shall, within twenty one (21) days
--------------------
after the date hereof, at Buyer's expense, provide Buyer with a Phase I
environmental assessment of the owned Real Property listed on Disclosure
----------
Schedule 1.32 (the "Phase I Report") performed by Dames & Moore. If, in the
- -------------
Buyer's good faith judgment, the Phase I report fails to indicate that the owned
Real Property is in material compliance with all Environmental Laws, Buyer may,
by written notice received by Seller within thirty (30) days of receipt of such
report by Buyer, terminate this Agreement. If Buyer fails to so notify Seller,
Buyer will be deemed to have accepted the Environmental Condition of the Real
Property, subject to the representations and warranties of the Seller. Buyer
shall remit to Seller, within five (5) business days of receipt of the Dames &
Moore invoice, the cost of the Phase I Report.
(h) Title Commitment; Survey. Seller shall, within thirty (30) days
------------------------
after the date hereof, at Buyer's expense, provide to Buyer a title insurance
commitment (the "Title Commitment") from Chicago Title Insurance Company,
without a survey exception, and insuring matters customarily included on title
insurance policies in the area in which the owned Real Property listed on
Disclosure Schedule 1.32 is located. If the prior survey is not sufficient to
- ------------------------
permit waiver of the survey exception, Seller shall arrange for a new survey at
Buyer's expense. If the Title Commitment is not reasonably satisfactory to
Buyer, including facts disclosed by the survey (a) for any encroachments upon
the owned Real Property, (b) showing that any of the buildings, structures or
improvements (including, without limitation, any ground radials, guy wires or
guy anchors) constructed on the owned Real Property encroaches on any adjoining
real estate or (c) showing that any of the Stations' equipment tower(s),
antennae, antenna ground systems, buildings, driveways, parking lots and
Personal Property that are being assigned to Buyer hereunder are not located on
the owned Real Property that is being conveyed to Buyer hereunder, Buyer may, by
written notice received by Seller within fifteen (15) days of receipt of such
Title Commitment by Buyer, notify Seller of Buyer's exceptions to the Title
Commitment. Seller shall use its best efforts to affect the cure of such
defects. It shall be Seller's obligation to cure any such defects on or before
the Closing Date, provided however, that if, in Seller's opinion, any such
defect cannot reasonably be cured by the Closing Date, Seller shall so notify
Buyer in writing, within thirty (30) days of receipt of Buyer's notice of such
defects, whereupon, Buyer shall have fifteen (15) days to either (i) terminate
this Agreement by written notice to Seller; or (ii) elect to proceed. If Buyer
fails to provide Seller with written notice of its intent to terminate this
Agreement within the fifteen (15) day period specified above, Buyer shall be
deemed to have accepted the condition and state of the title to the owned Real
Property, subject to the representations and warranties of the Seller herein.
Buyer shall remit to Seller, within five (5) business days of receipt of the
Chicago Title invoice, the cost of the Title Commitment.
(i) New Lease. Seller shall deliver at the Closing the New
---------
Lease referred to in Section 5.1(o), duly executed by the Lessor.
8.2 Conditions to Obligations of Seller. All obligations of Seller
-----------------------------------
at the Closing hereunder are subject at Seller's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
<PAGE>
(a) Representations and Warranties. All representations and
------------------------------
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have performed and complied
------------------------
in all material respects with all covenants, agreements, and conditions required
by this Agreement to be performed or complied with by it prior to and at the
Closing Date.
(c) FCC Consent. The FCC Consent shall have become a Final Order,
-----------
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 7.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
(d) HSR Act. The waiting period (and any extension thereof) under the
-------
HSR Act shall have expired and there shall not be outstanding any order of a
court restraining the transaction contemplated hereby.
(e) Deliveries. Buyer shall have made or stand willing to make
----------
all the deliveries set forth in Section 9.3.
SECTION 9. CLOSING AND CLOSING DELIVERIES.
------------------------------
9.1 Closing.
-------
(a) Closing Date. The Closing shall take place at 10:00 a.m. on a
------------
date as agreed to by Buyer and Seller within five (5) business days following
the later of: (i) the date upon which the FCC Consent has become a Final Order;
and (ii) the expiration of the waiting period (and any extension thereof) under
the HSR Act.
(b) Closing Place. The Closing shall be held at the offices of Eckert
-------------
Seamans Cherin & Mellott, One International Place, 18th Floor, Boston, MA 02110,
or any other place that is agreed upon by Buyer and Seller.
9.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
--------------------
shall deliver to Buyer the following in form and substance reasonably acceptable
to Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale, deeds,
------------------
assignments, certificates of title and other transfer documents which shall be
sufficient to vest good title to the Assets in the name of Buyer, free and clear
of all claims, encumbrances and liens other than Permitted Liens.
(b) Consents. Executed original of each Consent.
--------
(c) Resolutions. Copies of the by-laws of Seller and the resolutions
-----------
adopted by the Boards of Directors and, if required, stockholders, of Seller,
<PAGE>
authorizing, and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby, certified by the Secretary of Seller as
being true and complete on the Closing Date.
(d) Certificate. A certificate, dated as of the Closing Date, executed
-----------
by an authorized officer of Seller, certifying: (i) that Seller has obtained
proper corporate authorization, including the consent of stockholders, necessary
to the consummation of this Agreement; (ii) that the representations and
warranties of Seller contained in this Agreement are true and complete in all
material respects as of the Closing Date as though made on and as of that date;
and (iii) that Seller has performed in all material respects all of its
obligations and agreements and complied in all material respects with all of its
covenants set forth in this Agreement to be performed and complied with on or
prior to the Closing Date.
(e) Opinion of Counsel. The opinion of Eckert Seamans Cherin &
------------------
Mellott, counsel to Seller, and Gardner, Carton & Douglas, special FCC counsel
to Seller, covering those matters customary in transactions of this type.
(f) New Lease. The New Lease, duly executed by the Lessor.
---------
9.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
-------------------
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in Section 23,
--------------
subject to the escrow holdback referred to in Section 7.3(e)(iii).
(b) Assumption Agreement. A duly executed assumption agreement,
--------------------
pursuant to which Buyer will assume and undertake to perform Seller's
obligations under the Assumed Contracts arising after the Effective Time, to the
extent specified in Section 2.6.
(c) Resolutions. Copies of resolutions adopted by Buyer, authorizing
-----------
and approving the execution of this Agreement and the consummation of the
transactions contemplated hereby, certified by its Secretary as being true and
correct on the Closing Date. and
(d) Certificate. A certificate, dated as of the Closing Date,
-----------
executed on behalf of Buyer by the President of Buyer, certifying: (i) that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of the Closing Date as though made on and
as of that date; and (ii) that Buyer has performed in all material respects all
of its obligations and agreements and complied in all material respects with all
of its covenants set forth in this Agreement to be performed or complied with on
or prior to the Closing Date.
<PAGE>
(e) Opinion of Counsel. The opinion of Brooks, Pierce, McLendon,
------------------
Humphrey & Leonard, counsel for Buyer, covering those matters customary in
transactions of this type.
SECTION 10. TERMINATION.
-----------
10.1 Termination Rights. Subject to the provisions of Section 10.5
------------------
below, this Agreement may be terminated by either Buyer or Seller, if the
terminating party is not then in material breach or default, upon written notice
to the other party, upon the occurrence of any of the following:
(a) Conditions. If on the Closing Date any of the conditions
----------
precedent to the obligations of the terminating party set forth in this
Agreement have not been satisfied or waived in writing by the terminating party.
(b) Judgments. If there shall be in effect on the Closing Date any
---------
judgment, decree, or order that would prevent or make unlawful the Closing of
this Agreement.
(c) Loss of Assets. The exercise by Buyer of its right
--------------
pursuant to Section 7.4 to terminate for loss of the Assets.
(d) Upset Date. If the Closing Date shall not have occurred on
----------
or before March 1, 1997.
10.2 Disposition of Escrow Deposit. The Escrow Deposit shall be
-----------------------------
forfeited by Buyer and shall become the property of Seller in the event the
transaction fails to close (i) by reason of a material breach by Buyer of its
representations, warranties and covenants hereunder; or (ii) failure of Buyer to
satisfy the conditions required of Buyer in Section 8.2 of this Agreement; or
(iii) if the FCC shall not have issued a Final Order by March 1, 1997, approving
assignment of the Stations to Buyer and the failure of the FCC to have issued
such Final Order is for reasons solely attributable to Buyer. The Escrow
Deposit shall be returned to Buyer in the event the transaction fails to close
(i) by reason of a material breach by Seller of its representations, warranties
and covenants hereunder; or (ii) failure of Seller to satisfy the conditions
required of Seller in Section 8.1 of this Agreement; or (iii) if Buyer shall
have timely terminated the Agreement for environmental matters in accordance
with the provisions of Section 8.1(g) or title matters in accordance with the
provisions of Section 8.1(h); or (iv) if the FCC shall not have issued a Final
Order by March 1, 1997, approving the assignment of the Stations to Buyer and
the failure of the FCC to have issued such Final Order is for any reason other
than a reason solely attributable to Buyer.
10.3 Liquidated Damages. If this Agreement is terminated by Seller
------------------
due to a breach by Buyer of its representations, warranties, and covenants under
this Agreement, then the Escrow Deposit shall be paid to Seller as liquidated
damages, it being agreed that the Escrow Deposit shall constitute full payment
for any and all damages suffered by Seller
<PAGE>
by reason of Buyer's failure to close this Agreement. Buyer and Seller agree in
advance that Seller's actual damages if Buyer breaches its obligations hereunder
would be difficult to ascertain and that the amount of the Escrow Deposit paid
to Seller is a fair and equitable amount to reimburse Seller for damages
sustained from the termination of this Agreement for the reason stated in the
first sentence of this Section 10.3.
10.4 Specific Performance. The parties recognize that if Seller
--------------------
refuses to Close as and when required under the provisions of this Agreement,
monetary damages will not be adequate to compensate Buyer for its injury. Buyer
shall therefore be entitled, in addition to a right to collect money damages, to
obtain specific performance of the terms of this Agreement. If any action is
brought by Buyer to enforce this Agreement, Seller shall waive the defense that
there is an adequate remedy at law.
10.5 Opportunity to Cure. Neither party shall have the right to
-------------------
terminate this Agreement as a result of the other party's default unless the
terminating party shall have given the defaulting party written notice
specifying in reasonable detail the nature of the default and shall have
afforded the defaulting party fifteen (15) business days to cure the default.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
----------------------------------------------
INDEMNIFICATION.
---------------
11.1 Representations and Warranties. Except as otherwise
------------------------------
specifically set forth herein, all representations and warranties contained in
this Agreement shall survive the Closing for a period of twelve (12) months.
11.2 Indemnification by Seller. From and after the Closing, Seller
-------------------------
hereby agrees, subject to Section 11.4(e), to indemnify and hold Buyer and its
officers, directors, shareholders and affiliates harmless against and with
respect to, and shall reimburse Buyer for:
(a) Breach. Any and all losses, liabilities, claims, actions or
------
damages or expenses resulting from any untrue representation, breach of
warranty, or nonfulfillment of any covenant by Seller contained herein or in any
certificate, document, or instrument delivered to Buyer hereunder.
(b) Obligations. Any and all obligations of Seller not assumed by
-----------
Buyer pursuant to the terms of this Agreement, including any and all liabilities
arising at any time under any Contract not included in the Assumed Contracts
subject to the condition that Buyer shall have given Seller timely written
notice of, and an opportunity to defend, any and all such asserted liabilities.
(c) Ownership. Any and all losses, liabilities, or damages resulting
---------
from the operation or ownership of the Stations prior to the Effective Time,
including any and all liabilities arising under the Licenses or the Contracts
which relate to events occurring prior to the Effective Time subject to the
condition that Buyer shall have
<PAGE>
given Seller timely written notice of, and an opportunity to defend, any and all
such asserted liabilities.
(d) Legal Matters. Any and all actions, suits, proceedings, claims,
-------------
demands, assessments, judgments, costs, and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or incurred in investigating
or attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
11.3 Indemnification by Buyer. Notwithstanding the Closing, Buyer
------------------------
hereby agrees to indemnify and hold Seller and its officers, directors,
shareholders and affiliates harmless against and with respect to, and shall
reimburse Seller for:
(a) Breach. Any and all losses, liabilities, claims, actions or
------
damages and expenses resulting from any untrue representation, breach of
warranty, or nonfulfillment of any covenant by Buyer contained herein or in any
certificate, document, or instrument delivered to Seller hereunder.
(b) Ownership. Any and all losses, liabilities, or damages resulting
---------
from the operation or ownership of the Stations on and after the Effective Time,
including any and all liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring after the Effective Time.
(c) Legal Matters. Any and all actions, suits, proceedings, claims,
-------------
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or incurred in investigating
or attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
11.4 Procedure for Indemnification. The procedure for
-----------------------------
indemnification shall be as follows:
(a) Notice. The Claimant shall promptly (but in any event within
------
thirty (30) days) give notice to the Indemnitor of any claim, whether solely
between the parties or brought by a third party, specifying (i) the factual
basis for the claim, and (ii) the amount of the claim to the extent
determinable. Notwithstanding the foregoing, a failure of the Claimant to
provide notice within such time period shall not result in a forfeiture of the
indemnification rights provided for herein unless the Indemnitor is materially
prejudiced by such delay.
(b) Investigation. With respect to claims between the parties,
-------------
following receipt of notice from the Claimant of a claim, the Indemnitor shall
have thirty (30) business days to make any investigation of the claim that the
Indemnitor deems necessary or desirable. For the purposes of this
investigation, the Claimant agrees to make available to the Indemnitor and/or
its authorized representatives the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnitor cannot agree as to
the validity and amount of the claim within said 30-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate legal remedy.
<PAGE>
(c) Control. With respect to any claim by a third party as to which
-------
the Claimant is entitled to indemnification hereunder, the Indemnitor shall have
the right at its own expense to participate in or assume control of the defense
of the Claim, and the Claimant shall cooperate fully with the Indemnitor,
subject to reimbursement for actual out-of-pocket expenses incurred by the
Claimant as the result of a request by the Indemnitor. If the Indemnitor elects
to assume control of the defense of any third-party claim within fifteen (15)
business days of notice under Section 11.4(a), the Claimant shall have the right
to participate in the defense of the claim at its own expense. If the Indemnitor
does not elect to assume control or otherwise participate in the defense of any
third party claim, it shall be bound by the results obtained by the Claimant
with respect to the claim.
(d) Immediate Action. If a claim, whether between the parties or by a
----------------
third party, requires immediate action, the parties will make every effort to
reach a decision with respect thereto as expeditiously as possible.
(e) Limitations on Indemnification.
------------------------------
(i) Any indemnity payment hereunder shall be limited to the extent of
the actual loss or damage suffered by the Claimant and shall be reduced by the
amount of any recovery by the Claimant from any third party, including any
insurer, and by the amount of any tax benefits received.
(ii) No party shall be entitled to indemnification hereunder except to
the extent that the total amount of its claims for indemnification exceeds
$5,000, and in no event shall the aggregate amount for which any party is liable
hereunder exceed $100,000. No party shall be entitled to indemnification
hereunder for any claim arising from the breach by the other party of its
representations and warranties which is not asserted against the Indemnitor
within twelve (12) months after the Closing Date.
(iii) The limitations in Section 11.4 (e)(ii)shall not apply
to any claim for indemnification for any liability of the Claimant or the
Indemnitor to any third party, to the adjustments and prorations to be made
pursuant to Section 7.3, or to Buyer's obligations with respect to Seller's
Accounts Receivable as set forth in Section 7.6.
SECTION 12. MISCELLANEOUS.
-------------
12.1 Fees and Expenses. Seller and Buyer shall share equally all
-----------------
HSR Act and FCC filing fees (including any subsequently instituted tax on the
assignment of FCC licenses). Seller shall bear the cost of all other filing
fees, transfer taxes, sales taxes, document stamps, or other charges levied by
any governmental entity on account of or in connection with the transfer of the
Assets from Seller to Buyer. Except as otherwise provided in this Agreement,
each party shall pay its own expenses incurred in connection with the
authorization, preparation, execution, and performance of this Agreement,
including, without limitation, all fees and expenses of counsel, accountants,
agents, and representatives.
<PAGE>
12.2 Notices. All notices, demands, and requests required or
-------
permitted to be given under the provisions of this Agreement shall be in writing
and shall be deemed to have been duly delivered and received: (i) on the date of
personal delivery; (ii) on the date of receipt (as shown on the return receipt)
if mailed by registered or certified mail, postage prepaid and return receipt
requested; or (iii) on the next business day after delivery to a courier service
that guarantees delivery on the next business day if the conditions to the
courier's guaranty are complied with, in each case addressed as follows:
If to Seller: Roy H. Park Broadcasting of Tennessee, Inc.
1700 Vine Center Office Tower
333 West Vine Street
Lexington, KY 40507
Attn: Wright M. Thomas, President
with a copy to: Stephen I. Burr, Esquire
Eckert Seamans Cherin & Mellott
One International Place, 18th Floor
Boston, MA 02110
If to Buyer: Jackson Telecasters, Inc.
c/o Bahakel Broadcasting
One Television Place
Charlotte, NC 28205
Attn: Beverly Bahakel Poston
with a copy to: Wade H. Hargrove, Esq.
Brooks, Pierce, McLendon, Humphrey & Leonard
First Union Center, Suite 1600
Raleigh, NC 27601
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 12.2.
12.3 Benefit and Binding Effect. Both parties hereto may assign this
--------------------------
Agreement without the prior written consent of the other party hereto. Such
assignment shall not, however, release such party from its duties and
obligations under this Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, however, neither party hereto may assign this Agreement
without the prior written consent of the other party.
12.4 Further Assurances. The parties shall execute any other
------------------
documents that may be necessary or desirable to the implementation and
consummation of this Agreement.
<PAGE>
12.5 Governing Law. This Agreement shall be governed, construed, and
-------------
enforced in accordance with the laws of the State of Tennessee (without regard
to the choice of law provisions thereof).
12.6 Headings and References. The headings and table of contents
-----------------------
herein are included for ease of reference only and shall not control or affect
the meaning or construction of the provisions of this Agreement. For purpose of
this Agreement, the words "hereof", "herein", "hereby", and other words of
similar import refer to this Agreement as a whole, including all Appendices,
Annexes and Schedules hereto. Reference herein to Articles, Sections,
Appendices, Annexes and Schedules unless otherwise designated, shall be to the
relevant Articles, Sections, Appendices, Annexes and Schedules hereof and
hereto. All dollar amounts referred to herein are in United States Dollars.
12.7 Gender and Number. Words used herein, regardless of the gender
-----------------
and number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine, or neuter, and any other number, singular or
plural, as the context requires.
12.8 Entire Agreement. This Agreement, all schedules hereto, and
----------------
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
12.9 Counterparts. This Agreement may be signed in two or more
------------
counterparts, with the same effect as if the signature on each counterpart were
upon the same instrument.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
officers of Buyer and Seller as of the date first written above.
ATTEST: JACKSON TELECASTERS, INC.
By:___________________________
Name:_________________________
Title:________________________
ATTEST: ROY H. PARK BROADCASTING OF
TENNESSEE, INC.
By:_________________________
Wright M. Thomas, President
By:_________________________
Gary B. Knapp, Director
By:_________________________
Donald R. Tomlin, Jr., Director
<PAGE>
List of Exhibits and Schedule
Exhibit A Escrow Agreement
Exhibit B Assignment and Concurrent Use Agreement
<PAGE>
WDEF AM
WDEF FM
AMENDMENT TO ASSET PURCHASE AGREEMENT
-------------------------------------
This Amendment to Asset Purchase Agreement (this "Amendment") is made as of
the 17th day of May, 1996, by and between ROY H. PARK BROADCASTING OF TENNESSEE,
INC., a Tennessee corporation, with offices at 1700 Vine Center Office Tower,
333 West Vine Street, Lexington, Kentucky 40507 ("Seller"), and JACKSON
TELECASTERS, INC., a Tennessee corporation, with offices at One Television
Place, Charlotte, North Carolina 28205 ("Buyer"), pursuant to that certain Asset
Purchase Agreement made as of the 27th day of March, 1996 (the "Agreement").
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement.
W I T N E S S E T H:
WHEREAS, Seller and Buyer are parties to the Agreement; and
WHEREAS, the Agreement provides the Buyer with the right to terminate the
Agreement in the event that Buyer, in its good faith judgment, determines that
the owned Real Property is not in material compliance with the Environmental
Laws, all as more particularly set forth in Section 8.1(g) of the Agreement; and
WHEREAS, the Buyer has requested that additional information be provided in
order to determine whether or not the owned Real Property meets the standards
for material compliance with the Environmental Laws set forth in Section 8.1(g);
and
WHEREAS, the Buyer and Seller desire to extend the time in which the Buyer
has the right to terminate the Agreement in accordance with Section 8.1(g) in
order to allow Buyer an opportunity to further evaluate, in its good faith
judgment, whether the owned Real Property is in material compliance with the
Environmental Laws (as more particularly set forth in Section 8.1(g)), they
hereby agree to modify and amend Section 8.1(g) of the Agreement upon the terms
and conditions more particularly set forth below.
NOW, THEREFORE, the undersigned, for Ten Dollars ($10.00) and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, hereby agree as follows:
1. Seller shall, within fourteen (14) days after the date hereof, at
Seller's expense, provide Buyer with a supplemental environmental assessment of
the owned Real Property listed on Disclosure Schedule 1.32 (the "Supplemental
Report") performed by Dames & Moore. The scope of the work to be performed in
the Supplemental Report is more particularly set forth on Exhibit A attached
---------
hereto. If, in the Buyer's good faith judgment, the Supplemental Report fails
to indicate that the owned Real Property is in material compliance with all
Environmental Laws,
<PAGE>
Buyer may, by written notice received by Seller within twenty (20) days of
receipt of the Supplemental Report by Buyer, terminate this Agreement. If Buyer
fails to so notify Seller, Buyer will be deemed to have accepted the
Environmental Condition of the Real Property, subject to the representations and
warranties of the Seller.
2. In all other respects, all terms and provisions of the Agreement are
hereby ratified and confirmed, time still being of the essence.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed by the duly authorized
officers of Buyer and Seller as of the date first written above.
ATTEST: JACKSON TELECASTERS, INC.
By:_________________________
Name:_______________________
Title:______________________
ATTEST: ROY H. PARK BROADCASTING OF
TENNESSEE, INC.
By:________________________
Wright M. Thomas, President
84888.1
<PAGE>
Exhibit 2.5
WHOA-TV
ASSET PURCHASE AGREEMENT
by and among
MONTGOMERY ALABAMA CHANNEL 32 OPERATING LIMITED PARTNERSHIP
AND WHOA-TV, INC. ("Sellers")
and
PARK OF MONTGOMERY I, INC. ("Buyer")
Effective Date: February 29, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
SECTION 1. DEFINITIONS ................................. 1
1.1 "Accounts Receivable" ........................ 1
1.2 "Affiliate ................................... 1
1.3 "Antenna Site ................................ 1
1.4 "Assets" ..................................... 2
1.5 "Assumed Contracts" .......................... 2
1.6 "Buyer's Knowledge" .......................... 2
1.7 "Certified Creditor List" .................... 2
1.8 "Claimant" ................................... 2
1.9 "Closing" .................................... 2
1.10 "Closing Date" .............................. 2
1.11 "Consents" .................................. 2
1.12 "Contracts" ................................. 2
1.13 "Disclosure Schedules" ...................... 2
1.14 "Effective Time" ............................ 3
1.15 "FCC" ....................................... 3
1.16 "FCC Consent" ............................... 3
1.17 "FCC Licenses" .............................. 3
1.18 "Final Order" ............................... 3
1.19 "Gordonville Lease" ......................... 3
1.20 "Gordonville Tower" ......................... 3
1.21 "HSR Act" ................................... 3
1.22 "Indemnitor" ................................ 3
1.23 "Intangibles" ............................... 3
1.24 "Leased Real Property ....................... 4
1.25 "Licenses" .................................. 4
1.26 "Lien" ...................................... 4
1.27 "Marine Debt" ............................... 4
1.28 "Note Purchase Agreement" ................... 4
1.29 "Participation Agreement" ................... 4
1.30 "Permitted Liens" ........................... 4
1.31 "Personal Property" ......................... 4
1.32 "Purchase Price" ............................ 5
1.33 "Real Property" ............................. 5
1.34 "Secured Creditors" ......................... 5
1.35 "Sellers' Knowledge" ........................ 5
1.36 "Senior Debt" ............................... 5
1.37 "Station" ................................... 5
1.38 "Tower Entity Interest" ..................... 5
1.39 "Tower Interest" ............................ 6
1.40 "Tower Lease" ............................... 6
SECTION 2. SALE AND PURCHASE OF ASSETS AND
OTHER CONSIDERATION ....................... 6
2.1 Agreement to Sell and Buy ................... 6
2.2 Excluded Assets ............................. 6
2.3 Purchase Price .............................. 7
2.4 Allocation of Purchase Price ................ 7
i
<PAGE>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
2.5 Payment of Purchase Price ................... 8
2.6 Assumption of Liabilities and Obligations ... 8
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS ... 9
3.1 Organization, Standing, and Authority ....... 9
3.2 Authorization and Binding Obligation ........ 9
3.3 Absence of Conflicting Agreements;
Required Consents ........................... 10
3.4 Governmental Authorizations ................. 10
3.5 Title to Property ........................... 12
3.6 Leased Real Property ........................ 12
3.7 Contracts ................................... 13
3.8 Consents .................................... 14
3.9 Intangibles ................................. 14
3.10 Financial Statements ........................ 14
3.11 Personnel ................................... 15
3.12 Claims and Legal Actions .................... 16
3.13 Compliance with Laws, Licenses, etc. ........ 17
3.14 Environmental ............................... 17
3.15 Conduct of Business in Ordinary Course;
Adverse Change .............................. 18
3.16 Taxes ....................................... 18
3.17 Insurance ................................... 19
3.18 Full Disclosure ............................. 19
3.19 Cable Carriage .............................. 19
3.20 Rate Card ................................... 19
3.21 Sufficiency of Assets ....................... 19
3.22 Fair Market Value ........................... 20
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER ..... 20
4.1 Organization, Standing, and Authority ....... 20
4.2 Authorization and Binding Obligation ........ 20
4.3 Absence of Conflicting Agreements;
Required Consents ........................... 20
4.4 Claims and Legal Actions .................... 20
4.5 Qualification ............................... 21
4.6 Full Disclosure ............................. 21
4.7 Reliance .................................... 21
4.8 Fair Market Value ........................... 21
SECTION 5. COVENANTS OF SELLERS ........................ 21
5.1 Pre-Closing Covenants ....................... 21
5.2 Closing Covenant ............................ 25
5.3 Post-Closing Covenants ...................... 25
SECTION 6. COVENANTS OF BUYER .......................... 25
ii
<PAGE>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS ............ 25
7.1 FCC Consent ................................. 25
7.2 HSR Filings ................................. 26
7.3 Adjustments and Prorations .................. 26
7.4 Risk of Loss ................................ 29
7.5 Confidentiality ............................. 30
7.6 Collection of Accounts Receivable ........... 30
7.7 Brokers ..................................... 31
7.8 Cooperation ................................. 31
7.9 Control of the Station ...................... 31
7.10 Consultation ................................ 31
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND
SELLERS ..................................... 32
8.1 Conditions to Obligations of Buyer .......... 32
8.2 Conditions to Obligations of Sellers ........ 33
SECTION 9. CLOSING AND CLOSING DELIVERIES .............. 34
9.1 Closing ..................................... 34
9.2 Deliveries by Sellers ....................... 34
9.3 Deliveries by Buyer ......................... 36
SECTION 10. TERMINATION ................................. 37
10.1 Termination Rights .......................... 37
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
AND INDEMNIFICATION ......................... 37
11.1 Representations and Warranties .............. 37
11.2 Indemnification by Sellers .................. 37
11.3 Indemnification by Buyer .................... 38
11.4 Procedure for Indemnification ............... 38
11.5 Liquidated Damages .......................... 40
11.6 Specific Performance ........................ 40
11.7 Opportunity to Cure ......................... 40
SECTION 12. MISCELLANEOUS ............................... 40
12.1 Fees and Expenses ........................... 40
12.2 Notices ..................................... 41
12.3 Benefit and Binding Effect .................. 42
12.4 Further Assurances .......................... 42
12.5 Governing Law ............................... 42
12.6 Headings and References ..................... 42
12.7 Gender and Number ........................... 42
12.8 Entire Agreement ............................ 42
12.9 Counterparts ................................ 42
12.10 Survival .................................... 43
iii
<PAGE>
TABLE OF CONTENTS (continued)
-----------------
PAGE
----
List of Exhibits and Schedules ................................ 45
iv
<PAGE>
WHOA-TV
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made as of the 29th day of February, 1996,
by and among Montgomery Alabama Channel 32 Operating Limited Partnership ("32
LP"), a Maryland limited partnership, and WHOA-TV, INC. ("TV, Inc."), a Florida
corporation with offices c/o Soundview Media, Inc., Suite 2F, Nashville,
Tennessee 37210 (TV, Inc. and 32 LP are hereinafter referred to individually as
a "Seller" and collectively, as the "Sellers") and PARK OF MONTGOMERY I, INC.,
an Alabama corporation with offices at 1700 Vine Center Office Tower, 333 West
Vine Street, Lexington, Kentucky 40507 ("Buyer").
RECITALS
A. Sellers own and operate television station WHOA-TV, Channel 32
(the "Station"), pursuant to licenses issued by the Federal Communications
Commission.
B. Sellers desire to sell and Buyer wishes to buy all the assets
used or useful in the operation of the Station, for the price and on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises contained herein, Buyer and Sellers, intending to
be legally bound hereby, agree as follows:
SECTION 1. DEFINITIONS.
-----------
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
1.1 "Accounts Receivable" means all rights of Sellers to payment
for: (a) the sale of advertising time by the Station; and (b) services performed
by the Station.
1.2 "Affiliate" means a person or entity that, directly or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with, another person or entity.
1.3 "Antenna Site" has the meaning set forth in Section 3.6(c).
<PAGE>
1.4 "Assets" means the assets of the Station being sold,
transferred, or otherwise conveyed to Buyer hereunder, as specified in
Section 2.1.
1.5 "Assumed Contracts" means: (a) those Contracts listed as
Assumed Contracts in Disclosure Schedule 3.7 and indicated therein as Assumed
-----------------------
Contracts; (b) all Contracts for the sale of time on the Station and all trade
or barter agreements which are outstanding on the Closing Date and which comply
with the provisions of Section 5.1(a); (c) Contracts entered into between the
date hereof and the Closing Date which comply with the provisions of Section
5.1(a).
1.6 "Buyer's Knowledge" (or words of similar import) means any
actual knowledge of Wright M. Thomas, President of Buyer, and Dr. Gary B. Knapp
and Donald R. Tomlin, Jr., Directors of Buyer.
1.7 "Certified Creditor List" shall have the meaning set forth in
Section 5.1(o).
1.8 "Claimant" means a party claiming indemnification pursuant to
Section 11.
1.9 "Closing" means the consummation of the transactions
contemplated in this Agreement in accordance with the provisions of Section 9.
1.10 "Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 9.
1.11 "Consents" means the consents, permits, or approvals of third
parties, including governmental authorities, necessary to the day-to-day
operation of the Station by Buyer, or necessary to transfer any of the Assets to
Buyer, or otherwise to consummate the transactions contemplated hereby.
1.12 "Contracts" means all written contracts, leases, licenses, and
other agreements (including without limitation leases for personal or real
property and employment agreements) including any amendments or other
modifications thereto, that relate to the Assets or the operation of the
Station, to which either Seller is a party, or to which any Affiliate of Sellers
is a party if such Contract is useful or related to the Assets or operation of
the Station or the business of Sellers, including those described in Disclosure
----------
Schedule 3.7, together with any additions thereto between the date hereof and
- ------------
the Closing Date.
1.13 "Disclosure Schedules" means Disclosure Schedules of even date
relating to this Agreement titled "WHOA-TV
2
<PAGE>
Disclosure Schedules," which Disclosure Schedules have been separately delivered
to Buyer.
1.14 "Effective Time" means 12:01 a.m., Eastern Standard Time, on
the Closing Date.
1.15 "FCC" means the Federal Communications Commission.
1.16 "FCC Consent" means action by the FCC granting its consent to
the assignment of the FCC Licenses from Sellers to Buyer as contemplated by this
Agreement.
1.17 "FCC Licenses" means those Licenses issued by the FCC to
Sellers in connection with the business and operations of the Station, including
those listed in Disclosure Schedule 1.17, together with any additions or changes
------------------------
thereto between the date hereof and the Closing Date.
1.18 "Final Order" means an action of the FCC that has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and with respect
to which no timely filed petition for stay, reconsideration or administrative or
judicial appeal or sua sponte action of the FCC with comparable effect is
--- ------
pending and as to which the time for filing any such petition or appeal
(administrative or judicial) or for the taking of any such sua sponte action of
--- ------
the FCC has expired.
1.19 "Gordonville Lease" shall have the meaning set forth in
Section 3.6(b).
1.20 "Gordonville Tower" means the broadcast transmission tower
referenced in Section 3.6(c), together with any and all equipment, property and
improvements thereon relating to the operation of the Station and the
transmission of its signals, including, without limitation, the Antenna Site.
1.21 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
1.22 "Indemnitor" means a party from whom indemnification is claimed
pursuant to Section 11.
1.23 "Intangibles" means all copyrights, trademarks, tradenames,
service marks, service names, licenses, patents, permits, the call letters
"WHOA" and logos, service marks, telephone numbers, computer software, magnetic
media, business and sales lists, program libraries, slogans and jingles,
advertising and promotional materials, privileges, proprietary information,
technical information and data, machinery and equipment warranties, and other
similar intangible property rights and interests applied for, issued to, or
owned by Sellers
3
<PAGE>
or under which Sellers are licensed or franchised and used or useful in the
business and operations of the Station, including those listed as Intangibles in
Disclosure Schedule 1.23.
- ------------------------
1.24 "Leased Real Property" means all the Real Property that is
occupied pursuant to a lease or a license pursuant to Section 3.6.
1.25 "Licenses" means all licenses, permits, and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration, or any other federal, state, or local governmental
authorities to Sellers in connection with the business and operations of the
Station, including those listed as Licenses in Disclosure Schedule 1.25,
------------------------
together with any additions thereto between the date hereof and the Closing
Date.
1.26 "Lien" means any mortgage, lease, deed of trust, lien, pledge,
hypothecation, assignment, deposit arrangement, option, right of first refusal,
indenture, license, security interest, encumbrance, right of way, easement,
encroachment or similar arrangement of any kind or nature.
1.27 "Marine Debt" means the loan and all related obligations of the
Sellers to Marine Midland Business Loans, Inc. and its Affiliates or
predecessors in interest, as more particularly described in the Note Purchase
Agreement.
1.28 "Note Purchase Agreement" means the agreement pursuant to the
terms of which an Affiliate of Buyer has or will acquire the Marine Debt and all
collateral securing such debt.
1.29 "Participation Agreement" means the participation agreement
dated as of February 12, 1996 between Soundview Television of Montgomery, Inc.
and Park of Montgomery II, Inc., an Affiliate of Buyer relating to the
acquisition of an interest in the Senior Debt.
1.30 "Permitted Liens" means: (a) Liens for taxes, assessments, or
similar governmental charges for levies incurred in the ordinary course of
business that are not yet due and payable or as to which any applicable grace
period shall not have expired; and (b) Liens set forth in Disclosure
----------
Schedule 1.30 and identified as a Permitted Lien.
- -------------
1.31 "Personal Property" means the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, (including
all studio and transmission equipment wherever located) and other tangible
personal property used or useful in the operation of the Station, and identified
and described as Personal Property in Disclosure Schedule 1.31 and all computer
------------------------
discs and tapes, plans, diagrams, blueprints, schematics, and books and records
relating to the operation of
4
<PAGE>
the Station, filings with the FCC and executed copies of the Assumed Contracts,
together with any additions thereto between the date hereof and the Closing
Date.
1.32 "Purchase Price" means the purchase price specified in
Section 2.3.
1.33 "Real Property" means the interests in real property, including
all leaseholds, easements, licenses, rights to access, and rights of way, and
all improvements thereon, identified and described as Real Property in
Disclosure Schedule 1.33.
- ------------------------
1.34 "Secured Creditors" means those creditors of Sellers holding
liens, security interests or other encumbrances on or affecting the Assets, and
those creditors of Sellers who have an inchoate lien or similar right relating
to the Assets, including without limitation, governmental taxing authorities,
holders of or those creditors with a right to assert mechanics or materialmens
liens, and any judgment creditors of either Seller.
1.35 "Sellers' Knowledge" (or words of similar import) means any
actual knowledge of the officers, directors, management or other key employees
of Sellers, or of the general partner of 32 LP, including on-screen
personalities, senior engineering and technical employees, and senior financial
and human resources employees.
1.36 "Senior Debt" means the loan from Soundview Television of
Montgomery, Inc. to 32 LP evidenced by a promissory note dated April 11, 1995 in
the principal amount of Five Hundred Thousand Dollars ($500,000).
1.37 "Station" means the television station described in the first
recital to this Agreement.
1.38 "Tower Entity Interest" means the ten percent (10%) limited
partnership interest in 32 LP, the entity which owns the Antenna Site and will
be leasing it to Buyer pursuant to the Tower Lease, which limited partnership
interest shall be in form and substance reasonably satisfactory to Buyer and
shall provide to Buyer (i) a ten percent (10%) interest in the profits, losses,
proceeds, revenues, income and distributions of 32 LP; (ii) shall insulate Buyer
from any legal liability with respect to the ownership or operation of the
Gordonville Tower or the Antenna Site; and (iii) shall specifically grant to
Buyer, pursuant to an amendment to the Agreement of Limited Partnership of 32
LP, in form and substance reasonably satisfactory to Buyer, the right to use the
Antenna Site rent free for the ten (10) year period immediately following the
Closing Date in the event the Tower Lease is terminated for any reason during
such period.
5
<PAGE>
1.39 "Tower Interest" means a ten percent (10%) undivided fee simple
interest in the Gordonville Tower.
1.40 "Tower Lease" means the lease to be delivered to Buyer at the
Closing, pursuant to the terms of which Buyer shall lease the Antenna Site for
the ten (10) year period immediately following the Closing Date for the rent
specified in Section 2.4, plus additional rent of Ten Dollars ($10) per year,
which lease shall be in form and substance reasonably satisfactory to Buyer.
SECTION 2. SALE AND PURCHASE OF ASSETS AND OTHER CONSIDERATION.
---------------------------------------------------
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
-------------------------
set forth in this Agreement, Sellers hereby agree to sell, transfer and deliver
to Buyer (or in the case of the Harrison Road Property, Buyer's nominee
Affiliate) on the Closing Date, and Buyer agrees to purchase, all of the
tangible and intangible assets owned or held by Sellers and used or useful in
the business or operations of the Station, wherever located, other than the
assets specified in Section 2.2, free and clear of any claims, liabilities,
Liens, conditions (except for those permitted in accordance with
Sections 2.5(a), 3.5 and 3.6 below, and except for any condition that is part
of the express terms of any License or Assumed Contract), including without
limitation the following:
(a) The Personal Property;
(b) The Licenses;
(c) The Real Property;
(d) The Assumed Contracts;
(e) The Intangibles;
(f) The Tower Entity Interest;
(g) The Tower Interest; and
(h) The Tower Lease.
2.2 Excluded Assets. The Assets shall exclude the following
---------------
assets:
(a) Sellers' cash on hand and cash equivalents and all other
cash and cash equivalents in any of Seller's bank accounts, prepaid expenses,
any and all insurance policies, bonds, letters of credit, or other similar
items, and any cash surrender value and insurance proceeds in regard thereto as
of the Effective Time;
6
<PAGE>
(b) Sellers' Accounts Receivable arising from the operation of
the Station prior to the Effective Time;
(c) All books and records that Sellers are required by law to
retain, and books and records related solely to internal corporate matters;
(d) All claims, rights, and interest in and to any refunds for
federal, state, or local franchise, income, or other taxes or fees of any nature
whatsoever for periods prior to the Effective Time;
(e) Any pension, profit-sharing, or employee benefit plans;
and
(f) The items listed as Excluded Assets in Disclosure
----------
Schedule 2.2.
- ------------
2.3 Purchase Price. The purchase price to be paid by Buyer for the
--------------
Assets shall be Six Million Dollars ($6,000,000) plus assumption of the Assumed
----
Liabilities pursuant to Section 2.6. Prorations of expenses and revenues shall
be made in accordance with Section 7.3.
2.4 Allocation of Purchase Price. The parties agree that Seventy
----------------------------
Thousand Dollars ($70,000) of the Purchase Price shall be deemed to be pre-paid
rent pursuant to the Tower Lease. As to the remainder of the Purchase Price, at
or before the Closing, Buyer and Sellers shall determine the allocation of the
Purchase Price in accordance with Treasury Regulation section 1.1060-1T based
upon the approximate relative fair market values of the Purchased Assets, as
mutually agreed upon in writing within thirty (30) days immediately following
the Closing Date. If Sellers and Buyer are unable to agree within such period,
the allocation of Purchase Price shall be determined by a nationally acceptable
appraisal firm chosen by Buyer and reasonably acceptable to Sellers (it being
anticipated that the Purchase Price will be allocated first to such of the
Purchased Assets as are tangible to the extent of the approximate fair market
values thereof on the Closing Date, with the balance to intangible Purchased
Assets). Buyer shall pay all fees and expenses of such appraisal firm. Sellers
and Buyer will report the federal income tax consequences of the sale and
acquisition of the Purchased Assets under this Agreement in a manner consistent
with the foregoing, and will file Forms 8594 in the manner and at the times
required by Treasury Regulation section 1.1060-1T. Buyer shall prepare drafts of
Form 8594 reflecting the respective Purchase Price allocations determined as
provided above in accordance with Treasury Regulation section 1.1060-1T for
Sellers and Buyer, such draft Form 8594 to be provided to Sellers within one
hundred eighty (180) days following the Closing Date, but in no event later than
the due date, including extensions, for
7
<PAGE>
Sellers' Federal income tax return for the period including the Closing Date.
Sellers' consent to such drafts shall not be unreasonably withheld or delayed.
2.5 Payment of Purchase Price. Payment of the Purchase Price for
-------------------------
the Assets shall be made as follows:
(a) Credit for Marine Debt. Pursuant to the Note Purchase
----------------------
Agreement, an Affiliate of Buyer has or will acquire the Marine Debt for a
purchase price of Four Million Five Hundred Thousand Dollars ($4,500,000), which
sum shall be credited against the Purchase Price due to Sellers hereunder. Buyer
shall take title to the Assets at Closing subject to the Marine Debt and from
and after the Closing Date Sellers and their Affiliates shall have no further
obligations to Buyer or its Affiliates with respect to the Marine Debt.
(b) Payment to Secured Creditors. At the Closing, Buyer
----------------------------
shall pay directly to Secured Creditors of Sellers (exclusive of the holder of
the Marine Debt) those amounts then due and owing to such Secured Creditors as
of the Closing Date, exclusive of Secured Creditors of Affiliates of the
Sellers. The full amount paid by Buyer for the benefit of Sellers pursuant to
this Section 2.5(b) shall be credited against the Purchase Price due hereunder.
(c) Remaining Balance of Purchase Price. The balance of the
-----------------------------------
Purchase Price, if any, after giving effect to the amounts referred to in
Sections 2.5(a) and 2.5(b), shall be paid in cash at the Closing, by wire
transfer of federal funds to the account designated by Sellers in writing to
Buyer at least two (2) business days prior to the Closing Date. In the event no
such account is designated by Sellers within such period, Buyer shall have the
right to make such payment by bank cashiers check payable to the order of the
Sellers.
(d) Prorations. Prorations of expenses and revenues shall be
----------
made in accordance with Section 7.3.
2.6 Assumption of Liabilities and Obligations.
-----------------------------------------
(a) Assumption. Except as provided in Section 2.6(b), as of
----------
the Effective Time, Buyer shall assume and undertake to pay, discharge, and
perform the following (the "Assumed Liabilities"): (i) insofar as they relate to
the period after the Effective Time, all the obligations and liabilities of
Sellers under the Assumed Contracts; (ii) all obligations and liabilities
arising out of events occurring after the Effective Time related to Buyer's
ownership of the Assets or its operation of the Station after the Effective
Time; and (iii) any obligations of Sellers assigned to Buyer as part of the
adjustments and prorations pursuant to Section 7.3 of this
8
<PAGE>
Agreement. Other than as specified in this Section 2.6(a), Buyer shall assume
no obligations or liabilities of Sellers.
(b) Limitation. Notwithstanding any provision of this
----------
Agreement to the contrary, Buyer shall not assume: (i) any obligations or
liabilities, whether or not under any Contract, not included in the Assumed
Contracts; (ii) any obligations or liabilities under the Assumed Contracts
relating to the time period prior to the Effective Time; (iii) any claims or
pending litigation or proceedings relating to any action with respect to the
operation of the Station prior to the Effective Time, and (iv) any insurance
policies of Sellers. All such obligations and liabilities shall remain and be
the obligations and liabilities solely of Sellers.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS.
-----------------------------------------
Sellers jointly and severally represent and warrant to Buyer as
follows:
3.1 Organization, Standing, and Authority. TV, Inc. is a
-------------------------------------
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida and is duly qualified to conduct business as a
foreign corporation and is in good standing in the State of Alabama. Frey
Communications South, Inc. is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida and serves as the sole
general partner of 32 LP ("General Partner"). The General Partner is duly
qualified to conduct business as a foreign corporation and is in good standing
in the State of Alabama. 32 LP is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Maryland and is
qualified to conduct business and is in good standing as a foreign limited
partnership under the laws of the State of Alabama. Sellers and the General
Partners have the requisite power and authority to: (i) own, lease and use the
Assets as now owned, leased, and used and, in the case of the General Partner,
to act as the general partner of 32 LP; (ii) conduct the business of operating
the Station as now conducted; and (iii) execute, deliver, and perform this
Agreement and the documents contemplated hereby according to their respective
terms. The character and location of the properties used in the operation of
the Station and the nature of the business conducted by the Station do not
require the General Partner or Sellers to qualify to do business as a foreign
corporation in any jurisdiction other than Alabama. Sellers have not been known
by or used any other corporate, partnership, or any fictitious or other name in
the conduct of the Station's business or in connection with the use or operation
of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery,
------------------------------------
and performance of this Agreement by Sellers
9
<PAGE>
have been duly authorized by all necessary corporate and partnership actions,
including stockholder approval, if required, on the part of Sellers. This
Agreement has been duly executed and delivered by Sellers and constitutes the
legal, valid, and binding obligation of Sellers, enforceable against Sellers in
accordance with its terms.
3.3 Absence of Conflicting Agreements; Required Consents. Subject
----------------------------------------------------
to obtaining the Consents listed in Disclosure Schedule 3.3 and the FCC Consent,
-----------------------
the execution, delivery, and performance of this Agreement (with or without the
giving of notice, the lapse of time, or both): (i) do not require the consent of
any third party; (ii) will not conflict with any provision of the Certificate or
Articles of Incorporation or By-Laws of TV, Inc. or General Partner, or the
certificate or agreement of limited partnership of 32 LP; (iii) will not
conflict with, result in a breach of, or constitute a default under, any
applicable law, judgment, order, ordinance, decree, rule, regulation, or ruling
of any court or governmental instrumentality; (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of, any performance
required by the terms of any financing, debt or equity agreement or any material
agreement, instrument, license, or permit to which either Seller is a party or
by which either Seller may be bound; and (v) will not create any claim,
liability, Lien, charge, or encumbrance upon any of the Assets.
3.4 Governmental Authorizations.
---------------------------
(a) Except as set forth in Disclosure Schedule 3.4, Sellers
-----------------------
have in effect all the Licenses listed on Disclosure Schedule 1.17 and all other
------------------------
Federal, state, and local governmental approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits and rights ("Permits") necessary
for Sellers to own, lease, or operate their properties and assets and to carry
on their business as now conducted, and there has occurred no default under any
such Permit. Except as set forth in Disclosure Schedule 3.4 , the FCC Licenses:
-----------------------
(i) constitute all authorizations issued to Sellers by the FCC in connection
with the operation of the Station; (ii) are in full force and effect; (iii) are
valid for the balance of the current license term applicable generally to
television stations licensed in Montgomery, Alabama; (iv) constitute all
authorizations required under the Communications Act of 1934, as amended, and
the rules and regulations of the FCC for the operation of the Station
substantially as now conducted; (v) to Sellers' Knowledge, are not subject to
any pending or threatened FCC investigations or enforcement or other proceedings
which might reasonably be expected to result in the revocation or non-renewal of
such licenses; and (vi) are free and clear of any restrictions which might limit
the full operation of the Station (other than
10
<PAGE>
restrictions under the terms of the licenses themselves and restrictions imposed
by FCC rules). Sellers are not aware of any reason why the FCC Licenses would
be rescinded, revoked, suspended, modified, impaired or forfeited, or would not
be renewed in the ordinary course.
(b) Sellers have the right to the use of the call letters
"WHOA" pursuant to the rules and regulations of the Commission, and Sellers do
not know of any challenge or claim with respect to the use of those call letters
by the Station.
(c) The Station, all auxiliary broadcast stations and other
facilities associated with and/or operated in conjunction with the Station, and
all assets relating to or used in connection with the operation of the Station,
are in compliance in all material respects with the Communications Act of 1934,
as amended (the "Communications Act"), all rules and regulations of the FCC, the
terms of the FCC Licenses, all representations and filings made to or with the
FCC in connection with the Station or the grant of the FCC Licenses, and all
orders, requests for information and other requirements of the FCC, individually
and in the aggregate. The Sellers have timely filed with the FCC all reports,
applications, documents, instruments and other information required to be filed
in connection with the ownership and operation of the Station, and all such
filings are accurate and complete in all material respects.
(d) No judgment, decree, order or notice has been issued by
the FCC or by any other governmental authority which permits, or after notice or
lapse of time or both, would permit, revocation, suspension, or termination of
any of the FCC Licenses prior to the respective expiration dates thereof, or
which results or would result in the imposition of any material administrative
or judicial sanction with respect to the Station or in any other material
impairment of any rights under the FCC Licenses. No notice of violation or
adverse order, or any material objection, petition to deny or opposition,
competing application, or any complaint has been issued by or filed with the FCC
or any other governmental authority in connection with the FCC Licenses or the
operation of the Stations. To the best of Sellers' Knowledge, none of the
foregoing are threatened.
(e) There is not now pending or, to the best of Sellers'
Knowledge, threatened any litigation, application, proceeding (other than
rulemaking proceedings affecting the broadcasting industry generally), inquiry
or investigation by or before any court, the FCC, or any other governmental
authority with respect to the Sellers, the Station, or any of the transactions
contemplated thereby, or which could adversely affect the Sellers, the FCC
Licenses or the operation of the Station.
11
<PAGE>
(f) No condition exists or event has occurred which, with or
without the giving of notice or lapse of time or both, would (i) constitute or
result in a violation by the Sellers or the Station of the Communications Act or
of any rule, regulation, policy, order or decision of the FCC, or (ii) result in
or permit the suspension, revocation, termination, impairment, forfeiture, or
nonrenewal of any FCC License, or the imposition of any material restriction or
limitation on the operation of the Station.
3.5 Title to Property. Except as set forth in Disclosure Schedule
----------------- -------------------
Schedule 3.5, Sellers have good, clear and marketable fee simple title to, or
- ------------
valid leasehold interests in, all of the Real Property. 32 LP has good, clear
and marketable title to the Gordonville Tower and the Antenna Site and all
improvements thereon used or useful in the operation of the Station or the
transmission of the Station's signals. All such assets and properties, other
than assets and properties in which Sellers have a leasehold interest, are free
and clear of all Liens other than those set forth in Disclosure Schedule 3.5 and
-----------------------
except for Permitted Liens. Except as set forth in Disclosure Schedule 3.5,
-----------------------
Sellers have complied in all respects with the terms of all leases to which they
are parties and under which they are in occupancy, and all such leases are in
full force and effect, and Sellers enjoy peaceful and undisturbed possession
under all such leases. The Personal Property constitutes all of the personal
property that is used or held by Sellers or others for use by the Station, or
necessary to operate the Station as it is now being operated. The Personal
Property is in good operating condition and repair (reasonable wear and tear
excepted), is maintained in compliance with good engineering practice, is not in
need of repair, and is otherwise sufficient to permit the Station to operate in
accordance with the FCC Licenses, the underlying construction permits of the
Station, and the rules and regulations of the FCC. All Station equipment is
type-approved or type-accepted where such type-approval or type-acceptance is
required.
3.6 Leased Real Property.
--------------------
(a) Leased Real Property. All of the Real Property that is
--------------------
occupied by Sellers pursuant to a lease or license (the "Leased Real Property")
is listed on Disclosure Schedule 1.33 and is held at the rates and for terms
------------------------
ending on the dates shown in Disclosure Schedule 1.33 pursuant to the
------------------------
agreements there described, which are the sole and complete agreements
concerning Sellers' use of Leased Real Property. There are no encroachments upon
any Real Property or Leased Real Property; Sellers have an unencumbered and
unrestricted right of access for all purposes to and from all of the Real
Property and Leased Real Property, including, without limitation, the real
property that is subject to the Gordonville Lease; none of the
12
<PAGE>
buildings, structures or improvements (including without limitation any ground
radials, guy wires or guy anchors) constructed on the Real Property or Leased
Real Property encroach on any adjoining real estate; and all such buildings,
structures or improvements are constructed in conformity with or are
"grandfathered" with respect to all "setback" lines, easements and other
restrictions or rights of record or that have been established by any applicable
building, safety or zoning code or ordinance. There are no pending, or to
Sellers' Knowledge, threatened, condemnation or eminent domain proceedings that
may affect the Real Property or the Leased Real Property. Any and all
"grandfathered" rights of Sellers with respect to Real Property or Leased Real
Property are specifically identified on Disclosure Schedule 1.33.
------------------------
(b) Gordonville Lease. Sellers acknowledge that a portion
-----------------
of the Leased Real Property is comprised of real property located in
Gordonville, Alabama, that is leased to 32 LP pursuant to that certain Lease,
dated August 23, 1988, by and between Bessie G. Beck, as lessor, and Frey
Communications South, Inc., as lessee (as amended and subsequently assigned to
32 LP, the "Gordonville Lease"). A true, correct and complete copy of the
Gordonville Lease is set forth in Disclosure Schedule 3.7.
-----------------------
(c) Antenna Site. Sellers acknowledge that an antenna site
------------
for the benefit of the Station, and from which the Station transmits its signals
(the "Antenna Site"), is located on a broadcast transmission tower owned by 32
LP located in Gordonville, Alabama (the "Gordonville Tower") on the real
property which is subject to the Gordonville Lease.
3.7 Contracts. Except as expressly set forth in Disclosure
--------- ----------
Schedule 3.7 , the Contracts listed in Disclosure Schedule 3.7 constitute all of
- ------------ -----------------------
the material agreements which are required to conduct the business of the
Station as it is presently being conducted except for: contracts with
advertisers for the sale of advertising time on the Station at the Station's
prevailing rates which are not prepaid and which may be cancelled by the Station
without penalty on not more than thirty (30) business days' notice. Except as
set forth in Disclosure Schedule 3.7 , all Assumed Contracts are in full force
-----------------------
and effect and are valid, binding, and enforceable in accordance with their
terms, and there is not under any Assumed Contract any default by any party
thereto or any event that, after notice or lapse of time or both, would
constitute a default. Except for the Consents listed in Disclosure Schedule 3.3
-----------------------
and the FCC Consent, Sellers have full legal power and authority to assign their
rights under the Assumed Contracts to Buyer in accordance with this Agreement,
and the assignment of the Assumed Contracts to Buyer will not affect the
validity, enforceability, or continuation of any of the Assumed Contracts.
Those Consents indicated by an asterisk on Disclosure Schedule 3.3 (the
-----------------------
13
<PAGE>
"Material Consents") are deemed to be material to the operation of the Station
by Buyer and the transfer of the Assets and Assumed Contacts to Buyer.
3.8 Consents. Except for compliance with the HSR Act provided for
--------
in Section 7.2, the FCC Consent provided for in Section 7.1 and the other
Consents listed in Disclosure Schedule 3.3, no consent, approval, permit, or
-----------------------
authorization of or declaration to or filing with any governmental or regulatory
authority or any other third party is required: (i) to consummate this Agreement
and the transactions contemplated hereby; (ii) to permit Sellers to assign or
transfer the Assets to Buyer; or (iii) to enable Buyer to operate the Station in
essentially the same manner as it is now conducted.
3.9 Intangibles. To the best of Sellers' Knowledge, Sellers are
-----------
not infringing upon or otherwise acting adversely to any trademarks, tradenames,
service marks, service names, copyrights, patents, patent applications, know-
how, methods, or processes owned by any other person or persons, and there is no
claim or action pending with respect thereto.
3.10 Financial Statements.
--------------------
(a) Sellers have maintained the books of account of the
Station in the usual, regular, and ordinary manner in accordance with generally
accepted accounting principles applied on a consistent basis.
(b) Disclosure Schedule 3.10 hereto contains true and
------------------------
complete copies of the audited financial statements, including all notes thereto
for Sellers prepared by the Sellers' independent certified public accountants,
for the years ending December 31, 1993 and 1994, and the unaudited financial
statements of the Sellers covering the year ending December 31, 1995, certified
by the chief financial officers of Sellers. Each such financial statement is
true and correct and fairly presents the financial condition and the results of
operations of the Station for the period indicated.
(c) Since the date of the most recent financial statements
referred to in Section 3.10(b), there has been no material adverse change in the
assets or liabilities or in the business or condition, financial or otherwise,
of the Station, or of the Sellers, whether as a result of any known legislative
or regulatory change, revocation of any license or right to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation, or act of nature or other public force or otherwise. Since such
date, there has been no change that would materially adversely affect the
ability of the Station to carry on its business as now being conducted. To the
knowledge of Sellers, no fact or condition
14
<PAGE>
exists or is contemplated or threatened that might cause a material adverse
change in the business of the Station after the Closing.
(d) Since the date of the most recent financial statements
referred to in Section 3.10(b), Sellers have operated the business relating to
the Station in the ordinary course and substantially consistent with past
practice, and, except as set forth on Disclosure Schedule 3.10(d):
---------------------------
(i) Sellers have not entered into any transaction
outside the ordinary course of business and substantially consistent with past
practice that is material to the business or Assets of the Station and that has
not been disclosed to Buyer herein or in the Disclosure Schedules hereto;
(ii) Sellers have not sold or transferred any material
assets of the Station (other than assets that have been replaced with other
assets of similar function and equal or greater value) outside the ordinary
course of business;
(iii) Sellers have not granted or agreed to grant any
general increase in any rate or rates of salaries or compensation to the
employees of the Station or any specific increase in the salary or compensation
to employees; and
(iv) Sellers have not substantially altered its policies
relating to the cash or credit sales of advertising time.
3.11 Personnel.
---------
(a) Employees and Compensation. Disclosure Schedule 3.11(a)
-------------------------- ---------------------------
contains: (i) a description of all employee benefit plans or arrangements
applicable to the employees of the Sellers and all fixed or contingent
liabilities or obligations of the Sellers with respect to any person now or
formerly employed by Sellers at the Station, including, without limitation,
pension or thrift plans, individual or supplemental pension or accrued
compensation arrangements, contributions to hospitalization or other health or
life insurance programs, incentive plans, bonus arrangements, and vacation, sick
leave, disability, and termination arrangements or policies, including worker's
compensation policies; and (ii) copies of all applicable plan documents, trust
documents, insurance contracts, contracts with employees, and summary plan
descriptions of the written plans and arrangements described above. Except as
set forth on Disclosure Schedule 3.11(a), Sellers do not have or maintain any
---------------------------
bonus, stock option, deferred compensation, pension or profit-sharing plan, or
other retirement plan or arrangement, or other direct or indirect employee
compensation fringe benefit or welfare plan, including, without limitation, any
"employee benefit plan" within
15
<PAGE>
the meaning of Section 3(e) of the Employee Retirement Income Security Act of
1974 ("ERISA"). Sellers do not maintain or contribute to, and since its date of
incorporation has not adopted, assumed, established, maintained or contributed
to, any employee benefits plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA. Except as set forth in Disclosure
----------
Schedule 3.11(a): (i) all employee benefits and welfare plans or arrangements
- ----------------
described above were established and have been executed, managed, and
administered without material exception in accordance with all applicable
requirements of the Internal Revenue Code, the Employee Retirement Income
Security Act of 1974, as amended, and other applicable laws; (ii) Sellers are
not aware of the existence of any governmental audit or examination of any of
such plans or arrangements or of any facts that would lead it to believe that
any audit or examination is pending or threatened; and (iii) no action, suit, or
claim with respect to any of such plans or arrangements is pending or, to the
best of Sellers' Knowledge, threatened. Except as set forth in Disclosure
----------
Schedule 3.11(a), Sellers have not promulgated any policy or entered into any
- ----------------
written agreement relating to the payment of severance pay to any employee whose
employment may be terminated or suspended, voluntarily or otherwise, by Sellers.
Sellers do not now, nor have they ever made contributions or been required to
make contributions to any multi-employer plan under ERISA. Sellers have
substantially complied with and are not in default in any material respect under
any laws, rules and regulations, relating to employment of labor, including
those relating to wages, hours, equal employment opportunities, employment of
protected minorities (including women and persons over 40 years of age),
collective bargaining and the withholding and payment of taxes and contributions
and has withheld all amounts required or agreed to be withheld from wages and
salaries of its employees, and is not liable for any arrearage of wages or for
any tax or penalty or failure to comply with the foregoing. Sellers have not
consented to any final decree involving any claim of unfair labor practice and
has not been held in any final judicial proceeding to have committed any unfair
labor practice and there are no material controversies pending or threatened
between Sellers and any of their employees.
(b) Agreements. Except as set forth in Disclosure
---------- ----------
Schedule 3.11(b): (i) Sellers are not a party to or subject to any collective
- ----------------
bargaining agreements with respect to the Station; and (ii) Sellers have no
contracts of employment with any employee of the Station other than contracts
terminable at will or on less than thirty (30) days notice.
3.12 Claims and Legal Actions. Except as set forth in Disclosure
------------------------ ----------
Schedule 3.12 and except for investigations and rule making proceedings
- -------------
affecting the television broadcasting industry generally, there is no claim,
legal action,
16
<PAGE>
counterclaim, suit, arbitration, governmental investigation, or other legal,
administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or, to the best of Sellers' Knowledge, threatened, against
or relating to Sellers, their properties, the Assets, or the business of the
Station, that, individually or in the aggregate, could reasonably be expected
to: (i) have a material adverse effect on either Seller or the Station; (ii)
impair the ability of either of the Sellers to perform their obligations under
this Agreement; or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement.
3.13 Compliance with Laws, Licenses, etc. Except as set forth in
------------------------------------
Disclosure Schedule 3.13, Sellers are in compliance with all applicable
- ------------------------
statutes, laws, ordinances, regulations, rules, judgments, decrees, licenses,
permits, approvals or orders of any governmental agency or authority, including,
without limitation, the FCC Licenses.
3.14 Environmental. Except as disclosed in Disclosure
------------- ----------
Schedule 3.14:
- -------------
(a) There are no substances or conditions, in, on, under or
emanating from the Real Property, including, without limitation, surface waters
and subsurface waters thereof, which could support a claim or cause of action
under any and all currently applicable federal, state or local environmental
statutes, ordinances, regulations or guidelines.
(b) The Real Property and the improvements thereon and the use
and operations thereof are currently in compliance with all currently applicable
and effective requirements relating to health, safety, and protection of the
environment, and are in compliance with all permits required thereby, except to
the extent any such noncompliance would not have a material and adverse effect
on Sellers, the Station or the Assets.
(c) There has been no spillage or leaks at the Real Property
associated with the filing, draining, or use of any underground storage tanks
which requires clean-up or remediation under currently applicable and effective
law.
(d) Sellers have not and to Sellers' Knowledge no third
parties have, generated, treated, stored or disposed of, nor, in any manner,
arranged for disposal or treatment of, any Hazardous Waste (as defined in the
Resource Conservation and Recovery Act 42 U.S.C. Subsection 6901 et seq.) on the
-- ---
Real Property, and to Sellers' Knowledge there is no Hazardous Substance (as
hereinafter defined) present on, in or under the Real Property above any
applicable threshold level which now requires clean up or remediation under
Section 121 of the
17
<PAGE>
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Subsection 9621. "Hazardous Substances" for purposes of this Agreement shall
mean: (i) hazardous substances or hazardous wastes, as those terms are defined
by the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Subsection 9601 et seq., and/or any other applicable federal, state, or
-- ---
local law, regulation, ordinance or requirement, as in effect on the date
hereof; (ii) petroleum, including but not limited to crude oil or any fraction
thereof; (iii) asbestos in any form or condition; and (iv) any radioactive
material, including, but not limited to, any source, special nuclear or by-
product material as defined at 42 U.S.C. Subsection 2011 et seq., as in effect
-- ---
on the date hereof.
(e) Sellers are not and have not been subject to, or received
any notice of, any private, administrative or judicial action, relating to the
presence or alleged presence of Hazardous Substance in, under, upon or emanating
from the Real Property; and there are no pending or, to Sellers' Knowledge,
threatened actions or proceedings from any governmental agency or any other
person or entity regarding any matter relating to health, safety, or protection
of the environment at the Real Property.
(f) There are no conditions on properties adjacent to the Real
Property which would reasonably be expected to prevent continued compliance of
the Real Property with any federal, state or local law, regulation, ordinance or
requirement presently in effect relating to protection of the environment.
(g) Sellers do not own, lease, possess, or control at the Real
Property any polychlorinated biphenyls (PCB) or PCB contaminated fluids or
equipment, or any material or substance containing asbestos.
(h) The Station has been, and shall continue to be, operated
in a manner which will not expose human beings to levels of non-ionizing
radiation higher than the levels recommended for such exposure in "American
National Standard Safety Levels with Respect to Human Exposure to Radio
Frequency Electromagnetic Fields, 300 kHz to 100 GHz" (ANSI Standards LC95.1-
1982), issued by the American National Standards Institute.
3.15 Conduct of Business in Ordinary Course; Adverse Change. Except
------------------------------------------------------
as set forth in Disclosure Schedule 3.15, since December 31, 1995, Sellers have
------------------------
conducted the business of the Station in the ordinary course.
3.16 Taxes. Sellers have, or by the Closing Date will have, paid
-----
and discharged all taxes, assessments, excises and other levies relating to the
Assets, excepting such taxes,
18
<PAGE>
assessments, and other levies as will not be due until after the Closing Date
and that are to be prorated between Buyer and Sellers hereunder.
3.17 Insurance. Disclosure Schedule 3.17 lists all insurance
--------- ------------------------
policies currently in force and effect relating to the Station or the Assets.
All premiums are current unless noted on Disclosure Schedule 3.17.
------------------------
3.18 Full Disclosure. No representation or warranty made by Sellers
---------------
contained in this Agreement nor any certificate, document, or other instrument
furnished or to be furnished by Sellers pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading.
3.19 Cable Carriage. Disclosure Schedule 3.19 hereto lists (i) each
-------------- ------------------------
cable television system currently carrying the signal of the Station; (ii) the
channel on which each such system is currently carrying such signal; and (iii)
each cable television system as to which Sellers either have made a valid
election of must-carry status or has entered into a valid retransmission
agreement, in each case as shown in Disclosure Schedule 3.19. Except as
------------------------
disclosed on Disclosure Schedule 3.19 no cable television station located in the
------------------------
Station's area of Dominant Influence (as defined by Arbitron) has refused to
carry the Station. In the event that the Closing has not occurred as of October
1, 1996, Sellers, in consultation with Buyer, shall make timely valid election
of either must-carry or retransmission consent status as appropriate, with
respect to every cable television system as to which the Station may lawfully
assert carriage rights.
3.20 Rate Card. Disclosure Schedule 3.20 hereto is a true and
--------- ------------------------
complete copy of Sellers' Rate card for the Station in effect on the date
hereof.
3.21 Sufficiency of Assets. The Assets include all of the assets
---------------------
necessary for, or used to any substantial extent in the conduct of, the business
of owning and operating the Station substantially in the manner in which that
business has been conducted by Sellers and these assets will be sufficient to
enable Buyer to conduct the business of owning and operating the Station
substantially in the manner in which the business has been conducted by Sellers.
The Assets include all the assets reflected on the balance sheets referred to in
Section 3.10, except for Excluded Assets, and items used, consumed, or expended
since the date of the most recent balance sheet in the ordinary course of
business and replaced by items of similar value and utility.
19
<PAGE>
3.22 Fair Market Value. Based upon their experience and expertise
-----------------
1n the industry, and all relevant facts and circumstances, in the opinion of the
Sellers, the considerations set forth in Section 2.3 represents the fair market
value of the Assets being sold to Buyer hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to Sellers as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
-------------------------------------
duly organized, validly existing, and in good standing under the laws of the
State of Alabama. At the Closing Date, Buyer will have the requisite corporate
power and authority to: (i) own, lease, and use the Assets; (ii) conduct the
business of operating the Station; and (iii) execute, deliver, and perform this
Agreement and the documents contemplated hereby according to their respective
terms.
4.2 Authorization and Binding Obligation. The execution, delivery,
------------------------------------
and performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes a legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
4.3 Absence of Conflicting Agreements; Required Consents. Subject
----------------------------------------------------
to obtaining the Consents, the execution, delivery, and performance of this
Agreement by Buyer and the documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both): (i) do not require the consent of
any third party; (ii) will not conflict with the Articles of Incorporation or
By-Laws of Buyer; (iii) will not conflict with, result in a breach of, or
constitute a default under, any applicable law, judgment, order, injunction,
decree, rule, regulation, or ruling of any court or governmental
instrumentality; and (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license or permit to which Buyer is a party or by which
Buyer may be bound, such that Buyer could not acquire or operate the Assets.
4.4 Claims and Legal Actions. There is no action, suit,
------------------------
proceeding, or investigation pending or, to Buyer's Knowledge, threatened that,
if decided against Buyer, would materially and adversely affect Buyer's ability
to perform its obligations under this Agreement or the transactions contemplated
thereby.
20
<PAGE>
4.5 Qualification. Except as set forth in Disclosure Schedule 4.5,
------------- -----------------------
to Buyer's Knowledge, Buyer is qualified legally, financially and otherwise to
become the assignee of the Licenses, including the FCC Licenses, under the
Communications Act of 1934, as amended prior to the date of this Agreement, and
the rules, regulations and policies of the FCC as in effect on the date of this
Agreement. To Buyer's Knowledge, there are no facts that could prevent, hinder,
discourage, or delay the FCC from issuing the FCC Consent except as set forth on
Disclosure Schedule 4.5.
- -----------------------
4.6 Full Disclosure. No representation or warranty made by Buyer
---------------
contained in this Agreement nor any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading.
4.7 Reliance. Buyer has not relied on any representation or
--------
statement made by Sellers, or any person acting on Sellers' behalf, except as
specifically provided in this Agreement, the Exhibits and Schedules hereto and
Disclosure Schedule.
4.8 Fair Market Value. Based upon its experience and expertise in
-----------------
the industry, and all relevant facts and circumstances, in the opinion of Buyer
the consideration set forth in Section 2.3 represents the fair market value of
the Assets being sold to Buyer hereunder.
SECTION 5. COVENANTS OF SELLERS.
--------------------
5.1 Pre-Closing Covenants. Sellers covenant and agree that,
---------------------
between the date hereof and the Closing Date, Sellers will conduct the business
and operations of the Station diligently in the ordinary course, and, except as
contemplated by this Agreement or with the prior written consent of Buyer,
Sellers will act in accordance with the following:
(a) Contracts. Without the express written consent of Buyer,
---------
Sellers will not enter into any contract, agreement or commitment relating to
the Station or the Assets other than contracts involving obligations of Sellers
of not less than Five Thousand Dollars ($5,000), or Fifty Thousand Dollars
($50,000) in the aggregate and which can be terminated by Sellers or Buyer
without penalty on not more than thirty (30) days notice, or amend or terminate
any Assumed Contract or waive any substantial right thereunder except in the
ordinary course of business and where the total consideration due to or payable
by the Sellers is less than Five Thousand Dollars ($5,000) and is otherwise
consistent with the provisions of this Agreement and
21
<PAGE>
the past practices of the Stations. Sellers further agree that they will not
incur any obligations relating to borrowed money or the guaranty of indebtedness
of any third-party including any Affiliate of the Sellers without the express
written consent of Buyer. Sellers will follow their usual and customary
policies and practices with respect to extending credit for sales of time on the
Station and with respect to collecting accounts receivable arising from such
extensions of credit.
(b) Encumbrances. Sellers will not create, assume, or permit
------------
to exist any mortgage, pledge, lien, or other charge or encumbrance or rights
affecting any of the Assets, except for those in existence on the date of this
Agreement and disclosed in Disclosure Schedule 5.1(b) and except for mechanics
-----------------------
liens, liens for current taxes which are not yet due and payable, and other
similar liens, which will either be discharged on or before the Closing or be
included in the adjustments and prorations pursuant to Section 7.3 of this
Agreement.
(c) Dispositions. Sellers will not sell, assign, lease, or
------------
otherwise transfer or dispose of any of the Assets except: (i) in the ordinary
course of business when such Assets are no longer used or useful in connection
with the operations of the Station; (ii) in connection with the acquisition of
replacement property of equivalent kind and value; or (iii) dispositions in the
aggregate not in excess of Ten Thousand Dollars ($10,000).
(d) Waivers. Sellers will not waive any material right
-------
relating to the Station or the Assets.
(e) Licenses. Except as set forth in this Agreement, Sellers
--------
will not cause or permit, by any act or failure to act, any of the Licenses to
expire or to be surrendered or modified, or take any action that would cause the
FCC or any other governmental authority to institute proceedings for the
suspension, revocation, or adverse modification of any of the Licenses, or fail
to prosecute with due diligence any pending applications to any governmental
authority in connection with the operation of the Station, or take any other
action within its control that could reasonably be expected to result in the
Station being in noncompliance in any material respect with the requirements of
the Communications Act of 1934, as amended, or any other applicable law, or the
rules and regulations of the FCC or any other governmental authority having
jurisdiction. Sellers will take all reasonable steps to defend and protect the
integrity of the Station's signal and service contours and participate actively
in any FCC proceedings of which it becomes aware (other than those generally
affecting the broadcasting industry) which may reasonably be expected to result
in a material adverse affect upon the operations of the Station, with the goal
of minimizing such effect upon the Station.
22
<PAGE>
(f) Consents. Sellers will use their best efforts to obtain
--------
the Consents on or before the Closing Date, without any material change in the
terms or conditions of any Assumed Contract that could be materially less
advantageous to the Station than those pertaining under the Assumed Contract as
in effect on the date hereof. Sellers shall also use reasonable efforts to
obtain all other Consents on or before the Closing Date.
(g) Books. Sellers will maintain the books and records of the
-----
Station in accordance with generally accepted accounting principals consistently
applied.
(h) Access to Information. Sellers will give to Buyer and its
---------------------
counsel, accountants, engineers, and other authorized representatives reasonable
access to the Assets and to all books and records relating thereto, and will
furnish or cause to be furnished to Buyer and its authorized representatives all
information relating to the Assets that they reasonably request (including any
financial reports and operations reports produced with respect to the Station).
(i) Maintenance of Assets. Sellers will maintain all of the
---------------------
Station's property and assets or replacements thereof in their present condition
as represented in this Agreement, ordinary wear and tear excepted. Sellers will
maintain supplies of inventory and spare parts consistent with past practice.
(j) Compliance with Laws. Sellers will comply in all material
--------------------
respects with all rules and regulations of the FCC, and with all other
applicable laws, rules, and regulations to which it is subject. Upon receipt of
notice of violation of any law, rule, or regulation, Sellers will use reasonable
efforts to contest in good faith or cure the violation prior to the Closing
Date.
(k) Insurance. Sellers will maintain in force the existing
---------
hazard and liability insurance policies, or comparable coverage, for the Station
and the Assets.
(l) Preservation of Business. Sellers will use their
------------------------
reasonable efforts until the Closing Date to preserve the business and
organization of the Station intact, to keep available to the Station their
present employees, and to preserve for the Station their present relationships
with suppliers and customers and others having business relations with it.
(m) Environmental Reports. Sellers shall deliver to Buyer
---------------------
within thirty (30) days following the execution of this Agreement a Phase I
Environmental Report covering the Real Property and the Leased Property prepared
by Dames & Moore
23
<PAGE>
or another environmental engineering firm reasonably acceptable to Buyer, at
Buyer's sole expense. In the event the Phase I Environmental Report indicates
that conditions may exist on the Real Property or the Leased Property which are
not in full compliance with all applicable environmental laws, Buyer shall have
the right to request that a Phase II Environmental Report be prepared, at
Buyer's sole expense. Buyer shall have the right to terminate this Agreement by
written notice to the Sellers at any time prior to the Closing Date based upon
Buyer's reasonable determination that conditions on the Real Property or the
Leased Property are not in material compliance with applicable environmental
laws.
(n) Title Commitment. Within thirty (30) days following the
----------------
date of this Agreement, the Sellers shall deliver to Buyer a title commitment
from Chicago Title Insurance Company or such other title insurance company as
may be reasonably satisfactory to Buyer, which title commitment shall cover the
Harrison Road Property. In the event such title commitment does not show the
state of the title to such property to be in compliance with the terms of this
Agreement, Sellers shall use their best efforts to permit a transfer of the ten
percent (10%) interests in the Harrison Road Property to Buyer on the Closing
Date in compliance with the terms and conditions of this Agreement.
(o) Creditors of Sellers. As soon as possible after the date
--------------------
hereof, but in no event later than thirty (30) calendar days after the date
hereof, each of the Sellers shall deliver to Buyer a list certified to by such
Seller's chief financial officer as being complete and correct in all material
respects that sets forth (i) the names and business addresses of all of such
Seller's creditors (including, without limitation, any and all federal, state,
county, local and foreign taxing authorities) and the amounts owed to such
creditors; and (ii) the names and business addresses of all vendors who are
known to the Seller to assert claims against it even though such claims may be
disputed by Seller, together with the amount in controversy (hereinafter, a
"Certified Creditor List"). Sellers covenant and agree to provide Buyer updated
Certified Creditor Lists every thirty (30) calendar days until the Closing, with
a final Certified Creditor List to be delivered by each Seller on the Closing
Date. Buyer and Sellers shall use their mutual best efforts to identify in
writing the creditors of the Sellers who are Secured Creditors to be paid in
full at the Closing in accordance with the provisions of Section 2.5(b) of this
Agreement. In the event the best efforts of the parties fail to generate a
mutually agreed upon list of Secured Creditors on the Closing Date, a Secured
Creditors list prepared by Buyer and delivered to Sellers on the Closing shall
be conclusive and binding on the parties for all purposes, including, without
24
<PAGE>
limitation, for purposes of the payment of a portion of the Purchase Price
pursuant to Section 2.5(b) hereof.
5.2 Closing Covenant. On the Closing Date, if the conditions set
----------------
forth in Section 8.2 have been satisfied, Sellers will sell, transfer, convey,
assign, and deliver to Buyer the Assets as provided in Section 2 of this
Agreement and make the deliveries provided in Section 9.2 of this Agreement.
5.3 Post-Closing Covenants.
----------------------
(a) Access. Sellers will provide Buyer access and the right
------
to copy for a period of three (3) years from the Closing Date, any books and
records relating to the Assets but not included in the Assets, provided that
such information is kept confidential and is not disclosed by Buyer except as
and to the extent required by applicable law and except as required in the
normal course of Buyer's business.
(b) Further Documents. After the Closing, Sellers will
-----------------
execute and deliver to Buyer any additional bills of sale or other transfer
documents that, in the reasonable opinion of Buyer, may be necessary to ensure,
complete, and evidence the full and effective transfer of the Assets to Buyer
pursuant to this Agreement.
(c) Antenna Site Lease Accommodations. In the event that the
---------------------------------
Antenna Site ceases to be available to Buyer pursuant to the Tower Lease for any
reason prior to the expiration of the lease term, then in such event Sellers
covenant to provide to Buyer, without any interruption in the provision of an
appropriate Antenna Site, a comparable alternate antenna site at no cost or
expense to Buyer with regard to either the relocation to such new site or with
regard to any rental obligations which may be incurred with respect to same.
SECTION 6. COVENANTS OF BUYER.
------------------
On the Closing Date, if the conditions set forth in Section 8.1 have
been satisfied, Buyer shall purchase the Assets from Sellers as provided in
Section 2 of this Agreement and shall make the deliveries provided in
Section 9.3 of this Agreement.
SECTION 7. SPECIAL COVENANTS AND AGREEMENTS.
--------------------------------
7.1 FCC Consent. Promptly upon the execution of this Agreement,
-----------
Buyer and Sellers shall prepare for filing with the FCC an appropriate
application for FCC Consent, which shall be filed with the FCC within five (5)
business days after the date hereof. All FCC filing fees shall be paid one-half
by Sellers and one-half by Buyer. The parties shall thereafter prosecute the
application with all reasonable diligence and
25
<PAGE>
otherwise use their best efforts to obtain a grant of the application as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on it by the FCC Consent, except that no party shall be required to
comply with a condition if: (i) the condition was imposed on it as the result of
a circumstance the existence of which does not constitute a breach by such party
of any of its representations, warranties, or covenants hereunder; and (ii)
compliance with the condition would have a material adverse effect upon it;
provided, however, that a condition requiring Buyer to file periodic reports
with the FCC concerning affirmative action and equal employment opportunity
shall not be deemed to have a material adverse effect on Buyer. Buyer and
Sellers shall oppose any requests for reconsideration or judicial review of the
FCC Consent (but nothing herein shall be construed to limit any party's right to
terminate this Agreement pursuant to Section 10 of this Agreement). If the
Closing shall not have occurred for any reason within the original effective
period of the FCC Consent, and neither party shall have terminated this
Agreement under Section 10.1(c), the parties shall jointly request an
extension of the effective period of the FCC Consent. No extension of the
FCC Consent shall limit the exercise by either party of its right to terminate
the Agreement under Section 10.1.
7.2 HSR Filings. If required for compliance with the HSR Act, as
-----------
soon as possible after the date hereof, but in no event later than thirty (30)
business days after the date hereof, Buyer and Sellers shall prepare and file
all documents with the Federal Trade Commission and the United States Department
of Justice as are required to comply with the HSR Act and shall promptly furnish
all materials thereafter requested by any of the regulatory agencies having
jurisdiction over such filings. Sellers and Buyer shall pay one-half of all
Hart-Scott-Rodino filing fees.
7.3 Adjustments and Prorations. All revenues arising from the
--------------------------
operation of the Station up until the Effective Time and all expenses arising
from the operation of the Station up until the Effective Time, including
business and license fees (including any retroactive adjustments thereof),
utility charges, real and personal property taxes and assessments levied against
the Assets, property and equipment rentals, applicable copyright or other fees,
sales and services charges, taxes, and employee benefits (except as provided in
paragraph 7.3(b) below), and similar prepaid and deferred items, shall be
prorated between Buyer and Sellers in accordance with the principle that Sellers
shall receive all revenues and be responsible for all expenses, costs, and
liabilities allocable to the period prior to the Effective Time, and Buyer shall
be responsible for all expenses, costs, and obligations allocable to the period
after the Effective Time, subject to the following:
26
<PAGE>
(a) Contracts. There shall be no adjustment and Sellers
---------
shall remain solely liable with respect to any Contracts not included in the
Assumed Contracts, and any other obligation or liability not being assumed by
Buyer in accordance with Section 2.6.
(b) Employee Compensation; Severance. Disclosure
-------------------------------- ----------
Schedule 7.3(b) sets forth a complete and accurate listing, by employee (with
- ---------------
title or job description), of all compensation, salary, bonuses and benefits for
each employee of Sellers. Disclosure Schedule 7.3(b) also sets forth a
--------------------------
complete and accurate listing of all payments due to such employees in the
nature of severance pay due and owing to them by Sellers in the event their
employment by Sellers, or either of them, is terminated on or before the Closing
Date. Sellers shall be responsible for the payment of all compensation and other
amounts owed to the Station's employees through the Closing Date. Within twenty
(20) business days of the date hereof, Buyer will conduct job interviews with
all of the employees that wish to be interviewed. Within forty-five (45)
business days of the date hereof, Buyer will notify Sellers in writing which of
the Station's employees will be offered positions after the Closing Date.
(c) Trade and Barter. To the extent that the aggregate value
----------------
(based upon the Station's current rate card) by which the Station's post-Closing
obligations under trade, barter or similar arrangements for the sale of
advertising time (with the exception of program barter agreements) is greater
than the aggregate value of the goods, services or other items to be received by
the Station after the Closing, Buyer shall be entitled to receive the
difference; provided, however, that such adjustment or proration shall not be
made unless such difference is more than twenty-five thousand and 00/100 Dollars
-------------------------------
($25,000.00). Notwithstanding the foregoing, Buyer shall receive the full
---------
amount of the value of the Station's post-Closing obligations under trade,
barter or similar arrangements where the recipients of goods or services were
Affiliates of the Sellers, without regard to the twenty-five thousand and 00/100
-------------------------------
Dollars ($25,000.00) threshold referred to above. Sellers shall not enter into
---------
any new such arrangements that cannot be satisfied in full by the Closing
without Buyer's express written consent. Buyer shall receive a credit for any
amount by which the aggregate amount paid to Sellers under prepaid time sales
contracts exceeds the value or advertising attributable to such payments which
is required to be run by the Station after the Closing pursuant to the terms of
such contracts. Sellers shall receive a credit for any pre-Closing Date
advertising for which Station have not received full barter value prior to the
Closing Date.
27
<PAGE>
(d) Manner of Determining Prorations. The prorations
pursuant to this
--------------------------------
pursuant to this Section 7.3 will be determined in accordance with the
following procedures:
(i) No later than sixty (60) days after the Closing
Date, Buyer will deliver to Sellers a statement setting forth Buyer's
determination of the settlement prorations pursuant to Section 7.3, which shall
be certified by Buyer to be true and complete as of the Closing Date. If Sellers
dispute the amount of the settlement prorations determined by Buyer, it shall
deliver to Buyer within thirty (30) days after its receipt of Buyer's statement
a statement setting forth its determination of the amount of the settlement
prorations. If Sellers notify Buyer of their acceptance of Buyer's statement, or
if Sellers fail to deliver their statement within the 30-day period specified in
the preceding sentence, Buyer's determination of the settlement prorations shall
be conclusive and binding on the parties as of the last day of the 30-day
period.
(ii) Buyer and Sellers shall use their good faith
efforts to resolve any dispute involving the determination of the settlement
prorations. Each party shall provide the other party with access and the right
to copy any books and records in its possession relating to its determination of
the settlement prorations. If the parties are unable to resolve the dispute
within fifteen (15) days following the delivery of Sellers' statement, each of
Buyer and Sellers shall select an independent certified public accountant, who
shall be knowledgeable and experienced in the operation of television
broadcasting stations, and the two accountants so chosen shall attempt to
resolve the dispute. If they are not able to do so within forty-five (45) days
following the delivery of Sellers' statement, the two accountants shall agree
upon a third accountant, and the dispute shall be resolved by the decision of
the majority of the accountants, which shall be conclusive and binding on the
parties. Any fees of the accountants shall be split equally between the parties.
(e) Payment of Purchase Price and Prorations. The Purchase
----------------------------------------
Price and settlement prorations shall be paid as follows:
(i) Payment of Purchase Price. Buyer shall pay or
-------------------------
cause to be paid to Sellers at the Closing the Purchase Price.
(ii) Payments to Reflect Final Determination of
------------------------------------------
Prorations.
- ----------
(1) If the aggregate of the prorations and
adjustments, as finally determined pursuant to Section 7.3(d)(i) and
Section 7.3(d)(ii) (the "Prorations")
28
<PAGE>
results in an amount due from Buyer to Sellers, Buyer shall pay such amount to
Sellers, in immediately available funds within five (5) days after the date on
which the Prorations are so determined.
(2) If the Prorations result in an amount due from
Sellers to Buyer, Buyer shall retain an amount equal to such amount from amounts
collected by Buyer pursuant to Section 7.6 with respect to Sellers' accounts
receivable. Any amounts collected by Buyer with respect to Sellers' accounts
receivable and not permitted to be retained pursuant to this paragraph shall be
remitted to Sellers in accordance with Section 7.6. If the amounts of Prorations
due from Sellers to Buyer exceeds the amount of Sellers' accounts receivable
collected by Buyer prior to the date on which the Prorations are determined,
Sellers shall pay to Buyer, in immediately available funds within five (5) days
after the date on which the Prorations are determined, the difference between
the amount owed to Buyer with respect to the Prorations, reduced by the amount
of Sellers' accounts receivable collected by Buyer which have not already been
remitted to Sellers prior to the date on which the Prorations are determined.
Buyer shall be entitled to retain the amount of Sellers' accounts receivable
collected by Buyer prior to the date on which the Prorations are determined,
and, if Sellers make the payment to Buyer provided for in this paragraph, Buyer
shall remit to Sellers in accordance with Section 7.6 any amounts subsequently
collected by Buyer with respect to Sellers' accounts receivable.
7.4 Risk of Loss. The risk of loss or damage to any of the Assets
------------
from fire or other casualty or cause shall be upon Sellers at all times up to
the Closing on the Closing Date. If material loss or damage to the Assets
occurs, Sellers shall have the option: (i) to repair or cause to be repaired and
to restore the Assets to their condition prior to any such loss or damage; or
(ii) subject to the agreement of Buyer, to reduce the Purchase Price by the
amount of insurance proceeds received in connection with such loss or damage.
In the event of any such loss or damage, Sellers shall notify Buyer promptly of
same in writing, specifying with particularity the loss or damage incurred, the
cause thereof, if known or reasonably ascertainable, and the insurance coverage.
The proceeds of any claim for any loss payable under any insurance policy with
respect thereto shall, at the option of Sellers, be used to repair, replace or
restore any such property to its former condition subject to the conditions
stated below. If Sellers have notified Buyer that they elect to repair, replace
or restore the property and the property is not completely repaired, replaced or
restored on or before the Closing Date specified in Section 9, Buyer, at its
sole option, may: (i) postpone the Closing until such time as the property has
been completely repaired, replaced or restored, and, if necessary, the parties
29
<PAGE>
shall join in an application or applications requesting the FCC to extend the
effective period of its consent to the assignment application; (ii) consummate
the Closing and accept the property in its then condition, in which event
Sellers shall assign to Buyer all proceeds of insurance covering the property
involved, provided said proceeds are sufficient to repair said damages.
7.5 Confidentiality. Each party hereto will keep confidential any
---------------
information obtained from the other party in connection with the transactions
contemplated by this Agreement. If this Agreement is terminated and the
purchase and sale contemplated hereby abandoned, each party will return to the
other party all information obtained by it in connection with the transactions
contemplated hereby, and will provide a certificate to that effect. No public
announcement concerning the subject matter of this Agreement shall be made by
either party without the approval of the other as to the announcement's content
and timing, which approval shall not unreasonably be withheld.
7.6 Collection of Accounts Receivable. Buyer agrees to use its
---------------------------------
best efforts to collect Sellers' accounts receivable in the normal and ordinary
course of business as Sellers' agent for collection and will apply all such
amounts collected to the debtor's oldest account receivable (unless and only to
the extent that such debtor disputes that such account receivable is properly
due); provided, however, that such obligation and authority shall not extend to
the institution of litigation, employment of counsel or a collection agency or
any other extraordinary means of collection unless authorized in writing by
Sellers. Buyer agrees to cooperate fully with Sellers as to any litigation or
other collection efforts instituted by Sellers to collect delinquent accounts
receivable. On or before the fifteenth (15th) day of each month, Buyer shall
deliver to Sellers a statement or report showing all such collections effected
since the last previous report, together with a check or draft for the amount of
such collections. If authorized by Sellers, and at Sellers' expense, Buyer
shall have full power and authority as Sellers' agent for collection to settle
disputes, effect compromises, institute and terminate suits relating thereto and
generally to pursue such collections in accordance with Buyer's customary
collection procedures, including employment of counsel or a collection agency or
any other extraordinary means, in all instances acting as agent for Sellers but
without any necessity to disclose that fact. If necessary or advisable in
Buyer's sole discretion, Buyer may effect any or all such collections and
perform authorized acts relating thereto as agent for an undisclosed principal.
If at any time Buyer determines that any such accounts are uncollectible, Buyer
shall notify Sellers of such determination and upon Sellers' written request
shall furnish or make available to Sellers all records, files and data relating
to such accounts and Buyer's determination of uncollectibility. Except as
expressly provided
30
<PAGE>
herein, Buyer shall have no responsibility for any obligation regarding any of
Sellers' accounts receivable. Buyer's obligation to collect accounts receivable
as Sellers' agent shall expire at the end of the fourth full month following the
Closing Date, and, within fifteen (15) days after the end of such month, Buyer
shall render a final statement or report showing accounts collected and
uncollected.
7.7 Brokers.
-------
(a) Buyer's Broker. Buyer represents and warrants to Sellers
--------------
that except for its retention of Media Venture Partners, Inc. (for which Buyer
acknowledges full responsibility) neither it nor any person or entity acting on
its behalf has agreed to pay a commission, finder's fee, or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, nor has it or any person or entity acting on its behalf taken any action
on which a claim for any such payment could be based.
(b) Sellers' Broker. Sellers hereby represent and warrant
---------------
that neither they nor any person or entity acting on their behalf has agreed to
pay a commission, finder's fee or similar payment in connection with this
Agreement or the transactions contemplated hereunder, and the Sellers jointly
and severally agree to indemnify and hold harmless Buyer and its parent and
affiliated corporations from and against any claim that Sellers or any person or
entity acting on its behalf has agreed to pay a commission, finder's fee, or
similar payment in connection with this Agreement or any matter related hereto
to any person or entity, and Buyer agrees to take full responsibility for any
such payment.
7.8 Cooperation. Buyer and Sellers shall cooperate fully with each
-----------
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their obligations under this Agreement,
and Buyer and Sellers will use their best efforts to consummate the transactions
contemplated hereby and to fulfill their obligations hereunder.
7.9 Control of the Station. Prior to Closing, Buyer shall not,
----------------------
directly or indirectly, control, supervise, or direct, or attempt to control,
supervise or direct the operations of the Station; those operations, including
complete control and supervision of all of the Station's programs, employees,
and policies, shall be the sole responsibility of Sellers.
7.10 Consultation. Subject to the provisions of Section 7.9,
------------
between the date hereof and the Closing, Sellers will consult with Buyer's
management with a view to informing
31
<PAGE>
such management as to the operation, management, and business of the Station.
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS.
----------------------------------------------
8.1 Conditions to Obligations of Buyer. All obligations of Buyer
----------------------------------
at the Closing hereunder are subject at Buyer's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. Except as otherwise
------------------------------
provided in this Agreement, all representations and warranties of Sellers
contained in this Agreement shall be true and complete in all material respects
at and as of the Closing Date as though made at and as of that time.
(b) Covenants and Conditions. Sellers shall have performed
------------------------
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing Date.
(c) FCC Consent. The FCC Consent shall have been granted
-----------
and, if Buyer so elects, shall have become a Final Order, without the imposition
on Buyer of any conditions that need not be complied with by Buyer under
Section 7.1 hereof and Sellers shall have complied with any conditions imposed
on it by the FCC Consent.
(d) HSR Matters. The waiting period (and any extension
thereof) under
-----------
thereof) under the HSR Act, if applicable, shall have expired and there shall
not be outstanding any order of a court restraining the transaction contemplated
hereby.
(e) Deliveries. Sellers shall have made or stand willing to
----------
make all the deliveries to Buyer set forth in Section 9.2.
(f) Receipt of Material Consents. All Material Consents as
----------------------------
such term is defined in Section 3.7 hereof, shall have been received without the
imposition on Buyer of any conditions that are materially more burdensome for
Buyer than those currently applicable to Sellers.
(g) No Material Adverse Change. There shall not have been any
--------------------------
material adverse change in the Assets, business prospects, or financial
condition of either of the Sellers.
(h) Claims and Legal Actions. Any pending or threatened legal
------------------------
actions, suits, arbitrations, investigations or other legal, administrative or
tax proceedings, including without limitation, any listed on Disclosure
----------
Schedule 3.12, which
- -------------
32
<PAGE>
directly or indirectly affect the Assets, the FCC Licenses, or the business or
financial prospects of the Station shall have been settled, dismissed or
otherwise concluded on terms that do not have a material adverse effect upon
Buyer, the Assets, or the business or financial prospects of the Station, or in
Buyer's reasonable judgment, are likely to be settled or otherwise concluded on
such terms.
(i) Senior Debt. The Senior Debt shall be satisfied or
-----------
otherwise discharged from sources of funds other than the Purchase Price and all
security interests, liens and encumbrances on the Assets shall have been
released.
(j) Tower Entity Interest. Buyer shall receive the Tower
---------------------
Entity Interest and shall be admitted as a limited partner of 32 LP, as
evidenced by documents delivered at Closing in form and substance satisfactory
to Buyer. 32 LP shall execute and deliver to Buyer the amendment to the
Agreement of Limited Partnership of 32 LP contemplated by Sections 1.38
and 9.2(h) hereof, in form and substance satisfactory to Buyer.
(k) Tower Interest. Buyer shall receive the Tower Interest,
--------------
as evidenced by documents delivered at Closing in form and substance
satisfactory to Buyer.
(l) Tower Lease. The Tower Lease, in form and substance
-----------
reasonably satisfactory to Buyer, shall be executed and delivered to Buyer.
(m) Certified Creditor List. Sellers shall execute and
-----------------------
deliver at Closing a Certified Creditor List showing a true, correct and
complete list of the creditors of Sellers as of the Closing, including without
limitation, all Secured Creditors.
8.2 Conditions to Obligations of Sellers. All obligations of
------------------------------------
Sellers at the Closing hereunder are subject at Sellers' option to the
fulfillment prior to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
------------------------------
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have performed and
------------------------
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to and
at the Closing Date.
33
<PAGE>
(c) FCC Consent. The FCC Consent shall have been received,
-----------
and Buyer shall have complied with any conditions imposed on it by the FCC
Consent.
(d) HSR Act. The waiting period (and any extension thereof)
-------
under the HSR Act, if applicable, shall have expired and there shall not be
outstanding any order of a court restraining the transaction contemplated
hereby.
(e) Deliveries. Buyer shall have made or stand willing to
----------
make all the deliveries set forth in Section 9.3.
(f) Marine Debt. Buyer shall cause to be delivered to
-----------
Sellers a release and indemnification agreement in form and substance reasonably
satisfactory to Sellers, providing that (i) all obligations of the Sellers and
their Affiliates with respect to the Marine Debt are released as to such persons
and entities; (ii) the holder thereof will look solely to Buyer and the Assets
to satisfy the obligations evidenced by the Marine Debt; and (iii) Buyer shall
indemnify the Sellers and their Affiliates from any and all claims, costs and
obligations with respect to the Marine Debt from and after the Closing Date.
SECTION 9. CLOSING AND CLOSING DELIVERIES.
------------------------------
9.1 Closing.
-------
(a) Closing Date. The Closing shall take place at 10:00 a.m.
------------
on a date as agreed to by Buyer and Sellers within five (5) business days
following the later of: (i) the date upon which the FCC Consent has become a
Final Order and all other Material Consents have been received (provided however
that in Buyer's sole discretion, Buyer may elect to close before the FCC Consent
has become a Final Order); or (ii) the expiration of the waiting period (and any
extension thereof) under the HSR Act, if applicable, but in no event later than
the Upset Date set forth in Section 10.1(c).
(b) Closing Place. The Closing shall be held at the offices
-------------
of Eckert Seamans Cherin & Mellott, One International Place, 18th Floor, Boston,
MA 02110, or any other place that is agreed upon by Buyer and Sellers.
9.2 Deliveries by Sellers. Prior to or on the Closing Date,
---------------------
Sellers shall deliver to Buyer the following in form and substance reasonably
acceptable to Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale,
certificates of
------------------
certificates of title and other transfer documents which shall be sufficient
to vest good, clear, marketable title to the
34
<PAGE>
Assets in the name of Buyer, free and clear of all claims, security interests,
encumbrances and liens other than Permitted Liens.
(b) Consents. A copy of each Consent.
--------
(c) Resolutions. Copies of the by-laws of Sellers and the
-----------
resolutions adopted by the Boards of Directors and, if required, stockholders,
of Sellers, authorizing, and approving the execution of this Agreement and the
consummation of the transactions contemplated hereby, certified by the Secretary
of Sellers as being true and complete on the Closing Date.
(d) Certificate. A certificate, dated as of the Closing Date,
-----------
executed by an authorized officer of each Seller, certifying: (i) that each
Seller has obtained proper corporate authorization, including the consent of
stockholders, necessary to the consummation of this Agreement; (ii) that the
representations and warranties of such Seller contained in this Agreement are
true and complete in all material respects as of the Closing Date as though made
on and as of that date; and (iii) that such Seller has performed in all material
respects all of its obligations and agreements and complied in all material
respects with all of its covenants set forth in this Agreement to be performed
and complied with on or prior to the Closing Date.
(e) Opinion of Counsel. The opinion of Neville Shaver
------------------
Kelly & McLean counsel to Sellers, covering FCC matters and all other matters
customary in transactions of this type.
(f) Claims and Legal Actions. Documentation reasonably
------------------------
satisfactory to Buyer evidencing that the condition set forth in Section 8.1(h)
has been satisfied.
(g) Senior Debt. Documentation reasonably satisfactory to
-----------
Buyer evidencing that the condition set forth in Section 8.1(i) has been
satisfied.
(h) Tower Entity Interest. Documentation reasonably
---------------------
satisfactory to Buyer providing for the issuance to Buyer of the Tower Entity
Interest, and all attendant rights thereto, including, without limitation, (i) a
copy of the Agreement of Limited Partnership of 32 LP; (ii) a duly executed copy
of an amendment to the Agreement of Limited Partnership of 32 LP, which
amendment shall, among other things, incorporate those provisions set forth in
Section 1.38; and (iii) an undertaking by 32 LP, in its capacity as the owner of
the Gordonville Tower, to maintain such broadcast transmission tower, and all
related improvements, during the term of the Tower Lease in accordance with
prevailing industry standards at its sole cost and expense.
35
<PAGE>
(i) Tower Interest. Documentation reasonably satisfactory to
--------------
Buyer evidencing the transfer of the Tower Interest to Buyer.
(j) Tower Lease. A duly executed copy of the Tower Lease.
-----------
(k) Certified Creditor List. The Certified Creditor List
-----------------------
referred to in Section 8.1(m).
9.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
-------------------
shall deliver to Sellers the following, in form and substance reasonably
satisfactory to Sellers and their counsel:
(a) Purchase Price. The Purchase Price as provided in
--------------
Section 2.3.
(b) Assumption Agreement. A duly executed assumption
--------------------
agreement, pursuant to which Buyer will assume and undertake to perform Sellers'
obligations under the Assumed Contracts arising after the Effective Time, to the
extent specified in Section 2.6.
(c) Resolutions. Copies of resolutions adopted by Buyer,
-----------
authorizing and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby, certified by its Secretary as being
true and correct on the Closing Date.
(d) Certificate. A certificate, dated as of the Closing Date,
-----------
executed on behalf of Buyer by the President of Buyer, certifying: (i) that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of the Closing Date as though made on and
as of that date; and (ii) that Buyer has performed in all material respects all
of its obligations and agreements and complied in all material respects with all
of its covenants set forth in this Agreement to be performed or complied with on
or prior to the Closing Date.
(e) Opinion of Counsel. The opinion of Eckert Seamans
------------------
Cherin & Mellott, counsel for Buyer, and Wiley Rein & Fielding, special FCC
counsel to Sellers, covering those matters customary in transactions of this
type.
(f) Marine Debt. Documentation reasonably satisfactory to
-----------
Sellers evidencing the satisfaction of the condition set forth in
Section 8.2(f).
(g) Tower Lease. The Tower Lease shall be executed and
-----------
delivered by Buyer.
36
<PAGE>
SECTION 10. TERMINATION.
-----------
10.1 Termination Rights. This Agreement may be terminated by either
------------------
Buyer or Sellers, if the terminating party is not then in material breach or
default, upon written notice to the other party, upon the occurrence of any of
the following:
(a) Conditions. If on the Closing Date any of the conditions
----------
precedent to the obligations of the terminating party set forth in this
Agreement have not been satisfied or waived in writing by the terminating party.
(b) Judgments. If there shall be in effect on the Closing
---------
Date any judgment, decree, or order that would prevent or make unlawful the
Closing of this Agreement.
(c) Upset Date. If the Closing Date shall not have occurred
----------
on or before May 1, 1997.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
----------------------------------------------
INDEMNIFICATION.
----------------
11.1 Representations and Warranties. Except as otherwise
------------------------------
specifically set forth herein, all representations and warranties contained in
this Agreement shall survive the Closing for a period of twenty-four (24)
months.
11.2 Indemnification by Sellers. From and after the Closing,
--------------------------
Sellers hereby agree, subject to Section 11.4(e), jointly and severally, to
indemnify and hold Buyer and its officers, directors, shareholders and
Affiliates harmless against and with respect to, and shall reimburse Buyer for:
(a) Breach. Any and all losses, liabilities, claims, actions
------
or damages or expenses resulting from any untrue representation, breach of
warranty, or nonfulfillment of any covenant by Sellers contained herein or in
any certificate, document, or instrument delivered to Buyer hereunder.
(b) Obligations. Any and all obligations of Sellers not
-----------
assumed by Buyer pursuant to the terms of this Agreement, including any and all
liabilities arising at any time under any Contract not included in the Assumed
Contracts subject to the condition that Buyer shall have given Sellers prompt
written notice of, and an opportunity to defend, any and all such asserted
liabilities.
(c) Ownership. Any and all losses, liabilities, or damages
---------
resulting from the operation or ownership of the Station prior to the Effective
Time, including any and all liabilities arising under the Licenses or the
Contracts which
37
<PAGE>
relate to events occurring prior to the Effective Time subject to the condition
that Buyer shall have given Sellers prompt written notice of, and an opportunity
to defend, any and all such asserted liabilities.
(d) Legal Matters. Any and all actions, suits, proceedings,
-------------
claims demands, assessments, judgments, costs, and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
11.3 Indemnification by Buyer. Notwithstanding the Closing, Buyer
------------------------
hereby agrees to indemnify and hold Sellers and its officers, directors,
shareholders and Affiliates harmless against and with respect to, and shall
reimburse Sellers for:
(a) Breach. Any and all losses, liabilities, claims, actions
------
or damages and expenses resulting from any untrue representation, breach of
warranty, or nonfulfillment of any covenant by Buyer contained herein or in any
certificate, document, or instrument delivered to Sellers hereunder.
(b) Ownership. Any and all losses, liabilities, or damages
---------
resulting from the operation or ownership of the Station on and after the
Effective Time, including any and all liabilities arising under the Licenses or
the Assumed Contracts which relate to events occurring after the Effective Time.
(c) Legal Matters. Any and all actions, suits, proceedings,
-------------
claims demands, assessments, judgments, costs and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
11.4 Procedure for Indemnification. The procedure for
-----------------------------
indemnification shall be as follows:
(a) Notice. The Claimant shall promptly (but in any event
------
within fifteen (15) business days) give notice to the Indemnitor of any claim,
whether solely between the parties or brought by a third party, specifying
(i) the factual basis for the claim, and (ii) the amount of the claim.
Notwithstanding the foregoing, a failure to give notice within the time period
specified above shall result in a forfeiture or loss of the indemnification
rights hereunder only if and to the extent the Indemnitor is materially damaged
or prejudiced by such delay.
(b) Investigation. With respect to claims between the
-------------
parties, following receipt of notice from the
38
<PAGE>
Claimant of a claim, the Indemnitor shall have thirty (30) business days to make
any investigation of the claim that the Indemnitor deems necessary or desirable.
For the purposes of this investigation, the Claimant agrees to make available to
the Indemnitor and/or its authorized representatives the information relied upon
by the Claimant to substantiate the claim. If the Claimant and the Indemnitor
cannot agree as to the validity and amount of the claim within said 30-day
period (or any mutually agreed upon extension thereof), the Claimant may seek
appropriate legal remedy.
(c) Control. With respect to any claim by a third party as to
-------
which the Claimant is entitled to indemnification hereunder, the Indemnitor
shall have the right at its own expense to participate in or assume control of
the defense of the Claim, using counsel reasonably satisfactory to Claimant and
the Claimant shall cooperate fully with the Indemnitor, subject to reimbursement
for actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnitor. If the Indemnitor elects to assume control of the
defense of any third-party claim within fifteen (15) business days of notice
under Section 11.4(a), the Claimant shall have the right to participate in the
defense of the claim at its own expense. If the Indemnitor does not elect to
assume control or otherwise actively participate in the defense of any third
party claim, it shall be bound by the results obtained by the Claimant with
respect to the claim.
(d) Immediate Action. If a claim, whether between the
----------------
parties of by a third party, requires immediate action, the parties will make
every effort to reach a decision with respect thereto as expeditiously as
possible.
(e) Limitations on Indemnification.
------------------------------
(i) Any indemnity payment hereunder shall be limited to
the extent of the actual loss or damage suffered by the Claimant and shall be
reduced by the amount of any recovery by the Claimant from any third party,
including any insurer, and by the amount of any tax benefits received.
(ii) No party shall be entitled to indemnification
hereunder except to the extent that the total amount of its claims for
indemnification exceeds Ten Thousand Dollars ($10,000), provided, however, that
in the event bona fide claims for indemnification exceed such amount, then the
Claimant shall be entitled to indemnification with respect to all such claims.
No party shall be entitled to indemnification hereunder for any claim arising
from the breach by the other party of its representations and warranties which
is not asserted against the Indemnitor within twenty-four (24) months after the
Closing Date.
39
<PAGE>
(iii) The limitations in Section 1.14(e)(ii) shall not
apply to any claim for indemnification for any liability of the Claimant to any
third party, to the adjustments and prorations to be made pursuant to
Section 7.3, or to Buyer's obligations with respect to Sellers' Accounts
Receivable as set forth in Section 7.6.
11.5 Liquidated Damages. If this Agreement is terminated by Sellers
------------------
due to a material breach by Buyer of its representations, warranties and
covenants hereunder, then Buyer's participating interest in the Senior Debt, as
evidenced by the Participation Agreement, shall be forfeited by Buyer and the
Participation Agreement shall automatically terminate and be of no further force
or effect, it being agreed that the forfeiture of Buyer's participating interest
in the Senior Debt shall constitute full payment for any and all damages
suffered by Sellers by reason of Buyer's failure to close the transactions
contemplated by this Agreement. Buyer and Sellers agree in advance that
Sellers' actual damages if Buyer breaches its obligations hereunder would be
difficult to ascertain and that the forfeiture of the participating interest in
the Senior Debt is a fair and equitable amount to reimburse Sellers for damages
sustained from the termination of this Agreement for the reason stated in the
first sentence of this Section 11.5.
11.6 Specific Performance. The parties recognize that if Sellers
--------------------
refuses to Close as and when required under the provisions of this Agreement,
monetary damages will not be adequate to compensate Buyer for its injury. Buyer
shall therefore be entitled, in addition to a right to collect money damages, to
obtain specific performance of the terms of this Agreement. If any action is
brought by Buyer to enforce this Agreement, Sellers shall waive the defense that
there is an adequate remedy at law.
11.7 Opportunity to Cure. Neither party shall have the right to
-------------------
terminate this Agreement as a result of the other party's default unless the
terminating party shall have given the defaulting party written notice
specifying in reasonable detail the nature of the default and shall have
afforded the defaulting party fifteen (15) business days to cure the default.
SECTION 12. MISCELLANEOUS.
-------------
12.1 Fees and Expenses. Sellers and Buyer shall share equally all
-----------------
HSR Act and FCC filing fees (including any subsequently instituted tax on the
assignment of FCC licenses). Sellers shall bear the cost of all other filing
fees, transfer taxes, sales taxes, document stamps, or other charges levied by
any governmental entity on account of or in connection with the transfer of the
Assets from Sellers to Buyer. Except as otherwise provided in this Agreement,
each party shall pay its
40
<PAGE>
own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including, without limitation, all
fees and expenses of counsel, accountants, agents, and representatives.
12.2 Notices. All notices, demands, and requests required or
-------
permitted to be given under the provisions of this Agreement shall be in writing
and shall be deemed to have been duly delivered and received: (i) on the date of
personal delivery; (ii) on the date of receipt (as shown on the return receipt)
if mailed by registered or certified mail, postage prepaid and return receipt
requested; or (iii) on the next business day after delivery to a courier service
that guarantees delivery on the next business day if the conditions to the
courier's guaranty are complied with, in each case addressed as set forth below.
It is agreed that the sending of a copy of any notice to counsel to a party
shall not constitute notice to the party:
---
If to Sellers: WHOA-TV, Inc.
Montgomery Alabama Channel 32
Operating Limited Partnership
c/o Soundview Media, Inc.
631 Second Avenue South
Suite 2F
Nashville, TN 37210
Attn: Carleton Burtt
with a simultaneous
copy to: Richard M. Neville, Esq.
Neville Shaver Kelly & McLean
Three Landmark Square
Suite 210
Stamford, CT 06901
If to Buyer: Park of Montgomery I, Inc.
1700 Vine Center Office Tower
333 West Vine Street
Lexington, KY 40507
Attn: Wright M. Thomas, President
with a simultaneous
copy to: Stephen I. Burr, Esquire
Eckert Seamans Cherin & Mellott
One International Place, 18th Floor
Boston, MA 02110
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 12.2.
41
<PAGE>
12.3 Benefit and Binding Effect. Neither party hereto may assign
--------------------------
this Agreement without the prior written consent of the other party hereto.
Such assignment shall not, however, release such party from its duties and
obligations under this Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
12.4 Further Assurances. The parties shall execute any other
------------------
documents that may be necessary or desirable to the implementation and
consummation of this Agreement.
12.5 Governing Law. This Agreement shall be governed, construed,
-------------
and enforced in accordance with the laws of the State of Alabama (without regard
to the choice of law provisions thereof).
12.6 Headings and References. The headings and table of contents
-----------------------
herein are included for ease of reference only and shall not control or affect
the meaning or construction of the provisions of this Agreement. For purpose of
this Agreement, the words "hereof", "herein", "hereby", and other words of
similar import refer to this Agreement as a whole, including all Appendices,
Annexes and Schedules hereto. Reference herein to Articles, Sections,
Appendices, Annexes and Schedules unless otherwise designated, shall be to the
relevant Articles, Sections, Appendices, Annexes and Schedules hereof and
hereto. All dollar amounts referred to herein are in United States Dollars.
12.7 Gender and Number. Words used herein, regardless of the gender
-----------------
and number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine, or neuter, and any other number, singular or
plural, as the context requires.
12.8 Entire Agreement. This Agreement, all schedules hereto, and
----------------
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Sellers with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations and agreements between the parties
including, without limitation, any and all letters of intent, and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
12.9 Counterparts. This Agreement may be signed in three or more
------------
counterparts, with the same effect as if the signature on each counterpart were
upon the same instrument.
42
<PAGE>
12.10 Survival. The occurrence of the Closing shall be deemed to be
--------
a full performance and discharge of every agreement and obligation herein
contained or expressed such as are, by the terms hereof, to be performed after
the Closing.
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
officers of Buyer and Sellers as of the date first written above.
MONTGOMERY ALABAMA CHANNEL 32
OPERATING LIMITED PARTNERSHIP
By FREY COMMUNICATIONS SOUTH, INC.
Its General Partner
By:
--------------------------------------
Carleton Burtt
Chairman and Chief Executive
Officer
SEE ACKNOWLEDGMENT ATTACHED
WHOA-TV, INC.
By:
----------------------------------------
Carleton Burtt
Chairman and Chief Executive
Officer
SEE ACKNOWLEDGMENT ATTACHED
PARK OF MONTGOMERY I, INC.
By:
----------------------------------------
Wright M. Thomas, President
By:
----------------------------------------
Gary B. Knapp, Director
By:
----------------------------------------
Donald R. Tomlin, Jr.,
Director
SEE ACKNOWLEDGMENTS ATTACHED
43
<PAGE>
In order to induce the Sellers to execute and deliver this Agreement,
the undersigned hereby join in and agree to be bound by the provisions of
Section 11.5 only.
PARK OF MONTGOMERY II, INC.
By:
----------------------------------------
Wright M. Thomas, President
By:
----------------------------------------
Gary B. Knapp, Director
By:
----------------------------------------
Donald R. Tomlin, Jr.,
Director
SEE ACKNOWLEDGMENTS ATTACHED
44
<PAGE>
Exhibit 3(i)(a)
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:16 AM 05/11/1995
950104240 - 775645
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PARK COMMUNICATIONS, INC.
The Certificate of Incorporation for Park Communications, Inc., filed
and recorded with the Secretary of State of the State of Delaware under the name
of Park Broadcasting, Inc. on October 12, 1971, which Certificate of
Incorporation was amended on August 23, 1983 for the purpose of effecting a
change of name to Park Communications, Inc., shall be amended and restated in
its entirety as follows:
FIRST: The name of the corporation is Park Communications, Inc. (the
-----
"Corporation").
SECOND: The address, including street, number, city and county, of the
------
registered office of the Corporation in the State of Delaware is 32 Loockerman
Square, Suite L-100, City of Dover 19901, County of Kent; and the name of the
registered agent of the Corporation in the State of Delaware at such address is
The Prentice Hall Corporation System, Inc.
THIRD: The nature of the business and the purposes to be conducted and
-----
promoted by the Corporation, shall be to conduct any lawful business, to promote
any lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of stock which the Corporation
------
shall have authority to issue is 300. The par value of the shares shall be one
dollar ($1.00) per share. All such shares are of one class and are shares of
Common Stock.
FIFTH: The Corporation is to have perpetual existence.
-----
SIXTH: The personal liability of the directors of the Corporation is
-----
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of Section 102 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented.
SEVENTH: The Corporation shall, to the fullest extent permitted by the
-------
provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power
<PAGE>
to indemnify under said section from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any Bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
EIGHTH: From time to time any of the provisions of this Certificate of
------
Incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article Eighth.
IN WITNESS WHEREOF, this amended and restated Certificate of
Incorporation has been executed by an authorized officer of the Corporation.
By: ______________________________
Wright M. Thomas
President
Attest:
By: ______________________________
Randel N. Stair
Assistant Secretary
<PAGE>
Exhibit 3(i)(b)
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 05/07/1996
960132686 - 775645
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF
PARK COMMUNICATIONS, INC.
Park Communications, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, does
hereby certify:
FIRST: That written consent in lieu of a meeting of The Board of
-----
Directors of said corporation has been given in accordance with Section 141(f)
of the General Corporation Law of the State of Delaware, and that a resolution
was duly adopted authorizing a proposed amendment to the Certificate of
Incorporation of said corporation, declaring said amendment to be advisable. The
resolution setting forth the proposed amendment to the Certificate of
Incorporation of Park Communications, Inc. is as follows:
RESOLVED, that Article Fourth of the Certificate of Incorporation be
amended and restated to provide as follows:
"Fourth: The total number of shares of stock which the
------
corporation shall have authority to issue is fifteen millon
(15,000,000) at a par value of $.0001 per share. All such shares
are of one class and are shares of Common Stock.
Each share of Common Stock, par value $1.00 per share, previously
authorized (such Common Stock being hereinafter referred to in
this paragraph as "old Common Stock") shall, at the close of
business on the date this amendment becomes effective, be
changed, reclassified and split into 106,285.7143
<PAGE>
shares of Common Stock, no par value (such Common Stock into
which old Common Stock is changed and reclassified being
hereinafter referred to in this paragraph as "new Common Stock").
Of the 15,000,000 shares of new Common Stock authorized, a
sufficient number shall be reserved for issuance to the holder of
old Common Stock of record at the close of business on the date
this amendment becomes effective to effectuate the 106,285.7143-
for-one stock split of the old Common Stock, and the remaining
shares of new Common Stock shall be regarded as authorized but
unissued and unreserved shares of new Common Stock."
SECOND: That written consent in lieu of a special meeting of the
------
stockholders of said corporation has been given in accordance with Section 228
of the General Corporation Law of the State of Delaware, and that the amendment
described above was unanimously approved.
THIRD: That said amendment was duly adopted in accordance with the
-----
provisions of Sections 228 and 242 of the General Corporation Law of the State
of Delaware.
In accordance with Section 103(a)(2) and Section 103(b)(2) of the
General Corporation Law of the State of Delaware, this corporation hereby
executes and acknowledges this Certificate of Amendment of its Certificate of
Incorporation this 6th day of May, 1996.
PARK COMMUNICATIONS, INC.
By
--------------------
President
<PAGE>
Exhibit 3(ii)
PARK COMMUNICATIONS, INC.
-------------------------
(a Delaware corporation)
BYLAWS
As adopted by the Board of Directors on July 12, 1994.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C> <C>
I. OFFICES
1. Registered Office............................................ 1
2. Additional Offices........................................... 1
II. MEETINGS OF STOCKHOLDERS
1. Time and Place............................................... 1
2. Annual Meeting............................................... 1
3. Notice of Annual Meeting..................................... 1
4. Special Meetings............................................. 1
5. Notice of Special Meeting.................................... 2
6. List of Stockholders......................................... 2
7. Presiding Officer; Order of Business......................... 2
8. Quorum; Adjournments......................................... 3
9. Voting....................................................... 4
10. Action by Consent............................................ 4
III. DIRECTORS
1. General Powers; Number; Tenure............................... 4
2. Vacancies.................................................... 5
3. Removal, Resignation......................................... 5
4. Place of Meetings............................................ 5
5. Annual Meeting............................................... 5
6. Regular Meetings............................................. 5
7. Special Meetings............................................. 6
8. Quorum; Vote Required for Action; Adjournments............... 6
9. Compensation................................................. 6
10. Action by Consent............................................ 6
11. Meetings by Telephone or Similar Communications.............. 6
IV. COMMITTEES
1. Audit Committee.............................................. 6
2. Compensation Committee....................................... 7
3. Executive Committee.......................................... 7
4. Other Committees............................................. 7
5. Powers....................................................... 7
6. Procedure; Meetings.......................................... 8
</TABLE>
-i-
<PAGE>
7. Quorum....................................................... 8
8. Vacancies; Changes; Discharge................................ 8
9. Compensation................................................. 8
10. Action by Consent............................................ 8
11. Meetings by Telephone or Similar Communications.............. 8
V. NOTICES
1. Form; Delivery............................................... 9
2. Waiver....................................................... 9
VI. OFFICERS
1. Designations................................................. 9
2. Term of Office; Removal...................................... 9
3. Compensation................................................. 10
4. The Chairman of the Board.................................... 10
5. The President................................................ 10
6. The Vice-Presidents.......................................... 10
7. The Secretary................................................ 11
8. The Assistant Secretary...................................... 11
9. The Treasurer................................................ 11
10. The Assistant Treasurer...................................... 11
VII. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
1. Persons Entitled to Indemnification.......................... 12
2. Indemnification.............................................. 12
3. Advancement.................................................. 13
4. Contribution................................................. 13
5. Nonexclusivity of Indemnification............................ 13
6. Amendment to Delaware Law.................................... 14
VIII. AFFILIATED TRANSACTIONS AND INTERESTED DIRECTORS
1. Affiliated Transactions...................................... 14
2. Determining Quorum........................................... 14
IX. STOCK CERTIFICATES
1. Form; Signatures............................................. 14
2. Registration of Transfer..................................... 15
-ii-
<PAGE>
<TABLE>
<S> <C> <C>
3. Registered Stockholders.................................... 15
4. Record Date................................................ 15
5. Lost, Stolen or Destroyed Certificates..................... 16
X. GENERAL PROVISIONS
1. Dividends.................................................. 16
2. Reserves................................................... 16
3. Fiscal Year................................................ 16
4. Seal....................................................... 16
5. Inspection of Books........................................ 16
XI. AMENDMENTS................................................. 17
SECRETARY'S CERTIFICATE........................................... 17
</TABLE>
-iii-
<PAGE>
BYLAWS
------
of
PARK COMMUNICATIONS, INC.
-------------------------
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
-----------------
shall be at: c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Additional Offices. The Corporation's principal office
------------------
shall be in the City of Ithaca, County of Tompkins, State of New York. The
Corporation may also have offices at such other places, both within and without
the State of Delaware, as the Board of Directors may from time to time determine
or as the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place. A meeting of stockholders for any purpose
--------------
may be held at such time and place, within or without the State of Delaware, as
the Board of Directors may fix from time to time and as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. Annual meetings of stockholders, commencing
--------------
with the year 1994, shall be held on the second Tuesday of April, if not a legal
holiday, or, if a legal holiday, then on the next secular day following, at 9:30
A.M., or at such other date and time as shall, from time to time, be designated
by the Board of Directors and stated in the notice of the meeting. At such
annual meeting, the stockholders shall elect a Board of Directors and transact
such other business as may properly be brought before the meeting.
Section 3. Notice of Annual Meeting. Written notice of the annual
------------------------
meeting, stating the place, date and time thereof, shall be given to each
stockholder entitled to vote at such meeting not less than 10 (unless a longer
period is required by law) nor more than 60 days prior to the meeting.
Section 4. Special Meetings. Special meetings of the stockholders, for
----------------
any purpose or purposes, unless otherwise prescribed by statute or the
Certificate of Incorporation, may be called by the Chairman of the Board and
shall be called by the President or Secretary at the request in writing of a
majority of the Board of Directors, or at the request in writing of the
stockholders owning a majority of the shares of capital stock of the Corporation
issued and
<PAGE>
outstanding and entitled to vote on the matters to be presented at such meeting.
Such requests shall state the purpose or purposes of the proposed meeting.
Business transacted at all special meetings shall be confined to the object
stated in the call.
Section 5. Notice of Special Meeting. Written notice of a special
-------------------------
meeting, stating the place, date and time thereof and the purpose or purposes
for which the meeting is called, shall be given to each stockholder entitled to
vote at such meeting at such address as appears on the books of the corporation
not less than 10 (unless a longer period is required by law) nor more than 60
days prior to the meeting.
Section 6. List of Stockholders. The officer in charge of the stock
--------------------
ledger of the Corporation or the transfer agent shall prepare and make, at least
10 days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least 10 days prior to the meeting, at a
place within the city where the meeting is to be held, which place, if other
than the place of the meeting, shall be specified in the notice of the meeting.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present in person thereat.
Section 7. Presiding Officer; Order of Business.
------------------------------------
(a) Meetings of stockholders shall be presided over by the Chairman of
the Board or, if the Chairman of the Board is not present, by the President, or,
if the President is not present, by a Vice-President, or, if a Vice-President is
not present, by such person who may have been chosen by the Board of Directors,
or, if none of such persons is present, by a chairman to be chosen by the
stockholders owning a majority of the shares of capital stock of the Corporation
issued and outstanding and entitled to vote at the meeting and who are present
in person or represented by proxy. The Secretary of the Corporation, or, if an
Assistant Secretary is not present, an Assistant Secretary, or, if an Assistant
Secretary is not present, such person as may be chosen by the Board of
Directors, shall act as secretary of meetings of stockholders, or, if none of
such persons is present, the stockholders owning a majority of the shares of
capital stock of the Corporation issued and outstanding and entitled to vote at
the meeting and who are present in person or represented by proxy shall choose
any person present to act as secretary of the meeting.
(b) The following order of business, unless otherwise ordered at the
meeting, shall be observed as far as practicable and consistent with the
purposes of the meeting:
1. Call of the meeting to order.
-2-
<PAGE>
2. Presentation of proof of mailing of the notice of the meeting and, if
the meeting is a special meeting, the call thereof.
3. Presentation of proxies.
4. Announcement that a quorum is present.
5. Reading and approval of the minutes of the previous meeting.
6. Reports, if any, of officers.
7. Election of directors, if the meeting is an annual meeting or a
meeting called for that purpose.
8. Consideration of the specific purpose or purposes for which the
meeting has been called (other than the election of directors), if the
meeting is a special meeting.
9. Transaction of such other business as may properly come before the
meeting.
10. Adjournment.
Section 8. Quorum; Adjournments. The holders of a majority of the shares
--------------------
of capital stock of the Corporation issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall be necessary to, and
shall constitute a quorum for, the transaction of business at all meetings of
the stockholders, except as otherwise provided by statute, the Certificate of
Incorporation or these Bylaws. If, however, a quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall, by a majority
vote of the shares held by such stockholders, have the power to adjourn the
meeting from time to time, without notice of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken, until a quorum shall be present or represented. Even if a quorum shall be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall, by a
majority vote of the shares held by such stockholders, have the power to adjourn
the meeting from time to time, without notice of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken, until a date which is not more than 30 days after the date of the
original meeting. At any such adjourned meeting, at which a quorum shall be
present in person or represented by proxy, any business may be transacted which
might have been transacted at the meeting as originally called. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote thereat.
-3-
<PAGE>
Section 9. Voting.
------
(a) At any meeting of stockholders, every stockholder having voting
power upon the matter in question shall be entitled to vote in person or by
proxy. Except as otherwise provided by law or the Certificate of Incorporation,
each stockholder of record shall be entitled to one vote for each share of
capital stock registered in his name on the books of the Corporation, except
that no share of stock shall be voted on at any election of directors which has
been transferred on the books of the Corporation within twenty days next
preceding the election. The vote for directors, and, upon the demand of any
stockholder, the vote upon any question before the meeting, shall be by written
ballot.
(b) All elections of directors shall be determined by a plurality
vote, and, except as otherwise provided by law, the Certificate of Incorporation
or these Bylaws, all other matters to be voted upon by stockholders shall be
determined by a vote of a majority of the shares present in person or
represented by proxy at the meeting.
(c) Each stockholder entitled to vote at a meeting of stockholders may
authorize an individual or individuals to act for it by proxy, but no such proxy
shall be voted or acted upon after one year from its date, unless the proxy
provides for a longer period. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or another duly
executed proxy bearing a later date with the Secretary of the Corporation.
Section 10. Action by Consent. Any action required or permitted by law or
-----------------
the Certificate of Incorporation to be taken at any meeting of stockholders may
be taken without a meeting, without prior notice and without a vote, if a
written consent, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
the holders of all shares entitled to vote thereon were present in person or
represented by proxy and voted. Such written consent shall be filed with the
minutes of meetings of stockholders. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not so consented in writing thereto.
ARTICLE III
DIRECTORS
Section 1. General Powers; Number; Tenure. The business of the
------------------------------
Corporation shall be managed by its Board of Directors, which may exercise all
powers of the Corporation and perform all lawful acts and things which are not
by law, the Certificate of Incorporation or these
-4-
<PAGE>
Bylaws directed or required to be exercised or performed by the stockholders.
Within the limits specified in this Section 1, the number of directors shall be
not less than three nor more than nine members, the exact number within these
limits to be determined from time to time by the Board of Directors; provided,
however, that there shall be a minimum of at least two independent directors on
the Board of Directors at all times. The directors shall be elected at the
annual meeting of the stockholders, except as provided in Section 2 of this
Article, and each director elected shall hold office until his successor is
elected and shall qualify. Directors need not be stockholders. The Board of
Directors shall present at each annual meeting, and when called for by vote of
the stockholders at any special meeting of the stockholders, a full and clear
statement of the business and condition of the Corporation.
Section 2. Vacancies. If any vacancies occur in the Board of Directors,
---------
or if any new directorships are created, they may be filled by vote of a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director. Each director so chosen shall hold office until the
next annual meeting of stockholders and until his successor is duly elected and
shall qualify. If there are no directors in office, any officer or stockholder
may call a special meeting of stockholders in accordance with the provisions of
the Certificate of Incorporation or these Bylaws, at which meeting such
vacancies shall be filled.
Section 3. Removal; Resignation.
--------------------
(a) Except as otherwise provided by law or the Certificate of
Incorporation, any director, directors or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
(b) Any director may resign at any time by giving written notice to
the Board of Directors, the Chairman of the Board, the President or the
Secretary of the Corporation. Unless otherwise specified in such written
notice, a resignation shall take effect upon delivery thereof to the Board of
Directors or the designated officer. It shall not be necessary for a
resignation to be accepted before it becomes effective.
Section 4. Place of Meetings. The Board of Directors may hold meetings,
-----------------
both regular and special, either within or without the State of Delaware.
Section 5. Annual Meeting. The annual meeting of each newly elected Board
--------------
of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present.
Section 6. Regular Meetings. Additional regular meetings of the Board of
----------------
Directors may be held without notice, at such time and place as may from time to
time be determined by the Board of Directors.
-5-
<PAGE>
Section 7. Special Meetings. Special Meetings of the Board of Directors
----------------
may be called by the Chairman of the Board or by the President or Secretary upon
written request by 2 or more directors on at least 5 days' notice to each
director. Any such notice need not state the purpose or purposes of such
meeting except as provided in Article XI.
Section 8. Quorum; Vote Required for Action; Adjournments. At all
----------------------------------------------
meetings of the Board of Directors, a majority of the directors then in office
shall constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by law, the Certificate of Incorporation or these Bylaws.
If a quorum is not present at any meeting of the Board of Directors, the
directors present may adjourn the meeting, from time to time without notice
other than announcement at the meeting, until a quorum shall be present.
Section 9. Compensation. Directors shall be entitled to such compensation
------------
for their services as directors and to such reimbursement for any reasonable
expenses incurred in attending directors' meetings as may from time to time be
fixed by the Board of Directors. The compensation of directors may be on such
basis as is determined by the Board of Directors. Any director may waive
compensation for any meeting. Any director receiving compensation under these
provisions shall not be barred from serving the Corporation in any other
capacity and receiving compensation and reimbursement for reasonable expenses
for such other services.
Section 10. Action by Consent. Any action required or permitted to be
-----------------
taken at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting if a written consent to such action is signed by all
members of the Board of Directors and such written consent is filed with the
minutes of its proceedings.
Section 11. Meetings by Telephone or Similar Communications. The Board of
-----------------------------------------------
Directors may participate in a meeting by means of conference telephone or
similar communications equipment by means of which all directors participating
in the meeting can hear each other, and participation in such meeting shall
constitute presence in person by such director at such meeting.
ARTICLE IV
COMMITTEES
Section 1. Audit Committee. The Board of Directors, by resolution adopted
---------------
by a majority of the whole Board, shall appoint an Audit Committee consisting of
not more than three members, a majority of which shall be independent directors.
The primary responsibilities of the Audit Committee shall include overseeing the
financial reporting process (including the system of internal control), assuring
the objectivity of the independent audit, and performing any functions imposed
on such committee under federal or state law, or by applicable regulations of
-6-
<PAGE>
any securities exchange on which the Corporation's securities are traded. One
of the members of the Audit Committee shall be designated as the Chairman of the
Audit Committee. Each member of the Audit Committee shall continue as a member
thereof until the expiration of his term as a director, or his earlier
resignation, unless sooner removed as a member or a director.
Section 2. Compensation Committee. The Board of Directors, by resolution
----------------------
adopted by a majority of the whole Board, shall appoint a Compensation Committee
consisting of at least three members, including two independent directors. The
Chairman of the Board shall be an ex officio member of the Compensation
Committee. The primary responsibilities of the Compensation Committee shall
include reviewing the compensation arrangements of the Company's executive
officers and, subject to the review and approval by the full Board, formulating
proposed compensation packages for such officers. One of the members of the
Compensation Committee shall be designated as the Chairman of the Compensation
Committee. Each member of the Compensation Committee shall continue as a member
thereof until the expiration of his or her term as a director, or his or her
earlier resignation, unless sooner removed as a member or a director.
Section 3. Executive Committee. The Board of Directors, by resolution
-------------------
adopted by a majority of the whole Board, may appoint an Executive Committee
consisting of one or more directors, one of whom shall be designated as Chairman
of the Executive Committee. During the interval between meetings of the Board,
the Executive Committee shall advise with and aid the officers of the
Corporation in all matters concerning its interests and the management of its
business, and generally perform such duties as may be directed or delegated by
the board of directors from time to time. Each member of the Executive
Committee shall continue as a member thereof until the expiration of his term as
a director, or his earlier resignation, unless sooner removed as a member or as
a director.
Section 4. Other Committees. The Board of Directors, by resolutions
----------------
adopted by a majority of the whole Board, may appoint such other committee or
committees as it shall deem advisable and with such functions and duties as the
Board of Directors shall prescribe.
Section 5. Powers. Unless circumscribed by resolution of the Board
------
appointing the Audit Committees or Compensation Committee and except as
otherwise provided by law or these Bylaws, the Audit Committee and Compensation
Committee shall have and may exercise all of the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation as deemed by the Audit Committee and Compensation Committee in their
respective discretion to be reasonable and necessary in performing their
respective designated functions. Unless circumscribed by resolution of the
Board appointing the Executive Committee and except as otherwise provided by law
or these Bylaws, the Executive Committee shall have and may exercise all of the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation. Unless otherwise provided by law or these
Bylaws, other committees of the Board shall have such powers as may from time to
time be determined by the Board of Directors; provided, however, that in no
event shall any committee of the Board (including the Executive Committee) have
the power to declare a dividend in cash,
-7-
<PAGE>
property or shares of the Corporation, amend the certificate of incorporation,
adopt an agreement of merger or consolidation, recommend to the stockholders the
sale, lease, or exchange of all or substantially all of the Corporation's
property and assets, recommend to the stockholders a dissolution of the
Corporation or a revocation or a dissolution, or amend the Bylaws of the
Corporation.
Section 6. Procedure; Meetings. Each committee shall fix its own rules of
-------------------
procedure and shall meet at such times and at such place or places as may be
provided by such rules or as the members of such committee shall provide. Each
committee shall keep regular minutes of its meetings and deliver such minutes to
the Board of Directors.
The Chairman of each committee, or, in his or her absence, a member of the
relevant committee chosen by a majority of the members present, shall preside at
meetings of such committee, and another member thereof chosen by the committee
shall act as Secretary of the relevant committee.
Section 7. Quorum. A majority of a committee shall constitute a quorum
------
for the transaction of business, and the affirmative vote of a majority of the
members of the committee shall be required for any action of such committee;
provided, however, that when a committee of one member is authorized under the
provisions of this Article, such one member shall constitute a quorum.
Section 8. Vacancies; Changes; Discharge. The Board of Directors shall
-----------------------------
have the power at any time to fill vacancies in, to change the membership of,
and to discharge any committee.
Section 9. Compensation. Members of any committee shall be entitled to
------------
such compensation for their services as members of any such committee and to
such reimbursement for any reasonable expenses incurred in attending committee
meetings at may from time to time be fixed by the Board of Directors. Any
member may waive compensation for any meeting. Any committee member receiving
compensation under these provisions shall not be barred from serving the
Corporation in any other capacity and from receiving compensation and
reimbursement of reasonable expenses for such other services.
Section 10. Action by Consent. Any action required or permitted to be
-----------------
taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if a written consent to such action is signed by all members
of the committee and such written consent is filed with the minutes of its
proceedings.
Section 11. Meeting by Telephone or Similar Communications. The
----------------------------------------------
members of any committee designated by the Board of Directors may participate in
a meeting of such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in such
meeting can hear each other and participation in such meeting shall constitute
presence in person at such meeting.
-8-
<PAGE>
ARTICLE V
NOTICES
Section 1. Form; Delivery. Whenever, under the provisions of law,
--------------
the Certificate of Incorporation or these Bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice unless otherwise specifically provided, but such notice may be given in
writing, by mail, addressed to such director or stockholder, at his address as
it appears on the records of the Corporation, with postage thereon prepaid.
Such notices shall be deemed to be given at the time they are deposited in the
United States mail. Notice to a director may also be given personally or by
facsimile sent to his address as it appears on the records of the Corporation.
Section 2. Waiver. Whenever any notice is required to be given under
------
the provisions or law, the Certificate of Incorporation or these Bylaws, a
written waiver thereof, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed to be
equivalent to such notice. In addition, any stockholder who attends a meeting
of stockholders in person, or is represented at such meeting by proxy, without
protesting at the commencement of the meeting the lack of notice thereof to him,
or any director who attends a meeting of the Board of Directors without
protesting, at the commencement of the meeting, such lack of notice, shall be
conclusively deemed to have waived notice of such meeting.
ARTICLE VI
OFFICERS
Section 1. Designations. The Officers of the Corporation shall be
------------
chosen by the Board of Directors. The Board of Directors shall choose a
Chairman of the Board and a President from its own number, a Vice-President (or
Vice-Presidents), a Secretary, and a Treasurer, and may choose one or more
Assistant Secretaries and/or Assistant Treasurers and other officers and agents
as it shall deem necessary or appropriate (including a Chief Executive Officer
and a Chief Financial Officer). All officers of the Corporation shall exercise
such powers and perform such duties as shall from time to time be determined by
the Board of Directors. Any number of offices may be held by the same person,
unless the Certificate of Incorporation or these Bylaws otherwise provide.
Section 2. Term of Office; Removal. The officers designated above
-----------------------
shall be chosen by the Board of Directors at its annual meeting after each
annual meeting of stockholders. Each officer of the Corporation shall hold
office until his successor is chosen and shall qualify. Any officer elected or
appointed by the Board of Directors may be removed, with or without cause, at
any time by the affirmative vote of a majority of the directors then in office.
Such removal shall not prejudice the contract rights, if any, of the person so
removed. Any vacancy occurring
-9-
<PAGE>
in any office of the Corporation may be filled for the unexpired portion of the
term by the Board of Directors.
Section 3. Compensation. The salaries of all officers of the
------------
Corporation shall be fixed from time to time by the Board of Directors and no
officer shall be prevented from receiving such salary by reason of the fact that
he or she is also a director of the Corporation.
Section 4. The Chairman of the Board. The Chairman of the Board
-------------------------
shall be an officer of the Corporation and, subject to the direction of the
Board of Directors, shall perform such executive, supervisory and management
functions and duties as may be assigned to him or her from time to time by the
Board of Directors. He or she shall, if present, preside at all meetings of
stockholders and of the Board of Directors. The Chairman of the Board shall be
ex officio member of all standing committees (except the Audit Committee), and
shall have the general powers and duties of supervision and management usually
vested in the office of chairman of the board of directors of a corporation.
Section 5. The President.
-------------
(a) The President shall be the Chief Operating Officer of the
Corporation and, subject to the direction of the Board of Directors, shall have
general charge of the business, affairs and property of the Corporation and
general supervision over its other officers and agents. In general, he shall
perform all duties incident to the office of President and shall see that all
orders and resolutions of the Board of Directors are carried into effect. In
addition to and not in limitation of the foregoing, the President shall be
empowered to authorize any change of the registered office or registered agent
(or both) of the Corporation in the State of Delaware. The President shall have
the general powers and duties of supervision and management usually vested in
the office of president of a corporation.
(b) Unless otherwise prescribed by the Board of Directors, the
President shall have full power and authority on behalf of the Corporation to
attend, act and vote at any meeting of security holders of other corporations in
which the Corporation may hold securities. At such meeting the President shall
possess and may exercise any and all rights and powers incident to the ownership
of such securities which the Corporation might have possessed and exercised if
it had been present. The Board of Directors may from time to time confer like
powers upon any other person or persons.
Section 6. The Vice-Presidents. The Vice-President (or in the event
-------------------
there be more than one, the Vice-Presidents in the order designated, or in the
absence of any designation, in the order of their election), shall, in the
absence of the President or in the event of his disability, perform the duties
and exercise the powers of the President and shall generally assist the
President and perform such other duties and have such other powers as may from
time to time be prescribed by the Board of Directors.
-10-
<PAGE>
Section 7. The Secretary. The Secretary shall attend all meetings of
-------------
the Board of Directors and all meetings of stockholders and record all votes and
the proceedings of the meetings in a book to be kept for that purpose and shall
perform like duties for the Executive Committee or other committees, if
required. The Secretary shall give, or cause to be given, notice of all
meetings of stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may from time to time be prescribed by the
Board of Directors, the Chairman of the Board or the President, under whose
supervision the Secretary shall act. The Secretary shall have custody of the
seal of the Corporation, and the Secretary, or an Assistant Secretary, shall
have authority to affix the same to any instrument requiring it, and, when so
affixed, the seal may be attested by his or her signature or by the signature of
such Assistant Secretary. The Board of Directors may give general authority to
any other officer to affix the seal of the Corporation and to attest the
affixing thereof by his or her signature.
Section 8. The Assistant Secretary. The Assistant Secretary, if any
-----------------------
(or in the event there be more than one, the Assistant Secretaries in the order
designated, or in the absence of any designation, in the order of their
election), shall, in the absence of the Secretary or in the event of his or her
disability, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board of Directors.
Section 9. The Treasurer. The Treasurer shall have the custody of
-------------
the corporate funds and other valuable effects, including securities, and shall
keep full and accurate accounts of receipts and disbursements in books belonging
to the Corporation and shall deposit all moneys and other valuable effects in
the name and to the credit of the Corporation in such depositories as may from
time to time be designated by the Board of Directors. He or she shall disburse
the funds of the Corporation as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements, and shall render to the Chairman of the
Board, the President and the Board of Directors, at regular meetings of the
Board, or whenever they may require it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation.
Section 10. The Assistant Treasurer. The Assistant Treasurer, if any
-----------------------
(or in the event there shall be more than one, the Assistant Treasurers in the
order designated, or in the absence of any designation, in the order of their
election), shall, in the absence of the Treasurer or in the event of his or her
disability, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board of Directors.
-11-
<PAGE>
ARTICLE VII
INDEMNIFICATION OF
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. Persons Entitled To Indemnification. Except as required
-----------------------------------
by Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL"), as in effect from time to time, and by any other relevant provision of
these Bylaws, the DGCL or any other applicable law, the persons entitled to
indemnification under these Bylaws shall include any person (or the heirs,
executors or administrators of such person) who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise (hereinafter called "Indemnitees").
Section 2. Indemnification.
---------------
(a) Mandatory Indemnification. As required under Section 145
-------------------------
of the DGCL, to the extent any person has been successful on the merits or
otherwise in defense of any completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, brought against such person
by reason of the fact that such person is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, the Corporation shall
indemnify such person against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(b) Permissive Indemnification. In addition to mandatory
--------------------------
indemnification under Section 145 of the DGCL, as set forth above, the
Corporation shall indemnify the Indemnitees, and each of them, in each and every
situation where, under Section 145 of the DGCL, the Corporation is not
obligated, but is nevertheless permitted or empowered, to make such
indemnification, in such amounts and to the fullest extent permitted under
applicable law.
(c) Requisite Finding. Prior to the making of any permissive
-----------------
indemnification pursuant to the foregoing paragraph, the Corporation shall
promptly make or cause to be made a determination as to whether each Indemnitee
acted in good faith and in a manner such Indemnitee reasonably believed to be in
or not opposed to the best interests of the Corporation, and, in the case of any
criminal action or proceeding, had no reasonable cause to believe that such
Indemnitee's conduct was unlawful. Such determination may be made (i) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, (ii) if such a quorum is
not obtainable, or even if a quorum is obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the stockholders.
-12-
<PAGE>
Section 3. Advancement. Except as otherwise provided in this Article
-----------
VII, costs, charges and expenses (including attorneys' fees) incurred in any
action, suit, proceeding or investigation or any appeal therefrom shall be paid
by the Corporation in advance of the final disposition of such matter, if the
indemnified person undertakes to repay such amount in the event it is ultimately
determined, as provided herein, that such person is not entitled to
indemnification. Notwithstanding the foregoing, no advance shall be made by the
Corporation if a determination is reasonably and promptly made by the board of
directors by a majority vote of a quorum of disinterested directors, or (if such
a quorum is not obtainable or, even if obtainable, a quorum of disinterested
directors so directs) by independent legal counsel in a written opinion that,
based upon the facts known to the board or counsel at the time such
determination is made, such person acted in bad faith and in a manner that such
person did not believe to be in or not opposed to the best interests of the
Corporation, or, with respect to any criminal proceeding, that such person
believed or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the board or independent
legal counsel reasonably determines that such person deliberately breached his
or her duty to the Corporation or its shareholders.
Section 4. Contribution. In order to provide just and equitable
------------
contribution in circumstances where indemnification pursuant to this Article is
held by a court of competent jurisdiction to be unavailable to an Indemnitee in
whole or in part, the Corporation shall, in such event, after taking into
account, among other things, contributions by other directors and officers of
the Corporation pursuant to indemnification agreements and otherwise, and, in
the absence of personal enrichment, acts of intentional fraud or dishonesty or
criminal conduct on the part of the Indemnitee, contribute to the payment of the
Indemnitee's losses to the extent that after other contributions are taken into
account, such losses exceed: (i) in the case of a director of the Corporation
or any of its subsidiaries who is not an officer of the Corporation or any of
such subsidiaries, the amount of fees paid to him or her for serving as a
director during the 12 months preceding the commencement of the suit,
proceeding, or investigation; or (ii) in the case of a director of the
Corporation or any of its subsidiaries who is also an officer of the Corporation
or any of such subsidiaries, the amount set forth in clause (i) plus 5% of the
aggregate cash compensation paid to said director for service in such office(s)
during the 12 months preceding the commencement of the suit, proceeding, or
investigation; or (iii) in the case of an officer of the Corporation or any of
its subsidiaries, 5% of the aggregate cash compensation paid to such officer for
service in such office(s) during the 12 months preceding the commencement of
such suit, proceeding, or investigation.
Section 5. Nonexclusivity of Indemnification. The indemnification
---------------------------------
and advancement of expenses by, or granted pursuant to, this Article shall not
be deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office.
-13-
<PAGE>
Section 6. Amendment to Delaware Law. If the Delaware General
-------------------------
Corporation Law is amended after the date of these Bylaws to further provide for
the indemnification of the Indemnitees, then the indemnification of the
Indemnitees shall be permitted to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
ARTICLE VIII
AFFILIATED TRANSACTIONS AND INTERESTED DIRECTORS
Section 1. Affiliated Transactions. No contract or transaction
-----------------------
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction or solely because his or their votes are
counted for such purpose, if:
(a) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or
(b) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as
of the time it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders.
Section 2. Determining Quorum. Common or interested directors may
------------------
be counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee thereof which authorizes the contract or
transaction.
ARTICLE IX
STOCK CERTIFICATES
Section 1. Form; Signatures.
----------------
-14-
<PAGE>
(a) Every holder of stock in the Corporation shall be entitled
to have a certificate, signed by or in the name of the Corporation by the
President and the Secretary or an Assistant Secretary of the Corporation,
stating that the Corporation is organized under the laws of Delaware, exhibiting
the number, class and par value (and series, if any) of shares owned by him.
Such signatures and seal may be facsimile. In case any officer who has signed,
or whose facsimile signature was placed on, a certificate shall have ceased to
be such officer before such certificate is issued, it may nevertheless be issued
by the Corporation with the same effect as if he were such officer at the date
of its issue.
(b) All stock certificates representing shares of capital stock
which are subject to restrictions on transfer or to other restrictions shall
have conspicuously noted thereon such notation to such effect as may be required
by law or determined by the Board of Directors.
Section 2. Registration of Transfer. Upon surrender to the
------------------------
Corporation or any transfer agent of the Corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation or its transfer
agent to issue a new certificate to the person entitled thereto, to cancel the
old certificate and to record the transaction upon its books.
Section 3. Registered Stockholders.
-----------------------
(a) Except as otherwise provided by law, the Corporation shall
be entitled to recognize the exclusive right of a person who is registered on
its books as the owner of shares of its capital stock to receive dividends or
other distributions, to vote as such owner, and to hold liable for calls and
assessments any person who is registered on its books as the owner of shares of
its capital stock. The Corporation shall not be bound to recognize any equitable
or legal claim to or interest in such shares on the part of any other person.
(b) If a stockholder desires that notices and/or dividends shall
be sent to a name or address other than the name or address appearing on the
stock ledger maintained by the Corporation (or by the transfer agent or
registrar, if any), such stockholder shall have the duty to notify the
Corporation (or the transfer agent or registrar, if any) in writing, of such
desire. Such written notice shall specify the alternate name or address to be
used.
Section 4. Record Date. In order that the Corporation may determine
-----------
the stockholders of record who are entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any rights of the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
or to make a determination of the stockholders of record for any other proper
purpose, the Board of Directors may, in advance, fix a date as the record date
for any such determination. Such date shall not be more than 60 nor less than
10 days before the date of such meeting, nor more than 60 days prior to the date
of any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the
-15-
<PAGE>
meeting taken pursuant to Section 8 of Article II; provided, however, that the
Board of Directors may fix a new record date for the adjourned meeting.
Section 5. Lost, Stolen or Destroyed Certificates. The Board of
--------------------------------------
Directors may direct a new certificate to be issued in place of any certificate
theretofore issued by the Corporation which is claimed to have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Corporation a bond in such sum, or other security in such form, as
it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate claimed to have been lost, stolen or
destroyed.
ARTICLE X
GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions of the Certificate
---------
of Incorporation and applicable law, dividends upon the outstanding capital
stock of the Corporation may be declared by the Board of Directors at any
regular or special meeting, pursuant to law, and may be paid in cash, in
property or in shares of the Corporation's capital stock.
Section 2. Reserves. The Board of Directors shall have full power,
--------
subject to the provisions of law and the Certificate of Incorporation, to
determine whether any, and, if so, what part, of the funds legally available for
the payment of dividends shall be declared as dividends and paid to the
stockholders of the Corporation. The Board of Directors, in its sole
discretion, may fix a sum which may be set aside or reserved over and above the
paid-in capital of the Corporation for working capital or as a reserve for any
proper purpose, and may, from time to time, increase, diminish or vary such fund
or funds.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
-----------
as determined from time to time by the Board of Directors.
Section 4. Seal. The corporate seal shall have inscribed thereon the
----
name of the Corporation, the year of its incorporation and the words Corporate
Seal and Delaware.
Section 5. Inspection of Books. The Board of Directors shall
-------------------
determine from time to time whether, and, if allowed, when and under what
conditions and regulations the accounts and books of the Corporation (except
such as may by statute be specifically open to inspection) or any of them shall
be open to the inspection of the stockholders, and the stockholders' rights in
this respect are and shall be limited accordingly.
-16-
<PAGE>
ARTICLE XI
AMENDMENTS
The Board of Directors shall have the power to make, alter and repeal
these Bylaws, and to adopt new bylaws, by an affirmative vote of a majority of
all members of the Board of Directors, provided that notice of the proposal to
make, alter or repeal these Bylaws, or to adopt new bylaws, must be included in
the notice of the meeting of the Board of Directors at which such action takes
place.
SECRETARY'S CERTIFICATE
I, Dorothy D. Park, Secretary of Park Communications, Inc., a Delaware
corporation (the "Corporation"), DO HEREBY CERTIFY that the foregoing is a true
and correct copy of the Corporation's Bylaws as adopted by the Board of
Directors of the Corporation on July 12, 1994.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Corporate
Seal of the Corporation this 22nd day of August 1994.
-----------------------------------
Dorothy D. Park
Secretary
[Corporate Seal]
-17-
<PAGE>
Exhibit 4.1
PARK COMMUNICATIONS, INC., as Issuer
IBJ SCHRODER BANK & TRUST COMPANY, as Trustee
____________________
INDENTURE
Dated as of May 13, 1996
____________________
$80,000,000
13-3/4% Senior Pay-in-Kind Notes due 2004
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of May 13, 1996
Trust Indenture Indenture
Act Section Section
{ 310(a)(1) ................................. 6.09
(a)(2) ................................. 6.09
(a)(3) .................................Not Applicable
(a)(4) .................................Not Applicable
(a)(5) ................................. 6.09
(b) ................................. 6.08, 6.10
(c) .................................Not Applicable
{ 311(a) ................................. 6.13
(b) ................................. 6.13
(c) ................................ Not Applicable
{ 312(a) ................................ 7.01
(b) ................................ 7.02
(c) ................................ 7.02
{ 313(a) ................................ 7.03
(b) ................................ 7.03
(c) ................................ 7.03
(d) ................................ 7.03
{ 314(a) ................................ 7.04; 10.08;
10.09
(b) ................................ 13.02
(c)(1) ................................ 1.04
(c)(2) ................................ 1.04
(c)(3) ................................ Not Applicable
(d) ................................ 13.03; 13.05
(e) ................................ 1.04
(f) ................................ Not Applicable
{ 315(a) ................................ 6.01(a)
(b) ................................ 6.02
(c) ................................ 6.01(b)
(d) ................................ 6.01(c)
(e) ................................ 5.14
{ 316(a) (last
sentence) ................................ 1.01
(definition
of "Out-
standing")
(a)(1)(A) ................................ 5.12
(a)(1)(B) ................................ 5.13
(a)(2) ................................ Not Applicable
<PAGE>
(b) ................................ 5.08
(c) ................................ 9.04
{ 317(a)(1) ................................ 5.03
(a)(2) ................................ 5.04
(b) ................................ 10.03
{ 318(a) ................................ 1.08
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
PARTIES ....................................................... 1
RECITALS ...................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. Definitions.................................. 1
Section 1.02. Other Definitions............................ 28
Section 1.03. Rules of Construction........................ 29
Section 1.04. Form of Documents Delivered to
Trustee....................................... 30
Section 1.05. Acts of Holders.............................. 31
Section 1.06. Notices, etc., to the Trustee and the
Company....................................... 32
Section 1.07. Notice to Holders; Waiver.................... 33
Section 1.08. Conflict with Trust Indenture Act............ 33
Section 1.09. Effect of Headings and Table of
Contents...................................... 34
Section 1.10. Successors and Assigns....................... 34
Section 1.11. Separability Clause.......................... 34
Section 1.12. Benefits of Indenture........................ 34
Section 1.13. GOVERNING LAW................................ 34
Section 1.14. No Recourse Against Others................... 35
Section 1.15. Independence of Covenants.................... 35
Section 1.16. Exhibits and Schedules....................... 35
Section 1.17. Counterparts................................. 35
Section 1.18. Duplicate Originals.......................... 35
Section 1.19. Incorporation by Reference of TIA............ 35
ARTICLE TWO
SECURITY FORMS
Section 2.01. Form and Dating ............................. 36
Section 2.02. Execution and Authentication;
Aggregate Principal Amount ................... 37
<PAGE>
Section 2.03. Restrictive Legends ......................... 38
_________________
Note: This table of contents shall not, for any purpose, be deemed
to be a part of this Indenture.
-i-
<PAGE>
Section 2.04. Book-Entry Provisions for Global
Security ..................................... 40
Section 2.05. Special Transfer Provisions ................. 42
ARTICLE THREE
THE NOTES
Section 3.01. Title and Terms.............................. 44
Section 3.02. Denominations................................ 45
Section 3.03. [Intentionally Omitted]...................... 45
Section 3.04. Temporary Notes.............................. 45
Section 3.05. Registration, Registration of
Transfer and Exchange......................... 46
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Notes......................................... 47
Section 3.07. Payment of Interest; Interest Rights
Preserved..................................... 48
Section 3.08. Persons Deemed Owners........................ 50
Section 3.09. Cancellation................................. 50
Section 3.10. Computation of Interest...................... 51
Section 3.11. Legal Holidays............................... 51
Section 3.12. CUSIP Number................................. 51
Section 3.13. Payment of Additional Interest Under
Registration Rights Agreement................. 51
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01 The Company's Option To Effect
Defeasance or Covenant Defeasance............. 52
Section 4.02. Defeasance and Discharge..................... 52
Section 4.03. Covenant Defeasance.......................... 53
Section 4.04. Conditions to Defeasance or Covenant
Defeasance.................................... 53
Section 4.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust;
Other Miscellaneous Provisions................ 56
Section 4.06. Reinstatement................................ 56
Section 4.07. Repayment to Company......................... 57
-ii-
<PAGE>
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default............................ 57
Section 5.02. Acceleration of Maturity; Rescission
and Annulment................................. 60
Section 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee; Other
Remedies...................................... 61
Section 5.04. Trustee May File Proofs of Claims............ 62
Section 5.05. Trustee May Enforce Claims Without
Possession of Notes........................... 63
Section 5.06. Application of Money Collected............... 63
Section 5.07. Limitation on Suits.......................... 64
Section 5.08. Unconditional Right of Holders To
Receive Principal, Premium and
Interest...................................... 65
Section 5.09. Restoration of Rights and Remedies........... 65
Section 5.10. Rights and Remedies Cumulative............... 65
Section 5.11. Delay or Omission Not Waiver................. 66
Section 5.12. Control by Majority.......................... 66
Section 5.13. Waiver of Past Defaults...................... 66
Section 5.14. Undertaking for Costs........................ 67
Section 5.15. Waiver of Stay, Extension or Usury
Laws.......................................... 68
ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.......... 68
Section 6.02. Notice of Defaults........................... 69
Section 6.03. Certain Rights of Trustee.................... 70
Section 6.04. Trustee Not Responsible for Recitals,
Dispositions of Notes or
Application of Proceeds Thereof............... 71
Section 6.05. Trustee and Agents May Hold Notes;
Collections; etc.............................. 72
Section 6.06. Money Held in Trust.......................... 72
Section 6.07. Compensation and Indemnification of
Trustee and Its Prior Claim................... 72
Section 6.08. Conflicting Interests........................ 73
Section 6.09. Corporate Trustee Required;
<PAGE>
Eligibility .................................. 73
Section 6.10. Resignation and Removal; Appointment
of Successor Trustee ......................... 74
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<PAGE>
Section 6.11. Acceptance of Appointment by
Successor .................................... 76
Section 6.12. Successor Trustee by Merger, etc. ........... 77
Section 6.13. Preferential Collection of Claims
Against Issuers .............................. 77
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company
To Furnish Trustee Names and
Addresses of Holders.......................... 78
Section 7.02. Communications of Holders.................... 78
Section 7.03. Reports by Trustee........................... 78
Section 7.04. Reports by the Company....................... 79
ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01. When the Company May Merge, etc.............. 79
Section 8.02. Successor Substituted........................ 80
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders................... 81
Section 9.02. With Consent of Holders...................... 81
Section 9.03. Compliance with Trust Indenture Act.......... 83
Section 9.04. Revocation and Effect of Consents............ 83
Section 9.05. Notation on or Exchange of Notes............. 84
Section 9.06. Trustee May Sign Amendments, etc............. 84
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and
<PAGE>
Interest ..................................... 85
Section 10.02. Maintenance of Office or Agency ............. 85
Section 10.03. Money for Note Payments To Be Held in
Trust ........................................ 86
-iv-
<PAGE>
Section 10.04. Existence................................... 88
Section 10.05. Payment of Taxes and Other Claims........... 88
Section 10.06. Maintenance of Properties................... 88
Section 10.07. Insurance................................... 89
Section 10.08. Compliance Certificate...................... 89
Section 10.09. Provision of Financial Statements........... 90
Section 10.10. Pledge of Capital Stock of Park
Broadcasting, Inc. and Park
Newspapers, Inc.............................. 91
Section 10.11. Limitation on Incurrence of
Indebtedness................................. 91
Section 10.12. Limitation on Restricted Payments........... 94
Section 10.13. Limitations on Transactions with
Affiliates................................... 99
Section 10.14. Limitation on Asset Sales................... 100
Section 10.15. Change of Control........................... 105
Section 10.16. Limitations on Liens........................ 108
Section 10.17. Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries................................. 108
Section 10.18. Limitation on Subsidiary Capital
Stock........................................ 109
Section 10.19. Limitation on Amendment of Tax
Sharing Agreement............................ 110
Section 10.20. Limitation on Line of Business.............. 110
Section 10.21. Issuance of Contingent Warrants............. 110
Section 10.22. Offer to Purchase on Public Equity
Offering .................................... 111
Section 10.23. Certain Exceptions for Capital
Contributions To Refinance the
Existing Credit Facility .................... 114
ARTICLE ELEVEN
REDEMPTION OF NOTES
Section 11.01. Optional and Special Redemption ............ 114
Section 11.02. Applicability of Article ................... 116
Section 11.03. Election To Redeem; Notice to
Trustee ..................................... 116
Section 11.04. Selection by Trustee of Notes To Be
Redeemed .................................... 116
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<PAGE>
Section 11.05. Notice of Redemption........................ 117
Section 11.06. Deposit of Redemption Price................. 118
Section 11.07. Notes Payable on Redemption
Date......................................... 118
Section 11.08. Notes Redeemed or Purchased in Part......... 119
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of
Indenture ................................... 119
Section 12.02. Application of Trust Money ................. 120
ARTICLE THIRTEEN
COLLATERAL AND SECURITY
Section 13.01. Collateral and Pledge Agreement............. 121
Section 13.02. Recording and Opinions...................... 123
Section 13.03. Release of Collateral....................... 124
Section 13.04. Possession and Use of Collateral............ 125
Section 13.05. Specified Releases of Collateral............ 125
Section 13.06. Form and Sufficiency of Release............. 127
Section 13.07. Purchaser Protected......................... 127
Section 13.08. Authorization of Actions To Be Taken
by Trustee Under the Pledge
Agreement.................................... 127
Section 13.09. Authorization of Receipt of Funds by
the Trustee Under the Pledge
Agreement.................................... 128
TESTIMONIUM .................................................. 129
SIGNATURES ................................................... 129
Exhibit A - Form of Initial Note ........................... A-1
Exhibit B - Form of Exchange Note .......................... B-1
Exhibit C - Form of Certificate To Be Delivered in
Connection with Transfers to Non-QIB
<PAGE>
Accredited Investors ........................... C-1
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<PAGE>
Exhibit D - Form of Certificate To Be Delivered in
Connection with Transfers Pursuant to
Regulation S .................................... D-1
Exhibit E - Form of Securities Pledge Agreement ............ E-1
Exhibit F - Form of Original Issue Discount
Legend .......................................... F-1
Schedule A - List of Unrestricted Subsidiaries as
of the Issue Date
-vii-
<PAGE>
INDENTURE, dated as of May 13, 1996, by and between
PARK COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), and IBJ SCHRODER BANK & TRUST COMPANY, a New York
banking company, as trustee (the "Trustee").
RECITALS
The Company has duly authorized the creation of an
issue of 13-3/4% Senior Pay-in-Kind Notes due 2004 (the
"Initial Notes," which term shall include any Notes issued in
lieu of cash interest on the Initial Notes prior to the
issuance of the Exchange Notes as and to the extent permitted
by this Indenture) and Series B 13-3/4% Senior Pay-in-Kind
Notes due 2004 to be issued in exchange for the Initial Notes
pursuant to the Registration Rights Agreement (the "Exchange
Notes," which term shall include Notes issued in lieu of cash
interest on the Initial Notes or the Exchange Notes if issued
on or after the date of initial issuance of the Exchange Notes
as and to the extent permitted by this Indenture), and to
provide therefor the Company has duly authorized the execution
and delivery of this Indenture.
All things necessary have been done to make the
Notes, when executed by the Company and authenticated and
delivered hereunder and duly issued by the Company, the valid
obligations of the Company and to make this Indenture a valid
agreement of the Company, in accordance with the terms hereof.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of the Notes by the Holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit
of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
<PAGE>
"Acquired Debt" means, with respect to any specified
Person, Indebtedness of any other Person (the "Acquired
Person") existing at the time the Acquired Person merges with
or into, or becomes a Restricted Subsidiary of, such specified
Person, including Indebtedness incurred in connection with, or
<PAGE>
in contemplation of, the Acquired Person merging with or into,
or becoming a Restricted Subsidiary of, such specified Person.
"Acquired Person" has the meaning set forth in the
definition of "Acquired Debt."
"Affiliate" means, with respect to any specified
Person, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with
such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with")
of any Person means the possession, directly or indirectly, 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 agreement or otherwise.
"Applicable Premium" means, with respect to a Note,
the greater of (i) (a) the present value of all remaining
required interest and principal payments due on such Note and
all premium payments relating thereto assuming a redemption
date of May 15, 1999, computed using a discount rate equal to
the Treasury Rate plus 75 basis points, minus (b) the then
outstanding principal amount of such Note minus (c) accrued
interest paid on the date of redemption and (ii) the redemption
price applicable to the twelve-month period beginning May 15,
1999.
"Asset Sale" means (i) any sale, lease, conveyance or
other disposition by the Company or any Restricted Subsidiary
of any property or assets (including by way of a sale-and-
leaseback) other than in the ordinary course of business or
(ii) the issuance or sale of Capital Stock of any Restricted
Subsidiary (but not of any Unrestricted Subsidiary), in the
case of each of (i) and (ii), whether in a single transaction
or a series of related transactions, to any Person (other than
to the Company or a Wholly Owned Restricted Subsidiary);
provided, however, that for purposes of Section 10.14, Asset
Sales shall not include: (a) a transaction or series of
related transactions for which the Company or the applicable
Restricted Subsidiary receives aggregate consideration of less
than $500,000 in any fiscal year; (b) transactions complying
with Section 8.01; (c) any Lien securing Indebtedness to the
extent that such Lien is granted in compliance with Section
10.16; (d) any Restricted Payment (or Permitted Investment)
<PAGE>
permitted by Section 10.12; and (e) any disposition of assets
or property to the extent such property or assets are obsolete,
worn out or no longer useful in the Company's or any Restricted
Subsidiary's business; provided, however, that the fair market
value (determined reasonably and in good faith by the Board of
<PAGE>
Directors of the Company) of any assets or property so disposed
of shall not exceed $500,000 in the aggregate in any given
year. Notwithstanding anything in this Indenture to the
contrary, (A) no sale, lease, conveyance or other disposition
of all or any portion of the Radio Station Assets or dividend
from the operations of, or from any sale or disposition of, any
Radio Station Assets (unless received in repayment of a Radio
Note) and (B) no sale, lease, conveyance or other disposition
of all or any portion of any property or assets used in or
related to the television station WUTR (including by way of the
sale of the Capital Stock of the Subsidiary owning such
property or assets) shall be deemed an Asset Sale; provided,
however, that any transaction (or series of transactions)
described in clause (B) is in the aggregate for fair market
value.
"Bankruptcy Law" means Title 11, United States
Bankruptcy Code of 1978, as amended, or any similar United
States Federal or state law relating to bankruptcy, insolvency,
receivership, winding-up, liquidation, reorganization or relief
of debtors, or any amendment to, succession to or change in any
such law.
"Board of Directors" means, with respect to any
Person, the board of directors, management committee or similar
governing body or any authorized committee thereof responsible
for the management of the business and affairs of such Person.
"Board Resolution" means, with respect to any Person,
a copy of a resolution certified by the Secretary or an
Assistant Secretary of such Person to have been duly adopted by
the Board of Directors of such Person and to be in full force
and effect on the date of such certification, and delivered to
the Trustee.
"Broadcasting" means Park Broadcasting, Inc., a
Delaware corporation and a Subsidiary of the Company, and its
successors and assigns.
"Broadcasting Notes" means the $241 million aggregate
principal amount of 11-3/4% Senior Notes due 2004 of
Broadcasting to be issued under an indenture to be dated
May 13, 1996 between Broadcasting and IBJ Schroder Bank & Trust
Company, as trustee.
<PAGE>
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking
institutions in The City of New York, State of New York, are
authorized or obligated by law, regulation or executive order
to close.
<PAGE>
"Capital Lease Obligation" of any Person means, at
the time any determination thereof is to be made, the amount of
the liability in respect of a capital lease for property leased
by such Person that would at such time be required to be
capitalized on the balance sheet of such Person in accordance
with GAAP.
"Capital Stock" of any Person means any and all
shares, interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however
designated) corporate stock or other equity participations,
including partnership interests, whether general or limited, of
such Person, including any Preferred Stock.
"Cash Equivalents" means (a) securities with
maturities of one year or less from the date of acquisition
issued, fully guaranteed or insured by the United States
Government or any agency thereof, (b) certificates of deposit,
time deposits, overnight bank deposits, bankers' acceptances
and repurchase agreements issued by a Qualified Issuer having
maturities of 270 days or less from the date of acquisition,
(c) commercial paper of an issuer rated at least A-2 by
Standard & Poor's Corporation or at least P-2 by Moody's
Investors Service, Inc., or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named
rating agencies cease publishing ratings of investments, and
having maturities of 270 days or less from the date of
acquisition, and (d) money market accounts or funds with or
issued by Qualified Issuers.
"Change of Control" means the occurrence of any of
the following events: (a) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange
Act), other than the Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of 50% or more of the voting power of the total
outstanding Voting Stock of the Company or PAI, as the case may
be; (b) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors of the Company or PAI, as the case may be (together
with any new directors whose election to such Board of
<PAGE>
Directors, or whose nomination for election by the stockholders
of the Company or PAI, as the case may be, was approved by a
vote of the Permitted Holders who at the time of the vote are
stockholders of the Company or PAI, as the case may be, or
either (i) 66-2/3% or (ii) all remaining members of the Board
<PAGE>
of Directors of the Company or PAI, as the case may be, then
still in office who were either directors at the beginning of
such period or whose election or nomination for election was
previously so approved), cease for any reason to constitute a
majority of such Board of Directors of the Company or PAI, as
the case may be, then in office; (c) the sale or other
disposition of all or substantially all of the Capital Stock or
assets of the Company or PAI, as the case may be, to any
"person" or "group" (as defined in Rule 13d-5 under the
Exchange Act), other than to the Permitted Holders, as an
entirety or substantially as an entirety in a single
transaction or a series of related transactions; or (d) the
Company or PAI, as the case may be, consolidates with or merges
with or into another Person or any Person consolidates with or
merges with or into the Company, other than in any such
transaction where immediately after such transaction the
"beneficial owners" of the Voting Stock of the Company or PAI,
as the case may be, immediately prior to such transaction or
the Permitted Holders own at least a majority of the voting
power of the outstanding Voting Stock of the Surviving Person
immediately after the consummation of such transaction. For
purposes of the foregoing definition of Change of Control, the
transfer (by lease, assignment, sale or otherwise, in a single
transaction or series of related transactions) of all or
substantially all of the properties or assets of one or more
Subsidiaries of the Company the Capital Stock of which
constitutes all or substantially all of the properties and
assets of the Company shall be deemed to be the transfer of all
or substantially all of the properties and assets of the
Company.
"Change of Control Triggering Event" means the
occurrence of both a Change of Control and a Rating Decline.
"Collateral" means the "Pledged Collateral" as
defined in the Pledge Agreement.
"Commission" or "SEC" means the Securities and
Exchange Commission, as from time to time constituted, or if at
any time after the execution of this Indenture such Commission
is not existing and performing the applicable duties now
assigned to it, then the body or bodies performing such duties
at such time.
"Company" means the Person named as the "Company" in
<PAGE>
the first paragraph of this Indenture, until a successor Person
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such
successor Person.
<PAGE>
"Company Request" or "Company Order" means a written
request or order of the Company signed in the name of the
Company by an officer of the Company.
"Consolidated Interest Expense" means, with respect
to any period, the sum of (i) the interest expense of the
Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP
consistently applied, including, without limitation, (a) amor-
tization of debt discount, (b) the net payments, if any, under
Interest Rate Agreement Obligations (including any amortization
of discounts), (c) the interest portion of any deferred payment
obligation, and (d) accrued interest, plus (ii) the interest
component of all Capital Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by the Company and the
Restricted Subsidiaries during such period, and all capitalized
interest of the Company and the Restricted Subsidiaries, in
each case as determined on a consolidated basis in accordance
with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any
period, the net income (or loss) of the Company and the
Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP consistently applied
and adjusted (i) by adding the amount of management advisory
fees paid by the Company to PAI for such period and deducted in
calculating such net income (or loss) and (ii) to the extent
included in calculating such net income (or loss), by
excluding, without duplication, (a) all extraordinary gains but
not losses (less all fees and expenses relating thereto),
together with any related provisions for taxes, (b) the portion
of net income (or loss) of the Company and the Restricted
Subsidiaries allocable to interests in unconsolidated Persons
or Unrestricted Subsidiaries, except to the extent of the
amount of dividends or distributions actually paid in cash to
the Company or the Restricted Subsidiaries by such other
Persons during such period (subject in the case of any such
dividend or distribution to any Restricted Subsidiary to the
limitations set forth in clause (e) below), (c) net income (or
loss) of any Person combined with the Company or any of the
Restricted Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination,
(d) net gains but not losses (less all fees and expenses
relating thereto) in respect of dispositions of assets
(including, without limitation, pursuant to sale-and-leaseback
<PAGE>
transactions) other than in the ordinary course of business
together with any related provisions for taxes and (e) the net
income of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by that
Restricted Subsidiary of that income to the Company is not at
<PAGE>
the time permitted, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders
(regardless of any waiver in respect thereof).
"Consolidated Net Worth" means, with respect to any
Person on any date, the equity of the common and preferred
stockholders of such Person and its Restricted Subsidiaries as
of such date, determined on a consolidated basis in accordance
with GAAP consistently applied.
"consolidation" means, with respect to any Person,
the consolidation of the accounts of its Restricted
Subsidiaries with those of such Person, all in accordance with
GAAP; provided, however, that "consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary
with the accounts of such Person. The term "consolidated" has
a correlative meaning to the foregoing.
"Corporate Trust Office" means the office of the
Trustee at which at any particular time its corporate trust
business shall be principally administered, which office at the
date of execution of this Indenture is located at One State
Street, New York, New York 10004.
"Cumulative Interest Expense" means, as of any date
of determination, the amount from the Issue Date to the end of
the Company's most recently ended full fiscal quarter prior to
such date, taken as a single accounting period, of the sum of
(i) the interest expense of the Company for such period,
determined in accordance with GAAP consistently applied,
including, without limitation, (a) amortization of debt
discount, (b) the net payments, if any, under Interest Rate
Agreement Obligations (including amortization of discounts),
(c) the interest portion of any deferred payment obligation and
(d) accrued interest, plus (ii) the interest component of all
Capital Lease Obligations paid, accrued and/or scheduled to be
paid or accrued by the Company during such period, and all
capitalized interest of the Company, in each case determined in
accordance with GAAP consistently applied.
"Cumulative Operating Cash Flow" means, as of any
date of determination, Operating Cash Flow from the Issue Date
to the end of the Company's most recently ended fiscal quarter
<PAGE>
prior to such date, taken as a single accounting period.
"Debt to Operating Cash Flow Ratio" means, with
respect to any date of determination, the ratio of (i) the
aggregate principal amount of all outstanding Indebtedness of
<PAGE>
the Company and the Restricted Subsidiaries as of such date on
a consolidated basis, plus the aggregate liquidation preference
or redemption amount of all Disqualified Stock of the Company
and the Restricted Subsidiaries (other than any Disqualified
Stock owned by the Company or any Wholly Owned Restricted
Subsidiary) determined in accordance with GAAP, to (ii)
Operating Cash Flow of the Company and the Restricted
Subsidiaries on a consolidated basis for the four most recent
full fiscal quarters ending on or immediately prior to such
date, determined on a pro forma basis (without giving effect to
clause (ii)(c) of the definition of Consolidated Net Income)
after giving pro forma effect to (A) the incurrence of any
Indebtedness being incurred on such date of determination and
(if applicable) the application of the net proceeds therefrom,
including to refinance other Indebtedness; (B) in the case of
Acquired Debt, the related acquisition as if such acquisition
had occurred at the beginning of such four-quarter period; and
(C) any acquisition or disposition by the Company and the
Restricted Subsidiaries of any company or any business or any
assets out of the ordinary course of business, or any related
repayment of Indebtedness, in each case since the first day of
such four-quarter period, assuming such acquisition or
disposition had been consummated, with respect to any
acquisition, on the first day of, and with respect to any
disposition, immediately prior to the first day of, such
four-quarter period.
"Default" means any event that is, or after the
giving of notice or passage of time or both would be, an Event
of Default.
"Disposition" means, with respect to any Person, any
merger, consolidation or other business combination involving
such Person (whether or not such Person is the Surviving
Person) or the sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of such Person's
assets.
"Disqualified Stock" means (i) any Preferred Stock of
any Restricted Subsidiary and (ii) any Capital Stock of the
Company that, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable),
or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole
<PAGE>
or in part on or prior to the Stated Maturity of the Notes;
provided, however, that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require the Company to purchase or
redeem such Capital Stock upon the occurrence of a change of
<PAGE>
control occurring prior to the final maturity date of the Notes
shall not constitute Disqualified Stock if the change of
control provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the
provisions of Section 10.15 and such Capital Stock specifically
provides that the Company will not purchase or redeem any such
Capital Stock pursuant to such provisions prior to the
Company's purchase of the Notes as are required to be purchased
pursuant to the provisions of Section 10.15.
"Dollars" or "$" means lawful money of the United
States of America.
"Equity Market Capitalization" of any Person means
the aggregate market value of the outstanding Capital Stock
(other than Preferred Stock and excluding any such Capital
Stock held in treasury by such Person) of such Person of a
class that is listed or admitted to unlisted trading privileges
on a United States national securities exchange or included for
trading on the Nasdaq National Market System. For purposes of
this definition the "market value" of any such Capital Stock
shall be the average of the high and low sale prices or, if no
sales are reported, the average of the high and low bid prices,
as reported on the principal national securities exchange on
which such Capital Stock is listed or admitted to trading or,
if such Capital Stock is not listed or admitted to trading on a
national securities exchange, as reported by Nasdaq, for each
trading day in a 20 consecutive trading day period ending not
more than 45 days prior to the date such Person commits to make
an investment in the Capital Stock of the Company.
"Event of Default" shall have the meaning specified
in Section 5.01 hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exchange Notes" has the meaning provided in the
first paragraph of the recitals hereof.
"Existing Credit Facility" means the Base Loan and
Additional Loan Credit Agreement among the Company, its
Subsidiaries named therein and the lenders party thereto, dated
on or about May 11, 1995, as amended and in effect on the Issue
Date.
<PAGE>
"fair market value" means, with respect to any asset,
the price (after taking into account any liabilities relating
to such asset) which could be negotiated in an arm's-length
free market transaction, for cash, between a willing seller and
<PAGE>
a willing buyer, neither of which is under pressure or
compulsion to complete the transaction.
"GAAP" means, as of any date, generally accepted
accounting principles in the United States and not including
any interpretations or regulations that have been proposed but
that have not become effective.
"Global Note" has the meaning provided in Section
2.01.
"guarantee" or "Guarantee" means a guarantee (other
than by endorsement of negotiable instruments for collection in
the ordinary course of business), direct or indirect, in any
manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any
part of any Indebtedness.
"Holder" or "Noteholder" means a Person in whose name
a Note is registered in the Note Register.
"Indebtedness" means, with respect to any Person,
without duplication, and whether or not contingent, (i) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services or which is
evidenced by a note, bond, debenture or similar instrument,
(ii) all Capital Lease Obligations of such Person, (iii) all
obligations of such Person in respect of letters of credit or
bankers' acceptances issued or created for the account of such
Person, (iv) all Interest Rate Agreement Obligations of such
Person, (v) all liabilities secured by any Lien (other than any
Permitted Lien) on any property owned by such Person even if
such Person has not assumed or otherwise become liable for the
payment thereof to the extent of the lesser of the amount of
the debt secured thereby or the value of the property subject
to such Lien (it being understood that if such debt exceeds the
value of such property, the full amount thereof shall be
included in this definition), (vi) all obligations to purchase,
redeem, retire, or otherwise acquire for value any Capital
Stock of such Person, or any warrants, rights or options to
acquire such Capital Stock, now or hereafter outstanding,
(vii) to the extent not included in (vi), all Disqualified
Stock issued by such Person, valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus
accrued dividends thereon, and (viii) to the extent not
<PAGE>
otherwise included, any guarantee by such Person of any other
Person's indebtedness or other obligations described in clauses
(i) through (vii) above. "Indebtedness" of the Company and the
Restricted Subsidiaries (i) shall be determined in accordance
with GAAP and (ii) shall not include current trade payables
<PAGE>
incurred in the ordinary course of business and payable in
accordance with customary practices, film contracts and non-
interest bearing installment obligations and accrued liabili-
ties incurred in the ordinary course of business which are not
more than 90 days past due. For purposes hereof, the "maximum
fixed repurchase price" of any Disqualified Stock which does
not have a fixed repurchase price shall be calculated in accor-
dance with the terms of such Disqualified Stock as if such
Disqualified Stock were purchased on any date on which Indebt-
edness shall be required to be determined pursuant to this
Indenture, and if such price is based upon, or measured by the
fair market value of, such Disqualified Stock, such fair market
value is to be determined reasonably and in good faith by the
board of directors of the issuer of such Disqualified Stock.
"Indenture" means this instrument as originally
executed (including all exhibits and schedules hereto) and as
it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to
the applicable provisions hereof.
"Independent Director" means a director of the
Company other than a director (i) who (apart from being a
director of the Company or any Subsidiary) is an employee,
associate or Affiliate of the Company or a Subsidiary or has
held any such position during the previous five years, or
(ii) who is a director, employee, associate or Affiliate of
another party (other than the Company or any of its
Subsidiaries) to the transaction in question.
"Initial Notes" has the meaning provided in the first
paragraph of the recitals hereof.
"Initial Purchasers" means Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Goldman, Sachs & Co.
"Insolvency or Liquidation Proceeding" means, with
respect to any Person, any liquidation, dissolution or winding
up of such Person, or any bankruptcy, reorganization,
insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"Institutional Accredited Investor" means an
institution that is an "accredited investor" as that term is
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
<PAGE>
Act.
"Interest Payment Date" means, when used with respect
to any Note, the Stated Maturity of an installment of interest
on such Note, as set forth in such Note.
<PAGE>
"Interest Rate Agreement Obligations" means, with
respect to any Person, the Obligations of such Person under
(i) interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements, and (ii) other agreements
or arrangements designed to protect such Person against
fluctuations in interest rates.
"Investment Grade" means BBB- or higher by S&P or
Baa3 or higher by Moody's or the equivalent of such ratings by
S&P or Moody's or in the event S&P or Moody's shall cease
rating the Notes and the Company shall select any other Rating
Agency, the equivalent of such ratings by such other Rating
Agency.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including
Affiliates of such Person) in the form of loans, Guarantees,
advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions
for consideration of Indebtedness, Capital Stock or other
securities and all other items that are or would be classified
as investments on a balance sheet prepared in accordance with
GAAP.
"Issue Date" means the date of first issuance of the
Notes under this Indenture, May 13, 1996.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset, whether or
not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in any asset and
any filing of, or agreement to give, any financing statement
under the Uniform Commercial Code (or equivalent statutes) of
any jurisdiction).
"Net Proceeds" means, with respect to any Asset Sale
by any Person, the aggregate cash proceeds received by such
Person and/or its Affiliates in respect of such Asset Sale,
which amount is equal to the excess, if any, of (i) the cash
received by such Person and/or its Affiliates (including any
cash payments received by way of deferred payment pursuant to,
<PAGE>
or monetization of, a note or installment receivable or
otherwise, but only as and when received) in connection with
such Asset Sale, over (ii) the sum of (a) the amount of any
Indebtedness that is secured by such asset and which is
required to be repaid by such Person in connection with such
<PAGE>
Asset Sale, plus (b) all fees, commissions and other expenses
incurred by such Person in connection with such Asset Sale,
plus (c) provision for taxes, including income taxes,
attributable to the Asset Sale or attributable to required
prepayments or repayments of Indebtedness with the proceeds of
such Asset Sale, plus (d) a reasonable reserve for the
after-tax cost of any indemnification payments (fixed or
contingent) attributable to seller's indemnities to purchaser
in respect of such Asset Sale undertaken by the Company or any
of the Restricted Subsidiaries in connection with such Asset
Sale, plus (e) if such Person is a Restricted Subsidiary, any
dividends or distributions payable to holders of minority
interests in such Restricted Subsidiary from the proceeds of
such Asset Sale.
"New Credit Agreements" means (i) a credit facility
to be entered into by Broadcasting, its Subsidiaries party
thereto and the lenders named therein, as the same may be
amended, modified, renewed, refunded, replaced or refinanced
(collectively, "refinanced") from time to time, including
(A) any related notes, letters of credit, guarantees,
collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified or
refinanced from time to time, and (B) any notes, guarantees,
collateral documents, instruments and agreements executed in
connection with any such amendment, modification or re-
financing, such facility in an aggregate amount not to exceed
$15 million at any one time outstanding; and (ii) a credit
facility to be entered into by Newspapers, its Subsidiaries
party thereto and the lenders named therein, as the same may be
amended, modified, renewed, refunded, replaced or refinanced
(collectively, "refinanced") from time to time, including
(A) any related notes, letters of credit, guarantees,
collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified or
refinanced from time to time, and (B) any notes, guarantees,
collateral documents, instruments and agreements executed in
connection with any such amendment, modification or re-
financing, such facility in an aggregate amount not to exceed
$10 million at any one time outstanding.
"Newspapers" means Park Newspapers, Inc., a Delaware
corporation and a Subsidiary of the Company, and its successors
and assigns.
<PAGE>
"Newspapers Notes" means the $155 million aggregate
principal amount of 11-7/8% Senior Notes due 2004 of Newspapers
issued under an indenture dated May 13, 1996 between Newspapers
and IBJ Schroder Bank & Trust Company, as trustee.
<PAGE>
"Non-U.S. Person" means a person who is not a U.S.
person, as defined in Regulation S.
"Notes" mean (i) the Initial Notes (including any
Initial Notes issued in lieu of cash interest on the Initial
Notes as and to the extent permitted by this Indenture) and the
Exchange Notes (including any Exchange Notes issued in lieu of
cash interest on the Initial Notes and the Exchange Notes as
and to the extent permitted by this Indenture) and (ii) any
Warrant Notes, treated as a single class of securities, as
amended or supplemented from time to time in accordance with
the terms hereof, that are issued pursuant to this Indenture.
"Obligations" means any principal, interest
(including, without limitation, Post-Petition Interest),
penalties, fees, indemnifications, reimbursement obligations,
damages and other liabilities payable under the documentation
governing any Indebtedness.
"Offering Memorandum" means the offering memorandum
dated as of May 6, 1996 relating to the offering of the Notes.
"Officer" means, with respect to any Person, the
President and Chief Operating Officer, any Vice President, the
Chief Financial Officer and the Treasurer, or any other officer
designated by the Board of Directors serving in a similar
capacity.
"Officers' Certificate" means, with respect to any
Person, a certificate signed by the Chief Operating Officer,
the Chief Financial Officer or a Vice President of such Person,
and by the Secretary or Assistant Secretary of such Person, and
delivered to the Trustee.
"Operating Cash Flow" means, with respect to any
period, the Consolidated Net Income of the Company and the
Restricted Subsidiaries for such period, plus, without
duplication, (i) extraordinary net losses and net losses
realized on any sale or other disposition of assets during such
period, to the extent such losses were deducted in computing
Consolidated Net Income, plus (ii) provision for taxes based on
income or profits, to the extent such provision for taxes was
included in computing such Consolidated Net Income, and any
provision for taxes utilized in computing the net losses under
clause (i) hereof, plus (iii) Consolidated Interest Expense of
<PAGE>
the Company and the Restricted Subsidiaries for such period,
plus (iv) depreciation, amortization and all other non-cash
charges (excluding non-cash charges associated with changes in
working capital and other balance sheet changes in the ordinary
course of business), to the extent such depreciation,
<PAGE>
amortization and other non-cash charges were deducted in
computing such Consolidated Net Income (including amortization
of goodwill and other intangibles), plus (v) the difference of
(A) the amount of cash payments actually received by the
Company under its network affiliation agreements less (B) the
actual amount of revenue recognized thereunder in accordance
with GAAP.
"Opinion of Counsel" means a written opinion of
counsel, who may be counsel for the Company, and who shall be
acceptable to the Trustee.
"Outstanding" means, as of the date of determination,
all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
(other than the Company or any Affiliate thereof) in trust
for the Holders of such Notes; provided, however, that if
such Notes are to be redeemed, notice of such redemption
has been duly and irrevocably given pursuant to this
Indenture or provision therefor satisfactory to the
Trustee has been made;
(iii) Notes with respect to which the Company has
effected defeasance or covenant defeasance as provided in
Article Four, to the extent provided in Sections 4.02 and
4.03; and
(iv) Notes in exchange for or in lieu of which other
Notes have been authenticated and delivered pursuant to
this Indenture, other than any such Notes in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Notes are held by a bona fide
purchaser in whose hands the Notes are valid obligations
of the Company;
provided, however, that in determining whether the Holders of
the requisite principal amount of Outstanding Notes have given
any request, demand, authorization, direction, notice, consent
<PAGE>
or waiver hereunder, Notes owned by the Company or any other
obligor under the Notes or any Affiliate of the Company or such
other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand,
<PAGE>
authorization, direction, notice, consent or waiver, only Notes
which the Trustee knows to be so owned shall be so disregarded.
Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with
respect to such Notes and that the pledgee is not the Company
or any other obligor under the Notes or any Affiliate of the
Company or such other obligor.
"PAI" means Park Acquisitions, Inc., a Delaware
corporation, and its successors and assigns.
"Paying Agent" means any Person authorized by the
Company to pay the principal, premium, if any, or interest on
any Notes on behalf of the Company.
"Permitted Holders" means (i) each of (A) Gary B.
Knapp, a natural person resident in Lexington, Kentucky on the
Issue Date, (B) Donald R. Tomlin, Jr., a natural person
resident in Columbia, South Carolina on the Issue Date, and (C)
PAI so long as PAI is controlled by Persons who would otherwise
be "Permitted Holders" hereunder; (ii) the spouse, ancestors,
siblings, descendants (including children or grandchildren by
adoption) of (A) any of the Persons described in clause (i) or
(B) any spouse, ancestor, sibling or descendant (including
children or grandchildren by adoption) of any of the Persons
described in clause (i); (iii) in the event of the incompetence
or death of any of the Persons described in clauses (i) and
(ii), such Person's estate, executor, administrator, committee
or other personal representative, in each case who at any
particular date shall beneficially own or have the right to
acquire, directly or indirectly, Capital Stock of the Company;
(iv) any trusts created for the benefit of the Persons
described in clause (i), (ii) or (iii) or any trust for the
benefit of any such trust; or (v) any Person controlled by any
of the Persons described in clause (i), (ii), (iii) or (iv).
For purposes of this definition, "control," as used with
respect to any Person, shall mean the possession, directly or
indirectly, of the power to elect or appoint not less than a
majority of the members of the Board of Directors of such
Person.
"Permitted Investments" means (i) any Investment in
the Company or any Wholly Owned Restricted Subsidiary; (ii) any
Investment in Cash Equivalents; (iii) any Investment in a
<PAGE>
Person (an "Acquired Person") if, as a result of such
Investment, (a) the Acquired Person becomes a Wholly Owned
Restricted Subsidiary, or (b) the Acquired Person either (1) is
merged or consolidated with or into the Company or any Wholly
Owned Restricted Subsidiary and the Company or such Wholly
<PAGE>
Owned Restricted Subsidiary is the Surviving Person, or
(2) transfers or conveys all or substantially all of its assets
to, or is liquidated into, the Company or any Wholly Owned
Restricted Subsidiary; (iv) Investments in accounts and notes
receivable acquired in the ordinary course of business; (v) any
securities received in connection with an Asset Sale that
complies with Section 10.14; provided, however, the fair market
value of such securities does not exceed 15% of the aggregate
consideration received at the time of such Asset Sale;
(vi) Interest Rate Agreement Obligations permitted pursuant to
the second paragraph of Section 10.11; (vii) any other
Investments that do not exceed $5.0 million in amount in the
aggregate at any one time outstanding; (viii) Investments for
which the sole consideration provided is Capital Stock (other
than Disqualified Stock) of the Company and (ix) Investments
existing on the Issue Date.
"Permitted Liens" means (i) Liens permitted by the
indentures governing the Broadcasting Notes and the Newspapers
Notes as in effect on the Issue Date; (ii) Liens securing
Indebtedness of a Person existing at the time that such Person
is merged into or consolidated with the Company or a Restricted
Subsidiary; provided, however, that such Liens were in
existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those
of such Person; (iii) Liens on property acquired by the Company
or a Restricted Subsidiary; provided, however, that such Liens
were in existence prior to the contemplation of such
acquisition and do not extend to any other property; (iv) Liens
arising from Capital Lease Obligations permitted under this
Indenture; (v) Liens arising from Purchase Money Indebtedness
permitted under this Indenture; (vi) Liens in respect of
Interest Rate Agreement Obligations permitted under this
Indenture; (vii) Liens in favor of the Company or any
Restricted Subsidiary; (viii) Liens incurred, or pledges and
deposits in connection with, workers' compensation,
unemployment insurance and other social security benefits, and
leases, appeal bonds and other obligations of like nature
incurred by the Company or any Restricted Subsidiary in the
ordinary course of business; (ix) Liens imposed by law,
including, without limitation, mechanics', carriers',
warehousemen's, materialmen's, suppliers' and vendors' Liens,
incurred by the Company or any Restricted Subsidiary in the
ordinary course of business; (x) Liens for ad valorem, income
or property taxes or assessments and similar charges which
<PAGE>
either are not delinquent or are being contested in good faith
by appropriate proceedings for which the Company has set aside
on its books reserves to the extent required by GAAP; (xi)
easements, reservations, licenses, rights-of-way, zoning
restrictions and other similar charges or encumbrances in
<PAGE>
respect of real property not interfering in any material
respect with the ordinary conduct of the business of the
Company or any Restricted Subsidiary; (xii) Liens securing
reimbursement obligations with respect to commercial letters of
credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof; and
(xiii) any Lien to secure the refinancing of any Indebtedness
described in the foregoing clauses; provided, however, that to
the extent any such clause limits the amounts secured or the
assets subject to such Liens, no refinancing shall increase the
assets subject to such Liens or the amounts secured thereby
beyond the assets or amounts set forth in such clause.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
limited liability company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Pledge Agreement" means the Pledge Agreement
substantially in the form of Exhibit E hereto as such agreement
may be amended or modified from time to time in accordance with
its terms.
"Post-Petition Interest" means, with respect to any
Indebtedness of any Person, all interest accrued or accruing on
such Indebtedness after the commencement of any Insolvency or
Liquidation Proceeding against such Person in accordance with
and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or
instrument creating, evidencing or governing such Indebtedness,
whether or not, pursuant to applicable law or otherwise, the
claim for such interest is allowed as a claim in such
Insolvency or Liquidation Proceeding.
"Predecessor Note" means, with respect to any
particular Note, every previous Note evidencing all or a
portion of the same debt as that evidenced by such particular
Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 3.06 hereof in
exchange for a mutilated Note or in lieu of a lost, destroyed
or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preferred Stock," as applied to the Capital Stock of
any Person, means Capital Stock of any class or classes
<PAGE>
(however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of
such Person, over Capital Stock of any other class of such
Person.
<PAGE>
"Private Placement Legend" means the legend initially
set forth on the Notes in the form set forth in Section 2.05.
"Public Equity Offering" means an underwritten public
offering of Capital Stock (other than Disqualified Stock) of
the Company or PAI, pursuant to an effective registration
statement filed under the Securities Act; provided, however,
that with respect to any such public equity offering by PAI,
cash proceeds from such public equity offering equal to not
less than (i) with respect to any redemption prior to
December 31, 1997, 112.0% and (ii) with respect to any
redemption on or after December 31, 1997, 113.0% of the
aggregate principal amount of the Notes to be redeemed are
received by the Company as a capital contribution immediately
prior to such redemption and, with respect to any issuance by
the Company or PAI, to the extent that the proceeds therefrom
are not used to effect a redemption of the Broadcasting Notes
or the Newspapers Notes.
"Purchase Money Indebtedness" means Indebtedness of
the Company and the Restricted Subsidiaries incurred in
connection with the purchase of property or assets for the
business of the Company and the Restricted Subsidiaries.
"Qualified Institutional Buyer" or "QIB" shall have
the meaning specified in Rule 144A under the Securities Act.
"Qualified Issuer" means (A) any lender that is a
party to the Senior Credit Facility; and (B) any commercial
bank (i) which has capital and surplus in excess of
$80,000,000, and (ii) the outstanding short-term debt
securities of which are rated at least A-2 by Standard & Poor's
Corporation or at least P-2 by Moody's Investors Service, Inc.,
or carry an equivalent rating by a nationally recognized rating
agency if both the two named rating agencies cease publishing
ratings of investments.
"Radio Station Assets" means (i) the business and
assets of each of the following Subsidiaries of the Company:
Park Broadcasting of Florida, Inc.; Park Radio of Greater New
York, Inc.; Park Broadcasting of Iowa, Inc.; Park Radio of
Iowa, Inc.; Roy H. Park Broadcasting of the Midwest, Inc.;
Roy H. Park Broadcasting of Minnesota, Inc.; Roy H. Park
Broadcasting of the Lake Country, Inc.; Roy H. Park
Broadcasting of Oregon, Inc.; Contemporary FM, Inc.; Roy H.
<PAGE>
Park Radio, Inc.; Roy H. Park FM Broadcasting of East Carolina,
Inc.; Roy H. Park Broadcasting of Syracuse, Inc.; and Roy H.
Park Broadcasting of Washington, Inc. and (ii) the business and
assets of the following Subsidiaries of the Company which are
related to the operation of the radio broadcasting business of
<PAGE>
such Subsidiaries: Roy H. Park Broadcasting of Tennessee, Inc.
and Roy H. Park Broadcasting of Virginia, Inc.
"Rating Agency" means any of (i) S&P, (ii) Moody's or
(iii) if S&P or Moody's or both shall not make a rating of the
Notes publicly available, a security rating agency or agencies,
as the case may be, nationally recognized in the United States
and selected by the Company which shall be substituted for S&P
or Moody's or both, as the case may be.
"Rating Category" means (i) with respect to S&P, any
of the following categories: AAA, AA, A, BBB, BB, B, CCC, CC,
C and D (or equivalent successor categories); (ii) with respect
to Moody's, any of the following categories: Aaa, Aa, Baa, Ba,
B, Caa, Ca, C and D (or equivalent successor categories); and
(iii) the equivalent of any such category of S&P or Moody's
used by another Rating Agency. In determining whether the
rating of the Notes has decreased by one or more gradations,
gradations within Rating Categories (+ and - for S&P; 1, 2 and
3 for Moody's; or the equivalent gradations for another Rating
Agency) shall be taken into account (e.g., with respect to S&P,
a decline in rating from BB+ to BB, as well as from BB- to B+,
will constitute a decrease of one gradation).
"Rating Decline" means the occurrence on, or within
60 days after, the date of public notice of the occurrence of a
Change of Control or of the intention of the Company or Persons
controlling the Company to effect a Change of Control (which
period shall be extended so long as the rating of the Notes is
under publicly announced consideration for possible downgrade
by any of the Rating Agencies) of the following: (i) if the
Notes are rated by either Rating Agency as Investment Grade
immediately prior to the beginning of such period, the rating
of the Notes by both Rating Agencies shall be below Investment
Grade; or (ii) if the Notes are rated below Investment Grade by
both Rating Agencies immediately prior to the beginning of such
period, the rating of the Notes by either Rating Agency (or
both) shall be decreased by one or more gradations (including
gradations within Rating Categories as well as between Rating
Categories).
"Redemption Date" means, with respect to any Note to
be redeemed, any date fixed for such redemption by or pursuant
to this Indenture and the terms of the Notes.
<PAGE>
"Redemption Price" means, with respect to any Note to
be redeemed, the price at which it is to be redeemed pursuant
to this Indenture and the terms of the Notes.
<PAGE>
"Registration Rights Agreement" means the
Registration Rights Agreement dated on or about the Issue Date
between the Company and the Initial Purchasers for the benefit
of themselves and the Holders as the same may be amended from
time to time in accordance with the terms thereof.
"Regular Record Date" means the Regular Record Date
specified in the Notes.
"Regulation S" means Regulation S under the
Securities Act.
"Responsible Officer" means, with respect to the
Trustee, the chairman or vice chairman of the board of
directors, the chairman or vice chairman of the executive
committee of the board of directors, the president, any vice
president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant
cashier, any trust officer or assistant trust officer, the
controller and any assistant controller or any other officer of
the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any
other officer of the Trustee to whom any corporate trust matter
is referred because of his or her knowledge of and familiarity
with the particular subject.
"Restricted Investment" means any Investment other
than a Permitted Investment.
"Restricted Payment" means (i) any dividend or other
distribution declared or paid on any Capital Stock of the
Company or any of the Restricted Subsidiaries (other than
dividends or distributions payable solely in Capital Stock
(other than Disqualified Stock) of the Company or such
Restricted Subsidiary or dividends or distributions payable to
the Company or any Wholly Owned Restricted Subsidiary); (ii)
any payment to purchase, redeem, defease or otherwise acquire
or retire for value any Capital Stock of the Company or any
Restricted Subsidiary or other Affiliate of the Company (other
than any Capital Stock owned by the Company or any Wholly Owned
Restricted Subsidiary); (iii) any payment to purchase, redeem,
defease or otherwise acquire or retire for value any
Indebtedness that is subordinated in right of payment to the
Notes other than a purchase, redemption, defeasance or other
<PAGE>
acquisition or retirement for value that is paid for with the
proceeds of Refinancing Indebtedness that is permitted under
Section 10.11; or (iv) any Restricted Investment.
Notwithstanding anything in this Indenture to the contrary, any
transaction consummated by Broadcasting or Newspapers which
<PAGE>
would otherwise be a Restricted Investment under this Indenture
shall not be prohibited by this Indenture (but shall still
count as a Restricted Investment) if made in accordance with
the provisions of the indenture governing the Broadcasting
Notes (with respect to Broadcasting) or the Newspapers Notes
(with respect to Newspapers) as in effect on the Issue Date.
"Restricted Payment Basket" means as of any date an
amount equal to (a) the cumulative amount of cash dividends
received by the Company from its Subsidiaries since the Issue
Date (other than any dividends of the proceeds of the
Broadcasting Notes and the Newspapers Notes) minus (b) the sum
of (i) the Cumulative Interest Expense of the Company and (ii)
the cumulative amount of provision for taxes based on income of
the Company since the Issue Date.
"Restricted Security" has the meaning assigned to
such term in Rule 144(a)(3) under the Securities Act; provided,
however, that the Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to
whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means each direct or indirect
Subsidiary of the Company other than an Unrestricted
Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as
amended.
"Senior Credit Facility" means the Credit Agreement,
entered into on May 13, 1996, between the Company, the
Subsidiaries of the Company named therein and the lenders named
therein, as the same may be amended or modified or renewed,
refunded, replaced or refinanced (collectively, "refinanced")
from time to time, including (i) any related notes, letters of
credit, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case
as amended, modified or refinanced from time to time, and
(ii) any notes, guarantees, collateral documents, instruments
and agreements executed in connection with any such amendment,
modification or refinancing; provided, however, that (A) no
amendment, modification or refinancing shall be permitted
unless the terms thereof require substantially the same
<PAGE>
application of the proceeds of the sale or other disposition of
the Radio Station Assets (including amount and timing) to the
repayment of Indebtedness under the Senior Credit Facility (and
do not require prepayment from the sale or other disposition of
or any different restriction (as compared to the terms in
<PAGE>
effect on the Issue Date) in respect of KEZX-AM and KWJZ-FM)
and (B) after any such time as the $58 million aggregate
principal amount outstanding under the Senior Credit Facility
on the Issue Date is first repaid other than through a
refinancing, the Senior Credit Facility shall be deemed not to
exist for purposes of any exception to the covenants herein.
"Special Record Date" means, with respect to the
payment of any Defaulted Interest, a date fixed by the Trustee
pursuant to Section 3.07 hereof.
"Stated Maturity" means, when used with respect to
any Note or any installment of interest thereon, the date
specified in such Note as the fixed date on which any principal
of such Note or such installment of interest is due and
payable, and when used with respect to any other Indebtedness,
means the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such
Indebtedness, or any installment of interest thereon, is due
and payable.
"Strategic Equity Investment" means the issuance and
sale of Capital Stock (other than Disqualified Stock) of the
Company or PAI to a Person substantially engaged in the
television broadcasting or newspaper publishing business or any
other business reasonably related to the Company's business
that has an Equity Market Capitalization of at least $350.0
million; provided, however, that with respect to any such
issuance by PAI, cash proceeds from such issuance equal to not
less than (i) with respect to any redemption effected prior to
December 31, 1997, 112.0% and (ii) with respect to any
redemption effected on or after December 31, 1997, 113.0% of
the aggregate principal amount of the Notes to be redeemed are
received by the Company as a capital contribution immediately
prior to such redemption and, with respect to any issuance by
the Company or PAI, to the extent that the proceeds therefrom
are not used to effect a redemption of the Broadcasting Notes
or Newspapers Notes.
"Subsidiary" of a Person means (i) any corporation
more than 50% of the outstanding voting power of the Voting
Stock of which is owned or controlled, directly or indirectly,
by such Person or by one or more other Subsidiaries of such
Person, or by such Person and one or more other Subsidiaries
thereof, or (ii) any limited partnership of which such Person
<PAGE>
or any Subsidiary of such Person is a general partner, or
(iii) any other Person (other than a corporation or limited
partnership) in which such Person, or one or more other
Subsidiaries of such Person, or such Person and one or more
other Subsidiaries thereof, directly or indirectly, has more
<PAGE>
than 50% of the outstanding partnership or similar interests or
has the power, by contract or otherwise, to direct or cause the
direction of the policies, management and affairs thereof.
"Surviving Person" means, with respect to any Person
involved in or that makes any Disposition, the Person formed by
or surviving such Disposition or the Person to which such
Disposition is made.
"Tax Sharing Agreement" means the Intercorporate Tax
Sharing Agreement among PAI and its Subsidiaries dated on or
about (but not after) the Issue Date, as amended or
supplemented from time to time in accordance herewith.
"Treasury Rate" means the yield to maturity at the
time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15(519) which has become
publicly available at least two business days prior to the date
fixed for redemption (or, if such Statistical Release is no
longer published, any publicly available source of similar
market data)) most nearly equal to the then remaining term to
May 15, 1999; provided, however, that if the then remaining
term to May 15, 1999 is not equal to the constant maturity of a
United States Treasury security for which a weekly average
yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the
then remaining term to May 15, 1999 is less than one year, the
weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be
used.
"Trust Indenture Act" or "TIA" means the Trust
Indenture Act of 1939, as amended, and as in effect from time
to time.
"Trustee" means the Person named as the "Trustee" in
the first paragraph of this Indenture, until a successor
Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Trustee.
"Unrestricted Subsidiary" means (A) as of the Issue
<PAGE>
Date, each Subsidiary listed on Schedule A hereto and (B) any
other Subsidiary of the Company designated as an Unrestricted
Subsidiary by the Board of Directors of the Company; provided,
however, that for purposes of this clause (B) (i) the
Subsidiary to be so designated (x) (I) has total assets with a
<PAGE>
fair market value at the time of such designation of $1,000 or
less or (II) is being so designated prior to the acquisition by
the Company of such Subsidiary by merger or consolidation with
an Unrestricted Subsidiary, and (y) does not own any Capital
Stock of the Company or any Restricted Subsidiary, (ii) if such
Subsidiary is acquired by the Company, such Subsidiary is
designated as an Unrestricted Subsidiary prior to the
consummation of such acquisition, (iii) no Default or Event of
Default shall have occurred and be continuing, (iv) no portion
of any Indebtedness or any other Obligation (contingent or
otherwise) of such Subsidiary (a) is guaranteed by, or is
otherwise the subject of credit support provided by, the
Company or any of the Restricted Subsidiaries, (b) is recourse
to or obligates the Company or any of the Restricted
Subsidiaries in any way, or (c) subjects any property or asset
of the Company or any of the Restricted Subsidiaries directly
or indirectly, contingently or otherwise, to the satisfaction
of such Indebtedness or other obligation, (v) neither the
Company nor any of the Restricted Subsidiaries has any
contract, agreement, arrangement or understanding with such
Subsidiary other than on terms as favorable to the Company or
such Restricted Subsidiary as those that might be obtained at
the time from Persons that are not Affiliates of the Company,
and (vi) neither the Company nor any of the Restricted
Subsidiaries has any obligations (a) to subscribe for
additional shares of Capital Stock of such Subsidiary, or
(b) to maintain or preserve such Subsidiary's financial
condition or to cause such Subsidiary to achieve certain levels
of operating results. Any such designation by the Company's
Board of Directors shall be evidenced to the Trustee by filing
with the Trustee a certificate stating that such designation
complies with the foregoing conditions. The Company's Board of
Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing, including,
without limitation, under Sections 10.11 and 10.16, assuming
the incurrence by the Company and the Restricted Subsidiaries
at the time of such designation of all existing Indebtedness
and Liens of the Unrestricted Subsidiary to be so designated as
a Restricted Subsidiary. In the event of any Disposition
involving the Company in which the Company is not the Surviving
Person, the Board of Directors of the Surviving Person may
(x) prior to such Disposition, designate any of its
Subsidiaries, and any of the Company's Subsidiaries being
<PAGE>
acquired pursuant to such Disposition that are not Restricted
Subsidiaries, as Unrestricted Subsidiaries, and (y) after such
Disposition, designate any of its direct or indirect
Subsidiaries as an Unrestricted Subsidiary under the same
<PAGE>
conditions and in the same manner as the Company under the
terms of this Indenture.
"U.S. Government Obligations" means securities that
are (i) direct obligations of the United States of America for
the timely payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository
receipt; provided, however, that (except as required by law)
such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of
or interest on the U.S. Government Obligation evidenced by such
depository receipt.
"Voting Stock" of a Person means Capital Stock of
such Person of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of
directors, managers or trustees of such Person (irrespective of
whether or not at the time the stock of any other class or
classes shall have or might have voting power by reason of the
happening of any contingency).
"Warrant Agreement" means the Warrant Agreement dated
as of May 13, 1996 between the Company and IBJ Schroder Bank &
Trust Company, as Warrant Agent.
"Warrant Notes" means any 13-3/4% Senior Pay-in-Kind
Notes due 2004 issued pursuant to the terms of this Indenture
to repurchase Warrants on the terms as provided in the Warrant
Agreement (as in effect on the date hereof).
"Warrant Registration Rights Agreement" means the
<PAGE>
Registration Rights Agreement dated as of May 13, 1996 between
the Company and the Initial Purchasers.
"Wholly Owned Restricted Subsidiary" means any
Restricted Subsidiary with respect to which all of the
<PAGE>
outstanding voting securities (other than directors' qualifying
shares) are owned, directly or indirectly, by the Company or a
Surviving Person of any Disposition involving the Company, as
the case may be.
Section 1.02. Other Definitions.
Defined in
Term Section
"Act" 1.05
"Affiliate Transaction" 10.13
"Agent Members" 2.04
"Asset Sale Offer" 10.14
"Asset Sale Offer Price" 10.14
"Asset Sale Offer Trigger Date" 10.14
"Authenticating Agent" 2.02
"Change of Control Date" 10.15
"Change of Control Offer" 10.15
"Change of Control Purchase Date" 10.15
"Change of Control Purchase Price" 10.15
"covenant defeasance" 4.03
"Defaulted Interest" 3.07
"defeasance" 4.02
"Defeased Notes" 4.01
"Equity Offer Purchase Date" 10.22
"Equity Offer Trigger Date" 10.22
"Equity Proceeds Offer" 10.22
"Excess Proceeds" 10.14
"First Equity Offering Optional
Redemption Price" 11.01
"Global Note" 2.01
"incur" 10.11(a)
"Note Register" 3.05
"Note Registrar" 3.05
"Notice of Default" 5.01
"Offshore Physical Note" 2.01
"Optional Redemption Price" 11.01
"Other Obligations" 1.20
"Permitted Indebtedness" 10.11
"Permitted Payments" 10.12
"Physical Notes" 2.01
"Radio Station Note" 10.14
"Required Filing Dates" 10.09
"Restricted Payment Offer" 10.12(c)
<PAGE>
"Restricted Payment Offer Price" 10.12(c)
"Restricted Payment Purchase Date" 10.12(c)
"Second Equity Offering Optional
Redemption Price" 11.01
"U.S. Physical Notes" 2.01
<PAGE>
Section 1.03. Rules of Construction.
For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article, and include the
plural as well as the singular;
(b) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance
with GAAP;
(d) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision;
(e) all references to "$" or "dollars" shall refer
to the lawful currency of the United States of America;
(f) the words "include," "included" and "including"
as used herein shall be deemed in each case to be followed
by the phrase "without limitation"; and
(g) any reference to a Section or Article refers to
such Section or Article of this Indenture.
Section 1.04. Form of Documents Delivered to
Trustee.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee (a) an Officers' Certificate in
form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with, (b) an Opinion of
Counsel in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of counsel, all such
<PAGE>
conditions have been complied with and (c) where applicable, a
certificate or opinion by an accountant that complies with
Section 314(c) of the Trust Indenture Act.
<PAGE>
Each certificate and Opinion of Counsel with respect
to compliance with a condition or covenant provided for in this
Indenture shall include:
(a) a statement that the Person making such
certificate or Opinion of Counsel has read such covenant
or condition;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
contained in such certificate or Opinion of Counsel are
based;
(c) a statement that, in the opinion of such Person,
he has made such examination or investigation as is
necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion
of such Person, such condition or covenant has been
complied with.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified
Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Officer of the
Company may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by,
counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such
certificate or opinion of counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of,
or representations by, an officer or officers of the Company
stating that the information with respect to such factual
matters is in the possession of the Company, unless such
<PAGE>
counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to such matters are erroneous.
<PAGE>
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated, with proper
identification of each matter covered therein, and form one
instrument.
Section 1.05. Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in Person or by an agent
duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee
and, where it is hereby expressly required, to the Company.
Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments.
Proof of execution (as provided below in subsection (b) of this
Section 1.05) of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01 hereof) conclusive in
favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient including,
without limitation, by verification from a notary public or
signature guarantee.
(c) The ownership of Notes shall be proved by the
Note Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other action by the Holder of any
Note shall bind every future Holder of the same Note or the
Holder of every Note issued upon the transfer thereof or in
exchange therefor or in lieu thereof to the same extent as the
original Holder, in respect of anything done, suffered or
omitted to be done by the Trustee, any Paying Agent or the
Company in reliance thereon, whether or not notation of such
<PAGE>
action is made upon such Note.
<PAGE>
Section 1.06. Notices, etc., to the Trustee and the
Company.
Any request, demand, authorization, direction,
notice, consent, waiver or Act of Holders or other document
provided or permitted by this Indenture to be made upon, given
or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company
shall be sufficient for every purpose hereunder if made,
given, furnished or filed, in writing, to or with the
Trustee at One State Street, New York, New York 10004 or
at any other address previously furnished in writing to
the Holders and the Company by the Trustee or at the
office of any drop agent specified to the Holders and the
Company from time to time; and
(b) the Company by the Trustee or by any Holder
shall be sufficient for every purpose (except as otherwise
expressly provided herein) hereunder if in writing and
mailed, first-class postage prepaid, to the Company, c/o
Park Communications, Inc., addressed to it at 1700 Vine
Center Office Tower, 333 West Vine Street, Lexington,
Kentucky 40507, Attention: Wright M. Thomas, or at any
other address previously furnished in writing to the
Trustee by the Company.
Section 1.07. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders
of any event, such notice shall be sufficiently given (unless
otherwise expressly provided herein) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at the address of such Holder as it appears in the Note
Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice.
In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Any
notice when mailed to a Holder in the aforesaid manner shall be
conclusively deemed to have been received by such Holder
whether or not actually received by such Holder. Where this
Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such
<PAGE>
notice, either before or after the event, and such waiver shall
be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in
reliance upon such waiver.
<PAGE>
In case by reason of the suspension of regular mail
service or by reason of any other cause, it shall be
impracticable to mail notice of any event as required by any
provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.
Section 1.08. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or
conflicts with any provision of the Trust Indenture Act or
another provision which is required or deemed to be included in
this Indenture by any of the provisions of the Trust Indenture
Act, such provision or requirement of the Trust Indenture Act
shall control.
If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act that may be
so modified or excluded, such provision of the Trust Indenture
Act shall be deemed to apply to this Indenture as so modified
or excluded, as the case may be.
Section 1.09. Effect of Headings and Table of
Contents.
The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company and Trustee shall bind their respective successors and
assigns, whether so expressed or not.
Section 1.11. Separability Clause.
In case any provision in this Indenture or in the
Notes 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.
Section 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Notes issued
<PAGE>
pursuant hereto, express or implied, shall give to any Person
(other than the parties hereto and their successors hereunder,
any Paying Agent and the Holders) any benefit or any legal or
equitable right, remedy or claim under this Indenture.
<PAGE>
Section 1.13. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF). THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN
RESPECT OF THE NOTES AND THE HOLDERS AGREE TO SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS INDENTURE OR THE NOTES.
Section 1.14. No Recourse Against Others.
No director, officer, employee or stockholder of the
Company, as such, shall have any liability for any obligations
of the Company under the Notes or this Indenture. Each holder
of Notes by accepting a Note waives and releases all such
liability, and such waiver and release is part of the
consideration for the issuance of the Notes.
Section 1.15. Independence of Covenants.
All covenants and agreements in this Indenture shall
be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact
that it would be permitted by an exception to, or be otherwise
within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or condition
exists.
Section 1.16. Exhibits and Schedules.
All exhibits and schedules attached hereto are by
this reference made a part hereof with the same effect as if
herein set forth in full.
Section 1.17. Counterparts.
This Indenture may be executed in any number of
counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same
instrument.
Section 1.18. Duplicate Originals.
<PAGE>
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
<PAGE>
Section 1.19. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the
TIA, the provision is incorporated by reference in, and made a
part of, this Indenture. Any terms incorporated by reference
in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them therein.
ARTICLE TWO
SECURITY FORMS
Section 2.01. Form and Dating.
The Initial Notes (including any Initial Notes issued
in lieu of cash interest on the Initial Notes) and the
Trustee's certificate of authentication relating thereto shall
be substantially in the form of Exhibit A hereto and the
Exchange Notes (including any Exchange Notes issued in lieu of
cash interest on the Initial Notes and the Exchange Notes), the
Warrant Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of
Exhibit B hereto; provided, however, that any Notes issued in
lieu of cash interest and the Warrant Notes shall state that
interest shall accrue from the most recent date to which
interest has been paid or duly provided for on such Note or, if
no interest has been paid on such Note, from the date that such
Note was first issued. The Notes may have notations, legends
or endorsements required by law, stock exchange rule or
depository rule or usage. The Company and the Trustee shall
approve the form of the Notes and any notation, legend or
endorsement on them. Each Note shall be dated the date of its
issuance and shall show the date of its authentication.
Notes issued with original issue discount shall bear
the legend set forth on Exhibit F hereto.
The terms and provisions contained in the Notes,
annexed hereto as Exhibits A and B, shall constitute, and are
hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
<PAGE>
Notes offered and sold in reliance on Rule 144A shall
be issued initially in the form of one or more permanent global
Notes in registered form, substantially in the form set forth
in Exhibit A (the "Global Note"), deposited with the Trustee,
<PAGE>
as custodian for the depository thereof, duly executed by the
Company and authenticated by the Trustee as hereinafter
provided and shall bear the legend set forth in Section 2.03
hereof. The aggregate principal amount of the Global Note may
from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depository,
as hereinafter provided.
Notes offered and sold in offshore transactions in
reliance on Regulation S shall be issued in the form of
permanent certificated Notes in registered form in
substantially the form set forth in Exhibit A (the "Offshore
Physical Notes"). Notes offered and sold in reliance on any
other exemption from registration under the Securities Act
other than as described in the preceding paragraph shall be
issued, and Notes offered and sold in reliance on Rule 144A may
be issued, in the form of permanent certificated Notes in
registered form, in substantially the form set forth in
Exhibit A (the "U.S. Physical Notes"). The Offshore Physical
Notes and the U.S. Physical Notes are sometimes collectively
herein referred to as the "Physical Notes." Physical Notes
shall initially be registered in the name of the Depository or
a nominee of such Depository and be delivered to the Trustee as
custodian for such Depository. Beneficial owners of Physical
Notes, however, may request registration of such Physical Notes
in their names or the names of their nominees.
Section 2.02. Execution and Authentication;
Aggregate Principal Amount.
The Notes shall be executed on behalf of the Company
by an Officer of the Company. The signature of any Officer on
the Notes may be manual or facsimile.
If an Officer or Assistant Secretary whose signature
is on a Note was an Officer or Assistant Secretary at the time
of such execution but no longer holds that office or position
at the time the Trustee authenticates the Note, the Note shall
nevertheless be valid.
A Note shall not be valid until an authorized
signatory of the Trustee manually signs the certificate of
authentication on the Note. The signature shall be conclusive
evidence that the Note has been authenticated under this
Indenture.
<PAGE>
The Trustee shall authenticate (i) Initial Notes for
original issue in the aggregate principal amount not to exceed
$80,000,000, (ii) Exchange Notes from time to time for issue
only in exchange for a like principal amount of Initial Notes,
<PAGE>
(iii) Notes issued pursuant to this Indenture as interest on
the Notes in lieu of cash interest on the Notes (not to exceed
$39,500,000 plus the principal amount of any Notes issued in
lieu of cash for Additional Interest due on the Notes pursuant
to the Registration Rights Agreement) and (iv) Warrant Notes,
in each case upon a written order of the Company in the form of
an Officers' Certificate. Notes issued in lieu of cash
interest on the Initial Notes shall be additional Initial Notes
if issued prior to the issuance of the Exchange Notes and Notes
issued in lieu of cash interest on the Initial Notes or the
Exchange Notes shall be additional Exchange Notes if issued on
or after the date of initial issuance of the Exchange Notes.
The Officers' Certificate shall specify the amount of Notes to
be authenticated and the date on which the Notes are to be
authenticated, whether the Notes are to be Initial Notes or
Exchange Notes or Notes issued in lieu of cash interest on the
Notes or Warrant Notes and whether the Notes are to be issued
as Physical Notes or a Global Note or such other information as
the Trustee may reasonably request. The aggregate principal
amount of Notes outstanding at any time may not exceed
$80,000,000 plus (i) the aggregate principal amount of Notes
issued in accordance with this Indenture in lieu of cash
interest on the Notes (not to exceed $39,500,000 plus the
principal amount of any Notes issued in lieu of cash for
Additional Interest due on the Notes pursuant to the
Registration Rights Agreement) and (ii) Warrant Notes, except
as provided in Section 3.06 hereof.
The Trustee may appoint an authenticating agent (the
"Authenticating Agent") reasonably acceptable to the Company to
authenticate Notes. Unless otherwise provided in the
appointment, an Authenticating Agent may authenticate Notes
whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes
authentication by such Authenticating Agent. An Authenticating
Agent has the same rights as an Agent to deal with the Company
or with any Affiliate of the Company.
Section 2.03. Restrictive Legends.
Each Global Note and Physical Note that constitutes a
Restricted Security shall bear the following legend (the
"Private Placement Legend") on the face thereof until the third
anniversary of the Issue Date, unless otherwise agreed by the
Company and the Holder thereof:
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
<PAGE>
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT
AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES
THAT IT WILL NOT WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A) TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS
BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE OR
TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE OR REGISTRAR), (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER
OF THIS SECURITY WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THE SECURITY, IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION
<PAGE>
REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
<PAGE>
Each Global Note shall also bear the following legend
on the face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN
PART FOR SECURITIES IN DEFINITIVE FORM, THIS
SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY,
OR BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY
THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.05 OF THE
INDENTURE.
Section 2.04. Book-Entry Provisions for Global
Security.
(1) The Global Note initially shall (i) be
registered in the name of the Depository or the nominee of such
Depository, (ii) be delivered to the Trustee as custodian for
such Depository and (iii) bear legends as set forth in Section
2.15.
Members of, or participants in, the Depository
<PAGE>
("Agent Members") shall have no rights under this Indenture
with respect to any Global Note held on their behalf by the
Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company,
the Trustee and any Agent of the Company or the Trustee as the
<PAGE>
absolute owner of the Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any Agent of the Company or the Trustee
from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between
the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a
holder of any Note.
(2) Transfers of the Global Note shall be limited to
transfers in whole, but not in part, to the Depository, its
successors or their respective nominees. Interests of
beneficial owners in the Global Note may be transferred or
exchanged for Physical Notes in accordance with the rules and
procedures of the Depository and the provisions of Section 2.05
hereof. In addition, Physical Notes shall be transferred to
all beneficial owners in exchange for their beneficial
interests in the Global Note if (i) the Depository notifies the
Company that it is unwilling or unable to continue as
Depository for the Global Note and a successor depositary is
not appointed by the Company within 90 days of such notice or
(ii) an Event of Default has occurred and is continuing and the
Registrar has received a written request from the Depository to
issue Physical Notes.
(3) In connection with any transfer or exchange of a
portion of the beneficial interest in the Global Note to
beneficial owners pursuant to paragraph (2), the Registrar
shall (if one or more Physical Notes are to be issued) reflect
on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note
to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Physical
Notes of like tenor and amount.
(4) In connection with the transfer of the entire
Global Note to beneficial owners pursuant to paragraph (2), the
Global Note shall be deemed to be surrendered to the Trustee
for cancellation, and the Company shall execute, and the
Trustee shall authenticate and deliver to each beneficial owner
identified by the Depository in exchange for its beneficial
interest in the Global Note, an equal aggregate principal
amount of Physical Notes of authorized denominations.
<PAGE>
(5) Any Physical Note constituting a Restricted
Security delivered in exchange for an interest in the Global
Note pursuant to paragraph (2) or (3) shall, except as
otherwise provided by paragraphs (1)(a)(x) and (3) of Section
2.05 hereof, bear the legend regarding transfer restrictions
<PAGE>
applicable to the Physical Notes set forth in Section 2.03
hereof.
(6) The Holder of the Global Note may grant proxies
and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this
Indenture or the Notes.
Section 2.05. Special Transfer Provisions.
(1) Transfers to Non-QIB Institutional Accredited
Investors and Non-U.S. Persons. The following provisions shall
apply with respect to the registration of any proposed transfer
of a Note constituting a Restricted Security to any
Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(a) the Registrar shall register the transfer of any
Note constituting a Restricted Security, whether or not
such Note bears the Private Placement Legend, if (x) the
requested transfer is after the third anniversary of the
Issue Date or (y) (A) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB
(excluding Non-U.S. Persons), the proposed transferee has
delivered to the Registrar a certificate substantially in
the form of Exhibit C hereto or (B) in the case of a
transfer to a Non-U.S. Person, the proposed transferor has
delivered to the Registrar a certificate substantially in
the form of Exhibit D hereto; and
(b) if the proposed transferor is an Agent Member
holding a beneficial interest in the Global Note, upon
receipt by the Registrar of (x) the certificate, if any,
required by paragraph (a) above and (y) written
instructions given in accordance with the Depository's and
the Registrar's procedures,
whereupon (i) the Registrar shall reflect on its books and
records the date and (if the transfer does not involve a
transfer of outstanding Physical Notes) a decrease in the
principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note
to be transferred, and (ii) the Company shall execute and the
Trustee shall authenticate and deliver one or more Physical
<PAGE>
Notes of like tenor and amount.
(2) Transfers to QIBs. The following provisions
shall apply with respect to the registration of any proposed
<PAGE>
transfer of a Note constituting a Restricted Security to a QIB
(excluding transfers to Non-U.S. Persons):
(a) the Registrar shall register the transfer if
such transfer is being made by a proposed transferor who
has checked the box provided for on the form of Note
stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for
on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is
purchasing the Note for its own account or an account with
respect to which it exercises sole investment discretion
and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as
it has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that
the transferor is relying upon its foregoing
representations in order to claim the exemption from
registration provided by Rule 144A; and
(b) if the proposed transferee is an Agent Member,
and the Notes to be transferred consist of Physical Notes
which after transfer are to be evidenced by an interest in
the Global Note, upon receipt by the Registrar of written
instructions given in accordance with the Depository's and
the Registrar's procedures, the Registrar shall reflect on
its books and records the date and an increase in the
principal amount of the Global Note in an amount equal to
the principal amount of the Physical Notes to be
transferred, and the Trustee shall cancel the Physical
Notes so transferred.
(3) Private Placement Legend. Upon the transfer,
exchange or replacement of Notes not bearing the Private
Placement Legend, the Registrar shall deliver Notes that do not
bear the Private Placement Legend. Upon the transfer, exchange
or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private
Placement Legend unless (i) the requested transfer is after the
third anniversary of the Issue Date, or (ii) there is delivered
to the Registrar an Opinion of Counsel reasonably satisfactory
<PAGE>
to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the
Securities Act.
<PAGE>
(4) General. By its acceptance of any Note bearing
the Private Placement Legend, each Holder of such a Note
acknowledges the restrictions on transfer of such Note set
forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters,
notices and other written communications received pursuant to
Section 2.04 hereof or this Section 2.05. The Company shall
have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time
during the Registrar's normal business hours upon the giving of
reasonable written notice to the Registrar.
ARTICLE THREE
THE NOTES
Section 3.01. Title and Terms.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to
$80,000,000, except as provided in the next sentence hereof and
except for Notes authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Notes
pursuant to Section 3.04, 3.05, 3.06, 9.05, 10.12, 10.14,
10.15, 10.22 or 11.08. In addition, Notes may be issued in
lieu of cash interest on the Notes as and to the extent
provided in this Indenture and Warrant Notes may be issued.
The Notes shall be known and designated as the
"13-3/4% Senior Pay-in-Kind Notes due 2004" of the Company.
The final Stated Maturity of the Notes shall be May 15, 2004.
Interest on the Notes will accrue at the rate of 13-3/4% per
annum and will be payable semi-annually in arrears on May 15
and November 15 in each year, commencing on November 15, 1996,
to holders of record on the immediately preceding May 1 and
November 1, respectively. Interest on the Notes will accrue
from the most recent date to which interest has been paid or
duly provided for or, if no interest has been paid, from the
date such Notes were issued. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
Through May 15, 1999, interest is payable at the option of the
<PAGE>
Company, in whole but not in part, by the issuance of
additional Notes (valued at 100% of the face amount thereof) in
lieu of cash interest; provided, however, that in connection
with any redemption or repurchase of the Notes as permitted or
required by this Indenture and upon the acceleration of the
<PAGE>
maturity of the Notes pursuant to this Indenture, all accrued
and unpaid interest shall be payable solely in cash. After
May 15, 1999, accrued and unpaid interest (including any
interest accruing on Defaulted Interest to the extent permitted
by law) is payable solely in cash.
Section 3.02. Denominations.
The Notes shall be issuable only in fully registered
form without coupons and in denominations of $1,000 and any
integral multiple thereof (other than (i) Notes issued in lieu
of cash interest on the Notes as and to the extent permitted
herein; (ii) Warrant Notes and (iii) Notes issued on transfer
or exchange of other Notes to the extent either (A) in excess
of an integral multiple of $1,000 or (B) the Notes so
transferred or exchanged do not aggregate an integral multiple
of $1,000).
Section 3.03. [Intentionally Omitted]
Section 3.04. Temporary Notes.
Pending the preparation of definitive Notes, the
Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Notes. Temporary Notes may
be printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of
which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers
executing such Notes may determine, as conclusively evidenced
by their execution of such Notes.
If temporary Notes are issued, the Company will cause
definitive Notes to be prepared without unreasonable delay.
After the preparation of definitive Notes, the temporary Notes
shall be exchangeable for definitive Notes upon surrender of
the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 10.02, without
charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Notes of authorized
denominations. Until so exchanged the temporary Notes shall in
all respects be entitled to the same benefits under this
<PAGE>
Indenture as definitive Notes.
<PAGE>
Section 3.05. Registration, Registration of Transfer
and Exchange.
The Company shall cause to be kept at the Corporate
Trust Office a register (the register maintained in such office
and in any other office or agency designated pursuant to
Section 10.02 being herein sometimes referred to as the "Note
Register") in which, subject to such reasonable regulations as
the Person appointed as being responsible for the keeping of
the Note Register (the "Note Registrar") may prescribe, the
Company shall provide for the registration of Notes and of
transfers of Notes. The Trustee is hereby initially appointed
Note Registrar for the purpose of registering Notes and
transfers of Notes as herein provided.
Upon surrender for registration of transfer of any
Note at the office or agency of the Company designated pursuant
to Section 10.02, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of any
authorized denomination or denominations, of a like aggregate
principal amount.
At the option of the Holder, Notes in certificated
form may be exchanged for other Notes of any authorized
denomination or denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for
exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Notes which the Holder making the
exchange is entitled to receive.
All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the
Company, evidencing the same indebtedness, and entitled to the
same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange and no such
transfer or exchange shall constitute a repayment of any
obligation nor create any new obligations of the Company.
Every Note presented or surrendered for registration
of transfer, or for exchange or redemption, shall (if so
required by the Company or the Note Registrar) be duly endorsed
or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Note Registrar, duly
<PAGE>
executed by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made to a Holder for any
registration of transfer or exchange or redemption of Notes,
<PAGE>
but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 3.04, 9.05,
10.12, 10.14, 10.15, 10.22 or 11.08 not involving any transfer.
The Company shall not be required (a) to issue,
register the transfer of or exchange any Note during a period
beginning at the opening of business 15 days before the mailing
of a notice of redemption of the Notes selected for redemption
under Section 11.04 and ending at the close of business on the
day of such mailing, or (b) to register the transfer of or
exchange any Note so selected for redemption in whole or in
part, except the unredeemed portion of Notes being redeemed in
part.
When Notes are presented to the Note Registrar with a
request to register the transfer or to exchange them for an
equal principal amount of Notes of other authorized
denominations, the Note Registrar shall register the transfer
or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall
authenticate Notes at the Note Registrar's request.
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Notes.
If (a) any mutilated Note is surrendered to the
Trustee, or (b) the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any
Note, and there is delivered to the Company and the Trustee,
such security or indemnity, in each case, as may be required by
them to save each of them harmless from any loss which either
of them may suffer if a Note is replaced, then, in the absence
of notice to the Company or the Trustee that such Note has been
acquired by a bona fide purchaser, the Company shall execute
and the Trustee shall authenticate and deliver, in exchange for
any such mutilated Note or in lieu of any such destroyed, lost
or stolen Note, a replacement Note of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any replacement Notes under this
Section, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that
<PAGE>
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected
therewith.
<PAGE>
Every replacement Note issued pursuant to this
Section in lieu of any destroyed, lost or stolen Note shall
constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and
proportionately with any and all other Notes duly issued
hereunder.
The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes.
Section 3.07. Payment of Interest; Interest Rights
Preserved.
Interest on any Note which is payable, and is
punctually paid or duly provided for, on any Interest Payment
Date shall be paid by check or wire transfer or, at any time on
or prior to May 15, 1999, by the issuance of additional Notes
for all interest then accrued and unpaid (such Notes valued at
100% of the face amount thereof) to the Person in whose name
that Note (or one or more Predecessor Notes) is registered at
the close of business on the Regular Record Date for such
interest. Any accrued and unpaid interest paid after May 15,
1999 and any interest due upon redemption, repurchase or
acceleration of the Notes shall be paid only in cash.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment
Date and interest on such defaulted interest at the then
applicable interest rate borne by the Notes, to the extent
lawful (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest"), shall forthwith
cease to be payable to the Holder on the Regular Record Date
and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in subsection (a) or (b)
below:
(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Notes
(or their respective Predecessor Notes) are registered at
the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed
<PAGE>
in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Note and the date of the
proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money (or, for any
<PAGE>
Defaulted Interest relating to interest accrued on or
prior to May 15, 1999, additional Notes issued in lieu of
cash interest; to the extent such Defaulted Interest
represents interest (including interest accruing on
defaulted interest (to the extent lawful)) after May 15,
1999 such interest is payable solely in cash) equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the
proposed payment, such money (or Notes, if applicable)
when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this
subsection (a) provided. Thereupon the Trustee shall fix
a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall
promptly notify the Company in writing of such Special
Record Date. In the name and at the expense of the
Company, the Trustee shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid,
to each Holder at its address as it appears in the Note
Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Notes (or their
respective Predecessor Notes) are registered on such
Special Record Date and shall no longer be payable
pursuant to the following subsection (b).
(b) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be
required by such exchange, if, after written notice given
by the Company to the Trustee of the proposed payment
pursuant to this subsection (b), such payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section,
each Note delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Note
<PAGE>
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note.
<PAGE>
Section 3.08. Persons Deemed Owners.
Prior to and at the time of due presentment for
registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in
whose name any Note is registered in the Note Register as the
owner of such Note for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 3.07)
interest on such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and neither the
Company, the Trustee nor any agent of the Company or the
Trustee shall be affected by notice to the contrary.
Section 3.09. Cancellation.
All Notes surrendered for payment, redemption,
registration of transfer or exchange shall be delivered to the
Trustee and, if not already cancelled, shall be promptly
cancelled by it. The Company may at any time deliver to the
Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Company may have acquired in any
manner whatsoever, as evidenced by a Company Order instructing
the Trustee that all Notes so delivered shall be promptly
cancelled by the Trustee. No Notes shall be authenticated in
lieu of or in exchange for any Notes cancelled as provided in
this Section 3.09, except as expressly permitted by this
Indenture. All cancelled Notes held by the Trustee shall be
destroyed in accordance with the applicable governmental record
retention regulations and certification of their destruction
delivered to the Company unless by a Company Order the Company
shall direct that the cancelled Notes be returned to it. The
Trustee shall provide the Company with a list of all Notes that
have been cancelled from time to time as requested by the
Company.
Section 3.10. Computation of Interest.
Interest on the Notes shall be computed on the basis
of a 360-day year of twelve 30-day months.
Section 3.11. Legal Holidays.
In any case where any Interest Payment Date,
Redemption Date, date established for the payment of Defaulted
Interest or Stated Maturity of any Note shall not be a Business
<PAGE>
Day, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of principal, premium, if
any, or interest need not be made on such date, but may be made
on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date, Redemption
<PAGE>
Date, date established for the payment of Defaulted Interest or
at the Stated Maturity, as the case may be, and no interest
shall accrue with respect to such payment for the period from
and after such Interest Payment Date, Redemption Date, date
established for the payment of Defaulted Interest or Stated
Maturity, as the case may be, to the next succeeding Business
Day.
Section 3.12. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP"
number (if then generally in use), and if so, the Trustee may
use the CUSIP numbers in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice
may state that no representation is made as to the correctness
or accuracy of the CUSIP number printed in the notice or on the
Notes, and that reliance may be placed only on the other
identification numbers printed on the Notes. All Notes shall
bear identical CUSIP numbers. The Company shall promptly
notify the Trustee in writing of any change in the CUSIP number
of the Notes.
Section 3.13. Payment of Additional Interest Under
Registration Rights Agreement.
Under certain circumstances the Company will be
obligated to pay certain additional amounts of interest to the
Holders, as more particularly set forth in section 2(e) of the
Registration Rights Agreement, the terms which are hereby
incorporated herein by reference.
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. The Company's Option To Effect
Defeasance or Covenant Defeasance.
The Company may, at its option, at any time, elect to
have terminated the obligations of the Company with respect to
Outstanding Notes, as set forth in this Article, and elect to
have either Section 4.02 or Section 4.03 be applied to all of
the Outstanding Notes (the "Defeased Notes"), upon compliance
with the conditions set forth below in Section 4.04.
<PAGE>
Section 4.02. Defeasance and Discharge.
Upon the Company's exercise under Section 4.01 of the
option applicable to this Section 4.02, the Company shall be
deemed to have been released and discharged from its
<PAGE>
obligations with respect to the Defeased Notes on the date the
conditions set forth below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that
the Company shall be deemed to have paid and discharged the
entire indebtedness represented by the Defeased Notes, which
shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 4.05 and the other Sections of this
Indenture referred to in (a) and (b) below, and to have
satisfied all other obligations under such Notes and this
Indenture insofar as such Notes are concerned (and the Trustee,
at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following, which shall
survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders of Defeased Notes to receive, solely
from the trust fund described in Section 4.04 and as more fully
set forth in such Section, payments in respect of the principal
of, premium, if any, and interest on such Notes when such
payments are due, (b) the Company's obligations with respect to
such Defeased Notes under Sections 3.04, 3.05, 3.06, 7.01 and
10.02, (c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder, including, without limitation, the
Trustee's rights under Section 6.07, and (d) this Article Four.
Subject to compliance with this Article Four, the Company may,
at its option and at any time, exercise its option under this
Section 4.02 notwithstanding the prior exercise of its option
under Section 4.03 with respect to the Notes.
Section 4.03. Covenant Defeasance.
Upon the Company's exercise under Section 4.01 of the
option applicable to this Section 4.03, the Company shall be
released from its obligations under any covenant or provision
contained in Sections 10.06 through 10.22 and the provisions of
Article Eight shall not apply, with respect to the Defeased
Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"), and the Notes
shall thereafter be deemed not to be "Outstanding" for the
purposes of any direction, waiver, consent or declaration or
Act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to
the Outstanding Notes, the Company may omit to comply with and
shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or
<PAGE>
indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document
and such omission to comply shall not constitute a Default or
an Event of Default under Section 5.01(c), but, except as
<PAGE>
specified above, the remainder of this Indenture and such
Outstanding Notes shall be unaffected thereby.
Section 4.04. Conditions to Defeasance or Covenant
Defeasance.
The following shall be the conditions to application
of either Section 4.02 or Section 4.03 to the Outstanding
Notes:
(1) The Company shall have irrevocably deposited or
caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 6.09 who
shall agree to comply with the provisions of this Article
Four applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the
benefit of the Holders of such Notes, (a) money, in United
States dollars, in an amount, or (b) U.S. Government
Obligations maturing as to principal, premium, if any, and
interest in such amounts of money and at such times as are
sufficient without consideration of any reinvestment of
such interest, to pay principal of and interest on
Defeased Notes not later than one day before the due date
of any payment, or (c) a combination thereof, in amounts
as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants or a
nationally recognized investment banking firm expressed in
a written certification thereof delivered to the Trustee,
to pay and discharge and which shall be applied by the
Trustee (or other qualifying trustee) to pay and
discharge, the principal of, premium, if any, and interest
on the Defeased Notes on the Stated Maturity or otherwise
in accordance with the terms of this Indenture and the
Notes; provided, however, that the Trustee (or other
qualifying trustee) shall have received an irrevocable
written order from the Company instructing the Trustee (or
other qualifying trustee) to apply such money or the
proceeds of such U.S. Government Obligations to said
payments with respect to the Notes; provided, further,
however, that from and after the time of deposit, the
money or U.S. Government Obligations deposited shall not
be subject to the rights of the holders of other
Indebtedness of the Company;
<PAGE>
(2) No Default or Event of Default shall have
occurred and be continuing on the date of such deposit or,
insofar as Section 5.01(f) or (g) is concerned, at any
time during the period ending on the ninety-first day
after the date of such deposit;
<PAGE>
(3) Such defeasance or covenant defeasance shall not
cause the Trustee for the Notes to have a conflicting
interest with respect to any securities of the Company;
(4) Such defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a
Default or Event of Default under, this Indenture or any
other agreement or instrument to which the Company is a
party or by which it is bound (including, without
limitation, the Warrant Agreement);
(5) In the case of an election under Section 4.02,
the Company shall have delivered to the Trustee an Opinion
of Counsel recognized in the United States stating that
(x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or
(y) since the date hereof, there has been a change in the
applicable Federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm
that, the Holders of the Outstanding Notes will not
recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the
case if such defeasance had not occurred;
(6) In the case of an election under Section 4.03,
the Company shall have delivered to the Trustee an Opinion
of Counsel recognized in the United States to the effect
that the Holders of the Outstanding Notes will not
recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will
be subject to Federal income tax on the same amounts, in
the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred;
(7) The Company shall have delivered to the Trustee
an Opinion of Counsel in form and substance reasonably
acceptable to the Trustee to the effect that (x) the trust
funds established pursuant to this Article will not be
subject to any rights of any other holders of Indebtedness
of the Company (other than Holders of the Notes), and
(y) after the 91st day following the deposit, the trust
funds established pursuant to this Article will not be
subject to the effect of any applicable bankruptcy,
<PAGE>
insolvency, reorganization or similar laws affecting
creditors' rights generally; and
(8) The Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
<PAGE>
stating that (i) all conditions precedent provided for
relating to either the defeasance under Section 4.02 or
the covenant defeasance under Section 4.03, as the case
may be, have been complied with and (ii) if any other
Indebtedness of the Company shall then be outstanding or
committed, such defeasance or covenant defeasance will not
violate the provisions of the agreements or instruments
evidencing such Indebtedness.
Opinions required to be delivered under this Section
shall be in compliance with the requirements set forth in
Section 1.04 and this Section 4.04.
Section 4.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust; Other Miscellaneous Provi-
sions.
Subject to the provisions of the last paragraph of
Section 10.03, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or
such other Person that would qualify to act as successor
trustee under Article Six, collectively for purposes of this
Section 4.05, the "Trustee") pursuant to Section 4.04 in
respect of the Defeased Notes shall be held in trust and
applied by the Trustee, in accordance with the provisions of
such Notes and this Indenture, to the payment, either directly
or through any Paying Agent (other than the Company or any
Affiliate of the Company) as the Trustee may determine, to the
Holders of such Notes of all sums due and to become due thereon
in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to
the extent required by law.
The Company shall pay and indemnify the Trustee and
its agents and hold them harmless against any tax, fee or other
charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 4.04 or the
principal, premium, if any, and interest received in respect
thereof other than any such tax, fee or other charge which by
law is for the account of the Holders of the Defeased Notes.
Section 4.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with Section
<PAGE>
4.02 or 4.03, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the
obligations of the Company under this Indenture and the Notes
shall be revived and reinstated as though no deposit had
<PAGE>
occurred pursuant to Section 4.02 or 4.03, as the case may be,
until such time as the Trustee or Paying Agent is permitted to
apply all such money and U.S. Government Obligations in
accordance with Section 4.02 or 4.03, as the case may be;
provided, however, that if the Company makes any payment of
principal, premium, if any, or interest on any Note following
the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to
receive such payment from the money and U.S. Government
Obligations held by the Trustee or Paying Agent.
Section 4.07. Repayment to Company.
The Trustee shall pay to the Company upon its written
request any money held by it for the payment of principal or
interest that remains unclaimed for two years; provided,
however, that the Trustee before being required to make any
payment may at the expense of the Company cause to be published
once in a newspaper of general circulation in The City of New
York or mail to each Holder entitled to such money notice that
such money remains unclaimed and that, after a date specified
therein which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money
then remaining shall be repaid to the Company. After payment
to the Company, Noteholders entitled to money must look to the
Company for payment as general creditors unless an applicable
abandoned property law designates another person and all
liability of the Trustee or Paying Agent with respect to such
money shall thereupon cease.
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.
"Event of Default," wherever used herein, means any
one of the following events (whatever the reason for such Event
of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) the Company shall fail to pay interest on the
Notes (including any Additional Interest as defined in the
<PAGE>
Registration Rights Agreement) when the same becomes due
and payable and such failure shall continue for 30 days or
more; or
<PAGE>
(b) the Company shall fail to pay principal of or
premium, if any, on the Notes when and as the same shall
become due and payable at maturity, upon acceleration,
optional or mandatory redemption, required repurchase, or
otherwise; or
(c) the Company shall fail to comply with any of its
other covenants, agreements or warranties in this
Indenture or the Pledge Agreement (other than the defaults
specified in clauses (a) and (b) above), which failure
continues (A) in the case of any such covenant, agreement
or warranty contained in Section 10.11, 10.12 or 10.14 or
in Article Eight of this Indenture, for a period of 30
days after written notice thereof has been given to the
Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25.0% in aggregate principal
amount of the Notes then Outstanding and (B) in the case
of any other such covenant, agreement or warranty
contained in this Indenture, for 60 days after written
notice thereof has been given to the Company by the
Trustee or to the Company and the Trustee by the Holders
of at least 25.0% in aggregate principal amount of the
Notes then Outstanding; or
(d) the occurrence of one or more defaults under any
agreements, indentures or instruments under which the
Company or any Restricted Subsidiary then has outstanding
Indebtedness in excess of $5 million individually or in
the aggregate and, if not already matured to its final
maturity in accordance with its terms, such Indebtedness
shall have been accelerated and such Indebtedness shall
not have been repaid or such acceleration rescinded within
20 days; or
(e) one or more judgments, orders or decrees for the
payment of money in excess of $5 million, either
individually or in the aggregate (net of amounts covered
by a reputable and creditworthy insurance company, or by
bond, surety or similar instrument), shall be entered
against the Company or any Restricted Subsidiary or any of
their respective properties and which judgments, orders or
decrees are not paid, discharged, bonded or stayed or
stayed pending appeal for a period of 60 days after their
entry; or
<PAGE>
(f) there shall have been entered by a court of
competent jurisdiction (a) a decree or order for relief in
respect of the Company or any Restricted Subsidiary in an
involuntary case or proceeding under any applicable
Bankruptcy Law or (b) a decree or order adjudging the
<PAGE>
Company or any Restricted Subsidiary bankrupt or
insolvent, or seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company
or any Restricted Subsidiary under any applicable Federal
or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Restricted
Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of
their affairs, and any such decree or order for relief
shall continue to be in effect, or any such other decree
or order shall be unstayed and in effect, for a period of
60 days; or
(g) (i) the Company or any Restricted Subsidiary
commences a voluntary case or proceeding under any
applicable Bankruptcy Law or any other case or proceeding
to be adjudicated bankrupt or insolvent, (ii) the Company
or any Restricted Subsidiary consents to the entry of a
decree or order for relief in respect of the Company or
such Restricted Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or to the
commencement of any bankruptcy or insolvency case or
proceeding against it, (iii) the Company or any Restricted
Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable Federal or
state law, (iv) the Company or any Restricted Subsidiary
(x) consents to the filing of such petition or the
appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or such Restricted
Subsidiary or of any substantial part of their respective
property, (y) makes an assignment for the benefit of
creditors or (z) admits in writing its inability to pay
its debts generally as they become due or (v) the Company
or any Restricted Subsidiary takes any corporate action in
furtherance of any such actions in this paragraph (g); or
(h) after the execution and delivery thereof, the
Pledge Agreement ceases to be in full force and effect
(other than in accordance with its terms), or the Pledge
Agreement ceases to give the Trustee the Liens, rights,
powers and privileges purported to be created thereby
(other than in accordance with its terms), or the Pledge
Agreement is declared null and void, or the Company denies
<PAGE>
any of its obligations under the Pledge Agreement or any
collateral purported to be pledged thereunder becomes
subject to any Lien other than the Liens created or
permitted by the Pledge Agreement.
<PAGE>
The Company shall provide an Officers' Certificate to
the Trustee promptly upon any officer of the Company obtaining
knowledge of any Default or Event of Default that has occurred
and, if applicable, describe such Default or Event of Default
and the status thereof.
Section 5.02. Acceleration of Maturity; Rescission
and Annulment.
If an Event of Default (other than an Event of
Default specified in Section 5.01(f) or (g) with respect to the
Company) occurs and is continuing, the Trustee or the Holders
of not less than 25.0% in aggregate principal amount of the
Notes then Outstanding may, and the Trustee upon the request of
the Holders of not less than 25.0% in aggregate principal
amount of the Notes then Outstanding shall, declare the Notes
due and payable, in an amount equal to the principal amount of
the Notes, together with accrued and unpaid interest to the
date the Notes become due and payable immediately by notice in
writing to the Company, and to the Company and the Trustee, if
by the Holders, specifying the respective Event of Default and
that such notice is a "notice of acceleration," and the Notes
and all accrued and unpaid interest thereon shall thereupon
become immediately due and payable. If an Event of Default
specified in Section 5.01(f) or (g) with respect to the Company
above occurs and is continuing, then the principal of all the
Notes shall 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.
At any time after such declaration of acceleration
has been made and before a judgment or decree for payment of
the money due has been obtained by the Trustee as hereinafter
provided in this Article, the Holders of not less than a
majority in aggregate principal amount of the Notes
Outstanding, by written notice to the Company and the Trustee,
may rescind such declaration of acceleration and its
consequences if:
(a) the Company has paid or deposited with the
Trustee a sum sufficient to pay:
(i) all amounts paid or advanced by the Trustee
under Section 6.07, including the reasonable
compensation, expenses, disbursements and advances of
<PAGE>
the Trustee, its agents and counsel;
(ii) all overdue interest on all Notes;
<PAGE>
(iii) the principal of and premium, if any, on
any Notes which have become due otherwise than by
such declaration of acceleration and interest thereon
at the rate then borne by the Notes; and
(iv) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate
then borne by the Notes; and
(b) all Events of Default, other than the non-
payment of principal of the Notes that has become due
solely by such declaration of acceleration, have been
cured or waived.
Section 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee; Other Remedies.
The Company covenants that if:
(a) default is made in the payment of any interest
on any Note when such interest becomes due and payable and
such default continues for a period of 30 days or more, or
(b) default is made in the payment of the principal
of or premium, if any, on any Note at the Stated Maturity
thereof or upon any optional or mandatory redemption
thereof or required repurchase thereof,
the Company will, upon demand of the Trustee, pay to the
Trustee, for the benefit of the Holders of such Notes, the
whole amount then due and payable on such Notes for principal,
premium, if any, and interest, with interest upon the overdue
principal, premium, if any, and, to the extent that payment of
such interest shall be legally enforceable, upon overdue
installments of interest, at the rate then borne by the Notes;
and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as trustee
of an express trust, may, but is not obligated under this
paragraph to, institute a judicial proceeding for the
collection of the sums so due and unpaid and may, but is not
<PAGE>
obligated under this paragraph to, prosecute such proceeding to
judgment or final decree, and may, but is not obligated under
this paragraph to, enforce the same against the Company or any
other obligor upon the Notes and collect the moneys adjudged or
decreed to be payable in the manner provided by law out of the
<PAGE>
property of the Company or any other obligor upon the Notes,
wherever situated.
If an Event of Default occurs and is continuing, the
Trustee may in its discretion, but is not obligated under this
paragraph to, (i) proceed to protect and enforce its rights and
the rights of the Holders under this Indenture, the Notes and
the Pledge Agreement by such appropriate private or judicial
proceedings as the Trustee shall deem most effectual to protect
and enforce such rights, whether for the specific enforcement
of any covenant or agreement contained in this Indenture, the
Notes or the Pledge Agreement or in aid of the exercise of any
power granted herein or therein, or (ii) proceed to protect and
enforce any other proper remedy. No recovery of any such
judgment upon any property of the Company shall affect or
impair any rights, powers or remedies of the Trustee or the
Holders. Each Holder of Notes, by accepting a Note,
(a) acknowledges that the exercise of remedies by the Trustee
with respect to the collateral pledged under the Pledge
Agreement is subject to the terms and conditions of the Pledge
Agreement and (b) acknowledges and consents to the terms of the
Pledge Agreement and to the Trustee's performance of its
agreements thereunder.
Section 5.04. Trustee May File Proofs of Claims.
In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon
the Notes, or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of
whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise, but is not obligated under this
paragraph
(a) to file and prove a claim for the whole amount
of principal, premium, if any, and interest owing and
unpaid in respect of the Notes and to file such other
papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any
<PAGE>
claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial
proceeding, and
<PAGE>
(b) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same;
and any Custodian, in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making
of such payments directly to the Holders, to pay the Trustee
any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section
6.07 hereof.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of
any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 5.05. Trustee May Enforce Claims Without
Possession of Notes.
All rights of action and claims under this Indenture,
the Notes or the Pledge Agreement may be prosecuted and
enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name and as trustee of an express
trust, and any recovery of judgment shall, after provision for
the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Holders of the Notes
in respect of which such judgment has been recovered.
Section 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this
Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of
such money on account of principal, premium, if any, or
interest, upon presentation of the Notes and the notation
thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
<PAGE>
First: to the Trustee for amounts due under Section
6.07;
Second: to Holders for interest accrued on the
Notes, ratably, without preference or priority of any
<PAGE>
kind, according to the amounts due and payable on the
Notes for interest;
Third: to Holders for principal amounts owing under
the Notes, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Notes for principal and premium; and
Fourth: the balance, if any, to the Company.
The Trustee, upon prior written notice to the
Company, may fix a record date and payment date for any payment
to Noteholders pursuant to this Section 5.06.
Section 5.07. Limitation on Suits.
No Holder of any Notes shall have any right to
institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice
to the Trustee of a continuing Event of Default;
(b) the Holder or Holders of not less than 25.0% in
principal amount of the Outstanding Notes shall have made
written request(s) to the Trustee to institute proceedings
in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs, expenses
and liabilities to be incurred in compliance with such
request;
(d) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in aggregate principal
amount of the Outstanding Notes;
it being understood and intended that no one or more Holders
<PAGE>
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture or any Note to
affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture,
<PAGE>
any Note or the Pledge Agreement except in the manner provided
in this Indenture and for the equal and ratable benefit of all
the Holders.
Section 5.08. Unconditional Right of Holders To
Receive Principal, Premium and Interest.
Notwithstanding any other provision in this
Indenture, the Holder of any Note shall have the right, which
is absolute and unconditional, to receive cash payment, in
United States dollars, of the principal of, premium, if any,
and (subject to Section 3.07 hereof) interest on such Note on
the respective Stated Maturities expressed in such Note (or, in
the case of redemption or repurchase, on the respective
Redemption Dates or date fixed for repurchase) and to institute
suit for the enforcement of any such payment, and such rights
shall not be impaired without the express consent of such
Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture
or any Note and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the
Company, the Trustee and the Holders shall, subject to any
determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been
instituted.
Section 5.10. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
<PAGE>
Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder
of any Note to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
<PAGE>
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article Five or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may
be.
Section 5.12. Control by Majority.
The Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes shall 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;
provided, however, that:
(a) such direction shall not be in conflict with any
rule of law or with this Indenture or any Note or the
Pledge Agreement or expose the Trustee to liability; and
(b) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
In the event the Trustee takes any action or follows
any direction pursuant to this Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole
discretion against any loss or expense caused by taking such
action or following such direction. This Section 5.12 shall be
in lieu of { 316(a)(1)(A) of the TIA, and such { 316(a)(1)(A)
of the TIA is hereby expressly excluded from this Indenture and
the Notes, as permitted by the TIA.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes may on behalf of the
Holders of all the Notes waive any past Default hereunder and
its consequences, except a Default:
(a) in the payment of the principal of, premium, if
any, or interest on any Note; or
(b) in respect of a covenant or provision under this
Indenture which cannot be modified or amended without the
<PAGE>
consent of the Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Indenture;
<PAGE>
but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent
thereon. In case of any such waiver, the Company, the Trustee
and the Holders shall be restored to their former positions and
rights hereunder and under the Notes, respectively. This
paragraph of this Section 5.13 shall be in lieu of
{ 316(a)(1)(B) of the TIA and such { 316(a)(1)(B) of the TIA is
hereby expressly excluded from this Indenture and the Notes, as
permitted by the TIA.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder
of any Note by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this
Indenture, the Notes or the Pledge Agreement, or in any suit
against the Trustee for any action taken, suffered or omitted
by it as Trustee, the filing by any party litigant in such suit
of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such
suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than
10% in principal amount of the Outstanding Notes, or to any
suit instituted by any Holder for the enforcement of the
payment of the principal of, premium, if any, or interest on
any Note on or after the respective Stated Maturities expressed
in such Note (or, in the case of redemption or repurchase, on
or after the respective Redemption Dates or dates fixed for
repurchase).
Section 5.15. Waiver of Stay, Extension or Usury
Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury or other
law wherever enacted, now or at any time hereafter in force,
which would prohibit or forgive the Company from paying all or
any portion of the principal of, premium, if any, or interest
<PAGE>
on the Notes contemplated herein or in the Notes or which may
affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the
<PAGE>
execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of
Default,
(1) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture or the Pledge Agreement; but in the case of any
such certificates or opinions which by provision hereof
are specifically required to be furnished to the Trustee,
the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements
of this Indenture.
(b) In case a Default has occurred, the Trustee
shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture or the Pledge
Agreement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that (i)
this paragraph does not limit the effect of paragraph (a) of
this Section 6.01; (ii) the Trustee shall not be liable for any
error of judgment made in good faith by an officer of the
Trustee, unless it is proved that the Trustee was negligent in
<PAGE>
ascertaining the pertinent facts; and (iii) the Trustee shall
not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by
it pursuant to Section 5.12.
<PAGE>
(d) No provision of this Indenture or the Pledge
Agreement shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit
to take any action under this Indenture or take any action at
the request or direction of Holders if it shall have reasonable
grounds for believing that repayment of such funds is not
assured to it or it does not receive an indemnity satisfactory
to it in its sole discretion against such risk, liability,
loss, fee or expense which might be incurred by it in
compliance with such request or direction.
(e) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section
6.01.
Section 6.02. Notice of Defaults.
Within 30 days after the occurrence of any Default,
the Trustee shall transmit by mail to all Holders, as their
names and addresses appear in the Note Register, notice of such
Default hereunder; provided, however, that, except in the case
of a Default in the payment of the principal of, premium, if
any, or interest on any Note, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of
Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the
Holders.
Section 6.03. Certain Rights of Trustee.
Subject to Section 6.01 hereof and the provisions of
(S)315 of the TIA:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, approval,
appraisal, bond, debenture, note, coupon, security, other
evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or
presented by the proper party or parties;
<PAGE>
(b) any request or direction of the Company
mentioned herein shall be sufficiently evidenced by a
Company Request or Company Order and any resolution of the
Board of Directors of the Company may be sufficiently
evidenced by a Board Resolution of the Company thereof;
<PAGE>
(c) the Trustee and its agents may consult, at the
expense of the Company, with counsel and any written
advice of such counsel or any Opinion of 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 reliance thereon in accordance with
such advice or Opinion of Counsel;
(d) the Trustee and its agents shall not be bound to
make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, approval, appraisal, bond, debenture, note, coupon,
security, other evidence of indebtedness or other paper or
document unless requested in writing so to do by the
Holders of not less than a majority in aggregate principal
amount of the Notes then Outstanding; provided, however,
that, if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable
indemnity against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of every
such investigation shall be paid by the Company or, if
paid by the Trustee or any predecessor Trustee, shall be
repaid by the Company upon demand; provided, further,
however, that the Trustee in its discretion may make such
further inquiry or investigation into such facts or
matters as it may deem fit, and, if the Trustee shall
determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or
attorney during the reasonable business hours of the
Company;
(e) the Trustee and its agents may execute any of
the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent (other
than an agent who is an employee of the Trustee) or
attorney appointed with due care by it hereunder;
<PAGE>
(f) Subject to Sections 9.01 and 9.02 hereof, the
Trustee may (but shall not be obligated to), without the
consent of the Holders, give any consent, waiver or
approval required under the Pledge Agreement or by the
terms hereof with respect to the Collateral, but shall not
<PAGE>
without the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the
time outstanding (i) give any consent, waiver or approval
or (ii) agree to any amendment or modification of, the
Pledge Agreement, in each case, that would have an adverse
effect on the interests of any Holder. The Trustee shall
be entitled to request and conclusively rely on an Opinion
of Counsel with respect to whether any consent, waiver,
approval, amendment or modification shall have an adverse
effect on the interests of any Holder.
Section 6.04. Trustee Not Responsible for Recitals,
Dispositions of Notes or Application of Proceeds Thereof.
The recitals contained herein and in the Notes,
except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Indenture, the Notes or the Pledge Agreement, except that the
Trustee represents that it is duly authorized to execute and
deliver this Indenture and the Pledge Agreement, authenticate
the Notes and perform its obligations hereunder and that the
statements made by it in a Statement of Eligibility and
Qualification on Form T-1 supplied to the Company in connection
with the registration of any Notes issued hereunder are true
and accurate subject to the qualifications set forth therein.
The Trustee shall not be accountable for the use or application
by the Company of Notes or the proceeds thereof.
Section 6.05. Trustee and Agents May Hold Notes;
Collections; etc.
The Trustee, any Paying Agent, Note Registrar or any
other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes, with the
same rights it would have if it were not the Trustee, Paying
Agent, Note Registrar or such other agent and, subject to
Sections 6.08 and 6.13 hereof and {{ 310 and 311 of the Trust
Indenture Act, may otherwise deal with the Company and receive,
collect, hold and retain collections from the Company with the
same rights it would have if it were not the Trustee, Paying
Agent, Note Registrar or such other agent.
Section 6.06. Money Held in Trust.
<PAGE>
All moneys received by the Trustee shall, until used
or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be
segregated from other funds except to the extent required
<PAGE>
herein or by law. The Trustee shall not be under any liability
for interest on any moneys received by it hereunder.
Section 6.07. Compensation and Indemnification of
Trustee and Its Prior Claim.
The Company covenants and agrees: (a) to pay to the
Trustee from time to time, and the Trustee shall be entitled
to, reasonable compensation for all services rendered by it
hereunder and under the Pledge Agreement (which shall not be
limited by any provision of law in regard to the compensation
of a trustee of an express trust); (b) to reimburse the Trustee
and each predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or
made by or on behalf of it in accordance with any of the
provisions of this Indenture and under the Pledge Agreement
(including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other
Persons not regularly in its employ), except any such
reasonable expense, disbursement or advance as may arise from
its negligence or bad faith; and (c) to indemnify the Trustee
and each predecessor Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this
Indenture or the trusts hereunder and under the Pledge
Agreement and its duties hereunder and under the Pledge
Agreement, including enforcement of this Section 6.07. The
obligations of the Company under this Section to compensate and
indemnify the Trustee and each predecessor Trustee and to pay
or reimburse the Trustee and each predecessor Trustee for
expenses, disbursements and advances shall constitute an
additional obligation hereunder and shall survive the
satisfaction and discharge of this Indenture. To secure the
obligations of the Company to the Trustee under this Section
6.07, the Trustee shall have a prior Lien upon all property and
funds held or collected by the Trustee as such, except funds
and property paid by the Company and held in trust for the
benefit of the Holders of particular Notes under this
Indenture. All such payments and reimbursements shall be made
with interest at a rate reasonably acceptable to the Trustee
and the Company. The Trustee shall be entitled to file a proof
of claim in any bankruptcy proceeding as a secured creditor for
its reasonable compensation, fees and expenses under this
Section 6.07.
<PAGE>
When the Trustee incurs expenses under Article Five
hereof, the expenses (including reasonable fees and expenses of
its counsel) and the compensation for the service in connection
<PAGE>
therewith are intended to constitute expense of administration
under any applicable bankruptcy law.
Section 6.08. Conflicting Interests.
The Trustee shall be subject to and comply with the
provisions of { 310(b) of the TIA.
Section 6.09. Corporate Trustee Required; Eligi-
bility.
There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under TIA {{ 310(a)(1) and
310(a)(5) and which shall have a combined capital, surplus and
undivided profits of at least $100,000,000, and have an office
or agency at which Notes may be presented for transfer and
redemption and at which demands may be made in The City of New
York. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of
United States Federal, state, territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the
effect hereinafter specified in this Article.
Section 6.10. Resignation and Removal; Appointment
of Successor Trustee.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment by
the successor Trustee under Section 6.11.
(b) The Trustee, or any trustee or trustees
hereinafter appointed, may at any time resign by giving written
notice thereof to the Company at least 20 Business Days prior
to the date of such proposed resignation. Upon receiving such
notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument, a copy of which shall
be delivered to the resigning Trustee and a copy to the
successor trustee. If an instrument of acceptance by a
<PAGE>
successor Trustee shall not have been delivered to the Trustee
within 20 Business Days after the giving of such notice of
resignation, the resigning Trustee may, or any Holder who has
been a bona fide Holder of a Note for at least six months may,
on behalf of himself and all others similarly situated,
<PAGE>
petition any court of competent jurisdiction for the
appointment of a successor Trustee. Such court may thereupon,
after such notice, if any, as it may deem proper, appoint a
successor trustee.
(c) The Trustee may be removed at any time by an Act
of the Holders of a majority in principal amount of the
Outstanding Notes, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of { 310(b) of the TIA in accordance with
Section 6.08 hereof after written request therefor by the
Company or by any Holder who has been a bona fide Holder
of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under
Section 6.09 hereof and shall fail to resign after written
request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed or
any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose or
rehabilitation, conservation or liquidation,
then, in any case, (i) the Company may remove the Trustee, or
(ii) subject to Section 5.14, the Holder of any Note who has
been a bona fide Holder of a Note for at least six months may,
on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a
successor trustee.
(e) If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the
office of Trustee for any cause, the Company shall promptly
appoint a successor Trustee. If, within one year after such
resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding
<PAGE>
Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the
<PAGE>
Company or the Holders of the Notes and accepted appointment in
the manner hereinafter provided, the Holder of any Note who has
been a bona fide Holder for at least six months may, subject to
Section 5.14, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each
resignation and each removal of the Trustee and each
appointment of a successor Trustee by mailing written notice of
such event by first-class mail, postage prepaid, to the Holders
of Notes as their names and addresses appear in the Note
Register. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.
(g) Any resignation or removal of the Trustee
pursuant to this Indenture shall be deemed to be a resignation
or removal of the Trustee in its capacity as Trustee under the
Pledge Agreement and any appointment of a successor Trustee
pursuant to this Indenture shall be deemed to be an appointment
of a successor Trustee under the Pledge Agreement and such
successor shall assume all of the obligations of the Trustee in
its capacity as Trustee under the Pledge Agreement.
Section 6.11. Acceptance of Appointment by
Successor.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all
the rights, powers, trusts and duties of the retiring Trustee
as if originally named as Trustee hereunder; but, nevertheless,
on the written request of the Company or the successor Trustee,
upon payment of amounts due it pursuant to Section 6.07, such
retiring Trustee shall duly assign, transfer and deliver to the
successor Trustee all moneys and property at the time held by
it hereunder and shall execute and deliver an instrument
transferring to such successor Trustee all the rights, powers,
duties and obligations of the retiring Trustee. Upon request
of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights and
<PAGE>
powers. Any Trustee ceasing to act shall, nevertheless, retain
a prior claim upon all property or funds held or collected by
such Trustee to secure any amounts then due it pursuant to the
provisions of Section 6.07.
<PAGE>
No successor Trustee with respect to the Notes shall
accept appointment as provided in this Section 6.11 unless at
the time of such acceptance such successor Trustee shall be
eligible to act as Trustee under this Article.
Upon acceptance of appointment by any successor
Trustee as provided in this Section 6.11, the Company shall
give notice thereof to the Holders of the Notes, by mailing
such notice to such Holders at their addresses as they shall
appear on the Note Register. If the acceptance of appointment
is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined
with the notice called for by Section 6.10(f). If the Company
fails to give such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee
shall cause such notice to be given at the expense of the
Company.
Section 6.12. Successor Trustee by Merger, etc.
Any corporation into which the Trustee may be merged
or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion, or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder without the execution or filing of any
paper or any further act on the part of any of the parties
hereto, provided such corporation shall be eligible under this
Article to serve as Trustee hereunder.
In case at the time such successor to the Trustee
under this Section 6.12 shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor Trustee
and deliver such Notes so authenticated; and, in case at that
time any of the Notes shall not have been authenticated, any
successor to the Trustee under this Section 6.12 may
authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all
such cases such certificate shall have the full force which it
is anywhere in the Notes or in this Indenture provided that the
certificate of the Trustee shall have.
<PAGE>
Section 6.13. Preferential Collection of Claims
Against Issuers.
The Trustee shall comply with Section 311(a) of the
TIA, excluding any creditor relationship listed in { 311(b) of
<PAGE>
the TIA. If the present or any future Trustee shall resign or
be removed, it shall be subject to { 311(a) of the TIA to the
extent provided therein.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company
To Furnish Trustee Names and Addresses of Holders.
(a) The Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to
it of the names and addresses of all Holders; provided,
however, that if and for so long as the Trustee shall be the
Note Registrar, the Note Register shall satisfy the
requirements relating to such list. Neither the Company nor
the Trustee shall be under any responsibility with regard to
the accuracy of such list.
(b) The Company will furnish or cause to be
furnished to the Trustee
(i) semiannually, not more than 10 days after each
Regular Record Date, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the
Holders as of such Regular Record Date; and
(ii) at such other times as the Trustee may request
in writing, within 30 days after receipt by the Company of
any such request, a list of similar form and content as of
a date not more than 15 days prior to the time such list
is furnished;
provided, however, that if and so long as the Trustee shall be
the Note Registrar, no such list need be furnished pursuant to
this Section 7.01(b).
Section 7.02. Communications of Holders.
Holders may communicate with other Holders with
respect to their rights under this Indenture or under the Notes
pursuant to { 312(b) of the TIA. The Trustee shall comply with
{ 312(b) of the TIA. The Company and the Trustee and any and
<PAGE>
all other Persons benefited by this Indenture shall have the
protection afforded by { 312(c) of the TIA.
<PAGE>
Section 7.03. Reports by Trustee.
Within 60 days after June 15 of each year commencing
with the first June 15 following the date of this Indenture,
the Trustee shall mail to all Holders, as their names and
addresses appear in the Note Register, a brief report dated as
of such June 15 that complies with { 313(a) of the TIA;
provided, however, that if no such event as described in
{ 313(a) of the TIA has occurred within such period then no
such report need be transmitted. The Trustee shall also comply
with {{ 313(b), 313(c) and 313(d) of the TIA. At the time of
its mailing to Holders, a copy of each report shall be filed
with the Company, the Commission and with each national
securities exchange on which the Notes are listed. The Company
shall notify the Trustee when the Notes are listed on any stock
exchange or any delisting thereof.
Section 7.04. Reports by Company.
The Company shall file with the Trustee copies of the
reports and of the information and documents which the Company
is required to provide to any Person under Section 10.09.
ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01. When Company May Merge, etc.
The Company shall not, in any single transaction or
series of related transactions, consolidate or merge with or
into (whether or not the Company is the Surviving Person), or
sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets to,
another Person, and the Company will not permit any Restricted
Subsidiary to enter into any such transaction or series of
related transactions if such transaction or series of related
transactions, in the aggregate, would result in a sale,
assignment, transfer, lease, conveyance or other disposition of
all or substantially all of the properties and assets of the
Company and the Restricted Subsidiaries, taken as a whole, to
another Person, unless (i) the Surviving Person is a
corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the
<PAGE>
Surviving Person (if other than the Company) assumes all the
obligations of the Company under the Notes, this Indenture and,
if then in effect, the Registration Rights Agreement and the
Pledge Agreement pursuant to a supplemental indenture or other
written agreement, as the case may be, in a form reasonably
<PAGE>
satisfactory to the Trustee; (iii) at the time of and
immediately after such Disposition, no Default or Event of
Default shall have occurred and be continuing; and (iv) the
Surviving Person (A) will have Consolidated Net Worth
(immediately after giving effect to the Disposition on a pro
forma basis) equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction, and
(B) at the time of such Disposition and after giving pro forma
effect thereto, would be permitted to incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) of
Section 10.11. The Surviving Person need not comply with
clause (iv)(B) of the immediately preceding sentence in
connection with any merger or consolidation of the Company with
or into PAI if (i) since its formation PAI shall not have
incurred any Indebtedness or granted any Liens in respect of
its property or assets (or entered into any agreement to do any
of the foregoing) or conducted any business or operations other
than owning the Capital Stock of the Company and performing its
obligations under the Tax Sharing Agreement and any management
agreement with respect to the Company and its Subsidiaries,
except for Indebtedness incurred under the Existing Credit
Facility and Liens granted in connection therewith and Liens on
the Capital Stock of the Company granted under the Senior
Credit Facility and (ii) all Indebtedness of PAI under the
Existing Credit Facility shall have been repaid in full and all
Liens granted in connection therewith shall have been released.
Section 8.02. Successor Substituted.
Upon any Disposition involving the Company in
accordance with Section 8.01 hereof, the Successor Person or
Persons shall succeed to, and be substituted for, and may
exercise every right and power of, and shall assume all of the
liabilities and obligations of, the Company under this
Indenture, the Notes, the Registration Rights Agreement and the
Pledge Agreement with the same effect as if such successor had
been named as the Company in this Indenture, the Notes, the
Registration Rights Agreement and the Pledge Agreement. When a
successor assumes all the obligations of its predecessor under
this Indenture, the Notes, the Registration Rights Agreement
and the Pledge Agreement, the predecessor shall be released
from those obligations; provided, however, that in the case of
a transfer by lease, the predecessor shall not be released from
the payment of principal, premium, if any, and interest on the
Notes.
<PAGE>
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.
The Company and the Trustee may amend, waive or
supplement this Indenture, the Notes or the Pledge Agreement
without notice to or consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
provided, however, that such amendment or supplement does
not adversely affect the rights of any Holder;
(b) to comply with Article Eight;
(c) to provide for uncertificated Notes in addition
to certificated Notes;
(d) to comply with any requirements of the
Commission in order to effect or maintain the
qualification of this Indenture under the TIA; or
(e) to make any change that would provide any
additional benefit or rights to the Holders or that does
not adversely affect the rights of any Holder;
(f) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein conferred upon the Company; or
(g) to secure the Notes as provided pursuant to the
requirements of Section 10.16 or otherwise.
Notwithstanding the above, the Trustee and the
Company may not make any change that adversely affects the
legal rights of any Holders hereunder or the Pledge Agreement.
The Company shall be required to deliver to the Trustee an
Officers' Certificate and an Opinion of Counsel stating that
any such change under Section 9.01(a) or (e) of the preceding
sentence does not adversely affect the rights of any Holder.
Section 9.02. With Consent of Holders.
Subject to Section 5.08, the Company, when authorized
<PAGE>
by its Board of Directors, and the Trustee may amend or
supplement this Indenture or the Notes with the written consent
of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes, and the Holders of
not less than a majority in aggregate principal amount of the
<PAGE>
Outstanding Notes by written notice to the Trustee may waive
future compliance by the Company with any provision of this
Indenture or the Notes.
Notwithstanding the provisions of this Section 9.02,
without the consent of each Holder affected, an amendment or
waiver, including a waiver pursuant to Section 5.13, may not:
(i) reduce the principal amount of the Notes whose
Holders must consent to an amendment, supplement or
waiver;
(ii) reduce the principal or change the fixed
maturity of any Note, or alter the provisions with respect
to the redemption or repurchase of the Notes in a manner
adverse to the Holders of the Notes;
(iii) reduce the rate of or change the time for
payment of interest on any Notes;
(iv) waive a Default or Event of Default in the
payment of principal of, premium, if any, or interest on
the Notes (except that Holders of at least a majority in
aggregate principal amount of the then outstanding Notes
may (a) rescind an acceleration of the Notes, and
(b) waive the payment default that resulted from such
acceleration);
(v) make any Note payable in money other than that
stated in the Notes;
(vi) modify any of the provisions of Section 5.08 or
5.13 (other than to add sections of this Indenture subject
thereto) or this Section 9.02 (except to increase the
percentage of outstanding Notes required for such actions
or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent
of the holder of each Note affected thereby);
(vii) amend, change or modify the obligation of the
Company to make and consummate (a) a Change of Control
Offer in the event of a Change of Control Triggering
Event, (b) an Asset Sale Offer after any Asset Sale Offer
Trigger Date, (c) an offer to purchase Notes as and when
required by Section 10.12 and (d) an Equity Proceeds
<PAGE>
Offer, or, in each case (a), (b), (c) and (d) of this
paragraph (vii), amend or modify any of the provisions or
definitions with respect thereto;
<PAGE>
(viii) modify the ranking or priority of the Notes (it
being understood that an amendment or waiver with respect
to Section 10.16 is not within the ambit of this paragraph
(viii)); or
(ix) waive a redemption payment with respect to any
Note.
It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form
of any proposed amendment, supplement or waiver, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to the
Holders of each Note affected thereby, with a copy to the
Trustee, a notice briefly describing the amendment, supplement
or waiver. Any failure of the Company to mail such notice, or
any defect therein, shall not, however, in any way impair or
affect the validity of any supplemental indenture.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment of or supplement to this Indenture
or the Notes shall comply with the TIA as then in effect and as
applicable to this Indenture.
Section 9.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder
and every subsequent Holder of that Note or portion of that
Note that evidences the same debt as the consenting Holder's
Note, even if notation of the consent is not made on any note.
Subject to the following paragraph, any such Holder or
subsequent Holder may revoke the consent as to such Holder's
Note or portion of such Note by notice to the Trustee or the
Company received before the date on which the Trustee receives
an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not
theretofore revoked such consent) to the amendment, supplement
or waiver.
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled
<PAGE>
to consent to any amendment, supplement or waiver. If a record
date is fixed, then, notwithstanding the last sentence of the
immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to consent to such
<PAGE>
amendment, supplement or waiver or to revoke any consent
previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid
or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes
effective, it shall bind every Holder of Notes, unless it makes
a change described in any of clauses (i) through (ix) of
Section 9.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Note who has consented to it and
every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note.
Section 9.05. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the
terms of a Note, the Trustee shall (in accordance with the
specific direction of the Company) request the Holder of the
Note to deliver it to the Trustee. The Trustee shall (in
accordance with the specific direction of the Company) place an
appropriate notation on the Note about the changed terms and
return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Note
shall issue and the Trustee shall authenticate a new Note that
reflects the changed terms. Failure to make the appropriate
notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver.
Section 9.06. Trustee May Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or
waiver authorized pursuant to this Article Nine if the
amendment, supplement or waiver does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If
it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver, the
Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that the execution of any amendment,
supplement or waiver is authorized or permitted by this
Indenture, that it is not inconsistent herewith and that it
will be valid and binding upon the Company in accordance with
its terms.
<PAGE>
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and
Interest.
The Company will duly and punctually pay the
principal of, premium, if any, and interest on the Notes in
accordance with the terms of the Notes and this Indenture.
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in The City of New York, an
office or agency where Notes may be presented or surrendered
for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be
served. The office of the Trustee shall be such office or
agency of the Company, unless the Company shall designate and
maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the
Trustee of any change in the location of any such office or
agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Company hereby appoints the
Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one
or more other offices or agencies (in or outside of The City of
New York) where the Notes may be presented or surrendered for
any or all such purposes, and may from time to time rescind
such designation; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of
Manhattan in The City of New York for such purposes. The
Company will give prompt written notice to the Trustee of any
such designation or rescission and any change in the location
of any such other office or agency.
Section 10.03. Money for Note Payments To Be Held in
Trust.
<PAGE>
If the Company shall at any time act as its own
Paying Agent, the Company will, on or before each due date of
the principal of, premium, if any, or interest on any of the
Notes, segregate and hold in trust for the benefit of the
<PAGE>
Holders entitled thereto a sum sufficient to pay the principal,
premium, if any, or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its
action or failure so to act.
If the Company is not acting as Paying Agent, the
Company will, on or before the day preceding each due date of
the principal of, premium, if any, or interest on, any Notes,
deposit with a Paying Agent a sum in same day funds (or, for
interest accrued and unpaid on or prior to May 15, 1999,
additional Notes (valued at 100% of the face amount thereof) in
lieu of cash interest on the Notes as and to the extent
permitted by this Indenture) sufficient to pay the principal,
premium, if any, or interest so becoming due, such sum to be
held in trust for the benefit of the Holders entitled to such
principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of
such action or any failure so to act.
If the Company is not acting as Paying Agent, the
Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the
provisions of this Section 10.03, that such Paying Agent will:
(a) hold all sums (or additional Notes in lieu of
cash interest on the Notes) held by it for the payment of
the principal of, premium, if any, or interest on Notes in
trust for the benefit of the Holders entitled thereto
until such sums shall be paid to such Holders or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any Default by the
Company (or any other obligor upon the Notes) in the
making of any payment of principal of, premium, if any, or
interest on the Notes;
(c) at any time during the continuance of any such
Default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums (or additional Notes
in lieu of cash interest on the Notes) so held in trust by
such Paying Agent; and
(d) acknowledge, accept and agree to comply in all
<PAGE>
respects with the provisions of this Indenture relating to
the duties, rights and liabilities of such Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or
<PAGE>
for any other purpose, pay, or direct any Paying Agent to pay,
to the Trustee all sums (or additional Notes in lieu of cash
interest on the Notes) held in trust by the Company or such
Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company
or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from
all further liability with respect to such money (or additional
Notes in lieu of cash interest on the Notes).
Any money (or additional Notes in lieu of cash
interest on the Notes) deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of, premium, if any, or interest on any Note and
remaining unclaimed for two years after such principal,
premium, if any, or interest has become due and payable shall
be paid to the Company upon receipt of a Company Request
therefor, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money (or additional
Notes in lieu of cash interest on the Notes), and all liability
of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, shall at the
expense of the Company cause to be published once, in the New
York Times and the Wall Street Journal (national edition),
notice that such money (or additional Notes in lieu of cash
interest on the Notes) remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from
the date of such notification or publication, any unclaimed
balance of such money (or additional Notes in lieu of cash
interest on the Notes) then remaining will be repaid to the
Company.
Section 10.04. Existence.
Subject to Article Eight, the Company will do or
cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate
existence of each of the Restricted Subsidiaries, and the
rights (charter and statutory), licenses and franchises of the
Company and each of the Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any
<PAGE>
such right, license or franchise if the Board of Directors
shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and the
Restricted Subsidiaries as a whole and that the loss thereof is
not disadvantageous in any material respect to the Holders;
<PAGE>
provided, further, however, that the foregoing shall not
prohibit a sale, transfer or conveyance of a Restricted
Subsidiary of the Company or any of its assets or Capital Stock
in compliance with the terms of this Indenture.
Section 10.05. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (a) all
taxes, assessments and governmental charges levied or imposed
(i) upon the Company or any of its Subsidiaries or (ii) upon
the income, profits or property of the Company or any of its
Subsidiaries and (b) all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a Lien upon the
property of the Company or any of its Subsidiaries; provided,
however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate
proceedings properly instituted and diligently conducted.
Section 10.06. Maintenance of Properties.
The Company will cause all properties owned by the
Company or the Restricted Subsidiaries or used or held for use
in the conduct of its business or the business of the
Restricted Subsidiaries to be maintained and kept in good
condition, repair and working order (reasonable wear and tear
excepted) and supplied with all necessary equipment and will
cause to be made all repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in
connection therewith may be conducted at all times in the
ordinary course; provided, however, that nothing in this
Section 10.06 shall prevent the Company from discontinuing the
maintenance of any of such properties if such discontinuance
is, in the judgment of the Company, desirable in the conduct of
its business or the business of any of the Restricted
Subsidiaries.
Section 10.07. Insurance.
The Company will at all times keep all of its and the
Restricted Subsidiaries' properties which are of an insurable
nature insured with insurers, believed by the Company in good
<PAGE>
faith to be financially sound and responsible, against loss or
damage to the extent that property of similar character is
usually so insured by corporations similarly situated and
owning like properties (which may include self-insurance, if
<PAGE>
reasonable and in comparable form to that maintained by
companies similarly situated).
Section 10.08. Compliance Certificate.
(a) The Company will deliver to the Trustee within
60 days after the end of each of the Company's first three
fiscal quarters and within 90 days after the end of each of the
Company's fiscal years an Officers' Certificate stating whether
or not the signers know of any Default or Event of Default by
the Company or any Restricted Subsidiary that occurred during
such fiscal period. If they do know of such a Default or Event
of Default, the certificate shall describe any such Default or
Event of Default and its status. The first certificate to be
delivered pursuant to this Section 10.08(a) shall be for the
first full fiscal quarter of the Company beginning after the
Issue Date. The Company shall also deliver a certificate to
the Trustee at least annually from the chief financial officer
(or if the Company does not have a chief financial officer, the
Company's principal executive, financial or accounting officer)
of the Company as to his or her knowledge of the compliance by
the Company and the Restricted Subsidiaries with all conditions
and covenants under this Indenture and whether any Default or
Event of Default has occurred, such compliance to be determined
without regard to any period of grace or requirement of notice
provided herein.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, the Company shall use its reasonable best efforts
to deliver to the Trustee within 90 days after the end of each
fiscal year a written statement by the Company's independent
certified public accountants stating (A) that their audit
examination has included a review of the terms of this
Indenture and the Notes as they relate to accounting matters,
and (B) whether, in connection with their audit examination,
any Default or Event of Default under this Indenture has come
to their attention and, if such a Default or Event of Default
has come to their attention, specifying the nature and period
of existence thereof; provided, however, that, without any
restriction as to the scope of the audit examination, such
independent certified public accountants shall not be liable by
reason of any failure to obtain knowledge of any such Default
or Event of Default that would not be disclosed in the course
of an audit examination conducted in accordance with GAAP.
<PAGE>
(c) The Company will deliver to the Trustee as soon
as possible, and in any event within 10 days after the Company
becomes aware or should reasonably have become aware of the
occurrence of any Default or Event of Default, an Officers'
<PAGE>
Certificate specifying such Default or Event of Default and
what action the Company is taking or proposes to take with
respect thereto.
Section 10.09. Provision of Financial Statements.
Whether or not the Company is then subject to
Section 13(a) or 15(d) of the Exchange Act, the Company will
file with the Commission, so long as the Notes are outstanding,
the annual reports, quarterly reports and other periodic
reports which the Company would have been required to file with
the Commission pursuant to such Section 13(a) or 15(d) if the
Company were so subject, commencing with the quarter ended
September 30, 1996, and such documents shall be filed with the
Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so
to file such documents if the Company were so subject. The
Company will also in any event (i) within 15 days of each
Required Filing Date, (a) transmit or cause to be transmitted
by mail to all Holders of Notes, as their names and addresses
appear in the Note register, without cost to such Holders, and
(b) file with the Trustee copies of the annual reports,
quarterly reports and other periodic reports which the Company
would have been required to file with the Commission pursuant
to Section 13(a) or 15(d) of the Exchange Act if the Company
were subject to such Sections and (ii) if filing such documents
by the Company with the Commission is prohibited under the
Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of
such documents to any prospective holder at the Company's cost.
The Company also shall comply with the other provisions of TIA
{ 314(a). In addition, to the extent applicable, the Company
shall cause its annual reports to stockholders and any
quarterly or other financial reports furnished to stockholders
generally to be filed with the Trustee and mailed, no later
than the date such materials are mailed or made available to
the Company's stockholders, to the Holders at their addresses
as set forth in the register of securities maintained by the
Registrar.
The Company shall provide to the Trustee on a timely
basis such information as the Trustee requires to enable the
Trustee to prepare and file any form required to be submitted
to the Internal Revenue Service or to the Holders of the Notes
relating to original issue discount, including, without
<PAGE>
limitation, Form 1099-OID or any successor form.
<PAGE>
Section 10.10. Pledge of Capital Stock of Park
Broadcasting, Inc. and Park Newspapers, Inc.
Immediately upon repayment in full of all amounts
outstanding under the Senior Credit Facility and the
termination of all commitments thereunder, the Company will
execute and deliver the Pledge Agreement. The Company shall
take all further actions reasonably requested by the Trustee to
effect a valid perfected first priority security interest in
and Lien on all of the Capital Stock of Broadcasting and
Newspapers owned by the Company, whether outstanding on the
date of execution and delivery of the Pledge Agreement or
thereafter issued, including the filing of all appropriate
instruments and the delivery of an opinion of counsel to the
Trustee. Upon the execution and delivery of the Pledge
Agreement, the Company shall be deemed to represent and warrant
as of the date of execution and delivery of the Pledge
Agreement that the Trustee has acquired a valid, perfected,
first priority security interest in and lien on such Capital
Stock.
Section 10.11. Limitation on Incurrence of
Indebtedness.
(a) The Company will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or directly or
indirectly guarantee or in any other manner become directly or
indirectly liable for (collectively, to "incur") any
Indebtedness (including any Acquired Debt), except that the
Company may incur Indebtedness if, at the time of, and
immediately after giving pro forma effect to, such incurrence
of Indebtedness, the Debt to Operating Cash Flow Ratio is not
more than 7.0:1.
(b) The foregoing limitations will not apply to the
incurrence of any of the following (collectively, "Permitted
Indebtedness"), each of which shall be given independent
effect:
(i) Indebtedness incurred by the Company under the Senior
Credit Facility, not to exceed $58,000,000 in
aggregate principal amount outstanding at any time,
less any mandatory or optional prepayments thereof
actually made in respect of the Senior Credit
Facility, and Indebtedness of Broadcasting or any of
<PAGE>
the Subsidiaries of Broadcasting (other than the
Subsidiary which owns radio stations KEZX-AM and
KWJZ-FM) consisting of a guarantee of the Company's
Indebtedness under the Senior Credit Facility, less
any mandatory or optional prepayments thereof
<PAGE>
actually made in respect of the Senior Credit
Facility;
(ii) Indebtedness of the Company represented by the Notes
(including any Notes issued in accordance with this
Indenture in lieu of cash interest on the Notes);
(iii) Indebtedness of the Company represented by the
Exchange Notes (including any Exchange Notes issued
in accordance with this Indenture in lieu of cash
interest on the Exchange Notes or the Initial Notes);
(iv) Indebtedness owed by any Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned
Restricted Subsidiary, or owed by the Company to any
Wholly Owned Restricted Subsidiary; provided,
however, that any such Indebtedness shall be at all
times held by a Person which is either the Company or
a Wholly Owned Restricted Subsidiary of the Company;
provided, further, however, that upon either (a) the
transfer or other disposition of any such
Indebtedness to a Person other than the Company or
another Wholly Owned Restricted Subsidiary or (b) the
sale, lease, transfer or other disposition of shares
of Capital Stock (including by consolidation or
merger) of any such Wholly Owned Restricted
Subsidiary to a Person other than the Company or
another Wholly Owned Restricted Subsidiary, the
incurrence of such Indebtedness shall be deemed to be
an incurrence that is not permitted by this clause
(iv);
(v) Indebtedness permitted to be incurred by
(1) Broadcasting and its Subsidiaries under the
indenture governing the Broadcasting Notes and
(2) Newspapers and its Subsidiaries under the
indenture governing the Newspapers Notes, in each
case as such indentures are in effect on the Issue
Date;
(vi) Indebtedness arising with respect to Interest Rate
Agreement Obligations incurred for the purpose of
fixing or hedging interest rate risk with respect to
any floating rate Indebtedness that is permitted by
the terms of this Indenture to be outstanding;
<PAGE>
(vii) any Indebtedness incurred in connection with or given
in exchange for the renewal, extension, substitution,
refunding, defeasance, refinancing or replacement (a
"refinancing") of any Indebtedness described in
<PAGE>
clauses (ii), (iii), (v) and (viii) of this
Section 10.11(b) or incurred under the first
paragraph of this covenant ("Refinancing
Indebtedness"); provided, however, that (a) the
principal amount of such Refinancing Indebtedness
shall not exceed the principal amount (or accrued
amount, if less) of the Indebtedness so refinanced
(plus the premiums paid in connection therewith
(which shall not exceed the stated amount of any
premium or other payment required to be paid in
connection with such a refinancing pursuant to the
terms of the Indebtedness being refinanced) and the
reasonable expenses incurred in connection
therewith); (b) such Refinancing Indebtedness shall
not require any scheduled payment of principal or
mandatory redemption prior to the earlier of the
final maturity of the Notes or the final maturity of
the Indebtedness being refinanced; (c) such
Refinancing Indebtedness shall rank no more senior,
and shall be at least as subordinated, in right of
payment to the Notes as the Indebtedness being
refinanced; and (d) the obligor on such Refinancing
Indebtedness shall be the obligor on the Indebtedness
being refinanced or the Company; and
(viii) Indebtedness of the Company represented by the
Warrant Notes.
(c) Indebtedness of any Person which is outstanding
at the time such Person becomes a Restricted Subsidiary or is
merged with or into or consolidated with the Company or a
Restricted Subsidiary shall be deemed to have been incurred at
the time such Person becomes a Restricted Subsidiary or is
merged with or into or consolidated with the Company or a
Restricted Subsidiary, and Indebtedness which is assumed at the
time of the acquisition of any asset shall be deemed to have
been incurred at the time of such acquisition.
Section 10.12. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, make any
Restricted Payment, unless at the time of and immediately after
giving effect to the proposed Restricted Payment (with the
value of any such Restricted Payment, if other than cash, to be
<PAGE>
determined reasonably and in good faith by the Board of
Directors of the Company, whose determination shall be
conclusive, and evidenced by (A) a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to
the Trustee and (B) if the value of any such Restricted Payment
<PAGE>
is greater than $5.0 million, an opinion issued by an
investment banking or appraisal firm of national standing),
(i) no Default or Event of Default (and no event that,
after notice or lapse of time, or both, would become
an "event of default" under the terms of any
Indebtedness of the Company or the Restricted
Subsidiaries) shall have occurred and be continuing
or would occur as a consequence thereof;
(ii) the Company could incur at least $1.00 of additional
Indebtedness pursuant to paragraph (a) of Section
10.11; and
(iii) the aggregate amount of all Restricted Payments made
since the Issue Date shall not exceed the sum of
(a) 50% of the Restricted Payment Basket (or if such
Restricted Payment Basket shall be negative, minus
100% of such negative amount), plus (b) the aggregate
amount of all net cash proceeds received after the
Issue Date by the Company from the issuance and sale
(other than to a Restricted Subsidiary) of Capital
Stock (other than Disqualified Stock) to the extent
that such proceeds are not used to redeem,
repurchase, retire or otherwise acquire Capital Stock
or any Indebtedness of the Company or any Restricted
Subsidiary pursuant to clause (ii) of Section
10.12(b) below.
Notwithstanding the foregoing, (1) no Restricted
Payment shall be made unless the Company has paid all accrued
interest due on the Notes on the immediately preceding Interest
Payment Date in cash and (2) prior to making any Restricted
Payment (other than any Permitted Payment set forth in clause
(ii), (iii) or (iv) of Section 10.12(b) below), the Company
shall first make an offer to purchase an aggregate principal
amount of Notes equal to the amount of such proposed Restricted
Payment at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase in accordance with the procedures
set forth in Section 10.12(c) below. After the consummation of
such offer to purchase, the Company may make a Restricted
Payment in an amount equal to the excess of the aggregate
amount of Notes offered to be purchased over the aggregate
amount tendered for purchase pursuant to such offer; provided,
<PAGE>
however, that all other conditions set forth in this covenant
for making such Restricted Payment are complied with at such
time. For the purposes of clause (iii) of the immediately
preceding paragraph only, any payment made pursuant to clause
(E) of the second paragraph of Section 10.13 shall be included
<PAGE>
as if it were a Restricted Payment in the calculation of the
aggregate amount of all Restricted Payments made since the
Issue Date.
(b) The foregoing provisions will not prohibit, so
long as (other than with respect to clause (i) below) there is
no Default or Event of Default continuing, the following
actions (collectively, "Permitted Payments"), each of which
will be given independent effect: (i) the payment of any
dividend within 60 days after the date of declaration thereof
if at such declaration date such payment would have been
permitted under this Indenture; (ii) the redemption,
repurchase, retirement or other acquisition of any Capital
Stock or any Indebtedness of the Company in exchange for, or
out of the proceeds of, the substantially concurrent sale
(other than to a Restricted Subsidiary) of Capital Stock or any
Indebtedness of the Company (other than Disqualified Stock);
(iii) the repurchase of the Warrants pursuant to the terms of
the Warrant Agreement (as in effect on the Issue Date) through
the issuance of Notes; and (iv) the payment of cash in lieu of
the issuance of fractional shares of Common Stock upon exercise
of the Warrants pursuant to the terms of the Warrant Agreement
as in effect on the Issue Date. For purposes of clause (iii)
of the first paragraph of Section 10.12(a) above, Permitted
Payments made pursuant to clauses (i), (iii) and (iv) of the
immediately preceding sentence shall be included (as of the
date of declaration in the case of such clause (i)) as
Restricted Payments made since the Issue Date and Permitted
Payments made pursuant to clause (ii) of the immediately
preceding sentence shall not be included as Restricted
Payments.
(c) If the Company desires and is otherwise able to
make a Restricted Payment it shall first mail or cause to be
mailed a written notice prepared by the Company of an offer to
purchase (the "Restricted Payment Offer") the maximum aggregate
principal amount of Notes that may be purchased from the amount
of the proposed Restricted Payment at a purchase price in cash
equal to 100% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date fixed for repurchase (the
"Restricted Payment Offer Price") to the Holders of Notes at
their last registered addresses with a copy to the Trustee and
the Paying Agent. The Restricted Payment Offer shall remain
open from the time of mailing for at least 20 Business Days or
such longer period as may be required by law. The notice,
<PAGE>
which shall govern the terms of the Restricted Payment Offer,
shall include such disclosures as are required by law and shall
state:
<PAGE>
(a) that the Company is offering to purchase the
maximum principal amount of Notes that may be purchased
out of the amount of the proposed Restricted Payment at a
purchase price in cash equal to the Restricted Payment
Offer Price on a date (the "Restricted Payment Purchase
Date"), which shall be a Business Day, specified in such
notice, that is not earlier than 30 days or later than 60
days from the date such notice is mailed;
(b) the amount of accrued interest, if any, as of
the Restricted Payment Purchase Date;
(c) that any Note not tendered for payment will
continue to accrue interest in accordance with the terms
thereof;
(d) that, unless the Company defaults in the payment
of the purchase price for the Notes payable pursuant to
the Restricted Payment Offer, any Notes accepted for
payment pursuant to the Restricted Payment Offer shall
cease to accrue interest after the Restricted Payment
Purchase Date;
(e) that Holders electing to have Notes purchased
pursuant to a Restricted Payment Offer will be required to
surrender their Notes to the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City
time, on the Restricted Payment Purchase Date with the
"Option of Holder to Elect Purchase" on the reverse
thereof completed and must complete any form letter of
transmittal proposed by the Company (which letter must be
completed correctly by such Holder) and which is
acceptable to the Trustee and the Paying Agent;
(f) that Holders of Notes will be entitled to
withdraw their election if the Paying Agent receives, not
later than 5:00 p.m., New York City time, on the Business
Day prior to the Restricted Payment Purchase Date, a
telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of
Notes the Holder delivered for purchase, the Note
certificate number (if any) and a statement that such
Holder is withdrawing its election to have such Notes
purchased;
<PAGE>
(g) that Holders whose Notes are purchased only in
part will be issued Notes equal in principal amount to the
unpurchased portion of the Notes surrendered;
<PAGE>
(h) the instructions that Holders must follow in
order to tender their Notes; and
(i) information concerning the business of the
Company, the most recent annual and quarterly reports of
the Company filed with the SEC pursuant to the Exchange
Act (or, if the Company is not then required to file any
such reports with the SEC, the comparable reports prepared
pursuant to Section 10.09), a description of material
developments in the Company's business, information with
respect to pro forma historical financial information
after giving effect to such Restricted Payment and such
other information concerning the circumstances and
relevant facts regarding such Restricted Payment and
Restricted Payment Offer as would be material to a Holder
of Notes in connection with the decision of such Holder as
to whether or not it should tender Notes pursuant to the
Restricted Payment Offer.
On the Restricted Payment Purchase Date, the Company
will (i) accept for payment the maximum principal amount of
Notes or portions thereof tendered pursuant to the Restricted
Payment Offer that can be purchased with the amount of the
proposed Restricted Payment, (ii) deposit with the Paying Agent
an amount in cash equal to the aggregate purchase price of all
Notes or portions thereof accepted for payment and any accrued
and unpaid interest on such Notes as of the Restricted Payment
Purchase Date, and (ii) deliver or cause to be delivered to the
Trustee all Notes tendered pursuant to the Restricted Payment
Offer. If less than all Notes tendered pursuant to the
Restricted Payment Offer are accepted for payment by the
Company for any reason consistent with this Indenture,
selection of the Notes to be purchased by the Company shall be
in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or,
if the Notes are not so listed, on a pro rata basis or by lot;
provided, however, that Notes accepted for payment in part
shall only be purchased in integral multiples of $1,000. The
Paying Agent shall promptly mail to each Holder of Notes or
portions thereof accepted for payment an amount in cash equal
to the Restricted Payment Offer Price for such Notes plus any
accrued and unpaid interest thereon, and the Trustee shall
promptly authenticate and mail to such Holders of Notes
accepted for payment in part a new Note equal in principal
amount to any unpurchased portion of the Note surrendered. Any
<PAGE>
Notes not so accepted in whole or in part shall be promptly
returned to the Holder thereof.
On and after a Restricted Payment Purchase Date,
interest will cease to accrue on the Notes or portions thereof
<PAGE>
accepted for payment unless the Company defaults in the payment
of the purchase price therefor. The Company will publicly
announce the results of the Restricted Payment Offer not later
than the first Business Day following the Restricted Payment
Purchase Date.
The Company will comply with 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 the event that the Company is required to
purchase Notes as described above and will be deemed not to be
in violation of any of its covenants herein to the extent such
compliance is in conflict with such covenants.
Section 10.13. Limitations on Transactions with
Affiliates.
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, enter into or
suffer to exist any transaction or series of related
transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services)
with any Affiliate of the Company (other than the Company or a
Wholly Owned Restricted Subsidiary) (each an "Affiliate
Transaction"), unless (1) such transaction or series of
transactions is on terms that are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than
would be available in a comparable transaction in arm's-length
dealings with an unrelated third party and (2)(a) with respect
to any transaction or series of transactions involving
aggregate payments in excess of $1.0 million, the Company
delivers an Officers' Certificate to the Trustee certifying
that such transaction or series of related transactions
complies with clause (1) above and such transaction or series
of related transactions has been approved by a majority of the
members of the Board of Directors of the Company (and approved
by a majority of the Independent Directors or, in the event
there is only one Independent Director, by such Independent
Director), and (b) with respect to any transaction or series of
transactions involving aggregate payments in excess of $5
million or any transaction or series of related transactions
referred to in clause (2)(a) above where there are no
Independent Directors, an opinion as to the fairness to the
Company or such Restricted Subsidiary from a financial point of
view issued by an investment banking or appraisal firm of
<PAGE>
national standing.
Notwithstanding the foregoing, this covenant will not
apply to (A) employment agreements or compensation or employee
benefit arrangements with any officer, director or employee of
<PAGE>
the Company entered into in the ordinary course of business
(including customary benefits thereunder (it being understood
that benefits of the nature in place as of the Issue Date shall
be deemed permissible hereunder)), (B) any transaction entered
into by or among the Company or one of its Wholly Owned
Restricted Subsidiaries with one or more Wholly Owned
Restricted Subsidiaries of the Company, (C) any Restricted
Payment made in compliance with Section 10.12, (D) any
Permitted Investments other than Investments permitted by
clause (vii) of the definition of Permitted Investments,
(E) payments to PAI on the Business Day after each Interest
Payment Date of each year for the payment of management
advisory fees in an amount not to exceed $250,000 on each such
date; provided, however, that no such payment shall be made
unless (A) the Company has paid in cash all accrued interest on
the Notes due on such Interest Payment Date and (B) no Default
or Event of Default shall have occurred and be continuing at
the time of such payment, (F) payments to PAI pursuant to the
Tax Sharing Agreement, (G) the pledge of Capital Stock of
Unrestricted Subsidiaries by the Company or any Restricted
Subsidiary to support such Unrestricted Subsidiaries'
Indebtedness and (H) transactions involving the Company or any
of the Restricted Subsidiaries on the one hand and any
Unrestricted Subsidiary owning Radio Station Assets on the
other relating to general administrative, corporate, legal and
accounting services and similar intercompany relationships to
the extent entered into in the ordinary course of business and
consistent with such transactions and relationships existing on
the Issue Date.
Section 10.14. Limitation on Asset Sales.
The Company will not, and will not permit any
Restricted Subsidiary to, make any Asset Sale unless (a) the
Company or such Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least
equal to the fair market value (as evidenced by (i) a
resolution of the Board of Directors set forth in an Officers'
Certificate delivered to the Trustee and (ii) if the fair
market value is greater than $5.0 million, an opinion issued by
an investment banking or appraisal firm of national standing)
of the assets or other property sold or disposed of in the
Asset Sale, and (b) at least 85% of such consideration consists
of either (I) cash or Cash Equivalents; provided, however, that
for purposes of this covenant "cash" shall include the amount
<PAGE>
of any Indebtedness (other than any Indebtedness that is by its
terms subordinated to the Notes) of the Company or such
Restricted Subsidiary that are assumed by the transferee of any
such assets or other property in such Asset Sale (and excluding
any liabilities that are incurred in connection with or in
<PAGE>
anticipation of such Asset Sale), but only to the extent that
such assumption is effected on a basis under which there is no
further recourse to the Company or any of the Restricted
Subsidiaries with respect to such liabilities or (II)
properties and capital assets (including franchises and
licenses required to own or operate such properties) to be used
in the same lines of business being conducted by the Company or
such Restricted Subsidiary on the Issue Date; provided,
further, however, that Broadcasting, Newspapers and their
respective Subsidiaries may receive such consideration in
assets and properties as and to the extent permitted pursuant
to the indenture governing the Broadcasting Notes and the
Newspaper Notes, respectively, as in effect on the Issue Date.
Within 360 days after any Asset Sale, the Company may
elect to apply the Net Proceeds from such Asset Sale to
(a) permanently repay any Indebtedness of Broadcasting,
Newspapers or their respective Restricted Subsidiaries (as
defined in the respective indentures governing the Broadcasting
Notes and the Newspapers Notes as in effect on the Issue Date),
or of the Company or any Restricted Subsidiary under the Senior
Credit Facility; and/or (b) make an investment in, or acquire
capital assets or property directly related to, the television
broadcasting or newspaper publishing business. Pending the
final application of any such Net Proceeds, the Company may
temporarily invest such Net Proceeds in any Investments
described under clauses (i) through (iv) of the definition of
Permitted Investments. Any Net Proceeds from an Asset Sale not
applied or invested as provided in the first sentence of this
paragraph within 360 days of such Asset Sale will be deemed to
constitute "Excess Proceeds". If and to the extent that the
Net Proceeds from any Asset Sale of Broadcasting, Newspapers or
any of their respective Subsidiaries would otherwise constitute
Excess Proceeds and cannot at such time be paid as a dividend
to the Company by virtue of the indentures governing the
Broadcasting Notes or the Newspapers Notes, as the case may be,
such Net Proceeds shall not be deemed to constitute Excess
Proceeds until such time as and to the extent that such Net
Proceeds are permitted to be paid as a dividend thereunder. If
the Net Proceeds of any Asset Sale are applied to repay the
indebtedness outstanding under the Senior Credit Facility, the
Company shall cause all of its Unrestricted Subsidiaries which
at such time own the Radio Station Assets (other than KEZX-AM
or KWJZ-FM) to execute and deliver a senior unsecured note
evidencing their joint and several obligation to Park
<PAGE>
Broadcasting in the amount of such Net Proceeds applied to the
Senior Credit Facility (the "Radio Station Note") and bearing
interest (not payable until the Senior Credit Facility has been
repaid in full) at the rate then borne by the Notes. Each
Radio Station Note shall provide by its terms that it shall
<PAGE>
become immediately due and payable after the Senior Credit
Facility has been repaid in full in an amount equal to such
Radio Station Note's pro rata portion (relative to all Radio
Station Notes) of the net proceeds (after taxes and reasonable
expenses) of each sale of Radio Station Assets (other than
KEZX-AM and KWJZ-FM) occurring after the repayment in full of
the Senior Credit Facility. Prior to such time as the Senior
Credit Facility has been repaid in full, the Company will not
and will not permit any of its Subsidiaries to sell, transfer
or otherwise dispose of the Radio Station Assets (other than
KEZX-AM or KWJZ-FM) unless at least the net proceeds (after
taxes and reasonable expenses) thereof are applied to the
repayment of the Senior Credit Facility. The Company will not
permit any Unrestricted Subsidiary which owns Radio Station
Assets to enter into any agreement other than the Senior Credit
Facility which would restrict in any manner the payment when
due of any Radio Station Note.
Each date on which the aggregate amount of Excess
Proceeds in respect of which an Asset Sale Offer has not been
made exceeds $5,000,000 shall be deemed an "Asset Sale Offer
Trigger Date". Within 30 days of each Asset Sale Offer Trigger
Date the Company shall commence an offer (the "Asset Sale
Offer") to purchase the maximum principal amount of Notes and
other Indebtedness of the Company that ranks pari passu in
right of payment with the Notes (to the extent required by the
instrument governing such other Indebtedness) that may be
purchased out of the Excess Proceeds. Any Notes to be
purchased pursuant to an Asset Sale Offer shall be purchased
pro rata based on the aggregate principal amount of Notes and
all such other Indebtedness outstanding; and all such Notes
shall be purchased at an offer price in cash in an amount equal
to 100% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase. To the
extent that any Excess Proceeds remain after completion of an
Asset Sale Offer, the Company may use the remaining amount for
general corporate purposes otherwise permitted by this
Indenture. Upon the consummation of any Asset Sale Offer, the
amount of Excess Proceeds from the Asset Sale in question to be
the subject of future Asset Sale Offers shall be deemed to be
zero.
Notice of an Asset Sale Offer shall be prepared and
mailed by the Company with a copy to the Trustee not later than
the 30th day after the related Asset Sale Offer Trigger Date to
<PAGE>
each Holder of Notes at such Holder's registered address,
stating:
(i) that an Asset Sale Offer Trigger Date has
occurred and that the Company is offering to purchase the
<PAGE>
maximum principal amount of Notes that may be purchased
out of the Excess Proceeds to the extent to be applied to
an offer to purchase Notes (as provided in the immediately
preceding paragraph), at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of the
purchase (the "Asset Sale Offer Purchase Date"), which
shall be a Business Day, specified in such notice, that is
not earlier than 30 days or later than 60 days from the
date such notice is mailed;
(ii) the amount of accrued and unpaid interest, if
any, as of the Asset Sale Offer Purchase Date;
(iii) that any Note not tendered will continue to
accrue interest in accordance with the terms thereof;
(iv) that, unless the Company defaults in the payment
of the purchase price for the Notes payable pursuant to
the Asset Sale Offer, any Notes accepted for payment
pursuant to the Asset Sale Offer shall cease to accrue
interest after the Asset Sale Offer Purchase Date;
(v) that Holders electing to have Notes purchased
pursuant to an Asset Sale Offer will be required to
surrender their Notes to the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City
time, on the Asset Sale Purchase Date with the "Option of
Holder to Elect Purchase" on the reverse thereof completed
and must complete any form letter of transmittal proposed
by the Company (which letter must be completed correctly
by such Holder) and which is acceptable to the Trustee and
the Paying Agent;
(vi) that Holders of Notes will be entitled to
withdraw their election if the Paying Agent receives, not
later than 5:00 p.m., New York City time, on the Business
Day prior to the Asset Sale Offer Purchase Date, a
telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of
Notes the Holder delivered for purchase, the Note
certificate number (if any) and a statement that such
Holder is withdrawing its election to have such Notes
purchased;
<PAGE>
(vii) that Holders whose Notes are purchased only in
part will be issued Notes equal in principal amount to the
unpurchased portion of the Notes surrendered;
<PAGE>
(viii) the instructions that Holders must follow in
order to tender their Notes; and
(ix) information concerning the business of the
Company, the most recent annual and quarterly reports of
the Company filed with the SEC pursuant to the Exchange
Act (or, if the Company is not then required to file any
such reports with the SEC, the comparable reports prepared
pursuant to Section 10.09), a description of material
developments in the Company's business, information with
respect to pro forma historical financial information
after giving effect to such Asset Sale and such other
information concerning the circumstances and relevant
facts regarding such Asset Sale and Asset Sale Offer as
would be material to a Holder of Notes in connection with
the decision of such Holder as to whether or not it should
tender Notes pursuant to the Asset Sale Offer.
On the Asset Sale Offer Purchase Date, the Company
will (i) accept for payment the maximum principal amount of
Notes or portions thereof tendered pursuant to the Asset Sale
Offer that can be purchased out of Excess Proceeds from such
Asset Sale that are to be applied to an Asset Sale Offer (to
the extent provided in the second preceding paragraph),
(ii) deposit with the Paying Agent an amount in cash equal to
the aggregate purchase price of all Notes or portions thereof
accepted for payment and any accrued and unpaid interest on
such Notes as of the Asset Sale Offer Purchase Date, and
(iii) deliver or cause to be delivered to the Trustee all Notes
tendered pursuant to the Asset Sale Offer. If less than all
Notes tendered pursuant to the Asset Sale Offer are accepted
for payment by the Company for any reason consistent with this
Indenture, selection of the Notes to be purchased by the
Company shall be in compliance with the requirements of the
principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro
rata basis or by lot; provided, however, that Notes accepted
for payment in part shall only be purchased in integral
multiples of $1,000. The Paying Agent shall promptly mail to
each Holder of Notes or portions thereof accepted for payment
an amount in cash equal to the purchase price for such Notes
plus any accrued and unpaid interest thereon, and the Trustee
shall promptly authenticate and mail to such Holder of Notes
accepted for payment in part a new Note equal in principal
amount to any unpurchased portion of the Notes, and any Note
<PAGE>
not accepted for payment in whole or in part shall be promptly
returned to the Holder of such Note.
On and after an Asset Sale Offer Purchase Date,
interest will cease to accrue on the Notes or portions thereof
<PAGE>
accepted for payment, unless the Company defaults in the
payment of the purchase price therefor. The Company will
publicly announce the results of the Asset Sale Offer on or as
soon as practicable after the Asset Sale Offer Purchase Date.
The Company will comply with the applicable tender
offer rules, including the requirements of Rule 14e-1 under the
Exchange Act, and all other applicable securities laws and
regulations in connection with any Asset Sale Offer and will be
deemed not to be in violation of any of its covenants herein to
the extent such compliance is in conflict with such covenants.
Section 10.15. Change of Control.
Upon the occurrence of a Change of Control Triggering
Event (the date of such occurrence, the "Change of Control
Date"), the Company shall make an offer to purchase (a "Change
of Control Offer"), and shall, subject to the provisions
described below, purchase, all or any portion (equal to $1,000
or an integral multiple thereof) of the then outstanding Notes
validly tendered at a purchase price in cash (the "Change of
Control Purchase Price") equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the
Change of Control Purchase Date. The Company shall be required
to purchase all Notes properly tendered into the Change of
Control Offer and not withdrawn.
Notice of a Change of Control Offer shall be prepared
and mailed by the Company not later than the 30th day after the
Change of Control Date to the Holders of Notes at their last
registered addresses with a copy to the Trustee and the Paying
Agent. The Offer shall remain open from the time of mailing
for at least 20 Business Days or such longer period as may be
required by law. The notice, which shall govern the terms of
the Change of Control Offer, shall include such disclosures as
are required by law and shall state:
(a) that the Change of Control Triggering Event has
occurred and that such Holder has the right to require the
Company to purchase all or a portion (equal to $1,000 or
an integral multiple thereof) of such Holder's Notes
(including any Notes issued in lieu of cash interest on
such Notes) at a purchase price in cash equal to 101% of
the aggregate principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase, which
<PAGE>
shall be a Business Day, specified in such notice, that is
not earlier than 30 days or later than 60 days from the
date such notice is mailed (the "Change of Control
Purchase Date");
<PAGE>
(b) the amount of accrued and unpaid interest, if
any, as of the Change Control Purchase Date;
(c) that any Note not tendered for payment will
continue to accrue interest in accordance with the terms
thereof;
(d) that, unless the Company defaults in the payment
of the purchase price for the Notes payable pursuant to
the Change of Control Offer, any Notes accepted for
payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control
Purchase Date;
(e) that Holders electing to have Notes purchased
pursuant to a Change of Control Offer will be required to
surrender their Notes to the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City
time, on the Change of Control Purchase Date with the
"Option of Holder to Elect Purchase" on the reverse
thereof completed and must complete any form letter of
transmittal proposed by the Company and be completed
correctly by such Holder and be acceptable to the Trustee
and the Paying Agent;
(f) that Holders of Notes will be entitled to
withdraw their election if the Paying Agent receives, not
later than 5:00 p.m., New York City time, on the Business
Day prior to the Change of Control Purchase Date, a
telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of
Notes the Holder delivered for purchase, the Note
certificate number (if any) and a statement that such
Holder is withdrawing its election to have such Notes
purchased;
(g) that Holders whose Notes are purchased only in
part will be issued Notes equal in principal amount to the
unpurchased portion of the Notes surrendered;
(h) the instructions that Holders must follow in
order to tender their Notes; and
(i) information concerning the business of the
Company, the most recent annual and quarterly reports of
<PAGE>
the Company filed with the SEC pursuant to the Exchange
Act (or, if the Company is not then required to file any
such reports with the SEC, the comparable reports prepared
pursuant to Section 10.09), a description of material
developments in the Company's business, information with
<PAGE>
respect to pro forma historical financial information
after giving effect to such Change of Control and such
other information concerning the circumstances and
relevant facts regarding such Change of Control and Change
of Control Offer as would be material to a Holder of Notes
in connection with the decision of such Holder as to
whether or not it should tender Notes pursuant to the
Change of Control Offer.
On the Change of Control Purchase Date, the Company
will (i) accept for payment all Notes or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent an amount in cash equal to the aggregate
purchase price of all Notes or portions thereof accepted for
payment, plus any accrued and unpaid interest on such Notes as
of the Change of Control Purchase Date, and (iii) deliver or
cause to be delivered to the Trustee all Notes tendered
pursuant to the Change of Control Offer. The Paying Agent
shall promptly mail to each Holder of Notes or portions thereof
accepted for payment an amount in cash equal to the purchase
price for such Notes, plus any accrued and unpaid interest
thereon, and the Trustee shall promptly authenticate and mail
to such Holders of Notes accepted for payment in part a new
Note equal in principal amount to any unpurchased portion of
the Note surrendered. Any Notes not so accepted in whole or in
part shall be promptly returned to the Holder thereof.
On and after a Change of Control Purchase Date,
interest will cease to accrue on the Notes or portions thereof
accepted for payment unless the Company defaults in the payment
of the purchase price therefor. The Company will publicly
announce the results of the Change of Control Offer not later
than the first Business Day following the Change of Control
Purchase Date.
The Company will comply with 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 the event that Change of Control occurs and the
Company is required to purchase Notes as described above and
will be deemed not to be in violation of any of its covenants
herein to the extent such compliance is in conflict with such
covenants.
Section 10.16. Limitations on Liens.
<PAGE>
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create,
incur, assume or suffer to exist (i) any Lien on the Capital
Stock of Broadcasting or Newspapers (whether outstanding on the
<PAGE>
date of this Indenture or thereafter) required to be owned by
the Company under this Indenture, other than Liens securing the
Senior Credit Facility and (ii) any Lien (other than Permitted
Liens) on any other property or assets of the Company or any
Restricted Subsidiary (other than the Capital Stock of
Unrestricted Subsidiaries) now owned or hereafter acquired, or
any income or profits therefrom, or assign or convey any right
to receive income therefrom to secure any Indebtedness, unless
with respect to this clause (ii) the Notes are equally and
ratably secured thereby.
Section 10.17. Limitation on Dividends and Other
Payment Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create or
otherwise cause to suffer to exist or become effective any
encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other
distribution to the Company or any Restricted Subsidiary on its
Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, or pay any
Indebtedness owed to the Company or any other Restricted
Subsidiary, (b) make loans or advances to the Company or any
other Restricted Subsidiary or guarantee any Indebtedness of
the Company or any other Restricted Subsidiary, or (c) transfer
any of its properties or assets to the Company or any other
Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of (i) the Senior
Credit Facility and the indentures governing the Broadcasting
Notes and the Newspapers Notes, in each case as in effect on
the Issue Date, and any amendments, restatements, renewals,
replacements or refinancings thereof; provided, however, that
such amendments, restatements, renewals, replacements or
refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in
the Senior Credit Facility or such indentures, as the case may
be (or, if more restrictive, than those contained in this
Indenture) immediately prior to any such amendment,
restatement, renewal, replacement or refinancing,
(ii) applicable law, (iii) any instrument governing
Indebtedness or Capital Stock of an Acquired Person acquired by
the Company or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in
<PAGE>
contemplation of such acquisition); provided, however, that
(1) such restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Acquired
Person, and (2) the consolidated net income of such Acquired
Person for any period prior to such acquisition shall not be
<PAGE>
taken into account in determining whether such acquisition was
permitted by the terms of this Indenture, (iv) by reason of
customary non-assignment provisions in leases entered into the
ordinary course of business, (v) Purchase Money Indebtedness
for property acquired in the ordinary course of business that
only impose restrictions on the property so acquired, (vi) an
agreement for the sale or disposition of the Capital Stock or
assets of such Restricted Subsidiary; provided, however, that
such restriction is only applicable to such Restricted
Subsidiary or assets, as applicable, and such sale or
disposition otherwise is permitted under Section 10.14;
provided, further, however, that such restriction or
encumbrance shall be effective only for a period from the
execution and delivery of such agreement through a termination
date not later than 270 days after such execution and delivery,
(vii) Refinancing Indebtedness permitted under the Indenture;
provided, however, that the restrictions contained in the
agreements governing such Refinancing Indebtedness are no more
restrictive in the aggregate than those contained in the
Agreements governing the Indebtedness being refinanced
immediately prior to such refinancing, (viii) this Indenture or
(ix) any credit facility of the Restricted Subsidiaries and any
amendments, restatements, renewals, replacements or
refinancings thereof.
Section 10.18. Limitation on Subsidiary Capital
Stock.
The Company will not permit any Restricted Subsidiary
to issue any Capital Stock, except for (i) Capital Stock issued
to and held by the Company or a Wholly Owned Restricted
Subsidiary, (ii) Capital Stock issued by a Person prior to the
time (a) such Person becomes a Restricted Subsidiary, (b) such
Person merges with or into a Restricted Subsidiary or (c) a
Restricted Subsidiary merges with or into such Person;
provided, however, that such Capital Stock was not issued by
such Person in anticipation of the type of transaction
contemplated by clauses (a), (b) or (c) and (iii) Common Stock
issued by Broadcasting or Newspapers in public offerings in
each case so long as after giving effect thereto the Company or
a Wholly Owned Restricted Subsidiary owns not less than a
majority of the economic interest in and has the power to vote
a majority of the voting power of the outstanding Voting Stock
of such Subsidiary.
<PAGE>
Section 10.19. Limitation on Amendment of Tax
Sharing Agreement.
The Company will not, and will not permit any
Restricted Subsidiary to, (i) amend, supplement or modify the
<PAGE>
Tax Sharing Agreement, unless any such amendment, supplement or
modification is no less favorable to the Holders than the terms
thereof on the Issue Date or (ii) assign the Tax Sharing
Agreement or the benefits and obligations thereunder to any
other Person.
Section 10.20. Limitation on Line of Business.
The Company will not, and will not permit any
Restricted Subsidiary to, engage in any business other than
television broadcasting or newspaper publishing and businesses
directly related thereto; provided, however, that the Company
and the Restricted Subsidiaries may engage in the radio
broadcasting business solely by continuing to operate the Radio
Station Assets until the disposition of the Radio Station
Assets.
Section 10.21. Issuance of Contingent Warrants.
The Company will issue to Holders of the Notes
warrants (the "Contingent Warrants") exercisable for 3.0% of
the Common Stock of the Company on a fully-diluted basis as of
the date of such issuance after giving effect to the issuance
of such Contingent Warrants in the event that the Company does
not effect a Public Equity Offering or a Strategic Equity
Investment (or a series of substantially concurrent Strategic
Equity Investments) on or prior to December 31, 1997 resulting
in net proceeds to the Company of at least $40.0 million. Such
Contingent Warrants will be issued pursuant to the Warrant
Agreement and holders thereof will have the benefits of the
Warrant Registration Rights Agreement.
Any Contingent Warrants issued shall be issued to the
Holders of the Outstanding Notes as of December 31, 1997
(including any Notes issued in lieu of cash interest pursuant
to Section 3.07 hereof) pro rata, based upon the aggregate
principal amount of the Notes held by such Holder as of
December 31, 1997. For purposes of the foregoing, Notes held
by the Company or any of its Affiliates as of December 31, 1997
shall not be deemed to be Outstanding.
Section 10.22. Offer to Purchase on Public Equity
Offering.
In the event that the Company or PAI shall consummate
<PAGE>
on or prior to December 31, 1997 any Public Equity Offering or
Strategic Equity Investment, then the Company shall promptly
make an offer to purchase from all Holders (an "Equity Proceeds
Offer") on a date (the "Equity Offer Purchase Date") not later
than the 90th day after the date of consummation (such
<PAGE>
consummation date, the "Equity Offer Trigger Date") of such
Public Equity Offering or Strategic Equity Investment (such
consummation date to be determined without regard to the date
of the consummation of any over-allotment option granted by the
Company or PAI, as the case may be, to the underwriters, if
any) at a purchase price equal to 112.0% of the aggregate
principal amount of Notes to be repurchased, plus accrued and
unpaid interest, if any, to the Equity Offer Purchase Date, an
aggregate principal amount of Outstanding Notes equal to the
aggregate net proceeds (after deducting any underwriting
discounts and commissions and any expenses directly related to
such Public Equity Offering or Strategic Equity Investment, but
including any aggregate net proceeds (with the foregoing
deductions) received or receivable by the Company or PAI, as
the case may be, from any actual exercise of any over-allotment
option granted to the underwriters, if any) received or
receivable by the Company or PAI, as the case may be, from each
such Public Equity Offering or Strategic Equity Investment to
the extent such proceeds shall not have been applied to the
redemption of the Notes pursuant to the second paragraph of
Section 11.01 hereof and the amount not so applied exceed $2
million. For purposes of this covenant, proceeds of any Public
Equity Offering or Strategic Equity Investment shall be deemed
to have been applied to the extent a notice of redemption for
the Notes has been given with respect to such proceeds pursuant
to the second paragraph of Section 11.01 hereof (unless and to
the extent that on the date fixed for redemption such proceeds
are not applied to redeem the Notes).
Notice of an Equity Proceeds Offer shall be prepared
and mailed by the Company with a copy to the Trustee not later
than the 30th day after the related Equity Offer Trigger Date
to each Holder of Notes at such Holder's registered address,
stating:
(i) that an Equity Offer Trigger Date has occurred
and that the Company is offering to purchase an aggregate
principal amount of Notes equal to the aggregate net
proceeds of the applicable Public Equity Offering or
Strategic Equity Investment, as the case may be, to be
applied to an Equity Proceeds Offer to the extent to be
applied to an offer to purchase Notes (as provided in the
immediately preceding paragraph), at a purchase price in
cash equal to 112.0% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the Equity Offer
<PAGE>
Purchase Date, which shall be a Business Day, specified in
such notice, that is not earlier than 30 days or later
than 60 days from the date such notice is mailed;
<PAGE>
(ii) the amount of accrued and unpaid interest, if
any, as of the Equity Offer Purchase Date;
(iii) that any Note not tendered will continue to
accrue interest in accordance with the terms thereof;
(iv) that, unless the Company defaults in the payment
of the purchase price for the Notes payable pursuant to
the Equity Proceeds Offer, any Notes accepted for payment
pursuant to the Equity Proceeds Offer shall cease to
accrue interest after the Equity Offer Purchase Date;
(v) that Holders electing to have Notes purchased
pursuant to an Equity Proceeds Offer will be required to
surrender their Notes to the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City
time, on the Equity Offer Purchase Date with the "Option
of Holder to Elect Purchase" on the reverse thereof
completed and must complete any form letter of transmittal
proposed by the Company (which letter must be completed
correctly by such Holder) and which is acceptable to the
Trustee and the Paying Agent;
(vi) that Holders of Notes will be entitled to
withdraw their election if the Paying Agent receives, not
later than 5:00 p.m., New York City time, on the Business
Day prior to the Equity Offer Purchase Date, a telegram,
telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes the
Holder delivered for purchase, the Note certificate number
(if any) and a statement that such Holder is withdrawing
its election to have such Notes purchased;
(vii) that Holders whose Notes are purchased only in
part will be issued Notes equal in principal amount to the
unpurchased portion of the Notes surrendered;
(viii) the instructions that Holders must follow in
order to tender their Notes; and
(ix) information concerning the business of the
Company, the most recent annual and quarterly reports of
the Company filed with the SEC pursuant to the Exchange
Act (or, if the Company is not then required to file any
such reports with the SEC, the comparable reports prepared
<PAGE>
pursuant to Section 10.09), a description of material
developments in the Company's business, information with
respect to pro forma historical financial information
after giving effect to such Public Equity Offering or
Strategic Equity Investment, as the case may be, and such
<PAGE>
other information concerning the circumstances and
relevant facts regarding such Public Equity Offering or
Strategic Equity Investment, as the case may be, and
Equity Proceeds Offer as would be material to a Holder of
Notes in connection with the decision of such Holder as to
whether or not it should tender Notes pursuant to the
Equity Proceeds Offer.
On the Equity Offer Purchase Date, the Company will
(i) accept for payment the maximum principal amount of Notes or
portions thereof tendered pursuant to the Equity Proceeds Offer
that can be purchased out of net proceeds from such Public
Equity Offering or Strategic Equity Investment, as the case may
be, that are to be applied to an Equity Proceeds Offer (to the
extent provided in the second preceding paragraph), (ii) depos-
it with the Paying Agent an amount in cash equal to the
aggregate purchase price of all Notes or portions thereof
accepted for payment and any accrued and unpaid interest on
such Notes as of the Equity Offer Purchase Date, and
(iii) deliver or cause to be delivered to the Trustee all Notes
tendered pursuant to the Equity Proceeds Offer. If less than
all Notes tendered pursuant to the Equity Proceeds Offer are
accepted for payment by the Company for any reason consistent
with this Indenture, selection of the Notes to be purchased by
the Company shall be in compliance with the requirements of the
principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro
rata basis or by lot; provided, however, that Notes accepted
for payment in part shall only be purchased in integral
multiples of $1,000. The Paying Agent shall promptly mail to
each Holder of Notes or portions thereof accepted for payment
an amount in cash equal to the purchase price for such Notes
plus any accrued and unpaid interest thereon, and the Trustee
shall promptly authenticate and mail to such Holder of Notes
accepted for payment in part a new Note equal in principal
amount to any unpurchased portion of the Notes, and any Note
not accepted for payment in whole or in part shall be promptly
returned to the Holder of such Note.
On and after an Equity Offer Purchase Date, interest
will cease to accrue on the Notes or portions thereof accepted
for payment, unless the Company defaults in the payment of the
purchase price therefor. The Company will publicly announce
the results of the Equity Proceeds Offer on or as soon as
practicable after the Equity Offer Purchase Date.
<PAGE>
The Company will comply with the applicable tender
offer rules, including the requirements of Rule 14e-1 under the
Exchange Act, and all other applicable securities laws and
regulations in connection with any Equity Proceeds Offer and
<PAGE>
will be deemed not to be in violation of any of its covenants
herein to the extent such compliance is in conflict with such
covenants.
Section 10.23. Certain Exceptions for Capital
Contributions To Refinance the Existing Credit Facility. Any
other provision of this Indenture to the contrary
notwithstanding, any capital contribution made on the Issue
Date in any Subsidiary of the Company to effect the repayment
of the Existing Credit Facility from the proceeds of the
offering of the Notes and the consummation of the other
financing transactions taking place on the Issue Date in
connection therewith shall not be deemed to be a violation of
any covenant of this Indenture (and the aggregate amount of any
such capital contribution shall not be counted as a Restricted
Investment).
ARTICLE ELEVEN
REDEMPTION OF NOTES
Section 11.01. Optional and Special Redemption.
Optional Redemption. Except as provided below, the
Notes are not redeemable prior to May 15, 1999. Subject to
earlier redemption in the manner described in the next two
succeeding paragraphs, the Notes will be redeemable at the
option of the Company, in whole or in part, at the Redemption
Prices (expressed as percentages of principal amount) set forth
below, plus accrued interest to the Redemption Date, if
redeemed during the 12-month period beginning May 15 of the
years indicated below:
Redemption
Year __Price___
1999 ............................... 107.00%
2000 ............................... 105.25
2001 ............................... 103.50
2002 ............................... 101.75
2003 and thereafter ................ 100.00
In addition, at any time prior to December 31, 1997,
the Company may, at its option, redeem all or any portion of
the Outstanding Notes with the net proceeds of one or more
<PAGE>
Public Equity Offerings Strategic Equity Investments; provided,
however, that the proceeds to the Company of the first such
Public Equity Offering or one or any series of substantially
concurrent Strategic Equity Investment are at least $40
million, at 112.0% of the principal amount thereof plus accrued
<PAGE>
and unpaid interest, if any, to the date of redemption (the
"First Equity Offering Optional Redemption Price"); provided,
further, however, that notice of such redemption is given
within 30 days of such issuance or investment. In addition, on
and after December 31, 1997 and prior to May 15, 1999, the
Company may, at its option, redeem with the net proceeds of one
or more Public Equity Offerings or Strategic Equity Investments
up to 50% of the aggregate principal amount of the Notes then
outstanding; provided, however, that the proceeds to the
Company of the first such offering or investment or series of
substantially concurrent investments (including any such
offering, investment or series of investments the proceeds of
which were used to redeem Notes) are at least $40.0 million, at
113.0% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of redemption (the "Second Equity
Offering Optional Redemption Price"); provided, further,
however, that notice of such redemption is given within 30 days
of such issuance or investment.
In addition, the Company may at any time prior to
May 15, 1999, redeem the Notes, in whole or in part, at a
redemption price equal to the principal amount thereof plus the
Applicable Premium plus accrued and unpaid interest, if any, to
the date of redemption (the "Optional Redemption Price");
provided, however, that (i) if such redemption is to be
effected for less than all of the Notes then outstanding, not
less than $40.0 million of Notes is outstanding immediately
after giving effect to such redemption (other than any Notes
owned by the Company or any of its Affiliates) and (ii) no
redemption (or, on or after December 31, 1997, partial
redemption) of the Notes then outstanding may be made with the
proceeds of any Public Equity Offering or Strategic Equity
Investment pursuant to this sentence if, as of the date of the
proposed redemption, either the First Equity Offering Optional
Redemption Price or the Second Equity Offering Optional
Redemption Price (whichever is then applicable) would be
greater than the Optional Redemption Price as of such date.
Section 11.02. Applicability of Article.
Redemption of Notes at the election of the Company or
otherwise, as permitted or required by any provision of this
Indenture, shall be made in accordance with such provision and
this Article.
<PAGE>
Section 11.03. Election To Redeem; Notice to
Trustee.
The election of the Company to redeem any Notes
pursuant to Section 11.01(a) shall be evidenced by a Board
<PAGE>
Resolution of the Company and an Officers' Certificate. In
case of any redemption at the election of the Company, the
Company shall, at least 45 days prior to the Redemption Date
fixed by the Company (unless a shorter notice period shall be
satisfactory to the Trustee), notify the Trustee in writing of
such Redemption Date and of the principal amount of Notes to be
redeemed.
Section 11.04. Selection by Trustee of Notes To Be
Redeemed.
In the event that less than all of the Notes are to
be redeemed at any time, selection of such Notes for redemption
will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not then listed on a
national securities exchange, on a pro rata basis or by lot;
provided, however, that no Notes of a principal amount of
$1,000 shall be redeemed in part; provided, further, however,
that any redemption pursuant to the provisions relating to one
or more Public Equity Offerings or Strategic Equity Investments
by the Company shall be made on a pro rata basis or on as
nearly a pro rata basis as practicable (subject to any
procedures of The Depository Trust Company). If any Note is to
be redeemed in part only, the notice of redemption that relates
to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in a principal amount equal
to the unredeemed portion thereof will be issued in the name of
the holder thereof upon cancellation of the original Note. On
and after the redemption date, if the Company does not default
in the payment of the redemption price, interest will cease to
accrue on Notes or portions thereof called for redemption.
For all purposes of this Indenture, unless the
context otherwise requires, all provisions relating to
redemption of Notes shall relate, in the case of any Note
redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be
redeemed.
Section 11.05. Notice of Redemption.
Notice of redemption shall be mailed by first-class
mail, postage prepaid, mailed at least 30 but not more than 60
days before the Redemption Date, to each Holder of Notes to be
<PAGE>
redeemed at its registered address.
All notices of redemption shall state:
(a) the Redemption Date;
<PAGE>
(b) the Redemption Price;
(c) if less than all outstanding Notes are to be
redeemed, the identification of the particular Notes to be
redeemed;
(d) in the case of a Note to be redeemed in part,
the principal amount of such Note to be redeemed and that
after the Redemption Date upon surrender of such Note, a
new Note or Notes in the aggregate principal amount equal
to the unredeemed portion thereof will be issued;
(e) that Notes called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;
(f) that on the Redemption Date the Redemption Price
will become due and payable upon each such Note or portion
thereof, and that (unless the Company shall default in
payment of the Redemption Price) interest thereon shall
cease to accrue on and after said date;
(g) the place or places where such Notes are to be
surrendered for payment of the Redemption Price;
(h) the CUSIP number, if any, relating to such
Notes; and
(i) the paragraph of the Notes pursuant to which the
Notes are being redeemed.
Notice of redemption of Notes to be redeemed shall be
given by the Company or, at the Company's written request, by
the Trustee in the name and at the expense of the Company.
The notice if mailed in the manner herein provided
shall be conclusively presumed to have been given, whether or
not the Holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the
Holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the
redemption of any other Note.
Section 11.06. Deposit of Redemption Price.
<PAGE>
On or prior to the day preceding any Redemption Date,
the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 10.03) an
amount of money in same day funds sufficient to pay the
<PAGE>
Redemption Price of, and accrued interest on, all the Notes or
portions thereof which are to be redeemed on that date.
Section 11.07. Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid,
the Notes so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein
specified and from and after such date (unless the Company
shall default in the payment of the Redemption Price) such
Notes shall cease to bear interest. Upon surrender of any such
Note for redemption in accordance with said notice, such Note
shall be paid by the Company at the Redemption Price; provided,
however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the
Holders of such Notes, or one or more Predecessor Notes,
registered as such on the relevant Regular Record Dates
according to the terms and the provisions of Section 3.07.
If any Note called for redemption shall not be so
paid upon surrender thereof for redemption, the principal and
premium, if any, shall, until paid, bear interest from the
Redemption Date at the rate then borne by such Note.
Section 11.08. Notes Redeemed or Purchased in Part.
Any Note which is to be redeemed or purchased only in
part shall be surrendered to the Paying Agent at the office or
agency maintained for such purpose pursuant to Section 10.02
(with, if the Company, the Note Registrar or the Trustee so
requires, due endorsement by, or a written instrument of
transfer in form satisfactory to, the Company, the Note
Registrar or the Trustee duly executed by the Holder thereof or
such Holder's attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Note without service charge, a
new Note or Notes, of any authorized denomination as requested
by such Holder in aggregate principal amount equal to, and in
exchange for, the portion of the principal of the Note so
surrendered that is not redeemed or purchased.
<PAGE>
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of
Indenture.
This Indenture shall cease to be of further effect
(except as to surviving rights of registration of transfer or
exchange of Notes herein expressly provided for, the Company's
obligations under Section 6.07 hereof, and the Trustee's and
Paying Agent's obligations under Section 4.06 hereof) and the
Trustee, on written demand of and at the expense of the
Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Notes theretofore authenticated and
delivered (other than (A) Notes which have been destroyed,
lost or stolen and which have been replaced or paid as
provided in Section 3.06 hereof and (B) Notes for whose
payment in United States dollars has theretofore been
irrevocably deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in
Section 10.03) have been delivered to the Trustee for
cancellation; or
(ii) all such Notes not theretofore delivered to the
Trustee for cancellation have become due and payable and
the Company has irrevocably deposited or caused to be
deposited with the Trustee in trust for the purpose an
amount in United States dollars sufficient to pay and
discharge the entire Indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for
the principal of, premium, if any, and interest to the
date of such deposit;
(b) the Company has paid or caused to be paid all
other sums payable hereunder by the Company;
(c) The satisfaction and discharge of this Indenture
shall not result in a breach or violation of, or constitute a
Default or Event of Default under, this Indenture or any other
<PAGE>
agreement or instrument to which the Company is a party or by
which it is bound (including, without limitation, the Warrant
Agreement); and
<PAGE>
(d) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating
that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of
this Indenture, the obligations of the Company to the Trustee
under Section 6.07 and, if money shall have been deposited with
the Trustee pursuant to subclause (a)(ii) of this Section
12.01, the obligations of the Trustee under Section 12.02 and
the last paragraph of Section 10.03 shall survive.
Section 12.02. Application of Trust Money.
Subject to the provisions of the last paragraph of
Section 10.03, all money deposited with the Trustee pursuant to
Section 12.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture,
to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the
principal of, premium, if any, and interest on the Notes for
whose payment such money has been deposited with the Trustee.
ARTICLE THIRTEEN
COLLATERAL AND SECURITY
Section 13.01. Collateral and Pledge Agreement.
(a) In order to secure the due and punctual payment
of the principal of and interest on the Notes when and as the
same shall be due and payable, whether on an Interest Payment
Date, at maturity, by acceleration, purchase, repurchase,
redemption or otherwise, and interest on the overdue principal
of and interest (to the extent permitted by law), if any, on
the Notes and the performance of all other obligations of the
Company to the holders of the Notes or the Trustee under this
Indenture and the Notes, when required by Section 10.10 hereof,
(i) the Company shall enter into with the Trustee
the Pledge Agreement and such amendments or supplements to
the Pledge Agreement, or other documents and instruments,
<PAGE>
including, without limitation, UCC-1 financing statements,
in each case in recordable form, if required by law to be
recorded, containing such provisions as are necessary in
order to grant to the Trustee for the benefit of the
Noteholders a valid and perfected first priority Lien on
<PAGE>
and security interest in the original Collateral and a
valid and perfected Lien on and security interest in any
subsequently acquired Collateral. Pursuant to the
foregoing, the Company shall have granted to the Trustee
for the benefit of the Noteholders a valid and perfected
first priority Lien on and security interest in the
original Collateral and a valid and perfected Lien on and
security interest in any subsequently acquired Collateral.
The Trustee and the Company hereby agree that the Trustee
shall hold the Collateral in trust for the benefit of the
Noteholders pursuant to the terms of this Indenture and
the Pledge Agreement; and
(ii) the Company shall deliver to the Trustee
evidence of payment or a closing statement indicating
payment of all filing fees, recording charges, transfer
taxes and other costs and expenses, including reasonable
legal fees and disbursements of counsel for the Trustee
(and any local counsel), that may be incurred to validly
and effectively subject the Collateral to the Lien of the
Pledge Agreement and perfect such Lien.
(b) Prior to the time(s) the Company and the Trustee
enter into the Pledge Agreement, or any amendment or supplement
thereto, the Company shall furnish to the Trustee an Opinion of
Counsel (i) as to the sufficiency of the Pledge Agreement, or
amendment or supplement thereto, as the case may be, to
accomplish the purposes intended by this Article Thirteen, (ii)
as to the compliance of the Pledge Agreement, or amendment or
supplement thereto, as the case may be, with Section 13.01(a),
(iii) as to the due authorization, execution and delivery by
the Company of the Pledge Agreement, or amendment or supplement
thereto, as the case may be, and (iv) that the Pledge
Agreement, or amendment or supplement thereto, as the case may
be, constitutes a legal, valid, binding and enforceable
obligation of the Company. The Pledge Agreement, or amendment
or supplement thereto, as the case may be, shall be in form
administratively satisfactory to the Trustee. In entering into
the Pledge Agreement, or amendment or supplement thereto, as
the case may be, the Trustee shall be entitled to the rights
and protections provided by Section 9.06.
(c) Subject to Section 9.01, the Company, when
authorized by a Board Resolution, and the Trustee may amend the
Pledge Agreement with the written consent of the Holders of not
<PAGE>
less than a majority in aggregate principal amount of the Notes
then outstanding, and the Holders of not less than a majority
in aggregate principal amount of the Notes then outstanding by
written notice to the Trustee may waive future compliance by
the Company with any provisions of the Pledge Agreement.
<PAGE>
Notwithstanding the foregoing, the Trustee shall, without the
consent of any Holder, be entitled to take any action,
including entering into any amendment or supplement or waiving
compliance with the terms thereof to the extent expressly
authorized by this Indenture or the Pledge Agreement.
Notwithstanding the foregoing sentence, without the consent of
each Holder affected, no amendment, supplement or waiver may
(i) reduce the percentage in outstanding aggregate principal
amount of Notes the Holders of which must consent to an
amendment, supplement or waiver of any provision of the Pledge
Agreement, or (ii) affect, with respect to the Collateral, the
priority of the security interest in favor of the Trustee on
behalf of itself and the Holders in a manner adverse to the
Holders (it being understood that the release of all or
substantially all of the Collateral is not within the ambit of
this provision). It shall not be necessary for the consent of
the Holders under this Section 13.01(c) to approve the
particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the
substance thereof. After an amendment, supplement or waiver
under this Section 13.01(c) becomes effective, the Company
shall mail to the Holder of each Note affected thereby, with a
copy to the Trustee, a notice briefly describing the amendment,
supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any amendment, supplement or
waiver.
(d) Each Noteholder, by accepting a Note, agrees to
all of the terms and provisions of the Pledge Agreement, as the
same may be amended from time to time pursuant to the
provisions of the Pledge Agreement and this Indenture.
(e) Notwithstanding the provisions of Section 13.01,
nothing in this Article Thirteen is intended to grant to the
Trustee a security interest in any property other than the
security interest described in Section 13.01 or to create any
fiduciary obligation on the part of either the Company to the
Trustee or the Holders of Notes except as specifically set
forth herein or in the Pledge Agreement.
Section 13.02. Recording and Opinions.
(a) The Company shall take or cause to be taken all
action required to perfect, maintain, preserve and protect the
<PAGE>
Lien on and security interest in the Collateral granted by the
Pledge Agreement, including, without limitation, the filing of
financing statements, continuation statements and any
instruments of further assurance, in such manner and in such
places as may be required by law fully to preserve and protect
<PAGE>
the rights of the Holders and the Trustee under this Indenture
and the Pledge Agreement to all property comprising the
Collateral. The Company shall from time to time promptly pay
all financing and continuation statement recording and/or
filing fees, charges and taxes relating to this Indenture and
the Pledge Agreement, any amendments thereto and any other
instruments of further assurance required pursuant to the
Pledge Agreement.
(b) The Company shall furnish to the Trustee, at
such time as required by { 314(b) of the TIA, Opinion(s) of
Counsel either (a) substantially to the effect that, in the
opinion of such counsel, this Indenture and the grant of a
security interest in the Collateral intended to be made by the
Pledge Agreement and all other instruments of further
assurance, including, without limitation, financing statements,
have been properly recorded and filed to the extent necessary
to perfect the security interests in the Collateral created by
the Pledge Agreement and reciting the details of such action,
and stating that as to the security interests created pursuant
to the Pledge Agreement, such recordings and filings are the
only recordings and filings necessary to give notice thereof
and that no re-recordings or refilings are necessary to
maintain such notice (other than as stated in such opinion), or
(b) to the effect that, in the opinion of such counsel, no such
action is necessary to perfect such security interests.
(c) To the extent required by the TIA, the Company
shall furnish to the Trustee on May 15 in each year, beginning
with May 15, 1997, an Opinion of Counsel, dated as of such
date, either (i)(A) stating that, in the opinion of such
counsel, action has been taken with respect to the recording,
filing, re-recording and refiling of all supplemental
indentures, financing statements, continuation statements and
other documents as is necessary to maintain the Lien of the
Pledge Agreement and reciting with respect to the security
interests in the Collateral the details of such action or
referring to prior Opinions of Counsel in which such details
are given, and (B) stating that, based on relevant laws as in
effect on the date of such Opinion of Counsel, all financing
statements, continuation statements and other documents have
been executed and filed that are necessary as of such date and
during the succeeding 24 months (except where such continuation
statements are not permitted by law to be filed) fully to
maintain the security interest of the Noteholders and the
<PAGE>
Trustee hereunder and under the Pledge Agreement with respect
to the Collateral, or (ii) stating that, in the opinion of such
counsel, no such action is necessary to maintain such Lien.
<PAGE>
Section 13.03. Release of Collateral.
(a) The Trustee, in its capacity as Trustee under
the Pledge Agreement, shall not at any time release Collateral
from the security interest created by this Indenture and the
Pledge Agreement unless such release is in accordance with the
provisions of this Indenture and the Pledge Agreement.
(b) At any time when an Event of Default shall not
have occurred and be continuing, the Trustee may, in its
discretion, release the Collateral pursuant to the provisions
of this Indenture and the Pledge Agreement.
(c) If and to the extent the Collateral is released
pursuant to this Indenture and the Pledge Agreement, the
release of any Collateral from the terms of the Pledge
Agreement shall not be deemed to impair the security under this
Indenture in contravention of the provisions hereof. To the
extent applicable, the Company shall cause TIA { 314(d)
relating to the release of property from the Lien of the Pledge
Agreement and relating to the substitution therefor of any
property to be subjected to the Lien of the Pledge Agreement to
be complied with. Any certificate or opinion required by TIA
{ 314(d) may be made by an Officer of the Company, except in
cases where TIA { 314(d) requires that such certificate or
opinion be made by an independent Person, which Person shall be
an independent engineer, appraiser or other expert selected or
approved by the Trustee in the exercise of reasonable care. A
Person is "independent" if such Person (a) is in fact
independent, (b) does not have any direct financial interest or
any material indirect financial interest in the Company or in
any Affiliate of the Company and (c) is not an officer,
employee, promoter, underwriter, trustee, partner or director
or person performing similar functions to any of the foregoing
for the Company. The Trustee shall be entitled to receive and
rely upon a certificate provided by any such Person confirming
that such Person is independent within the foregoing
definition.
Section 13.04. Possession and Use of Collateral.
Subject to and in accordance with the provisions of
this Indenture and the Pledge Agreement, the Company shall not
have the right to remain in possession or retain any control
over any Collateral.
<PAGE>
Section 13.05. Specified Releases of Collateral.
(a) Satisfaction and Discharge; Defeasance. The
Company shall be entitled to obtain a full release of all of
<PAGE>
the Collateral from the Liens of this Indenture and of the
Pledge Agreement upon compliance with the conditions precedent
set forth in Article Four for defeasance or covenant defeasance
or Article Twelve for satisfaction and discharge of this
Indenture. Upon delivery by the Company to the Trustee of an
Officers' Certificate and an Opinion of Counsel, each to the
effect that such conditions precedent have been complied with,
the Trustee shall forthwith take all necessary action (at the
request of and the expense of the Company) to release and
recovery to the Company all of the Collateral, and shall
deliver such Collateral in its possession to the Company
including, without limitation, the execution and delivery of
releases and satisfactions wherever required.
(b) Dispositions of Collateral. The Company shall
be entitled to obtain a release of, and the Trustee shall
release, items of Collateral (the "Released Interests") if
(i) Broadcasting or Newspapers issues Common Stock in a public
offering and (ii) the Company shall have delivered to the
Trustee the following:
(i) Company Order. A Company Order requesting
release of Released Interests, such Company Order (A)
specifically describing the proposed Released Interests,
(B) stating that the release of such Released Interests
will not interfere with or impede the Trustee's ability to
realize upon the remaining Collateral and will not impair
the Lien on the remaining Collateral and (C) confirming
that the transaction requiring the release of the Released
Interests complies with this Indenture and the Pledge
Agreement.
(ii) Officers' Certificate. An Officers' Certificate
certifying that (A) there is no Default or Event of
Default in effect or continuing on the date thereof,
(B) the release of the Collateral will not result in a
Default or Event of Default hereunder and (C) all
conditions precedent to such release have been complied
with; and
(iii) Compliance with TIA and Other Documentation.
All certificates, opinions and other documentation
required by the TIA or Section 13.03 of this Indenture, if
any, and, in the event there is to be a substitution of
property for the Collateral, all documentation necessary
<PAGE>
to effect the substitution of such new Collateral
(including without limitation the documents, if any,
required by Section 13.01).
<PAGE>
Upon compliance by the Company with the condition
precedent set forth above, the Trustee shall cause to be
released and reconveyed to the Company, the Released Interests.
Section 13.06. Form and Sufficiency of Release.
In the event that the Company has sold, exchanged, or
otherwise disposed of or proposes to sell, exchange or
otherwise dispose of any portion of the Collateral that under
the provisions of Section 13.05 may be sold, exchanged or
otherwise disposed of by the Company, and the Company requests
the Trustee to furnish a written disclaimer, release or
quit-claim of any interest in such property under this
Indenture and the Pledge Agreement, the Trustee, upon receipt
of all required documents designated in Section 13.05 in its
capacity as Trustee under the Pledge Agreement, shall execute,
acknowledge and deliver to the Company (in proper and
recordable form, such form to be provided by the Company) such
an instrument promptly after satisfaction of the conditions set
forth herein for delivery of any such release. Notwithstanding
the preceding sentence, all purchasers and grantees of any
property or rights purporting to be released herefrom shall be
entitled to rely upon any release executed by the Trustee
hereunder as sufficient for the purpose of this Indenture and
as constituting a good and valid release of the property
therein described from the Lien of this Indenture or of the
Pledge Agreement.
Section 13.07. Purchaser Protected.
No purchaser or grantee of any property or rights
purporting to be released herefrom shall be bound to ascertain
the authority of the Trustee to execute the release or to
inquire as to the existence of any conditions herein prescribed
for the exercise of such authority; nor shall any purchaser or
grantee of any property or rights permitted by this Indenture
to be sold or otherwise disposed of by the Company be under any
obligation to ascertain or inquire into the authority of the
Company to make such sale or other disposition.
Section 13.08. Authorization of Actions To Be Taken
by the Trustee Under the Pledge Agreement.
Subject to the provisions of the Pledge Agreement,
(a) the Trustee may, in its sole discretion and without the
<PAGE>
consent of the Noteholders, take all actions it deems necessary
or appropriate in order to (i) enforce any of the terms of the
Pledge Agreement and (ii) collect and receive any and all
amounts payable in respect of the obligations of the Company
hereunder and (b) the Trustee shall have power to institute and
<PAGE>
to maintain such suits and proceedings as it may deem expedient
to prevent any impairment of the Collateral by any act that may
be unlawful or in violation of the Pledge Agreement or this
Indenture, and such suits and proceedings as the Trustee may
deem expedient to preserve or protect its interests and the
interests of the Noteholders in the Collateral (including the
power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative
or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the
security interest thereunder or be prejudicial to the interests
of the Securityholders or of the Trustee.)
Section 13.09. Authorization of Receipt of Funds by
the Trustee Under the Pledge Agreement.
The Trustee is authorized to receive any funds for
the benefit of the Noteholders distributed under the Pledge
Agreement, and to make further distributions, upon receipt of a
Company Order, of such funds to the Holders in accordance with
the provisions of this Indenture.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the day and year
first above written.
PARK COMMUNICATIONS, INC.
By:
Name: Wright M. Thomas
Title: President
IBJ SCHRODER BANK & TRUST,
COMPANY, as Trustee
By:
Name:
Title:
<PAGE>
EXHIBIT A
PARK COMMUNICATIONS, INC.
-----------
13-3/4% SENIOR PAY-IN-KIND NOTE DUE 2004
CUSIP No. __________
No. ___________ $____________
PARK COMMUNICATIONS, INC., a Delaware corporation
(the "Company," which term includes any successor under the
Indenture hereinafter referred to), for value received,
promises to pay to ______________ or registered assigns, the
principal sum of _______________ United States Dollars on
May 15, 2004, at the office or agency of the Company referred
to below, and to pay interest thereon on May 15, and
November 15, in each year, commencing on November 15, 1996
(each an "Interest Payment Date"), accruing from the Issue Date
or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, at the rate of 13-3/4% per
annum, until the principal hereof is paid or duly provided for.
Through May 15, 1999, interest is payable at the option of the
Company, in whole but not in part, by the issuance of
additional Notes (valued at 100% of the face amount thereof) in
lieu of cash interest; provided, however, that in connection
with any redemption or repurchase of the Notes as permitted or
required by the Indenture and upon the acceleration of the
maturity of the Notes pursuant to the Indenture, all accrued
and unpaid interest shall be payable solely in cash. After
May 15, 1999, accrued and unpaid interest (including any
interest accruing on Defaulted Interest to the extent permitted
by law) is payable solely in cash. Interest shall be computed
on the basis of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, be paid to the
Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on the May 1 or
November 1 (each a "Regular Record Date"), whether or not a
Business Day, as the case may be, next preceding such Interest
<PAGE>
Payment Date. Any such interest not so punctually paid, or
duly provided for, and interest on such defaulted interest at
the then applicable interest rate borne by the Notes, to the
extent lawful, shall forthwith cease to be payable to the
A-1
<PAGE>
Holder on such Regular Record Date, and may be paid to the
Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be
fixed by the Trustee, notice of which shall be given to Holders
of Notes not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may
be required by such exchange, all as more fully provided in
such Indenture.
Payment of the principal of, premium, if any, and
interest on this Note will be made at the Corporate Trust
office or agency of the Trustee maintained for that purpose in
The City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that
payment of interest may be made at the option of the Company by
check (which may be a check of the Company) mailed to the
address of the Person entitled thereto as such address shall
appear on the Note Register.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof.
Unless the certificate of authentication hereon has
been duly executed by the Trustee referred to on the reverse
hereof by manual signature, this Note shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for
any purpose.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-
mentioned Indenture.
IBJ SCHRODER BANK &
TRUST COMPANY, as Trustee
By:
Authorized Signatory
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.
Dated: PARK COMMUNICATIONS, INC.
By:
Name:
Title:
By:
Name:
Title:
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<PAGE>
(REVERSE OF NOTE)
13-3/4% Senior Pay-in-Kind Note due 2004
1. Indenture. This Note is one of a duly authorized
issue of Notes of the Company designated as its 13-3/4% Senior
Pay-in-Kind Notes due 2004 (the "Notes"), limited (except as
otherwise provided in the Indenture referred to below) in
aggregate principal amount to $80,000,000 plus (i) Notes which
may be issued in lieu of cash interest on the Notes as
permitted by the Indenture (not to exceed $39,500,000 plus the
principal amount of any Notes issued in lieu of cash for
Additional Interest due on the Notes pursuant to the
Registration Rights Agreement) and (ii) Notes which may be
issued to repurchase Warrants as provided in the Warrant
Agreement, which may be issued under an indenture (the
"Indenture") dated as of May 13, 1996, between the Company and
IBJ Schroder Bank & Trust Company, as trustee (the "Trustee,"
which term includes any successor Trustee under the Indenture),
to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective
rights, limitations of rights, duties, obligations and
immunities thereunder of the Company, the Trustee and the
Holders of the Notes, and of the terms upon which the Notes
are, and are to be, authenticated and delivered.
All capitalized terms used in this Note which are
defined in the Indenture and not otherwise defined herein shall
have the meanings assigned to them in the Indenture.
No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place, and rate, and in the
coin or currency, herein prescribed.
2. Redemption.
(a) Optional Redemption. Except as set forth below,
the Notes are not redeemable prior to May 15, 1999. Subject to
earlier redemption in the manner described in the next two
succeeding paragraphs, the Notes will be redeemable at the
option of the Company, in whole or in part, at the redemption
<PAGE>
prices (expressed as percentages of principal amount) set forth
below, plus accrued interest to the redemption date, if
redeemed during the 12-month period beginning May 15 of the
years indicated below:
A-4
<PAGE>
Year Redemption Price
1999 ......................... 107.00%
2000 ......................... 105.25
2001 ......................... 103.50
2002 ......................... 101.75
2003 and thereafter .......... 100.00
In addition, at any time prior to December 31, 1997,
the Company may, at its option, redeem all or a portion of the
Outstanding Notes with the net proceeds of one or more Public
Equity Offerings or one or any series of substantially
concurrent Strategic Equity Investments, provided, however,
that the proceeds to the Company of the first such Public
Equity Offering or Strategic Equity Investment or any series of
substantially concurrent Strategic Equity Offerings are at
least $40 million, at 112.0% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of
redemption (the "First Equity Offering Optional Redemption
Price"); provided, further, however, that notice of such
redemption is given within 30 days of such issuance or
investment. In addition, on and after December 31, 1997 and
prior to May 15, 1999, the Company may, at its option, redeem
with the net proceeds of one or more Public Equity Offerings or
Strategic Equity Investments up to 50% of the aggregate
principal amount of the Notes then outstanding; provided,
however, that the proceeds to the Company of the first such
offering or investment (including any such offering, investment
or series of investments the proceeds of which were used to
redeem Notes) are at least $40.0 million, at 113.0% of the
principal amount thereof plus accrued and unpaid interest, if
any, to the date of redemption (the "Second Equity Offering
Optional Redemption Price"); provided, further, however, that
notice of such redemption is given within 30 days of such
issuance or investment.
In addition, the Company may at any time prior to
May 15, 1999 redeem the Notes, in whole or in part, at a
redemption price equal to the principal amount thereof plus the
Applicable Premium plus accrued and unpaid interest, if any, to
the date of redemption (the "Optional Redemption Price");
provided, however, that (i) if such redemption is to be
effected for less than all of the Notes then outstanding, not
less than $40.0 million of Notes is outstanding immediately
after giving effect to such redemption (other than any Notes
<PAGE>
owned by the Company or any of its Affiliates) and (ii) no
redemption (or, on or after December 31, 1997, partial
redemption) of the Notes then outstanding may be made with the
proceeds of any Public Equity Offering or Strategic Equity
A-5
<PAGE>
Investment pursuant to this sentence if, as of the date of the
proposed redemption, either the First Equity Offering Optional
Redemption Price or the Second Equity Offering Optional
Redemption Price (whichever is then applicable) would be
greater than the Optional Redemption Price as of such date.
(b) Sinking Fund. The Company will not be required
to make any mandatory sinking fund payments in respect of the
Notes.
(c) Interest Payments. In the case of any
redemption of the Notes, interest installments whose Stated
Maturity is on or prior to the Redemption Date will be payable
to the Holders of such Notes, or one or more Predecessor Notes,
of record at the close of business on the relevant Record Date
referred to on the face hereof. Notes (or portions thereof)
for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from
and after the Redemption Date.
(d) Partial Redemption. In the event of redemption
of the Note in part only, a new Note or Notes for the
unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
3. Offers to Purchase. Sections 10.12, 10.14, 10.15
and 10.22 of the Indenture provide that prior to making any
Restricted Payment (with respect to Section 10.12) and
following certain Asset Sales (with respect to Section 10.14)
and upon the occurrence of a Change of Control Triggering Event
(with respect to Section 10.15), the consummation of certain
Public Equity Offerings or Strategic Equity Investments prior
to December 31, 1997 (with respect to Section 10.22) and
subject to further limitations contained therein, the Company
shall make an offer to purchase certain amounts of the Notes in
accordance with the procedures set forth in the Indenture.
4. Defaults and Remedies. If an Event of Default
shall occur and be continuing, the principal of all of the
outstanding Notes, plus all accrued and unpaid interest, if
any, to the date the Notes become due and payable, may be
declared due and payable in the manner and with the effect
provided in the Indenture.
5. Defeasance. The Indenture contains provisions
<PAGE>
(which provisions apply to this Note) for defeasance at any
time of (a) the entire indebtedness of the Company on this Note
and (b) certain restrictive covenants and related Defaults and
A-6
<PAGE>
Events of Default, in each case upon compliance by the Company
with certain conditions set forth therein.
6. Amendments and Waivers. The Company and the
Trustee (if a party thereto) may, without the consent of the
Holders of any Outstanding Notes, amend, waive or supplement
the Indenture or the Notes for certain specified purposes,
including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture
under the Trust Indenture Act of 1939, as amended, and making
any change that does not adversely affect the rights of any
Holder. Other amendments and modifications of the Indenture or
the Notes may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority of the
aggregate principal amount of the Outstanding Notes, subject to
certain exceptions requiring the consent of the Holders of the
particular Notes to be affected. Any such consent or waiver by
or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent or waiver is made upon this Note.
7. Denominations, Transfer and Exchange. The Notes
are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof
(other than (i) Notes issued in lieu of cash interest on the
Notes as provided in the Indenture, (ii) Notes issued to
repurchase Warrants as provided in the Indenture and the
Warrant Agreement (as in effect on the Issue Date) and
(iii) Notes issued on transfer or exchange of other Notes to
the extent either (A) in excess of an integral multiple of
$1,000 or (B) the Notes so transferred or exchanged do not
aggregate an integral multiple of $1,000). As provided in the
Indenture and subject to certain limitations therein set forth,
the Notes are exchangeable for a like aggregate principal
amount of Notes of the authorized denomination, as requested by
the Holder surrendering the same.
The transfer of this Note is registrable on the Note
Register of the Company, upon surrender of this Note for
registration of transfer at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan in The
City of New York or at such other office or agency of the
Company as may be maintained for such purpose, duly endorsed
<PAGE>
by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized
A-7
<PAGE>
denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
8. Persons Deemed Owners. Prior to and at the time
of due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not
this Note shall be overdue, and neither the Company, the
Trustee nor any agent shall be affected by notice to the
contrary.
9. Registration Rights. Pursuant to the
Registration Rights Agreement among the Company and the Holders
of the Initial Notes, the Company will be obligated to
consummate an exchange offer pursuant to which the Holder of
this Note shall have the right to exchange this Note for the
Company's Series B 13-3/4% Senior Pay-in-Kind Notes due 2004
(the "Exchange Notes"), which will have been registered under
the Securities Act, in like principal amount and having terms
identical in all material respects as the Initial Notes. The
Holders of the Initial Notes shall be entitled to receive
certain additional interest payments in the event such exchange
offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the
Registration Rights Agreement.
10. Issuance of Warrants. In the event that the
Company does not effect a Public Equity Offering or a Strategic
Equity Investment on or prior to December 31, 1997 resulting in
net proceeds to the Company of at least $40.0 million, the
Company will issue to Holders of Notes, pro rata, warrants
exercisable for 3.0% of the Common Stock of the Company on a
fully-diluted basis as of the date of such issuance after
giving effect to the issuance of such warrants.
11. No Recourse Against Others. No officer or
employee of the Company, or any director, officer, partner,
affiliate, employee or stockholder of the Company, shall have
any liability for any obligations of the Company under the
Notes or the Indenture. Each Holder of Notes by accepting a
Note waives and releases all such liability, and such waiver
and release is part of the consideration for the issuance of
the Notes.
<PAGE>
12. GOVERNING LAW. THE INDENTURE AND THIS NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE, THE
A-8
<PAGE>
COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE
HOLDERS AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS
NOTE.
A-9
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to
(Insert assignee's social security or tax ID number) __________
(Print or type assignee's name, address and zip code) and
irrevocably appoint
agent to transfer this Note on the books of the Company. The
agent may substitute another to act for such agent.
Date:______________ Your signature:
(Sign exactly as your name
appears on the other side of
this Note)
By:
NOTICE: To be executed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
A-10
<PAGE>
In connection with any transfer of this Note
occurring prior to the date which is the earlier of (i) the
date of the declaration by the SEC of the effectiveness of a
registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), covering resales of this Note
(which effectiveness shall not have been suspended or
terminated at the date of the transfer) and (ii) the third
anniversary of the Issue Date, the undersigned confirms that it
has not utilized any general solicitation or general
advertising in connection with the transfer:
[Check One]
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended; or
(3) ___ to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933, as amended) that has
furnished to the Trustee a signed letter containing
certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) ___ outside the United States to a "foreign person" in
compliance with Rule 904 of Regulation S under the
Securities Act of 1933, as amended; or
(5) ___ pursuant to the exemption from registration provided
by Rule 144 under the Securities Act of 1933, as
amended; or
(6) ___ pursuant to an effective registration statement under
the Securities Act of 1933, as amended; or
(7) ___ pursuant to another available exemption from the
registration requirements of the Securities Act of
1933, as amended.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the
name of any person other than the registered Holder thereof,
provided, that if box (3), (4), (5) or (7) is checked, the
<PAGE>
Company or the Trustee may require, prior to registering any
such transfer of the Notes, in its sole discretion, such
written legal opinions, certifications (including an investment
letter in the case of box (3) or (4), and other information as
A-11
<PAGE>
the Trustee, Note Registrar or the Company has reasonably
requested to confirm that such transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, as
amended.
If none of the foregoing boxes are checked, the Trustee or
Registrar shall not be obligated to register this Note in the
name of any person other than the Holder hereof unless and
until the conditions to any such transfer of registration set
forth herein and in Section 2.05 of the Indenture shall have
been satisfied.
Dated:___________________ Signed:
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee:
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is
purchasing this Note for its own account or an account with
respect to which it exercises sole investment discretion and
that it and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act
of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware
that the
A-12
<PAGE>
transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from
registration provided by Rule 144A.
Date:_____________________
NOTICE: To be executed by an
an executive officer
A-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the
Company pursuant to Section 10.12, 10.14, 10.15 or 10.22 of the
Indenture, check the Box: [ ]
If you wish to have a portion of this Note purchased
by the Company pursuant to Section 10.12, 10.14, 10.15 or 10.22
of the Indenture, state the amount:
$______________
Date: _____________ Your Signature: ______________________
(Sign exactly as your name
appears on the other side
of this Note)
By:
NOTICE: To be signed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
A-14
<PAGE>
EXHIBIT B
PARK COMMUNICATIONS, INC.
-----------
13-3/4% SENIOR PAY-IN-KIND NOTE DUE 2004
CUSIP No. __________
No. ___________ $____________
PARK COMMUNICATIONS, INC., a Delaware corporation
(the "Company," which term includes any successor under the
Indenture hereinafter referred to), for value received,
promises to pay to ______________, or registered assigns, the
principal sum of _______________ United States Dollars on
May 15, 2004, at the office or agency of the Company referred
to below, and to pay interest thereon on May 15 and November 15
in each year, commencing on November 15, 1996 (each an
"Interest Payment Date"), accruing from the Issue Date or from
the most recent Interest Payment Date to which interest has
been paid or duly provided for, at the rate of 13-3/4% per
annum, until the principal hereof is paid or duly provided for.
Through May 15, 1999, interest is payable at the option of the
Company, in whole but not in part, by the issuance of
additional Notes (valued at 100% of the face amount thereof) in
lieu of cash interest; provided, however, that in connection
with any redemption or repurchase of the Notes as permitted or
required by the Indenture and upon the acceleration of the
maturity of the Notes pursuant to the Indenture, all accrued
and unpaid interest shall be payable solely in cash. After
May 15, 1999, accrued and unpaid interest (including any
interest accruing on Defaulted Interest to the extent permitted
by law) is payable solely in cash. Interest shall be computed
on the basis of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, be paid to the
Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on the May 1 or
November 1 (each a "Regular Record Date"), whether or not a
Business Day, as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid, or
<PAGE>
duly provided for, and interest on such defaulted interest at
the then applicable interest rate borne by the Notes, to the
extent lawful, shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may be paid to the
B-1
<PAGE>
Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be
fixed by the Trustee, notice of which shall be given to Holders
of Notes not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may
be required by such exchange, all as more fully provided in
such Indenture.
Payment of the principal of, premium, if any, and
interest on this Note will be made at the corporate trust
office or agency of the Trustee maintained for that purpose in
The City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts: provided, however, that
payment of interest may be made at the option of the Company by
check (which may be a check of the Company) mailed to the
address of the Person entitled thereto as such address shall
appear on the Note Register.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof.
Unless the certificate of authentication hereon has
been duly executed by the Trustee referred to on the reverse
hereof by manual signature, this Note shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for
any purpose.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-
mentioned Indenture.
IBJ SCHRODER BANK &
TRUST COMPANY, as Trustee
By:
Authorized Signatory
<PAGE>
B-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.
Dated: PARK COMMUNICATIONS, INC.
By:
Name:
Title:
By:
Name:
Title:
B-3
<PAGE>
(REVERSE OF NOTE)
13-3/4% Senior Pay-in-Kind Note due 2004
1. Indenture. This Note is one of a duly authorized
issue of Notes of the Company designated as its 13-3/4% Senior
Pay-in-Kind Notes due 2004 (the "Notes"), limited (except as
otherwise provided in the Indenture referred to below) in
aggregate principal amount to $80,000,000 plus (i) Notes which
may be issued in lieu of cash interest on the Notes as
permitted by the Indenture (not to exceed $39,500,000 plus the
principal amount of any Notes issued in lieu of cash for
Additional Interest due on the Notes pursuant to the
Registration Rights Agreement) and (ii) Notes which may be
issued to repurchase Warrants as provided in the Warrant
Agreement, which may be issued under an indenture (the
"Indenture") dated as of May 13, 1996, between the Company and
IBJ Schroder Bank & Trust Company, as trustee (the "Trustee,"
which term includes any successor Trustee under the Indenture),
to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective
rights, limitations of rights, duties, obligations and
immunities thereunder of the Company, the Trustee and the
Holders of the Notes, and of the terms upon which the Notes
are, and are to be, authenticated and delivered.
All capitalized terms used in this Note which are
defined in the Indenture and not otherwise defined herein shall
have the meanings assigned to them in the Indenture.
No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place, and rate, and in the
coin or currency, herein prescribed.
2. Redemption.
(a) Optional Redemption. Except as set forth below,
the Notes are not redeemable prior to May 15, 1999. Subject to
earlier redemption in the manner described in the next two
succeeding paragraphs, the Notes will be redeemable at the
option of the Company, in whole or in part, at the redemption
<PAGE>
prices (expressed as percentages of principal amount) set forth
below, plus accrued interest to the redemption date, if
redeemed during the 12-month period beginning May 15 of the
years indicated below:
B-4
<PAGE>
Year Redemption Price
1999 ......................... 107.00%
2000 ......................... 105.25
2001 ......................... 103.50
2002 ......................... 101.75
2003 and thereafter .......... 100.00
In addition, at any time prior to December 31, 1997,
the Company, at its option, may redeem all or a portion of the
Outstanding Notes with the net proceeds of one or more Public
Equity Offerings or one or any series of substantially
concurrent Strategic Equity Investments, provided, however,
that the proceeds to the Company of the first such Public
Equity Offering or Strategic Equity Investment or one or any
series of substantially concurrent Strategic Equity Investments
are at least $40 million, at 112.0% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date
of redemption (the "First Equity Offering Optional Redemption
Price"); provided, further, however, that notice of such
redemption is given within 30 days of such issuance or
investment. In addition, on and after December 31, 1997 and
prior to May 15, 1999, the Company may, at its option, redeem
with the net proceeds of one or more Public Equity Offerings or
Strategic Equity Investments up to 50% of the aggregate
principal amount of the Notes then outstanding; provided,
however, that the proceeds to the Company of the first such
offering or investment or series of substantially concurrent
investments (including any such offering, investment or series
of investments the proceeds of which were used to redeem Notes)
are at least $40.0 million, at 113.0% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date
of redemption (the "Second Equity Offering Optional Redemption
Price"); provided, further, however, that notice of such
redemption is given within 30 days of such issuance or
investment.
In addition, the Company may at any time prior to
May 15, 1999 redeem the Notes, in whole or in part, at a
redemption price equal to the principal amount thereof plus the
Applicable Premium plus accrued and unpaid interest to the date
of redemption (the "Optional Redemption Price"); provided,
however, that (i) if such redemption is to be effected for less
than all of the Notes then outstanding, not less than $40.0
million of Notes is outstanding immediately after giving effect
<PAGE>
to such redemption (other than any Notes owned by the Company
or any of its Affiliates) and (ii) no redemption (or, on or
after December 31, 1997, partial redemption) of the Notes then
outstanding may be made with the proceeds of any Public Equity
B-5
<PAGE>
Offering or Strategic Equity Investment pursuant to this
sentence if, as of the date of the proposed redemption, either
the First Equity Offering Optional Redemption Price or the
Second Equity Offering Optional Redemption Price (whichever is
then applicable) would be greater than the Optional Redemption
Price as of such date.
(b) Sinking Fund. The Company will not be required
to make any mandatory sinking fund payments in respect of the
Notes.
(c) Interest Payments. In the case of any
redemption of the Notes, interest installments whose Stated
Maturity is on or prior to the Redemption Date will be payable
to the Holders of such Notes, or one or more Predecessor Notes,
of record at the close of business on the relevant Record Date
referred to on the face hereof. Notes (or portions thereof)
for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from
and after the Redemption Date.
(d) Partial Redemption. In the event of redemption
of the Note in part only, a new Note or Notes for the
unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
3. Offers to Purchase. Sections 10.12, 10.14, 10.15
and 10.22 of the Indenture provide that prior to making any
Restricted Payment (with respect to Section 10.12) and
following certain Asset Sales (with respect to Section 10.14)
and upon the occurrence of a Change of Control Triggering Event
(with respect to Section 10.15), the consummation of certain
Public Equity Offerings or Strategic Equity Investments prior
to December 31, 1997 (with respect to Section 10.22) and
subject to further limitations contained therein, the Company
shall make an offer to purchase certain amounts of the Notes in
accordance with the procedures set forth in the Indenture.
4. Defaults and Remedies. If an Event of Default
shall occur and be continuing, the principal of all of the
outstanding Notes, plus all accrued and unpaid interest, if
any, to the date the Notes become due and payable, may be
declared due and payable in the manner and with the effect
provided in the Indenture.
<PAGE>
5. Defeasance. The Indenture contains provisions
(which provisions apply to this Note) for defeasance at any
time of (a) the entire indebtedness of the Company on this Note
and (b) certain restrictive covenants and related Defaults and
B-6
<PAGE>
Events of Default, in each case upon compliance by the Company
with certain conditions set forth therein.
6. Amendments and Waivers. The Company and the
Trustee (if a party thereto) may, without the consent of the
Holders of any Outstanding Notes, amend, waive or supplement
the Indenture or the Notes for certain specified purposes,
including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture
under the Trust Indenture Act of 1939, as amended, and making
any change that does not adversely affect the rights of any
Holder. Other amendments and modifications of the Indenture or
the Notes may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority of the
aggregate principal amount of the Outstanding Notes, subject to
certain exceptions requiring the consent of the Holders of the
particular Notes to be affected. Any such consent or waiver by
or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent or waiver is made upon this Note.
7. Denominations, Transfer and Exchange. The Notes
are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof
(other than (i) Notes issued in lieu of cash interest on the
Notes as provided in the Indenture, (ii) Notes issued to
repurchase Warrants as provided in the Indenture and the
Warrant Agreement (as in effect on the Issue Date) and
(iii) Notes issued on transfer or exchange of other Notes to
the extent either (A) in excess of an integral multiple of
$1,000 or (B) the Notes so transferred or exchanged do not
aggregate an integral multiple of $1,000). As provided in the
Indenture and subject to certain limitations therein set forth,
the Notes are exchangeable for a like aggregate principal
amount of Notes of the authorized denomination, as requested by
the Holder surrendering the same.
The transfer of this Note is registrable on the Note
Register of the Company, upon surrender of this Note for
registration of transfer at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan in The
City of New York or at such other office or agency of the
Company as may be maintained for such purpose, duly endorsed
<PAGE>
by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized
B-7
<PAGE>
denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
8. Persons Deemed Owners. Prior to and at the time
of due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not
this Note shall be overdue, and neither the Company, the
Trustee nor any agent shall be affected by notice to the
contrary.
9. Issuance of Warrants. In the event that the
Company does not effect a Public Equity Offering or a Strategic
Equity Investment on or prior to December 31, 1997 resulting in
net proceeds to the Company of at least $40.0 million, the
Company will issue to Holders of Notes, pro rata, warrants
exercisable for 3.0% of the Common Stock of the Company on a
fully diluted basis as of the date of such issuance after
giving effect to the issuance of such warrants.
10. No Recourse Against Others. No officer or
employee of the Company, or any director, officer, partner,
affiliate, employee or stockholder of the Company, shall have
any liability for any obligations of the Company under the
Notes or the Indenture. Each Holder of Notes by accepting a
Note waives and releases all such liability, and such waiver
and release is part of the consideration for the issuance of
the Notes.
11. GOVERNING LAW. THE INDENTURE AND THIS NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE, THE
COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE
HOLDERS AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS
NOTE.
B-8
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to
(Insert assignee's social security or tax ID number) __________
(Print or type assignee's name, address and zip code) and
irrevocably appoint
agent to transfer this Note on the books of the Company. The
agent may substitute another to act for such agent.
Date:______________ Your signature:
(Sign exactly as your name
appears on the other side of
this Note)
By:
NOTICE: To be executed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
B-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the
Company pursuant to Section 10.12, 10.14, 10.15 or 10.22 of the
Indenture, check the Box: [ ]
If you wish to have a portion of this Note purchased
by the Company pursuant to Section 10.12, 10.14, 10.15 or 10.22
of the Indenture, state the amount:
$______________
Date: _____________ Your Signature: ____________________ __
(Sign exactly as your name
appears on the other side
of this Note)
By:
NOTICE: To be signed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
B-10
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
___________, ____
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Re: Park Communications, Inc. (the "Company")
13-3/4% Senior Pay-in-Kind Notes due 2004
(the "Notes")
Ladies and Gentlemen:
In connection with our proposed purchase of $_______
aggregate principal amount of the Notes, we confirm that:
1. We have received a copy of the Offering
Memorandum (the "Offering Memorandum"), dated May 6, 1996,
relating to the Notes and such other information as we
deem necessary in order to make our investment decision.
We acknowledge that we have read and agreed to the matters
stated in the section entitled "Notice to Investors" of
the Offering Memorandum.
2. We understand that any subsequent transfer of
the Notes is subject to certain restrictions and
conditions set forth in the Indenture dated as of May 13,
1996 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes except in
compliance with, such restrictions and conditions and the
Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the Notes have not been
<PAGE>
registered under the Securities Act, and that the Notes
may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as
C-1
<PAGE>
hereinafter stated, that if we should sell any Notes
within three years after the original issuance of the
Notes, we will do so only (A) to the Company or any
subsidiary thereof, (B) inside the United States in
accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein),
(C) inside the United States to an "institutional
accredited investor" (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to you a signed letter
substantially in the form of this letter, (D) outside the
United States in accordance with Rule 904 of Regulation S
under the Securities Act, (E) pursuant to the exemption
from registration provided by Rule 144 under the
Securities Act (if available), or (F) pursuant to an
effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing
any of the Notes from us a notice advising such purchaser
that resales of the Notes are restricted as stated herein.
4. We understand that, on any proposed resale of
any Notes, we will be required to furnish to you and the
Company such certification, written legal opinions and
other information as you and the Company may reasonably
require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that
the Notes purchased by us will bear a legend to the
foregoing effect.
5. We are an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act) and have such
knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which
we are acting are each able to bear the economic risk of
our or its investment, as the case may be.
6. We are acquiring the Notes purchased by us for
our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of
which we exercise sole investment discretion.
C-2
<PAGE>
You, the Company and counsel for the Company are
entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
Authorized Signature
C-3
<PAGE>
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
______Pursuant to Regulation S_____
______________, ____
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Re: Park Communications, Inc. (the "Company")
13-3/4% Senior Pay-in-Kind Notes due 2004
(the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $___________
aggregate principal amount of the Notes, we confirm that such
sale has been effected pursuant to and in accordance with
Regulation S under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person
in the United States;
(2) either (a) at the time the buy offer was
originated, the transferee was outside the United States
or we and any person acting on our behalf reasonably
believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or
through the facilities of a designated off-shore
securities market and neither we nor any person acting on
our behalf knows that the transaction has been pre-
arranged with a buyer in the United States;
(3) no directed selling efforts have been made in
the United States in contravention of the requirements of
<PAGE>
Rule 903(b) or Rule 904(b) of Regulation S, as applicable;
D-1
<PAGE>
(4) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities
Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You, the Company and counsel for the Company are
entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby.
Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Transferor]
By:
Authorized Signature
D-2
<PAGE>
Exhibit E
SECURITIES PLEDGE AGREEMENT
This SECURITIES PLEDGE AGREEMENT (the "Agreement"),
dated as of , 199 , made by Park Communications, Inc., a
Delaware corporation (the "Pledgor"), in favor and for the
benefit of [insert name of Trustee], as collateral agent (in
such capacity and together with any successors and assigns in
such capacity, the "Collateral Agent") for the ratable benefit
of holders (the "Holders") of the Pledgor's 13-3/4% Senior
Pay-in-Kind Notes due 2004 (the "Notes"), as pledgee, assignee
and secured party.
R E C I T A L S :
A. The Pledgor is the legal and beneficial owner of
the Pledged Collateral (as defined below) pledged by it.
B. The Pledgor and IBJ Schroder Bank & Trust
Company, as trustee (the "Trustee," which term includes its
successors under the Indenture) have entered into a certain
indenture dated as of May 13, 1996 (as it may be amended,
supplemented or otherwise modified and in effect, the
"Indenture"), pursuant to which the Pledgor has issued the
Notes in an aggregate principal amount of $80,000,000
(exclusive of additional Notes which may be issued after the
Issue Date in accordance with the Indenture). Capitalized
terms not defined herein have the meanings ascribed to such
terms in the Indenture.
C. The Pledgor has received substantial benefit
from the execution, delivery and performance of the Indenture,
and in order to induce the Holders to purchase the Notes and in
connection therewith has agreed to grant to the Collateral
Agent, liens and security interests in the Pledged Collateral
owned by it to secure the Secured Obligations (as defined
below) in accordance with the terms of the Indenture.
D. This Agreement is given by the Pledgor in favor
of the Collateral Agent for its benefit and the benefit of the
Holders (collectively, the "Secured Parties") to secure the
payment and performance of the Secured Obligations.
<PAGE>
A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Pledgor
and the Collateral Agent hereby agree as follows:
SECTION 1. Pledge. As collateral security for the
payment and performance in full when due of all the Secured
Obligations, the Pledgor hereby pledges, hypothecates, assigns,
transfers and grants to the Collateral Agent, for its benefit
and the benefit of the Secured Parties, a continuing first
priority security interest in and to all of the right, title
and interest of such Pledgor in, to and under the following
property, whether now existing or hereafter arising or acquired
from time to time (collectively, the "Pledged Collateral"):
(a) all issued and outstanding shares of capital
stock of each Person described on Schedule I hereto (the
"Pledged Shares") owned by the Pledgor, including the
certificates representing the Pledged Shares and any
interest of such Pledgor in the entries on the books of
any financial intermediary pertaining to the Pledged
Shares;
(b) all additional shares of capital stock of any
issuer of the Pledged Shares from time to time acquired by
the Pledgor in any manner (which shares shall be deemed to
be part of the Pledged Shares), including the certificates
representing such additional shares and any interest of
the Pledgor in the entries on the books of any financial
intermediary pertaining to such additional shares;
(c) all Proceeds (as defined under the Uniform
Commercial Code as in effect in any applicable
jurisdiction (the "UCC") or under other relevant law) of
any of the foregoing, and in any event, including, without
limitation, any and all (i) proceeds of any insurance,
indemnity, warranty or guarantee payable to the Collateral
Agent or to the Pledgor from time to time with respect to
any of the Pledged Collateral, (ii) payments (in any form
whatsoever) made or due and payable to the Pledgor from
time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all
or any part of the Pledged Collateral by any government or
political subdivision or any agency, authority, board,
<PAGE>
bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand
jury or arbitrator, in each case whether foreign or
domestic, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government (a "Governmental Authority") (or
any Person acting under color of a Governmental
Authority), (iii) instruments representing obligations to
pay amounts in respect of Pledged Shares, (iv) products of
the Pledged Collateral, and (v) other amounts from time to
time paid or payable under or in connection with any of
the Pledged Collateral; and
(d) all dividends, cash, options, warrants, rights,
instruments, distributions, returns of capital, income,
profits and other property, interests or proceeds from
time to time received, receivable or otherwise distributed
to such Pledgor in respect of or in exchange for any or
all of the foregoing (collectively, "Distributions").
SECTION 2. Secured Obligations. This Agreement
secures, and the Pledged Collateral is collateral security for,
all indebtedness, liabilities and obligations of the Pledgor to
the Secured Parties (including fees and expenses owed to the
Trustee pursuant to the Indenture, including amounts which
would become due but for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code), whether now
existing or hereafter incurred, direct or indirect, absolute or
contingent, secured or not secured, matured or not matured,
joint or several, whether for principal, interest, fees,
expenses, premiums, indemnities or otherwise, including,
without limitation, all the unpaid principal amount of, and
accrued interest on, all Notes issued under the Indenture
(whether issued on or after the date hereof), and all other
amounts due to the Trustee or the Holders from time to time
under, arising out of or in connection with the Indenture
(including, without limitation, this Agreement) (the obli-
gations described above, collectively, the "Secured
Obligations").
SECTION 3. No Release. Nothing set forth in this
Agreement shall relieve the Pledgor from the performance of any
term, covenant, condition or agreement on the Pledgor's part to
be performed or observed under or in respect of any of the
Pledged Collateral or from any liability to any Person under or
<PAGE>
in respect of any of the Pledged Collateral or shall impose any
obligation on the Collateral Agent or any Secured Party to
perform or observe any such term, covenant, condition or
agreement on the Pledgor's part to be so performed or observed
or shall impose any liability on the Collateral Agent or any
Secured Party for any act or omission on the part of the
Pledgor relating thereto or for any breach of any
representation or warranty on the part of the Pledgor contained
in this Agreement or under or in respect of the Pledged
Collateral or made in connection herewith. The provisions of
this Section 3 shall survive the termination of this Agreement
and the discharge of the Secured Obligations.
SECTION 4. Delivery of Pledged Collateral.
(a) Delivery. All certificates, agreements or
instruments representing or evidencing the Pledged Collateral,
to the extent not previously delivered to the Collateral Agent,
shall promptly upon receipt thereof by the Pledgor be delivered
to and held by or on behalf of the Collateral Agent pursuant
hereto. All Pledged Collateral shall be in suitable form for
transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to the Collateral Agent. The
Collateral Agent shall have the right, at any time upon the
occurrence of an Event of Default and without prior written
notice to the Pledgor, to endorse, assign or otherwise transfer
to or to register in the name of the Collateral Agent or any of
its nominees any or all of the Pledged Collateral and to
exchange certificates representing or evidencing Pledged
Collateral for certificates of smaller or larger denominations.
(b) Certificated Securities. All Pledged Shares
shall be at all times certificated securities. If an issuer of
Pledged Shares is incorporated in a jurisdiction which does not
permit the use of certificates to evidence equity ownership,
then the Pledgor shall, to the extent permitted by applicable
law, cause such pledge to be recorded on the stock register of
the issuer, execute any customary stock pledge forms or other
documents necessary or appropriate to complete the pledge and
give the Collateral Agent the right to transfer such Pledged
Shares under the terms hereof and provide to the Collateral
Agent an opinion of counsel, in form and substance reasonably
satisfactory to it, confirming such pledge.
<PAGE>
(c) After-Acquired Collateral. The Pledgor shall,
upon obtaining any additional Pledged Shares, promptly (and in
any event within two (2) Business Days) deliver to the
Collateral Agent a pledge amendment, duly executed by such
Pledgor in substantially the form of Schedule II hereto (each,
a "Pledge Amendment"), in respect of the additional Pledged
Shares which are to be pledged pursuant to this Agreement. The
Pledgor hereby authorizes the Collateral Agent to attach each
Pledge Amendment to this Agreement and agrees that all
additional Pledged Shares listed on any Pledge Amendment
delivered to the Collateral Agent shall for all purposes
hereunder be deemed Pledged Collateral.
(d) Supplements, Further Assurances. The Pledgor
hereby authorizes the Collateral Agent, without relieving the
Pledgor of any obligations hereunder or under the Indenture,
and the Collateral Agent will, upon instructions from the
Pledgor, execute financing statements, continuation statements,
amendments thereto and other documents relative to all or any
part thereof, without the signature of the Pledgor where
permitted by law, and such Pledgor agrees to file such
financing statements, continuation statements, amendments
thereto and other documents and to do the further acts and
things, and to execute and deliver to the Collateral Agent such
additional assignments, agreements, powers and instruments, as
the Pledgor may reasonably deem necessary or appropriate,
wherever required or permitted by law in order to perfect and
preserve the rights and interests granted to the Collateral
Agent hereunder or to carry into effect the purposes of this
Agreement or better to assure and confirm unto the Collateral
Agent its respective rights, powers and remedies hereunder.
All of the foregoing shall be at the sole cost and expense of
the Pledgor.
SECTION 5. Representations and Warranties. The
Pledgor represents, warrants or covenants (as applicable) as
follows:
(a) Ownership. The Pledgor is, as of the date
hereof, and, as to Pledged Collateral acquired by it from
time to time after the date hereof, the Pledgor will be,
the legal record and beneficial owner of all of its
respective Pledged Collateral free from any Lien or other
right, title or interest of any Person other than the
Liens and security interests granted by such Pledgor to
the Collateral Agent pursuant to this Agreement. The
<PAGE>
Pledgor shall defend its respective ownership of its
Pledged Collateral against all claims and demands of all
other Persons at any time claiming any interest therein
adverse to the Collateral Agent.
(b) Chief Executive Office; Corporate Name; Records.
The chief executive office and the corporate name of the
Pledgor is as set forth on Annex A hereto. The Pledgor
shall not change its name or move its chief executive
office, except in accordance with the last sentence of
this Section 5(b). All tangible record evidence of all
Pledged Collateral and the only original books of account
and records of the Pledgor relating thereto are, and will
continue to be, kept at such respective chief executive
office, or at such new location for such chief executive
office as the Pledgor may establish in accordance with the
last sentence of this Section 5(b). The Pledgor shall not
establish a new location for its chief executive office or
change its name until (i) it shall have given the
Collateral Agent not less than 45 days' prior written
notice of its intention to do so, clearly identifying such
new location or name and providing such other information
in connection therewith as the Collateral Agent or any
Secured Party reasonably may request, and (ii) with
respect to such new location or name, the Pledgor shall
have taken all action satisfactory to the Collateral Agent
to maintain the perfection and priority of the security
interest of the Collateral Agent for the benefit of the
Secured Parties in the Pledged Collateral intended to be
granted hereby.
(c) Authorization; Enforceability. The Pledgor has
full power, authority and legal right to pledge and grant
the security interest in all of its respective Pledged
Collateral pursuant to this Agreement, and this Agreement
constitutes the legal, valid and binding obligation of the
Pledgor, enforceable against the Pledgor in accordance
with its terms, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent transfer,
moratorium and similar laws affecting creditors' rights
generally and to general equitable principles (whether
enforcement is sought in proceedings in equity or at law).
(d) No Consents, etc. Except as heretofore obtained
and in effect, no consent of any party (including, without
<PAGE>
limitation, stockholders or creditors of the Pledgor) and
no consent, authorization, approval, or other action by,
and no notice to or filing with (other than routine
filings with the Federal Communications Commission (the
"FCC")), any Governmental Authority or regulatory body or
other Person is required for (x) the pledge by the Pledgor
of the Pledged Collateral pledged by it pursuant to this
Agreement or for the execution, delivery or performance of
this Agreement by such Pledgor or (y) the exercise by the
Collateral Agent of the rights provided for in this
Agreement other than any required consents of the FCC or
(z) the exercise by the Collateral Agent of the remedies
in respect of the Pledged Collateral pursuant to this
Agreement other than with respect to contracts or other
agreements which are not, individually, material to the
business or operation of the Pledgor and its Subsidiaries
taken as a whole and other than any required consents of
the FCC.
(e) No Conflicts. The execution, delivery and
performance by the Pledgor of this Agreement do not (or
with notice or lapse of time or both, will not) violate,
conflict with or constitute a default under, or result in
the termination of, or accelerate the performance required
by, or result in there being declared void, voidable or
without further binding effect, any provision of any other
contractual obligations which, individually, is material
to the business or operation of the Pledgor and its
Subsidiaries taken as a whole to which the Pledgor is a
party.
(f) Benefit to Pledgor. The Pledgor has received
substantial benefit as a result of the execution, delivery
and performance of the Indenture.
(g) Due Authorization and Issuance. All of the
Pledged Shares have been, and to the extent hereafter
issued will be upon such issuance, duly authorized and
validly issued and fully paid and nonassessable.
(h) Delivery of Pledged Collateral; Filings. The
Pledgor has delivered to the Collateral Agent all
certificates representing the Pledged Shares, and has
filed UCC-1 financing statements (with copies delivered to
the Collateral Agent) evidencing the pledge, security
interests and Liens created by this Agreement, and such
<PAGE>
delivery and pledge of the Pledged Collateral pursuant to
this Agreement creates a valid and (with respect to the
Pledged Collateral other than the Pledged Shares, when the
UCC-1 Financing Statements are filed) perfected first
priority security interest in the Pledged Collateral
securing the payment of the Secured Obligations pursuant
to the UCC in effect in each applicable jurisdiction.
(i) Pledged Shares. As of the date hereof, (x) the
Pledged Shares consisting of capital stock of the
corporations identified in Schedule I hereto constitute
the percentage of the issued and outstanding shares of
capital stock of such corporations as identified in
Schedule I, and (y) other than the Pledged Shares, the
Pledgor does not own, directly or indirectly, any other
shares of capital stock of the corporations identified in
Schedule I hereto.
(j) No Violations, etc. The pledge of the Pledged
Collateral pursuant to this Agreement does not violate
Regulation G, T, U or X of the Federal Reserve Board.
(k) No Options, Warrants, etc. Other than as
provided on Schedule III hereto, there are no options,
warrants, calls, rights, commitments or agreements of any
character to which Pledgor is a party or by which it is
bound, obligating Pledgor to issue, deliver or sell, or
cause to be issued, delivered or sold, additional Pledged
Shares or obligating Pledgor to grant, extend or enter
into any such option, warrant, call, right, commitment or
agreement. There are no voting trusts or other agreements
or understandings to which Pledgor is a party with respect
to the voting of the capital stock of any issuer of the
Pledged Shares.
SECTION 6. Voting Rights; Distributions; etc.
(a) So long as no Default or Event of Default shall
have occurred:
(i) The Pledgor shall be entitled to exercise any
and all voting and other consensual rights pertaining to
the Pledged Shares or any part thereof.
(ii) The Pledgor shall be entitled to receive and
retain, and to utilize free and clear of the Lien of this
<PAGE>
Agreement, any and all Distributions; provided, however,
that any and all such Distributions consisting of rights
or interests in the form of securities shall be, and shall
promptly be delivered to the Collateral Agent to hold as,
Pledged Collateral, in accordance with the provisions
hereof and shall, if received by the Pledgor, be received
in trust for the benefit of the Collateral Agent, be
segregated from the other property or funds of the
Pledgor, and promptly be delivered to the Collateral Agent
as Pledged Collateral in the same form as so received
(with any necessary endorsement).
(iii) The Collateral Agent shall be deemed without
further action or formality to have granted to the Pledgor
all necessary consents relating to voting rights and
shall, if necessary, upon written request of the Pledgor
and at the Pledgor's sole cost and expense, from time to
time execute and deliver (or cause to be executed and
delivered) to the Pledgor all such instruments as the
Pledgor may reasonably request in order to permit the
Pledgor to exercise the voting and other rights which it
is entitled to exercise pursuant to Section 6(a)(i) hereof
and to receive the Distributions which it is authorized to
receive pursuant to Section 6(a)(ii) hereof.
(b) Upon the occurrence of a Default or an Event of
Default:
(i) All rights of the Pledgor to exercise the voting
and other consensual rights it would otherwise be entitled
to exercise pursuant to Section 6(a)(i) hereof shall cease
without any action or the giving of any notice to the
Pledgor, and all such rights shall thereupon become vested
in the Collateral Agent, which shall thereupon have the
sole right to exercise such voting and other consensual
rights.
(ii) Subject to Section 28 hereof, all rights of the
Pledgor to receive Distributions which it would otherwise
be authorized to receive pursuant to Section 6(a)(ii)
hereof shall cease without any action or the giving of any
notice to the Pledgor and all such rights shall thereupon
become vested in the Collateral Agent, which shall
thereupon have the sole right to receive and hold as
Pledged Collateral such Distributions.
<PAGE>
(c) The Pledgor shall, at the Pledgor's sole cost
and expense, from time to time execute and deliver to the
Collateral Agent appropriate instruments as the Collateral
Agent may reasonably request in order to permit the Collateral
Agent to exercise the voting and other rights which it may be
entitled to exercise pursuant to Section 6(b)(i) hereof and to
receive all Distributions which it may be entitled to receive
under Section 6(b)(ii) hereof.
(d) All Distributions which are received by the
Pledgor contrary to the provisions of Section 6(b)(ii) hereof
shall be received and held in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of the
Pledgor and shall promptly be paid over to the Collateral Agent
as Pledged Collateral in the same form as so received (with any
necessary endorsement).
SECTION 7. Transfers and Other Liens; Additional
Equity Interests.
(a) Except as expressly permitted under the
Indenture, the Pledgor shall not (i) sell, convey, assign or
otherwise dispose of, or grant any option, right or warrant
with respect to, any of the Pledged Collateral, (ii) create or
permit to exist any Lien upon or with respect to any of its
Pledged Collateral other than the Liens and security interests
granted by the Pledgor to the Collateral Agent pursuant to this
Agreement, or (iii) permit any issuer of the Pledged Shares to
merge, consolidate or change its legal form.
(b) The Pledgor shall (i) cause the issuer of the
Pledged Shares not to issue any securities in addition to or in
substitution for the Pledged Shares issued by such issuer,
except to the Pledgor, other than any securities issued in
accordance with clause (iii) of Section 10.18 of the Indenture,
and (ii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all shares of stock
or other equity securities of any Person which, pursuant to the
Indenture, are required to be pledged thereunder.
SECTION 8. Reasonable Care. The Collateral Agent
shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment
substantially equivalent to that which the Collateral Agent, in
its individual capacity, accords its own property consisting of
<PAGE>
similar instruments or interests, it being understood that
neither the Collateral Agent nor any of the Secured Parties
shall have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities,
tenders or other matters relating to any Pledged Collateral,
whether or not the Collateral Agent has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps
to preserve rights against any Person with respect to any
Pledged Collateral.
SECTION 9. Events of Default; Remedies; Etc.
(a) Event of Default. An event of default hereunder
(an "Event of Default") shall exist upon the occurrence of an
Event of Default, as such term is defined in the Indenture.
(b) Dispositions of Pledged Collateral. Upon the
occurrence of an Event of Default, the Collateral Agent may, in
addition to other rights and remedies provided for herein or
otherwise available to it, from time to time (i) exercise all
the rights and remedies of a secured party under the UCC at the
time of an Event of Default; (ii) retain and apply
Distributions to the Secured Obligations as provided in
Section 10 hereof; and (iii) without notice except as specified
below, sell the Pledged Collateral or any part thereof in one
or more parcels at public or private sale, at any exchange,
broker's board or at any of the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and at
such price or prices and upon such other terms as are
commercially reasonable. At any time during which this
Agreement shall not have been terminated in accordance with
Section 17 hereof, any Secured Party or any of their respective
affiliates may be the purchaser of any or all of the Pledged
Collateral at any such sale and shall be entitled, for the
purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral
sold at such sale, to use and apply any of the Secured
Obligations owed to such Person as a credit on account of the
purchase price of any Pledged Collateral payable by such Person
at such sale. Each purchaser at any such sale shall acquire
the property sold absolutely free from any claim or right on
the part of the Pledgor, and the Pledgor hereby waives, to the
fullest extent permitted by law, all rights of redemption, stay
and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or
hereafter enacted. The Collateral Agent shall not be obligated
<PAGE>
to make any sale of Pledged Collateral regardless of notice of
sale having been given. The Collateral Agent may adjourn any
public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was
so adjourned. The Pledgor hereby waives, to the fullest extent
permitted by law, any claims against Collateral Agent arising
by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale.
(c) Certain Notices. The Pledgor agrees that, to
the extent notice of sale shall be required by law, five days'
prior written notice from the Collateral Agent of the time and
place of any public sale or of the time after which a private
sale or other intended disposition is to take place shall be
commercially reasonable notification of such matters. In
addition to the rights and remedies provided in this Agreement
and the Indenture, the Collateral Agent shall have all the
rights and remedies of a secured party under the UCC.
(d) Limitations Relating to Securities Act. The
Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, the
Collateral Agent may be compelled, with respect to any sale of
all or any part of the Pledged Collateral, to limit purchasers
to Persons who will agree, among other things, to acquire the
Pledged Collateral for their own account, for investment and
not with a view to the distribution or resale thereof. The
Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable to the Collateral Agent 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 not be deemed to have been made in a
commercially unreasonable manner solely as a result of its
having been made as a private sale, and that the Collateral
Agent shall have no obligation to engage in public sales and no
obligation to delay the sale of any Pledged Collateral for the
period of time necessary to permit the issuer thereof to
register it for a form of public sale requiring registration
under the Securities Act or under applicable state securities
laws, even if such issuer would agree to do so.
<PAGE>
(e) Registration and Qualification. Notwithstanding
the foregoing, upon the occurrence of an Event of Default at
the request of the Collateral Agent, the Pledgor, for the
benefit of the Collateral Agent, shall cause any registration,
qualification under or compliance with any federal or state
securities law or laws to be effected with respect to all or
any part of the Pledged Collateral as soon as practicable and
at the Pledgor's sole cost and expense. The Pledgor will 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
Collateral, including, without limitation, registration under
the Securities Act (or any similar statute then in effect),
appropriate qualifications under applicable blue sky or other
state securities laws and appropriate compliance with any other
government requirements. The Pledgor will cause the Collateral
Agent to be kept advised in writing as to the progress of each
such registration, qualification or compliance and as to the
completion thereof, will furnish to the Collateral Agent such
number of prospectuses, offering circulars or other documents
incident thereto as the Collateral Agent from time to time may
request, and will indemnify and will cause the issuer of the
Pledged Collateral to indemnify the Collateral Agent and all
others participating in the distribution of such Pledged
Collateral 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 similar document) or by
any omission (or alleged omission) to state therein (or in any
related registration statement, notification or similar
document) a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(f) Certain Information. Upon written request by
the Collateral Agent, the Pledgor shall from time to time
furnish to the Collateral Agent all such information as the
Collateral Agent may request in order to determine the number
of Pledged Shares included in the Pledged Collateral which may
be sold by the Collateral Agent as exempt transactions under
the Securities Act and the rules of the Securities and Exchange
Commission thereunder, as the same are from time to time in
effect.
(g) Specific Performance. In addition to any of the
<PAGE>
other rights and remedies hereunder, the Collateral Agent shall
have the right to institute a proceeding seeking specific
performance in connection with any of the agreements or
obligations hereunder.
(h) Waiver of Claims. The Pledgor hereby waives, to
the full extent permitted by applicable law, notice of judicial
hearing in connection with the Collateral Agent's taking
possession or the Collateral Agent's disposition of any of the
Pledged Collateral, including, without limitation, any and all
prior notice and hearing for any prejudgment remedy or remedies
and any such right which the Pledgor would otherwise have under
law, and the Pledgor hereby further waives, to the full extent
permitted by applicable law: (i) all damages occasioned by
such taking of possession; (ii) all other requirements as to
the time, place and terms of sale or other requirements with
respect to the enforcement of the Collateral Agent's rights
hereunder; and (iii) all rights of redemption, appraisal,
valuation, stay, extension or moratorium now or hereafter in
force under any applicable law. To the full extent permitted
by law, any sale of, or the grant of options to purchase, or
any other realization upon, any Pledged Collateral in
accordance with the terms of this Agreement shall operate to
divest all right, title, interest, claim and demand, either at
law or in equity, of the Pledgor therein and thereto, and shall
be a perpetual bar both at law and in equity against the
Pledgor and against any and all Persons claiming or attempting
to claim the Pledged Collateral so sold, optioned or realized
upon, or any part thereof, from, through or under the Pledgor.
(i) Deficiency. Notwithstanding any other provision
of this Agreement to the contrary, if, after giving effect to
any sale, transfer or other disposition of any or all of the
Pledged Collateral pursuant hereto and after the application of
the proceeds hereunder to the Secured Obligations, any Secured
Obligations remain unpaid or unsatisfied, the Pledgor shall
remain liable for the unpaid and unsatisfied amount of such
Secured Obligations for which the Pledgor is otherwise liable
pursuant to the Indenture or otherwise.
SECTION 10. Application of Proceeds. All
Distributions held from time to time by the Collateral Agent
and all proceeds received by the Collateral Agent in respect of
any sale of, collection from or other realization upon all or
any part of the Pledged Collateral pursuant to the exercise by
the Collateral Agent of its remedies as a secured creditor as
<PAGE>
provided in Section 9 hereof shall be, without prior notice to
or assent by the Pledgor, applied together with any other sums
then held by the Collateral Agent pursuant to this Agreement as
follows:
FIRST, to the payment of all reasonable costs and
expenses, fees, commissions and taxes of such sale,
collection or other realization, including, without
limitation, compensation to Collateral Agent and its
agents and counsel, and all reasonable expenses,
liabilities and advances made or incurred by the
Collateral Agent in connection therewith, together with
interest on each such amount at the highest rate then in
effect under the Indenture and the Notes from and after
the date such amount is due, owing or unpaid until paid in
full in cash;
SECOND, to the payment of all other reasonable costs
and expenses of such sale, collection or other
realization, including, without limitation, compensation
to the Holders and their agents and counsel and all
reasonable costs, liabilities and indebtedness made or
incurred by the Holders in connection therewith, together
with interest on each such amount at the highest rate then
in effect under the Indenture and the Notes from and after
the date such amount is due, owing or unpaid until paid in
full in cash;
THIRD, to the indefeasible payment in full in cash of
interest and all amounts other than principal under the
Indenture and the Notes at any time and from time to time
owing by the Pledgor under or in connection with the
Indenture and the Notes, ratably according to the unpaid
amounts thereof, without preference or priority of any
kind among amounts so due and payable, together with
interest on each such amount at the highest rate then in
effect under the Indenture and the Notes from and after
the date such amount is due, owing or unpaid until paid in
full in cash;
FOURTH, to the indefeasible payment in full in cash
of principal at any time and from time to time owing by
any Pledgor under or in connection with the Indenture and
the Notes, ratably according to the unpaid amounts
thereof, without preference or priority of any kind among
amounts of principal so due and payable, together with
<PAGE>
interest on each such amount at the highest rate then in
effect under the Indenture and the Notes from and after
the date such amount is due, owing or unpaid until paid in
full in cash; and
FIFTH, the balance, if any, to the Pledgor, or its
successors or assigns, or to whomsoever may be lawfully
entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 11. Expenses. The Pledgor will upon demand
pay to the Collateral Agent the amount of any and all
reasonable expenses, including the fees and expenses of its
counsel and the fees and expenses of any experts required by
the Collateral Agent which the Collateral Agent may incur in
connection with (i) the collection of the Secured Obligations,
(ii) the enforcement and administration of this Agreement,
(iii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Pledged
Collateral, (iv) the exercise or enforcement of any of the
rights of any Secured Party hereunder or (v) the failure by the
Pledgor to perform or observe any of the provisions hereof.
All amounts payable by the Pledgor under this Section 11 shall
be due upon demand and shall be part of the Secured
Obligations. The Pledgor's obligations under this Section
shall survive the termination of this Agreement and the
discharge of the Pledgor's other obligations hereunder.
SECTION 12. No Waiver; Cumulative Remedies.
(a) No failure on the part of the Collateral Agent
to exercise, no course of dealing with respect to, and no delay
on the part of the Collateral Agent in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right,
power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. The remedies herein provided are cumulative and are
not exclusive of any remedies provided by law.
(b) In the event the Collateral Agent shall have
instituted any proceeding to enforce any right, power or remedy
under this Agreement by sale or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Collateral Agent,
<PAGE>
then and in every such case, the Pledgor, the Collateral Agent
and each holder of any of the Secured Obligations shall be
restored to their respective former positions and right
hereunder with respect to the Pledged Collateral, and all
rights, remedies and powers of the Collateral Agent and the
Secured Parties shall continue as if no such proceeding had
been instituted.
SECTION 13. The Collateral Agent. The Collateral
Agent has been appointed as collateral agent pursuant to the
Indenture. The actions of the Collateral Agent hereunder are
subject to the provisions of the Indenture. The Collateral
Agent shall have the right hereunder to make demands, to give
notices, to exercise or refrain from exercising any rights, and
to take or refrain from taking action (including, without
limitation, the release or substitution of Pledged Collateral),
in accordance with this Agreement and the Indenture. The
Collateral Agent may resign and a successor Collateral Agent
may be appointed in the manner provided in the Indenture. Upon
the acceptance of any appointment as Collateral Agent by a
successor Collateral Agent, that successor Collateral Agent
shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring
Collateral Agent under this Agreement, and the retiring
Collateral Agent shall thereupon be discharged from its duties
and obligations under this Agreement. After any retiring
Collateral Agent's resignation, the provisions of this
Agreement shall inure to its benefit as to any actions taken or
omitted to be taken by it under this Agreement while it was
Collateral Agent.
SECTION 14. Collateral Agent May Perform; Collateral
Agent Appointed Attorney-in-Fact. If the Pledgor shall fail to
do any act or thing that it has covenanted to do hereunder or
if any warranty on the part of the Pledgor contained herein
shall be breached, the Collateral Agent or any Secured Party
may (but shall not be obligated to) do the same or cause it to
be done or remedy any such breach, and may expend funds for
such purpose. Any and all amounts so reasonably expended by
Collateral Agent or such Secured Party shall be paid by the
Pledgor promptly upon demand therefor, with interest at the
highest rate then in effect under the Indenture and the Notes
during the period from and including the date on which such
funds were so expended to the date of repayment. The Pledgor's
obligations under this Section 14 shall survive the termination
of this Agreement and the discharge of the Pledgor's other
<PAGE>
obligations under this Agreement and the Indenture. The
Pledgor hereby appoints the Collateral Agent its attorney-in-
fact, with full authority in the place and stead of the Pledgor
and in the name of the Pledgor, or otherwise, from time to time
in Collateral Agent's discretion to take any action and to
execute any instrument consistent with the terms of this
Agreement and the Indenture which the Collateral Agent may deem
reasonably necessary or advisable to accomplish the purposes of
this Agreement, provided that the Collateral Agent is not
authorized to execute applications to the FCC on behalf of and
in the name of Pledgor except to the extent the FCC may permit.
The foregoing grant of authority is a power of attorney coupled
with an interest and such appointment shall be irrevocable for
the term of this Agreement. The Pledgor hereby ratifies all
that such attorney shall lawfully do or cause to be done by
virtue hereof.
SECTION 15. Indemnity.
(a) Indemnity. The Pledgor agrees to indemnify, pay
and hold harmless the Collateral Agent, each of the Secured
Parties and each of their respective officers, directors,
employees, representatives, agents, attorneys-in-fact and
Affiliates and each other Person, if any, controlling them or
any of their Affiliates within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act (each an
"Indemnitee" and collectively, the "Indemnitees") from, and
hold each of them harmless against, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, claims (including those based upon negligence, strict or
absolute liability and any liability in tort), costs, expenses
or disbursements of any kind or nature whatsoever (including,
reasonable fees and expenses of counsel for such Indemnitees in
connection with any claim, action, judgment, suit, hearing,
governmental investigation, arbitration or proceeding
(including by or before any Governmental Authority) (a
"Proceeding") commenced or threatened, whether or not such
Indemnitee shall be designated a party thereto and whether or
not such Proceeding is initiated or brought by or on behalf of
the Pledgor), which may be, at any time (including following
the payment of the Secured Obligations) incurred by, imposed on
or asserted against such Indemnitee), by, or in any manner
resulting from, relating to or arising out of this Agreement or
the Indenture or the Notes (including, without limitation, any
misrepresentation by the Pledgor in this Agreement or the
Indenture) (the "indemnified liabilities"); provided that the
<PAGE>
Pledgor shall have no obligation to an Indemnitee hereunder
with respect to indemnified liabilities if such indemnified
liability arose from the willful misconduct, gross negligence
or bad faith of such Indemnitee (treating for this purpose
only, any Secured Party and its officers, directors, employees,
representatives, agents, attorneys-in-fact and Affiliates as a
single Indemnitee). To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any
law or public policy, the Pledgor shall contribute the maximum
portion which it is permitted to pay and satisfy under
applicable law, to the payment and satisfaction of all
indemnified liabilities incurred by any of the Indemnitees.
(b) Survival. The obligations of the Pledgor
contained in this Section 15 shall survive the termination of
this Agreement and the discharge of the Pledgor's other
obligations under this Agreement and the Indenture.
(c) Reimbursement. Any amounts paid by any
Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Secured Obligations secured by
the Pledged Collateral.
SECTION 16. Modification in Writing. No amendment,
modification, supplement, termination or waiver of or to any
provision of this Agreement, or consent to any departure by the
Pledgor therefrom, shall be effective unless the same shall be
done in accordance with the terms of this Agreement and the
Indenture. Any amendment, modification or supplement of or to
any provision of this Agreement, any waiver of any provision of
this Agreement, and any consent to any departure by the Pledgor
from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is
specifically required by this Agreement, no notice to or demand
on the Pledgor in any case shall entitle the Pledgor to any
other or further notice or demand in similar or other
circumstances.
SECTION 17. Termination; Releases.
When all the Secured Obligations have been paid in
full in cash, this Agreement shall terminate. Upon termination
of this Agreement or any release of Pledged Collateral in
accordance with the provisions hereunder and under the
<PAGE>
Indenture and the Notes, the Collateral Agent shall, upon the
request and at the sole cost and expense of the Pledgor,
promptly assign, transfer and deliver to the Pledgor, against
receipt and without recourse to or warranty by the Collateral
Agent, such of the Pledged Collateral to be released (in the
case of a release) as may be in possession of the Collateral
Agent and as shall not have been sold or otherwise applied
pursuant to the terms hereof and proper instruments (including
Uniform Commercial Code termination statements on Form UCC-3)
acknowledging the termination of this Agreement and the release
of such Pledged Collateral. So long as there is no Default or
Event of Default continuing, the Collateral Agent shall release
any Pledged Collateral to be offered and sold pursuant to a
public offering to the extent such offer and sale is made in
compliance with the Indenture and the provisions of Article 13
of the Indenture and the TIA are complied with.
SECTION 18. Notices. All notices or other
communications herein required to be given shall be given at
the address and in the manner required in the Indenture.
SECTION 19. Continuing Security Interest;
Assignment. This Agreement shall create continuing security
interests in the Pledged Collateral and shall (i) be binding
upon the Pledgor, its successors and assigns, and (ii) inure,
together with the rights and remedies of the Collateral Agent
hereunder, to the benefit of the Collateral Agent and the other
Secured Parties and their respective successors and assigns; no
other Persons (including, without limitation, any other
creditor of the Pledgor) shall have any interest herein or any
right or benefit with respect hereto.
SECTION 20. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 21. Severability of Provisions. Any
provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
<PAGE>
SECTION 22. Execution in Counterparts. This
Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an
original, but all such counterparts together shall constitute
one and the same instrument.
SECTION 23. Headings. The Section headings used in
this Agreement are for convenience of reference only and shall
not affect the construction of this Agreement.
SECTION 24. [Intentionally Omitted]
SECTION 25. Obligations Absolute. All obligations
of the Pledgor hereunder shall be absolute and unconditional
irrespective of:
(i) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or
similar event of the Pledgor;
(ii) any lack of validity or enforceability of the
Indenture or any other agreement or instrument relating
thereto;
(iii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of
or any consent to any departure from the Indenture, the
Notes or any other agreement or instrument relating hereto
or thereto;
(iv) any exchange, release or non-perfection of any
other collateral or the pledge of any additional
collateral or the failure to recover in respect thereof
pursuant to any remedy or right of the Collateral Agent or
any other Secured Party contained in this Agreement, the
Notes or the Indenture;
(v) any exercise or non-exercise, or any waiver of
any right, remedy, power or privilege under or in respect
of this Agreement, the Notes or the Indenture except as
specifically set forth in a waiver granted pursuant to the
provisions of Section 16 hereof; or
<PAGE>
(vi) any other circumstances which might otherwise
constitute a defense available to, or a discharge of,
Pledgor (other than payment of Secured Obligations).
SECTION 26. [Intentionally omitted]
SECTION 27. [Intentionally Omitted]
SECTION 28. Broadcast Licenses.
(a) Notwithstanding any other provision of this
Agreement, any foreclosure on, sale, transfer or other
disposition of, or the exercise of any right to vote with
respect to, any portion of the Pledged Collateral as provided
herein or any other action taken or proposed to be taken by the
Secured Parties or the Collateral Agent hereunder, to the
extent such action would effect a change in the operational,
voting or other control of any of the broadcast television
stations owned by the Company or any Subsidiary (the
"Stations") requiring the prior consent of the FCC, shall be
undertaken in accordance with the Communications Act of 1934,
as amended (or any successor statute), and the rules and
regulations of the FCC.
(b) (1) If an Event of Default shall have occurred,
the Pledgor shall take and cause to be taken by any issuer of
the Pledged Collateral any action that the Secured Parties or
the Collateral Agent may request in the exercise of their
rights and remedies under this Agreement in order to transfer
and assign, to or for the benefit of the Secured Parties, or to
one or more third parties as the Secured Parties or the
Collateral Agent may designate, or to a combination of the
foregoing, the Pledged Collateral. To enforce the provisions
of this Section, the Collateral Agent is empowered to seek from
the FCC and any other governmental authority, to the extent
required, consent to or approval of a voluntary or involuntary
transfer of control of all or any of the Pledged Collateral for
the purpose of seeking a bona fide purchaser to whom the
Pledged Collateral ultimately will be transferred. The Pledgor
hereby agree to authorize, or cause the issuer of the Pledged
Collateral to authorize, such a voluntary or involuntary
transfer of control upon the request of the Collateral Agent
after and during the continuation of an Event of Default; and,
without limiting any rights of the Collateral Agent under this
Agreement, authorize the Collateral Agent to nominate a trustee
or receiver to assume control of the Pledged Collateral,
<PAGE>
subject only to any required judicial or FCC consent, to
effectuate the transactions described in this Agreement. Such
trustee or receiver shall have all the rights and powers as
provided to it by law, court order or to the Collateral Agent
under this Agreement. The Pledgor shall cooperate fully in
obtaining the consent of the FCC and the approval or consent of
each other governmental authority required to effectuate the
foregoing.
(2) The Pledgor shall further use its best efforts
to obtain consent or approval of the FCC and any other
governmental authority, and to assist the Collateral Agent in
obtaining such consent, if required, for any action or
transaction contemplated by this Agreement, including, without
limitation, the preparation, execution and filing with the FCC
of any application or applications for consent to the transfer
of control necessary or appropriate under the FCC's rules and
regulations for any FCC approval of any transfer or assignment
of any portion of the Pledged Collateral, as requested by the
Collateral Agent. In the event that the Pledgor shall fail or
refuse to sign any such application to the FCC, the Pledgor
agrees that any such application may be signed on its behalf by
the clerk of any court of competent jurisdiction.
(c) The Pledgor acknowledges and agrees that consent
of the FCC and of each other governmental authority for
transfer of control of each license or other authorization
issued by the FCC and controlled by the Pledgor is integral to
the Collateral Agent's and the Secured Parties' realization of
the value of the Pledged Collateral, that there is no adequate
remedy at law for failure by the Pledgor to comply with the
provisions of this Section and that such failure would not be
adequately compensable in damages; and, therefore, the Pledgor
agrees that the agreements contained in this Section may be
specifically enforced.
(d) This Agreement and the transactions contemplated
hereby do not and will not constitute, create, or have the
effect of constituting or creating, directly or indirectly,
actual or practical control over the Pledged Collateral by the
Secured Parties or the Collateral Agent or control by the
Secured Parties or the Collateral Agent over operations of the
issuers of the Pledged Collateral under the the licenses,
permits and authorizations that are, as of any date of
determination, required by the FCC with respect to the
operation of the Stations including those listed on Schedule IV
<PAGE>
hereto, and all modifications, extensions and renewals thereof
(the "Broadcast Licenses"), which control (within the meaning
of the Communications Act of 1934, as amended, and the FCC's
rules and regulations) shall remain with the Pledgors until
such time as the Collateral Agent, the Secured Parties or any
third-party purchaser of the assets subject to this Agreement
shall have complied with the applicable requirements of the
Communications Act of 1934, as amended (or any successor
statute), and the applicable rules of the FCC with respect to
any required consent for such change of control.
(e) The parties acknowledge their intention that,
upon the occurrence of an Event of Default, the Collateral
Agent and the Secured Parties shall receive, to the fullest
extent permitted by applicable law and governmental policies
(including, without limitation, the rules and policies of the
FCC), all rights necessary or desirable to obtain, use or sell
the Pledged Collateral or to have the Pledged Collateral sold
to a third party purchaser for the benefit of the Secured
Parties and, in connection therewith, to assign or transfer the
Broadcast Licenses or to have the Broadcast Licenses assigned
or transferred to such purchaser, and to exercise all remedies
available to the Secured Parties or the Collateral Agent under
this Agreement, the other Collateral Documents, the UCC and
other applicable law. The Pledgor agrees that, in the event of
changes in law or governmental policy occurring after the date
hereof that affect in any manner the Secured Parties' rights of
access to, or use or sale of, the Broadcast Licenses and
Pledged Collateral, or the procedures necessary to enable the
Secured Parties or the Collateral Agent to obtain such rights
of access, use or sale, the Secured Parties and the Pledgor,
upon request of the Collateral Agent or the Secured Parties,
shall amend this Agreement in such manner as the Secured
Parties or the Collateral Agent shall reasonably request, in
order to provide the Secured Parties and the Collateral Agent
with such rights to the greatest extent possible consistent
with then-applicable law and governmental policy.
IN WITNESS WHEREOF, the Pledgor and Collateral Agent
has caused this Agreement to be executed and delivered by its
duly authorized officer as of the date first above written.
PARK COMMUNICATIONS, INC.
By:
<PAGE>
Name:
Title:
[Insert name of Trustee]
as Collateral Agent
By: ____________________________
Name:
Title:
<PAGE>
Annex A
Pledgor Chief Executive Office
Park Communications, Inc.
<PAGE>
SCHEDULE I
Stock owned by PARK COMMUNICATIONS, INC.:
Percentage of
All Capital or
Other Equity
Class Par Certificate Number Interests of
Issuer of Stock Value ___No(s).__ of Shares Issuer________
Park
Broad-
casting,
Inc.
Park
News-
papers,
Inc.
<PAGE>
SCHEDULE II
Pledge Amendment
This Pledge Amendment (this "Pledge Amendment"), dated
___________, 19__, is delivered pursuant to Section 4(c) of that
certain Securities Pledge Agreement (as it may be amended, supplemented
or otherwise modified from time to time, the "Securities Pledge
Agreement"; capitalized terms not defined herein have the meanings
assigned to such terms in the Securities Pledge Agreement) dated as of
[ ], 199 , between Park Communications, Inc. and
[ ], as Collateral Agent on behalf of the Secured
Parties identified therein. The undersigned hereby agrees that this
Pledge Amendment may be attached to the Securities Pledge Agreement and
that the Pledged Shares listed below shall be deemed to be and shall
become part of the Pledged Collateral and shall secure all Secured
Obligations.
PARK COMMUNICATIONS, INC.
as Pledgor
By: ________________________
Name:
Title:
Percentage of
All Capital or
Other Equity
Class Par Certificate Number Interests of
Issuer of Stock Value ___No(s).__ of Shares Issuer________
<PAGE>
SCHEDULE III
Options, Warrants, Etc.
<PAGE>
SCHEDULE IV
Broadcast Television Stations
<PAGE>
EXHIBIT F
Each Note that is issued with original issue discount
within the meaning of Section 1273(a) of the Internal Revenue
Code of 1986, as amended, shall bear the following legend on
the face thereof:
THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE
DISCOUNT WITHIN THE MEANING OF SECTION 1273(a)
OF THE INTERNAL REVENUE CODE OF 1986. THE ISSUE
PRICE IS $965 FOR EACH $1,000 OF STATED
PRINCIPAL AMOUNT. THE ORIGINAL ISSUE DISCOUNT
IS $1,551.58 FOR EACH $1,000.00 OF STATED
PRINCIPAL AMOUNT. THE ISSUE DATE IS MAY 13,
1996. THE YIELD TO MATURITY IS 14.312%
COMPOUNDED SEMIANNUALLY. ORIGINAL ISSUE
DISCOUNT WILL BE ALLOCATED BASED ON ACCRUAL
PERIODS ENDING ON EACH DATE ON WHICH AN INTEREST
PAYMENT IS DUE AND THE 360 DAYS PER YEAR
CONVENTION.
<PAGE>
Schedule A
UNRESTRICTED SUBSIDIARIES
Subsidiaries of Park Broadcasting, Inc.
Park Broadcasting of Florida, Inc.
Park Radio of Greater New York, Inc.
Park Broadcasting of Iowa, Inc.
Park Radio of Iowa, Inc.
Roy H. Park Broadcasting of the Midwest, Inc.
Roy H. Park Broadcasting of Minnesota, Inc.
Roy H. Park Broadcasting of the Lake Country, Inc.
Roy H. Park Broadcasting of Oregon, Inc.
Contemporary FM, Inc.
Roy H. Park Radio, Inc.
Roy H. Park FM Broadcasting of East Carolina, Inc.
Roy H. Park Broadcasting of Syracuse, Inc.
Roy H. Park Broadcasting of Washington, Inc.
Subsidiaries of Park Newspapers, Inc.
Park Newspapers of Susquehanna, Inc.
Park Newspapers of Honesdale, Inc.
Park Newspapers of Norwich, Inc.
<PAGE>
Park Newspapers of Florida, Inc.
<PAGE>
Exhibit 4.2
WARRANT AGREEMENT
Dated as of May 13, 1996
By and Between
PARK COMMUNICATIONS, INC.
and
IBJ SCHRODER BANK & TRUST COMPANY,
as Warrant Agent
______________________
Warrants to Purchase Common Stock
Par Value $0.0001 Per Share
<PAGE>
TABLE OF CONTENTS
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
Page
SECTION 1.01. Issuance of Warrants................................. 2
SECTION 1.02. Form of Warrant Certificates......................... 2
SECTION 1.03. Execution of Warrant Certificates.................... 3
SECTION 1.04. Authentication and Delivery.......................... 3
SECTION 1.05. Temporary Warrant Certificates....................... 4
SECTION 1.06. Separation of Initial Warrants and
Notes............................................... 5
SECTION 1.07. Registration......................................... 5
SECTION 1.08. Registration of Transfers and
Exchanges............................................ 6
SECTION 1.09. Lost, Stolen, Destroyed, Defaced or
Mutilated Warrant Certificates....................... 14
SECTION 1.10. Offices for Exercise, etc............................ 15
ARTICLE II
DURATION, EXERCISE OF WARRANTS
AND EXERCISE PRICE
SECTION 2.01. Duration of Warrants................................. 16
SECTION 2.02. Exercise, Exercise Price,
Settlement and Delivery............................. 16
SECTION 2.03. Cancellation of Warrant
Certificates........................................ 21
SECTION 2.04. Notice of an Exercise Event.......................... 22
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. Enforcement of Rights................................ 22
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
<PAGE>
SECTION 4.01. Payment of Taxes..................................... 23
SECTION 4.02. Qualification Under the Securities
Laws................................................. 23
SECTION 4.03. Rules 144 and 144A................................... 24
-i-
<PAGE>
SECTION 4.04. Registration or Repurchase of
Warrants................................................ 24
SECTION 4.05. Restriction on Limitations on
Issuing Notes to Repurchase
Warrants................................................ 30
SECTION 4.06. FCC Approval......................................... 30
ARTICLE V
ADJUSTMENTS
SECTION 5.01. Adjustment of Exercise Rate;
Notices................................................. 30
SECTION 5.02. Fractional Shares.................................... 37
SECTION 5.03. Certain Distributions................................ 37
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. Warrant Agent........................................ 38
SECTION 6.02. Conditions of Warrant Agent's
Obligations............................................. 38
SECTION 6.03. Resignation and Appointment of
Successor............................................... 43
ARTICLE VII
[Intentionally Omitted]
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendment............................................ 45
SECTION 8.02. Notices and Demands to the Company
and Warrant Agent....................................... 47
SECTION 8.03. Addresses for Notices to Parties
and for Transmission of Documents....................... 47
SECTION 8.04. Notices to Holders................................... 48
SECTION 8.05. APPLICABLE LAW....................................... 48
SECTION 8.06. Persons Having Rights Under
Agreement............................................... 48
SECTION 8.07. Headings............................................. 48
SECTION 8.08. Counterparts......................................... 48
SECTION 8.09. Inspection of Agreement.............................. 48
<PAGE>
SECTION 8.10. Availability of Equitable Remedies.................... 48
EXHIBIT A - Form of Warrant Certificate.............................. A-1
-ii-
<PAGE>
EXHIBIT B - Certificate To Be Delivered upon
Exchange or Registration of
Transfer of Warrants.................................... B-1
EXHIBIT C - Transferee Letter of Representation...................... C-1
EXHIBIT D - Form of Certificate of Election.......................... D-1
-iii-
<PAGE>
INDEX OF DEFINED TERMS
Defined Term Section
Affiliate............................................. 5.01(b)
Agreement............................................. Recitals
Business Day.......................................... 2.01
Capital Stock......................................... 5.01(o)
Cashless Exercise..................................... 2.02(c)
Cashless Exercise Ratio............................... 2.02(c)
Certificate of Election............................... 4.04
Change of Control..................................... 2.02(a)
Common Stock.......................................... Recitals
Company............................................... Recitals
Contingent Warrants................................... Recitals
Current Market Value.................................. 5.01(p)
Definitive Warrants................................... 1.02
Distribution.......................................... 5.03
Distribution Rights................................... 5.03
Electing Majority Holders............................. 4.04
Election Notice....................................... 4.04
Election To Exercise.................................. 2.02(b)
Exchange Act.......................................... 2.02(a)
Exercisability Date................................... 2.02(a)
Exercise Date......................................... 2.02(d)
Exercise Event........................................ 2.02(a)
Exercise Price........................................ 2.02(a)
Exercise Price Per Share.............................. 2.02(c)
Exercise Rate......................................... 2.02(a)
Expiration Date....................................... 2.01
Expiration Time....................................... 5.01(d)
First Valuation Report................................ 4.04
Global Warrants....................................... 1.02
Holdings.............................................. Recitals
Indenture............................................. Recitals
Independent Financial Expert.......................... 4.04
Initial Purchasers.................................... Recitals
Initial Warrants...................................... Recitals
New Valuation Date.................................... 4.04
Notes................................................. Recitals
Notice Date........................................... 4.04
Notice of Election Right.............................. 4.04
Officers' Certificate................................. 1.08(f)
Prospectus............................................ 4.02
Public Equity Offering................................ 2.02(a)
<PAGE>
Public Market......................................... 2.02(a)
Purchase Notice....................................... 4.04
Purchase Notice Date.................................. 4.04
Purchase Offer........................................ 4.04
Registrar............................................. 1.07
-iv-
<PAGE>
Registration Election................................. 4.04
Registration Election Date............................ 4.04
Registration Rights Agreement......................... Recitals
Related Parties....................................... 6.02(e)
Resale Restriction Termination Date................... 1.08
Second Valuation Report............................... 4.04
Securities Act........................................ 1.06
Separability Date..................................... 1.06
Separated............................................. 1.06
Separation............................................ 1.06
Shares................................................ 1.01
Surviving Person...................................... 5.01(f)
Time of Determination................................. 5.01(p)
Third Valuation Report................................ 4.04
Trustee............................................... Recitals
Unit Agent............................................ Recitals
Unit Agreement........................................ Recitals
Unit Certificate...................................... Recitals
Units................................................. Recitals
Valuation Date........................................ 4.04
Warrant Agent......................................... Recitals
Warrant Agent Office.................................. 1.10
Warrant Certificates.................................. Recitals
Warrant Exercise Office............................... 2.02(b)
Warrant Purchase Date................................. 4.04
Warrant Purchase Price................................ 4.04
Warrant Register...................................... 1.07
Warrants.............................................. Recitals
-v-
<PAGE>
WARRANT AGREEMENT
WARRANT AGREEMENT ("Agreement"), dated as of
May 13, 1996 by and between PARK COMMUNICATIONS, INC.,
a Delaware corporation (together with any successor
thereto, the "Company"), and IBJ SCHRODER BANK & TRUST
COMPANY, a New York banking company, not in its individual
capacity but solely as warrant agent (with any successor
Warrant Agent, the "Warrant Agent").
WHEREAS, the Company, which is a wholly-owned
subsidiary of Park Acquisitions, Inc., a Delaware corporation
("Holdings"), has entered into a purchase agreement dated
May 6, 1996 with Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Goldman, Sachs & Co. (the "Initial
Purchasers") in which the Company has agreed to sell to the
Initial Purchasers 80,000 units (the "Units") consisting in the
aggregate of (i) $80,000,000 aggregate principal amount at
maturity of 13-3/4% Senior Pay-in-Kind Notes due 2004 (the
"Notes") of the Company to be issued under an indenture dated
as of May 13, 1996 (the "Indenture"), between the Company and
IBJ Schroder Bank & Trust Company, a New York banking
corporation, as trustee (in such capacity, the "Trustee"), and
(ii) 800,000 warrants (the "Initial Warrants"), each
representing the right to purchase initially one share of
common stock, par value $0.0001 per share, of the Company (the
"Common Stock"), subject to adjustment in accordance with the
terms hereof; and
WHEREAS, each Unit will consist of one Note in the
principal amount at maturity of $1,000 and 10 Initial Warrants
and the Notes and the Initial Warrants comprising part of the
Units shall not be separately transferable until the
Separability Date (as defined below); and
WHEREAS, pursuant to section 10.21 of the Indenture,
in certain circumstances the Company will be obligated to issue
additional warrants (the "Contingent Warrants" and together
with the Initial Warrants, the "Warrants"; and the certificates
evidencing the Warrants being herein referred to as the
"Warrant Certificates") exercisable for Common Stock of the
Company; and
<PAGE>
WHEREAS, the holders of the Warrants are entitled to
the benefits of a Warrant Registration Rights Agreement dated
as of May 13, 1996 between the Company and the Initial
Purchasers (the "Registration Rights Agreement"); and
<PAGE>
WHEREAS, the Company desires the Warrant Agent as
warrant agent to assist the Company in connection with the
issuance, exchange, cancellation, replacement and exercise of
the Warrants, and in this Agreement wishes to set forth, among
other things, the terms and conditions on which the Warrants
may be issued, exchanged, cancelled, replaced and exercised;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. Issuance of Warrants. Initial
Warrants comprising part of the Units shall be originally
issued in connection with the issuance of the Units and such
Initial Warrants shall not be separately transferable from the
Notes until on or after the Separability Date as provided in
Section 1.06 hereof. Contingent Warrants shall be issued as
required by section 10.21 of the Indenture.
Each Warrant Certificate shall evidence the number of
Warrants specified therein, and each Warrant evidenced thereby
shall represent the right, subject to the provisions contained
herein and therein, to purchase from the Company (and the
Company shall issue and sell to such holder of the Warrant) one
(1) fully paid and non-assessable share of the Company's Common
Stock (the shares purchasable upon exercise of a Warrant being
hereinafter referred to as the "Shares" and, where appropriate,
such term shall also mean the other securities or property
purchasable and deliverable upon exercise of a Warrant as
provided in Article V) at the price specified herein and
therein, in each case subject to adjustment as provided herein
and therein.
SECTION 1.02. Form of Warrant Certificates. The
Warrant Certificates will initially be issued either in global
form (the "Global Warrants"), substantially in the form of
Exhibit A hereto (including footnote 1 thereto), or in
registered form as definitive Warrant Certificates (the
"Definitive Warrants"). The Warrant Certificates evidencing
the Global Warrants or the Definitive Warrants to be delivered
pursuant to this Agreement shall be substantially in the form
set forth in Exhibit A attached hereto. Such Global Warrants
shall represent such of the outstanding Warrants as shall be
<PAGE>
specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Warrants from
time to time endorsed thereon and that the aggregate amount of
outstanding Warrants represented thereby may from time to time
be reduced or increased, as appropriate. Any endorsement of a
Global Warrant to reflect the amount of any increase or
<PAGE>
decrease in the amount of outstanding Warrants represented
thereby shall be made by the Warrant Agent and Depositary (as
defined below) in accordance with instructions given by the
holder thereof. The Depository Trust Company shall act as the
Depositary with respect to the Global Warrants until a
successor shall be appointed by the Company and the Warrant
Agent. Upon written request, a Warrant holder may receive from
the Warrant Agent or the Depository Definitive Warrants as set
forth in Section 1.08 hereof.
SECTION 1.03. Execution of Warrant Certificates.
The Warrant Certificates shall be executed on behalf of the
Company by the chairman of its Board of Directors, its
president or any vice president and attested by its secretary
or assistant secretary, under its corporate seal. Such
signatures may be the manual or facsimile signatures of the
present or any future such officers. The seal of the Company
may be in the form of a facsimile thereof and may be impressed,
affixed, imprinted or otherwise reproduced on the Warrant
Certificates. Typographical and other minor errors or defects
in any such reproduction of the seal or any such signature
shall not affect the validity or enforceability of any Warrant
Certificate that has been duly countersigned and delivered by
the Warrant Agent.
In case any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be such
officer before the Warrant Certificate so signed shall be
countersigned and delivered by the Warrant Agent or disposed of
by the Company, such Warrant Certificate nevertheless may be
countersigned and delivered or disposed of as though the person
who signed such Warrant Certificate had not ceased to be such
officer of the Company; and any Warrant Certificate may be
signed on behalf of the Company by such persons as, at the
actual date of the execution of such Warrant Certificate, shall
be the proper officers of the Company, although at the date of
the execution and delivery of this Agreement any such person
was not such an officer.
SECTION 1.04. Authentication and Delivery. Subject
to the immediately following paragraph, Warrant Certificates
shall be authenticated by manual signature and dated the date
of authentication by the Warrant Agent and shall not be valid
for any purpose unless so authenticated and dated. The Warrant
Certificates shall be numbered and shall be registered in the
Warrant Register (as defined in Section 1.07 hereof).
<PAGE>
Upon the receipt by the Warrant Agent of a written
order of the Company, which order shall be signed by the
chairman of its Board of Directors, its president or any vice
president and attested by its secretary or assistant secretary,
and shall specify the amount of Warrants to be authenticated,
<PAGE>
whether the Warrants are to be Global Warrants or Definitive
Warrants, the date of such Warrants and such other information
as the Warrant Agent may reasonably request, without any
further action by the Company, the Warrant Agent is authorized,
upon receipt from the Company at any time and from time to time
of the Warrant Certificates, duly executed as provided in
Section 1.03 hereof, to authenticate the Warrant Certificates
and upon the holder's request deliver them. Such
authentication shall be by a duly authorized signatory of the
Warrant Agent (although it shall not be necessary for the same
signatory to sign all Warrant Certificates).
In case any authorized signatory of the Warrant Agent
who shall have authenticated any of the Warrant Certificates
shall cease to be such authorized signatory before the Warrant
Certificate shall be disposed of by the Company or the Warrant
Agent, such Warrant Certificate nevertheless may be delivered
or disposed of as though the person who authenticated such
Warrant Certificate had not ceased to be such authorized
signatory of the Warrant Agent; and any Warrant Certificate may
be authenticated on behalf of the Warrant Agent by such persons
as, at the actual time of authentication of such Warrant
Certificates, shall be the duly authorized signatories of the
Warrant Agent, although at the time of the execution and
delivery of this Agreement any such person is not such an
authorized signatory.
The Warrant Agent's authentication on all Warrant
Certificates shall be in substantially the form set forth in
Annex A hereto.
SECTION 1.05. Temporary Warrant Certificates.
Pending the preparation of definitive Warrant Certificates, the
Company may execute, and the Warrant Agent shall authenticate
and deliver, temporary Warrant Certificates, which are printed,
lithographed, typewritten or otherwise produced, substantially
of the tenor of the definitive Warrant Certificates in lieu of
which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers
executing such Warrant Certificates may determine, as evidenced
by their execution of such Warrant Certificates.
If temporary Warrant Certificates are issued, the
Company will cause definitive Warrant Certificates to be
prepared without unreasonable delay. After the preparation of
definitive Warrant Certificates, the temporary Warrant
<PAGE>
Certificates shall be exchangeable for definitive Warrant
Certificates upon surrender of the temporary Warrant
Certificates at any office or agency maintained by the Company
for that purpose pursuant to Section 1.10 hereof. Subject to
the provisions of Section 4.01 hereof, such exchange shall be
without charge to the holder. Upon surrender for cancellation
<PAGE>
of any one or more temporary Warrant Certificates, the Company
shall execute, and the Warrant Agent shall authenticate and
deliver in exchange therefor, one or more definitive Warrant
Certificates representing in the aggregate a like number of
Warrants. Until so exchanged, the holder of a temporary
Warrant Certificate shall in all respects be entitled to the
same benefits under this Agreement as a holder of a definitive
Warrant Certificate.
SECTION 1.06. Separation of Initial Warrants and
Notes. The Notes and Initial Warrants will not be separately
transferable until the Separability Date. "Separability Date"
shall mean the earliest to occur of: (i) November 15, 1996,
(ii) the date a registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to a
registered exchange offer for the Notes or covering the sale by
holders of the Notes is declared effective under the Securities
Act, (iii) such date as may be determined by Merrill Lynch,
Pierce, Fenner & Smith Incorporated and specified to the
Company, the Trustee, the Warrant Agent and the Unit Agent in
writing, (iv) any Exercise Event (as defined herein) or (v) an
Event of Default (as defined in the Indenture).
Notwithstanding the foregoing, in the event a Change of Control
Triggering Event (as defined in the Indenture) occurs and the
Company mails the related notice thereof to holders of Notes
prior to the Separability Date, as determined by the preceding
sentence, the Separability Date shall be such earlier date of
mailing. The separation of Warrant and Note certificates is
herein referred to as a "Separation" and the related Initial
Warrants are referred to as "Separated".
SECTION 1.07. Registration. The Company will keep,
at the office or agency maintained by the Company for such
purpose, a register or registers in which, subject to such
reasonable regulations as it may prescribe, the Company shall
provide for the registration of, and registration of transfer
and exchange of, Warrants as provided in this Article. Each
person designated by the Company from time to time as a person
authorized to register the transfer and exchange of the
Warrants is hereinafter called, individually and collectively,
the "Registrar". The Company hereby initially appoints the
Warrant Agent as Registrar. Upon written notice to the Warrant
Agent and any acting Registrar, the Company may appoint a
successor Registrar for such purposes.
The Company will at all times designate one person
<PAGE>
(who may be the Company and who need not be a Registrar) to act
as repository of a master list of names and addresses of the
holders of Warrants (the "Warrant Register"). The Warrant
Agent will act as such repository unless and until some other
person is, by written notice from the Company to the Warrant
Agent and the Registrar, designated by the Company to act as
<PAGE>
such. The Company shall cause each Registrar to furnish to
such repository, on a current basis, such information as to all
registrations of transfer and exchanges effected by such
Registrar, as may be necessary to enable such repository to
maintain the Warrant Register on as current a basis as is
practicable.
SECTION 1.08. Registration of Transfers and
Exchanges.
(a) Transfer and Exchange of Definitive Warrants.
When Definitive Warrants are presented to the Warrant Agent
with a request:
(i) to register the transfer of the Definitive Warrants;
or
(ii) to exchange such Definitive Warrants for an equal
number of Definitive Warrants of other authorized
denominations,
the Warrant Agent shall register the transfer or make the
exchange as requested if the requirements under this Warrant
Agreement as set forth in this Section 1.08 hereof for such
transactions are met; provided, however, that the Definitive
Warrants presented or surrendered for registration of transfer
or exchange:
(x) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Company and the Warrant Agent, duly executed by the
holder thereof or by his attorney, duly authorized in
writing; and
(y) in the case of Warrants the offer and sale of which
have not been registered under the Securities Act and
are presented for transfer or exchange prior to the
date on or after which the Warrants may be resold
without restriction under federal securities laws (as
evidenced by an opinion of counsel delivered and
reasonably acceptable to the Company) (the "Resale
Restriction Termination Date"), such Warrants shall
be transferred in accordance with all applicable
state securities laws and shall be accompanied, in
the sole discretion of the Company, by the following
additional information and documents, as applicable,
<PAGE>
however, it being understood that the Warrant Agent
need not determine which clause (A) through (D) below
is applicable:
(A) if such Warrant is being delivered to the
Warrant Agent by a holder for registration in
<PAGE>
the name of such holder, without transfer, a
certification from such holder to that effect
(in substantially the form of Exhibit B hereto);
or
(B) if such Warrant is being transferred to a
qualified institutional buyer (as defined in
Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities
Act or pursuant to an exemption from
registration in accordance with Rule 144 or
Regulation S under the Securities Act or
pursuant to an effective registration statement
under the Securities Act, a certification to
that effect (in substantially the form of
Exhibit B hereto); or
(C) if such Warrant is being transferred to an
institutional "accredited investor" within the
meaning of subparagraphs (a)(1), (a)(2), (a)(3)
or (a)(7) of Rule 501 under the Securities Act,
delivery of a Certificate of Transfer in the
form of Exhibit C hereto and an opinion of
counsel reasonably acceptable to the Company
and/or other information satisfactory to the
Company to the effect that such transfer is in
compliance with the Securities Act; or
(D) if such Warrant is being transferred in reliance
on another exemption from the registration
requirements of the Securities Act, a
certification to that effect (in substantially
the form of Exhibit B hereto) and an opinion of
counsel and/or other information satisfactory to
the Company to the effect that such transfer is
in compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive Warrant
for a Beneficial Interest in a Global Warrant. A Definitive
Warrant may not be exchanged for a beneficial interest in a
Global Warrant except upon satisfaction of the requirements set
forth below. Upon receipt by the Warrant Agent of a Definitive
Warrant, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Warrant
Agent, together with:
<PAGE>
(A) certification, substantially in the form of
Exhibit B hereto, that such Definitive Warrant
is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with
Rule 144A under the Securities Act; and
<PAGE>
(B) written instructions directing the Warrant Agent
to make, or to direct the Depositary to make, an
endorsement on the Global Warrant to reflect an
increase in the aggregate amount of the Warrants
represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and
cause, or direct the Depositary to cause, in accordance with
the standing instructions and procedures existing between the
Depositary and the Warrant Agent, the number of Shares
represented by the Global Warrant to be increased accordingly.
If no Global Warrant is then outstanding, the Company shall
issue and the Warrant Agent shall authenticate a new Global
Warrant in the appropriate amount.
(c) Transfer and Exchange of Global Warrants. The
transfer and exchange of Global Warrants or beneficial
interests therein shall be effected through the Depositary, in
accordance with this Agreement (including the restrictions on
transfer set forth herein) and the procedures of the Depositary
therefor.
(d) Transfer of a Beneficial Interest in a Global
Warrant for a Definitive Warrant.
(i) Any person having a beneficial interest in a Global
Warrant may upon request exchange such beneficial
interest for a Definitive Warrant upon compliance
with all applicable state securities laws and upon
receipt by the Warrant Agent of written instructions
or such other form of instructions as is customary
for the Depositary from the Depositary or its
nominee on behalf of any person having a beneficial
interest in a Global Warrant and upon receipt by the
Warrant Agent of a written order or such other form
of instructions as is customary for the Depositary
or the person designated by the Depositary as having
such a beneficial interest containing registration
instructions and, in the case of any such transfer
or exchange prior to the Resale Restriction
Termination Date, the following additional
information and documents, however, it being
understood that the Warrant Agent need not determine
which clause (A) through (D) below is applicable:
(A) if such beneficial interest is being transferred
<PAGE>
to the person designated by the Depositary as
being the beneficial owner, a certification from
such person to that effect (in substantially the
form of Exhibit B hereto); or
<PAGE>
(B) if such beneficial interest is being transferred
to a qualified institutional buyer (as defined
in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities
Act or pursuant to an exemption from
registration in accordance with Rule 144 or
Regulation S under the Securities Act or
pursuant to an effective registration statement
under the Securities Act, a certification to
that effect from the transferee or transferor
(in substantially the form of Exhibit B hereto);
or
(C) if such beneficial interest is being transferred
to an institutional "accredited investor" within
the meaning of subparagraphs (a)(1), (a)(2),
(a)(3) or (a)(7) of Rule 501 under the
Securities Act, delivery of a Certificate of
Transfer in the form of Exhibit C hereto and an
opinion of counsel and/or other information
satisfactory to the Company to the effect that
such transfer is in compliance with the
Securities Act; or
(D) if such beneficial interest is being transferred
in reliance on another exemption from the
registration requirements of the Securities Act,
a certification to that effect from the
transferee or transferor (in substantially the
form of Exhibit B hereto) and an opinion of
counsel from the transferee or transferor
reasonably acceptable to the Company to the
effect that such transfer is in compliance with
the Securities Act,
then the Warrant Agent will cause, in accordance with
the standing instructions and procedures existing
between the Depositary and the Warrant Agent, the
aggregate amount of the Global Warrant to be reduced
and, following such reduction, the Company will
execute and, upon receipt of an authentication order
in the form of an Officers' Certificate (as defined),
the Warrant Agent will authenticate and deliver to
the transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a
<PAGE>
beneficial interest in a Global Warrant pursuant to
this Section 1.08(d) shall be registered in such
names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct
or indirect participants or otherwise, shall
instruct the Warrant Agent in writing. The Warrant
<PAGE>
Agent shall deliver such Definitive Warrants to the
persons in whose names such Warrants are so
registered in accordance with the request of such
holder.
(e) Restrictions on Transfer and Exchange of Global
Warrants. Notwithstanding any other provisions of this
Agreement (other than the provisions set forth in subsection
(f) of this Section 1.08), a Global Warrant may not be
transferred as a whole except by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
(f) Authentication of Definitive Warrants in
Absence of Depositary. If at any time:
(i) the Depositary for the Warrants notifies the Company
that the Depositary is unwilling or unable to
continue as Depositary for the Global Warrant and a
successor Depositary for the Global Warrant is not
appointed by the Company within 90 days after
delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Warrant Agent in writing that it elects to cause the
issuance of Definitive Warrants under this Warrant
Agreement,
then the Company will execute, and the Warrant Agent, upon
receipt of an officers' certificate signed by two officers of
the Company (one of whom must be the principal executive
officer, principal financial officer or principal accounting
officer) (an "Officers' Certificate") requesting the
authentication and delivery of Definitive Warrants, will
authenticate and deliver Definitive Warrants, in an aggregate
number equal to the aggregate number of warrants represented by
the Global Warrant, in exchange for such Global Warrant.
(g) Legends.
(i) Except as permitted by the following paragraph (ii),
each Warrant Certificate evidencing the Global
Warrants and the Definitive Warrants (and all
Warrants issued in exchange therefor or substitution
<PAGE>
thereof) shall bear a legend substantially to the
following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
<PAGE>
NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT
TO COMPLIANCE WITH OTHER APPLICABLE LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE ON OR AFTER WHICH THIS
WARRANT MAY BE RESOLD WITHOUT RESTRICTION UNDER
FEDERAL SECURITIES LAWS (AS EVIDENCED BY AN
OPINION OF COUNSEL DELIVERED AND REASONABLY
SATISFACTORY TO THE COMPANY) (THE "RESALE
RESTRICTION TERMINATION DATE"), ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT
OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR,"
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND OTHERWISE IN COMPLIANCE WITH
OTHER APPLICABLE LAWS, SUBJECT TO THE COMPANY'S
AND THE WARRANT AGENT'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D),
(E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM AND, IN
<PAGE>
EACH OF THE FOREGOING CASES, A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE
OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE COMPANY AND THE WARRANT AGENT.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
<PAGE>
THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
(ii) Upon any sale or transfer of a Warrant pursuant to
Rule 144 under the Securities Act in accordance with
Section 1.08 hereof or under an effective
registration statement under the Securities Act:
(A) in the case of any Warrant that is a Definitive
Warrant, the Warrant Agent shall permit the
holder thereof to exchange such Warrant for a
Definitive Warrant that does not bear the
legends set forth above and rescind any related
restriction on the transfer of such Warrant; and
(B) any such Warrant represented by a Global Warrant
shall not be subject to the provisions set forth
in (i) above (such sales or transfers being
subject only to the provisions of Section
1.08(c) hereof); provided, however, that with
respect to any request for an exchange of a
Warrant that is represented by a Global Warrant
for a Definitive Warrant that does not bear the
legends set forth above, which request is made
in reliance upon Rule 144 under the Securities
Act, the holder thereof shall certify in writing
to the Warrant Agent that such request is being
made pursuant to Rule 144 under the Securities
Act (such certification to be substantially in
the form of Exhibit B hereto).
(h) Cancellation and/or Adjustment of a Global
Warrant. At such time as all beneficial interests in a Global
Warrant have either been exchanged for Definitive Warrants,
redeemed, repurchased or cancelled, such Global Warrant shall
be returned to or retained and cancelled by the Warrant Agent.
At any time prior to such cancellation, if any beneficial
interest in a Global Warrant is exchanged for Definitive
Warrants, redeemed, repurchased or cancelled, the number of
Warrants represented by such Global Warrant shall be reduced
and an endorsement shall be made on such Global Warrant, by the
Warrant Agent to reflect such reduction.
(i) Obligations with Respect to Transfers and
Exchanges of Definitive Warrants.
<PAGE>
(i) To permit registrations of transfers and exchanges,
the Company shall execute, at the Warrant Agent's
request, and the Warrant Agent shall authenticate
Definitive Warrants and Global Warrants.
<PAGE>
(ii) All Definitive Warrants and Global Warrants issued
upon any registration, transfer or exchange of
Definitive Warrants or Global Warrants shall be the
valid obligations of the Company, entitled to the
same benefits under this Warrant Agreement as the
Definitive Warrants or Global Warrants surrendered
upon the registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer
of any Warrant, the Warrant Agent and the Company may
deem and treat the person in whose name any Warrant
is registered as the absolute owner of such Warrant,
and neither the Warrant Agent nor the Company shall
be affected by notice to the contrary.
(j) Payment of Taxes. The Company will pay all
documentary stamp taxes attributable to the initial issuance of
the Shares upon the exercise of Warrants; provided, however,
that the Company shall not be required to pay any tax or taxes
which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for the
Shares in a name other than that of the registered holder of a
Warrant Certificate surrendered upon the exercise of a Warrant,
and the Company shall not be required to issue or deliver such
Warrant Certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
SECTION 1.09. Lost, Stolen, Destroyed, Defaced or
Mutilated Warrant Certificates. Upon receipt by the Company
and the Warrant Agent (or any agent of the Company or the
Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction,
defacement, or mutilation of any Warrant Certificate and of
indemnity satisfactory to them and, in the case of mutilation
or defacement, upon surrender thereof to the Warrant Agent for
cancellation, then, in the absence of notice to the Company or
the Warrant Agent that such Warrant Certificate has been
acquired by a bona fide purchaser or holder in due course, the
Company shall execute, and an authorized signatory of the
Warrant Agent shall manually authenticate and deliver, in
exchange for or in lieu of the lost, stolen, destroyed, defaced
or mutilated Warrant Certificate, a new Warrant Certificate
representing a like number of Warrants, bearing a number or
other distinguishing symbol not contemporaneously outstanding.
<PAGE>
Upon the issuance of any new Warrant Certificate under this
Section, the Company may require the payment from the holder of
such Warrant Certificate of a sum sufficient to cover any tax,
stamp tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and
expenses of the Warrant Agent and the Registrar) in connection
<PAGE>
therewith. Every substitute Warrant Certificate executed and
delivered pursuant to this Section in lieu of any lost, stolen
or destroyed Warrant Certificate shall constitute an additional
contractual obligation of the Company, whether or not the lost,
stolen or destroyed Warrant Certificate shall be at any time
enforceable by anyone, and shall be entitled to the benefits of
(but shall be subject to all the limitations of rights set
forth in) this Agreement equally and proportionately with any
and all other Warrant Certificates duly executed and delivered
hereunder. The provisions of this Section 1.09 are exclusive
with respect to the replacement of lost, stolen, destroyed,
defaced or mutilated Warrant Certificates and shall preclude
(to the extent lawful) any and all other rights or remedies
notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement of
lost, stolen, destroyed, defaced or mutilated Warrant
Certificates.
The Warrant Agent is hereby authorized to
authenticate in accordance with the provisions of this
Agreement, and deliver the new Warrant Certificates required
pursuant to the provisions of this Section.
SECTION 1.10. Offices for Exercise, etc. So long as
any of the Warrants remain outstanding, the Company will
designate and maintain in the Borough of Manhattan, The City of
New York: (a) an office or agency where the Warrant
Certificates may be presented for exercise, (b) an office or
agency where the Warrant Certificates may be presented for
registration of transfer and for exchange (including the
exchange of temporary Warrant Certificates for definitive
Warrant Certificates pursuant to Section 1.05 hereof), and (c)
an office or agency where notices and demands to or upon the
Company in respect of the Warrants or of this Agreement may be
served. The Company may from time to time change or rescind
such designation, as it may deem desirable or expedient;
provided, however, that an office or agency shall at all times
be maintained in the Borough of Manhattan, The City of New
York, as provided in the first sentence of this Section. In
addition to such office or offices or agency or agencies, the
Company may from time to time designate and maintain one or
more additional offices or agencies within or outside The City
of New York, where Warrant Certificates may be presented for
exercise or for registration of transfer or for exchange, and
the Company may from time to time change or rescind such
designation, as it may deem desirable or expedient. The
<PAGE>
Company will give to the Warrant Agent written notice of the
location of any such office or agency and of any change of
location thereof. The Company hereby designates the Warrant
Agent at its principal corporate trust office in the Borough of
Manhattan, The City of New York (the "Warrant Agent Office"),
as the initial agency maintained for each such purpose. In
<PAGE>
case the Company shall fail to maintain any such office or
agency or shall fail to give such notice of the location or of
any change in the location thereof, presentations and demands
may be made and notice may be served at the Warrant Agent
Office and the Company appoints the Warrant Agent as its agent
to receive all such presentations, surrenders, notices and
demands.
ARTICLE II
DURATION, EXERCISE OF WARRANTS AND EXERCISE PRICE
SECTION 2.01. Duration of Warrants. Subject to the
terms and conditions established herein, the Warrants shall
expire at 5:00 p.m., New York City time, on May 15, 2004 (such
date, the "Expiration Date"). Each Warrant may be exercised on
any Business Day (as defined below) on or after the
Exercisability Date (as defined below) and on or prior to the
close of business on the Expiration Date.
Any Warrant not exercised before the close of
business on the Expiration Date shall become void, and all
rights of the holder under the Warrant Certificate evidencing
such Warrant and under this Agreement shall cease.
"Business Day" shall mean any day on which (i) banks
in New York City, (ii) the principal national securities
exchange or market on which the Common Stock is listed or
admitted to trading and (iii) the principal national securities
exchange or market, if any, on which the Warrants are listed or
admitted to trading are open for business.
SECTION 2.02. Exercise, Exercise Price, Settlement
and Delivery. (a) Subject to the provisions of this
Agreement, a holder of any Initial Warrant shall have the right
to purchase from the Company on or after the Exercisability
Date and on or prior to the close of business on the Expiration
Date one (1) fully paid, registered and non-assessable Share,
subject to adjustment in accordance with Article V hereof, at
the purchase price of $0.01 for each Initial Warrant exercised
(the "Exercise Price"). Subject to the provisions of this
Agreement, a holder of any Contingent Warrant shall have the
right to purchase from the Company on or after the occurrence
of an Exercise Event and on or prior to the close of business
on the Expiration Date one (1) fully paid, registered and non-
assessable Share, subject to adjustment in accordance with
<PAGE>
Article V hereof, at the Exercise Price. The number and kind
of Shares for which a Warrant may be exercised (the "Exercise
Rate") shall be subject to adjustment from time to time as set
forth in Article V hereof.
<PAGE>
"Exercisability Date" means the date as of which each
of the following shall have occurred (whether before or on such
date): (i) the Separability Date and (ii) an Exercise Event.
"Change of Control" means the occurrence of one or
more of the following events (whether or not approved by the
Board of Directors of the Company):
(i) any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), other than
Permitted Holders, is or becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a Person shall be deemed to have
beneficial ownership of all shares that such Person has
the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly
or indirectly, of 50% or more of the voting power of the
total outstanding Voting Stock of the Company or Holdings,
as the case may be; or
(ii) during any period of two consecutive years,
individuals who at the beginning of such period
constituted the Board of Directors of the Company or
Holdings, as the case may be (together with any new
directors whose election to such Board of Directors, or
whose nomination for election by the stockholders of the
Company or Holdings, as the case may be, was approved by a
vote of the Permitted Holders who at the time of the vote
are stockholders of the Company or Holdings, as the case
may be, or either (A) 66-2/3% or (B) all remaining members
of the Board of Directors of the Company or Holdings, as
the case may be, then still in office who were either
directors at the beginning of such period or whose
election or nomination for election was previously so
approved), cease for any reason to constitute a majority
of the Board of Directors of the Company or Holdings, as
the case may be, then in office; or
(iii) the sale of all or substantially all of the
Capital Stock or assets of the Company or Holdings, as the
case may be, to any "person" or "group" (as defined in
Rule 13d-5 under the Exchange Act), other than to the
Permitted Holders, as an entirety or substantially as an
entirety in a single transaction or a series of related
transactions; or
<PAGE>
(iv) the Company or Holdings, as the case may be,
consolidates with or merges with or into another Person
other than in any such event where immediately after such
transaction the stockholders immediately prior to such
transaction or the Permitted Holders hold at least a
<PAGE>
majority of the voting power of the outstanding Voting
Stock of the Surviving Person immediately after the
consummation of such transaction.
For purposes of the foregoing definition of Change of
Control, the transfer (by lease, assignment, sale or otherwise,
in a single transaction or series of related transactions) of
all or substantially all of the properties or assets of one or
more Subsidiaries of the Company, the Capital Stock of which
constitutes all or substantially all of the properties and
assets of the Company, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the
Company.
"Exercise Event" means, with respect to each Warrant,
the date of the occurrence of the earliest of: (1) immediately
prior to the occurrence of a Change of Control, (2) the 180th
day (or such fewer number of days as determined by the Company
in its sole discretion) after the consummation of a Public
Equity Offering, (3) the 90th day after the Registration
Election Date, (4) the approval by the holders of the Capital
Stock of the Company of any Plan of Liquidation of the Company
and (5) the 180th day prior to May 15, 2004.
"Person" means an individual, partnership,
corporation, unincorporated organization, trust or joint
venture, or a governmental agency or political subdivision
thereof.
"Plan of Liquidation" means, with respect to the
Company, a plan (including by operation of law) that provides
for, contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously)
(i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company otherwise than
as an entirety or substantially as an entirety and (ii) the
distribution of all or substantially all of the proceeds of
such sale, lease, conveyance or other disposition and all or
substantially all of the remaining assets of the Company to
holders of Capital Stock of the Company.
"Public Equity Offering" means a primary public
offering (whether or not underwritten, but excluding any
offering pursuant to Form S-8 under the Securities Act or any
other publicly registered offering pursuant to the Securities
Act pertaining to an issuance of shares of Common Stock or
<PAGE>
securities exercisable therefor under any benefit plan,
employee compensation plan, or employee or director stock
purchase plan) of capital stock of the Company pursuant to an
effective registration statement under the Securities Act.
<PAGE>
"Voting Stock" of a Person means Capital Stock of
such Person of the class or classes pursuant to which the
holders thereof have the general voting powers under ordinary
circumstances to elect at least a majority of the board of
directors, managers or trustees of such Person (irrespective of
whether or not at the time the stock of any other class or
classes shall have or might have voting power by reason of the
happening of any contingency).
(b) Warrants may be exercised on or after the date
they are exercisable hereunder by (i) surrendering at any
office or agency maintained for that purpose by the Company
pursuant to Section 1.10 (each a "Warrant Exercise Office") the
Warrant Certificate evidencing such Warrants with the form of
election to purchase Shares set forth on the reverse side of
the Warrant Certificate (the "Election to Exercise") duly
completed and signed by the registered holder or holders
thereof or by the duly appointed legal representative thereof
or by a duly authorized attorney, and in the case of a
transfer, such signature shall be guaranteed by an Eligible
Guarantor Institution, and (ii) paying in full the Exercise
Price for each such Warrant exercised and any other amounts
required to be paid pursuant to Section 1.08(j) hereof. Each
Warrant may be exercised only in whole.
(c) Simultaneously with the exercise of each
Warrant, payment in full of the Exercise Price shall be made in
cash or by certified or official bank check to be delivered to
the office or agency where the Warrant Certificate is being
surrendered. Notwithstanding the foregoing sentence, a Warrant
may also be exercised solely by the surrender of the Warrant,
and without the payment of the Exercise Price in cash, for such
number of Shares equal to the product of (1) the number of
Shares for which such Warrant is exercisable with payment in
cash of the Exercise Price as of the date of exercise and
(2) the Cashless Exercise Ratio. For purposes of this
Agreement, the "Cashless Exercise Ratio" shall equal a
fraction, the numerator of which is the excess of the Current
Market Value of the Common Stock on the date of exercise
(calculated as set forth in Section 5.01(p) hereof) over the
Exercise Price Per Share as of the date of exercise and the
denominator of which is the Current Market Value of the Common
Stock on the date of exercise (calculated as set forth in
Section 5.01(p) hereof). An exercise of a Warrant in
accordance with the immediately preceding sentences is herein
called a "Cashless Exercise." Upon surrender of a Warrant
<PAGE>
Certificate representing more than one Warrant in connection
with the holder's option to elect a Cashless Exercise, the
number of Shares deliverable upon a Cashless Exercise shall be
equal to the number of Warrants that the holder specifies is to
be exercised pursuant to a Cashless Exercise multiplied by the
Cashless Exercise Ratio. All provisions of this Agreement
<PAGE>
shall be applicable with respect to an exercise of a Warrant
Certificate pursuant to a Cashless Exercise for less than the
full number of Warrants represented thereby. "Exercise Price
Per Share" means the Exercise Price divided by the number of
Shares for which a Warrant is then exercisable (without giving
effect to the Cashless Exercise option). No payment or
adjustment shall be made on account of any dividends on the
Shares issued upon exercise of a Warrant. If, pursuant to the
Securities Act, the Company is not able to effect the
registration of the offer and sale of the Warrant Shares by the
Company to the holders of the Warrants upon the exercise
thereof as required by Section 4.02 hereof, the holders of the
Warrants agree to effect the exercise of the Warrants solely
pursuant to the Cashless Exercise option to the extent that
such Cashless Exercise is not adverse to the interests of the
holders of the Warrants. The Warrant Agent shall have no
obligation under this section to calculate the Cashless
Exercise Ratio.
(d) Upon such surrender of a Warrant Certificate and
payment and collection of the Exercise Price at any Warrant
Exercise Office (other than any Warrant Exercise Office that
also is an office of the Warrant Agent), such Warrant
Certificate and payment shall be promptly delivered to the
Warrant Agent. The "Exercise Date" for a Warrant shall be the
date when all of the items referred to in the first sentence of
paragraphs (b) and (c) of this Section 2.02 are received by the
Warrant Agent at or prior to 11:00 a.m., New York City time, on
a Business Day and the exercise of the Warrants will be
effective as of such Exercise Date. If any items referred to
in the first sentence of paragraphs (b) and (c) are received
after 11:00 a.m., New York City time, on a Business Day, the
exercise of the Warrants to which such item relates will be
effective on the next succeeding Business Day. Notwithstanding
the foregoing, in the case of an exercise of Warrants on the
Expiration Date, if all of the items referred to in the first
sentence of paragraphs (b) and (c) are received by the Warrant
Agent at or prior to 5:00 p.m., New York City time, on the
Expiration Date, the exercise of the Warrants to which such
items relate will be effective on the Expiration Date.
(e) Upon the exercise of a Warrant in accordance
with the terms hereof, the receipt of a Warrant Certificate and
payment of the Exercise Price (or election of the Cashless
Exercise option), the Warrant Agent shall: (i) except to the
extent exercise of the Warrant has been effected through
<PAGE>
Cashless Exercise, cause an amount equal to the Exercise Price
to be paid to the Company by crediting the same to the account
designated by the Company in writing to the Warrant Agent for
that purpose; (ii) advise the Company immediately by telephone
of the amount so deposited to the Company's account and
promptly confirm such telephonic advice in writing; and
<PAGE>
(iii) as soon as practicable, advise the Company in writing of
the number of Warrants exercised in accordance with the terms
and conditions of this Agreement and the Warrant Certificates,
the instructions of each exercising holder of the Warrant
Certificates with respect to delivery of the Shares to which
such holder is entitled upon such exercise, and such other
information as the Company shall reasonably request.
(f) Subject to Section 5.02 hereof, as soon as
practicable after the exercise of any Warrant or Warrants in
accordance with the terms hereof, the Company shall issue or
cause to be issued to or upon the written order of the
registered holder of the Warrant Certificate evidencing such
exercised Warrant or Warrants, a certificate or certificates
evidencing the Shares to which such holder is entitled, in
fully registered form, registered in such name or names as may
be directed by such holder pursuant to the Election to
Exercise, as set forth on the reverse of the Warrant
Certificate. Such certificate or certificates evidencing the
Shares shall be deemed to have been issued and any persons who
are designated to be named therein shall be deemed to have
become the holder of record of such Shares as of the close of
business on the Exercise Date. After such exercise of any
Warrant or Warrants, the Company shall also issue or cause to
be issued to or upon the written order of the registered holder
of such Warrant Certificate, a new Warrant Certificate,
countersigned by the Warrant Agent pursuant to written
instruction, evidencing the number of Warrants, if any,
remaining unexercised unless such Warrants shall have expired.
SECTION 2.03. Cancellation of Warrant Certificates.
In the event the Company shall purchase or otherwise acquire
Warrants, the Warrant Certificates evidencing such Warrants may
thereupon be delivered to the Warrant Agent, and if so
delivered, shall at the Company's written instruction be
canceled by it and retired. The Warrant Agent shall cancel all
Warrant Certificates properly surrendered for exchange,
substitution, transfer or exercise. Upon the Company's written
request, the Warrant Agent shall deliver such canceled Warrant
Certificates to the Company.
SECTION 2.04. Notice of an Exercise Event. The
Company shall, as soon as practicable after the occurrence of
an Exercise Event, send or cause to be sent to each holder of
Warrants and to each beneficial owner of the Warrants to the
extent that the Warrants are held of record by a depositary or
<PAGE>
other agent (with a copy to the Warrant Agent), by first-class
mail, at the addresses appearing on the Warrant Register, a
notice prepared by the Company advising such holder of the
Exercise Event which has occurred, which notice shall describe
the type of Exercise Event and the date of the occurrence
<PAGE>
thereof and the date of expiration of the right to exercise the
Warrants prominently set forth in the face of such notice.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. Enforcement of Rights. (a)
Notwithstanding any of the provisions of this Agreement, any
holder of any Warrant Certificate, without the consent of the
Warrant Agent, the holder of any Shares or the holder of any
other Warrant Certificate, may, in and for his own behalf,
enforce, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, his right
to exercise the Warrant or Warrants evidenced by his Warrant
Certificate in the manner provided in such Warrant Certificate
and in this Agreement.
(b) Neither the Warrants nor any Warrant Certificate
shall entitle the holders thereof to any of the rights of a
holder of Shares, including, without limitation, the right to
vote or to receive any dividends or other payments or to
consent or to receive notice as stockholders in respect of the
meetings of stockholders or for the election of directors of
the Company or any other matter, or any rights whatsoever as
stockholders of the Company, except as provided in Section 5.03
hereof.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Taxes. The Company will
pay all documentary stamp taxes attributable to the initial
issuance of Warrants and of the Shares upon the exercise of
Warrants; provided, however, that the Company shall not be
required to pay any tax or other governmental charge which may
be payable in respect of any transfer or exchange of any
Warrant Certificates or any certificates for Shares in a name
other than the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant. In any such case,
no transfer or exchange shall be made unless or until the
person or persons requesting issuance thereof shall have paid
to the Company the amount of such tax or other governmental
charge or shall have established to the satisfaction of the
<PAGE>
Company that such tax or other governmental charge has been
paid or an exemption is available therefrom.
SECTION 4.02. Qualification Under the Securities
Laws. Immediately prior to the occurrence of an Exercise Event
arising as a result of a Public Equity Offering or the
<PAGE>
Registration Election Date, the Company will, if permitted by
applicable law, take all such action as is necessary to cause
the offer and sale by the Company of the Shares issuable upon
exercise of the Warrants to be registered or otherwise
qualified under the provisions of the Securities Act and
pursuant to all applicable state securities laws and to provide
for the issuance of all Shares delivered upon exercise of the
Warrants pursuant to an effective registration statement under
the Securities Act. So long as any unexpired Warrants which
have become exercisable due to the occurrence of such an
Exercise Event remain outstanding, the Company will file such
amendments and/or supplements to any registration statement
under the Securities Act or under any state securities laws
covering the issuance of such Shares and supplement and keep
current any prospectus forming a part of such registration
statement as may be necessary to permit the Company to deliver
to each person exercising a Warrant a prospectus meeting the
requirements of Section 10(a)(3) of the Securities Act (a
"Prospectus") and the regulations of the Securities and
Exchange Commission and otherwise complying with the Securities
Act and regulations thereunder, and as may be necessary to
comply with any applicable state securities laws. The Warrant
Agent shall have no duty to monitor when such registration or
qualification is necessary nor shall the Warrant Agent be
responsible for the Company's failure to comply with this
Section 4.02.
SECTION 4.03. Rules 144 and 144A. The Company
covenants that it will file the reports required to be filed by
it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the Securities and Exchange
Commission thereunder in a timely manner in accordance with the
requirements of the Securities Act and the Exchange Act and, if
at any time the Company is not required to file such reports,
it will, upon the request of any holder or beneficial owner of
Warrants, make available such information necessary to permit
sales pursuant to Rule 144A under the Securities Act.
SECTION 4.04. Registration or Repurchase of
Warrants. (i) (a) In the event that a Public Equity Offering
shall not have occurred on or prior to May 15, 2001 resulting
in net proceeds to the Company of at least $40.0 million, the
Company shall give written notice (the "Notice of Election
Right") to the holders of Warrants within 60 days after May 15,
2001 of the holders' right to the election described herein,
together with a certificate of election (the "Certificate of
<PAGE>
Election") substantially in the form of Exhibit D to this
Agreement, which notice shall describe with reasonable detail
the holders' right to election. Within 60 days after receipt
of such Notice of Election Right, the election (as evidenced by
the choice elected in the Notice of Election Right) of the
holders of not less than a majority of Warrants of all holders
<PAGE>
of Warrants who complete and return their Certificates of
Election to the Warrant Agent (the "Electing Majority Holders")
shall be deemed to be notice (which notice shall be
irrevocable) (such notice, the "Election Notice" and the date
the Election Notice is given, the "Notice Date") to the Company
of the holders' election to require the Company to either
(i) offer to purchase all outstanding Warrants at a price per
Warrant (the "Warrant Purchase Price") equal to the fair market
value thereof as determined in accordance with the procedures
described below, on the Warrant Purchase Date (as defined
below) or (ii) effect the registration (the "Registration
Election") of the offering and sale of the Warrants and/or the
Warrant Shares on behalf of the holders of the Warrants
pursuant to this Agreement and the Registration Rights
Agreement. If such notice shall be given for the Registration
Election, the date of such notice shall be deemed the
"Registration Election Date." If no holder responds by such
60th day after receipt of such Notice of Election Right or the
responding holders are deadlocked, the Company shall have the
option, in its sole discretion, to deem the election of the
holders to have been for the Registration Election or the
repurchase of the Warrants on the terms set forth herein. The
decision of the Electing Majority Holders (or of the Company
pursuant to the immediately preceding sentence) shall bind all
holders of Warrants.
(b) The Company shall, in connection with sending
the Notice of Election Right, select an independent investment
banking or appraisal firm of national standing (an "Independent
Financial Expert") and cause such Independent Financial Expert
to deliver to the Company a written report (the "First
Valuation Report") stating the methods of valuation considered
or used and the fair market value of each of the Warrants as of
March 31, 2001 (the "Valuation Date") and containing a
statement as to the nature and scope of the examination or
investigation upon which the determination of fair market value
was made and the factors and bases underlying such
determination.
(c) If the Election Notice is for the repurchase of
the Warrants, in the Election Notice the Electing Majority
Holders holding not less than 66-2/3% of the Warrants held by
the Electing Majority Holders may elect to appoint a second
Independent Financial Expert to make a determination of the
fair market value of the Warrants as of the Valuation Date. If
they so elect, the Electing Majority Holders who hold a
<PAGE>
majority of the Warrants held by the Electing Majority Holders
shall cause such Independent Financial Expert, within 45 days
of such election, to deliver to the Company (with a copy to the
Warrant Agent) a written report (the "Second Valuation Report")
of the fair market value of each of the Warrants as of the
Valuation Date substantially similar in content as to methods,
<PAGE>
nature and scope of examination and factors and bases
underlying valuation and disclosure thereof to the First
Valuation Report.
(d) The Company shall have ten Business Days after
receipt of the Second Valuation Report to object to the fair
market value of the Warrants as set forth in the Second
Valuation Report. If the Company does not object, such fair
market value shall be the Warrant Purchase Price. If the
Company does object, it shall give written notice thereof to
the holders of the Warrants and the Warrant Agent. The
Electing Majority Holders who hold a majority of the Warrants
held by the Electing Majority Holders and the Company shall,
within 20 Business Days after the Company so objects, select a
third Independent Financial Expert mutually acceptable to both
parties to prepare a written report (the "Third Valuation
Report") of its determination of the fair market value of the
Warrants as of the Valuation Date, which report shall be
delivered to the Company and the holders of the Warrants (with
a copy to the Warrant Agent) within 30 days after the selection
of such Independent Financial Expert. Such valuation shall
contain a statement as to the nature and scope of the
examination or investigation upon which the determination of
fair market value was made and the factors and bases underlying
such determination. If the holders and the Company cannot
agree to the selection of an Independent Financial Expert, the
New York office of the following firms (or their successor
firms) shall serve as the Independent Financial Expert in the
following order of priority; provided, however, that such firm
has not, for the prior three years, rendered professional
services to the Company or its Affiliates:
(1) Arthur Andersen & Co.
(2) Price Waterhouse & Co.
(3) Deloitte & Touche
(4) KPMG Peat Marwick
(5) Ernst & Young
(6) Coopers & Lybrand
(e) The fair market value determined in the Third
Valuation Report shall constitute the Warrant Purchase Price;
provided, however, that if the Warrant Purchase Price contained
in the Third Valuation Report is more than the higher of the
first two valuations, the higher of the first two valuations
shall constitute the Warrant Purchase Price; provided, further,
however, that if the Warrant Purchase Price contained in the
<PAGE>
Third Valuation Report is less than the lower of the first two
valuations, the lower of the first two valuations shall
constitute the Warrant Purchase Price. If any Independent
Financial Expert becomes aware of any material changes since
the Valuation Date, after reasonable inquiry with respect
thereto, in the business or financial condition or prospects of
<PAGE>
the Company and its Subsidiaries, such Independent Financial
Expert shall specify such material changes in its written
report and shall revise its valuation as it deems appropriate.
The fees and other costs of each of the first two Independent
Financial Experts shall be borne by the party appointing such
Independent Financial Expert, and the fees and other costs of
the third Independent Financial Expert shall be shared equally
by the Company and the holders of Warrants; provided, however,
that all indemnities in respect of any Independent Financial
Expert shall be for the account of the Company.
(f) The Company shall only be obligated to offer to
purchase for cash Warrants (at the Warrant Purchase Price) to
the extent that it is able to do so in accordance with
covenants in the agreements evidencing its indebtedness, in
which event Warrants shall be purchased for cash from tendering
holders pro rata in accordance with the number of Warrants
tendered by each holder. To the extent that tendering holders
are not paid the Warrant Purchase Price in cash for all
Warrants tendered because of such restrictions, the Company
shall repurchase the tendered Warrants by issuing, pursuant to
a registration statement declared effective under the
Securities Act (which shall be filed not later than Purchase
Notice Date), Notes (valued at 100% of the face amount
thereof), up to a maximum aggregate principal amount of Notes
so issued equal to 50% of the aggregate Warrant Purchase Price
of all Warrants tendered. Any Warrants purchased for Notes
shall be purchased from tendering holders pro rata in
accordance with the number of tendered Warrants not purchased
for cash. If on or prior to each of May 15, 2002 and May 15,
2003 a Public Equity Offering resulting in net proceeds of at
least $40.0 million shall not have occurred and the Company
shall not have purchased for cash all Warrants tendered
pursuant to the immediately preceding Purchase Offer, then the
Company shall be obligated to effect offers to purchase the
outstanding Warrants on the same terms and subject to the same
limitations as set forth above (such limitation independently
applicable to each such date), with the Warrant Purchase Price
to be based on a new determination of fair market value as of
March 31, 2002 or March 31, 2003 (each a "New Valuation Date"),
as the case may be, pursuant to the procedures set forth in (g)
below.
(g) The Company shall cause an Independent Financial
Expert selected by the Company to deliver to the holders within
60 days after May 15 of 2002 and 2003 (unless not required
<PAGE>
hereby) a written report (which shall be similar in content as
to methods, nature and scope of examination and factors and
bases underlying valuation as the valuation report described in
Section (i)(b) above) of the fair market value of the Warrants
as of the applicable New Valuation Date. The Company shall
deliver such written report together with a notice of the
<PAGE>
holders' rights to a second determination of the fair market
value of the Warrants. Holders of not less than 66-2/3% of the
Warrants held by those holders who respond to the notice may,
within 30 days after receipt of such notice, elect a second
Independent Financial Expert to make a determination of the
fair market value of the Warrants as of the applicable New
Valuation Date and deliver a written report of such fair market
value to the Company within 45 days of such election. The
Company shall have the same rights to object to the
determination of fair market value as set forth in (i)(d) above
and the Warrant Purchase Price shall be determined as set forth
in (i)(e) above. In addition, fees and expenses shall be
allocated as set forth in Section (i)(e) above.
(ii) Within 20 Business Days after the Warrant
Purchase Price has been determined in accordance with any
required offer to purchase Warrants, the Company shall provide
notice of its offer to purchase (the "Purchase Offer") to the
holders of Warrants by mailing by first class mail a notice of
such offer (the "Purchase Notice") to their addresses as set
forth in the Warrant Register with a copy to the Warrant Agent.
The date of the mailing of the Purchase Notice is hereafter
called the "Purchase Notice Date." The Purchase Offer must
remain open for 20 Business Days after the Purchase Notice Date
(or such longer period as may be required by law) and the date
set for the purchase of the Warrants shall be the "Warrant
Purchase Date." The notice, which shall govern the terms of
the Purchase Offer, shall include such disclosures as are
required by law and shall state:
(a) that the Warrant Purchase Date has been
determined, the aggregate number of Warrants which may be
repurchased for cash without violating any agreement to
which the Company is a party and that the Company is
offering to purchase for cash the maximum number of
Warrants which may be purchased without violating any of
the Company's agreements at the Warrant Purchase Price on
the Warrant Purchase Date, which shall be a Business Day,
specified in such notice, that is not earlier than 30 days
or later than 60 days from the date such notice is mailed;
(b) to the extent that less than all tendered
Warrants are purchased for cash by the Company due to
restrictions contained in its indebtedness, such tendered
Warrants shall be purchased for cash on a pro rata basis
and that tendered Warrants not purchased for cash shall be
<PAGE>
purchased with Notes in an aggregate principal amount not
to exceed 50% of the aggregate Purchase Price of all
Warrants tendered with such Warrants so purchased for
Notes purchased pro rata;
<PAGE>
(c) that Holders electing to have Warrants purchased
pursuant to a Purchase Offer will be required to surrender
their Warrants to the Warrant Agent at the address
specified in the notice prior to 5:00 p.m., New York City
time, on the Warrant Purchase Date with the "Option of
Holder to Elect Purchase" on the reverse thereof completed
and must complete any form letter of transmittal proposed
by the Company and be completed correctly by such Holder
and be acceptable to the Warrant Agent;
(d) that Holders of Warrants will be entitled to
withdraw their election if the Paying Agent receives, not
later than 5:00 p.m., New York City time, on the Business
Day prior to the Warrant Purchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of
the Holder, the number of Warrants the Holders delivered
for purchase, the Warrant Certificate number (if any) and
a statement that such Holder is withdrawing its election
to have such Warrants purchased;
(e) that Holders whose Warrants are purchased only
in part will be issued Warrant Certificates representing
the number of unpurchased Warrants;
(f) the instructions that Holders must follow in
order to tender their Warrants; and
(g) information concerning the business of the
Company, the most recent annual and quarterly reports of
the Company filed with the SEC pursuant to the Exchange
Act (or, if the Company is not then required to file any
such reports with the SEC, the comparable reports prepared
pursuant to Section 10.09 of the Indenture as in effect on
the date hereof), a description of material developments
in the Company's business, information with respect to pro
forma historical financial information after giving effect
to such Purchase Offer and such other information
concerning the circumstances and relevant facts regarding
such Purchase Offer as would be material to a Holder of
Warrants in connection with the decision of such Holder as
to whether or not it should tender Warrants pursuant to
the Purchase Offer.
On the Warrant Purchase Date, the Company will
(i) accept for payment (either by payment of cash or issuance
of Notes) all Warrants or portions thereof tendered pursuant to
<PAGE>
the Purchase Offer, subject to the limitations set forth
herein, (ii) deposit with the Warrant Agent cash and/or Notes
(valued at 100% of the face amount thereof) in an amount equal
to the Warrant Purchase Price for all Warrants or portions
thereof accepted for payment, and (iii) deliver or cause to be
delivered to the Warrant Agent all Warrants tendered pursuant
<PAGE>
to the Purchase Offer. If less than all Warrants tendered
pursuant to the Purchase Offer are accepted for payment with
cash or Notes by the Company for any reason consistent with
this Warrant Agreement, selection of the Warrants to be
purchased by the Company shall be on a pro rata basis. The
Warrant Agent shall promptly mail to each Holder of Warrants or
portions thereof accepted for payment the Warrant Purchase
Price, and the Warrant Agent shall promptly authenticate and
mail to such Holder of Warrants accepted for payment in part a
new Warrant Certificate representing the number of any
unpurchased Warrants, and any Warrants not accepted for payment
shall be promptly returned to the Holder of such Warrants.
The Company will comply with the applicable tender
offer rules, including the requirements of Rule 14e-1 under the
Exchange Act, and all other applicable securities laws and
regulations in connection with any Purchase Offer and will be
deemed not to be in violation of any of its covenants herein to
the extent such compliance is in conflict with such covenants.
SECTION 4.05. Restriction on Limitations on Issuing
Notes to Repurchase Warrants. The Company shall not, and shall
not cause any Subsidiary to, directly or indirectly, enter into
any agreement or instrument which would prohibit the Company
from issuing Notes to repurchase Warrants, other than the
Indenture and the Senior Credit Facility (as defined in the
Indenture), each as in effect on the date hereof.
SECTION 4.06. FCC Approval. The Company covenants
that it will take all actions necessary to obtain any approval
or consent for the issuance of Shares upon the exercise of
Warrants from the Federal Communications Commission that are
required under the Communications Act of 1934, as amended, and
the rules and regulations promulgated thereunder prior to the
occurrence of an Exercise Event.
ARTICLE V
ADJUSTMENTS
SECTION 5.01. Adjustment of Exercise Rate; Notices.
The Exercise Rate is subject to adjustment from time to time as
provided in this Section.
(a) Adjustment for Change in Capital Stock. If,
after the date hereof, the Company:
<PAGE>
(i) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock (other than any
such dividend to the extent covered by Section 5.03);
<PAGE>
(ii) subdivides its outstanding shares of Common
Stock into a greater number of shares;
(iii) combines its outstanding shares of Common Stock
into a smaller number of shares; or
(iv) pays a dividend or makes a distribution on its
Common Stock in shares of its Capital Stock (as defined
below) (other than Common Stock or rights, warrants, or
options for its Common Stock to the extent such issuance
or distribution is covered by Section 5.03);
then the Exercise Rate in effect immediately prior to such
action for each Warrant then outstanding shall be adjusted so
that the holder of a Warrant thereafter exercised may receive
the number of shares of Capital Stock of the Company which such
holder would have owned immediately following such action if
such holder had exercised the Warrant immediately prior to such
action or immediately prior to the record date applicable
thereto, if any (regardless of whether the Warrants then
outstanding are then exercisable and without giving effect to
the Cashless Exercise option).
The adjustment shall become effective immediately
after the record date in the case of a dividend or distribution
and immediately after the effective date in the case of a
subdivision, combination or reclassification. In the event
that such dividend or distribution is not so paid or made or
such subdivision, combination or reclassification is not
effected, the Exercise Rate shall again be adjusted to be the
Exercise Rate which would then be in effect if such record date
or effective date had not been so fixed.
If after an adjustment a holder of a Warrant upon
exercise of such Warrant may receive shares of two or more
classes of Capital Stock of the Company, the Exercise Rate
shall thereafter be subject to adjustment upon the occurrence
of an action taken with respect to any such class of Capital
Stock as is contemplated by this Article V with respect to the
Common Stock, on terms comparable to those applicable to Common
Stock in this Article V.
(b) Adjustment for Sale of Common Stock Below
Current Market Value. If, after the date hereof, the Company
sells to any Affiliate of the Company any Common Stock or any
securities convertible into or exchangeable or exercisable for
<PAGE>
the Common Stock (other than (1) pursuant to the exercise of
the Warrants, (2) pursuant to any security convertible into, or
exchangeable or exercisable for, the Common Stock which was
outstanding as of the date of this Agreement, (3) upon the
conversion, exchange or exercise of any convertible,
exchangeable or exercisable security as to which upon the
<PAGE>
issuance thereof an adjustment pursuant to this Article V has
been made or which did not require any adjustment pursuant to
this Article V or (4) the issuance of Common Stock upon the
conversion, exchange or exercise of convertible, exchangeable
or exercisable securities of the Company outstanding on the
date of this Agreement (to the extent in accordance with the
terms of such securities as in effect on the date of this
Agreement)) at a price below the then Current Market Value
(calculated as set forth in Section 5.01(p) hereof), the
Exercise Rate for each Warrant then outstanding shall be
adjusted in accordance with the formula:
<TABLE>
<CAPTION>
E' = E x (O + N)
(O + (N x P/M))
<S> <C>
where:
E' = the adjusted Exercise Rate for each Warrant then
outstanding;
E = the current Exercise Rate for each Warrant then
outstanding;
O = the number of shares of Common Stock outstanding
immediately prior to the sale of Common Stock or
issuance of securities convertible, exchangeable or
exercisable for Common Stock;
N = the number of shares of Common Stock so sold or the
maximum stated number of shares of Common Stock
issuable upon the conversion, exchange, or exercise
of any such convertible, exchangeable or exercisable
securities, as the case may be;
P = the offering price per share pursuant to any such
convertible, exchangeable or exercisable securities
so sold or the sale price of the shares so sold, as
the case may be; and
M = the Current Market Value as of the Time of
Determination or at the time of sale, as the case may
be (calculated as set forth in Section 5.01(p)
hereof.
</TABLE>
The adjustment shall become effective immediately
<PAGE>
after the record date for the determination of stockholders
entitled to receive the rights, warrants or options to which
this paragraph (b) applies or upon consummation of the sale of
Common Stock, as the case may be. To the extent that shares of
Common Stock are not delivered after the expiration of such
rights or warrants, the Exercise Rate for each Warrant then
<PAGE>
outstanding shall be readjusted to the Exercise Rate which
would otherwise be in effect had the adjustment made upon the
issuance of such rights or warrants been made on the basis of
delivery of only the number of shares of Common Stock actually
delivered. In the event that such rights or warrants are not
so issued, the Exercise Rate for each Warrant then outstanding
shall again be adjusted to be the Exercise Rate which would
then be in effect if such date fixed for determination of
stockholders entitled to receive such rights or warrants had
not been so fixed.
No adjustment shall be made under this paragraph (b)
if the application of the formula stated above in this
paragraph (b) would result in a value of E' that is lower than
the value of E.
"Affiliate" means, with respect to any specified
Person, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with
such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with")
of any Person means the possession, directly or indirectly, 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 agreement or otherwise.
No adjustment need be made pursuant to this Section
5.01(b) to the extent that Section 5.03 applies.
(c) [Intentionally Omitted].
(d) [Intentionally Omitted].
(e) Notice of Adjustment. Whenever the Exercise
Rate is adjusted, the Company shall promptly mail to holders of
Warrants then outstanding at the addresses appearing on the
Warrant Register a notice of the adjustment. The Company shall
file with the Warrant Agent and any other Registrar such notice
and a certificate from the Company's independent public
accountants briefly stating the facts requiring the adjustment
and the manner of computing it. The certificate shall be
conclusive evidence that the adjustment is correct. Neither
the Warrant Agent nor any such Registrar shall be under any
duty or responsibility with respect to any such certificate
except to exhibit the same during normal business hours to any
<PAGE>
holder desiring inspection thereof.
(f) Reorganization of Company; Special
Distributions. If the Company, in a single transaction or
through a series of related transactions, consolidates with or
merges with or into any other person or sells, assigns,
<PAGE>
transfers, leases, conveys or otherwise disposes of all or
substantially all of its properties and assets to another
person or group of affiliated persons or is a party to a merger
or binding share exchange which reclassifies or changes its
outstanding Common Stock, as a condition to consummating any
such transaction the person formed by or surviving any such
consolidation or merger if other than the Company or the person
to whom such transfer has been made (the "Surviving Person")
shall enter into a supplemental warrant agreement. The
supplemental warrant agreement shall provide that the holder of
a Warrant then outstanding may exercise it for the kind and
amount of securities, cash or other assets which such holder
would have received immediately after the consolidation,
merger, binding share exchange or transfer if such holder had
exercised the Warrant immediately before the effective date of
the transaction (whether or not the Warrants were then
exercisable and without giving effect to the Cashless Exercise
option), assuming (to the extent applicable) that such holder
(i) was not a constituent person or an affiliate of a
constituent person to such transaction; (ii) made no election
with respect thereto; and (iii) was treated alike with the
plurality of non-electing holders. The supplemental warrant
agreement shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in this Article V. The Surviving Person shall
mail to holders of Warrants at the addresses appearing on the
Warrant Register a notice briefly describing the supplemental
warrant agreement. If the issuer of securities deliverable
upon exercise of Warrants is an affiliate of the successor
Company, that issuer shall join in the supplemental warrant
agreement.
If this paragraph (f) applies, it shall supersede the
application of paragraph (a) of this Section 5.01.
If, pursuant to section 8.01 of the Indenture, any
person is required to enter into a supplemental indenture
assuming all of the Company's obligations under the Notes, then
as a condition to entering into such transaction, the Company
shall require such person to enter into a supplemental warrant
agreement. Such supplemental warrant agreement shall provide
that such person shall succeed to and be substituted to for
every right and obligation of the Company in respect of the
Contingent Warrants under this Agreement.
(g) Company Determination Final. Any determination
<PAGE>
that the Company or the Board of Directors of the Company must
make pursuant to this Article V is conclusive.
(h) Warrant Agent's Adjustment Disclaimer. The
Warrant Agent has no duty to determine when an adjustment under
this Article V should be made, how it should be made or what it
<PAGE>
should be. The Warrant Agent has no duty to determine whether
a supplemental warrant agreement under paragraph (f) need be
entered into or whether any provisions of any supplemental
warrant agreement are correct. The Warrant Agent shall not be
accountable for and makes no representation as to the validity
or value of any securities or assets issued upon exercise of
Warrants. The Warrant Agent shall not be responsible for the
Company's failure to comply with this Article V.
(i) Adjustment for Tax Purposes. The Company may
make such increases in the Exercise Rate, in addition to those
otherwise required by this Section, as it considers to be
advisable in order that any event treated for Federal income
tax purposes as a dividend of stock or stock rights shall not
be taxable to the recipients.
(j) Underlying Shares. The Company shall at all
times reserve and keep available, free from preemptive rights,
out of its authorized but unissued Common Stock or Common Stock
held in the treasury of the Company, for the purpose of
effecting the exercise of Warrants, the full number of Shares
then deliverable upon the exercise of all Warrants then
outstanding, and the shares so deliverable shall be fully paid
and nonassessable and free from all liens and security
interests.
(k) Specificity of Adjustment. Irrespective of any
adjustments in the number or kind of shares purchasable upon
the exercise of the Warrants, Warrant Certificates theretofore
or thereafter issued may continue to express the same number
and kind of Shares per Warrant as are stated on the Warrant
Certificates initially issuable pursuant to this Agreement.
(l) Adjustments to Par Value. The Company shall use
its best efforts to make, if necessary, such adjustments to the
par value of the Common Stock in order that, upon exercise of
the Warrants, the Shares will be fully paid and non-assessable.
(m) Voluntary Adjustment. The Company from time to
time may increase the Exercise Rate by any number and for any
period of time (provided, that such period is not less than 20
Business Days). Whenever the Exercise Rate is so increased,
the Company shall mail to holders at the addresses appearing on
the Warrant Register and file with the Warrant Agent a notice
of the increase. The Company shall give the notice at least 15
days before the date the increased Exercise Rate takes effect.
<PAGE>
The notice shall state the increased Exercise Rate and the
period it will be in effect. A voluntary increase in the
Exercise Rate does not change or adjust the Exercise Rate
otherwise in effect as determined by this Section 5.01.
<PAGE>
(n) No Other Adjustment for Dividends. Except as
provided in this Article V, no payment or adjustment will be
made for dividends on any Common Stock.
(o) Multiple Adjustments. After an adjustment to
the Exercise Rate for outstanding Warrants under this Article
V, any subsequent event requiring an adjustment under this
Article V shall cause an adjustment to the Exercise Rate for
outstanding Warrants as so adjusted.
(p) Definitions.
"Capital Stock" means, with respect to any
corporation, any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that
corporation.
"Current Market Value" per share of Common Stock of
the Company or any other security at any date means (i) if the
security is not registered under the Exchange Act, (a) the
value of the security determined in good faith by the Board of
Directors of the Company and certified in a board resolution,
based on the most recently completed arm's-length transaction
between the Company and a person other than an affiliate of the
Company and the closing of which occurs on such date or shall
have occurred within the six-month period preceding such date,
or (b) if no such transaction shall have occurred on such date
or within such six-month period, the value of the security as
determined by a nationally recognized investment banking firm
or appraisal firm which is not an affiliate of the Company or
(ii) if the security is registered under the Exchange Act, the
average of the daily closing bid prices for each business day
during the period commencing 15 business days before such date
and ending on the date one day prior to such date, or if the
security has been registered under the Exchange Act for less
than 15 consecutive business days before such date, then the
average of the daily closing bid prices for all of the business
days before such date for which daily closing bid prices are
available. If the closing bid price is not determinable for at
least 10 business days in such period, the Current Market Value
of the security shall be determined as if the security were not
registered under the Exchange Act.
"Time of Determination" means the time and date of
the determination of stockholders entitled to receive rights,
<PAGE>
warrants, or options or a distribution, in each case, to which
paragraph (b) applies.
(q) Adjustments to Exercise Rate Not Applicable to
Contingent Warrants Until Issuance. No adjustment to the
Exercise Rate pursuant to the terms hereof shall adjust the
<PAGE>
Exercise Rate of the Contingent Warrants (which shall initially
be one (1) share of Common Stock for each Contingent Warrant
issued) unless the event or circumstance occurs on or after the
date that the Contingent Warrants are issued. In this regard,
any adjustment hereunder may need to be made in respect of the
Exercise Rate for the Initial Warrants and for the Contingent
Warrants.
SECTION 5.02. Fractional Shares. The Company will
not be required to issue fractional Shares upon exercise of the
Warrants or distribute Share certificates that evidence
fractional Shares. In lieu of fractional Shares, there shall
be paid to the registered holders of Warrant Certificates at
the time Warrants evidenced thereby are exercised as herein
provided an amount in cash equal to the same fraction of the
Current Market Value, as defined in paragraph (p) of Section
5.01 of this Agreement, per Share on the Business Day preceding
the date the Warrant Certificates evidencing such Warrants are
surrendered for exercise. Such payments will be made by check
or by transfer to an account maintained by such registered
holder with a bank in The City of New York. If any holder
surrenders for exercise more than one Warrant Certificate, the
number of Shares deliverable to such holder may, at the option
of the Company, be computed on the basis of the aggregate
amount of all the Warrants exercised by such holder.
SECTION 5.03. Certain Distributions. If at any time
the Company grants, issues or sells options, convertible
securities, or rights to purchase Capital Stock, warrants or
other securities pro rata to the record holders of the Common
Stock (the "Distribution Rights") or, without duplication,
makes any dividend or otherwise makes any distribution
("Distribution") on shares of Common Stock (whether in cash,
property, evidences of indebtedness or otherwise), then the
Company shall grant, issue, sell or make to each registered
holder of Warrants then outstanding the aggregate Distribution
Rights or Distribution, as the case may be, which such holder
would have acquired if such holder had held the maximum number
of Shares acquirable upon complete exercise of such holder's
Warrants (regardless of whether the Warrants are then
exercisable and without giving effect to the Cashless Exercise
option) immediately before the record date for the grant,
issuance or sale of such Distribution Rights or Distribution,
as the case may be, or, if there is no such record date, the
date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Distribution
<PAGE>
Rights or Distribution, as the case may be.
<PAGE>
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. Warrant Agent. The Company hereby
appoints IBJ Schroder Bank & Trust Company as Warrant Agent of
the Company in respect of the Warrants and the Warrant
Certificates upon the terms and subject to the conditions
herein and in the Warrant Certificates set forth; and IBJ
Schroder Bank & Trust Company hereby accepts such appointment.
The Warrant Agent shall have the powers and authority
specifically granted to and conferred upon it in the Warrant
Certificates and hereby and such further powers and authority
to act on behalf of the Company as the Company may hereafter
grant to or confer upon it and it shall accept in writing. All
of the terms and provisions with respect to such powers and
authority contained in the Warrant Certificates are subject to
and governed by the terms and provisions hereof. The Warrant
Agent may act through agents and shall not be responsible for
the misconduct or negligence of any such agent appointed with
due care.
SECTION 6.02. Conditions of Warrant Agent's
Obligations. The Warrant Agent accepts its obligations herein
set forth upon the terms and conditions hereof and in the
Warrant Certificates, including the following, to all of which
the Company agrees and to all of which the rights hereunder of
the holders from time to time of the Warrant Certificates shall
be subject:
(a) The Warrant Agent shall be entitled to
compensation to be agreed upon with the Company in writing
for all services rendered by it and the Company agrees
promptly to pay such compensation and to reimburse the
Warrant Agent for its reasonable out-of-pocket expenses
(including reasonable fees and expenses of counsel)
incurred without gross negligence or willful misconduct on
its part in connection with the services rendered by it
hereunder. The Company also agrees to indemnify the
Warrant Agent and any predecessor Warrant Agent, their
directors, officers, affiliates, agents and employees for,
and to hold them and their directors, officers,
affiliates, agents and employees harmless against, any
loss, liability or expense of any nature whatsoever
(including, without limitation, reasonable fees and
expenses of counsel) incurred without gross negligence or
<PAGE>
willful misconduct on the part of the Warrant Agent,
arising out of or in connection with its acting as such
Warrant Agent hereunder and its exercise of its rights and
performance of its obligations hereunder. The obligations
of the Company under this Section 6.02 shall survive the
<PAGE>
exercise and the expiration of the Warrant Certificates
and the resignation and removal of the Warrant Agent.
(b) In acting under this Agreement and in connection
with the Warrant Certificates, the Warrant Agent is acting
solely as agent of the Company and does not assume any
obligation or relationship of agency or trust for or with
any of the owners or holders of the Warrant Certificates.
(c) The Warrant Agent may consult with counsel of
its selection and any advice or written 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 such advice or opinion.
(d) The Warrant Agent shall be fully protected and
shall incur no liability for or in respect of any action
taken or omitted to be taken or thing suffered by it in
reliance upon any Warrant Certificate, notice, direction,
consent, certificate, affidavit, opinion of counsel,
instruction, statement or other paper or document
reasonably believed by it to be genuine and to have been
presented or signed by the proper parties.
(e) The Warrant Agent, and its officers, directors,
affiliates and employees ("Related Parties"), may become
the owners of, or acquire any interest in, Warrant
Certificates, shares or other obligations of the Company
with the same rights that it or they would have it if were
not the Warrant Agent hereunder and, to the extent
permitted by applicable law, it or they may engage or be
interested in any financial or other transaction with the
Company and may act on, or as depositary, trustee or agent
for, any committee or body of holders of shares or other
obligations of the Company as freely as if it were not the
Warrant Agent hereunder. Nothing in this Agreement shall
be deemed to prevent the Warrant Agent or such Related
Parties from acting in any other capacity for the Company.
(f) The Warrant Agent shall not be under any
liability for interest on, and shall not be required to
invest, any monies at any time received by it pursuant to
any of the provisions of this Agreement or of the Warrant
Certificates.
<PAGE>
(g) The Warrant Agent shall not be under any
responsibility in respect of the validity of this
Agreement (or any term or provision hereof) or the
execution and delivery hereof (except the due execution
and delivery hereof by the Warrant Agent) or in respect of
<PAGE>
the validity or execution of any Warrant Certificate
(except its authentication thereof).
(h) The recitals and other statements contained
herein and in the Warrant Certificates (except as to the
Warrant Agent's authentication thereon) shall be taken as
the statements of the Company and the Warrant Agent
assumes no responsibility for the correctness of the same.
The Warrant Agent does not make any representation as to
the validity or sufficiency of this Agreement or the
Warrant Certificates, except for its due execution and
delivery of this Agreement; provided, however, that the
Warrant Agent shall not be relieved of its duty to
authenticate the Warrant Certificates as authorized by
this Agreement. The Warrant Agent shall not be
accountable for the use or application by the Company of
the proceeds of the exercise of any Warrant.
(i) Before the Warrant Agent acts or refrains from
acting with respect to any matter contemplated by this
Warrant Agreement, it may require:
(1) an Officers' Certificate (as defined in the
Indenture) stating on behalf of the Company that, in
the opinion of the signers, all conditions precedent,
if any, provided for in this Warrant Agreement
relating to the proposed action have been complied
with; and
(2) if reasonably necessary in the sole
judgment of the Warrant Agent, an opinion of counsel
for the Company stating that, in the opinion of such
counsel, all such conditions precedent have been
complied with provided that such matter is one
customarily opined on by counsel.
Each Officers' Certificate or, if requested, an
opinion of counsel with respect to compliance with a
condition or covenant provided for in this Warrant
Agreement shall include:
(1) a statement that the person making such
certificate or opinion has read such covenant or
condition;
(2) a brief statement as to the nature and
<PAGE>
scope of the examination or investigation upon which
the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such
person, he or she has made such examination or
<PAGE>
investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the
opinion of such person, such condition or covenant
has been complied with.
(j) The Warrant Agent shall be obligated to perform
such duties as are herein and in the Warrant Certificates
specifically set forth and no implied duties or
obligations shall be read into this Agreement or the
Warrant Certificates against the Warrant Agent. The
Warrant Agent shall not be accountable or under any duty
or responsibility for the use by the Company of any of the
Warrant Certificates authenticated by the Warrant Agent
and delivered by it to the Company pursuant to this
Agreement. The Warrant Agent shall have no duty or
responsibility in case of any default by the Company in
the performance of its covenants or agreements contained
in the Warrant Certificates or in the case of the receipt
of any written demand from a holder of a Warrant
Certificate with respect to such default, including,
without limiting the generality of the foregoing, any duty
or responsibility to initiate or attempt to initiate any
proceedings at law or otherwise or, except as provided in
Section 8.02 hereof, to make any demand upon the Company.
(k) Unless otherwise specifically provided herein,
any order, certificate, notice, request, direction or
other communication from the Company made or given under
any provision of this Agreement shall be sufficient if
signed by its chairman of the Board of Directors, its
president, its treasurer, its controller or any vice
president or its secretary or any assistant secretary.
(l) The Warrant Agent shall have no responsibility
in respect of any adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform,
execute, acknowledge and deliver, or cause to be
performed, executed, acknowledged and delivered, all such
further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the
carrying out or performing by the Warrant Agent of the
provisions of this Agreement.
<PAGE>
(n) The Warrant Agent is hereby authorized and
directed to accept written instructions with respect to
the performance of its duties hereunder from any one of
the chairman of the Board of Directors, the president, the
treasurer, the controller, any vice president or the
<PAGE>
secretary of the Company or any other officer or official
of the Company reasonably believed to be authorized to
give such instructions and to apply to such officers or
officials for advice or instructions in connection with
its duties, and it shall not be liable for any action
taken or suffered to be taken by it in good faith in
accordance with instructions with respect to any matter
arising in connection with the Warrant Agent's duties and
obligations arising under this Agreement. Such
application by the Warrant Agent for written instructions
from the Company may, at the option of the Warrant Agent,
set forth in writing any action proposed to be taken or
omitted by the Warrant Agent with respect to its duties or
obligations under this Agreement and the date on or after
which such action shall be taken and the Warrant Agent
shall not be liable for any action taken or omitted in
accordance with a proposal included in any such
application on or after the date specified therein (which
date shall be not less than 10 Business Days after the
Company receives such application unless the Company
consents to a shorter period), provided that (i) such
application includes a statement to the effect that it is
being made pursuant to this paragraph (n) and that unless
objected to prior to such date specified in the
application, the Warrant Agent will not be liable for any
such action or omission to the extent set forth in such
paragraph (n) and (ii) prior to taking or omitting any
such action, the Warrant Agent has not received written
instructions objecting to such proposed action or
omission.
(o) Whenever in the performance of its duties under
this Agreement the Warrant Agent shall deem it necessary
or desirable that any fact or matter be proved or
established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and
established by a certificate signed on behalf of the
Company by any one of the chairman of the Board of
Directors, the president, the treasurer, the controller,
any vice president or the secretary of the Company or any
other officer or official of the Company reasonably
believed to be authorized to give such instructions and
delivered to the Warrant Agent; and such certificate shall
be full authorization to the Warrant Agent for any action
<PAGE>
taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(p) The Warrant Agent shall not be required to risk
or expend its own funds in the performance of its
obligations and duties hereunder.
<PAGE>
SECTION 6.03. Resignation and Appointment of
Successor.
(a) The Company agrees, for the benefit of the
holders from time to time of the Warrant Certificates, that
there shall at all times be a Warrant Agent hereunder.
(b) The Warrant Agent may at any time resign as
Warrant Agent by giving written notice to the Company of such
intention on its part, specifying the date on which its desired
resignation shall become effective; provided, however, that
such date shall be at least 60 days after the date on which
such notice is given unless the Company agrees to accept less
notice. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor Warrant Agent, qualified as
provided in Section 6.03(d) hereof, by written instrument in
duplicate signed on behalf of the Company, one copy of which
shall be delivered to the resigning Warrant Agent and one copy
to the successor Warrant Agent. As provided in Section 6.03(d)
hereof, such resignation shall become effective upon the
earlier of (x) the acceptance of the appointment by the
successor Warrant Agent or (y) 60 days after receipt by the
Company of notice of such resignation. The Company may, at any
time and for any reason, and shall, upon any event set forth in
the next succeeding sentence, remove the Warrant Agent and
appoint a successor Warrant Agent by written instrument in
duplicate, specifying such removal and the date on which it is
intended to become effective, signed on behalf of the Company,
one copy of which shall be delivered to the Warrant Agent being
removed and one copy to the successor Warrant Agent. The
Warrant Agent shall be removed as aforesaid if it shall become
incapable of acting, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Warrant Agent or of its
property shall be appointed, or any public officer shall take
charge or control of it or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation. Any
removal of the Warrant Agent and any appointment of a successor
Warrant Agent shall become effective upon acceptance of
appointment by the successor Warrant Agent as provided in
Section 6.03(d). As soon as practicable after appointment of
the successor Warrant Agent, the Company shall cause written
notice of the change in the Warrant Agent to be given to each
of the registered holders of the Warrants in the manner
provided for in Section 8.04 hereof.
(c) Upon resignation or removal of the Warrant
<PAGE>
Agent, if the Company shall fail to appoint a successor Warrant
Agent within a period of 60 days after receipt of such notice
of resignation or removal, then the holder of any Warrant
Certificate or the retiring Warrant Agent may apply to a court
of competent jurisdiction for the appointment of a successor to
the Warrant Agent. Pending appointment of a successor to the
<PAGE>
Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the
Company.
(d) Any successor Warrant Agent, whether appointed
by the Company or by a court, shall be a bank or trust company
in good standing, incorporated under the laws of the United
States of America or any State thereof and having, at the time
of its appointment, a combined capital surplus of at least
$50 million. Such successor Warrant Agent shall execute and
deliver to its predecessor and to the Company an instrument
accepting such appointment hereunder and all the provisions of
this Agreement, and thereupon such successor Warrant Agent,
without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations of
its predecessor hereunder, with like effect as if originally
named as Warrant Agent hereunder, and such predecessor shall
thereupon become obligated to (i) transfer and deliver, and
such successor Warrant Agent shall be entitled to receive, all
securities, records or other property on deposit with or held
by such predecessor as Warrant Agent hereunder and (ii) upon
payment of the amounts then due it pursuant to Section 6.02(a)
hereof, pay over, and such successor Warrant Agent shall be
entitled to receive, all monies deposited with or held by any
predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant
Agent hereunder may be merged or converted, or any corporation
or bank with which the Warrant Agent may be consolidated, or
any corporation or bank resulting from any merger, conversion
or consolidation to which the Warrant Agent shall be a party,
or any corporation or bank to which the Warrant Agent shall
sell or otherwise transfer all or substantially all of its
corporate trust business, shall be the successor to the Warrant
Agent under this Agreement (provided that such corporation or
bank shall be qualified as aforesaid) without the execution or
filing of any document or any further act on the part of any of
the parties hereto.
(f) No Warrant Agent under this Warrant Agreement
shall be personally liable for any action or omission of any
successor Warrant Agent.
ARTICLE VII
[Intentionally Omitted]
<PAGE>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendment. This Agreement and the
terms of the Warrants may be amended by the Company and the
Warrant Agent, without the consent of the holder of any Warrant
Certificate, for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective or
inconsistent provision contained herein or therein, or to
effect any assumptions of the Company's obligations hereunder
and thereunder by a successor corporation under the
circumstances described in Section 5.01(f) hereof or in any
other manner which the Company may deem necessary or desirable
and which shall not adversely affect the interests of the
holders of the Warrant Certificates.
The Company and the Warrant Agent may amend, modify
or supplement this Agreement and the terms of the Warrants, and
waivers to departures from the terms hereof and thereof may be
given, with the consent of the holders of the outstanding
Warrants and the holders of the Notes who collectively would
hold not less than a majority in number of the Warrants if all
of the Contingent Warrants were then issued and outstanding for
the purpose of adding any provision to or changing in any
manner or eliminating any of the provisions of this Agreement
or modifying in any manner the rights of the holders of the
outstanding Warrants; provided, however, that (i) no such
consent of any holder of Notes need be obtained (A) to the
extent that the rights of the holders of the Contingent
Warrants (assuming they were issued and outstanding) would not
be adversely affected thereby or (B) after the issuance of
Contingent Warrants (or after the date on which the Company
consummates a Public Equity Offering or Strategic Equity
Investment (each as defined in the Indenture) resulting in net
proceeds to the Company of at least $40.0 million such that the
Contingent Warrants are not required to be issued under the
Indenture) and (ii) no such modification that increases the
Exercise Price or decreases the Exercise Rate, makes any change
to the last paragraph of Section 5.01(f), alters the obligation
of a Surviving Person to enter into a supplemental warrant
agreement as herein provided, reduces the period of time during
which the Warrants are exercisable hereunder, or effects any
change to this Section 8.01 may be made with respect to any
Warrant without the consent of the holder of such Warrant, or,
with respect to Contingent Warrants prior to their issuance,
<PAGE>
the holder of the Notes which would be entitled thereto.
Notwithstanding any other provision of this Agreement, the
Warrant Agent's consent must be obtained regarding any
supplement or amendment which alters the Warrant Agent's rights
or duties (it being expressly understood that the foregoing
shall not be in derogation of the right of the Company to
<PAGE>
remove the Warrant Agent in accordance with Section 6.03
hereof). For purposes of any amendment, modification or waiver
hereunder, Warrants (or Notes, with respect to Contingent
Warrants not yet issued) held by the Company or any of its
Affiliates shall be disregarded.
Any modification or amendment made in accordance with
this Agreement will be conclusive and binding on all present
and future holders of Warrant Certificates whether or not they
have consented to such modification or amendment or waiver and
whether or not notation of such modification or amendment is
made upon such Warrant Certificates. Any instrument given by
or on behalf of any holder of a Warrant Certificate in
connection with any consent to any modification or amendment
will be conclusive and binding on all subsequent holders of
such Warrant Certificate.
SECTION 8.02. Notices and Demands to the Company and
Warrant Agent. If the Warrant Agent shall receive any notice
or demand addressed to the Company by the holder of a Warrant
Certificate pursuant to the provisions hereof or of the Warrant
Certificates, the Warrant Agent shall promptly forward such
notice or demand to the Company.
SECTION 8.03. Addresses for Notices to Parties and
for Transmission of Documents. All notices hereunder to the
parties hereto shall be deemed to have been given when sent by
certified or registered mail, postage prepaid, or by facsimile
transmission, confirmed by first class mail, postage prepaid,
addressed to any party hereto as follows:
To the Company:
Park Communications, Inc.
1700 Vine Center Office Tower
333 West Vine Street
Lexington, Kentucky 40507
Facsimile No.: (606) 226-9609
Attention: Wright M. Thomas, President
with copies to:
Eckert Seamans Cherin & Mellott
One International Place
Boston, MA 02110
Facsimile No.: (617) 342-6899
<PAGE>
Attention: Stephen I. Burr, Esq.
<PAGE>
To the Warrant Agent:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York
Facsimile No.: (212) 858-2952
Attention: Corporate Trust & Agencies Department
or at any other address of which either of the foregoing shall
have notified the other in writing.
SECTION 8.04. Notices to Holders. Notices to
holders of Warrants shall be mailed to such holders at the
addresses of such holders as they appear in the Warrant
Register. Any such notice shall be sufficiently given if sent
by first-class mail, postage prepaid.
SECTION 8.05. APPLICABLE LAW. THE VALIDITY,
INTERPRETATION AND PERFORMANCE OF THIS AGREEMENT AND EACH
WARRANT CERTIFICATE ISSUED HEREUNDER AND OF THE RESPECTIVE
TERMS AND PROVISIONS THEREOF SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PROVISIONS THEREOF.
SECTION 8.06. Persons Having Rights Under Agreement.
Nothing in this Agreement expressed or implied and nothing that
may be inferred from any of the provisions hereof is intended,
or shall be construed, to confer upon, or give to, any person
or corporation other than the Company, the Warrant Agent, the
holders of the Warrant Certificates and the holders of the
Notes in respect of the Contingent Warrants not yet issued any
right, remedy or claim under or by reason of this Agreement or
of any covenant, condition, stipulation, promise or agreement
hereof; and all covenants, conditions, stipulations, promises
and agreements in this Agreement contained shall be for the
sole and exclusive benefit of the Company and the Warrant Agent
and their successors and of the holders of the Warrant
Certificates and the holders of the Notes in respect of the
Contingent Warrants not yet issued.
SECTION 8.07. Headings. The descriptive headings of
the several Articles and Sections of this Agreement are
inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
SECTION 8.08. Counterparts. This Agreement may be
<PAGE>
executed in any number of counterparts, each of which so
executed shall be deemed to be an original; but such
counterparts shall together constitute but one and the same
instrument.
<PAGE>
SECTION 8.09. Inspection of Agreement. A copy of
this Agreement shall be available during regular business hours
at the principal corporate trust office of the Warrant Agent,
for inspection by the holder of any Warrant Certificate. The
Warrant Agent may require such holder to submit his Warrant
Certificate for inspection by it.
SECTION 8.10. Availability of Equitable Remedies.
Since a breach of the provisions of this Agreement could not
adequately be compensated by money damages, holders of Warrants
shall be entitled, in addition to any other right or remedy
available to them, to an injunction restraining such breach or
a threatened breach and to specific performance of any such
provision of this Agreement, and in either case no bond or
other security shall be required in connection therewith, and
the parties hereby consent to such injunction and to the
ordering of specific performance.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly
executed by the parties hereto as of the day and year first
above written.
PARK COMMUNICATIONS, INC.
By: ____________________________
Name: Wright M. Thomas
Title: President
IBJ SCHRODER BANK & TRUST COMPANY,
as Warrant Agent
By: ____________________________
Name:
Title:
<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
[Unless and until it is exchanged in whole or in part
for Warrants in certificated form, this Warrant may not be
transferred except as a whole by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. Unless this certificate
is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the issuer or
its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede &
Co. or such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or
such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.]1
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO
COMPLIANCE WITH OTHER APPLICABLE LAWS. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE ON OR AFTER
WHICH THIS WARRANT MAY BE RESOLD WITHOUT RESTRICTION UNDER
FEDERAL SECURITIES LAWS (AS EVIDENCED BY AN OPINION OF COUNSEL
DELIVERED AND REASONABLY SATISFACTORY TO THE COMPANY) (THE
"RESALE RESTRICTION TERMINATION DATE"), ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
<PAGE>
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
_________________________
1 This paragraph is to be included only if the Warrant is in
global form.
A-1
<PAGE>
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR
SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
OTHERWISE IN COMPLIANCE WITH OTHER APPLICABLE LAWS, SUBJECT TO
THE COMPANY'S AND THE WARRANT AGENT'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND IN
EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE COMPANY AND THE WARRANT
AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
CUSIP #[ ]
No. [ ] [ ] Warrants
WARRANT CERTIFICATE
PARK COMMUNICATIONS, INC.
This Warrant Certificate certifies that [ ],
or registered assigns, is the registered holder of [ ]
Warrants (the "Warrants") to purchase shares of Common Stock,
par value $0.0001 per share (the "Common Stock"), of PARK
COMMUNICATIONS, INC., a Delaware corporation (the "Company",
which term includes its successors and assigns). Each Warrant
entitles the holder to purchase from the Company at any time
from 9:00 a.m. New York City time on or after the Exercis-
ability Date until 5:00 p.m., New York City time, on May 15,
2004 (the "Expiration Date"), one fully paid and nonassessable
share of Common Stock (a "Share", or, if adjusted, the
"Shares", which may also include any other securities or
<PAGE>
property purchasable upon exercise of a Warrant, such
adjustment and inclusion each as provided in the Warrant
Agreement) at the exercise price (the "Exercise Price") of
$0.01 per Warrant upon surrender of this Warrant Certificate
and payment of the Exercise Price at any office or agency
A-2
<PAGE>
maintained for that purpose by the Company (the "Warrant Agent
Office"), subject to the conditions set forth herein and in the
Warrant Agreement. Notwithstanding the foregoing, a Warrant
may also be exercised solely by the surrender of the Warrant,
and without the payment of the Exercise Price in cash, for such
number of Shares equal to the product of (1) the number of
Shares for which such Warrant is exercisable with payment of
the Exercise Price as of the date of exercise and (2) the
Cashless Exercise Ratio. For purposes of this Warrant, the
"Cashless Exercise Ratio" shall equal a fraction, the numerator
of which is the excess of the Current Market Value of the
Common Stock on the date of exercise (calculated as set forth
in Section 5.01(p) of the Warrant Agreement) over the Exercise
Price Per Share as of the date of exercise and the denominator
of which is the Current Market Value of the Common Stock on the
date of exercise (calculated as set forth in Section 5.01(p) of
the Warrant Agreement). An exercise of a Warrant in accordance
with the immediately preceding sentences is herein called a
"Cashless Exercise." Upon surrender of a Warrant Certificate
representing more than one Warrant in connection with the
Holder's option to elect a Cashless Exercise, the number of
Shares deliverable upon a Cashless Exercise shall be equal to
the number of Warrants that the Holder specifies is to be
exercised pursuant to a Cashless Exercise multiplied by the
Cashless Exercise Ratio. All provisions of this Agreement
shall be applicable with respect to an exercise of a Warrant
Certificate pursuant to a Cashless Exercise for less than the
full number of Warrants represented thereby.
"Exercise Event" means, with respect to each Warrant
as to which such event is applicable (but not with respect to
any other Warrant), the date of the earliest of: (1)
immediately prior to the occurrence of a Change of Control,
(2) the 180th day (or such fewer number of days as determined
by the Company in its sole discretion) after the consummation
of a Public Equity Offering, (3) the 90th day after the
Registration Election Date, (4) the approval by the holders of
the Capital Stock of the Company of any Plan of Liquidation of
the Company and (5) the 180th day prior to May 15, 2004.
"Separability Date" shall mean the earliest to occur
of: (i) November 15, 1996, (ii) the date a registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to a registered exchange offer
for the Notes or covering the sale by holders of the Notes is
declared effective under the Securities Act, (iii) such earlier
<PAGE>
date as may be determined by Merrill Lynch, Pierce, Fenner &
Smith Incorporated and specified to the Company, the Trustee,
the Warrant Agent and the Unit Agent in writing, (iv) any
Exercise Event or (v) an Event of Default as defined in the
Indenture (as defined in the Warrant Agreement).
A-3
<PAGE>
Notwithstanding the foregoing, in the event a Change of Control
Triggering Event occurs and the Company mails the related
notice thereof to holders of Notes prior to the Separability
Date as determined by the preceding sentence, the Separability
Date shall be such earlier date of mailing.
To the extent an exercise of a Warrant is not in
effect through the Cashless Exercise, the Exercise Price shall
be payable by certified check or official bank check or by such
other means as is acceptable to the Company in the lawful
currency of the United States of America which as of the time
of payment is legal tender for payment of public or private
debts. The Company has initially designated the principal
corporate trust office of the Warrant Agent in the Borough of
Manhattan, The City of New York, as the initial Warrant Agent
Office. The number of Shares issuable upon exercise of the
Warrants ("Exercise Rate") is subject to adjustment upon the
occurrence of certain events set forth in the Warrant
Agreement.
Any Warrants not exercised on or prior to 5:00 p.m.,
New York City time, on May 15, 2004 shall thereafter be void.
Reference is hereby made to the further provisions on
the reverse hereof which provisions shall for all purposes have
the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless
authenticated by the Warrant Agent, as such term is used in the
Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
A-4
<PAGE>
WITNESS the facsimile seal of the Company and
facsimile signatures of its duly authorized officers.
Dated:
PARK COMMUNICATIONS, INC.
By: __________________________
Name:
Title:
Attest:
By: _______________________
Name:
Title:
Certificate of Authentication:
This is one of the Warrants
referred to in the within
mentioned Warrant Agreement:
IBJ SCHRODER BANK & TRUST COMPANY,
as Warrant Agent
By: _____________________________
Authorized Signatory
A-5
<PAGE>
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
PARK COMMUNICATIONS, INC.
The Warrants evidenced by this Warrant Certificate
are part of a duly authorized issue of Warrants expiring at
5:00 p.m., New York City time, on May 15, 2004, each of which
represents the right to purchase at any time on or after the
Exercisability Date (as defined in the Warrant Agreement) and
on or prior to such date one share of Common Stock of the
Company, subject to adjustment as set forth in the Warrant
Agreement. The Warrants are issued pursuant to a Warrant
Agreement dated as of May 13, 1996 (the "Warrant Agreement"),
duly executed and delivered by the Company to IBJ Schroder Bank
& Trust Company, as Warrant Agent (the "Warrant Agent"), which
Warrant Agreement is hereby incorporated by reference in and
made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Warrant Agent, the
Company and the holders (the words "holders" or holder" meaning
the registered holders or registered holder) of the Warrants.
Warrants may be exercised by (i) surrendering at any
Warrant Agent Office this Warrant Certificate with the form of
Election to Exercise set forth hereon duly completed and
executed and (ii) to the extent such exercise is not being
effected through a Cashless Exercise, paying in full the
Warrant Exercise Price for each such Warrant exercised and any
other amounts required to be paid pursuant to the Warrant
Agreement.
If all of the items referred to in the last sentence
of the preceding paragraph are received by the Warrant Agent at
or prior to 11:00 a.m., New York City time, on a Business Day,
the exercise of the Warrant to which such items relate will be
effective on such Business Day. If any items referred to in
the last sentence of the preceding paragraph are received after
11:00 a.m., New York City time, on a Business Day, the exercise
of the Warrants to which such item relates will be deemed to be
effective on the next succeeding Business Day. Notwithstanding
the foregoing, in the case of an exercise of Warrants on
<PAGE>
May 15, 2004, if all of the items referred to in the last
sentence of the preceding paragraph are received by the Warrant
Agent at or prior to 5:00 p.m., New York City time, on such
Expiration Date, the exercise of the Warrants to which such
items relate will be effective on the Expiration Date.
A-6
<PAGE>
As soon as practicable after the exercise of any
Warrant or Warrants, the Company shall issue or cause to be
issued to or upon the written order of the registered holder of
this Warrant Certificate, a certificate or certificates
evidencing the Share or Shares to which such holder is
entitled, in fully registered form, registered in such name or
names as may be directed by such holder pursuant to the
Election to Exercise, as set forth on the reverse of this
Warrant Certificate. Such certificate or certificates
evidencing the Share or Shares shall be deemed to have been
issued and any persons who are designated to be named therein
shall be deemed to have become the holder of record of such
Share or Shares as of the close of business on the date upon
which the exercise of this Warrant was deemed to be effective
as provided in the preceding paragraph.
The Company will not be required to issue fractional
shares of Common Stock upon exercise of the Warrants or
distribute Share certificates that evidence fractional shares
of Common Stock. In lieu of fractional shares of Common Stock,
there shall be paid to the registered Holder of this Warrant
Certificate at the time such Warrant Certificate is exercised
an amount in cash equal to the same fraction of the Current
Market Value (as defined in the Warrant Agreement) per share on
the Business Day preceding the date this Warrant Certificate is
surrendered for exercise.
Warrant Certificates, when surrendered at any office
or agency maintained by the Company for that purpose by the
registered holder thereof in person or by legal representative
or attorney duly authorized in writing, may be exchanged for a
new Warrant Certificate or new Warrant Certificates evidencing
in the aggregate a like number of Warrants, in the manner and
subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge
imposed in connection therewith.
Upon due presentment for registration of transfer of
this Warrant Certificate at any office or agency maintained by
the Company for that purpose, a new Warrant Certificate
evidencing in the aggregate a like number of Warrants shall be
issued to the transferee in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
<PAGE>
The Company and the Warrant Agent may deem and treat
the registered holder hereof as the absolute owner of this
Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone) for the purpose of any
exercise hereof and for all other purposes, and neither the
A-7
<PAGE>
Company nor the Warrant Agent shall be affected by any notice
to the contrary.
The term "Business Day" shall mean any day on which
(i) banks in New York City, (ii) the principal national
securities exchange or market on which the Common Stock is
listed or admitted to trading and (iii) the principal national
securities exchange or market on which the Warrants are listed
or admitted to trading are open for business.
A-8
<PAGE>
(FORM OF ELECTION TO EXERCISE)
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise
[ ] of the Warrants represented by this Warrant Certificate
and purchase the whole number of Shares issuable upon the
exercise of such Warrants and herewith tenders payment for such
Shares in the amount of $[ ] in cash or by certified or
official bank check, in accordance with the terms hereof. In
lieu of payment of the cash exercise price, the holder hereof
is electing to exercise [ ] Warrants pursuant to a Cashless
Exercise (as defined in the Warrant Agreement) for [ ] shares
of Common Stock at the current Cashless Exercise Ratio. The
undersigned requests that a certificate representing such
Shares be registered in the name of ______________________
whose address is _____________________________ and that such
certificate be delivered to ___________________________ whose
address is __________________________. Any cash payments to be
paid in lieu of a fractional Share should be made to
__________________ whose address is ________________________
and the check representing payment thereof should be delivered
to ______________________ whose address is
______________________.
Dated __________________, 19__
Name of holder of
Warrant Certificate: _______________________________
(Please Print)
Tax Identification or
Social Security Number: ____________________________
Address: ___________________________________________
___________________________________________
Signature: _________________________________________
Note: The above signature must
correspond with the name as
written upon the face of this
<PAGE>
Warrant Certificate in every
particular, without alteration or
enlargement or any change whatever
and if the certificate
representing the Shares or any
A-9
<PAGE>
Warrant Certificate representing
Warrants not exercised is to be
registered in a name other than
that in which this Warrant
Certificate is registered, or if
any cash payment to be paid in
lieu of a fractional share is to
be made to a person other than the
registered holder of this Warrant
Certificate, the signature of the
holder hereof must be guaranteed
as provided in the Warrant
Agreement.
Dated ____________________, 19__
Signature: ________________________________________
Note: The above signature must
correspond with the name as
written upon the face of this
Warrant Certificate in every
particular, without alteration or
enlargement or any change
whatever.
Signature Guaranteed: _____________________________
[FORM OF ASSIGNMENT]
For value received _______________________ hereby
sells, assigns and transfers unto _____________________ the
within Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint __________________________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company,
with full power of substitution in the premises.
Dated ____________________, 199__
Signature: ________________________________________
Note: The above signature must
correspond with the name as
written upon the face of this
Warrant Certificate in every
particular, without alteration or
<PAGE>
enlargement or any change
whatever.
Signature Guaranteed: _____________________________
A-10
<PAGE>
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS2
The following exchanges of a part of this Global Warrant for
certificated Warrants have been made:
<TABLE>
<S> <C> <C> <C> <C>
Number of
Amount of Amount of Warrants of
decrease in increase in Warrant Signature of
Number of Number of following authorized
Date of Warrants of this Warrants of this such decrease officer of
Exchange Global Warrant Global Warrant (or increase) Warrant Agent
</TABLE>
<PAGE>
_________________________
2 This is to be included only if the Warrant is in global
form.
A-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have the Warrants represented by this
Warrant Certificate purchased by the Company pursuant to
Section 4.04 of the Warrant Agreement, check the Box: [ ]
If you wish to have a portion of the Warrants
represented by this Warrant Certificate purchased by the
Company pursuant to Section 4.04 of the Warrant Agreement,
state the number of Warrants:
______________
Date: _____________ Your Signature: ______________________
(Sign exactly as your name
appears on the other side
of this Warrant Certificate)
By:
NOTICE: To be signed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
A-12
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants")
of PARK COMMUNICATIONS, INC.
This Certificate relates to ____ Warrants held in*
___ book-entry or* _______ certificated form by ______ (the
"Transferor").
The Transferor:*
__
/ / has requested the Warrant Agent by written order to
deliver in exchange for its beneficial interest in the Global
Warrant held by the Depositary a Warrant or Warrants in
definitive, registered form of authorized denominations and an
aggregate number equal to its beneficial interest in such
Global Warrant (or the portion thereof indicated above); or
__
/ / has requested the Warrant Agent by written order to
exchange or register the transfer of a Warrant or Warrants.
In connection with such request and in respect of
each such Warrant, the Transferor does hereby certify that
Transferor is familiar with the Warrant Agreement relating to
the above captioned Warrants and the restrictions on transfers
thereof as provided in Section 1.08 of such Warrant Agreement,
and that the transfer of this Warrant does not require
registration under the Securities Act of 1933, as amended (the
"Act") because[*]:
__
/ / Such Warrant is being acquired for the Transferor's
own account, without transfer (in satisfaction of Section
1.08(a)(y)(A) or Section 1.08(d)(i)(A) of the Warrant
Agreement).
__
/ / Such Warrant is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Act), in
reliance on Rule 144A or in accordance with Regulation S under
the Act.
__
<PAGE>
__
/ / Such Warrant is being transferred in accordance with
Rule 144 under the Act.
B-1
<PAGE>
__
/ / Such Warrant is being transferred in reliance on and
in compliance with an exemption from the registration
requirements of the Act, other than Rule 144A or Rule 144 or
Regulation S under the Act. An opinion of counsel to the
effect that such transfer does not require registration under
the Act accompanies this Certificate.
______________________________
[INSERT NAME OF TRANSFEROR]
By: _________________________
Date: _____________
*Check applicable box.
B-2
<PAGE>
EXHIBIT C
Transferee Letter of Representation
PARK COMMUNICATIONS, INC.
1700 Vine Center Office Tower
333 West Vine Street
Lexington, Kentucky 40507
Ladies and Gentlemen:
In connection with our proposed purchase of warrants
to purchase Common Stock, par value $0.0001 per share (the
"Securities"), of Park Communications, Inc. (the "Company"), we
confirm that:
1. We understand that the Securities have not been
registered under the Securities Act of 1933, as amended
(the "Securities Act") and, unless so registered, may not
be sold except as permitted in the following sentence. We
agree on our own behalf and on behalf of any investor
account for which we are purchasing Securities to offer,
sell or otherwise transfer such Securities prior to the
date on or after which such Securities may be resold
without restriction under federal securities laws (as
evidenced by an opinion of counsel delivered and
reasonably satisfactory to the Company) (the "Resale
Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) so long
as the Securities are eligible for resale pursuant to
Rule 144A, under the Securities Act, to a person we
reasonably believe is a qualified institutional buyer
under Rule 144A (a "QIB") that purchases for its own
account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on
Rule 144A, (d) pursuant to offers and sales that occur
outside the United States within the meaning of
Regulation S under the Securities Act, (e) to an
institutional "accredited investor" within the meaning of
subparagraphs (a)(1), (2), (3) or (7) of Rule 501 under
the Securities Act that is purchasing for his own account
or for the account of such an institutional "accredited
<PAGE>
investor," or (f) pursuant to any other available
exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of our
property or the property of such investor account or
C-1
<PAGE>
accounts be at all times within our or their control and
to compliance with any applicable state securities laws.
The foregoing restrictions on resale will not apply
subsequent to the Resale Restriction Termination Date. If
any resale or other transfer of the Securities is proposed
to be made pursuant to clause (e) above prior to the
Resale Restriction Termination Date, the transferor shall
deliver a letter from the transferee substantially in the
form of this letter to the warrant agent under the Warrant
Agreement pursuant to which the Securities were issued
(the "Warrant Agent") which shall provide, among other
things, that the transferee is an institutional
"accredited investor" within the meaning of
subparagraphs (a)(1), (2), (3) or (7) of Rule 501 under
the Securities Act and that it is acquiring such
Securities for investment purposes and not for distri-
bution in violation of the Securities Act. The Warrant
Agent and the Company reserve the right prior to any
offer, sale or other transfer prior to the Resale
Restriction Termination Date of the Securities pursuant to
clauses (c), (d), (e) or (f) above to require the delivery
of a written opinion of counsel, certifications, and or
other information satisfactory to the Company and the
Warrant Agent.
2. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act) purchasing for our own account
or for the account of such an institutional "accredited
investor," and we are acquiring the Securities for
investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation
of the Securities Act and we have such knowledge and
experience in financial and business matters as to be
capable of evaluating the merits and risks of our
investment in the Securities, and we and any accounts for
which we are acting are each able to bear the economic
risk of our or its investment for an indefinite period.
3. We are acquiring the Securities purchased by us
for our own account or for one or more accounts as to each
of which we exercise sole investment discretion.
C-2
<PAGE>
4. You and your counsel are entitled to rely upon
this letter and you are irrevocably authorized to produce
this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
(Name of Purchaser)
By:
Date:
Upon transfer the Securities would be registered in
the name of the new beneficial owner as follows:
Name:______________________________
Address:___________________________
Taxpayer ID Number:________________
C-3
<PAGE>
EXHIBIT D
[FORM OF CERTIFICATE OF ELECTION]
The Company has not effected a Public Equity Offering
resulting in net proceeds to the Company of at least $40.0
million and in accordance with Section 4.04 of the Warrant
Agreement you have the option of choosing one of the following:
Check either (1) or (2)
(1) If you wish to have this Warrant purchased
(subject to the limitations set forth in the Warrant Agreement)
by the Company pursuant to Section 4.04 of the Warrant
Agreement, check the Box: [ ]
(2) If you wish to have this Warrant and the Shares
for which it is exercisable registered in accordance with the
provisions of the Registration Rights Agreement, check the Box:
[ ]
Included herewith is a Valuation Report describing
the fair market value of the Warrants as of the Valuation Date
as determined by an Independent Financial Expert chosen by the
Company. In the event that holders of 66-2/3% of the Warrants
held by the holders who complete and return this form with Box
(1) above checked elect to have another Independent Financial
Expert appointed to determine the fair market value of the
Warrants on the Valuation Date, such an Independent Financial
Expert will be appointed to determine the fair market value of
the Warrant on the Valuation Date. Please check the following
box if you wish to appoint another Independent Financial Expert
to issue another valuation report. Such Independent Financial
Expert shall be selected by the Electing Majority Holders
holding a majority of the Warrants held by the Electing
Majority Holders. The fees of the Independent Financial Expert
so chosen shall be borne by holders of Warrants and shall be
deducted from the Warrant Purchase Price. Check here: [ ].
Capitalized terms used herein and not defined have
the meaning set forth in the Warrant Agreement.
D-1
<PAGE>
Exhibit 4.3
UNIT AGREEMENT
Between
PARK COMMUNICATIONS, INC.
and
IBJ SCHRODER BANK & TRUST COMPANY,
as Unit Agent
Dated as of May 13, 1996
<PAGE>
UNIT AGREEMENT (the "Agreement") dated as of May 13, 1996
between PARK COMMUNICATIONS, INC., a Delaware corporation (the
"Issuer"), and IBJ SCHRODER BANK & TRUST COMPANY, as Unit Agent.
WHEREAS, the Issuer proposes to issue $80,000,000
aggregate principal amount of its 13-3/4% Senior Pay-in-Kind
Notes due 2004 (the "Notes") pursuant to an Indenture dated as
of May 13, 1996 (the "Indenture") between the Issuer and IBJ
Schroder Bank & Trust Company, as Trustee (the "Trustee"), and
the Issuer proposes to issue warrants (the "Warrants") to
purchase initially an aggregate of 800,000 shares of its Common
Stock, par value $0.0001 per share (the "Common Stock"),
pursuant to a Warrant Agreement dated May 13, 1996 (the
"Warrant Agreement") between the Issuer and IBJ Schroder Bank &
Trust Company, as Warrant Agent (the "Warrant Agent"). The
Notes and the Warrants will initially be offered as part of a
unit (the "Units"), with each Unit consisting of $1,000
principal amount at maturity of Notes and ten warrants each to
purchase one share of Common Stock of the Issuer.
WHEREAS, the Issuer, the Trustee and the Warrant
Agent desire to appoint IBJ Schroder Bank & Trust Company to
act as their agent for the purpose of enforcing the provisions
contained in this Agreement. IBJ Schroder Bank & Trust Company
in such capacity is referred to herein as the "Unit Agent".
WHEREAS, the Notes and the Warrants will not be
separately transferable prior to their separation pursuant to
Section 2 below (the "Separation Date").
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereto
agree as follows:
SECTION 1. Appointment of Unit Agent. (a) The
Issuer hereby appoints the Unit Agent to act as agent for the
Issuer in accordance with the instructions set forth
hereinafter in this Agreement, and the Unit Agent hereby
accepts such appointment.
<PAGE>
(b) The Trustee and the Issuer hereby appoint the
Unit Agent as Authenticating Agent and Registrar (as such terms
are defined in the Indenture) for the Notes until the
Separation Date. In its capacity as Authenticating Agent and
<PAGE>
Registrar, the Unit Agent shall have the rights and obligations
provided for such capacities in the Indenture.
(c) The Warrant Agent and the Issuer hereby appoint
the Unit Agent as an agent of the Warrant Agent for the
purposes of maintaining a register of the registered owners of
and the registration of transfers and exchanges of the Warrants
until the Separation Date. In its capacity as agent of the
Warrant Agent, the Unit Agent shall have the rights and
obligations provided for such capacities in the Warrant
Agreement.
SECTION 2. Separation of the Notes and the Warrants.
(a) The Notes and the Warrants shall not be separately
transferable until the Separation Date, which shall be the
earliest of (i) November 15, 1996, (ii) the date a registration
statement with respect to a registered exchange offer for the
Notes is declared effective under the Securities Act, (iii) the
occurrence of an Exercise Event (as defined below), (iv) the
occurrence of an Event of Default (as defined in the
Indenture), or (v) such earlier date as determined by Merrill
Lynch, Pierce, Fenner & Smith Incorporated in its discretion.
With respect to each Warrant, an "Exercise Event" means the
date of the earliest of: (1) immediately prior to the
occurrence of a Change of Control (as defined in the Warrant
Agreement), (2) the 180th day (or such fewer number of days as
determined by the Company in its sole discretion) after the
consummation of a Public Equity Offering, (3) the 90th day
after the Registration Election Date (as defined in the Warrant
Agreement), (4) the approval by the holders of Capital Stock of
the Company of any Plan of Liquidation (as defined in the
Warrant Agreement) of the Company and (5) the 180th day prior
to May 15, 2004. In the event that a separation of the Notes
and the Warrants occurs, on the Separation Date the Company
shall notify the Unit Agent, the Trustee and the Warrant Agent,
with a copy of such notice to The Depository Trust Company, of
such separation and holders of Notes or Warrants may request
that the Unit Agent remove the legend described in Section 2(b)
below from Notes or Warrants.
(b) The Notes and the Warrants (and all Notes and
Warrants issued in exchange therefor or substitution thereof)
shall bear a legend substantially to the following effect:
THIS SECURITY HAS BEEN OFFERED AS PART OF A UNIT.
<PAGE>
EACH OF THE UNITS CONSISTS OF $1,000 PRINCIPAL
AMOUNT AT MATURITY OF SENIOR PAY-IN-KIND NOTES DUE
2004 OF THE COMPANY (THE "NOTES") AND TEN
WARRANTS, EACH WARRANT INITIALLY EXERCISABLE TO
PURCHASE ONE SHARE OF COMMON STOCK, PAR VALUE
<PAGE>
$0.0001 PER SHARE, OF THE COMPANY (THE
"WARRANTS"). THE NOTES AND THE WARRANTS WILL NOT
BE TRANSFERABLE BY A HOLDER THEREOF SEPARATELY
FROM EACH OTHER UNTIL THE "SEPARATION DATE," WHICH
SHALL BE THE EARLIEST OF (i) NOVEMBER 15, 1996;
(ii) THE DATE A REGISTRATION STATEMENT WITH
RESPECT TO A REGISTERED EXCHANGE OFFER FOR THE
NOTES IS DECLARED EFFECTIVE UNDER THE SECURITIES
ACT; (iii) THE OCCURRENCE OF AN EXERCISE EVENT (AS
DEFINED IN THE WARRANT AGREEMENT); (iv) THE
OCCURRENCE OF AN EVENT OF DEFAULT (AS DEFINED IN
THE INDENTURE); OR (v) SUCH EARLIER DATE
DETERMINED BY MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED IN ITS DISCRETION.
SECTION 3. Unit Agent. The Unit Agent undertakes
the duties and obligations imposed by this Agreement upon the
following terms and conditions, by which the Issuer and the
holders of Units, by their acceptance thereof, shall be bound:
(a) The statements contained herein shall be taken
as statements of the Issuer, and the Unit Agent assumes no
responsibility for the correctness of any of the same
except such as describe the Unit Agent. The Unit Agent
assumes no responsibility with respect to the distribution
of the Units except as herein otherwise specifically
provided.
(b) The Unit Agent shall not be responsible for and
shall incur no liability or responsibility to the Issuer
or any holder of a Unit for any failure of the Issuer to
comply with any of the covenants in this Agreement, the
Indenture or Warrant Agreement.
(c) The Unit Agent may consult at any time with
counsel satisfactory to it (who may be counsel for the
Issuer) and the Unit Agent shall incur no liability or
responsibility to the Issuer or to any holder of any Unit
in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion
or the advice of such counsel.
(d) The Unit Agent shall incur no liability or
responsibility to the Issuer or to any holder of any Unit
for any action taken in reliance on any Unit, certificate
<PAGE>
of shares, notice, opinion, resolution, waiver, consent,
order, certificate, or other paper, document or instrument
believed by the Unit Agent to be genuine and to have been
signed, sent or presented by the proper party or parties.
<PAGE>
(e) The Issuer agrees to pay to the Unit Agent such
compensation as shall be agreed to between the Issuer and
the Unit Agent for all services rendered by the Unit Agent
in connection with this Agreement, to reimburse the Unit
Agent for all expenses, taxes and governmental charges and
other charges of any kind and nature incurred by the Unit
Agent in connection with this Agreement (including,
without limitation, reasonable fees and expenses of
counsel) and to indemnify the Unit Agent and its agents,
employees, directors, officers and affiliates and save it
and them harmless against any and all losses, liabilities
and expenses of any nature whatsoever, including, without
limitation, judgments, costs and counsel fees and actual
expenses, for any action taken or omitted by the Unit
Agent or arising in connection with this Agreement and the
exercise by the Unit Agent of its rights hereunder and the
performance by the Unit Agent of any of its obligations
hereunder except as a result of the Unit Agent's gross
negligence or bad faith or willful misconduct.
(f) The Unit Agent, and any stockholder, director,
officer, affiliate or employee ("Related Parties") of it,
may buy, sell or deal in any of the Units, Notes,
Warrants, Common Stock or other securities of the Issuer
or become pecuniarily interested in any transaction in
which the Issuer may be interested, or contract with or
lend money to the Issuer or otherwise act as fully and
freely as though it were not Unit Agent under this
Agreement. Nothing herein shall preclude the Unit Agent
or such Related Parties from acting in any other capacity
for the Issuer or for any other legal entity.
(g) The Unit Agent shall act hereunder solely as
agent for the Issuer, the Trustee and the Warrant Agent,
and its duties shall be determined solely by the
provisions hereof. The Unit Agent shall not be liable for
anything which it may do or refrain from doing in
connection with this Agreement except for its own gross
negligence or bad faith or willful misconduct.
(h) No provision of this Agreement shall require the
Unit Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of
its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for
<PAGE>
believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured to it.
<PAGE>
(i) Before the Unit Agent acts or refrains from
acting with respect to any matter contemplated by this
Unit Agreement, it may require from the Issuer:
(1) an Officers' Certificate of the Issuer
stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this
Unit Agreement relating to the proposed action have
been complied with; and
(2) an opinion of counsel for the Issuer
stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
Each Officers' Certificate or opinion of counsel with
respect to compliance with a condition or covenant
provided for in this Unit Agreement shall include:
(1) a statement that the person making such
certificate or opinion has read such covenant or
condition;
(2) a brief statement as to the nature and
scope of the examination or investigation upon which
the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such
person, he or she has made such examination or
investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the
opinion of such person, such condition or covenant
has been complied with.
The Unit Agent shall not be liable for any action it
takes or omits to take in good faith in reliance on any
such certificate or opinion.
(j) In the absence of bad faith on its part, the
Unit Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
<PAGE>
Unit Agent and conforming to the requirements of this Unit
Agreement. However, the Unit Agent shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Unit Agreement.
<PAGE>
(k) The Unit Agent may rely and shall be fully
protected in relying upon any document believed by it to
be genuine and to have been signed or presented by the
proper person. The Unit Agent need not investigate any
fact or matter stated in the document.
(l) The Unit Agent may act through agents and shall
not be responsible for the misconduct or negligence of any
agent appointed with due care.
(m) To the extent applicable, the Unit Agent shall
have all of the rights and protections afforded the
Trustee under the Indenture and the Warrant Agent under
the Warrant Agreement.
SECTION 4. Replacement of Unit Agent. The Unit
Agent may resign by so notifying the Issuer. The Holders of a
majority in principal amount of the outstanding Units may
remove the Unit Agent by so notifying the Issuer and the Unit
Agent and may appoint a successor Unit Agent. The Issuer may
remove the Unit Agent if:
(1) the Unit Agent is adjudged bankrupt or
insolvent;
(2) a receiver or other public officer takes charge
of the Unit Agent or its property; or
(3) the Unit Agent becomes incapable of acting.
If the Unit Agent resigns or is removed or if a
vacancy exists in the office of the Unit Agent for any reason,
the Issuer shall notify each holder of such event and shall
promptly appoint a successor Unit Agent. Notwithstanding any
resignation or removal of the Unit Agent, the cancellation of
the Units or the termination of this Agreement, the Issuer's
obligations under Section 3(e) shall survive for the benefit of
the retiring Unit Agent.
SECTION 5. Successor Unit Agent by Merger, Etc. If
the Unit Agent consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust
business to, another corporation, the resulting, surviving or
transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise
<PAGE>
eligible hereunder, be the successor Unit Agent.
SECTION 6. Notices to the Issuer and Unit Agent,
Trustee and Transfer Agent. Any notice or demand authorized by
this Agreement to be given or made to the Issuer shall be
<PAGE>
sufficiently given or made when and if deposited in the mail,
first class or registered, postage paid, addressed
If to the Issuer:
Park Communications, Inc.
1700 Vine Center Office Tower
333 West Vine Street
Lexington, KY 40507
Telecopier No.: (606) 252-9609
Attention: Wright M. Thomas
If to the Unit Agent, the Trustee or the Warrant Agent:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Telecopier No.: (212) 858-2952
Attention: Corporate Trust
Agencies & Administration
The parties hereto by notice to the other parties may
designate additional or different addresses for subsequent
communications or notice.
Any notice to be mailed to a holder of Units shall be
mailed to him at his address as it appears on the register of
Units maintained by the Unit Agent. Copies of any such
communication shall also be mailed to the Unit Agent, Trustee
and Warrant Agent. The Unit Agent shall furnish the Issuer,
the Trustee or the Warrant Agent promptly when requested with a
list of registered holders of Units for the purpose of mailing
any notice or communication to the holders of the Notes or
Warrants and at such other times as may be reasonably
requested.
SECTION 7. Supplements and Amendments. The Issuer
and the Unit Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Units in
order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising
hereunder which the Issuer, the Trustee, the Warrant Agent and
the Unit Agent may deem necessary or desirable and which shall
<PAGE>
not in any way adversely affect the interests of the holders of
Units. The Unit Agent shall be entitled to receive, and shall
be fully protected in relying upon, an opinion of counsel and
an officers' certificate, each stating that the execution of
any amendment or supplement authorized pursuant to this
<PAGE>
Section 7 is authorized or permitted by this Agreement. Such
opinion of counsel shall not be an expense of the Unit Agent.
Any amendment or supplement to this Agreement that has a
material adverse effect on the interests of Unit holders shall
require the written consent of registered holders of the then
outstanding Units representing not less than a majority of the
then outstanding Units.
SECTION 8. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Issuer, the Trustee, the Warrant Agent or the Unit Agent shall
bind and inure to the benefit of their respective successors
and assigns hereunder.
SECTION 9. Governing Law. THIS AGREEMENT AND EACH
UNIT ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE,
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
SECTION 10. Benefits of This Agreement. Nothing in
this Agreement shall be construed to give to any person or
entity other than the Issuer, the Trustee, the Warrant Agent,
the Unit Agent and the registered holders of the Units any
legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit
of the Issuer, the Trustee, the Warrant Agent, the Unit Agent
and the registered holders of the Units.
SECTION 11. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute
but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed, as of the day and year
first above written.
PARK COMMUNICATIONS, INC.
By:
------------------------------
Name: Wright M. Thomas
Title: President
IBJ SCHRODER BANK & TRUST COMPANY,
as Unit Agent
By:
------------------------------
Name:
-----------------------
Title:
-----------------------
<PAGE>
Exhibit 10.1
REGISTRATION RIGHTS AGREEMENT
Dated May 13, 1996
between
PARK COMMUNICATIONS, INC.
and
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
and
GOLDMAN, SACHS & CO.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement")
is made and entered into May 13, 1996 between PARK
COMMUNICATIONS, INC., a Delaware corporation (the "Company"),
and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and
GOLDMAN, SACHS & CO. (the "Purchasers").
This Agreement is made pursuant to the Purchase
Agreement dated May 6, 1996 between the Company and the
Purchasers (the "Purchase Agreement"), which provides for,
among other things, the sale by the Company to the Purchasers
of an aggregate of $80,000,000 principal amount of the
Company's 13 3/4% Senior Pay-in-Kind Notes due 2004 (the
"Securities", which term shall include any securities issued
under the Indenture in lieu of cash interest on the
Securities). In order to induce the Purchasers to enter into
the Purchase Agreement, the Company has agreed to provide to
the Purchasers and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution
and delivery of this Agreement is a condition to the closing
under the Purchase Agreement.
In consideration of the foregoing, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the
following capitalized defined terms shall have the following
meanings:
"Additional Interest" shall have the meaning set
forth in Section 2(e) hereof.
"Advice" shall have the meaning set forth in the last
paragraph of Section 3 hereof.
"Applicable Period" shall have the meaning set forth
in Section 3(t) hereof.
"Business Day" shall mean a day that is not a
Saturday, a Sunday, or a day on which banking institutions
<PAGE>
in New York, New York are required to be closed.
"Closing Time" shall mean the Closing Time as defined
in the Purchase Agreement.
<PAGE>
"Company" shall have the meaning set forth in the
preamble to this Agreement and also includes the Company's
successors and permitted assigns.
"Depositary" shall mean The Depository Trust Company,
or any other depositary appointed by the Company;
provided, however, that such depositary must have an
address in the Borough of Manhattan, in The City of New
York.
"Effectiveness Period" shall have the meaning set
forth in Section 2(b) hereof.
"Event Date" shall have the meaning set forth in
Section 2(e) hereof.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
"Exchange Offer" shall mean the exchange offer by the
Company of Exchange Securities for Securities pursuant to
Section 2(a) hereof.
"Exchange Offer Registration" shall mean a
registration under the Securities Act effected pursuant to
Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an
exchange offer registration statement on Form S-4 (or, if
applicable, on another appropriate form), and all
amendments and supplements to such registration statement,
in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by
reference therein.
"Exchange Period" shall have the meaning set forth in
Section 2(a) hereof.
"Exchange Securities" shall mean the 13 3/4% Senior
Pay-in-Kind Notes due 2004, Series B, issued by the
Company under the Indenture containing terms identical to
the Securities (except that (i) interest thereon shall
accrue from the last date on which interest was paid on
the Securities or, if no such interest has been paid, from
May 13, 1996 and (ii) the transfer restrictions thereon
<PAGE>
shall be eliminated) to be offered to Holders of
Securities in exchange for Securities pursuant to the
Exchange Offer, and any securities issued under the
Indenture in lieu of cash interest on the Securities or
the Exchange Securities.
<PAGE>
"Holder" shall mean the Purchasers, for so long as
they own any Registrable Securities, and each of their
successors, assigns and direct and indirect transferees
who become registered owners of Registrable Securities
under the Indenture.
"Indenture" shall mean the Indenture relating to the
Securities dated as of May 13, 1996 between the Company,
as issuer, and IBJ Schroder Bank & Trust Company, as
trustee, as the same may be amended from time to time in
accordance with the terms thereof.
"Inspectors" shall have the meaning set forth in
Section 3(n) hereof.
"Majority Holders" shall mean the Holders of a
majority of the aggregate principal amount of outstanding
Registrable Securities.
"Participating Broker-Dealer" shall have the meaning
set forth in Section 3(t) hereof.
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth
in Section 2(a) hereof.
"Private Exchange Securities" shall have the meaning
set forth in Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary
prospectus, and any such prospectus as amended or
supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities
covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus,
including post-effective amendments, and in each case
including all material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth
in the preamble to this Agreement.
<PAGE>
"Purchasers" shall have the meaning set forth in the
preamble to this Agreement.
<PAGE>
"Records" shall have the meaning set forth in
Section 3(n) hereof.
"Registrable Securities" shall mean the Securities
and, if issued, the Private Exchange Securities; provided,
however, that Securities or Private Exchange Securities,
as the case may be, shall cease to be Registrable
Securities when (i) a Registration Statement with respect
to such Securities or Private Exchange Securities for the
resale thereof, as the case may be, shall have been
declared effective under the Securities Act and such
Securities or Private Exchange Securities, as the case may
be, shall have been disposed of pursuant to such
Registration Statement, (ii) such Securities or Private
Exchange Securities, as the case may be, shall have been
sold to the public pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the
Securities Act, (iii) such Securities or Private Exchange
Securities, as the case may be, shall have ceased to be
outstanding or (iv) with respect to the Securities, such
Securities have been exchanged for Exchange Securities
upon consummation of the Exchange Offer and are thereafter
freely tradeable by the holder thereof not an affiliate of
the Company.
"Registration Expenses" shall mean any and all
expenses incident to performance of or compliance by the
Company with this Agreement, including without limitation:
(i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. (the "NASD") registration and
filing fees, including, if applicable, the fees and
expenses of any "qualified independent underwriter" (and
its counsel) that is required to be retained by any Holder
of Registrable Securities in accordance with the rules and
regulations of the NASD, (ii) all fees and expenses
incurred in connection with compliance with state
securities or blue sky laws (including reasonable fees and
disbursements of counsel for any underwriters or Holders
in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities) and
compliance with the rules of the NASD, (iii) all expenses
of any Persons in preparing or assisting in preparing,
word processing, printing and distributing any
Registration Statement, any Prospectus and any amendments
or supplements thereto, and in preparing or assisting in
<PAGE>
preparing, printing and distributing any underwriting
agreements, securities sales agreements and other
documents relating to the performance of and compliance
with this Agreement, (iv) all rating agency fees, (v) the
fees and disbursements of counsel for the Company and of
<PAGE>
the independent certified public accountants of the
Company, including the expenses of any "cold comfort"
letters required by or incident to such performance and
compliance, (vi) the fees and expenses of the Trustee, and
any exchange agent or custodian, (vii) all fees and
expenses incurred in connection with the listing, if any,
of any of the Registrable Securities on any securities
exchange or exchanges, and (viii) any fees and
disbursements of any underwriter customarily required to
be paid by issuers or sellers of securities and the
reasonable fees and expenses of any special experts
retained by the Company in connection with any
Registration Statement, but excluding fees of counsel to
the underwriters and underwriting discounts and
commissions and transfer taxes, if any, relating to the
sale or disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration
statement of the Company which covers any of the Exchange
Securities or Registrable Securities pursuant to the
provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including
post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange
Commission.
"Securities" shall have the meaning set forth in the
preamble to this Agreement.
"Securities Act" shall mean the Securities Act of
1933, as amended from time to time.
"Shelf Registration" shall mean a registration
effected pursuant to Section 2(b) hereof.
"Shelf Registration Event" shall have the meaning set
forth in Section 2(b) hereof.
"Shelf Registration Event Date" shall have the
meaning set forth in Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
<PAGE>
registration statement of the Company pursuant to the
provisions of Section 2(b) hereof which covers all of the
Registrable Securities or all of the Private Exchange
Securities, as the case may be, on an appropriate form
under Rule 415 under the Securities Act, or any similar
<PAGE>
rule that may be adopted by the SEC, and all amendments
and supplements to such registration statement, including
post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"TIA" shall have the meaning set forth in Section
3(l) hereof.
"Trustee" shall mean the trustee with respect to the
Securities under the Indenture.
2. Registration Under the Securities Act.
(a) Exchange Offer. To the extent not prohibited by
any applicable law or applicable interpretation of the staff of
the SEC, the Company shall, for the benefit of the Holders, at
the Company's cost, use its best efforts to (i) cause to be
filed with the SEC within 45 days after the Closing Time an
Exchange Offer Registration Statement on an appropriate form
under the Securities Act covering the offer by the Company to
the Holders to exchange all of the Registrable Securities
(other than Private Exchange Securities) for a like principal
amount of Exchange Securities, (ii) have such Exchange Offer
Registration Statement declared effective under the Securities
Act by the SEC not later than the date which is 120 days after
the Closing Time, (iii) have such Registration Statement remain
effective until the closing of the Exchange Offer and (iv)
cause the Exchange Offer to be consummated not later than 150
days after the Closing Time. The Exchange Securities will be
issued under the Indenture. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company shall
promptly commence the Exchange Offer, it being the objective of
such Exchange Offer to enable each Holder eligible and electing
to exchange Registrable Securities for Exchange Securities
(assuming that such Holder is not an affiliate of the Company
within the meaning of Rule 405 under the Securities Act and is
not a broker-dealer tendering Registrable Securities acquired
directly from the Company for its own account, acquires the
Exchange Securities in the ordinary course of such Holder's
business and has no arrangements or understandings with any
Person to participate in the Exchange Offer for the purpose of
distributing (within the meaning of the Securities Act) the
Exchange Securities) to transfer such Exchange Securities from
and after their receipt without any limitations or restrictions
<PAGE>
under the Securities Act and under state securities or blue sky
laws.
In connection with the Exchange Offer, the Company
shall:
<PAGE>
(i) mail to each Holder a copy of the Prospectus
forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and
related documents;
(ii) keep the Exchange Offer open for acceptance for
a period of not less than 30 days after the date notice
thereof is mailed to the Holders (or longer if required by
applicable law) (such period referred to herein as the
"Exchange Period");
(iii) utilize the services of the Depositary for the
Exchange Offer;
(iv) permit Holders to withdraw tendered Securities
at any time prior to the close of business, New York time,
on the last Business Day of the Exchange Period, by
sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting
forth the name of such Holder, the principal amount of
Securities delivered for exchange, and a statement that
such Holder is withdrawing his election to have such
Securities exchanged;
(v) notify each Holder that any Security not
tendered will remain outstanding and continue to accrue
interest, but will not retain any rights under this
Agreement (except in the case of the Purchasers and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all
applicable laws relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer the
Purchasers hold any Securities acquired by them and having the
status of an unsold allotment in the initial distribution, the
Company upon the request of any Purchaser shall, simultaneously
with the delivery of the Exchange Securities in the Exchange
Offer, issue and deliver to such Purchaser in exchange (the
"Private Exchange") for the Securities held by such Purchaser,
a like principal amount of debt securities of the Company that
are identical (except that such securities shall bear
appropriate transfer restrictions) to the Exchange Securities
(the "Private Exchange Securities") and which are issued
pursuant to the Indenture (which will provide that the Exchange
<PAGE>
Securities will not be subject to the transfer restrictions set
forth in the Indenture and that the Exchange Securities, the
Private Exchange Securities and the Securities will vote and
consent together on all matters as one class and that neither
the Exchange Securities, the Private Exchange Securities nor
<PAGE>
the Securities will have the right to vote or consent as a
separate class on any matter). The Private Exchange Securities
shall be of the same series as and shall bear the same CUSIP
number as the Exchange Securities.
As soon as practicable after the close of the
Exchange Offer and/or the Private Exchange, as the case may be,
the Company shall:
(i) accept for exchange all Securities or portions
thereof tendered and not validly withdrawn pursuant to the
Exchange Offer;
(ii) accept for exchange all Securities duly tendered
pursuant to the Private Exchange; and
(iii) deliver, or cause to be delivered, to the
Trustee for cancellation all Securities or portions
thereof so accepted for exchange by the Company, and
issue, and cause the Trustee under the Indenture to
promptly authenticate and deliver to each Holder, a new
Exchange Security or Private Exchange Security, as the
case may be, equal in principal amount to the principal
amount of the Securities surrendered by such Holder.
To the extent not prohibited by any law or applicable
interpretation of the staff of the SEC, the Company shall use
its best efforts to complete the Exchange Offer as provided
above, and shall comply with the applicable requirements of the
Securities Act, the Exchange Act and other applicable laws in
connection with the Exchange Offer. The Exchange Offer shall
not be subject to any conditions, other than that the Exchange
Offer does not violate applicable law or any applicable
interpretation of the staff of the SEC. Each Holder of
Registrable Securities who wishes to exchange such Registrable
Securities for Exchange Securities in the Exchange Offer will
be required to make certain customary representations in
connection therewith, including representations that such
Holder is not an affiliate of the Company within the meaning of
Rule 405 under the Securities Act, that any Exchange Securities
to be received by it will be acquired in the ordinary course of
business and that at the time of the commencement of the
Exchange Offer it has no arrangement with any Person to
participate in the distribution (within the meaning of the
Securities Act) of the Exchange Securities. The Company shall
<PAGE>
inform the Purchasers, after consultation with the Trustee and
the Purchasers, of the names and addresses of the Holders to
whom the Exchange Offer is made, and the Purchasers shall have
the right to contact such Holders and otherwise facilitate the
tender of Registrable Securities in the Exchange Offer.
<PAGE>
Upon consummation of the Exchange Offer in accordance
with this Section 2(a), the provisions of this Agreement shall
continue to apply, mutatis mutandis, solely with respect to
Registrable Securities that are Private Exchange Securities,
Registrable Securities as to which Section 2(b)(iii) hereof is
applicable and Exchange Securities held by Participating
Broker-Dealers, and the Company shall have no further
obligation to register Registrable Securities (other than
Private Exchange Securities or Securities as to which Section
2(b)(iii) hereof is applicable) pursuant to Section 2(b)
hereof.
(b) Shelf Registration. In the event that (i) the
Company or the Majority Holders reasonably determine, after
conferring with counsel (which may be in-house counsel), that
the Exchange Offer Registration provided in Section 2(a) hereof
is not available or may not be consummated as soon as
practicable after the last day of the Exchange Period because
it would violate applicable securities laws or because the
applicable interpretations of the staff of the SEC would not
permit the Company to effect the Exchange Offer, or (ii) the
Exchange Offer is not for any other reason consummated within
150 days of the Closing Time, or (iii) the Company or the
Majority Holders reasonably determine, after conferring with
counsel (which may be in-house counsel), that the Exchange
Securities would not, upon receipt, be freely tradeable by such
Holders which are not affiliates of the Company without
restriction under the Securities Act and without restrictions
under applicable blue sky or state securities laws, or a Holder
is not permitted by applicable law to participate in the
Exchange Offer or (iv) upon the request of any Purchaser with
respect to any Registrable Securities which it acquired
directly from the Company and, with respect to other
Registrable Securities held by it, if such Purchaser is not
permitted, in the opinion of counsel to such Purchaser,
pursuant to applicable law or applicable interpretations of the
Staff of the SEC, to participate in the Exchange Offer and
thereby receive securities that are freely tradeable without
restriction under the Securities Act and applicable blue sky or
state securities laws (any of the events specified in (i)-(iv)
being a "Shelf Registration Event" and the date of occurrence
thereof, the "Shelf Registration Event Date"), the Company
shall, at its cost, use its best efforts to cause to be filed
as promptly as practicable after such Shelf Registration Event
Date, as the case may be, and, in any event, within 45 days
<PAGE>
after such Shelf Registration Event Date, a Shelf Registration
Statement providing for the sale by the Holders of all of the
Registrable Securities, and shall use its best efforts to have
such Shelf Registration Statement declared effective by the SEC
as soon as practicable. No Holder of Registrable Securities
<PAGE>
may include any of its Registrable Securities in any Shelf
Registration pursuant to this Agreement unless and until such
Holder furnishes to the Company in writing such information as
the Company may, after conferring with counsel with regard to
information relating to Holders that would be required by the
SEC to be included in such Shelf Registration Statement or
Prospectus included therein, reasonably request for inclusion
in any Shelf Registration Statement or Prospectus included
therein. Each Holder as to which any Shelf Registration is
being effected agrees to furnish to the Company all information
with respect to such Holder necessary to make the information
previously furnished to the Company by such Holder not
materially misleading.
The Company agrees to use its best efforts to keep
the Shelf Registration Statement continuously effective for a
period of three years from the date of issuance of the
Securities (subject to extension pursuant to the last paragraph
of Section 3 hereof) or for such shorter period which will
terminate when all of the Registrable Securities covered by the
Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or cease to be outstanding (the
"Effectiveness Period"). The Company shall not permit any
securities other than Registrable Securities to be included in
the Shelf Registration. The Company further agrees, if
necessary, to supplement or amend the Shelf Registration
Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the
Company for such Shelf Registration Statement or by the
Securities Act or by any other rules and regulations thereunder
for shelf registrations, and the Company agrees to furnish to
the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed
with the SEC.
(c) Expenses. The Company shall pay all
Registration Expenses in connection with the registration
pursuant to Section 2(a) or 2(b) hereof and will reimburse the
Purchasers for the reasonable fees and disbursements of Cahill
Gordon & Reindel incurred in connection with the Exchange Offer
and any one counsel designated in writing by the Majority
Holders to act as counsel for the Holders of the Registrable
Securities in connection with a Shelf Registration Statement.
Except as provided herein, each Holder shall pay all expenses
of its counsel, underwriting discounts and commissions and
<PAGE>
transfer taxes, if any, relating to the sale or disposition of
such Holder's Registrable Securities pursuant to the Shelf
Registration Statement.
<PAGE>
(d) Effective Registration Statement. An Exchange
Offer Registration Statement pursuant to Section 2(a) hereof or
a Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have become effective unless it has been
declared effective by the SEC; provided, however, that if,
after it has been declared effective, the offering of
Registrable Securities pursuant to a Shelf Registration
Statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not
to have been effective during the period of such interference.
The Company will be deemed not to have used its best efforts to
cause the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, to become, or to
remain, effective during the requisite period if it voluntarily
takes any action that would result in any such Registration
Statement not being declared effective or in the Holders of
Registrable Securities covered thereby not being able to
exchange or offer and sell such Registrable Securities during
that period unless such action is required by applicable law.
(e) Additional Interest. In the event that (i) the
Exchange Offer Registration Statement is not filed with the SEC
on or prior to the 45th calendar day following the Closing
Time, (ii) the Exchange Offer Registration Statement is not
declared effective on or prior to the 120th calendar day
following the Closing Time, (iii) the Exchange Offer is not
consummated on or prior to the 150th calendar day following the
Closing Time or (iv) if a Shelf Registration Event shall have
occurred and if by 150 days after the Closing Time a Shelf
Registration Statement is not declared effective, in each case
(i)-(iv) the interest rate borne by the Securities shall be
increased (the "Additional Interest") by one-quarter of one
percent (0.25%) per annum from and including the 46th day
following the Closing Time in the case of (i) above, from and
including the 121st day following the Closing Time in the case
of clause (ii) above, from and including the 151st day
following the Closing Time in the case of (iii) above or,
solely with respect to Securities which could not be exchanged
as set forth above, Exchange Securities that are not freely
tradeable and Private Exchange Securities, from and including
the 151st day after the Closing Time in the case of clause (iv)
above. In addition, such interest rate shall be increased by
an additional one-quarter of one percent (0.25%) per annum for
each 90-day period that any Additional Interest continues to
<PAGE>
accrue pursuant to this Section 2(e); provided, however, that
the aggregate increase in such interest rate pursuant to this
Section 2(e) will in no event exceed one percent (1.00%) per
annum. Upon (w) the filing of the Exchange Offer Registration
Statement in the case of clause (i) above, (x) the
<PAGE>
effectiveness of the Exchange Offer Registration Statement in
the case of clause (ii) above, (y) the date of the consummation
of the Exchange Offer in the case of clause (iii) above or
(z) the effectiveness of a Shelf Registration Statement in the
case of clause (iv) above, provided that none of the conditions
set forth in clauses (i), (ii), (iii) and (iv) above continues
to exist, the interest rate borne by the Securities from the
date of such filing, effectiveness or consummation, as the case
may be, will be reduced to the original interest rate.
In the event that the Shelf Registration Statement
has been declared effective and subsequently ceases to be
effective prior to the end of the Effectiveness Period (subject
to extension pursuant to the last paragraph of Section 3
hereof), for a period in excess of 45 days, whether or not
consecutive, in any given year, then, the interest rate borne
by the Securities, or the Private Exchange Securities, as the
case may be, shall be increased by an additional one-quarter of
one percent (0.25%) per annum on the 46th day in the applicable
year such Shelf Registration Statement ceases to be effective.
Such interest rate shall be increased by an additional
one-quarter of one percent (0.25%) per annum for each
additional 90 days that such Shelf Registration Statement is
not effective, subject to the same aggregate maximum increase
in the interest rate per annum of one percent (1.00%) per annum
referred to above. Upon the effectiveness of a Shelf
Registration Statement, the interest rate borne by the
Securities, or the Private Exchange Securities, as the case may
be, shall be reduced to their original interest rate unless and
until increased as described in this paragraph.
The Company shall notify the Trustee within three
Business Days after each and every date on which an event
occurs in respect of which Additional Interest is required to
be paid (an "Event Date"). Additional Interest shall be paid
by depositing with the Trustee, in trust, for the benefit of
the Holders of Securities or of Private Exchange Securities, as
the case may be, on or before the applicable semiannual
interest payment date, immediately available funds in sums
sufficient to pay the Additional Interest then due; provided,
however, that on or prior to May 15, 1999 Additional Interest
may be paid by the issuance of additional Securities (valued at
100% of the face amount thereof) in lieu of cash to the extent
permitted under the Indenture. The Additional Interest due
shall be payable on each interest payment date to the record
<PAGE>
Holder of Securities entitled to receive the interest payment
to be paid on such date as set forth in the Indenture. Each
obligation to pay Additional Interest shall be deemed to accrue
from and including the day following the applicable Event Date.
<PAGE>
(f) Specific Enforcement. Without limiting the
remedies available to the Purchasers and the Holders, the
Company acknowledges that any failure by the Company to comply
with its obligations under Section 2(a) and Section 2(b) hereof
may result in material irreparable injury to the Purchasers or
the Holders for which there is no adequate remedy at law, that
it would not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, the
Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations
under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures. In connection with the
obligations of the Company with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the
Company shall use its best efforts to:
(a) prepare and file with the SEC a Registration
Statement or Registration Statements as prescribed by
Sections 2(a) and 2(b) hereof within the relevant time
period specified in Section 2 hereof on the appropriate
form under the Securities Act, which form (i) shall be
selected by the Company, (ii) shall, in the case of a
Shelf Registration, be available for the sale of the
Registrable Securities by the selling Holders thereof and
(iii) shall comply as to form in all material respects
with the requirements of the applicable form and include
all financial statements required by the SEC to be filed
therewith; and use its best efforts to cause such
Registration Statement to become effective and remain
effective in accordance with Section 2 hereof; provided,
however, that if (1) such filing is pursuant to
Section 2(b), or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section
2(a) is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell
Exchange Securities, before filing any Registration
Statement or Prospectus or any amendments or supplements
thereto, the Company shall furnish to and afford the
Holders of the Registrable Securities and each such
Participating Broker-Dealer, as the case may be, covered
by such Registration Statement, their counsel and the
managing underwriters, if any, a reasonable opportunity to
review copies of all such documents (including copies of
any documents to be incorporated by reference therein and
<PAGE>
all exhibits thereto) proposed to be filed (at least 5
Business Days prior to such filing). The Company shall
not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the
Holders must be afforded an opportunity to review prior to
<PAGE>
the filing of such document if the Majority Holders or
such Participating Broker-Dealer, as the case may be,
their counsel or the managing underwriters, if any, shall
reasonably object;
(b) prepare and file with the SEC such amendments
and post-effective amendments to each Registration
Statement as may be necessary to keep such Registration
Statement effective for the Effectiveness Period or the
Applicable Period, as the case may be; and cause each
Prospectus to be supplemented by any required prospectus
supplement and as so supplemented to be filed pursuant to
Rule 424 (or any similar provision then in force) under
the Securities Act, and comply with the provisions of the
Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder applicable to it with
respect to the disposition of all securities covered by
each Registration Statement during the Effectiveness
Period or the Applicable Period, as the case may be, in
accordance with the intended method or methods of
distribution by the selling Holders thereof described in
this Agreement (including sales by any Participating
Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify
each Holder of Registrable Securities, at least 20
Business Days prior to filing, that a Shelf Registration
Statement with respect to the Registrable Securities is
being filed and advising such Holder that the distribution
of Registrable Securities will be made in accordance with
the method selected by the Majority Holders; and (ii)
furnish to each Holder of Registrable Securities and to
each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many
copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto and
such other documents as such Holder or underwriter may
reasonably request, in order to facilitate the public sale
or other disposition of the Registrable Securities (it
being understood that the Company hereby consents to the
use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of Registrable
Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any
amendment or supplement thereto);
<PAGE>
(d) in the case of a Shelf Registration, use its
best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue
sky" laws of such jurisdictions by the time the applicable
<PAGE>
Registration Statement is declared effective by the SEC as
any Holder of Registrable Securities covered by a
Registration Statement and each underwriter of an
underwritten offering of Registrable Securities shall
reasonably request in advance of such date of
effectiveness, and do any and all other acts and things
which may be reasonably necessary or advisable to enable
such Holder and underwriter to consummate the disposition
in each such jurisdiction of such Registrable Securities
owned by such Holder; provided, however, that the Company
shall not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (ii) file any general
consent to service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not so subject;
(e) in the case of (1) a Shelf Registration or
(2) Participating Broker-Dealers who have notified the
Company that they will be utilizing the Prospectus
contained in the Exchange Offer Registration Statement as
provided in Section 3(t) hereof, notify each Holder of
Registrable Securities, or such Participating Broker-
Dealers, as the case may be, their counsel and the
managing underwriters, if any, promptly and promptly
confirm such notice in writing (i) when a Registration
Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii)
of any request by the SEC or any state securities
authority for amendments and supplements to a Registration
Statement or Prospectus or for additional information
after the Registration Statement has become effective,
(iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) if the Company receives
any notification with respect to the suspension of the
qualification of the Registrable Securities or the
Exchange Securities to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction or the
initiation of any proceeding for such purpose, (v) of the
happening of any event or the failure of any event to
occur or the discovery of any facts or otherwise, during
the period a Shelf Registration Statement is effective
which makes any statement made in such Registration
<PAGE>
Statement or the related Prospectus untrue in any material
respect or which causes such Registration Statement or
Prospectus to omit to state a material fact necessary to
make the statements therein, in the light of the
circumstances under which they were made, not misleading
<PAGE>
and (vi) the Company's reasonable determination that a
post-effective amendment to the Registration Statement
would be appropriate;
(f) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a
Registration Statement at the earliest possible moment;
(g) in the case of a Shelf Registration, furnish to
each Holder of Registrable Securities, without charge, at
least one conformed copy of each Registration Statement
relating to such Shelf Registration and any post-effective
amendment thereto (without documents incorporated therein
by reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate
with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be
sold and not bearing any restrictive legends; and cause
such Registrable Securities to be in such denominations
(consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the
underwriters may reasonably request at least two Business
Days prior to the closing of any sale of Registrable
Securities;
(i) in the case of a Shelf Registration or an
Exchange Offer Registration, upon the occurrence of any
circumstance contemplated by Section 3(e)(ii), 3(e)(iii),
3(e)(v), 3(e)(vi) or 3(e)(vii) hereof, use its best
efforts to prepare a supplement or post-effective
amendment to a Registration Statement or the related
Prospectus or any document incorporated therein by
reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; and to notify each Holder to suspend use of
the Prospectus as promptly as practicable after the
occurrence of such an event, and each Holder hereby agrees
to suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such
<PAGE>
misstatement or omission;
(j) in the case of a Shelf Registration, a
reasonable time prior to the filing of any document which
is to be incorporated by reference into a Registration
<PAGE>
Statement or a Prospectus after the initial filing of a
Registration Statement, provide a reasonable number of
copies of such document to the Holders; and make such of
the representatives of the Company as shall be reasonably
requested by the Holders of Registrable Securities or the
Purchasers on behalf of such Holders available for
discussion of such document;
(k) obtain a CUSIP number for all Exchange
Securities or Registrable Securities, as the case may be,
not later than the effective date of a Registration
Statement, and provide the Trustee with printed
certificates for the Exchange Securities or the
Registrable Securities, as the case may be, in a form
eligible for deposit with the Depositary;
(l) cause the Indenture to be qualified under the
Trust Indenture Act of 1939 (the "TIA") in connection with
the registration of the Exchange Securities or Registrable
Securities, as the case may be, cooperate with the Trustee
and the Holders to effect such changes to the Indenture as
may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and execute, and use
its best efforts to cause the Trustee to execute, all
documents as may be required to effect such changes, and
all other forms and documents required to be filed with
the SEC to enable the Indenture to be so qualified in a
timely manner;
(m) in the case of a Shelf Registration, enter into
such agreements (including underwriting agreements) as are
customary in underwritten offerings and take all such
other appropriate actions as are reasonably requested in
order to expedite or facilitate the registration or the
disposition of such Registrable Securities, and in such
connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an
underwritten registration: (i) make such representations
and warranties to Holders of such Registrable Securities
and the underwriters (if any), with respect to the
business of the Company and its subsidiaries as then
conducted or proposed to be conducted and the Registration
Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each
case, as are customarily made by issuers to underwriters
<PAGE>
in underwritten offerings, and confirm the same if and
when requested; (ii) obtain opinions of counsel to the
Company and updates thereof in form and substance
reasonably satisfactory to the managing underwriters (if
any) and the Holders of a majority in principal amount of
<PAGE>
the Registrable Securities being sold, addressed to each
selling Holder and the underwriters (if any) covering the
matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be
reasonably requested by such Holders and underwriters;
(iii) obtain "cold comfort" letters and updates thereof in
form and substance reasonably satisfactory to the managing
underwriters from the independent certified public
accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary
of the Company or of any business acquired by the Company
for which financial statements and financial data are, or
are required to be, included in the Registration
Statement), addressed to the selling Holders of
Registrable Securities and to each of the underwriters,
such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters
in connection with underwritten offerings and such other
matters as reasonably requested by such selling Holders
and underwriters (including, without limitation, negative
assurance with respect to any interim financial period
included in the Registration Statement or the Prospectus
and with respect to any period after the date of the
latest balance sheet included therein and up to five days
prior to the closing date in respect of any such sale);
and (iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and
procedures no less favorable than those set forth in
Section 4 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal
amount of Registrable Securities covered by such
Registration Statement and the managing underwriters or
agents) with respect to all parties to be indemnified
pursuant to said Section (including, without limitation,
such underwriters and selling Holders). The above shall
be done at each closing under such underwriting agreement,
or as and to the extent required thereunder;
(n) if (1) a Shelf Registration is filed pursuant to
Section 2(b) or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section
2(a) is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the applicable period, make
available for inspection by any selling Holder of such
<PAGE>
Registrable Securities being sold, or each such
Participating Broker-Dealer, as the case may be, any
underwriter participating in any such disposition of
Registrable Securities, if any, and any attorney,
accountant or other agent retained by any such selling
<PAGE>
Holder or each such Participating Broker-Dealer, as the
case may be, or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other
records, pertinent corporate documents and properties of
the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them
to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the
Company and its subsidiaries to supply all information in
each case reasonably requested by any such Inspector in
connection with such Registration Statement. Records
which the Company determines, in good faith, to be
confidential and any Records which it notifies the
Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission
in such Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or is necessary in
connection with any action, suit or proceeding or
(iii) the information in such Records has been made
generally available to the public. Each selling Holder of
such Registrable Securities and each such Participating
Broker-Dealer will be required to agree that information
obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the
Company unless and until such is made generally available
to the public. Each selling Holder of such Registrable
Securities and each such Participating Broker-Dealer will
be required to further agree that it will, upon learning
that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and
allow the Company at its expense to undertake appropriate
action to prevent disclosure of the Records deemed
confidential (it being understood that the Holders shall
at all times be unrestricted in complying with any order
of any court or tribunal of competent jurisdiction);
(o) comply with all applicable rules and regulations
of the SEC and make generally available to its security-
holders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the
<PAGE>
Securities Act) no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at
the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment
<PAGE>
or best efforts underwritten offering and (ii) if not sold
to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after
the effective date of a Registration Statement, which
statements shall cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a
Private Exchange, obtain an opinion of counsel to the
Company addressed to the Trustee for the benefit of all
Holders of Registrable Securities participating in the
Exchange Offer or the Private Exchange, as the case may
be, and which includes an opinion that (i) the Company has
duly authorized, executed and delivered the Exchange
Securities and Private Exchange Securities and the
Indenture, and (ii) each of the Exchange Securities or the
Private Exchange Securities, as the case may be, and the
Indenture constitute a legal, valid and binding obligation
of the Company, enforceable against the Company in
accordance with its respective terms (in each case, with
customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to
be consummated, upon delivery of the Registrable
Securities by Holders to the Company (or to such other
Person as directed by the Company) in exchange for the
Exchange Securities or the Private Exchange Securities, as
the case may be, the Company shall mark, or cause to be
marked, on such Registrable Securities delivered by such
Holders that such Registrable Securities are being
cancelled in exchange for the Exchange Securities or the
Private Exchange Securities, as the case may be; in no
event shall such Registrable Securities be marked as paid
or otherwise satisfied;
(r) cooperate with each seller of Registrable
Securities covered by any Registration Statement and each
underwriter, if any, participating in the disposition of
such Registrable Securities and their respective counsel
in connection with any filings required to be made with
the NASD;
(s) use its best efforts to take all other steps
necessary to effect the registration of the Registrable
Securities covered by a Registration Statement
contemplated hereby;
<PAGE>
(t) (A) in the case of the Exchange Offer
Registration Statement (i) include in the Exchange Offer
Registration Statement a section entitled "Plan of
Distribution," which section shall be reasonably
<PAGE>
acceptable to the Purchasers or another representative of
the Participating Broker-Dealers, and which shall contain
a summary statement of the positions taken or policies
made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer (a
"Participating Broker-Dealer") that holds Registrable
Securities acquired for its own account as a result of
market-making activities or other trading activities and
that will be the beneficial owner (as defined in Rule
13d-3 under the Exchange Act) of Exchange Securities to be
received by such broker-dealer in the Exchange Offer,
whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or
policies, in the reasonable judgment of the Purchasers or
such other representative, represent the prevailing views
of the staff of the SEC, including a statement that any
such broker-dealer who receives Exchange Securities for
Registrable Securities pursuant to the Exchange Offer may
be deemed a statutory underwriter and must deliver a
prospectus meeting the requirements of the Securities Act
in connection with any resale of such Exchange Securities,
(ii) furnish to each Participating Broker-Dealer who has
delivered to the Company the notice referred to in Section
3(e), without charge, as many copies of each Prospectus
included in the Exchange Offer Registration Statement,
including any preliminary prospectus, and any amendment or
supplement thereto, as such Participating Broker-Dealer
may reasonably request (it being understood that the
Company hereby consents to the use of the Prospectus
forming part of the Exchange Offer Registration Statement
or any amendment or supplement thereto, by any Person
subject to the prospectus delivery requirements of the
SEC, including all Participating Broker-Dealers, in
connection with the sale or transfer of the Exchange
Securities covered by the Prospectus or any amendment or
supplement thereto), (iii) use its best efforts to keep
the Exchange Offer Registration Statement effective and to
amend and supplement the Prospectus contained therein in
order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time
as such Persons must comply with such requirements in
order to resell the Exchange Securities; provided,
however, that such period shall not be required to exceed
180 days (or such longer period if extended pursuant to
<PAGE>
the last sentence of Section 3 hereof) (the "Applicable
Period"), and (iv) include in the transmittal letter or
similar documentation to be executed by an exchange
offeree in order to participate in the Exchange Offer (x)
the following provision:
<PAGE>
"If the exchange offeree is a broker-dealer
holding Registrable Securities acquired for
its own account as a result of market-making
activities or other trading activities, it
will deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resale of Exchange
Securities received in respect of such
Registrable Securities pursuant to the
Exchange Offer";
and (y) a statement to the effect that by a broker-dealer
making the acknowledgment described in clause (x) and by
delivering a Prospectus in connection with the exchange of
Registrable Securities, the broker-dealer will not be
deemed to admit that it is an underwriter within the
meaning of the Securities Act; and
(B) in the case of any Exchange Offer Registration
Statement, the Company agrees to deliver to the Purchasers
or to another representative of the Participating Broker-
Dealers on behalf of the Participating Broker-Dealers upon
consummation of the Exchange Offer (i) an opinion of
counsel substantially in the form attached hereto as
Exhibit A, (ii) an officers' certificate containing
certifications substantially similar to those set forth in
Section 7(f) of the Purchase Agreement and such additional
certifications as are customarily delivered in a public
offering of debt securities and (iii) as well as upon the
effectiveness of the Exchange Offer Registration
Statement, a comfort letter, in each case, in customary
form if permitted by Statement on Auditing Standards No.
72 of the American Institute of Certified Public
Accountants.
The Company may require each seller of Registrable
Securities as to which any registration is being effected to
furnish to the Company such information regarding such seller
and the proposed distribution of such Registrable Securities,
as the Company may from time to time reasonably request in
writing. The Company may exclude from such registration the
Registrable Securities of any seller who unreasonably fails to
furnish such information within a reasonable time after
receiving such request.
<PAGE>
In the case of (1) a Shelf Registration Statement or
(2) Participating Broker-Dealers who have notified the Company
that they will be utilizing the Prospectus contained in the
Exchange Offer Registration Statement as provided in Section
3(t) hereof, each Holder agrees that, upon receipt of any
<PAGE>
notice from the Company of the happening of any event of the
kind described in Section 3(e)(ii), 3(e)(iii), 3(e)(v),
3(e)(vi) or 3(e)(vii) hereof, such Holder will forthwith
discontinue disposition of Registrable Securities pursuant to a
Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated
by Section 3(i) hereof or until it is advised in writing (the
"Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, if so directed by the Company,
such Holder will deliver to the Company (at the Company's
expense) all copies in such Holder's possession, other than
permanent file copies then in such Holder's possession, of the
Prospectus covering such Registrable Securities or Exchange
Securities, as the case may be, current at the time of receipt
of such notice. If the Company shall give any such notice to
suspend the disposition of Registrable Securities or Exchange
Securities, as the case may be, pursuant to a Registration
Statement, the Company shall use its best efforts to file and
have declared effective (if an amendment) as soon as
practicable an amendment or supplement to the Registration
Statement and shall extend the period during which such
Registration Statement shall be maintained effective pursuant
to this Agreement by the number of days in the period from and
including the date of the giving of such notice to and
including the date when the Company shall have made available
to the Holders (x) copies of the supplemented or amended
Prospectus necessary to resume such dispositions or (y) the
Advice.
4. Indemnification and Contribution. (a) The
Company shall indemnify and hold harmless each Purchaser, each
Holder, each Participating Broker-Dealer, each underwriter who
participates in an offering of Registrable Securities, their
respective affiliates, each Person, if any, who controls any of
such parties within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act and each of their
respective directors, officers, employees and agents, as
follows:
(i) from and against any and all loss, liability,
claim, damage and expense whatsoever, joint or several, as
incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto),
covering Registrable Securities or Exchange Securities,
<PAGE>
including all documents incorporated therein by reference,
or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary
to make the statements therein not misleading or arising
out of any untrue statement or alleged untrue statement of
<PAGE>
a material fact contained in any Prospectus (or any
amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) from and against any and all loss, liability,
claim, damage and expense whatsoever, joint or several, as
incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or
proceeding by any court or governmental agency or body,
commenced or threatened, or of any claim whatsoever based
upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement
is effected with the prior written consent of the Company
(except as provided in Section 4(d) below); and
(iii) from and against any and all expenses
whatsoever, as incurred (including reasonable fees and
disbursements of counsel chosen by the Purchasers, such
Holder, such Participating Broker-Dealer or any
underwriter (except to the extent otherwise expressly
provided in Section 4(c) hereof)), reasonably incurred in
investigating, preparing or defending against any
litigation, or any investigation or proceeding by any
court or governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) of this Section
4(a);
provided, however, that this indemnity does not apply to any
loss, liability, claim, damage or expense to the extent arising
out of an untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity
with written information furnished in writing to the Company by
such Purchaser, such Holder, such Participating Broker-Dealer
or any underwriter with respect to such Purchaser, Holder,
Participating Broker-Dealer or underwriter, as the case may be,
expressly for use in the Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or
supplement thereto). Any amounts advanced by the Company to an
indemnified party pursuant to this Section 4 as a result of
such losses shall be returned to the Company if it shall be
<PAGE>
finally determined by such a court in a judgment not subject to
appeal or final review that such indemnified party was not
entitled to indemnification by the Company.
<PAGE>
(b) Each Holder agrees, severally and not jointly,
to indemnify and hold harmless the Company, each Purchaser,
each underwriter who participates in an offering of Registrable
Securities and the other selling Holders and each of their
respective directors, officers (including each officer of the
Company who signed the Registration Statement), employees and
agents and each Person, if any, who controls the Company, any
Purchaser, any underwriter or any other selling Holder within
the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, from and against any and all loss,
liability, claim, damage and expense whatsoever described in
the indemnity contained in Section 4(a) hereof, as incurred,
but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to
the Company by such selling Holder with respect to such Holder
expressly for use in the Registration Statement (or any
amendment thereto), or any such Prospectus (or any amendment or
supplement thereto); provided, however, that, in the case of
Shelf Registration Statement, no such Holder shall be liable
for any claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Registrable
Securities pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice
to each indemnifying party of any action commenced against it
in respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability which it may have
other than on account of this indemnity agreement and shall not
relieve the indemnifying party from its obligation under this
Section 4 unless materially prejudiced thereby. An
indemnifying party may participate at its own expense in the
defense of such action. Notwithstanding the foregoing, if it
so elects within a reasonable time after receipt of such
notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and approved
by the indemnified parties defendant in such action (such
approval not to be unreasonably withheld), unless such
indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them which
are different from or in addition to those available to such
<PAGE>
indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be
liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action. In
no event shall the indemnifying parties be liable for the fees
<PAGE>
and expenses of more than one counsel (in addition to local
counsel) for all indemnified parties in connection with any one
action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect
to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 4 (whether or
not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent
includes an unconditional written release in form and substance
satisfactory to the indemnified parties of each indemnified
party from all liability arising out of such litigation,
investigation, proceeding or claim.
(d) If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified
party for reasonable fees and expenses of counsel pursuant to
Section 4(a)(iii) above, such indemnifying party agrees that it
shall liable for any settlement of the nature contemplated by
Section 4(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt
by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of
such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) If the indemnification provided for in Section
4(a) or (b) hereof is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities,
claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the
one hand and the Holder of Registrable Securities, the
Participating Broker-Dealer or Purchaser, as the case may be,
on the other hand from the offering of the Securities pursuant
to the Purchase Agreement or (ii) if the allocation provided by
<PAGE>
clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and of the Holder of
Registrable Securities, the Participating Broker-Dealer or
<PAGE>
Purchaser, as the case may be, on the other hand in connection
with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative fault of the Company on the one hand and
the Holder of Registrable Securities, the Participating Broker-
Dealer or the Purchasers, as the case may be, on the other hand
shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company, or by the
Holder of Registrable Securities, the Participating Broker-
Dealer or the Purchasers, as the case may be, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Holders of the Registrable
Securities and the Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 4(e)
were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable
considerations referred to above in this Section 4(e). The
aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above
in Section 4(c) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based
upon such untrue or alleged untrue statement or omission or
alleged omission.
No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
For purposes of this Section 4(e), each Person, if
any, who controls a Holder of Registrable Securities, a
Purchaser or a Participating Broker-Dealer within the meaning
of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such
other Person, and each director of the Company, each officer of
the Company who signed the Registration Statement, and each
<PAGE>
Person, if any, who controls the Company within the meaning of
Section 15 of the Securities act or Section 20 of the Exchange
Act shall have the same rights to contribution as the Company.
<PAGE>
5. Participation in Underwritten Registrations. No
Holder may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and
executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other
documents reasonably required under the terms of such
underwriting arrangements.
6. Selection of Underwriters. The Holders of
Registrable Securities covered by the Shelf Registration
Statement who desire to do so may sell the securities covered
by such Shelf Registration in an underwritten offering. In any
such underwritten offering, the underwriter or underwriters and
manager or managers that will administer the offering will be
selected by the Holders of a majority in aggregate principal
amount of the Registrable Securities included in such offering;
provided, however, that such underwriters and managers must be
reasonably satisfactory to the Company.
7. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the
Company is subject to the reporting requirements of Section 13
or 15 of the Exchange Act and any Registrable Securities remain
outstanding, the Company covenants that it will file the
reports required to be filed by it under the Securities Act and
Section 13(a) or 15(d) of the Exchange Act and the rules and
regulations adopted by the SEC thereunder, that if it ceases to
be so required to file such reports, it will upon the request
of any Holder of Registrable Securities (a) make publicly
available such information as is necessary to permit sales
pursuant to Rule 144 under the Securities Act, (b) deliver such
information to a prospective purchaser as is necessary to
permit sales pursuant to Rule 144A under the Securities Act and
it will take such further action as any Holder of Registrable
Securities may reasonably request, and (c) take such further
action that is reasonable in the circumstances, in each case,
to the extent required from time to time to enable such Holder
to sell its Registrable Securities without registration under
the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule
may be amended from time to time, (ii) Rule 144A under the
<PAGE>
Securities Act, as such rule may be amended from time to time,
or (iii) any similar rules or regulations hereafter adopted by
the SEC. Upon the request of any Holder of Registrable
Securities, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
<PAGE>
(b) No Inconsistent Agreements. The Company has
not entered into nor will the Company on or after the date of
this Agreement enter into any agreement which is inconsistent
with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder
do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued
and outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent
of (A) the Holders of not less than a majority in aggregate
principal amount of the then outstanding Registrable Securities
and (B) in circumstances that would adversely affect the
Participating Broker-Dealers, the Participating Broker-Dealers
holding not less than a majority in aggregate principal amount
of the Exchange Securities held by all Participating Broker-
Dealers; provided, however, that Section 4 and this Section
7(c) may not be amended, modified or supplemented without the
prior written consent of each Holder and each Participating
Broker-Dealer (including any Person who was a Holder or
Participating Broker-Dealer of Registrable Securities or
Exchange Securities, as the case may be, disposed of pursuant
to any Registration Statement). Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of
Holders of Registrable Securities whose securities are being
sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Securities may be given
by Holders of at least a majority in aggregate principal amount
of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement.
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, telecopier,
or any courier guaranteeing overnight delivery (i) if to a
Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the
provisions of this Section 7(d), which address initially is,
with respect to the Purchasers, the address set forth in the
<PAGE>
Purchase Agreement; and (ii) if to the Company, initially at
the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 7(d).
<PAGE>
All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited
in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other
communications shall be concurrently delivered by the Person
giving the same to the Trustee, at the address specified in the
Indenture.
(e) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors,
assigns and transferees of the Purchasers, including, without
limitation and without the need for an express assignment,
subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms
of the Purchase Agreement or the Indenture. If any transferee
of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such
Registrable Securities, such Person shall be conclusively
deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such Person shall be
entitled to receive the benefits hereof.
(f) Third Party Beneficiary. Each of the Purchasers
shall be a third party beneficiary of the agreements made
hereunder between the Company, on the one hand, and the
Holders, on the other hand, and shall have the right to enforce
such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the
rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(h) Headings. The headings in this Agreement are
<PAGE>
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED
TO HAVE BEEN MADE IN THE STATE OF NEW YORK. THE VALIDITY AND
<PAGE>
INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS
SET FORTH HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof
in any circumstance, is held invalid, illegal or unenforceable,
the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Securities Held by the Company or Its
Affiliates. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its
affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether
such consent or approval was given by the Holders of such
required percentage.
(l) Entire Agreement. This Agreement, together with
the Purchase Agreement and the Indenture, is intended by the
parties as a final and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein and therein and any and all prior oral
or written agreements, representations, or warranties,
contracts, understandings, correspondence, conversation and
memoranda between the Purchasers on the one hand and the
Company on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates,
predecessors in interest or successors in interest with respect
to the subject matter hereof and thereof are merged herein and
replaced hereby.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
PARK COMMUNICATIONS, INC.
By: _________________________
Name: Wright M. Thomas
Title: President
Confirmed and accepted as of
the date first above
written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: ___________________________
Name:
Title:
GOLDMAN, SACHS & CO.
By: ___________________________
Name:
Title:
<PAGE>
Exhibit A
Form of Opinion of Counsel
1. Each of the Exchange Offer Registration
Statement and the Prospectus (other than the financial
statements, notes or schedules thereto and other financial and
statistical information and supplemental schedules included or
referred to therein or omitted therefrom and the Form T-1, as
to which such counsel need express no opinion), complies as to
form in all material respects with the applicable requirements
of the Securities Act and the applicable rules and regulations
promulgated under the Securities Act.
2. In the course of such counsel's review and
discussion of the contents of the Exchange Offer Registration
Statement and the Prospectus with certain officers and other
representatives of the Company and representatives of the
independent certified public accountants of the Company, but
without independent check or verification or responsibility for
the accuracy, completeness or fairness of the statements
contained therein, on the basis of the foregoing (relying as to
materiality to a large extent upon representations and opinions
of officers and other representatives of the Company), no facts
have come to such counsel's attention which cause such counsel
to believe that the Exchange Offer Registration Statement
(other than the financial statements, notes and schedules
thereto and other financial and statistical information
contained or referred to therein and the Form T-1, as to which
such counsel need express no belief), at the time the Exchange
Offer Registration Statement became effective and at the time
of the consummation of the Exchange Offer, contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements contained therein not misleading, or that the
Prospectus (other than the financial statements, notes and
schedules thereto and other financial and statistical
information contained or referred to therein, as to which such
counsel need express no belief) contains any untrue statement
of a material fact or omits to state a material fact necessary
to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
<PAGE>
Exhibit 10.2
_______________________________________________________________
_______________________________________________________________
WARRANT
REGISTRATION RIGHTS AGREEMENT
Dated as of May 13, 1996
Between
PARK COMMUNICATIONS, INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
AND
GOLDMAN, SACHS & CO.
_______________________________________________________________
_______________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
Section 1. Definitions............................................ 1
Section 2. Registration Rights.................................... 6
2.1(a) Requested Registration................................... 6
2.1(b) Effective Registration................................... 7
2.1(c) Restrictions on Sale by Holders.......................... 8
2.1(d) Underwritten Registrations............................... 8
2.1(e) Expenses................................................. 9
2.1(f) Priority in Requested Registration....................... 9
2.2(a) Piggy-Back Registration.................................. 9
2.2(b) Priority in Piggy-Back Registration...................... 11
2.3 Limitations, Conditions and
Qualifications to Obligations Under
Registration Covenants.................................. 12
2.4 Restrictions on Sale by the Company
and Others.............................................. 14
2.5 Rule 144 and Rule 144A..................................... 15
2.6 Registration on Form S-3................................... 15
Section 3. [Intentionally Omitted]
Section 4. Registration Procedures.................................. 16
Section 5. Indemnification and Contribution......................... 24
Section 6. Miscellaneous............................................ 28
(a) No Inconsistent Agreements................................ 28
(b) Amendments and Waivers.................................... 29
(c) Notices................................................... 30
(d) Successors and Assigns.................................... 30
(e) Counterparts.............................................. 30
(f) Headings.................................................. 31
(g) Governing Law; Jurisdiction............................... 31
(h) Severability.............................................. 31
(i) Entire Agreement.......................................... 31
(j) Attorneys' Fees........................................... 31
(k) Securities Held by the Company or Its
Affiliates.............................................. 31
</TABLE>
<PAGE>
(l) Remedies.............................................. 32
-i-
<PAGE>
WARRANT REGISTRATION RIGHTS AGREEMENT
THIS WARRANT REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is made and entered into as of May 13, 1996,
between PARK COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), and MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED and GOLDMAN, SACHS & CO. (the "Purchasers").
This Agreement is made pursuant to the Purchase
Agreement, dated as of May 6, 1996, among the Company and the
Purchasers (the "Purchase Agreement"), relating to, among other
things, the sale by the Company to the Purchasers of an
aggregate of 80,000 Units, each Unit consisting of $1,000
principal amount at maturity of 13-3/4% Senior Pay-in-Kind
Notes due 2004 and 10 warrants, each initially exercisable for
one (1) share of Common Stock, par value $0.0001 per share, of
the Company. In order to induce the Purchasers to enter into
the Purchase Agreement, the Company has agreed to provide to
the Purchasers and the Holders (as defined herein), among other
things, the registration rights for the Warrants and the
Warrant Shares (as defined herein) set forth in this Agreement.
The execution and delivery of this Agreement is a condition to
the obligations of the Purchasers under the Purchase Agreement.
In consideration of the foregoing, the parties hereto
agree as follows:
Section 1. Definitions. As used in this Agreement, the
following defined terms shall have the following meanings:
"Advice" has the meaning ascribed to such term in the
last paragraph of Section 4 hereof.
"Affiliate" means, when used with reference to any
Person, any other Person directly or indirectly
controlling, controlled by, or under direct or indirect
common control with, the referent Person or such other
Person, as the case may be. For the purposes of this
definition, the term "control" when used with respect to
any specified Person means the power to direct or cause
the direction of management or policies of such Person,
directly or indirectly, whether through the ownership of
<PAGE>
voting securities, by contract or otherwise; and the terms
"affiliated," "controlling" and "controlled" have meanings
correlative of the foregoing. None of the Purchasers or
any of their Affiliates shall be deemed to be an Affiliate
<PAGE>
of the Company or of any of its subsidiaries or
Affiliates.
"Business Day" shall mean a day that is not a Legal
Holiday.
"Capital Stock" means any and all shares, interests,
participations, or other equivalents (however designated)
of corporate stock of the Company, including each class of
common stock and preferred stock of the Company, together
with any warrants, rights, or options to purchase or
acquire any of the foregoing.
"Common Stock" shall mean the Common Stock, par value
$0.0001 per share, of the Company.
"Company" shall have the meaning ascribed to that
term in the preamble of this Agreement and shall also
include the Company's permitted successors and assigns.
"Debt Warrants" means the Warrants issued pursuant to
Section 10.21 of the Indenture.
"DTC" has the meaning ascribed to such term in
Section 4(i) hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
"Holder" means each holder (including the Purchasers)
of any Warrants or Warrant Shares, and each of their
successors, assigns and direct and indirect transferees
who become registered owners of such Warrant Shares.
"Included Securities" has the meaning ascribed to
such term in Section 2.1(a) hereof.
"indemnified party" has the meaning ascribed to such
term in Section 5(c) hereof.
"indemnifying party" has the meaning ascribed to such
term in Section 5(c) hereof.
"Indenture" means the Indenture, of even date
herewith, between the Company and IBJ Schroder Bank &
<PAGE>
Trust Company, as Trustee, pursuant to which the Notes are
issued.
"Inspectors" has the meaning ascribed to such term in
Section 4(n) hereof.
<PAGE>
"Legal Holiday" shall mean a Saturday, a Sunday or a
day on which banking institutions in New York, New York
are required by law, regulation or executive order to
remain closed.
"Notes" means the aggregate of $80,000,000 aggregate
principal amount of 13-3/4% Senior Pay-in-Kind Notes due
2004 of the Company issued under the Indenture.
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Piggy-Back Registration" has the meaning ascribed to
such term in Section 2.2(a) hereof.
"Prospectus" means the prospectus included in any
Registration Statement (including, without limitation, any
prospectus subject to completion and a prospectus that
includes any information previously omitted from a
prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and
supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
"Public Equity Offering" has the meaning set forth in
the Warrant Agreement.
"Purchase Agreement" has the meaning ascribed to such
term in the preamble hereof.
"Purchasers" has the meaning ascribed to such term in
the preamble hereof.
"Registrable Securities" means any of (i) the
Warrants, (ii) the Warrant Shares and (iii) any other
securities issued or issuable with respect to any Warrants
or Warrant Shares by way of stock dividend or stock split
or in connection with a combination of shares,
recapitalization, merger, consolidation or other
reorganization or otherwise, unless, in each case, such
Warrants or Warrant Shares have been offered and sold
<PAGE>
pursuant to an effective registration statement under the
Securities Act. As to any particular Registrable
Securities held by a Holder, such securities shall cease
to be Registrable Securities when (i) a Registration
Statement with respect to the offering of such securities
<PAGE>
by the Holder thereof shall have been declared effective
under the Securities Act and such securities shall have
been disposed of by such Holder pursuant to such
Registration Statement, (ii) such securities may at the
time of determination be sold to the public pursuant to
Rule 144 without any restriction on the amount of
securities which may be sold by such Holder and without
the lapse of any further time or the satisfaction of any
condition, (iii) such securities shall have been otherwise
transferred by such Holder and new certificates for such
securities not bearing a legend restricting further
transfer shall have been delivered by the Company or its
transfer agent and subsequent disposition of such
securities shall not require registration or qualification
under the Securities Act or any similar state law then in
force or (iv) such securities shall have ceased to be
outstanding.
"Registration Election Date" has the meaning set
forth in the Warrant Agreement.
"Registration Expenses" shall mean all expenses
incident to the Company's performance of or compliance
with this Agreement, including, without limitation, all
SEC and stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees and
expenses, fees and expenses of compliance with securities
or blue sky laws (including, without limitation,
reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of
the Registrable Securities), printing expenses, messenger,
telephone and delivery expenses, fees and disbursements of
counsel for the Company and all independent certified
public accountants, the fees and disbursements of
underwriters customarily paid by issuers or sellers of
securities (but not including any underwriting discounts
or commissions or transfer taxes, if any, attributable to
the sale of Registrable Securities by Holders of such
Registrable Securities) and other reasonable out-of-pocket
expenses of Holders (it being understood that Registration
Expenses shall not include, as to the fees and expenses of
counsel, the fees and expenses of more than one counsel
for the Holders).
"Registration Statement" shall mean any appropriate
<PAGE>
registration statement of the Company filed with the SEC
pursuant to the Securities Act which covers any of the
Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such
Registration Statement, including post-effective
<PAGE>
amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Requested Registration" has the meaning ascribed to
such term in Section 2.1(a) hereof.
"Requisite Securities" shall mean a number of
Registrable Securities equal to not less than 50% of the
Registrable Securities held in the aggregate by all
Holders; provided, however, that with respect to any
action to be taken at the request of the Holders of the
Registrable Securities prior to such time as the Warrants
have expired pursuant to the terms thereof and of the
Warrant Agreement, each Warrant outstanding shall be
deemed to represent that number of Registrable Securities
for which such Warrant would be then exercisable (without
giving effect to the Cashless Exercise (as defined in the
Warrant Agreement)).
"Rule 144" shall mean Rule 144 promulgated under the
Securities Act, as such Rule may be amended from time to
time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for
offers and sales of securities made in compliance
therewith resulting in offers and sales by subsequent
holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus
delivery requirements of the Securities Act.
"Rule 144A" shall mean Rule 144A promulgated under
the Securities Act, as such Rule may be amended from time
to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
"SEC" shall mean the Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of
1933, as amended from time to time.
"Selling Holder" shall mean a Holder who is selling
Registrable Securities in accordance with the provisions
of Section 2.1 or 2.2.
<PAGE>
"Warrant Agent" means IBJ Schroder Bank & Trust
Company and any successor Warrant Agent for the Warrants
pursuant to the Warrant Agreement.
<PAGE>
"Warrant Agreement" means the Warrant Agreement dated
as of May 13, 1996 between the Company and the Warrant
Agent, as amended or supplemented from time to time in
accordance with the terms thereof.
"Warrants" means, at any time, all warrants of the
Company issued pursuant to the Warrant Agreement and then
outstanding.
"Warrant Shares" means the shares of Common Stock
deliverable upon exercise of the Warrants.
Section 2. Registration Rights.
2.1 (a) Requested Registration. At any time and
from time to time after (i) the 180th day after the occurrence
of a Public Equity Offering and/or (ii) the 90th day after the
Registration Election Date, Holders owning, individually or in
the aggregate, not less than the Requisite Securities may make
a written request for registration under the Securities Act of
their Registrable Securities (a "Requested Registration").
Within (i) 365 days in the case of any Requested Registration
under clause (i) of the preceding sentence or (ii) 90 days in
the case of any Requested Registration under clause (ii) of the
preceding sentence of the receipt of such written request for a
Requested Registration, the Company shall file with the SEC and
use its best efforts to cause to become effective under the
Securities Act a Registration Statement with respect to such
Registrable Securities. Any such request will specify the
number of Registrable Securities proposed to be sold and will
also specify the intended method of disposition thereof. The
Company shall give written notice of such registration request
to all other Holders of Registrable Securities within 15 days
after the receipt thereof. Within 20 days after receipt by any
Holder of Registrable Securities of such notice from the
Company, such Holder may request in writing that such Holder's
Registrable Securities be included in such Registration
Statement and the Company shall include in such Registration
Statement the Registrable Securities of any such Holder
requested to be so included (the "Included Securities"). Each
such request by such other Holders shall specify the number of
Included Securities proposed to be sold and the intended method
of disposition thereof. Subject to Sections 2.1(b) and 2.1(f)
hereof, the Company shall be required to register Registrable
Securities pursuant to this Section 2.1(a) on a maximum of one
<PAGE>
occasion; provided, however, that if one such Requested
Registration has been completed prior to issuance of the Debt
Warrants, the Company shall be required to effect one
additional Requested Registration.
<PAGE>
(b) Effective Registration. A Registration
Statement will not be deemed to have been effected as a
Requested Registration unless it has been declared effective by
the SEC and the Company has complied in all material respects
with all of its obligations under this Agreement with respect
thereto; provided, however, that if, after such Registration
Statement has become effective, the offering of Registrable
Securities pursuant to such Registration Statement is or
becomes the subject of any stop order, injunction or other
order or requirement of the SEC or any other governmental or
administrative agency or court that prevents, restrains or
otherwise limits the sale of Registrable Securities pursuant to
such Registration Statement for any reason not attributable to
any Holder participating in such registration and such
Registration Statement has not become effective within a
reasonable time period thereafter, such Registration Statement
will be deemed not to have been effected. If (i) a
registration requested pursuant to this Section 2.1 is deemed
not to have been effected or (ii) a Requested Registration does
not remain effective under the Securities Act until at least
the earlier of (A) an aggregate of 180 days after the effective
date thereof or (B) the consummation of the distribution by the
Holders of all of the Registrable Securities covered thereby,
then such registration shall not count towards determining if
the Company has satisfied its obligation to effect Requested
Registrations pursuant to this Section 2.1. For purposes of
calculating the 180-day period referred to in the preceding
sentence, any period of time during which such Registration
Statement was not in effect shall be excluded. The Holders of
Registrable Securities shall be permitted to withdraw all or
any part of the Registrable Securities from a Requested
Registration at any time prior to the effective date of such
Requested Registration. Notwithstanding any such withdrawal by
a Holder of Registrable Securities, if the Company has complied
with all of its obligations hereunder, such withdrawal shall
not require the Company to effect any additional Requested
Registrations.
(c) Restrictions on Sale by Holders. Each Holder of
Registrable Securities whose Registrable Securities are covered
by a Registration Statement filed pursuant to this Section 2.1
and are to be sold thereunder agrees, if and to the extent
reasonably requested by the managing underwriter or
underwriters in an underwritten offering, not to effect any
public sale or distribution of Registrable Securities or of
<PAGE>
securities of the Company of the same class as any securities
included in such Registration Statement, including a sale
pursuant to Rule 144 (except as part of such underwritten
offering), during the 30-day period prior to, and during the
120-day period beginning on, the closing date of each
underwritten offering made pursuant to such Registration
Statement, to the extent timely notified in writing by the
Company or such managing underwriter or underwriters.
The foregoing provisions of Section 2.1(c) shall not
apply to any Holders of Registrable Securities if such Holder
is prevented by applicable statute or regulation from entering
into any such agreement; provided, however, that any such
Holder shall undertake, in its request to participate in any
such underwritten offering, not to effect any public sale or
distribution of any Registrable Securities commencing on the
date of sale of such Registrable Securities unless it has
provided 45 days' prior written notice of such sale or
distribution to the underwriter or underwriters.
(d) Underwritten Registrations. If any of the
Registrable Securities covered by a Requested Registration are
to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage
the offering will be selected by the Holders of not less than a
majority of the Registrable Securities to be sold thereunder
and will be reasonably acceptable to the Company.
No Holder of Registrable Securities may participate
in any underwritten registration pursuant to a Registration
Statement filed under this Agreement unless such Holder (a)
agrees to (i) sell such Holder's Registrable Securities on the
basis provided in and in compliance with any underwriting
arrangements approved by the Holders of not less than a
majority of the Registrable Securities to be sold thereunder
and (ii) comply with Rules 10b-6 and 10b-7 under the Exchange
Act and (b) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such
underwriting arrangements.
(e) Expenses. The Company will pay all Registration
Expenses in connection with the registrations requested
pursuant to Section 2.1(a) hereof. Each Holder of Registrable
Securities shall pay all underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition
of such Holder's Registrable Securities pursuant to a
Registration Statement requested pursuant to this Section 2.1.
(f) Priority in Requested Registration. In a
<PAGE>
registration pursuant to Section 2.1 hereof involving an
underwritten offering, if the managing underwriter or
underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders who have requested
such Requested Registration or who have sought inclusion
therein that in such underwriter's or underwriters' reasonable
opinion the total number of securities which the Selling
Holders and any other Person desiring to participate in such
registration intend to include in such offering is such as to
adversely affect the success of such offering, including the
price at which such securities can be sold, then the Company
will be required to include in such registration only the
amount of securities which it is so advised should be included
in such registration. In such event, securities shall be
registered in such registration in the following order of
priority: (i) first, the securities which have been requested
to be included in such registration by the Holders of
Registrable Securities pursuant to this Agreement (such
securities for the account of the Holders to be allocated among
the Holders pro rata based on the amount of securities sought
to be registered by the Holders) and (ii) second, provided that
no securities sought to be included by the Holders have been
excluded from such registration, securities to be sold for the
account of the Company and the securities of other Persons
entitled to exercise "piggy-back" registration rights pursuant
to contractual commitments of the Company in the order of
priority determined in accordance with agreements between the
Company and such other Persons, if any.
2.2 (a) Piggy-Back Registration. If at any time
the Company proposes to file a Registration Statement under the
Securities Act with respect to an offering by the Company for
its own account or for the account of any of its security-
holders of any class of its common equity securities (other
than (i) a Registration Statement on Form S-4 or S-8 (or any
substitute form that may be adopted by the SEC) or any other
publicly registered offering pursuant to the Securities Act
pertaining to the issuance of shares of Common Stock or
securities exercisable therefor under any benefit plan,
employee compensation plan, or employee or director stock
purchase plan or (ii) a Registration Statement filed in
connection with an exchange offer or offering of securities
solely to the Company's existing securityholders), then the
Company shall give written notice of such proposed filing to
the Holders of Registrable Securities as soon as practicable
(but in no event fewer than 15 days before the anticipated
filing date or 10 days if the Company is subject to filing
reports under the Exchange Act and able to use Form S-3 under
the Securities Act), and such notice shall offer such Holders
the opportunity to register such number of shares of
<PAGE>
Registrable Securities as each such Holder may request in
writing within 15 days (or eight days if the Company is subject
to filing reports under the Exchange Act and able to use Form
S-3 under the Securities Act) after receipt of such written
notice from the Company (which request shall specify the
Registrable Securities intended to be disposed of by such
Selling Holder and the intended method of distribution thereof)
(a "Piggy-Back Registration"). The Company shall use its best
efforts to keep such Piggy-Back Registration continuously
effective under the Securities Act until at least the earlier
of (A) 180 days after the effective date thereof or (B) the
consummation of the distribution by the Holders of all of the
Registrable Securities covered thereby. The Company shall use
its best efforts to cause the managing underwriter or
underwriters, if any, of such proposed offering to permit the
Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as
any similar securities of the Company or any other security-
holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with
the intended method of distribution thereof. Any Selling
Holder shall have the right to withdraw its request for
inclusion of its Registrable Securities in any Registration
Statement pursuant to this Section 2.2 by giving written notice
to the Company of its request to withdraw. The Company may
withdraw a Piggy-Back Registration at any time prior to the
time it becomes effective or the Company may elect to delay the
registration; provided, however, that the Company shall give
prompt written notice thereof to participating Selling Holders.
The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested
pursuant to this Section 2.2, and each Holder of Registrable
Securities shall pay all underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition
of such Holder's Registrable Securities pursuant to a
Registration Statement effected pursuant to this Section 2.2.
No registration effected under this Section 2.2, and
no failure to effect a registration under this Section 2.2,
shall relieve the Company of its obligation to effect a
registration upon the request of Holders of Registrable
Securities pursuant to Section 2.1 hereof, and no failure to
effect a registration under this Section 2.2 and to complete
the sale of securities registered thereunder in connection
therewith shall relieve the Company of any other obligation
under this Agreement.
(b) Priority in Piggy-Back Registration. In a
registration pursuant to Section 2.2 hereof involving an
underwritten offering, if the managing underwriter or
<PAGE>
underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders requesting
inclusion in such offering that in such underwriter's or
underwriters' reasonable opinion the total number of securities
which the Company, the Selling Holders and any other Persons
desiring to participate in such registration intend to include
in such offering is such as to adversely affect the success of
such offering, including the price at which such securities can
be sold, then the Company will be required to include in such
registration only the amount of securities which it is so
advised should be included in such registration. In such
event: (x) in cases only involving the registration for sale
of securities for the Company's own account (other than
pursuant to the exercise of piggyback rights herein and in
other contractual commitments of the Company), securities shall
be registered in such offering in the following order of
priority: (i) first, the securities which the Company proposes
to register, (ii) second, provided that no securities sought to
be included by the Company have been excluded from such
registration, the securities which have been requested to be
included in such registration by the Holders of Registrable
Securities pursuant to this Agreement (such securities for the
account of the Holders to be allocated among the Holders pro
rata based on the amount of securities sought to be registered
by the Holders) and (iii) third, provided that no securities
sought to be included by the Company or the Holders have been
excluded from such registration, the securities of other
Persons entitled to exercise "piggy-back" registration rights
pursuant to contractual commitments of the Company (pro rata
based on the amount of securities sought to be registered by
such Persons); and (y) in cases not involving the registration
for sale of securities for the Company's own account only,
securities shall be registered in such offering in the
following order of priority: (i) first, securities to be sold
for the account of the Company and the securities of any Person
whose exercise of a "demand" registration right pursuant to a
contractual commitment of the Company is the basis for the
registration (provided that if such Person is a Holder of
Registrable Securities, as among Holders of Registrable
Securities there shall be no priority and Registrable
Securities sought to be included by Holders of Registrable
Securities shall be included pro rata based on the amount of
securities sought to be registered by such Persons),
(ii) second, provided that no securities of the Company or such
Person referred to in the immediately preceding clause (i) have
been excluded from such registration, the securities requested
to be included in such registration by the Holders of
Registrable Securities pursuant to this Agreement (such
securities for the account of the Holders to be allocated among
the Holders pro rata based on the total amount of securities
<PAGE>
sought to be registered by the Holders) and (iii) third,
provided that no securities of such Person referred to in the
immediately preceding clause (i) or of the Holders have been
excluded from such registration, securities of other Persons
entitled to exercise "piggy-back" registration rights pursuant
to contractual commitments (pro rata based on the amount of
securities sought to be registered by such Persons).
If, as a result of the provisions of this Section
2.2(b), any Selling Holder shall not be entitled to include all
Registrable Securities in a Piggy-Back Registration that such
Selling Holder has requested to be included, such Selling
Holder may elect to withdraw his request to include Registrable
Securities in such registration.
2.3 Limitations, Conditions and Qualifications to
Obligations Under Registration Covenants. The obligations of
the Company set forth in Sections 2.1, 2.2 and 2.6 hereof are
subject to each of the following limitations, conditions and
qualifications:
(i) Subject to the next sentence of this paragraph,
the Company shall be entitled to postpone, for a
reasonable period of time, the filing or effectiveness of,
or suspend the rights of any Holders to make sales
pursuant to, any Registration Statement otherwise required
to be prepared, filed and made and kept effective by it
hereunder; provided, however, that the duration of such
postponement or suspension may not exceed the earlier to
occur of (A) 15 days after the cessation of the
circumstances described in the next sentence of this
paragraph on which such postponement or suspension is
based or (B) 90 days after the date of the determination
of the Board of Directors referred to in the next sentence
of this paragraph, and the duration of such postponement
or suspension shall be excluded from the calculation of
the 180-day period described in Section 2.1(b) hereof;
provided, further, however, that no postponement may be
effected, and no right of any Holder to effect sales may
be suspended, pursuant to the provisions hereof in respect
of a Requested Registration such that the Registration
Statement in respect thereof is not filed within 365 days
of the request therefor. Such postponement or suspension
may be effected only if the Company determines reasonably
and in good faith that the filing or effectiveness of, or
sales pursuant to, such Registration Statement would
materially impede, delay or interfere with any financing,
offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving
the Company or any of its affiliates or require disclosure
<PAGE>
of material information which the Company has a bona fide
business purpose for preserving as confidential; provided,
however, that the Company shall not be entitled to such
postponement or suspension more than once in any twelve-
month period. If the Company shall so postpone the filing
of a Registration Statement it shall, as promptly as
possible, deliver a certificate signed by the Chief
Executive Officer of the Company to the Selling Holders as
to such determination, and the Selling Holders shall (y)
have the right, in the case of a postponement of the
filing or effectiveness of a Registration Statement, upon
the affirmative vote of the Holders of not less than a
majority of the Registrable Securities to be included in
such Registration Statement, to withdraw the request for
registration by giving written notice to the Company
within 10 days after receipt of such notice or (z) in the
case of a suspension of the right to make sales, receive
an extension of the registration period equal to the
number of days of the suspension. Any Requested
Registration as to which the withdrawal election referred
to in the preceding sentence has been effected shall not
be counted for purposes of the Requested Registration the
Company is required to effect pursuant to Section 2.1
hereof.
(ii) The Company shall not be required by this
Agreement to effect a Requested Registration within
120 days immediately following the effective date of any
registration statement pertaining to a firmly underwritten
offering of equity securities of the Company for its own
account; provided, however, that this clause (ii) shall
not apply if the underwriter of such offering consents to
the request for such Requested Registration pursuant to
Section 2.1(a).
(iii) The Company shall not be required by this
Agreement to effect a Requested Registration within
90 days immediately following the effective date of any
registration statement pertaining to a firmly underwritten
offering of equity securities of the Company for the
account of any securityholder of the Company; provided,
however, that this clause (ii) shall not apply if the
underwriter of such offering consents to the request for
such Requested Registration pursuant to Section 2.1(a).
(iv) The Company's obligations shall be subject to
the obligations of the Selling Holders, which the Selling
Holders acknowledge, to furnish all information and
materials and to take any and all actions as may be
required under applicable federal and state securities
<PAGE>
laws and regulations to permit the Company to comply with
all applicable requirements of the SEC and to obtain any
acceleration of the effective date of such Registration
Statement.
(v) The Company shall not be obligated to cause any
special audit to be undertaken in connection with any
registration pursuant to this Agreement unless such audit
is required by the SEC.
2.4 Restrictions on Sale by the Company and Others.
The Company covenants and agrees that (i) it shall not, and
that it shall not cause or permit any of its subsidiaries to,
effect any public sale or distribution of any securities of the
same class as any of the Registrable Securities or any
securities convertible into or exchangeable or exercisable for
such securities (or any option or other right for such
securities) during the 30-day period prior to, and during the
90-day period beginning on, the commencement of any
underwritten offering of Registrable Securities pursuant to a
Requested Registration which has been requested pursuant to
this Agreement, or a Piggy-Back Registration which has been
scheduled, prior to the Company or any of its subsidiaries
publicly announcing its intention to effect any such public
sale or distribution; (ii) the Company will not, and the
Company will not cause or permit any subsidiary of the Company
to, after the date hereof, enter into any agreement or contract
that conflicts with or limits or prohibits the full and timely
exercise by the Holders of Registrable Securities of the rights
herein to request a Requested Registration or to join in any
Piggy-Back Registration subject to the other terms and
provisions hereof; and (iii) that it shall use its reasonable
best efforts to secure the written agreement of each of its
officers and directors to not effect any public sale or
distribution of any securities of the same class as the
Registrable Securities (or any securities convertible into or
exchangeable or exercisable for any such securities), or any
option or right for such securities during the period described
in clause (i) of this Section 2.4.
2.5 Rule 144 and Rule 144A. The Company covenants
that it will file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner
and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder or beneficial
owner of Registrable Securities, make available such
information necessary to permit sales pursuant to Rule 144A
under the Securities Act. The Company further covenants that
it will take such further action as any Holder of Registrable
<PAGE>
Securities may reasonably request, all to the extent required
from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144(k)
and Rule 144A under the Securities Act, as such Rules may be
amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of
any Holder of Registrable Securities, the Company will in a
timely manner deliver to such Holder a written statement as to
whether it has complied with such information requirements.
2.6 Registration on Form S-3. (a) In addition to
the rights set forth in Section 2.1 and 2.2 hereof, if a Holder
or Holders requests that the Company file a registration
statement on Form S-3 (or any successor to Form S-3) for a
public offering of Registrable Securities the reasonably
anticipated aggregate price to the public of which would be at
least $1,000,000, and the Company is a registrant entitled to
use Form S-3 to register the Registrable Securities for such an
offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering as
soon as practicable on Form S-3 (or any successor form to Form
S-3). Any such Registration Statement need only be kept
effective for 18 months from its date of effectiveness.
(b) The Holders' right to register Registrable
Securities under Section 2.6 shall be shared pro rata among all
Holders of Registrable Securities and all other holders of
securities of the Company who have a right to request inclusion
therein based on the number of Registrable Securities held by
each Holder.
(c) Notwithstanding the foregoing, the Company shall
not be obligated to effect more than one registration pursuant
to this Section 2.6 or take any action pursuant to this
Section 2.6 in the following situations: (i) if the Company,
within ten (10) days of the receipt of the request of the
Holders, gives notice of its bona fide intention to effect the
filing of a registration statement with the SEC within forty-
five (45) days of receipt of such request (other than with
respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of
Registrable Securities); or (ii) during the period starting
with the date of filing of, and ending on a date ninety (90)
days following the effective date of, a registration statement
described in (i) above or pursuant to Section 2.1 or 2.2
hereof; provided, however, that the Company is actively
employing in good faith all reasonable efforts to cause such
registration statement to become effective; provided, however,
<PAGE>
that no other Person could require the Company to file once
registration statement in such period.
Section 3. [Intentionally Omitted]
Section 4. Registration Procedures. In connection with
the obligations of the Company with respect to any Registration
Statement pursuant to Sections 2.1, 2.2 and 2.6 hereof, the
Company shall, except as otherwise provided:
(a) Prepare and file with the SEC as soon as
practicable each such Registration Statement (but in any
event on or prior to the date of filing thereof required
under this Agreement) and use its best efforts to cause
such Registration Statement to become effective and remain
effective as provided herein; provided, however, that
before filing any such Registration Statement or any
Prospectus (for registrations pursuant to Sections 2.1 and
2.2 hereof) or any amendments or supplements thereto (only
for registrations pursuant to Section 2.1 hereof)
(including documents that would be incorporated or deemed
to be incorporated therein by reference, including such
documents filed under the Exchange Act that would be
incorporated therein by reference), the Company shall
afford promptly to the Holders of the Registrable
Securities covered by such Registration Statement, their
counsel and the managing underwriter or underwriters, if
any, an opportunity to review copies of all such documents
proposed to be filed a reasonable time prior to the
proposed filing thereof. The Company shall not file any
Registration Statement or Prospectus (for registrations
pursuant to Sections 2.1 and 2.2 hereof) or any amendments
or supplements thereto (only for registrations pursuant to
Section 2.1 hereof) if the Holders of a majority of the
Registrable Securities covered by such Registration
Statement, their counsel, or the managing underwriter or
underwriters, if any, shall reasonably object in writing
unless failure to file any such amendment or supplement
would involve a violation of the Securities Act or other
applicable law.
(b) Prepare and file with the SEC such amendments
and post-effective amendments to the Registration
Statement as may be necessary to keep such Registration
Statement continuously effective for the time periods
prescribed hereby; cause the related Prospectus to be
supplemented by any required prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the
Securities Act; and comply with the provisions of the
<PAGE>
Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable
to it with respect to the disposition of all securities
covered by such Registration Statement as so amended or in
such prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities,
their counsel and the managing underwriter or
underwriters, if any, promptly (but in any event within
two (2) Business Days), and confirm such notice in
writing, (i) when a Prospectus or any prospectus
supplement or post-effective amendment has been filed,
and, with respect to a Registration Statement or any post-
effective amendment, when the same has become effective
(including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-
effective amendment including financial statements and
schedules and exhibits), (ii) of the issuance by the SEC
of any stop order suspending the effectiveness of such
Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the
initiation or threatening of any proceedings for that
purpose, (iii) of the receipt by the Company of any
notification with respect to (A) the suspension of the
qualification or exemption from qualification of the
Registration Statement or any of the Registrable
Securities covered thereby for offer or sale in any
jurisdiction, or (B) the initiation of any proceeding for
such purpose, (iv) of the happening of any event, the
existence of any condition or information becoming known
that requires the making of any changes in such
Registration Statement, Prospectus or documents so that,
in the case of such Registration Statement, it will
conform in all material respects with the requirements of
the Securities Act and it will not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make
the statements therein, not misleading, and that in the
case of the Prospectus, it will conform in all material
respects with the requirements of the Securities Act and
it will not contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary to make the statements
therein, in light of the circumstances under which they
were made, not misleading, and (v) of the Company's
reasonable determination that a post-effective amendment
to such Registration Statement would be appropriate.
(d) Use every reasonable effort to prevent the
issuance of any order suspending the effectiveness of the
<PAGE>
Registration Statement or of any order preventing or
suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of
the Registrable Securities covered thereby for sale in any
jurisdiction, and, if any such order is issued, to obtain
the withdrawal of any such order at the earliest possible
moment.
(e) If reasonably requested by the managing
underwriter or underwriters, if any, or the Holders of a
majority of the Registrable Securities being sold in
connection with an underwritten offering (only for
registrations pursuant to Section 2.1 hereof),
(i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing
underwriter or underwriters, if any, or such Holders
reasonably request to be included therein to comply with
applicable law, (ii) make all required filings of such
prospectus supplement or such post-effective amendment as
soon as practicable after the Company has received
notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment, and
(iii) supplement or make amendments to such Registration
Statement.
(f) Furnish to each Holder of Registrable Securities
who so requests and to counsel for the Holders of
Registrable Securities and each managing underwriter, if
any, without charge, upon request, one conformed copy of
the Registration Statement and each post-effective
amendment thereto, including financial statements and
schedules, and of all documents incorporated or deemed to
be incorporated therein by reference and all exhibits
(including exhibits incorporated by reference).
(g) Deliver to each Holder of Registrable
Securities, their counsel and each underwriter, if any,
without charge, as many copies of each Prospectus
(including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request;
and, subject to the last paragraph of this Section 4, the
Company hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the
Holders of Registrable Securities and the underwriter or
underwriters or agents, if any, in connection with the
offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities,
to register or qualify, and cooperate with the Holders of
<PAGE>
Registrable Securities, the underwriter or underwriters,
if any, and their respective counsel in connection with
the registration or qualification (or exemption from such
registration or qualification) of, such Registrable
Securities for offer and sale under the securities or Blue
Sky laws of such jurisdictions within the United States as
the managing underwriter or underwriters reasonably
request in writing, or, in the event of a non-underwritten
offering, as the Holders of a majority of the Registrable
Securities may request; provided, however, that where
Registrable Securities are offered other than through an
underwritten offering, the Company agrees to cause its
counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed
pursuant to this Section 4(h); keep each such registration
or qualification (or exemption therefrom) effective during
the period required hereunder for effectiveness of the
Registration Statement and do any and all other acts or
things necessary or advisable to enable the disposition in
such jurisdictions of the securities covered thereby;
provided, however, that the Company will not be required
to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take
any action that would subject it to general service of
process in any such jurisdiction where it is not then so
subject or (C) become subject to taxation in any
jurisdiction where it is not then so subject.
(i) Cooperate with the Holders of Registrable
Securities and the managing underwriter or underwriters,
if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be
sold, which certificates shall not bear any restrictive
legends whatsoever and shall be in a form eligible for
deposit with The Depository Trust Company ("DTC"); and
enable such Registrable Securities to be in such
denominations and registered in such names as the managing
underwriter or underwriters, if any, or Holders may
reasonably request at least two business days prior to any
sale of Registrable Securities in a firm commitment
underwritten public offering.
(j) [Intentionally Omitted]
(k) Upon the occurrence of any event contemplated by
Section 4(c)(v) or 4(c)(vi) above, as promptly as
practicable prepare a supplement or post-effective
amendment to the Registration Statement or a supplement to
the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and,
<PAGE>
subject to Section 4(a) hereof, file such with the SEC so
that, as thereafter delivered to the purchasers of
Registrable Securities being sold thereunder, such
Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which they
were made, not misleading.
(l) Prior to the effective date of a Registration
Statement, (i) provide the registrar for the Registrable
Securities with certificates for such securities in a form
eligible for deposit with DTC and (ii) provide a CUSIP
number for such securities.
(m) For registrations pursuant to Section 2.1
hereof, enter into an underwriting agreement in form,
scope and substance as is customary in underwritten
offerings and take all such other actions as are
reasonably requested by the managing underwriter or
underwriters in order to expedite or facilitate the
registration or disposition of such Registrable Securities
in any underwritten offering to be made of the Registrable
Securities in accordance with this Agreement, and in such
connection, (i) make such representations and warranties
to the underwriter or underwriters, with respect to the
business of the Company and the subsidiaries of the
Company, and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, in form,
substance and scope as are customarily made by issuers to
underwriters in underwritten offerings, and confirm the
same if and when requested; (ii) use best efforts to
obtain opinions of counsel to the Company and updates
thereof, addressed to the underwriter or underwriters
covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters
as may be reasonably requested by underwriters; (iii) use
best efforts to obtain "cold comfort" letters and updates
thereof from the independent certified public accountants
of the Company (and, if applicable, the subsidiaries of
the Company) and, if necessary, any other independent
certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for
which financial statements and financial data are, or are
required to be, included in the Registration Statement,
addressed to each of the underwriters, such letters to be
in customary form and covering matters of the type
customarily covered in "cold comfort" letters in
connection with underwritten offerings and such other
<PAGE>
matters as reasonably requested by the managing
underwriter or underwriters and as permitted by the
Statement of Auditing Standards No. 72; and (iv) if an
underwriting agreement is entered into, the same shall
contain customary indemnification provisions and
procedures (or such other provisions and procedures
acceptable to Holders of a majority of Registrable
Securities covered by such Registration Statement and the
managing underwriter or underwriters or agents) with
respect to all parties to be indemnified pursuant to said
Section. The above shall be done at each closing under
such underwriting agreement, or as and to the extent
required thereunder.
(n) Make available for inspection by a
representative of the Holders of Registrable Securities
being sold, any underwriter participating in any such
disposition of Registrable Securities, if any, and any
attorney or accountant retained by such representative of
the Holders or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other
records, pertinent corporate documents and properties of
the Company and the subsidiaries of the Company, and cause
the officers, directors and employees of the Company and
the subsidiaries of the Company to supply all information
in each case reasonably requested by any such Inspector in
connection with such Registration Statement; provided,
however, that all material non-public information shall be
kept confidential by such Inspector, except to the extent
that (i) the disclosure of such information is necessary
or advisable to avoid or correct a misstatement or
omission in the Registration Statement or in any
Prospectus; provided, however, that prior notice is given
to the Company, and the Company's legal counsel and such
Holder's legal counsel concur that disclosure is required,
(ii) the release of such information is ordered pursuant
to a subpoena or other order from a court of competent
jurisdiction, (iii) disclosure of such information is
necessary or advisable in connection with any action,
claim, suit or proceeding, directly or indirectly,
involving or potentially involving such Inspector and
arising out of, based upon, relating to or involving this
Agreement or any of the transactions contemplated hereby
or arising hereunder; provided, however, that prior notice
shall be provided as soon as practicable to the Company of
the potential disclosure of any information by such
Inspector pursuant to clauses (ii) or (iii) of this
sentence to permit the Company to obtain a protective
order (or waive the provisions of this paragraph (n)), or
<PAGE>
(iv) such information has been made generally available to
the public.
(o) Comply with all applicable rules and regulations
of the SEC and make generally available to its security-
holders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the
Securities Act) no later than forty-five (45) days after
the end of any 12-month period (or ninety (90) days after
the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to an underwriter or
to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to an
underwriter or to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of
the Company after the effective date of the relevant
Registration Statement, which statements shall cover said
12-month periods.
(p) Use its best efforts to cause all Registrable
Securities relating to such Registration Statement to be
listed on each securities exchange, if any, on which
similar securities issued by the Company are then listed.
(q) Cooperate with the Selling Holders of
Registrable Securities to facilitate the timely
preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any
restrictive legends and registered in such names as the
Selling Holders may reasonably request at least two
business days prior to the closing of any sale of
Registrable Securities.
Each seller of Registrable Securities as to which any
registration is being effected agrees, as a condition to the
registration obligations with respect to such Holder provided
herein, to furnish to the Company such information regarding
such seller and the distribution of such Registrable Securities
as the Company may, from time to time, reasonably request in
writing to comply with the Securities Act and other applicable
law. The Company may exclude from such registration the
Registrable Securities of any seller for so long as such seller
fails to furnish such information within a reasonable time
after receiving such request. If the identity of a seller of
Registrable Securities is to be disclosed in the Registration
Statement, such seller shall be permitted to include all
information regarding such seller as it shall reasonably
request.
<PAGE>
Each Holder of Registrable Securities agrees by
acquisition of such Registrable Securities that, upon receipt
of any notice from the Company of the happening of any event of
the kind described in Section 4(c)(ii), 4(c)(iv), 4(c)(v), or
4(c)(vi) hereof, such Holder will forthwith discontinue
disposition of such Registrable Securities covered by the
Registration Statement or Prospectus until such Holder's
receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4(k) hereof), or until it is advised in
writing (the "Advice") by the Company that the use of the
applicable prospectus may be resumed, and has received copies
of any amendments or supplements thereto, and, if so directed
by the Company, such Holder will, at the Company's expense,
deliver to the Company all copies, other than permanent file
copies, then in such Holder's actual possession of the
Prospectus covering such Registrable Securities current at the
time of receipt of such notice; provided, however, that nothing
herein shall create any obligation on the part of any Holder to
undertake to retrieve or return any such Prospectus not within
the actual possession of such Holder. In the event the Company
shall give any such notice, the period of time for which a
Registration Statement is required hereunder to be effective
shall be extended by the number of days during such periods
from and including the date of the giving of such notice to and
including the date when each seller of Registrable Securities
covered by such Registration Statement shall have received (x)
the copies of the supplemented or amended Prospectus
contemplated by Section 4(k) hereof or (y) the Advice.
Section 5. Indemnification and Contribution. (a) The
Company shall indemnify and hold harmless each Holder, each
underwriter who participates in an offering of Registrable
Securities, their respective affiliates, each Person, if any,
who controls any of such parties within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act and
each of their respective directors, officers, employees and
agents, as follows:
(i) from and against any and all loss, liability,
claim, damage and expense whatsoever, joint or several, as
incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto),
covering Registrable Securities, including all documents
incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact
<PAGE>
contained in any Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) from and against any and all loss, liability,
claim, damage and expense whatsoever, joint or several, as
incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or
proceeding by any court or governmental agency or body,
commenced or threatened, or of any claim whatsoever based
upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement
is effected with the prior written consent of the Company
(except as provided in Section 5(d) below); and
(iii) from and against any and all expenses
whatsoever, as incurred (including reasonable fees and
disbursements of counsel chosen by such Holder, or any
underwriter (except to the extent otherwise expressly
provided in Section 5(c) hereof)), reasonably incurred in
investigating, preparing or defending against any
litigation, or any investigation or proceeding by any
court or governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) of this Section
5(a);
provided, however, that this indemnity does not apply to any
loss, liability, claim, damage or expense to the extent arising
out of an untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity
with written information furnished in writing to the Company by
such Holder or any underwriter with respect to such Holder or
underwriter, as the case may be, expressly for use in the
Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto). Any
amounts advanced by the Company to an indemnified party
pursuant to this Section 5 as a result of such losses shall be
returned to the Company if it shall be finally determined by
such a court in a judgment not subject to appeal or final
review that such indemnified party was not entitled to
indemnification by the Company.
(b) Each Holder agrees, severally and not jointly,
to indemnify and hold harmless the Company, each underwriter
who participates in an offering of Registrable Securities and
the other selling Holders and each of their respective
<PAGE>
directors, officers (including each officer of the Company who
signed the Registration Statement), employees and agents and
each Person, if any, who controls the Company, any underwriter
or any other selling Holder within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and
against any and all loss, liability, claim, damage and expense
whatsoever described in the indemnity contained in Section 5(a)
hereof, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to
the Company by such selling Holder with respect to such Holder
expressly for use in the Registration Statement (or any
amendment thereto), or any such Prospectus (or any amendment or
supplement thereto); provided, however, that no such Holder
shall be liable for any claims hereunder in excess of the
amount of gross proceeds received by such Holder from the sale
of Registrable Securities pursuant to any Registration
Statement.
(c) Each indemnified party shall give prompt notice
to each indemnifying party of any action commenced against it
in respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability which it may have
other than on account of this indemnity agreement and shall not
relieve the indemnifying party from its obligation under this
Section 5 unless materially prejudiced thereby. An
indemnifying party may participate at its own expense in the
defense of such action. Notwithstanding the foregoing, if it
so elects within a reasonable time after receipt of such
notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and approved
by the indemnified parties defendant in such action (such
approval not to be unreasonably withheld), unless such
indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them which
are different from or in addition to those available to such
indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be
liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action. In
no event shall the indemnifying parties be liable for the fees
and expenses of more than one counsel (in addition to local
counsel) for all indemnified parties in connection with any one
action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior
<PAGE>
written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect
to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 5 (whether or
not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent
includes an unconditional written release in form and substance
satisfactory to the indemnified parties of each indemnified
party from all liability arising out of such litigation,
investigation, proceeding or claim.
(d) If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified
party for reasonable fees and expenses of counsel pursuant to
Section 5(a)(iii) above, such indemnifying party agrees that it
shall liable for any settlement of the nature contemplated by
Section 5(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt
by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of
such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) If the indemnification provided for in Section
5(a) or (b) hereof is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities,
claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the
one hand and the Holder on the other hand from the offering of
the Warrants pursuant to the Purchase Agreement or (ii) if the
allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company on the one hand and
of the Holder on the other hand in connection with the
statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative fault of the Company on the one hand and
the Holder on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue
<PAGE>
statement of a material fact or the omission or alleged
omission to state a material fact relates to information
supplied by the Company, or by the Holder, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Holders of the Registrable
Securities agree that it would not be just and equitable if
contribution pursuant to this Section 5(e) were determined by
pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred
to above in this Section 5(e). The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 5(e)
shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon
such untrue or alleged untrue statement or omission or alleged
omission.
No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
For purposes of this Section 5(e), each Person, if
any, who controls a Holder of Registrable Securities within the
meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as
such other Person, and each director of the Company, each
officer of the Company who signed the Registration Statement,
and each Person, if any, who controls the Company within the
meaning of Section 15 of the Securities act or Section 20 of
the Exchange Act shall have the same rights to contribution as
the Company.
Section 6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not
entered into nor will the Company on or after the date of this
Agreement enter into, or cause or permit any of its
subsidiaries to enter into, any agreement which is inconsistent
with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder
do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued
and outstanding securities, if any, under any such agreements.
<PAGE>
(b) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the prior
written consent of holders of Registrable Securities then
outstanding and the holders of Notes which would be entitled to
Debt Warrants representing not less than a majority of the
Registrable Securities (assuming all Debt Warrants had been
issued); provided, however, that no such consent of the holders
of the Notes need be obtained (i) if and to the extent that any
such amendment, modification, supplement or waiver or consent
would not adversely affect their rights hereunder (assuming the
Debt Warrants were then outstanding) or (ii) after the issuance
of Debt Warrants (or after the date on which the Company
consummates a Public Equity Offering or Strategic Equity
Investment (each as defined in the Indenture) resulting in net
proceeds to the Company of at least $40.0 million such that the
Debt Warrants are not required to be issued under the
Indenture). For purposes of the foregoing sentence,
outstanding Warrants and Debt Warrants not yet issued shall be
deemed to equal that number of shares of Common Stock for which
such Warrant or Debt Warrant would then be exercisable
(assuming all conditions to exercise were satisfied and such
exercise were entirely for cash and not by surrender of
Warrants and assuming all Debt Warrants were then issued and
each were exercisable for one share of Common Stock).
Notwithstanding the foregoing, (A) Section 5 hereof and this
Section 6(b) may not be amended, modified or supplemented
without the prior written consent of each Holder (including any
Person who was a Holder of Registrable Securities disposed of
pursuant to any Registration Statement) and each holder of
Notes, if the Debt Warrants have not yet been issued, affected
by such amendment, modification or supplement (provided that no
consent of the holders of Notes need be obtained after the date
on which the Company consummates a Public Equity Offering or
Strategic Equity Investment resulting in net proceeds to the
Company of at least $40.0 million such that the Debt Warrants
are not required to be issued under the Indenture) and (B) no
amendment or waiver of the proviso to the last sentence of
Section 2.1(a) hereof may be effected without the consent of
the holders of the Notes who would hold a majority of the Debt
Warrants, or if the Debt Warrants have been issued, the holders
of a majority of the Debt Warrants. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions
hereof that relates exclusively to the rights of Holders of
Registrable Securities whose securities are being sold pursuant
to a Registration Statement and that does not directly or
indirectly affect, impair, limit or compromise the rights of
other Holders of Registrable Securities may be given by the
Holders of not less than a majority of the Registrable
<PAGE>
Securities proposed to be sold by such Holders pursuant to such
Registration Statement.
(c) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand delivery, registered first-class mail, telex, telecopier,
or any courier guaranteeing overnight delivery (i) if to a
Holder, at the most current address of such Holder as set forth
in the register for the Warrants or the Warrant Shares, which
address initially is, with respect to the Purchaser, the
address set forth in the Purchase Agreement; and (ii) if to the
Company, initially at the address set forth below the Company's
name on the signature pages hereto and thereafter at such other
address, notice of which is given in accordance with the
provisions of this Section 6(c), with a copy to Eckert Seamans
Cherin & Mellott, Attention: Stephen I. Burr, Esq., and
thereafter at such other address notice of which is given in
accordance with the provisions of this Section 6(c).
All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if
Personally delivered; five Business Days after being deposited
in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
(d) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors,
assigns and transferees of each of the parties and the holders
of the Notes prior to the issuance of the Debt Warrants,
including, without limitation and without the need for an
express assignment, subsequent Holders. If any transferee of
any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable
Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and
provisions of this Agreement and such Person shall be entitled
to receive the benefits hereof.
(e) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(f) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
<PAGE>
otherwise affect the meaning hereof.
(g) Governing Law; Jurisdiction. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND
PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
(h) Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by
such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or
unenforceable.
(i) Entire Agreement. This Agreement, together with
the Purchase Agreement and the Warrant Agreement, is intended
by the parties as a final expression of their agreement, and is
intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. This
Agreement, the Purchase Agreement and the Warrant Agreement
supersede all prior agreements and understandings between the
parties with respect to such subject matter.
(j) Attorneys' Fees. As between the parties to this
Agreement, in any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be
entitled to recover reasonable attorneys' fees in addition to
its costs and expenses and any other available remedy.
(k) Securities Held by the Company or Its
Affiliates. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities or Warrants is
required hereunder, Registrable Securities or Warrants held by
the Company or by any of its affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not be
counted (in either the numerator or the denominator) in
determining whether such consent or approval was given by the
Holders of such required percentage.
<PAGE>
(l) Remedies. In the event of a breach by the
Company of any of its obligations under this Agreement, each
Holder, in addition to being entitled to exercise all rights
provided herein, in the Purchase Agreement or granted by law,
including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
PARK COMMUNICATIONS, INC.
By:
Name: Wright M. Thomas
Title: President
Address for Notices:
333 West Vine Street
Suite 1700
Lexington, Kentucky 40507
Facsimile No.: (606) 252-7275
Telephone No.: (606) 226-9609
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By:
Name:
Title:
Address for Notices:
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281-1305
Facsimile No.: (212) 449-8983
Telephone No.: (212) 449-1000
GOLDMAN, SACHS & CO.
By:
Name:
Title:
Address for Notices:
85 Broad Street
New York, New York 10004
Facsimile No.: (212) 902-3000
Telephone No.: (212) 902-1000
<PAGE>
Exhibit 10.3
PARK BROADCASTING, INC., as Issuer
IBJ SCHRODER BANK & TRUST COMPANY, as Trustee
____________________
INDENTURE
Dated as of May 13, 1996
____________________
$241,000,000
11-3/4% Senior Notes due 2004
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of May 13, 1996
Trust Indenture Indenture
Act Section Section
{ 310(a)(1) ................................... 6.09
(a)(2) ................................... 6.09
(a)(3) ................................... Not Applicable
(a)(4) ................................... Not Applicable
(a)(5) ................................... 6.09
(b) ................................... 6.08, 6.10
(c) ................................... Not Applicable
{ 311(a) ................................... 6.13
(b) ................................... 6.13
(c) ................................... Not Applicable
{ 312(a) ................................... 7.01
(b) ................................... 7.02
(c) ................................... 7.02
{ 313(a) ................................... 7.03
(b) ................................... 7.03
(c) ................................... 7.03
(d) ................................... 7.03
{ 314(a) ................................... 7.04; 10.08;
10.09
(b) ................................... N.A.
(c)(1) ................................... 1.04
(c)(2) ................................... 1.04
(c)(3) ................................... Not Applicable
(d) ................................... N.A.
(e) ................................... 1.04
(f) ................................... Not Applicable
{ 315(a) ................................... 6.01(a)
(b) ................................... 6.02
(c) ................................... 6.01(b)
(d) ................................... 6.01(c)
(e) ................................... 5.14
{ 316(a) (last
sentence) ................................... 1.01
(definition
of "Out-
standing")
(a)(1)(A) ................................... 5.12
(a)(1)(B) ................................... 5.13
(a)(2) ................................... Not Applicable
<PAGE>
(b) ................................... 5.08
(c) ................................... 9.04
{ 317(a)(1) ................................... 5.03
(a)(2) ................................... 5.04
(b) ................................... 10.03
{ 318(a) ................................... 1.08
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
PARTIES .................................................. 1
RECITALS ................................................. 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
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Section 1.01. Definitions..................................... 1
Section 1.02. Other Definitions............................... 27
Section 1.03. Rules of Construction........................... 28
Section 1.04. Form of Documents Delivered to Trustee.......... 29
Section 1.05. Acts of Holders................................. 30
Section 1.06. Notices, etc., to the Trustee and the
Company......................................... 31
Section 1.07. Notice to Holders; Waiver....................... 32
Section 1.08. Conflict with Trust Indenture Act............... 32
Section 1.09. Effect of Headings and Table of Content......... 33
Section 1.10. Successors and Assigns.......................... 33
Section 1.11. Separability Clause............................. 33
Section 1.12. Benefits of Indenture........................... 33
Section 1.13. GOVERNING LAW................................... 33
Section 1.14. No Recourse Against Others...................... 34
Section 1.15. Independence of Covenants....................... 34
Section 1.16. Exhibits and Schedules.......................... 34
Section 1.17. Counterparts.................................... 34
Section 1.18. Duplicate Originals............................. 34
Section 1.19. Incorporation by Reference of TIA............... 34
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ARTICLE TWO
SECURITY FORMS
Section 2.01. Form and Dating ................................ 35
Section 2.02. Execution and Authentication; Aggregate
Principal Amount ............................. 36
<PAGE>
Section 2.03. Restrictive Legends ............................ 37
_________________
Note: This table of contents shall not, for any purpose, be
deemed
to be a part of this Indenture.
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<PAGE>
Section 2.04. Book-Entry Provisions for Global
Security ....................................... 39
Section 2.05. Special Transfer Provisions ................... 40
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ARTICLE THREE
THE NOTES
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Section 3.01. Title and Terms............................ 43
Section 3.02. Denominations.............................. 43
Section 3.03. [Intentionally Omitted].................... 43
Section 3.04. Temporary Notes............................ 43
Section 3.05. Registration, Registration of Trans-
fer and Exchange........................... 44
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Notes...................................... 46
Section 3.07. Payment of Interest; Interest Rights
Preserved.................................. 46
Section 3.08. Persons Deemed Owners...................... 48
Section 3.09. Cancellation............................... 48
Section 3.10. Computation of Interest.................... 49
Section 3.11. Legal Holidays............................. 49
Section 3.12. CUSIP Number............................... 49
Section 3.13. Payment of Additional Interest Under
Registration Rights Agreement.............. 49
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ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. The Company's Option To Effect Defea-
sance or Covenant Defeasance................ 50
Section 4.02. Defeasance and Discharge.................... 50
Section 4.03. Covenant Defeasance......................... 51
Section 4.04. Conditions to Defeasance or Covenant
Defeasance.................................. 51
Section 4.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust;
Other Miscellaneous Provisions.............. 53
Section 4.06. Reinstatement............................... 54
Section 4.07. Repayment to Company........................ 54
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ARTICLE FIVE
REMEDIES
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Section 5.01. Events of Default........................ 55
Section 5.02. Acceleration of Maturity; Rescission
and Annulment............................ 57
Section 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee; Other
Remedies................................. 58
Section 5.04. Trustee May File Proofs of Claims........ 60
Section 5.05. Trustee May Enforce Claims Without
Possession of Notes...................... 61
Section 5.06. Application of Money Collected........... 61
Section 5.07. Limitation on Suits...................... 62
Section 5.08. Unconditional Right of Holders To
Receive Principal, Premium and
Interest................................. 62
Section 5.09. Restoration of Rights and Remedies....... 63
Section 5.10. Rights and Remedies Cumulative........... 63
Section 5.11. Delay or Omission Not Waiver............. 63
Section 5.12. Control by Majority...................... 63
Section 5.13. Waiver of Past Defaults.................. 64
Section 5.14. Undertaking for Costs.................... 65
Section 5.15. Waiver of Stay, Extension or Usury
Laws..................................... 65
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ARTICLE SIX
THE TRUSTEE
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Section 6.01. Certain Duties and Responsibilities...... 66
Section 6.02. Notice of Defaults....................... 67
Section 6.03. Certain Rights of Trustee................ 67
Section 6.04. Trustee Not Responsible for Recitals,
Dispositions of Notes or Applica-
tion of Proceeds Thereof................. 68
Section 6.05. Trustee and Agents May Hold Notes;
Collections; etc......................... 69
Section 6.06. Money Held in Trust...................... 69
Section 6.07. Compensation and Indemnification of
Trustee and Its Prior Claim.............. 69
Section 6.08. Conflicting Interests.................... 70
Section 6.09. Corporate Trustee Required; Eligibil-
ity .................................... 70
</TABLE>
<PAGE>
Section 6.10. Resignation and Removal; Appointment
of Successor Trustee .................... 71
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<PAGE>
Section 6.11. Acceptance of Appointment by Succes-
sor ..................................... 73
Section 6.12. Successor Trustee by Merger, etc. ........ 74
Section 6.13. Preferential Collection of Claims
Against Issuers ......................... 74
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND COMPANY
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Section 7.01. Preservation of Information; Company
To Furnish Trustee Names and
Addresses of Holders.................... 75
Section 7.02. Communications of Holders............... 75
Section 7.03. Reports by Trustee...................... 75
Section 7.04. Reports by the Company.................. 76
</TABLE>
ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01. When the Company May Merge, etc. ....... 76
Section 8.02. Successor Substituted .................. 77
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
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Section 9.01. Without Consent of Holders.............. 77
Section 9.02. With Consent of Holders................. 78
Section 9.03. Compliance with Trust Indenture Act..... 80
Section 9.04. Revocation and Effect of Consents....... 80
Section 9.05. Notation on or Exchange of Notes........ 81
Section 9.06. Trustee May Sign Amendments, etc........ 81
</TABLE>
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and
Interest .............................. 81
<PAGE>
Section 10.02. Maintenance of Office or Agency ......... 81
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Section 10.03. Money for Note Payments To Be Held in
Trust ................................... 82
Section 10.04. Existence ................................ 84
Section 10.05. Payment of Taxes and Other Claims ........ 84
Section 10.06. Maintenance of Properties ................ 85
Section 10.07. Insurance ................................ 85
Section 10.08. Compliance Certificate ................... 85
Section 10.09. Provision of Financial Statements ........ 86
Section 10.10. [Intentionally Deleted] .................. 87
Section 10.11. Limitation on Incurrence of Indebted-
ness .................................... 87
Section 10.12. Limitation on Restricted Payments ........ 90
Section 10.13. Limitations on Transactions with
Affiliates .............................. 92
Section 10.14. Limitation on Asset Sales ................ 94
Section 10.15. Change of Control ........................ 98
Section 10.16. Limitations on Liens Securing Certain
Debt..................................... 101
Section 10.17. Limitation on Dividends and Other
Payment Restrictions Affecting Sub-
sidiaries ............................... 101
Section 10.18. Limitation on Subsidiary Capital
Stock ................................... 103
Section 10.19. Limitation on Amendment of Tax Shar-
ing Agreement ........................... 103
Section 10.20. Limitation on Line of Business ........... 103
Section 10.21. Certain Exceptions for Capital Con-
tributions To Refinance the Exist-
ing Credit Facility ..................... 103
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ARTICLE ELEVEN
REDEMPTION OF NOTES
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Section 11.01. Optional and Special Redemption .......... 104
Section 11.02. Applicability of Article ................. 105
Section 11.03. Election To Redeem; Notice to
Trustee ................................. 105
Section 11.04. Selection by Trustee of Notes To Be
Redeemed ................................ 105
Section 11.05. Notice of Redemption ..................... 106
Section 11.06. Deposit of Redemption Price .............. 107
Section 11.07. Notes Payable on Redemption
Date .................................... 107
Section 11.08. Notes Redeemed or Purchased in Part ...... 108
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<PAGE>
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of Inden-
ture .................................... 108
Section 12.02. Application of Trust Money ............... 109
TESTIMONIUM .............................................. 110
SIGNATURES ............................................... 110
Exhibit A - Form of Initial Note ......................... A-1
Exhibit B - Form of Exchange Note ........................ B-1
Exhibit C - Form of Certificate To Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors ........................... C-1
Exhibit D - Form of Certificate To Be Delivered in
Connection with Transfers Pursuant to
Regulation S ................................... D-1
Exhibit E - Form of Original Issue Discount Legend........ E-1
Schedule A- List of Unrestricted Subsidiaries as
of the Issue Date
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<PAGE>
INDENTURE, dated as of May 13, 1996, by and between
PARK BROADCASTING, INC., a Delaware corporation (the "Com-
pany"), and IBJ SCHRODER BANK & TRUST COMPANY, a New York bank-
ing company, as trustee (the "Trustee").
RECITALS
The Company has duly authorized the creation of an
issue of 11-3/4% Senior Notes due 2004 (the "Initial Notes")
and Series B 11-3/4% Senior Notes due 2004 to be issued in
exchange for the Initial Notes pursuant to the Registration
Rights Agreement (the "Exchange Notes"), and to provide there-
for the Company has duly authorized the execution and delivery
of this Indenture.
All things necessary have been done to make the
Notes, when executed by the Company and authenticated and
delivered hereunder and duly issued by the Company, the valid
obligations of the Company and to make this Indenture a valid
agreement of the Company, in accordance with the terms hereof.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the pur-
chase of the Notes by the Holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit
of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
"Acquired Debt" means, with respect to any specified
Person, Indebtedness of any other Person (the "Acquired Per-
son") existing at the time the Acquired Person merges with or
into, or becomes a Restricted Subsidiary of, such specified
Person, including Indebtedness incurred in connection with, or
in contemplation of, the Acquired Person merging with or into,
or becoming a Restricted Subsidiary of, such specified Person.
<PAGE>
"Acquired Person" has the meaning set forth in the
definition of "Acquired Debt."
"Affiliate" means, with respect to any specified Per-
son, any other Person directly or indirectly controlling or
<PAGE>
controlled by or under direct or indirect common control with
such specified Person. For purposes of this definition, "con-
trol" (including, with correlative meanings, the terms "con-
trolling," "controlled by" and "under common control with") of
any Person means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of vot-
ing securities, by agreement or otherwise.
"Applicable Premium" means, with respect to a Note,
the greater of (i) 1.0% of the then outstanding principal
amount of such Note and (ii)(a) the present value of all
remaining required interest and principal payments due on such
Note and all premium payments relating thereto assuming a
redemption date of May 15, 2001, computed using a discount rate
equal to the Treasury Rate plus 75 basis points minus (b) the
then outstanding principal amount of such Note minus
(c) accrued interest paid on the date of redemption.
"Asset Sale" means (i) any sale, lease, conveyance or
other disposition by the Company or any Restricted Subsidiary
of any property or assets (including by way of a sale-and-
leaseback) other than in the ordinary course of business or
(ii) the issuance or sale of Capital Stock of any Restricted
Subsidiary (but not of any Unrestricted Subsidiary), in the
case of each of (i) and (ii), whether in a single transaction
or a series of related transactions, to any Person (other than
to the Company or a Wholly Owned Restricted Subsidiary); pro-
vided, however, that for purposes of Section 10.14, Asset Sales
shall not include: (a) a transaction or series of related
transactions for which the Company or the applicable Restricted
Subsidiary receives aggregate consideration of less than
$500,000 in any fiscal year; (b) transactions complying with
Section 8.01; (c) any Lien securing Indebtedness to the extent
that such Lien is granted in compliance with Section 10.16;
(d) any Restricted Payment (or Permitted Investment) permitted
by Section 10.12; and (e) any disposition of assets or property
to the extent such property or assets are obsolete, worn out or
no longer useful in the Company's or any Restricted Subsid-
iary's business; provided, however, that the fair market value
(determined reasonably and in good faith by the Board of Direc-
tors of the Company) of any assets or property so disposed of
shall not exceed $500,000 in the aggregate in any given year.
Notwithstanding anything herein to the contrary, (A) no sale,
lease, conveyance or other disposition of all or any portion of
the Radio Station Assets or dividend from the operations of, or
<PAGE>
from any sale or disposition of, any Radio Station Assets
<PAGE>
(unless received in repayment of a Radio Note) and (B) no sale,
lease, conveyance or other disposition of all or any portion of
property or assets used in or related to the television station
WUTR (including by way of the sale of the Capital Stock of the
Subsidiary owning such property or assets) shall be deemed an
Asset Sale; provided, however, that any transaction (or series
of transactions) described in clause (B) is in the aggregate
for fair market value.
"Bankruptcy Law" means Title 11, United States Bank-
ruptcy Code of 1978, as amended, or any similar United States
Federal or state law relating to bankruptcy, insolvency,
receivership, winding-up, liquidation, reorganization or relief
of debtors, or any amendment to, succession to or change in any
such law.
"Board of Directors" means, with respect to any Per-
son, the board of directors, management committee or similar
governing body or any authorized committee thereof responsible
for the management of the business and affairs of such Person.
"Board Resolution" means, with respect to any Person,
a copy of a resolution certified by the Secretary or an Assis-
tant Secretary of such Person to have been duly adopted by the
Board of Directors of such Person and to be in full force and
effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking insti-
tutions in The City of New York, State of New York, are autho-
rized or obligated by law, regulation or executive order to
close.
"Capital Lease Obligation" of any Person means, at
the time any determination thereof is to be made, the amount of
the liability in respect of a capital lease for property leased
by such Person that would at such time be required to be capi-
talized on the balance sheet of such Person in accordance with
GAAP.
"Capital Stock" of any Person means any and all
shares, interests, rights to purchase, warrants, options, par-
ticipations or other equivalents of or interests in (however
designated) corporate stock or other equity participations,
including partnership interests, whether general or limited, of
<PAGE>
such Person, including any Preferred Stock.
<PAGE>
"Cash Equivalents" means (a) securities with
maturities of one year or less from the date of acquisition
issued, fully guaranteed or insured by the United States
Government or any agency thereof, (b) certificates of deposit,
time deposits, overnight bank deposits, bankers' acceptances
and repurchase agreements issued by a Qualified Issuer having
maturities of 270 days or less from the date of acquisition,
(c) commercial paper of an issuer rated at least A-2 by Stan-
dard & Poor's Corporation or at least P-2 by Moody's Investors
Service, Inc., or carrying an equivalent rating by a nationally
recognized rating agency if both of the two named rating agen-
cies cease publishing ratings of investments, and having
maturities of 270 days or less from the date of acquisition,
and (d) money market accounts or funds with or issued by Quali-
fied Issuers.
"Change of Control" means the occurrence of any of
the following events: (a) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange
Act), other than the Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable immedi-
ately or only after the passage of time), directly or indi-
rectly, of 50% or more of the voting power of the total out-
standing Voting Stock of the Company, Park Communications or
PAI, as the case may be; (b) during any period of two consecu-
tive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company, Park Commu-
nications or PAI, as the case may be (together with any new
directors whose election to such Board of Directors, or whose
nomination for election by the stockholders of the Company,
Park Communications or PAI, as the case may be, was approved by
a vote of the Permitted Holders who at the time of the vote are
stockholders of the Company, Park Communications or PAI, as the
case may be, or either (i) 66-2/3% or (ii) all remaining mem-
bers of the Board of Directors of the Company, Park Communica-
tions or PAI, as the case may be, then still in office who were
either directors at the beginning of such period or whose elec-
tion or nomination for election was previously so approved),
cease for any reason to constitute a majority of such Board of
Directors of the Company, Park Communications or PAI, as the
case may be, then in office; (c) the sale or other disposition
of all or substantially all of the Capital Stock or assets of
the Company, Park Communications or PAI, as the case may be, to
<PAGE>
any "person" or "group" (as defined in Rule 13d-5 under the
<PAGE>
Exchange Act), other than to the Permitted Holders, as an
entirety or substantially as an entirety in a single transac-
tion or a series of related transactions; or (d) the Company,
Park Communications or PAI, as the case may be, consolidates
with or merges with or into another Person or any Person con-
solidates with or merges with or into the Company, other than
in any such transaction where immediately after such transac-
tion the "beneficial owners" of the Voting Stock of the Com-
pany, Park Communications or PAI, as the case may be, immedi-
ately prior to such transaction or the Permitted Holders own at
least a majority of the voting power of the outstanding Voting
Stock of the Surviving Person immediately after the consumma-
tion of such transaction. For purposes of the foregoing defi-
nition of Change of Control, the transfer (by lease, assign-
ment, sale or otherwise, in a single transaction or series of
related transactions) of all or substantially all of the prop-
erties or assets of one or more Subsidiaries of the Company the
Capital Stock of which constitutes all or substantially all of
the properties and assets of the Company shall be deemed to be
the transfer of all or substantially all of the properties and
assets of the Company.
"Change of Control Triggering Event" means the occur-
rence of both a Change of Control and a Rating Decline.
"Commission" or "SEC" means the Securities and
Exchange Commission, as from time to time constituted, or if at
any time after the execution of this Indenture such Commission
is not existing and performing the applicable duties now
assigned to it, then the body or bodies performing such duties
at such time.
"Communications Notes" means the $80.0 million aggre-
gate principal amount of 13-3/4% Senior Pay-in-Kind Notes due
2004 of Park Communications to be issued under an indenture to
be dated May 13, 1996 between Park Communications and IBJ
Schroder Bank & Trust Company, as trustee.
"Communications Senior Credit Facility" means the
Credit Agreement, to be entered into as of the Issue Date,
among Park Communications, the Subsidiaries of Park Communica-
tions named therein and the lenders named therein, as the same
may be amended, modified, renewed, refunded, replaced or refi-
nanced (collectively, "refinanced") from time to time, includ-
ing (i) any related notes, letters of credit, guarantees, col-
lateral documents, instruments and agreements executed in con-
<PAGE>
nection therewith, and in each case as amended, modified or
<PAGE>
refinanced from time to time and (ii) any notes, guarantees,
collateral documents, instruments and agreements executed in
connection with any such amendment, modification or refinanc-
ing; provided, however, that (A) no amendment, modification or
refinancing shall be permitted unless the terms thereof require
substantially the same application of the proceeds of the sale
or other disposition of the Radio Station Assets (including
amount and timing) to the repayment of indebtedness under the
Communications Senior Credit Facility (and do not require pre-
payment from the sale or other disposition of, or any different
restriction (as compared to terms in effect on the Issue Date)
in respect of, KEZX-AM and KWJZ-FM) and (B) after such time as
the $58.0 million aggregate principal amount outstanding under
the Communications Senior Credit Facility on the Issue Date is
first repaid other than through a refinancing, the Communica-
tions Senior Credit Facility shall be deemed not to exist for
purposes of any exception to the covenants in this Indenture.
"Company" means the Person named as the "Company" in
the first paragraph of this Indenture, until a successor Person
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such suc-
cessor Person.
"Company Request" or "Company Order" means a written
request or order of the Company signed in the name of the Com-
pany by an officer of the Company.
"Consolidated Interest Expense" means, with respect
to any period, the sum of (i) the interest expense of the Com-
pany and the Restricted Subsidiaries for such period (other
than any interest expense for such period attributable to
(i) the Communications Senior Credit Facility and (ii) the
amortization of issuance costs related to the Notes), deter-
mined on a consolidated basis in accordance with GAAP consis-
tently applied, including, without limitation, (a) amortization
of debt discount, (b) the net payments, if any, under Interest
Rate Agreement Obligations (including amortization of dis-
counts), (c) the interest portion of any deferred payment obli-
gation and (d) accrued interest, plus (ii) the interest compo-
nent of all Capital Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by the Company and the
Restricted Subsidiaries during such period, and all capitalized
interest of the Company and the Restricted Subsidiaries, in
each case as determined on a consolidated basis in accordance
with GAAP consistently applied.
<PAGE>
"Consolidated Net Income" means, with respect to any
period, the net income (or loss) of the Company and the
Restricted Subsidiaries for such period, determined on a con-
solidated basis in accordance with GAAP consistently applied
and adjusted (i) by adding the amount of interest expense for
such period calculated in accordance with GAAP attributable to
(x) the Communications Senior Credit Facility and (y) debt
issuance costs related to the Notes (in each case to the extent
deducted in calculating such net income (or loss)), (ii) by
adding the amount of corporate overhead for such period of Park
Communications allocated to the Company and its Subsidiaries in
accordance with GAAP consistently applied and deducted in cal-
culating such net income (or loss), (iii) by adding the amount
of management advisory fees paid by the Company to Park Commu-
nications for such period and deducted in calculating such net
income (or loss) and (iv) to the extent included in calculating
such net income (or loss), by excluding, without duplication,
(a) all extraordinary gains but not losses (less all fees and
expenses relating thereto) together with any related provisions
for taxes, (b) the portion of net income (or loss) of the Com-
pany and the Restricted Subsidiaries allocable to interests in
unconsolidated Persons or Unrestricted Subsidiaries, except
(other than with respect to Unrestricted Subsidiaries that own
the Radio Station Assets) to the extent of the amount of divi-
dends or distributions actually paid in cash to the Company or
the Restricted Subsidiaries by such other Person or Unre-
stricted Subsidiaries during such period (subject in the case
of any such dividend or distribution to any Restricted Subsid-
iary to the limitations set forth in clause (e) below), (c) net
income (or loss) of any Person combined with the Company or any
Restricted Subsidiary on a "pooling of interests" basis attrib-
utable to any period prior to the date of combination, (d) net
gains but not losses (less all fees and expenses relating
thereto) in respect of dispositions of assets (including, with-
out limitation, pursuant to sale-and-leaseback transactions)
other than in the ordinary course of business, together with
any related provisions for taxes, (e) the net income of any
Restricted Subsidiary to the extent that the declaration of
dividends or similar distributions by that Restricted Subsid-
iary of that income to the Company is not at the time permit-
ted, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders (regardless of any
waiver in respect thereof), and (f) any amount attributable to
the operations of the Radio Station Assets or received by the
<PAGE>
Company or any Restricted Subsidiary as a dividend (including,
<PAGE>
without limitation, any dividend made from the proceeds of any
sale or disposition of Radio Station Assets) from any Unre-
stricted Subsidiary owning the Radio Station Assets or as a
dividend or other distribution from any Restricted Subsidiary
to the extent relating to the operations of or resulting from
the sale or disposition of any Radio Station Assets.
"Consolidated Net Worth" means, with respect to any
Person on any date, the equity of the common and preferred
stockholders of such Person and its Restricted Subsidiaries as
of such date, determined on a consolidated basis in accordance
with GAAP consistently applied.
"consolidation" means, with respect to any Person,
the consolidation of the accounts of its Restricted Subsidiar-
ies with those of such Person, all in accordance with GAAP;
provided, however, that "consolidation" will not include con-
solidation of the accounts of any Unrestricted Subsidiary with
the accounts of such Person. The term "consolidated" has a
correlative meaning to the foregoing.
"Corporate Trust Office" means the office of the
Trustee at which at any particular time its corporate trust
business shall be principally administered, which office at the
date of execution of this Indenture is located at One State
Street, New York, New York 10004.
"Cumulative Consolidated Interest Expense" means, as
of any date of determination, Consolidated Interest Expense
from the Issue Date to the end of the Company's most recently
ended full fiscal quarter prior to such date, taken as a single
accounting period.
"Cumulative Operating Cash Flow" means, as of any
date of determination, Operating Cash Flow from the Issue Date
to the end of the Company's most recently ended fiscal quarter
prior to such date, taken as a single accounting period.
"Debt to Operating Cash Flow Ratio" means, with
respect to any date of determination, the ratio of (i) the
aggregate principal amount of all outstanding Indebtedness of
the Company and the Restricted Subsidiaries as of such date on
a consolidated basis, plus the aggregate liquidation preference
or redemption amount of all Disqualified Stock of the Company
and the Restricted Subsidiaries (other than any Disqualified
Stock owned by the Company or any Wholly Owned Restricted Sub-
<PAGE>
sidiary) determined in accordance with GAAP, to (ii) Operating
<PAGE>
Cash Flow of the Company and the Restricted Subsidiaries on a
consolidated basis for the four most recent full fiscal quar-
ters ending on or immediately prior to such date, determined on
a pro forma basis (without giving effect to clause (iv)(c) of
the definition of Consolidated Net Income) after giving pro
forma effect to (A) the incurrence of any Indebtedness being
incurred on such date of determination and (if applicable) the
application of the net proceeds therefrom, including to refi-
nance other Indebtedness; (B) in the case of Acquired Debt, the
related acquisition as if such acquisition had occurred at the
beginning of such four-quarter period; and (C) any acquisition
or disposition by the Company and the Restricted Subsidiaries
of any company or any business or any assets out of the ordi-
nary course of business, or any related repayment of Indebted-
ness, in each case since the first day of such four-quarter
period, assuming such acquisition or disposition had been con-
summated, with respect to any acquisition, on the first day of,
and with respect to any disposition, immediately prior to the
first day of, such four-quarter period.
"Default" means any event that is, or after the giv-
ing of notice or passage of time or both would be, an Event of
Default.
"Disposition" means, with respect to any Person, any
merger, consolidation or other business combination involving
such Person (whether or not such Person is the Surviving Per-
son) or the sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of such Person's
assets.
"Disqualified Stock" means (i) any Preferred Stock of
any Restricted Subsidiary and (ii) any Capital Stock of the
Company that, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable),
or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole
or in part on or prior to the Stated Maturity of the Notes;
provided, however, that any Capital Stock that would not con-
stitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require the Company to purchase or
redeem such Capital Stock upon the occurrence of a change of
control occurring prior to the final maturity date of the Notes
shall not constitute Disqualified Stock if the change of con-
trol provisions applicable to such Capital Stock are no more
<PAGE>
favorable to the holders of such Capital Stock than the
<PAGE>
provisions of Section 10.15 and such Capital Stock specifically
provides that the Company will not purchase or redeem any such
Capital Stock pursuant to such provisions prior to the Compa-
ny's purchase of the Notes as are required to be purchased pur-
suant to the provisions of Section 10.15.
"Dollars" or "$" means lawful money of the United
States of America.
"Equity Market Capitalization" of any Person means
the aggregate market value of the outstanding Capital Stock
(other than Preferred Stock and excluding any such Capital
Stock held in treasury by such Person) of such Person of a
class that is listed or admitted to unlisted trading privileges
on a United States national securities exchange or included for
trading on the Nasdaq National Market System. For purposes of
this definition the "market value" of any such Capital Stock
shall be the average of the high and low sale prices or, if no
sales are reported, the average of the high and low bid prices,
as reported on the principal national securities exchange on
which such Capital Stock is listed or admitted to trading or,
if such Capital Stock is not listed or admitted to trading on a
national securities exchange, as reported by Nasdaq, for each
trading day in a 20 consecutive trading day period ending not
more than 45 days prior to the date such Person commits to make
an investment in the Capital Stock of the Company.
"Event of Default" shall have the meaning specified
in Section 5.01 hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exchange Notes" has the meaning provided in the
first paragraph of the recitals hereof.
"Existing Credit Facility" means the Base Loan and
Additional Loan Credit Agreement among PAI, its Subsidiaries
named therein and the lenders party thereto, dated on or about
May 11, 1995, as amended and in effect on the Issue Date.
"fair market value" means, with respect to any asset,
the price (after taking into account any liabilities relating
to such asset) which could be negotiated in an arm's-length
free market transaction, for cash, between a willing seller and
a willing buyer, neither of which is under pressure or compul-
<PAGE>
sion to complete the transaction.
<PAGE>
"GAAP" means, as of any date, generally accepted
accounting principles in the United States and not including
any interpretations or regulations that have been proposed but
that have not become effective.
"Global Note" has the meaning provided in Section
2.01.
"guarantee" or "Guarantee" means a guarantee (other
than by endorsement of negotiable instruments for collection in
the ordinary course of business), direct or indirect, in any
manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any
part of any Indebtedness.
"Holder" or "Noteholder" means a Person in whose name
a Note is registered in the Note Register.
"Indebtedness" means, with respect to any Person,
without duplication, and whether or not contingent, (i) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services or which is
evidenced by a note, bond, debenture or similar instrument,
(ii) all Capital Lease Obligations of such Person, (iii) all
obligations of such Person in respect of letters of credit or
bankers' acceptances issued or created for the account of such
Person, (iv) all Interest Rate Agreement Obligations of such
Person, (v) all liabilities secured by any Lien (other than any
Permitted Lien) on any property owned by such Person even if
such Person has not assumed or otherwise become liable for the
payment thereof to the extent of the lesser of the amount of
the debt secured thereby or the value of the property subject
to such Lien (it being understood that if such debt exceeds the
value of such property, the full amount thereof shall be
included in this definition), (vi) all obligations to purchase,
redeem, retire, or otherwise acquire for value any Capital
Stock of such Person, or any warrants, rights or options to
acquire such Capital Stock, now or hereafter outstanding,
(vii) to the extent not included in (vi), all Disqualified
Stock issued by such Person, valued at the greater of its vol-
untary or involuntary maximum fixed repurchase price plus
accrued dividends thereon, and (viii) to the extent not other-
wise included, any guarantee by such Person of any other Per-
son's indebtedness or other obligations described in clauses
(i) through (vii) above. "Indebtedness" of the Company and the
Restricted Subsidiaries (i) shall be determined in accordance
<PAGE>
with GAAP and (ii) shall not include current trade payables
<PAGE>
incurred in the ordinary course of business and payable in
accordance with customary practices, film contracts and non-
interest bearing installment obligations and accrued liabili-
ties incurred in the ordinary course of business which are not
more than 90 days past due. For purposes hereof, the "maximum
fixed repurchase price" of any Disqualified Stock which does
not have a fixed repurchase price shall be calculated in accor-
dance with the terms of such Disqualified Stock as if such Dis-
qualified Stock were purchased on any date on which Indebted-
ness shall be required to be determined pursuant to this Inden-
ture, and if such price is based upon, or measured by the fair
market value of, such Disqualified Stock, such fair market
value is to be determined reasonably and in good faith by the
board of directors of the issuer of such Disqualified Stock.
"Indenture" means this instrument as originally exe-
cuted (including all exhibits and schedules hereto) and as it
may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the
applicable provisions hereof.
"Independent Director" means a director of the Com-
pany other than a director (i) who (apart from being a director
of the Company or any Subsidiary) is an employee, associate or
Affiliate of the Company or a Subsidiary or has held any such
position during the previous five years, or (ii) who is a
director, employee, associate or Affiliate of another party
(other than the Company or any of its Subsidiaries) to the
transaction in question.
"Initial Notes" has the meaning provided in the first
paragraph of the recitals hereof.
"Initial Purchasers" means Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Goldman, Sachs & Co.
"Insolvency or Liquidation Proceeding" means, with
respect to any Person, any liquidation, dissolution or winding
up of such Person, or any bankruptcy, reorganization, insol-
vency, receivership or similar proceeding with respect to such
Person, whether voluntary or involuntary.
"Institutional Accredited Investor" means an institu-
tion that is an "accredited investor" as that term is defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
<PAGE>
"Interest Payment Date" means, when used with respect
to any Note, the Stated Maturity of an installment of interest
on such Note, as set forth in such Note.
"Interest Rate Agreement Obligations" means, with
respect to any Person, the Obligations of such Person under
(i) interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements, and (ii) other agreements
or arrangements designed to protect such Person against fluctu-
ations in interest rates.
"Investment Grade" means BBB- or higher by S&P or
Baa3 or higher by Moody's or the equivalent of such ratings by
S&P or Moody's or in the event S&P or Moody's shall cease rat-
ing the Notes and the Company shall select any other Rating
Agency, the equivalent of such ratings by such other Rating
Agency.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affili-
ates of such Person) in the form of loans, Guarantees, advances
or capital contributions (excluding commission, travel and
similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for con-
sideration of Indebtedness, Capital Stock or other securities
and all other items that are or would be classified as invest-
ments on a balance sheet prepared in accordance with GAAP.
"Issue Date" means the date of first issuance of the
Notes under this Indenture, May 13, 1996.
"Lien" means, with respect to any asset, any mort-
gage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell or give a security interest in any asset and any filing
of, or agreement to give, any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Net Proceeds" means, with respect to any Asset Sale
by any Person, the aggregate cash proceeds received by such
Person and/or its Affiliates in respect of such Asset Sale,
which amount is equal to the excess, if any, of (i) the cash
<PAGE>
received by such Person and/or its Affiliates (including any
<PAGE>
cash payments received by way of deferred payment pursuant to,
or monetization of, a note or installment receivable or other-
wise, but only as and when received) in connection with such
Asset Sale, over (ii) the sum of (a) the amount of any Indebt-
edness that is secured by such asset and which is required to
be repaid by such Person in connection with such Asset Sale,
plus (b) all fees, commissions and other expenses incurred by
such Person in connection with such Asset Sale, plus (c) pro-
vision for taxes, including income taxes, attributable to the
Asset Sale or attributable to required prepayments or repay-
ments of Indebtedness with the proceeds of such Asset Sale,
plus (d) a reasonable reserve for the after-tax cost of any
indemnification payments (fixed or contingent) attributable to
seller's indemnities to purchaser in respect of such Asset Sale
undertaken by the Company or any of the Restricted Subsidiaries
in connection with such Asset Sale, plus (e) if such Person is
a Restricted Subsidiary, any dividends or distributions payable
to holders of minority interests in such Restricted Subsidiary
from the proceeds of such Asset Sale.
"Non-U.S. Person" means a person who is not a U.S.
person, as defined in Regulation S.
"Notes" mean the Initial Notes and the Exchange
Notes.
"Obligations" means any principal, interest, penal-
ties, fees, indemnifications, reimbursement obligations, dam-
ages and other liabilities payable under the documentation gov-
erning any Indebtedness.
"Offering Memorandum" means the offering memorandum
dated as of May 6, 1996 relating to the offering of the Notes.
"Officer" means, with respect to any Person, the
President and Chief Operating Officer, any Vice President, the
Chief Financial Officer and the Treasurer, or any other officer
designated by the Board of Directors serving in a similar
capacity.
"Officers' Certificate" means, with respect to any
Person, a certificate signed by the Chief Operating Officer,
the Chief Financial Officer or a Vice President of such Person,
and by the Secretary or Assistant Secretary of such Person, and
delivered to the Trustee.
<PAGE>
"Operating Cash Flow" means, with respect to any
period, the Consolidated Net Income of the Company and the
Restricted Subsidiaries for such period, plus, without duplica-
tion, (i) extraordinary net losses and net losses realized on
any sale or other disposition of assets during such period, to
the extent such losses were deducted in computing Consolidated
Net Income, plus (ii) provision for taxes based on income or
profits, to the extent such provision for taxes was included in
computing such Consolidated Net Income, and any provision for
taxes utilized in computing the net losses under clause
(i) hereof, plus (iii) Consolidated Interest Expense of the
Company and the Restricted Subsidiaries for such period, plus
(iv) depreciation, amortization and all other non-cash charges
(excluding non-cash charges associated with changes in working
capital and other balance sheet changes in the ordinary course
of business), to the extent such depreciation, amortization and
other non-cash charges were deducted in computing such Consoli-
dated Net Income (including amortization of goodwill and other
intangibles), plus (v) the difference of (A) the amount of cash
payments actually received by the Company under its network
affiliation agreements less (B) the actual amount of revenue
recognized thereunder in accordance with GAAP.
"Opinion of Counsel" means a written opinion of coun-
sel, who may be counsel for the Company, and who shall be
acceptable to the Trustee.
"Outstanding" means, as of the date of determination,
all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been thereto-
fore deposited with the Trustee or any Paying Agent (other
than the Company or any Affiliate thereof) in trust for
the Holders of such Notes; provided, however, that if such
Notes are to be redeemed, notice of such redemption has
been duly and irrevocably given pursuant to this Indenture
or provision therefor satisfactory to the Trustee has been
made;
(iii) Notes with respect to which the Company has
effected defeasance or covenant defeasance as provided in
<PAGE>
Article Four, to the extent provided in Sections 4.02 and
4.03; and
(iv) Notes in exchange for or in lieu of which other
Notes have been authenticated and delivered pursuant to
this Indenture, other than any such Notes in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Notes are held by a bona fide
purchaser in whose hands the Notes are valid obligations
of the Company;
provided, however, that in determining whether the Holders of
the requisite principal amount of Outstanding Notes have given
any request, demand, authorization, direction, notice, consent
or waiver hereunder, Notes owned by the Company or any other
obligor under the Notes or any Affiliate of the Company or such
other obligor shall be disregarded and deemed not to be Out-
standing, except that, in determining whether the Trustee shall
be protected in relying upon any such request, demand, authori-
zation, direction, notice, consent or waiver, only Notes which
the Trustee knows to be so owned shall be so disregarded.
Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the sat-
isfaction of the Trustee the pledgee's right so to act with
respect to such Notes and that the pledgee is not the Company
or any other obligor under the Notes or any Affiliate of the
Company or such other obligor.
"PAI" means Park Acquisitions, Inc., a Delaware cor-
poration, and its successors and assigns.
"Park Communications" means Park Communications,
Inc., a Delaware corporation, and its successors and assigns.
"Paying Agent" means any Person authorized by the
Company to pay the principal, premium, if any, or interest on
any Notes on behalf of the Company.
"Permitted Holders" means (i) each of (A) Gary B.
Knapp, a natural person resident in Lexington, Kentucky on the
Issue Date, (B) Donald R. Tomlin, Jr., a natural person resi-
dent in Columbia, South Carolina on the Issue Date, and (C) PAI
and Park Communications so long as PAI and Park Communications
are controlled by Persons who would otherwise be "Permitted
Holders" hereunder; (ii) the spouse, ancestors, siblings,
descendants (including children or grandchildren by adoption)
<PAGE>
of (A) any of the Persons described in clause (i) or (B) any
<PAGE>
spouse, ancestor, sibling or descendant (including children or
grandchildren by adoption) of any of the Persons described in
clause (i); (iii) in the event of the incompetence or death of
any of the Persons described in clauses (i) and (ii), such Per-
son's estate, executor, administrator, committee or other per-
sonal representative, in each case who at any particular date
shall beneficially own or have the right to acquire, directly
or indirectly, Capital Stock of the Company; (iv) any trusts
created for the benefit of the Persons described in clause (i),
(ii) or (iii) or any trust for the benefit of any such trust;
or (v) any Person controlled by any of the Persons described in
clause (i), (ii), (iii) or (iv). For purposes of this defini-
tion, "control," as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to elect
or appoint not less than a majority of the members of the Board
of Directors of such Person.
"Permitted Investments" means (i) any Investment in
the Company or any Wholly Owned Restricted Subsidiary; (ii) any
Investment in Cash Equivalents; (iii) any Investment in a Per-
son (an "Acquired Person") if, as a result of such Investment,
(a) the Acquired Person becomes a Wholly Owned Restricted Sub-
sidiary, or (b) the Acquired Person either (1) is merged or
consolidated with or into the Company or any Wholly Owned
Restricted Subsidiary and the Company or such Wholly Owned
Restricted Subsidiary is the Surviving Person, or (2) transfers
or conveys all or substantially all of its assets to, or is
liquidated into, the Company or any Wholly Owned Restricted
Subsidiary; (iv) Investments in accounts and notes receivable
acquired in the ordinary course of business; (v) any securities
received in connection with an Asset Sale that complies with
Section 10.14; provided, however, the fair market value of such
securities does not exceed 15% of the aggregate consideration
received at the time of such Asset Sale; (vi) Interest Rate
Agreement Obligations permitted pursuant to Section
10.11(b)(vi); (vii) any other Investments that do not exceed
$10.0 million in amount in the aggregate at any one time out-
standing; (viii) Investments for which the sole consideration
provided is Capital Stock (other than Disqualified Stock) of
the Company, (ix) Investments existing on the Issue Date and
(x) guarantees by Restricted Subsidiaries of the Communications
Senior Credit Facility.
"Permitted Liens" means (i) Liens securing Indebted-
ness of a Person existing at the time that such Person is
merged into or consolidated with the Company or a Restricted
<PAGE>
Subsidiary; provided, however, that such Liens were in
<PAGE>
existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those
of such Person; (ii) Liens on property acquired by the Company
or a Restricted Subsidiary, provided, however, that such Liens
were in existence prior to the contemplation of such acquisi-
tion and do not extend to any other property; (iii) Liens in
favor of the Company or any Restricted Subsidiary; (iv) Liens
incurred, or pledges and deposits in connection with, workers'
compensation, unemployment insurance and other social security
benefits, and leases, appeal bonds and other obligations of
like nature incurred by the Company or any Restricted Subsid-
iary in the ordinary course of business; (v) Liens imposed by
law, including, without limitation, mechanics', carriers',
warehousemen's, materialmen's, suppliers' and vendors' Liens,
incurred by the Company or any Restricted Subsidiary in the
ordinary course of business; (vi) Liens for ad valorem, income
or property taxes or assessments and similar charges which
either are not delinquent or are being contested in good faith
by appropriate proceedings for which the Company has set aside
on its books reserves to the extent required by GAAP;
(vii) Liens arising from Capital Lease Obligations permitted
under this Indenture; (viii) Liens securing any Indebtedness
(including Purchase Money Indebtedness) of the Company or the
Restricted Subsidiaries (other than any Indebtedness which is
expressly subordinated to any other Indebtedness) permitted
under this Indenture; provided, however, that such Liens are
granted not later than 360 days after the incurrence of such
Indebtedness; (ix) Liens in respect of Interest Rate Agreement
Obligations permitted under this Indenture; (x) easements, res-
ervations, licenses, rights-of-way, zoning restrictions and
other similar charges or encumbrances in respect of real prop-
erty not interfering in any material respect with the ordinary
conduct of the business of the Company or any of the Restricted
Subsidiaries; (xi) Liens securing reimbursement obligations
with respect to commercial letters of credit which encumber
documents and other property relating to such letters of credit
and products and proceeds thereof; (xii) Liens existing on the
Issue Date; and (xiii) any Lien to secure the refinancing of
any Indebtedness described in the foregoing clauses; provided,
however, that to the extent any such clause limits the amounts
secured or the assets subject to such Liens, no refinancing
shall increase the assets subject to such Liens or the amounts
secured thereby beyond the assets or amounts set forth in such
clause.
"Person" means any individual, corporation, partner-
<PAGE>
ship, joint venture, association, joint-stock company, limited
<PAGE>
liability company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Note" means, with respect to any par-
ticular Note, every previous Note evidencing all or a portion
of the same debt as that evidenced by such particular Note;
and, for the purposes of this definition, any Note authenti-
cated and delivered under Section 3.06 hereof in exchange for a
mutilated Note or in lieu of a lost, destroyed or stolen Note
shall be deemed to evidence the same debt as the mutilated,
lost, destroyed or stolen Note.
"Preferred Stock," as applied to the Capital Stock of
any Person, means Capital Stock of any class or classes (how-
ever designated) which is preferred as to the payment of divi-
dends or distributions, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of
such Person, over Capital Stock of any other class of such
Person.
"Private Placement Legend" means the legend initially
set forth on the Notes in the form set forth in Section 2.05.
"Public Equity Offering" means an underwritten public
offering of Capital Stock (other than Disqualified Stock) of
the Company, Park Communications or PAI pursuant to an effec-
tive registration statement filed under the Securities Act;
provided, however, that with respect to any such public equity
offering by Park Communications or PAI, cash proceeds from such
public equity offering equal to not less than 111.75% of the
aggregate principal amount of Notes to be redeemed are received
by the Company as a capital contribution immediately prior to
such redemption.
"Purchase Money Indebtedness" means Indebtedness of
the Company and the Restricted Subsidiaries incurred in connec-
tion with the purchase of property or assets for the business
of the Company and the Restricted Subsidiaries.
"Qualified Institutional Buyer" or "QIB" shall have
the meaning specified in Rule 144A under the Securities Act.
"Qualified Issuer" means (A) any lender that is a
party to the Communications Senior Credit Facility; and (B) any
commercial bank (i) which has capital and surplus in excess of
$80,000,000, and (ii) the outstanding short-term debt securi-
<PAGE>
ties of which are rated at least A-2 by Standard & Poor's
<PAGE>
Corporation or at least P-2 by Moody's Investors Service, Inc.,
or carry an equivalent rating by a nationally recognized rating
agency if both the two named rating agencies cease publishing
ratings of investments.
"Radio Station Assets" means (i) the business and
assets of each of the following Subsidiaries of the Company:
Park Broadcasting of Florida, Inc.; Park Radio of Greater New
York, Inc.; Park Broadcasting of Iowa, Inc.; Park Radio of
Iowa, Inc.; Roy H. Park Broadcasting of the Midwest, Inc.;
Roy H. Park Broadcasting of Minnesota, Inc.; Roy H. Park Broad-
casting of the Lake Country, Inc.; Roy H. Park Broadcasting of
Oregon, Inc.; Contemporary FM, Inc.; Roy H. Park Radio, Inc.;
Roy H. Park FM Broadcasting of East Carolina, Inc.; Roy H. Park
Broadcasting of Syracuse, Inc.; and Roy H. Park Broadcasting of
Washington, Inc. and (ii) the business and assets of the fol-
lowing Subsidiaries of the Company which are related to the
operation of the radio broadcasting business of such Subsidiar-
ies: Roy H. Park Broadcasting of Tennessee, Inc. and Roy H.
Park Broadcasting of Virginia, Inc.
"Rating Agency" means any of (i) S&P, (ii) Moody's or
(iii) if S&P or Moody's or both shall not make a rating of the
Notes publicly available, a security rating agency or agencies,
as the case may be, nationally recognized in the United States
and selected by the Company which shall be substituted for S&P
or Moody's or both, as the case may be.
"Rating Category" means (i) with respect to S&P, any
of the following categories: AAA, AA, A, BBB, BB, B, CCC, CC,
C and D (or equivalent successor categories); (ii) with respect
to Moody's, any of the following categories: Aaa, Aa, Baa, Ba,
B, Caa, Ca, C and D (or equivalent successor categories); and
(iii) the equivalent of any such category of S&P or Moody's
used by another Rating Agency. In determining whether the rat-
ing of the Notes has decreased by one or more gradations, gra-
dations within Rating Categories (+ and - for S&P; 1, 2 and 3
for Moody's; or the equivalent gradations for another Rating
Agency) shall be taken into account (e.g., with respect to S&P,
a decline in rating from BB+ to BB, as well as from BB- to B+,
will constitute a decrease of one gradation).
"Rating Decline" means the occurrence on, or within
60 days after, the date of public notice of the occurrence of a
Change of Control or of the intention of the Company or Persons
controlling the Company to effect a Change of Control (which
<PAGE>
period shall be extended so long as the rating of the Notes is
<PAGE>
under publicly announced consideration for possible downgrade
by any of the Rating Agencies) of the following: (i) if the
Notes are rated by either Rating Agency as Investment Grade
immediately prior to the beginning of such period, the rating
of the Notes by both Rating Agencies shall be below Investment
Grade; or (ii) if the Notes are rated below Investment Grade by
both Rating Agencies immediately prior to the beginning of such
period, the rating of the Notes by either Rating Agency (or
both) shall be decreased by one or more gradations (including
gradations within Rating Categories as well as between Rating
Categories).
"Redemption Date" means, with respect to any Note to
be redeemed, any date fixed for such redemption by or pursuant
to this Indenture and the terms of the Notes.
"Redemption Price" means, with respect to any Note to
be redeemed, the price at which it is to be redeemed pursuant
to this Indenture and the terms of the Notes.
"Registration Rights Agreement" means the Registra-
tion Rights Agreement dated on or about the Issue Date between
the Company and the Initial Purchasers for the benefit of them-
selves and the Holders as the same may be amended from time to
time in accordance with the terms thereof.
"Regular Record Date" means the Regular Record Date
specified in the Notes.
"Regulation S" means Regulation S under the Securi-
ties Act.
"Responsible Officer" means, with respect to the
Trustee, the chairman or vice chairman of the board of direc-
tors, the chairman or vice chairman of the executive committee
of the board of directors, the president, any vice president,
the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller and
any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by
any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other offi-
cer of the Trustee to whom any corporate trust matter is
referred because of his or her knowledge of and familiarity
with the particular subject.
<PAGE>
"Restricted Investment" means any Investment other
than a Permitted Investment.
"Restricted Payment" means (i) any dividend or other
distribution declared or paid on any Capital Stock of the Com-
pany or any of the Restricted Subsidiaries (other than divi-
dends or distributions payable solely in Capital Stock (other
than Disqualified Stock) of the Company or such Restricted Sub-
sidiary or dividends or distributions payable to the Company or
any Wholly Owned Restricted Subsidiary); (ii) any payment to
purchase, redeem, defease or otherwise acquire or retire for
value any Capital Stock of the Company or any Restricted Sub-
sidiary or other Affiliate of the Company (other than any Capi-
tal Stock owned by the Company or any Wholly Owned Restricted
Subsidiary); (iii) any payment to purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is
subordinated in right of payment to the Notes other than a pur-
chase, redemption, defeasance or other acquisition or retire-
ment for value that is paid for with the proceeds of Refinanc-
ing Indebtedness that is permitted under Section 10.11;
(iv) any Restricted Investment; and (v) any payment of princi-
pal, interest or any other obligation under the Communications
Senior Credit Facility by the Company or any Restricted Subsid-
iary. Notwithstanding anything in this Indenture to the con-
trary, no dividend or other payment to Park Communications of
any amount (whether in cash or property) from the operations
of, or from the proceeds of the sale, lease, conveyance or
other disposition of all or any portion of the Radio Station
Assets (other than any dividend of the proceeds of any Radio
Station Assets to the extent received in repayment of any Radio
Station Note) shall be considered a Restricted Payment.
"Restricted Security" has the meaning assigned to
such term in Rule 144(a)(3) under the Securities Act; provided,
however, that the Trustee shall be entitled to request and con-
clusively rely on an Opinion of Counsel with respect to whether
any Note constitutes a Restricted Security.
"Restricted Subsidiary" means each direct or indirect
Subsidiary of the Company other than an Unrestricted
Subsidiary.
"Revolving Credit Facility" means any credit facil-
ity, entered into by the Company, the Subsidiaries of the Com-
pany named therein and the lenders named therein, as the same
may be amended, modified, renewed, refunded, replaced or refi-
<PAGE>
nanced (collectively, "refinanced") from time to time,
<PAGE>
including (i) any related notes, letters of credit, guarantees,
collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified or
refinanced from time to time, and (ii) any notes, guarantees,
collateral documents, instruments and agreements executed in
connection with any such amendment, modification or
refinancing.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as
amended.
"Special Record Date" means, with respect to the pay-
ment of any Defaulted Interest, a date fixed by the Trustee
pursuant to Section 3.07 hereof.
"Stated Maturity" means, when used with respect to
any Note or any installment of interest thereon, the date spec-
ified in such Note as the fixed date on which any principal of
such Note or such installment of interest is due and payable,
and when used with respect to any other Indebtedness, means the
date specified in the instrument governing such Indebtedness as
the fixed date on which the principal of such Indebtedness, or
any installment of interest thereon, is due and payable.
"Strategic Equity Investment" means the issuance and
sale of Capital Stock (other than Disqualified Stock) of the
Company, Park Communications or PAI to a Person substantially
engaged in the television broadcasting business or any other
business reasonably related to the Company's business that has
an Equity Market Capitalization of at least $350.0 million;
provided, however, that with respect to any such issuance by
Park Communications or PAI, cash proceeds from such issuance
equal to not less than 111.75% of the aggregate principal
amount of Notes to be redeemed are received by the Company as a
capital contribution immediately prior to any such redemption.
"Subsidiary" of a Person means (i) any corporation
more than 50% of the outstanding voting power of the Voting
Stock of which is owned or controlled, directly or indirectly,
by such Person or by one or more other Subsidiaries of such
Person, or by such Person and one or more other Subsidiaries
thereof, or (ii) any limited partnership of which such Person
or any Subsidiary of such Person is a general partner, or
(iii) any other Person (other than a corporation or limited
<PAGE>
partnership) in which such Person, or one or more other
<PAGE>
Subsidiaries of such Person, or such Person and one or more
other Subsidiaries thereof, directly or indirectly, has more
than 50% of the outstanding partnership or similar interests or
has the power, by contract or otherwise, to direct or cause the
direction of the policies, management and affairs thereof.
"Surviving Person" means, with respect to any Person
involved in or that makes any Disposition, the Person formed by
or surviving such Disposition or the Person to which such Dis-
position is made.
"Tax Sharing Agreement" means the Intercorporate Tax
Sharing Agreement among PAI and its Subsidiaries dated on or
about (but not after) the Issue Date, as amended or supple-
mented from time to time in accordance herewith.
"Television Stations" means (i) the business and
assets of each of the following Subsidiaries of the Company:
Birmingham Television Corporation, Inc.; Roy H. Park Broadcast-
ing, Inc.; Park Broadcasting of Kentucky, Inc.; Park Broadcast-
ing of Louisiana, Inc.; Park Broadcasting of Roanoke, Inc.; Roy
H. Park Broadcasting of Utica-Rome, Inc.; Roy H. Park Broad-
casting of the Tri-Cities, Inc.; Park of Montgomery I, Inc.;
and Park of Montgomery II, Inc. and (ii) the business and
assets of the following Subsidiaries of the Company which are
related to the operation of the television broadcasting busi-
ness of such Subsidiaries: Roy H. Park Broadcasting of Tennes-
see, Inc. and Roy H. Park Broadcasting of Virginia, Inc.
"Treasury Rate" means the yield to maturity at the
time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15(519) which has become
publicly available at least two business days prior to the date
fixed for redemption (or, if such Statistical Release is no
longer published, any publicly available source of similar mar-
ket data)) most nearly equal to the then remaining term to
May 15, 2001; provided, however, that if the then remaining
term to May 15, 2001 is not equal to the constant maturity of a
United States Treasury security for which a weekly average
yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury secu-
rities for which such yields are given, except that if the then
remaining term to May 15, 2001 is less than one year, the
weekly average yield on actually traded United States Treasury
<PAGE>
securities adjusted to a constant maturity of one year shall be
used.
"Trust Indenture Act" or "TIA" means the Trust Inden-
ture Act of 1939, as amended, and as in effect from time to
time.
"Trustee" means the Person named as the "Trustee" in
the first paragraph of this Indenture, until a successor Trus-
tee shall have become such pursuant to the applicable provi-
sions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"Unrestricted Subsidiary" means (A) as of the Issue
Date, each Subsidiary listed on Schedule A hereto and (B) any
other Subsidiary of the Company designated as an Unrestricted
Subsidiary by the Board of Directors of the Company; provided,
however, that for purposes of this clause (B), (i) the Subsid-
iary to be so designated (x) (I) has total assets with a fair
market value at the time of such designation of $1,000 or less
or (II) is being so designated prior to the acquisition by the
Company of such Subsidiary by merger or consolidation with an
Unrestricted Subsidiary, and (y) does not own any Capital Stock
of the Company or any Restricted Subsidiary, (ii) if such Sub-
sidiary is acquired by the Company, such Subsidiary is desig-
nated as an Unrestricted Subsidiary prior to the consummation
of such acquisition, (iii) no Default or Event of Default shall
have occurred and be continuing, (iv) no portion of any Indebt-
edness or any other Obligation (contingent or otherwise) of
such Subsidiary (a) is guaranteed by, or is otherwise the sub-
ject of credit support provided by, the Company or any of the
Restricted Subsidiaries, (b) is recourse to or obligates the
Company or any of the Restricted Subsidiaries in any way, or
(c) subjects any property or asset of the Company or any of the
Restricted Subsidiaries directly or indirectly, contingently or
otherwise, to the satisfaction of such Indebtedness or other
obligation, (v) neither the Company nor any of the Restricted
Subsidiaries has any contract, agreement, arrangement or under-
standing with such Subsidiary other than on terms as favorable
to the Company or such Restricted Subsidiary as those that
might be obtained at the time from Persons that are not Affili-
ates of the Company, and (vi) neither the Company nor any of
the Restricted Subsidiaries has any obligations (a) to sub-
scribe for additional shares of Capital Stock of such Subsid-
iary, or (b) to maintain or preserve such Subsidiary's finan-
cial condition or to cause such Subsidiary to achieve certain
<PAGE>
levels of operating results. Any such designation by the
<PAGE>
Company's Board of Directors shall be evidenced to the Trustee
by filing with the Trustee a certificate stating that such
designation complies with the foregoing conditions. The Compa-
ny's Board of Directors may designate any Unrestricted Subsid-
iary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation, no Default
or Event of Default shall have occurred and be continuing,
including, without limitation, under Sections 10.11 and 10.16,
assuming the incurrence by the Company and the Restricted Sub-
sidiaries at the time of such designation of all existing
Indebtedness and Liens of the Unrestricted Subsidiary to be so
designated as a Restricted Subsidiary. Notwithstanding the
foregoing or any other provision of this Indenture to the con-
trary, no assets of the Television Stations may be held at any
time by an Unrestricted Subsidiary, other than assets trans-
ferred to Unrestricted Subsidiaries that in the aggregate are
not material to such broadcasting operations. In the event of
any Disposition involving the Company in which the Company is
not the Surviving Person, the Board of Directors of the Surviv-
ing Person may (x) prior to such Disposition, designate any of
its Subsidiaries, and any of the Company's Subsidiaries being
acquired pursuant to such Disposition that are not Restricted
Subsidiaries, as Unrestricted Subsidiaries, and (y) after such
Disposition, designate any of its direct or indirect Subsidiar-
ies as an Unrestricted Subsidiary under the same conditions and
in the same manner as the Company under the terms of this
Indenture.
"U.S. Government Obligations" means securities that
are (i) direct obligations of the United States of America for
the timely payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or super-
vised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is uncon-
ditionally guaranteed as a full faith and credit obligation by
the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian
with respect to any such U.S. Government Obligation or a spe-
cific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of
the holder of such depository receipt; provided, however, that
(except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custo-
<PAGE>
dian in respect of the U.S. Government Obligation or the
<PAGE>
specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
"Voting Stock" of a Person means Capital Stock of
such Person of the class or classes pursuant to which the hold-
ers thereof have the general voting power under ordinary cir-
cumstances to elect at least a majority of the board of direc-
tors, managers or trustees of such Person (irrespective of
whether or not at the time the stock of any other class or
classes shall have or might have voting power by reason of the
happening of any contingency).
"Weighted Average Life to Maturity" means, when
applied to any Indebtedness at any date, the number of years
obtained by dividing (i) the sum of the products obtained by
multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other required scheduled pay-
ment of principal, including payment at final maturity, in
respect thereof, with (b) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (ii) the then outstanding aggre-
gate principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any
Restricted Subsidiary with respect to which all of the out-
standing voting securities (other than directors' qualifying
shares) are owned, directly or indirectly, by the Company or a
Surviving Person of any Disposition involving the Company, as
the case may be.
Section 1.02. Other Definitions.
Defined in
Term Section
"Act" 1.05
"Affiliate Transaction" 10.13
"Agent Members" 2.04
"Asset Sale Offer" 10.14
"Asset Sale Offer Price" 10.14
"Asset Sale Offer Trigger Date" 10.14
"Authenticating Agent" 2.02
"Change of Control Date" 10.15
"Change of Control Offer" 10.15
"Change of Control Purchase Date" 10.15
"Change of Control Purchase Price" 10.15
<PAGE>
"covenant defeasance" 4.03
<PAGE>
"Defaulted Interest" 3.07
"defeasance" 4.02
"Defeased Notes" 4.01
"Excess Proceeds" 10.14
"Global Note" 2.01
"incur" 10.11(a)
"Note Register" 3.05
"Note Registrar" 3.05
"Notice of Default" 5.01
"Offshore Physical Note" 2.01
"Optional Redemption Price" 11.01
"Other Obligations" 1.20
"Permitted Indebtedness" 10.11
"Permitted Payments" 10.12
"Physical Notes" 2.01
"Radio Station Note" 10.14
"Required Filing Dates" 10.09
"U.S. Physical Notes" 2.01
Section 1.03. Rules of Construction.
For all purposes of this Indenture, except as other-
wise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article have the mean-
ings assigned to them in this Article, and include the
plural as well as the singular;
(b) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance
with GAAP;
(d) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision;
(e) all references to "$" or "dollars" shall refer
to the lawful currency of the United States of America;
<PAGE>
(f) the words "include," "included" and "including"
as used herein shall be deemed in each case to be followed
by the phrase "without limitation"; and
(g) any reference to a Section or Article refers to
such Section or Article of this Indenture.
Section 1.04. Form of Documents Delivered to
Trustee.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee (a) an Officers' Certificate in
form and substance reasonably satisfactory to the Trustee stat-
ing that, in the opinion of the signers, all conditions prece-
dent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (b) an Opinion of
Counsel in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of counsel, all such con-
ditions have been complied with and (c) where applicable, a
certificate or opinion by an accountant that complies with Sec-
tion 314(c) of the Trust Indenture Act.
Each certificate and Opinion of Counsel with respect
to compliance with a condition or covenant provided for in this
Indenture shall include:
(a) a statement that the Person making such certifi-
cate or Opinion of Counsel has read such covenant or
condition;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
contained in such certificate or Opinion of Counsel are
based;
(c) a statement that, in the opinion of such Person,
he has made such examination or investigation as is neces-
sary to enable him to express an informed opinion as to
whether or not such covenant or condition has been com-
plied with; and
(d) a statement as to whether or not, in the opinion
of such Person, such condition or covenant has been com-
plied with.
<PAGE>
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Per-
son, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Officer of the Com-
pany may be based, insofar as it relates to legal matters, upon
a certificate or opinion of, or representations by, counsel,
unless such officer knows, or in the exercise of reasonable
care should know, that the certificate or opinion or represen-
tations with respect to the matters upon which his certificate
or opinion is based are erroneous. Any such certificate or
opinion of counsel may be based, insofar as it relates to fac-
tual matters, upon a certificate or opinion of, or representa-
tions by, an officer or officers of the Company stating that
the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated, with proper identifi-
cation of each matter covered therein, and form one instrument.
Section 1.05. Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Inden-
ture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar
tenor signed by such Holders in Person or by an agent duly
appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instru-
ment or instruments are delivered to the Trustee and, where it
is hereby expressly required, to the Company. Such instrument
or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of exe-
<PAGE>
cution (as provided below in subsection (b) of this Section
<PAGE>
1.05) of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Inden-
ture and (subject to Section 6.01 hereof) conclusive in favor
of the Trustee and the Company, if made in the manner provided
in this Section.
(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved in any reason-
able manner which the Trustee deems sufficient including, with-
out limitation, by verification from a notary public or signa-
ture guarantee.
(c) The ownership of Notes shall be proved by the
Note Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other action by the Holder of any
Note shall bind every future Holder of the same Note or the
Holder of every Note issued upon the transfer thereof or in
exchange therefor or in lieu thereof to the same extent as the
original Holder, in respect of anything done, suffered or omit-
ted to be done by the Trustee, any Paying Agent or the Company
in reliance thereon, whether or not notation of such action is
made upon such Note.
Section 1.06. Notices, etc., to the Trustee and the
Company.
Any request, demand, authorization, direction,
notice, consent, waiver or Act of Holders or other document
provided or permitted by this Indenture to be made upon, given
or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company
shall be sufficient for every purpose hereunder if made,
given, furnished or filed, in writing, to or with the
Trustee at One State Street, New York, New York 10004 or
at any other address previously furnished in writing to
the Holders and the Company by the Trustee or at the
office of any drop agent specified to the Holders and the
Company from time to time; and
(b) the Company by the Trustee or by any Holder
shall be sufficient for every purpose (except as otherwise
expressly provided herein) hereunder if in writing and
mailed, first-class postage prepaid, to the Company, c/o
<PAGE>
Park Broadcasting, Inc., addressed to it at 1700 Vine
<PAGE>
Center Office Tower, 333 West Vine Street, Lexington, Ken-
tucky 40507, Attention: Wright M. Thomas, or at any other
address previously furnished in writing to the Trustee by
the Company.
Section 1.07. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders
of any event, such notice shall be sufficiently given (unless
otherwise expressly provided herein) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at the address of such Holder as it appears in the Note
Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice.
In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the suffi-
ciency of such notice with respect to other Holders. Any
notice when mailed to a Holder in the aforesaid manner shall be
conclusively deemed to have been received by such Holder
whether or not actually received by such Holder. Where this
Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall
be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail
service or by reason of any other cause, it shall be impracti-
cable to mail notice of any event as required by any provision
of this Indenture, then any method of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 1.08. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or con-
flicts with any provision of the Trust Indenture Act or another
provision which is required or deemed to be included in this
Indenture by any of the provisions of the Trust Indenture Act,
such provision or requirement of the Trust Indenture Act shall
control.
If any provision of this Indenture modifies or
<PAGE>
excludes any provision of the Trust Indenture Act that may be
<PAGE>
so modified or excluded, such provision of the Trust Indenture
Act shall be deemed to apply to this Indenture as so modified
or excluded, as the case may be.
Section 1.09. Effect of Headings and Table of Con-
tents.
The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company and Trustee shall bind their respective successors and
assigns, whether so expressed or not.
Section 1.11. Separability Clause.
In case any provision in this Indenture or in the
Notes 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.
Section 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Notes issued pur-
suant hereto, express or implied, shall give to any Person
(other than the parties hereto and their successors hereunder,
any Paying Agent and the Holders) any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 1.13. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF). THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN
RESPECT OF THE NOTES AND THE HOLDERS AGREE TO SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS INDENTURE OR THE NOTES.
<PAGE>
Section 1.14. No Recourse Against Others.
No director, officer, employee or stockholder of the
Company, as such, shall have any liability for any obligations
of the Company under the Notes or this Indenture. Each holder
of Notes by accepting a Note waives and releases all such lia-
bility, and such waiver and release is part of the considera-
tion for the issuance of the Notes.
Section 1.15. Independence of Covenants.
All covenants and agreements in this Indenture shall
be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact
that it would be permitted by an exception to, or be otherwise
within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or condition
exists.
Section 1.16. Exhibits and Schedules.
All exhibits and schedules attached hereto are by
this reference made a part hereof with the same effect as if
herein set forth in full.
Section 1.17. Counterparts.
This Indenture may be executed in any number of coun-
terparts, each of which shall be an original; but such counter-
parts shall together constitute but one and the same
instrument.
Section 1.18. Duplicate Originals.
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
Section 1.19. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the
TIA, the provision is incorporated by reference in, and made a
part of, this Indenture. Any terms incorporated by reference
in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them therein.
<PAGE>
ARTICLE TWO
SECURITY FORMS
Section 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of
authentication relating thereto shall be substantially in the
form of Exhibit A hereto. The Exchange Notes and the Trustee's
certificate of authentication relating thereto shall be sub-
stantially in the form of Exhibit B hereto. The Notes may have
notations, legends or endorsements required by law, stock
exchange rule or depository rule or usage. The Company and the
Trustee shall approve the form of the Notes and any notation,
legend or endorsement on them. Each Note shall be dated the
date of its issuance and shall show the date of its
authentication.
Notes issued with original discount shall bear the
legend set forth on Exhibit E hereto.
The terms and provisions contained in the Notes,
annexed hereto as Exhibits A and B, shall constitute, and are
hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execu-
tion and delivery of this Indenture, expressly agree to such
terms and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall
be issued initially in the form of one or more permanent global
Notes in registered form, substantially in the form set forth
in Exhibit A (the "Global Note"), deposited with the Trustee,
as custodian for the depository thereof, duly executed by the
Company and authenticated by the Trustee as hereinafter pro-
vided and shall bear the legend set forth in Section 2.03
hereof. The aggregate principal amount of the Global Note may
from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depository,
as hereinafter provided.
Notes offered and sold in offshore transactions in
reliance on Regulation S shall be issued in the form of perma-
nent certificated Notes in registered form in substantially the
form set forth in Exhibit A (the "Offshore Physical Notes").
Notes offered and sold in reliance on any other exemption from
registration under the Securities Act other than as described
<PAGE>
in the preceding paragraph shall be issued, and Notes offered
<PAGE>
and sold in reliance on Rule 144A may be issued, in the form of
permanent certificated Notes in registered form, in substan-
tially the form set forth in Exhibit A (the "U.S. Physical
Notes"). The Offshore Physical Notes and the U.S. Physical
Notes are sometimes collectively herein referred to as the
"Physical Notes." Physical Notes shall initially be registered
in the name of the Depository or a nominee of such Depository
and be delivered to the Trustee as custodian for such Deposi-
tory. Beneficial owners of Physical Notes, however, may
request registration of such Physical Notes in their names or
the names of their nominees.
Section 2.02. Execution and Authentication; Aggre-
gate Principal Amount.
The Notes shall be executed on behalf of the Company
by an Officer of the Company. The signature of any Officer on
the Notes may be manual or facsimile.
If an Officer or Assistant Secretary whose signature
is on a Note was an Officer or Assistant Secretary at the time
of such execution but no longer holds that office or position
at the time the Trustee authenticates the Note, the Note shall
nevertheless be valid.
A Note shall not be valid until an authorized signa-
tory of the Trustee manually signs the certificate of authenti-
cation on the Note. The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture.
The Trustee shall authenticate (i) Initial Notes for
original issue in the aggregate principal amount not to exceed
$241,000,000 and (ii) Exchange Notes from time to time for
issue only in exchange for a like principal amount of Initial
Notes, in each case upon a written order of the Company in the
form of an Officers' Certificate. The Officers' Certificate
shall specify the amount of Notes to be authenticated and the
date on which the Notes are to be authenticated, whether the
Notes are to be Initial Notes or Exchange Notes and whether the
Notes are to be issued as Physical Notes or a Global Note or
such other information as the Trustee may reasonably request.
The aggregate principal amount of Notes outstanding at any time
may not exceed $241,000,000, except as provided in Section 3.06
hereof.
The Trustee may appoint an authenticating agent (the
<PAGE>
"Authenticating Agent") reasonably acceptable to the Company to
<PAGE>
authenticate Notes. Unless otherwise provided in the appoint-
ment, an Authenticating Agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such
Authenticating Agent. An Authenticating Agent has the same
rights as an Agent to deal with the Company or with any Affili-
ate of the Company.
Section 2.03. Restrictive Legends.
Each Global Note and Physical Note that constitutes a
Restricted Security shall bear the following legend (the "Pri-
vate Placement Legend") on the face thereof until the third
anniversary of the Issue Date, unless otherwise agreed by the
Company and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT
AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALI-
FIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITU-
TIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURI-
TIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY
IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT
WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE
TRANSFER THIS SECURITY, EXCEPT (A) TO THE COMPANY
OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COM-
PLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE TRUSTEE OR TRANSFER
AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESEN-
TATIONS AND AGREEMENTS RELATING TO THE RESTRIC-
TIONS ON TRANSFER OF THIS SECURITY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE OR
REGISTRAR), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
<PAGE>
OF REGULATION S UNDER THE SECURITIES ACT,
<PAGE>
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGIS-
TRATION STATEMENT UNDER THE SECURITIES ACT AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUB-
STANTIALLY TO THE EFFECT OF THIS LEGEND. IN CON-
NECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN
THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE
SECURITY, IF THE PROPOSED TRANSFEREE IS AN INSTI-
TUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND
THE COMPANY SUCH CERTIFICATIONS, WRITTEN LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANS-
FER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRA-
TION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Note shall also bear the following legend
on the face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN
PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECU-
RITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR
BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY THE
DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY
OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRE-
SENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHO-
RIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGIS-
TERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
<PAGE>
HEREIN.
<PAGE>
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMI-
NEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANS-
FERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 2.05 OF THE INDENTURE.
Section 2.04. Book-Entry Provisions for Global
Security.
(1) The Global Note initially shall (i) be regis-
tered in the name of the Depository or the nominee of such
Depository, (ii) be delivered to the Trustee as custodian for
such Depository and (iii) bear legends as set forth in Section
2.15.
Members of, or participants in, the Depository
("Agent Members") shall have no rights under this Indenture
with respect to any Global Note held on their behalf by the
Depository, or the Trustee as its custodian, or under the Glo-
bal Note, and the Depository may be treated by the Company, the
Trustee and any Agent of the Company or the Trustee as the
absolute owner of the Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any Agent of the Company or the Trustee
from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between
the Depository and its Agent Members, the operation of custom-
ary practices governing the exercise of the rights of a holder
of any Note.
(2) Transfers of the Global Note shall be limited to
transfers in whole, but not in part, to the Depository, its
successors or their respective nominees. Interests of benefi-
cial owners in the Global Note may be transferred or exchanged
for Physical Notes in accordance with the rules and procedures
of the Depository and the provisions of Section 2.05 hereof.
In addition, Physical Notes shall be transferred to all benefi-
cial owners in exchange for their beneficial interests in the
Global Note if (i) the Depository notifies the Company that it
is unwilling or unable to continue as Depository for the Global
Note and a successor depositary is not appointed by the Company
within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a
written request from the Depository to issue Physical Notes.
<PAGE>
(3) In connection with any transfer or exchange of a
portion of the beneficial interest in the Global Note to bene-
ficial owners pursuant to paragraph (2), the Registrar shall
(if one or more Physical Notes are to be issued) reflect on its
books and records the date and a decrease in the principal
amount of the Global Note in an amount equal to the principal
amount of the beneficial interest in the Global Note to be
transferred, and the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Physical Notes of
like tenor and amount.
(4) In connection with the transfer of the entire
Global Note to beneficial owners pursuant to paragraph (2), the
Global Note shall be deemed to be surrendered to the Trustee
for cancellation, and the Company shall execute, and the Trus-
tee shall authenticate and deliver to each beneficial owner
identified by the Depository in exchange for its beneficial
interest in the Global Note, an equal aggregate principal
amount of Physical Notes of authorized denominations.
(5) Any Physical Note constituting a Restricted
Security delivered in exchange for an interest in the Global
Note pursuant to paragraph (2) or (3) shall, except as other-
wise provided by paragraphs (1)(a)(x) and (3) of Section 2.05
hereof, bear the legend regarding transfer restrictions appli-
cable to the Physical Notes set forth in Section 2.03 hereof.
(6) The Holder of the Global Note may grant proxies
and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this Inden-
ture or the Notes.
Section 2.05. Special Transfer Provisions.
(1) Transfers to Non-QIB Institutional Accredited
Investors and Non-U.S. Persons. The following provisions shall
apply with respect to the registration of any proposed transfer
of a Note constituting a Restricted Security to any Institu-
tional Accredited Investor which is not a QIB or to any Non-
U.S. Person:
(a) the Registrar shall register the transfer of any
Note constituting a Restricted Security, whether or not
such Note bears the Private Placement Legend, if (x) the
requested transfer is after the third anniversary of the
<PAGE>
Issue Date or (y) (A) in the case of a transfer to an
<PAGE>
Institutional Accredited Investor which is not a QIB
(excluding Non-U.S. Persons), the proposed transferee has
delivered to the Registrar a certificate substantially in
the form of Exhibit C hereto or (B) in the case of a
transfer to a Non-U.S. Person, the proposed transferor has
delivered to the Registrar a certificate substantially in
the form of Exhibit D hereto; and
(b) if the proposed transferor is an Agent Member
holding a beneficial interest in the Global Note, upon
receipt by the Registrar of (x) the certificate, if any,
required by paragraph (a) above and (y) written instruc-
tions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (i) the Registrar shall reflect on its books and
records the date and (if the transfer does not involve a trans-
fer of outstanding Physical Notes) a decrease in the principal
amount of the Global Note in an amount equal to the principal
amount of the beneficial interest in the Global Note to be
transferred, and (ii) the Company shall execute and the Trustee
shall authenticate and deliver one or more Physical Notes of
like tenor and amount.
(2) Transfers to QIBs. The following provisions
shall apply with respect to the registration of any proposed
transfer of a Note constituting a Restricted Security to a QIB
(excluding transfers to Non-U.S. Persons):
(a) the Registrar shall register the transfer if
such transfer is being made by a proposed transferor who
has checked the box provided for on the form of Note stat-
ing, or has otherwise advised the Company and the Regis-
trar in writing, that the sale has been made in compliance
with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Note
stating, or has otherwise advised the Company and the Reg-
istrar in writing, that it is purchasing the Note for its
own account or an account with respect to which it exer-
cises sole investment discretion and that it and any such
account is a QIB within the meaning of Rule 144A, and is
aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pur-
suant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is
<PAGE>
relying upon its foregoing representations in order to
<PAGE>
claim the exemption from registration provided by Rule
144A; and
(b) if the proposed transferee is an Agent Member,
and the Notes to be transferred consist of Physical Notes
which after transfer are to be evidenced by an interest in
the Global Note, upon receipt by the Registrar of written
instructions given in accordance with the Depository's and
the Registrar's procedures, the Registrar shall reflect on
its books and records the date and an increase in the
principal amount of the Global Note in an amount equal to
the principal amount of the Physical Notes to be trans-
ferred, and the Trustee shall cancel the Physical Notes so
transferred.
(3) Private Placement Legend. Upon the transfer,
exchange or replacement of Notes not bearing the Private Place-
ment Legend, the Registrar shall deliver Notes that do not bear
the Private Placement Legend. Upon the transfer, exchange or
replacement of Notes bearing the Private Placement Legend, the
Registrar shall deliver only Notes that bear the Private Place-
ment Legend unless (i) the requested transfer is after the
third anniversary of the Issue Date, or (ii) there is delivered
to the Registrar an Opinion of Counsel reasonably satisfactory
to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securi-
ties Act.
(4) General. By its acceptance of any Note bearing
the Private Placement Legend, each Holder of such a Note
acknowledges the restrictions on transfer of such Note set
forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters,
notices and other written communications received pursuant to
Section 2.04 hereof or this Section 2.05. The Company shall
have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time
during the Registrar's normal business hours upon the giving of
reasonable written notice to the Registrar.
<PAGE>
ARTICLE THREE
THE NOTES
Section 3.01. Title and Terms.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to
$241,000,000, except as provided in the next sentence hereof
and except for Notes authenticated and delivered upon registra-
tion of transfer of, or in exchange for, or in lieu of, other
Notes pursuant to Section 3.04, 3.05, 3.06, 9.05, 10.12, 10.14,
10.15 or 11.08.
The Notes shall be known and designated as the
"11-3/4% Senior Notes due 2004" of the Company. The final
Stated Maturity of the Notes shall be May 15, 2004. Interest
on the Notes will accrue at the rate of 11-3/4% per annum and
will be payable semi-annually in arrears on May 15 and
November 15 in each year, commencing on November 15, 1996, to
holders of record on the immediately preceding May 1 and
November 1, respectively. Interest on the Notes will accrue
from the most recent date to which interest has been paid or
duly provided for or, if no interest has been paid, from the
Issue Date. Interest will be computed on the basis of a 360-
day year comprised of twelve 30-day months.
Section 3.02. Denominations.
The Notes shall be issuable only in fully registered
form without coupons and in denominations of $1,000 and any
integral multiple thereof.
Section 3.03. [Intentionally Omitted]
Section 3.04. Temporary Notes.
Pending the preparation of definitive Notes, the Com-
pany may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Notes. Temporary Notes may
be printed, lithographed, typewritten, mimeographed or other-
wise produced, in any authorized denomination, substantially of
the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substi-
tutions and other variations as the officers executing such
Notes may determine, as conclusively evidenced by their execu-
<PAGE>
tion of such Notes.
<PAGE>
If temporary Notes are issued, the Company will cause
definitive Notes to be prepared without unreasonable delay.
After the preparation of definitive Notes, the temporary Notes
shall be exchangeable for definitive Notes upon surrender of
the temporary Notes at the office or agency of the Company des-
ignated for such purpose pursuant to Section 10.02, without
charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Notes of authorized denomi-
nations. Until so exchanged the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture
as definitive Notes.
Section 3.05. Registration, Registration of Transfer
and Exchange.
The Company shall cause to be kept at the Corporate
Trust Office a register (the register maintained in such office
and in any other office or agency designated pursuant to Sec-
tion 10.02 being herein sometimes referred to as the "Note Reg-
ister") in which, subject to such reasonable regulations as the
Person appointed as being responsible for the keeping of the
Note Register (the "Note Registrar") may prescribe, the Company
shall provide for the registration of Notes and of transfers of
Notes. The Trustee is hereby initially appointed Note Regis-
trar for the purpose of registering Notes and transfers of
Notes as herein provided.
Upon surrender for registration of transfer of any
Note at the office or agency of the Company designated pursuant
to Section 10.02, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of any autho-
rized denomination or denominations, of a like aggregate prin-
cipal amount.
At the option of the Holder, Notes in certificated
form may be exchanged for other Notes of any authorized denomi-
nation or denominations, of a like aggregate principal amount,
upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate
and deliver, the Notes which the Holder making the exchange is
entitled to receive.
<PAGE>
All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Com-
pany, evidencing the same indebtedness, and entitled to the
same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange and no such
transfer or exchange shall constitute a repayment of any obli-
gation nor create any new obligations of the Company.
Every Note presented or surrendered for registration
of transfer, or for exchange or redemption, shall (if so
required by the Company or the Note Registrar) be duly endorsed
or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Note Registrar, duly exe-
cuted by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made to a Holder for any
registration of transfer or exchange or redemption of Notes,
but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 3.04, 9.05,
10.12, 10.14, 10.15 or 11.08 not involving any transfer.
The Company shall not be required (a) to issue, reg-
ister the transfer of or exchange any Note during a period
beginning at the opening of business 15 days before the mailing
of a notice of redemption of the Notes selected for redemption
under Section 11.04 and ending at the close of business on the
day of such mailing, or (b) to register the transfer of or
exchange any Note so selected for redemption in whole or in
part, except the unredeemed portion of Notes being redeemed in
part.
When Notes are presented to the Note Registrar with a
request to register the transfer or to exchange them for an
equal principal amount of Notes of other authorized denomina-
tions, the Note Registrar shall register the transfer or make
the exchange as requested if its requirements for such transac-
tions are met. To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall
authenticate Notes at the Note Registrar's request.
<PAGE>
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Notes.
If (a) any mutilated Note is surrendered to the Trus-
tee, or (b) the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any
Note, and there is delivered to the Company and the Trustee,
such security or indemnity, in each case, as may be required by
them to save each of them harmless from any loss which either
of them may suffer if a Note is replaced, then, in the absence
of notice to the Company or the Trustee that such Note has been
acquired by a bona fide purchaser, the Company shall execute
and the Trustee shall authenticate and deliver, in exchange for
any such mutilated Note or in lieu of any such destroyed, lost
or stolen Note, a replacement Note of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any replacement Notes under this
Section, the Company may require the payment of a sum suffi-
cient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every replacement Note issued pursuant to this Sec-
tion in lieu of any destroyed, lost or stolen Note shall con-
stitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be enti-
tled to all benefits of this Indenture equally and proportion-
ately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of muti-
lated, destroyed, lost or stolen Notes.
Section 3.07. Payment of Interest; Interest Rights
Preserved.
Interest on any Note which is payable, and is punctu-
ally paid or duly provided for, on any Interest Payment Date
shall be paid by check or wire transfer to the Person in whose
name that Note (or one or more Predecessor Notes) is registered
at the close of business on the Regular Record Date for such
interest.
<PAGE>
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment
Date and interest on such defaulted interest at the then appli-
cable interest rate borne by the Notes, to the extent lawful
(such defaulted interest and interest thereon herein collec-
tively called "Defaulted Interest"), shall forthwith cease to
be payable to the Holder on the Regular Record Date and such
Defaulted Interest may be paid by the Company, at its election
in each case, as provided in subsection (a) or (b) below:
(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Notes
(or their respective Predecessor Notes) are registered at
the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed
in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Note and the date of the pro-
posed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such
Defaulted Interest as in this subsection (a) provided.
Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the pro-
posed payment. The Trustee shall promptly notify the Com-
pany in writing of such Special Record Date. In the name
and at the expense of the Company, the Trustee shall cause
notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-
class postage prepaid, to each Holder at its address as it
appears in the Note Register, not less than 10 days prior
to such Special Record Date. Notice of the proposed pay-
ment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Inter-
est shall be paid to the Persons in whose names the Notes
(or their respective Predecessor Notes) are registered on
such Special Record Date and shall no longer be payable
pursuant to the following subsection (b).
<PAGE>
(b) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be
required by such exchange, if, after written notice given
by the Company to the Trustee of the proposed payment pur-
suant to this subsection (b), such payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section,
each Note delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Note
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note.
Section 3.08. Persons Deemed Owners.
Prior to and at the time of due presentment for reg-
istration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose
name any Note is registered in the Note Register as the owner
of such Note for the purpose of receiving payment of principal
of, premium, if any, and (subject to Section 3.07) interest on
such Note and for all other purposes whatsoever, whether or not
such Note shall be overdue, and neither the Company, the Trus-
tee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Section 3.09. Cancellation.
All Notes surrendered for payment, redemption, regis-
tration of transfer or exchange shall be delivered to the Trus-
tee and, if not already cancelled, shall be promptly cancelled
by it. The Company may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner
whatsoever, as evidenced by a Company Order instructing the
Trustee that all Notes so delivered shall be promptly cancelled
by the Trustee. No Notes shall be authenticated in lieu of or
in exchange for any Notes cancelled as provided in this Section
3.09, except as expressly permitted by this Indenture. All
cancelled Notes held by the Trustee shall be destroyed in
accordance with the applicable governmental record retention
regulations and certification of their destruction delivered to
the Company unless by a Company Order the Company shall direct
that the cancelled Notes be returned to it. The Trustee shall
<PAGE>
provide the Company with a list of all Notes that have been
cancelled from time to time as requested by the Company.
Section 3.10. Computation of Interest.
Interest on the Notes shall be computed on the basis
of a 360-day year of twelve 30-day months.
Section 3.11. Legal Holidays.
In any case where any Interest Payment Date, Redemp-
tion Date, date established for the payment of Defaulted Inter-
est or Stated Maturity of any Note shall not be a Business Day,
then (notwithstanding any other provision of this Indenture or
of the Notes) payment of principal, premium, if any, or inter-
est need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if
made on the Interest Payment Date, Redemption Date, date estab-
lished for the payment of Defaulted Interest or at the Stated
Maturity, as the case may be, and no interest shall accrue with
respect to such payment for the period from and after such
Interest Payment Date, Redemption Date, date established for
the payment of Defaulted Interest or Stated Maturity, as the
case may be, to the next succeeding Business Day.
Section 3.12. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP"
number (if then generally in use), and if so, the Trustee may
use the CUSIP numbers in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice
may state that no representation is made as to the correctness
or accuracy of the CUSIP number printed in the notice or on the
Notes, and that reliance may be placed only on the other iden-
tification numbers printed on the Notes. All Notes shall bear
identical CUSIP numbers. The Company shall promptly notify the
Trustee in writing of any change in the CUSIP number of the
Notes.
Section 3.13. Payment of Additional Interest Under
Registration Rights Agreement.
Under certain circumstances the Company will be obli-
gated to pay certain additional amounts of interest to the
Holders, as more particularly set forth in section 2(e) of the
Registration Rights Agreement, the terms which are hereby
<PAGE>
incorporated herein by reference.
<PAGE>
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. The Company's Option To Effect Defea-
sance or Covenant Defeasance.
The Company may, at its option, at any time, elect to
have terminated the obligations of the Company with respect to
Outstanding Notes, as set forth in this Article, and elect to
have either Section 4.02 or Section 4.03 be applied to all of
the Outstanding Notes (the "Defeased Notes"), upon compliance
with the conditions set forth below in Section 4.04.
Section 4.02. Defeasance and Discharge.
Upon the Company's exercise under Section 4.01 of the
option applicable to this Section 4.02, the Company shall be
deemed to have been released and discharged from its obliga-
tions with respect to the Defeased Notes on the date the condi-
tions set forth below are satisfied (hereinafter, "defea-
sance"). For this purpose, such defeasance means that the Com-
pany shall be deemed to have paid and discharged the entire
indebtedness represented by the Defeased Notes, which shall
thereafter be deemed to be "Outstanding" only for the purposes
of Section 4.05 and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all
other obligations under such Notes and this Indenture insofar
as such Notes are concerned (and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging the
same), except for the following, which shall survive until
otherwise terminated or discharged hereunder: (a) the rights
of Holders of Defeased Notes to receive, solely from the trust
fund described in Section 4.04 and as more fully set forth in
such Section, payments in respect of the principal of, premium,
if any, and interest on such Notes when such payments are due,
(b) the Company's obligations with respect to such Defeased
Notes under Sections 3.04, 3.05, 3.06, 7.01 and 10.02, (c) the
rights, powers, trusts, duties and immunities of the Trustee
hereunder, including, without limitation, the Trustee's rights
under Section 6.07, and (d) this Article Four. Subject to com-
pliance with this Article Four, the Company may, at its option
and at any time, exercise its option under this Section 4.02
notwithstanding the prior exercise of its option under Section
4.03 with respect to the Notes.
<PAGE>
Section 4.03. Covenant Defeasance.
Upon the Company's exercise under Section 4.01 of the
option applicable to this Section 4.03, the Company shall be
released from its obligations under any covenant or provision
contained in Sections 10.06 through 10.20 and the provisions of
Article Eight shall not apply, with respect to the Defeased
Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"), and the Notes
shall thereafter be deemed not to be "Outstanding" for the pur-
poses of any direction, waiver, consent or declaration or Act
of Holders (and the consequences of any thereof) in connection
with such covenants, but shall continue to be deemed "Outstand-
ing" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to the Outstanding
Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default
under Section 5.01(c), but, except as specified above, the
remainder of this Indenture and such Outstanding Notes shall be
unaffected thereby.
Section 4.04. Conditions to Defeasance or Covenant
Defeasance.
The following shall be the conditions to application
of either Section 4.02 or Section 4.03 to the Outstanding
Notes:
(1) The Company shall have irrevocably deposited or
caused to be deposited with the Trustee (or another trus-
tee satisfying the requirements of Section 6.09 who shall
agree to comply with the provisions of this Article Four
applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the
Holders of such Notes, (a) money, in United States dol-
lars, in an amount, or (b) U.S. Government Obligations
maturing as to principal, premium, if any, and interest in
such amounts of money and at such times as are sufficient
without consideration of any reinvestment of such inter-
est, to pay principal of and interest on Defeased Notes
<PAGE>
not later than one day before the due date of any payment,
<PAGE>
or (c) a combination thereof, in amounts as will be suffi-
cient, in the opinion of a nationally recognized firm of
independent public accountants or a nationally recognized
investment banking firm expressed in a written certifica-
tion thereof delivered to the Trustee, to pay and dis-
charge and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal
of, premium, if any, and interest on the Defeased Notes on
the Stated Maturity or otherwise in accordance with the
terms of this Indenture and the Notes; provided, however,
that the Trustee (or other qualifying trustee) shall have
received an irrevocable written order from the Company
instructing the Trustee (or other qualifying trustee) to
apply such money or the proceeds of such U.S. Government
Obligations to said payments with respect to the Notes;
provided, further, however, that from and after the time
of deposit, the money or U.S. Government Obligations
deposited shall not be subject to the rights of the hold-
ers of other Indebtedness of the Company;
(2) No Default or Event of Default shall have
occurred and be continuing on the date of such deposit or,
insofar as Section 5.01(f) or (g) is concerned, at any
time during the period ending on the ninety-first day
after the date of such deposit;
(3) Such defeasance or covenant defeasance shall not
cause the Trustee for the Notes to have a conflicting
interest with respect to any securities of the Company;
(4) Such defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a
Default or Event of Default under, this Indenture or any
other agreement or instrument to which the Company is a
party or by which it is bound;
(5) In the case of an election under Section 4.02,
the Company shall have delivered to the Trustee an Opinion
of Counsel recognized in the United States stating that
(x) the Company has received from, or there has been pub-
lished by, the Internal Revenue Service a ruling or
(y) since the date hereof, there has been a change in the
applicable Federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm
that, the Holders of the Outstanding Notes will not recog-
nize income, gain or loss for Federal income tax purposes
<PAGE>
as a result of such defeasance and will be subject to
<PAGE>
Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such
defeasance had not occurred;
(6) In the case of an election under Section 4.03,
the Company shall have delivered to the Trustee an Opinion
of Counsel recognized in the United States to the effect
that the Holders of the Outstanding Notes will not recog-
nize income, gain or loss for Federal income tax purposes
as a result of such covenant defeasance and will be sub-
ject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the
case if such covenant defeasance had not occurred;
(7) The Company shall have delivered to the Trustee
an Opinion of Counsel in form and substance reasonably
acceptable to the Trustee to the effect that (x) the trust
funds established pursuant to this Article will not be
subject to any rights of any other holders of Indebtedness
of the Company (other than Holders of the Notes), and
(y) after the 91st day following the deposit, the trust
funds established pursuant to this Article will not be
subject to the effect of any applicable bankruptcy, insol-
vency, reorganization or similar laws affecting creditors'
rights generally; and
(8) The Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that (i) all conditions precedent provided for
relating to either the defeasance under Section 4.02 or
the covenant defeasance under Section 4.03, as the case
may be, have been complied with and (ii) if any other
Indebtedness of the Company shall then be outstanding or
committed, such defeasance or covenant defeasance will not
violate the provisions of the agreements or instruments
evidencing such Indebtedness.
Opinions required to be delivered under this Section
shall be in compliance with the requirements set forth in
Section 1.04 and this Section 4.04.
Section 4.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust; Other Miscellaneous Provi-
sions.
Subject to the provisions of the last paragraph of
<PAGE>
Section 10.03, all money and U.S. Government Obligations
<PAGE>
(including the proceeds thereof) deposited with the Trustee (or
such other Person that would qualify to act as successor trus-
tee under Article Six, collectively for purposes of this Sec-
tion 4.05, the "Trustee") pursuant to Section 4.04 in respect
of the Defeased Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and
this Indenture, to the payment, either directly or through any
Paying Agent (other than the Company or any Affiliate of the
Company) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of
principal, premium, if any, and interest, but such money need
not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee and
its agents and hold them harmless against any tax, fee or other
charge imposed on or assessed against the U.S. Government Obli-
gations deposited pursuant to Section 4.04 or the principal,
premium, if any, and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the
account of the Holders of the Defeased Notes.
Section 4.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with Section
4.02 or 4.03, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the
obligations of the Company under this Indenture and the Notes
shall be revived and reinstated as though no deposit had
occurred pursuant to Section 4.02 or 4.03, as the case may be,
until such time as the Trustee or Paying Agent is permitted to
apply all such money and U.S. Government Obligations in accor-
dance with Section 4.02 or 4.03, as the case may be; provided,
however, that if the Company makes any payment of principal,
premium, if any, or interest on any Note following the rein-
statement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such pay-
ment from the money and U.S. Government Obligations held by the
Trustee or Paying Agent.
Section 4.07. Repayment to Company.
The Trustee shall pay to the Company upon its written
request any money held by it for the payment of principal or
<PAGE>
interest that remains unclaimed for two years; provided,
<PAGE>
however, that the Trustee before being required to make any
payment may at the expense of the Company cause to be published
once in a newspaper of general circulation in The City of New
York or mail to each Holder entitled to such money notice that
such money remains unclaimed and that, after a date specified
therein which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money
then remaining shall be repaid to the Company. After payment
to the Company, Noteholders entitled to money must look to the
Company for payment as general creditors unless an applicable
abandoned property law designates another person and all lia-
bility of the Trustee or Paying Agent with respect to such
money shall thereupon cease.
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.
"Event of Default," wherever used herein, means any
one of the following events (whatever the reason for such Event
of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) the Company shall fail to pay interest on the
Notes (including any Additional Interest as defined in the
Registration Rights Agreement) when the same becomes due
and payable and such failure shall continue for 30 days or
more; or
(b) the Company shall fail to pay principal of or
premium, if any, on the Notes when and as the same shall
become due and payable at maturity, upon acceleration,
optional or mandatory redemption, required repurchase, or
otherwise; or
(c) the Company shall fail to comply with any of its
other covenants, agreements or warranties in this Inden-
ture (other than the defaults specified in clauses (a) and
(b) above), which failure continues (A) in the case of any
such covenant, agreement or warranty contained in Section
10.11, 10.12 or 10.14 or in Article Eight of this Inden-
<PAGE>
ture, for a period of 30 days after written notice thereof
<PAGE>
has been given to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25.0%
in aggregate principal amount of the Notes then Outstand-
ing and (B) in the case of any other such covenant, agree-
ment or warranty contained in this Indenture, for 60 days
after written notice thereof has been given to the Company
by the Trustee or to the Company and the Trustee by the
Holders of at least 25.0% in aggregate principal amount of
the Notes then Outstanding; or
(d) the occurrence of one or more defaults under any
agreements, indentures or instruments under which the Com-
pany or any Restricted Subsidiary then has outstanding
Indebtedness in excess of $5 million individually or in
the aggregate and, if not already matured to its final
maturity in accordance with its terms, such Indebtedness
shall have been accelerated and such Indebtedness shall
not have been repaid or such acceleration rescinded within
20 days; or
(e) one or more judgments, orders or decrees for the
payment of money in excess of $5 million, either individu-
ally or in the aggregate (net of amounts covered by a rep-
utable and creditworthy insurance company, or by bond,
surety or similar instrument), shall be entered against
the Company or any Restricted Subsidiary or any of their
respective properties and which judgments, orders or
decrees are not paid, discharged, bonded or stayed or
stayed pending appeal for a period of 60 days after their
entry; or
(f) there shall have been entered by a court of com-
petent jurisdiction (a) a decree or order for relief in
respect of the Company or any Restricted Subsidiary in an
involuntary case or proceeding under any applicable Bank-
ruptcy Law or (b) a decree or order adjudging the Company
or any Restricted Subsidiary bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or compo-
sition of or in respect of the Company or any Restricted
Subsidiary under any applicable Federal or state law, or
appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the
Company or any Restricted Subsidiary or of any substantial
part of their respective properties, or ordering the wind-
ing up or liquidation of their affairs, and any such
decree or order for relief shall continue to be in effect,
<PAGE>
or any such other decree or order shall be unstayed and in
effect, for a period of 60 days; or
(g) (i) the Company or any Restricted Subsidiary
commences a voluntary case or proceeding under any appli-
cable Bankruptcy Law or any other case or proceeding to be
adjudicated bankrupt or insolvent, (ii) the Company or any
Restricted Subsidiary consents to the entry of a decree or
order for relief in respect of the Company or such
Restricted Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or to the commencement
of any bankruptcy or insolvency case or proceeding against
it, (iii) the Company or any Restricted Subsidiary files a
petition or answer or consent seeking reorganization or
relief under any applicable Federal or state law, (iv) the
Company or any Restricted Subsidiary (x) consents to the
filing of such petition or the appointment of or taking
possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the
Company or such Restricted Subsidiary or of any substan-
tial part of their respective property, (y) makes an
assignment for the benefit of creditors or (z) admits in
writing its inability to pay its debts generally as they
become due or (v) the Company or any Restricted Subsidiary
takes any corporate action in furtherance of any such
actions in this paragraph (g).
The Company shall provide an Officers' Certificate to
the Trustee promptly upon any officer of the Company obtaining
knowledge of any Default or Event of Default that has occurred
and, if applicable, describe such Default or Event of Default
and the status thereof.
Section 5.02. Acceleration of Maturity; Rescission
and Annulment.
If an Event of Default (other than an Event of
Default specified in Section 5.01(f) or (g) with respect to the
Company) occurs and is continuing, the Trustee or the Holders
of not less than 25.0% in aggregate principal amount of the
Notes then Outstanding may, and the Trustee upon the request of
the Holders of not less than 25.0% in aggregate principal
amount of the Notes then Outstanding shall, declare the Notes
due and payable, in an amount equal to the principal amount of
the Notes, together with accrued and unpaid interest to the
date the Notes become due and payable immediately by notice in
<PAGE>
writing to the Company, and to the Company and the Trustee, if
<PAGE>
by the Holders, specifying the respective Event of Default and
that such notice is a "notice of acceleration," and the Notes
and all accrued and unpaid interest thereon shall thereupon
become immediately due and payable. If an Event of Default
specified in Section 5.01(f) or (g) with respect to the Company
above occurs and is continuing, then the principal of all the
Notes shall ipso facto become and be immediately due and pay-
able without any declaration or other act on the part of the
Trustee or any Holder of the Notes.
At any time after such declaration of acceleration
has been made and before a judgment or decree for payment of
the money due has been obtained by the Trustee as hereinafter
provided in this Article, the Holders of not less than a major-
ity in aggregate principal amount of the Notes Outstanding, by
written notice to the Company and the Trustee, may rescind such
declaration of acceleration and its consequences if:
(a) the Company has paid or deposited with the Trus-
tee a sum sufficient to pay:
(i) all amounts paid or advanced by the Trustee
under Section 6.07, including the reasonable compen-
sation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
(ii) all overdue interest on all Notes;
(iii) the principal of and premium, if any, on
any Notes which have become due otherwise than by
such declaration of acceleration and interest thereon
at the rate then borne by the Notes; and
(iv) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate
then borne by the Notes; and
(b) all Events of Default, other than the non-pay-
ment of principal of the Notes that has become due solely
by such declaration of acceleration, have been cured or
waived.
Section 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee; Other Remedies.
The Company covenants that if:
<PAGE>
(a) default is made in the payment of any interest
on any Note when such interest becomes due and payable and
such default continues for a period of 30 days or more, or
(b) default is made in the payment of the principal
of or premium, if any, on any Note at the Stated Maturity
thereof or upon any optional or mandatory redemption
thereof or required repurchase thereof,
the Company will, upon demand of the Trustee, pay to the Trus-
tee, for the benefit of the Holders of such Notes, the whole
amount then due and payable on such Notes for principal, pre-
mium, if any, and interest, with interest upon the overdue
principal, premium, if any, and, to the extent that payment of
such interest shall be legally enforceable, upon overdue
installments of interest, at the rate then borne by the Notes;
and, in addition thereto, such further amount as shall be suf-
ficient to cover the costs and expenses of collection, includ-
ing the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as trustee
of an express trust, may, but is not obligated under this para-
graph to, institute a judicial proceeding for the collection of
the sums so due and unpaid and may, but is not obligated under
this paragraph to, prosecute such proceeding to judgment or
final decree, and may, but is not obligated under this para-
graph to, enforce the same against the Company or any other
obligor upon the Notes and collect the moneys adjudged or
decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Notes,
wherever situated.
If an Event of Default occurs and is continuing, the
Trustee may in its discretion, but is not obligated under this
paragraph to, (i) proceed to protect and enforce its rights and
the rights of the Holders under this Indenture and the Notes by
such appropriate private or judicial proceedings as the Trustee
shall deem most effectual to protect and enforce such rights,
whether for the specific enforcement of any covenant or agree-
ment contained in this Indenture or the Notes or in aid of the
exercise of any power granted herein or therein, or (ii) pro-
ceed to protect and enforce any other proper remedy. No recov-
ery of any such judgment upon any property of the Company shall
affect or impair any rights, powers or remedies of the Trustee
<PAGE>
or the Holders.
<PAGE>
Section 5.04. Trustee May File Proofs of Claims.
In case of the pendency of any receivership, insol-
vency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative
to the Company or any other obligor upon the Notes, or the
property of the Company or of such other obligor or their cred-
itors, the Trustee (irrespective of whether the principal of
the Notes shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the pay-
ment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise, but
is not obligated under this paragraph
(a) to file and prove a claim for the whole amount
of principal, premium, if any, and interest owing and
unpaid in respect of the Notes and to file such other
papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disburse-
ments and advances of the Trustee, its agents and counsel)
and of the Holders allowed in such judicial proceeding,
and
(b) to collect and receive any moneys or other prop-
erty payable or deliverable on any such claims and to dis-
tribute the same;
and any Custodian, in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making
of such payments directly to the Holders, to pay the Trustee
any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and coun-
sel, and any other amounts due the Trustee under Section 6.07
hereof.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of
any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
<PAGE>
Section 5.05. Trustee May Enforce Claims Without
Possession of Notes.
All rights of action and claims under this Indenture
or the Notes may be prosecuted and enforced by the Trustee
without the possession of any of the Notes or the production
thereof in any proceeding relating thereto, and any such pro-
ceeding instituted by the Trustee shall be brought in its own
name and as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reason-
able compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Notes in respect of which such judgment has
been recovered.
Section 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this
Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of
such money on account of principal, premium, if any, or inter-
est, upon presentation of the Notes and the notation thereon of
the payment if only partially paid and upon surrender thereof
if fully paid:
First: to the Trustee for amounts due under Section
6.07;
Second: to Holders for interest accrued on the
Notes, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Notes for interest;
Third: to Holders for principal amounts owing under
the Notes, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Notes for principal and premium; and
Fourth: the balance, if any, to the Company.
The Trustee, upon prior written notice to the Com-
pany, may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 5.06.
<PAGE>
Section 5.07. Limitation on Suits.
No Holder of any Notes shall have any right to insti-
tute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trus-
tee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice
to the Trustee of a continuing Event of Default;
(b) the Holder or Holders of not less than 25.0% in
principal amount of the Outstanding Notes shall have made
written request(s) to the Trustee to institute proceedings
in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trus-
tee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such
request;
(d) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in aggregate principal
amount of the Outstanding Notes;
it being understood and intended that no one or more Holders
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture or any Note to
affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture
or any Note except in the manner provided in this Indenture and
for the equal and ratable benefit of all the Holders.
Section 5.08. Unconditional Right of Holders To
Receive Principal, Premium and Interest.
Notwithstanding any other provision in this Inden-
ture, the Holder of any Note shall have the right, which is
absolute and unconditional, to receive cash payment, in United
States dollars, of the principal of, premium, if any, and (sub-
<PAGE>
ject to Section 3.07 hereof) interest on such Note on the
<PAGE>
respective Stated Maturities expressed in such Note (or, in the
case of redemption or repurchase, on the respective Redemption
Dates or date fixed for repurchase) and to institute suit for
the enforcement of any such payment, and such rights shall not
be impaired without the express consent of such Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any pro-
ceeding to enforce any right or remedy under this Indenture or
any Note and such proceeding has been discontinued or abandoned
for any reason, or has been determined adversely to the Trustee
or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in
such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as
though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or here-
after existing at law or in equity or otherwise. The assertion
or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder
of any Note to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or con-
stitute a waiver of any such Event of Default or an acquies-
cence therein. Every right and remedy given by this Article
Five or by law to the Trustee or to the Holders may be exer-
cised from time to time, and as often as may be deemed expe-
dient, by the Trustee or by the Holders, as the case may be.
Section 5.12. Control by Majority.
The Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes shall have the right
<PAGE>
to direct the time, method and place of conducting any
<PAGE>
proceeding for any remedy available to the Trustee, or exer-
cising any trust or power conferred on the Trustee; provided,
however, that:
(a) such direction shall not be in conflict with any
rule of law or with this Indenture or any Note or expose
the Trustee to liability; and
(b) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
In the event the Trustee takes any action or follows
any direction pursuant to this Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole dis-
cretion against any loss or expense caused by taking such
action or following such direction. This Section 5.12 shall be
in lieu of { 316(a)(1)(A) of the TIA, and such { 316(a)(1)(A)
of the TIA is hereby expressly excluded from this Indenture and
the Notes, as permitted by the TIA.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes may on behalf of the
Holders of all the Notes waive any past Default hereunder and
its consequences, except a Default:
(a) in the payment of the principal of, premium, if
any, or interest on any Note; or
(b) in respect of a covenant or provision under this
Indenture which cannot be modified or amended without the
consent of the Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Indenture;
but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent
thereon. In case of any such waiver, the Company, the Trustee
and the Holders shall be restored to their former positions and
rights hereunder and under the Notes, respectively. This para-
graph of this Section 5.13 shall be in lieu of { 316(a)(1)(B)
of the TIA and such { 316(a)(1)(B) of the TIA is hereby
expressly excluded from this Indenture and the Notes, as per-
<PAGE>
mitted by the TIA.
<PAGE>
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder
of any Note by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this
Indenture or the Notes, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its dis-
cretion assess reasonable costs, including reasonable attor-
neys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section
shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Out-
standing Notes, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of, premium, if
any, or interest on any Note on or after the respective Stated
Maturities expressed in such Note (or, in the case of redemp-
tion or repurchase, on or after the respective Redemption Dates
or dates fixed for repurchase).
Section 5.15. Waiver of Stay, Extension or Usury
Laws.
The Company covenants (to the extent that it may law-
fully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury or other
law wherever enacted, now or at any time hereafter in force,
which would prohibit or forgive the Company from paying all or
any portion of the principal of, premium, if any, or interest
on the Notes contemplated herein or in the Notes or which may
affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execu-
tion of any power herein granted to the Trustee, but will suf-
fer and permit the execution of every such power as though no
such law had been enacted.
<PAGE>
ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of
Default,
(1) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Inden-
ture; but in the case of any such certificates or opinions
which by provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(b) In case a Default has occurred, the Trustee
shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be con-
strued to relieve the Trustee from liability for its own negli-
gent action, its own negligent failure to act, or its own will-
ful misconduct, except that (i) this paragraph does not limit
the effect of paragraph (a) of this Section 6.01; (ii) the
Trustee shall not be liable for any error of judgment made in
good faith by an officer of the Trustee, unless it is proved
that the Trustee was negligent in ascertaining the pertinent
facts; and (iii) the Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accor-
dance with a direction received by it pursuant to Section 5.12.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
<PAGE>
hereunder or to take or omit to take any action under this
<PAGE>
Indenture or take any action at the request or direction of
Holders if it shall have reasonable grounds for believing that
repayment of such funds is not assured to it or it does not
receive an indemnity satisfactory to it in its sole discretion
against such risk, liability, loss, fee or expense which might
be incurred by it in compliance with such request or direction.
(e) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trus-
tee shall be subject to the provisions of this Section 6.01.
Section 6.02. Notice of Defaults.
Within 30 days after the occurrence of any Default,
the Trustee shall transmit by mail to all Holders, as their
names and addresses appear in the Note Register, notice of such
Default hereunder; provided, however, that, except in the case
of a Default in the payment of the principal of, premium, if
any, or interest on any Note, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of
Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the
Holders.
Section 6.03. Certain Rights of Trustee.
Subject to Section 6.01 hereof and the provisions of
{315 of the TIA:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, cer-
tificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, approval, appraisal,
bond, debenture, note, coupon, security, other evidence of
indebtedness or other paper or document believed by it to
be genuine and to have been signed or presented by the
proper party or parties;
(b) any request or direction of the Company men-
tioned herein shall be sufficiently evidenced by a Company
Request or Company Order and any resolution of the Board
of Directors of the Company may be sufficiently evidenced
by a Board Resolution of the Company thereof;
(c) the Trustee and its agents may consult, at the
<PAGE>
expense of the Company, with counsel and any written
<PAGE>
advice of such counsel or any Opinion of 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 reliance thereon in accordance with
such advice or Opinion of Counsel;
(d) the Trustee and its agents shall not be bound to
make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opin-
ion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, secu-
rity, other evidence of indebtedness or other paper or
document unless requested in writing so to do by the Hold-
ers of not less than a majority in aggregate principal
amount of the Notes then Outstanding; provided, however,
that, if the payment within a reasonable time to the Trus-
tee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable indem-
nity against such expenses or liabilities as a condition
to proceeding; the reasonable expenses of every such
investigation shall be paid by the Company or, if paid by
the Trustee or any predecessor Trustee, shall be repaid by
the Company upon demand; provided, further, however, that
the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it
may deem fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be enti-
tled to examine the books, records and premises of the
Company, personally or by agent or attorney during the
reasonable business hours of the Company; or
(e) the Trustee and its agents may execute any of
the trusts or powers hereunder or perform any duties here-
under either directly or by or through agents or attorneys
and the Trustee shall not be responsible for any miscon-
duct or negligence on the part of any agent (other than an
agent who is an employee of the Trustee) or attorney
appointed with due care by it hereunder.
Section 6.04. Trustee Not Responsible for Recitals,
Dispositions of Notes or Application of Proceeds Thereof.
The recitals contained herein and in the Notes,
<PAGE>
except the Trustee's certificates of authentication, shall be
<PAGE>
taken as the statements of the Company, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Indenture or the Notes, except that the Trustee represents that
it is duly authorized to execute and deliver this Indenture,
authenticate the Notes and perform its obligations hereunder
and that the statements made by it in a Statement of Eligibil-
ity and Qualification on Form T-1 supplied to the Company in
connection with the registration of any Notes issued hereunder
are true and accurate subject to the qualifications set forth
therein. The Trustee shall not be accountable for the use or
application by the Company of Notes or the proceeds thereof.
Section 6.05. Trustee and Agents May Hold Notes;
Collections; etc.
The Trustee, any Paying Agent, Note Registrar or any
other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes, with the
same rights it would have if it were not the Trustee, Paying
Agent, Note Registrar or such other agent and, subject to Sec-
tions 6.08 and 6.13 hereof and {{ 310 and 311 of the Trust
Indenture Act, may otherwise deal with the Company and receive,
collect, hold and retain collections from the Company with the
same rights it would have if it were not the Trustee, Paying
Agent, Note Registrar or such other agent.
Section 6.06. Money Held in Trust.
All moneys received by the Trustee shall, until used
or applied as herein provided, be held in trust for the pur-
poses for which they were received, but need not be segregated
from other funds except to the extent required herein or by
law. The Trustee shall not be under any liability for interest
on any moneys received by it hereunder.
Section 6.07. Compensation and Indemnification of
Trustee and Its Prior Claim.
The Company covenants and agrees: (a) to pay to the
Trustee from time to time, and the Trustee shall be entitled
to, reasonable compensation for all services rendered by it
hereunder (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express
trust); (b) to reimburse the Trustee and each predecessor Trus-
tee upon its request for all reasonable expenses, disbursements
<PAGE>
and advances incurred or made by or on behalf of it in
<PAGE>
accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other Per-
sons not regularly in its employ), except any such reasonable
expense, disbursement or advance as may arise from its negli-
gence or bad faith; and (c) to indemnify the Trustee and each
predecessor Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts
hereunder and its duties hereunder, including enforcement of
this Section 6.07. The obligations of the Company under this
Section to compensate and indemnify the Trustee and each prede-
cessor Trustee and to pay or reimburse the Trustee and each
predecessor Trustee for expenses, disbursements and advances
shall constitute an additional obligation hereunder and shall
survive the satisfaction and discharge of this Indenture. To
secure the obligations of the Company to the Trustee under this
Section 6.07, the Trustee shall have a prior Lien upon all
property and funds held or collected by the Trustee as such,
except funds and property paid by the Company and held in trust
for the benefit of the Holders of particular Notes under this
Indenture. All such payments and reimbursements shall be made
with interest at a rate reasonably acceptable to the Company
and the Trustee. The Trustee shall be entitled to file a proof
of claim in any bankruptcy proceeding as a secured creditor for
its reasonable compensation, fees and expenses under this
Section 6.07.
When the Trustee incurs expenses under Article Five
hereof, the expenses (including reasonable fees and expenses of
its counsel) and the compensation for the service in connection
therewith are intended to constitute expense of administration
under any applicable bankruptcy law.
Section 6.08. Conflicting Interests.
The Trustee shall be subject to and comply with the
provisions of { 310(b) of the TIA.
Section 6.09. Corporate Trustee Required; Eligi-
bility.
There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under TIA {{ 310(a)(1) and
310(a)(5) and which shall have a combined capital, surplus and
<PAGE>
undivided profits of at least $100,000,000, and have an office
<PAGE>
or agency at which Notes may be presented for transfer and
redemption and at which demands may be made in The City of New
York. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of
United States Federal, state, territorial or District of Colum-
bia supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such cor-
poration shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so pub-
lished. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.10. Resignation and Removal; Appointment
of Successor Trustee.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment by
the successor Trustee under Section 6.11.
(b) The Trustee, or any trustee or trustees herein-
after appointed, may at any time resign by giving written
notice thereof to the Company at least 20 Business Days prior
to the date of such proposed resignation. Upon receiving such
notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument, a copy of which shall
be delivered to the resigning Trustee and a copy to the succes-
sor trustee. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 20
Business Days after the giving of such notice of resignation,
the resigning Trustee may, or any Holder who has been a bona
fide Holder of a Note for at least six months may, on behalf of
himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor
Trustee. Such court may thereupon, after such notice, if any,
as it may deem proper, appoint a successor trustee.
(c) The Trustee may be removed at any time by an Act
of the Holders of a majority in principal amount of the Out-
standing Notes, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provi-
<PAGE>
sions of { 310(b) of the TIA in accordance with Section
<PAGE>
6.08 hereof after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a Note
for at least six months, or
(2) the Trustee shall cease to be eligible under
Section 6.09 hereof and shall fail to resign after written
request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed or
any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose or
rehabilitation, conservation or liquidation,
then, in any case, (i) the Company may remove the Trustee, or
(ii) subject to Section 5.14, the Holder of any Note who has
been a bona fide Holder of a Note for at least six months may,
on behalf of himself and all others similarly situated, peti-
tion any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper
and prescribe, remove the Trustee and appoint a successor
trustee.
(e) If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the
office of Trustee for any cause, the Company shall promptly
appoint a successor Trustee. If, within one year after such
resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding
Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its accep-
tance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed by the Company. If
no successor Trustee shall have been so appointed by the Com-
pany or the Holders of the Notes and accepted appointment in
the manner hereinafter provided, the Holder of any Note who has
been a bona fide Holder for at least six months may, subject to
Section 5.14, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resigna-
tion and each removal of the Trustee and each appointment of a
<PAGE>
successor Trustee by mailing written notice of such event by
<PAGE>
first-class mail, postage prepaid, to the Holders of Notes as
their names and addresses appear in the Note Register. Each
notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by
Successor.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all
the rights, powers, trusts and duties of the retiring Trustee
as if originally named as Trustee hereunder; but, nevertheless,
on the written request of the Company or the successor Trustee,
upon payment of amounts due it pursuant to Section 6.07, such
retiring Trustee shall duly assign, transfer and deliver to the
successor Trustee all moneys and property at the time held by
it hereunder and shall execute and deliver an instrument trans-
ferring to such successor Trustee all the rights, powers,
duties and obligations of the retiring Trustee. Upon request
of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights and pow-
ers. Any Trustee ceasing to act shall, nevertheless, retain a
prior claim upon all property or funds held or collected by
such Trustee to secure any amounts then due it pursuant to the
provisions of Section 6.07.
No successor Trustee with respect to the Notes shall
accept appointment as provided in this Section 6.11 unless at
the time of such acceptance such successor Trustee shall be
eligible to act as Trustee under this Article.
Upon acceptance of appointment by any successor Trus-
tee as provided in this Section 6.11, the Company shall give
notice thereof to the Holders of the Notes, by mailing such
notice to such Holders at their addresses as they shall appear
on the Note Register. If the acceptance of appointment is sub-
stantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined
with the notice called for by Section 6.10(f). If the Company
fails to give such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee
<PAGE>
shall cause such notice to be given at the expense of the
Company.
Section 6.12. Successor Trustee by Merger, etc.
Any corporation into which the Trustee may be merged
or converted or with which it may be consolidated, or any cor-
poration resulting from any merger, conversion, or consolida-
tion to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee
hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided
such corporation shall be eligible under this Article to serve
as Trustee hereunder.
In case at the time such successor to the Trustee
under this Section 6.12 shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor Trustee
and deliver such Notes so authenticated; and, in case at that
time any of the Notes shall not have been authenticated, any
successor to the Trustee under this Section 6.12 may authenti-
cate such Notes either in the name of any predecessor hereunder
or in the name of the successor Trustee; and in all such cases
such certificate shall have the full force which it is anywhere
in the Notes or in this Indenture provided that the certificate
of the Trustee shall have.
Section 6.13. Preferential Collection of Claims
Against Issuers.
The Trustee shall comply with Section 311(a) of the
TIA, excluding any creditor relationship listed in { 311(b) of
the TIA. If the present or any future Trustee shall resign or
be removed, it shall be subject to { 311(a) of the TIA to the
extent provided therein.
<PAGE>
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company
To Furnish Trustee Names and Addresses of Holders.
(a) The Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to
it of the names and addresses of all Holders; provided, how-
ever, that if and for so long as the Trustee shall be the Note
Registrar, the Note Register shall satisfy the requirements
relating to such list. Neither the Company nor the Trustee
shall be under any responsibility with regard to the accuracy
of such list.
(b) The Company will furnish or cause to be fur-
nished to the Trustee
(i) semiannually, not more than 10 days after each
Regular Record Date, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the
Holders as of such Regular Record Date; and
(ii) at such other times as the Trustee may request
in writing, within 30 days after receipt by the Company of
any such request, a list of similar form and content as of
a date not more than 15 days prior to the time such list
is furnished;
provided, however, that if and so long as the Trustee shall be
the Note Registrar, no such list need be furnished pursuant to
this Section 7.01(b).
Section 7.02. Communications of Holders.
Holders may communicate with other Holders with
respect to their rights under this Indenture or under the Notes
pursuant to { 312(b) of the TIA. The Trustee shall comply with
{ 312(b) of the TIA. The Company and the Trustee and any and
all other Persons benefited by this Indenture shall have the
protection afforded by { 312(c) of the TIA.
Section 7.03. Reports by Trustee.
Within 60 days after June 15 of each year commencing
<PAGE>
with the first June 15 following the date of this Indenture,
<PAGE>
the Trustee shall mail to all Holders, as their names and
addresses appear in the Note Register, a brief report dated as
of such June 15 that complies with { 313(a) of the TIA; pro-
vided, however, that if no such event as described in { 313(a)
of the TIA has occurred within such period then no such report
need be transmitted. The Trustee shall also comply with
{ 313(b), { 313(c) and { 313(d) of the TIA. At the time of its
mailing to Holders, a copy of each report shall be filed with
the Company, the Commission and with each national securities
exchange on which the Notes are listed. The Company shall
notify the Trustee when the Notes are listed on any stock
exchange or any delisting thereof.
Section 7.04. Reports by Company.
The Company shall file with the Trustee copies of the
reports and of the information and documents which the Company
is required to provide to any Person under Section 10.09.
ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01. When Company May Merge, etc.
The Company shall not, in any single transaction or
series of related transactions, consolidate or merge with or
into (whether or not the Company is the Surviving Person), or
sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets to,
another Person, and the Company will not permit any Restricted
Subsidiary to enter into any such transaction or series of
related transactions if such transaction or series of related
transactions, in the aggregate, would result in a sale, assign-
ment, transfer, lease, conveyance or other disposition of all
or substantially all of the properties and assets of the Com-
pany and the Restricted Subsidiaries, taken as a whole, to
another Person, unless (i) the Surviving Person is a corpora-
tion organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the Surviv-
ing Person (if other than the Company) assumes all the obliga-
tions of the Company under the Notes, this Indenture and, if
then in effect, the Registration Rights Agreement pursuant to a
supplemental indenture or other written agreement, as the case
may be, in a form reasonably satisfactory to the Trustee;
<PAGE>
(iii) at the time of and immediately after such Disposition, no
<PAGE>
Default or Event of Default shall have occurred and be continu-
ing; and (iv) the Surviving Person (A) will have Consolidated
Net Worth (immediately after giving effect to the Disposition
on a pro forma basis) equal to or greater than the Consolidated
Net Worth of the Company immediately preceding the transaction,
and (B) at the time of such Disposition and after giving pro
forma effect thereto, would be permitted to incur at least
$1.00 of additional Indebtedness pursuant to paragraph (a) of
Section 10.11.
Section 8.02. Successor Substituted.
Upon any Disposition involving the Company in accor-
dance with Section 8.01 hereof, the Successor Person or Persons
shall succeed to, and be substituted for, and may exercise
every right and power of, and shall assume all of the liabili-
ties and obligations of, the Company under this Indenture, the
Notes and the Registration Rights Agreement with the same
effect as if such successor had been named as the Company in
this Indenture, the Notes and the Registration Rights Agree-
ment. When a successor assumes all the obligations of its
predecessor under this Indenture, the Notes and the Registra-
tion Rights Agreement, the predecessor shall be released from
those obligations; provided, however, that in the case of a
transfer by lease, the predecessor shall not be released from
the payment of principal, premium, if any, and interest on the
Notes.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.
The Company and the Trustee may amend, waive or sup-
plement this Indenture or the Notes without notice to or con-
sent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
provided, however, that such amendment or supplement does
not adversely affect the rights of any Holder;
(b) to comply with Article Eight;
(c) to provide for uncertificated Notes in addition
<PAGE>
to certificated Notes;
<PAGE>
(d) to comply with any requirements of the Commis-
sion in order to effect or maintain the qualification of
this Indenture under the TIA; or
(e) to make any change that would provide any addi-
tional benefit or rights to the Holders or that does not
adversely affect the rights of any Holder;
(f) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein conferred upon the Company; or
(g) to secure the Notes as provided pursuant to the
requirements of Section 10.16 or otherwise.
Notwithstanding the above, the Trustee and the Com-
pany may not make any change that adversely affects the legal
rights of any Holders hereunder. The Company shall be required
to deliver to the Trustee an Officers' Certificate and an Opin-
ion of Counsel stating that any such change under Section
9.01(a) or (e) of the preceding sentence does not adversely
affect the rights of any Holder.
Section 9.02. With Consent of Holders.
Subject to Section 5.08, the Company, when authorized
by its Board of Directors, and the Trustee may amend or supple-
ment this Indenture or the Notes with the written consent of
the Holders of not less than a majority in aggregate principal
amount of the Outstanding Notes, and the Holders of not less
than a majority in aggregate principal amount of the Outstand-
ing Notes by written notice to the Trustee may waive future
compliance by the Company with any provision of this Indenture
or the Notes.
Notwithstanding the provisions of this Section 9.02,
without the consent of each Holder affected, an amendment or
waiver, including a waiver pursuant to Section 5.13, may not:
(i) reduce the principal amount of the Notes whose
Holders must consent to an amendment, supplement or
waiver;
(ii) reduce the principal or change the fixed matur-
ity of any Note, or alter the provisions with respect to
the redemption or repurchase of the Notes in a manner
<PAGE>
adverse to the Holders of the Notes;
<PAGE>
(iii) reduce the rate of or change the time for pay-
ment of interest on any Notes;
(iv) waive a Default or Event of Default in the pay-
ment of principal of, premium, if any, or interest on the
Notes (except that Holders of at least a majority in
aggregate principal amount of the then outstanding Notes
may (a) rescind an acceleration of the Notes, and
(b) waive the payment default that resulted from such
acceleration);
(v) make any Note payable in money other than that
stated in the Notes;
(vi) modify any of the provisions of Section 5.08 or
5.13 (other than to add sections of this Indenture subject
thereto) or this Section 9.02 (except to increase the per-
centage of outstanding Notes required for such actions or
to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the
holder of each Note affected thereby);
(vii) amend, change or modify the obligation of the
Company to make and consummate (a) a Change of Control
Offer in the event of a Change of Control Triggering Event
and (b) an Asset Sale Offer after any Asset Sale Offer
Trigger Date, or, in each case (a) and (b) of this para-
graph (vii), amend or modify any of the provisions or def-
initions with respect thereto;
(viii) modify the ranking or priority of the Notes (it
being understood that an amendment or waiver with respect
to Section 10.16 is not within the ambit of this paragraph
(viii)); or
(ix) waive a redemption payment with respect to any
Note.
It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form
of any proposed amendment, supplement or waiver, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to the
Holders of each Note affected thereby, with a copy to the Trus-
<PAGE>
tee, a notice briefly describing the amendment, supplement or
<PAGE>
waiver. Any failure of the Company to mail such notice, or any
defect therein, shall not, however, in any way impair or affect
the validity of any supplemental indenture.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment of or supplement to this Indenture
or the Notes shall comply with the TIA as then in effect and as
applicable to this Indenture.
Section 9.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder
and every subsequent Holder of that Note or portion of that
Note that evidences the same debt as the consenting Holder's
Note, even if notation of the consent is not made on any note.
Subject to the following paragraph, any such Holder or subse-
quent Holder may revoke the consent as to such Holder's Note or
portion of such Note by notice to the Trustee or the Company
received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requi-
site principal amount of Notes have consented (and not thereto-
fore revoked such consent) to the amendment, supplement or
waiver.
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled
to consent to any amendment, supplement or waiver. If a record
date is fixed, then, notwithstanding the last sentence of the
immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to consent to such amend-
ment, supplement or waiver or to revoke any consent previously
given, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes
effective, it shall bind every Holder of Notes, unless it makes
a change described in any of clauses (i) through (ix) of
Section 9.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Note who has consented to it and
every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note.
<PAGE>
Section 9.05. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the
terms of a Note, the Trustee shall (in accordance with the spe-
cific direction of the Company) request the Holder of the Note
to deliver it to the Trustee. The Trustee shall (in accordance
with the specific direction of the Company) place an appropri-
ate notation on the Note about the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue
and the Trustee shall authenticate a new Note that reflects the
changed terms. Failure to make the appropriate notation or
issue a new Note shall not affect the validity and effect of
such amendment, supplement or waiver.
Section 9.06. Trustee May Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or
waiver authorized pursuant to this Article Nine if the amend-
ment, supplement or waiver does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If
it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver, the
Trustee shall be entitled to receive, and shall be fully pro-
tected in relying upon, an Officers' Certificate and an Opinion
of Counsel stating that the execution of any amendment, supple-
ment or waiver is authorized or permitted by this Indenture,
that it is not inconsistent herewith and that it will be valid
and binding upon the Company in accordance with its terms.
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and
Interest.
The Company will duly and punctually pay the princi-
pal of, premium, if any, and interest on the Notes in accor-
dance with the terms of the Notes and this Indenture.
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in The City of New York, an
office or agency where Notes may be presented or surrendered
<PAGE>
for payment, where Notes may be surrendered for registration of
<PAGE>
transfer or exchange and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be
served. The office of the Trustee shall be such office or
agency of the Company, unless the Company shall designate and
maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the
Trustee of any change in the location of any such office or
agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surren-
ders, notices and demands may be made or served at the Corpo-
rate Trust Office, and the Company hereby appoints the Trustee
as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one
or more other offices or agencies (in or outside of The City of
New York) where the Notes may be presented or surrendered for
any or all such purposes, and may from time to time rescind
such designation; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of
Manhattan in The City of New York for such purposes. The Com-
pany will give prompt written notice to the Trustee of any such
designation or rescission and any change in the location of any
such other office or agency.
Section 10.03. Money for Note Payments To Be Held in
Trust.
If the Company shall at any time act as its own Pay-
ing Agent, the Company will, on or before each due date of the
principal of, premium, if any, or interest on any of the Notes,
segregate and hold in trust for the benefit of the Holders
entitled thereto a sum sufficient to pay the principal, pre-
mium, if any, or interest so becoming due until such sums shall
be paid to such Persons or otherwise disposed of as herein pro-
vided, and will promptly notify the Trustee of its action or
failure so to act.
If the Company is not acting as Paying Agent, the
Company will, on or before the day preceding each due date of
the principal of, premium, if any, or interest on any Notes,
deposit with a Paying Agent a sum in same day funds sufficient
to pay the principal, premium, if any, or interest so becoming
due, such sum to be held in trust for the benefit of the Hold-
<PAGE>
ers entitled to such principal, premium or interest, and
<PAGE>
(unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to
act.
If the Company is not acting as Paying Agent, the
Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the pro-
visions of this Section 10.03, that such Paying Agent will:
(a) hold all sums held by it for the payment of the
principal of, premium, if any, or interest on Notes in
trust for the benefit of the Holders entitled thereto
until such sums shall be paid to such Holders or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any Default by the
Company (or any other obligor upon the Notes) in the mak-
ing of any payment of principal of, premium, if any, or
interest on the Notes;
(c) at any time during the continuance of any such
Default, upon the written request of the Trustee, forth-
with pay to the Trustee all sums so held in trust by such
Paying Agent; and
(d) acknowledge, accept and agree to comply in all
respects with the provisions of this Indenture relating to
the duties, rights and liabilities of such Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or
for any other purpose, pay, or direct any Paying Agent to pay,
to the Trustee all sums held in trust by the Company or such
Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company
or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from
all further liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of, premium, if any, or interest on any Note and
remaining unclaimed for two years after such principal, pre-
mium, if any, or interest has become due and payable shall be
paid to the Company upon receipt of a Company Request therefor,
<PAGE>
or (if then held by the Company) shall be discharged from such
<PAGE>
trust; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Company for pay-
ment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of
the Company as trustee thereof, shall thereupon cease; pro-
vided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, shall at the expense
of the Company cause to be published once, in The New York
Times and The Wall Street Journal (national edition), notice
that such money remains unclaimed and that, after a date speci-
fied therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance
of such money then remaining will be repaid to the Company.
Section 10.04. Existence.
Subject to Article Eight, the Company will do or
cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate
existence of each of the Restricted Subsidiaries, and the
rights (charter and statutory), licenses and franchises of the
Company and each of the Restricted Subsidiaries; provided, how-
ever, that the Company shall not be required to preserve any
such right, license or franchise if the Board of Directors
shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and the
Restricted Subsidiaries as a whole and that the loss thereof is
not disadvantageous in any material respect to the Holders;
provided, further, however, that the foregoing shall not pro-
hibit a sale, transfer or conveyance of a Restricted Subsidiary
of the Company or any of its assets or Capital Stock in compli-
ance with the terms of this Indenture.
Section 10.05. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (a) all
taxes, assessments and governmental charges levied or imposed
(i) upon the Company or any of its Subsidiaries or (ii) upon
the income, profits or property of the Company or any of its
Subsidiaries and (b) all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a Lien upon the
property of the Company or any of its Subsidiaries; provided,
however, that the Company shall not be required to pay or dis-
charge or cause to be paid or discharged any such tax, assess-
ment, charge or claim whose amount, applicability or validity
<PAGE>
is being contested in good faith by appropriate proceedings
properly instituted and diligently conducted.
Section 10.06. Maintenance of Properties.
The Company will cause all properties owned by the
Company or the Restricted Subsidiaries or used or held for use
in the conduct of its business or the business of the
Restricted Subsidiaries to be maintained and kept in good con-
dition, repair and working order (reasonable wear and tear
excepted) and supplied with all necessary equipment and will
cause to be made all repairs, renewals, replacements, better-
ments and improvements thereof, all as in the judgment of the
Company may be necessary so that the business carried on in
connection therewith may be conducted at all times in the ordi-
nary course; provided, however, that nothing in this
Section 10.06 shall prevent the Company from discontinuing the
maintenance of any of such properties if such discontinuance
is, in the judgment of the Company, desirable in the conduct of
its business or the business of any of the Restricted Subsid-
iaries.
Section 10.07. Insurance.
The Company will at all times keep all of its and the
Restricted Subsidiaries' properties which are of an insurable
nature insured with insurers, believed by the Company in good
faith to be financially sound and responsible, against loss or
damage to the extent that property of similar character is usu-
ally so insured by corporations similarly situated and owning
like properties (which may include self-insurance, if reason-
able and in comparable form to that maintained by companies
similarly situated).
Section 10.08. Compliance Certificate.
(a) The Company will deliver to the Trustee within
60 days after the end of each of the Company's first three fis-
cal quarters and within 90 days after the end of each of the
Company's fiscal years an Officers' Certificate stating whether
or not the signers know of any Default or Event of Default by
the Company or any Restricted Subsidiary that occurred during
such fiscal period. If they do know of such a Default or Event
of Default, the certificate shall describe any such Default or
Event of Default and its status. The first certificate to be
delivered pursuant to this Section 10.08(a) shall be for the
<PAGE>
first full fiscal quarter of the Company beginning after the
<PAGE>
Issue Date. The Company shall also deliver a certificate to
the Trustee at least annually from the chief financial officer
(or if the Company does not have a chief financial officer, the
Company's principal executive, financial or accounting officer)
of the Company as to his or her knowledge of the compliance by
the Company and the Restricted Subsidiaries with all conditions
and covenants under this Indenture and whether any Default or
Event of Default has occurred, such compliance to be determined
without regard to any period of grace or requirement of notice
provided herein.
(b) So long as not contrary to the then current rec-
ommendations of the American Institute of Certified Public
Accountants, the Company shall use its reasonable best efforts
to deliver to the Trustee within 90 days after the end of each
fiscal year a written statement by the Company's independent
certified public accountants stating (A) that their audit
examination has included a review of the terms of this Inden-
ture and the Notes as they relate to accounting matters, and
(B) whether, in connection with their audit examination, any
Default or Event of Default under this Indenture has come to
their attention and, if such a Default or Event of Default has
come to their attention, specifying the nature and period of
existence thereof; provided, however, that, without any
restriction as to the scope of the audit examination, such
independent certified public accountants shall not be liable by
reason of any failure to obtain knowledge of any such Default
or Event of Default that would not be disclosed in the course
of an audit examination conducted in accordance with GAAP.
(c) The Company will deliver to the Trustee as soon
as possible, and in any event within 10 days after the Company
becomes aware or should reasonably have become aware of the
occurrence of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default and
what action the Company is taking or proposes to take with
respect thereto.
Section 10.09. Provision of Financial Statements.
Whether or not the Company is then subject to
Section 13(a) or 15(d) of the Exchange Act, the Company will
file with the Commission, so long as the Notes are outstanding,
the annual reports, quarterly reports and other periodic
reports which the Company would have been required to file with
the Commission pursuant to such Section 13(a) or 15(d) if the
<PAGE>
Company were so subject, commencing with the quarter ended
<PAGE>
September 30, 1996, and such documents shall be filed with the
Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so
to file such documents if the Company were so subject. The
Company will also in any event (i) within 15 days of each
Required Filing Date, (a) transmit or cause to be transmitted
by mail to all Holders of Notes, as their names and addresses
appear in the Note register, without cost to such Holders, and
(b) file with the Trustee copies of the annual reports, quar-
terly reports and other periodic reports which the Company
would have been required to file with the Commission pursuant
to Section 13(a) or 15(d) of the Exchange Act if the Company
were subject to such Sections and (ii) if filing such documents
by the Company with the Commission is prohibited under the
Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of
such documents to any prospective holder at the Company's cost.
The Company also shall comply with the other provisions of TIA
314(a). In addition, to the extent applicable, the Company
shall cause its annual reports to stockholders and any quar-
terly or other financial reports furnished to stockholders gen-
erally to be filed with the Trustee and mailed, no later than
the date such materials are mailed or made available to the
Company's stockholders, to the Holders at their addresses as
set forth in the register of securities maintained by the
Registrar.
The Company shall provide to the Trustee on a timely
basis such information as the Trustee requires to enable the
Trustee to prepare and file any form required to be submitted
to the Internal Revenue Service or to the Holders of the Notes
relating to original issue discount, including without limita-
tion, Form 1099-OID or any successor form.
Section 10.10. [Intentionally Omitted]
Section 10.11. Limitation on Incurrence of Indebted-
ness.
(a) The Company will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or directly or
indirectly guarantee or in any other manner become directly or
indirectly liable for (collectively, to "incur") any Indebted-
ness (including any Acquired Debt), except that the Company may
incur Indebtedness if, at the time of, and immediately after
giving pro forma effect to, such incurrence of Indebtedness,
<PAGE>
the Debt to Operating Cash Flow Ratio is not more than
<PAGE>
(i) 6.75:1 for any incurrence on or prior to December 31, 1997
and (ii) 6.0:1 for any incurrence after December 31, 1997.
(b) The foregoing limitations will not apply to the
incurrence of any of the following (collectively, "Permitted
Indebtedness"), each of which shall be given independent
effect:
(i) Indebtedness of the Company or any Restricted
Subsidiary consisting of a guarantee of Park
Communications' Indebtedness under the Communi-
cations Senior Credit Facility, such amount not
to exceed $58.0 million in aggregate principal
amount outstanding at any time, less any manda-
tory or optional prepayments actually made in
respect of the Communications Senior Credit
Facility;
(ii) Indebtedness of the Company represented by the
Notes;
(iii) Indebtedness of the Company represented by the
Exchange Notes;
(iv) Indebtedness of the Company and the Restricted
Subsidiaries under the Revolving Credit Facil-
ity, not to exceed $15.0 million in aggregate
principal amount outstanding at any time;
(v) Indebtedness owed by any Wholly Owned Restricted
Subsidiary to the Company or to another Wholly
Owned Restricted Subsidiary, or owed by the Com-
pany to any Wholly Owned Restricted Subsidiary;
provided, however, that any such Indebtedness
shall be at all times held by a Person which is
either the Company or a Wholly Owned Restricted
Subsidiary of the Company; provided, further,
however, that upon either (a) the transfer or
other disposition of any such Indebtedness to a
Person other than the Company or another Wholly
Owned Restricted Subsidiary or (b) the sale,
lease, transfer or other disposition of shares
of Capital Stock (including by consolidation or
merger) of any such Wholly Owned Restricted Sub-
sidiary to a Person other than the Company or
another Wholly Owned Restricted Subsidiary, the
<PAGE>
incurrence of such Indebtedness shall be deemed
<PAGE>
to be an incurrence that is not permitted by
this clause (v);
(vi) Indebtedness arising with respect to Interest
Rate Agreement Obligations incurred for the pur-
pose of fixing or hedging interest rate risk
with respect to any floating rate Indebtedness
that is permitted by the terms of this Indenture
to be outstanding;
(vii) any Indebtedness incurred in connection with or
given in exchange for the renewal, extension,
substitution, refunding, defeasance, refinancing
or replacement (a "refinancing") of any Indebt-
edness described in clauses (ii) and (iii) above
or incurred under Section 10.11(a) ("Refinancing
Indebtedness"); provided, however, that (a) the
principal amount of such Refinancing Indebted-
ness shall not exceed the principal amount (or
accrued amount, if less) of the Indebtedness so
refinanced (plus the premiums paid in connection
therewith (which shall not exceed the stated
amount of any premium or other payment required
to be paid in connection with such a refinancing
pursuant to the terms of the Indebtedness being
refinanced) and the reasonable expenses incurred
in connection therewith); (b) such Refinancing
Indebtedness shall have a Weighted Average Life
to Maturity equal to or greater than the
Weighted Average Life to Maturity of the Indebt-
edness being refinanced; (c) such Refinancing
Indebtedness shall be at least as subordinated
in right of payment to the Notes as the Indebt-
edness being renewed, extended, substituted,
refunded, defeased, refinanced or replaced; and
(d) the obligor on such Refinancing Indebtedness
shall be the obligor on the Indebtedness being
refinanced or the Company; and
(viii) in addition to the items referred to in clauses
(i) through (vii) above, Indebtedness of the
Company and payment and performance bonds not to
exceed $15.0 million in aggregate principal
amount at any time outstanding.
(c) Indebtedness of any Person which is outstanding
<PAGE>
at the time such Person becomes a Restricted Subsidiary or is
<PAGE>
merged with or into or consolidated with the Company or a
Restricted Subsidiary shall be deemed to have been incurred at
the time such Person becomes a Restricted Subsidiary or is
merged with or into or consolidated with the Company or a
Restricted Subsidiary, and Indebtedness which is assumed at the
time of the acquisition of any asset shall be deemed to have
been incurred at the time of such acquisition.
Section 10.12. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, make any
Restricted Payment, unless at the time of and immediately after
giving effect to the proposed Restricted Payment (with the
value of any such Restricted Payment, if other than cash, to be
determined reasonably and in good faith by the Board of Direc-
tors of the Company, whose determination shall be conclusive,
and evidenced by (A) a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee and
(B) if the value of any such Restricted Payment is greater than
$5.0 million, an opinion issued by an investment banking or
appraisal firm of national standing),
(i) no Default or Event of Default (and no event that,
after notice or lapse of time, or both, would become
an "event of default" under the terms of any Indebt-
edness of the Company or the Restricted Subsidiaries)
shall have occurred and be continuing or would occur
as a consequence thereof;
(ii) the Company (x) prior to December 31, 1997, has a
Debt to Operating Cash Flow Ratio as of the date of
such Restricted Payment of not greater than 6.25:1
(for calculations of such ratio if made in respect of
a date of determination (I) on or prior to March 31,
1997, the Operating Cash Flow component of such ratio
shall be determined by multiplying the Operating Cash
Flow of the Company for the period from March 31,
1996 to the end of the fiscal quarter ended immedi-
ately prior to such determination date by a fraction,
the numerator of which is four and the denominator of
which is the number of full fiscal quarters from
March 31, 1996 to such determination date and
(II) after March 31, 1997, the Operating Cash Flow
component of such ratio shall be determined as pro-
vided in the definition of "Debt to Operating Cash
<PAGE>
Flow Ratio") and (y) on or after December 31, 1997,
<PAGE>
could incur at least $1.00 of additional Indebtedness
pursuant to Section 10.11(a); and
(iii)the aggregate amount of all Restricted Payments made
after the Issue Date shall not exceed the sum of
(a) an amount equal to the Company's Cumulative Oper-
ating Cash Flow less 1.4 times the Company's Cumula-
tive Consolidated Interest Expense, plus (b) the
aggregate amount of all net cash proceeds received
since the Issue Date by the Company from the issuance
and sale (other than to a Restricted Subsidiary) of
Capital Stock (other than Disqualified Stock) to the
extent that such proceeds are not used to redeem,
repurchase, retire or otherwise acquire Capital Stock
or any Indebtedness of the Company or any Restricted
Subsidiary pursuant to clause (ii) of Section
10.12(b) below (it being understood that no capital
contributions attributable to the Offering and the
consummation of the Refinancing Transactions (includ-
ing the repayment of the Existing Term Loan as
defined in the Offering Memorandum) shall be deemed
for any purpose to be net cash proceeds received by
the Company within the contemplation of this clause
(b)).
For the purposes of clause (iii) of the immediately
preceding paragraph only, any payments made pursuant to clauses
(E) and (H) of the second paragraph of Section 10.13 shall be
included as if they were Restricted Payments in the calculation
of the aggregate amount of all Restricted Payments made since
the Issue Date.
(b) The foregoing provisions will not prohibit, so
long as (other than with respect to clause (i) below) there is
no Default or Event of Default continuing, the following
actions (collectively, "Permitted Payments"), each of which
will be given independent effect: (i) the payment of any divi-
dend within 60 days after the date of declaration thereof if at
such declaration date such payment would have been permitted
under this Indenture; (ii) the redemption, repurchase, retire-
ment or other acquisition of any Capital Stock or any Indebted-
ness of the Company in exchange for, or out of the proceeds of,
the substantially concurrent sale (other than to a Restricted
Subsidiary) of Capital Stock or any Indebtedness of the Company
(other than Disqualified Stock); (iii) the payment of dividends
to Park Communications in an amount and at such time as is suf-
<PAGE>
ficient to pay interest on the Communications Senior Credit
<PAGE>
Facility at the rates determined in accordance with the provi-
sions of the Communications Senior Credit Facility as in effect
on the Issue Date; (iv) the payment of dividends to Park Commu-
nications on the Issue Date in an amount equal to the gross
proceeds of the offering of the Notes less expenses thereof
actually paid by the Company; and (v) the payment of dividends
to Park Communications to the extent the amount of any such
payment shall be used by Park Communications to make mandatory
payments of Indebtedness outstanding under the Communications
Senior Credit Facility.
For purposes of clause (iii) of Section 10.12(a)
above, (A) Permitted Payments made pursuant to clauses (i),
(iii) and (v) of the immediately preceding paragraph (other
than dividends to the extent made from the operations of, or
from the proceeds of the sales or dispositions of, Radio Sta-
tion Assets (unless received in repayment of any Radio Station
Note)) shall be included (with respect to clause (i), as of the
date of declaration) as Restricted Payments made since the
Issue Date, and Permitted Payments made pursuant to clauses
(ii) and (iv) of the immediately preceding paragraph shall not
be included as Restricted Payments and (B) the amount of
Restricted Payments made since the Issue Date shall be reduced
by the amount of cash proceeds received by the Company from the
repayment of any Radio Station Note, not to exceed the amount
of Restricted Payments deemed made pursuant to clause (v) of
the immediately preceding paragraph.
Section 10.13. Limitations on Transactions with
Affiliates.
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, enter into or
suffer to exist any transaction or series of related transac-
tions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or services) with any
Affiliate of the Company (other than the Company or a Wholly
Owned Restricted Subsidiary) (each an "Affiliate Transaction"),
unless (1) such transaction or series of transactions is on
terms that are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than would be avail-
able in a comparable transaction in arm's-length dealings with
an unrelated third party and (2)(a) with respect to any trans-
action or series of transactions involving aggregate payments
in excess of $1.0 million, the Company delivers an Officers'
Certificate to the Trustee certifying that such transaction or
<PAGE>
series of related transactions complies with clause (1) above
<PAGE>
and such transaction or series of related transactions has been
approved by a majority of the members of the Board of Directors
of the Company (and approved by a majority of the Independent
Directors or, in the event there is only one Independent Direc-
tor, by such Independent Director), and (b) with respect to any
transaction or series of transactions involving aggregate pay-
ments in excess of $5 million or any transaction or series of
related transactions referred to in clause (2)(a) above where
there are no Independent Directors, an opinion as to the fair-
ness to the Company or such Restricted Subsidiary from a finan-
cial point of view issued by an investment banking or appraisal
firm of national standing.
Notwithstanding the foregoing, this covenant will not
apply to (A) employment agreements or compensation or employee
benefit arrangements with any officer, director or employee of
the Company entered into in the ordinary course of business
(including customary benefits thereunder (it being understood
that benefits of the nature in place as of the Issue Date shall
be deemed permissible hereunder)), (B) any transaction entered
into by or among the Company or one of its Wholly Owned
Restricted Subsidiaries with one or more Wholly Owned
Restricted Subsidiaries of the Company, (C) any Restricted Pay-
ment made in compliance with Section 10.12 and any dividend to
Park Communications from the operations of, or from the sale or
disposition of, any Radio Station Asset to the extent not a
Restricted Payment by virtue of the definition of "Restricted
Payments," (D) any Permitted Investments other than Investments
permitted by clause (vii) of the definition of "Permitted
Investments," (E) payments to Park Communications on the busi-
ness day after each Interest Payment Date for the payment of
management advisory fees in any amount not to exceed $125,000
on each such date; provided, however, that no such payment
shall be made unless (1) the Company has paid all accrued
interest on the Notes due on such Interest Payment Date and
(2) no Default or Event of Default shall have occurred and be
continuing at the time of such payment, (F) payments to Park
Communications or PAI pursuant to the Tax Sharing Agreement,
(G) the pledge of Capital Stock of Unrestricted Subsidiaries by
the Company or any Restricted Subsidiary to support such Unre-
stricted Subsidiaries' Indebtedness, (H) payments to Park Com-
munications in respect of the Company's allocable portion of
the consolidated legal, tax, accounting and other administra-
tive expenses of Park Communications, not to exceed $875,000
during any consecutive six-month period; provided, however,
that no such payment shall be made unless no Default or Event
<PAGE>
of Default shall have occurred and be continuing at the time of
<PAGE>
such payment and (I) transactions involving the Company or any
of the Restricted Subsidiaries on the one hand and any Unre-
stricted Subsidiary owning Radio Station Assets on the other
relating to general administrative, corporate, legal and
accounting services and similar intercompany relationships to
the extent entered into in the ordinary course of business and
consistent with such transactions and relationships existing on
the Issue Date.
Section 10.14. Limitation on Asset Sales.
The Company will not, and will not permit any
Restricted Subsidiary to, make any Asset Sale unless (a) the
Company or such Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least
equal to the fair market value (as evidenced by (i) a resolu-
tion of the Board of Directors set forth in an Officers' Cer-
tificate delivered to the Trustee and (ii) if the fair market
value is greater than $5.0 million, an opinion issued by an
investment banking or appraisal firm of national standing) of
the assets or other property sold or disposed of in the Asset
Sale, and (b) at least 85% of such consideration consists of
either (I) cash or Cash Equivalents; provided, however, that
for purposes of this covenant "cash" shall include the amount
of any Indebtedness (other than any Indebtedness that is by its
terms subordinated to the Notes) of the Company or such
Restricted Subsidiary that are assumed by the transferee of any
such assets or other property in such Asset Sale (and excluding
any liabilities that are incurred in connection with or in
anticipation of such Asset Sale), but only to the extent that
such assumption is effected on a basis under which there is no
further recourse to the Company or any of the Restricted Sub-
sidiaries with respect to such liabilities or (II) properties
and capital assets (including franchises and licenses required
to own or operate such properties) to be used in the same lines
of business being conducted by the Company or such Restricted
Subsidiary on the Issue Date.
Within 360 days after any Asset Sale, the Company may
elect to apply the Net Proceeds from such Asset Sale to
(a) permanently repay any Indebtedness of the Company or its
Restricted Subsidiaries (including under the Communications
Senior Credit Facility), other than any Indebtedness of the
Company or any Restricted Subsidiary which expressly ranks sub-
ordinate to any other Indebtedness, and/or (b) make an invest-
ment in, or acquire capital assets or property directly related
<PAGE>
to, the television broadcasting business. Pending the final
<PAGE>
application of any such Net Proceeds, the Company may tempo-
rarily invest such Net Proceeds in any Investments described
under clauses (i) through (iv) of the definition of "Permitted
Investments." Any Net Proceeds from an Asset Sale not applied
or invested as provided in the first sentence of this paragraph
within 360 days of such Asset Sale will be deemed to constitute
"Excess Proceeds." If the Net Proceeds of any Asset Sale are
applied to repay the indebtedness outstanding under the Commu-
nications Senior Credit Facility, the Company shall cause all
of its Unrestricted Subsidiaries which at such time own the
Radio Station Assets (other than KEZX-AM and KWJZ-FM) to exe-
cute and deliver a senior unsecured note evidencing their joint
and several obligation to the Company in the amount of such Net
Proceeds applied to the Communications Senior Credit Facility
(the "Radio Station Note") and bearing interest (not payable
until the Communications Senior Credit Facility has been repaid
in full) at the rate then borne by the Notes. Each Radio Sta-
tion Note shall provide by its terms that it shall become imme-
diately due and payable after the Communications Senior Credit
Facility has been repaid in full in an amount equal to such
Radio Station Note's pro rata portion (relative to all Radio
Station Notes) of the net proceeds (after taxes and reasonable
expenses) of each sale of Radio Station Assets (other than
KEZX-AM and KWJZ-FM) occurring after the repayment in full of
the Communications Senior Credit Facility. Prior to such time
as the Communications Senior Credit Facility has been repaid in
full, the Company will not, and will not permit any of its Sub-
sidiaries to, sell, transfer or otherwise dispose of the Radio
Station Assets (other than KEZX-AM or KWJZ-FM) unless at least
the net proceeds (after taxes and reasonable expenses) thereof
are applied to the repayment of the Communications Senior
Credit Facility. The Company will not permit any Unrestricted
Subsidiary which owns Radio Station Assets to enter into any
agreement other than the Communications Senior Credit Facility
which would restrict in any manner the payment when due of any
Radio Station Note.
Each date on which the aggregate amount of Excess
Proceeds in respect of which an Asset Sale Offer has not been
made exceeds $5,000,000 shall be deemed an "Asset Sale Offer
Trigger Date". Within 30 days of each Asset Sale Offer Trigger
Date the Company shall commence an offer (the "Asset Sale
Offer") to purchase the maximum principal amount of Notes and
other Indebtedness of the Company that ranks pari passu in
right of payment with the Notes (to the extent required by the
instrument governing such other Indebtedness) that may be pur-
<PAGE>
chased out of the Excess Proceeds. Any Notes to be purchased
<PAGE>
pursuant to an Asset Sale Offer shall be purchased pro rata
based on the aggregate principal amount of Notes and all such
other Indebtedness outstanding; and all such Notes shall be
purchased at an offer price in cash in an amount equal to 100%
of the principal amount thereof, plus accrued and unpaid inter-
est, if any, to the date of purchase. To the extent that any
Excess Proceeds remain after completion of an Asset Sale Offer,
the Company may use the remaining amount for general corporate
purposes otherwise permitted by this Indenture. Upon the con-
summation of any Asset Sale Offer, the amount of Excess Pro-
ceeds from the Asset Sale in question to be the subject of
future Asset Sale Offers shall be deemed to be zero.
Notice of an Asset Sale Offer shall be prepared and
mailed by the Company with a copy to the Trustee not later than
the 30th day after the related Asset Sale Offer Trigger Date to
each Holder of Notes at such Holder's registered address, stat-
ing:
(i) that an Asset Sale Offer Trigger Date has
occurred and that the Company is offering to purchase the
maximum principal amount of Notes that may be purchased
out of the Excess Proceeds to the extent to be applied to
an offer to purchase Notes (as provided in the immediately
preceding paragraph), at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of the
purchase (the "Asset Sale Offer Purchase Date"), which
shall be a Business Day, specified in such notice, that is
not earlier than 30 days or later than 60 days from the
date such notice is mailed;
(ii) the amount of accrued and unpaid interest, if
any, as of the Asset Sale Offer Purchase Date;
(iii) that any Note not tendered will continue to
accrue interest in accordance with the terms thereof;
(iv) that, unless the Company defaults in the payment
of the purchase price for the Notes payable pursuant to
the Asset Sale Offer, any Notes accepted for payment pur-
suant to the Asset Sale Offer shall cease to accrue inter-
est after the Asset Sale Offer Purchase Date;
(v) that Holders electing to have Notes purchased
pursuant to an Asset Sale Offer will be required to sur-
<PAGE>
render their Notes to the Paying Agent at the address
<PAGE>
specified in the notice prior to 5:00 p.m., New York City
time, on the Asset Sale Purchase Date with the "Option of
Holder to Elect Purchase" on the reverse thereof completed
and must complete any form letter of transmittal proposed
by the Company (which letter must be completed correctly
by such Holder) and which is acceptable to the Trustee and
the Paying Agent;
(vi) that Holders of Notes will be entitled to with-
draw their election if the Paying Agent receives, not
later than 5:00 p.m., New York City time, on the Business
Day prior to the Asset Sale Offer Purchase Date, a tele-
gram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of
Notes the Holder delivered for purchase, the Note certifi-
cate number (if any) and a statement that such Holder is
withdrawing its election to have such Notes purchased;
(vii) that Holders whose Notes are purchased only in
part will be issued Notes equal in principal amount to the
unpurchased portion of the Notes surrendered;
(viii) the instructions that Holders must follow in
order to tender their Notes; and
(ix) information concerning the business of the Com-
pany, the most recent annual and quarterly reports of the
Company filed with the SEC pursuant to the Exchange Act
(or, if the Company is not then required to file any such
reports with the SEC, the comparable reports prepared pur-
suant to Section 10.09), a description of material devel-
opments in the Company's business, information with
respect to pro forma historical financial information
after giving effect to such Asset Sale and such other
information concerning the circumstances and relevant
facts regarding such Asset Sale and Asset Sale Offer as
would be material to a Holder of Notes in connection with
the decision of such Holder as to whether or not it should
tender Notes pursuant to the Asset Sale Offer.
On the Asset Sale Offer Purchase Date, the Company
will (i) accept for payment the maximum principal amount of
Notes or portions thereof tendered pursuant to the Asset Sale
Offer that can be purchased out of Excess Proceeds from such
Asset Sale that are to be applied to an Asset Sale Offer (to
the extent provided in the second preceding paragraph),
<PAGE>
(ii) deposit with the Paying Agent an amount in cash equal to
<PAGE>
the aggregate purchase price of all Notes or portions thereof
accepted for payment and any accrued and unpaid interest on
such Notes as of the Asset Sale Offer Purchase Date, and
(iii) deliver or cause to be delivered to the Trustee all Notes
tendered pursuant to the Asset Sale Offer. If less than all
Notes tendered pursuant to the Asset Sale Offer are accepted
for payment by the Company for any reason consistent with this
Indenture, selection of the Notes to be purchased by the Com-
pany shall be in compliance with the requirements of the prin-
cipal national securities exchange, if any, on which the Notes
are listed or, if the Notes are not so listed, on a pro rata
basis or by lot; provided, however, that Notes accepted for
payment in part shall only be purchased in integral multiples
of $1,000. The Paying Agent shall promptly mail to each Holder
of Notes or portions thereof accepted for payment an amount in
cash equal to the purchase price for such Notes plus any
accrued and unpaid interest thereon, and the Trustee shall
promptly authenticate and mail to such Holder of Notes accepted
for payment in part a new Note equal in principal amount to any
unpurchased portion of the Notes, and any Note not accepted for
payment in whole or in part shall be promptly returned to the
Holder of such Note.
On and after an Asset Sale Offer Purchase Date,
interest will cease to accrue on the Notes or portions thereof
accepted for payment, unless the Company defaults in the pay-
ment of the purchase price therefor. The Company will publicly
announce the results of the Asset Sale Offer on or as soon as
practicable after the Asset Sale Offer Purchase Date.
The Company will comply with the applicable tender
offer rules, including the requirements of Rule 14e-1 under the
Exchange Act, and all other applicable securities laws and reg-
ulations in connection with any Asset Sale Offer and will be
deemed not to be in violation of any of its covenants herein to
the extent such compliance is in conflict with such covenants.
Section 10.15. Change of Control.
Upon the occurrence of a Change of Control Triggering
Event (the date of such occurrence, the "Change of Control
Date"), the Company shall make an offer to purchase (a "Change
of Control Offer"), and shall, subject to the provisions
described below, purchase, all or any portion (equal to $1,000
or an integral multiple thereof) of the then outstanding Notes
validly tendered at a purchase price in cash (the "Change of
<PAGE>
Control Purchase Price") equal to 101% of the principal amount
<PAGE>
thereof, plus accrued and unpaid interest, if any, to the
Change of Control Purchase Date. The Company shall be required
to purchase all Notes properly tendered into the Change of Con-
trol Offer and not withdrawn.
Notice of a Change of Control Offer shall be prepared
and mailed by the Company not later than the 30th day after the
Change of Control Date to the Holders of Notes at their last
registered addresses with a copy to the Trustee and the Paying
Agent. The Offer shall remain open from the time of mailing
for at least 20 Business Days or such longer period as may be
required by law. The notice, which shall govern the terms of
the Change of Control Offer, shall include such disclosures as
are required by law and shall state:
(a) that the Change of Control Triggering Event has
occurred and that such Holder has the right to require the
Company to purchase all or a portion (equal to $1,000 or
an integral multiple thereof) of such Holder's Notes at a
purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid inter-
est, if any, to the date of purchase, which shall be a
Business Day, specified in such notice, that is not ear-
lier than 30 days or later than 60 days from the date such
notice is mailed (the "Change of Control Purchase Date");
(b) the amount of accrued and unpaid interest, if
any, as of the Change Control Purchase Date;
(c) that any Note not tendered for payment will con-
tinue to accrue interest in accordance with the terms
thereof;
(d) that, unless the Company defaults in the payment
of the purchase price for the Notes payable pursuant to
the Change of Control Offer, any Notes accepted for pay-
ment pursuant to the Change of Control Offer shall cease
to accrue interest after the Change of Control Purchase
Date;
(e) that Holders electing to have Notes purchased
pursuant to a Change of Control Offer will be required to
surrender their Notes to the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City
time, on the Change of Control Purchase Date with the
"Option of Holder to Elect Purchase" on the reverse
<PAGE>
thereof completed and must complete any form letter of
<PAGE>
transmittal proposed by the Company and be completed cor-
rectly by such Holder and be acceptable to the Trustee and
the Paying Agent;
(f) that Holders of Notes will be entitled to with-
draw their election if the Paying Agent receives, not
later than 5:00 p.m., New York City time, on the Business
Day prior to the Change of Control Purchase Date, a tele-
gram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of
Notes the Holder delivered for purchase, the Note certifi-
cate number (if any) and a statement that such Holder is
withdrawing its election to have such Notes purchased;
(g) that Holders whose Notes are purchased only in
part will be issued Notes equal in principal amount to the
unpurchased portion of the Notes surrendered;
(h) the instructions that Holders must follow in
order to tender their Notes; and
(i) information concerning the business of the Com-
pany, the most recent annual and quarterly reports of the
Company filed with the SEC pursuant to the Exchange Act
(or, if the Company is not then required to file any such
reports with the SEC, the comparable reports prepared pur-
suant to Section 10.09), a description of material devel-
opments in the Company's business, information with
respect to pro forma historical financial information
after giving effect to such Change of Control and such
other information concerning the circumstances and rele-
vant facts regarding such Change of Control and Change of
Control Offer as would be material to a Holder of Notes in
connection with the decision of such Holder as to whether
or not it should tender Notes pursuant to the Change of
Control Offer.
On the Change of Control Purchase Date, the Company
will (i) accept for payment all Notes or portions thereof ten-
dered pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent an amount in cash equal to the aggregate
purchase price of all Notes or portions thereof accepted for
payment, plus any accrued and unpaid interest on such Notes as
of the Change of Control Purchase Date, and (iii) deliver or
cause to be delivered to the Trustee all Notes tendered pursu-
ant to the Change of Control Offer. The Paying Agent shall
<PAGE>
promptly mail to each Holder of Notes or portions thereof
<PAGE>
accepted for payment an amount in cash equal to the purchase
price for such Notes, plus any accrued and unpaid interest
thereon, and the Trustee shall promptly authenticate and mail
to such Holders of Notes accepted for payment in part a new
Note equal in principal amount to any unpurchased portion of
the Note surrendered. Any Notes not so accepted in whole or in
part shall be promptly returned to the Holder thereof.
On and after a Change of Control Purchase Date,
interest will cease to accrue on the Notes or portions thereof
accepted for payment unless the Company defaults in the payment
of the purchase price therefor. The Company will publicly
announce the results of the Change of Control Offer not later
than the first Business Day following the Change of Control
Purchase Date.
The Company will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are appli-
cable, in the event that Change of Control occurs and the Com-
pany is required to purchase Notes as described above and will
be deemed not to be in violation of any of its covenants herein
to the extent such compliance is in conflict with such
covenants.
Section 10.16. Limitations on Liens Securing Certain
Debt.
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create,
incur, assume or suffer to exist any Lien (other than Permitted
Liens) on any property or assets of the Company or any
Restricted Subsidiary (other than the Capital Stock of Unre-
stricted Subsidiaries) now owned or hereafter acquired, or any
income or profits therefrom, or assign or convey any right to
receive income therefrom to secure any Indebtedness, unless the
Notes are equally and ratably secured thereby for so long as
such Indebtedness is secured thereby.
Section 10.17. Limitation on Dividends and Other
Payment Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create or
otherwise cause to suffer to exist or become effective any
encumbrance or restriction of any kind on the ability of any
<PAGE>
Restricted Subsidiary to (a) pay dividends or make any other
<PAGE>
distribution to the Company or any Restricted Subsidiary on its
Capital Stock or with respect to any other interest or partici-
pation in, or measured by, its profits, or pay any Indebtedness
owed to the Company or any other Restricted Subsidiary,
(b) make loans or advances to the Company or any other
Restricted Subsidiary or guarantee any Indebtedness of the Com-
pany or any other Restricted Subsidiary, or (c) transfer any of
its properties or assets to the Company or any other Restricted
Subsidiary, except for such encumbrances or restrictions exist-
ing under or by reason of (i) the Communications Senior Credit
Facility as in effect on the Issue Date, and any amendments,
restatements, renewals, replacements or refinancings thereof;
provided, however, that such amendments, restatements, renew-
als, replacements or refinancings are no more restrictive with
respect to such dividend and other payment restrictions than
those contained in the Communications Senior Credit Facility
(or, if more restrictive, than those contained in this Inden-
ture) immediately prior to any such amendment, restatement,
renewal, replacement or refinancing, (ii) applicable law,
(iii) any instrument governing Indebtedness or Capital Stock of
an Acquired Person acquired by the Company or any of the
Restricted Subsidiaries as in effect at the time of such acqui-
sition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition); pro-
vided, however, that (1) such restriction is not applicable to
any Person, or the properties or assets of any Person, other
than the Acquired Person, and (2) the consolidated net income
of such Acquired Person for any period prior to such acquisi-
tion shall not be taken into account in determining whether
such acquisition was permitted by the terms of this Indenture,
(iv) by reason of customary non-assignment provisions in leases
entered into the ordinary course of business, (v) Purchase
Money Indebtedness for property acquired in the ordinary course
of business that only impose restrictions on the property so
acquired, (vi) an agreement for the sale or disposition of the
Capital Stock or assets of such Restricted Subsidiary; pro-
vided, however, that such restriction is only applicable to
such Restricted Subsidiary or assets, as applicable, and such
sale or disposition otherwise is permitted under Section 10.14;
provided, further, however, that such restriction or encum-
brance shall be effective only for a period from the execution
and delivery of such agreement through a termination date not
later than 270 days after such execution and delivery,
(vii) Refinancing Indebtedness permitted under this Indenture;
provided, however, that the restrictions contained in the
agreements governing such Refinancing Indebtedness are no more
<PAGE>
restrictive in the aggregate than those contained in the
<PAGE>
agreements governing the Indebtedness being refinanced immedi-
ately prior to such refinancing, (viii) this Indenture or
(ix) the Revolving Credit Facility, and any amendments,
restatements, renewals, replacements or refinancings thereof.
Section 10.18. Limitation on Subsidiary Capital
Stock.
The Company will not permit any Restricted Subsidiary
to issue any Capital Stock, except for (i) Capital Stock issued
to and held by the Company or a Wholly Owned Restricted Subsid-
iary and (ii) Capital Stock issued by a Person prior to the
time (a) such Person becomes a Restricted Subsidiary, (b) such
Person merges with or into a Restricted Subsidiary or (c) a
Restricted Subsidiary merges with or into such Person; pro-
vided, however, that such Capital Stock was not issued by such
Person in anticipation of the type of transaction contemplated
by clause (a), (b) or (c).
Section 10.19. Limitation on Amendment of Tax Shar-
ing Agreement.
The Company will not, and will not permit any
Restricted Subsidiary to, (i) amend, supplement or modify the
Tax Sharing Agreement, unless any such amendment, supplement or
modification is no less favorable to the Holders than the terms
thereof on the Issue Date or (ii) assign the Tax Sharing Agree-
ment or the benefits and obligations thereunder to any other
Person.
Section 10.20. Limitation on Line of Business.
The Company will not, and will not permit any
Restricted Subsidiary to, engage in any business other than
television broadcasting and businesses directly related
thereto; provided, however, that the Company and the Restricted
Subsidiaries may engage in the radio broadcasting business
solely by continuing to operate the Radio Station Assets until
the disposition of the Radio Station Assets.
Section 10.21. Certain Exceptions for Capital Con-
tributions To Refinance the Existing Credit Facility.
Any other provision of this Indenture to the contrary
notwithstanding, any capital contribution made on the Issue
Date in any Subsidiary of the Company to effect the repayment
<PAGE>
of the Existing Credit Facility from the proceeds of the
<PAGE>
offering of the Notes and the consummation of the other financ-
ing transactions taking place on the Issue Date in connection
therewith shall not be deemed to be a violation of any covenant
of this Indenture (and the aggregate amount of any such capital
contribution shall not be counted as a Restricted Investment).
ARTICLE ELEVEN
REDEMPTION OF NOTES
Section 11.01. Optional and Special Redemption.
Optional Redemption. Except as provided below, the
Notes are not redeemable prior to May 15, 2001. Subject to
earlier redemption in the manner described in the next two suc-
ceeding paragraphs, the Notes will be redeemable at the option
of the Company, in whole or in part, at the Redemption Prices
(expressed as percentages of principal amount) set forth below,
plus accrued interest to the Redemption Date, if redeemed dur-
ing the 12-month period beginning May 15 of the years indicated
below:
Redemption
Year __Price___
2001 ......................... 106.00%
2002 ......................... 104.00
2003 ......................... 102.00
2004 ......................... 100.00
In addition, at any time prior to May 15, 1999, the
Company may, at its option, redeem up to 35% of the aggregate
principal amount of Notes originally issued with the net pro-
ceeds of one or more Public Equity Offerings or Strategic
Equity Investments where the proceeds to the Company of any
such Public Equity Offering or Strategic Equity Investment are
at least $40.0 million, at 111.75% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date
of redemption; provided, however, that not less than $155.0
million principal amount of the Notes is outstanding immedi-
ately after giving effect to such redemption (other than any
Notes owned by the Company or any of its Affiliates) and such
redemption is effected within 60 days of such issuance or
investment.
<PAGE>
In addition, at any time prior to May 15, 2001, upon
the occurrence of a Change of Control, the Company may redeem
the Notes, in whole but not in part, at a redemption price
equal to the principal amount thereof plus the Applicable Pre-
mium plus accrued and unpaid interest, if any, to the date of
redemption. Notice of redemption of the Notes pursuant to this
paragraph shall be mailed to holders of the Notes not more than
30 days following the occurrence of a Change of Control. The
Company may not redeem Notes pursuant to this paragraph if it
has made an offer to repurchase Notes with respect to such
Change of Control.
Section 11.02. Applicability of Article.
Redemption of Notes at the election of the Company or
otherwise, as permitted or required by any provision of this
Indenture, shall be made in accordance with such provision and
this Article.
Section 11.03. Election To Redeem; Notice to
Trustee.
The election of the Company to redeem any Notes pur-
suant to Section 11.01(a) shall be evidenced by a Board Resolu-
tion of the Company and an Officers' Certificate. In case of
any redemption at the election of the Company, the Company
shall, at least 45 days prior to the Redemption Date fixed by
the Company (unless a shorter notice period shall be satisfac-
tory to the Trustee), notify the Trustee in writing of such
Redemption Date and of the principal amount of Notes to be
redeemed.
Section 11.04. Selection by Trustee of Notes To Be
Redeemed.
In the event that less than all of the Notes are to
be redeemed at any time, selection of such Notes for redemption
will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not then listed on a
national securities exchange, on a pro rata basis or by lot;
provided, however, that no Notes of a principal amount of
$1,000 shall be redeemed in part; provided, further, however,
that any redemption pursuant to the provisions relating to one
or more Public Equity Offerings or Strategic Equity Investments
by the Company shall be made on a pro rata basis or on as
<PAGE>
nearly a pro rata basis as practicable (subject to any
<PAGE>
procedures of The Depository Trust Company). If any Note is to
be redeemed in part only, the notice of redemption that relates
to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in a principal amount equal
to the unredeemed portion thereof will be issued in the name of
the holder thereof upon cancellation of the original Note. On
and after the redemption date, if the Company does not default
in the payment of the redemption price, interest will cease to
accrue on Notes or portions thereof called for redemption.
For all purposes of this Indenture, unless the con-
text otherwise requires, all provisions relating to redemption
of Notes shall relate, in the case of any Note redeemed or to
be redeemed only in part, to the portion of the principal
amount of such Note which has been or is to be redeemed.
Section 11.05. Notice of Redemption.
Notice of redemption shall be mailed by first-class
mail, postage prepaid, mailed at least 30 but not more than 60
days before the Redemption Date, to each Holder of Notes to be
redeemed at its registered address.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all outstanding Notes are to be
redeemed, the identification of the particular Notes to be
redeemed;
(d) in the case of a Note to be redeemed in part,
the principal amount of such Note to be redeemed and that
after the Redemption Date upon surrender of such Note, a
new Note or Notes in the aggregate principal amount equal
to the unredeemed portion thereof will be issued;
(e) that Notes called for redemption must be surren-
dered to the Paying Agent to collect the Redemption Price;
(f) that on the Redemption Date the Redemption Price
will become due and payable upon each such Note or portion
thereof, and that (unless the Company shall default in
payment of the Redemption Price) interest thereon shall
<PAGE>
cease to accrue on and after said date;
<PAGE>
(g) the place or places where such Notes are to be
surrendered for payment of the Redemption Price;
(h) the CUSIP number, if any, relating to such
Notes; and
(i) the paragraph of the Notes pursuant to which the
Notes are being redeemed.
Notice of redemption of Notes to be redeemed shall be
given by the Company or, at the Company's written request, by
the Trustee in the name and at the expense of the Company.
The notice if mailed in the manner herein provided
shall be conclusively presumed to have been given, whether or
not the Holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the
Holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the
redemption of any other Note.
Section 11.06. Deposit of Redemption Price.
On or prior to the day preceding any Redemption Date,
the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 10.03) an
amount of money in same day funds sufficient to pay the Redemp-
tion Price of, and accrued interest on, all the Notes or por-
tions thereof which are to be redeemed on that date.
Section 11.07. Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid,
the Notes so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein speci-
fied and from and after such date (unless the Company shall
default in the payment of the Redemption Price) such Notes
shall cease to bear interest. Upon surrender of any such Note
for redemption in accordance with said notice, such Note shall
be paid by the Company at the Redemption Price; provided, how-
ever, that installments of interest whose Stated Maturity is on
or prior to the Redemption Date shall be payable to the Holders
of such Notes, or one or more Predecessor Notes, registered as
such on the relevant Regular Record Dates according to the
terms and the provisions of Section 3.07.
<PAGE>
If any Note called for redemption shall not be so
paid upon surrender thereof for redemption, the principal and
premium, if any, shall, until paid, bear interest from the
Redemption Date at the rate then borne by such Note.
Section 11.08. Notes Redeemed or Purchased in Part.
Any Note which is to be redeemed or purchased only in
part shall be surrendered to the Paying Agent at the office or
agency maintained for such purpose pursuant to Section 10.02
(with, if the Company, the Note Registrar or the Trustee so
requires, due endorsement by, or a written instrument of trans-
fer in form satisfactory to, the Company, the Note Registrar or
the Trustee duly executed by the Holder thereof or such Hold-
er's attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver
to the Holder of such Note without service charge, a new Note
or Notes, of any authorized denomination as requested by such
Holder in aggregate principal amount equal to, and in exchange
for, the portion of the principal of the Note so surrendered
that is not redeemed or purchased.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of
Indenture.
This Indenture shall cease to be of further effect
(except as to surviving rights of registration of transfer or
exchange of Notes herein expressly provided for, the Company's
obligations under Section 6.07 hereof, and the Trustee's and
Paying Agent's obligations under Section 4.06 hereof) and the
Trustee, on written demand of and at the expense of the Com-
pany, shall execute proper instruments acknowledging satisfac-
tion and discharge of this Indenture, when
(a) either
(i) all Notes theretofore authenticated and deliv-
ered (other than (A) Notes which have been destroyed, lost
or stolen and which have been replaced or paid as provided
in Section 3.06 hereof and (B) Notes for whose payment in
United States dollars has theretofore been irrevocably
<PAGE>
deposited in trust or segregated and held in trust by the
<PAGE>
Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 10.03) have been
delivered to the Trustee for cancellation; or
(ii) all such Notes not theretofore delivered to the
Trustee for cancellation have become due and payable and
the Company has irrevocably deposited or caused to be
deposited with the Trustee in trust for the purpose an
amount in United States dollars sufficient to pay and dis-
charge the entire Indebtedness on such Notes not thereto-
fore delivered to the Trustee for cancellation, for the
principal of, premium, if any, and interest to the date of
such deposit;
(b) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating
that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been com-
plied with.
Notwithstanding the satisfaction and discharge of
this Indenture, the obligations of the Company to the Trustee
under Section 6.07 and, if money shall have been deposited with
the Trustee pursuant to subclause (a)(ii) of this Section
12.01, the obligations of the Trustee under Section 12.02 and
the last paragraph of Section 10.03 shall survive.
Section 12.02. Application of Trust Money.
Subject to the provisions of the last paragraph of
Section 10.03, all money deposited with the Trustee pursuant to
Section 12.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture,
to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the
principal of, premium, if any, and interest on the Notes for
whose payment such money has been deposited with the Trustee.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the day and year
first above written.
PARK BROADCASTING, INC.
By:
Name: Wright M. Thomas
Title: President
IBJ SCHRODER BANK & TRUST,
COMPANY, as Trustee
By:
Name:
Title:
<PAGE>
EXHIBIT A
PARK BROADCASTING, INC.
___________
11-3/4% SENIOR NOTE DUE 2004
CUSIP No. ____________
No. ___________ $____________
PARK BROADCASTING, INC., a Delaware corporation (the
"Company," which term includes any successor under the Inden-
ture hereinafter referred to), for value received, promises to
pay to ______________ or registered assigns, the principal sum
of _______________ United States Dollars on May 15, 2004, at
the office or agency of the Company referred to below, and to
pay interest thereon on May 15, and November 15, in each year,
commencing on November 15, 1996 (each an "Interest Payment
Date"), accruing from the Issue Date or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for, at the rate of 11-3/4% per annum, until the prin-
cipal hereof is paid or duly provided for. Interest shall be
computed on the basis of a 360-day year of twelve 30-day
months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, be paid to the
Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on the May 1 or
November 1 (each a "Regular Record Date"), whether or not a
Business Day, as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid, or
duly provided for, and interest on such defaulted interest at
the then applicable interest rate borne by the Notes, to the
extent lawful, shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may be paid to the Per-
son in whose name this Note (or one or more Predecessor Notes)
is registered at the close of business on a Special Record Date
for the payment of such defaulted interest to be fixed by the
Trustee, notice of which shall be given to Holders of Notes not
less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner not inconsistent
<PAGE>
with the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in such Indenture.
A-1
<PAGE>
Payment of the principal of, premium, if any, and
interest on this Note will be made at the Corporate Trust
office or agency of the Trustee maintained for that purpose in
The City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that
payment of interest may be made at the option of the Company by
check (which may be a check of the Company) mailed to the
address of the Person entitled thereto as such address shall
appear on the Note Register.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof.
Unless the certificate of authentication hereon has
been duly executed by the Trustee referred to on the reverse
hereof by manual signature, this Note shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for
any purpose.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-
mentioned Indenture.
IBJ SCHRODER BANK &
TRUST COMPANY, as Trustee
By:
Authorized Signatory
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.
Dated: PARK BROADCASTING, INC.
By:
Name:
Title:
By:
Name:
Title:
A-3
<PAGE>
(REVERSE OF NOTE)
11-3/4% Senior Note due 2004
1. Indenture. This Note is one of a duly authorized
issue of Notes of the Company designated as its 11-3/4% Senior
Notes due 2004 (the "Notes"), limited (except as otherwise pro-
vided in the Indenture referred to below) in aggregate princi-
pal amount to $241,000,000, which may be issued under an inden-
ture (the "Indenture") dated as of May 13, 1996, between the
Company and IBJ Schroder Bank & Trust Company, as trustee (the
"Trustee," which term includes any successor Trustee under the
Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respec-
tive rights, limitations of rights, duties, obligations and
immunities thereunder of the Company, the Trustee and the Hold-
ers of the Notes, and of the terms upon which the Notes are,
and are to be, authenticated and delivered.
All capitalized terms used in this Note which are
defined in the Indenture and not otherwise defined herein shall
have the meanings assigned to them in the Indenture.
No reference herein to the Indenture and no provi-
sions of this Note or of the Indenture shall alter or impair
the obligation of the Company, which is absolute and uncondi-
tional, to pay the principal of, premium, if any, and interest
on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed.
2. Redemption.
(a) Optional Redemption. Except as set forth below,
the Notes are not redeemable prior to May 15, 2001. Subject to
earlier redemption in the manner described in the next two suc-
ceeding paragraphs, the Notes will be redeemable at the option
of the Company, in whole or in part, at the redemption prices
(expressed as percentages of principal amount) set forth below,
plus accrued interest to the redemption date, if redeemed dur-
ing the 12-month period beginning May 15 of the years indicated
below:
Year Redemption Price
2001 .................... 106.00%
<PAGE>
2002 .................... 104.00
2003 .................... 102.00
2004 .................... 100.00
A-4
<PAGE>
In addition, at any time prior to May 15, 1999, the
Company may, at its option, redeem up to 35% of the aggregate
principal amount of Notes originally issued with the net pro-
ceeds of one or more Public Equity Offerings or Strategic
Equity Investments where the proceeds to the Company of any
such Public Equity Offering or Strategic Equity Investment are
at least $40.0 million, at 111.75% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date
of redemption; provided, however, that not less than $155.0
million principal amount of the Notes is outstanding immedi-
ately after giving effect to such redemption (other than any
Notes owned by the Company or any of its Affiliates) and such
redemption is effected within 60 days of such issuance or
investment.
In addition, at any time prior to May 15, 2001, upon
the occurrence of a Change of Control, the Company may redeem
the Notes, in whole but not in part, at a redemption price
equal to the principal amount thereof plus the Applicable Pre-
mium plus accrued and unpaid interest, if any, to the date of
redemption. Notice of redemption of the Notes pursuant to this
paragraph shall be mailed to holders of the Notes not more than
30 days following the occurrence of a Change of Control. The
Company may not redeem Notes pursuant to this paragraph if it
has made an offer to repurchase Notes with respect to such
Change of Control.
(b) Sinking Fund. The Company will not be required
to make any mandatory sinking fund payments in respect of the
Notes.
(c) Interest Payments. In the case of any redemp-
tion of the Notes, interest installments whose Stated Maturity
is on or prior to the Redemption Date will be payable to the
Holders of such Notes, or one or more Predecessor Notes, of
record at the close of business on the relevant Record Date
referred to on the face hereof. Notes (or portions thereof)
for whose redemption and payment provision is made in accor-
dance with the Indenture shall cease to bear interest from and
after the Redemption Date.
(d) Partial Redemption. In the event of redemption
of the Note in part only, a new Note or Notes for the
unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
<PAGE>
3. Offers to Purchase. Sections 10.14 and 10.15 of
the Indenture provide that following certain Asset Sales (with
respect to Section 10.14) and upon the occurrence of a Change
A-5
<PAGE>
of Control Triggering Event (with respect to Section 10.15) and
subject to further limitations contained therein, the Company
shall make an offer to purchase certain amounts of the Notes in
accordance with the procedures set forth in the Indenture.
4. Defaults and Remedies. If an Event of Default
shall occur and be continuing, the principal of all of the out-
standing Notes, plus all accrued and unpaid interest, if any,
to the date the Notes become due and payable, may be declared
due and payable in the manner and with the effect provided in
the Indenture.
5. Defeasance. The Indenture contains provisions
(which provisions apply to this Note) for defeasance at any
time of (a) the entire indebtedness of the Company on this Note
and (b) certain restrictive covenants and related Defaults and
Events of Default, in each case upon compliance by the Company
with certain conditions set forth therein.
6. Amendments and Waivers. The Company and the
Trustee (if a party thereto) may, without the consent of the
Holders of any Outstanding Notes, amend, waive or supplement
the Indenture or the Notes for certain specified purposes,
including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture
under the Trust Indenture Act of 1939, as amended, and making
any change that does not adversely affect the rights of any
Holder. Other amendments and modifications of the Indenture or
the Notes may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority of the
aggregate principal amount of the Outstanding Notes, subject to
certain exceptions requiring the consent of the Holders of the
particular Notes to be affected. Any such consent or waiver by
or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent or waiver is made upon this Note.
7. Denominations, Transfer and Exchange. The Notes
are issuable only in registered form without coupons in denomi-
nations of $1,000 and any integral multiple thereof. As pro-
vided in the Indenture and subject to certain limitations
therein set forth, the Notes are exchangeable for a like aggre-
gate principal amount of Notes of the authorized denomination,
as requested by the Holder surrendering the same.
<PAGE>
The transfer of this Note is registrable on the Note
Register of the Company, upon surrender of this Note for
A-6
<PAGE>
registration of transfer at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan in The
City of New York or at such other office or agency of the Com-
pany as may be maintained for such purpose, duly endorsed by,
or accompanied by a written instrument of transfer in form sat-
isfactory to the Company and the Note Registrar duly executed
by, the Holder hereof or his attorney duly authorized in writ-
ing, and thereupon one or more new Notes, of authorized denomi-
nations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
8. Persons Deemed Owners. Prior to and at the time
of due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is regis-
tered as the owner hereof for all purposes, whether or not this
Note shall be overdue, and neither the Company, the Trustee nor
any agent shall be affected by notice to the contrary.
9. Registration Rights. Pursuant to the Registra-
tion Rights Agreement among the Company and the Holders of the
Initial Notes, the Company will be obligated to consummate an
exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for the Company's Series B
11-3/4% Senior Notes due 2004 (the "Exchange Notes"), which
will have been registered under the Securities Act, in like
principal amount and having terms identical in all material
respects as the Initial Notes. The Holders of the Initial
Notes shall be entitled to receive certain additional interest
payments in the event such exchange offer is not consummated
and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights Agreement.
10. No Recourse Against Others. No officer or
employee of the Company, or any director, officer, partner,
affiliate, employee or stockholder of the Company, shall have
any liability for any obligations of the Company under the
Notes or the Indenture. Each Holder of Notes by accepting a
Note waives and releases all such liability, and such waiver
and release is part of the consideration for the issuance of
the Notes.
11. GOVERNING LAW. THE INDENTURE AND THIS NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE, THE
<PAGE>
COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE
HOLDERS AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
A-7
<PAGE>
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEED-
ING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS NOTE.
A-8
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to
(Insert assignee's social security or tax ID number) __________
(Print or type assignee's name, address and zip code) and irre-
vocably appoint
agent to transfer this Note on the books of the Company. The
agent may substitute another to act for such agent.
Date:______________ Your signature:
(Sign exactly as your name
appears on the other side of
this Note)
By:
NOTICE: To be executed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent Medal-
lion Program ("STAMP") or similar program.
A-9
<PAGE>
In connection with any transfer of this Note occur-
ring prior to the date which is the earlier of (i) the date of
the declaration by the SEC of the effectiveness of a registra-
tion statement under the Securities Act of 1933, as amended
(the "Securities Act"), covering resales of this Note (which
effectiveness shall not have been suspended or terminated at
the date of the transfer) and (ii) the third anniversary of the
Issue Date, the undersigned confirms that it has not utilized
any general solicitation or general advertising in connection
with the transfer:
[Check One]
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended; or
(3) ___ to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securi-ties Act
of 1933, as amended) that has furnished to the Trustee a
signed letter containing certain repre-sentations and
agreements (the form of which letter can be obtained from
the Trustee); or
(4) ___ outside the United States to a "foreign person" in
compliance with Rule 904 of Regulation S under the
Securities Act of 1933, as amended; or
(5) ___ pursuant to the exemption from registration provided by
Rule 144 under the Securities Act of 1933, as amended; or
(6) ___ pursuant to an effective registration statement under
the Securities Act of 1933, as amended; or
(7) ___ pursuant to another available exemption from the reg-
istration requirements of the Securities Act of 1933, as
amended.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the
name of any person other than the registered Holder thereof,
provided, that if box (3), (4), (5) or (7) is checked, the Com-
pany or the Trustee may require, prior to registering any such
<PAGE>
transfer of the Notes, in its sole discretion, such written
legal opinions, certifications (including an investment letter
in the case of box (3) or (4), and other information as the
A-10
<PAGE>
Trustee, Note Registrar or the Company has reasonably requested
to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the regis-
tration requirements of the Securities Act of 1933, as amended.
If none of the foregoing boxes are checked, the Trustee or Reg-
istrar shall not be obligated to register this Note in the name
of any person other than the Holder hereof unless and until the
conditions to any such transfer of registration set forth
herein and in Section 2.05 of the Indenture shall have been
satisfied.
Dated:___________________ Signed:
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee:
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is
purchasing this Note for its own account or an account with
respect to which it exercises sole investment discretion and
that it and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act
of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the under-
signed has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the
A-11
<PAGE>
transferor is relying upon the undersigned's foregoing repre-
sentations in order to claim the exemption from registration
provided by Rule 144A.
Date:_____________________
NOTICE: To be executed by an
an executive officer
A-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Com-
pany pursuant to Section 10.14 or 10.15 of the Indenture, check
the Box: [ ]
If you wish to have a portion of this Note purchased
by the Company pursuant to Section 10.14 or 10.15 of the Inden-
ture, state the amount:
$______________
Date: _____________ Your Signature: ____________________ __
(Sign exactly as your name
appears on the other side
of this Note)
By:
NOTICE: To be signed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent Medal-
lion Program ("STAMP") or similar program.
A-13
<PAGE>
EXHIBIT B
PARK BROADCASTING, INC.
___________
11-3/4% SENIOR NOTE DUE 2004
CUSIP No. __________
No. ___________ $____________
PARK BROADCASTING, INC., a Delaware corporation (the
"Company," which term includes any successor under the Inden-
ture hereinafter referred to), for value received, promises to
pay to ______________, or registered assigns, the principal sum
of _______________ United States Dollars on May 15, 2004, at
the office or agency of the Company referred to below, and to
pay interest thereon on May 15 and November 15 in each year,
commencing on November 15, 1996 (each an "Interest Payment
Date"), accruing from the Issue Date or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for, at the rate of 11-3/4% per annum, until the prin-
cipal hereof is paid or duly provided for. Interest shall be
computed on the basis of a 360-day year of twelve 30-day
months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, be paid to the
Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on the May 1 or
November 1 (each a "Regular Record Date"), whether or not a
Business Day, as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid, or
duly provided for, and interest on such defaulted interest at
the then applicable interest rate borne by the Notes, to the
extent lawful, shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may be paid to the Per-
son in whose name this Note (or one or more Predecessor Notes)
is registered at the close of business on a Special Record Date
for the payment of such defaulted interest to be fixed by the
Trustee, notice of which shall be given to Holders of Notes not
less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the
<PAGE>
Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in such Indenture.
B-1
<PAGE>
Payment of the principal of, premium, if any, and
interest on this Note will be made at the corporate trust
office or agency of the Trustee maintained for that purpose in
The City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts: provided, however, that
payment of interest may be made at the option of the Company by
check (which may be a check of the Company) mailed to the
address of the Person entitled thereto as such address shall
appear on the Note Register.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof.
Unless the certificate of authentication hereon has
been duly executed by the Trustee referred to on the reverse
hereof by manual signature, this Note shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for
any purpose.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-
mentioned Indenture.
IBJ SCHRODER BANK &
TRUST COMPANY, as Trustee
By:
Authorized Signatory
B-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.
Dated: PARK BROADCASTING, INC.
By:
Name:
Title:
By:
Name:
Title:
B-3
<PAGE>
(REVERSE OF NOTE)
11-3/4% Senior Note due 2004
1. Indenture. This Note is one of a duly authorized
issue of Notes of the Company designated as its 11-3/4% Senior
Notes due 2004 (the "Notes"), limited (except as otherwise pro-
vided in the Indenture referred to below) in aggregate princi-
pal amount to $241,000,000, which may be issued under an inden-
ture (the "Indenture") dated as of May 13, 1996, between the
Company and IBJ Schroder Bank & Trust Company, as trustee (the
"Trustee," which term includes any successor Trustee under the
Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respec-
tive rights, limitations of rights, duties, obligations and
immunities thereunder of the Company, the Trustee and the Hold-
ers of the Notes, and of the terms upon which the Notes are,
and are to be, authenticated and delivered.
All capitalized terms used in this Note which are
defined in the Indenture and not otherwise defined herein shall
have the meanings assigned to them in the Indenture.
No reference herein to the Indenture and no provi-
sions of this Note or of the Indenture shall alter or impair
the obligation of the Company, which is absolute and uncondi-
tional, to pay the principal of, premium, if any, and interest
on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed.
2. Redemption.
(a) Optional Redemption. Except as set forth below,
the Notes are not redeemable prior to May 15, 2001. Subject to
earlier redemption in the manner described in the next two suc-
ceeding paragraphs, the Notes will be redeemable at the option
of the Company, in whole or in part, at the redemption prices
(expressed as percentages of principal amount) set forth below,
plus accrued interest to the redemption date, if redeemed dur-
ing the 12-month period beginning May 15 of the years indicated
below:
Year Redemption Price
2001 .................... 106.00%
<PAGE>
2002 .................... 104.00
2003 .................... 102.00
2004 .................... 100.00
B-4
<PAGE>
In addition, at any time prior to May 15, 1999, the
Company may, at its option, redeem up to 35% of the aggregate
principal amount of Notes originally issued with the net pro-
ceeds of one or more Public Equity Offerings or Strategic
Equity Investments where the proceeds to the Company of any
such Public Equity Offering or Strategic Equity Investment are
at least $40.0 million, at 111.75% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date
of redemption; provided, however, that not less than $155.0
million principal amount of the Notes is outstanding immedi-
ately after giving effect to such redemption (other than any
Notes owned by the Company or any of its Affiliates) and such
redemption is effected within 60 days of such issuance or
investment.
In addition, at any time prior to May 15, 2001, upon
the occurrence of a Change of Control, the Company may redeem
the Notes, in whole but not in part, at a redemption price
equal to the principal amount thereof plus the Applicable Pre-
mium plus accrued and unpaid interest, if any, to the date of
redemption. Notice of redemption of the Notes pursuant to this
paragraph shall be mailed to holders of the Notes not more than
30 days following the occurrence of a Change of Control. The
Company may not redeem Notes pursuant to this paragraph if it
has made an offer to repurchase Notes with respect to such
Change of Control.
(b) Sinking Fund. The Company will not be required
to make any mandatory sinking fund payments in respect of the
Notes.
(c) Interest Payments. In the case of any redemp-
tion of the Notes, interest installments whose Stated Maturity
is on or prior to the Redemption Date will be payable to the
Holders of such Notes, or one or more Predecessor Notes, of
record at the close of business on the relevant Record Date
referred to on the face hereof. Notes (or portions thereof)
for whose redemption and payment provision is made in accor-
dance with the Indenture shall cease to bear interest from and
after the Redemption Date.
(d) Partial Redemption. In the event of redemption
of the Note in part only, a new Note or Notes for the
unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
<PAGE>
3. Offers to Purchase. Sections 10.14 and 10.15 of
the Indenture provide that following certain Asset Sales (with
respect to Section 10.14) and upon the occurrence of a Change
B-5
<PAGE>
of Control Triggering Event (with respect to Section 10.15) and
subject to further limitations contained therein, the Company
shall make an offer to purchase certain amounts of the Notes in
accordance with the procedures set forth in the Indenture.
4. Defaults and Remedies. If an Event of Default
shall occur and be continuing, the principal of all of the out-
standing Notes, plus all accrued and unpaid interest, if any,
to the date the Notes become due and payable, may be declared
due and payable in the manner and with the effect provided in
the Indenture.
5. Defeasance. The Indenture contains provisions
(which provisions apply to this Note) for defeasance at any
time of (a) the entire indebtedness of the Company on this Note
and (b) certain restrictive covenants and related Defaults and
Events of Default, in each case upon compliance by the Company
with certain conditions set forth therein.
6. Amendments and Waivers. The Company and the
Trustee (if a party thereto) may, without the consent of the
Holders of any Outstanding Notes, amend, waive or supplement
the Indenture or the Notes for certain specified purposes,
including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture
under the Trust Indenture Act of 1939, as amended, and making
any change that does not adversely affect the rights of any
Holder. Other amendments and modifications of the Indenture or
the Notes may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority of the
aggregate principal amount of the Outstanding Notes, subject to
certain exceptions requiring the consent of the Holders of the
particular Notes to be affected. Any such consent or waiver by
or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent or waiver is made upon this Note.
7. Denominations, Transfer and Exchange. The Notes
are issuable only in registered form without coupons in denomi-
nations of $1,000 and any integral multiple thereof. As pro-
vided in the Indenture and subject to certain limitations
therein set forth, the Notes are exchangeable for a like aggre-
gate principal amount of Notes of the authorized denomination,
as requested by the Holder surrendering the same.
<PAGE>
The transfer of this Note is registrable on the Note
Register of the Company, upon surrender of this Note for
B-6
<PAGE>
registration of transfer at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan in The
City of New York or at such other office or agency of the Com-
pany as may be maintained for such purpose, duly endorsed by,
or accompanied by a written instrument of transfer in form sat-
isfactory to the Company and the Note Registrar duly executed
by, the Holder hereof or his attorney duly authorized in writ-
ing, and thereupon one or more new Notes, of authorized denomi-
nations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
8. Persons Deemed Owners. Prior to and at the time
of due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is regis-
tered as the owner hereof for all purposes, whether or not this
Note shall be overdue, and neither the Company, the Trustee nor
any agent shall be affected by notice to the contrary.
9. No Recourse Against Others. No officer or
employee of the Company, or any director, officer, partner,
affiliate, employee or stockholder of the Company, shall have
any liability for any obligations of the Company under the
Notes or the Indenture. Each Holder of Notes by accepting a
Note waives and releases all such liability, and such waiver
and release is part of the consideration for the issuance of
the Notes.
10. GOVERNING LAW. THE INDENTURE AND THIS NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE, THE
COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE
HOLDERS AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEED-
ING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS NOTE.
B-7
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to
(Insert assignee's social security or tax ID number) __________
(Print or type assignee's name, address and zip code) and irre-
vocably appoint
agent to transfer this Note on the books of the Company. The
agent may substitute another to act for such agent.
Date:______________ Your signature:
(Sign exactly as your name
appears on the other side of
this Note)
By:
NOTICE: To be executed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent Medal-
lion Program ("STAMP") or similar program.
B-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Com-
pany pursuant to Section 10.14 or 10.15 of the Indenture, check
the Box: [ ]
If you wish to have a portion of this Note purchased
by the Company pursuant to Section 10.14 or 10.15 of the Inden-
ture, state the amount:
$______________
Date: _____________ Your Signature: ____________________ __
(Sign exactly as your name
appears on the other side
of this Note)
By:
NOTICE: To be signed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent Medal-
lion Program ("STAMP") or similar program.
B-9
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
___________, ____
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Re: Park Broadcasting, Inc. (the "Company")
11-3/4% Senior Notes due 2004 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed purchase of $_______
aggregate principal amount of the Notes, we confirm that:
1. We have received a copy of the Offering Memoran-
dum (the "Offering Memorandum"), dated May 6, 1996, relat-
ing to the Notes and such other information as we deem
necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters
stated in the section entitled "Notice to Investors" of
the Offering Memorandum.
2. We understand that any subsequent transfer of
the Notes is subject to certain restrictions and condi-
tions set forth in the Indenture dated as of May 13, 1996
relating to the Notes (the "Indenture") and the under-
signed agrees to be bound by, and not to resell, pledge or
otherwise transfer the Notes except in compliance with,
such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").
3. We understand that the Notes have not been reg-
istered under the Securities Act, and that the Notes may
not be offered or sold except as permitted in the follow-
<PAGE>
ing sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter
stated, that if we should sell any Notes within three
C-1
<PAGE>
years after the original issuance of the Notes, we will do
so only (A) to the Company or any subsidiary thereof,
(B) inside the United States in accordance with Rule 144A
under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) inside the United States
to an "institutional accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you a
signed letter substantially in the form of this letter,
(D) outside the United States in accordance with Rule 904
of Regulation S under the Securities Act, (E) pursuant to
the exemption from registration provided by Rule 144 under
the Securities Act (if available), or (F) pursuant to an
effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing
any of the Notes from us a notice advising such purchaser
that resales of the Notes are restricted as stated herein.
4. We understand that, on any proposed resale of
any Notes, we will be required to furnish to you and the
Company such certification, written legal opinions and
other information as you and the Company may reasonably
require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that
the Notes purchased by us will bear a legend to the fore-
going effect.
5. We are an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act) and have such
knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which
we are acting are each able to bear the economic risk of
our or its investment, as the case may be.
6. We are acquiring the Notes purchased by us for
our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of
which we exercise sole investment discretion.
C-2
<PAGE>
You, the Company and counsel for the Company are
entitled to rely upon this letter and are irrevocably autho-
rized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
Authorized Signature
C-3
<PAGE>
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
______Pursuant to Regulation S_____
______________, ____
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Re: Park Broadcasting, Inc. (the "Company")
11-3/4% Senior Notes due 2004 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $___________
aggregate principal amount of the Notes, we confirm that such
sale has been effected pursuant to and in accordance with Regu-
lation S under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person
in the United States;
(2) either (a) at the time the buy offer was origi-
nated, the transferee was outside the United States or we
and any person acting on our behalf reasonably believed
that the transferee was outside the United States, or
(b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and
neither we nor any person acting on our behalf knows that
the transaction has been pre-arranged with a buyer in the
United States;
(3) no directed selling efforts have been made in
the United States in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S, as applicable;
<PAGE>
(4) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities
Act; and
D-1
<PAGE>
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You, the Company and counsel for the Company are
entitled to rely upon this letter and are irrevocably autho-
rized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used
in this certificate have the meanings set forth in Regulation
S.
Very truly yours,
[Name of Transferor]
By:
Authorized Signature
D-2
<PAGE>
EXHIBIT E
Each Note that is issued with original issue discout
within the meaning of Section 1273(a) of the Internal Revenue
Code of 1986, as amended, shall bear the following legend on
the face thereof:
THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DIS-
COUNT WITHIN THE MEANING OF SECTION 1273(a) OF THE
INTERNAL REVENUE CODE OF 1986. THE ISSUE PRICE IS
$974.90 FOR EACH $1,000 OF STATED PRINCIPAL
AMOUNT. THE ORIGINAL ISSUE DISCOUNT IS $25.10 FOR
EACH $1,000.00 OF STATED PRINCIPAL AMOUNT. THE
ISSUE DATE IS MAY 13, 1996. THE YIELD TO MATURITY
IS 12.250% COMPOUNDED SEMIANNUALLY. ORIGINAL
ISSUE DISCOUNT WILL BE ALLOCATED BASED ON ACCRUAL
PERIODS ENDING ON EACH DATE ON WHICH AN INTEREST
PAYMENT IS DUE AND THE 360 DAYS PER YEAR
CONVENTION.
E-1
<PAGE>
SCHEDULE A
UNRESTRICTED SUBSIDIARIES
Park Broadcasting of Florida, Inc.
Park Radio of Greater New York, Inc.
Park Broadcasting of Iowa, Inc.
Park Radio of Iowa, Inc.
Roy H. Park Broadcasting of the Midwest, Inc.
Roy H. Park Broadcasting of Minnesota, Inc.
Roy H. Park Broadcasting of the Lake Country, Inc.
Roy H. Park Broadcasting of Oregon, Inc.
Contemporary FM, Inc.
Roy H. Park Radio, Inc.
Roy H. Park FM Broadcasting of East Carolina, Inc.
Roy H. Park Broadcasting of Syracuse, Inc.
Roy H. Park Broadcasting of Washington, Inc.
<PAGE>
Exhibit 10.4
PARK NEWSPAPERS, INC., as Issuer
IBJ SCHRODER BANK & TRUST COMPANY, as Trustee
____________________
INDENTURE
Dated as of May 13, 1996
____________________
$155,000,000
11-7/8% Senior Notes due 2004
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of May 13, 1996
Trust Indenture Indenture
Act Section Section
{ 310(a)(1) .......................................... 6.09
(a)(2) .......................................... 6.09
(a)(3) .......................................... Not Applicable
(a)(4) .......................................... Not Applicable
(a)(5) .......................................... 6.09
(b) .......................................... 6.08, 6.10
(c) .......................................... Not Applicable
{ 311(a) .......................................... 6.13
(b) .......................................... 6.13
(c) .......................................... Not Applicable
{ 312(a) .......................................... 7.01
(b) .......................................... 7.02
(c) .......................................... 7.02
{ 313(a) .......................................... 7.03
(b) .......................................... 7.03
(c) .......................................... 7.03
(d) .......................................... 7.03
{ 314(a) .......................................... 7.04; 10.08;
10.09
(b) .......................................... N.A.
(c)(1) .......................................... 1.04
(c)(2) .......................................... 1.04
(c)(3) .......................................... Not Applicable
(d) .......................................... N.A.
(e) .......................................... 1.04
(f) .......................................... Not Applicable
{ 315(a) .......................................... 6.01(a)
(b) .......................................... 6.02
(c) .......................................... 6.01(b)
(d) .......................................... 6.01(c)
(e) .......................................... 5.14
{ 316(a) (last
sentence) .......................................... 1.01
(definition
of "Out-
standing")
(a)(1)(A) .......................................... 5.12
(a)(1)(B) .......................................... 5.13
(a)(2) .......................................... Not Applicable
(b) .......................................... 5.08
(c) .......................................... 9.04
{ 317(a)(1) .......................................... 5.03
(a)(2) .......................................... 5.04
(b) .......................................... 10.03
{ 318(a) .......................................... 1.08
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
PARTIES ............................................................. 1
RECITALS ............................................................ 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. Definitions........................................ 1
Section 1.02. Other Definitions.................................. 26
Section 1.03. Rules of Construction.............................. 27
Section 1.04. Form of Documents Delivered to
Trustee.......................................... 28
Section 1.05. Acts of Holders.................................... 29
Section 1.06. Notices, etc., to the Trustee and the
Company.......................................... 30
Section 1.07. Notice to Holders; Waiver.......................... 31
Section 1.08. Conflict with Trust Indenture Act.................. 31
Section 1.09. Effect of Headings and Table of
Contents......................................... 32
Section 1.10. Successors and Assigns............................. 32
Section 1.11. Separability Clause................................ 32
Section 1.12. Benefits of Indenture.............................. 32
Section 1.13. GOVERNING LAW...................................... 32
Section 1.14. No Recourse Against Others......................... 33
Section 1.15. Independence of Covenants.......................... 33
Section 1.16. Exhibits and Schedules............................. 33
Section 1.17. Counterparts....................................... 33
Section 1.18. Duplicate Originals................................ 33
Section 1.19. Incorporation by Reference of TIA.................. 33
ARTICLE TWO
SECURITY FORMS
Section 2.01. Form and Dating ................................... 34
Section 2.02. Execution and Authentication;
Aggregate Principal Amount ...................... 35
Section 2.03. Restrictive Legends ............................... 36
_________________
Note: This table of contents shall not, for any purpose, be deemed
to be a part of this Indenture.
-i-
<PAGE>
<PAGE>
Section 2.04. Book-Entry Provisions for Global
Security .......................................... 38
Section 2.05. Special Transfer Provisions ....................... 39
ARTICLE THREE
THE NOTES
Section 3.01. Title and Terms.................................... 42
Section 3.02. Denominations...................................... 42
Section 3.03. [Intentionally Omitted]............................ 42
Section 3.04. Temporary Notes.................................... 42
Section 3.05. Registration, Registration of
Transfer and Exchange.............................. 43
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Notes.............................................. 45
Section 3.07. Payment of Interest; Interest Rights
Preserved.......................................... 45
Section 3.08. Persons Deemed Owners.............................. 47
Section 3.09. Cancellation....................................... 47
Section 3.10. Computation of Interest............................ 48
Section 3.11. Legal Holidays..................................... 48
Section 3.12. CUSIP Number....................................... 48
Section 3.13. Payment of Additional Interest Under
Registration Rights Agreement...................... 48
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. The Company's Option To Effect
Defeasance or Covenant Defeasance.................. 49
Section 4.02. Defeasance and Discharge........................... 49
Section 4.03. Covenant Defeasance................................ 50
Section 4.04. Conditions to Defeasance or Covenant
Defeasance......................................... 50
Section 4.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust;
Other Miscellaneous Provisions..................... 52
Section 4.06. Reinstatement...................................... 53
Section 4.07. Repayment to Company............................... 53
-ii-
<PAGE>
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.................................. 54
Section 5.02. Acceleration of Maturity; Rescission
and Annulment...................................... 56
Section 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee; Other
Remedies........................................... 57
Section 5.04. Trustee May File Proofs of Claims.................. 59
Section 5.05. Trustee May Enforce Claims Without
Possession of Notes................................ 60
Section 5.06. Application of Money Collected..................... 60
Section 5.07. Limitation on Suits................................ 61
Section 5.08. Unconditional Right of Holders To
Receive Principal, Premium and
Interest........................................... 61
Section 5.09. Restoration of Rights and Remedies................. 62
Section 5.10. Rights and Remedies Cumulative..................... 62
Section 5.11. Delay or Omission Not Waiver....................... 62
Section 5.12. Control by Majority................................ 62
Section 5.13. Waiver of Past Defaults............................ 63
Section 5.14. Undertaking for Costs.............................. 64
Section 5.15. Waiver of Stay, Extension or Usury
Laws............................................... 64
ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities................ 65
Section 6.02. Notice of Defaults................................. 66
Section 6.03. Certain Rights of Trustee.......................... 66
Section 6.04. Trustee Not Responsible for Recitals,
Dispositions of Notes or
Application of Proceeds Thereof.................... 67
Section 6.05. Trustee and Agents May Hold Notes;
Collections; etc................................... 68
Section 6.06. Money Held in Trust................................ 68
Section 6.07. Compensation and Indemnification of
Trustee and Its Prior Claim........................ 68
Section 6.08. Conflicting Interests.............................. 69
Section 6.09. Corporate Trustee Required;
<PAGE>
Eligibility ........................................ 69
Section 6.10. Resignation and Removal; Appointment
of Successor Trustee ............................... 70
-iii-
<PAGE>
Section 6.11. Acceptance of Appointment by
Successor ......................................... 72
Section 6.12. Successor Trustee by Merger, etc. ................. 73
Section 6.13. Preferential Collection of Claims
Against Issuers ................................... 73
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company
To Furnish Trustee Names and
Addresses of Holders............................... 74
Section 7.02. Communications of Holders.......................... 74
Section 7.03. Reports by Trustee................................. 74
Section 7.04. Reports by the Company............................. 75
ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01. When the Company May Merge, etc. .................. 75
Section 8.02. Successor Substituted ............................. 76
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders......................... 76
Section 9.02. With Consent of Holders............................ 77
Section 9.03. Compliance with Trust Indenture Act................ 79
Section 9.04. Revocation and Effect of Consents.................. 79
Section 9.05. Notation on or Exchange of Notes................... 80
Section 9.06. Trustee May Sign Amendments, etc................... 80
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and
<PAGE>
Interest ........................................... 80
Section 10.02. Maintenance of Office or Agency .................... 80
Section 10.03. Money for Note Payments To Be Held in
Trust .............................................. 81
-iv-
<PAGE>
Section 10.04. Existence.......................................... 83
Section 10.05. Payment of Taxes and Other Claims.................. 83
Section 10.06. Maintenance of Properties.......................... 84
Section 10.07. Insurance.......................................... 84
Section 10.08. Compliance Certificate............................. 84
Section 10.09. Provision of Financial Statements.................. 85
Section 10.10. [Intentionally Omitted]............................ 86
Section 10.11. Limitation on Incurrence of
Indebtedness....................................... 86
Section 10.12. Limitation on Restricted Payments.................. 88
Section 10.13. Limitations on Transactions with
Affiliates......................................... 90
Section 10.14. Limitation on Asset Sales.......................... 91
Section 10.15. Change of Control.................................. 95
Section 10.16. Limitations on Liens Securing Certain
Debt............................................... 98
Section 10.17. Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries....................................... 98
Section 10.18. Limitation on Subsidiary Capital
Stock.............................................. 100
Section 10.19. Limitation on Amendment of Tax
Sharing Agreement.................................. 100
Section 10.20. Limitation on Line of Business..................... 100
Section 10.21. Certain Exceptions for Capital
Contributions To Refinance the
Existing Credit Facility........................... 100
ARTICLE ELEVEN
REDEMPTION OF NOTES
Section 11.01. Optional and Special Redemption.................... 101
Section 11.02. Applicability of Article........................... 102
Section 11.03. Election To Redeem; Notice to
Trustee............................................ 102
Section 11.04. Selection by Trustee of Notes To Be
Redeemed........................................... 102
Section 11.05. Notice of Redemption............................... 103
Section 11.06. Deposit of Redemption Price........................ 104
Section 11.07. Notes Payable on Redemption
Date............................................... 104
Section 11.08. Notes Redeemed or Purchased in Part................ 105
-v-
<PAGE>
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of
Indenture ....................................... 105
Section 12.02. Application of Trust Money ........................ 106
TESTIMONIUM ......................................................... 107
SIGNATURES .......................................................... 107
Exhibit A - Form of Initial Note ................................. A-1
Exhibit B - Form of Exchange Note ................................ B-1
Exhibit C - Form of Certificate To Be Delivered
in Connection with Transfers to Non-
QIB Accredited Investors ............................... C-1
Exhibit D - Form of Certificate To Be Delivered
in Connection with Transfers Pursuant
to Regulation S ........................................ D-1
Schedule A - List of Unrestricted Subsidiaries as
of the Issue Date
-vi-
<PAGE>
INDENTURE, dated as of May 13, 1996, by and between
PARK NEWSPAPERS, INC., a Delaware corporation (the "Company"),
and IBJ SCHRODER BANK & TRUST COMPANY, a New York banking
company, as trustee (the "Trustee").
RECITALS
The Company has duly authorized the creation of an
issue of 11-7/8% Senior Notes due 2004 (the "Initial Notes")
and Series B 11-7/8% Senior Notes due 2004 to be issued in
exchange for the Initial Notes pursuant to the Registration
Rights Agreement (the "Exchange Notes"), and to provide
therefor the Company has duly authorized the execution and
delivery of this Indenture.
All things necessary have been done to make the
Notes, when executed by the Company and authenticated and
delivered hereunder and duly issued by the Company, the valid
obligations of the Company and to make this Indenture a valid
agreement of the Company, in accordance with the terms hereof.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of the Notes by the Holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit
of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
"Acquired Debt" means, with respect to any specified
Person, Indebtedness of any other Person (the "Acquired
Person") existing at the time the Acquired Person merges with
or into, or becomes a Restricted Subsidiary of, such specified
Person, including Indebtedness incurred in connection with, or
in contemplation of, the Acquired Person merging with or into,
or becoming a Restricted Subsidiary of, such specified Person.
<PAGE>
"Acquired Person" has the meaning set forth in the
definition of "Acquired Debt."
<PAGE>
"Affiliate" means, with respect to any specified
Person, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with
such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with")
of any Person means the possession, directly or indirectly, 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 agreement or otherwise.
"Applicable Premium" means, with respect to a Note,
the greater of (i) 1.0% of the then outstanding principal
amount of such Note and (ii)(a) the present value of all
remaining required interest and principal payments due on such
Note and all premium payments relating thereto assuming a
redemption date of May 15, 2001, computed using a discount rate
equal to the Treasury Rate plus 75 basis points minus (b) the
then outstanding principal amount of such Note minus
(c) accrued interest paid on the date of redemption.
"Asset Sale" means (i) any sale, lease, conveyance or
other disposition by the Company or any Restricted Subsidiary
of any property or assets (including by way of a sale-and-
leaseback) other than in the ordinary course of business or
(ii) the issuance or sale of Capital Stock of any Restricted
Subsidiary (but not of any Unrestricted Subsidiary), in the
case of each of (i) and (ii), whether in a single transaction
or a series of related transactions, to any Person (other than
to the Company or a Wholly Owned Restricted Subsidiary);
provided, however, that for purposes of Section 10.14, Asset
Sales shall not include: (a) a transaction or series of
related transactions for which the Company or the applicable
Restricted Subsidiary receives aggregate consideration of less
than $500,000 in any fiscal year; (b) transactions complying
with Section 8.01; (c) any Lien securing Indebtedness to the
extent that such Lien is granted in compliance with Section
10.16; (d) any Restricted Payment (or Permitted Investment)
permitted by Section 10.12; and (e) any disposition of assets
or property to the extent such property or assets are obsolete,
worn out or no longer useful in the Company's or any Restricted
Subsidiary's business; provided, however, that the fair market
value (determined reasonably and in good faith by the Board of
Directors of the Company) of any assets or property so disposed
of shall not exceed $500,000 in the aggregate in any given
<PAGE>
year.
"Bankruptcy Law" means Title 11, United States
Bankruptcy Code of 1978, as amended, or any similar United
States Federal or state law relating to bankruptcy, insolvency,
<PAGE>
receivership, winding-up, liquidation, reorganization or relief
of debtors, or any amendment to, succession to or change in any
such law.
"Board of Directors" means, with respect to any
Person, the board of directors, management committee or similar
governing body or any authorized committee thereof responsible
for the management of the business and affairs of such Person.
"Board Resolution" means, with respect to any Person,
a copy of a resolution certified by the Secretary or an
Assistant Secretary of such Person to have been duly adopted by
the Board of Directors of such Person and to be in full force
and effect on the date of such certification, and delivered to
the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking
institutions in The City of New York, State of New York, are
authorized or obligated by law, regulation or executive order
to close.
"Capital Lease Obligation" of any Person means, at
the time any determination thereof is to be made, the amount of
the liability in respect of a capital lease for property leased
by such Person that would at such time be required to be
capitalized on the balance sheet of such Person in accordance
with GAAP.
"Capital Stock" of any Person means any and all
shares, interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however
designated) corporate stock or other equity participations,
including partnership interests, whether general or limited, of
such Person, including any Preferred Stock.
"Cash Equivalents" means (a) securities with
maturities of one year or less from the date of acquisition
issued, fully guaranteed or insured by the United States
Government or any agency thereof, (b) certificates of deposit,
time deposits, overnight bank deposits, bankers' acceptances
and repurchase agreements issued by a Qualified Issuer having
maturities of 270 days or less from the date of acquisition,
(c) commercial paper of an issuer rated at least A-2 by
Standard & Poor's Corporation or at least P-2 by Moody's
<PAGE>
Investors Service, Inc., or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named
rating agencies cease publishing ratings of investments, and
having maturities of 270 days or less from the date of
<PAGE>
acquisition, and (d) money market accounts or funds with or
issued by Qualified Issuers.
"Change of Control" means the occurrence of any of
the following events: (a) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange
Act), other than the Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of 50% or more of the voting power of the total
outstanding Voting Stock of the Company, Park Communications or
PAI, as the case may be; (b) during any period of two
consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Company, Park
Communications or PAI, as the case may be (together with any
new directors whose election to such Board of Directors, or
whose nomination for election by the stockholders of the
Company, Park Communications or PAI, as the case may be, was
approved by a vote of the Permitted Holders who at the time of
the vote are stockholders of the Company, Park Communications
or PAI, as the case may be, or either (i) 66-2/3% or (ii) all
remaining members of the Board of Directors of the Company,
Park Communications or PAI, as the case may be, then still in
office who were either directors at the beginning of such
period or whose election or nomination for election was
previously so approved), cease for any reason to constitute a
majority of such Board of Directors of the Company, Park
Communications or PAI, as the case may be, then in office;
(c) the sale or other disposition of all or substantially all
of the Capital Stock or assets of the Company, Park
Communications or PAI, as the case may be, to any "person" or
"group" (as defined in Rule 13d-5 under the Exchange Act),
other than to the Permitted Holders, as an entirety or
substantially as an entirety in a single transaction or a
series of related transactions; or (d) the Company, Park
Communications or PAI, as the case may be, consolidates with or
merges with or into another Person or any Person consolidates
with or merges with or into the Company, other than in any such
transaction where immediately after such transaction the
"beneficial owners" of the Voting Stock of the Company, Park
Communications or PAI, as the case may be, immediately prior to
such transaction or the Permitted Holders own at least a
<PAGE>
majority of the voting power of the outstanding Voting Stock of
the Surviving Person immediately after the consummation of such
transaction. For purposes of the foregoing definition of
Change of Control, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of related
<PAGE>
transactions) of all or substantially all of the properties or
assets of one or more Subsidiaries of the Company the Capital
Stock of which constitutes all or substantially all of the
properties and assets of the Company shall be deemed to be the
transfer of all or substantially all of the properties and
assets of the Company.
"Change of Control Triggering Event" means the
occurrence of both a Change of Control and a Rating Decline.
"Commission" or "SEC" means the Securities and
Exchange Commission, as from time to time constituted, or if at
any time after the execution of this Indenture such Commission
is not existing and performing the applicable duties now
assigned to it, then the body or bodies performing such duties
at such time.
"Communications Notes" means the $80.0 million
aggregate principal amount of 13-3/4% Senior Pay-in-Kind Notes
due 2004 of Park Communications to be issued under an indenture
to be dated May 13, 1996 between Park Communications and IBJ
Schroder Bank & Trust Company, as trustee.
"Communications Senior Credit Facility" means the
Credit Agreement, to be entered into as of the Issue Date,
among Park Communications, the Subsidiaries of Park
Communications named therein and the lenders named therein, as
the same may be amended, modified, renewed, refunded, replaced
or refinanced (collectively, "refinanced") from time to time,
including (i) any related notes, letters of credit, guarantees,
collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified or
refinanced from time to time and (ii) any notes, guarantees,
collateral documents, instruments and agreements executed in
connection with any such amendment, modification or
refinancing.
"Company" means the Person named as the "Company" in
the first paragraph of this Indenture, until a successor Person
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such
successor Person.
"Company Request" or "Company Order" means a written
request or order of the Company signed in the name of the
<PAGE>
Company by an officer of the Company.
"Consolidated Interest Expense" means, with respect
to any period, the sum of (i) the interest expense of the
Company and the Restricted Subsidiaries for such period (other
<PAGE>
than the amortization of issuance costs related to the Notes),
determined on a consolidated basis in accordance with GAAP
consistently applied, including, without limitation,
(a) amortization of debt discount, (b) the net payments, if
any, under Interest Rate Agreement Obligations (including
amortization of discounts), (c) the interest portion of any
deferred payment obligation and (d) accrued interest, plus
(ii) the interest component of all Capital Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by the
Company and the Restricted Subsidiaries during such period, and
all capitalized interest of the Company and the Restricted
Subsidiaries, in each case as determined on a consolidated
basis in accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any
period, the net income (or loss) of the Company and the
Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP consistently
applied, adjusted, to the extent included in calculating such
net income (or loss), (i) by adding the amount of corporate
overhead for such period of Park Communications allocated to
the Company and its Subsidiaries in accordance with GAAP
consistently applied and deducted in calculating such net
income (or loss), (ii) by adding the amount of interest expense
for such period calculated in accordance with GAAP attributable
to debt issuance costs related to the Notes (to the extent
deducted in calculating such net income (or loss)), (iii) by
adding the amount of management advisory fees paid by the
Company to Park Communications for such period and deducted in
calculating such net income (or loss) and (iv) by excluding,
without duplication, (a) all extraordinary gains but not losses
(less all fees and expenses relating thereto) together with any
related provisions for taxes, (b) the portion of net income (or
loss) of the Company and the Restricted Subsidiaries allocable
to interests in unconsolidated Persons or Unrestricted
Subsidiaries, except to the extent of the amount of dividends
or distributions actually paid in cash to the Company or the
Restricted Subsidiaries by such other Person during such period
(subject in the case of any such dividend or distribution to
any Restricted Subsidiary to the limitations set forth in
clause (e) below), (c) net income (or loss) of any Person
combined with the Company or any Restricted Subsidiary on a
"pooling of interests" basis attributable to any period prior
to the date of combination, (d) net gains but not losses (less
all fees and expenses relating thereto) in respect of
<PAGE>
dispositions of assets (including, without limitation, pursuant
to sale-and-leaseback transactions) other than in the ordinary
course of business, together with any related provisions for
taxes, and (e) the net income of any Restricted Subsidiary to
the extent that the declaration of dividends or similar
<PAGE>
distributions by that Restricted Subsidiary of that income to
the Company is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted
Subsidiary or its stockholders (regardless of any waiver in
respect thereof).
"Consolidated Net Worth" means, with respect to any
Person on any date, the equity of the common and preferred
stockholders of such Person and its Restricted Subsidiaries as
of such date, determined on a consolidated basis in accordance
with GAAP consistently applied.
"consolidation" means, with respect to any Person,
the consolidation of the accounts of its Restricted
Subsidiaries with those of such Person, all in accordance with
GAAP; provided, however, that "consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary
with the accounts of such Person. The term "consolidated" has
a correlative meaning to the foregoing.
"Corporate Trust Office" means the office of the
Trustee at which at any particular time its corporate trust
business shall be principally administered, which office at the
date of execution of this Indenture is located at One State
Street, New York, New York 10004.
"Debt to Operating Cash Flow Ratio" means, with
respect to any date of determination, the ratio of (i) the
aggregate principal amount of all outstanding Indebtedness of
the Company and the Restricted Subsidiaries as of such date on
a consolidated basis, plus the aggregate liquidation preference
or redemption amount of all Disqualified Stock of the Company
and the Restricted Subsidiaries (other than any Disqualified
Stock owned by the Company or any Wholly Owned Restricted
Subsidiary) determined in accordance with GAAP, to (ii)
Operating Cash Flow of the Company and the Restricted
Subsidiaries on a consolidated basis for the four most recent
full fiscal quarters ending on or immediately prior to such
date, determined on a pro forma basis (without giving effect to
clause (iv)(c) of the definition of Consolidated Net Income)
after giving pro forma effect to (A) the incurrence of any
Indebtedness being incurred on such date of determination and
(if applicable) the application of the net proceeds therefrom,
<PAGE>
including to refinance other Indebtedness; (B) in the case of
Acquired Debt, the related acquisition as if such acquisition
had occurred at the beginning of such four-quarter period; and
(C) any acquisition or disposition by the Company and the
Restricted Subsidiaries of any company or any business or any
<PAGE>
assets out of the ordinary course of business, or any related
repayment of Indebtedness, in each case since the first day of
such four-quarter period, assuming such acquisition or
disposition had been consummated, with respect to any
acquisition, on the first day of, and with respect to any
disposition, immediately prior to the first day of, such
four-quarter period.
"Default" means any event that is, or after the
giving of notice or passage of time or both would be, an Event
of Default.
"Disposition" means, with respect to any Person, any
merger, consolidation or other business combination involving
such Person (whether or not such Person is the Surviving
Person) or the sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of such Person's
assets.
"Disqualified Stock" means (i) any Preferred Stock of
any Restricted Subsidiary and (ii) any Capital Stock of the
Company that, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable),
or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole
or in part on or prior to the Stated Maturity of the Notes;
provided, however, that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require the Company to purchase or
redeem such Capital Stock upon the occurrence of a change of
control occurring prior to the final maturity date of the Notes
shall not constitute Disqualified Stock if the change of
control provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the
provisions of Section 10.15 and such Capital Stock specifically
provides that the Company will not purchase or redeem any such
Capital Stock pursuant to such provisions prior to the
Company's purchase of the Notes as are required to be purchased
pursuant to the provisions of Section 10.15.
"Dollars" or "$" means lawful money of the United
States of America.
"Equity Market Capitalization" of any Person means
<PAGE>
the aggregate market value of the outstanding Capital Stock
(other than Preferred Stock and excluding any such Capital
Stock held in treasury by such Person) of such Person of a
class that is listed or admitted to unlisted trading privileges
on a United States national securities exchange or included for
<PAGE>
trading on the Nasdaq National Market System. For purposes of
this definition the "market value" of any such Capital Stock
shall be the average of the high and low sale prices or, if no
sales are reported, the average of the high and low bid prices,
as reported on the principal national securities exchange on
which such Capital Stock is listed or admitted to trading or,
if such Capital Stock is not listed or admitted to trading on a
national securities exchange, as reported by Nasdaq, for each
trading day in a 20 consecutive trading day period ending not
more than 45 days prior to the date such Person commits to make
an investment in the Capital Stock of the Company.
"Event of Default" shall have the meaning specified
in Section 5.01 hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exchange Notes" has the meaning provided in the
first paragraph of the recitals hereof.
"Existing Credit Facility" means the Base Loan and
Additional Loan Credit Agreement among PAI, its Subsidiaries
named therein and the lenders party thereto, dated on or about
May 11, 1995, as amended and in effect on the Issue Date.
"fair market value" means, with respect to any asset,
the price (after taking into account any liabilities relating
to such asset) which could be negotiated in an arm's-length
free market transaction, for cash, between a willing seller and
a willing buyer, neither of which is under pressure or
compulsion to complete the transaction.
"GAAP" means, as of any date, generally accepted
accounting principles in the United States and not including
any interpretations or regulations that have been proposed but
that have not become effective.
"Global Note" has the meaning provided in Section
2.01.
"guarantee" or "Guarantee" means a guarantee (other
than by endorsement of negotiable instruments for collection in
the ordinary course of business), direct or indirect, in any
manner (including, without limitation, letters of credit and
<PAGE>
reimbursement agreements in respect thereof), of all or any
part of any Indebtedness.
"Holder" or "Noteholder" means a Person in whose name
a Note is registered in the Note Register.
<PAGE>
"Indebtedness" means, with respect to any Person,
without duplication, and whether or not contingent, (i) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services or which is
evidenced by a note, bond, debenture or similar instrument,
(ii) all Capital Lease Obligations of such Person, (iii) all
obligations of such Person in respect of letters of credit or
bankers' acceptances issued or created for the account of such
Person, (iv) all Interest Rate Agreement Obligations of such
Person, (v) all liabilities secured by any Lien (other than any
Permitted Lien) on any property owned by such Person even if
such Person has not assumed or otherwise become liable for the
payment thereof to the extent of the lesser of the amount of
the debt secured thereby or the value of the property subject
to such Lien (it being understood that if such debt exceeds the
value of such property, the full amount thereof shall be
included in this definition), (vi) all obligations to purchase,
redeem, retire, or otherwise acquire for value any Capital
Stock of such Person, or any warrants, rights or options to
acquire such Capital Stock, now or hereafter outstanding,
(vii) to the extent not included in (vi), all Disqualified
Stock issued by such Person, valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus
accrued dividends thereon, and (viii) to the extent not
otherwise included, any guarantee by such Person of any other
Person's indebtedness or other obligations described in clauses
(i) through (vii) above. "Indebtedness" of the Company and the
Restricted Subsidiaries (i) shall be determined in accordance
with GAAP and (ii) shall not include current trade payables
incurred in the ordinary course of business and payable in
accordance with customary practices and non-interest bearing
installment obligations and accrued liabilities incurred in the
ordinary course of business which are not more than 90 days
past due. For purposes hereof, the "maximum fixed repurchase
price" of any Disqualified Stock which does not have a fixed
repurchase price shall be calculated in accordance with the
terms of such Disqualified Stock as if such Disqualified Stock
were purchased on any date on which Indebtedness shall be
required to be determined pursuant to this Indenture, and if
such price is based upon, or measured by the fair market value
of, such Disqualified Stock, such fair market value is to be
determined reasonably and in good faith by the board of
directors of the issuer of such Disqualified Stock.
"Indenture" means this instrument as originally
<PAGE>
executed (including all exhibits and schedules hereto) and as
it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to
the applicable provisions hereof.
<PAGE>
"Independent Director" means a director of the
Company other than a director (i) who (apart from being a
director of the Company or any Subsidiary) is an employee,
associate or Affiliate of the Company or a Subsidiary or has
held any such position during the previous five years, or
(ii) who is a director, employee, associate or Affiliate of
another party (other than the Company or any of its
Subsidiaries) to the transaction in question.
"Initial Notes" has the meaning provided in the first
paragraph of the recitals hereof.
"Initial Purchasers" means Goldman, Sachs & Co. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"Insolvency or Liquidation Proceeding" means, with
respect to any Person, any liquidation, dissolution or winding
up of such Person, or any bankruptcy, reorganization,
insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"Institutional Accredited Investor" means an
institution that is an "accredited investor" as that term is
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.
"Interest Payment Date" means, when used with respect
to any Note, the Stated Maturity of an installment of interest
on such Note, as set forth in such Note.
"Interest Rate Agreement Obligations" means, with
respect to any Person, the Obligations of such Person under
(i) interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements, and (ii) other agreements
or arrangements designed to protect such Person against
fluctuations in interest rates.
"Investment Grade" means BBB- or higher by S&P or
Baa3 or higher by Moody's or the equivalent of such ratings by
S&P or Moody's or in the event S&P or Moody's shall cease
rating the Notes and the Company shall select any other Rating
Agency, the equivalent of such ratings by such other Rating
Agency.
"Investments" means, with respect to any Person, all
<PAGE>
investments by such Person in other Persons (including
Affiliates of such Person) in the form of loans, Guarantees,
advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions
<PAGE>
for consideration of Indebtedness, Capital Stock or other
securities and all other items that are or would be classified
as investments on a balance sheet prepared in accordance with
GAAP.
"Issue Date" means the date of first issuance of the
Notes under this Indenture, May 13, 1996.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset, whether or
not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in any asset and
any filing of, or agreement to give, any financing statement
under the Uniform Commercial Code (or equivalent statutes) of
any jurisdiction).
"Net Proceeds" means, with respect to any Asset Sale
by any Person, the aggregate cash proceeds received by such
Person and/or its Affiliates in respect of such Asset Sale,
which amount is equal to the excess, if any, of (i) the cash
received by such Person and/or its Affiliates (including any
cash payments received by way of deferred payment pursuant to,
or monetization of, a note or installment receivable or
otherwise, but only as and when received) in connection with
such Asset Sale, over (ii) the sum of (a) the amount of any
Indebtedness that is secured by such asset and which is
required to be repaid by such Person in connection with such
Asset Sale, plus (b) all fees, commissions and other expenses
incurred by such Person in connection with such Asset Sale,
plus (c) provision for taxes, including income taxes,
attributable to the Asset Sale or attributable to required
prepayments or repayments of Indebtedness with the proceeds of
such Asset Sale, plus (d) a reasonable reserve for the
after-tax cost of any indemnification payments (fixed or
contingent) attributable to seller's indemnities to purchaser
in respect of such Asset Sale undertaken by the Company or any
of the Restricted Subsidiaries in connection with such Asset
Sale, plus (e) if such Person is a Restricted Subsidiary, any
dividends or distributions payable to holders of minority
interests in such Restricted Subsidiary from the proceeds of
such Asset Sale.
<PAGE>
"Newspaper Operations" means the business and assets
of each of the following Subsidiaries of the Company:
The Pilot Company, Inc.;
Park Newspapers of Michigan, Inc.;
<PAGE>
Park Newspapers of Sapulpa, Inc.;
Park Newspapers of Creek, Inc.;
Park Newspapers of Morganton, Inc.;
Park Newspapers of Concord, Inc.;
Park Newspapers of Clinton, Inc.;
The Concord Tribune, Inc.;
Park Newspapers of Devils Lake, Inc.;
Park Newspapers of Marion, Inc.;
Park Newspapers of Moore County, Inc.;
Park Newspapers of Statesville, Inc.;
Park Newspapers of Lumberton, Inc.;
Kannapolis Publishing Company;
Clinton Newspapers, Inc.;
Coldwater Reporter Company;
Park Newspapers of Iradell, Inc.;
Park Newspapers of St. Lawrence, Inc.;
Park Newspapers of Georgia, Inc.;
RHP Newspapers, Inc.;
Lockport Publications, Inc.;
Lockport Union-Sun & Journal, Inc.;
Park Newspapers of Virginia, Inc.;
Prince William Publishing Company;
Park Newspapers of Oklahoma, Inc.;
McAlester Publishing Company;
Park Newspapers of Illinois, Inc.;
Park Newspapers of Indiana, Inc.;
Park Newspapers of Waynesboro, Inc.;
Park Newspapers of Medina, Inc.;
Park Newspapers of Clark County, Inc.;
The News & Journal, Inc.;
Park Newspapers of Kentucky, Inc.;
Park Newspapers of Mooresville, Inc.;
Park Newspapers of Hudson, Inc.;
Park Newspapers of Minnesota, Inc.;
Park Newspapers of Morehead, Inc.;
South Idaho Newspapers, Inc.;
Park Newspapers of Idaho, Inc.;
Park Newspapers of Northeastern
North Carolina, Inc.;
Park Newspapers of Eden, Inc.;
Park Newspapers of the Cumberlands, Inc.;
Mooresville Tribune, Inc.;
Park Newspapers of Rockingham, Inc.; and
Effingham Daily News Company.
<PAGE>
"Non-U.S. Person" means a person who is not a U.S.
person, as defined in Regulation S.
"Notes" mean the Initial Notes and the Exchange
Notes.
<PAGE>
"Obligations" means any principal, interest,
penalties, fees, indemnifications, reimbursement obligations,
damages and other liabilities payable under the documentation
governing any Indebtedness.
"Offering Memorandum" means the offering memorandum
dated as of May 6, 1996 relating to the offering of the Notes.
"Officer" means, with respect to any Person, the
President and Chief Operating Officer, any Vice President, the
Chief Financial Officer and the Treasurer, or any other officer
designated by the Board of Directors serving in a similar
capacity.
"Officers' Certificate" means, with respect to any
Person, a certificate signed by the Chief Operating Officer,
the Chief Financial Officer or a Vice President of such Person,
and by the Secretary or Assistant Secretary of such Person, and
delivered to the Trustee.
"Operating Cash Flow" means, with respect to any
period, the Consolidated Net Income of the Company and the
Restricted Subsidiaries for such period, plus, without
duplication, (i) extraordinary net losses and net losses
realized on any sale or other disposition of assets during such
period, to the extent such losses were deducted in computing
Consolidated Net Income, plus (ii) provision for taxes based on
income or profits, to the extent such provision for taxes was
included in computing such Consolidated Net Income, and any
provision for taxes utilized in computing the net losses under
clause (i) hereof, plus (iii) Consolidated Interest Expense of
the Company and the Restricted Subsidiaries for such period,
plus (iv) depreciation, amortization and all other non-cash
charges (excluding non-cash charges associated with changes in
working capital and other balance sheet changes in the ordinary
course of business), to the extent such depreciation,
amortization and other non-cash charges were deducted in
computing such Consolidated Net Income (including amortization
of goodwill and other intangibles).
"Opinion of Counsel" means a written opinion of
counsel, who may be counsel for the Company, and who shall be
acceptable to the Trustee.
"Outstanding" means, as of the date of determination,
<PAGE>
all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
<PAGE>
(ii) Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
(other than the Company or any Affiliate thereof) in trust
for the Holders of such Notes; provided, however, that if
such Notes are to be redeemed, notice of such redemption
has been duly and irrevocably given pursuant to this
Indenture or provision therefor satisfactory to the
Trustee has been made;
(iii) Notes with respect to which the Company has
effected defeasance or covenant defeasance as provided in
Article Four, to the extent provided in Sections 4.02 and
4.03; and
(iv) Notes in exchange for or in lieu of which other
Notes have been authenticated and delivered pursuant to
this Indenture, other than any such Notes in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Notes are held by a bona fide
purchaser in whose hands the Notes are valid obligations
of the Company;
provided, however, that in determining whether the Holders of
the requisite principal amount of Outstanding Notes have given
any request, demand, authorization, direction, notice, consent
or waiver hereunder, Notes owned by the Company or any other
obligor under the Notes or any Affiliate of the Company or such
other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes
which the Trustee knows to be so owned shall be so disregarded.
Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with
respect to such Notes and that the pledgee is not the Company
or any other obligor under the Notes or any Affiliate of the
Company or such other obligor.
"PAI" means Park Acquisitions, Inc., a Delaware
corporation, and its successors and assigns.
"Park Communications" means Park Communications,
Inc., a Delaware corporation, and its successors and assigns.
<PAGE>
"Paying Agent" means any Person authorized by the
Company to pay the principal, premium, if any, or interest on
any Notes on behalf of the Company.
<PAGE>
"Permitted Holders" means (i) each of (A) Gary B.
Knapp, a natural person resident in Lexington, Kentucky on the
Issue Date, (B) Donald R. Tomlin, Jr., a natural person
resident in Columbia, South Carolina on the Issue Date, and
(C) Park Communications and PAI so long as Park Communications
and PAI are controlled by Persons who would otherwise be
"Permitted Holders" hereunder; (ii) the spouse, ancestors,
siblings, descendants (including children or grandchildren by
adoption) of (A) any of the Persons described in clause (i) or
(B) any spouse, ancestor, sibling or descendant (including
children or grandchildren by adoption) of any of the Persons
described in clause (i); (iii) in the event of the incompetence
or death of any of the Persons described in clauses (i) and
(ii), such Person's estate, executor, administrator, committee
or other personal representative, in each case who at any
particular date shall beneficially own or have the right to
acquire, directly or indirectly, Capital Stock of the Company;
(iv) any trusts created for the benefit of the Persons
described in clause (i), (ii) or (iii) or any trust for the
benefit of any such trust; or (v) any Person controlled by any
of the Persons described in clause (i), (ii), (iii) or (iv).
For purposes of this definition, "control," as used with
respect to any Person, shall mean the possession, directly or
indirectly, of the power to elect or appoint not less than a
majority of the members of the Board of Directors of such
Person.
"Permitted Investments" means (i) any Investment in
the Company or any Wholly Owned Restricted Subsidiary; (ii) any
Investment in Cash Equivalents; (iii) any Investment in a
Person (an "Acquired Person") if, as a result of such
Investment, (a) the Acquired Person becomes a Wholly Owned
Restricted Subsidiary, or (b) the Acquired Person either (1) is
merged or consolidated with or into the Company or any Wholly
Owned Restricted Subsidiary and the Company or such Wholly
Owned Restricted Subsidiary is the Surviving Person, or
(2) transfers or conveys all or substantially all of its assets
to, or is liquidated into, the Company or any Wholly Owned
Restricted Subsidiary; (iv) Investments in accounts and notes
receivable acquired in the ordinary course of business; (v) any
securities received in connection with an Asset Sale that
complies with Section 10.14; provided, however, the fair market
value of such securities does not exceed 15% of the aggregate
consideration received at the time of such Asset Sale;
(vi) Interest Rate Agreement Obligations permitted pursuant to
<PAGE>
Section 10.11(b)(v); (vii) any other Investments that do not
exceed $5.0 million in amount in the aggregate at any one time
outstanding; (viii) Investments for which the sole
consideration provided is Capital Stock (other than
<PAGE>
Disqualified Stock) of the Company; and (ix) Investments
existing on the Issue Date.
"Permitted Liens" means (i) Liens securing
Indebtedness of a Person existing at the time that such Person
is merged into or consolidated with the Company or a Restricted
Subsidiary; provided, however, that such Liens were in
existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those
of such Person; (ii) Liens on property acquired by the Company
or a Restricted Subsidiary, provided, however, that such Liens
were in existence prior to the contemplation of such
acquisition and do not extend to any other property; (iii)
Liens in favor of the Company or any Restricted Subsidiary;
(iv) Liens incurred, or pledges and deposits in connection
with, workers' compensation, unemployment insurance and other
social security benefits, and leases, appeal bonds and other
obligations of like nature incurred by the Company or any
Restricted Subsidiary in the ordinary course of business; (v)
Liens imposed by law, including, without limitation,
mechanics', carriers', warehousemen's, materialmen's,
suppliers' and vendors' Liens, incurred by the Company or any
Restricted Subsidiary in the ordinary course of business; (vi)
Liens for ad valorem, income or property taxes or assessments
and similar charges which either are not delinquent or are
being contested in good faith by appropriate proceedings for
which the Company has set aside on its books reserves to the
extent required by GAAP; (vii) Liens arising from Capital Lease
Obligations permitted under this Indenture; (viii) Liens
securing any Indebtedness (including Purchase Money
Indebtedness) of the Company or the Restricted Subsidiaries
(other than any Indebtedness which is expressly subordinated to
any other Indebtedness) permitted under this Indenture;
provided, however, that such Liens are granted not later than
360 days after the incurrence of such Indebtedness; (ix) Liens
in respect of Interest Rate Agreement Obligations permitted
under this Indenture; (x) easements, reservations, licenses,
rights-of-way, zoning restrictions and other similar charges or
encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of
the Company or any of the Restricted Subsidiaries; (xi) Liens
securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds
thereof; (xii) Liens existing on the Issue Date; and (xiii) any
<PAGE>
Lien to secure the refinancing of any Indebtedness described in
the foregoing clauses; provided, however, that to the extent
any such clause limits the amounts secured or the assets
subject to such Liens, no refinancing shall increase the assets
<PAGE>
subject to such Liens or the amounts secured thereby beyond the
assets or amounts set forth in such clause.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
limited liability company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Predecessor Note" means, with respect to any
particular Note, every previous Note evidencing all or a
portion of the same debt as that evidenced by such particular
Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 3.06 hereof in
exchange for a mutilated Note or in lieu of a lost, destroyed
or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preferred Stock," as applied to the Capital Stock of
any Person, means Capital Stock of any class or classes
(however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of
such Person, over Capital Stock of any other class of such
Person.
"Private Placement Legend" means the legend initially
set forth on the Notes in the form set forth in Section 2.05.
"Public Equity Offering" means an underwritten public
offering of Capital Stock (other than Disqualified Stock) of
the Company, Park Communications or PAI pursuant to an
effective registration statement filed under the Securities
Act; provided, however, that with respect to any such public
equity offering by Park Communications or PAI, cash proceeds
from such public equity offering equal to not less than
111.875% of the aggregate principal amount of Notes to be
redeemed are received by the Company as a capital contribution
immediately prior to such redemption.
"Purchase Money Indebtedness" means Indebtedness of
the Company and the Restricted Subsidiaries incurred in
connection with the purchase of property or assets for the
business of the Company and the Restricted Subsidiaries.
"Qualified Institutional Buyer" or "QIB" shall have
<PAGE>
the meaning specified in Rule 144A under the Securities Act.
"Qualified Issuer" means (A) any lender that is a
party to the Communications Senior Credit Facility; and (B) any
commercial bank (i) which has capital and surplus in excess of
<PAGE>
$80,000,000, and (ii) the outstanding short-term debt
securities of which are rated at least A-2 by Standard & Poor's
Corporation or at least P-2 by Moody's Investors Service, Inc.,
or carry an equivalent rating by a nationally recognized rating
agency if both the two named rating agencies cease publishing
ratings of investments.
"Rating Agency" means any of (i) S&P, (ii) Moody's or
(iii) if S&P or Moody's or both shall not make a rating of the
Notes publicly available, a security rating agency or agencies,
as the case may be, nationally recognized in the United States
and selected by the Company which shall be substituted for S&P
or Moody's or both, as the case may be.
"Rating Category" means (i) with respect to S&P, any
of the following categories: AAA, AA, A, BBB, BB, B, CCC, CC,
C and D (or equivalent successor categories); (ii) with respect
to Moody's, any of the following categories: Aaa, Aa, Baa, Ba,
B, Caa, Ca, C and D (or equivalent successor categories); and
(iii) the equivalent of any such category of S&P or Moody's
used by another Rating Agency. In determining whether the
rating of the Notes has decreased by one or more gradations,
gradations within Rating Categories (+ and - for S&P; 1, 2 and
3 for Moody's; or the equivalent gradations for another Rating
Agency) shall be taken into account (e.g., with respect to S&P,
a decline in rating from BB+ to BB, as well as from BB- to B+,
will constitute a decrease of one gradation).
"Rating Decline" means the occurrence on, or within
60 days after, the date of public notice of the occurrence of a
Change of Control or of the intention of the Company or Persons
controlling the Company to effect a Change of Control (which
period shall be extended so long as the rating of the Notes is
under publicly announced consideration for possible downgrade
by any of the Rating Agencies) of the following: (i) if the
Notes are rated by either Rating Agency as Investment Grade
immediately prior to the beginning of such period, the rating
of the Notes by both Rating Agencies shall be below Investment
Grade; or (ii) if the Notes are rated below Investment Grade by
both Rating Agencies immediately prior to the beginning of such
period, the rating of the Notes by either Rating Agency (or
both) shall be decreased by one or more gradations (including
gradations within Rating Categories as well as between Rating
Categories).
<PAGE>
"Redemption Date" means, with respect to any Note to
be redeemed, any date fixed for such redemption by or pursuant
to this Indenture and the terms of the Notes.
<PAGE>
"Redemption Price" means, with respect to any Note to
be redeemed, the price at which it is to be redeemed pursuant
to this Indenture and the terms of the Notes.
"Refinancing Transactions" has the meaning ascribed
to such term in the Offering Memorandum.
"Registration Rights Agreement" means the
Registration Rights Agreement dated on or about the Issue Date
between the Company and the Initial Purchasers for the benefit
of themselves and the Holders as the same may be amended from
time to time in accordance with the terms thereof.
"Regular Record Date" means the Regular Record Date
specified in the Notes.
"Regulation S" means Regulation S under the
Securities Act.
"Responsible Officer" means, with respect to the
Trustee, the chairman or vice chairman of the board of
directors, the chairman or vice chairman of the executive
committee of the board of directors, the president, any vice
president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant
cashier, any trust officer or assistant trust officer, the
controller and any assistant controller or any other officer of
the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any
other officer of the Trustee to whom any corporate trust matter
is referred because of his or her knowledge of and familiarity
with the particular subject.
"Restricted Investment" means any Investment other
than a Permitted Investment.
"Restricted Payment" means (i) any dividend or other
distribution declared or paid on any Capital Stock of the
Company or any of the Restricted Subsidiaries (other than
dividends or distributions payable solely in Capital Stock
(other than Disqualified Stock) of the Company or such
Restricted Subsidiary or dividends or distributions payable to
the Company or any Wholly Owned Restricted Subsidiary); (ii)
any payment to purchase, redeem, defease or otherwise acquire
<PAGE>
or retire for value any Capital Stock of the Company or any
Restricted Subsidiary or other Affiliate of the Company (other
than any Capital Stock owned by the Company or any Wholly Owned
Restricted Subsidiary); (iii) any payment to purchase, redeem,
defease or otherwise acquire or retire for value any
<PAGE>
Indebtedness that is subordinated in right of payment to the
Notes other than a purchase, redemption, defeasance or other
acquisition or retirement for value that is paid for with the
proceeds of Refinancing Indebtedness that is permitted under
Section 10.11; or (iv) any Restricted Investment.
"Restricted Security" has the meaning assigned to
such term in Rule 144(a)(3) under the Securities Act; provided,
however, that the Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to
whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means each direct or indirect
Subsidiary of the Company other than an Unrestricted
Subsidiary.
"Revolving Credit Facility" means any credit facility
entered into by the Company, the Subsidiaries of the Company
named therein and the lenders named therein, as the same may be
amended, modified, renewed, refunded, replaced or refinanced
(collectively, "refinanced") from time to time, including (i)
any related notes, letters of credit, guarantees, collateral
documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified or refinanced
from time to time, and (ii) any notes, guarantees, collateral
documents, instruments and agreements executed in connection
with any such amendment, modification or refinancing.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as
amended.
"Special Record Date" means, with respect to the
payment of any Defaulted Interest, a date fixed by the Trustee
pursuant to Section 3.07 hereof.
"Stated Maturity" means, when used with respect to
any Note or any installment of interest thereon, the date
specified in such Note as the fixed date on which any principal
of such Note or such installment of interest is due and
payable, and when used with respect to any other Indebtedness,
means the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such
Indebtedness, or any installment of interest thereon, is due
<PAGE>
and payable.
"Strategic Equity Investment" means the issuance and
sale of Capital Stock (other than Disqualified Stock) of the
Company, Park Communications or PAI to a Person substantially
<PAGE>
engaged in the newspaper publishing business or any other
business reasonably related to the Company's business that has
an Equity Market Capitalization of at least $350.0 million;
provided, however, that with respect to any such issuance by
Park Communications or PAI, cash proceeds from such issuance
equal to not less than 111.875% of the aggregate principal
amount of Notes to be redeemed are received by the Company as a
capital contribution immediately prior to any such redemption.
"Subsidiary" of a Person means (i) any corporation
more than 50% of the outstanding voting power of the Voting
Stock of which is owned or controlled, directly or indirectly,
by such Person or by one or more other Subsidiaries of such
Person, or by such Person and one or more other Subsidiaries
thereof, or (ii) any limited partnership of which such Person
or any Subsidiary of such Person is a general partner, or
(iii) any other Person (other than a corporation or limited
partnership) in which such Person, or one or more other
Subsidiaries of such Person, or such Person and one or more
other Subsidiaries thereof, directly or indirectly, has more
than 50% of the outstanding partnership or similar interests or
has the power, by contract or otherwise, to direct or cause the
direction of the policies, management and affairs thereof.
"Surviving Person" means, with respect to any Person
involved in or that makes any Disposition, the Person formed by
or surviving such Disposition or the Person to which such
Disposition is made.
"Tax Sharing Agreement" means the Intercorporate Tax
Sharing Agreement among PAI and its Subsidiaries dated on or
about (but not after) the Issue Date, as amended or
supplemented from time to time in accordance herewith.
"Treasury Rate" means the yield to maturity at the
time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15(519) which has become
publicly available at least two business days prior to the date
fixed for redemption (or, if such Statistical Release is no
longer published, any publicly available source of similar
market data)) most nearly equal to the then remaining term to
May 15, 2001; provided, however, that if the then remaining
term to May 15, 2001 is not equal to the constant maturity of a
United States Treasury security for which a weekly average
<PAGE>
yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the
then remaining term to May 15, 2001 is less than one year, the
<PAGE>
weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be
used.
"Trust Indenture Act" or "TIA" means the Trust
Indenture Act of 1939, as amended, and as in effect from time
to time.
"Trustee" means the Person named as the "Trustee" in
the first paragraph of this Indenture, until a successor
Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Trustee.
"Unrestricted Subsidiary" means (A) as of the Issue
Date, each Subsidiary listed on Schedule A hereto and (B) any
other Subsidiary of the Company designated as an Unrestricted
Subsidiary by the Board of Directors of the Company; provided,
however, that for purposes of this clause (B), (i) the
Subsidiary to be so designated (x) (I) has total assets with a
fair market value at the time of such designation of $1,000 or
less or (II) is being so designated prior to the acquisition by
the Company of such Subsidiary by merger or consolidation with
an Unrestricted Subsidiary, and (y) does not own any Capital
Stock of the Company or any Restricted Subsidiary, (ii) if such
Subsidiary is acquired by the Company, such Subsidiary is
designated as an Unrestricted Subsidiary prior to the
consummation of such acquisition, (iii) no Default or Event of
Default shall have occurred and be continuing, (iv) no portion
of any Indebtedness or any other Obligation (contingent or
otherwise) of such Subsidiary (a) is guaranteed by, or is
otherwise the subject of credit support provided by, the
Company or any of the Restricted Subsidiaries, (b) is recourse
to or obligates the Company or any of the Restricted
Subsidiaries in any way, or (c) subjects any property or asset
of the Company or any of the Restricted Subsidiaries directly
or indirectly, contingently or otherwise, to the satisfaction
of such Indebtedness or other obligation, (v) neither the
Company nor any of the Restricted Subsidiaries has any
contract, agreement, arrangement or understanding with such
Subsidiary other than on terms as favorable to the Company or
such Restricted Subsidiary as those that might be obtained at
the time from Persons that are not Affiliates of the Company,
and (vi) neither the Company nor any of the Restricted
Subsidiaries has any obligations (a) to subscribe for
<PAGE>
additional shares of Capital Stock of such Subsidiary, or
(b) to maintain or preserve such Subsidiary's financial
condition or to cause such Subsidiary to achieve certain levels
of operating results. Any such designation by the Company's
Board of Directors shall be evidenced to the Trustee by filing
<PAGE>
with the Trustee a certificate stating that such designation
complies with the foregoing conditions. The Company's Board of
Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing, including,
without limitation, under Sections 10.11 and 10.16, assuming
the incurrence by the Company and the Restricted Subsidiaries
at the time of such designation of all existing Indebtedness
and Liens of the Unrestricted Subsidiary to be so designated as
a Restricted Subsidiary. Notwithstanding the foregoing or any
other provision of this Indenture to the contrary, no assets of
the Newspaper Operations may be held at any time by an
Unrestricted Subsidiary, other than assets transferred to
Unrestricted Subsidiaries that in the aggregate are not
material to such publishing operations. In the event of any
Disposition involving the Company in which the Company is not
the Surviving Person, the Board of Directors of the Surviving
Person may (x) prior to such Disposition, designate any of its
Subsidiaries, and any of the Company's Subsidiaries being
acquired pursuant to such Disposition that are not Restricted
Subsidiaries, as Unrestricted Subsidiaries, and (y) after such
Disposition, designate any of its direct or indirect
Subsidiaries as an Unrestricted Subsidiary under the same
conditions and in the same manner as the Company under the
terms of this Indenture.
"U.S. Government Obligations" means securities that
are (i) direct obligations of the United States of America for
the timely payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository
receipt; provided, however, that (except as required by law)
such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from
<PAGE>
any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of
or interest on the U.S. Government Obligation evidenced by such
depository receipt.
<PAGE>
"Voting Stock" of a Person means Capital Stock of
such Person of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of
directors, managers or trustees of such Person (irrespective of
whether or not at the time the stock of any other class or
classes shall have or might have voting power by reason of the
happening of any contingency).
"Weighted Average Life to Maturity" means, when
applied to any Indebtedness at any date, the number of years
obtained by dividing (i) the sum of the products obtained by
multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other required scheduled
payment of principal, including payment at final maturity, in
respect thereof, with (b) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (ii) the then outstanding
aggregate principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any
Restricted Subsidiary with respect to which all of the
outstanding voting securities (other than directors' qualifying
shares) are owned, directly or indirectly, by the Company or a
Surviving Person of any Disposition involving the Company, as
the case may be.
Section 1.02. Other Definitions.
Defined in
Term Section
"Act" 1.05
"Affiliate Transaction" 10.13
"Agent Members" 2.04
"Asset Sale Offer" 10.14
"Asset Sale Offer Price" 10.14
"Asset Sale Offer Trigger Date" 10.14
"Authenticating Agent" 2.02
"Change of Control Date" 10.15
"Change of Control Offer" 10.15
"Change of Control Purchase Date" 10.15
"Change of Control Purchase Price" 10.15
"covenant defeasance" 4.03
"Defaulted Interest" 3.07
<PAGE>
"defeasance" 4.02
"Defeased Notes" 4.01
"Excess Proceeds" 10.14
"Global Note" 2.01
"incur" 10.11(a)
<PAGE>
"Note Register" 3.05
"Note Registrar" 3.05
"Notice of Default" 5.01
"Offshore Physical Note" 2.01
"Optional Redemption Price" 11.01
"Other Obligations" 1.20
"Permitted Indebtedness" 10.11
"Permitted Payments" 10.12
"Physical Notes" 2.01
"Required Filing Dates" 10.09
"U.S. Physical Notes" 2.01
Section 1.03. Rules of Construction.
For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article, and include the
plural as well as the singular;
(b) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance
with GAAP;
(d) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision;
(e) all references to "$" or "dollars" shall refer
to the lawful currency of the United States of America;
(f) the words "include," "included" and "including"
as used herein shall be deemed in each case to be followed
by the phrase "without limitation"; and
(g) any reference to a Section or Article refers to
such Section or Article of this Indenture.
<PAGE>
Section 1.04. Form of Documents Delivered to
Trustee.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
<PAGE>
shall furnish to the Trustee (a) an Officers' Certificate in
form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with, (b) an Opinion of
Counsel in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of counsel, all such
conditions have been complied with and (c) where applicable, a
certificate or opinion by an accountant that complies with
Section 314(c) of the Trust Indenture Act.
Each certificate and Opinion of Counsel with respect
to compliance with a condition or covenant provided for in this
Indenture shall include:
(a) a statement that the Person making such
certificate or Opinion of Counsel has read such covenant
or condition;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
contained in such certificate or Opinion of Counsel are
based;
(c) a statement that, in the opinion of such Person,
he has made such examination or investigation as is
necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion
of such Person, such condition or covenant has been
complied with.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified
Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Officer of the
<PAGE>
Company may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by,
counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his
<PAGE>
certificate or opinion is based are erroneous. Any such
certificate or opinion of counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of,
or representations by, an officer or officers of the Company
stating that the information with respect to such factual
matters is in the possession of the Company, unless such
counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated, with proper
identification of each matter covered therein, and form one
instrument.
Section 1.05. Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in Person or by an agent
duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee
and, where it is hereby expressly required, to the Company.
Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments.
Proof of execution (as provided below in subsection (b) of this
Section 1.05) of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01 hereof) conclusive in
favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient including,
without limitation, by verification from a notary public or
signature guarantee.
(c) The ownership of Notes shall be proved by the
<PAGE>
Note Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other action by the Holder of any
Note shall bind every future Holder of the same Note or the
<PAGE>
Holder of every Note issued upon the transfer thereof or in
exchange therefor or in lieu thereof to the same extent as the
original Holder, in respect of anything done, suffered or
omitted to be done by the Trustee, any Paying Agent or the
Company in reliance thereon, whether or not notation of such
action is made upon such Note.
Section 1.06. Notices, etc., to the Trustee and the
Company.
Any request, demand, authorization, direction,
notice, consent, waiver or Act of Holders or other document
provided or permitted by this Indenture to be made upon, given
or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company
shall be sufficient for every purpose hereunder if made,
given, furnished or filed, in writing, to or with the
Trustee at One State Street, New York, New York 10004 or
at any other address previously furnished in writing to
the Holders and the Company by the Trustee or at the
office of any drop agent specified to the Holders and the
Company from time to time; and
(b) the Company by the Trustee or by any Holder
shall be sufficient for every purpose (except as otherwise
expressly provided herein) hereunder if in writing and
mailed, first-class postage prepaid, to the Company, c/o
Park Newspapers, Inc., addressed to it at 1700 Vine Center
Office Tower, 333 West Vine Street, Lexington, Kentucky
40507, Attention: Wright M. Thomas, or at any other
address previously furnished in writing to the Trustee by
the Company.
Section 1.07. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders
of any event, such notice shall be sufficiently given (unless
otherwise expressly provided herein) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at the address of such Holder as it appears in the Note
Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice.
In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice
<PAGE>
so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Any
notice when mailed to a Holder in the aforesaid manner shall be
conclusively deemed to have been received by such Holder
whether or not actually received by such Holder. Where this
<PAGE>
Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall
be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail
service or by reason of any other cause, it shall be
impracticable to mail notice of any event as required by any
provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.
Section 1.08. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or
conflicts with any provision of the Trust Indenture Act or
another provision which is required or deemed to be included in
this Indenture by any of the provisions of the Trust Indenture
Act, such provision or requirement of the Trust Indenture Act
shall control.
If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act that may be
so modified or excluded, such provision of the Trust Indenture
Act shall be deemed to apply to this Indenture as so modified
or excluded, as the case may be.
Section 1.09. Effect of Headings and Table of
Contents.
The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company and Trustee shall bind their respective successors and
assigns, whether so expressed or not.
Section 1.11. Separability Clause.
<PAGE>
In case any provision in this Indenture or in the
Notes 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.
<PAGE>
Section 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Notes issued
pursuant hereto, express or implied, shall give to any Person
(other than the parties hereto and their successors hereunder,
any Paying Agent and the Holders) any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 1.13. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF). THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN
RESPECT OF THE NOTES AND THE HOLDERS AGREE TO SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS INDENTURE OR THE NOTES.
Section 1.14. No Recourse Against Others.
No director, officer, employee or stockholder of the
Company, as such, shall have any liability for any obligations
of the Company under the Notes or this Indenture. Each holder
of Notes by accepting a Note waives and releases all such
liability, and such waiver and release is part of the
consideration for the issuance of the Notes.
Section 1.15. Independence of Covenants.
All covenants and agreements in this Indenture shall
be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact
that it would be permitted by an exception to, or be otherwise
within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or condition
exists.
Section 1.16. Exhibits and Schedules.
All exhibits and schedules attached hereto are by
this reference made a part hereof with the same effect as if
herein set forth in full.
<PAGE>
Section 1.17. Counterparts.
This Indenture may be executed in any number of
counterparts, each of which shall be an original; but such
<PAGE>
counterparts shall together constitute but one and the same
instrument.
Section 1.18. Duplicate Originals.
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
Section 1.19. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the
TIA, the provision is incorporated by reference in, and made a
part of, this Indenture. Any terms incorporated by reference
in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them therein.
ARTICLE TWO
SECURITY FORMS
Section 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of
authentication relating thereto shall be substantially in the
form of Exhibit A hereto. The Exchange Notes and the Trustee's
certificate of authentication relating thereto shall be
substantially in the form of Exhibit B hereto. The Notes may
have notations, legends or endorsements required by law, stock
exchange rule or depository rule or usage. The Company and the
Trustee shall approve the form of the Notes and any notation,
legend or endorsement on them. Each Note shall be dated the
date of its issuance and shall show the date of its
authentication.
The terms and provisions contained in the Notes,
annexed hereto as Exhibits A and B, shall constitute, and are
hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall
<PAGE>
be issued initially in the form of one or more permanent global
Notes in registered form, substantially in the form set forth
in Exhibit A (the "Global Note"), deposited with the Trustee,
as custodian for the depository thereof, duly executed by the
Company and authenticated by the Trustee as hereinafter
<PAGE>
provided and shall bear the legend set forth in Section 2.03
hereof. The aggregate principal amount of the Global Note may
from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depository,
as hereinafter provided.
Notes offered and sold in offshore transactions in
reliance on Regulation S shall be issued in the form of
permanent certificated Notes in registered form in
substantially the form set forth in Exhibit A (the "Offshore
Physical Notes"). Notes offered and sold in reliance on any
other exemption from registration under the Securities Act
other than as described in the preceding paragraph shall be
issued, and Notes offered and sold in reliance on Rule 144A may
be issued, in the form of permanent certificated Notes in
registered form, in substantially the form set forth in
Exhibit A (the "U.S. Physical Notes"). The Offshore Physical
Notes and the U.S. Physical Notes are sometimes collectively
herein referred to as the "Physical Notes." Physical Notes
shall initially be registered in the name of the Depository or
a nominee of such Depository and be delivered to the Trustee as
custodian for such Depository. Beneficial owners of Physical
Notes, however, may request registration of such Physical Notes
in their names or the names of their nominees.
Section 2.02. Execution and Authentication;
Aggregate Principal Amount.
The Notes shall be executed on behalf of the Company
by an Officer of the Company. The signature of any Officer on
the Notes may be manual or facsimile.
If an Officer or Assistant Secretary whose signature
is on a Note was an Officer or Assistant Secretary at the time
of such execution but no longer holds that office or position
at the time the Trustee authenticates the Note, the Note shall
nevertheless be valid.
A Note shall not be valid until an authorized
signatory of the Trustee manually signs the certificate of
authentication on the Note. The signature shall be conclusive
evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for
<PAGE>
original issue in the aggregate principal amount not to exceed
$155,000,000 and (ii) Exchange Notes from time to time for
issue only in exchange for a like principal amount of Initial
Notes, in each case upon a written order of the Company in the
form of an Officers' Certificate. The Officers' Certificate
<PAGE>
shall specify the amount of Notes to be authenticated and the
date on which the Notes are to be authenticated, whether the
Notes are to be Initial Notes or Exchange Notes and whether the
Notes are to be issued as Physical Notes or a Global Note or
such other information as the Trustee may reasonably request.
The aggregate principal amount of Notes outstanding at any time
may not exceed $155,000,000, except as provided in Section 3.06
hereof.
The Trustee may appoint an authenticating agent (the
"Authenticating Agent") reasonably acceptable to the Company to
authenticate Notes. Unless otherwise provided in the
appointment, an Authenticating Agent may authenticate Notes
whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes
authentication by such Authenticating Agent. An Authenticating
Agent has the same rights as an Agent to deal with the Company
or with any Affiliate of the Company.
Section 2.03. Restrictive Legends.
Each Global Note and Physical Note that constitutes a
Restricted Security shall bear the following legend (the
"Private Placement Legend") on the face thereof until the third
anniversary of the Issue Date, unless otherwise agreed by the
Company and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT
AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES
THAT IT WILL NOT WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A) TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE
<PAGE>
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS
<PAGE>
BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE OR
TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE OR REGISTRAR), (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER
OF THIS SECURITY WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THE SECURITY, IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Note shall also bear the following legend
on the face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN
PART FOR SECURITIES IN DEFINITIVE FORM, THIS
SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY,
OR BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY
THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
<PAGE>
THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
<PAGE>
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.05 OF THE
INDENTURE.
Section 2.04. Book-Entry Provisions for Global
Security.
(1) The Global Note initially shall (i) be
registered in the name of the Depository or the nominee of such
Depository, (ii) be delivered to the Trustee as custodian for
such Depository and (iii) bear legends as set forth in Section
2.15.
Members of, or participants in, the Depository
("Agent Members") shall have no rights under this Indenture
with respect to any Global Note held on their behalf by the
Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company,
the Trustee and any Agent of the Company or the Trustee as the
absolute owner of the Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any Agent of the Company or the Trustee
from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between
the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a
holder of any Note.
(2) Transfers of the Global Note shall be limited to
transfers in whole, but not in part, to the Depository, its
successors or their respective nominees. Interests of
beneficial owners in the Global Note may be transferred or
exchanged for Physical Notes in accordance with the rules and
<PAGE>
procedures of the Depository and the provisions of Section 2.05
hereof. In addition, Physical Notes shall be transferred to
all beneficial owners in exchange for their beneficial
interests in the Global Note if (i) the Depository notifies the
Company that it is unwilling or unable to continue as
<PAGE>
Depository for the Global Note and a successor depositary is
not appointed by the Company within 90 days of such notice or
(ii) an Event of Default has occurred and is continuing and the
Registrar has received a written request from the Depository to
issue Physical Notes.
(3) In connection with any transfer or exchange of a
portion of the beneficial interest in the Global Note to
beneficial owners pursuant to paragraph (2), the Registrar
shall (if one or more Physical Notes are to be issued) reflect
on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note
to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Physical
Notes of like tenor and amount.
(4) In connection with the transfer of the entire
Global Note to beneficial owners pursuant to paragraph (2), the
Global Note shall be deemed to be surrendered to the Trustee
for cancellation, and the Company shall execute, and the
Trustee shall authenticate and deliver to each beneficial owner
identified by the Depository in exchange for its beneficial
interest in the Global Note, an equal aggregate principal
amount of Physical Notes of authorized denominations.
(5) Any Physical Note constituting a Restricted
Security delivered in exchange for an interest in the Global
Note pursuant to paragraph (2) or (3) shall, except as
otherwise provided by paragraphs (1)(a)(x) and (3) of Section
2.05 hereof, bear the legend regarding transfer restrictions
applicable to the Physical Notes set forth in Section 2.03
hereof.
(6) The Holder of the Global Note may grant proxies
and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this
Indenture or the Notes.
Section 2.05. Special Transfer Provisions.
(1) Transfers to Non-QIB Institutional Accredited
Investors and Non-U.S. Persons. The following provisions shall
apply with respect to the registration of any proposed transfer
<PAGE>
of a Note constituting a Restricted Security to any
Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
<PAGE>
(a) the Registrar shall register the transfer of any
Note constituting a Restricted Security, whether or not
such Note bears the Private Placement Legend, if (x) the
requested transfer is after the third anniversary of the
Issue Date or (y) (A) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB
(excluding Non-U.S. Persons), the proposed transferee has
delivered to the Registrar a certificate substantially in
the form of Exhibit C hereto or (B) in the case of a
transfer to a Non-U.S. Person, the proposed transferor has
delivered to the Registrar a certificate substantially in
the form of Exhibit D hereto; and
(b) if the proposed transferor is an Agent Member
holding a beneficial interest in the Global Note, upon
receipt by the Registrar of (x) the certificate, if any,
required by paragraph (a) above and (y) written
instructions given in accordance with the Depository's and
the Registrar's procedures,
whereupon (i) the Registrar shall reflect on its books and
records the date and (if the transfer does not involve a
transfer of outstanding Physical Notes) a decrease in the
principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note
to be transferred, and (ii) the Company shall execute and the
Trustee shall authenticate and deliver one or more Physical
Notes of like tenor and amount.
(2) Transfers to QIBs. The following provisions
shall apply with respect to the registration of any proposed
transfer of a Note constituting a Restricted Security to a QIB
(excluding transfers to Non-U.S. Persons):
(a) the Registrar shall register the transfer if
such transfer is being made by a proposed transferor who
has checked the box provided for on the form of Note
stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for
on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is
purchasing the Note for its own account or an account with
respect to which it exercises sole investment discretion
<PAGE>
and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as
it has requested pursuant to Rule 144A or has determined
<PAGE>
not to request such information and that it is aware that
the transferor is relying upon its foregoing
representations in order to claim the exemption from
registration provided by Rule 144A; and
(b) if the proposed transferee is an Agent Member,
and the Notes to be transferred consist of Physical Notes
which after transfer are to be evidenced by an interest in
the Global Note, upon receipt by the Registrar of written
instructions given in accordance with the Depository's and
the Registrar's procedures, the Registrar shall reflect on
its books and records the date and an increase in the
principal amount of the Global Note in an amount equal to
the principal amount of the Physical Notes to be
transferred, and the Trustee shall cancel the Physical
Notes so transferred.
(3) Private Placement Legend. Upon the transfer,
exchange or replacement of Notes not bearing the Private
Placement Legend, the Registrar shall deliver Notes that do not
bear the Private Placement Legend. Upon the transfer, exchange
or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private
Placement Legend unless (i) the requested transfer is after the
third anniversary of the Issue Date, or (ii) there is delivered
to the Registrar an Opinion of Counsel reasonably satisfactory
to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the
Securities Act.
(4) General. By its acceptance of any Note bearing
the Private Placement Legend, each Holder of such a Note
acknowledges the restrictions on transfer of such Note set
forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters,
notices and other written communications received pursuant to
Section 2.04 hereof or this Section 2.05. The Company shall
have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time
during the Registrar's normal business hours upon the giving of
reasonable written notice to the Registrar.
<PAGE>
ARTICLE THREE
THE NOTES
Section 3.01. Title and Terms.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to
$155,000,000, except as provided in the next sentence hereof
and except for Notes authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of,
other Notes pursuant to Section 3.04, 3.05, 3.06, 9.05, 10.12,
10.14, 10.15 or 11.08.
The Notes shall be known and designated as the
"11-7/8% Senior Notes due 2004" of the Company. The final
Stated Maturity of the Notes shall be May 15, 2004. Interest
on the Notes will accrue at the rate of 11-7/8% per annum and
will be payable semi-annually in arrears on May 15 and
November 15 in each year, commencing on November 15, 1996, to
holders of record on the immediately preceding May 1 and
November 1, respectively. Interest on the Notes will accrue
from the most recent date to which interest has been paid or
duly provided for or, if no interest has been paid, from the
Issue Date. Interest will be computed on the basis of a 360-
day year comprised of twelve 30-day months.
Section 3.02. Denominations.
The Notes shall be issuable only in fully registered
form without coupons and in denominations of $1,000 and any
integral multiple thereof.
Section 3.03. [Intentionally Omitted]
Section 3.04. Temporary Notes.
Pending the preparation of definitive Notes, the
Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Notes. Temporary Notes may
be printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of
which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers
<PAGE>
executing such Notes may determine, as conclusively evidenced
by their execution of such Notes.
If temporary Notes are issued, the Company will cause
definitive Notes to be prepared without unreasonable delay.
<PAGE>
After the preparation of definitive Notes, the temporary Notes
shall be exchangeable for definitive Notes upon surrender of
the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 10.02, without
charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Notes of authorized
denominations. Until so exchanged the temporary Notes shall in
all respects be entitled to the same benefits under this
Indenture as definitive Notes.
Section 3.05. Registration, Registration of Transfer
and Exchange.
The Company shall cause to be kept at the Corporate
Trust Office a register (the register maintained in such office
and in any other office or agency designated pursuant to
Section 10.02 being herein sometimes referred to as the "Note
Register") in which, subject to such reasonable regulations as
the Person appointed as being responsible for the keeping of
the Note Register (the "Note Registrar") may prescribe, the
Company shall provide for the registration of Notes and of
transfers of Notes. The Trustee is hereby initially appointed
Note Registrar for the purpose of registering Notes and
transfers of Notes as herein provided.
Upon surrender for registration of transfer of any
Note at the office or agency of the Company designated pursuant
to Section 10.02, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of any
authorized denomination or denominations, of a like aggregate
principal amount.
At the option of the Holder, Notes in certificated
form may be exchanged for other Notes of any authorized
denomination or denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for
exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Notes which the Holder making the
exchange is entitled to receive.
All Notes issued upon any registration of transfer or
<PAGE>
exchange of Notes shall be the valid obligations of the
Company, evidencing the same indebtedness, and entitled to the
same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange and no such
<PAGE>
transfer or exchange shall constitute a repayment of any
obligation nor create any new obligations of the Company.
Every Note presented or surrendered for registration
of transfer, or for exchange or redemption, shall (if so
required by the Company or the Note Registrar) be duly endorsed
or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Note Registrar, duly
executed by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made to a Holder for any
registration of transfer or exchange or redemption of Notes,
but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 3.04, 9.05,
10.12, 10.14, 10.15 or 11.08 not involving any transfer.
The Company shall not be required (a) to issue,
register the transfer of or exchange any Note during a period
beginning at the opening of business 15 days before the mailing
of a notice of redemption of the Notes selected for redemption
under Section 11.04 and ending at the close of business on the
day of such mailing, or (b) to register the transfer of or
exchange any Note so selected for redemption in whole or in
part, except the unredeemed portion of Notes being redeemed in
part.
When Notes are presented to the Note Registrar with a
request to register the transfer or to exchange them for an
equal principal amount of Notes of other authorized
denominations, the Note Registrar shall register the transfer
or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall
authenticate Notes at the Note Registrar's request.
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Notes.
If (a) any mutilated Note is surrendered to the
Trustee, or (b) the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any
Note, and there is delivered to the Company and the Trustee,
<PAGE>
such security or indemnity, in each case, as may be required by
them to save each of them harmless from any loss which either
of them may suffer if a Note is replaced, then, in the absence
of notice to the Company or the Trustee that such Note has been
acquired by a bona fide purchaser, the Company shall execute
<PAGE>
and the Trustee shall authenticate and deliver, in exchange for
any such mutilated Note or in lieu of any such destroyed, lost
or stolen Note, a replacement Note of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any replacement Notes under this
Section, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected
therewith.
Every replacement Note issued pursuant to this
Section in lieu of any destroyed, lost or stolen Note shall
constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and
proportionately with any and all other Notes duly issued
hereunder.
The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes.
Section 3.07. Payment of Interest; Interest Rights
Preserved.
Interest on any Note which is payable, and is
punctually paid or duly provided for, on any Interest Payment
Date shall be paid by check or wire transfer to the Person in
whose name that Note (or one or more Predecessor Notes) is
registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment
Date and interest on such defaulted interest at the then
applicable interest rate borne by the Notes, to the extent
lawful (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest"), shall forthwith
cease to be payable to the Holder on the Regular Record Date
and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in subsection (a) or (b)
<PAGE>
below:
(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Notes
(or their respective Predecessor Notes) are registered at
<PAGE>
the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed
in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Note and the date of the
proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such
Defaulted Interest as in this subsection (a) provided.
Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the
Company in writing of such Special Record Date. In the
name and at the expense of the Company, the Trustee shall
cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at its
address as it appears in the Note Register, not less than
10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose
names the Notes (or their respective Predecessor Notes)
are registered on such Special Record Date and shall no
longer be payable pursuant to the following subsection
(b).
(b) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be
required by such exchange, if, after written notice given
by the Company to the Trustee of the proposed payment
pursuant to this subsection (b), such payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section,
each Note delivered under this Indenture upon registration of
<PAGE>
transfer of or in exchange for or in lieu of any other Note
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note.
<PAGE>
Section 3.08. Persons Deemed Owners.
Prior to and at the time of due presentment for
registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in
whose name any Note is registered in the Note Register as the
owner of such Note for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 3.07)
interest on such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and neither the
Company, the Trustee nor any agent of the Company or the
Trustee shall be affected by notice to the contrary.
Section 3.09. Cancellation.
All Notes surrendered for payment, redemption,
registration of transfer or exchange shall be delivered to the
Trustee and, if not already cancelled, shall be promptly
cancelled by it. The Company may at any time deliver to the
Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Company may have acquired in any
manner whatsoever, as evidenced by a Company Order instructing
the Trustee that all Notes so delivered shall be promptly
cancelled by the Trustee. No Notes shall be authenticated in
lieu of or in exchange for any Notes cancelled as provided in
this Section 3.09, except as expressly permitted by this
Indenture. All cancelled Notes held by the Trustee shall be
destroyed in accordance with the applicable governmental record
retention regulations and certification of their destruction
delivered to the Company unless by a Company Order the Company
shall direct that the cancelled Notes be returned to it. The
Trustee shall provide the Company with a list of all Notes that
have been cancelled from time to time as requested by the
Company.
Section 3.10. Computation of Interest.
Interest on the Notes shall be computed on the basis
of a 360-day year of twelve 30-day months.
Section 3.11. Legal Holidays.
In any case where any Interest Payment Date,
Redemption Date, date established for the payment of Defaulted
Interest or Stated Maturity of any Note shall not be a Business
<PAGE>
Day, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of principal, premium, if
any, or interest need not be made on such date, but may be made
on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date, Redemption
<PAGE>
Date, date established for the payment of Defaulted Interest or
at the Stated Maturity, as the case may be, and no interest
shall accrue with respect to such payment for the period from
and after such Interest Payment Date, Redemption Date, date
established for the payment of Defaulted Interest or Stated
Maturity, as the case may be, to the next succeeding Business
Day.
Section 3.12. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP"
number (if then generally in use), and if so, the Trustee may
use the CUSIP numbers in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice
may state that no representation is made as to the correctness
or accuracy of the CUSIP number printed in the notice or on the
Notes, and that reliance may be placed only on the other
identification numbers printed on the Notes. All Notes shall
bear identical CUSIP numbers. The Company shall promptly
notify the Trustee in writing of any change in the CUSIP number
of the Notes.
Section 3.13. Payment of Additional Interest Under
Registration Rights Agreement.
Under certain circumstances the Company will be
obligated to pay certain additional amounts of interest to the
Holders, as more particularly set forth in section 2(e) of the
Registration Rights Agreement, the terms which are hereby
incorporated herein by reference.
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. The Company's Option To Effect
Defeasance or Covenant Defeasance.
The Company may, at its option, at any time, elect to
have terminated the obligations of the Company with respect to
Outstanding Notes, as set forth in this Article, and elect to
have either Section 4.02 or Section 4.03 be applied to all of
the Outstanding Notes (the "Defeased Notes"), upon compliance
with the conditions set forth below in Section 4.04.
<PAGE>
Section 4.02. Defeasance and Discharge.
Upon the Company's exercise under Section 4.01 of the
option applicable to this Section 4.02, the Company shall be
<PAGE>
deemed to have been released and discharged from its
obligations with respect to the Defeased Notes on the date the
conditions set forth below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that
the Company shall be deemed to have paid and discharged the
entire indebtedness represented by the Defeased Notes, which
shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 4.05 and the other Sections of this
Indenture referred to in (a) and (b) below, and to have
satisfied all other obligations under such Notes and this
Indenture insofar as such Notes are concerned (and the Trustee,
at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following, which shall
survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders of Defeased Notes to receive, solely
from the trust fund described in Section 4.04 and as more fully
set forth in such Section, payments in respect of the principal
of, premium, if any, and interest on such Notes when such
payments are due, (b) the Company's obligations with respect to
such Defeased Notes under Sections 3.04, 3.05, 3.06, 7.01 and
10.02, (c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder, including, without limitation, the
Trustee's rights under Section 6.07, and (d) this Article Four.
Subject to compliance with this Article Four, the Company may,
at its option and at any time, exercise its option under this
Section 4.02 notwithstanding the prior exercise of its option
under Section 4.03 with respect to the Notes.
Section 4.03. Covenant Defeasance.
Upon the Company's exercise under Section 4.01 of the
option applicable to this Section 4.03, the Company shall be
released from its obligations under any covenant or provision
contained in Sections 10.06 through 10.20 and the provisions of
Article Eight shall not apply, with respect to the Defeased
Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"), and the Notes
shall thereafter be deemed not to be "Outstanding" for the
purposes of any direction, waiver, consent or declaration or
Act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to
the Outstanding Notes, the Company may omit to comply with and
shall have no liability in respect of any term, condition or
<PAGE>
limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document
and such omission to comply shall not constitute a Default or
<PAGE>
an Event of Default under Section 5.01(c), but, except as
specified above, the remainder of this Indenture and such
Outstanding Notes shall be unaffected thereby.
Section 4.04. Conditions to Defeasance or Covenant
Defeasance.
The following shall be the conditions to application
of either Section 4.02 or Section 4.03 to the Outstanding
Notes:
(1) The Company shall have irrevocably deposited or
caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 6.09 who
shall agree to comply with the provisions of this Article
Four applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the
benefit of the Holders of such Notes, (a) money, in United
States dollars, in an amount, or (b) U.S. Government
Obligations maturing as to principal, premium, if any, and
interest in such amounts of money and at such times as are
sufficient without consideration of any reinvestment of
such interest, to pay principal of and interest on
Defeased Notes not later than one day before the due date
of any payment, or (c) a combination thereof, in amounts
as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants or a
nationally recognized investment banking firm expressed in
a written certification thereof delivered to the Trustee,
to pay and discharge and which shall be applied by the
Trustee (or other qualifying trustee) to pay and
discharge, the principal of, premium, if any, and interest
on the Defeased Notes on the Stated Maturity or otherwise
in accordance with the terms of this Indenture and the
Notes; provided, however, that the Trustee (or other
qualifying trustee) shall have received an irrevocable
written order from the Company instructing the Trustee (or
other qualifying trustee) to apply such money or the
proceeds of such U.S. Government Obligations to said
payments with respect to the Notes; provided, further,
however, that from and after the time of deposit, the
money or U.S. Government Obligations deposited shall not
be subject to the rights of the holders of other
Indebtedness of the Company;
<PAGE>
(2) No Default or Event of Default shall have
occurred and be continuing on the date of such deposit or,
insofar as Section 5.01(f) or (g) is concerned, at any
<PAGE>
time during the period ending on the ninety-first day
after the date of such deposit;
(3) Such defeasance or covenant defeasance shall not
cause the Trustee for the Notes to have a conflicting
interest with respect to any securities of the Company;
(4) Such defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a
Default or Event of Default under, this Indenture or any
other agreement or instrument to which the Company is a
party or by which it is bound;
(5) In the case of an election under Section 4.02,
the Company shall have delivered to the Trustee an Opinion
of Counsel recognized in the United States stating that
(x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or
(y) since the date hereof, there has been a change in the
applicable Federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm
that, the Holders of the Outstanding Notes will not
recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the
case if such defeasance had not occurred;
(6) In the case of an election under Section 4.03,
the Company shall have delivered to the Trustee an Opinion
of Counsel recognized in the United States to the effect
that the Holders of the Outstanding Notes will not
recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will
be subject to Federal income tax on the same amounts, in
the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred;
(7) The Company shall have delivered to the Trustee
an Opinion of Counsel in form and substance reasonably
acceptable to the Trustee to the effect that (x) the trust
funds established pursuant to this Article will not be
subject to any rights of any other holders of Indebtedness
of the Company (other than Holders of the Notes), and
(y) after the 91st day following the deposit, the trust
<PAGE>
funds established pursuant to this Article will not be
subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting
creditors' rights generally; and
<PAGE>
(8) The Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that (i) all conditions precedent provided for
relating to either the defeasance under Section 4.02 or
the covenant defeasance under Section 4.03, as the case
may be, have been complied with and (ii) if any other
Indebtedness of the Company shall then be outstanding or
committed, such defeasance or covenant defeasance will not
violate the provisions of the agreements or instruments
evidencing such Indebtedness.
Opinions required to be delivered under this Section
shall be in compliance with the requirements set forth in
Section 1.04 and this Section 4.04.
Section 4.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust; Other Miscellaneous Provi-
sions.
Subject to the provisions of the last paragraph of
Section 10.03, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or
such other Person that would qualify to act as successor
trustee under Article Six, collectively for purposes of this
Section 4.05, the "Trustee") pursuant to Section 4.04 in
respect of the Defeased Notes shall be held in trust and
applied by the Trustee, in accordance with the provisions of
such Notes and this Indenture, to the payment, either directly
or through any Paying Agent (other than the Company or any
Affiliate of the Company) as the Trustee may determine, to the
Holders of such Notes of all sums due and to become due thereon
in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to
the extent required by law.
The Company shall pay and indemnify the Trustee and
its agents and hold them harmless against any tax, fee or other
charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 4.04 or the
principal, premium, if any, and interest received in respect
thereof other than any such tax, fee or other charge which by
law is for the account of the Holders of the Defeased Notes.
Section 4.06. Reinstatement.
<PAGE>
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with Section
4.02 or 4.03, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the
<PAGE>
obligations of the Company under this Indenture and the Notes
shall be revived and reinstated as though no deposit had
occurred pursuant to Section 4.02 or 4.03, as the case may be,
until such time as the Trustee or Paying Agent is permitted to
apply all such money and U.S. Government Obligations in
accordance with Section 4.02 or 4.03, as the case may be;
provided, however, that if the Company makes any payment of
principal, premium, if any, or interest on any Note following
the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to
receive such payment from the money and U.S. Government
Obligations held by the Trustee or Paying Agent.
Section 4.07. Repayment to Company.
The Trustee shall pay to the Company upon its written
request any money held by it for the payment of principal or
interest that remains unclaimed for two years; provided,
however, that the Trustee before being required to make any
payment may at the expense of the Company cause to be published
once in a newspaper of general circulation in The City of New
York or mail to each Holder entitled to such money notice that
such money remains unclaimed and that, after a date specified
therein which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money
then remaining shall be repaid to the Company. After payment
to the Company, Noteholders entitled to money must look to the
Company for payment as general creditors unless an applicable
abandoned property law designates another person and all
liability of the Trustee or Paying Agent with respect to such
money shall thereupon cease.
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.
"Event of Default," wherever used herein, means any
one of the following events (whatever the reason for such Event
of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
<PAGE>
(a) the Company shall fail to pay interest on the
Notes (including any Additional Interest as defined in the
Registration Rights Agreement) when the same becomes due
<PAGE>
and payable and such failure shall continue for 30 days or
more; or
(b) the Company shall fail to pay principal of or
premium, if any, on the Notes when and as the same shall
become due and payable at maturity, upon acceleration,
optional or mandatory redemption, required repurchase, or
otherwise; or
(c) the Company shall fail to comply with any of its
other covenants, agreements or warranties in this
Indenture (other than the defaults specified in clauses
(a) and (b) above), which failure continues (A) in the
case of any such covenant, agreement or warranty contained
in Section 10.11, 10.12 or 10.14 or in Article Eight of
this Indenture, for a period of 30 days after written
notice thereof has been given to the Company by the
Trustee or to the Company and the Trustee by the Holders
of at least 25.0% in aggregate principal amount of the
Notes then Outstanding and (B) in the case of any other
such covenant, agreement or warranty contained in this
Indenture, for 60 days after written notice thereof has
been given to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25.0% in
aggregate principal amount of the Notes then Outstanding;
or
(d) the occurrence of one or more defaults under any
agreements, indentures or instruments under which the
Company or any Restricted Subsidiary then has outstanding
Indebtedness in excess of $5 million individually or in
the aggregate and, if not already matured to its final
maturity in accordance with its terms, such Indebtedness
shall have been accelerated and such Indebtedness shall
not have been repaid or such acceleration rescinded within
20 days; or
(e) one or more judgments, orders or decrees for the
payment of money in excess of $5 million, either
individually or in the aggregate (net of amounts covered
by a reputable and creditworthy insurance company, or by
bond, surety or similar instrument), shall be entered
against the Company or any Restricted Subsidiary or any of
their respective properties and which judgments, orders or
decrees are not paid, discharged, bonded or stayed or
<PAGE>
stayed pending appeal for a period of 60 days after their
entry; or
(f) there shall have been entered by a court of
competent jurisdiction (a) a decree or order for relief in
<PAGE>
respect of the Company or any Restricted Subsidiary in an
involuntary case or proceeding under any applicable
Bankruptcy Law or (b) a decree or order adjudging the
Company or any Restricted Subsidiary bankrupt or
insolvent, or seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company
or any Restricted Subsidiary under any applicable Federal
or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Restricted
Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of
their affairs, and any such decree or order for relief
shall continue to be in effect, or any such other decree
or order shall be unstayed and in effect, for a period of
60 days; or
(g) (i) the Company or any Restricted Subsidiary
commences a voluntary case or proceeding under any
applicable Bankruptcy Law or any other case or proceeding
to be adjudicated bankrupt or insolvent, (ii) the Company
or any Restricted Subsidiary consents to the entry of a
decree or order for relief in respect of the Company or
such Restricted Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or to the
commencement of any bankruptcy or insolvency case or
proceeding against it, (iii) the Company or any Restricted
Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable Federal or
state law, (iv) the Company or any Restricted Subsidiary
(x) consents to the filing of such petition or the
appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or such Restricted
Subsidiary or of any substantial part of their respective
property, (y) makes an assignment for the benefit of
creditors or (z) admits in writing its inability to pay
its debts generally as they become due or (v) the Company
or any Restricted Subsidiary takes any corporate action in
furtherance of any such actions in this paragraph (g).
The Company shall provide an Officers' Certificate to
the Trustee promptly upon any officer of the Company obtaining
knowledge of any Default or Event of Default that has occurred
and, if applicable, describe such Default or Event of Default
<PAGE>
and the status thereof.
<PAGE>
Section 5.02. Acceleration of Maturity; Rescission
and Annulment.
If an Event of Default (other than an Event of
Default specified in Section 5.01(f) or (g) with respect to the
Company) occurs and is continuing, the Trustee or the Holders
of not less than 25.0% in aggregate principal amount of the
Notes then Outstanding may, and the Trustee upon the request of
the Holders of not less than 25.0% in aggregate principal
amount of the Notes then Outstanding shall, declare the Notes
due and payable, in an amount equal to the principal amount of
the Notes, together with accrued and unpaid interest to the
date the Notes become due and payable immediately by notice in
writing to the Company, and to the Company and the Trustee, if
by the Holders, specifying the respective Event of Default and
that such notice is a "notice of acceleration," and the Notes
and all accrued and unpaid interest thereon shall thereupon
become immediately due and payable. If an Event of Default
specified in Section 5.01(f) or (g) with respect to the Company
above occurs and is continuing, then the principal of all the
Notes shall 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.
At any time after such declaration of acceleration
has been made and before a judgment or decree for payment of
the money due has been obtained by the Trustee as hereinafter
provided in this Article, the Holders of not less than a
majority in aggregate principal amount of the Notes
Outstanding, by written notice to the Company and the Trustee,
may rescind such declaration of acceleration and its
consequences if:
(a) the Company has paid or deposited with the
Trustee a sum sufficient to pay:
(i) all amounts paid or advanced by the Trustee
under Section 6.07, including the reasonable
compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel;
(ii) all overdue interest on all Notes;
(iii) the principal of and premium, if any, on
any Notes which have become due otherwise than by
<PAGE>
such declaration of acceleration and interest thereon
at the rate then borne by the Notes; and
<PAGE>
(iv) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate
then borne by the Notes; and
(b) all Events of Default, other than the non-
payment of principal of the Notes that has become due
solely by such declaration of acceleration, have been
cured or waived.
Section 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee; Other Remedies.
The Company covenants that if:
(a) default is made in the payment of any interest
on any Note when such interest becomes due and payable and
such default continues for a period of 30 days or more, or
(b) default is made in the payment of the principal
of or premium, if any, on any Note at the Stated Maturity
thereof or upon any optional or mandatory redemption
thereof or required repurchase thereof,
the Company will, upon demand of the Trustee, pay to the
Trustee, for the benefit of the Holders of such Notes, the
whole amount then due and payable on such Notes for principal,
premium, if any, and interest, with interest upon the overdue
principal, premium, if any, and, to the extent that payment of
such interest shall be legally enforceable, upon overdue
installments of interest, at the rate then borne by the Notes;
and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as trustee
of an express trust, may, but is not obligated under this
paragraph to, institute a judicial proceeding for the
collection of the sums so due and unpaid and may, but is not
obligated under this paragraph to, prosecute such proceeding to
judgment or final decree, and may, but is not obligated under
this paragraph to, enforce the same against the Company or any
other obligor upon the Notes and collect the moneys adjudged or
decreed to be payable in the manner provided by law out of the
<PAGE>
property of the Company or any other obligor upon the Notes,
wherever situated.
If an Event of Default occurs and is continuing, the
Trustee may in its discretion, but is not obligated under this
<PAGE>
paragraph to, (i) proceed to protect and enforce its rights and
the rights of the Holders under this Indenture and the Notes by
such appropriate private or judicial proceedings as the Trustee
shall deem most effectual to protect and enforce such rights,
whether for the specific enforcement of any covenant or
agreement contained in this Indenture or the Notes or in aid of
the exercise of any power granted herein or therein, or
(ii) proceed to protect and enforce any other proper remedy.
No recovery of any such judgment upon any property of the
Company shall affect or impair any rights, powers or remedies
of the Trustee or the Holders.
Section 5.04. Trustee May File Proofs of Claims.
In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon
the Notes, or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of
whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise, but is not obligated under this
paragraph
(a) to file and prove a claim for the whole amount
of principal, premium, if any, and interest owing and
unpaid in respect of the Notes and to file such other
papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same;
and any Custodian, in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making
<PAGE>
of such payments directly to the Holders, to pay the Trustee
any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section
6.07 hereof.
<PAGE>
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of
any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 5.05. Trustee May Enforce Claims Without
Possession of Notes.
All rights of action and claims under this Indenture
or the Notes may be prosecuted and enforced by the Trustee
without the possession of any of the Notes or the production
thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its
own name and as trustee of an express trust, and any recovery
of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, be for the ratable
benefit of the Holders of the Notes in respect of which such
judgment has been recovered.
Section 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this
Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of
such money on account of principal, premium, if any, or
interest, upon presentation of the Notes and the notation
thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
First: to the Trustee for amounts due under Section
6.07;
Second: to Holders for interest accrued on the
Notes, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Notes for interest;
Third: to Holders for principal amounts owing under
the Notes, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Notes for principal and premium; and
<PAGE>
Fourth: the balance, if any, to the Company.
The Trustee, upon prior written notice to the
Company, may fix a record date and payment date for any payment
to Noteholders pursuant to this Section 5.06.
<PAGE>
Section 5.07. Limitation on Suits.
No Holder of any Notes shall have any right to
institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice
to the Trustee of a continuing Event of Default;
(b) the Holder or Holders of not less than 25.0% in
principal amount of the Outstanding Notes shall have made
written request(s) to the Trustee to institute proceedings
in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs, expenses
and liabilities to be incurred in compliance with such
request;
(d) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in aggregate principal
amount of the Outstanding Notes;
it being understood and intended that no one or more Holders
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture or any Note to
affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture
or any Note except in the manner provided in this Indenture and
for the equal and ratable benefit of all the Holders.
Section 5.08. Unconditional Right of Holders To
Receive Principal, Premium and Interest.
Notwithstanding any other provision in this
Indenture, the Holder of any Note shall have the right, which
is absolute and unconditional, to receive cash payment, in
<PAGE>
United States dollars, of the principal of, premium, if any,
and (subject to Section 3.07 hereof) interest on such Note on
the respective Stated Maturities expressed in such Note (or, in
the case of redemption or repurchase, on the respective
Redemption Dates or date fixed for repurchase) and to institute
<PAGE>
suit for the enforcement of any such payment, and such rights
shall not be impaired without the express consent of such
Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture
or any Note and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the
Company, the Trustee and the Holders shall, subject to any
determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been
instituted.
Section 5.10. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder
of any Note to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article Five or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may
be.
Section 5.12. Control by Majority.
The Holders of not less than a majority in aggregate
<PAGE>
principal amount of the Outstanding Notes shall 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;
provided, however, that:
<PAGE>
(a) such direction shall not be in conflict with any
rule of law or with this Indenture or any Note or expose
the Trustee to liability; and
(b) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
In the event the Trustee takes any action or follows
any direction pursuant to this Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole
discretion against any loss or expense caused by taking such
action or following such direction. This Section 5.12 shall be
in lieu of { 316(a)(1)(A) of the TIA, and such { 316(a)(1)(A)
of the TIA is hereby expressly excluded from this Indenture and
the Notes, as permitted by the TIA.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes may on behalf of the
Holders of all the Notes waive any past Default hereunder and
its consequences, except a Default:
(a) in the payment of the principal of, premium, if
any, or interest on any Note; or
(b) in respect of a covenant or provision under this
Indenture which cannot be modified or amended without the
consent of the Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Indenture;
but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent
thereon. In case of any such waiver, the Company, the Trustee
and the Holders shall be restored to their former positions and
rights hereunder and under the Notes, respectively. This
paragraph of this Section 5.13 shall be in lieu of
{ 316(a)(1)(B) of the TIA and such { 316(a)(1)(B) of the TIA is
hereby expressly excluded from this Indenture and the Notes, as
permitted by the TIA.
Section 5.14. Undertaking for Costs.
<PAGE>
All parties to this Indenture agree, and each Holder
of any Note by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this
<PAGE>
Indenture or the Notes, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of
this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Notes, or to any suit instituted by
any Holder for the enforcement of the payment of the principal
of, premium, if any, or interest on any Note on or after the
respective Stated Maturities expressed in such Note (or, in the
case of redemption or repurchase, on or after the respective
Redemption Dates or dates fixed for repurchase).
Section 5.15. Waiver of Stay, Extension or Usury
Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury or other
law wherever enacted, now or at any time hereafter in force,
which would prohibit or forgive the Company from paying all or
any portion of the principal of, premium, if any, or interest
on the Notes contemplated herein or in the Notes or which may
affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of
<PAGE>
Default,
(1) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this
<PAGE>
Indenture, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or
opinions which by provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture.
(b) In case a Default has occurred, the Trustee
shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be
construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, or its own
willful misconduct, except that (i) this paragraph does not
limit the effect of paragraph (a) of this Section 6.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by an officer of the Trustee, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and (iii) the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith
in accordance with a direction received by it pursuant to
Section 5.12.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or to take or omit to take any action under this
Indenture or take any action at the request or direction of
Holders if it shall have reasonable grounds for believing that
repayment of such funds is not assured to it or it does not
receive an indemnity satisfactory to it in its sole discretion
against such risk, liability, loss, fee or expense which might
be incurred by it in compliance with such request or direction.
(e) Whether or not therein expressly so provided,
<PAGE>
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section
6.01.
<PAGE>
Section 6.02. Notice of Defaults.
Within 30 days after the occurrence of any Default,
the Trustee shall transmit by mail to all Holders, as their
names and addresses appear in the Note Register, notice of such
Default hereunder; provided, however, that, except in the case
of a Default in the payment of the principal of, premium, if
any, or interest on any Note, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of
Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the
Holders.
Section 6.03. Certain Rights of Trustee.
Subject to Section 6.01 hereof and the provisions of
{ 315 of the TIA:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, approval,
appraisal, bond, debenture, note, coupon, security, other
evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company
mentioned herein shall be sufficiently evidenced by a
Company Request or Company Order and any resolution of the
Board of Directors of the Company may be sufficiently
evidenced by a Board Resolution of the Company thereof;
(c) the Trustee and its agents may consult, at the
expense of the Company, with counsel and any written
advice of such counsel or any Opinion of 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 reliance thereon in accordance with
such advice or Opinion of Counsel;
(d) the Trustee and its agents shall not be bound to
make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
<PAGE>
order, approval, appraisal, bond, debenture, note, coupon,
security, other evidence of indebtedness or other paper or
document unless requested in writing so to do by the
Holders of not less than a majority in aggregate principal
amount of the Notes then Outstanding; provided, however,
<PAGE>
that, if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable
indemnity against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of every
such investigation shall be paid by the Company or, if
paid by the Trustee or any predecessor Trustee, shall be
repaid by the Company upon demand; provided, further,
however, that the Trustee in its discretion may make such
further inquiry or investigation into such facts or
matters as it may deem fit, and, if the Trustee shall
determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or
attorney during the reasonable business hours of the
Company; or
(e) the Trustee and its agents may execute any of
the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent (other
than an agent who is an employee of the Trustee) or
attorney appointed with due care by it hereunder.
Section 6.04. Trustee Not Responsible for Recitals,
Dispositions of Notes or Application of Proceeds Thereof.
The recitals contained herein and in the Notes,
except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Indenture or the Notes, except that the Trustee represents that
it is duly authorized to execute and deliver this Indenture,
authenticate the Notes and perform its obligations hereunder
and that the statements made by it in a Statement of
Eligibility and Qualification on Form T-1 supplied to the
Company in connection with the registration of any Notes issued
hereunder are true and accurate subject to the qualifications
set forth therein. The Trustee shall not be accountable for
the use or application by the Company of Notes or the proceeds
<PAGE>
thereof.
<PAGE>
Section 6.05. Trustee and Agents May Hold Notes;
Collections; etc.
The Trustee, any Paying Agent, Note Registrar or any
other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes, with the
same rights it would have if it were not the Trustee, Paying
Agent, Note Registrar or such other agent and, subject to
Sections 6.08 and 6.13 hereof and {{ 310 and 311 of the Trust
Indenture Act, may otherwise deal with the Company and receive,
collect, hold and retain collections from the Company with the
same rights it would have if it were not the Trustee, Paying
Agent, Note Registrar or such other agent.
Section 6.06. Money Held in Trust.
All moneys received by the Trustee shall, until used
or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be
segregated from other funds except to the extent required
herein or by law. The Trustee shall not be under any liability
for interest on any moneys received by it hereunder.
Section 6.07. Compensation and Indemnification of
Trustee and Its Prior Claim.
The Company covenants and agrees: (a) to pay to the
Trustee from time to time, and the Trustee shall be entitled
to, reasonable compensation for all services rendered by it
hereunder (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express
trust); (b) to reimburse the Trustee and each predecessor
Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by or on behalf of
it in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other
Persons not regularly in its employ), except any such
reasonable expense, disbursement or advance as may arise from
its negligence or bad faith; and (c) to indemnify the Trustee
and each predecessor Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this
Indenture or the trusts hereunder and its duties hereunder,
<PAGE>
including enforcement of this Section 6.07. The obligations of
the Company under this Section to compensate and indemnify the
Trustee and each predecessor Trustee and to pay or reimburse
the Trustee and each predecessor Trustee for expenses,
disbursements and advances shall constitute an additional
<PAGE>
obligation hereunder and shall survive the satisfaction and
discharge of this Indenture. To secure the obligations of the
Company to the Trustee under this Section 6.07, the Trustee
shall have a prior Lien upon all property and funds held or
collected by the Trustee as such, except funds and property
paid by the Company and held in trust for the benefit of the
Holders of particular Notes under this Indenture. All such
payments and reimbursements shall be made with interest at a
rate reasonably acceptable to the Trustee and the Company. The
Trustee shall be entitled to file a proof of claim in any
bankruptcy proceeding as a secured creditor for its reasonable
compensation, fees and expenses under this Section 6.07.
When the Trustee incurs expenses under Article Five
hereof, the expenses (including reasonable fees and expenses of
its counsel) and the compensation for the service in connection
therewith are intended to constitute expense of administration
under any applicable bankruptcy law.
Section 6.08. Conflicting Interests.
The Trustee shall be subject to and comply with the
provisions of { 310(b) of the TIA.
Section 6.09. Corporate Trustee Required; Eligi-
bility.
There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under TIA {{ 310(a)(1) and
310(a)(5) and which shall have a combined capital, surplus and
undivided profits of at least $100,000,000, and have an office
or agency at which Notes may be presented for transfer and
redemption and at which demands may be made in The City of New
York. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of
United States Federal, state, territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the
effect hereinafter specified in this Article.
<PAGE>
Section 6.10. Resignation and Removal; Appointment
of Successor Trustee.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article
<PAGE>
shall become effective until the acceptance of appointment by
the successor Trustee under Section 6.11.
(b) The Trustee, or any trustee or trustees
hereinafter appointed, may at any time resign by giving written
notice thereof to the Company at least 20 Business Days prior
to the date of such proposed resignation. Upon receiving such
notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument, a copy of which shall
be delivered to the resigning Trustee and a copy to the
successor trustee. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee
within 20 Business Days after the giving of such notice of
resignation, the resigning Trustee may, or any Holder who has
been a bona fide Holder of a Note for at least six months may,
on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the
appointment of a successor Trustee. Such court may thereupon,
after such notice, if any, as it may deem proper, appoint a
successor trustee.
(c) The Trustee may be removed at any time by an Act
of the Holders of a majority in principal amount of the
Outstanding Notes, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of { 310(b) of the TIA in accordance with
Section 6.08 hereof after written request therefor by the
Company or by any Holder who has been a bona fide Holder
of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under
Section 6.09 hereof and shall fail to resign after written
request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed or
any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose or
rehabilitation, conservation or liquidation,
then, in any case, (i) the Company may remove the Trustee, or
<PAGE>
(ii) subject to Section 5.14, the Holder of any Note who has
been a bona fide Holder of a Note for at least six months may,
on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee. Such
<PAGE>
court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a
successor trustee.
(e) If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the
office of Trustee for any cause, the Company shall promptly
appoint a successor Trustee. If, within one year after such
resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding
Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the
Company or the Holders of the Notes and accepted appointment in
the manner hereinafter provided, the Holder of any Note who has
been a bona fide Holder for at least six months may, subject to
Section 5.14, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each
resignation and each removal of the Trustee and each
appointment of a successor Trustee by mailing written notice of
such event by first-class mail, postage prepaid, to the Holders
of Notes as their names and addresses appear in the Note
Register. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by
Successor.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all
the rights, powers, trusts and duties of the retiring Trustee
as if originally named as Trustee hereunder; but, nevertheless,
on the written request of the Company or the successor Trustee,
upon payment of amounts due it pursuant to Section 6.07, such
retiring Trustee shall duly assign, transfer and deliver to the
<PAGE>
successor Trustee all moneys and property at the time held by
it hereunder and shall execute and deliver an instrument
transferring to such successor Trustee all the rights, powers,
duties and obligations of the retiring Trustee. Upon request
of any such successor Trustee, the Company shall execute any
<PAGE>
and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights and
powers. Any Trustee ceasing to act shall, nevertheless, retain
a prior claim upon all property or funds held or collected by
such Trustee to secure any amounts then due it pursuant to the
provisions of Section 6.07.
No successor Trustee with respect to the Notes shall
accept appointment as provided in this Section 6.11 unless at
the time of such acceptance such successor Trustee shall be
eligible to act as Trustee under this Article.
Upon acceptance of appointment by any successor
Trustee as provided in this Section 6.11, the Company shall
give notice thereof to the Holders of the Notes, by mailing
such notice to such Holders at their addresses as they shall
appear on the Note Register. If the acceptance of appointment
is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined
with the notice called for by Section 6.10(f). If the Company
fails to give such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee
shall cause such notice to be given at the expense of the
Company.
Section 6.12. Successor Trustee by Merger, etc.
Any corporation into which the Trustee may be merged
or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion, or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder without the execution or filing of any
paper or any further act on the part of any of the parties
hereto, provided such corporation shall be eligible under this
Article to serve as Trustee hereunder.
In case at the time such successor to the Trustee
under this Section 6.12 shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor Trustee
and deliver such Notes so authenticated; and, in case at that
time any of the Notes shall not have been authenticated, any
<PAGE>
successor to the Trustee under this Section 6.12 may
authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all
such cases such certificate shall have the full force which it
<PAGE>
is anywhere in the Notes or in this Indenture provided that the
certificate of the Trustee shall have.
Section 6.13. Preferential Collection of Claims
Against Issuers.
The Trustee shall comply with Section 311(a) of the
TIA, excluding any creditor relationship listed in { 311(b) of
the TIA. If the present or any future Trustee shall resign or
be removed, it shall be subject to { 311(a) of the TIA to the
extent provided therein.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company
To Furnish Trustee Names and Addresses of Holders.
(a) The Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to
it of the names and addresses of all Holders; provided,
however, that if and for so long as the Trustee shall be the
Note Registrar, the Note Register shall satisfy the
requirements relating to such list. Neither the Company nor
the Trustee shall be under any responsibility with regard to
the accuracy of such list.
(b) The Company will furnish or cause to be
furnished to the Trustee
(i) semiannually, not more than 10 days after each
Regular Record Date, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the
Holders as of such Regular Record Date; and
(ii) at such other times as the Trustee may request
in writing, within 30 days after receipt by the Company of
any such request, a list of similar form and content as of
a date not more than 15 days prior to the time such list
is furnished;
provided, however, that if and so long as the Trustee shall be
the Note Registrar, no such list need be furnished pursuant to
<PAGE>
this Section 7.01(b).
<PAGE>
Section 7.02. Communications of Holders.
Holders may communicate with other Holders with
respect to their rights under this Indenture or under the Notes
pursuant to { 312(b) of the TIA. The Trustee shall comply with
312(b) of the TIA. The Company and the Trustee and any and
all other Persons benefited by this Indenture shall have the
protection afforded by { 312(c) of the TIA.
Section 7.03. Reports by Trustee.
Within 60 days after June 15 of each year commencing
with the first June 15 following the date of this Indenture,
the Trustee shall mail to all Holders, as their names and
addresses appear in the Note Register, a brief report dated as
of such June 15 that complies with { 313(a) of the TIA;
provided, however, that if no such event as described in
{ 313(a) of the TIA has occurred within such period then no
such report need be transmitted. The Trustee shall also comply
with {{ 313(b), 313(c) and 313(d) of the TIA. At the time of
its mailing to Holders, a copy of each report shall be filed
with the Company, the Commission and with each national
securities exchange on which the Notes are listed. The Company
shall notify the Trustee when the Notes are listed on any stock
exchange or any delisting thereof.
Section 7.04. Reports by Company.
The Company shall file with the Trustee copies of the
reports and of the information and documents which the Company
is required to provide to any Person under Section 10.09.
ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01. When Company May Merge, etc.
The Company shall not, in any single transaction or
series of related transactions, consolidate or merge with or
into (whether or not the Company is the Surviving Person), or
sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets to,
another Person, and the Company will not permit any Restricted
<PAGE>
Subsidiary to enter into any such transaction or series of
related transactions if such transaction or series of related
transactions, in the aggregate, would result in a sale,
assignment, transfer, lease, conveyance or other disposition of
all or substantially all of the properties and assets of the
<PAGE>
Company and the Restricted Subsidiaries, taken as a whole, to
another Person, unless (i) the Surviving Person is a
corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the
Surviving Person (if other than the Company) assumes all the
obligations of the Company under the Notes, this Indenture and,
if then in effect, the Registration Rights Agreement pursuant
to a supplemental indenture or other written agreement, as the
case may be, in a form reasonably satisfactory to the Trustee;
(iii) at the time of and immediately after such Disposition, no
Default or Event of Default shall have occurred and be
continuing; and (iv) the Surviving Person (A) will have
Consolidated Net Worth (immediately after giving effect to the
Disposition on a pro forma basis) equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the
transaction, and (B) at the time of such Disposition and after
giving pro forma effect thereto, would be permitted to incur at
least $1.00 of additional Indebtedness pursuant to paragraph
(a) of Section 10.11.
Section 8.02. Successor Substituted.
Upon any Disposition involving the Company in
accordance with Section 8.01 hereof, the Successor Person or
Persons shall succeed to, and be substituted for, and may
exercise every right and power of, and shall assume all of the
liabilities and obligations of, the Company under this
Indenture, the Notes and the Registration Rights Agreement with
the same effect as if such successor had been named as the
Company in this Indenture, the Notes and the Registration
Rights Agreement. When a successor assumes all the obligations
of its predecessor under this Indenture, the Notes and the
Registration Rights Agreement, the predecessor shall be
released from those obligations; provided, however, that in the
case of a transfer by lease, the predecessor shall not be
released from the payment of principal, premium, if any, and
interest on the Notes.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.
<PAGE>
The Company and the Trustee may amend, waive or
supplement this Indenture or the Notes without notice to or
consent of any Holder:
<PAGE>
(a) to cure any ambiguity, defect or inconsistency;
provided, however, that such amendment or supplement does
not adversely affect the rights of any Holder;
(b) to comply with Article Eight;
(c) to provide for uncertificated Notes in addition
to certificated Notes;
(d) to comply with any requirements of the
Commission in order to effect or maintain the
qualification of this Indenture under the TIA; or
(e) to make any change that would provide any
additional benefit or rights to the Holders or that does
not adversely affect the rights of any Holder;
(f) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein conferred upon the Company; or
(g) to secure the Notes as provided pursuant to the
requirements of Section 10.16 or otherwise.
Notwithstanding the above, the Trustee and the
Company may not make any change that adversely affects the
legal rights of any Holders hereunder. The Company shall be
required to deliver to the Trustee an Officers' Certificate and
an Opinion of Counsel stating that any such change under
Section 9.01(a) or (e) of the preceding sentence does not
adversely affect the rights of any Holder.
Section 9.02. With Consent of Holders.
Subject to Section 5.08, the Company, when authorized
by its Board of Directors, and the Trustee may amend or
supplement this Indenture or the Notes with the written consent
of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes, and the Holders of
not less than a majority in aggregate principal amount of the
Outstanding Notes by written notice to the Trustee may waive
future compliance by the Company with any provision of this
Indenture or the Notes.
Notwithstanding the provisions of this Section 9.02,
<PAGE>
without the consent of each Holder affected, an amendment or
waiver, including a waiver pursuant to Section 5.13, may not:
<PAGE>
(i) reduce the principal amount of the Notes whose
Holders must consent to an amendment, supplement or
waiver;
(ii) reduce the principal or change the fixed
maturity of any Note, or alter the provisions with respect
to the redemption or repurchase of the Notes in a manner
adverse to the Holders of the Notes;
(iii) reduce the rate of or change the time for
payment of interest on any Notes;
(iv) waive a Default or Event of Default in the
payment of principal of, premium, if any, or interest on
the Notes (except that Holders of at least a majority in
aggregate principal amount of the then outstanding Notes
may (a) rescind an acceleration of the Notes, and
(b) waive the payment default that resulted from such
acceleration);
(v) make any Note payable in money other than that
stated in the Notes;
(vi) modify any of the provisions of Section 5.08 or
5.13 (other than to add sections of this Indenture subject
thereto) or this Section 9.02 (except to increase the
percentage of outstanding Notes required for such actions
or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent
of the holder of each Note affected thereby);
(vii) amend, change or modify the obligation of the
Company to make and consummate (a) a Change of Control
Offer in the event of a Change of Control Triggering Event
and (b) an Asset Sale Offer after any Asset Sale Offer
Trigger Date, or, in each case (a) and (b) of this
paragraph (vii), amend or modify any of the provisions or
definitions with respect thereto;
(viii) modify the ranking or priority of the Notes (it
being understood that an amendment or waiver with respect
to Section 10.16 is not within the ambit of this paragraph
(viii)); or
(ix) waive a redemption payment with respect to any
<PAGE>
Note.
It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form
<PAGE>
of any proposed amendment, supplement or waiver, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to the
Holders of each Note affected thereby, with a copy to the
Trustee, a notice briefly describing the amendment, supplement
or waiver. Any failure of the Company to mail such notice, or
any defect therein, shall not, however, in any way impair or
affect the validity of any supplemental indenture.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment of or supplement to this Indenture
or the Notes shall comply with the TIA as then in effect and as
applicable to this Indenture.
Section 9.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder
and every subsequent Holder of that Note or portion of that
Note that evidences the same debt as the consenting Holder's
Note, even if notation of the consent is not made on any note.
Subject to the following paragraph, any such Holder or
subsequent Holder may revoke the consent as to such Holder's
Note or portion of such Note by notice to the Trustee or the
Company received before the date on which the Trustee receives
an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not
theretofore revoked such consent) to the amendment, supplement
or waiver.
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled
to consent to any amendment, supplement or waiver. If a record
date is fixed, then, notwithstanding the last sentence of the
immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to consent to such
amendment, supplement or waiver or to revoke any consent
previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid
or effective for more than 90 days after such record date.
<PAGE>
After an amendment, supplement or waiver becomes
effective, it shall bind every Holder of Notes, unless it makes
a change described in any of clauses (i) through (ix) of
Section 9.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Note who has consented to it and
<PAGE>
every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note.
Section 9.05. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the
terms of a Note, the Trustee shall (in accordance with the
specific direction of the Company) request the Holder of the
Note to deliver it to the Trustee. The Trustee shall (in
accordance with the specific direction of the Company) place an
appropriate notation on the Note about the changed terms and
return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Note
shall issue and the Trustee shall authenticate a new Note that
reflects the changed terms. Failure to make the appropriate
notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver.
Section 9.06. Trustee May Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or
waiver authorized pursuant to this Article Nine if the
amendment, supplement or waiver does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If
it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver, the
Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that the execution of any amendment,
supplement or waiver is authorized or permitted by this
Indenture, that it is not inconsistent herewith and that it
will be valid and binding upon the Company in accordance with
its terms.
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and
Interest.
The Company will duly and punctually pay the
principal of, premium, if any, and interest on the Notes in
accordance with the terms of the Notes and this Indenture.
<PAGE>
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in The City of New York, an
office or agency where Notes may be presented or surrendered
<PAGE>
for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be
served. The office of the Trustee shall be such office or
agency of the Company, unless the Company shall designate and
maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the
Trustee of any change in the location of any such office or
agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Company hereby appoints the
Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one
or more other offices or agencies (in or outside of The City of
New York) where the Notes may be presented or surrendered for
any or all such purposes, and may from time to time rescind
such designation; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of
Manhattan in The City of New York for such purposes. The
Company will give prompt written notice to the Trustee of any
such designation or rescission and any change in the location
of any such other office or agency.
Section 10.03. Money for Note Payments To Be Held in
Trust.
If the Company shall at any time act as its own
Paying Agent, the Company will, on or before each due date of
the principal of, premium, if any, or interest on any of the
Notes, segregate and hold in trust for the benefit of the
Holders entitled thereto a sum sufficient to pay the principal,
premium, if any, or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its
action or failure so to act.
If the Company is not acting as Paying Agent, the
Company will, on or before the day preceding each due date of
the principal of, premium, if any, or interest on any Notes,
deposit with a Paying Agent a sum in same day funds sufficient
<PAGE>
to pay the principal, premium, if any, or interest so becoming
due, such sum to be held in trust for the benefit of the
Holders entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will
<PAGE>
promptly notify the Trustee of such action or any failure so to
act.
If the Company is not acting as Paying Agent, the
Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the
provisions of this Section 10.03, that such Paying Agent will:
(a) hold all sums held by it for the payment of the
principal of, premium, if any, or interest on Notes in
trust for the benefit of the Holders entitled thereto
until such sums shall be paid to such Holders or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any Default by the
Company (or any other obligor upon the Notes) in the
making of any payment of principal of, premium, if any, or
interest on the Notes;
(c) at any time during the continuance of any such
Default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by
such Paying Agent; and
(d) acknowledge, accept and agree to comply in all
respects with the provisions of this Indenture relating to
the duties, rights and liabilities of such Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or
for any other purpose, pay, or direct any Paying Agent to pay,
to the Trustee all sums held in trust by the Company or such
Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company
or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from
all further liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of, premium, if any, or interest on any Note and
remaining unclaimed for two years after such principal,
premium, if any, or interest has become due and payable shall
be paid to the Company upon receipt of a Company Request
<PAGE>
therefor, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all
<PAGE>
liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying
Agent, before being required to make any such repayment, shall
at the expense of the Company cause to be published once, in
The New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30
days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid
to the Company.
Section 10.04. Existence.
Subject to Article Eight, the Company will do or
cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate
existence of each of the Restricted Subsidiaries, and the
rights (charter and statutory), licenses and franchises of the
Company and each of the Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any
such right, license or franchise if the Board of Directors
shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and the
Restricted Subsidiaries as a whole and that the loss thereof is
not disadvantageous in any material respect to the Holders;
provided, further, however, that the foregoing shall not
prohibit a sale, transfer or conveyance of a Restricted
Subsidiary of the Company or any of its assets or Capital Stock
in compliance with the terms of this Indenture.
Section 10.05. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (a) all
taxes, assessments and governmental charges levied or imposed
(i) upon the Company or any of its Subsidiaries or (ii) upon
the income, profits or property of the Company or any of its
Subsidiaries and (b) all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a Lien upon the
property of the Company or any of its Subsidiaries; provided,
however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate
proceedings properly instituted and diligently conducted.
<PAGE>
Section 10.06. Maintenance of Properties.
The Company will cause all properties owned by the
Company or the Restricted Subsidiaries or used or held for use
<PAGE>
in the conduct of its business or the business of the
Restricted Subsidiaries to be maintained and kept in good
condition, repair and working order (reasonable wear and tear
excepted) and supplied with all necessary equipment and will
cause to be made all repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in
connection therewith may be conducted at all times in the
ordinary course; provided, however, that nothing in this
Section 10.06 shall prevent the Company from discontinuing the
maintenance of any of such properties if such discontinuance
is, in the judgment of the Company, desirable in the conduct of
its business or the business of any of the Restricted
Subsidiaries.
Section 10.07. Insurance.
The Company will at all times keep all of its and the
Restricted Subsidiaries' properties which are of an insurable
nature insured with insurers, believed by the Company in good
faith to be financially sound and responsible, against loss or
damage to the extent that property of similar character is
usually so insured by corporations similarly situated and
owning like properties (which may include self-insurance, if
reasonable and in comparable form to that maintained by
companies similarly situated).
Section 10.08. Compliance Certificate.
(a) The Company will deliver to the Trustee within
60 days after the end of each of the Company's first three
fiscal quarters and within 90 days after the end of each of the
Company's fiscal years an Officers' Certificate stating whether
or not the signers know of any Default or Event of Default by
the Company or any Restricted Subsidiary that occurred during
such fiscal period. If they do know of such a Default or Event
of Default, the certificate shall describe any such Default or
Event of Default and its status. The first certificate to be
delivered pursuant to this Section 10.08(a) shall be for the
first full fiscal quarter of the Company beginning after the
Issue Date. The Company shall also deliver a certificate to
the Trustee at least annually from the chief financial officer
(or if the Company does not have a chief financial officer, the
Company's principal executive, financial or accounting officer)
of the Company as to his or her knowledge of the compliance by
<PAGE>
the Company and the Restricted Subsidiaries with all conditions
and covenants under this Indenture and whether any Default or
Event of Default has occurred, such compliance to be determined
without regard to any period of grace or requirement of notice
provided herein.
<PAGE>
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, the Company shall use its reasonable best efforts
to deliver to the Trustee within 90 days after the end of each
fiscal year a written statement by the Company's independent
certified public accountants stating (A) that their audit
examination has included a review of the terms of this
Indenture and the Notes as they relate to accounting matters,
and (B) whether, in connection with their audit examination,
any Default or Event of Default under this Indenture has come
to their attention and, if such a Default or Event of Default
has come to their attention, specifying the nature and period
of existence thereof; provided, however, that, without any
restriction as to the scope of the audit examination, such
independent certified public accountants shall not be liable by
reason of any failure to obtain knowledge of any such Default
or Event of Default that would not be disclosed in the course
of an audit examination conducted in accordance with GAAP.
(c) The Company will deliver to the Trustee as soon
as possible, and in any event within 10 days after the Company
becomes aware or should reasonably have become aware of the
occurrence of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default and
what action the Company is taking or proposes to take with
respect thereto.
Section 10.09. Provision of Financial Statements.
Whether or not the Company is then subject to
Section 13(a) or 15(d) of the Exchange Act, the Company will
file with the Commission, so long as the Notes are outstanding,
the annual reports, quarterly reports and other periodic
reports which the Company would have been required to file with
the Commission pursuant to such Section 13(a) or 15(d) if the
Company were so subject, commencing with the quarter ended
September 30, 1996, and such documents shall be filed with the
Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so
to file such documents if the Company were so subject. The
Company will also in any event (i) within 15 days of each
Required Filing Date, (a) transmit or cause to be transmitted
by mail to all Holders of Notes, as their names and addresses
appear in the Note register, without cost to such Holders, and
(b) file with the Trustee copies of the annual reports,
<PAGE>
quarterly reports and other periodic reports which the Company
would have been required to file with the Commission pursuant
to Section 13(a) or 15(d) of the Exchange Act if the Company
were subject to such Sections and (ii) if filing such documents
by the Company with the Commission is prohibited under the
<PAGE>
Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of
such documents to any prospective holder at the Company's cost.
The Company also shall comply with the other provisions of TIA
{314(a). In addition, to the extent applicable, the Company
shall cause its annual reports to stockholders and any
quarterly or other financial reports furnished to stockholders
generally to be filed with the Trustee and mailed, no later
than the date such materials are mailed or made available to
the Company's stockholders, to the Holders at their addresses
as set forth in the register of securities maintained by the
Registrar.
Section 10.10. [Intentionally Omitted]
Section 10.11. Limitation on Incurrence of
Indebtedness.
(a) The Company will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or directly or
indirectly guarantee or in any other manner become directly or
indirectly liable for (collectively, to "incur") any
Indebtedness (including any Acquired Debt), except that the
Company may incur Indebtedness if, at the time of, and
immediately after giving pro forma effect to, such incurrence
of Indebtedness, the Debt to Operating Cash Flow Ratio is not
more than (i) 6.0:1 for any incurrence on or prior to
November 15, 1997 and (ii) 5.5:1 for any incurrence after
November 15, 1997.
(b) The foregoing limitations will not apply to the
incurrence of any of the following (collectively, "Permitted
Indebtedness"), each of which shall be given independent
effect:
(i) Indebtedness of the Company represented by the
Notes;
(ii) Indebtedness of the Company represented by the
Exchange Notes;
(iii) Indebtedness of the Company and the Restricted
Subsidiaries under the Revolving Credit
Facility, not to exceed $10.0 million in
aggregate principal amount outstanding at any
<PAGE>
time;
(iv) Indebtedness owed by any Wholly Owned Restricted
Subsidiary to the Company or to another Wholly
Owned Restricted Subsidiary, or owed by the
<PAGE>
Company to any Wholly Owned Restricted
Subsidiary; provided, however, that any such
Indebtedness shall be at all times held by a
Person which is either the Company or a Wholly
Owned Restricted Subsidiary of the Company;
provided, further, however, that upon either
(a) the transfer or other disposition of any
such Indebtedness to a Person other than the
Company or another Wholly Owned Restricted
Subsidiary or (b) the sale, lease, transfer or
other disposition of shares of Capital Stock
(including by consolidation or merger) of any
such Wholly Owned Restricted Subsidiary to a
Person other than the Company or another Wholly
Owned Restricted Subsidiary, the incurrence of
such Indebtedness shall be deemed to be an
incurrence that is not permitted by this clause
(iv);
(v) Indebtedness arising with respect to Interest
Rate Agreement Obligations incurred for the
purpose of fixing or hedging interest rate risk
with respect to any floating rate Indebtedness
that is permitted by the terms of this Indenture
to be outstanding;
(vi) any Indebtedness incurred in connection with or
given in exchange for the renewal, extension,
substitution, refunding, defeasance, refinancing
or replacement (a "refinancing") of any
Indebtedness described in clauses (i) and (ii)
above or incurred under Section 10.11(a)
("Refinancing Indebtedness"); provided, however,
that (a) the principal amount of such
Refinancing Indebtedness shall not exceed the
principal amount (or accrued amount, if less) of
the Indebtedness so refinanced (plus the
premiums paid in connection therewith (which
shall not exceed the stated amount of any
premium or other payment required to be paid in
connection with such a refinancing pursuant to
the terms of the Indebtedness being refinanced)
and the reasonable expenses incurred in
connection therewith); (b) such Refinancing
Indebtedness shall have a Weighted Average Life
<PAGE>
to Maturity equal to or greater than the
Weighted Average Life to Maturity of the
Indebtedness being refinanced; (c) such
Refinancing Indebtedness shall be at least as
subordinated in right of payment to the Notes as
<PAGE>
the Indebtedness being renewed, extended,
substituted, refunded, defeased, refinanced or
replaced; and (d) the obligor on such
Refinancing Indebtedness shall be the obligor on
the Indebtedness being refinanced or the
Company; and
(vii) in addition to the items referred to in clauses
(i) through (vi) above, Indebtedness of the
Company and payment and performance bonds not to
exceed $10.0 million in aggregate principal
amount at any time outstanding.
(c) Indebtedness of any Person which is outstanding
at the time such Person becomes a Restricted Subsidiary or is
merged with or into or consolidated with the Company or a
Restricted Subsidiary shall be deemed to have been incurred at
the time such Person becomes a Restricted Subsidiary or is
merged with or into or consolidated with the Company or a
Restricted Subsidiary, and Indebtedness which is assumed at the
time of the acquisition of any asset shall be deemed to have
been incurred at the time of such acquisition.
Section 10.12. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, make any
Restricted Payment, unless at the time of and immediately after
giving effect to the proposed Restricted Payment (with the
value of any such Restricted Payment, if other than cash, to be
determined reasonably and in good faith by the Board of
Directors of the Company, whose determination shall be
conclusive, and evidenced by (A) a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to
the Trustee and (B) if the value of any such Restricted Payment
is greater than $5.0 million, an opinion issued by an
investment banking or appraisal firm of national standing),
(i) no Default or Event of Default (and no event that,
after notice or lapse of time, or both, would become
an "event of default" under the terms of any
Indebtedness of the Company or the Restricted
Subsidiaries) shall have occurred and be continuing
or would occur as a consequence thereof;
<PAGE>
(ii) the Company could incur at least $1.00 of additional
Indebtedness pursuant to Section 10.11(a); and
(iii) the aggregate amount of all Restricted Payments made
after the Issue Date shall not exceed the sum of
<PAGE>
(A) an amount equal to 50% of the Company's aggregate
cumulative Consolidated Net Income (or if the
aggregate cumulative Consolidated Net Income shall be
a loss, minus 100% of such loss) from the Issue Date
(treating such period as a single accounting period),
plus (B) the aggregate amount of all net cash
proceeds received since the Issue Date by the Company
from the issuance and sale (other than to a
Restricted Subsidiary) of Capital Stock (other than
Disqualified Stock) to the extent that such proceeds
are not used to redeem, repurchase, retire or
otherwise acquire Capital Stock or any Indebtedness
of the Company or any Restricted Subsidiary pursuant
to clause (ii) of Section 10.12(b) below (it being
understood that no capital contributions attributable
to the Offering and the consummation of the
Refinancing Transactions (including the repayment of
the Existing Term Loan (as defined in the Offering
Memorandum)) shall be deemed for any purpose to be
net cash proceeds received by the Company within the
contemplation of this clause (B)).
For the purposes of clause (iii) of the immediately
preceding paragraph only, any payments made pursuant to clauses
(E) and (H) of the second paragraph of Section 10.13 shall be
included as if they were Restricted Payments in the calculation
of the aggregate amount of all Restricted Payments made since
the Issue Date.
(b) The foregoing provisions will not prohibit, so
long as (other than with respect to clause (i) below) there is
no Default or Event of Default continuing, the following
actions (collectively, "Permitted Payments"), each of which
will be given independent effect: (i) the payment of any
dividend within 60 days after the date of declaration thereof
if at such declaration date such payment would have been
permitted under this Indenture; (ii) the redemption,
repurchase, retirement or other acquisition of any Capital
Stock or any Indebtedness of the Company in exchange for, or
out of the proceeds of, the substantially concurrent sale
(other than to a Restricted Subsidiary) of Capital Stock or any
Indebtedness of the Company (other than Disqualified Stock);
and (iii) the payment of dividends to Park Communications on
the Issue Date in an amount equal to the gross proceeds of the
offering of the Notes less expenses thereof actually paid by
<PAGE>
the Company.
For purposes of clause (iii) of Section 10.12(a)
above, Permitted Payments made pursuant to clause (i) of the
immediately preceding paragraph shall be included as of the
<PAGE>
date of declaration as a Restricted Payment made since the
Issue Date, and Permitted Payments made pursuant to clauses
(ii) and (iii) of the immediately preceding paragraph shall not
be included as Restricted Payments.
Section 10.13. Limitations on Transactions with
Affiliates.
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, enter into or
suffer to exist any transaction or series of related
transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services)
with any Affiliate of the Company (other than the Company or a
Wholly Owned Restricted Subsidiary) (each an "Affiliate
Transaction"), unless (1) such transaction or series of
transactions is on terms that are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than
would be available in a comparable transaction in arm's-length
dealings with an unrelated third party and (2)(a) with respect
to any transaction or series of transactions involving
aggregate payments in excess of $1.0 million, the Company
delivers an Officers' Certificate to the Trustee certifying
that such transaction or series of related transactions
complies with clause (1) above and such transaction or series
of related transactions has been approved by a majority of the
members of the Board of Directors of the Company (and approved
by a majority of the Independent Directors or, in the event
there is only one Independent Director, by such Independent
Director), and (b) with respect to any transaction or series of
transactions involving aggregate payments in excess of $5
million or any transaction or series of related transactions
referred to in clause (2)(a) above where there are no
Independent Directors, an opinion as to the fairness to the
Company or such Restricted Subsidiary from a financial point of
view issued by an investment banking or appraisal firm of
national standing.
Notwithstanding the foregoing, this covenant will not
apply to (A) employment agreements or compensation or employee
benefit arrangements with any officer, director or employee of
the Company entered into in the ordinary course of business
(including customary benefits thereunder (it being understood
that benefits of the nature in place as of the Issue Date shall
be deemed permissible hereunder)), (B) any transaction entered
<PAGE>
into by or among the Company or one of its Wholly Owned
Restricted Subsidiaries with one or more Wholly Owned
Restricted Subsidiaries of the Company, (C) any Restricted
Payment made in compliance with Section 10.12, (D) any
Permitted Investments other than Investments permitted by
<PAGE>
clause (vii) of the definition of "Permitted Investments,"
(E) payments to Park Communications on the business day after
each Interest Payment Date for the payment of management
advisory fees in any amount not to exceed $125,000 on each such
date; provided, however, that no such payment shall be made
unless (1) the Company has paid all accrued interest on the
Notes due on such Interest Payment Date and (2) no Default or
Event of Default shall have occurred and be continuing at the
time of such payment, (F) payments to Park Communications or
PAI pursuant to the Tax Sharing Agreement, (G) the pledge of
Capital Stock of Unrestricted Subsidiaries by the Company or
any Restricted Subsidiary to support such Unrestricted
Subsidiaries' Indebtedness, and (H) payments to Park
Communications in respect of the Company's allocable portion of
the consolidated legal, tax, accounting and other
administrative expenses of Park Communications, not to exceed
$1.0 million during any consecutive six-month period; provided,
however, that no such payment shall be made unless no Default
or Event of Default shall have occurred and be continuing at
the time of such payment.
Section 10.14. Limitation on Asset Sales.
The Company will not, and will not permit any
Restricted Subsidiary to, make any Asset Sale unless (a) the
Company or such Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least
equal to the fair market value (as evidenced by (i) a
resolution of the Board of Directors set forth in an Officers'
Certificate delivered to the Trustee and (ii) if the fair
market value is greater than $5.0 million, an opinion issued by
an investment banking or appraisal firm of national standing)
of the assets or other property sold or disposed of in the
Asset Sale, and (b) at least 85% of such consideration consists
of either (I) cash or Cash Equivalents; provided, however, that
for purposes of this covenant "cash" shall include the amount
of any Indebtedness (other than any Indebtedness that is by its
terms subordinated to the Notes) of the Company or such
Restricted Subsidiary that are assumed by the transferee of any
such assets or other property in such Asset Sale (and excluding
any liabilities that are incurred in connection with or in
anticipation of such Asset Sale), but only to the extent that
such assumption is effected on a basis under which there is no
further recourse to the Company or any of the Restricted
Subsidiaries with respect to such liabilities or (II)
<PAGE>
properties and capital assets (including franchises and
licenses required to own or operate such properties) to be used
in the same lines of business being conducted by the Company or
such Restricted Subsidiary on the Issue Date.
<PAGE>
Within 360 days after any Asset Sale, the Company may
elect to apply the Net Proceeds from such Asset Sale to (a)
permanently repay any Indebtedness of the Company or the
Restricted Subsidiaries, other than any Indebtedness of the
Company or any Restricted Subsidiary which expressly ranks
subordinate to any other Indebtedness, and/or (b) make an
investment in, or acquire capital assets or property directly
related to, the newspaper publishing business. Pending the
final application of any such Net Proceeds, the Company may
temporarily invest such Net Proceeds in any Investments
described under clauses (i) through (iv) of the definition of
"Permitted Investments." Any Net Proceeds from an Asset Sale
not applied or invested as provided in the first sentence of
this paragraph within 360 days of such Asset Sale will be
deemed to constitute "Excess Proceeds."
Each date on which the aggregate amount of Excess
Proceeds in respect of which an Asset Sale Offer has not been
made exceeds $5,000,000 shall be deemed an "Asset Sale Offer
Trigger Date". Within 30 days of each Asset Sale Offer Trigger
Date the Company shall commence an offer (the "Asset Sale
Offer") to purchase the maximum principal amount of Notes and
other Indebtedness of the Company that ranks pari passu in
right of payment with the Notes (to the extent required by the
instrument governing such other Indebtedness) that may be
purchased out of the Excess Proceeds. Any Notes to be
purchased pursuant to an Asset Sale Offer shall be purchased
pro rata based on the aggregate principal amount of Notes and
all such other Indebtedness outstanding; and all such Notes
shall be purchased at an offer price in cash in an amount equal
to 100% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase. To the
extent that any Excess Proceeds remain after completion of an
Asset Sale Offer, the Company may use the remaining amount for
general corporate purposes otherwise permitted by this
Indenture. Upon the consummation of any Asset Sale Offer, the
amount of Excess Proceeds from the Asset Sale in question to be
the subject of future Asset Sale Offers shall be deemed to be
zero.
Notice of an Asset Sale Offer shall be prepared and
mailed by the Company with a copy to the Trustee not later than
the 30th day after the related Asset Sale Offer Trigger Date to
each Holder of Notes at such Holder's registered address,
stating:
<PAGE>
(i) that an Asset Sale Offer Trigger Date has
occurred and that the Company is offering to purchase the
maximum principal amount of Notes that may be purchased
out of the Excess Proceeds to the extent to be applied to
<PAGE>
an offer to purchase Notes (as provided in the immediately
preceding paragraph), at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of the
purchase (the "Asset Sale Offer Purchase Date"), which
shall be a Business Day, specified in such notice, that is
not earlier than 30 days or later than 60 days from the
date such notice is mailed;
(ii) the amount of accrued and unpaid interest, if
any, as of the Asset Sale Offer Purchase Date;
(iii) that any Note not tendered will continue to
accrue interest in accordance with the terms thereof;
(iv) that, unless the Company defaults in the payment
of the purchase price for the Notes payable pursuant to
the Asset Sale Offer, any Notes accepted for payment
pursuant to the Asset Sale Offer shall cease to accrue
interest after the Asset Sale Offer Purchase Date;
(v) that Holders electing to have Notes purchased
pursuant to an Asset Sale Offer will be required to
surrender their Notes to the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City
time, on the Asset Sale Purchase Date with the "Option of
Holder to Elect Purchase" on the reverse thereof completed
and must complete any form letter of transmittal proposed
by the Company (which letter must be completed correctly
by such Holder) and which is acceptable to the Trustee and
the Paying Agent;
(vi) that Holders of Notes will be entitled to
withdraw their election if the Paying Agent receives, not
later than 5:00 p.m., New York City time, on the Business
Day prior to the Asset Sale Offer Purchase Date, a
telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of
Notes the Holder delivered for purchase, the Note
certificate number (if any) and a statement that such
Holder is withdrawing its election to have such Notes
purchased;
(vii) that Holders whose Notes are purchased only in
part will be issued Notes equal in principal amount to the
<PAGE>
unpurchased portion of the Notes surrendered;
(viii) the instructions that Holders must follow in
order to tender their Notes; and
<PAGE>
(ix) information concerning the business of the
Company, the most recent annual and quarterly reports of
the Company filed with the SEC pursuant to the Exchange
Act (or, if the Company is not then required to file any
such reports with the SEC, the comparable reports prepared
pursuant to Section 10.09), a description of material
developments in the Company's business, information with
respect to pro forma historical financial information
after giving effect to such Asset Sale and such other
information concerning the circumstances and relevant
facts regarding such Asset Sale and Asset Sale Offer as
would be material to a Holder of Notes in connection with
the decision of such Holder as to whether or not it should
tender Notes pursuant to the Asset Sale Offer.
On the Asset Sale Offer Purchase Date, the Company
will (i) accept for payment the maximum principal amount of
Notes or portions thereof tendered pursuant to the Asset Sale
Offer that can be purchased out of Excess Proceeds from such
Asset Sale that are to be applied to an Asset Sale Offer (to
the extent provided in the second preceding paragraph),
(ii) deposit with the Paying Agent an amount in cash equal to
the aggregate purchase price of all Notes or portions thereof
accepted for payment and any accrued and unpaid interest on
such Notes as of the Asset Sale Offer Purchase Date, and
(iii) deliver or cause to be delivered to the Trustee all Notes
tendered pursuant to the Asset Sale Offer. If less than all
Notes tendered pursuant to the Asset Sale Offer are accepted
for payment by the Company for any reason consistent with this
Indenture, selection of the Notes to be purchased by the
Company shall be in compliance with the requirements of the
principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro
rata basis or by lot; provided, however, that Notes accepted
for payment in part shall only be purchased in integral
multiples of $1,000. The Paying Agent shall promptly mail to
each Holder of Notes or portions thereof accepted for payment
an amount in cash equal to the purchase price for such Notes
plus any accrued and unpaid interest thereon, and the Trustee
shall promptly authenticate and mail to such Holder of Notes
accepted for payment in part a new Note equal in principal
amount to any unpurchased portion of the Notes, and any Note
not accepted for payment in whole or in part shall be promptly
returned to the Holder of such Note.
<PAGE>
On and after an Asset Sale Offer Purchase Date,
interest will cease to accrue on the Notes or portions thereof
accepted for payment, unless the Company defaults in the
payment of the purchase price therefor. The Company will
<PAGE>
publicly announce the results of the Asset Sale Offer on or as
soon as practicable after the Asset Sale Offer Purchase Date.
The Company will comply with the applicable tender
offer rules, including the requirements of Rule 14e-1 under the
Exchange Act, and all other applicable securities laws and
regulations in connection with any Asset Sale Offer and will be
deemed not to be in violation of any of its covenants herein to
the extent such compliance is in conflict with such covenants.
Section 10.15. Change of Control.
Upon the occurrence of a Change of Control Triggering
Event (the date of such occurrence, the "Change of Control
Date"), the Company shall make an offer to purchase (a "Change
of Control Offer"), and shall, subject to the provisions
described below, purchase, all or any portion (equal to $1,000
or an integral multiple thereof) of the then outstanding Notes
validly tendered at a purchase price in cash (the "Change of
Control Purchase Price") equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the
Change of Control Purchase Date. The Company shall be required
to purchase all Notes properly tendered into the Change of
Control Offer and not withdrawn.
Notice of a Change of Control Offer shall be prepared
and mailed by the Company not later than the 30th day after the
Change of Control Date to the Holders of Notes at their last
registered addresses with a copy to the Trustee and the Paying
Agent. The Offer shall remain open from the time of mailing
for at least 20 Business Days or such longer period as may be
required by law. The notice, which shall govern the terms of
the Change of Control Offer, shall include such disclosures as
are required by law and shall state:
(a) that the Change of Control Triggering Event has
occurred and that such Holder has the right to require the
Company to purchase all or a portion (equal to $1,000 or
an integral multiple thereof) of such Holder's Notes at a
purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase, which shall be
a Business Day, specified in such notice, that is not
earlier than 30 days or later than 60 days from the date
such notice is mailed (the "Change of Control Purchase
<PAGE>
Date");
(b) the amount of accrued and unpaid interest, if
any, as of the Change Control Purchase Date;
<PAGE>
(c) that any Note not tendered for payment will
continue to accrue interest in accordance with the terms
thereof;
(d) that, unless the Company defaults in the payment
of the purchase price for the Notes payable pursuant to
the Change of Control Offer, any Notes accepted for
payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control
Purchase Date;
(e) that Holders electing to have Notes purchased
pursuant to a Change of Control Offer will be required to
surrender their Notes to the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City
time, on the Change of Control Purchase Date with the
"Option of Holder to Elect Purchase" on the reverse
thereof completed and must complete any form letter of
transmittal proposed by the Company and be completed
correctly by such Holder and be acceptable to the Trustee
and the Paying Agent;
(f) that Holders of Notes will be entitled to
withdraw their election if the Paying Agent receives, not
later than 5:00 p.m., New York City time, on the Business
Day prior to the Change of Control Purchase Date, a
telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of
Notes the Holder delivered for purchase, the Note
certificate number (if any) and a statement that such
Holder is withdrawing its election to have such Notes
purchased;
(g) that Holders whose Notes are purchased only in
part will be issued Notes equal in principal amount to the
unpurchased portion of the Notes surrendered;
(h) the instructions that Holders must follow in
order to tender their Notes; and
(i) information concerning the business of the
Company, the most recent annual and quarterly reports of
the Company filed with the SEC pursuant to the Exchange
Act (or, if the Company is not then required to file any
such reports with the SEC, the comparable reports prepared
<PAGE>
pursuant to Section 10.09), a description of material
developments in the Company's business, information with
respect to pro forma historical financial information
after giving effect to such Change of Control and such
other information concerning the circumstances and
<PAGE>
relevant facts regarding such Change of Control and Change
of Control Offer as would be material to a Holder of Notes
in connection with the decision of such Holder as to
whether or not it should tender Notes pursuant to the
Change of Control Offer.
On the Change of Control Purchase Date, the Company
will (i) accept for payment all Notes or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent an amount in cash equal to the aggregate
purchase price of all Notes or portions thereof accepted for
payment, plus any accrued and unpaid interest on such Notes as
of the Change of Control Purchase Date, and (iii) deliver or
cause to be delivered to the Trustee all Notes tendered
pursuant to the Change of Control Offer. The Paying Agent
shall promptly mail to each Holder of Notes or portions thereof
accepted for payment an amount in cash equal to the purchase
price for such Notes, plus any accrued and unpaid interest
thereon, and the Trustee shall promptly authenticate and mail
to such Holders of Notes accepted for payment in part a new
Note equal in principal amount to any unpurchased portion of
the Note surrendered. Any Notes not so accepted in whole or in
part shall be promptly returned to the Holder thereof.
On and after a Change of Control Purchase Date,
interest will cease to accrue on the Notes or portions thereof
accepted for payment unless the Company defaults in the payment
of the purchase price therefor. The Company will publicly
announce the results of the Change of Control Offer not later
than the first Business Day following the Change of Control
Purchase Date.
The Company will comply with 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 the event that Change of Control occurs and the
Company is required to purchase Notes as described above and
will be deemed not to be in violation of any of its covenants
herein to the extent such compliance is in conflict with such
covenants.
Section 10.16. Limitations on Liens Securing Certain
Debt.
The Company will not, and will not permit any
<PAGE>
Restricted Subsidiary to, directly or indirectly, create,
incur, assume or suffer to exist any Lien (other than Permitted
Liens) on any properties or assets of the Company or any
Restricted Subsidiary (other than the Capital Stock of
Unrestricted Subsidiaries) now owned or hereafter acquired, or
<PAGE>
any income or profits therefrom, or assign or convey any right
to receive income therefrom to secure any Indebtedness, unless
the Notes are equally and ratably secured thereby for so long
as such Indebtedness is secured thereby.
Section 10.17. Limitation on Dividends and Other
Payment Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create or
otherwise cause to suffer to exist or become effective any
encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other
distribution to the Company or any Restricted Subsidiary on its
Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, or pay any
Indebtedness owed to the Company or any other Restricted
Subsidiary, (b) make loans or advances to the Company or any
other Restricted Subsidiary or guarantee any Indebtedness of
the Company or any other Restricted Subsidiary, or (c) transfer
any of its properties or assets to the Company or any other
Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of (i) applicable law,
(ii) any instrument governing Indebtedness or Capital Stock of
an Acquired Person acquired by the Company or any of the
Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such
acquisition); provided, however, that (1) such restriction is
not applicable to any Person, or the properties or assets of
any Person, other than the Acquired Person, and (2) the
consolidated net income of such Acquired Person for any period
prior to such acquisition shall not be taken into account in
determining whether such acquisition was permitted by the terms
of this Indenture, (iii) by reason of customary non-assignment
provisions in leases entered into the ordinary course of
business, (iv) Purchase Money Indebtedness for property
acquired in the ordinary course of business that only impose
restrictions on the property so acquired, (v) an agreement for
the sale or disposition of the Capital Stock or assets of such
Restricted Subsidiary; provided, however, that such restriction
is only applicable to such Restricted Subsidiary or assets, as
applicable, and such sale or disposition otherwise is permitted
under Section 10.14; provided, further, however, that such
restriction or encumbrance shall be effective only for a period
<PAGE>
from the execution and delivery of such agreement through a
termination date not later than 270 days after such execution
and delivery, (vi) Refinancing Indebtedness permitted under
this Indenture; provided, however, that the restrictions
contained in the agreements governing such Refinancing
<PAGE>
Indebtedness are no more restrictive in the aggregate than
those contained in the agreements governing the Indebtedness
being refinanced immediately prior to such refinancing,
(vii) this Indenture or (viii) the Revolving Credit Facility,
and any amendments, restatements, renewals, replacements or
refinancings thereof.
Section 10.18. Limitation on Subsidiary Capital
Stock.
The Company will not permit any Restricted Subsidiary
to issue any Capital Stock, except for (i) Capital Stock issued
to and held by the Company or a Wholly Owned Restricted
Subsidiary and (ii) Capital Stock issued by a Person prior to
the time (a) such Person becomes a Restricted Subsidiary,
(b) such Person merges with or into a Restricted Subsidiary or
(c) a Restricted Subsidiary merges with or into such Person;
provided, however, that such Capital Stock was not issued by
such Person in anticipation of the type of transaction
contemplated by clause (a), (b) or (c).
Section 10.19. Limitation on Amendment of Tax
Sharing Agreement.
The Company will not, and will not permit any
Restricted Subsidiary to, (i) amend, supplement or modify the
Tax Sharing Agreement, unless any such amendment, supplement or
modification is no less favorable to the Holders than the terms
thereof on the Issue Date or (ii) assign the Tax Sharing
Agreement or the benefits and obligations thereunder to any
other Person.
Section 10.20. Limitation on Line of Business.
The Company will not, and will not permit any
Restricted Subsidiary to, engage in any business other than
newspaper publishing and businesses directly related thereto.
Section 10.21. Certain Exceptions for Capital
Contributions To Refinance the Existing Credit Facility.
Any other provision of this Indenture to the contrary
notwithstanding, any capital contribution made on the Issue
Date in any Subsidiary of the Company to effect the repayment
of the Existing Credit Facility from the proceeds of the
<PAGE>
offering of the Notes and the consummation of the other
financing transactions taking place on the Issue Date in
connection therewith shall not be deemed to be a violation of
any covenant of this Indenture (and the aggregate amount of any
<PAGE>
such capital contribution shall not be counted as a Restricted
Investment).
ARTICLE ELEVEN
REDEMPTION OF NOTES
Section 11.01. Optional and Special Redemption.
Optional Redemption. Except as provided below, the
Notes are not redeemable prior to May 15, 2001. Subject to
earlier redemption in the manner described in the next two
succeeding paragraphs, the Notes will be redeemable at the
option of the Company, in whole or in part, at the Redemption
Prices (expressed as percentages of principal amount) set forth
below, plus accrued interest to the Redemption Date, if
redeemed during the 12-month period beginning May 15 of the
years indicated below:
Redemption
Year __Price___
2001 ............................... 105.938%
2002 ............................... 103.958
2003 ............................... 101.979
2004 ............................... 100.000
In addition, at any time prior to May 15, 1999, the
Company may, at its option, redeem up to $50.0 million of the
aggregate principal amount of Notes originally issued with the
net proceeds of one or more Public Equity Offerings or
Strategic Equity Investments where the proceeds to the Company
of any such Public Equity Offering or Strategic Equity
Investment are at least $40.0 million, at 111.875% of the
principal amount thereof plus accrued and unpaid interest, if
any, to the date of redemption; provided, however, that not
less than $100.0 million principal amount of the Notes is
outstanding immediately after giving effect to such redemption
(other than any Notes owned by the Company or any of its
Affiliates) and such redemption is effected within 60 days of
such issuance or investment.
In addition, at any time prior to May 15, 2001, upon
the occurrence of a Change of Control, the Company may redeem
<PAGE>
the Notes, in whole but not in part, at a redemption price
equal to the principal amount thereof plus the Applicable
Premium plus accrued and unpaid interest, if any, to the date
of redemption. Notice of redemption of the Notes pursuant to
this paragraph shall be mailed to holders of the Notes not more
<PAGE>
than 30 days following the occurrence of a Change of Control.
The Company may not redeem Notes pursuant to this paragraph if
it has made an offer to repurchase Notes with respect to such
Change of Control.
Section 11.02. Applicability of Article.
Redemption of Notes at the election of the Company or
otherwise, as permitted or required by any provision of this
Indenture, shall be made in accordance with such provision and
this Article.
Section 11.03. Election To Redeem; Notice to
Trustee.
The election of the Company to redeem any Notes
pursuant to Section 11.01(a) shall be evidenced by a Board
Resolution of the Company and an Officers' Certificate. In
case of any redemption at the election of the Company, the
Company shall, at least 45 days prior to the Redemption Date
fixed by the Company (unless a shorter notice period shall be
satisfactory to the Trustee), notify the Trustee in writing of
such Redemption Date and of the principal amount of Notes to be
redeemed.
Section 11.04. Selection by Trustee of Notes To Be
Redeemed.
In the event that less than all of the Notes are to
be redeemed at any time, selection of such Notes for redemption
will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not then listed on a
national securities exchange, on a pro rata basis or by lot;
provided, however, that no Notes of a principal amount of
$1,000 shall be redeemed in part; provided, further, however,
that any redemption pursuant to the provisions relating to one
or more Public Equity Offerings or Strategic Equity Investments
by the Company shall be made on a pro rata basis or on as
nearly a pro rata basis as practicable (subject to any
procedures of The Depository Trust Company). If any Note is to
be redeemed in part only, the notice of redemption that relates
to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in a principal amount equal
to the unredeemed portion thereof will be issued in the name of
<PAGE>
the holder thereof upon cancellation of the original Note. On
and after the redemption date, if the Company does not default
in the payment of the redemption price, interest will cease to
accrue on Notes or portions thereof called for redemption.
<PAGE>
For all purposes of this Indenture, unless the
context otherwise requires, all provisions relating to
redemption of Notes shall relate, in the case of any Note
redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be
redeemed.
Section 11.05. Notice of Redemption.
Notice of redemption shall be mailed by first-class
mail, postage prepaid, mailed at least 30 but not more than 60
days before the Redemption Date, to each Holder of Notes to be
redeemed at its registered address.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all outstanding Notes are to be
redeemed, the identification of the particular Notes to be
redeemed;
(d) in the case of a Note to be redeemed in part,
the principal amount of such Note to be redeemed and that
after the Redemption Date upon surrender of such Note, a
new Note or Notes in the aggregate principal amount equal
to the unredeemed portion thereof will be issued;
(e) that Notes called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;
(f) that on the Redemption Date the Redemption Price
will become due and payable upon each such Note or portion
thereof, and that (unless the Company shall default in
payment of the Redemption Price) interest thereon shall
cease to accrue on and after said date;
(g) the place or places where such Notes are to be
surrendered for payment of the Redemption Price;
(h) the CUSIP number, if any, relating to such
Notes; and
<PAGE>
(i) the paragraph of the Notes pursuant to which the
Notes are being redeemed.
<PAGE>
Notice of redemption of Notes to be redeemed shall be
given by the Company or, at the Company's written request, by
the Trustee in the name and at the expense of the Company.
The notice if mailed in the manner herein provided
shall be conclusively presumed to have been given, whether or
not the Holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the
Holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the
redemption of any other Note.
Section 11.06. Deposit of Redemption Price.
On or prior to the day preceding any Redemption Date,
the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 10.03) an
amount of money in same day funds sufficient to pay the
Redemption Price of, and accrued interest on, all the Notes or
portions thereof which are to be redeemed on that date.
Section 11.07. Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid,
the Notes so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein
specified and from and after such date (unless the Company
shall default in the payment of the Redemption Price) such
Notes shall cease to bear interest. Upon surrender of any such
Note for redemption in accordance with said notice, such Note
shall be paid by the Company at the Redemption Price; provided,
however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the
Holders of such Notes, or one or more Predecessor Notes,
registered as such on the relevant Regular Record Dates
according to the terms and the provisions of Section 3.07.
If any Note called for redemption shall not be so
paid upon surrender thereof for redemption, the principal and
premium, if any, shall, until paid, bear interest from the
Redemption Date at the rate then borne by such Note.
Section 11.08. Notes Redeemed or Purchased in Part.
<PAGE>
Any Note which is to be redeemed or purchased only in
part shall be surrendered to the Paying Agent at the office or
agency maintained for such purpose pursuant to Section 10.02
(with, if the Company, the Note Registrar or the Trustee so
requires, due endorsement by, or a written instrument of
<PAGE>
transfer in form satisfactory to, the Company, the Note
Registrar or the Trustee duly executed by the Holder thereof or
such Holder's attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Note without service charge, a
new Note or Notes, of any authorized denomination as requested
by such Holder in aggregate principal amount equal to, and in
exchange for, the portion of the principal of the Note so
surrendered that is not redeemed or purchased.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of
Indenture.
This Indenture shall cease to be of further effect
(except as to surviving rights of registration of transfer or
exchange of Notes herein expressly provided for, the Company's
obligations under Section 6.07 hereof, and the Trustee's and
Paying Agent's obligations under Section 4.06 hereof) and the
Trustee, on written demand of and at the expense of the
Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Notes theretofore authenticated and
delivered (other than (A) Notes which have been destroyed,
lost or stolen and which have been replaced or paid as
provided in Section 3.06 hereof and (B) Notes for whose
payment in United States dollars has theretofore been
irrevocably deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in
Section 10.03) have been delivered to the Trustee for
cancellation; or
(ii) all such Notes not theretofore delivered to the
Trustee for cancellation have become due and payable and
the Company has irrevocably deposited or caused to be
deposited with the Trustee in trust for the purpose an
amount in United States dollars sufficient to pay and
<PAGE>
discharge the entire Indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for
the principal of, premium, if any, and interest to the
date of such deposit;
<PAGE>
(b) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating
that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of
this Indenture, the obligations of the Company to the Trustee
under Section 6.07 and, if money shall have been deposited with
the Trustee pursuant to subclause (a)(ii) of this Section
12.01, the obligations of the Trustee under Section 12.02 and
the last paragraph of Section 10.03 shall survive.
Section 12.02. Application of Trust Money.
Subject to the provisions of the last paragraph of
Section 10.03, all money deposited with the Trustee pursuant to
Section 12.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture,
to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the
principal of, premium, if any, and interest on the Notes for
whose payment such money has been deposited with the Trustee.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the day and year
first above written.
PARK NEWSPAPERS, INC.
By:
Name: Wright M. Thomas
Title: President
IBJ SCHRODER BANK & TRUST,
COMPANY, as Trustee
By:
Name:
Title:
<PAGE>
EXHIBIT A
PARK NEWSPAPERS, INC.
-----------
11-7/8% SENIOR NOTE DUE 2004
CUSIP No. __________
No. ___________ $____________
PARK NEWSPAPERS, INC., a Delaware corporation (the
"Company," which term includes any successor under the
Indenture hereinafter referred to), for value received,
promises to pay to ______________ or registered assigns, the
principal sum of _______________ United States Dollars on
May 15, 2004, at the office or agency of the Company referred
to below, and to pay interest thereon on May 15, and
November 15, in each year, commencing on November 15, 1996
(each an "Interest Payment Date"), accruing from the Issue Date
or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, at the rate of 11-7/8% per
annum, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, be paid to the
Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on the May 1 or
November 1 (each a "Regular Record Date"), whether or not a
Business Day, as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid, or
duly provided for, and interest on such defaulted interest at
the then applicable interest rate borne by the Notes, to the
extent lawful, shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may be paid to the
Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be
fixed by the Trustee, notice of which shall be given to Holders
of Notes not less than 10 days prior to such Special Record
<PAGE>
Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may
A-1
<PAGE>
be required by such exchange, all as more fully provided in
such Indenture.
Payment of the principal of, premium, if any, and
interest on this Note will be made at the Corporate Trust
office or agency of the Trustee maintained for that purpose in
The City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that
payment of interest may be made at the option of the Company by
check (which may be a check of the Company) mailed to the
address of the Person entitled thereto as such address shall
appear on the Note Register.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof.
Unless the certificate of authentication hereon has
been duly executed by the Trustee referred to on the reverse
hereof by manual signature, this Note shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for
any purpose.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-
mentioned Indenture.
IBJ SCHRODER BANK &
TRUST COMPANY, as Trustee
By:
Authorized Signatory
<PAGE>
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.
Dated: PARK NEWSPAPERS, INC.
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
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<PAGE>
(REVERSE OF NOTE)
11-7/8% Senior Note due 2004
1. Indenture. This Note is one of a duly authorized
issue of Notes of the Company designated as its 11-7/8% Senior
Notes due 2004 (the "Notes"), limited (except as otherwise
provided in the Indenture referred to below) in aggregate
principal amount to $155,000,000, which may be issued under an
indenture (the "Indenture") dated as of May 13, 1996, between
the Company and IBJ Schroder Bank & Trust Company, as trustee
(the "Trustee," which term includes any successor Trustee under
the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the
Trustee and the Holders of the Notes, and of the terms upon
which the Notes are, and are to be, authenticated and
delivered.
All capitalized terms used in this Note which are
defined in the Indenture and not otherwise defined herein shall
have the meanings assigned to them in the Indenture.
No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place, and rate, and in the
coin or currency, herein prescribed.
2. Redemption.
(a) Optional Redemption. Except as set forth below,
the Notes are not redeemable prior to May 15, 2001. Subject to
earlier redemption in the manner described in the next two
succeeding paragraphs, the Notes will be redeemable at the
option of the Company, in whole or in part, at the redemption
prices (expressed as percentages of principal amount) set forth
below, plus accrued interest to the redemption date, if
redeemed during the 12-month period beginning May 15 of the
years indicated below:
<PAGE>
A-4
<PAGE>
Year Redemption Price
2001 ......................... 105.938%
2002 ......................... 103.958
2003 ......................... 101.979
2004 ......................... 100.000
In addition, at any time prior to May 15, 1999, the
Company may, at its option, redeem up to $50.0 million of the
aggregate principal amount of Notes originally issued with the
net proceeds of one or more Public Equity Offerings or
Strategic Equity Investments where the proceeds to the Company
of any such Public Equity Offering or Strategic Equity
Investment are at least $40.0 million, at 111.875% of the
principal amount thereof plus accrued and unpaid interest, if
any, to the date of redemption; provided, however, that not
less than $100.0 million principal amount of the Notes is
outstanding immediately after giving effect to such redemption
(other than any Notes owned by the Company or any of its
Affiliates) and such redemption is effected within 60 days of
such issuance or investment.
In addition, at any time prior to May 15, 2001, upon
the occurrence of a Change of Control, the Company may redeem
the Notes, in whole but not in part, at a redemption price
equal to the principal amount thereof plus the Applicable
Premium plus accrued and unpaid interest, if any, to the date
of redemption. Notice of redemption of the Notes pursuant to
this paragraph shall be mailed to holders of the Notes not more
than 30 days following the occurrence of a Change of Control.
The Company may not redeem Notes pursuant to this paragraph if
it has made an offer to repurchase Notes with respect to such
Change of Control.
(b) Sinking Fund. The Company will not be required
to make any mandatory sinking fund payments in respect of the
Notes.
(c) Interest Payments. In the case of any
redemption of the Notes, interest installments whose Stated
Maturity is on or prior to the Redemption Date will be payable
to the Holders of such Notes, or one or more Predecessor Notes,
of record at the close of business on the relevant Record Date
referred to on the face hereof. Notes (or portions thereof)
for whose redemption and payment provision is made in
<PAGE>
accordance with the Indenture shall cease to bear interest from
and after the Redemption Date.
A-5
<PAGE>
(d) Partial Redemption. In the event of redemption
of the Note in part only, a new Note or Notes for the
unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
3. Offers to Purchase. Sections 10.14 and 10.15 of
the Indenture provide that following certain Asset Sales (with
respect to Section 10.14) and upon the occurrence of a Change
of Control Triggering Event (with respect to Section 10.15) and
subject to further limitations contained therein, the Company
shall make an offer to purchase certain amounts of the Notes in
accordance with the procedures set forth in the Indenture.
4. Defaults and Remedies. If an Event of Default
shall occur and be continuing, the principal of all of the
outstanding Notes, plus all accrued and unpaid interest, if
any, to the date the Notes become due and payable, may be
declared due and payable in the manner and with the effect
provided in the Indenture.
5. Defeasance. The Indenture contains provisions
(which provisions apply to this Note) for defeasance at any
time of (a) the entire indebtedness of the Company on this Note
and (b) certain restrictive covenants and related Defaults and
Events of Default, in each case upon compliance by the Company
with certain conditions set forth therein.
6. Amendments and Waivers. The Company and the
Trustee (if a party thereto) may, without the consent of the
Holders of any Outstanding Notes, amend, waive or supplement
the Indenture or the Notes for certain specified purposes,
including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture
under the Trust Indenture Act of 1939, as amended, and making
any change that does not adversely affect the rights of any
Holder. Other amendments and modifications of the Indenture or
the Notes may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority of the
aggregate principal amount of the Outstanding Notes, subject to
certain exceptions requiring the consent of the Holders of the
particular Notes to be affected. Any such consent or waiver by
or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not
<PAGE>
notation of such consent or waiver is made upon this Note.
7. Denominations, Transfer and Exchange. The Notes
are issuable only in registered form without coupons in
A-6
<PAGE>
denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations
therein set forth, the Notes are exchangeable for a like
aggregate principal amount of Notes of the authorized
denomination, as requested by the Holder surrendering the same.
The transfer of this Note is registrable on the Note
Register of the Company, upon surrender of this Note for
registration of transfer at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan in The
City of New York or at such other office or agency of the
Company as may be maintained for such purpose, duly endorsed
by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
8. Persons Deemed Owners. Prior to and at the time
of due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not
this Note shall be overdue, and neither the Company, the
Trustee nor any agent shall be affected by notice to the
contrary.
9. Registration Rights. Pursuant to the
Registration Rights Agreement among the Company and the Holders
of the Initial Notes, the Company will be obligated to
consummate an exchange offer pursuant to which the Holder of
this Note shall have the right to exchange this Note for the
Company's Series B 11-7/8% Senior Notes due 2004 (the "Exchange
Notes"), which will have been registered under the Securities
Act, in like principal amount and having terms identical in all
material respects as the Initial Notes. The Holders of the
Initial Notes shall be entitled to receive certain additional
interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to
and in accordance with the terms of the Registration Rights
Agreement.
10. No Recourse Against Others. No officer or
employee of the Company, or any director, officer, partner,
<PAGE>
affiliate, employee or stockholder of the Company, shall have
any liability for any obligations of the Company under the
Notes or the Indenture. Each Holder of Notes by accepting a
Note waives and releases all such liability, and such waiver
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<PAGE>
and release is part of the consideration for the issuance of
the Notes.
11. GOVERNING LAW. THE INDENTURE AND THIS NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE, THE
COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE
HOLDERS AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS
NOTE.
<PAGE>
A-8
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to
(Insert assignee's social security or tax ID number) __________
(Print or type assignee's name, address and zip code) and
irrevocably appoint
agent to transfer this Note on the books of the Company. The
agent may substitute another to act for such agent.
Date:______________ Your signature:
(Sign exactly as your name
appears on the other side of
this Note)
By:
NOTICE: To be executed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
<PAGE>
A-9
<PAGE>
In connection with any transfer of this Note
occurring prior to the date which is the earlier of (i) the
date of the declaration by the SEC of the effectiveness of a
registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), covering resales of this Note
(which effectiveness shall not have been suspended or
terminated at the date of the transfer) and (ii) the third
anniversary of the Issue Date, the undersigned confirms that it
has not utilized any general solicitation or general
advertising in connection with the transfer:
[Check One]
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended; or
(3) ___ to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933, as amended) that has
furnished to the Trustee a signed letter containing
certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) ___ outside the United States to a "foreign person" in
compliance with Rule 904 of Regulation S under the
Securities Act of 1933, as amended; or
(5) ___ pursuant to the exemption from registration provided
by Rule 144 under the Securities Act of 1933, as
amended; or
(6) ___ pursuant to an effective registration statement under
the Securities Act of 1933, as amended; or
(7) ___ pursuant to another available exemption from the
registration requirements of the Securities Act of
1933, as amended.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the
name of any person other than the registered Holder thereof,
provided, that if box (3), (4), (5) or (7) is checked, the
<PAGE>
Company or the Trustee may require, prior to registering any
such transfer of the Notes, in its sole discretion, such
written legal opinions, certifications (including an investment
letter in the case of box (3) or (4), and other information as
A-10
<PAGE>
the Trustee, Note Registrar or the Company has reasonably
requested to confirm that such transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, as
amended.
If none of the foregoing boxes are checked, the Trustee or
Registrar shall not be obligated to register this Note in the
name of any person other than the Holder hereof unless and
until the conditions to any such transfer of registration set
forth herein and in Section 2.05 of the Indenture shall have
been satisfied.
Dated:___________________ Signed:
(Sign exactly as name
appears on the other
side of this Security)
Signature Guarantee:
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is
purchasing this Note for its own account or an account with
respect to which it exercises sole investment discretion and
that it and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act
of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware
that the
A-11
<PAGE>
transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from
registration provided by Rule 144A.
Date:_____________________
NOTICE: To be executed by an
an executive officer
A-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the
Company pursuant to Section 10.14 or 10.15 of the Indenture,
check the Box: [ ]
If you wish to have a portion of this Note purchased
by the Company pursuant to Section 10.14 or 10.15 of the
Indenture, state the amount:
$______________
Date: _____________ Your Signature: ____________________ __
(Sign exactly as your name
appears on the other side
of this Note)
By:
NOTICE: To be signed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
A-13
<PAGE>
EXHIBIT B
PARK NEWSPAPERS, INC.
-----------
11-7/8% SENIOR NOTE DUE 2004
CUSIP No. __________
No. ___________ $____________
PARK NEWSPAPERS, INC., a Delaware corporation (the
"Company," which term includes any successor under the
Indenture hereinafter referred to), for value received,
promises to pay to ______________, or registered assigns, the
principal sum of _______________ United States Dollars on
May 15, 2004, at the office or agency of the Company referred
to below, and to pay interest thereon on May 15 and November 15
in each year, commencing on November 15, 1996 (each an
"Interest Payment Date"), accruing from the Issue Date or from
the most recent Interest Payment Date to which interest has
been paid or duly provided for, at the rate of 11-7/8% per
annum, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, be paid to the
Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on the May 1 or
November 1 (each a "Regular Record Date"), whether or not a
Business Day, as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid, or
duly provided for, and interest on such defaulted interest at
the then applicable interest rate borne by the Notes, to the
extent lawful, shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may be paid to the
Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be
fixed by the Trustee, notice of which shall be given to Holders
of Notes not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not
<PAGE>
inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may
be required by such exchange, all as more fully provided in
such Indenture.
B-1
<PAGE>
Payment of the principal of, premium, if any, and
interest on this Note will be made at the corporate trust
office or agency of the Trustee maintained for that purpose in
The City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts: provided, however, that
payment of interest may be made at the option of the Company by
check (which may be a check of the Company) mailed to the
address of the Person entitled thereto as such address shall
appear on the Note Register.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof.
Unless the certificate of authentication hereon has
been duly executed by the Trustee referred to on the reverse
hereof by manual signature, this Note shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for
any purpose.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-
mentioned Indenture.
IBJ SCHRODER BANK &
TRUST COMPANY, as Trustee
By:
Authorized Signatory
B-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.
Dated: PARK NEWSPAPERS, INC.
By:
Name:
Title:
By:
Name:
Title:
B-3
<PAGE>
(REVERSE OF NOTE)
11-7/8% Senior Note due 2004
1. Indenture. This Note is one of a duly authorized
issue of Notes of the Company designated as its 11-7/8% Senior
Notes due 2004 (the "Notes"), limited (except as otherwise
provided in the Indenture referred to below) in aggregate
principal amount to $155,000,000, which may be issued under an
indenture (the "Indenture") dated as of May 13, 1996, between
the Company and IBJ Schroder Bank & Trust Company, as trustee
(the "Trustee," which term includes any successor Trustee under
the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the
Trustee and the Holders of the Notes, and of the terms upon
which the Notes are, and are to be, authenticated and
delivered.
All capitalized terms used in this Note which are
defined in the Indenture and not otherwise defined herein shall
have the meanings assigned to them in the Indenture.
No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place, and rate, and in the
coin or currency, herein prescribed.
2. Redemption.
(a) Optional Redemption. Except as set forth below,
the Notes are not redeemable prior to May 15, 2001. Subject to
earlier redemption in the manner described in the next two
succeeding paragraphs, the Notes will be redeemable at the
option of the Company, in whole or in part, at the redemption
prices (expressed as percentages of principal amount) set forth
below, plus accrued interest to the redemption date, if
redeemed during the 12-month period beginning May 15 of the
years indicated below:
B-4
<PAGE>
Year Redemption Price
2001 ......................... 105.938%
2002 ......................... 103.958
2003 ......................... 101.979
2004 ......................... 100.000
In addition, at any time prior to May 15, 1999, the
Company may, at its option, redeem up to $50.0 million of the
aggregate principal amount of Notes originally issued with the
net proceeds of one or more Public Equity Offerings or
Strategic Equity Investments where the proceeds to the Company
of any such Public Equity Offering or Strategic Equity
Investment are at least $40.0 million, at 111.875% of the
principal amount thereof plus accrued and unpaid interest, if
any, to the date of redemption; provided, however, that not
less than $100.0 million principal amount of the Notes is
outstanding immediately after giving effect to such redemption
(other than any Notes owned by the Company or any of its
Affiliates) and such redemption is effected within 60 days of
such issuance or investment.
In addition, at any time prior to May 15, 2001, upon
the occurrence of a Change of Control, the Company may redeem
the Notes, in whole but not in part, at a redemption price
equal to the principal amount thereof plus the Applicable
Premium plus accrued and unpaid interest, if any, to the date
of redemption. Notice of redemption of the Notes pursuant to
this paragraph shall be mailed to holders of the Notes not more
than 30 days following the occurrence of a Change of Control.
The Company may not redeem Notes pursuant to this paragraph if
it has made an offer to repurchase Notes with respect to such
Change of Control.
(b) Sinking Fund. The Company will not be required
to make any mandatory sinking fund payments in respect of the
Notes.
(c) Interest Payments. In the case of any
redemption of the Notes, interest installments whose Stated
Maturity is on or prior to the Redemption Date will be payable
to the Holders of such Notes, or one or more Predecessor Notes,
of record at the close of business on the relevant Record Date
referred to on the face hereof. Notes (or portions thereof)
for whose redemption and payment provision is made in
<PAGE>
accordance with the Indenture shall cease to bear interest from
and after the Redemption Date.
B-5
<PAGE>
(d) Partial Redemption. In the event of redemption
of the Note in part only, a new Note or Notes for the
unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
3. Offers to Purchase. Sections 10.14 and 10.15 of
the Indenture provide that following certain Asset Sales (with
respect to Section 10.14) and upon the occurrence of a Change
of Control Triggering Event (with respect to Section 10.15) and
subject to further limitations contained therein, the Company
shall make an offer to purchase certain amounts of the Notes in
accordance with the procedures set forth in the Indenture.
4. Defaults and Remedies. If an Event of Default
shall occur and be continuing, the principal of all of the
outstanding Notes, plus all accrued and unpaid interest, if
any, to the date the Notes become due and payable, may be
declared due and payable in the manner and with the effect
provided in the Indenture.
5. Defeasance. The Indenture contains provisions
(which provisions apply to this Note) for defeasance at any
time of (a) the entire indebtedness of the Company on this Note
and (b) certain restrictive covenants and related Defaults and
Events of Default, in each case upon compliance by the Company
with certain conditions set forth therein.
6. Amendments and Waivers. The Company and the
Trustee (if a party thereto) may, without the consent of the
Holders of any Outstanding Notes, amend, waive or supplement
the Indenture or the Notes for certain specified purposes,
including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture
under the Trust Indenture Act of 1939, as amended, and making
any change that does not adversely affect the rights of any
Holder. Other amendments and modifications of the Indenture or
the Notes may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority of the
aggregate principal amount of the Outstanding Notes, subject to
certain exceptions requiring the consent of the Holders of the
particular Notes to be affected. Any such consent or waiver by
or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not
<PAGE>
notation of such consent or waiver is made upon this Note.
7. Denominations, Transfer and Exchange. The Notes
are issuable only in registered form without coupons in
B-6
<PAGE>
denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations
therein set forth, the Notes are exchangeable for a like
aggregate principal amount of Notes of the authorized
denomination, as requested by the Holder surrendering the same.
The transfer of this Note is registrable on the Note
Register of the Company, upon surrender of this Note for
registration of transfer at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan in The
City of New York or at such other office or agency of the
Company as may be maintained for such purpose, duly endorsed
by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
8. Persons Deemed Owners. Prior to and at the time
of due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not
this Note shall be overdue, and neither the Company, the
Trustee nor any agent shall be affected by notice to the
contrary.
9. No Recourse Against Others. No officer or
employee of the Company, or any director, officer, partner,
affiliate, employee or stockholder of the Company, shall have
any liability for any obligations of the Company under the
Notes or the Indenture. Each Holder of Notes by accepting a
Note waives and releases all such liability, and such waiver
and release is part of the consideration for the issuance of
the Notes.
10. GOVERNING LAW. THE INDENTURE AND THIS NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE, THE
COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE
HOLDERS AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR
<PAGE>
PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS
NOTE.
B-7
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to
(Insert assignee's social security or tax ID number) __________
(Print or type assignee's name, address and zip code) and
irrevocably appoint
agent to transfer this Note on the books of the Company. The
agent may substitute another to act for such agent.
Date:______________ Your signature:
(Sign exactly as your name
appears on the other side of
this Note)
By:
NOTICE: To be executed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
B-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the
Company pursuant to Section 10.14 or 10.15 of the Indenture,
check the Box: [ ]
If you wish to have a portion of this Note purchased
by the Company pursuant to Section 10.14 or 10.15 of the
Indenture, state the amount:
$______________
Date: _____________ Your Signature: ____________________ __
(Sign exactly as your name
appears on the other side
of this Note)
By:
NOTICE: To be signed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
B-9
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
___________, ____
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Re: Park Newspapers, Inc. (the "Company")
11-7/8% Senior Notes due 2004 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed purchase of $_______
aggregate principal amount of the Notes, we confirm that:
1. We have received a copy of the Offering
Memorandum (the "Offering Memorandum"), dated May 6, 1996,
relating to the Notes and such other information as we
deem necessary in order to make our investment decision.
We acknowledge that we have read and agreed to the matters
stated in the section entitled "Notice to Investors" of
the Offering Memorandum.
2. We understand that any subsequent transfer of
the Notes is subject to certain restrictions and
conditions set forth in the Indenture dated as of May 13,
1996 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes except in
compliance with, such restrictions and conditions and the
Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the Notes have not been
registered under the Securities Act, and that the Notes
<PAGE>
may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes
C-1
<PAGE>
within three years after the original issuance of the
Notes, we will do so only (A) to the Company or any
subsidiary thereof, (B) inside the United States in
accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein),
(C) inside the United States to an "institutional
accredited investor" (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to you a signed letter
substantially in the form of this letter, (D) outside the
United States in accordance with Rule 904 of Regulation S
under the Securities Act, (E) pursuant to the exemption
from registration provided by Rule 144 under the
Securities Act (if available), or (F) pursuant to an
effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing
any of the Notes from us a notice advising such purchaser
that resales of the Notes are restricted as stated herein.
4. We understand that, on any proposed resale of
any Notes, we will be required to furnish to you and the
Company such certification, written legal opinions and
other information as you and the Company may reasonably
require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that
the Notes purchased by us will bear a legend to the
foregoing effect.
5. We are an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act) and have such
knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which
we are acting are each able to bear the economic risk of
our or its investment, as the case may be.
6. We are acquiring the Notes purchased by us for
our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of
which we exercise sole investment discretion.
C-2
<PAGE>
You, the Company and counsel for the Company are
entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
Authorized Signature
C-3
<PAGE>
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
______Pursuant to Regulation S_____
______________, ____
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Re: Park Newspapers, Inc. (the "Company")
11-7/8% Senior Notes due 2004 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $___________
aggregate principal amount of the Notes, we confirm that such
sale has been effected pursuant to and in accordance with
Regulation S under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person
in the United States;
(2) either (a) at the time the buy offer was
originated, the transferee was outside the United States
or we and any person acting on our behalf reasonably
believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or
through the facilities of a designated off-shore
securities market and neither we nor any person acting on
our behalf knows that the transaction has been pre-
arranged with a buyer in the United States;
(3) no directed selling efforts have been made in
the United States in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S, as applicable;
<PAGE>
(4) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities
Act; and
D-1
<PAGE>
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You, the Company and counsel for the Company are
entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby.
Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Transferor]
By:
Authorized Signature
D-2
<PAGE>
Schedule A
UNRESTRICTED SUBSIDIARIES
Park Newspapers of Susquehanna, Inc.
Park Newspapers of Honesdale, Inc.
Park Newspapers of Norwich, Inc.
Park Newspapers of Florida, Inc.
<PAGE>
Exhibit 10.5
================================================================================
CREDIT AGREEMENT
Among
PARK COMMUNICATIONS, INC.
and
MERRILL LYNCH & CO.
As Arranger and Syndication Agent,
and
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
As Administrative Agent
and Collateral Agent,
and
THE LENDING INSTITUTIONS LISTED HEREIN
____________________
Dated as of May 10, 1996
____________________
$58,000,000
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Amount and Terms of Credit; Extension
of Maturity Date ....................................... 2
1.01 Commitments .............................................. 2
1.02 Notice of Borrowing ...................................... 2
1.03 Disbursement of Funds .................................... 2
1.04 Notes .................................................... 3
1.05 Conversions/Continuations ................................ 4
1.06 Interest ................................................. 5
1.07 Interest Periods ......................................... 6
1.08 Special Provisions Governing LIBOR
Loans .................................................. 6
1.09 Capital Requirements ..................................... 11
1.10 Extension of Maturity Date ............................... 12
SECTION 2. Payments ................................................. 13
2.01 Voluntary Prepayments .................................... 13
2.02 Mandatory Prepayments .................................... 13
2.03 Repayment ................................................ 15
2.04 Method and Place of Payment .............................. 15
2.05 Net Payments; Tax Certificates ........................... 16
SECTION 3. Conditions Precedent ..................................... 17
3.01 Conditions Precedent to Loans ............................ 17
(a) Credit Documents; Notes ............................. 17
(b) Officer's Solvency Certificate ...................... 18
(c) Opinions of Counsel ................................. 18
(d) Financial Statements, Etc. .......................... 18
(e) Sale Documents ...................................... 19
(f) Security Documents .................................. 19
(g) Capital and Organizational
Structure, Etc. ................................... 20
(h) Corporate Proceedings ............................... 20
(i) Organizational Documentation, Etc. .................. 20
(j) Compliance with Law ................................. 21
(k) Insurance ........................................... 21
(l) Payment of Certain Fees ............................. 21
(m) Transaction Documents; Consummation
of the Transactions ............................... 21
(n) Pre-Closing Sales ................................... 22
(o) Tax Sharing, Management, Consulting ................. 22
and Employment Agreements and
Arrangements ...................................... 22
(p) Consents, Etc. ...................................... 22
(q) Repayment of Existing Loans ......................... 22
(r) Environmental Matters ............................... 22
-i-
<PAGE>
Page
----
(s) Certain Liabilities ................................. 22
(t) Performance of Agreements ........................... 23
(u) Due Diligence ....................................... 23
(v) No Material Adverse Effect, Etc. .................... 23
(w) No Default; Representations and
Warranties ........................................ 23
(x) Other Documents, Etc. ............................... 23
3.02 Delivery of Documents .................................... 24
3.03 Conditions for the Benefit of the
Agents and the Lenders ................................. 24
SECTION 4. Representations, Warranties and
Agreements ............................................. 24
4.01 Corporate Status; Governmental Consents .................. 24
4.02 Corporate Power and Authority ............................ 25
4.03 No Conflicts; No Defaults ................................ 25
4.04 Litigation ............................................... 26
4.05 Use of Proceeds .......................................... 26
4.06 Governmental Approvals, Etc. ............................. 26
4.07 Governmental Regulation .................................. 27
4.08 True and Complete Disclosure; No
Material Adverse Effect ................................ 27
4.09 Financial Condition; Financial
Statements; Fiscal Year End ............................ 28
4.10 Representations and Warranties in
Other Agreements ....................................... 29
4.11 Security Interests ....................................... 29
4.12 Tax Returns and Payments ................................. 29
4.13 ERISA .................................................... 30
4.14 Subsidiaries; Other Ventures ............................. 30
4.15 Patents, Etc. ............................................ 30
4.16 Compliance with Laws, Etc. ............................... 31
4.17 Properties ............................................... 31
4.18 Capital Stock ............................................ 31
4.19 Labor Matters ............................................ 31
4.20 Indebtedness ............................................. 32
4.21 Environmental Matters .................................... 32
4.22 Broker's Fees ............................................ 33
4.23 Disaster ................................................. 33
4.24 Insurance ................................................ 34
4.25 FCC Matters .............................................. 34
4.26 Material Contracts; No Burdensome
Restrictions ........................................... 35
4.27 Management Agreements .................................... 35
-ii-
<PAGE>
Page
----
SECTION 5. Affirmative Covenants .................................... 36
5.01 Information Covenants .................................... 36
(a) Annual Financial Information ........................ 36
(b) Quarterly Financial Information ..................... 36
(c) Monthly Financial Information ....................... 36
(d) Accountants' Review ................................. 37
(e) Yearly Budgets ...................................... 37
(f) Compliance Certificate .............................. 37
(g) Management Letters .................................. 37
(h) Investor Information; SEC Filings ................... 37
(i) Notice of Certain Events ............................ 38
(j) Litigation Reports .................................. 38
(k) FCC Proceedings, Etc. ............................... 39
(l) Accounting Changes .................................. 39
(m) Other ............................................... 39
5.02 Books, Records and Inspections ........................... 40
5.03 Maintenance of Property; Insurance ....................... 40
5.04 Payment of Taxes ......................................... 40
5.05 Corporate Franchises ..................................... 41
5.06 Governmental Consents and Governmental
Requirements ........................................... 41
5.07 ERISA .................................................... 41
5.08 Performance of Obligations ............................... 42
5.09 End of Fiscal Years; Fiscal Quarters ..................... 42
5.10 Preservation of Status as Senior
Indebtedness ........................................... 42
5.11 Performance and Enforcement Under
Certain Agreements ..................................... 42
5.12 Pledge of Additional Collateral .......................... 43
5.13 Security Interests ....................................... 43
5.14 Environmental Events ..................................... 44
5.15 Additional Loan Parties .................................. 44
5.16 Broadcast Licenses ....................................... 45
5.17 Corporate Separateness ................................... 45
SECTION 6. Negative Covenants ....................................... 46
6.01 Conduct of Business ...................................... 46
6.02 Amendments or Waivers of Certain
Documents .............................................. 46
6.03 Liens and Related Matters ................................ 46
6.04 Indebtedness ............................................. 48
6.05 Capital Expenditures ..................................... 49
6.06 Advances, Investments and Loans .......................... 50
6.07 Prepayments of Existing Debt of the
Borrower Group; Payments of Cash
Interest on the P-I-K Notes ............................ 50
6.08 Dividends, Etc. .......................................... 51
6.09 Affiliate Transactions ................................... 52
-iii-
<PAGE>
Page
----
6.10 Financial Covenants ...................................... 52
(a) Minimum Cash Interest Coverage
Ratio ............................................. 52
(b) Maximum Total Debt Leverage
Ratio ............................................. 53
(c) Determination Date .................................. 53
6.11 Restriction on Leases .................................... 53
6.12 Restriction on Tax Consolidation ......................... 53
6.13 Sale and Lease-Backs ..................................... 53
6.14 Limitation on Other Restrictions on
Amendment of Credit Documents .......................... 53
6.15 Sale or Discount of Receivables .......................... 54
6.16 Issuance or Disposal of Subsidiary
Stock .................................................. 54
6.17 Restriction on Fundamental Changes;
Asset Sales ............................................ 54
6.18 Contingent Obligations ................................... 55
SECTION 7. Events of Default ........................................ 56
7.01 Payments ................................................. 56
7.02 Representations, Etc. .................................... 56
7.03 Covenants ................................................ 56
7.04 Default Under Other Agreements ........................... 57
7.05 Bankruptcy, Etc. ......................................... 57
7.06 ERISA Events ............................................. 58
7.07 Judgments, Etc. .......................................... 58
7.08 Change of Control ........................................ 59
7.09 Dissolution .............................................. 59
7.10 Obligations .............................................. 59
7.11 Collateral ............................................... 59
7.12 Guarantees ............................................... 59
7.13 Broadcast Licenses and Consents .......................... 60
7.14 Sale Documents ........................................... 60
7.15 Material Adverse Effect .................................. 60
7.16 Environmental Events ..................................... 60
7.17 Insurance Coverage ....................................... 61
SECTION 8. Rules of Construction .................................... 62
8.01 Rules of Construction .................................... 62
SECTION 9. The Agents ............................................... 63
9.01 Appointment .............................................. 63
9.02 Delegation of Duties ..................................... 64
9.03 Exculpatory Provisions ................................... 64
9.04 Reliance by the Agents ................................... 65
9.05 Notice of Default ........................................ 66
-iv-
<PAGE>
Page
----
9.06 Non-Reliance on the Agents and
Other Lenders .......................................... 66
9.07 Indemnification .......................................... 67
9.08 The Agents in Their Respective
Individual Capacities .................................. 67
9.09 Resignation by Any of the Agents ......................... 68
9.10 Security Documents, Etc. ................................. 68
9.11 Determinations Pursuant to Security
Documents .............................................. 69
9.12 Payee of Note Treated as Owner ........................... 70
SECTION 10. Miscellaneous ............................................ 70
10.01 Payment of Expenses; Indemnification,
Etc. ................................................... 70
10.02 Right of Setoff .......................................... 72
10.03 Notices .................................................. 73
10.04 Benefit of Agreement; Assignments;
Participations ......................................... 73
(a) Benefit ............................................. 74
(b) Assignments ......................................... 74
(c) Participations ...................................... 75
(d) Assignments to Federal Reserve
Bank .............................................. 75
(e) Information to Transferees .......................... 76
(f) Register ............................................ 76
10.05 No Waiver; Remedies Cumulative ........................... 76
10.06 Payments Pro Rata; Ratable Sharing ....................... 77
10.07 Accounting Principles; Calculations ...................... 78
10.08 Governing Law; Submission to
Jurisdiction; Venue .................................... 78
10.09 Counterparts ............................................. 79
10.10 Effectiveness ............................................ 79
10.11 Headings Descriptive ..................................... 79
10.12 Amendment or Waiver ...................................... 79
10.13 Survival ................................................. 80
10.14 Waivers .................................................. 81
10.15 Independence of Representations,
Warranties and Covenants ............................... 82
10.16 Severability; Modification to
Conform to Law ......................................... 82
10.17 Obligations Several; Independent
Nature of Lenders' Rights .............................. 82
10.18 Prior Understandings ..................................... 83
10.19 Agent's or Lender's Consent .............................. 83
10.20 Confidentiality .......................................... 83
SECTION 11. Definitions .............................................. 83
11.01 Definitions .............................................. 83
-v-
<PAGE>
ANNEXES
-------
ANNEX I - Agents' Addresses
ANNEX II - Lenders' Addresses and Commitments
SCHEDULES
---------
SCHEDULE 4.03 - Conflicting Agreements
SCHEDULE 4.04 - Litigation
SCHEDULE 4.14 - Subsidiaries; Joint Ventures
SCHEDULE 4.17 - Liens
SCHEDULE 4.20 - Debt of the Borrower and its Subsidiaries to
Remain Outstanding
SCHEDULE 4.21 - Environmental Matters
SCHEDULE 4.25A - Broadcast Licenses
SCHEDULE 4.25B - Communications Act Filings
SCHEDULE 4.25C - Pending Applications, Complaints or Proceedings
SCHEDULE 4.26 - Material Contracts
SCHEDULE 4.27 - Management Agreements
SCHEDULE 6.06 - Investments Existing on the Funding Date
SCHEDULE 11.01A - Permitted Encumbrances
SCHEDULE 11.01B - Radio Stations
EXHIBITS
--------
EXHIBIT A - Form of Notice of Borrowing
EXHIBIT B - Form of Note
EXHIBIT C - Form of Notice of Conversion/Continuation
EXHIBIT D-1 - Form of Opinion of Eckert Seamens Cherin &
Mellott, Special Counsel for the Loan Parties
EXHIBIT D-2 - Form of Opinion of Cahill Gordon & Reindel,
Special Counsel for the Agents
EXHIBIT D-3 - Form of Local Counsel Opinion
EXHIBIT D-4 - Form of Opinion of Wiley, Rein & Fielding,
Special FCC Counsel for the Loan Parties
EXHIBIT E-1 - Form of Securities Pledge Agreement -- Radio
Pledgors
EXHIBIT E-2 - Form of Securities Pledge Agreement -- TV
Pledgors
EXHIBIT F-1 - Form of General Security Agreement -- Radio
Pledgors
EXHIBIT F-2 - Form of General Security Agreement -- TV
Pledgors
EXHIBIT G - Form of Interest Escrow Agreement
EXHIBIT H - Form of Tax Escrow Agreement
EXHIBIT I - Form of Compliance Certificate
EXHIBIT J - Form of Officer's Solvency Certificate
EXHIBIT K-1 - Form of Subsidiary Guarantee -- Radio Pledgors
EXHIBIT K-2 - Form of Subsidiary Guarantee -- TV Guarantors
-vi-
<PAGE>
EXHIBIT K-3 - Form of Subsidiary Guarantee -- Park
Broadcasting, Inc.
EXHIBIT L - Form of Assignment Agreement
EXHIBIT M - Form of Notice of Assignment
EXHIBIT N - Form of PBI Facility Commitment Letter
EXHIBIT O - Form of PNI Facility Commitment Letter
EXHIBIT P - Form of Collateral Agency Agreement
-vii-
<PAGE>
CREDIT AGREEMENT, dated as of May 10, 1996, among PARK COMMUNICATIONS,
INC., a Delaware corporation (the "Borrower"), the lending institutions listed
--------
in Annex II on the date hereof or that may become parties hereto by virtue of
--------
assignments effected pursuant to Section 10.04 (each a "Lender" and,
------
collectively, the "Lenders"), MERRILL LYNCH & CO. ("Merrill Lynch") as arranger
------- -------------
and as syndication agent for the Lenders (in such capacity, the "Agent") and
-----
First Union National Bank of North Carolina ("First Union"), as administrative
-----------
agent (in such capacity, the "Administrative Agent") and collateral agent (in
--------------------
such capacity and together with the Collateral Agent appointed under the
Collateral Agency Agreement, if any (as defined herein), the "Collateral
----------
Agent"). Unless otherwise defined herein, all capitalized terms used herein and
- -----
defined in Section 11.01 are used herein as so defined, and certain other terms
shall be construed in accordance with the rules of construction in Section 8.01.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower and its Subsidiaries are currently parties to a
Base Loan and Additional Loan Credit Agreement by and among them, Park
Acquisitions, Inc., a Delaware corporation ("Parent"), The Employees' Retirement
------
System of Alabama and The Teachers' Retirement System of Alabama, as both lender
and agent, dated as of May 11, 1995 (together with all agreements and other
documents executed in connection therewith and as amended through the date
hereof, the "Existing Credit Agreement") under which approximately $540,000,000
-------------------------
in loans are currently outstanding to the Borrower and its Subsidiaries (the
"Existing Loans");
- ---------------
WHEREAS, the Borrower wishes to refinance (the "Refinancing") the
-----------
Existing Loans through, among other things, (i) the issuance, by the Borrower,
of Senior Pay-in-Kind Notes due 2004 yielding gross proceeds to the Borrower of
$80,000,000 (the "P-I-K Notes"), (ii) the issuance, by Park Newspapers, Inc., a
-----------
Delaware corporation ("PNI"), of $155,000,000 aggregate principal amount of
---
Senior Notes due 2004 (the "Newspaper Notes"), (iii) the issuance by Park
---------------
Broadcasting, Inc., a Delaware corporation ("PBI"), of $235,000,000 aggregate
---
principal amount of Senior Notes due 2004 (the "Broadcasting Notes") and (iv)
------------------
the application of $35,000,000 in gross proceeds from the sale prior to the date
hereof of certain radio broadcasting assets of the Borrower or its Subsidiaries.
WHEREAS, the Borrower desires that the Lenders make Loans to the
Borrower for the purpose of effecting the Refinancing and to pay a portion of
the fees and expense related thereto; and
<PAGE>
-2-
WHEREAS, the Lenders are willing, upon the terms and subject to the
conditions set forth herein, to make Loans to the Borrower for the account of
the Borrower for the purposes set forth in the immediately preceding recital;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit; Extension of Maturity Date.
------------------------------------------------------
1.01 Commitments. Subject to and upon the terms and conditions
-----------
herein set forth, each Lender severally and not jointly agrees, at any time
prior to May 31, 1996, to make a loan (each a "Loan" and, collectively, the
----
"Loans") to the Borrower. Each Lender's Commitment shall terminate at the close
- ------
of business on the sooner of (a) May 31, 1996 or (b) the Funding Date. Except
as hereinafter provided, Loans shall, at the option of the Borrower, be Base
Rate Loans or LIBOR Loans; provided, however, that no LIBOR Loan may be made
-------- -------
until after the Syndication Date.
1.02 Notice of Borrowing. When the Borrower desires that the Lenders
-------------------
make the Loans, it shall give the Administrative Agent at the Administrative
Agent's Office written notice (or telephonic notice promptly followed by such
written notice) of Borrowing (the "Notice of Borrowing"), substantially in the
-------------------
form of Exhibit A, not later than 10:00 A.M. on the date that is one Business
---------
Day prior to the proposed date of such Borrowing. The Notice of Borrowing (a)
shall be irrevocable, (b) shall be deemed to be a representation and warranty by
the Borrower that all conditions precedent to such Borrowing have been or will
be on the Funding Date satisfied and (c) shall specify (i) the aggregate
principal amount in Dollars of the Loans to be made which in no event may exceed
the Total Commitment and which shall be in integral multiples of $2,000,000 and
(ii) the date of Borrowing (which shall be a Business Day). The Borrowing shall
consist of Base Rate Loans. The Administrative Agent shall as promptly as
practicable give each Lender written notice (or telephonic notice promptly
confirmed in writing) of the proposed Borrowing, of such Lender's Pro Rata Share
thereof and of the other matters covered by the Notice of Borrowing.
1.03 Disbursement of Funds. (a) No later than 1:00 P.M. on the date
---------------------
specified in the Notice of Borrowing, each Lender will make available to the
Administrative Agent in New York its Pro Rata Share of the Borrowing requested
to be made on such date in the manner provided below.
<PAGE>
-3-
(b) Each Lender shall make available all amounts it is to fund under
the Borrowing in immediately available U.S. funds to the Administrative Agent to
the account specified therefor by the Administrative Agent or, if no account is
so specified, at the Administrative Agent's Office, and the Administrative Agent
will make available to the Borrower by depositing to the account specified
therefor by the Borrower or, if no account is so specified, to its account at
the Administrative Agent's Office the aggregate of the amounts so made available
in immediately available U.S. funds. Unless the Administrative Agent shall have
been notified by any Lender prior to the Funding Date that such Lender does not
intend to make available to the Administrative Agent its portion of the
Borrowing, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent, and the Administrative Agent, in
reliance upon such assumption, may (in its sole discretion and without any
obligation to do so) make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the Administrative
Agent by such Lender and the Administrative Agent has made the same available to
the Borrower, the Administrative Agent shall be entitled to recover such
corresponding amount from such Lender. The Administrative Agent shall also be
entitled to recover from such Lender or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (x) if paid by such Lender,
--- -----
the Federal Funds Rate or (y) if paid by the Borrower (and/or one or more other
Loan Parties), the then applicable rate of interest, calculated in accordance
with Section 1.06, for the Loans. The Administrative Agent shall also be
entitled to recover from any Lender an amount equal to any other losses incurred
by the Administrative Agent as a result of the failure of such Lender to provide
such amount as provided in this Agreement.
(c) No Lender shall be responsible for any default by any other
Lender in its obligation to make Loans hereunder and each Lender shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fulfil its commitments hereunder. Nothing
herein shall be deemed to relieve any Lender from its obligation to fulfill its
commitments hereunder or to prejudice any rights which any Loan Party may have
against any Lender as a result of any default by such Lender hereunder.
1.04 Notes. The Borrower's obligation to pay the principal of and
-----
interest on the Loans made to it by each Lender
<PAGE>
-4-
shall be evidenced by a promissory note (each, a "Note" and, collectively, the
----
"Notes") duly executed and delivered by the Borrower, substantially in the form
- ------
of Exhibit B, with blanks appropriately completed in conformity herewith.
---------
1.05 Conversions/Continuations. Subject to the provisions of Section
-------------------------
1.08, the Borrower shall have the option (i) to convert on any Business Day all
or any part of its outstanding Base Rate Loans equal to at least the Minimum
Borrowing Amount and in integral multiples of $2,000,000 in excess of such
amount to LIBOR Loans, (ii) to convert on any Business Day all or any part of
its outstanding LIBOR Loans equal to at least the Minimum Borrowing Amount and
in integral multiples of $2,000,000 in excess of that amount to Base Rate Loans;
provided, however, that (a) except as otherwise provided in Section 1.08(b),
- -------- -------
LIBOR Loans may be converted into Base Rate Loans only on the last day of an
Interest Period applicable thereto, (b) no partial conversion of LIBOR Loans
shall reduce the outstanding principal amount of LIBOR Loans made pursuant to a
single Borrowing to less than the Minimum Borrowing Amount (unless reduced to
zero), (c) a Loan may be continued as or converted into a LIBOR Loan only if no
Default or Event of Default is in existence on the date of conversion or
continuation, as the case may be, (d) no Loan shall be converted into a LIBOR
Loan until after the Syndication Date and (e) at no time shall there be more
than two Borrowings of LIBOR Loans; or (iii) upon the expiration of any Interest
Period applicable to LIBOR Loans, to continue all or any part of such
outstanding LIBOR Loans equal to at least the Minimum Borrowing Amount and in
integral multiples of $2,000,000 in excess of that amount as LIBOR Loans (it
being understood the succeeding Interest Period of such continued Loans shall
commence on the last day of the Interest Period of the Loans to be continued).
Each such conversion/continuation shall be effected by the Borrower by giving
the Administrative Agent at the Administrative Agent's Office written notice (or
telephonic notice promptly followed by such written notice) (each a "Notice of
---------
Conversion/Continuation"), substantially in the form of Exhibit C, no later than
- ----------------------- ---------
10:00 A.M. on the date that is three Business Days prior to the proposed date of
conversion/ continuation (one Business Day in the case of conversion into Base
Rate Loans), which shall specify the Loans to be so converted or continued, the
Type of Loans to be converted into, the Interest Period for such converted loans
and the proposed conversion/continuation date. The Administrative Agent shall
give each Lender notice as promptly as practicable of any such proposed
conversion or continuation affecting any of such Lender's Loans.
Notwithstanding the foregoing, if a Default or Event of Default is in existence
at the time any Interest Period in respect of any Borrowing of LIBOR Loans is to
expire, such Loans may not be
<PAGE>
-5-
continued as LIBOR Loans but instead shall be automatically converted on the
last day of such Interest Period into Base Rate Loans. If no Notice of
Conversion/Continuation has been duly delivered with respect to a LIBOR Loan on
or before 10:00 A.M. on the third Business Day prior to the last day of the
Interest Period applicable thereto, such LIBOR Loan shall be automatically
converted into a Base Rate Loan.
Except as provided in Section 1.08, a Notice of
Conversion/Continuation for conversion into or continuation of LIBOR Loans or
for conversion to Base Rate Loans shall be irrevocable.
The giving to the Administrative Agent of a Notice of
Conversion/Continuation shall be deemed to be a representation by the Borrower
on the date of such Notice of Conversion/Continuation that no Default or Event
of Default has occurred and is continuing under any Credit Document.
1.06 Interest. (a) The Borrower agrees to pay interest in respect
--------
of the unpaid principal amount of each Loan made to it from the date made to the
date repaid at the rates per annum set forth below:
---------
(i) if a Base Rate Loan, then at the sum of the Base Rate in
effect from time to time plus the Applicable Borrowing Margin then in
effect; or
(ii) if a LIBOR Loan, then at the sum of the LIBOR Rate applicable
to such LIBOR Loan plus the Applicable Borrowing Margin then in effect.
Subject to the terms and conditions of this Agreement, the Borrower shall be
entitled to determine, at the time a Notice of Conversion/Continuation is given
pursuant to Section 1.05, whether Loans shall be Base Rate Loans or LIBOR Loans.
(b) Interest on each Loan shall be payable in arrears on and to each
Interest Payment Date applicable to that Loan and at maturity (whether at stated
maturity, by acceleration or otherwise). In the case of Loans which were repaid
or prepaid during the prior Interest Period (in the case of LIBOR Loans) or the
prior month (in the case of Base Rate Loans) interest shall be payable through
and including the date of repayment or prepayment, as determined in accordance
with Section 2.04 hereof.
(c) All computations of interest hereunder shall be made in
accordance with Section 10.07(b).
<PAGE>
-6-
(d) The Administrative Agent, upon determining the interest rate for
any Borrowing of LIBOR Loans, shall promptly notify the Borrower and the Lenders
thereof. Such determination made in good faith shall, absent manifest error, be
final, conclusive and binding upon all parties hereto.
1.07 Interest Periods. The Interest Period applicable to all LIBOR
----------------
Loans shall be a one-month period. Notwithstanding anything to the contrary
contained above:
(a) all LIBOR Loans comprising a Borrowing shall have the same
Interest Period;
(b) the initial Interest Period for any LIBOR Loans shall commence
on the date of any conversion from Base Rate Loans, and each Interest
Period occurring thereafter (including continuations thereof) in respect of
a Borrowing shall commence on the date on which the immediately preceding
Interest Period expires;
(c) if any Interest Period begins on a date for which there is no
numerically corresponding date in the calendar month in which such Interest
Period ends, such Interest Period shall end on the last Business Day of
such calendar month;
(d) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest Period
-------- -------
would otherwise expire on a day which is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(e) no Interest Period shall extend beyond the Maturity Date; and
(f) no Interest Period shall extend beyond the Scheduled Maturity
Date unless and until the Extension Option has been exercised and is in
effect.
1.08 Special Provisions Governing LIBOR Loans. Notwithstanding the
----------------------------------------
other provisions of this Agreement, the following provisions shall govern with
respect to LIBOR Loans as to the matters covered:
(a) On an Interest Rate Determination Date, the Administrative Agent
shall determine (which determination made in good faith shall, absent
manifest error, be final,
<PAGE>
-7-
conclusive and binding upon all parties hereto) the interest rate which
shall apply to the LIBOR Loans for which an interest rate is then being
determined and shall promptly give notice thereof (in writing or by
telephone confirmed in writing) to the Borrower and to each Lender.
(b) In the event that (x) in the case of clause (i) below, the
Administrative Agent or (y) in the case of clause (ii) or (iii) below, any
Lender shall have determined (which determination made in good faith shall,
absent manifest error, be final, conclusive and binding upon all parties
hereto):
(i) on any Interest Rate Determination Date that, by reason of
any changes arising on or after the date of the Commitment Letter,
affecting United States money markets or the London interbank
Eurodollar market, (I) quotations of interest rates for the relevant
deposits are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining the rate of interest
for such Loans under this Agreement; or (II) the rates of interest
referred to in the definition of "LIBOR Base Rate", on the basis of
which the rate of interest on any LIBOR Loans for such period is
determined, do not accurately reflect the cost to the Lenders of
making or maintaining such LIBOR Loans for such period; or (III)
adequate and fair means do not exist for ascertaining the LIBOR Base
Rate in accordance with the definition thereof;
(ii) at any time that such Lender shall incur increased costs
or reductions in the amounts received or receivable hereunder with
respect to any LIBOR Loan or its obligation to make LIBOR Loans
because of (x) any change since the date of the Commitment Letter
(including changes proposed or published prior thereto) in any
applicable law, governmental rule, regulation, guideline, request or
order, whether or not having the force of law, or in the
interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline or order, such as, for example, but not limited to: (A) a
change in the basis of taxation of payments to any Lender of the
principal of or interest on the Notes or any other amounts payable
hereunder or under the Notes (except for changes in the rate of tax
on, or determined by reference to, the overall income of a Lender
pursuant to the income tax laws of the United States or of the
jurisdiction where such Lender is incorporated or the jurisdiction
where
<PAGE>
-8-
such Lender's lending office is located) or (B) a change in official
reserve requirements or compulsory loan assessment, special deposit or
similar requirement relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, any office of
such Lender, but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of the LIBOR
Rate relating to such Loans) or (y) other circumstances arising after
the date of the Commitment Letter affecting such Lender, the London
interbank Eurodollar market, or the position of such Lender in such
market; or
(iii) at any time that the making or continuance of any LIBOR
Loan has become unlawful under, or would be inconsistent with
compliance by such Lender in good faith with, any law, governmental
rule, regulation, guideline or order (whether or not having the force
of law and whether or not failure to comply therewith would be
unlawful), or has become impracticable as a result of a contingency
occurring after the date of the Commitment Letter which materially and
adversely affects the London interbank Eurodollar market;
then, and in any such event, the Administrative Agent in the case of clause
----
(i) above or such Lender in the case of clause (ii) or (iii) above shall on
such date give notice (by telephone confirmed in writing) to the Borrower
of the Loan affected and, in the case of clause (ii) or (iii) to the
Administrative Agent, of such determination (which notice the
Administrative Agent shall promptly transmit to each of the other Lenders).
Thereafter (x) in the case of clause (i) above, until such time as the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice by the Administrative Agent no
longer exist, LIBOR Loans shall no longer be available, any Notice of
Conversion/Continuation given by the Borrower with respect to the
conversion into or continuance of LIBOR Loans which have not yet been
effected shall be deemed rescinded by the Borrower and all outstanding
LIBOR Loans not prepaid on the last day of the applicable Interest Period
shall be automatically converted into Base Rate Loans, (y) in the case of
clause (ii) above, the Borrower shall pay to such Lender, upon written
demand therefor, such additional amounts (in the form of an increased rate
of, or a different method of calculating, interest or otherwise as such
Lender in its reasonable discretion shall determine) as shall be required
to compensate such Lender for such increased costs or reductions
<PAGE>
-9-
in amounts receivable hereunder (a written notice as to the additional
amounts owed to such Lender, showing the basis for the calculation thereof,
submitted to the Borrower by such Lender shall, absent manifest error, be
final, conclusive and binding upon all parties hereto) and (z) in the case
of clause (iii) above, the Borrower shall take one of the actions specified
in Section 1.08(c) as promptly as possible and, in any event, within the
time period required by law. Failure on the part of any Lender to demand
compensation for any increased costs or reduction in amounts received or
receivable with respect to any period shall not constitute a waiver of such
Lender's right to demand compensation with respect to such period or any
other period; provided, however, that no Lender shall be entitled to
-------- -------
compensation under this Section 1.08(b) for any costs incurred or
reductions suffered with respect to any date unless it shall have notified
the Borrower that it will demand compensation for such costs or reductions
not more than 180 days after such date.
(c) At any time that any LIBOR Loan is affected by the circumstances
described in Section 1.08(b)(ii) or (iii), the Borrower may (and in the
case of a LIBOR Loan affected by circumstances described in Section
1.08(b)(iii) shall) either (I) if Notice of Conversion/Continuation has
been given with respect to the affected LIBOR Loan, cancel said Notice of
Conversion/Continuation by giving the Administrative Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Lender pursuant to Section 1.08(b)(ii) or (iii),
or (II) if the affected LIBOR Loan is then outstanding, upon at least three
Business Days' notice to the Administrative Agent (or, if shorter, within
the time period required by law), require the affected Lender to convert
each such LIBOR Loan into a Base Rate Loan, or prepay such LIBOR Loan
(which conversion or prepayment, in the case of the circumstances described
in Section 1.08(a)(iii), shall occur no later than the last day of the
Interest Period then applicable to such LIBOR Loan (or such earlier date as
shall be required by law)); provided, however, that if more than one Lender
-------- -------
is affected at any time pursuant to clause (I) or (II) of this Section
1.08(c), then all affected Lenders must be treated the same pursuant to
this Section 1.08(c); provided, further, however, that the Borrower shall
-------- ------- -------
compensate all such affected Lenders as set forth in Section 1.08(e).
(d) Each Lender agrees that, upon the occurrence of any event giving
rise to the operation of Section 1.08(b)(ii) or (iii), it will, to the
extent not inconsistent with such
<PAGE>
-10-
Lender's internal policies, use reasonable efforts to make, fund or
maintain the affected LIBOR Loans of such Lender through another lending
office of such Lender if as a result thereof the additional moneys which
would otherwise be required to be paid in respect of such Loans pursuant to
Section 1.08(b)(ii) would be materially reduced or the illegality or other
adverse circumstances which would otherwise require prepayment of such
Loans pursuant to Section 1.08(b)(iii) would cease to exist, and if, as
determined by such Lender, in its reasonable discretion, the making,
funding or maintenance of such Loans through such other lending office
would not otherwise be disadvantageous to such Lender. The Borrower hereby
agrees to pay all reasonable expenses incurred by any Lender in utilizing
another lending office of such Lender pursuant to this Section 1.08(d).
(e) The Borrower shall compensate each Lender, upon written request
by that Lender, within 15 days of receipt of such written request, for all
losses (including loss of profit), expenses and liabilities (including such
factors as any interest paid by that Lender to lenders of funds borrowed by
it to make or carry its LIBOR Loans and any loss sustained by that Lender
in connection with re-employment of such funds) which that Lender may
sustain or incur or to be sustained or incurred with respect to the
Borrower's LIBOR Loans: (i) if for any reason (other than a default or
error by that Lender) a Borrowing of any such LIBOR Loan does not occur on
a date specified therefor in a Notice of Conversion/Continuation or in a
telephonic request for conversion or continuation, or a successive Interest
Period in respect of any such LIBOR Loan does not commence after notice
therefor is given pursuant to Section 1.05 (whether or not withdrawn by the
Borrower or deemed withdrawn pursuant to Section 1.08(b)), (ii) if any
prepayment or repayment (whether voluntarily pursuant to Section 2.01, as
required by Section 2.02, by acceleration or otherwise) or conversion of
any of such Lender's LIBOR Loans occurs on a date which is not the last day
of the Interest Period applicable to that Loan, (iii) if any prepayment or
repayment of any such Lender's LIBOR Loans is not made on any date
specified in a notice of prepayment or repayment given by the Borrower, or
(iv) as a consequence of (x) any other failure by the Borrower to repay
such Lender's LIBOR Loans when required by the terms of this Agreement or
(y) any election made pursuant to Section 1.08(c)(II). A certificate
prepared in good faith showing in reasonable detail the amount of such
losses, expenses and liabilities submitted to the Borrower by such Lender
shall, absent manifest error, be final, conclusive and binding for all
purposes.
<PAGE>
-11-
(f) Any Lender may make, carry or transfer LIBOR Loans at, to or for
the account of any of its branch offices or the office of an Affiliate of
that Lender.
(g) Calculation of all amounts payable to a Lender under this
Section 1.08 shall be made as though that Lender had actually funded its
relevant LIBOR Loan through the purchase of a Eurodollar deposit bearing
interest at the LIBOR Rate applicable to such LIBOR Loan in an amount equal
to the amount of the LIBOR Loan and having a maturity comparable to the
Interest Period and through the transfer of such Eurodollar deposit from an
offshore office of that Lender to a domestic office of that Lender in the
United States of America; it being understood that each Lender may fund
each of 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 1.08.
(h) During the continuance of a Default or an Event of Default, the
Borrower may not elect to have (i) a LIBOR Loan maintained as a LIBOR Loan
after the expiration of any Interest Period then in effect for that Loan or
(ii) a Base Rate Loan converted into a LIBOR Loan.
(i) The protection of this Section 1.08 shall be available to each
Lender regardless of any possible contention of the invalidity or
inapplicability of any law, regulation or other condition which shall give
rise to any demand to such Lender for compensation hereunder; provided,
--------
however, that a Lender's claim for protection shall be made in good faith.
-------
1.09 Capital Requirements. If, at any time or from time to time
--------------------
after the date of the Commitment Letter, any Lender shall have determined that
the adoption or effectiveness of any applicable law, rule, regulation or
guideline adopted pursuant to or arising out of the July 1988 report of the
Basle Committee on Lending Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption or implementation of any legal requirement of any Governmental
Authority regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency or authority charged with the interpretation
or administration thereof, or compliance by such Lender or such Lender's direct
or indirect parent with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency or authority (including in each
<PAGE>
-12-
case any such change proposed or published prior thereto), has or would have the
effect of reducing the rate of return on the capital or assets of such Lender or
such Lender's parent as a consequence of such Lender's obligations hereunder to
a level below that which such Lender or such Lender's parent could have achieved
but for such adoption, effectiveness, compliance or change or as a consequence
of an increase in the amount of capital required to be maintained by such Lender
(including in each case with respect to any Lender's Commitment or any Loan),
such Lender shall give prompt written notice thereof to the Borrower (with a
copy to the Administrative Agent) and the Borrower shall pay to such Lender such
additional amount within 15 days of receipt of such notice. Failure on the part
of any Lender to demand compensation for any reduction in return on capital with
respect to any period shall not constitute a waiver of such Lender's right to
demand compensation with respect to such period or any other period; provided,
--------
however, that no Lender shall be entitled to compensation under this Section
- -------
1.09 for any costs incurred or reductions suffered with respect to any date
unless it shall have notified the Borrower that it will demand compensation for
such costs or reductions not more than 180 days after such date. The protection
of this Section 1.09 shall be available to each Lender regardless of any
possible contention of the invalidity or inapplicability of any law, regulation
or other condition which shall give rise to any demand to such Lender for
compensation hereunder; provided, however, that a Lender's claim for protection
-------- -------
shall be made in good faith.
1.10 Extension of Maturity Date. The Borrower may, in its sole
--------------------------
discretion, by written notice to the Agents and the Lenders not fewer than 30
days prior to the Scheduled Maturity Date, elect to extend the Maturity Date to
the first anniversary of the Funding Date; provided, however, that on the
-------- -------
Scheduled Maturity Date and after giving effect to such extension (i) no Default
or Event of Default has occurred and is continuing, (ii) all representations and
warranties contained herein and in the other Credit Documents in effect at such
time shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of such date,
unless such representation and warranty expressly indicates that it is being
made as of any other specified date in which case on and as of such other date,
(iii) not more than $17,500,000 in Loans shall be outstanding hereunder and (iv)
the Sale Documents are either (x) the Sale Documents executed prior to the
Funding Date which Sale Documents have not been materially amended or modified
without the consent of the Requisite Lenders or (y) Sale Documents replacing
previously executed Sale Documents which have substantially similar terms to the
Sale Documents they replaced
<PAGE>
-13-
(such election effected in accordance with the foregoing, the "Extension
---------
Option").
- ------
SECTION 2. Payments.
--------
2.01 Voluntary Prepayments. The Borrower shall have the right to
---------------------
prepay Loans in whole at any time or in part from time to time, without premium
or penalty, on the following terms and conditions: (i) the Borrower shall give
the Administrative Agent at the Administrative Agent's Office irrevocable
written notice (or telephonic notice promptly confirmed in writing) of its
intent to prepay the Loans, the amount of such prepayment and, in the case of
LIBOR Loans, the specific Borrowing or Borrowings pursuant to which such Loans
were made, which notice shall be given by the Borrower at least three Business
Days prior to the date of such prepayment and which notice shall promptly be
transmitted by the Administrative Agent to each of the Lenders; (ii) each
partial prepayment of any Borrowing shall be in an aggregate principal amount of
at least $1,000,000 and in integral multiples of $100,000 above that amount;
provided, however, that no partial prepayment of a Borrowing shall reduce the
- -------- -------
aggregate principal amount of outstanding Loans made pursuant to such Borrowing
to an amount less than the Minimum Borrowing Amount; (iii) if LIBOR Loans are
prepaid pursuant to this Section 2.01 other than on the last day of an Interest
Period applicable thereto, the Borrower shall pay to the Lenders the amounts
required by Section 1.08(e); and (iv) each prepayment in respect of any Loans
made pursuant to a Borrowing shall be applied pro rata among such Loans.
--- ----
2.02 Mandatory Prepayments.
---------------------
(a) Requirements. The Borrower shall prepay the outstanding
------------
principal amount of the Loans as set forth in Section 2.02(b):
(i) on March 31, 1997, in an amount equal to 100% of Excess Cash
Flow of PBI and its Subsidiaries for the fiscal year ended December 31,
1996;
(ii) on the date of receipt by the Borrower Group of any Net Cash
Proceeds, in an amount equal to such Net Cash Proceeds;
(iii) on the date of receipt by the Borrower Group of any
Financing Proceeds (other than any Financing Proceeds for the Incurrence of
Indebtedness permitted under the terms of Section 6.04 hereof), in an
amount equal to such Financing Proceeds;
<PAGE>
-14-
(iv) on the date of receipt by the Borrower Group of any Radio
Property Proceeds, in an amount equal to 85% of such Radio Property
Proceeds; provided, however, that the remaining 15% of such Radio Property
-------- -------
Proceeds are deposited in the Tax Escrow Account for distribution in
accordance therewith;
(v) on the date (assuming solely for this paragraph (v) that all of
the transactions contemplated by the Sale Documents then in full force and
effect are completed) that either (x) the aggregate Radio Property Proceeds
that would be received by the Borrower Group would be less than 170% of
the Loans outstanding or (y) the aggregate Net Cash Proceeds (ignoring,
solely for purposes of this clause (v)(y), the second proviso to such
definition) that would be received by the Borrower Group from the sale of
the Radio Stations covered by such Sale Documents are less than 110% of the
Loans outstanding, in either case in an amount such that immediately
following such prepayment, such Radio Property Proceeds and such Net Cash
Proceeds would be in excess of 170% and 110% of the Loans then outstanding,
respectively; provided, however, that in the event the Borrower is required
-------- -------
to make a prepayment hereunder as a result of the termination or expiration
of any Sale Document in accordance with its terms, the Borrower Group shall
have 30 calendar days from the date of such termination or expiration in
which to enter into a Sale Document, in form and substance reasonably
satisfactory to the Agents and the Lenders, in replacement of such
terminated Sale Document at which time the Borrower shall make any
prepayments required by this clause (v); provided, further, that a
-------- -------
subsequently executed Sale Document shall be deemed reasonably satisfactory
to the Agents and the Lenders if the terms of the Sale Document are
substantially similar to the terms of the Sale Document it replaces and the
buyer of the Radio Station is reasonably satisfactory to the Agents and the
Lenders; and
(vi) on the date of receipt by the Borrower Group of any
Termination Proceeds, in an amount equal to such Termination Proceeds.
(b) With respect to each prepayment of Loans required by Section
2.02(a), the Borrower may designate the specific Borrowing or Borrowings which
are to be prepaid; provided, however, that (x) if LIBOR Loans are designated for
-------- -------
prepayment pursuant to this Section 2.02 other than on the last day of an
Interest Period applicable thereto, the Borrower shall pay to the Lenders the
amounts required by Section 1.08(e) and (y) if any prepayment of LIBOR Loans
made pursuant to a single Borrowing shall reduce the
<PAGE>
-15-
outstanding Loans made pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount, such Borrowing shall immediately be converted into
Base Rate Loans. In the absence of a designation by the Borrower, the
Administrative Agent shall, subject to the above, make such designation in its
sole discretion. All prepayments shall include amounts payable, if any, under
Section 1.08(e) and other fees due thereunder, and shall be applied to the
payment of such fees before application to principal.
2.03 Repayment. All of the Loans shall be repaid in full on the
---------
Maturity Date.
2.04 Method and Place of Payment. (a) Except as otherwise
---------------------------
specifically provided herein, all payments under this Agreement shall be made to
the Administrative Agent, for the ratable account of the Lenders entitled
thereto, not later than 1:00 P.M. (Charlotte Time) on the date when due and
shall be made in immediately available funds in lawful money of the United
States of America to the account specified therefor by the Administrative Agent
or, if no account has been so specified, at the Administrative Agent's Office,
it being understood that written notice by the Borrower to the Administrative
Agent to make a payment from the funds in the Borrower's account at the
Administrative Agent's Office shall constitute the making of such payment to the
extent of such funds held in such account. The Administrative Agent will
thereafter cause to be distributed on the same day which payment is made or
deemed to be made pursuant to paragraph (b) below funds for the payment of
principal or interest or fees ratably to the Lenders entitled to receive any
such payment in accordance with the terms of this Agreement. If and to the
extent that any such distribution shall not be so made by the Administrative
Agent in full on the same day which payment is made or deemed to be made
pursuant to paragraph (b) below, the Administrative Agent shall pay to each
Lender its ratable amount thereof and each such Lender shall be entitled to
receive from the Administrative Agent, upon demand, interest on such amount at
the Federal Funds Rate for each day from the date such amount is paid to the
Administrative Agent until the date the Administrative Agent pays such amount to
such Lender.
(b) Any payment under this Agreement which is made by the Borrower
later than 1:00 P.M. (Charlotte Time) on the date such payment is due shall, for
purposes of determining the amount of interest owing hereunder or amounts owing
under Section 1.08(e), be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be
<PAGE>
-16-
extended to the next succeeding Business Day and, with respect to payments of
principal, interest shall be payable during such extension at the applicable
rate in effect immediately prior to such extension, except that with respect to
LIBOR Loans, if such next succeeding applicable Business Day is not in the same
month as the date on which such payment would otherwise be due hereunder or
under any Note, the due date with respect thereto shall be the next preceding
applicable Business Day.
2.05 Net Payments; Tax Certificates. (a) All payments by any Loan
------------------------------
Party under any Credit Document shall be made without set-off or counterclaim
and in such amounts as may be necessary in order that all such payments (after
deduction or withholding for or on account of any Taxes of a Lender pursuant to
the income tax laws of the United States or of the jurisdiction where such
Lender is incorporated or the jurisdiction where such Lender's lending office is
located) shall not be less than the amounts otherwise specified to be paid under
any Credit Document. If any Loan Party is required by law to make any deduction
or withholding on account of Taxes from any payment due under any Credit
Document, then (i) such Loan Party shall timely remit such Taxes to the
Governmental Authority imposing the same and (ii) the amount payable under such
Credit Document will be increased to such amount which, after deduction from
such increased amount of all amounts required to be deducted or withheld
therefrom, will not be less than the amount otherwise due and payable. Without
prejudice to the foregoing, if any Lender, or any of the Agents on behalf of
such Lender, is required by law to make any payment on account of Taxes, the
Borrower shall, upon notification by such Lender or any of the Agents, promptly
indemnify such Person against such Taxes payable or incurred in connection
therewith computed in a manner consistent with the first sentence of this
Section 2.05. The Borrower shall also reimburse each Lender, upon the written
request of such Lender, for taxes imposed on or measured by the net income of
such Lender pursuant to the laws of the jurisdiction in which the principal
office or lending office of such Lender is located, or under the laws of any
political subdivision or taxing authority of any such jurisdiction, as such
Lender shall determine are or were payable by such Lender, in respect of Taxes
paid to or on behalf of such Lender pursuant to this Section 2.05. A
certificate showing in reasonable detail the calculation of any additional
amounts payable to a Lender under this Section 2.05 submitted to the Borrower by
such Lender shall, absent manifest error, be final, conclusive and binding for
all purposes upon all parties hereto. With respect to each deduction or
withholding for or on account of any Taxes, the Borrower shall promptly furnish
to each Lender such certificates, receipts and other documents as may be
required (in
<PAGE>
-17-
the judgment of such Lender) to establish any tax credit to which such Lender
may be entitled.
(b) Each Lender that is organized under the laws of any jurisdiction
other than the United States of America or any State thereof (including the
District of Columbia) agrees to furnish to the Borrower and the Administrative
Agent, prior to the first interest payment date (or in the case of any Person
that becomes a Lender after the date hereof, prior to the first interest payment
date after such Person becomes a Lender), two copies of either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 or any
successor forms thereto (wherein such Lender claims entitlement to complete
exemption from or reduced rate of U.S. federal withholding tax on interest paid
by the Borrower hereunder) and upon request of the Borrower to provide to the
Borrower and the Administrative Agent a new Form 4224 or Form 1001 or any
successor form thereto if any previously delivered form is found to be
incomplete or incorrect in any material respect or upon the obsolescence of any
previously delivered form. Notwithstanding any other provision of this Section
2.05(b), a Lender shall not be required to deliver any form pursuant to this
Section 2.05(b) that such Lender is not legally able to deliver.
(c) Notwithstanding anything in this Section 2.05 to the contrary,
the Borrower shall not be required to pay any amounts on account of Taxes
pursuant to this Section 2.05 to any Lender, or the Administrative Agent on
behalf of such Lender, to the extent that such amounts would not have been
payable if such Lender had furnished a form (properly and accurately completed
in all material respects) which it was otherwise required to furnish in
accordance with Section 2.05(b).
SECTION 3. Conditions Precedent.
--------------------
3.01 Conditions Precedent to Loans. The obligations of the Lenders
-----------------------------
to make the Loans to the Borrower hereunder are subject to the satisfaction of
each of the following conditions on or prior to the Funding Date:
(a) Credit Documents; Notes. (i) Each Credit Document shall have
-----------------------
been duly authorized, executed and delivered by each of the Loan Parties (to the
extent a party thereto) and be in full force and effect on the Funding Date.
(ii) There shall have been delivered to the Administrative Agent,
Notes executed by the Borrower to the order of each Lender in the amount and
maturity and as otherwise provided herein.
<PAGE>
-18-
(iii) The Administrative Agent shall have received (x) in accordance
with the provisions of Section 1.02, before the Funding Date, an originally
executed Notice of Borrowing signed by the chief executive officer, the chief
financial officer or the treasurer of the Borrower or by any executive officer
of the Borrower designated by any of the above-described officers on behalf of
the Borrower in writing delivered to the Administrative Agent and (y) an
Officers' Certificate from the Borrower, dated the Funding Date and satisfactory
to the Agents, to the effect that the applicable conditions in this Section 3.01
(disregarding any reference herein that such conditions be deemed satisfactory
by the Agents or any Lender) have been satisfied or waived as of such date.
(b) Officer's Solvency Certificate. The Agents and the Lenders shall
------------------------------
have received on or prior to the Funding Date, an Officer's Solvency
Certificate, dated the Funding Date and satisfactory to the Agents and the
Lenders, in the form set forth as Exhibit J.
---------
(c) Opinions of Counsel. The Agents shall have received on the
-------------------
Funding Date a written opinion or opinions addressed to the Agents and each
Lender from (i) Eckert Seamans Cherin & Mellott, counsel for the Loan Parties,
in substantially the form of Exhibit D-1, (ii) Cahill Gordon & Reindel, special
-----------
counsel to the Agents, in substantially the form of Exhibit D-2, (iii) local
-----------
counsel to the Borrower Group in each jurisdiction in Kentucky, Louisiana,
Minnesota, Oregon, South Dakota, Tennessee and Virginia, in substantially the
form of Exhibit D-3 and (iv) Wiley Rein & Fielding, special FCC counsel for the
-----------
Loan Parties, in substantially the form of Exhibit D-4, each opinion to be dated
-----------
the Funding Date, reasonably satisfactory to the Agents and the Lenders and
covering such other matters and including such changes as shall be reasonably
requested by any of the Agents.
(d) Financial Statements, Etc. (i) On or before the Funding Date,
-------------------------
the Agents and the Lenders shall have received (x) the audited Financial
Statements for each of the three fiscal years ending immediately prior to the
Funding Date, (y) the unaudited Financial Statements for each fiscal quarter
following the date of the most recent annual Financial Statements delivered in
accordance with the prior clause (y) and ending more than 120 days prior to the
Funding Date, and (z) pro forma Financial Statements as of and for the twelve-
month period ending on March 31, 1996 giving effect to the Refinancing, in each
case in form and substance satisfactory to the Agents.
<PAGE>
-19-
(ii) On or before the Funding Date, the Agents and the Lenders shall
have received a detailed budget for the fiscal year ending December 31, 1996,
which budget shall be in form and substance satisfactory to the Lenders.
(e) Sale Documents. On or prior to the Funding Date, the Agents and
--------------
the Lenders shall have received true, complete and correct copies of all Post-
Closing Sale Documents. The Post-Closing Sale Documents shall have been duly
executed and delivered by the parties thereto and shall be in full force and
effect. The Sale Documents shall show, assuming completion of all transactions
contemplated by such Sale Documents, (i) the Radio Property Proceeds that would
be received by the Borrower Group are not less than 170% of the Loans requested
(without giving effect to any application of such Radio Property Proceeds) in
the Notice of Borrowing and (ii) the Net Cash Proceeds (ignoring, solely for
purposes of this clause (e)(ii), the second proviso to such definition) that
would be received by the Borrower Group from the sale of the Radio Stations
covered by such Sale Documents are not less than 110% of the Loans requested in
the Notice of Borrowing. The Lenders shall be satisfied that the parties to
Post-Closing Sale Documents have the capacity to satisfy the closing conditions
set forth in such Post-Closing Sale Documents within (i) in the case of the
Seattle Documents, one month of the Funding Date and (ii) in the case of the
Sale Documents, six months of the Funding Date and to otherwise consummate the
transactions contemplated thereby. Proper and complete applications for
assignment of the Broadcast Licenses pursuant to the Post-Closing Sale Documents
shall have been filed with the FCC. Any required Governmental Consents
(including, but not limited to, FCC consents) for the transfer or assignment of
the Broadcast Licenses shall either (i) have been obtained or (ii) shall have
been applied for and shall not have been objected to or the subject of any
petition, protest or other adverse proceeding.
(f) Security Documents. There shall have been delivered to the
------------------
Collateral Agent on or prior to the Funding Date:
(i) all Pledged Shares (as defined in the Securities Pledge
Agreement), together with executed and undated stock powers or assignments
or endorsements in blank;
(ii) $2,610,000 (representing an estimated six-months interest on
the Loans) for deposit in the Interest Escrow Account;
(iii) evidence of the filing of (or of the making of arrangements
to file contemporaneously with the making of the
<PAGE>
-20-
Loans) appropriate UCC financing statements in each of the offices where
such filing is necessary or appropriate to grant to the Collateral Agent a
perfected first priority Lien on the Collateral to which such Security
Documents apply which Lien shall be superior to and prior to the rights of
all third persons and subject to no other Liens (except, in each case,
Prior Liens) and which Lien shall be perfected upon the filing of the
financing statements referred to above; and
(iv) certified copies of Requests for Information (Form UCC-11 or
the equivalent), equivalent reports or lien search reports or other
financing statements disclosed by such Requests for Information, together
with judgment and tax lien searches, which name any Loan Party as debtor
and which are filed in those jurisdictions in which any of the Collateral
is located and the jurisdictions in which the principal place of business
of each of the Loan Parties is located, none of which shall evidence Liens
that encumber the Collateral except for Prior Liens or Liens with respect
to which provision reasonably satisfactory to the Collateral Agent has been
made to effect their release on or prior to the Funding Date.
(g) Capital and Organizational Structure, Etc. The Agents and the
-----------------------------------------
Lenders shall be reasonably satisfied with the capital, organizational,
management, ownership and legal structure of the Borrower and its Subsidiaries,
taking into account the Refinancing and the other transactions contemplated by
the Transaction Documents.
(h) Corporate Proceedings. As of the Funding Date, all corporate and
---------------------
legal proceedings and all instruments and agreements in connection with the
Refinancing and the other transactions contemplated by the Transaction Documents
to occur on the Funding Date shall be reasonably satisfactory to the Agents and
the Lenders, and the Agents shall have received all information and copies of
all certificates, documents and papers, including records of corporate
proceedings and Governmental Consents, if any, that the Agents may have
reasonably requested from any Company in connection therewith, such documents
and papers where appropriate to be certified by proper corporate or Governmental
Authorities (including, where appropriate, incumbency certificates).
(i) Organizational Documentation, Etc. The Lenders shall have
---------------------------------
received, as to each Credit Party, (i) copies of the certificate of
incorporation of such Credit Party, and all amendments thereto, certified and
accompanied by a corporate and, if available, tax good standing certificate (or
reasonable equivalent thereof) from the secretary of state of the state of
<PAGE>
-21-
incorporation of such Credit Party and corporate good standing certificates from
each jurisdiction in which such Credit Party is qualified to do business, each
dated as of a recent date prior to the Funding Date, and (ii) the bylaws of such
Credit Party, certified as of the Funding Date by its corporate secretary or an
assistant secretary.
(j) Compliance with Law. The Agents and the Lenders shall be
-------------------
reasonably satisfied that the consummation of the transactions to be entered
into in connection with the Transaction Documents will not (i) violate any
applicable material law, statute, rule or regulation or (ii) conflict with, or
result in a default or event of default under any material agreement of any
Company.
(k) Insurance. The Agents shall be reasonably satisfied as to the
---------
insurance coverage of the Borrower and its Subsidiaries.
(l) Payment of Certain Fees. The Borrower shall have paid (i) all
-----------------------
fees payable to Merrill Lynch and First Union pursuant to the Fee Letters, (ii)
the estimated fees and expenses of Cahill Gordon & Reindel, special counsel for
the Agents, and of each other counsel (including Dow, Lohnes & Albertson,
special FCC counsel) for the Agents, in connection with the preparation,
negotiation, execution and delivery of the Credit Documents and the closing of
the transactions contemplated thereby and (iii) any other fee or other payment
due to the Agents under any Credit Document on or before the Funding Date.
(m) Transaction Documents; Consummation of the Transactions. (i) The
-------------------------------------------------------
Agents shall have received on or prior to the Funding Date all Transaction
Documents which were not delivered on the date of the Commitment Letter.
(ii) The Transaction Documents (other than the Credit Documents)
shall be in full force and effect and all conditions to the purchase of the P-I-
K Notes, the Broadcasting Notes and the Newspaper Notes by the initial
purchasers thereof shall have been satisfied. The P-I-K Notes, the Broadcasting
Notes and the Newspaper Notes shall have been issued by the Borrower and its
Subsidiaries on terms (including, but not limited to, interest rate, fees
(whether through discounts, commissions or otherwise) maturity, events of
default and remedies) consistent with the terms thereof in the drafts previously
delivered to the Lenders. The Borrower and its Subsidiaries shall have received
gross proceeds from the issuance thereof of not less than $453,000,000. The
Loans are pari-passu with the P-I-K Notes.
<PAGE>
-22-
(n) Pre-Closing Sales. The Borrower Group shall have received gross
-----------------
cash proceeds from the sale of (i) WPAT (AM) of Patterson, New Jersey and (ii)
WPAT (FM) of Patterson, New Jersey of not less than $103,000,000 which amounts
shall be used to repay the Existing Loans.
(o) Tax Sharing, Management, Consulting and Employment Agreements
-------------------------------------------------------------
and Arrangements. The Agents shall be reasonably satisfied with all tax sharing,
- ----------------
management, executive employment and consulting agreements and compensation
arrangements (including bonus and stock options), employee or management
incentive plans and other consulting or management arrangements (including the
fees payable in connection therewith) to which any Credit Party is or will be a
party.
(p) Consents, Etc. On or prior to the Funding Date, each Credit
-------------
Party shall have obtained all Governmental Consents and Third-Party Consents, if
any, required to perform in a full and timely manner all of their respective
obligations under the Credit Documents and the other Transaction Documents and
to own and operate their respective properties.
(q) Repayment of Existing Loans. The Borrower shall have repaid in
---------------------------
full the Existing Loans and the Borrower and its Subsidiaries shall have no
Indebtedness outstanding on the Funding Date, except as set forth on Schedule
--------
4.20.
- ----
(r) Environmental Matters. At least 2 days prior to the Funding
---------------------
Date, the Borrower, at its sole cost and expense, shall have delivered to the
Agents a Phase I environmental audit report prepared in connection with each
parcel of real property owned or leased by the Borrower and its Subsidiaries and
if further investigation is, in the reasonable opinion of the Agents, indicated
or warranted by such Phase I audit reports or such questionnaires, such further
audits, inquiries, investigations and reports as may be necessary or appropriate
in response thereto, the scope and substance of which shall be reasonably
satisfactory to the Agents; said reports and questionnaires to be conducted and
prepared by an environmental engineering firm reasonably acceptable to the
Agents. Any review by the Agents of any matter concerning any environmental
condition shall be at the Borrower's sole cost and expense.
(s) Certain Liabilities. The Agents shall be reasonably satisfied
-------------------
in all respects with the tax and litigation position and the contingent tax and
other liabilities of the Borrower and its Subsidiaries and their plans with
respect thereto.
<PAGE>
-23-
(t) Performance of Agreements. Parent and each Company shall have
-------------------------
performed in all material respects all agreements required to be performed on or
prior to the Funding Date, except (i) as disclosed in writing to the Agents and
the Lenders or (ii) where the failure of such performance would not result in a
Default or an Event of Default hereunder.
(u) Due Diligence. The Agents' and the Lenders' ongoing due
-------------
diligence investigation shall not have disclosed information, and neither the
Agents nor the Lenders shall have otherwise discovered information not
previously disclosed to them, that either the Agents or the Lenders reasonably
believe has had or could have a Borrower Material Adverse Effect or a material
adverse effect on the tax or accounting consequences of the transactions to be
consummated on the Funding Date.
(v) No Material Adverse Effect, Etc. No event or condition shall
-------------------------------
have occurred since the latest Financial Statements referred to in paragraph
(d)(i)(w) of this Section 3.01., or would result from the Borrowing on the
Funding Date and the use of the proceeds thereof, nor shall any litigation,
investigation, injunction or restraining order against any Credit Party or any
entity be pending, entered or threatened, that (x) has had or could reasonably
be expected to have a Borrower Material Adverse Effect or (y) would restrain,
prevent or impose burdensome conditions with respect to any transaction
contemplated by the Transaction Documents to be consummated on the Funding Date.
(w) No Default; Representations and Warranties. At the Funding Date
------------------------------------------
and after giving effect to the Borrowings to be consummated on the Funding Date,
(i) there shall exist no Default or Event of Default and (ii) all
representations and warranties contained herein and in the other Credit
Documents in effect at such time shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the Funding Date, unless such representation and warranty
expressly indicates that it is being made as of any other specific date in which
case on and as of such other date.
(x) Other Documents, Etc. Prior to the Funding Date, the Agents and
--------------------
their counsel shall have reviewed all existing material agreements of the
Borrower and its Subsidiaries and the same shall be reasonably satisfactory to
the Agents and the Lenders. On or before the Funding Date, the Agents shall
also have received copies of all other documents, instruments, opinions and
certificates as the Agents or the Lenders may reasonably request in connection
with the making of the Loans and the other transactions
<PAGE>
-24-
contemplated by the Transaction Documents to be consummated on the Funding Date.
The acceptance of the proceeds of the Loans shall constitute a
representation and warranty by each Loan Party to the Agents and each of the
Lenders that all of the conditions in this Section 3.01 have been satisfied or,
to the knowledge of the Borrower, waived in all material respects (it being
expressly understood that the foregoing shall not be construed to be any
representation or warranty by the Borrower as to the satisfaction of the Lenders
or the Agents with respect to any condition) as of the time of such acceptance.
3.02 Delivery of Documents. All of the certificates, legal opinions
---------------------
and other documents and papers referred to in Section 3.01, unless otherwise
specified, shall be delivered to each of the Agents at their respective office
(or such other location as may be specified by an Agent) for the account of each
of the Lenders and in sufficient counterparts for each Lender and, except where
specifically otherwise provided, shall be reasonably satisfactory to the Agents
or the Lenders, as the case may be.
3.03 Conditions for the Benefit of the Agents and the Lenders. The
--------------------------------------------------------
conditions set forth in this Section 3 are for the exclusive benefit of the
Lenders and the Agents and may be waived only pursuant to Section 10.12.
SECTION 4. Representations, Warranties and Agreements. In order to
------------------------------------------
induce the Lenders to enter into this Agreement and to make the Loans provided
for herein, the Borrower makes the following representations and warranties to,
and agreements with, the Lenders (with the execution and delivery of this
Agreement and the making of each Loan thereafter being deemed to constitute a
representation and warranty by the Borrower that the matters specified in this
Section 4 are true and correct in all material respects on and as of the date
hereof and as of the Funding Date unless such representation and warranty
expressly indicates that it is being made only as of a specific date):
4.01 Corporate Status; Governmental Consents. (a) Parent and each
---------------------------------------
Company (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization; and (ii) has
duly qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified, except where the failure
to be so qualified or authorized would not have a Borrower Material Adverse
Effect. Except as set forth in the schedules to the Security Agreements, no
Loan Party has, since its
<PAGE>
-25-
incorporation or formation, as the case may be, been known by or used any other
corporate, fictitious or trade name.
(b) Each Company holds all Governmental Consents necessary to own
and operate their respective properties (including the transmitter and tower
sites owned or used by the Borrower Group) in the manner and for the purposes
currently operated by such Person, except to the extent that the failure to hold
such Governmental Consents could not reasonably be expected to have a Borrower
Material Adverse Effect, and such operation, to the best of their knowledge, is
in compliance with applicable Governmental Requirements, including those
relating to zoning and environmental compliance, except those the failure to
comply with which could not reasonably be expected to have a Borrower Material
Adverse Effect.
4.02 Corporate Power and Authority. Each Credit Party has the
-----------------------------
corporate or other organizational power and authority to execute and deliver,
and perform in a full and timely manner under, each Transaction Document to
which it is a party and has taken all necessary corporate and other action to
authorize the execution, delivery and performance of each Transaction Document
to which it is a party. Each Credit Party has duly executed and delivered each
Transaction Document to which it is a party and each such Transaction Document
constitutes the legal, valid and binding obligation of such Person, enforceable
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
4.03 No Conflicts; No Defaults. (a) The execution and delivery of,
-------------------------
and the full and timely performance by each Credit Party under, each Transaction
Document to which it is a party, and the full and timely consummation of each of
the transactions contemplated thereby (i) will not contravene any applicable
provision of any law, statute, rule, regulation, order, judgment, writ,
injunction or decree of any Governmental Authority, except where such event
could not reasonably be expected to have a Borrower Material Adverse Effect,
(ii) except as to matters set forth on Schedule 4.03, will not conflict or be
-------------
inconsistent with or result in any breach of any of the material terms,
covenants, conditions or provisions of, or constitute a default (or an event or
condition that would constitute a default with the giving of notice or the
passage of time, or both) under, or (other than pursuant to the Security
Documents) result in the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the property or assets of any Company pursuant
to the terms of, any Contractual Obligation to which any Credit Party is a party
<PAGE>
-26-
or by which it or any of its property or assets is bound or to which it may be
subject, except where such event could not reasonably be expected to have a
Borrower Material Adverse Effect and (iii) will not violate any provision of the
charter or by-laws of any Credit Party.
(b) No Company is in default with respect to any of its Contractual
Obligations which default could reasonably be expected to have a Borrower
Material Adverse Effect, and no event has occurred and, to the knowledge of the
Borrower, no condition exists which, with the giving of notice or the lapse of
time or both, would, singly or in the aggregate with any other event or
condition, constitute such a default. No Company is in violation of any
material term of any of its charter instruments or by-laws. No Company is in
violation of any Governmental Requirement applicable to it or by which any such
Person or its property or assets may be bound or affected which such violation
could reasonably be expected to have a Borrower Material Adverse Effect.
(c) No event has occurred and no condition, to the knowledge of the
Borrower, exists which, singly or in the aggregate with any other event or
condition, would constitute a Default or an Event of Default.
4.04 Litigation. Except as set forth on Schedule 4.04 and except for
----------
Proceedings affecting the communications industry generally, there is no
Proceeding pending or, to the Borrower's knowledge, threatened against or
affecting any Company or any of their properties or assets (i) that could
reasonably be expected to have a Borrower Material Adverse Effect or (ii) that
would, singly or in the aggregate with all such Proceedings, have a material
adverse effect on the ability to consummate the transactions contemplated by the
Sale Documents.
4.05 Use of Proceeds. (a) The proceeds of the Loans shall be
---------------
utilized: (i) to repay a portion of the Existing Loans and (ii) to pay a
portion of the transaction fees and expenses related thereto.
(b) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of any
Margin Regulation or any other regulation of the Federal Reserve Board or the
provisions of Section 7 of the Exchange Act.
4.06 Governmental Approvals, Etc. Each of the Credit Parties has all
---------------------------
Governmental Consents and Third-Party Consents that are required to authorize or
are required in connection with
<PAGE>
-27-
(x) the execution and delivery of, the full and timely performance under, or the
consummation of any of the transactions contemplated by, any Transaction
Document or (y) the legality, validity, binding effect or enforceability of any
Transaction Document, except for (i) filings required in connection with the
perfection of the security interests granted pursuant to the Credit Documents,
(ii) the consent, approval or waiver, if any, required from the FCC in
connection with the enforcement of the Credit Documents, in each case to the
extent such enforcement may involve restrictions under the Communications Act on
foreign ownership of Broadcast Licenses or may be deemed an assignment of any
Broadcast License or may be deemed a "change of control" under the
Communications Act, (iii) any consent required under the Communications Act with
respect to any transaction contemplated by a Sale Document if such transaction
has not been consummated and (iv) such Governmental Consents or Third-Party
Consents the failure of which to have obtained could not reasonably be expected
to have a Borrower Material Adverse Effect. There are no judgments, orders,
injunction or other restraints issued or noticed by or filed with any
Governmental Authority seeking to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, the transactions
contemplated by any Transaction Document, or the making of the Loans or the full
and timely performance by any Credit Party of any of its obligations under any
Transaction Document.
4.07 Governmental Regulation. (a) Neither Parent nor any Company
-----------------------
is, or will be after giving effect to the transactions contemplated hereby,
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act or to any Federal or state statute or regulation limiting its
ability to Incur Indebtedness as contemplated by any Credit Document.
(b) Neither Parent nor any Company is, or will be after giving
effect to the transactions contemplated hereby, an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940.
4.08 True and Complete Disclosure; No Material Adverse Effect. No
--------------------------------------------------------
representation or warranty of Parent or any Company contained in any Credit
Document, any other Transaction Document or any other document, certificate or
written statement furnished to any Agent or to any Lender through any Agent by
or on behalf of any Loan Party for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which the same were made,
not misleading. The projections and pro
<PAGE>
-28-
forma financial information contained in such materials are based upon good
faith estimates and assumptions believed by the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results. There is no fact known (or which should upon the reasonable exercise
of diligence be known) to any of the Companies (other than matters of a general
economic nature or affecting the communications industry generally) that has had
or could reasonably be expected to have a Borrower Material Adverse Effect and
that has not been disclosed herein or in such other documents, certificates and
statements furnished to the Lenders or the Agents for distribution to the
Lenders by any Company for use in connection with the transactions contemplated
hereby.
4.09 Financial Condition; Financial Statements; Fiscal Year End. (a)
----------------------------------------------------------
No Loan Party is entering into the arrangements contemplated by the Credit
Documents, or intends to make any transfer or incur any obligations under any
Credit Document, with actual intent to hinder, delay or defraud either present
or future creditors. On and as of the date hereof and the Funding Date, on a
pro forma basis after giving effect to the transaction contemplated by the
- ---------
Transaction Documents and to all Indebtedness Incurred and Liens and Guarantees
created, or to be created, by each Loan Party on or prior to such date, (i) each
Loan Party is and will be Solvent; and (ii) each Loan Party is and will be
Solvent within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers.
(b) All Financial Statements delivered under Section 3.01(d)(i) or
required to be delivered under Section 5.01 were or will be prepared in
accordance with GAAP, except in the case of interim financial statements for
normal recurring year-end adjustments and the absence of footnote disclosures.
Such Financial Statements present fairly the consolidated financial position of
the Persons, to the extent included therein, to whom they pertain as at the
respective dates thereof and the results of operations and changes in the
consolidated financial position of the Persons to whom they pertain for each of
the periods then ended.
(c) Except as reflected or reserved against in the Financial
Statements most recently delivered pursuant to Section 3.01(d)(i) or 5.01, there
are no liabilities or obligations with respect to any Company of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether or
not due) which
<PAGE>
-29-
could reasonably be expected to have a Borrower Material Adverse Effect.
(d) The fiscal year of the Borrower and its Subsidiaries ends on
December 31 for financial reporting purposes.
4.10 Representations and Warranties in Other Agreements. Each of the
--------------------------------------------------
representations and warranties of each Credit Party set forth in each
Transaction Document (other than this Agreement) and in any other instrument,
document or certificate delivered in connection therewith was and is true and
correct in all material respects on and as of the date made, and on and as of
the Funding Date to the extent any such representation or warranty is affirmed
as of such date.
4.11 Security Interests. The Security Documents, together with each
------------------
of the documents and instruments required to be delivered pursuant to Section
3.01(f), once executed, delivered and filed in the applicable jurisdictions,
create, as security for the obligations purported to be secured thereby, a valid
and enforceable perfected security interest in and Lien in favor of the
Collateral Agent on all Collateral, superior to and prior to the rights of all
third persons and subject to no Liens other than Prior Liens. The respective
pledgor or assignor, as the case may be, owns (or on and after the time it
executes the respective Security Document, will own) all Collateral covered by
such Security Document free and clear of all Liens, except Prior Liens, Liens
created by the applicable Security Document and Liens permitted by the
applicable Security Document. Other than as contemplated in Sections 3.01(f),
no filings are required in order to perfect the security interests created under
any Security Document except for filings which shall have been made prior to the
execution and delivery thereof.
4.12 Tax Returns and Payments. (a) (i) Each Company (and its
------------------------
predecessors, if any, for whose tax liabilities such Company is liable) has
timely filed all tax returns required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and (ii) no Company knows of any proposed tax
assessment against any Company, except, in each case, for (x) those contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted which proceedings have the effect of staying the forfeiture of the
property or asset subject to such tax claims and for which adequate reserves
have been established in accordance with GAAP or (y) where the failure to so
file, pay or reserve or such proposed assessment could not reasonably be
expected to have a Borrower Material Adverse Effect.
<PAGE>
-30-
(b) There are no tax indemnity agreements or other arrangements
under which any Company will have any obligation or liability, either directly
or indirectly, for taxes that are or may become payable in respect of taxable
periods prior to the date hereof which could reasonably be expected to have a
Borrower Material Adverse Effect.
4.13 ERISA. (a) Each of the Companies and each of their respective
-----
ERISA Affiliates are in compliance in all material respects with all applicable
provisions and requirements of ERISA and the Code and the regulations and
published interpretations thereunder with respect to all Employee Benefit Plans,
Pension Plans and Multiemployer Plans and have performed all their material
obligations thereunder.
(b) No ERISA Events have occurred or are reasonably expected to
occur which individually or in the aggregate resulted in or might reasonably be
expected to result in (i) a material liability of any Company or any of their
respective ERISA Affiliates or (ii) the imposition of a lien on the assets of
any Company or any of their respective ERISA Affiliates or a requirement for any
Company or any of their respective ERISA Affiliates to post a bond or other
security.
(c) As of the most recent valuation date for any Pension Plan, the
Amount of Unfunded Benefit Liabilities individually, or in the aggregate for all
Pension Plans, does not exceed $125,000.
(d) Each of the Companies and each of the Foreign Plans are in
compliance in all material respects with all applicable laws and regulations
with respect to the Foreign Plans and the terms of the Foreign Plans, and all
required contributions have been made to the Foreign Plans.
4.14 Subsidiaries; Other Ventures. Schedule 4.14 lists each member
---------------------------- -------------
of the Borrower Group as of the Funding Date. As of the Funding Date, each
Subsidiary of the Borrower is a Wholly Owned Subsidiary of the Borrower. Except
as set forth in Schedule 4.14, the Borrower is not engaged in any Joint Venture
-------------
with any other Person as of the Funding Date.
4.15 Patents, Etc. Each Company has the right to use all Licenses,
------------
free from burdensome restrictions, that are necessary for the operation of their
respective businesses as presently conducted and as proposed to be conducted,
except to the extent that such restrictions or the failure to have such Licenses
could not reasonably be expected to have a Borrower Material Adverse Effect.
All of the Licenses are in full force and effect, and each
<PAGE>
-31-
of such Persons is in compliance with the foregoing, without any known conflict
with the valid rights of others, except to the extent that any failure to be in
full force and effect or be in compliance could not reasonably be expected to
have a Borrower Material Adverse Effect. No event has occurred which permits,
or after notice or lapse of time or both would permit, the revocation or
termination of any Licenses or affect the rights of such Persons thereunder,
except to the extent that any such occurrence could not reasonably be expected
to have a Borrower Material Adverse Effect.
4.16 Compliance with Laws, Etc. Each Company is in compliance with
-------------------------
all laws and regulations, including Environmental Laws and those relating to
equal employment opportunity and employee safety, in all jurisdictions in which
it is presently doing business, except to the extent the failure to be in
compliance could not reasonably be expected to have a Borrower Material Adverse
Effect.
4.17 Properties. (a) Each Company has good and (with respect to
----------
real property) marketable title to and beneficial ownership of all of its
properties reflected in the financial statements referred to in Section 3.01 or
most recently delivered pursuant to Section 5.01, free and clear of all Liens,
other than Prior Liens, Permitted Encumbrances and the Liens set forth on
Schedule 4.17. Schedule 4.17 sets forth a true list of all Liens on the
- ------------- -------------
property of the Companies as of the Funding Date, other than Permitted
Encumbrances.
(b) All items of transmitting and studio equipment of each member of
the Borrower Group (i) have been maintained in a manner consistent with
generally accepted standards of good engineering practice and (ii) will permit
the Stations and any unit auxiliaries thereto to operate in accordance with the
terms of the Communications Act and with all other applicable Governmental
Requirements, except in each case, where the failure of such condition could not
reasonably be expected to have a Borrower Material Adverse Effect.
4.18 Capital Stock. All issued and outstanding capital stock of each
-------------
Company has been duly authorized, issued and delivered and is fully paid,
nonassessable and free of preemptive rights. All requirements of the Securities
Act have been complied with in connection with the issuance of all capital stock
of each Company. The Parent owns, beneficially and of record, all of the issued
and outstanding capital stock of the Borrower.
4.19 Labor Matters. No Company has experienced any strike, labor
-------------
dispute, lockout, slowdown or work stoppage due to
<PAGE>
-32-
labor disagreements which could reasonably be expected to have a Borrower
Material Adverse Effect and, to the knowledge of the Borrower, there is no such
strike, dispute, lockout, slowdown or work stoppage threatened against any such
Person. No Company has engaged in any unfair labor practice.
4.20 Indebtedness. Set forth on Schedule 4.20 is a list of all
------------ -------------
Indebtedness of the Borrower and its Subsidiaries that will remain outstanding
after the Funding Date. The Borrower has heretofore provided to the Agents
true, correct and complete copies of all documents relating to any one issue of
such Indebtedness having an aggregate principal amount that equals or exceeds
$100,000. Other than as set forth on Schedule 4.20, no instrument or agreement
-------------
governing any such Indebtedness contains any restrictions on the Incurrence by
any Company of additional Indebtedness or the guarantee thereof by any Company.
4.21 Environmental Matters. Except as set forth on Schedule 4.21, or
--------------------- -------------
as could not reasonably be expected to have a Borrower Material Adverse Effect
or subject any Agent or Lender to any damages or liability:
(a) each of the Companies and the properties and assets used in
their respective businesses are in compliance with Environmental Laws, which
compliance includes the possession of all licenses, permits, registrations and
other governmental authorizations (collectively, "Environmental Authorizations")
----------------------------
required under Environmental Laws, and compliance with the terms and conditions
thereof, and to the knowledge of such Company, there are no circumstances of a
nature which may materially prevent or interfere with such Company's ability to
comply in the future with applicable Environmental Laws;
(b) there is no Environmental Notice that is (1) pending or, to the
knowledge of the Borrower, threatened against any Company or (2) pending or, to
the knowledge of the Borrower, threatened against any Person whose liability for
such Environmental Notice may have been retained or assumed by or could
reasonably be imputed or attributed by law or contract to any Company;
(c) there are no past or present actions, activities, circumstances,
conditions, events or incidents arising out of, based upon, resulting from or
relating to the operation, ownership or use of any real properties, properties
or assets currently or formerly owned, operated, leased or used by any Company
(or any predecessor in interest of any of them), including the emission,
discharge, disposal or other release of any Hazardous Material in
<PAGE>
-33-
or into the Environment, that (1) could reasonably be expected to result in the
incurrence of costs under Environmental Laws or (2) could reasonably be expected
to form the basis of any Environmental Notice against or with respect to any
Company, or against any Person whose liability for any Environmental Notice may
have been retained or assumed by or could be imputed or attributed by law or
contract to any Company;
(d) without in any way limiting the generality of the foregoing, (1)
to the knowledge of the Borrower, there are and have been no underground storage
tanks or other storage receptacles, or related piping, located on, at or under
any real properties or properties owned or operated by any Company, (2) to the
knowledge of the Borrower, there are no and have been no PCBs used or stored by
any Company and (3) to the knowledge of the Borrower, there is no asbestos
contained in or forming part of any building, building component, structure or
office space located on, at or under any real properties or properties owned or
operated by any Company; and
(e) each Borrower has given the Agents access to all records and
files in its possession or otherwise available to any of them relating to actual
or potential material compliance or material liability issues of any Company
under Environmental Laws, including all reports, studies, analyses, tests or
monitoring results pertaining to the existence of Hazardous Materials or any
other environmental concern relating to the properties or assets currently or
formerly owned, operated, managed, leased, used or controlled by any Company or
otherwise concerning compliance with or liability under Environmental Laws.
4.22 Broker's Fees. No broker's or finder's fee or commission will
-------------
be payable by any Company with respect to the offer, issue and sale of any Note
or the Borrowing of any Loan or the execution, delivery and performance of any
other Transaction Document, and the Borrower hereby agrees to indemnify the
Lenders against and hold them harmless from any claim, demand or liability for
broker's or finder's fees alleged to have been incurred in connection with (i)
any such offer, issue and sale (other than claims arising out of actions taken
solely by any Lender with respect thereto), or (ii) the Borrowing of any Loan or
(iii) the execution, delivery and performance of any Credit Document and any
expenses, including reasonable legal fees, arising in connection with any such
claim, demand or liability in respect of broker's or finder's fees.
4.23 Disaster. Neither the business nor the properties of any
--------
Company has been affected by any fire, explosion, accident, or dispute, drought,
storm, hail, earthquake, embargo, act of God
<PAGE>
-34-
or of the public enemy or other casualty (whether or not covered by insurance)
which could reasonably be expected to have a Borrower Material Adverse Effect.
4.24 Insurance. The Borrower and its Subsidiaries have insurance
---------
policy binders from financially sound and reputable insurers or maintain with
such insurers valid and collectible insurance with respect to their respective
assets and businesses which is required to be obtained and maintained by them
pursuant to Section 5.03.
4.25 FCC Matters. (a) Schedule 4.25A correctly sets forth all of
----------- --------------
the Broadcast Licenses held by the Borrower and its Subsidiaries and correctly
sets forth the expiration date, if any, of each such Broadcast License. No
Company, other than a Loan Party, holds a Broadcast License (other than a
Seattle License) related to the ownership or operation of a Radio Station. Each
Broadcast License issued by the FCC in the name of the Borrower or such
Subsidiary and, to the best of the Borrower's knowledge, each Broadcast License
issued to any predecessor, was duly and validly issued pursuant to procedures
that comply in all material respects with all applicable Governmental
Requirements, and the Borrower has no knowledge of the occurrence of any event
or the existence of any condition that could reasonably be expected to lead to
the revocation or suspension of any such Broadcast License. The Broadcast
Licenses listed in Schedule 4.25A comprise all of the licenses, permits and
--------------
other authorizations required (other than for auxiliary broadcast stations and
receive-only earth stations) to be obtained from or granted by the FCC for the
lawful conduct and operation of the Stations in the manner and to the full
extent they are contemplated to be conducted, and none of such Broadcast
Licenses is subject to any restriction or condition that would limit, in any
material respect, such operation of such Stations. Each such Broadcast License
is in full force and effect and each holder thereof is in substantial compliance
therewith with no known conflict with the valid rights of others that could
reasonably be expected to have a Borrower Material Adverse Effect. No event has
occurred that permits, or after notice or lapse of time or both would permit,
the revocation, termination or materially adverse modification of any such
Broadcast License that could reasonably be expected to have a Borrower Material
Adverse Effect. The Borrower has no reason to believe that any of the Broadcast
Licenses listed on Schedule 4.25A will not be renewed In the Ordinary Course.
--------------
(b) Except as set forth in Schedule 4.25B, Parent and each Company
--------------
has duly filed in a timely manner all material filings (including ownership and
employment reports) that are required to be filed by any of them under the
Communications Act or in the
<PAGE>
-35-
Stations' local public inspection files and are in all material respects in
compliance with all provisions of the Communications Act applicable to them,
including the rules and regulations of the FCC relating to the broadcast of
radio or television signals or the operation of the Stations, except where the
failure to duly and timely file or be in compliance could not reasonably be
expected to have a Borrower Material Adverse Effect. All such reports and
statements are substantially complete and correct in all material respects as
filed; and, other than as contemplated by the Sales Documents or as disclosed in
writing to the Agents and the Lenders, there have been no changes in the
ownership of any Broadcast License since the most recently filed ownership
reports.
(c) To the knowledge of the Borrower, except as disclosed on
Schedule 4.25C, there are no applications, complaints or Proceedings pending or
- --------------
threatened (i) before the FCC relating to the business or operations of the
Stations other than rulemaking proceedings which affect the radio or television
industry generally, (ii) before any Governmental Authority relating to the
business or operations of the Stations involving charges of illegal
discrimination under any Federal or state employment laws or regulations, or
(iii) before any Governmental Authority relating to the business or operations
of the Stations involving zoning issues under any Governmental Requirement,
except for, in each such case, any such event that could not reasonably be
expected to have a Borrower Material Adverse Effect.
4.26 Material Contracts; No Burdensome Restrictions. (a) Except as
----------------------------------------------
set forth on Schedule 4.26, no member of the Borrower Group is a party to, or in
-------------
any manner obligated under, any contract, agreement or instrument under which a
default by any party thereto could reasonably be expected to have a Borrower
Material Adverse Effect.
(b) No Contractual Obligation of any Company has, or insofar as any
Loan Party may reasonably foresee could reasonably be expected to have, a
Borrower Material Adverse Effect.
4.27 Management Agreements. Except as set forth on Schedule 4.27, no
--------------------- -------------
Company is a party to any management agreements or similar arrangements for the
provision of services to any other Person.
SECTION 5. Affirmative Covenants. The Borrower covenants and agrees
---------------------
that on the Effective Date and thereafter for so long as this Agreement is in
effect and until the Loans together with interest, fees and all other
Obligations incurred hereunder and under the other Credit Documents are paid in
full (it being
<PAGE>
-36-
understood that the Borrower shall cause each of its Subsidiaries to observe and
comply in a timely manner with each term and provision of the covenants set
forth in this Section 5 to the extent applicable to such Subsidiary):
5.01 Information Covenants. The Borrower shall furnish or cause
---------------------
to be furnished to each Lender:
(a) Annual Financial Information. As soon as available and in any
----------------------------
event by March 31, 1997, the Financial Statements of the Borrower for the
1996 fiscal year, setting forth comparative consolidated figures for the
preceding fiscal year, and a report on such Financial Statements by
independent certified public accountants of recognized national standing,
which accountants (if other than Coopers & Lybrand L.L.P.) shall be
reasonably satisfactory to the Agents and the Requisite Lenders, which
report shall not be qualified as to the scope of audit or as to the status
of the Borrower as a going concern and shall state that such Financial
Statements present fairly in all material respects the consolidated
financial position of the Borrower as at the dates indicated and the
results of their operations and their cash flows for the periods indicated
in conformity with GAAP (except for such changes with which such
accountants concur) and that the examination by such accountants was
conducted in accordance with generally accepted auditing standards.
(b) Quarterly Financial Information. As soon as available and in any
-------------------------------
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Borrower, commencing with the
first fiscal quarter ending after March 31, 1996, the Financial Statements
of the Borrower for such quarterly period and for the elapsed portion of
the fiscal year ended with the last day of such quarterly period, and in
each case setting forth comparative consolidated figures for the related
periods in the prior fiscal year, subject to normal year-end audit
adjustments.
(c) Monthly Financial Information. As soon as practicable and in any
-----------------------------
event within 30 days after the end of each month, commencing with April
1996, (i) the consolidated statement of cash flow from operations of the
Borrower and its Subsidiaries and the consolidated and consolidating
balance sheet and income statement of the Borrower and its Subsidiaries
for such fiscal month and for the period from the beginning of the then
current fiscal year to the end of such fiscal month, subject to normal
year-end audit adjustments and
<PAGE>
-37-
(ii) a projection of consolidated cash flow from operations, on a monthly
basis, for the succeeding four months.
(d) Accountants' Review. Together with each delivery of Financial
-------------------
Statements pursuant to subsection (a) of this Section 5.01 above, a written
statement by the independent public accountants of the Borrower giving the
report thereon (i) stating that their audit examination has included a
review of the terms of Sections 5, 6, 7 and 8 of this Agreement as they
relate to accounting matters, (ii) stating whether, in connection with
their audit examination, any condition or event that constitutes a Default
or Event of Default has come to their attention, and if such a condition or
event has come to their attention, specifying the nature and period of
existence thereof; provided, however, that such accountants shall not be
-------- -------
liable by reason of any failure to obtain knowledge of any such Default or
Event of Default that would not be disclosed in the course of their audit
examination, and (iii) stating that based on their audit examination
nothing has come to their attention that causes them to believe that the
information contained in the Compliance Certificates delivered pursuant to
Section 5.01(f) for the fiscal year covered by their audit examination is
not stated in accordance with the terms of this Agreement.
(e) Yearly Budgets. By January 31, 1997, budgets of the Borrower and
--------------
its Subsidiaries in reasonable detail for each month of the 1997 fiscal
year, as customarily prepared by management for its internal use, setting
forth, with appropriate discussion, the principal assumptions upon which
such budgets are based. Together with each delivery of Financial
Statements pursuant to Section 5.01(a), (b) and (c), a comparison of the
current year-to-date financial results against the budgets previously
provided or required to be submitted pursuant to this subsection (e) shall
be presented.
(f) Compliance Certificate. Together with each delivery of Financial
----------------------
Statements pursuant to Section 5.01(a) and (b), a Compliance Certificate of
the Borrower.
(g) Management Letters. Within ten (10) Business Days of receipt, a
------------------
copy of any "management letter" submitted to the Borrower by its
independent accountants in connection with any annual audit made by them of
the books of the Borrower and its Subsidiaries.
(h) Investor Information; SEC Filings. Promptly upon their becoming
---------------------------------
available, copies of all Financial Statements,
<PAGE>
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reports, notices and proxy statements sent or made available generally by
the Borrower or any of its Subsidiaries to its security holders, of all
regular and periodic reports and all registration statements and
prospectuses, if any, filed by the Borrower or its Subsidiaries with any
securities exchange or with the SEC, and of all press releases and other
statements made available generally by any such Person to the public
concerning material developments in the business of the Borrower or any of
its Subsidiaries.
(i) Notice of Certain Events. Promptly upon any officer of the
------------------------
Borrower or PBI or any general manager of any other Company obtaining
knowledge (x) of any condition or event which constitutes a Default or
Event of Default, or becoming aware that any Lender has given any notice or
taken any other action with respect to a claimed Default or Event of
Default under this Agreement, (y) that any Person has given any notice to
any Company or taken any other action with respect to a claimed default or
event or condition of the type referred to in Section 7.04, or (z) of a
material adverse change in the business, assets, liabilities (contingent or
otherwise), operations, condition (financial or otherwise), solvency,
prospects or material agreements of the Borrower Group, taken as a whole,
an Officers' Certificate specifying the nature and period of existence of
any such condition or event, or specifying the notice given or action taken
by such holder or Person and the nature of such claimed Default, Event of
Default, event or condition, or material adverse change, and what action
the Borrower or the Parent has taken, is taking and proposes to take with
respect thereto.
(j) Litigation Reports. (i) Promptly upon any officer of any Company
------------------
obtaining knowledge of (x) the institution of, or written threat of, any
Proceeding (or series of Proceedings arising out of the same general
allegations or circumstances) against or affecting any Company or any
property of any such Person not previously disclosed to the Lenders, which
Proceeding or series of Proceedings seeks recovery from (A) any Credit
Party aggregating $500,000 or more or (B) any other Subsidiary of the
Borrower aggregating $5,000,000 or more or (y) any dispute in respect of or
the institution of, or written threat of, any Proceeding in respect of any
Contractual Obligation of any Loan Party which could reasonably be expected
to have a Borrower Material Adverse Effect, notice thereof to the Agents
and the Lenders and, upon request, prompt notice of the status of any such
Proceeding.
<PAGE>
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(ii) In addition to the information described in clause (i) above,
such other information as may be reasonably available to the Borrower to
enable the Lenders and their counsel to evaluate such matters.
(k) FCC Proceedings, Etc. Promptly upon their becoming available (i)
--------------------
a copy of all ownership reports filed with the FCC with respect to any
Company, (ii) a copy of any order or notice of the FCC or any other
Governmental Authority or a court of competent jurisdiction which relates
to any Broadcast License or any application therefor (other than orders or
notices which affect the radio or television broadcast industries generally
or which could not reasonably be expected to have a Borrower Material
Adverse Effect) or which refuses (or threatens to refuse) renewal or
extension of, or revokes, cancels, suspends or terminates (or threatens to
revoke, cancel, suspend or terminate), the authority of any Company to
operate a Station and with respect to any such refusal, revocation,
cancellation, suspension or termination, written notice specifying the
reasons for such revocation, cancellation, termination or denial, the
anticipated effect thereof, and the actions, if any, being taken by the
Borrower to remedy the same, (iii) a copy of any competing application
filed with respect to any Broadcast License or any application therefor,
(iv) a copy of any material citation, notice of violation or order to show
cause from the FCC directed to the Parent or any Company or any complaint
directed to Parent or any Company to which the FCC has requested an answer,
(v) notice of any other action taken or threatened to be taken by any
Governmental Authority (including the FCC) which could reasonably be
expected to have a Borrower Material Adverse Effect, and (vi) a copy of all
material information required to be filed by Parent or any Company in
respect of the business conducted by them with the FCC or any similar
Governmental Authority.
(l) Accounting Changes. Prior to the effectiveness thereof,
------------------
information relating to any proposed change in the accounting treatment or
reporting practices of the Borrower and its Subsidiaries, the nature or
scope of which materially affects the calculation of any component of any
financial covenant, standard or term contained in this Agreement.
(m) Other. With reasonable promptness, such other information and
-----
data with respect to the Borrower and its Subsidiaries or any other entity
in which the Borrower has an investment as from time to time may be
reasonably requested by any Agent or any Lender.
<PAGE>
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5.02 Books, Records and Inspections. Each Company shall keep true
------------------------------
books of records and accounts in which full and correct entries will be made of
all its business transactions, and will reflect in its Financial Statements
adequate accruals and appropriations to reserves, all in accordance with GAAP.
Each Company shall permit, upon reasonable prior notice to the chief financial
officer of the Borrower, officers and designated representatives of any of the
Agents or Lenders to visit and inspect any of the properties or assets of any
Company in whosesoever possession, and to examine the books of account of such
Company and discuss the affairs, finances and accounts of such Company with, and
be advised as to the same by, its officers and independent accountants (in the
presence of such officers), all at such reasonable times and intervals and to
such reasonable extent as any of the Agents or Lenders may reasonably request.
5.03 Maintenance of Property; Insurance.
----------------------------------
(a) Except as otherwise permitted hereunder or where the failure would not
reasonably be expected to have a Borrower Material Adverse Effect, each Company
shall maintain or cause to be maintained in good repair, working order and
condition (subject to normal wear and tear) all properties used in its
businesses and in a manner consistent with generally accepted standards of good
engineering practice and from time to time shall make or cause to be made all
appropriate repairs, renewals and replacements thereof and will maintain and
renew as necessary all licenses, permits and other clearances necessary to use
and occupy such properties.
(b) The Borrower and its Subsidiaries shall maintain or cause to be
maintained, with financially sound and reputable insurers, insurance (including
business interruption insurance) with respect to its properties and business
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly situated, of such types and in such amounts as are customarily carried
under similar circumstances by such other corporations to the extent that such
types and such amounts of insurance are available at commercially reasonable
rates. Each Loan Party shall maintain such insurance as may be required to
comply with each Security Document and shall otherwise comply with all
provisions of the Security Documents relating to insurance. Each Company shall
furnish to each Lender, upon reasonable request, information as to the insurance
carried.
5.04 Payment of Taxes. Each Company shall pay and discharge all
----------------
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits, or upon any properties belonging to it, prior to
the date on which material
<PAGE>
-41-
penalties attach thereto, and all lawful claims which, if unpaid, might become a
Lien or charge upon any of its properties or cause a failure or forfeiture of
title thereto; provided, however, that no Company shall be required to pay any
-------- -------
such tax, assessment, charge, levy or claim that is being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted if
it has maintained adequate reserves with respect thereto in accordance with GAAP
and if such proceedings would stay any forfeiture of any property or assets of
such Company.
5.05 Corporate Franchises. Each Company shall do, or cause to be
--------------------
done, all things necessary to preserve and keep in full force and effect its
existence, rights and authority, except where such failure to keep in full force
and effect such rights and authority would not have a Borrower Material Adverse
Effect; provided, however, that one Wholly Owned Subsidiary of PBI may be merged
-------- -------
with or into another Wholly Owned Subsidiary of PBI.
5.06 Governmental Consents and Governmental Requirements. Except
---------------------------------------------------
where the failure to do so would not have a Borrower Material Adverse Effect,
each Company shall (a) apply for, diligently pursue and obtain or cause to be
obtained, and thereafter maintain in full force and effect, all Governmental
Consents that shall now or hereafter be necessary under any Governmental
Requirement for (i) land use, public and employee health and safety, pollution
or protection of the environment, (ii) the grant by any Loan Party of the
security interests and Liens granted by any of the Security Documents and for
the validity and enforceability thereof or for the perfection of and the
exercise by the Agents and Lenders of their rights and remedies thereunder and
(iii) the operation of the business of and ownership of the properties of such
Company, (b) comply in all material respects at all times with all provisions of
all Governmental Consents and all other material agreements, licenses and leases
to which it is a party or of which it is a beneficiary and suffer no loss or
forfeiture thereof or thereunder and (c) comply in all material respects at all
times with all provisions of all other limitations, restrictions, obligations,
schedules, timetables and reporting requirements of any Governmental
Requirement. Each Company shall notify the Agents in the event of any, and
provide the Agents with a copy of all notices of, denial, suspension or
revocation of any material Governmental Consents.
5.07 ERISA. The Borrower shall furnish to the Agents and each of the
-----
Lenders:
(a) promptly upon becoming aware of the occurrence of or forthcoming
occurrence of any ERISA Event, a written notice
<PAGE>
-42-
specifying the nature thereof, what action the Borrower or any of its
Subsidiaries or any of their respective ERISA Affiliates has taken, is
taking or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto; and
(b) with reasonable promptness, copies of (i) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by a
Company or any of its ERISA Affiliates with the Internal Revenue Service
with respect to each Pension Plan, (ii) all notices received by a Company
or any of its ERISA Affiliates from a Multiemployer Plan sponsor or any
governmental agency concerning an ERISA Event, and (iii) such other
documents or governmental reports or filings relating to any Employee
Benefit Plan as any of the Agents shall reasonably request.
5.08 Performance of Obligations. Each Company shall perform in all
--------------------------
material respects all of its obligations under the terms of each mortgage,
indenture, security agreement, other debt instrument and material contract by
which it is bound or to which it is a party, except where such nonperformance
would not have a Borrower Material Adverse Effect.
5.09 End of Fiscal Years; Fiscal Quarters. Each Company shall, for
------------------------------------
financial reporting purposes, maintain the accounting periods maintained by it
on the Funding Date, consistent with the past practice and procedures of such
Company.
5.10 Preservation of Status as Senior Indebtedness. Each Loan Party
---------------------------------------------
shall promptly take all action reasonably requested by any of the Agents at any
time to protect, preserve and give effect to the status of the Lenders and the
Agents as the holders of senior indebtedness within the meaning of any agreement
or instrument relating to any Indebtedness of such Loan Party which is
expressly subordinated in right of payment to any other Indebtedness of such
Loan Party.
5.11 Performance and Enforcement Under Certain Agreements. Each
----------------------------------------------------
Company shall diligently and in good faith promptly perform in all material
respects all of its agreements and covenants under each Transaction Document and
Sale Document and each document and instrument related thereto or delivered in
connection with any thereof, in each case, to the extent reasonably within its
control. Subject to the provisions of the next sentence and the last sentence
of this Section 5.11, each Company shall (A) diligently and in good faith
promptly pursue the performance of
<PAGE>
-43-
each other party to each such document, and (B) diligently seek the enforcement
of all rights and remedies under each such document, except, in each case, where
the failure to do so could not reasonably be expected to have a Borrower
Material Adverse Effect. Each Company shall confer with the Agents, on behalf
of the Lenders, in enforcing or waiving any material rights of any Company under
any such document. The foregoing shall not prevent any Loan Party from
terminating any Sale Document in accordance with the terms thereof prior to the
closing thereunder.
5.12 Pledge of Additional Collateral. Subject to applicable FCC
-------------------------------
requirements or prohibitions, promptly, and in any event within 30 days, after
the acquisition of any Additional Collateral, each Loan Party shall take all
action necessary or desirable, including the filing of appropriate financing
statements under the provisions of the UCC or applicable Governmental
Requirements in each of the offices where such filing is necessary or
appropriate, to grant the Collateral Agent a perfected first priority Lien on
such property or asset (or comparable interest under foreign law in the case of
any foreign property or asset) pursuant to and to the full extent required by
the Security Documents and this Agreement. The costs of all actions taken by
the parties in connection with the pledge of Additional Collateral, including
reasonable costs of counsel for the Lenders, shall be for the account of the
Borrower, which shall pay all sums due on demand.
5.13 Security Interests. Subject to applicable FCC requirements or
------------------
prohibitions, (a) each Loan Party shall perform any and all acts and execute any
and all documents (including the execution, amendment or supplementation of any
financing statement, continuation statement or other statement) for filing under
the provisions of the UCC and the rules and regulations thereunder, or any other
statute, rule or regulation of any applicable Federal, state or local
jurisdiction which are necessary or advisable, from time to time, in order to
grant, continue and maintain in favor of the Collateral Agent for the benefit of
the Lenders valid and perfected Liens on the Collateral, which Liens shall be
subject only to Prior Liens.
(b) Each Loan Party shall undertake to deliver or cause to be
delivered to the Collateral Agent from time to time such other documentation,
consents, authorizations, approvals and orders, in form and substance reasonably
satisfactory to the Collateral Agent, as the Collateral Agent shall deem
reasonably necessary or advisable to perfect or maintain the Liens for the
benefit of the Lenders, including Liens on assets which are required to become
Collateral after the Funding Date.
<PAGE>
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(c) Each Loan Party party to the TV Securities Pledge Agreement
shall, at the request of the Collateral Agent, execute the Collateral Agency
Agreement.
5.14 Environmental Events. (a) Each Company shall promptly give
--------------------
notice to the Agents upon becoming aware thereof (i) of any violation of any
Environmental Law by any Company, (ii) of any Environmental Notice, inquiry,
Proceeding, investigation or other action under any Environmental Law with
respect to any Company, including a request for information or a notice of
potential liability from any foreign, Federal, state or local environmental
agency or board or any other Person, or (iii) of the discovery of the release
other than in compliance with Environmental Laws of any Hazardous Material in
excess of reportable or allowable standards or levels under any Environmental
Law, or in a manner or amount which could reasonably be expected to result in
liability of any Company under any Environmental Law, in each case which could
reasonably be expected to have a Borrower Material Adverse Effect or subject
any of the Agents or Lenders to any liability, loss or damages.
(b) In the event of the presence of any Hazardous Material on
properties or assets used in the business of any Company, which presence is in
violation of, or could reasonably be expected to result in liability to such
Company under, any Environmental Law, in each case that could reasonably be
expected to have a Borrower Material Adverse Effect or subject any of the Agents
or Lenders to any liability, loss or damages, each Company, upon discovery
thereof, shall take all reasonably necessary steps to initiate and expeditiously
complete all investigative, remedial, removal, response, corrective and other
action to mitigate and eliminate any such adverse effect, and shall keep the
Agents informed of their actions and the results.
(c) Each Company shall provide the Agents with copies of (i) all the
closing or post-closing Environmental Notifications without regard to
materiality and (ii) any notice, submittal or documentation provided by any
Company to any Person under any Environmental Law if the matter that is the
subject of the notice, submittal or other documentation would have a Borrower
Material Adverse Effect or subject any of the Agents or Lenders to any
liability, loss or damages. Such Environmental Notifications notice, submittal
or documentation shall be provided to the Agents promptly and, in any event,
within five Business Days after such material is provided to such Person.
5.15 Additional Loan Parties. In the event that PBI acquires or
-----------------------
forms any Subsidiary after the date hereof or the
<PAGE>
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Borrower acquires or forms any Subsidiary which holds assets used in radio or
television broadcasting after the Funding Date, then, on or before the
consummation of any acquisition or upon such Person becoming a Subsidiary of the
Borrower, as the case may be, the Borrower shall cause such Subsidiary to
execute and deliver all such agreements, guarantees, pledges, assignments,
documents and certificates (including any amendments to the Credit Documents) as
the Agents may reasonably request and do such other acts and things as the
Agents may reasonably request in order to have such Subsidiary guarantee the
Obligations, grant to the Collateral Agent ratably on behalf of the Lenders, a
duly perfected first priority Lien (subject to no other Liens other than Prior
Liens) on all personal property of such Subsidiary to effect fully the purposes
of the Credit Documents and to provide for payment of the Obligations in
accordance with the terms of the Credit Documents. Without limiting the
generality of the foregoing, in such event, (i) such Additional Loan Party shall
execute and deliver to the Agents and the Lenders, as appropriate, (A) a
Subsidiary Guarantee (or become a party to the Subsidiary Guarantee) and
thereafter shall be a Guarantor for all purposes under the Credit Documents, and
(B) all Security Documents as the Agents or the Requisite Lenders reasonably may
deem necessary or appropriate.
5.16 Broadcast Licenses. Except as contemplated by the Sale
------------------
Documents or to the extent that the failure to do so could not reasonably be
expected to have a Borrower Material Adverse Effect, each member of the Borrower
Group shall use its best efforts to keep in full force and effect all of the
Broadcast Licenses of the Borrower Group.
5.17 Corporate Separateness. Each Company shall take all such
----------------------
actions as are necessary to keep the operations of the Parent separate and apart
from those of the Companies, including ensuring that all customary formalities
regarding its corporate existence are followed. No Company shall take any
action, or conduct its affairs in a manner, which is likely to result in the
assets and liabilities of the Companies being substantively consolidated with
those of the Parent or with those of the Parent in a bankruptcy, reorganization
or other insolvency proceeding.
SECTION 6. Negative Covenants. The Borrower covenants and agrees that
------------------
on the Effective Date and thereafter for so long as this Agreement is in effect
and until the Loans together with interest, fees and all other Obligations
incurred hereunder and under the other Credit Documents are paid in full (it
being understood that the Borrower shall cause each of its Subsidiaries to
observe and comply in a timely manner with each term and
<PAGE>
-46-
provision of the covenants set forth in this Section 6 to the extent applicable
to such Subsidiary):
6.01 Conduct of Business. No Company shall (a) engage in any
-------------------
business other than (i) the business engaged in by such Company on the Effective
Date, and similar or related businesses, (ii) such other lines of business
substantially similar to the business engaged in by the Borrower and its
Subsidiaries on the Effective Date and (iii) such other lines of business as may
be consented to by the Agents and the Requisite Lenders, (b) except as permitted
by Section 6.15, cancel any material claim or debt, except for consideration In
the Ordinary Course or (c) enter into any management agreement with any Person,
except In the Ordinary Course or as otherwise permitted hereunder.
6.02 Amendments or Waivers of Certain Documents. After the Effective
------------------------------------------
Date, (a) no Company shall, without the prior written consent of the Requisite
Lenders, which consents shall not be unreasonably withheld, amend the terms of
its certificate of incorporation or bylaws or any agreement entered into by such
Company with respect to its equity interests and (b) no Company shall amend or
waive compliance with or consent to a departure from, or consent to any action
or failure to act under, any of the terms or provisions of any Existing Debt,
any Transaction Document, the Tax Sharing Agreement, the Broadcasting Facility,
the Newspaper Facility or any other material contract, lease, license or
agreement of the Borrower and its Subsidiaries, except in the case of each of
clauses (a) and (b) of this Section 6.02, to such extent as could not reasonably
be expected to be, individually or in the aggregate, materially adverse to the
Borrower and its Subsidiaries, the Agents or the Lenders.
6.03 Liens and Related Matters. (a) No Company shall create, incur,
-------------------------
assume or suffer to exist or remain in effect any Lien upon or with respect to
any item constituting Collateral now owned or hereafter acquired, or sell any
such property or assets subject to an understanding or agreement, contingent or
otherwise, to repurchase such property or assets or assign any right to receive
income or profits, or file or permit the filing of any financing statement under
the UCC or any other similar notice of Lien under any similar recording or
notice statute, except the Lien of the Security Document relating thereto and
Prior Liens applicable thereto. Neither the Borrower nor any of its
Subsidiaries shall create, incur, assume or suffer to exist or remain in effect
any Lien upon or with respect to any property or assets of such Person that does
not constitute Collateral, whether now owned or hereafter acquired, or sell any
such property or assets subject to an understanding or agreement, contingent or
<PAGE>
-47-
otherwise, to repurchase such property or assets or assign any right to receive
income or profits, or file or permit the filing of any financing statement under
the UCC or any other similar notice of Lien under any similar recording or
notice statute, except for Permitted Encumbrances.
(b) If any member of the Borrower Group shall create or assume any
Lien upon any of its properties or assets, or on any income or profits
therefrom, whether now owned or hereafter acquired, other than Liens permitted
by the provisions of this Section 6.03, it shall make or cause to be made
effective provisions whereby the Obligations will be secured by such Lien
equally and ratably with any and all other Indebtedness or other obligation
thereby secured as long as any such Indebtedness or other obligation shall be
secured; provided, however, that the foregoing shall not be construed as a
-------- -------
consent by the Requisite Lenders or any Lender to any creation or assumption of
any such Lien not permitted by the provisions of this Section 6.03.
(c) Except (I) with respect to specific property encumbered pursuant
to a Lien permitted to be incurred pursuant to clauses (ii), (iii) or (iv) of
the definition of Permitted Encumbrances, (II) with respect to specific property
to be sold pursuant to an executed agreement with respect to an Asset Sale
consummated in accordance with this Agreement, (III) pursuant to the terms of
the Broadcast Indenture, the Newspaper Indenture or the P-I-K Indenture as in
effect on the date hereof or (IV) pursuant to the terms of the Broadcasting
Facility and the Newspaper Facility, no Company shall enter into any agreement
after the Funding Date (other than the Credit Documents) prohibiting or
restricting in any manner (directly or indirectly and including by way of
covenant, representation or warranty or event of default) (i) the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired, (ii) any Incurrence of any Indebtedness or Contingent
Obligation, (iii) the sale, disposition or pledge of any of its assets, except
restrictions in a Capital Lease or other purchase money financing agreement
permitted hereunder relating to the asset financed thereunder, (iv) any
Investments of the Borrower, (v) any Capital Expenditures by the Borrower, (vi)
any acquisition, merger or consolidation involving the Borrower or (vii) any
change in control of the Borrower.
(d) No Company shall create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind (whether
arising by operation of law, by agreement, by its articles of incorporation,
bylaws or other constituent documents of such Subsidiary, or otherwise) on the
<PAGE>
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ability of any Subsidiary of the Borrower to (i) pay dividends or make any other
distribution on any of such Subsidiary's capital stock, partnership interests or
other interests, as the case may be, owned by the Borrower, (ii) make loans or
advances to, or guarantee any Indebtedness or any other obligation of, the
Borrower or (iii) transfer any of its property or assets to the Borrower,
except: (1) restrictions pursuant to the Credit Documents; (2) legal
restrictions of general applicability under the corporation law of the state in
which such Subsidiary is incorporated (in the case of a Subsidiary which is a
corporation), and fraudulent conveyance or similar laws of general applicability
for the benefit of creditors of such Subsidiary generally; (3) legal
restrictions of general applicability applying to the Borrower Group arising
under the Communications Act; (4) restrictions contained in the Broadcast
Indenture and the Newspaper Indenture as in effect on the date hereof; and (5)
restrictions contained in the Broadcasting Facility and the Newspaper Facility.
6.04 Indebtedness. No Company shall Incur, or suffer to exist or
------------
remain liable with respect to, any Indebtedness, except:
(i) the Loans and the Guarantees;
(ii) Indebtedness owing by the Borrower to a Wholly Owned
Subsidiary which is a member of the Borrower Group or Indebtedness owing by
a Wholly Owned Subsidiary of the Borrower to the Borrower or another Wholly
Owned Subsidiary of the Borrower (which in the case of Indebtedness of any
member of the Borrower Group, is owed only to another member of the
Borrower Group); provided, however, that (x) any such Indebtedness in
-------- -------
excess of an aggregate principal amount of $10,000 outstanding at any one
time shall be evidenced by Intercompany Notes which shall, to the extent
held by a Loan Party, be pledged pursuant to a Securities Pledge Agreement
and (y) such Indebtedness shall not be subordinate to any other
Indebtedness or other obligation of such Subsidiary other than the Loans;
(iii) Existing Debt as in effect on the date of this Agreement
(including any additional P-I-K Notes issued in accordance with the P-I-K
Indenture in lieu of cash interest on the P-I-K Notes);
(iv) Indebtedness in respect of Capital Leases Incurred after the
date hereof; provided, however, that such Capital Leases are permitted
-------- -------
pursuant to Section 6.11;
<PAGE>
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(v) Contingent Obligations permitted to be Incurred under Section
6.18;
(vi) guarantees by the Borrower of Indebtedness of any Loan Party,
which Indebtedness is Incurred in accordance with this Section 6.04;
(vii) Indebtedness in an amount not to exceed at any time
$2,500,000 Incurred to finance the cost of acquisition of real or tangible
personal property; provided, however, that such Indebtedness shall not
-------- -------
exceed 100% of the cost of such property;
(viii) Indebtedness owing to any Person that is a Lender under
Interest Rate Agreements to the extent incurred to protect the Borrower
against fluctuations in interest rates on Loans hereunder;
(ix) Indebtedness of PBI and its Subsidiaries under the
Broadcasting Facility in an amount not to exceed $4,000,000; and
(x) Indebtedness Incurred to refinance any Indebtedness permitted
under clause (iii), (iv) or (vii) of this Section 6.04; provided, however,
-------- -------
that (1) the principal amount of any such refinancing Indebtedness shall
not exceed the principal amount of the Indebtedness so refinanced as of the
date of the proposed Incurrence of the refinancing Indebtedness, (2) the
refinancing Indebtedness shall have a stated maturity date no earlier than,
and a weighted average life to maturity no less than, the Indebtedness
being refinanced as of the date of such proposed refinancing, (3) if the
existing Indebtedness is expressly subordinated to the obligations of the
Borrower under the Credit Documents, then the refinancing Indebtedness
shall be at least as subordinated to the obligations of the Borrower under
the Credit Documents, (4) such refinancing Indebtedness shall be secured
only to the extent and with the assets securing the existing Indebtedness,
if at all, (5) the Borrower shall have given the Agents notice a reasonable
time in advance of such refinancing, (6) the Indebtedness being refinanced
shall be discharged contemporaneously with the Incurrence of the
refinancing Indebtedness and (7) after giving effect to such Incurrence, no
Default or Event of Default shall have occurred and be continuing.
6.05 Capital Expenditures. No Company shall make any Capital
--------------------
Expenditure for any purpose in any fiscal year of the Borrower if the aggregate
amount of all Capital Expenditures of
<PAGE>
-50-
the Borrower and its Subsidiaries for such fiscal year shall exceed $10,000,000.
6.06 Advances, Investments and Loans. No Company shall make or
-------------------------------
own any Investment, except:
(i) Investments in Cash and Cash Equivalents;
(ii) receivables owing to any of them and advances to customers and
suppliers, in each case if created, acquired or made In the Ordinary Course
and payable or dischargeable in accordance with customary trade terms;
(iii) Indebtedness Incurred in compliance with Section 6.04(ii) or
(vi);
(iv) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and customers
and in settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising In the Ordinary Course;
(v) Investments arising as a result of Capital Expenditures
permitted under Section 6.05;
(vi) Investments existing on the Funding Date as set forth on
Schedule 6.06 and as in effect on the Funding Date;
-------------
(vii) (A) Investments in capital stock of any Subsidiary of the
Borrower existing on the Funding Date to the extent thereof as of the
Funding Date plus any proceeds from the Loans and the P-I-K Notes used to
repay Existing Loans of PBI and related transaction costs; and (B)
Investments in Subsidiaries created after the Funding Date with the prior
written consent of the Requisite Lenders to the extent permitted by the
Requisite Lenders; and
(viii) additional Investments of a nature not contemplated by the
foregoing clauses (i) through (vii); provided, however, that all
-------- -------
Investments made pursuant to this clause (viii) shall not exceed $5,000,000
in the aggregate (each such Investment valued as of the date made and
excluding any appreciation thereof) at any time outstanding.
6.07 Prepayments of Existing Debt of the Borrower Group; Payments of
---------------------------------------------------------------
Cash Interest on the P-I-K Notes. (i) No Company shall make (or give any
- --------------------------------
notice in respect of) any voluntary or optional payment or prepayment or
redemption or acquisition for
<PAGE>
-51-
value of (including by way of depositing with any trustee with respect thereto
money or securities before such Indebtedness is due for the purpose of paying
such Indebtedness when due or prepaying such Indebtedness prior to its stated
maturity upon the occurrence of any event requiring such prepayment pursuant to
the terms of such Indebtedness) or exchange of any Existing Debt, except any
refinancing thereof with refinancing Indebtedness Incurred pursuant to Section
6.04(x).
(ii) No Company will make any cash interest payments on the P-I-K
Notes.
6.08 Dividends, Etc. No Company shall (i) declare or pay any
--------------
dividends or return any capital to, its stockholders or authorize or make any
other distribution, payment or delivery of property or cash to its stockholders
as such (including pursuant to a merger or consolidation of any Company, but
excluding any dividends or other distributions payable solely in shares of its
common stock), (ii) redeem, retire, purchase or otherwise acquire or retire, for
any consideration, any shares of any class of any Company's capital stock now or
hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares), (iii) except as permitted by Section
6.09, make any loan, payment, contribution or other transfer of funds or other
property to any equity holder or to any Affiliate, (iv) make any payment of
Management Fees to any Affiliate of the Borrower or the Parent or make any
payment pursuant to any tax sharing or allocation agreement or arrangement
(including the Tax Sharing Agreement), (v) make any payment of any salary, bonus
or other form of compensation to any Person who is a significant stockholder,
Affiliate or executive officer of any Company to the extent that such is
otherwise not made In the Ordinary Course of the Borrower or (vi) set aside any
funds for any of the purposes set forth in the foregoing clauses (i)-(v) (each
of the foregoing, "Dividends"), except that, with respect to clauses (ii) below
---------
of this Section 6.08, so long as no Default or Event of Default shall have
occurred and be continuing or would arise therefrom:
(i) any Subsidiary of the Borrower may pay Dividends to its parent
corporation if such parent corporation is the Borrower or a Wholly Owned
Subsidiary of the Borrower; and
(ii) the Borrower may pay cash Dividends to the Parent pursuant to
the terms of the Tax Sharing Agreement as in effect on the date hereof.
6.09 Affiliate Transactions. (a) No Company shall (i) enter into,
----------------------
carry out or permit to exist any transaction or series
<PAGE>
-52-
of transactions (including the purchase, sale, lease or exchange of any property
or asset or the rendering of any service), whether or not In the Ordinary
Course, with, or (ii) enter into, permit or suffer to exist or amend any
contract, agreement or arrangement with, any Affiliate of any Company (each, an
"Affiliate Transaction" and collectively, "Affiliate Transactions") unless such
--------------------- ----------------------
transaction has been negotiated or such relationship will be conducted in good
faith and is on terms and conditions that are fair and reasonable and no less
favorable to such Person than as such Person could reasonably obtain at the time
in a comparable arm's-length transaction with a Person other than such an
Affiliate as determined by the board of directors of such Company and evidenced
by a resolution of such board; provided, however, that (i) the aggregate amount
-------- -------
of the value of all Affiliate Transactions (other than Affiliate Transactions
listed in Section 6.09(b)) shall not exceed $100,000 for any fiscal year of the
Borrower and (ii) the Borrower shall notify and receive the prior written
consent of the Agents and the Requisite Lenders prior to any such Person's
consummating or agreeing to any Affiliate Transaction that requires any such
member of the Borrower Group to make any payments or purchase, sell, lease or
exchange any property or render any service during any calendar year the value
of which is equal to or greater than $100,000.
(b) Notwithstanding Section 6.09(a), (i) dividends otherwise
permitted pursuant to the terms of Section 6.08, (ii) payments in connection
with the Tax Sharing Agreement and (iii) the allocation of amounts paid to third
party non-Affiliate providers to Wholly Owned Subsidiaries shall be permitted.
6.10 Financial Covenants.
-------------------
(a) Minimum Cash Interest Coverage Ratio. The Borrower shall not
------------------------------------
permit the ratio of (i) Consolidated EBITDA to (ii) Consolidated Cash Interest
Expense in each case, of PBI for any four fiscal quarter period ended
immediately preceding any Determination Date occurring on or after the Funding
Date to be less than 1.1:1.0. For purposes of this Section 6.10(a),
Consolidated Cash Interest Expense shall be adjusted to give pro forma effect
---------
to (i) any Indebtedness Incurred during such period in each case as if such
Indebtedness had been incurred on the first day of the relevant period and
assuming that such Indebtedness had borne an interest rate per annum equal to
---------
the rate per annum in effect on such Indebtedness at the relevant Determination
---------
Date and (ii) the repayment of any Indebtedness repaid with the proceeds of the
Indebtedness referred to in clause (i) hereof as if such Indebtedness had been
repaid on the first day of the relevant period.
<PAGE>
-53-
(b) Maximum Total Debt Leverage Ratio. The Borrower shall not permit
---------------------------------
the Total Debt Leverage Ratio of PBI and its Subsidiaries at any Determination
Date occurring on or after the Funding Date to be more than 8.75:1.0. For
purposes of this Section 6.10(b), the Total Debt Leverage Ratio shall be
calculated after giving effect to any Indebtedness Incurred or to be Incurred by
the Borrower or its Subsidiaries after the end of such month and on or prior to
such Determination Date.
(c) Determination Date. For purposes of this Section 6.10, the
------------------
Determination Date shall be (I) the Funding Date and (II) the last day of each
fiscal quarter of the Borrower occurring after the Funding Date.
6.11 Restriction on Leases. No Company shall become liable in any
---------------------
way, whether directly or by assignment or as a guarantor or other surety, for
the obligations of the lessee under any lease, whether an Operating Lease or a
Capital Lease, unless, immediately after giving effect to the incurrence of
liability with respect to such lease, the Consolidated Rental Payments of the
Borrower Group at the time in effect during the then current fiscal year of the
Borrower shall not exceed $1,200,000.
6.12 Restriction on Tax Consolidation. No Company shall file or
--------------------------------
consent to the filing of any consolidated income tax return with any Person
other than the the Parent and its Subsidiaries as contemplated by the Tax
Sharing Agreement as in effect on the date hereof.
6.13 Sale and Lease-Backs. No Company shall become or thereafter
--------------------
remain liable as lessee or as guarantor or other surety with respect to the
lessee's obligations under any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real or personal or mixed) whether now owned or
hereafter acquired, (i) which the Borrower or such Subsidiary has sold or
transferred or is to sell or transfer to any other Person or (ii) which the
Borrower or such Subsidiary intends to use for substantially the same purpose as
any other property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to any Person in connection with such lease, if in
the case of clause (i) or (ii) above, such sale and such lease are part of the
same transaction or a series of related transactions or such sale and such lease
occur within one year of each other or are with the same other Person.
6.14 Limitation on Other Restrictions on Amendment of Credit
-------------------------------------------------------
Documents. No Company shall enter into, suffer to exist or become or remain
- ---------
subject to any agreement or instrument to which such Company is a party or by
which any Company or any property of
<PAGE>
-54-
any Company (now owned or hereafter acquired) may be subject or bound, except
for the Credit Documents, that would prohibit or restrict in any manner
(directly or indirectly and including by way of covenant, representation or
warranty or event of default), or require the consent of any Person to, any
amendment to, or waiver or consent to departure from the terms of, any of the
Credit Documents.
6.15 Sale or Discount of Receivables. No Company shall sell, with or
-------------------------------
without recourse, or discount, or otherwise sell for less than the face value
thereof, notes or accounts receivable, other than in connection with trade
discounts In the Ordinary Course or consistent with past practice.
6.16 Issuance or Disposal of Subsidiary Stock. The Borrower shall
----------------------------------------
not: (a) issue, sell, assign, pledge or otherwise encumber or dispose of any
shares of capital stock, partnership interests, or other equity securities of
(or warrants, rights or options to acquire shares or other equity securities of)
any Company, except (i) to the Borrower or any Wholly Owned Subsidiary which is
a member of the Borrower Group, (ii) to qualify directors if required by
applicable law and (iii) the pledge thereof pursuant to the Security Documents;
or (b) permit any Company to issue, sell, assign, pledge or otherwise encumber
or dispose of any of their respective or any of their respective Subsidiaries'
shares of capital stock, partnership interests, or other securities (or
warrants, rights or options to acquire any such shares or other securities),
except (i) to the Borrower or a Wholly Owned Subsidiary which is a member of the
Borrower Group, (ii) to qualify directors if required by applicable law and
(iii) the pledge thereof pursuant to the Security Documents.
6.17 Restriction on Fundamental Changes; Asset Sales. (a) No
-----------------------------------------------
Company shall alter its corporate, capital or legal structure or enter into any
transaction of merger, consolidation or other combination or engage in any other
reorganization or recapitalization, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or effect any Asset Sale or otherwise
convey, sell, lease, sub-lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any part of its business,
property or assets (including any of the capital stock or partnership interests
held by such Person in any of its Subsidiaries), whether now owned or hereafter
acquired, or acquire by purchase, lease or otherwise (in one transaction or a
series of related transactions) all or any part of the business, property or
fixed assets of, or stock or other evidence of beneficial ownership of, any
Person (other than purchases or other acquisitions of inventory, leases,
materials, property and
<PAGE>
-55-
equipment In the Ordinary Course) or agree to do any of the foregoing at any
future time, except:
(i) the Borrower Group may consummate the transactions contemplated
by the Sale Documents;
(ii) the Borrower Group may from time to time make Asset Sales;
provided, however, that (x) the consideration received shall be an amount
-------- -------
at least equal to the fair market value thereof; (y) the sole consideration
received shall be Cash and (z) the Borrower makes the prepayments required
by Section 2.02 hereof;
(iii) the Borrower and its Subsidiaries may make Investments
permitted by Section 6.06 and may lease (as lessee) real or personal
property to the extent permitted by Section 6.11;
(iv) a Company may from time to time sell worn-out or obsolete
personal property of such Company In the Ordinary Course;
(v) a Company may from time to time abandon any personal property
of such Company which is no longer useful in the business of such Company
and cannot be sold; and
(vi) a Company may make sales, transfers or other dispositions of
assets held for resale In the Ordinary Course or trade in or replace assets
In the Ordinary Course (it being expressly understood that no Broadcast
License may be sold, transferred or conveyed pursuant to this clause (vi)).
(b) The Borrower and the appropriate Loan Party shall be entitled to
obtain a release of, and the Collateral Agent shall release, items of Collateral
subject to the Security Documents that are the subject of an Asset Sale of Radio
Properties upon compliance with the terms of this Agreement and the Security
Documents.
6.18 Contingent Obligations. No Company shall create or become or be
----------------------
liable with respect to any Contingent Obligation, except:
(i) Subsidiary Guarantees;
(ii) Contingent Obligations of the Borrower Group in respect of
Operating Leases to the extent permitted under Section 6.11;
<PAGE>
-56-
(iii) Contingent Obligations of the Borrower arising from guarantees
of Indebtedness of any Wholly Owned Subsidiary of the Borrower otherwise
Incurred in accordance with Section 6.04;
(iv) Contingent Obligations of PBI and Subsidiaries relating to
programming agreements entered into In the Ordinary Course; and
(v) other Contingent Obligations not to exceed $1,000,000
outstanding at any one time.
SECTION 7. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"), whether such occurrence
----------------
shall be voluntary or involuntary or come about or be effected by operation of
law or pursuant to or in compliance with any Governmental Requirement:
7.01 Payments. The Borrower shall fail to pay (a) any installment of
--------
principal of any Loan when due (other than any installment of interest or fees),
whether at stated maturity, by acceleration, by notice of prepayment or
otherwise, or (b) any interest on any Loan or any fees or any other amount due
under any Credit Document within two (2) Business Days after the due date; or
7.02 Representations, Etc. Any representation, warranty,
--------------------
certification or statement made in writing by any Loan Party herein or in any
other Credit Document or in any statement or certificate delivered or required
to be delivered pursuant hereto or thereto or in connection herewith or
therewith shall be incorrect or misleading in any material respect on the date
as of which made or deemed to be made; or
7.03 Covenants. Any Loan Party shall (a) fail to perform or comply
---------
with any term, covenant or agreement contained in Section 2, 5.05 or 6 of this
Agreement, (b) fail to perform or comply with any term, covenant or agreement
contained in Section 5.01(i) and such default shall continue unremedied for a
period of 15 days from the date of such default, (c) fail to perform or comply
with any term, covenant or agreement contained in Section 5.03, 5.04, 5.06,
5.07, 5.10, 5.11, 5.12 or 5.13 of this Agreement and such default shall continue
unremedied for a period of 30 days from the date of such default or (d) fail to
perform or comply with any other term, covenant or agreement contained in any
Credit Document (other than those referred to in Section 7.01 or 7.02 or clauses
(a), (b) and (c) of this Section 7.03 or Section 7.12) and such default shall
continue unremedied for a period of 30 days or more after the earlier to occur
of (x) notice
<PAGE>
-57-
to such defaulting Loan Party by any of the Agents or the Requisite Lenders and
(y) the date any Loan Party otherwise obtains notice or knowledge thereof; or
7.04 Default Under Other Agreements. (a) A Section 7 Company shall
------------------------------
with respect to (I) any Indebtedness (other than (x) Obligations, (y)
intercompany debt between or among Companies or (z) Contingent Obligations)
having a principal amount in excess of $500,000 individually or in the aggregate
or (II) any Contingent Obligation having a principal amount in excess of
$500,000 individually or $2,000,000 in the aggregate:
(i) default in any payment obligation in respect thereof beyond the
period of grace, if any, provided in the instrument or agreement under
which such Indebtedness or Contingent Obligation was created; or
(ii) default in the observance or performance of any agreement or
condition relating to or contained in any instrument or agreement
evidencing, securing or relating to any such Indebtedness or Contingent
Obligation, or any other event shall occur or condition exist, if the
effect of such default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or Contingent Obligation
(or a trustee or agent on behalf of such holder or holders) to cause, any
such Indebtedness or Contingent Obligation to become due or to be redeemed
or repurchased prior to its stated maturity (or the stated maturity of any
underlying obligation) or to terminate any obligation to lend; or
(b) Any such Indebtedness or Contingent Obligation of any Section 7
Company specified in Section 7.04(a) shall be declared to be due and payable, or
required to be paid prior to the stated maturity thereof, other than by a
regularly scheduled required prepayment or a prepayment in connection with a
refinancing thereof permitted by this Agreement or in connection with any Asset
Sale involving the assets securing any such Indebtedness; or
7.05 Bankruptcy, Etc. (a) An involuntary case shall be commenced
---------------
against any Section 7 Company under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over any Section 7 Company or over all or a substantial part of the
property of any Section 7 Company shall have been entered;
<PAGE>
-58-
or an interim receiver, trustee or other custodian of any Section 7 Company for
all or a substantial part of the property of any Section 7 Company is
involuntarily appointed; or a warrant of attachment, execution or similar
process shall be issued against any substantial part of any Section 7 Company,
and any such event under this Section 7.05 continues undischarged, unbonded and
unstayed for a period of 60 days; or
(b) Any Section 7 Company shall have an order for relief entered
with respect to it or shall commence a voluntary case under the Bankruptcy Code
or any other applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; any Section 7 Company shall make any assignment for the
benefit of creditors; or any Section 7 Company shall fail or be unable, or admit
in writing of its inability, to pay its debts as such debts become due; or the
board of directors (or any committee thereof) of any Section 7 Company shall
adopt any resolution or otherwise authorize any corporate action to approve any
of the foregoing; or
7.06 ERISA Events. There shall occur one or more ERISA Events which
------------
individually or in the aggregate results in or could reasonably be expected to
result in liability of any member of the Borrower Group or any of their
respective ERISA Affiliates in excess of $500,000; or there shall exist, as of
the most recent actuarial valuation date for any Pension Plan, an Amount of
Unfunded Benefit Liabilities, individually or in the aggregate for all Pension
Plans (excluding for purposes of such computation any Pension Plans which have a
negative Amount of Unfunded Benefit Liabilities), which exceeds $500,000; or
7.07 Judgments, Etc. (i) Any money judgment, writ or warrant of
--------------
attachment, or similar process involving in any individual case a liability in
excess of $1,000,000 singly or in the aggregate (in any case to the extent not
fully covered by insurance as to which such insurer has acknowledged coverage in
writing) shall be entered or filed against any Section 7 Company or any assets
of any Section 7 Company and shall remain undischarged, unvacated, unbonded or
unstayed, as the case may be, for a period of 30 days or more or in any event
later than five days prior to the date of any proposed sale thereunder or (ii)
any final non-monetary judgment shall be rendered against any Section 7 Company
that would have a Borrower Material Adverse Effect if such judgment
<PAGE>
-59-
shall remain undischarged, unvacated or unstayed for a period of 30 days or
more; or
7.08 Change of Control. (i) Other than pursuant to the terms of any
-----------------
Sale Document, any Company (other than the Borrower) shall fail (for any reason)
to be a Wholly Owned Subsidiary of the Borrower; or (ii) the Borrower ceases to
be a Wholly Owned Subsidiary of Parent; or (iii) either Gary B. Knapp fails to
own 50% of the Capital Stock of Parent or Donald R. Tomlin, Jr. fails to
control, directly or through the Tomlin Family Trust II, 50% of the Capital
Stock of Parent, in each case, disregarding for these purposes the Warrants; or
7.09 Dissolution. Any order, judgment or decree shall be entered
-----------
against any Section 7 Company decreeing the dissolution, liquidation or split-up
of such Section 7 Company and such order shall remain undischarged or unstayed
for a period of 30 days or more; or
7.10 Obligations. Any material obligation of any Loan Party under
-----------
any Credit Document shall not be or shall cease to be, for any reason other than
the full satisfaction thereof, in full force and effect or is, or is declared to
be, null and void, or any Loan Party shall, or shall purport to, terminate,
revoke, repudiate, declare voidable or void, deny, disaffirm or otherwise
contest any Credit Document or any term or provision thereof or any of its
obligations or liabilities under any Credit Document; or
7.11 Collateral. Any Security Document (together with any other
----------
security documents delivered or to be delivered thereunder) after delivery
thereof at any time shall cease to be in full force and effect or shall for any
reason fail to create or cease to maintain a valid and duly perfected first
priority security interest in and Lien upon any of the Collateral (unless
otherwise expressly permitted under Section 6.03) other than (i) Collateral (not
including Pledged Securities) of a value less than $250,000 or (ii) to the
extent solely as a result of the Agents or any Lender failing to take any action
within their control or as a result of a release of Collateral in accordance
with the terms hereof and thereof; or
7.12 Guarantees. Any Guarantor shall default in the due performance
----------
or observance of any term, covenant or agreement (other than those set forth in
Section 7.03(a)) on its part to be performed or observed pursuant to any
Guarantee and such default shall continue unremedied for a period of 30 days or
more after the earlier to occur of (x) notice to such defaulting Guarantor by
any
<PAGE>
-60-
of the Agents or the Requisite Lenders and (y) the date such guarantor otherwise
obtains notice or knowledge thereof; or
7.13 Broadcast Licenses and Consents. (a) Any Material Broadcast
-------------------------------
License shall be suspended, cancelled, terminated or revoked for any reason; or
(b) Any Broadcast License shall be finally denied renewal for any
reason or renewed on terms which materially adversely affect the economic or
commercial value or usefulness thereof; or
(c) Other than as contemplated by the Sale Documents, the Borrower
or any of its Subsidiaries shall fail to be the licensee under each of its
respective Broadcast Licenses or otherwise fail to have all material
authorizations and licenses required to operate any Station pursuant to such
Broadcast Licenses, in each case the failure of which could reasonably be
expected to have a Borrower Material Adverse Effect; or
(d) Any Station shall for any period of 60 consecutive days operate
any radio broadcast station at less than 90% of its authorized power or any
television station at less than 80% of its authorized power; or
7.14 Sale Documents. Any Loan Party shall repudiate any Sale
--------------
Document or for any reason fail to comply with the terms thereof binding upon
such Loan Party or any Governmental Authority shall issue any injunction or
other order or ruling preventing the consummation of the transactions
contemplated by any Sale Document and such injunction, order or ruling is not
lifted or a new Sale Document relating to the affected Radio Station is not
executed, within 30 days; or
7.15 Material Adverse Effect. Any event or condition having a
-----------------------
Borrower Material Adverse Effect shall occur or exist and such default shall not
have been remedied or waived within 30 days after receipt by the Borrower of
notice from any Lender or any of the Agents of such default; or
7.16 Environmental Events. Any one or more of the events or
--------------------
conditions set forth in the following clauses (i) or (ii) shall have occurred
with respect to any Company or any Environmental Affiliate of any Company, and
such events or conditions would have a Borrower Material Adverse Effect: (i) any
past or present violation of any Environmental Law by a Company which has not
been cured to the satisfaction of the Requisite Lenders, or (ii) the existence
of any pending or threatened
<PAGE>
-61-
Environmental Notice against any Company, or existence of any past or present
acts, omissions, events or circumstances that could form the basis of any
Environmental Notice against any such Company; or
7.17 Insurance Coverage. There shall occur any lapse or adverse
------------------
change with respect to any material portion of the insurance coverage of the
Borrower and its Subsidiaries;
THEN, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agents shall, upon the written request of the
Requisite Lenders, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agents or any Lender
to enforce its claims against any Loan Party, except as otherwise specifically
provided for in this Agreement (provided, however, that, if an Event of Default
-------- -------
specified in Section 7.05 shall occur, with respect to any Loan Party, the
result which would occur upon the giving of written notice by the Agent as
specified in clause (A) below shall occur automatically without the giving of
any such notice): (A) declare the principal of and accrued interest in respect
of all Loans and all Obligations owing under any Credit Document to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
each Loan Party; or (B) direct the Collateral Agent to enforce any or all of the
remedies created pursuant to the Security Documents. Nevertheless, if at any
time within 60 days after acceleration of the maturity of the Loans, the
Borrower shall pay all arrears of interest and all payments on account of the
principal which shall have become due otherwise than by acceleration (with
interest on principal and, to the extent permitted by law, on overdue interest,
at the rates specified in this Agreement or the Notes) and all other fees or
expenses then owed under the Credit Documents and all Defaults and Events of
Default (other than non-payment of principal of and accrued interest on the
Loans and the Notes due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to Section 10.12, then the Requisite Lenders by
written notice to the Borrower may (in their absolute and sole discretion)
rescind and annul the acceleration and its consequences; but such action shall
not affect any subsequent Default or Event of Default or impair any right
consequent thereto. The provisions of the immediately preceding sentence are
intended merely to bind the Lenders to a decision that may be made at the
election of the Requisite Lenders and are not intended to benefit any Loan Party
and do not grant any Loan Party the right to require the Lenders to rescind or
annul any acceleration hereunder, even if the conditions set forth herein are
met. If an Event of Default is cured or waived in accordance with the terms of
this Agreement, it ceases (but, if waived pursuant to
<PAGE>
-62-
the terms of this Agreement, only to the extent of such waiver).
Notwithstanding anything to the contrary contained herein, the Agents agree that
they shall not take any action pursuant to this Agreement that would constitute
or result in any assignment of a Broadcast License or any change of control of
the Borrower Group if such assignment or change of control would require under
then existing law, including the Communications Act, the prior approval of the
FCC without first obtaining such prior approval of the FCC.
SECTION 8. Rules of Construction.
---------------------
8.01 Rules of Construction. (a) In this Agreement and each other
---------------------
Credit Document, unless the context clearly requires otherwise (or such other
Credit Document clearly provides otherwise), references to (i) the plural
include the singular, the singular the plural and the part the whole; (ii)
Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; (iii) agreements (including this Agreement) and other contractual
instruments include subsequent amendments, assignments, and other modifications
thereto, but only to the extent such amendments, assignments or other
modifications thereto are not prohibited by their terms or the terms of any
Credit Document; (iv) statutes and related regulations include any amendments of
same and any successor statutes and regulations; and (v) time shall be to New
York City time. Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
(b) In this Agreement and each other Credit Document, unless the
context clearly requires otherwise (or such other Credit Document clearly
provides otherwise), (i) "amend" shall mean "amend, amend and restate,
-----
supplement or modify"; and "amended" and "amendment" shall have meanings
------- ---------
correlative to the foregoing; (ii) in the computation of periods of time from a
specified date to a later specified date, "from" shall mean "from and
----
including"; "to" and "until" shall mean "to but excluding"; and "through" shall
-- ----- -------
mean "to and including"; (iii) "hereof," "herein" and "hereunder" (and similar
------ ------ ---------
terms) in this Agreement or any other Credit Document refer to this Agreement or
such other Credit Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such other Credit Document; (iv)
"including" (and similar terms) shall mean "including without limitation" (and
- ----------
similarly for similar terms); (v) with respect to the Loan Parties "knowledge"
---------
or "aware" shall mean and include (A) the actual knowledge or awareness of the
-----
Loan Parties (which shall include the
<PAGE>
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actual knowledge and awareness of the officers and directors of the Loan
Parties) and (B) the knowledge or awareness that a prudent business person would
have obtained in the conduct of his business after making reasonable inquiry and
reasonable diligence with respect to the particular matter in question; (vi)
"or" has the inclusive meaning represented by the phrase "and/or"; (vii)
--
"property" and "assets" each shall include all properties and assets of any kind
- --------- ------
or nature, tangible or intangible, real, personal or mixed, now existing or
hereafter acquired; (viii) "satisfactory to" any of the Agents or Lenders shall
---------------
mean in form, scope and substance and on terms and conditions satisfactory to
such Person; and (ix) references to "the date hereof" shall mean the date first
---------------
set forth above.
(c) In this Agreement unless the context clearly requires otherwise,
any reference to (i) an Annex, Exhibit or Schedule is to an Annex, Exhibit or
Schedule, as the case may be, attached to this Agreement and constituting a part
hereof, and (ii) a Section or other subdivision is to a Section or such other
subdivision of this Agreement.
(d) No doctrine of construction of ambiguities in agreements or
instruments against the interests of the party controlling the drafting thereof
shall apply to any Credit Document.
SECTION 9. The Agents.
----------
9.01 Appointment. (a) Each Lender hereby irrevocably designates and
-----------
appoints (i) Merrill Lynch as Agent (such term to include, for purposes of this
Section 9, the Agent acting in any other representative capacity under any other
Credit Document (other than as Administrative Agent or Collateral Agent)), and
First Union, as Administrative Agent (such term to include, for purposes of this
Section 9, the Administrative Agent acting as Collateral Agent) of such Lender
to act as specified herein and in the other Credit Documents, and each such
Lender hereby irrevocably authorizes the Agents to take such action on its
behalf under the provisions of the Credit Documents and to exercise such powers
and perform such duties as are expressly delegated to the Agents by the terms of
the Credit Documents, together with such other powers as are reasonably
incidental thereto and (ii) First Union as agent to execute the Collateral
Agency Agreement and to act as specified therein. Each Lender agrees that the
rights and remedies granted to the Agents under any Credit Document shall be
exercised exclusively by the Agents and that no Lender shall have any right
individually to exercise any such right or remedy, except to the extent, if any,
expressly provided herein or therein.
<PAGE>
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(b) Notwithstanding any provision to the contrary elsewhere in this
Agreement or in any other Credit Document:
(i) None of the Agents shall have any duties or responsibilities,
except those expressly set forth in the Credit Documents, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into any Credit Document or otherwise exist against any of
the Agents.
(ii) The duties and responsibilities of the Agents under the Credit
Documents shall be mechanical and administrative in nature, and none of the
Agents shall have a fiduciary or trust relationship with any Lender.
(iii) In performing its functions and duties under the Credit
Documents, each of the Agents shall act solely as agent of the Lenders and
does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for any Loan Party. The
provisions of this Section 9 are solely for the benefit of the Agents and
the Lenders, and no Loan Party shall have any rights as a third-party
beneficiary of any of the provisions hereof.
(iv) Neither the Agent nor the Administrative Agent shall be under
any obligation to take any action hereunder or under any other Credit
Document if the Agent or the Administrative Agent, as the case may be,
believes in good faith that taking such action may conflict with any law or
any provision of any Credit Document, or may require the Agent or the
Administrative Agent, as the case may be, to qualify to do business in any
jurisdiction where it is not then so qualified.
9.02 Delegation of Duties. Each of the Agents may execute any of its
--------------------
duties under any Credit Document by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. All fees and expenses of such agents and attorneys-in-fact shall be
paid by the Borrower on demand. None of the Agents shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care except to the extent otherwise required by Section 9.03.
9.03 Exculpatory Provisions. None of the Agents or any of their
----------------------
respective officers, directors, employees, representatives, agents, attorneys-
in-fact or Affiliates shall be (i) liable for any waiver, consent or approval
given or any action
<PAGE>
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taken or omitted to be taken by such Person under or in connection with any
Credit Document or be responsible for the consequences of any oversight or error
in judgment by such Person whatsoever, except to the extent that such action,
omission, oversight or error in judgment is determined by a court of competent
jurisdiction in a final non-appealable judgment to have resulted solely from
such Person's own gross negligence or bad faith, (ii) responsible in any manner
to any Lender for the effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any other Credit Document or
for any representations, warranties, recitals or statements made herein or
therein or made in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other documents in
connection herewith or therewith furnished or made by any of the Agents to the
Lenders or by or on behalf of any Company or any of their respective officers to
any of the Agents or Lenders or (iii) required to inspect the properties, books
or records of any Company or otherwise to ascertain, inquire or give any notice
as to (A) the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any Credit Document, (B) the
business, operations, condition (financial or otherwise) or prospects of any
Company or any other Person, (C) the use of the proceeds of the Loans or (D)
except to the extent set forth in Section 9.05, the existence or possible
existence of any Default or Event of Default.
9.04 Reliance by the Agents. Each of the Agents shall be entitled to
----------------------
rely, and shall be fully protected in relying, upon any communication,
instrument or document believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Loan Parties), independent
accountants and other experts selected by any of the Agents. If any of the
Agents requests instructions from the Lenders with respect to any act or
omission in connection with any Credit Document, it shall be fully justified in
failing or refusing to take any action under any Credit Document unless and
until and to the extent it shall have first received instructions from the
Requisite Lenders (or from the Applicable Lenders, if such Credit Document so
expressly requires) or it shall first be indemnified to its satisfaction from
time to time by the Lenders against any and all liability and expense which may
be incurred by, imposed on or asserted against it by reason of taking or
continuing to take any such action. Each of the Agents shall in all cases be
fully protected in acting, or in refraining from acting, under the Credit
Documents in accordance with a request (written or oral) of the Requisite
Lenders (or of the Applicable Lenders if such Credit Document so expressly
requires), and such request and any action
<PAGE>
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taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
9.05 Notice of Default. None of the Agents shall be deemed to have
-----------------
knowledge of the occurrence of any Default or Event of Default, other than a
default in the payment of principal or interest on the Loans hereunder, unless
it has actually received written notice from a Lender or any Loan Party
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 Agent
or the Administrative Agent receives such a notice, the Agent or the
Administrative Agent, as the case may be, shall give prompt notice thereof to
the Lenders. The Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Requisite Lenders;
provided, however, that, unless and until the Agent shall have received such
- -------- -------
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
9.06 Non-Reliance on the Agents and Other Lenders. Each Lender
--------------------------------------------
expressly acknowledges for the benefit of the Borrower and the Agents that none
of the Agents or their respective officers, directors, employees,
representatives, agents, attorneys-in-fact or Affiliates have made any
representations or warranties to it and that no act by any of the Agents
hereinafter taken, including any review of the affairs of any Company, shall be
deemed to constitute any representation or warranty by any of the Agents to any
Lender. Each Lender represents to each of the Agents that it has, independently
and without reliance upon any of the Agents or other Lenders, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, assets, operations, property, financial
and other conditions, prospects and creditworthiness of the Companies and made
its own decision to make its Loans hereunder and enter into this Agreement and
the other agreements contemplated hereby. Each Lender also represents that it
will, independently and without reliance upon any of the Agents or other
Lenders, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Companies. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agents
hereunder, none of the Agents shall have any duty or responsibility to provide
any Lender
<PAGE>
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with any credit or other information concerning the business, operations,
assets, property, financial and other conditions, prospects or creditworthiness
of any Company which may come into the possession of any of the Agents or any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates, and none of the Agents shall have any responsibility for the
accuracy of or the completeness of the information provided to the Lenders.
9.07 Indemnification. Each Lender severally agrees to indemnify each
---------------
of the Agents in their respective capacities as such or in any other
representative capacity under any other Credit Document ratably according to its
Commitment or outstanding loans (as applicable), from and against any and all
Losses of the Agents resulting from, or arising out of, or in any way related to
or by reason of, the execution, delivery, performance, administration or
enforcement of any Document, any documents contemplated by or referred to herein
or the transactions contemplated hereby or thereby or any action taken or
omitted to be taken by the Agents under or in connection with any of the
foregoing, but only to the extent that any of the foregoing is not indefeasibly
paid by the Loan Parties; provided, however, that no Lender shall be liable to
-------- -------
the Agent or the Administrative Agent for the payment of any portion of such
Losses to the extent determined by a court of competent jurisdiction in a final
non-appealable judgment to have resulted solely from the gross negligence or bad
faith of the Agent or the Administrative Agent, as the case may be. If any
indemnity furnished to either the Agent or the Administrative Agent for any
purpose shall, in the opinion of the Agent or the Administrative Agent, as the
case may be, be insufficient or become impaired, the Agent or the Administrative
Agent, as the case may be, may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished. The agreements in this Section 9.07 shall survive the payment of all
Obligations and shall be in addition to and not in lieu of any other
indemnification agreements set forth in any Credit Document.
9.08 The Agents in Their Respective Individual Capacities. The
----------------------------------------------------
Agents and their respective Affiliates may make loans to, accept deposits from
and generally engage in any kind of banking, trust, financial advisory or other
business with any Company or any Affiliate of any Company as though the Agents
were not Agents hereunder and may accept fees and other consideration from any
Loan Party for services in connection with this Agreement and otherwise without
having to account for the same to the Lenders. With respect to the Loans made
by it and all Obligations owing to it, the Agent shall have the same rights and
powers under this Agreement as any Lender and may exercise the same as though
<PAGE>
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it were not the Agent, and the terms "Lender" and "Lenders" shall, unless the
------ -------
context clearly indicates otherwise, include the Agent in its individual
capacity.
9.09 Resignation by Any of the Agents. Subject to the appointment
--------------------------------
and acceptance of a successor Agent or Administrative Agent as provided below,
the Agent or the Administrative Agent may resign at any time by notifying the
Lenders and the Borrower and any of the Agent or the Administrative Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to the Borrower and the Agents and signed by
the Applicable Lenders. Upon any such resignation or notice of removal, the
Requisite Lenders, in the case of any resignation and the Applicable Lenders, in
the case of any removal, shall have the right to appoint a successor which shall
be an incorporated bank or trust company or an Affiliate of any such bank or
trust company, with, so long as no Default or Event of Default shall have
occurred and be continuing, the consent of the Borrower (which consent shall not
be unreasonably withheld or delayed). If no successor shall have been so
appointed and shall have accepted such appointment within 30 days after the
retiring or removed Agent or Administrative Agent gives notice of its
resignation or receives notice of its renewal, then the retiring or removed
Agent or Administrative Agent may, on behalf of the Lenders, appoint a successor
agent, so long as no Default or Event of Default shall have occurred and be
continuing, with the consent of the Borrower (which consent shall not be
unreasonably withheld), which shall be an incorporated bank or trust company or
an Affiliate of any such bank or trust company. Upon the acceptance of any
appointment as Agent or Administrative Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Agent or Administrative Agent,
as the case may be, and the retiring or removed agent shall be discharged from
its duties and obligations hereunder. Upon such succession, the term "Agent" or
-----
"Administrative Agent," as the case may be, shall include such successor. After
--------------------
any Administrative Agent's resignation or removal hereunder, the provisions of
this Section and Section 10.01 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent or Administrative Agent, as the case may be.
9.10 Security Documents, Etc. Each Lender hereby authorizes the
-----------------------
Collateral Agent to enter into each of the Security Documents on behalf of and
for the benefit of such Lender and to take all action contemplated thereby and
hereby, including the release from time to time of Collateral secured thereby.
Any amendment to any Security Document shall be governed by
<PAGE>
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Section 10.12. The Collateral Agent may assign its rights and obligations as
Collateral Agent under any of the Security Documents to which it is a party to
any direct or indirect Subsidiary of the Collateral Agent, or to any trustee,
which assignee, in each such case, shall be entitled to all the rights of the
Collateral Agent under the applicable Security Document and all the rights
hereunder of the Agent with respect to the applicable Security Document. The
provisions of this Section 9 shall apply to the Collateral Agent under each
Security Document (it being understood that references to "this Agreement" or
--------------
"hereunder" in this Section 9 shall be deemed to be references to the respective
- ----------
Security Document).
9.11 Determinations Pursuant to Security Documents. Following the
---------------------------------------------
execution of the final documents relating to the Broadcasting Facility and the
execution of the Collateral Agency Agreement in each circumstance where, under
any provision of the applicable Security Document, the Collateral Agent shall
have the right to grant or withhold any consent, exercise any remedy, make any
determination or direct any action by the Collateral Agent under such Security
Document, the Collateral Agent shall act in respect of such consent, exercise of
remedies, determination or action, as the case may be, only with the consent of
and at the direction of the Requisite Lenders; provided, however, that no such
-------- -------
consent of the Requisite Lenders shall be required with respect to any consent,
determination or other matter that is, in the Collateral Agent's reasonable
judgment, ministerial or administrative in nature; provided, further, however,
-------- ------- -------
that the Collateral Agent is hereby authorized on behalf of all of the Lenders,
without the necessity of any further consent from any Lender, from time to time
so long as it is not actually aware of an Event of Default then in existence, to
release portions of the Collateral from the security interests and Liens imposed
by the applicable Security Documents in connection with any dispositions of such
portions of the Collateral permitted by the terms of this Agreement (including,
but not limited to, in connection with the consummation at the transactions
contemplated by the Sale Documents). In each circumstance where any consent of
or direction from the Requisite Lenders is required, the Collateral Agent shall,
at the sole expense of the Borrower, send to the Lenders a notice setting forth
a description in reasonable detail of the matter as to which consent or
direction is requested and the Collateral Agent's proposed course of action
with respect thereto. In the event the Collateral Agent shall not have received
a response from any Lender within three Business Days after the date of such
notice, such Lender shall be deemed to have agreed to the course of action
proposed by the Collateral Agent.
<PAGE>
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Following execution of the final documentation relating to the
Broadcasting Facility and the execution of the Collateral Agency Agreement
determinations pursuant to the Security Documents shall be made in accordance
with the Collateral Agency Agreement.
9.12 Payee of Note Treated as Owner. Each of the Borrower and the
------------------------------
Agents may deem and treat the payee of any Note as the owner thereof for all
purposes hereof unless and until such Note has been assigned in accordance with
Section 10.04(b). Any request, authority or consent of any Person who at the
time of making such request or giving such authority or consent is the holder of
any Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of that Note or of any Note or Notes issued in exchange therefor.
SECTION 10. Miscellaneous.
-------------
10.01 Payment of Expenses; Indemnification, Etc. The Borrower
-----------------------------------------
agrees, whether or not the transactions herein contemplated are consummated:
(a) to pay promptly all (i) reasonable out-of-pocket costs, fees and
expenses of each of the Agents and the Collateral Agent in connection with
the negotiation, preparation, execution, administration and delivery of the
Credit Documents and the documents and instruments referred to therein
(including the creation and perfection of the Liens in favor of the
Lenders) and consummation of the transactions contemplated by the Credit
Documents, including audit fees, syndication expenses, both inside
allocable and outside counsel fees and disbursements (including the
reasonable fees and disbursements of each of Cahill Gordon & Reindel, Dow,
Lohnes & Albertson, FCC counsel to the Agents and each other special and
local counsel to the Agents), (ii) reasonable out-of-pocket expenses
accrued prior to the Funding Date related to the provision of consulting
services by consultants engaged by the Borrower at the request of any Agent
and approved by the Borrower, (iii) reasonable out-of-pocket costs, fees
and expenses (including the reasonable fees and disbursements of counsel to
the Agents) of each of the Agents and the Collateral Agent incurred in
connection with any amendment, waiver or consent relating to any Credit
Document, whether or not any such amendment, waiver or consent is executed
or becomes effective and (iv) out-of-pocket costs, fees and expenses
(including the reasonable fees of counsel to the Agents) of each of the
Agents and the Collateral Agent and each Lender incurred in connection with
the enforcement of any Obligations of, or the collection of any payments
due from,
<PAGE>
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any Loan Party under the Credit Documents to which it is party by reason of
any Event of Default or in connection with any refinancing or restructuring
of the credit arrangements provided under this Agreement in the nature of a
"work-out" or of any insolvency or bankruptcy proceedings, or otherwise;
(b) to pay, and hold each of the Lenders and Agents harmless from
and against, any and all present and future stamp and other similar taxes
with respect to the foregoing matters and save each of the Lenders and
Agents, harmless from and against any and all liabilities with respect to
or resulting from any delay or omission to pay such taxes; and
(c) to indemnify the Indemnitees (each, an "Indemnitee" and
----------
collectively, the "Indemnitees") from and hold each of them harmless
-----------
against any and all Losses resulting from, arising out of, in any way
related to or by reason of, (i) the execution, delivery, performance,
administration or enforcement of any Transaction Document, (ii) the
statements contained in, the financing transactions contemplated by or the
use by any Company of the Commitment Letter, the Term Sheet (as defined in
the Commitment Letter) or the Fee Letters, (iii) the Lenders' agreement to
make the Loans, (iv) the use or intended use of the proceeds of any Loans
hereunder or the use of any Collateral (including the exercise by any of
the Agents or Lenders of rights and remedies or any power of attorney with
respect thereto and any action or inaction of any of the Agents or Lenders
under any Security Document), (v) the consummation of any other
transactions contemplated in any Transaction Document or (vi) the
performance by the Administrative Agent of its duties under Section
10.04(b); provided, however, that neither the Borrower nor any other Loan
-------- -------
Party pursuant to any other Credit Document shall be liable under this
Section 10.01(c) to an Indemnitee to the extent any Loss arises from the
gross negligence or bad faith of such Indemnitee.
To the extent that the undertaking to indemnify and hold harmless set
forth in this Section 10.01 is unenforceable because it is violative of any
law or public policy or otherwise, the Borrower shall contribute the
maximum portion that it is permitted to pay and satisfy under applicable
law to the payment and satisfaction of all indemnified liabilities incurred
by any of the Indemnitees.
The Borrower also agrees on its own behalf and on behalf of the other
Loan Parties that no Indemnitee shall have any liability (whether direct or
indirect, in contract or tort or
<PAGE>
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otherwise) for any Losses to any Loan Party or any Loan Party's security
holders or creditors resulting from, arising out of, in any way related to
or by reason of, any matter referred to in clauses (i)-(vi) of the first
paragraph of this Section 10.01(c), except to the extent that any Loss
arises from the gross negligence or bad faith of such Indemnitee.
In the event that any Indemnitee is requested or required to appear as
a witness in any Proceeding brought by or on behalf of or against the
Borrower or any Affiliate of the Borrower in which such Indemnitee is not
named as a defendant, the Borrower agrees to reimburse each Indemnitee for
all reasonable out-of-pocket expenses and all reasonable allocable costs of
in-house legal counsel incurred by each Indemnitee in connection with such
Indemnitee's appearing and preparing to appear as such a witness, including
the reasonable fees and disbursements of each Indemnitee's legal counsel.
The Borrower agrees on its own behalf and on behalf of each other Loan
Party that, without the prior written consent of the Agents and the
Requisite Lenders (not to be unreasonably withheld), no Loan Party will
settle, compromise or consent to the entry of any judgment in any pending
or threatened Proceeding in respect of which indemnification could be
sought under the indemnification provisions of this Section 10.01 (whether
or not any Indemnitee is an actual or potential party to such Proceeding),
unless such settlement, compromise or consent includes an unconditional
written release reasonably satisfactory to the Agents and the Requisite
Lenders of each Indemnitee from all liability arising out of such
Proceeding and does not include any statement as to an admission of fault,
culpability or failure to act by or on behalf of any Indemnitee and does
not involve any payment of money or other value by any Indemnitee or any
injunctive relief or factual findings or stipulations binding on any
Indemnitee.
10.02 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default, each Lender is hereby authorized by the Borrower at any time or from
time to time, without presentment, demand, protest or other notice of any kind
to any Loan Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special, including Indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other Indebtedness at any time held or owing by
such Lender
<PAGE>
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(including by branches and agencies of such Lender wherever located) to or for
the credit or the account of any Loan Party against and on account of the
Obligations and liabilities of such Loan Party to such Lender under this
Agreement or under any other Credit Document, including all interests in
Obligations of such Loan Party purchased by such Lender pursuant to Section
10.06(b), and all other claims of any nature or description arising out of or
connected with any Credit Document, irrespective of whether or not such Lender
shall have made any demand hereunder and although said Obligations, liabilities
or claims, or any of them, shall be contingent or unmatured. Notwithstanding
the foregoing, any Lender exercising any right to setoff hereunder shall
promptly thereafter deliver to the Agents and the Borrower a written notice
thereof; provided, however, that any failure to deliver such notice shall not,
-------- -------
in any event, limit such Lender's or any other Lender's setoff rights hereunder
or otherwise.
10.03 Notices. (a) Except as otherwise expressly provided herein,
-------
all notices and other communications provided for hereunder shall be in writing
and mailed, telegraphed, telexed, cabled, sent by a nationally recognized
express courier or delivered by hand to the addresses set forth on, with respect
to the Lenders, Annex II and, with respect to the Agents, Annex I; or, at such
-------- -------
other address as shall be designated by any party in a written notice to the
other parties hereto as provided in this Section 10.03. All such notices and
communications shall be effective at the earliest to occur of receipt, three
Business Days after deposit in the United States mail, one Business Day after
delivery to a nationally recognized express courier, delivery to a telegraph or
cable company and telephone confirmation of receipt of telex or telecopier
communication; provided, however, that notices and communications to the
-------- -------
Borrower or any of the Agents shall not be effective until actually received by
the Borrower, such Agent or Administrative Agent, respectively.
(b) Any Lender giving any notice to any Loan Party shall
simultaneously send a copy thereof to the Agents, and the Administrative Agent
shall promptly notify the other Lenders of the receipt by it of any such notice.
(c) Each of the Lenders and Agents may rely on any notice (whether
or not such notice is made in a manner permitted or required by this Agreement
or any other Credit Document) purportedly made by or on behalf of any Loan
Party, and none of the Agents or Lenders shall have any duty to verify the
identity or authority of any Person giving such notice.
10.04 Benefit of Agreement;
<PAGE>
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Assignments; Participations.
---------------------------
(a) Benefit. This Agreement shall be binding upon and inure to the
-------
benefit of and be enforceable by the parties hereto, all future holders of the
Notes, and their respective successors and assigns; provided, however, that no
-------- -------
Loan Party may assign or transfer any of its rights, interests or obligations
under any Credit Document without the prior written consent of each Lender
except as specifically permitted by any such Credit Document; provided, further,
-------- -------
however, that the rights of each Lender to transfer, assign or grant
- -------
participations in its rights or obligations hereunder shall be limited as set
forth below in this Section 10.04.
(b) Assignments. Any Lender may at any time assign all or any part
-----------
of such Lender's Loans, Notes or Commitments, but only to (x) its parent
company, any Affiliate of such Lender or any other Lender or (y) one or more
commercial banks, financial institutions, "accredited investors" or "qualified
institutional buyers" (as defined in SEC Regulation D and SEC Rule 144A,
respectively); provided, however, that (i) such assignment shall be made
-------- -------
pursuant to an Assignment Agreement substantially in the form of Exhibit L and
---------
(ii) in the case of any assignment to a Person specified in clause (y), (A) such
assignment shall be made only with the prior written consents of each of the
Administrative Agent and the Borrower, which consents shall not be unreasonably
withheld or delayed; provided, however, that no consent of the Borrower shall be
-------- -------
required if any Default or Event of Default has occurred and is continuing at
the time of such assignment, and (B) if such assignment is for less than all of
such assigning Lender's remaining rights and obligations under this Agreement
and the other Credit Documents, (I) such assigning Lender shall retain, after
such assignment, a minimum principal amount of $5,000,000 of the Commitments or
Loans (as applicable) and (II) such assignment shall be in an aggregate
principal amount of not less than $5,000,000 of the Commitments or Loans (as
applicable).
To effect any assignment pursuant to this Section 10.04(b), the
assigning Lender shall deliver to the Administrative Agent and the Borrower, (1)
a written notice of assignment in the form of Exhibit M, (2) a copy of any
---------
consents required by clause (ii)(A) above, (3) a copy of a properly executed and
delivered Assignment Agreement required by clause (i) above and (4) if the
assignee was not a Lender prior to the assignment, a fee of $3,500 in connection
with the Administrative Agent's processing and recording of such assignment.
Within one Business Day of receiving the foregoing, the Administrative Agent
shall record such assignment in the Register and give notice of effectiveness
thereof
<PAGE>
-75-
to the Borrower, the Agent and each Lender. The assignment shall be deemed
effective at the close of business on the date of such recordation or such later
date specified in the Assignment Agreement as the Settlement Date. Upon such
effectiveness, the assignee shall become a "Lender" for all purposes of this
------
Agreement and the other Credit Documents and to the extent of such assignment,
the assigning Lender shall, except with respect to Sections 9.07 and 10.01 and,
with respect only to liabilities thereunder to such Lender that accrued or
otherwise arose by reason of circumstances or events prior to such assignment,
Sections 1.08, 1.09 and 2.05, relinquish its rights and be relieved of its
obligations hereunder with respect to the Commitments or the Notes and Loans (as
applicable) being assigned. Prior to such effectiveness, all amounts owing to
the assigning Lender with respect to such Loans shall remain owing by the
Borrower to such assigning Lender. If requested by the assignee Lender, the
Borrower shall, at the sole expense of the Borrower and in exchange for the Note
being assigned, issue one or more new Notes to the assignee in accordance with
the terms of the Notes being assigned.
(c) Participations. Any Lender may at any time transfer, grant or
--------------
sell participations in all or any part of such Lender's Loans and Notes or
Commitments (as applicable) to any Person; provided, however, that, except as
-------- -------
provided in the next sentence, (i) such Lender shall remain a "Lender" for all
------
purposes of this Agreement and the transferee of such participation shall not
constitute a Lender hereunder; (ii) the parties hereto shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under the Credit Documents; and (iii) no participant (unless and
only to the extent such participant is itself a Lender) shall be entitled to
require such Lender to take or refrain from taking action under this Agreement
or any other Credit Document, except that such Lender may agree with such
participant that such Lender will not, without such participant's consent, agree
to any amendment or waiver of this Agreement described in Section 10.12(i)-(ii).
Notwithstanding the foregoing, any such participant shall be considered to be a
"Lender" for purposes of Sections 1.08, 1.09, 2.05, 10.01, 10.02 and 10.06 with
------
respect to its participation; provided, however, that no participant shall be
-------- -------
entitled to receive any greater amount pursuant to Section 1.08, 1.09 or 2.05
than the transferor Lender would have been entitled to receive in respect of the
participation effected by such transferor Lender had no participation occurred.
(d) Assignments to Federal Reserve Bank. Nothing in this Section
-----------------------------------
10.04 shall prevent or prohibit any Lender from pledging its Loans hereunder to
a Federal Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank.
<PAGE>
-76-
(e) Information to Transferees. The Borrower on its own behalf and
--------------------------
on behalf of each of its Subsidiaries authorizes each Lender to disclose to any
Transferee and any prospective Transferee any and all financial information in
such Lender's possession concerning any Company which has been delivered to such
Lender by or on behalf of any Company pursuant to any Credit Document or which
has been delivered to such Lender by any Company in connection with such
Lender's credit evaluation of the Borrower and its Subsidiaries prior to
entering into this Agreement; provided, however, that any information not
-------- -------
publicly available (i.e., through SEC filings, press releases, etc.) shall be
---
deemed to be designated by the Borrower to be material non-public information
and such Lender may so disclose such information only if such Transferee or
prospective Transferee agrees to hold such information confidential in
accordance with the provisions of Section 10.21. In addition, each of the
Agents may furnish any information concerning any Company in such Agent's
possession to any Affiliate of such Agent. The Borrower shall and shall cause
each of its Subsidiaries to assist any Lender in effectuating any assignment or
participation pursuant to this Section 10.04 (including during syndication) in
whatever manner such Lender reasonably deems necessary, including the
participation in meetings with prospective Transferees.
(f) Register. The Administrative Agent shall maintain at its
--------
address specified in Section 10.03 a copy of each Assignment Agreement delivered
to and accepted by it and a register in which it shall record the names and
addresses of the Lenders and the Commitment of, or 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 Loan Parties, the Agents 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,
the Agent or any Lender at any reasonable time and from to time upon reasonable
prior notice.
10.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of any of the Agents or Lenders in exercising any right, power or privilege
under any Credit Document and no course of dealing between any Company and any
of the Agents or Lenders shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power, or privilege under any Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege under such Credit Document. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which any of the Agents or Lenders would otherwise have. No notice to
or demand
<PAGE>
-77-
on any Loan Party in any case shall entitle any Loan Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any of the Agents or Lenders to any other or further
action in any circumstances without notice or demand.
10.06 Payments Pro Rata; Ratable Sharing. (a) The Administrative
----------------------------------
Agent agrees that promptly after its receipt of each payment from or on behalf
of any Loan Party in respect of any Obligations of such Loan Party, it shall
distribute such payment to the Lenders based upon their respective Pro Rata
Shares, if any, of the Obligations with respect to which such payment was
received.
(b) Each Lender and each subsequent holder by acceptance of a Note
agree among themselves that (i) with respect to all amounts received by them
which are applicable to the payment of principal of or interest on the Notes,
equitable adjustment will be made so that, in effect, all such amounts will be
shared among the Lenders pro rata based on their respective shares of the
--- ----
Obligations with respect to which such payment was received, whether received by
voluntary payment, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action or by the enforcement of any or all of the Notes,
(ii) if any of them shall exercise any right of counterclaim, setoff, banker's
lien or similar right with respect to amounts owed by any Loan Party hereunder
or under the Notes that Lender or holder, as the case may be, shall apportion
the amount recovered as a result of the exercise of such right pro rata in
--- ----
accordance with each Lender's Pro Rata Share, and (iii) if any of them shall
thereby through the exercise of any right of counterclaim, setoff, banker's lien
or otherwise or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal and interest due with respect to the Notes held by
the Lender or holder, or any other amount payable hereunder which is greater
than the proportion received by any other holder of the Notes in respect of the
aggregate amount of principal and interest due with respect to the Notes held by
it or any other amount payable hereunder that Lender or that holder of the Notes
receiving such proportionately greater payments shall (y) notify each other
Lender and the Agent of such receipt and (z) purchase for cash, without recourse
or warranty, participations (which it shall be deemed to have done
simultaneously upon the receipt of such payment) in the Notes held by the other
holders so that all such recoveries of principal and interest with respect to
the Notes shall be proportionate to their respective Pro Rata Shares; provided,
--------
however, that if all or part of such proportionately greater payment received by
- -------
such purchasing holder is thereafter recovered from such holder, those purchases
<PAGE>
-78-
shall be rescinded and the purchase prices paid for such participations shall be
returned to that holder to the extent of such recovery, but without interest.
The Borrower expressly consents to the foregoing arrangement.
10.07 Accounting Principles; Calculations.
-----------------------------------
(a) Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters shall be made, and all
Financial Statements to be delivered pursuant to this Agreement shall be
prepared, in accordance with GAAP (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such terms by GAAP.
(b) All computations of interest and fees hereunder shall be made on
the actual number of days elapsed over a year of 365 days; provided, however,
-------- -------
that all computations of interest on LIBOR Loans shall be made on the actual
number of days elapsed over a year of 360 days.
10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. (a) THIS
------------------------------------------------
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICT OF LAWS.
(b) ANY PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE BORROWER ON ITS OWN BEHALF AND ON BEHALF OF EACH
OTHER COMPANY HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT. THE
BORROWER ON ITS OWN BEHALF AND ON BEHALF OF EACH OTHER COMPANY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE RESPECTIVE COMPANY AT ITS ADDRESS FOR
NOTICES PURSUANT TO SECTION 10.03, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. THE BORROWER ON ITS OWN BEHALF AND ON BEHALF OF EACH OTHER
COMPANY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, 1633 BROADWAY, NEW YORK,
NEW YORK 10019 AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY THE
BORROWER IRREVOCABLY AGREEING IN WRITING TO SERVE,
<PAGE>
-79-
AS ITS AND SUCH COMPANY'S AGENT TO RECEIVE ON SUCH COMPANY'S BEHALF, SERVICE OF
ALL PROCESS IN ANY PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY THE BORROWER ON ITS OWN BEHALF AND ON BEHALF OF EACH OTHER
COMPANY TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF SUCH
PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE COMPANY SO SERVED AT
ITS ADDRESS PROVIDED IN SECTION 10.03 EXCEPT THAT UNLESS OTHERWISE PROVIDED BY
APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF
SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY THE BORROWER REFUSES TO RECEIVE
AND FORWARD SUCH SERVICE, THE BORROWER HEREBY AGREES ON ITS OWN BEHALF AND ON
BEHALF OF EACH OTHER COMPANY THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE
SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT, THE AGENT OR ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN PARTY IN
ANY OTHER JURISDICTION.
(c) THE BORROWER ON ITS OWN BEHALF AND ON BEHALF OF EACH OTHER
COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID PROCEEDINGS ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE
COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
10.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all of
which shall together constitute one and the same instrument.
10.10 Effectiveness. This Agreement shall become effective on the
-------------
Effective Date. The Administrative Agent will give the Borrower, the Parent and
each Lender prompt written notice of the Effective Date.
10.11 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
10.12 Amendment or Waiver. Neither this Agreement nor any other
-------------------
Credit Document nor any terms hereof or thereof may be amended, waived,
discharged or terminated unless such amendment, waiver, discharge or termination
is in writing signed by the Requisite Lenders; provided, however, that no such
-------- -------
amendment,
<PAGE>
-80-
waiver, discharge or termination shall, without the prior written consent of
each affected Non-Defaulting Lender and the Agents: (i) extend the scheduled
final maturity (which expressly shall not include the exercise of the Extension
Option) of any Loan or Note, or any portion thereof, or reduce the rate or
extend the time of payment of interest (other than as a result of waiving the
applicability of any post-default increase in interest rates) thereon or fees or
reduce the principal amount thereof, or increase the Commitment of any Lender
over the amount thereof then in effect; (ii) release all or substantially all of
the Collateral or Guarantees (except as expressly permitted by the Credit
Documents); (iii) amend or waive any provision of this Section, or Section
1.06(d), 1.09, 2.02, 2.05, 9.07, 10.01, 10.02, 10.04, 10.06 or 10.07(b); (iv)
reduce any percentage specified in, or otherwise modify, the definition of
Requisite Lenders or Applicable Lenders; or (v) consent to the assignment or
transfer by the Borrower or the Parent of any of its rights and obligations
under any Credit Document; provided, further, however, that any provision of any
-------- ------- -------
Credit Document that, by its express terms, requires the agreement or consent of
(A) all Lenders, shall not be amended, waived, discharged or terminated without
the prior written consent of all Lenders or (B) the Applicable Lenders, shall
not be amended, waived, charged or terminated without the prior written consent
of the Applicable Lenders. No provision of Section 9 may be amended without the
prior written consent of the Agents. The Administrative Agent may, but shall
have no obligation to, with the concurrence of any Lender, execute amendments,
waivers or consent on behalf of that Lender. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given. In the case of any waiver effected in accordance with this
Section 10.12, the Loan Parties, the Lenders and the Agents shall be restored to
their former position and rights under each Credit Document, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon. Any amendment, termination, waiver or
consent effected in accordance with this Section 10.12 shall be binding upon
each holder of the Notes at the time outstanding, each future holder of the
Notes, and, if signed by the Borrower, on the Borrower and the other Loan
Parties.
10.13 Survival. All representations and warranties of each Loan
--------
Party contained herein or in any other Credit Document or made in connection
herewith or therewith shall survive the making of, and shall not be waived by
the execution and delivery of, this Agreement or any other Credit Document, any
investigation by (or on behalf of) or knowledge of any of the Agents or Lenders,
the making
<PAGE>
-81-
of any Loan or any other event or condition whatsoever. All covenants and
agreements of each Loan Party contained herein or in any other Credit Document
shall continue in full force and effect from and after the date hereof so long
as the Borrower may borrow hereunder and until payment in full of all
Obligations. Without limitation, all obligations of the Borrower under any
Credit Document to make payments to or indemnify any Indemnitee including
pursuant to Sections 1.08, 1.09, 2.05 and 10.01, shall survive the payment in
full of all Obligations, cancellation of the Notes, termination of the
Borrower's right to borrow, and all other events and conditions whatsoever. In
addition, all obligations of each Lender under the Credit Documents to make
payments to or indemnify the Agents shall survive the payment in full by the
Loan Parties of all Obligations, termination of the Borrower's right to borrow
and all other events or conditions whatsoever.
10.14 WAIVERS. (a) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
-------
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT
DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. The scope
of this waiver is intended to be all-encompassing of any and all disputes that
may be filed in any court and that relate to the subject matter of this
transaction, including contract, claims, tort claims, breach of duty claims, and
all other common law and statutory claims. Each party hereto acknowledges that
this waiver is a material inducement to enter into a business relationship, that
each has already relied on the waiver in entering into this Agreement, and that
each will continue to rely on the waiver in their related future dealings. Each
party hereto further warrants and represents that each has reviewed this waiver
with its legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS OR
REPLACEMENTS TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
(b) The Borrower, on behalf of itself and each of the other Loan
Parties, waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover any special, exemplary, punitive or consequential
damages from any of the Agents or Lenders in any Proceeding in connection with,
arising out of, or in any way related to the transactions contemplated herein or
in any other Credit Document.
<PAGE>
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(c) The Borrower, on its own behalf and on behalf of each of the
other Loan Parties, hereby waives promptness, diligence, notice of acceptance
and any other notice with respect to any of the Obligations and any requirement
that any Lender protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any other Loan
Party or any other Person or any collateral or other direct or indirect security
for any of the Obligations.
10.15 Independence of Representations, Warranties and Covenants. The
---------------------------------------------------------
representations, warranties and covenants contained herein shall be independent
of each other and no exception to any representation, warranty or covenant shall
be deemed to be an exception to any other representation, warranty or covenant
contained herein unless expressly provided, nor shall any such exception be
deemed to permit any action or omission that would be in contravention of
applicable law.
10.16 Severability; Modification to Conform to Law. It is the
--------------------------------------------
intention of the parties that this Agreement be enforceable to the fullest
extent permissible under applicable law, but that the unenforceability (or
modification to conform to such law) of any provision or provisions hereof shall
not render unenforceable, or impair, the remainder hereof. If any provision of
this Agreement shall be held invalid or unenforceable in whole or in part in any
jurisdiction, this Agreement shall, as to such jurisdiction, be deemed amended
to modify or delete, as necessary, the offending provision or provisions and to
alter the bounds thereof in order to render it or them valid and enforceable to
the maximum extent permitted by applicable law, without in any manner affecting
the validity or enforceability of such provision or provisions in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.
10.17 Obligations Several; Independent Nature of Lenders' Rights.
----------------------------------------------------------
The obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement and no action taken by the Lenders pursuant
hereto shall be deemed to constitute the Lenders to be a partnership, an
association, a joint venture or any other kind of entity. The amounts payable
at any time hereunder to each Lender shall be a separate and independent debt,
and each Lender shall be entitled to protect and enforce its rights arising out
of this Agreement, and it shall not be necessary for any other Lender to be
joined as an additional party in any Proceeding for such purpose.
Notwithstanding the foregoing, each Lender agrees that no Lender shall have any
right individually to seek to enforce any Security
<PAGE>
-83-
Document or to realize upon the security granted by the Security Documents, it
being understood that such rights and remedies may be exercised only by the
Collateral Agent for the benefit of the Secured Parties.
10.18 Prior Understandings. This Agreement and the other Credit
--------------------
Documents supersede all prior and contemporaneous understandings and agreements,
whether written or oral, among the parties hereto relating to the transactions
provided for herein and therein, except that the following shall continue to
remain in effect: (a) the Commitment Letter and (b) each of the Fee Letters.
10.19 Agent's or Lender's Consent. Except in those circumstances as
---------------------------
may otherwise be expressly provided for in this Agreement, whenever the consent
of any of the Agents or Lenders is required to be obtained under any Credit
Document as a condition to any action, inaction, condition or event, such Person
shall be authorized to give or withhold such consent in its sole and absolute
discretion and to condition its consent upon the giving of additional
collateral, the payment of money or any other matter.
10.20 Confidentiality. Each Lender and each Agent agrees to keep all
---------------
non-public information obtained by it pursuant hereto and the other Credit
Documents confidential in accordance with such Lender's or such Agent's
customary practice and agrees that it will only use such information in
connection with the transactions contemplated by the Credit Documents and not
disclose any of such information other than (i) to such Lender's or such Agent's
partners, joint venture partners, parent company, employees, representatives and
agents who are or are expected to be involved in the evaluation of such
information in connection with the transactions contemplated by the Credit
Documents and who are advised of the confidential nature of such information,
(ii) to the extent such information presently is or hereafter becomes available
to such Lender or such Agent on a non-confidential basis from a source other
than any Loan Party, (iii) to the extent disclosure is required by law,
regulation or judicial order or requested or required by regulators or auditors
or may be necessary in connection with any Proceeding and (iv) as permitted by
Section 10.04(e).
SECTION 11. Definitions.
-----------
11.01 Definitions. As used herein, the following terms shall have
-----------
the meanings herein specified unless the context otherwise requires:
<PAGE>
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"Additional Collateral" means any property or asset of the type that
---------------------
would have constituted Collateral at the Funding Date acquired by any Loan
Party.
"Administrative Agent" shall have the meaning assigned to that term in
--------------------
the first paragraph to this Agreement and in Section 9.09 hereof.
"Administrative Agent's Fee Letter" shall mean that certain fee letter
---------------------------------
between First Union and the Borrower.
"Administrative Agent's Office" shall mean the office of the
-----------------------------
Administrative Agent located at 301 South College Street, Charlotte, North
Carolina 28288, or such other office in New York, New York as the Administrative
Agent may hereafter designate in writing as such to the other parties hereto.
"Additional Loan Party(ies)" shall mean any Subsidiary of the Borrower
--------------------------
formed or acquired after the date hereof which is required by the terms of
Section 5.17 hereof to execute a Guarantee and/or Security Documents.
"Affiliate" shall mean, with respect to any specified Person, any
---------
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with") of any Person
means the possession, directly or indirectly, 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 agreement or otherwise.
"Affiliate Transaction(s)" shall have the meaning assigned to such
------------------------
term in Section 6.09(2).
"Agent" shall have the meaning assigned to that term in the first
-----
paragraph of this Agreement and in Section 9.09 hereof.
"Agents" shall mean the Agent and the Administrative Agent,
------
collectively.
"Agent's Office" shall mean the office of the Agent located at World
--------------
Financial Center, North Tower, 250 Vesey Street, New York, New York 10281, or
such other office in New York, New York as the Agent may hereafter designate in
writing as such to the other parties hereto.
<PAGE>
-85-
"Agreement" shall mean this Credit Agreement.
---------
"Amount of Unfunded Benefit Liability" shall mean, with respect to any
------------------------------------
Pension Plan, the excess of (a) the current liability (as defined in Section
412(1)(7) of the Code) with respect to such Pension Plan over (b) the fair
market value of the assets of such Pension Plan.
"Applicable Borrowing Margin" for any Loan shall mean:
---------------------------
A. prior to an Increase Event, (i) with respect to Base Rate Loans,
2.50% and (ii) with respect to LIBOR Loans, 3.50%;
B. on and after an Increase Event, (i) with respect to Base Rate
Loans, 4.0% and (ii) with respect to LIBOR Loans, 5.0%;
provided, however, that upon the occurrence and during the continuance of any
- -------- -------
Event of Default under Section 7.01, each such Applicable Borrowing Margin
determined pursuant to clauses A and B above shall be increased by 2.0%.
"Applicable Lenders" shall mean, with respect to decisions involving
------------------
the removal of any Agent pursuant to Section 9.09, Non-Defaulting Lenders (other
than any Agent which is a Lender the removal of which is being sought pursuant
to Section 9.09) holding not less than 66-2/3% of the Total Commitments or total
Loans then outstanding (as applicable) held by the Non-Defaulting Lenders (other
than any such Agent).
"Asset Sale" shall mean the sale, lease, conveyance or other
----------
disposition, to the extent consummated after the Funding Date, by any member of
the Borrower Group to any Person other than any other member of the Borrower
Group which is a Loan Party, of (i) any shares of stock of any Subsidiary of the
Borrower or (ii) any assets (including by way of a sale-and-leaseback) of the
Borrower Group (other than, solely for purposes of Section 2.02a(ii), (1)
transactions included in the definition of Financing Proceeds and (2) the trade-
in or replacement of assets by the Borrower Group In the Ordinary Course of the
Borrower Group).
"Authorized Officer" shall mean the President and the Chief Financial
------------------
Officer of the Borrower and any other senior officer of the Borrower designated
as such in writing to the Agents by the Borrower and acceptable to the Agents.
"Bankruptcy Code" shall mean Title 11 of the United States Code
---------------
entitled "Bankruptcy," as now and hereafter in effect.
<PAGE>
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"Base Rate" shall mean, at any time, the fluctuating rate of interest
---------
per annum equal to the greater of (a) the rate of interest most recently
- ---------
determined by the Administrative Agent as its "Base Rate", (b) the Federal Funds
Rate plus 1.00% and (c) the CD Rate plus 1.00%. The Base Rate is not
---- ----
necessarily intended to be the lowest rate of interest determined by the
Administrative Agent in connection with extensions of credit.
"Base Rate Loan" shall mean each Loan bearing interest at the rate
--------------
provided in Section 1.06(a)(i).
"Borrower" shall have the meaning assigned to that term in the
--------
introduction to this Agreement.
"Borrower Group" shall mean (i) the Borrower, PBI and PBI's
--------------
Subsidiaries and (ii) any member of such group.
"Borrower Material Adverse Effect" shall mean a Material Adverse
--------------------------------
Effect with respect to the Borrower.
"Borrowing" shall mean a group of Loans of a single Type made (or
---------
converted or continued) by the Lenders on a single date and as to which a single
Interest Period is in effect.
"Broadcast Licenses" shall mean the licenses, permits and
------------------
authorizations that are, as of any date of determination, required by the FCC
with respect to the operation of the Stations including those listed on Schedule
--------
4.25A, and all modifications, extensions and renewals thereof.
- -----
"Broadcasting Facility" shall mean the revolving credit facility
---------------------
entered into by PBI and certain of its Subsidiaries and the lenders named
therein and all related documents and instruments (including schedules and
exhibits related thereto) executed in connection therewith, collectively, all of
which documents shall be consistent with the terms of the commitment letter with
respect thereto previously delivered to the Lenders, as amended, modified or
supplemented from time to time.
"Broadcasting Indenture" shall mean the indenture (including all
----------------------
exhibits thereto), dated May 13, 1996, among PBI and IBJ Schroder Bank & Trust
Company, as trustee, pursuant to which the Broadcasting Notes are to be issued,
in the form previously delivered to the Lenders.
"Broadcasting Notes" shall mean the $235,000,000 aggregate principal
------------------
amount of Senior Subordinated Notes due 2006 of PBI.
<PAGE>
-87-
"Broadcasting Note Documents" shall mean (i) the Broadcasting
---------------------------
Indenture, (ii) the purchase agreement relating to the purchase of the Broadcast
Notes and (iii) all related documents and instruments (including schedules and
exhibits related thereto) executed in connection therewith, collectively, in the
forms previously delivered to the Agents.
"Business Day" shall mean (i) for all purposes other than as covered
------------
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in Charlotte, North Carolina or the City of New York a legal holiday or a day
on which banking institutions are authorized by law or other governmental
actions to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, LIBOR Loans, any day
which is a Business Day described in clause (i) and which is also a day for
trading by and between banks in Dollar deposits in the interbank Eurodollar
market.
"Capital Expenditures" of any Person shall mean, for any period, the
--------------------
aggregate gross increase during that period, in the property, plant or equipment
reflected in the consolidated balance sheet of such Person and its Subsidiaries,
but excluding expenditures made in connection with the replacement, substitution
or restoration of assets (i) to the extent financed from insurance proceeds paid
on account of the loss of or damage to the assets being replaced or restored, or
(ii) with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced; provided, however, that (x) Capital
-------- -------
Expenditures shall in any event include the purchase price paid in connection
with the acquisition of any other Person (including through the purchase of all
of the capital stock or other ownership interests of such Person or through
merger or consolidation) to the extent allocable to property, plant and
equipment and (y) there shall be excluded from the calculation of Capital
Expenditures any expenditures made prior to the Funding Date.
"Capital Lease" of any Person shall mean any lease of any property
-------------
(whether real, personal or mixed) by that Person as lessee which is, or is
required to be, accounted for as a capital lease on the balance sheet of that
Person, together with any renewals of such leases (or entry into new leases) on
substantially similar terms.
"Capital Stock" of any Person means any and all shares, interests,
-------------
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, of
such Person.
<PAGE>
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"Capitalized Lease Obligations" of any Person shall mean all
-----------------------------
obligations under Capital Leases of such Person or any of its Subsidiaries in
each case taken at the amount thereof accounted for as liabilities.
"Cash Collateral" shall mean all Cash and Cash Equivalents held by the
---------------
Collateral Agent under any of the Security Documents.
"Cash Equivalents" means (i) securities with maturities of one year or
----------------
less from the date of acquisition issued, fully guaranteed or insured by the
United States Government or any agency thereof, (ii) certificates of deposit,
time deposits, overnight bank deposits, bankers' acceptances and repurchase
agreements issued by a Qualified Issuer having maturities of 270 days or less
from the date of acquisition, (iii) commercial paper of an issuer rated at least
A-2 by Standard & Poor's Corporation or at least P-2 by Moody's Investors
Service, Inc., or carrying an equivalent rating by a nationally recognized
rating agency if both of the two named rating agencies cease publishing ratings
of investments, and having maturities of 270 days or less from the date of
acquisition, and (iv) money market accounts or funds with or issued by Qualified
Issuers.
"Cash Proceeds" shall mean, with respect to any Asset Sale or
-------------
Destruction, the aggregate cash payments received by the Borrower Group from
such Asset Sale or Destruction.
"CD Rate" shall mean, on any day, the sum (rounded upward to the
-------
nearest 1/100th of 1%) of (1) the rate obtained by dividing (x) the most recent
weekly average dealer offering rate for negotiable certificates of deposit with
a three-month maturity in the secondary market as published in the most recent
Federal Reserve System publication entitled "Select Interest Rates," published
weekly on Form H.15(519) as of the date hereof, or if such publication or a
substitute containing the foregoing rate information shall not be published by
the Federal Reserve System for any week, the weekly average offering rate
determined by the Administrative Agent on the basis of quotations for such
certificates received by it from three certificate of deposit dealers in New
York of recognized standing or, if such quotations are unavailable, then on the
basis of other sources reasonably selected by the Administrative Agent, by (y) a
percentage equal to 100% minus the stated maximum rate of all reserve
requirements as specified in Regulation D applicable on such day to a three-
month certificate of deposit of a member bank of the Federal Reserve System in
excess of $100,000 (including any marginal, emergency, supplemental, special or
other reserves), plus (2) the then daily
<PAGE>
-89-
net annual assessment rate as estimated by the Administrative Agent for
determining the current annual assessment payable by the Administrative Agent to
the Federal Deposit Insurance Corporation for insuring three-month certificates
of deposit.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Collateral" shall mean all of the Pledged Collateral, Pledged
----------
Securities, Cash Collateral and Additional Collateral.
"Collateral Agency Agreement" shall mean the Collateral Agency
---------------------------
Agreement executed by the parties listed on the signature pages thereto,
substantially in the form of Exhibit P (except for such changes therein as shall
have been approved by the Borrower, the Agents and the Requisite Lenders.
"Collateral Agent" shall have the meaning assigned to that term in the
----------------
first paragraph of this Agreement.
"Commitment" shall mean, with respect to each Lender, the amount set
----------
forth opposite such Lender's name on Annex II directly below the column entitled
--------
"Commitment," as same may be reduced from time to time pursuant to assignment in
accordance with Section 10.04.
"Commitment Letter" shall mean that certain commitment letter among
-----------------
Merrill Lynch and the Borrower dated May 3, 1996, and the term sheet attached
thereto and incorporated therein.
"Communications Act" shall mean the Communications Act of 1934, as
------------------
amended (including the Cable Communications Policy Act of 1984 and the Cable
Television Consumer Protection and Competition Act of 1992), and all rules and
regulations of the FCC, in each case as from time to time in effect.
"Companies" shall mean the Borrower and its Subsidiaries,
---------
collectively; and "Company" shall mean any of them.
-------
"Compliance Certificate" shall mean a certificate substantially in the
----------------------
form of Exhibit I, executed by the chief financial officer, controller, chief
---------
accounting officer or other Authorized Officer of the Borrower delivered
pursuant to Section 5.01(f) demonstrating in reasonable detail compliance with
Sections 6.05 and 6.10(a) and (b).
"Confidential Memorandum" shall mean the Confidential Memorandum,
-----------------------
dated April, 1996 and all written supplemental material
<PAGE>
-90-
thereto prepared by, or on behalf of, the Borrower and transmitted to the
Lenders prior to the Funding Date.
"Consolidated Cash Interest Expense" shall mean, for any period, for
----------------------------------
any Person, Consolidated Interest Expense of such Person, but excluding,
however, amortization of debt discount, deferred financing costs and interest
expense not payable in cash during such period.
"Consolidated EBITDA" shall mean, for any period, the Consolidated Net
-------------------
Income of PBI and its Subsidiaries for such period, plus, without duplication,
(i) extraordinary net losses and net losses realized on any sale or disposition
of assets during such period, to the extent such losses were deducted in
computing Consolidated Net Income, plus (ii) provision for taxes based on income
or profits, to the extent such provision for taxes was included in computing
such Consolidated Net Income, and any provision for taxes utilized in computing
the net losses under clause (i) hereof, plus (iii) Consolidated Interest Expense
of PBI and its Subsidiaries for such period, plus (iv) depreciation,
amortization and all other non-cash charges (excluding non-cash charges
associated in working capital and other balance sheet changes In the Ordinary
Course), to the extent such depreciation, amortization and other non-cash
charges were deducted in computing such Consolidated Net Income (including
amortization of goodwill and other intangibles), plus (v) the difference of (A)
the amount of cash payments actually received by the PBI and its Subsidiaries
under its network affiliation agreements less (B) the actual amount of revenue
recognized thereunder in accordance with GAAP; provided, however, that to the
-------- -------
extent not previously deducted in determining Consolidated Net Income, the
portion of corporate overhead of the Borrower allocated to PBI and its
Subsidiaries, if any, shall be deducted in determining Consolidated EBITDA.
"Consolidated Interest Expense" for any Person shall mean, for any
-----------------------------
period, the sum of (i) the interest expense of such Person and its Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP
consistently applied, including, without limitation, (a) amortization of debt
discount, (b) the net payments, if any, under Interest Rate Agreements
(including amortization of discounts), (c) the interest portion of any deferred
payment obligation and (d) accrued interest, plus (ii) the interest component of
all Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by such Person and its Subsidiaries during such period, and all
capitalized interest of such Person and its Subsidiaries, in each case as
determined on a consolidated basis in accordance with GAAP consistently applied.
<PAGE>
-91-
"Consolidated Net Income" shall mean, for any period, for any Person,
-----------------------
the net income (loss) of such Person and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP consistently applied, adjusted, to
the extent included in calculating such net income (or loss), by excluding,
without duplication, (i) all extraordinary gains but not losses (less all fees
and expenses relating thereto) together with any related provisions for taxes,
(ii) the portion of net income (or loss) of such Person and its Subsidiaries
allocable to interests in unconsolidated Persons, except to the extent of the
amount of dividends or distributions actually paid in cash to such Person or its
Subsidiaries by such other Person during such period (subject in the case of any
such dividend or distribution to any of such Person's Subsidiaries to the
limitations set forth in clause (v) below) (iii) net income (or loss) of any
Person combined with such Person or any of its Subsidiaries on a "pooling of
interests" basis attributable to any period prior to the date of combination,
(iv) net gains but not losses (less all fees and expenses relating thereto) in
respect of dispositions of assets (including, without limitation, pursuant to
sale-and-leaseback transactions) other than in the ordinary course of business
together with any related provisions for taxes, (v) the net income of any of
such Person's Subsidiaries to the extent that the declaration of dividends or
similar distributions by that Subsidiary of that income to such Person is not
at the time permitted, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders
(regardless of any waiver in respect thereof), and (vi) the net income of any
Person prior to the merger or consolidation with or into such Person.
"Consolidated Rental Payments" shall mean, for any period, the
----------------------------
aggregate amount of all rents paid or to be incurred under all Capital Leases
and Operating Leases of the Borrower and its Subsidiaries as lessees (net of
sublease income).
"Consolidated Total Debt" shall mean, with respect to any Person, on
-----------------------
any date, without duplication, the aggregate outstanding principal amount of
Indebtedness of such Person and its Subsidiaries determined on a consolidated
basis in accordance with GAAP.
"Contingent Obligations" shall mean, as to any Person, without
----------------------
duplication, any obligation of such Person guaranteeing or expressly intended to
guarantee by its terms any Indebtedness, leases, dividends or other obligations
("primary obligations") of any other Person (the "primary obligor") in any
------------------- ---------------
manner, whether
<PAGE>
-92-
directly or indirectly, including any obligation of such Person, whether or not
contingent, to (a) purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) advance or supply funds
(i) for the purchase or payment 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 of the primary obligor, (c) purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (d) otherwise assure or hold harmless the
owner of such primary obligation against loss in respect thereof; provided,
--------
however, that the term Contingent Obligation shall not include endorsements of
- -------
instruments for deposit or collection In the Ordinary Course. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person reasonably and in
good faith.
"Contractual Obligation", as applied to any Person, shall mean any
----------------------
provision of any security issued by that Person, any provision of any indenture,
security agreement, mortgage, deed of trust or loan agreement and any provision
of any material contract, undertaking, agreement or other instrument, in each
case to which that Person is a party or by which it or any of its properties or
assets is bound or to which it or any of its properties is subject.
"Credit Documents" shall mean (i) this Agreement, (ii) each Note,
----------------
(iii) each Guarantee and (iv) each Security Document.
"Credit Party" shall mean (i) Parent, (ii) PNI and (iii) each member
------------
of the Borrower Group; and "Credit Parties" shall mean all such Persons
--------------
collectively.
"Default" shall mean any event, act or condition which with notice or
-------
lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" shall mean (i) any Lender that fails in its
-----------------
obligation to fund any Loan pursuant to Section 1.03 on the Funding Date and
such failure continues for five Business Days; (ii) any Lender as to which any
event of the type described in Section 7.05 occurs (with all references in such
Section to any Person being deemed to be references to such Lender); or (iii)
any
<PAGE>
-93-
Lender as to which any Governmental Authority (including the OTS, RTC, FDIC, OCC
or Federal Reserve Board) directly or indirectly seizes, takes possession of or
undertakes, authorizes or orders similar action with respect to, or authorizes,
or orders the liquidation, dissolution, winding up, sale, transfer or other
disposition of, or takes steps or institutes proceedings or otherwise proceeds
to liquidate, dissolve, wind up, sell, transfer or otherwise dispose of, such
Lender or all or any part of such Lender's property or appoints or authorizes or
orders the appointment of a receiver, liquidator, sequestrator, trustee,
custodian, conservator or other officer or entity having similar powers over
such Lender or over all or any part of such Lender's property.
"Destruction" shall have the meaning assigned to that term in the
-----------
General Security Agreements.
"Determination Date" shall mean, as used in connection with any
------------------
certificate, report or calculation delivered or made hereunder, the date (which
shall be specified in such certificate, report or calculation) as of which the
determinations in such certificate, report or calculation are made.
"Disqualified Stock" means (i) any Preferred Stock of any Subsidiary
------------------
and (ii) any Capital Stock of the Borrower that, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
option of the holder thereof, in whole or in part on or prior to the stated
maturity of the Loans.
"Dividend(s)" shall have the meaning assigned to such term in Section
-----------
6.08.
"Dollars" shall mean United States Dollars.
-------
"Effective Date" shall mean the date on which the Borrower and each of
--------------
the Lenders shall have signed a copy hereof (whether the same or different
copies) and shall have delivered the same to the Administrative Agent at the
Administrative Agent's Office or, in the case of the Lenders, shall have given
to the Administrative Agent telephonic (confirmed in writing), written, telex or
telecopy notice (actually received) at such office that the same has been signed
and mailed to it.
"Employee Benefit Plan" shall mean any "employee benefit plan" as
---------------------
defined in Section 3(3) of ERISA which is or has been
<PAGE>
-94-
maintained or to which contributions are or have been made by any Company or any
ERISA Affiliate of any Company or as to which any Company or any ERISA Affiliate
of any Company may have any liability.
"Environment" shall mean any surface water, ground water, drinking
-----------
water supply, land surface or subsurface strata, ambient air and includes any
indoor location.
"Environmental Affiliate" shall mean, with respect to any Person, any
-----------------------
other Person whose liability (contingent or otherwise) for any Environmental
Claim such Person has retained or assumed or otherwise is liable for (by law,
agreement or otherwise).
"Environmental Approvals" shall mean any Governmental Consent pursuant
-----------------------
to or required under any Environmental Law.
"Environmental Authorizations" shall have the meaning assigned to such
----------------------------
term in Section 4.21(a).
"Environmental Claim" shall mean, with respect to any Person, any
-------------------
Proceeding, investigation, notice, claim, complaint, demand, written request for
information or other written communication by any other Person (including to any
Governmental Authority, citizens' group or present or former employee of such
Person) alleging, asserting or claiming any actual or potential (a) violation of
any Environmental Law, (b) liability under any Environmental Law or (c)
liability for investigatory, cleanup, remedial, removal, response, abatement,
closure and monitoring costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
the presence, or release into the environment, of any Hazardous Materials at any
location, whether or not owned by such Person.
"Environmental Laws" shall mean all Federal, state, local and foreign
------------------
laws, codes, regulations, ordinances, requirements, directives, orders, common
law, and administrative or judicial interpretations thereof that may be enforced
by any Governmental Authority or court, relating to pollution, the protection of
human health, the protection of the Environment, or the emission, discharge,
disposal or other release or threatened release of Hazardous Material in or into
the Environment.
"Environmental Notice" shall mean any notice or claim by any Person
--------------------
alleging liability (including potential liability for investigatory costs,
cleanup costs, governmental costs, compliance costs or harm, injuries or damages
to any person, property, natural
<PAGE>
-95-
resources, or any fines or penalties) arising out of, based upon, resulting from
or relating to any Environmental Law.
"Environmental Notifications" shall mean all necessary notifications,
---------------------------
registrations and filings required under Environmental Laws in connection with
this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974. Section references to ERISA are to ERISA as in effect at the date of this
Agreement and any subsequent provisions of ERISA amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" of any Person shall mean any entity, whether or not
---------------
incorporated, which is under common control or would be considered a single
employer with such Person within the meaning of Section 414 of the Code or
within the meaning of Section 4001(b) of ERISA.
"ERISA Event" shall mean (i) a "reportable event" within the meaning
-----------
of Section 4043 of ERISA and the regulations issued thereunder with respect to
any Pension Plan (excluding those for which the provision for 30-day notice to
the PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Code with respect to any Pension Plan
(whether or not waived in accordance with Section 412(d) of the Code) or the
failure to make by its due date a required installment under Section 412(m) of
the Code with respect to any Pension Plan or the failure to make any required
contribution to a Multiemployer Plan; (iii) the provision by the administrator
of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of
intent to terminate such plan in a distress termination described in Section
4041(c) of ERISA; (iv) the withdrawal by any Company or any of its ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability pursuant to Sections
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan or to appoint a trustee to administer a Pension Plan,
or the occurrence of any event or condition which could reasonably be expected
to constitute grounds under ERISA for the termination of, or the appointment of
a trustee to administer, any Pension Plan; (vi) the imposition of liability on
any Company or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069
of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the
withdrawal by any Company or any of its ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by any Company or any
<PAGE>
-96-
of its ERISA Affiliates of notice from any 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 or 4042 of ERISA;
(viii) the occurrence of an act or omission which could reasonably be expected
to give rise to the imposition on any Company or any of its ERISA Affiliates of
fines, penalties, taxes or related charges under Chapter 43 of the Code or under
Section 409 or 502(c), (i) or (l) or 4071 of ERISA in respect of any Employee
Benefit Plan; or (ix) the failure to make any payment or contribution to any
Pension Plan or the making of any amendment to any Pension Plan which could
result in the imposition of a lien or the posting of a bond or other security.
"Escrow Agreements" shall mean the Interest Escrow Agreement and the
-----------------
Tax Escrow Agreement, collectively.
"Event of Default" shall have the meaning assigned to that term in
----------------
Section 7.
"Excess Cash Flow" shall mean, without duplication, for any Person for
----------------
any period for which such amount is being determined, Consolidated EBITDA for
such period after deducting the amount of any cash paid during such period for
taxes of such Person and its consolidated Subsidiaries and any Consolidated Cash
Interest Expense of such Person paid during such period, minus (i) any amount of
-----
gain included in both (x) Consolidated Net Income and (y) any Net Cash Proceeds,
Financing Proceeds, Radio Property Proceeds or Termination Proceeds required to
be applied to the prepayment of the Loans pursuant to Section 2.02(a), minus
-----
(ii) the aggregate amount of Capital Expenditures of the Borrower Group that are
paid other than from (a) the proceeds of Indebtedness or (b) capital
contributions to the Borrower in such period and minus (iii) Dividends paid
-----
pursuant to Section 6.08(ii) to the extent in compliance therewith.
"Exchange Act" shall mean the United States Securities Exchange Act of
------------
1934 and the rules and regulations promulgated thereunder.
"Existing Credit Agreement" shall mean the Credit Agreement dated as
-------------------------
of May 11, 1995 among Parent, the Borrower and its Subsidiaries and the
Employees' Retirement System of Alabama and the Teacher's Retirement System of
Alabama and all agreements and other documents executed in connection therewith
and as amended.
"Existing Debt" shall mean the Indebtedness of the Borrower and its
-------------
Subsidiaries set forth on Schedule 4.20.
-------------
<PAGE>
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"Existing Loans" shall mean the loans outstanding under the Existing
--------------
Credit Agreement.
"Extension Option" shall have the meaning assigned to that term in
----------------
Section 1.10.
"FCAA" shall mean the Federal Clean Air Act.
----
"FCC" shall mean the Federal Communications Commission.
---
"FDIC" shall mean the Federal Deposit Insurance Corporation.
----
"Federal Funds Rate" shall mean on any one day the weighted average of
------------------
the rate on overnight Federal funds transactions with members of the Federal
Reserve System only arranged by Federal funds brokers as published as of such
day by the Federal Reserve Bank of New York, or if not so published, the average
rate then used by three first class banks selected by the Agents in extending
overnight loans to other first class banks.
"Federal Reserve Board" shall mean the Board of Governors of the
---------------------
Federal Reserve System.
"Fee Letters" shall mean the Administrative Agent's Fee Letter and the
-----------
Merrill Lynch Fee Letter collectively.
"Financial Statements" shall mean, with respect to any Person, for any
--------------------
period, balance sheets of such Person as of the end of such period and the
related statements of operations, of stockholders' equity and of cash flows for
such period, each prepared in conformity with GAAP subject to, in the case of
annual Financial Statements footnotes and ordinary year end adjustments;
provided, however, that Financial Statements of the Borrower shall be on a
- -------- -------
consolidated and a consolidating basis which consolidating Financial Statements
need not be audited.
"Financing Proceeds" shall mean the cash (other than Net Cash
------------------
Proceeds) received by the Borrower or its Subsidiaries, directly or indirectly,
from (i) any financing transaction of whatever kind or nature, including from
any Incurrence of Indebtedness (other than any Indebtedness Incurred pursuant to
Section 6.04(vii), (ix) or (x)), any mortgage or pledge of an asset or interest
therein (including a transaction which is the substantial equivalent of a
mortgage or pledge), from the sale of tax benefits, a lease to a third party and
a pledge of the lease payments due thereunder to secure Indebtedness, a joint
venture arrangement, an exchange of assets and a sale of the assets
<PAGE>
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received in such exchange, the refund of a cash deposit held by a vendor of an
asset other than In the Ordinary Course and consistent with past practice, or
any other similar arrangement or technique whereby the Borrower obtains cash in
respect of an asset, or (ii) the sale of any Capital Stock by the Borrower or
any of its Subsidiaries, in each case net of direct costs associated therewith.
"Foreign Plans" shall mean any employee benefit plan, program, policy,
-------------
arrangement or agreement maintained or contributed to by, or entered into with,
a Company with respect to employees employed outside the United States.
"Funding Date" shall mean the date of the funding of the Loans.
------------
"FWPCA" shall mean the Federal Water Pollution Control Act.
-----
"GAAP" shall mean generally accepted accounting principles in the
----
United States, applied on a basis consistent with the principles used in
preparing the Financial Statements of the Borrower and its consolidated
Subsidiaries as of December 31, 1995 and for the fiscal year then ended.
"General Security Agreements" shall mean and include, once executed
---------------------------
and delivered, the TV General Security Agreement, the Radio General Security
Agreement and any other general security agreements delivered pursuant to
Section 5.12 or 5.15.
"Governmental Authority" shall mean any government or political
----------------------
subdivision or any agency, authority, board, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Governmental Consent" shall mean any material approval,
--------------------
determination, order, consent, authorization, certificate, license, permit,
franchise, concession or validation of, or exemption or other action by, or
filing, recording or registration with, or notice to, any Governmental
Authority.
"Governmental Requirements" shall mean all legal requirements in
-------------------------
effect from time to time, including the common law and all Federal, state, local
and foreign laws, statutes, codes, acts, ordinances, orders, judgments, decrees,
injunctions, rules,
<PAGE>
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regulations, Governmental Consents, demand letters, directions and requirements
of all Governmental Authorities, officials and officers, and all instruments of
record, foreseen or unforeseen, ordinary or extraordinary, including any change
in any law or regulation or the interpretation thereof by any Governmental
Authority (whether or not having the force of law), relating now or at any time
heretofore or hereafter to the business or operations of any Loan Party or to
any of the property owned, leased or used by any Loan Party, including the
development, design, construction, acquisition, start-up, ownership and
operation and maintenance of property.
"Guarantees" shall mean and include, once executed and delivered, each
----------
Subsidiary Guarantee.
"Guarantor" shall mean each Subsidiary of the Borrower which has
---------
executed and delivered a Guarantee.
"Hazardous Materials" shall mean any pollutant, contaminant, hazardous
-------------------
or toxic substance, material, constituent or waste, asbestos or asbestos
containing material, petroleum or oil products, derivatives or constituents
(including crude oil and any fraction thereof) or other wastes, chemicals,
substances or materials subject to any Environmental Law.
"In the Ordinary Course" shall mean, for any Person, in the ordinary
----------------------
course of business of such Person and on ordinary business terms.
"Increase Event" shall mean the exercise of the Extension Option at a
--------------
time when Loans are outstanding under this Agreement in excess of $17,500,000.
"Incur" shall mean, with respect to any Indebtedness or other
-----
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings
---------- -------- ---------
correlative to the foregoing).
"Indebtedness" means, with respect to any Person, without duplication,
------------
and whether or not contingent, (i) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services or which is
evidenced by a note, bond, debenture or similar instrument (ii) all Capitalized
Lease Obligations of such Person, (iii) all obligations of such Person in
<PAGE>
-100-
respect of letters of credit or bankers' acceptances issued or created for the
account of such Person, (iv) all obligations under Interest Rate Agreements of
such Person, (v) all liabilities secured by any Lien (other than any Permitted
Encumbrances) on any property owned by such Person even if such Person has not
assumed or otherwise become liable for the payment thereof to the extent of the
lesser of the amount of the debt secured thereby or the value of the property
subject to such Lien (it being understood that if such debt exceeds the value of
such property, the full amount thereof shall be included in this definition),
(vi) all obligations to purchase, redeem, retire, or otherwise acquire for value
any Capital Stock of such Person, or any warrants, rights or options to acquire
such Capital Stock, now or hereafter outstanding, (vii) to the extent not
included in (vi), all Disqualified Stock issued by such Person, valued at the
greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued dividends thereon, and (viii) to the extent not otherwise included, any
guarantee by such Person of any other Person's indebtedness or other obligations
described in clauses (i) through (vii) above. "Indebtedness" of the Borrower
and its Subsidiaries shall not include current trade payables incurred in the
ordinary course of business and payable in accordance with customary practices,
film contracts and non-interest bearing installment obligations and accrued
liabilities incurred In the Ordinary Course of which are not more than 90 days
past due. For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant hereto, and if such price is based upon, or
measured by the fair market value of, such Disqualified Stock, such fair market
value is to be determined reasonably and in good faith by the board of directors
of the issuer of such Disqualified Stock.
"Indemnitee" shall mean each of the Lenders and Agents and their
----------
respective officers, directors, employees, representatives, agents, attorneys-
in-fact and Affiliates and each other Person, if any, controlling them or any of
their Affiliates within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act.
"Initial Lender" shall mean a Lender that is an original signatory to
--------------
this Agreement.
"Intercompany Notes" shall mean demand promissory notes reasonably
------------------
satisfactory to the Agents evidencing intercompany Indebtedness of any Wholly
Owned Subsidiary of the Borrower to the Borrower (which shall be unsubordinated
senior obligations of such
<PAGE>
-101-
Subsidiary and pledged to the Collateral Agent) or of the Borrower to any Wholly
Owned Subsidiary of the Borrower (which shall be subordinate to the Obligations
on terms acceptable to the Agents and pledged to the Collateral Agent).
"Interest Escrow Account" shall mean the Interest Escrow Account
-----------------------
established in accordance with the terms of the Interest Escrow Agreement.
"Interest Escrow Agreement" shall mean the Interest Escrow Agreement
-------------------------
substantially in the form of Exhibit G, except for such changes therein as shall
---------
have been approved by the Borrower, the Agents and the Requisite Lenders.
"Interest Payment Date" shall mean, (i) with respect to any LIBOR
---------------------
Loan, the last day of the Interest Period applicable thereto and, in addition,
the date of any refinancing or conversion of such LIBOR Loan, and (ii) with
respect to any Base Rate Loan, the last Business Day of each calender month.
"Interest Period" shall mean, with respect to any LIBOR Loan, the
---------------
interest period applicable thereto, as determined pursuant to Section 1.07.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
-----------------------
interest rate cap agreement, interest rate collar agreement, interest rate
futures contract, interest rate option contract or other similar agreement or
arrangement to which the Borrower or its Subsidiaries is a party.
"Interest Rate Determination Date" shall mean, with respect to a LIBOR
--------------------------------
Loan, the date which is two Business Days prior to the commencement of the
Interest Period for such Loan.
"Investment" of any Person shall mean (i) any direct or indirect
----------
purchase or other acquisition of any share of capital stock, evidence of
Indebtedness or other security issued by any other Person, (ii) any loan,
advance (other than advances to employees for travel expenses, drawing accounts
and similar expenditures extended In the Ordinary Course and consistent with
past practice) or extension of credit (other than accounts receivable created In
the Ordinary Course) to, or contribution to the capital of, any other Person,
including any guarantee of Indebtedness of any other Person and any Joint
Venture, (iii) any purchase of all or an integral part of the business of any
other Person or the assets comprising such business or such part thereof, (iv)
any commitment or option to make an investment if, in the case of an option, the
consideration therefor exceeds $500,000, and
<PAGE>
-102-
(v) any capital contribution to any other Person; and any of the foregoing shall
be considered an Investment whether such investment is acquired by purchase,
exchange, issuance of stock or other securities, merger, reorganization or any
other method.
"Joint Venture" shall mean a joint venture, partnership or other
-------------
similar arrangement, whether in corporate, partnership or other legal form.
"Lender" and "Lenders" shall have the meanings assigned to those terms
------ -------
in the first paragraph of this Agreement and in Section 10.04.
"LIBOR Base Rate" means the rate of interest determined on the basis
---------------
of the rate for deposits in dollars for a period equal to one month commencing
on the first day of such Interest Period appearing on Telerate Page 3750 as of
11:00 a.m. (London time) two (2) Business Days prior to the first day of the
applicable Interest Period. If, for any reason, such rate is not available,
then "LIBOR Base Rate" shall be determined by the Administrative Agent to be the
arithmetic average (rounded upward, if necessary, to the nearest one-sixteenth
of one percent (1/16%) of the rate per annum at which deposits in dollars would
be offered by first class banks in the London interbank market to the
Administrative Agent (or the Administrative Agent's London branch) at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of the applicable Interest Period for a period equal to one month and in an
amount substantially equal to the amount of the applicable Loan.
"LIBOR Loan" shall mean any Loan bearing interest at a rate determined
----------
by reference to the LIBOR Rate in accordance with the provisions of Section
1.06(a)(ii).
"LIBOR Rate" shall mean, with respect to each day during each Interest
----------
Period pertaining to a LIBOR Loan, a rate per annum determined for such day in
--- -----
accordance with the following formula (rounded upward, if necessary, to the
nearest 1/16th of 1%):
LIBOR Base Rate
---------------
1.00 - LIBOR Reserve Requirements
"LIBOR Reserve Requirements" shall mean, for any day as applied to a
--------------------------
LIBOR Loan, the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including
without limitation basic, supplemental, marginal and emergency reserves) under
any regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect
<PAGE>
-103-
thereto) prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D) maintained by a member bank of the
Federal Reserve System.
"Licenses" shall mean all material patents, trademarks, servicemarks,
--------
trade names, copyrights, licenses and similar intellectual property rights but
not including the Broadcast Licenses.
"Lien" shall mean with respect to any asset, any mortgage, lien,
----
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in any asset and any filing of, or agreement to give, any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Loan Party" shall mean each of (i) Parent, (ii) the Borrower and
----------
(iii) each Subsidiary of the Borrower that pledges any stock, grants any Lien or
issues any guarantee pursuant to any Credit Document; and "Loan Parties" shall
------------
mean all such Persons collectively.
"Loan(s)" shall have the meaning assigned to such term in
-------
Section 1.01.
"Losses" of any Person shall mean the losses, liabilities, claims
------
(including those based upon negligence, strict or absolute liability and
liability in tort), damages, expenses, obligations, penalties, actions,
judgments, encumbrances, liens, penalties, fines, suits, costs or disbursements
of any kind or nature whatsoever (including reasonable fees and expenses of
counsel in connection with any Proceeding commenced or threatened, whether or
not such Person shall be designated a party thereto and whether or not such
Proceeding is initiated or brought by on behalf of any Loan Party) at any time
(including following the payment of the Obligations) incurred by, imposed on or
asserted against such Person.
"Management Fees" shall mean, collectively, all amounts (including
---------------
salary and bonuses) paid, payable, distributed or distributable by any Company
to any Person pursuant to any management, advisory or similar agreement or
arrangement; provided, however, that Management Fees shall not include
-------- -------
reimbursement of expenses and payment of reasonable allocable expenses
(including accounting and legal services rendered by independent professionals
<PAGE>
-104-
or internal counsel) that are In the Ordinary Course with respect to the
Borrower and its Subsidiaries and consistent with past practice.
"Margin Regulation" shall mean any of Regulation G, Regulation T,
-----------------
Regulation U and Regulation X of the Federal Reserve Board.
"Material Adverse Effect" shall mean, with respect to any Person, (i)
-----------------------
any material adverse effect with respect to the business, assets, liabilities
(contingent or otherwise), operations, condition (financial or otherwise),
solvency or prospects of such Person and its Subsidiaries, taken as a whole,
(ii) any material adverse effect on the ability of such Person or any of its
Subsidiaries to perform in any material respect its obligations under any
Transaction Document or to effect on a timely basis the transactions
contemplated by any Transaction Document on the terms contemplated hereby and
thereby, (iii) any adverse effect on the legality, validity, binding effect or
enforceability of any Credit Document or the ability of any of the Agents or
Lenders to enforce any rights or remedies under or in connection with any Credit
Document or (iv) any material adverse effect on any Broadcast License. In
determining whether the occurrence of any individual event or the existence of
any individual condition would, or the failure of any individual event to occur
or any individual condition to exist would, have a Material Adverse Effect,
notwithstanding that the occurrence of such individual event or the existence of
such individual condition does not, or the failure to occur of such individual
event or such individual condition to exist does not, of itself have such
effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event or condition or failure of event or condition
and all other then existing events or conditions and failures of events or
conditions would have a Material Adverse Effect.
"Material Broadcast Licenses" shall mean those Broadcast Licenses
---------------------------
denominated as such on Schedule 4.25A .
"Maturity Date" shall mean the date six months after the date of the
-------------
Initial Funding Date; provided, however, that if the Borrower has effected the
-------- -------
Extension Option, the Maturity Date shall be the first anniversary of the
Initial Funding Date.
"Merrill Lynch" shall have the meaning set forth in the first
-------------
paragraph of this Agreement.
"Merrill Lynch Fee Letter" shall mean that certain fee letter between
------------------------
Merrill Lynch and the Borrower dated May 3, 1996.
<PAGE>
-105-
"Minimum Borrowing Amount" shall mean $5,000,000.
------------------------
"Multiemployer Plan" shall mean a "multiemployer plan", as defined in
------------------
Section 3(37) of ERISA, to which any Company or any of its ERISA Affiliates is
or has been required to contribute or otherwise may have any liability.
"Net Award" shall have the meaning assigned to that term in each
---------
General Security Agreement.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale or
-----------------
Destruction, the Cash Proceeds resulting therefrom net of (i) direct expenses of
sale (including customary broker's fees), (ii) the amount of any Indebtedness
(other than the Loans) required to be repaid upon any such event and (iii)
reasonable reserves established in accordance with GAAP for any retained
liabilities or in respect of indemnities; provided, however, that expenses shall
-------- -------
only include taxes to the extent that taxes are estimated to be payable in the
current year or in the next succeeding year with respect to the current year as
a result of such Asset Sale or Destruction; provided, further, however, that Net
-------- ------- -------
Cash Proceeds shall not include any amounts or items included in the definition
of Financing Proceeds or in the definition of Radio Property Proceeds.
"Newspaper Facility" shall mean the revolving credit facility entered
------------------
into by PNI and its Subsidiaries and the lenders named therein and all related
documents and instruments (including schedules and exhibits related thereto)
executed in connection therewith, collectively, all of which documents shall be
consistent with the terms of the commitment letter with respect thereto
previously delivered to the Lenders as amended, modified or supplemented from
time to time.
"Newspaper Indenture" shall mean the indenture (including all exhibits
-------------------
thereto), dated May 13, 1996, among PNI and IBJ Schroder Bank & Trust Company,
as trustee, pursuant to which the Newspaper Notes are to be issued, in the form
previously delivered to the Lenders.
"Newspaper Notes" shall mean the $140,000,000 aggregate principal
---------------
amount of Senior Subordinated Notes due 2006 of PNI.
"Newspaper Note Documents" shall mean (i) the Newspaper Indenture,
------------------------
(ii) the purchase agreement relating to the purchase of the Newspaper Notes and
(iii) all related documents and instruments (including schedules and exhibits
related thereto) executed in
<PAGE>
-106-
connection therewith, collectively, in the forms previously delivered to the
Agents.
"Non-Defaulting Lender" shall mean each Lender other than a Defaulting
---------------------
Lender.
"Notes" shall have the meaning assigned to that term in Section 1.04.
-----
"Notice of Borrowing" shall mean a written notice of Borrowing,
-------------------
substantially in the form of Exhibit A.
---------
"Notice of Conversion/Continuation" shall mean a written notice
---------------------------------
substantially in the form of Exhibit C.
---------
"Obligations" shall mean all amounts, direct or indirect, contingent
-----------
or absolute, of every type or description, and at any time existing, owing to
any of the Agents or Lenders pursuant to the terms of any Credit Document or
secured by any of the Security Documents.
"OCC" shall mean the Office of the Comptroller of the Currency.
---
"Officers' Certificate" shall mean, as applied to any corporation, a
---------------------
certificate executed on behalf of such corporation by its Chairman of the Board
(if an officer) or its President or one of its Vice Presidents and by its Chief
Financial Officer or its Treasurer or any Assistant Treasurer in their official
(and not individual) capacities.
"Operating Lease" of any Person, shall mean any lease (including
---------------
leases which may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) by such Person as Lessee which is not a
Capital Lease.
"OTS" shall mean the Office of Thrift Supervision.
---
"Parent" shall mean Park Acquisitions, Inc., a Delaware corporation.
------
"PBGC" shall mean the Pension Benefit Guaranty Corporation,
----
established pursuant to Section 4002 of ERI SA.
"PBI" shall mean Park Broadcasting, Inc., a Delaware corporation.
---
<PAGE>
-107-
"PBI Guarantee" shall mean and include, once executed and delivered,
-------------
the Guarantee - Park Broadcasting, Inc. executed by PBI substantially in the
form of Exhibit K-3 (except for such changes therein as shall have been approved
-----------
by the Borrower, the Agents and the Requisite Lenders).
"PCBs" shall mean polychlorinated biphenyls.
----
"Pension Plan" shall mean any Employee Benefit Plan, other than a
------------
Multiemployer Plan, which is subject to Section 412 of the Code or Section 3(2)
of ERISA.
"Permitted Encumbrances" shall mean (i) the Liens set forth on
----------------------
Schedule 11.01A; (ii) Liens in respect of purchase money Indebtedness permitted
- ---------------
by Section 6.04(vii) upon real or tangible personal property acquired by the
Borrower or its Subsidiaries after the date hereof (other than any Collateral or
any property or asset which is required to be pledged by a Loan Party as
Collateral pursuant to this Agreement and the other Credit Documents); provided,
--------
however, that (1) the principal amount of the Indebtedness secured by such Lien
- -------
does not exceed 100% of such cost and (2) such Lien does not extend to or cover
any other property or asset (including the income or profit therefrom) of the
Borrower or its Subsidiaries other than such item of property; (iii) Liens
securing the Broadcasting Facility and the Newspaper Facility; and (iv) Liens
securing Capital Leases permitted by Section 6.11; provided, however, that the
-------- -------
Liens in respect thereof do not extend to or cover any other property or asset
(including the income or profit therefrom) of the Borrower Group other than the
property or asset (or the income or profit therefrom) leased under such Capital
Lease.
"Person" shall mean any individual, corporation, partnership, joint
------
venture, association, joint venture, joint-stock company, limited liability
company, trust, unincorporated organization or any government, any agency or
political subdivision thereof.
"P-I-K Indenture" shall mean the indenture (including all exhibits
---------------
thereto), dated May 13, 1996, among the Borrower and IBJ Schroder Bank & Trust
Company, as trustee, pursuant to which the P-I-K Notes are to be issued, in the
form previously delivered to the Lenders.
"P-I-K Notes" shall mean the Senior Pay-in-Kind Notes due 2001 of the
-----------
Borrower.
<PAGE>
-108-
"P-I-K Note Documents" shall mean (i) the P-I-K Indenture, (ii) the
--------------------
purchase agreement relating to the purchase of the P-I-K Notes and (iii) all
related documents and instruments (including schedules and exhibits related
thereto) executed in connection therewith, collectively, in the form previously
delivered to the Agents.
"Pledged Collateral" shall mean all the Pledged Collateral as defined
------------------
in each of the General Security Agreements.
"Pledged Securities" shall mean all the Pledged Collateral as defined
------------------
in each of the Securities Pledge Agreements.
"PNI" shall mean Park Newspapers, Inc., a Delaware corporation.
---
"Post Closing Sale Documents" shall mean collectively, the Seattle
---------------------------
Documents and the Sale D ocuments.
"Prior Liens" shall mean Liens which, pursuant to the provisions of
-----------
any Security Document, are or may be superior to the Lien of any Security
Document.
"Proceeding" shall mean any claim, action, judgment, suit, hearing,
----------
governmental investigation, arbitration or proceeding, including by or before
any Governmental Authority.
"Pro Rata Share" shall mean, with respect to each of the Commitments
--------------
of, or Obligations owed to, each Lender, the percentage determined by dividing
such Lender's Commitment or Obligation, as the case may be by all of the
Lenders' Commitments or all such Obligations owed to such Lenders, as such Pro
Rata Share may change from time to time as a result of assignments made pursuant
to Section 10.04(b); provided, however, that with respect to any Obligations or
-------- -------
amounts owing or potentially owing to any Lender, Pro Rata Share shall mean the
percentage determined by dividing such Lender's Commitment by the Total
Commitments of the Non-Defaulting Lenders.
"Qualified Issuer" means (A) any Lender; and (B) any commercial bank
----------------
(i) which has capital and surplus in excess of $100,000,000, and (ii) the
outstanding short-term debt securities of which are rated at least A-2 by
Standard & Poor's Corporation or at least P-2 by Moody's Investors Service,
Inc., or carry an equivalent rating by nationally recognized rating agency if
both the two named rating agencies cease publishing ratings of investments.
<PAGE>
-109-
"Radio Guarantee" shall mean and include, once executed and delivered,
---------------
the Guarantee - Radio Guarantors executed by the subsidiaries listed on the
signature pages thereto, substantially in the form of Exhibit K-1 (except for
-----------
such changes therein as shall have been approved by the Borrower, the Agents and
the Requisite Lenders).
"Radio General Security Agreement" shall mean the General Securities
--------------------------------
Agreement -- Radio Pledgors executed by the Borrower and the Subsidiaries listed
on the signature pages thereto substantially in the form of Exhibit F-1 (except
-----------
for such changes therein as shall have been approved by the Borrower, the Agents
and the Requisite Lenders).
"Radio Property" shall mean any assets, including but not limited to
--------------
Broadcast Licenses, used in or related to, the operation by the Borrower Groups
of the Radio Stations, other than the assets held by Roy H. Park Broadcasting of
Washington, Inc., a Delaware corporation, on the date hereof.
"Radio Property Proceeds" shall mean the Cash Proceeds resulting from
-----------------------
any Asset Sale or Destruction involving Radio Properties (including any earnest
money previously paid to the Borrower Group with respect to any such Asset Sale)
net of, but only of (i) direct expenses of sale including reasonable attorney's
fees (other than any broker commissions and related expenses) and (ii)
reasonable reserves established in respect of indemnities; provided, however,
-------- -------
that expenses shall not include any income taxes due as a result of such sale.
"Radio Securities Pledge Agreement" shall mean the Securities Pledge
---------------------------------
Agreement -- Radio Pledgors executed by the Parent, the Borrower, the
Subsidiaries listed on the signature pages thereto, substantially in the form of
Exhibit E-1 (except for such changes therein as shall have been approved by the
- -----------
Borrower, the Agents and the Requisite Lenders).
"Radio Stations" means, collectively, those radio broadcast stations
--------------
listed on Schedule 11.01B he reto.
---------------
"RCRA" shall mean the Resource, Conservation and Recovery Act.
----
"Regulation D" shall mean Regulation D of the Federal Reserve Board.
------------
"Refinancing" shall have the meaning assigned to that term in the
-----------
Recitals hereto.
<PAGE>
-110-
"Refinancing Documents" shall mean, collectively, all of the
---------------------
agreements (including all related documents and instruments and all schedules,
annexes, appendices and exhibits to any thereof) executed by the Borrower or any
of its Subsidiaries in connection with the Refinancing, previously delivered to
the Agents.
"Requisite Lenders" shall mean Non-Defaulting Lenders holding not less
-----------------
than a majority of the Total Commitments held by Non-Defaulting Lenders, or if
the Total Commitments have been terminated, Non-Defaulting Lenders holding not
less than a majority of the outstanding Loans held by Non-Defaulting Lenders;
provided, however, that following an Event of Default, "Requisite Lenders" shall
- -------- -------
mean Non-Defaulting Lenders who do not, and whose Affiliates do not, at the
time, beneficially own any Broadcasting Notes (each such Lender, a
"Disinterested Lender") and who hold not less than a majority of the outstanding
Loans held by all Disinterested Lenders.
"RTC" shall mean the Resolution Trust Corporation.
---
"Sale Documents" shall mean, collectively, (i) all definitive
--------------
agreements for the sale of the Borrower's Radio Properties (including all
related documents and instruments and all schedules, annexes, appendices and
exhibits to any thereof) previously delivered to the Agents and (ii) all
agreements, documents and instruments (including all schedules, annexes,
appendices and exhibits to any thereof) entered into by any of the Borrower
Group relating to Radio Properties within 30 days of the termination or
expiration of any previously executed Sale Document, all of which are delivered
to the Agents.
"Scheduled Maturity Date" shall mean the date six months after the
-----------------------
Funding Date.
"Seattle Documents" shall mean all definitive agreements for the sale
-----------------
of the Borrowers interest in the Seattle Licenses and all related assets
(including all related documents and instruments and all schedules, appendices
and exhibits to any thereof) previously delivered to the Agents on or prior to
the date hereof.
"Seattle Licenses" shall mean the licenses, permits and authorizations
----------------
that are, as of any date of determination, required by the FCC with respect to
the operation of radio stations KEZX (AM) and KWJZ (FM) of Seattle, Washington
and all modifications, extensions and renewals thereof.
"SEC" shall mean the Securities and Exchange Commission.
---
<PAGE>
-111-
"SEC Regulation D" shall mean Regulation D as promulgated under the
----------------
Securities Act, as the same may be in effect from time to time.
"SEC Rule 144A" shall mean Rule 144A as promulgated under the
-------------
Securities Act, as the same may be in effect from time to time.
"Section 7 Company" shall mean the Parent, PNI or any member of the
-----------------
Borrower Group.
"Secured Parties" shall have the meaning specified in the Security
---------------
Documents.
"Securities" shall mean any stock, shares, voting trust certificates,
----------
bonds, debentures, options, warrants, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Securities Pledge Agreements" shall mean and include, once executed
----------------------------
and delivered, the TV Securities Pledge Agreement, the Radio Securities Pledge
Agreement and any securities pledge agreements delivered pursuant to Section
5.12 or 5.15.
"Securities Act" shall mean the United States Securities Act of 1933
--------------
and the rules and regulations promulgated thereunder.
"Security Documents" shall mean each of the the Securities Pledge
------------------
Agreements, the General Security Agreements, the Escrow Agreements and following
execution thereof, the Collateral Agency Agreement, and any other documents
utilized to pledge as Collateral for the Obligations any other property or
assets of whatever kind or nature.
"Solvent" shall mean, with respect to any Person on a particular date,
-------
that on such date, (a) the present fair value of the property of such Person
(valued as a going concern) is greater than the total amount of liabilities
(including contingent liabilities) of such Person; and (b) the present fair
saleable value of the assets of such Person (valued as a going concern), after
giving effect to any acquisitions or dispositions to be effected as of such
date, is not less than the amount that will be required to pay the probable
liability of such Person on its debts and liabilities (including contingent
liabilities) as they become absolute and matured; and (c) such Person does not
intend to, and
<PAGE>
-112-
does not believe that it will, incur debts or liabilities (including contingent
liabilities) beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person's
property would constitute an unreasonably small capital; and (e) such Person is
able to realize upon its assets and pay its debts and other liabilities
(including contingent liabilities) as they mature in the normal course of
business; and "Solvency" shall have the meaning correlative to the foregoing.
--------
"Stations" shall mean each radio or television station owned by a
--------
member of the Borrower Group.
"Subsidiary" shall mean, of any Person at any time, (i) any
----------
corporation more than 50% of the outstanding voting power of the Voting Stock of
which is owned or controlled, directly or indirectly, by such Person or by one
or more other Subsidiaries of such Person, or by such Person and one or more
other Subsidiaries thereof, or (ii) any limited partnership of which such Person
or any Subsidiary of such Person is a general partner, or (iii) any other
Person (other than a corporation or limited partnership) in which such Person,
or one or more other Subsidiaries of such Person, or such Person and one or more
other Subsidiaries thereof, directly or indirectly, has more than 50% of the
outstanding partnership or similar interests or has the power, by contract or
otherwise, to direct or cause the direction of the policies, management and
affairs thereof.
"Subsidiary Guarantees" shall mean the PBI Guarantee, the TV Guarantee
---------------------
and the Radio Guarantee.
"Subsidiary Guarantor" shall mean PBI, each Subsidiary of PBI and each
--------------------
other entity that becomes a Subsidiary of the Borrower which holds Radio
Property.
"Syndication Date" shall mean the date which is the fifth day after
----------------
the Funding Date.
"Taxes" shall mean any present or future taxes, levies, imposts,
-----
duties or other charges of whatsoever nature imposed by any Governmental
Authority, other than any tax on or measured by the income (whether gross or net
income), together with interest, penalties and expenses (including fees and
expenses of counsel) payable or incurred in connection therewith.
<PAGE>
-113-
"Tax Escrow Account" shall mean the Tax Escrow Account established in
------------------
accordance with the terms of the Tax Escrow Agreement.
"Tax Escrow Agreement" shall mean the Tax Escrow Agreement
--------------------
substantially in the form of Exhibit H, except for such changes as shall have
---------
been approved by the Borrower, the Agents and the Requisite Lenders.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement by and
---------------------
between the Parent and the Borrower dated as of Finding Date, previously
delivered to the Agents.
"Termination Proceeds" shall mean any cash received by the Borrower
--------------------
Group, regardless of when received or its denomination, which the Borrower Group
is entitled to retain as the result of the termination of any Sale Document.
"Third-Party Consent" shall mean any material order, consent,
-------------------
approval, license, permit, authorization or validation of, or filing, recording
or registration with, or notice to, or exemption or other action by any Person
other than any Loan Party or any Governmental Authority.
"Total Commitments" shall mean $58,000,000, the sum of the Commitments
-----------------
of each of the Lenders.
"Total Debt Leverage Ratio" shall mean, for any Person at any
-------------------------
Determination Date, the ratio of (i) the Consolidated Total Debt of such Person
as of such Determination Date to (ii) the Consolidated EBITDA of such Person for
the four fiscal quarter period ended immediately preceding of such Determination
Date.
"Transaction Documents" shall mean the P-I-K Note Documents, the
---------------------
Broadcasting Note Documents, the Newspaper Note Documents, the Refinancing
Documents and the Credit Documents, and "Transaction Document" shall mean any of
--------------------
them.
"Transferee" shall mean any participant or assignee.
----------
"TSCA" shall mean the Toxic Substances Control Act.
----
"TV Guarantee" shall mean and include, once executed and delivered,
------------
the Guarantee - TV Guarantors executed by the subsidiaries listed on the
signature pages thereto, substantially in the form of Exhibit K-2 (except for
-----------
such changes therein as shall have been approved by the Borrower, the Agents and
the Requisite Lenders).
<PAGE>
-114-
"TV General Security Agreement" shall mean the General Security
-----------------------------
Agreement executed by the Subsidiaries listed on the signature pages thereto,
substantially in the form of Exhibit E-2 (except for such changes therein as
-----------
shall have been approved by the Borrower, the Agents and the Requisite Lenders).
"TV Securities Pledge Agreement" shall mean the Securities Pledge
------------------------------
Agreement -- TV Pledgors executed by the Subsidiaries listed on the signature
pages thereto, substantially in the form of Exhibit F-2 (except for such changes
-----------
therein as shall have been approved by the Borrower, the Agents and the
Requisite Lenders).
"Type" shall mean a Base Rate Loan or a LIBOR Loan.
----
"UCC" shall mean the Uniform Commercial Code as in effect in any
---
applicable jurisdiction.
"Voting Stock" of a Person means Capital Stock of such Person of the
------------
class or classes pursuant to which the holders thereof have the general voting
power under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of such Person (irrespective of whether or not
at the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
"Warrants" means the Warrants to be issued in a unit with the P-I-K
-------
Notes.
"Wholly Owned Subsidiary" of any Person shall mean any Subsidiary of
-----------------------
such Person, but only if all of the capital stock or other ownership interests
in such Subsidiary, other than directors' or nominees' qualifying shares, is
owned directly or indirectly by such Person.
"Written" or "in writing" shall mean any form of written communication
------- ----------
or a communication by means of telex, telecopier device, telegraph or cable.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
MERRILL LYNCH & CO.,
as Arranger and Syndication Agent
By:________________________________
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as Administrative Agent
and Collateral Agent
By:________________________________
Name:
Title:
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:________________________________
Name:
Title:
ING CAPITAL ADVISORS, INC.
By:________________________________
Name:
Title:
MERRILL LYNCH CAPITAL CORPORATION
By:________________________________
Name:
Title:
<PAGE>
-116-
PARK COMMUNICATIONS, INC.
By:________________________________
Name:
Title:
PROTECTIVE LIFE INSURANCE COMPANY
By:________________________________
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By:________________________________
Name:
Title:
<PAGE>
Annex I
-------
MERRILL LYNCH & CO.
Address: World Financial Center
North Tower - 7th Floor
250 Vesey Street
New York, New York 10281-1307
Contact: Stephen Paras
Telephone: (212) 449-8221
Telecopier: (212) 449-8230
FIRST UNION NATIONAL BANK
Address: 301 South College Street
TW19
Charlotte, NC 28288-0735
Contact: Bruce Levy
Telephone: (704) 383-5292
Telecopier: (704) 374-4092
ING CAPITAL ADVISORS, INC.
Address: 333 South Grand Avenue
Suite 400
Los Angeles, CA 90071
Contact: Michael Hatley
Telephone: (213) 621-9062
Telecopier: (213) 626-6552
PROTECTIVE LIFE INSURANCE
Address: 1150 Two Galleria Tower
13455 Noel Road - LB#45
Dallas, TX 75240
Contact: Mark Okada
Telephone: (214) 233-4300
Telecopier: (214) 233-4343
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
Address: 1 Parkview Plaza
Oak Brook Terrace, IL 60181
Contact: Jeffery W. Maillet
Telephone: (708) 684-6438
Telecopier: (708) 684-6740
<PAGE>
Annex II
--------
Commitment
Commitments Percentage
----------- ----------
MERRILL LYNCH CAPITAL CORPORATION $21,200,000 36.6
Address: World Financial Center
c/o Merrill Lynch & Co.
North Tower - 7th Floor
250 Vesey Street
New York, New York 10281-1307
Contact:
Telephone:
Telecopier:
FIRST UNION NATIONAL BANK $18,000,000 39.0
Address: 301 South College Street
TW19
Charlotte, NC 28288-0735
Contact:
Telephone:
Telecopier:
ING CAPITAL ADVISORS, INC. $ 8,000,000 13.8
Address: 333 South Grand Avenue
Suite 400
Los Angeles, CA 90071
Contact:
Telephone:
Telecopier:
PROTECTIVE ASSET MANAGEMENT $ 5,000,000 8.6
Address: 1150 Two Galleria Tower
13455 Noel Road - LB#45
Dallas, TX 75240
Contact:
Telephone:
Telecopier:
VAN KAMPEN AMERICAN CAPITAL $ 5,800,000 10.0
PRIME RATE INCOME TRUST
Address: 1 Parkview Plaza
Oak Brook Terrace, IL 60181
Contact:
Telephone:
Telecopier:
<PAGE>
SCHEDULE 11.01A
Certain Permitted Encumbrances
------------------------------
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not, at the time, required by Section 5.04;
(ii) Liens in respect of property or assets of any Loan Party
imposed by law which (1) were incurred in the ordinary course of business,
such as carriers', warehousemen's and mechanics' Liens and other similar
Liens arising In the Ordinary Course, and (x) do not in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of any Loan Party
or (y) are being contested in good faith by appropriate proceedings that
have been promptly instituted and diligently pursued, and which proceedings
have the effect of staying the forfeiture or sale of the property or asset
subject to such Lien or (2) do not relate to material liabilities of any
Loan Party and do not in the aggregate materially detract from the value of
the property and assets of the Borrower Group taken as a whole;
(iii) Liens in connection with any attachment or judgment not
constituting an Event of Default under Section 7.07;
(iv) Liens (other than Liens imposed by ERISA) incurred or deposits
made in the Ordinary Course in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations (other than any Lien in respect of the
payment for borrowed money or the equivalent);
(v) easements, rights of way, restrictions, minor defects or
irregularities in title not interfering in any material respect with the
ordinary conduct of the business of the Borrower Group and which do not
materially impair for its intended purposes the real property (whether
owned or leased) to which it relates;
(vi) leases or subleases on real property granted to others not
interfering in any material respect with the business of any member of the
Borrower Group; and
(vii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement.
<PAGE>
Exhibit 10.6
INTERCORPORATE TAX SHARING AGREEMENT
THIS INTERCORPORATE TAX SHARING AGREEMENT ("Agreement"), executed on May
13, 1996 but effective as of January 1, 1996, among PARK ACQUISITIONS, INC.
("Parent Company") and its Affiliated Companies (as defined in this Agreement),
including without limitation, PARK COMMUNICATIONS, INC. ("Communications"), PARK
BROADCASTING, INC. ("Broadcasting") and PARK NEWSPAPERS, INC. ("Newspapers").
RECITALS:
A. This Agreement is entered into by the Parent Company and each other
member of the "affiliated group," as that term is defined in Section 1504 of the
Internal Revenue Code of 1986 as amended (the "Code"), of which the Parent
Company is a member (each such other member being called an "Affiliate Company"
and all such other members being called collectively the "Affiliated Companies")
and which are includible for any portion of a taxable year in the Parent
Company's consolidated federal Income Tax return (the term "Income Tax" and its
cognates being defined in Section 2.02 below). The "Parent Affiliated Group"
means the affiliated group of which the Parent Company is the common parent
company in any taxable year of the Parent Company.
B. The "Broadcasting Affiliated Group" means the group of those of the
Affiliated Companies which would be an affiliated group if Broadcasting were the
"common parent corporation" (as that term is used in Code Section 1504) and such
group did not include Newspapers, Communications or the Parent Company. The
"Newspapers Affiliated Group" means the group of those of the Affiliated
Companies which would be an affiliated group if Newspapers were the common
parent corporation and such group did not include Broadcasting, Communications
or the Parent Company. The term "PAI/PCI Affiliated Group" means the Parent
Company and Communications if they were the sole members of an affiliated group.
Each of the Broadcasting Affiliated Group, the Newspapers Affiliated Group and
the PAI/PCI Affiliated Group is sometimes referred to as a "Subgroup"; and each
of Broadcasting and Newspapers is sometimes referred to as a "Subparent."
C. The Parent Company and its Affiliated Companies wish to enter into an
agreement to provide for payments to Communications by the other Affiliated
Companies in respect of federal Income Tax liabilities and combined or
consolidated state Income Tax liabilities of the members of the Broadcasting
Affiliated Group and the Newspapers Affiliated Group, respectively (each such
payment being called an "Intercorporate Tax Payment"). This Agreement is not
intended to affect any separate company financial statement accounting, the
elected calculation of earnings and profits as determined under Code Section
1552 or any other tax or accounting issues.
D. Subject to the terms hereof, (i) each of the Broadcasting Affiliated
Group and the Newspapers Affiliated Group, which would have incurred a
consolidated (or combined) return Income Tax liability for any taxable period
ending on or after May 11, 1995 (a "Tax Reporting Period") with respect to which
the consolidated (or combined) Income Tax liability of the Parent Affiliated
Group is estimated, reported or finally determined, will make an Intercorporate
Tax Payment to Communications of the amount of Income Taxes which the respective
Subgroup would have incurred if the respective Subgroup had filed its own
consolidated (or combined)
<PAGE>
Income Tax return (a "Subreturn") for the Tax Reporting Period and all prior Tax
Reporting Periods to which this Agreement applies; and (ii) a net operating loss
or net capital loss (each individually a "tax loss") or a tax credit which is
not deemed under the terms of this Agreement to be utilized in a Tax Reporting
Period will be treated as carried forward (but not back) for application in the
Subgroup's future Subreturns.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
INTERCORPORATE TAX PAYMENTS
1.01. Carryforward Tax Losses or Tax Credits.
---------------------------------------
(a) Except as provided in Article IV below, a tax loss or tax credit
attributable to an Affiliate Company (a "Loss Affiliate Company") shall not
result in an Intercorporate Tax Payment to such Loss Affiliate Company or the
Subparent of the Subgroup in which it would be includible as a member. For
purposes of this Agreement, only tax losses and tax credits which arose in any
Tax Reporting Period will be considered; and subject to the SRLY rules and any
other rules limiting the availability of tax losses or tax credits, a tax loss
or tax credit attributable to a Loss Affiliate Company and not utilized under
the terms of this Agreement by a member of its Subgroup may be carried forward
but shall not be carried back.
(b) In determining the amounts of the Loss Affiliate Company's tax
losses and tax credits available for application for the current Tax Reporting
Period in the Subreturn of its Subgroup, there shall be excluded all tax losses
and tax credits of the Loss Affiliate Company which have been applied for any
prior Tax Reporting Period to the Income Tax liability of the Loss Affiliate
Company or another member of its Subgroup. The amount of all items of tax losses
and tax credits of the Parent Company and each Affiliate Company shall be
determined under the terms of this Agreement. In determining the Income Tax
liability of a Subgroup, only the tax losses and tax credits of Affiliate
Companies that are members of such Subgroup shall be taken into account. To the
extent that this Agreement does not cover the treatment or timing of a
particular item, the determination shall be made under the Code and applicable
regulations.
1.02. Overpayments. The portion of any overpayment of Income Taxes
-------------
resulting in a refund or application of a credit which, as reasonably determined
by Communications (in accordance with Section 4.01(b) below), is attributable to
an Affiliate Company for any prior Tax Reporting Period, and was originally paid
under Section 1.03(a) below by the Subparent of such Affiliate Company, shall be
credited against the future amounts due to Communications under Section 1.03(a)
with respect to such Affiliate and the Subgroup of which such Affiliate was a
member at the time of the overpayment.
1.03. Payments to Communications for Subgroup Income Tax Liabilities;
---------------------------------------------------------------
Application to State Liabilities.
- ---------------------------------
(a) The amount of the positive consolidated or combined return
Income Tax liability of each of, respectively, the Broadcasting Affiliated Group
and the Newspapers
-2-
<PAGE>
Affiliated Group (computed as if Broadcasting and Newspapers filed consolidated
or combined Subreturns and subject to adjustment under Section 1.02 above) for
any Tax Reporting Period shall be remitted by or on behalf of the respective
Subparent (Broadcasting or Newspapers, as the case may be) to Communications in
cash not later than five (5) days prior to the respective due date of Income
Taxes to which the Parent Company is subject, whether under Code Section 6655
(or an analogous provision of state Income Tax law) with regard to estimated
payments, Code Section 6151 (or an analogous provision of state Income Tax law)
with regard to payments required to accompany the consolidated (or combined)
Income Tax return of the Parent Affiliated Group, or any later date of any
actual payment of Income Taxes pursuant to amended return, administrative
adjustment or unappealable final determination of a court of competent
jurisdiction. (Moreover, on or before five (5) days prior to each of the above-
mentioned due dates, each member of a Subgroup shall pay to its respective
Subparent such member's share of the positive consolidated or combined return
Income Tax liability of the Subgroup based on such member's separate return
income.)
(b) In respect of state Income Tax liabilities, this Agreement shall
apply only to the consolidated or combined state Income Tax liabilities of the
Parent Affiliated Group or Communications for any Tax Reporting Period for which
the Parent Company or Communications files a consolidated or combined state
Income Tax return in which is included the results of operations of any one or
more other Affiliate Companies which is a member of the Broadcasting Affiliated
Group or the Newspapers Affiliated Group.
1.04 Tax Payment Obligations of Communications. Communications hereby
-----------------------------------------
agrees that it shall pay to the Parent Company or directly to the Internal
Revenue Service or appropriate state taxing authority, not later than when and
as due, the total amounts of all of the consolidated (and combined) federal and
state Income Tax liabilities of the Parent Affiliated Group for all Tax
Reporting Periods, but, in each instance, not in excess of the respective Income
Tax liability for which Communications would be liable if Communications and the
Affiliated Companies constituting its direct and indirect subsidiaries were
members of an affiliated group for federal or state Income Tax purposes of which
Communications was the common parent.
1.05 Cost of Administration. Each Affiliate Company shall pay, or
----------------------
reimburse Communications in the amount of, the portion reasonably allocated to
such Affiliate Company by Communications of all costs and expenses incurred in
connection with this Agreement, including, without limitation, all professional
fees, court costs and other expenses incurred in connection with the
determination or contest of an Affiliate Company's share of consolidated or
combined return Income Tax liability for a Tax Reporting Period or the
determination or contest of the consolidated (and combined) federal and state
Income Tax liabilities of the Parent Affiliate Group for such period. Payments
shall be made by the Affiliate Companies pursuant to this Section 1.05 no later
than ten (10) days after Communications has delivered a written invoice
therefor.
ARTICLE II
CERTAIN DETERMINATIONS
2.01. Determination of Subgroup Consolidated Return Tax Liability. The
-----------------------------------------------------------
consolidated (or combined) return Income Tax liability of each Subgroup shall be
computed as if the
-3-
<PAGE>
respective Subparent filed a consolidated return for the Tax Reporting Period
with respect to the consolidated (or combined) taxable income of the Affiliate
Companies which would be includible in the respective Subgroup, such
consolidated (or combined) taxable income being determined in accordance with
Treasury Regulation Section 1.1502-11 (or analogous or resulting provisions of
state law) as applied in respect of the separate taxable incomes of the members
of the respective Subgroup.
2.02. Income Taxes. For purposes of this Agreement the term "Income
-------------
Taxes" shall mean federal or state income taxes, taxes on preference items, and
any minimum tax or alternative minimum tax, imposed under the Code, any state
income tax statute or any successor statute, together with any interest and
penalties related thereto.
ARTICLE III
COVENANTS
3.01. Continuation of this Agreement. For so long as the Parent Company
-------------------------------
is permitted, it shall continue to file consolidated federal Income Tax returns
pursuant to Code Section 1501 for the Parent Affiliated Group, and this
Agreement shall continue in effect and be implemented and enforced in accordance
with its terms. Except as otherwise expressly agreed by the Parent Company,
Communications, Broadcasting and Newspapers, any corporation which becomes an
includible corporation in the Parent Affiliated Group shall be treated as a
party to this Agreement, effective as of the first day the results of its
operations for that day are included within the consolidated federal (or
consolidated or combined state) taxable income of the Parent Affiliated Group.
3.02. Decisions Affecting the Amount of the Intercorporate Tax Payments.
------------------------------------------------------------------
In determining the amount of Intercorporate Tax Payments to be made under the
terms of this Agreement, Communications shall have the right, in its sole
discretion, to make decisions concerning tax matters, refunds or credits of the
Parent Affiliated Group, which would affect (for purposes of determinations of
Intercorporate Tax Payments) the separate Income Tax return liability, refunds,
or credits of the respective Affiliated Companies (including, without
limitation, the making, not making, or revoking of elections, resolution of
disputes in connection with audits of Income Tax returns, and defending or
settling any Income Tax return or any matter related thereto). Each Affiliate
Company hereby irrevocably appoints Communications as its lawful agent and
attorney-in-fact to take such action (including, without limitation, the
execution of documents) as Communications may deem appropriate to effect the
foregoing.
3.03. Cooperation. Each Affiliate Company shall cooperate with
-----------
Communications in the filing, to the extent permitted by law, of a consolidated
federal income tax return and such combined state or local Income Tax returns as
Communications elects to file or cause to be filed, by maintaining such books
and records and providing such information as may be necessary or useful in the
filing of such returns and executing any documents and taking any actions which
Communications may reasonably request in connection therewith.
-4-
<PAGE>
ARTICLE IV
GAAP REPORTING
4.01. Special Procedures for GAAP Reporting Purposes.
----------------------------------------------
(a) Utilization of Tax Losses and Credits. If for a Tax Reporting
-------------------------------------
Period the total of the tax losses (or tax credits) of an Affiliate Company,
determined on a separate return basis, exceeds the total separate return income
(or Income Tax liability) of the Affiliate Company (so that not all available
tax losses or tax credits may be utilized on a separate return basis by such
Affiliate Company), then, subject to the SRLY rules, the rules of this Section
4.01(a) and any other rules limiting for tax purposes the intercompany
availability of tax losses or tax credits (other than the rule of Section
1.01(a) or 1.02 above limiting the use of losses and credits to members of the
same Subgroup as that of which such Affiliate Company is a member), the
available tax losses and tax credits, respectively, of the Affiliate Company
shall be deemed to be applied intercompany, First, in full against the separate
-----
return net income and Income Tax liability of the other Affiliate Companies
within the same Subgroup as that in which the Loss Affiliate Company would be
includible, with application, Second, against the positive separate return net
------
income and Income Tax liabilities of members of other Subgroups. Communications
shall be obligated to pay to the Affiliate Company which generated the tax
losses or tax credits deemed to be utilized under clause Second above, without
------
interest, on the day 90 days after the last to occur of the retirement of the
13.75% Senior Pay-in-Kind Notes due 2004 of Communications (the "PIK Notes"),
the 11.75% Senior Notes due 2004 of Broadcasting (the "Broadcasting Notes") and
the 11.875% Senior Notes due 2004 of Newspapers (the "Newspapers Notes"), or as
soon thereafter as is practicable, the amount of Subgroup Income Tax which would
have been saved had such tax losses or tax credits been applied for purposes of
this Agreement to reduce the Income Tax liability of any Subgroup.
Notwithstanding the foregoing, Communications shall have no payment obligation
with respect to any tax loss or tax credit which was utilized under this
Agreement to reduce the amount due by a Subgroup to Communications under Section
1.03 above. Moreover, for purposes solely of this Article IV (but not Articles I
through III above), any tax losses or tax credits deemed to be utilized by
another Subgroup under clause Second above shall not be available for
------
carryforward application under this Article IV (but shall be so available for
purposes of Articles I through III above).
(b) Penalties, Interest and Adjustments. Any penalty or interest
-----------------------------------
with respect to any underpayment of estimated or final consolidated (or
combined) Income Taxes of the Parent Affiliated Group shall be attributed to the
respective Affiliate Company to which the adjustment of income, deduction or
credit resulting in the penalty or interest is attributable, but if there are no
such Affiliate Companies, then to those Affiliate Companies with positive
separate return Income Tax liability (as reported, adjusted or redetermined) for
such Tax Reporting Period, ratably in proportion to their respective separate
return Income Tax liabilities. If any adjustment is made to the consolidated (or
combined) Income Tax liability of the Parent Affiliated Group for any Tax
Reporting Period by amended return, by adjustment upon audit by the Internal
Revenue Service (or state taxing authority) conceded by the Parent Company or
Communications, or by final nonappealable determination of a court of competent
jurisdiction, the overpayment or deficiency for such year shall be allocated to
those members or former members which had the items of income, deduction or
credit to which the overpayment or deficiency is attributable and, in the case
of a deficiency, shall be promptly paid, without
-5-
<PAGE>
interest, and in the case of an overpayment shall be credited as provided in
Section 1.02 above against the Income Tax liability of the Subgroup of which
such Affiliate Company is or was a member, and if any overpayment amount has not
been so credited before the day 90 days after the last to occur of the
retirement of the PIK Notes, the Broadcasting Notes and the Newspapers Notes,
such amount shall be paid by Communications to such member (or, if a former
member is involved, to such former member's Subparent), without interest.
ARTICLE V
MISCELLANEOUS
5.01. Amendments, Modifications and Supplements. Except as provided in
------------------------------------------
Section 3.01 above regarding additional includible corporations, no amendment,
modification or supplement relating hereto shall be effective unless in writing
signed by or on behalf of the party to be charged therewith. This Agreement may
be executed in one or more counterparts and with counterpart signature pages,
all of which, taken together, shall constitute one and the same instrument.
5.02. Duration; Survival. All covenants and agreements contained herein
-------------------
shall continue in full force and effect from and after the date hereof so long
as the Parent Affiliated Group remains and so long as the Parent Affiliated
Group continues filing a federal consolidated Income Tax return.
5.03. Governing Law. This Agreement shall be governed by, and construed
--------------
and enforced in accordance with, the laws of the State of Delaware, without
regard to its conflict of laws provisions.
5.04. Prior Agreements. This Agreement shall supersede all prior
----------------
agreements and understandings, if any, concerning tax sharing between the Parent
Company, Communications and any Affiliate Company.
5.05. Third-Party Beneficiaries. The parties hereto hereby acknowledge
-------------------------
and agree that the holders of the PIK Notes in purchasing the PIK Notes, and the
Trustee under the Indenture to the PIK Notes, are relying on the provisions
hereof and are intended to be third-party beneficiaries of the provisions
hereof.
5.06. Effect of Agreement. This Agreement shall determine the liability
-------------------
of Parent Company, Communications and the other Affiliated Companies to each
other as to the matters provided for herein, whether or not such determination
is effective for purposes of the Code or state or local revenue laws, financial
reporting purposes or any other purposes.
5.07. Right to Waive. Notwithstanding anything to the contrary herein
--------------
contained, any amount otherwise due to Communications hereunder may be waived by
Communications if not otherwise necessary to pay debt service and indebtedness
of Communications in the current or next succeeding year (after considering all
other sources of liquidity in the ordinary course); provided, however, that debt
-------- -------
service necessary shall not include any debt service in respect of any
indebtedness to the extent that the payment thereof may at the time be made by
the issuance of additional indebtedness (or by the capitalization of such debt
service).
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed and delivered this Agreement on the date first above
written, intending it to be effective as of January 1, 1996.
PARENT COMPANY
PARK ACQUISITIONS, INC.
By:________________________________
Donald R. Tomlin, Jr.,
Co-Chief Executive Officer
and
By:________________________________
Gary B. Knapp,
Co-Chief Executive Officer
PARK COMMUNICATIONS, INC.
By:________________________________
Name:______________________________
Title:_____________________________
PARK BROADCASTING, INC.
By:________________________________
Name:______________________________
Title:_____________________________
PARK NEWSPAPERS, INC.
By:________________________________
Name:______________________________
Title:_____________________________
[See attached counterpart signature pages]
-7-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
ROY H. PARK BROADCASTING, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
ROY H. PARK BROADCASTING OF
TENNESSEE, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
ROY H. PARK BROADCASTING OF THE
TRI-CITIES, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
ROY H. PARK BROADCASTING OF
ROANOKE, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-8-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
ROY H. PARK BROADCASTING OF
UTICA-ROME, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
BIRMINGHAM TELEVISION CORPORATION
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK BROADCASTING OF KENTUCKY, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
ROY H. PARK BROADCASTING OF
VIRGINIA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-9-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
PARK BROADCASTING OF LOUISIANA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
ROY H. PARK RADIO, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
ROY H. PARK FM BROADCASTING
OF EAST CAROLINA
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
ROY H. PARK BROADCASTING OF
THE MIDWEST, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-10-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
ROY H. PARK BROADCASTING OF
MINNESOTA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
ROY H. PARK BROADCASTING OF
THE LAKE COUNTRY, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
ROY H. PARK BROADCASTING OF
OREGON, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
CONTEMPORARY FM, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-11-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
ROY H. PARK BROADCASTING OF
SYRACUSE, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
ROY H. PARK BROADCASTING OF
WASHINGTON, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK RADIO OF GREATER NEW YORK, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK BROADCASTING OF IOWA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-12-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
PARK BROADCASTING OF FLORIDA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF ST. LAWRENCE, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF WAYNESBORO, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF MEDINA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-13-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
PARK NEWSPAPERS OF CLARK COUNTY, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF HUDSON, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF KENTUCKY, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
MOORESVILLE TRIBUNE, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-14-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
PARK NEWSPAPERS OF MOORE COUNTY, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF MINNESOTA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF MOREHEAD, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF IDAHO, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-15-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
PARK NEWSPAPERS OF NORTHEASTERN
NORTH CAROLINA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF EDEN, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF THE CUMBERLANDS,
INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF ROCKINGHAM, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-16-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
EFFINGHAM DAILY NEWS COMPANY
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF INDIANA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF OKLAHOMA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF CREEK, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-17-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
PARK NEWSPAPERS OF MORGANTON, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF IREDELL, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
THE CONCORD TRIBUNE, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF CONCORD, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-18-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
KANNAPOLIS PUBLISHING COMPANY, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
COLDWATER REPORTER COMPANY
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF MICHIGAN, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF LUMBERTON, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-19-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
CLINTON NEWSPAPERS, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF CLINTON, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF MARION, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF DEVILS LAKE, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-20-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
PARK NEWSPAPERS OF GEORGIA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF VIRGINIA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
LOCKPORT UNION SUN & JOURNAL, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
RHP NEWSPAPERS, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-21-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
PARK NEWSPAPERS OF ILLINOIS, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF FLORIDA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
THE PILOT COMPANY, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF SAPULPA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-22-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
PARK NEWSPAPERS OF STATESVILLE, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF IRADELL, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
LOCKPORT PUBLICATIONS, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PRINCE WILLIAM PUBLISHING COMPANY
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-23-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
MCALESTER PUBLISHING COMPANY
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF MOORESVILLE, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
SOUTH IDAHO NEWSPAPERS, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK RADIO OF IOWA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-24-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
PARK OF MONTGOMERY I, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK OF MONTGOMERY II, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF SUSQUEHANNA, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
PARK NEWSPAPERS OF HONESDALE, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-25-
<PAGE>
AFFILIATE COMPANY
COUNTERPART SIGNATURE PAGE
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
PARK NEWSPAPERS OF NORWICH, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
-26-
<PAGE>
[Form of:]
ADDENDUM
TO
INTERCORPORATE TAX SHARING AGREEMENT
AMONG
PARK ACQUISITIONS, INC. AND ITS AFFILIATED COMPANIES
DATED JANUARY 1, 1996
By the execution and delivery of this Addendum by its duly authorized
officer, the undersigned Affiliate Company agrees to be bound and benefited, by
and in accordance with, the terms of this Intercorporate Tax Sharing Agreement,
as of the date of its first inclusion in the Parent Company Affiliated Group.
AFFILIATE COMPANY
_____________________________________
By:__________________________________
Name:________________________________
Title:_______________________________
Date of Execution:___________________
-27-
<PAGE>
Exhibit 10.7
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") is made and
entered into as of the 13th day of May, 1996 by and among Park Acquisitions,
Inc., a Delaware corporation ("PAI"), Park Communications, Inc., a Delaware
corporation ("PCI"), Park Broadcasting, Inc., a Delaware corporation ("PBI") and
Park Newspapers, Inc., a Delaware corporation ("PNI").
WHEREAS, PCI owns all of the issued and outstanding capital stock of
each of PBI and PNI; and
WHEREAS, each of PCI and PBI, through PBI's subsidiaries, is engaged
in the business of television broadcasting and each of PCI and PNI, through
PNI's subsidiaries, is engaged in the business of newspaper publication; and
WHEREAS, in connection with such businesses, each of PCI, PBI and PNI
desires to retain PAI to provide administrative and financial consulting
assistance as may be necessary to enable each of PCI and PBI and PNI and their
respective subsidiaries to conduct its business (the "Advisory Services"); and
WHEREAS, each of PCI, PBI and PNI desires to contract with PAI, and
PAI desires to accept such engagement from each of PCI, PBI and PNI, for the
provision of the Advisory Services upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein and for other good and valuable consideration, and
intending to be legally bound hereby, PAI, PCI, PBI and PNI agree as follows:
1. Advisory Services.
-----------------
(a) For the period of time extending from May 13, 1996 until May
16, 1997, and as shall be renewed on an annual basis unless either party
provides the other with at least thirty (30) days' written notice prior to any
such annual renewal that this Agreement will not be so renewed, PAI hereby
accepts such engagement to provide the Advisory Services, subject to the terms
and conditions of this Agreement. Such Advisory Services shall include, but not
necessarily be limited to, the following:
(i) financial counseling, including negotiation and
placement of bank financings and refinancings;
(ii) assisting in financial and long-term strategic planning
and monitoring of actual results relative to plans;
(iii) assisting in investment decisions;
<PAGE>
(iv) assisting in finding, negotiating and closing
acquisitions to be made by any of PCI, PBI and PNI; and
(v) assisting in any sale or divestiture of assets,
properties or business of any of PCI, PBI or PNI.
(b) As compensation for its efforts under this Agreement, PCI
shall, if, and to the extent permitted under the terms of that certain Indenture
dated May 13, 1996 between PCI and IBJ Schroder Bank & Trust Company, as trustee
("IBJ Schroder"), that certain Indenture dated May 13, 1996 between PBI and IBJ
Schroder, as trustee, and that certain Indenture dated May 13, 1996 between PNI
and IBJ Schroder, as trustee (collectively, the "Indentures"), pay to PAI during
the term of this Agreement and any extensions thereof, a consulting fee of
$250,000 (of which $125,000 shall be contributed by each of PBI and PNI and
their respective subsidiaries) on the next business day following each May 15th
and November 15th of each year.
2. Consequential and Other Damages.
-------------------------------
PAI shall not be liable to any of PCI, PBI or PNI for any
special, indirect, incidental or consequential damages whatsoever which in any
way arise out of, relate to, or are a consequence of, PAI's or its employees',
officers', equity holders', agents' or servants' performance or nonperformance
under this Agreement.
3. Relationship.
------------
PAI, on the one hand, and any of PCI, PBI or PNI, on the other
hand, shall in no event be construed as joint venturers or partners of each
other as a consequence of the relationship contemplated under this Agreement.
Neither PAI, on the one hand, nor any of PCI, PBI or PNI, on the other hand,
shall have the power to bind or obligate the other.
4. Assignment.
----------
Except as may otherwise be prohibited by the Indentures, PAI may
sell, assign or otherwise transfer its right, title and interest in and under
this Agreement, in whole or in part to any entity controlled, directly or
indirectly, by the current principals of PAI. PCI, PBI and PNI may sell, assign
or otherwise transfer their respective rights, title and interests in and under
this Agreement, in whole or in part, to any entity controlling, controlled by or
under common control with PCI, PBI (in the case of an assignment by PCI or PBI)
or PNI (in the case of an assignment by PCI or PNI) or any entity that purchases
all or substantially all of the assets of PCI, PBI (in the case of an assignment
by PCI or PBI) or PNI (in the case of an assignment by PCI or PNI). Any
assignment under this paragraph shall be of no force and effect unless and until
the assignee thereunder shall assume, in
-2-
<PAGE>
writing, any and all obligations (or in the event of a partial assignment, such
obligations as are reasonably appropriate) of the assignor arising under this
Agreement.
5. General Matters.
---------------
(a) Captions. The captions utilized in this Agreement are for
--------
the purposes of identification only and shall not control or affect the meaning
or construction of any of the provisions hereof.
(b) Integration. This Agreement constitutes the entire agreement
-----------
between the parties with respect to the subject matter hereof and will supersede
all previous negotiations, representations, commitments and writings.
(c) Modification and Waiver. This Agreement may not be amended,
-----------------------
released, discharged, rescinded or abandoned, except by a written agreement duly
executed by each of the parties hereto. The failure of any party hereto at any
time to enforce any of the provisions of this Agreement will in no way
constitute or be construed as a waiver of such provision or of any other
provision hereof, nor in any way affect the validity of, or the right thereafter
to enforce, each and every provision of this Agreement.
(d) Governing Law. This Agreement and its validity,
-------------
construction, administration and all rights hereunder, will be governed by the
laws of the Commonwealth of Kentucky without regard to its conflict of laws
provisions. Any suit or proceeding arising out of, relating to or mentioning
this Agreement shall be commenced only in a state or Federal court located in
Lexington, Kentucky and each party to this Agreement hereby consents to the
jurisdiction and venue of such court.
(e) Severability. The invalidity or unenforceability of any
------------
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
(f) Notices. Wherever provision is made in this Agreement for
-------
the giving, service or delivery of any notice, statement or other instrument,
such notice shall be in writing and shall be deemed to have been duly given,
served and delivered, if (i) delivered by hand, (ii) mailed by United States
registered or certified mail or (iii) sent by facsimile, addressed as follows:
If to: Park Acquisitions, Inc.
Dr. Gary B. Knapp
1700 Vine Center Office Tower
333 West Vine Street
Lexington, KY 40507
Fax: (606) 233-4007
-3-
<PAGE>
and
Donald R. Tomlin, Jr.
Tomlin & Company, Inc.
1401 Main Street
Suite 825
Columbia, SC 29201
Fax: (803) 771-6828
If to: Park Communications, Inc.,
Park Broadcasting, Inc., or
Park Newspapers, Inc.
1700 Vine Center Office Tower
333 West Vine Street
Lexington, KY 40507
Attn: Wright M. Thomas
Fax: (606) 226-9609
Each party hereto may change the address to which notices are to be sent
hereunder by giving written notice of such change to the other party in the
manner herein provided for giving notices. Any notice hand delivered shall be
deemed to have been given on the date it is delivered, any notice delivered by
registered or certified mail shall be deemed to have been given on the date
specified on the return receipt and any notice sent by facsimile shall be deemed
to have been given on the date it was sent (so long as the sender receives
confirmation of transmission).
(g) Counterparts. This Agreement may be executed simultaneously in
------------
several counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same instrument.
[The remainder of this page left intentionally blank]
-4-
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound hereby,
the parties hereto have executed this Agreement as of the date first above
written.
PARK ACQUISITIONS, INC.
By:_____________________________________
Dr. Gary B. Knapp
By:_____________________________________
Donald R. Tomlin, Jr.
PARK COMMUNICATIONS, INC.
By:_____________________________________
Wright M. Thomas, President
PARK BROADCASTING, INC.
By:_____________________________________
Wright M. Thomas, President
PARK NEWSPAPERS, INC.
By:_____________________________________
Wright M. Thomas, President
-5-
<PAGE>
Exhibit 10.8
CBS TELEVISION NETWORK
----------------------
A Division of CBS Inc.
----------------------
AFFILIATION AGREEMENT
_________________
CBS TELEVISION NETWORK, A Division of CBS Inc., 51 West 52 Street, New York, New
York 10019 ("CBS"), and ROY H. PARK BROADCASTING, INC., P.O. Box 898,
Greenville, North Carolina 27834 ("Broadcaster"), licensed to operate
television station WNCT-TV at Greenville, North Carolina on channel number 9
("Affiliated Station"), hereby mutually covenant and agree, as of the 1st day of
October, 1995, as follows:
1. Offer, Acceptance and Delivery of Network Programs.
Broadcaster shall have a "first call" on CBS network television programs
("Network Programs") as follows:
(a) Offer of Network Programs.
CBS shall offer to Broadcaster for broadcasting by Affiliated Station those
Network Programs which are to be broadcast on a network basis by any television
broadcast station licensed to operate in Affiliated Station's community of
license.
(b) Acceptance of Network Programs.
As to any offer described in Paragraph 1(a) of this Agreement, Broadcaster
may accept such offer only by notifying CBS, by means of CBS's computer-based
communications system, of such acceptance within 72 hours (exclusive of
Saturdays, Sundays and holidays), or such longer period as CBS may specify
therein, after such offer; provided, however, that, if the first broadcast
referred to in such offer is scheduled to occur less than 72 hours after the
making of the offer, Broadcaster shall notify CBS of the acceptance or rejection
of such offer as promptly as possible and in any event prior to the first
broadcast time specified in such offer. Such acceptance shall constitute
Broadcaster's agreement that Affiliated Station will broadcast such Network
Program or Programs in accordance with the terms of this Agreement and of such
offer, and so long as Affiliated Station so broadcasts such Network Program or
Programs, CBS will not, subject to its rights in the program material, authorize
the broadcast thereof on a network basis by any other television broadcast
station licensed to operate in Affiliated Station's community of license;
provided, however, that CBS shall have the right to authorize any television
broadcast station, wherever licensed to operate, to broadcast any Network
Program consisting of an address by the President of the United States of
America on a subject of public importance or consisting of coverage of a matter
of immediate national concern. If, as to any Network Program offered hereunder,
Broadcaster does not notify CBS as provided for in this
-1-
<PAGE>
Paragraph 1(b), Broadcaster shall have no rights with respect to such Network
Program, and CBS may offer such Network Program on the same or different terms
to any other television broadcast station or stations licensed to operate in
Affiliated Station's community of license; provided, however, that, if any
Network Program offered hereunder is accepted, by Affiliated Station, upon any
other terms or conditions to which CBS agrees in writing, then the provisions of
this Agreement shall apply to the broadcast of such Network Program except to
the extent such provisions are expressly varied by the terms and conditions of
such acceptance as so agreed to by CBS.
(c) Delivery of Network Programs.
Any obligation of CBS to furnish Network Programs for broadcasting by
Affiliated Station is subject to CBS's making of arrangements satisfactory to it
for the delivery of Network Programs to Affiliated Station.
2. Payment to Broadcasters.
(a) Definitions.
(i) "Live Time Period" means the time period or periods specified
by CBS in its initial offer of a Network Program to
Broadcaster for the broadcast of such Network Program over
Affiliated Station; (ii) "Affiliated Station's Network Rate"
shall be $673 and is used herein solely for purposes of
computing payments by CBS to Broadcaster; (iii) "Commercial
Availability" means a period of time made available by CBS
during a Network Commercial Program for one or more Network
Commercial Announcements or local cooperative commercial
announcements; and (iv) "Network Commercial Announcements"
means a commercial announcement broadcast over Affiliated
Station during a Commercial Availability and paid for by or on
behalf of one or more CBS advertisers, but does not include
announcements consisting of billboards, credits, public
service announcements, promotional announcements and
announcements required by law.
(b) Payment for Broadcast of Programs.
For each Network Commercial Program or portion thereof, except those
specified in Paragraph 2(c) hereof, which is broadcast over Affiliated Station
during the Live Time Period therefor and the Live Time Period for which is set
forth in the table below, CBS shall pay Broadcaster the amount resulting from
multiplying the following:
(i) Affiliated Station's Network Rate; by
-2-
<PAGE>
(ii) the percentage set forth below opposite such time period
(which, unless otherwise specified, is expressed in Affiliated
Station's then-current local time); by
(iii) the fraction of an hour substantially occupied by such program
or portion thereof; by
(iv) the fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied
by Network Commercial Announcements.
Table
-----
Monday through Friday
7:00 a.m. - 10:00 a.m. ....................11.2%
10:00 a m. - 12:00 p.m. .....................15%
12:00 p.m. - 4:00 p.m. .......................6%
4:00 p.m. - 5:00 p.m. .......................12%
5:00 p.m. - 8:00 p.m. .......................15%
8:00 p.m. - 11:00 p.m. ......................30%
11:00 p.m. - 12:00 a.m. .....................15%
Saturday
8:00 am. - 9:00 a.m. .........................7%
9:00 a m. - 5:00 p.m. .......................12%
5:00 p.m. - 8:00 p.m. .......................15%
8:00 p.m. - 11:00 p.m. ......................30%
11:00 p.m. - 12:00 a.m. .....................15%
Sunday
11:30 am. - 5:00 p.m. .......................12%
5:00 p.m. - 7:00 p.m. .......................15%
7:00 p.m. -11:00 p.m. .......................30%
11:00 p.m. - 12:00 a m. .....................15%
For each Network Program or portion thereof, except those specified in Paragraph
2(c) hereof, which is broadcast by Affiliated Station during a time period other
than the Live Time Period therefor and the Live Time Period for which is set
forth in the table above, CBS shall pay Broadcaster as if Affiliated Station had
broadcast such program or portion thereof during such Live Time Period, except
that:
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(i) if the percentage set forth above opposite the time period
during which Affiliated Station broadcast such program or
portion thereof is less than that set forth opposite such Live
Time Period, then CBS shall pay Broadcaster on the basis of
the time period during which Affiliated Station broadcast such
program or portion thereof; and
(ii) if the time period or any portion thereof during which
Affiliated Station broadcast such program is not set forth in
the table above, then CBS shall pay Broadcaster in accordance
with Paragraph 2(c) hereof.
(c) Payment for Broadcast of Other Programs.
For the following programs, the percentages listed below (rather than those
daypart percentages set forth in the table in Paragraph 2(b) hereinabove) shall
be used in computing payment to Affiliated Station:
Monday-Friday Daytime Game shows .........................15%
Monday-Friday Continuing Dramas ...........................6%
Monday-Friday Late Night Daypart ......46.7% per telecast for
live clearance or 11.7%
per telecast for delayed
clearance
Monday - Friday CBS EVENING NEWS ..........................5%
CBS Sports programs .......................................0%
CBS SUNDAY MORNING and FACE THE NATION ....................8%
Notwithstanding the payment obligations set forth in Paragraph 2(b) above,
CBS shall pay Broadcaster such amounts as specified in CBS's program offer for
Network Programs broadcast by Affiliated Station consisting of (i) special event
programs (including, but not limited to, such programs as awards programs, mini-
series, movie specials, entertainment specials, special-time-period broadcasts
of regularly-scheduled series, and news specials such as political conventions,
election coverage, presidential inaugurations and related events), (ii) paid
political programming, and (iii) programs for which CBS specified a Live Time
Period, or which Affiliated Station broadcast during a time period, any portion
of which is not set forth in the table above.
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(d) Deduction.
From the amounts otherwise payable to Broadcaster hereunder, there shall be
deducted, for each week of the term of this Agreement, a sum equal to 168% of
Affiliated Station's Network Rate.
(e) Changes in Rate.
CBS may reduce Affiliated Station's Network Rate in connection with a re-
evaluation and reduction of the Affiliated Station Network Rate of CBS's
affiliated stations in general, by giving Affiliated Station at least thirty-
days' prior notice of such reduction in Affiliated Station's Network Rate in
which event Broadcaster may terminate this Agreement, effective as of the
effective date of any such reduction, on not less than fifteen-days' prior
notice to CBS. In order to reflect differences in the importance of compensation
payments to stations in markets of varying size, the size of any general
reduction of the Network Rate of CBS's affiliated stations pursuant to this
Paragraph 2(e) may vary to a reasonable degree according to each station's
market-size category (i.e., 1-50, 51-100, 101-150 or 151+). Further, CBS agrees
that in the event of such an across-the-board rate reduction, Affiliated
Station's Network Rate shall be reduced accordingly until thirty days after the
effective date of the reduction, at which time, unless an additional
corresponding benefit of equal value has accrued to the station, the Network
Rate shall be restored to the previous level and a retroactive adjustment shall
be made to make up the compensation difference.
(f) Time of Payment.
CBS shall make the payments hereunder reasonably promptly after the end of
each four-week or five-week accounting period of CBS for Network Commercial
Programs broadcast during such accounting period.
(g) Reports.
Broadcaster shall submit to CBS in the manner requested by CBS such reports
as CBS may reasonably request concerning the broadcasting of Network Programs by
Affiliated Station.
3. Term and Termination.
(a) Term.
The term of this Agreement shall be the period commencing on October 1,
1995 and expiring on December 31, 2004; provided, however, that, unless
Broadcaster or CBS shall notify the other at least six months prior to the
expiration of the original period or any subsequent five-year period that the
party giving such notice does not wish to have the term extended beyond such
period, the term of this Agreement shall be automatically extended upon the
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expiration of the original period and each subsequent extension thereof for an
additional period of five years. Notwithstanding any provision of any offer or
acceptance under Paragraph 1 hereof, upon the expiration or any termination of
the term of this Agreement, Broadcaster shall have no right whatsoever to
broadcast over Affiliated Station any Network Program.
(b) Termination on Transfer of License or Interest in Broadcaster.
Broadcaster shall notify CBS forthwith if any application is made to the
Federal Communications Commission relating to a transfer either of any interest
in Broadcaster or of Broadcaster's license for Affiliated Station. In the event
that CBS shall reasonably disapprove of the proposed transferee, CBS shall have
the right to terminate this Agreement effective as of the effective date of any
such transfer (except a transfer within the provisions of Section 73.3540(f) of
the Federal Communications Commission's present Rules and Regulations) by giving
Broadcaster notice thereof, and of its reasons for disapproving of the proposed
transferee, within thirty days after the date on which Broadcaster gives CBS
notice of the making of such application. If CBS does not so terminate this
Agreement, Broadcaster shall, prior to the effective date of any such transfer
of any interest in Broadcaster or of Broadcaster's license for Affiliated
Station, and as a condition precedent to such transfer, procure and deliver to
CBS, in form reasonably satisfactory to CBS, the agreement of the proposed
transferee that, upon consummation of the transfer, the transferee will
unconditionally assume and perform all obligations of Broadcaster under this
Agreement. Upon delivery of said agreement to CBS, in form satisfactory to it,
the provisions of this Agreement applicable to Broadcaster shall, effective upon
the date of such transfer, be applicable to such transferee.
Broadcaster's obligations to procure the assumption of this Agreement by
any transferee of Affiliated Station as a condition precedent to such transfer
shall be deemed to be of the essence of this Agreement; further, Broadcaster
expressly recognizes that money damages will be inadequate to compensate CBS for
the breach of such obligation, and that CBS shall accordingly be entitled to
equitable relief to enforce the same.
(c) Termination on Change of Transmitter Location, Power, Frequency or
Hours of Operation of Affiliated Station.
Broadcaster shall notify CBS forthwith if application is made to the
Federal Communications Commission to modify the transmitter location, power or
frequency of Affiliated Station or Broadcaster plans to modify the hours of
operation of Affiliated Station. CBS shall have the right to terminate this
Agreement, effective upon the effective date of such modification, by giving
Broadcaster notice thereof within thirty (30) days after the date on which
Broadcaster gives CBS notice of the application or plan for such modification.
If Broadcaster fails to notify CBS as required herein, then CBS shall have the
right to terminate this Agreement by giving Broadcaster thirty (30) days' notice
thereof within thirty (30) days of the date on which CBS first learns of such
application.
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(d) Termination in the Event of Bankruptcy.
Upon one (1) month's notice, CBS may terminate this Agreement if a petition
in bankruptcy is filed by or on behalf of Broadcaster, or Broadcaster otherwise
takes advantage of any insolvency law, or an involuntary petition in bankruptcy
is filed against Broadcaster and not dismissed within thirty (30) days
thereafter, or if a receiver or trustee of any of Broadcaster's property is
appointed at any time and such appointment is not vacated within thirty (30)
days thereafter (it being understood that Broadcaster will have a similar right
of termination upon the occurrence of any such event with respect to CBS).
(e) Termination in the Event of Breach.
Upon a breach of any material representation, warranty or agreement set
forth in this Agreement by any party (the "Defaulting Party"), the other party
(the "Non-Defaulting Party") may give written notice of such breach to the
Defaulting Party, whereupon the Defaulting Party shall have thirty days to cure
such breach, or if such breach is not capable of cure within thirty days, to
commence and thereafter diligently pursue such cure. If the Defaulting Party
fails to cure or to commence to cure within such thirty days, the Non-Defaulting
Party may exercise all available legal and equitable rights and remedies,
including, without limitation, the right to terminate this Agreement.
4. Use of Network Programs.
(a) General.
Broadcaster shall not broadcast any Network Program over Affiliated Station
unless such Network Program has first been offered by CBS to Broadcaster for
broadcasting over Affiliated Station and has been accepted by Broadcaster in
accordance with this Agreement. Except with the prior written consent of CBS,
Broadcaster shall neither sell any Network Program, in whole or in part, or any
time therein, for sponsorship, nor otherwise use Network Programs except as
specifically authorized in this Agreement. Affiliated Station shall not
broadcast any commercial announcement or announcements during any interval,
within a Network Program, which is designated by CBS to Affiliated Station as
being for the sole purpose of making a station identification announcement.
Broadcaster shall, with respect to each Network Program broadcast over
Affiliated Station, broadcast such Network Program in its entirety (including
but not limited to commercial announcements, billboards, credits, public service
announcements, promotional announcements and network identification), without
interruption, alteration, compression, deletion or addition of any kind, from
the beginning of the Network Program to the final system cue at the conclusion
of the Network Program. Nothing herein shall be construed as preventing
Broadcaster's deletion of (i) part of a Network Program in order to broadcast an
emergency announcement or news bulletin; (ii) a promotional announcement for a
Network Program not to be broadcast over Affiliated Station (provided that
Affiliated Station shall broadcast an alternative promotional announcement for
CBS network programming in place of the deleted promotional
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announcement); (iii) such words, phrases or scenes as Broadcaster, in the
reasonable exercise of its judgment, determines it would not be in the public
interest to broadcast over Affiliated Station; provided, however, that
Broadcaster shall not substitute for any material deleted pursuant to this
clause (iii) any commercial or promotional announcement of any kind whatsoever;
and provided further that Broadcaster shall notify CBS of every such deletion
within 72 hours thereof. Broadcaster shall not, without CBS's prior written
consent, authorize or permit any Network Program, recording, or other material
furnished by CBS to Broadcaster or Affiliated Station hereunder to be recorded,
duplicated, rebroadcast, retransmitted or otherwise used for any purpose
whatsoever other than broadcasting by Affiliated Station as provided herein;
except that Broadcaster may assert a right to carriage of Affiliated Station's
signal by a cable system pursuant to the provisions of Section 4 of the Cable
Consumer Protection and Competition Act of 1992 ("the 1992 Cable Act") and may,
to the extent permitted by paragraph 4(b) hereof, grant consent to the
retransmission of such signal by a cable system or other multichannel video
programming distributor, as defined by said Act, pursuant to the provisions of
Section 6 thereof.
(b) Retransmission Consent.
Broadcaster may grant consent to the retransmission of Affiliated Station's
signal by a cable system or other multichannel video programming distributor
pursuant to the provisions of Section 6 of the 1992 Cable Act (hereafter
"retransmission consent"), provided that one of the following conditions applies
at the time retransmission consent is granted:
(i) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
serves television homes within Affiliated Station's television
market.
(ii) the majority of television homes served by the cable system or
other multichannel program service on which Affiliated
Station's signal is to be retransmitted are within a county or
community in which Affiliated Station's signal is, and has
been since October 5, 1992, "significantly viewed" as defined
in Section 76.54 of the FCC's rules; or
(iii) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
carried such signal on October 5, 1992, and does not receive
such signal by satellite delivery.
Notwithstanding anything to the contrary in the foregoing, in no case shall
retransmission consent be granted to a television receive-only satellite
service, or a direct broadcast satellite service, if Affiliated Station's signal
is to be retransmitted by such service to television homes outside of Affiliated
Station's television market other than "unserved household(s)," as that term
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is defined in Section 119(d) of Title 17, United States Code, as in effect on
October 5, 1992. For purposes of this paragraph, a station's "television market"
shall be defined in the same manner as set forth in Sections 76.55(e) and 76.59
of the FCC's rules.
(c) Taped Recordings of Network Programs.
When authorized to make a taped delayed broadcast of a Network Program,
Broadcaster shall use Broadcaster-owned tape to record the Network Program when
transmitted by CBS only for a single broadcast by Affiliated Station and shall
erase the Program recorded on the tape within 24 hours of broadcasting the
Network Program and observe any limitations which CBS may place on the
exploitation of the Network Program so recorded and erased.
5. Rejection, Refusal, Substitution and Cancellation of Network Programs.
(a) Rights of Broadcaster and CBS.
With respect to Network Programs offered to or already accepted hereunder
by Broadcaster, nothing in this Agreement shall be construed to prevent or
hinder:
(i) Broadcaster from rejecting or refusing any such Network
Program which Broadcaster reasonably believes to be
unsatisfactory or unsuitable or contrary to the public
interest, or from substituting a program which, in
Broadcaster's opinion, is of greater local or national
importance; or
(ii) CBS from substituting one or more other Network Programs, in
which event CBS shall offer such substituted program or
programs to Broadcaster pursuant to the provisions of
Paragraph 1 hereof; or
(iii) CBS from canceling one or more Network Programs.
(b) Notice.
In the event of any such rejection, refusal, substitution or cancellation
by either party hereto, such party shall notify the other thereof as soon as
practicable by telex or by such computer-based communications system as CBS may
develop for notifications of this kind. Notice given to CBS shall be addressed
to CBS Affiliate Relations.
6. Disclosure of Information.
CBS shall endeavor in good faith, before furnishing any Network Program, to
disclose to Broadcaster information of which CBS has knowledge concerning the
inclusion of any matter in such Network Program for which any money, service or
other valuable consideration is
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directly or indirectly paid or promised to, or charged or accepted by, CBS or
any employee of CBS or any other person with whom CBS deals in connection with
the production or preparation of such Network Program. As used in this Paragraph
6, the term "service or other valuable consideration" shall not include any
service or property furnished without charge or at a nominal charge for use in,
or in connection with, any Network Program "unless it is so furnished in
consideration for an identification in a broadcast of any person, product,
service, trademark, or brand name beyond an identification which is reasonably
related to the use of such service or property on the broadcast," as such words
are used in Section 317 of the Communications Act of 1934 as amended. The
provisions of this Paragraph 6 requiring the disclosure of information shall not
apply in any case where, because of a waiver granted by the Federal
Communications Commission, an announcement is not required to be made under said
Section 317. The inclusion in any such Network Program of an announcement
required by said Section 317 shall constitute the disclosure to Broadcaster
required by this Paragraph 6.
7. Indemnification.
CBS will indemnify Broadcaster from and against any and all claims,
damages, liabilities, costs and expenses arising out of the broadcasting,
pursuant to this Agreement, of Network Programs furnished by CBS to the extent
that such claims, damages, liabilities, costs and expenses are (i) based upon
alleged libel, slander, defamation, invasion of the right of privacy, or
violation or infringement of copyright or literary or dramatic rights; (ii)
based upon the broadcasting of Network Programs as furnished by CBS, without any
deletions by Broadcaster; and (iii) not based upon any material added by
Broadcaster to such Network Programs (as to which deletions and added material
Broadcaster shall, to the like extent, indemnify CBS, all network advertisers,
if any, on such Network Program, and the advertising agencies of such
advertisers). Furthermore, each party will so indemnify the other only if such
other party gives the indemnifying party prompt notice of any claim or
litigation to which its indemnity applies; it being agreed that the indemnifying
party shall have the right to assume the defense of any or all claims or
litigation to which its indemnity applies and that the indemnified party will
cooperate fully with the indemnifying party in such defense and in the
settlement of such claim or litigation. Except as herein provided to the
contrary, neither Broadcaster nor CBS shall have any rights against the other
party hereto for claims by third persons or for the non-operation of facilities
or the non-furnishing of Network Programs for broadcasting if such non-operation
or non-furnishing is due to failure of equipment, action or claims by any third
person, labor dispute or any cause beyond such party's reasonable control.
8. News Reports Included in Affiliated Station's Local News Broadcasts.
As provided in the agreements pertaining to CBS Newsnet and CBS regional
news cooperatives (but as a separate obligation of this Affiliation Agreement as
well), Broadcaster shall make available, on request by CBS News, coverage
produced by Affiliated Station of news stories and breaking news events of
national and/or regional interest, to CBS News and to regional news cooperatives
operated by CBS News. Affiliated Station shall be compensated at
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CBS News' then-prevailing rates for material broadcast by CBS News or included
in the national Newsnet service.
9. Non-Duplication of Network Programs.
(a) For purposes of this paragraph, a television station's "Network
Exclusivity Zone" shall mean the zone within thirty-five (35) miles of the
station's reference points, or, in the case of a "small market television
station," as defined in Section 76.92 of the FCC rules, the zone within 55 miles
of said reference points; provided, however, that in no case shall the "Network
Exclusivity Zone" include an area within the Area of Dominant Influence (ADI),
as determined by Arbitron and published in the then current edition of its
Television ADI Market Guide, of another CBS Television Network Affiliate. A
station's "reference points" for purposes of this paragraph shall be as defined
in Section 73.658(m) of the FCC rules, and shall be deemed to include, with
respect to a station in a hyphenated market, the reference points of each named
community in that market.
(b) Broadcaster shall be entitled to exercise, within Affiliated
Station's Network Exclusivity Zone, the protection against duplication of
network programming, as provided by Sections 76.92 through 76.97 of the FCC
rules, with respect to a Network Program during the period beginning one (1) day
before and ending seven (7) days after the delivery of such Network Program by
CBS to Broadcaster; provided, however, that such right shall apply only to
Network Programs broadcast in the live time period as offered or on no more than
a one day delay as accepted by CBS; and provided further that nothing herein
shall be deemed to preclude CBS from granting to any other broadcast television
station licensed to any other community similar network non-duplication rights
within that station's Network Exclusivity Zone, and Broadcaster's aforesaid
right of network non-duplication shall not apply with respect to the
transmission of the programs of another CBS affiliate (current or future) by a
"community unit," as that term is defined by the rules of the FCC, located
(wholly or partially) within the area in which Broadcaster's Network Exclusivity
Zone overlaps the Network Exclusivity Zone of that other CBS affiliate.
(c) Broadcaster's network non-duplication rights under this paragraph
shall be subject to cancellation by CBS on six (6) months written notice to
Broadcaster. Any such cancellation by CBS shall not affect any of the other
rights and obligations of the parties under this Agreement.
10. Assignment, Conveyance and Conditions for Use of Descramblers.
(a) For value received, CBS hereby conveys, transfers, and assigns to
Broadcaster, all of its rights, title and interest in and to the tangible
personal property consisting of two (2) Videocipher 1B Descramblers (the
"Descramblers") subject to the following conditions:
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(i) Broadcaster may not assign its rights in the Descramblers to
any party without CBS's written approval.
(ii) At the termination or expiration of this Agreement,
Broadcaster's rights in the Descramblers shall cease and
Broadcaster shall take appropriate steps to assign the
Descramblers to CBS.
(b) Broadcaster shall use the Descramblers solely in connection with the
broadcast rights granted and specified in the Agreement.
(c) CBS makes no warranties whatsoever, either express or implied, in
respect of the equipment including, but not limited to, any warranties of
merchantability or fitness for a particular purpose.
(d) Broadcaster shall be solely responsible for any and all installation
and other related costs or charges in connection with the use and installation
of the Descramblers. Broadcaster shall at all times use and maintain the
Descramblers as instructed by CBS and the manufacturer and shall use its best
efforts to assure that the Descramblers are kept in good condition and that no
tampering with the Descramblers or other breach of security, as defined in
subparagraph (g) below, occurs. Broadcaster shall promptly notify the CBS
Satellite Management Center by telephone of any defect or failure in the
operation of the Descramblers and shall follow such procedures as are
established by CBS for the replacement or repair of the Descramblers. CBS shall
be responsible for the cost of correcting any defect or of rectifying any
failure of the Descramblers to operate during the Term of the Agreement,
provided that Broadcaster shall be responsible for any costs associated with its
failure to follow the prescribed procedures.
(e) In addition to its rights under paragraph 7 of the Agreement, CBS
will not be liable for any damages resulting from the operation of the
Descramblers or from the failure of the Descramblers to function properly or,
any loss, cost or damage to Broadcaster or others arising from defects or non-
performance of the Descramblers.
(f) If Broadcaster makes any use of the Descramblers in violation of the
terms and conditions of this Agreement, said use shall be a material breach of
this Agreement.
(g) Should Broadcaster's willful acts or negligence result in any breach
in the security of the two Descramblers covered by this Agreement, such breach
of security shall be a material breach of this Agreement. Breach of security
shall include but not be limited to any theft of all or part of the
Descramblers, any unauthorized reproduction of all or part of the Descramblers,
any unauthorized reproduction of the code involved in descrambling the network
feed from CBS to Broadcaster, or any related misappropriation of the physical
property or intellectual property contained in the Descramblers.
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11. General.
(a) As of the beginning of the term hereof, this Agreement takes the
place of, and is substituted for, any and all television affiliation agreements
heretofore existing between Broadcaster and CBS concerning Affiliated Station,
subject only to the fulfillment of any obligations thereunder relating to events
occurring prior to the beginning of the term hereof. This Agreement cannot be
changed or terminated orally and no waiver by either Broadcaster or CBS of any
breach of any provision hereof shall be or be deemed to be a waiver of any
preceding or subsequent breach of the same or any other provision of this
Agreement.
(b) The obligations of Broadcaster and CBS under this Agreement are
subject to all applicable federal, state and local law, rules and regulations
(including but not limited to the Communications Act of 1934 as amended and the
Rules and Regulations of the Federal Communications Commission) and this
Agreement and all matters or issues collateral thereto shall be governed by the
law of the State of New York applicable to contracts performed entirely therein.
(c) Neither Broadcaster nor CBS shall be or be deemed to be or hold
itself out as the agent of the other under this Agreement.
(d) Unless specified otherwise, all notices given hereunder shall be
given in writing, by personal delivery, mail, telegram, telex system or private
wire at the respective addresses of Broadcaster and CBS set forth above, unless
either party at any time or times designates another address for itself by
notifying the other party thereof by certified mail, in which case all notices
to such party shall thereafter be given at its most recently so designated
address. Notice given by mail shall be deemed given on the date of mailing
thereof with postage prepaid. Notice given by telegram shall be deemed given on
delivery of such telegram to a telegraph office with charges therefor prepaid or
to be billed to the sender thereof. Notice given by private wire shall be deemed
given on the sending thereof.
(e) The titles of the paragraphs in this Agreement are for convenience
only and shall not in any way affect the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
ROY H. PARK BROADCASTING, INC. CBS TELEVISION NETWORK
A Division of CBS Inc.
By _________________________ By _______________________
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CBS TELEVISION NETWORK
----------------------
A Division of CBS Inc.
----------------------
AMENDMENT TO AFFILIATION AGREEMENT
CBS TELEVISION NETWORK, A Division of CBS, Inc., 51 West 52 Street, New
York, New York 10019 ("CBS"), and ROY H. PARK BROADCASTING, INC., P.O. Box 898,
Greenville, North Carolina 27834 ("Broadcaster"), licensed to operate television
station WNCT-TV at Greenville, North Carolina on channel 9, hereby mutually
covenant and agree as follows:
(1) That the current Affiliation Agreement ("Agreement") between CBS and
Broadcaster dated October 1, 1995, as amended by letter agreement
dated October 1, 1995, be further amended by deleting the following
words found in line 5 of the introductory paragraph:
"...as of the 1st day of October, 1995," and inserting "effective
as of the 1st day of January, 1995."
in place thereof.
(2) That the Agreement be further amended by deleting the following words
found in paragraph 3(a), line 1:
"October 1, 1995" and inserting: "January 1, 1995"
in place thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
this 15th day of Dec., 1995.
---- ----
CBS TELEVISION NETWORK
A Division of CBS Inc.
By:_____________________________
ROY H. PARK BROADCASTING, INC.
By:_____________________________
<PAGE>
CBS
AFFILIATE
RELATIONS
A Division of CBS Inc.
51 West 52 Street
New York, New York 10019 October 1, 1995
(212) 975-4321
ROY H. PARK BROADCASTING, INC.
Greenville, North Carolina
Gentlemen:
Reference is made to the CBS Television Network Affiliation Agreement ("the
Agreement"), dated October 1, 1995, between you and us relating to television
station WNCT-TV ("the station") at Greenville, North Carolina.
In order to implement the terms of the Letter Agreement dated August 22, 1995
between Park Communications, Inc. and CBS, a one-time-only compensation payment
to the station of $1,080,000 will be included in the October, 1995 compensation
check (mailed in November) as a separate line item.
Further, the Affiliated Station's Network Rate as specified in Paragraph 2(a) of
the Agreement will be revised effective as of the dates listed below in order to
generate annual net compensation as indicated, based on the agreed upon level of
clearance of the existing Network program schedule and normal full sellout of
Network inventory.
<TABLE>
<CAPTION>
Effective Network Annual
Date Rate Net Compensation
---------------------- ------- ----------------
<S> <C> <C>
January 1, 1996 $2,695 $1,439,000
January 1, 1998 $2,320 $1,239,000
January 1, 1999 $ 475 $ 250,000
</TABLE>
In addition, you and we agree that in the event negotiations with the CBS
Affiliates Advisory Board result in the revision of any provision of the
standard form CBS Television Network Affiliation Agreement, which revision would
be more favorable to the station than the comparable provision in the Agreement,
CBS will promptly offer in writing to amend the Agreement to conform to such
more favorable provision.
This letter shall not be construed as amending in any way any of the other terms
or conditions of the Agreement.
<PAGE>
Assuming the above meets with your understanding, please indicate your
acceptance by signing in the space provided below.
Accepted and Agreed:
ROY H. PARK BROADCASTING, INC. CBS TELEVISION NETWORK
A Division of CBS Inc.
By_________________________ By_______________________
<PAGE>
Exhibit 10.9
CBS TELEVISION NETWORK
----------------------
A Division of CBS Inc.
----------------------
AFFILIATION AGREEMENT
_________________
CBS TELEVISION NETWORK, A Division of CBS Inc., 51 West 52 Street, New York, New
York 10019 ("CBS"), and ROY H. PARK BROADCASTING OF TENNESSEE, INC., 3300 Broad
Street, Chattanooga, Tennessee 37402 ("Broadcaster"), licensed to operate
television station WDEF-TV at Chattanooga, Tennessee on channel number 12
("Affiliated Station"), hereby mutually covenant and agree, as of the 1st day of
October, 1995, as follows:
1. Offer, Acceptance and Delivery of Network Programs.
Broadcaster shall have a "first call" on CBS network television programs
("Network Programs") as follows:
(a) Offer of Network Programs.
CBS shall offer to Broadcaster for broadcasting by Affiliated Station those
Network Programs which are to be broadcast on a network basis by any television
broadcast station licensed to operate in Affiliated Station's community of
license.
(b) Acceptance of Network Programs.
As to any offer described in Paragraph 1(a) of this Agreement, Broadcaster
may accept such offer only by notifying CBS, by means of CBS's computer-based
communications system, of such acceptance within 72 hours (exclusive of
Saturdays, Sundays and holidays), or such longer period as CBS may specify
therein, after such offer; provided, however, that, if the first broadcast
referred to in such offer is scheduled to occur less than 72 hours after the
making of the offer, Broadcaster shall notify CBS of the acceptance or rejection
of such offer as promptly as possible and in any event prior to the first
broadcast time specified in such offer. Such acceptance shall constitute
Broadcaster's agreement that Affiliated Station will broadcast such Network
Program or Programs in accordance with the terms of this Agreement and of such
offer, and so long as Affiliated Station so broadcasts such Network Program or
Programs, CBS will not, subject to its rights in the program material, authorize
the broadcast thereof on a network basis by any other television broadcast
station licensed to operate in Affiliated Station's community of license;
provided, however, that CBS shall have the right to authorize any television
broadcast station, wherever licensed to operate, to broadcast any Network
Program consisting of an address by the President of the United States of
America on a subject of public importance or consisting of coverage of a matter
of immediate national concern. If, as to any Network Program offered hereunder,
Broadcaster does not notify CBS as provided for in this
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Paragraph 1(b), Broadcaster shall have no rights with respect to such Network
Program, and CBS may offer such Network Program on the same or different terms
to any other television broadcast station or stations licensed to operate in
Affiliated Station's community of license; provided, however, that, if any
Network Program offered hereunder is accepted, by Affiliated Station, upon any
other terms or conditions to which CBS agrees in writing, then the provisions of
this Agreement shall apply to the broadcast of such Network Program except to
the extent such provisions are expressly varied by the terms and conditions of
such acceptance as so agreed to by CBS.
(c) Delivery of Network Programs.
Any obligation of CBS to furnish Network Programs for broadcasting by
Affiliated Station is subject to CBS's making of arrangements satisfactory to it
for the delivery of Network Programs to Affiliated Station.
2. Payment to Broadcasters.
(a) Definitions.
(i) "Live Time Period" means the time period or periods specified
by CBS in its initial offer of a Network Program to
Broadcaster for the broadcast of such Network Program over
Affiliated Station; (ii) "Affiliated Station's Network Rate"
shall be $491 and is used herein solely for purposes of
computing payments by CBS to Broadcaster; (iii) "Commercial
Availability" means a period of time made available by CBS
during a Network Commercial Program for one or more Network
Commercial Announcements or local cooperative commercial
announcements; and (iv) "Network Commercial Announcements"
means a commercial announcement broadcast over Affiliated
Station during a Commercial Availability and paid for by or on
behalf of one or more CBS advertisers, but does not include
announcements consisting of billboards, credits, public
service announcements, promotional announcements and
announcements required by law.
(b) Payment for Broadcast of Programs.
For each Network Commercial Program or portion thereof, except those
specified in Paragraph 2(c) hereof, which is broadcast over Affiliated Station
during the Live Time Period therefor and the Live Time Period for which is set
forth in the table below, CBS shall pay Broadcaster the amount resulting from
multiplying the following:
(i) Affiliated Station's Network Rate; by
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(ii) the percentage set forth below opposite such time period
(which, unless otherwise specified, is expressed in Affiliated
Station's then-current local time); by
(iii) the fraction of an hour substantially occupied by such program
or portion thereof; by
(iv) the fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied
by Network Commercial Announcements.
Table
-----
Monday through Friday
7:00 a.m. - 10:00 a.m. ................................11.2%
10:00 a m. - 12:00 p.m. .................................15%
12:00 p.m. - 4:00 p.m. ...................................6%
4:00 p.m. - 5:00 p.m. ...................................12%
5:00 p.m. - 8:00 p.m. ...................................15%
8:00 p.m. - 11:00 p.m. ..................................30%
11:00 p.m. - 12:00 a.m. .................................15%
Saturday
8:00 am. - 9:00 a.m. .....................................7%
9:00 a m. - 5:00 p.m. ...................................12%
5:00 p.m. - 8:00 p.m. ...................................15%
8:00 p.m. - 11:00 p.m. ..................................30%
11:00 p.m. - 12:00 a.m. .................................15%
Sunday
11:30 am. - 5:00 p.m. ...................................12%
5:00 p.m. - 7:00 p.m. ...................................15%
7:00 p.m. -11:00 p.m. ...................................30%
11:00 p.m. - 12:00 a m. .................................15%
For each Network Program or portion thereof, except those specified in Paragraph
2(c) hereof, which is broadcast by Affiliated Station during a time period other
than the Live Time Period therefor and the Live Time Period for which is set
forth in the table above, CBS shall pay Broadcaster as if Affiliated Station had
broadcast such program or portion thereof during such Live Time Period, except
that:
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(i) if the percentage set forth above opposite the time period
during which Affiliated Station broadcast such program or
portion thereof is less than that set forth opposite such Live
Time Period, then CBS shall pay Broadcaster on the basis of
the time period during which Affiliated Station broadcast such
program or portion thereof; and
(ii) if the time period or any portion thereof during which
Affiliated Station broadcast such program is not set forth in
the table above, then CBS shall pay Broadcaster in accordance
with Paragraph 2(c) hereof.
(c) Payment for Broadcast of Other Programs.
For the following programs, the percentages listed below (rather than those
daypart percentages set forth in the table in Paragraph 2(b) hereinabove) shall
be used in computing payment to Affiliated Station:
Monday-Friday Daytime Game shows .......................................15%
Monday-Friday Continuing Dramas .........................................6%
Monday-Friday Late Night Daypart ....................49.8% per telecast for
live clearance or 14.8%
per telecast for delayed
clearance
Monday - Friday CBS EVENING NEWS ........................................5%
CBS Sports programs .....................................................0%
CBS SUNDAY MORNING and FACE THE NATION ..................................8%
Notwithstanding the payment obligations set forth in Paragraph 2(b) above,
CBS shall pay Broadcaster such amounts as specified in CBS's program offer for
Network Programs broadcast by Affiliated Station consisting of (i) special event
programs (including, but not limited to, such programs as awards programs, mini-
series, movie specials, entertainment specials, special-time-period broadcasts
of regularly-scheduled series, and news specials such as political conventions,
election coverage, presidential inaugurations and related events), (ii) paid
political programming, and (iii) programs for which CBS specified a Live Time
Period, or which Affiliated Station broadcast during a time period, any portion
of which is not set forth in the table above.
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<PAGE>
(d) Deduction.
From the amounts otherwise payable to Broadcaster hereunder, there shall be
deducted, for each week of the term of this Agreement, a sum equal to 168% of
Affiliated Station's Network Rate.
(e) Changes in Rate.
CBS may reduce Affiliated Station's Network Rate in connection with a re-
evaluation and reduction of the Affiliated Station Network Rate of CBS's
affiliated stations in general, by giving Affiliated Station at least thirty-
days' prior notice of such reduction in Affiliated Station's Network Rate in
which event Broadcaster may terminate this Agreement, effective as of the
effective date of any such reduction, on not less than fifteen-days' prior
notice to CBS. In order to reflect differences in the importance of compensation
payments to stations in markets of varying size, the size of any general
reduction of the Network Rate of CBS's affiliated stations pursuant to this
Paragraph 2(e) may vary to a reasonable degree according to each station's
market-size category (i.e., 1-50, 51-100, 101-150 or 151+). Further, CBS agrees
that in the event of such an across-the-board rate reduction, Affiliated
Station's Network Rate shall be reduced accordingly until thirty days after the
effective date of the reduction, at which time, unless an additional
corresponding benefit of equal value has accrued to the station, the Network
Rate shall be restored to the previous level and a retroactive adjustment shall
be made to make up the compensation difference.
(f) Time of Payment.
CBS shall make the payments hereunder reasonably promptly after the end of
each four-week or five-week accounting period of CBS for Network Commercial
Programs broadcast during such accounting period.
(g) Reports.
Broadcaster shall submit to CBS in the manner requested by CBS such reports
as CBS may reasonably request concerning the broadcasting of Network Programs by
Affiliated Station.
3. Term and Termination.
(a) Term.
The term of this Agreement shall be the period commencing on October 1,
1995 and expiring on December 31, 2004; provided, however, that, unless
Broadcaster or CBS shall notify the other at least six months prior to the
expiration of the original period or any subsequent five-year period that the
party giving such notice does not wish to have the term extended beyond such
period, the term of this Agreement shall be automatically extended upon the
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<PAGE>
expiration of the original period and each subsequent extension thereof for an
additional period of five years. Notwithstanding any provision of any offer or
acceptance under Paragraph 1 hereof, upon the expiration or any termination of
the term of this Agreement, Broadcaster shall have no right whatsoever to
broadcast over Affiliated Station any Network Program.
(b) Termination on Transfer of License or Interest in Broadcaster.
Broadcaster shall notify CBS forthwith if any application is made to the
Federal Communications Commission relating to a transfer either of any interest
in Broadcaster or of Broadcaster's license for Affiliated Station. In the event
that CBS shall reasonably disapprove of the proposed transferee, CBS shall have
the right to terminate this Agreement effective as of the effective date of any
such transfer (except a transfer within the provisions of Section 73.3540(f) of
the Federal Communications Commission's present Rules and Regulations) by giving
Broadcaster notice thereof, and of its reasons for disapproving of the proposed
transferee, within thirty days after the date on which Broadcaster gives CBS
notice of the making of such application. If CBS does not so terminate this
Agreement, Broadcaster shall, prior to the effective date of any such transfer
of any interest in Broadcaster or of Broadcaster's license for Affiliated
Station, and as a condition precedent to such transfer, procure and deliver to
CBS, in form reasonably satisfactory to CBS, the agreement of the proposed
transferee that, upon consummation of the transfer, the transferee will
unconditionally assume and perform all obligations of Broadcaster under this
Agreement. Upon delivery of said agreement to CBS, in form satisfactory to it,
the provisions of this Agreement applicable to Broadcaster shall, effective upon
the date of such transfer, be applicable to such transferee.
Broadcaster's obligations to procure the assumption of this Agreement by
any transferee of Affiliated Station as a condition precedent to such transfer
shall be deemed to be of the essence of this Agreement; further, Broadcaster
expressly recognizes that money damages will be inadequate to compensate CBS for
the breach of such obligation, and that CBS shall accordingly be entitled to
equitable relief to enforce the same.
(c) Termination on Change of Transmitter Location, Power, Frequency or
Hours of Operation of Affiliated Station.
Broadcaster shall notify CBS forthwith if application is made to the
Federal Communications Commission to modify the transmitter location, power or
frequency of Affiliated Station or Broadcaster plans to modify the hours of
operation of Affiliated Station. CBS shall have the right to terminate this
Agreement, effective upon the effective date of such modification, by giving
Broadcaster notice thereof within thirty (30) days after the date on which
Broadcaster gives CBS notice of the application or plan for such modification.
If Broadcaster fails to notify CBS as required herein, then CBS shall have the
right to terminate this Agreement by giving Broadcaster thirty (30) days' notice
thereof within thirty (30) days of the date on which CBS first learns of such
application.
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<PAGE>
(d) Termination in the Event of Bankruptcy.
Upon one (1) month's notice, CBS may terminate this Agreement if a petition
in bankruptcy is filed by or on behalf of Broadcaster, or Broadcaster otherwise
takes advantage of any insolvency law, or an involuntary petition in bankruptcy
is filed against Broadcaster and not dismissed within thirty (30) days
thereafter, or if a receiver or trustee of any of Broadcaster's property is
appointed at any time and such appointment is not vacated within thirty (30)
days thereafter (it being understood that Broadcaster will have a similar right
of termination upon the occurrence of any such event with respect to CBS).
(e) Termination in the Event of Breach.
Upon a breach of any material representation, warranty or agreement set
forth in this Agreement by any party (the "Defaulting Party"), the other party
(the "Non-Defaulting Party") may give written notice of such breach to the
Defaulting Party, whereupon the Defaulting Party shall have thirty days to cure
such breach, or if such breach is not capable of cure within thirty days, to
commence and thereafter diligently pursue such cure. If the Defaulting Party
fails to cure or to commence to cure within such thirty days, the Non-Defaulting
Party may exercise all available legal and equitable rights and remedies,
including, without limitation, the right to terminate this Agreement.
4. Use of Network Programs.
(a) General.
Broadcaster shall not broadcast any Network Program over Affiliated Station
unless such Network Program has first been offered by CBS to Broadcaster for
broadcasting over Affiliated Station and has been accepted by Broadcaster in
accordance with this Agreement. Except with the prior written consent of CBS,
Broadcaster shall neither sell any Network Program, in whole or in part, or any
time therein, for sponsorship, nor otherwise use Network Programs except as
specifically authorized in this Agreement. Affiliated Station shall not
broadcast any commercial announcement or announcements during any interval,
within a Network Program, which is designated by CBS to Affiliated Station as
being for the sole purpose of making a station identification announcement.
Broadcaster shall, with respect to each Network Program broadcast over
Affiliated Station, broadcast such Network Program in its entirety (including
but not limited to commercial announcements, billboards, credits, public service
announcements, promotional announcements and network identification), without
interruption, alteration, compression, deletion or addition of any kind, from
the beginning of the Network Program to the final system cue at the conclusion
of the Network Program. Nothing herein shall be construed as preventing
Broadcaster's deletion of (i) part of a Network Program in order to broadcast an
emergency announcement or news bulletin; (ii) a promotional announcement for a
Network Program not to be broadcast over Affiliated Station (provided that
Affiliated Station shall broadcast an alternative promotional announcement for
CBS network programming in place of the deleted promotional
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announcement); (iii) such words, phrases or scenes as Broadcaster, in the
reasonable exercise of its judgment, determines it would not be in the public
interest to broadcast over Affiliated Station; provided, however, that
Broadcaster shall not substitute for any material deleted pursuant to this
clause (iii) any commercial or promotional announcement of any kind whatsoever;
and provided further that Broadcaster shall notify CBS of every such deletion
within 72 hours thereof. Broadcaster shall not, without CBS's prior written
consent, authorize or permit any Network Program, recording, or other material
furnished by CBS to Broadcaster or Affiliated Station hereunder to be recorded,
duplicated, rebroadcast, retransmitted or otherwise used for any purpose
whatsoever other than broadcasting by Affiliated Station as provided herein;
except that Broadcaster may assert a right to carriage of Affiliated Station's
signal by a cable system pursuant to the provisions of Section 4 of the Cable
Consumer Protection and Competition Act of 1992 ("the 1992 Cable Act") and may,
to the extent permitted by paragraph 4(b) hereof, grant consent to the
retransmission of such signal by a cable system or other multichannel video
programming distributor, as defined by said Act, pursuant to the provisions of
Section 6 thereof.
(b) Retransmission Consent.
Broadcaster may grant consent to the retransmission of Affiliated Station's
signal by a cable system or other multichannel video programming distributor
pursuant to the provisions of Section 6 of the 1992 Cable Act (hereafter
"retransmission consent"), provided that one of the following conditions applies
at the time retransmission consent is granted:
(i) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
serves television homes within Affiliated Station's television
market.
(ii) the majority of television homes served by the cable system or
other multichannel program service on which Affiliated
Station's signal is to be retransmitted are within a county or
community in which Affiliated Station's signal is, and has
been since October 5, 1992, "significantly viewed" as defined
in Section 76.54 of the FCC's rules; or
(iii) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
carried such signal on October 5, 1992, and does not receive
such signal by satellite delivery.
Notwithstanding anything to the contrary in the foregoing, in no case shall
retransmission consent be granted to a television receive-only satellite
service, or a direct broadcast satellite service, if Affiliated Station's signal
is to be retransmitted by such service to television homes outside of Affiliated
Station's television market other than "unserved household(s)," as that term
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is defined in Section 119(d) of Title 17, United States Code, as in effect on
October 5, 1992. For purposes of this paragraph, a station's "television market"
shall be defined in the same manner as set forth in Sections 76.55(e) and 76.59
of the FCC's rules.
(c) Taped Recordings of Network Programs.
When authorized to make a taped delayed broadcast of a Network Program,
Broadcaster shall use Broadcaster-owned tape to record the Network Program when
transmitted by CBS only for a single broadcast by Affiliated Station and shall
erase the Program recorded on the tape within 24 hours of broadcasting the
Network Program and observe any limitations which CBS may place on the
exploitation of the Network Program so recorded and erased.
5. Rejection, Refusal, Substitution and Cancellation of Network Programs.
(a) Rights of Broadcaster and CBS.
With respect to Network Programs offered to or already accepted hereunder
by Broadcaster, nothing in this Agreement shall be construed to prevent or
hinder:
(i) Broadcaster from rejecting or refusing any such Network
Program which Broadcaster reasonably believes to be
unsatisfactory or unsuitable or contrary to the public
interest, or from substituting a program which, in
Broadcaster's opinion, is of greater local or national
importance; or
(ii) CBS from substituting one or more other Network Programs, in
which event CBS shall offer such substituted program or
programs to Broadcaster pursuant to the provisions of
Paragraph 1 hereof; or
(iii) CBS from canceling one or more Network Programs.
(b) Notice.
In the event of any such rejection, refusal, substitution or cancellation
by either party hereto, such party shall notify the other thereof as soon as
practicable by telex or by such computer-based communications system as CBS may
develop for notifications of this kind. Notice given to CBS shall be addressed
to CBS Affiliate Relations.
6. Disclosure of Information.
CBS shall endeavor in good faith, before furnishing any Network Program, to
disclose to Broadcaster information of which CBS has knowledge concerning the
inclusion of any matter in such Network Program for which any money, service or
other valuable consideration is
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directly or indirectly paid or promised to, or charged or accepted by, CBS or
any employee of CBS or any other person with whom CBS deals in connection with
the production or preparation of such Network Program. As used in this Paragraph
6, the term "service or other valuable consideration" shall not include any
service or property furnished without charge or at a nominal charge for use in,
or in connection with, any Network Program "unless it is so furnished in
consideration for an identification in a broadcast of any person, product,
service, trademark, or brand name beyond an identification which is reasonably
related to the use of such service or property on the broadcast," as such words
are used in Section 317 of the Communications Act of 1934 as amended. The
provisions of this Paragraph 6 requiring the disclosure of information shall not
apply in any case where, because of a waiver granted by the Federal
Communications Commission, an announcement is not required to be made under said
Section 317. The inclusion in any such Network Program of an announcement
required by said Section 317 shall constitute the disclosure to Broadcaster
required by this Paragraph 6.
7. Indemnification.
CBS will indemnify Broadcaster from and against any and all claims,
damages, liabilities, costs and expenses arising out of the broadcasting,
pursuant to this Agreement, of Network Programs furnished by CBS to the extent
that such claims, damages, liabilities, costs and expenses are (i) based upon
alleged libel, slander, defamation, invasion of the right of privacy, or
violation or infringement of copyright or literary or dramatic rights; (ii)
based upon the broadcasting of Network Programs as furnished by CBS, without any
deletions by Broadcaster; and (iii) not based upon any material added by
Broadcaster to such Network Programs (as to which deletions and added material
Broadcaster shall, to the like extent, indemnify CBS, all network advertisers,
if any, on such Network Program, and the advertising agencies of such
advertisers). Furthermore, each party will so indemnify the other only if such
other party gives the indemnifying party prompt notice of any claim or
litigation to which its indemnity applies; it being agreed that the indemnifying
party shall have the right to assume the defense of any or all claims or
litigation to which its indemnity applies and that the indemnified party will
cooperate fully with the indemnifying party in such defense and in the
settlement of such claim or litigation. Except as herein provided to the
contrary, neither Broadcaster nor CBS shall have any rights against the other
party hereto for claims by third persons or for the non-operation of facilities
or the non-furnishing of Network Programs for broadcasting if such non-operation
or non-furnishing is due to failure of equipment, action or claims by any third
person, labor dispute or any cause beyond such party's reasonable control.
8. News Reports Included in Affiliated Station's Local News Broadcasts.
As provided in the agreements pertaining to CBS Newsnet and CBS regional
news cooperatives (but as a separate obligation of this Affiliation Agreement as
well), Broadcaster shall make available, on request by CBS News, coverage
produced by Affiliated Station of news stories and breaking news events of
national and/or regional interest, to CBS News and to regional news cooperatives
operated by CBS News. Affiliated Station shall be compensated at
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CBS News' then-prevailing rates for material broadcast by CBS News or included
in the national Newsnet service.
9. Non-Duplication of Network Programs.
(a) For purposes of this paragraph, a television station's "Network
Exclusivity Zone" shall mean the zone within thirty-five (35) miles of the
station's reference points, or, in the case of a "small market television
station," as defined in Section 76.92 of the FCC rules, the zone within 55 miles
of said reference points; provided, however, that in no case shall the "Network
Exclusivity Zone" include an area within the Area of Dominant Influence (ADI),
as determined by Arbitron and published in the then current edition of its
Television ADI Market Guide, of another CBS Television Network Affiliate. A
station's "reference points" for purposes of this paragraph shall be as defined
in Section 73.658(m) of the FCC rules, and shall be deemed to include, with
respect to a station in a hyphenated market, the reference points of each named
community in that market.
(b) Broadcaster shall be entitled to exercise, within Affiliated Station's
Network Exclusivity Zone, the protection against duplication of network
programming, as provided by Sections 76.92 through 76.97 of the FCC rules, with
respect to a Network Program during the period beginning one (1) day before and
ending seven (7) days after the delivery of such Network Program by CBS to
Broadcaster; provided, however, that such right shall apply only to Network
Programs broadcast in the live time period as offered or on no more than a one
day delay as accepted by CBS; and provided further that nothing herein shall be
deemed to preclude CBS from granting to any other broadcast television station
licensed to any other community similar network non-duplication rights within
that station's Network Exclusivity Zone, and Broadcaster's aforesaid right of
network non-duplication shall not apply with respect to the transmission of the
programs of another CBS affiliate (current or future) by a "community unit," as
that term is defined by the rules of the FCC, located (wholly or partially)
within the area in which Broadcaster's Network Exclusivity Zone overlaps the
Network Exclusivity Zone of that other CBS affiliate.
(c) Broadcaster's network non-duplication rights under this paragraph shall
be subject to cancellation by CBS on six (6) months written notice to
Broadcaster. Any such cancellation by CBS shall not affect any of the other
rights and obligations of the parties under this Agreement.
10. Assignment, Conveyance and Conditions for Use of Descramblers.
(a) For value received, CBS hereby conveys, transfers, and assigns to
Broadcaster, all of its rights, title and interest in and to the tangible
personal property consisting of two (2) Videocipher 1B Descramblers (the
"Descramblers") subject to the following conditions:
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(i) Broadcaster may not assign its rights in the Descramblers to
any party without CBS's written approval.
(ii) At the termination or expiration of this Agreement,
Broadcaster's rights in the Descramblers shall cease and
Broadcaster shall take appropriate steps to assign the
Descramblers to CBS.
(b) Broadcaster shall use the Descramblers solely in connection with the
broadcast rights granted and specified in the Agreement.
(c) CBS makes no warranties whatsoever, either express or implied, in
respect of the equipment including, but not limited to, any warranties of
merchantability or fitness for a particular purpose.
(d) Broadcaster shall be solely responsible for any and all installation
and other related costs or charges in connection with the use and installation
of the Descramblers. Broadcaster shall at all times use and maintain the
Descramblers as instructed by CBS and the manufacturer and shall use its best
efforts to assure that the Descramblers are kept in good condition and that no
tampering with the Descramblers or other breach of security, as defined in
subparagraph (g) below, occurs. Broadcaster shall promptly notify the CBS
Satellite Management Center by telephone of any defect or failure in the
operation of the Descramblers and shall follow such procedures as are
established by CBS for the replacement or repair of the Descramblers. CBS shall
be responsible for the cost of correcting any defect or of rectifying any
failure of the Descramblers to operate during the Term of the Agreement,
provided that Broadcaster shall be responsible for any costs associated with its
failure to follow the prescribed procedures.
(e) In addition to its rights under paragraph 7 of the Agreement, CBS will
not be liable for any damages resulting from the operation of the Descramblers
or from the failure of the Descramblers to function properly or, any loss, cost
or damage to Broadcaster or others arising from defects or non-performance of
the Descramblers.
(f) If Broadcaster makes any use of the Descramblers in violation of the
terms and conditions of this Agreement, said use shall be a material breach of
this Agreement.
(g) Should Broadcaster's willful acts or negligence result in any breach in
the security of the two Descramblers covered by this Agreement, such breach of
security shall be a material breach of this Agreement. Breach of security shall
include but not be limited to any theft of all or part of the Descramblers, any
unauthorized reproduction of all or part of the Descramblers, any unauthorized
reproduction of the code involved in descrambling the network feed from CBS to
Broadcaster, or any related misappropriation of the physical property or
intellectual property contained in the Descramblers.
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11. General.
(a) As of the beginning of the term hereof, this Agreement takes the place
of, and is substituted for, any and all television affiliation agreements
heretofore existing between Broadcaster and CBS concerning Affiliated Station,
subject only to the fulfillment of any obligations thereunder relating to events
occurring prior to the beginning of the term hereof. This Agreement cannot be
changed or terminated orally and no waiver by either Broadcaster or CBS of any
breach of any provision hereof shall be or be deemed to be a waiver of any
preceding or subsequent breach of the same or any other provision of this
Agreement.
(b) The obligations of Broadcaster and CBS under this Agreement are subject
to all applicable federal, state and local law, rules and regulations (including
but not limited to the Communications Act of 1934 as amended and the Rules and
Regulations of the Federal Communications Commission) and this Agreement and all
matters or issues collateral thereto shall be governed by the law of the State
of New York applicable to contracts performed entirely therein.
(c) Neither Broadcaster nor CBS shall be or be deemed to be or hold itself
out as the agent of the other under this Agreement.
(d) Unless specified otherwise, all notices given hereunder shall be given
in writing, by personal delivery, mail, telegram, telex system or private wire
at the respective addresses of Broadcaster and CBS set forth above, unless
either party at any time or times designates another address for itself by
notifying the other party thereof by certified mail, in which case all notices
to such party shall thereafter be given at its most recently so designated
address. Notice given by mail shall be deemed given on the date of mailing
thereof with postage prepaid. Notice given by telegram shall be deemed given on
delivery of such telegram to a telegraph office with charges therefor prepaid or
to be billed to the sender thereof. Notice given by private wire shall be deemed
given on the sending thereof.
(e) The titles of the paragraphs in this Agreement are for convenience only
and shall not in any way affect the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
ROY H. PARK
BROADCASTING OF TENNESSEE, INC. CBS TELEVISION NETWORK
A Division of CBS Inc.
By _____________________________ By _______________________________
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CBS TELEVISION NETWORK
----------------------
A Division of CBS Inc.
----------------------
AMENDMENT TO AFFILIATION AGREEMENT
CBS TELEVISION NETWORK, A Division of CBS, Inc., 51 West 52 Street, New
York, New York 10019 ("CBS"), and ROY H. PARK BROADCASTING OF TENNESSEE, INC.,
330 Broad Street, Chattanooga, Tennessee 37402 ("Broadcaster"), licensed to
operate television station WDEF-TV at Chattanooga, Tennessee on channel 12,
hereby mutually covenant and agree as follows:
(1) That the current Affiliation Agreement ("Agreement") between CBS and
Broadcaster dated October 1, 1995, as amended by letter agreement
dated October 1, 1995, be further amended by deleting the following
words found in line 5 of the introductory paragraph:
"...as of the 1st day of October, 1995," and inserting "effective
as of the 1st day of January, 1995."
in place thereof.
(2) That the Agreement be further amended by deleting the following words
found in paragraph 3(a), line 1:
"October 1, 1995" and inserting: "January 1, 1995"
in place thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
this 15th day of Dec., 1995.
---- ----
CBS TELEVISION NETWORK
A Division of CBS Inc.
By:_______________________________
ROY H. PARK BROADCASTING OF TENNESSEE, INC.
By:_______________________________
<PAGE>
CBS
AFFILIATE
RELATIONS
A Division of CBS Inc.
51 West 52 Street
New York, New York 10019 October 1, 1995
(212) 975-4321
ROY H. PARK BROADCASTING OF TENNESSEE, INC.
Chattanooga, Tennessee
Gentlemen:
Reference is made to the CBS Television Network Affiliation Agreement ("the
Agreement"), dated October 1, 1995, between you and us relating to television
station WDEF-TV ("the station") at Chattanooga, Tennessee.
In order to implement the terms of the Letter Agreement dated August 22, 1995
between Park Communications, Inc. and CBS, a one-time-only compensation payment
to the station of $910,000 will be included in the October, 1995 compensation
check (mailed in November) as a separate line item.
Further, the Affiliated Station's Network Rate as specified in Paragraph 2(a) of
the Agreement will be revised effective as of the dates listed below in order to
generate annual net compensation as indicated, based on the agreed upon level of
clearance of the existing Network program schedule and normal full sellout of
Network inventory.
<TABLE>
<CAPTION>
Effective Network Annual
Date Rate Net Compensation
--------- ------- ----------------
<S> <C> <C>
January 1, 1996 $2,170 $1,173,000
January 1, 1998 $1,805 $ 973,000
January 1, 1999 $ 470 $ 250,000
</TABLE>
In addition, you and we agree that in the event negotiations with the CBS
Affiliates Advisory Board result in the revision of any provision of the
standard form CBS Television Network Affiliation Agreement, which revision would
be more favorable to the station than the comparable provision in the Agreement,
CBS will promptly offer in writing to amend the Agreement to conform to such
more favorable provision.
This letter shall not be construed as amending in any way any of the other terms
or conditions of the Agreement.
<PAGE>
Assuming the above meets with your understanding, please indicate your
acceptance by signing in the space provided below.
Accepted and Agreed:
ROY H. PARK BROADCASTING CBS TELEVISION NETWORK
OF TENNESSEE, INC. A Division of CBS Inc.
By______________________ By____________________
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Exhibit 10.10
CBS TELEVISION NETWORK
----------------------
A Division of CBS Inc.
----------------------
AFFILIATION AGREEMENT
_________________
CBS TELEVISION NETWORK, A Division of CBS Inc., 51 West 52 Street, New York, New
York 10019 ("CBS"), and ROY H. PARK BROADCASTING OF THE TRI-CITIES, INC., P.O.
Box 1130, Johnson City, Tennessee 37601 ("Broadcaster"), licensed to operate
television station WJHL-TV at Johnson City, Tennessee on channel number 11
("Affiliated Station"), hereby mutually covenant and agree, as of the 1st day of
October, 1995, as follows:
1. Offer, Acceptance and Delivery of Network Programs.
Broadcaster shall have a "first call" on CBS network television programs
("Network Programs") as follows:
(a) Offer of Network Programs.
CBS shall offer to Broadcaster for broadcasting by Affiliated Station those
Network Programs which are to be broadcast on a network basis by any television
broadcast station licensed to operate in Affiliated Station's community of
license.
(b) Acceptance of Network Programs.
As to any offer described in Paragraph 1(a) of this Agreement, Broadcaster
may accept such offer only by notifying CBS, by means of CBS's computer-based
communications system, of such acceptance within 72 hours (exclusive of
Saturdays, Sundays and holidays), or such longer period as CBS may specify
therein, after such offer; provided, however, that, if the first broadcast
referred to in such offer is scheduled to occur less than 72 hours after the
making of the offer, Broadcaster shall notify CBS of the acceptance or rejection
of such offer as promptly as possible and in any event prior to the first
broadcast time specified in such offer. Such acceptance shall constitute
Broadcaster's agreement that Affiliated Station will broadcast such Network
Program or Programs in accordance with the terms of this Agreement and of such
offer, and so long as Affiliated Station so broadcasts such Network Program or
Programs, CBS will not, subject to its rights in the program material, authorize
the broadcast thereof on a network basis by any other television broadcast
station licensed to operate in Affiliated Station's community of license;
provided, however, that CBS shall have the right to authorize any television
broadcast station, wherever licensed to operate, to broadcast any Network
Program consisting of an address by the President of the United States of
America on a subject of public importance or consisting of coverage of a matter
of immediate national concern. If, as to any Network Program offered hereunder,
Broadcaster does not notify CBS as provided for in this
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Paragraph 1(b), Broadcaster shall have no rights with respect to such Network
Program, and CBS may offer such Network Program on the same or different terms
to any other television broadcast station or stations licensed to operate in
Affiliated Station's community of license; provided, however, that, if any
Network Program offered hereunder is accepted, by Affiliated Station, upon any
other terms or conditions to which CBS agrees in writing, then the provisions of
this Agreement shall apply to the broadcast of such Network Program except to
the extent such provisions are expressly varied by the terms and conditions of
such acceptance as so agreed to by CBS.
(c) Delivery of Network Programs.
Any obligation of CBS to furnish Network Programs for broadcasting by
Affiliated Station is subject to CBS's making of arrangements satisfactory to it
for the delivery of Network Programs to Affiliated Station.
2. Payment to Broadcasters.
(a) Definitions.
(i) "Live Time Period" means the time period or periods specified
by CBS in its initial offer of a Network Program to
Broadcaster for the broadcast of such Network Program over
Affiliated Station; (ii) "Affiliated Station's Network Rate"
shall be $729 and is used herein solely for purposes of
computing payments by CBS to Broadcaster; (iii) "Commercial
Availability" means a period of time made available by CBS
during a Network Commercial Program for one or more Network
Commercial Announcements or local cooperative commercial
announcements; and (iv) "Network Commercial Announcements"
means a commercial announcement broadcast over Affiliated
Station during a Commercial Availability and paid for by or on
behalf of one or more CBS advertisers, but does not include
announcements consisting of billboards, credits, public
service announcements, promotional announcements and
announcements required by law.
(b) Payment for Broadcast of Programs.
For each Network Commercial Program or portion thereof, except those
specified in Paragraph 2(c) hereof, which is broadcast over Affiliated Station
during the Live Time Period therefor and the Live Time Period for which is set
forth in the table below, CBS shall pay Broadcaster the amount resulting from
multiplying the following:
(i) Affiliated Station's Network Rate; by
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(ii) the percentage set forth below opposite such time period
(which, unless otherwise specified, is expressed in Affiliated
Station's then-current local time); by
(iii) the fraction of an hour substantially occupied by such program
or portion thereof; by
(iv) the fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied
by Network Commercial Announcements.
Table
-----
Monday through Friday
7:00 a.m. - 10:00 a.m. ....................11.2%
10:00 a m. - 12:00 p.m. .....................15%
12:00 p.m. - 4:00 p.m. .......................6%
4:00 p.m. - 5:00 p.m. .......................12%
5:00 p.m. - 8:00 p.m. .......................15%
8:00 p.m. - 11:00 p.m. ......................30%
11:00 p.m. - 12:00 a.m. .....................15%
Saturday
8:00 am. - 9:00 a.m. .........................7%
9:00 a m. - 5:00 p.m. .......................12%
5:00 p.m. - 8:00 p.m. .......................15%
8:00 p.m. - 11:00 p.m. ......................30%
11:00 p.m. - 12:00 a.m. .....................15%
Sunday
11:30 am. - 5:00 p.m. .......................12%
5:00 p.m. - 7:00 p.m. .......................15%
7:00 p.m. -11:00 p.m. .......................30%
11:00 p.m. - 12:00 a m. .....................15%
For each Network Program or portion thereof, except those specified in Paragraph
2(c) hereof, which is broadcast by Affiliated Station during a time period other
than the Live Time Period therefor and the Live Time Period for which is set
forth in the table above, CBS shall pay Broadcaster as if Affiliated Station had
broadcast such program or portion thereof during such Live Time Period, except
that:
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(i) if the percentage set forth above opposite the time period
during which Affiliated Station broadcast such program or
portion thereof is less than that set forth opposite such Live
Time Period, then CBS shall pay Broadcaster on the basis of
the time period during which Affiliated Station broadcast such
program or portion thereof; and
(ii) if the time period or any portion thereof during which
Affiliated Station broadcast such program is not set forth in
the table above, then CBS shall pay Broadcaster in accordance
with Paragraph 2(c) hereof.
(c) Payment for Broadcast of Other Programs.
For the following programs, the percentages listed below (rather than those
daypart percentages set forth in the table in Paragraph 2(b) hereinabove) shall
be used in computing payment to Affiliated Station:
Monday-Friday Daytime Game shows .........................15%
Monday-Friday Continuing Dramas ...........................6%
Monday-Friday Late Night Daypart ......48.3% per telecast for
live clearance or 13.3%
per telecast for delayed
clearance
Monday - Friday CBS EVENING NEWS ..........................5%
CBS Sports programs .......................................0%
CBS SUNDAY MORNING and FACE THE NATION ....................8%
Notwithstanding the payment obligations set forth in Paragraph 2(b) above,
CBS shall pay Broadcaster such amounts as specified in CBS's program offer for
Network Programs broadcast by Affiliated Station consisting of (i) special event
programs (including, but not limited to, such programs as awards programs, mini-
series, movie specials, entertainment specials, special-time-period broadcasts
of regularly-scheduled series, and news specials such as political conventions,
election coverage, presidential inaugurations and related events), (ii) paid
political programming, and (iii) programs for which CBS specified a Live Time
Period, or which Affiliated Station broadcast during a time period, any portion
of which is not set forth in the table above.
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(d) Deduction.
From the amounts otherwise payable to Broadcaster hereunder, there shall be
deducted, for each week of the term of this Agreement, a sum equal to 168% of
Affiliated Station's Network Rate.
(e) Changes in Rate.
CBS may reduce Affiliated Station's Network Rate in connection with a re-
evaluation and reduction of the Affiliated Station Network Rate of CBS's
affiliated stations in general, by giving Affiliated Station at least thirty-
days' prior notice of such reduction in Affiliated Station's Network Rate in
which event Broadcaster may terminate this Agreement, effective as of the
effective date of any such reduction, on not less than fifteen-days' prior
notice to CBS. In order to reflect differences in the importance of compensation
payments to stations in markets of varying size, the size of any general
reduction of the Network Rate of CBS's affiliated stations pursuant to this
Paragraph 2(e) may vary to a reasonable degree according to each station's
market-size category (i.e., 1-50, 51-100, 101-150 or 151+). Further, CBS agrees
that in the event of such an across-the-board rate reduction, Affiliated
Station's Network Rate shall be reduced accordingly until thirty days after the
effective date of the reduction, at which time, unless an additional
corresponding benefit of equal value has accrued to the station, the Network
Rate shall be restored to the previous level and a retroactive adjustment shall
be made to make up the compensation difference.
(f) Time of Payment.
CBS shall make the payments hereunder reasonably promptly after the end of
each four-week or five-week accounting period of CBS for Network Commercial
Programs broadcast during such accounting period.
(g) Reports.
Broadcaster shall submit to CBS in the manner requested by CBS such reports
as CBS may reasonably request concerning the broadcasting of Network Programs by
Affiliated Station.
3. Term and Termination.
(a) Term.
The term of this Agreement shall be the period commencing on October 1,
1995 and expiring on December 31, 2004; provided, however, that, unless
Broadcaster or CBS shall notify the other at least six months prior to the
expiration of the original period or any subsequent five-year period that the
party giving such notice does not wish to have the term extended beyond such
period, the term of this Agreement shall be automatically extended upon the
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expiration of the original period and each subsequent extension thereof for an
additional period of five years. Notwithstanding any provision of any offer or
acceptance under Paragraph 1 hereof, upon the expiration or any termination of
the term of this Agreement, Broadcaster shall have no right whatsoever to
broadcast over Affiliated Station any Network Program.
(b) Termination on Transfer of License or Interest in Broadcaster.
Broadcaster shall notify CBS forthwith if any application is made to the
Federal Communications Commission relating to a transfer either of any interest
in Broadcaster or of Broadcaster's license for Affiliated Station. In the event
that CBS shall reasonably disapprove of the proposed transferee, CBS shall have
the right to terminate this Agreement effective as of the effective date of any
such transfer (except a transfer within the provisions of Section 73.3540(f) of
the Federal Communications Commission's present Rules and Regulations) by giving
Broadcaster notice thereof, and of its reasons for disapproving of the proposed
transferee, within thirty days after the date on which Broadcaster gives CBS
notice of the making of such application. If CBS does not so terminate this
Agreement, Broadcaster shall, prior to the effective date of any such transfer
of any interest in Broadcaster or of Broadcaster's license for Affiliated
Station, and as a condition precedent to such transfer, procure and deliver to
CBS, in form reasonably satisfactory to CBS, the agreement of the proposed
transferee that, upon consummation of the transfer, the transferee will
unconditionally assume and perform all obligations of Broadcaster under this
Agreement. Upon delivery of said agreement to CBS, in form satisfactory to it,
the provisions of this Agreement applicable to Broadcaster shall, effective upon
the date of such transfer, be applicable to such transferee.
Broadcaster's obligations to procure the assumption of this Agreement by
any transferee of Affiliated Station as a condition precedent to such transfer
shall be deemed to be of the essence of this Agreement; further, Broadcaster
expressly recognizes that money damages will be inadequate to compensate CBS for
the breach of such obligation, and that CBS shall accordingly be entitled to
equitable relief to enforce the same.
(c) Termination on Change of Transmitter Location, Power, Frequency or
Hours of Operation of Affiliated Station.
Broadcaster shall notify CBS forthwith if application is made to the
Federal Communications Commission to modify the transmitter location, power or
frequency of Affiliated Station or Broadcaster plans to modify the hours of
operation of Affiliated Station. CBS shall have the right to terminate this
Agreement, effective upon the effective date of such modification, by giving
Broadcaster notice thereof within thirty (30) days after the date on which
Broadcaster gives CBS notice of the application or plan for such modification.
If Broadcaster fails to notify CBS as required herein, then CBS shall have the
right to terminate this Agreement by giving Broadcaster thirty (30) days' notice
thereof within thirty (30) days of the date on which CBS first learns of such
application.
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(d) Termination in the Event of Bankruptcy.
Upon one (1) month's notice, CBS may terminate this Agreement if a petition
in bankruptcy is filed by or on behalf of Broadcaster, or Broadcaster otherwise
takes advantage of any insolvency law, or an involuntary petition in bankruptcy
is filed against Broadcaster and not dismissed within thirty (30) days
thereafter, or if a receiver or trustee of any of Broadcaster's property is
appointed at any time and such appointment is not vacated within thirty (30)
days thereafter (it being understood that Broadcaster will have a similar right
of termination upon the occurrence of any such event with respect to CBS).
(e) Termination in the Event of Breach.
Upon a breach of any material representation, warranty or agreement set
forth in this Agreement by any party (the "Defaulting Party"), the other party
(the "Non-Defaulting Party") may give written notice of such breach to the
Defaulting Party, whereupon the Defaulting Party shall have thirty days to cure
such breach, or if such breach is not capable of cure within thirty days, to
commence and thereafter diligently pursue such cure. If the Defaulting Party
fails to cure or to commence to cure within such thirty days, the Non-Defaulting
Party may exercise all available legal and equitable rights and remedies,
including, without limitation, the right to terminate this Agreement.
4. Use of Network Programs.
(a) General.
Broadcaster shall not broadcast any Network Program over Affiliated Station
unless such Network Program has first been offered by CBS to Broadcaster for
broadcasting over Affiliated Station and has been accepted by Broadcaster in
accordance with this Agreement. Except with the prior written consent of CBS,
Broadcaster shall neither sell any Network Program, in whole or in part, or any
time therein, for sponsorship, nor otherwise use Network Programs except as
specifically authorized in this Agreement. Affiliated Station shall not
broadcast any commercial announcement or announcements during any interval,
within a Network Program, which is designated by CBS to Affiliated Station as
being for the sole purpose of making a station identification announcement.
Broadcaster shall, with respect to each Network Program broadcast over
Affiliated Station, broadcast such Network Program in its entirety (including
but not limited to commercial announcements, billboards, credits, public service
announcements, promotional announcements and network identification), without
interruption, alteration, compression, deletion or addition of any kind, from
the beginning of the Network Program to the final system cue at the conclusion
of the Network Program. Nothing herein shall be construed as preventing
Broadcaster's deletion of (i) part of a Network Program in order to broadcast an
emergency announcement or news bulletin; (ii) a promotional announcement for a
Network Program not to be broadcast over Affiliated Station (provided that
Affiliated Station shall broadcast an alternative promotional announcement for
CBS network programming in place of the deleted promotional
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announcement); (iii) such words, phrases or scenes as Broadcaster, in the
reasonable exercise of its judgment, determines it would not be in the public
interest to broadcast over Affiliated Station; provided, however, that
Broadcaster shall not substitute for any material deleted pursuant to this
clause (iii) any commercial or promotional announcement of any kind whatsoever;
and provided further that Broadcaster shall notify CBS of every such deletion
within 72 hours thereof. Broadcaster shall not, without CBS's prior written
consent, authorize or permit any Network Program, recording, or other material
furnished by CBS to Broadcaster or Affiliated Station hereunder to be recorded,
duplicated, rebroadcast, retransmitted or otherwise used for any purpose
whatsoever other than broadcasting by Affiliated Station as provided herein;
except that Broadcaster may assert a right to carriage of Affiliated Station's
signal by a cable system pursuant to the provisions of Section 4 of the Cable
Consumer Protection and Competition Act of 1992 ("the 1992 Cable Act") and may,
to the extent permitted by paragraph 4(b) hereof, grant consent to the
retransmission of such signal by a cable system or other multichannel video
programming distributor, as defined by said Act, pursuant to the provisions of
Section 6 thereof.
(b) Retransmission Consent.
Broadcaster may grant consent to the retransmission of Affiliated Station's
signal by a cable system or other multichannel video programming distributor
pursuant to the provisions of Section 6 of the 1992 Cable Act (hereafter
"retransmission consent"), provided that one of the following conditions applies
at the time retransmission consent is granted:
(i) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
serves television homes within Affiliated Station's television
market.
(ii) the majority of television homes served by the cable system or
other multichannel program service on which Affiliated
Station's signal is to be retransmitted are within a county or
community in which Affiliated Station's signal is, and has
been since October 5, 1992, "significantly viewed" as defined
in Section 76.54 of the FCC's rules; or
(iii) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
carried such signal on October 5, 1992, and does not receive
such signal by satellite delivery.
Notwithstanding anything to the contrary in the foregoing, in no case shall
retransmission consent be granted to a television receive-only satellite
service, or a direct broadcast satellite service, if Affiliated Station's signal
is to be retransmitted by such service to television homes outside of Affiliated
Station's television market other than "unserved household(s)," as that term
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is defined in Section 119(d) of Title 17, United States Code, as in effect on
October 5, 1992. For purposes of this paragraph, a station's "television market"
shall be defined in the same manner as set forth in Sections 76.55(e) and 76.59
of the FCC's rules.
(c) Taped Recordings of Network Programs.
When authorized to make a taped delayed broadcast of a Network Program,
Broadcaster shall use Broadcaster-owned tape to record the Network Program when
transmitted by CBS only for a single broadcast by Affiliated Station and shall
erase the Program recorded on the tape within 24 hours of broadcasting the
Network Program and observe any limitations which CBS may place on the
exploitation of the Network Program so recorded and erased.
5. Rejection, Refusal, Substitution and Cancellation of Network Programs.
(a) Rights of Broadcaster and CBS.
With respect to Network Programs offered to or already accepted hereunder
by Broadcaster, nothing in this Agreement shall be construed to prevent or
hinder:
(i) Broadcaster from rejecting or refusing any such Network
Program which Broadcaster reasonably believes to be
unsatisfactory or unsuitable or contrary to the public
interest, or from substituting a program which, in
Broadcaster's opinion, is of greater local or national
importance; or
(ii) CBS from substituting one or more other Network Programs, in
which event CBS shall offer such substituted program or
programs to Broadcaster pursuant to the provisions of
Paragraph 1 hereof; or
(iii) CBS from canceling one or more Network Programs.
(b) Notice.
In the event of any such rejection, refusal, substitution or cancellation
by either party hereto, such party shall notify the other thereof as soon as
practicable by telex or by such computer-based communications system as CBS may
develop for notifications of this kind. Notice given to CBS shall be addressed
to CBS Affiliate Relations.
6. Disclosure of Information.
CBS shall endeavor in good faith, before furnishing any Network Program, to
disclose to Broadcaster information of which CBS has knowledge concerning the
inclusion of any matter in such Network Program for which any money, service or
other valuable consideration is
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directly or indirectly paid or promised to, or charged or accepted by, CBS or
any employee of CBS or any other person with whom CBS deals in connection with
the production or preparation of such Network Program. As used in this Paragraph
6, the term "service or other valuable consideration" shall not include any
service or property furnished without charge or at a nominal charge for use in,
or in connection with, any Network Program "unless it is so furnished in
consideration for an identification in a broadcast of any person, product,
service, trademark, or brand name beyond an identification which is reasonably
related to the use of such service or property on the broadcast," as such words
are used in Section 317 of the Communications Act of 1934 as amended. The
provisions of this Paragraph 6 requiring the disclosure of information shall not
apply in any case where, because of a waiver granted by the Federal
Communications Commission, an announcement is not required to be made under said
Section 317. The inclusion in any such Network Program of an announcement
required by said Section 317 shall constitute the disclosure to Broadcaster
required by this Paragraph 6.
7. Indemnification.
CBS will indemnify Broadcaster from and against any and all claims,
damages, liabilities, costs and expenses arising out of the broadcasting,
pursuant to this Agreement, of Network Programs furnished by CBS to the extent
that such claims, damages, liabilities, costs and expenses are (i) based upon
alleged libel, slander, defamation, invasion of the right of privacy, or
violation or infringement of copyright or literary or dramatic rights; (ii)
based upon the broadcasting of Network Programs as furnished by CBS, without any
deletions by Broadcaster; and (iii) not based upon any material added by
Broadcaster to such Network Programs (as to which deletions and added material
Broadcaster shall, to the like extent, indemnify CBS, all network advertisers,
if any, on such Network Program, and the advertising agencies of such
advertisers). Furthermore, each party will so indemnify the other only if such
other party gives the indemnifying party prompt notice of any claim or
litigation to which its indemnity applies; it being agreed that the indemnifying
party shall have the right to assume the defense of any or all claims or
litigation to which its indemnity applies and that the indemnified party will
cooperate fully with the indemnifying party in such defense and in the
settlement of such claim or litigation. Except as herein provided to the
contrary, neither Broadcaster nor CBS shall have any rights against the other
party hereto for claims by third persons or for the non-operation of facilities
or the non-furnishing of Network Programs for broadcasting if such non-operation
or non-furnishing is due to failure of equipment, action or claims by any third
person, labor dispute or any cause beyond such party's reasonable control.
8. News Reports Included in Affiliated Station's Local News Broadcasts.
As provided in the agreements pertaining to CBS Newsnet and CBS regional
news cooperatives (but as a separate obligation of this Affiliation Agreement as
well), Broadcaster shall make available, on request by CBS News, coverage
produced by Affiliated Station of news stories and breaking news events of
national and/or regional interest, to CBS News and to regional news cooperatives
operated by CBS News. Affiliated Station shall be compensated at
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CBS News' then-prevailing rates for material broadcast by CBS News or included
in the national Newsnet service.
9. Non-Duplication of Network Programs.
(a) For purposes of this paragraph, a television station's "Network
Exclusivity Zone" shall mean the zone within thirty-five (35) miles of the
station's reference points, or, in the case of a "small market television
station," as defined in Section 76.92 of the FCC rules, the zone within 55 miles
of said reference points; provided, however, that in no case shall the "Network
Exclusivity Zone" include an area within the Area of Dominant Influence (ADI),
as determined by Arbitron and published in the then current edition of its
Television ADI Market Guide, of another CBS Television Network Affiliate. A
station's "reference points" for purposes of this paragraph shall be as defined
in Section 73.658(m) of the FCC rules, and shall be deemed to include, with
respect to a station in a hyphenated market, the reference points of each named
community in that market.
(b) Broadcaster shall be entitled to exercise, within Affiliated
Station's Network Exclusivity Zone, the protection against duplication of
network programming, as provided by Sections 76.92 through 76.97 of the FCC
rules, with respect to a Network Program during the period beginning one (1) day
before and ending seven (7) days after the delivery of such Network Program by
CBS to Broadcaster; provided, however, that such right shall apply only to
Network Programs broadcast in the live time period as offered or on no more than
a one day delay as accepted by CBS; and provided further that nothing herein
shall be deemed to preclude CBS from granting to any other broadcast television
station licensed to any other community similar network non-duplication rights
within that station's Network Exclusivity Zone, and Broadcaster's aforesaid
right of network non-duplication shall not apply with respect to the
transmission of the programs of another CBS affiliate (current or future) by a
"community unit," as that term is defined by the rules of the FCC, located
(wholly or partially) within the area in which Broadcaster's Network Exclusivity
Zone overlaps the Network Exclusivity Zone of that other CBS affiliate.
(c) Broadcaster's network non-duplication rights under this paragraph
shall be subject to cancellation by CBS on six (6) months written notice to
Broadcaster. Any such cancellation by CBS shall not affect any of the other
rights and obligations of the parties under this Agreement.
10. Assignment, Conveyance and Conditions for Use of Descramblers.
(a) For value received, CBS hereby conveys, transfers, and assigns to
Broadcaster, all of its rights, title and interest in and to the tangible
personal property consisting of two (2) Videocipher 1B Descramblers (the
"Descramblers") subject to the following conditions:
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(i) Broadcaster may not assign its rights in the Descramblers to
any party without CBS's written approval.
(ii) At the termination or expiration of this Agreement,
Broadcaster's rights in the Descramblers shall cease and
Broadcaster shall take appropriate steps to assign the
Descramblers to CBS.
(b) Broadcaster shall use the Descramblers solely in connection with the
broadcast rights granted and specified in the Agreement.
(c) CBS makes no warranties whatsoever, either express or implied, in
respect of the equipment including, but not limited to, any warranties of
merchantability or fitness for a particular purpose.
(d) Broadcaster shall be solely responsible for any and all installation
and other related costs or charges in connection with the use and installation
of the Descramblers. Broadcaster shall at all times use and maintain the
Descramblers as instructed by CBS and the manufacturer and shall use its best
efforts to assure that the Descramblers are kept in good condition and that no
tampering with the Descramblers or other breach of security, as defined in
subparagraph (g) below, occurs. Broadcaster shall promptly notify the CBS
Satellite Management Center by telephone of any defect or failure in the
operation of the Descramblers and shall follow such procedures as are
established by CBS for the replacement or repair of the Descramblers. CBS shall
be responsible for the cost of correcting any defect or of rectifying any
failure of the Descramblers to operate during the Term of the Agreement,
provided that Broadcaster shall be responsible for any costs associated with its
failure to follow the prescribed procedures.
(e) In addition to its rights under paragraph 7 of the Agreement, CBS
will not be liable for any damages resulting from the operation of the
Descramblers or from the failure of the Descramblers to function properly or,
any loss, cost or damage to Broadcaster or others arising from defects or non-
performance of the Descramblers.
(f) If Broadcaster makes any use of the Descramblers in violation of the
terms and conditions of this Agreement, said use shall be a material breach of
this Agreement.
(g) Should Broadcaster's willful acts or negligence result in any breach
in the security of the two Descramblers covered by this Agreement, such breach
of security shall be a material breach of this Agreement. Breach of security
shall include but not be limited to any theft of all or part of the
Descramblers, any unauthorized reproduction of all or part of the Descramblers,
any unauthorized reproduction of the code involved in descrambling the network
feed from CBS to Broadcaster, or any related misappropriation of the physical
property or intellectual property contained in the Descramblers.
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11. General.
(a) As of the beginning of the term hereof, this Agreement takes the
place of, and is substituted for, any and all television affiliation agreements
heretofore existing between Broadcaster and CBS concerning Affiliated Station,
subject only to the fulfillment of any obligations thereunder relating to events
occurring prior to the beginning of the term hereof. This Agreement cannot be
changed or terminated orally and no waiver by either Broadcaster or CBS of any
breach of any provision hereof shall be or be deemed to be a waiver of any
preceding or subsequent breach of the same or any other provision of this
Agreement.
(b) The obligations of Broadcaster and CBS under this Agreement are
subject to all applicable federal, state and local law, rules and regulations
(including but not limited to the Communications Act of 1934 as amended and the
Rules and Regulations of the Federal Communications Commission) and this
Agreement and all matters or issues collateral thereto shall be governed by the
law of the State of New York applicable to contracts performed entirely therein.
(c) Neither Broadcaster nor CBS shall be or be deemed to be or hold
itself out as the agent of the other under this Agreement.
(d) Unless specified otherwise, all notices given hereunder shall be
given in writing, by personal delivery, mail, telegram, telex system or private
wire at the respective addresses of Broadcaster and CBS set forth above, unless
either party at any time or times designates another address for itself by
notifying the other party thereof by certified mail, in which case all notices
to such party shall thereafter be given at its most recently so designated
address. Notice given by mail shall be deemed given on the date of mailing
thereof with postage prepaid. Notice given by telegram shall be deemed given on
delivery of such telegram to a telegraph office with charges therefor prepaid or
to be billed to the sender thereof. Notice given by private wire shall be deemed
given on the sending thereof.
(e) The titles of the paragraphs in this Agreement are for convenience
only and shall not in any way affect the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
ROY H. PARK BROADCASTING
OF THE TRI-CITIES, INC. CBS TELEVISION NETWORK
A Division of CBS Inc.
By ________________________ By _________________________
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CBS TELEVISION NETWORK
----------------------
A Division of CBS Inc.
----------------------
AMENDMENT TO AFFILIATION AGREEMENT
CBS TELEVISION NETWORK, A Division of CBS, Inc., 51 West 52 Street, New
York, New York 10019 ("CBS"), and ROY H. PARK BROADCASTING OF THE TRI-CITIES,
INC., P.O. Box 1130, Johnson City, Tennessee 37601 ("Broadcaster"), licensed to
operate television station WJHL-TV at Johnson City, Tennessee on channel 11,
hereby mutually covenant and agree as follows:
(1) That the current Affiliation Agreement ("Agreement") between CBS and
Broadcaster dated October 1, 1995, as amended by letter agreement
dated October 1, 1995, be further amended by deleting the following
words found in line 5 of the introductory paragraph:
"...as of the 1st day of October, 1995," and inserting "effective
as of the 1st day of January, 1995."
in place thereof.
(2) That the Agreement be further amended by deleting the following words
found in paragraph 3(a), line 1:
"October 1, 1995" and inserting: "January 1, 1995"
in place thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
this 15th day of Dec., 1995.
---- ----
CBS TELEVISION NETWORK
A Division of CBS Inc.
By:________________________________
ROY H. PARK BROADCASTING OF TRI-CITIES, INC.
By:________________________________
<PAGE>
CBS
AFFILIATE
RELATIONS
A Division of CBS Inc.
51 West 52 Street
New York, New York 10019 October 1, 1995
(212) 975-4321
ROY H. PARK BROADCASTING
OF THE TRI-CITIES, INC.
Johnson City, Tennessee
Gentlemen:
Reference is made to the CBS Television Network Affiliation Agreement ("the
Agreement"), dated October 1, 1995, between you and us relating to television
station WJHL-TV ("the station") at Johnson City, Tennessee.
In order to implement the terms of the Letter Agreement dated August 22, 1995
between Park Communications, Inc. and CBS, a one-time-only compensation payment
to the station of $1,200,000 will be included in the October, 1995 compensation
check (mailed in November) as a separate line item.
Further, the Affiliated Station's Network Rate as specified in Paragraph 2(a) of
the Agreement will be revised effective as of the dates listed below in order to
generate annual net compensation as indicated, based on the agreed upon level of
clearance of the existing Network program schedule and normal full sellout of
Network inventory.
<TABLE>
<CAPTION>
Effective Network Annual
Date Rate Net Compensation
---------------------- ------- -----------------
<S> <C> <C>
January 1, 1996 $2,950 $1,591,000
January 1, 1998 $2,585 $1,391,000
January 1, 1999 $ 565 $ 300,000
</TABLE>
In addition, you and we agree that in the event negotiations with the CBS
Affiliates Advisory Board result in the revision of any provision of the
standard form CBS Television Network Affiliation Agreement, which revision would
be more favorable to the station than the comparable provision in the Agreement,
CBS will promptly offer in writing to amend the Agreement to conform to such
more favorable provision.
This letter shall not be construed as amending in any way any of the other terms
or conditions of the Agreement.
<PAGE>
Assuming the above meets with your understanding, please indicate your
acceptance by signing in the space provided below.
Accepted and Agreed:
ROY H. PARK BROADCASTING CBS TELEVISION NETWORK
OF THE TRI-CITIES, INC. A Division of CBS Inc.
By________________________ By________________________
<PAGE>
Exhibit 10.11
CBS TELEVISION NETWORK
----------------------
A Division of CBS Inc.
----------------------
AFFILIATION AGREEMENT
-----------------
CBS TELEVISION NETWORK, A Division of CBS Inc., 51 West 52 Street, New York, New
York 10019 ("CBS"), and ROY H. PARK BROADCASTING OF VIRGINIA, INC., P.O. Box
11064, Richmond, Virginia 23230 ("Broadcaster"), licensed to operate television
station WTVR at Richmond, Virginia on channel number 6 ("Affiliated Station"),
hereby mutually covenant and agree, as of the 1st day of October, 1995, as
follows:
1. Offer, Acceptance and Delivery of Network Programs.
Broadcaster shall have a "first call" on CBS network television programs
("Network Programs") as follows:
(a) Offer of Network Programs.
CBS shall offer to Broadcaster for broadcasting by Affiliated Station those
Network Programs which are to be broadcast on a network basis by any television
broadcast station licensed to operate in Affiliated Station's community of
license.
(b) Acceptance of Network Programs.
As to any offer described in Paragraph 1(a) of this Agreement, Broadcaster
may accept such offer only by notifying CBS, by means of CBS's computer-based
communications system, of such acceptance within 72 hours (exclusive of
Saturdays, Sundays and holidays), or such longer period as CBS may specify
therein, after such offer; provided, however, that, if the first broadcast
referred to in such offer is scheduled to occur less than 72 hours after the
making of the offer, Broadcaster shall notify CBS of the acceptance or rejection
of such offer as promptly as possible and in any event prior to the first
broadcast time specified in such offer. Such acceptance shall constitute
Broadcaster's agreement that Affiliated Station will broadcast such Network
Program or Programs in accordance with the terms of this Agreement and of such
offer, and so long as Affiliated Station so broadcasts such Network Program or
Programs, CBS will not, subject to its rights in the program material, authorize
the broadcast thereof on a network basis by any other television broadcast
station licensed to operate in Affiliated Station's community of license;
provided, however, that CBS shall have the right to authorize any television
broadcast station, wherever licensed to operate, to broadcast any Network
Program consisting of an address by the President of the United States of
America on a subject of public importance or consisting of coverage of a matter
of immediate national concern. If, as to any Network Program offered hereunder,
Broadcaster does not notify CBS as provided for in this
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<PAGE>
Paragraph 1(b), Broadcaster shall have no rights with respect to such Network
Program, and CBS may offer such Network Program on the same or different terms
to any other television broadcast station or stations licensed to operate in
Affiliated Station's community of license; provided, however, that, if any
Network Program offered hereunder is accepted, by Affiliated Station, upon any
other terms or conditions to which CBS agrees in writing, then the provisions of
this Agreement shall apply to the broadcast of such Network Program except to
the extent such provisions are expressly varied by the terms and conditions of
such acceptance as so agreed to by CBS.
(c) Delivery of Network Programs.
Any obligation of CBS to furnish Network Programs for broadcasting by
Affiliated Station is subject to CBS's making of arrangements satisfactory to it
for the delivery of Network Programs to Affiliated Station.
2. Payment to Broadcasters.
(a) Definitions.
(i) "Live Time Period" means the time period or periods specified
by CBS in its initial offer of a Network Program to
Broadcaster for the broadcast of such Network Program over
Affiliated Station; (ii) "Affiliated Station's Network Rate"
shall be $898 and is used herein solely for purposes of
computing payments by CBS to Broadcaster; (iii) "Commercial
Availability" means a period of time made available by CBS
during a Network Commercial Program for one or more Network
Commercial Announcements or local cooperative commercial
announcements; and (iv) "Network Commercial Announcements"
means a commercial announcement broadcast over Affiliated
Station during a Commercial Availability and paid for by or on
behalf of one or more CBS advertisers, but does not include
announcements consisting of billboards, credits, public
service announcements, promotional announcements and
announcements required by law.
(b) Payment for Broadcast of Programs.
For each Network Commercial Program or portion thereof, except those
specified in Paragraph 2(c) hereof, which is broadcast over Affiliated Station
during the Live Time Period therefor and the Live Time Period for which is set
forth in the table below, CBS shall pay Broadcaster the amount resulting from
multiplying the following:
(i) Affiliated Station's Network Rate; by
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<PAGE>
(ii) the percentage set forth below opposite such time period
(which, unless otherwise specified, is expressed in Affiliated
Station's then-current local time); by
(iii) the fraction of an hour substantially occupied by such program
or portion thereof; by
(iv) the fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied
by Network Commercial Announcements.
Table
-----
Monday through Friday
7:00 a.m. - 10:00 a.m. ...................11.2%
10:00 a m. - 12:00 p.m. .....................15%
12:00 p.m. - 4:00 p.m. ......................6%
4:00 p.m. - 5:00 p.m. ......................12%
5:00 p.m. - 8:00 p.m. ......................15%
8:00 p.m. - 11:00 p.m. .....................30%
11:00 p.m. - 12:00 a.m. ....................15%
Saturday
8:00 am. - 9:00 a.m. ........................7%
9:00 a m. - 5:00 p.m. ......................12%
5:00 p.m. - 8:00 p.m. ......................15%
8:00 p.m. - 11:00 p.m. .....................30%
11:00 p.m. - 12:00 a.m. ....................15%
Sunday
11:30 am. - 5:00 p.m. ......................12%
5:00 p.m. - 7:00 p.m. ......................15%
7:00 p.m. -11:00 p.m. ......................30%
11:00 p.m. - 12:00 a m. ....................15%
For each Network Program or portion thereof, except those specified in Paragraph
2(c) hereof, which is broadcast by Affiliated Station during a time period other
than the Live Time Period therefor and the Live Time Period for which is set
forth in the table above, CBS shall pay Broadcaster as if Affiliated Station had
broadcast such program or portion thereof during such Live Time Period, except
that:
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(i) if the percentage set forth above opposite the time period
during which Affiliated Station broadcast such program or
portion thereof is less than that set forth opposite such Live
Time Period, then CBS shall pay Broadcaster on the basis of
the time period during which Affiliated Station broadcast such
program or portion thereof; and
(ii) if the time period or any portion thereof during which
Affiliated Station broadcast such program is not set forth in
the table above, then CBS shall pay Broadcaster in accordance
with Paragraph 2(c) hereof.
(c) Payment for Broadcast of Other Programs.
For the following programs, the percentages listed below (rather than those
daypart percentages set forth in the table in Paragraph 2(b) hereinabove) shall
be used in computing payment to Affiliated Station:
Monday-Friday Daytime Game shows ......................................15%
Monday-Friday Continuing Dramas ........................................6%
Monday-Friday Late Night Daypart ....................49.4% per telecast for
live clearance or 14.4%
per telecast for delayed
clearance
Monday - Friday CBS EVENING NEWS ........................................5%
CBS Sports programs .....................................................0%
CBS SUNDAY MORNING and FACE THE NATION ..................................8%
Notwithstanding the payment obligations set forth in Paragraph 2(b) above,
CBS shall pay Broadcaster such amounts as specified in CBS's program offer for
Network Programs broadcast by Affiliated Station consisting of (i) special event
programs (including, but not limited to, such programs as awards programs, mini-
series, movie specials, entertainment specials, special-time-period broadcasts
of regularly-scheduled series, and news specials such as political conventions,
election coverage, presidential inaugurations and related events), (ii) paid
political programming, and (iii) programs for which CBS specified a Live Time
Period, or which Affiliated Station broadcast during a time period, any portion
of which is not set forth in the table above.
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<PAGE>
(d) Deduction.
From the amounts otherwise payable to Broadcaster hereunder, there shall be
deducted, for each week of the term of this Agreement, a sum equal to 168% of
Affiliated Station's Network Rate.
(e) Changes in Rate.
CBS may reduce Affiliated Station's Network Rate in connection with a re-
evaluation and reduction of the Affiliated Station Network Rate of CBS's
affiliated stations in general, by giving Affiliated Station at least thirty-
days' prior notice of such reduction in Affiliated Station's Network Rate in
which event Broadcaster may terminate this Agreement, effective as of the
effective date of any such reduction, on not less than fifteen-days' prior
notice to CBS. In order to reflect differences in the importance of compensation
payments to stations in markets of varying size, the size of any general
reduction of the Network Rate of CBS's affiliated stations pursuant to this
Paragraph 2(e) may vary to a reasonable degree according to each station's
market-size category (i.e., 1-50, 51-100, 101-150 or 151+). Further, CBS agrees
that in the event of such an across-the-board rate reduction, Affiliated
Station's Network Rate shall be reduced accordingly until thirty days after the
effective date of the reduction, at which time, unless an additional
corresponding benefit of equal value has accrued to the station, the Network
Rate shall be restored to the previous level and a retroactive adjustment shall
be made to make up the compensation difference.
(f) Time of Payment.
CBS shall make the payments hereunder reasonably promptly after the end of
each four-week or five-week accounting period of CBS for Network Commercial
Programs broadcast during such accounting period.
(g) Reports.
Broadcaster shall submit to CBS in the manner requested by CBS such reports
as CBS may reasonably request concerning the broadcasting of Network Programs by
Affiliated Station.
3. Term and Termination.
(a) Term.
The term of this Agreement shall be the period commencing on October 1,
1995 and expiring on December 31, 2004; provided, however, that, unless
Broadcaster or CBS shall notify the other at least six months prior to the
expiration of the original period or any subsequent five-year period that the
party giving such notice does not wish to have the term extended beyond such
period, the term of this Agreement shall be automatically extended upon the
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<PAGE>
expiration of the original period and each subsequent extension thereof for an
additional period of five years. Notwithstanding any provision of any offer or
acceptance under Paragraph 1 hereof, upon the expiration or any termination of
the term of this Agreement, Broadcaster shall have no right whatsoever to
broadcast over Affiliated Station any Network Program.
(b) Termination on Transfer of License or Interest in Broadcaster.
Broadcaster shall notify CBS forthwith if any application is made to the
Federal Communications Commission relating to a transfer either of any interest
in Broadcaster or of Broadcaster's license for Affiliated Station. In the event
that CBS shall reasonably disapprove of the proposed transferee, CBS shall have
the right to terminate this Agreement effective as of the effective date of any
such transfer (except a transfer within the provisions of Section 73.3540(f) of
the Federal Communications Commission's present Rules and Regulations) by giving
Broadcaster notice thereof, and of its reasons for disapproving of the proposed
transferee, within thirty days after the date on which Broadcaster gives CBS
notice of the making of such application. If CBS does not so terminate this
Agreement, Broadcaster shall, prior to the effective date of any such transfer
of any interest in Broadcaster or of Broadcaster's license for Affiliated
Station, and as a condition precedent to such transfer, procure and deliver to
CBS, in form reasonably satisfactory to CBS, the agreement of the proposed
transferee that, upon consummation of the transfer, the transferee will
unconditionally assume and perform all obligations of Broadcaster under this
Agreement. Upon delivery of said agreement to CBS, in form satisfactory to it,
the provisions of this Agreement applicable to Broadcaster shall, effective upon
the date of such transfer, be applicable to such transferee.
Broadcaster's obligations to procure the assumption of this Agreement by
any transferee of Affiliated Station as a condition precedent to such transfer
shall be deemed to be of the essence of this Agreement; further, Broadcaster
expressly recognizes that money damages will be inadequate to compensate CBS for
the breach of such obligation, and that CBS shall accordingly be entitled to
equitable relief to enforce the same.
(c) Termination on Change of Transmitter Location, Power, Frequency or
Hours of Operation of Affiliated Station.
Broadcaster shall notify CBS forthwith if application is made to the
Federal Communications Commission to modify the transmitter location, power or
frequency of Affiliated Station or Broadcaster plans to modify the hours of
operation of Affiliated Station. CBS shall have the right to terminate this
Agreement, effective upon the effective date of such modification, by giving
Broadcaster notice thereof within thirty (30) days after the date on which
Broadcaster gives CBS notice of the application or plan for such modification.
If Broadcaster fails to notify CBS as required herein, then CBS shall have the
right to terminate this Agreement by giving Broadcaster thirty (30) days' notice
thereof within thirty (30) days of the date on which CBS first learns of such
application.
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<PAGE>
(d) Termination in the Event of Bankruptcy.
Upon one (1) month's notice, CBS may terminate this Agreement if a petition
in bankruptcy is filed by or on behalf of Broadcaster, or Broadcaster otherwise
takes advantage of any insolvency law, or an involuntary petition in bankruptcy
is filed against Broadcaster and not dismissed within thirty (30) days
thereafter, or if a receiver or trustee of any of Broadcaster's property is
appointed at any time and such appointment is not vacated within thirty (30)
days thereafter (it being understood that Broadcaster will have a similar right
of termination upon the occurrence of any such event with respect to CBS).
(e) Termination in the Event of Breach.
Upon a breach of any material representation, warranty or agreement set
forth in this Agreement by any party (the "Defaulting Party"), the other party
(the "Non-Defaulting Party") may give written notice of such breach to the
Defaulting Party, whereupon the Defaulting Party shall have thirty days to cure
such breach, or if such breach is not capable of cure within thirty days, to
commence and thereafter diligently pursue such cure. If the Defaulting Party
fails to cure or to commence to cure within such thirty days, the Non-Defaulting
Party may exercise all available legal and equitable rights and remedies,
including, without limitation, the right to terminate this Agreement.
4. Use of Network Programs.
(a) General.
Broadcaster shall not broadcast any Network Program over Affiliated Station
unless such Network Program has first been offered by CBS to Broadcaster for
broadcasting over Affiliated Station and has been accepted by Broadcaster in
accordance with this Agreement. Except with the prior written consent of CBS,
Broadcaster shall neither sell any Network Program, in whole or in part, or any
time therein, for sponsorship, nor otherwise use Network Programs except as
specifically authorized in this Agreement. Affiliated Station shall not
broadcast any commercial announcement or announcements during any interval,
within a Network Program, which is designated by CBS to Affiliated Station as
being for the sole purpose of making a station identification announcement.
Broadcaster shall, with respect to each Network Program broadcast over
Affiliated Station, broadcast such Network Program in its entirety (including
but not limited to commercial announcements, billboards, credits, public service
announcements, promotional announcements and network identification), without
interruption, alteration, compression, deletion or addition of any kind, from
the beginning of the Network Program to the final system cue at the conclusion
of the Network Program. Nothing herein shall be construed as preventing
Broadcaster's deletion of (i) part of a Network Program in order to broadcast an
emergency announcement or news bulletin; (ii) a promotional announcement for a
Network Program not to be broadcast over Affiliated Station (provided that
Affiliated Station shall broadcast an alternative promotional announcement for
CBS network programming in place of the deleted promotional
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<PAGE>
announcement); (iii) such words, phrases or scenes as Broadcaster, in the
reasonable exercise of its judgment, determines it would not be in the public
interest to broadcast over Affiliated Station; provided, however, that
Broadcaster shall not substitute for any material deleted pursuant to this
clause (iii) any commercial or promotional announcement of any kind whatsoever;
and provided further that Broadcaster shall notify CBS of every such deletion
within 72 hours thereof. Broadcaster shall not, without CBS's prior written
consent, authorize or permit any Network Program, recording, or other material
furnished by CBS to Broadcaster or Affiliated Station hereunder to be recorded,
duplicated, rebroadcast, retransmitted or otherwise used for any purpose
whatsoever other than broadcasting by Affiliated Station as provided herein;
except that Broadcaster may assert a right to carriage of Affiliated Station's
signal by a cable system pursuant to the provisions of Section 4 of the Cable
Consumer Protection and Competition Act of 1992 ("the 1992 Cable Act") and may,
to the extent permitted by paragraph 4(b) hereof, grant consent to the
retransmission of such signal by a cable system or other multichannel video
programming distributor, as defined by said Act, pursuant to the provisions of
Section 6 thereof.
(b) Retransmission Consent.
Broadcaster may grant consent to the retransmission of Affiliated Station's
signal by a cable system or other multichannel video programming distributor
pursuant to the provisions of Section 6 of the 1992 Cable Act (hereafter
"retransmission consent"), provided that one of the following conditions applies
at the time retransmission consent is granted:
(i) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
serves television homes within Affiliated Station's television
market.
(ii) the majority of television homes served by the cable system or
other multichannel program service on which Affiliated
Station's signal is to be retransmitted are within a county or
community in which Affiliated Station's signal is, and has
been since October 5, 1992, "significantly viewed" as defined
in Section 76.54 of the FCC's rules; or
(iii) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
carried such signal on October 5, 1992, and does not receive
such signal by satellite delivery.
Notwithstanding anything to the contrary in the foregoing, in no case shall
retransmission consent be granted to a television receive-only satellite
service, or a direct broadcast satellite service, if Affiliated Station's signal
is to be retransmitted by such service to television homes outside of Affiliated
Station's television market other than "unserved household(s)," as that term
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is defined in Section 119(d) of Title 17, United States Code, as in effect on
October 5, 1992. For purposes of this paragraph, a station's "television market"
shall be defined in the same manner as set forth in Sections 76.55(e) and 76.59
of the FCC's rules.
(c) Taped Recordings of Network Programs.
When authorized to make a taped delayed broadcast of a Network Program,
Broadcaster shall use Broadcaster-owned tape to record the Network Program when
transmitted by CBS only for a single broadcast by Affiliated Station and shall
erase the Program recorded on the tape within 24 hours of broadcasting the
Network Program and observe any limitations which CBS may place on the
exploitation of the Network Program so recorded and erased.
5. Rejection, Refusal, Substitution and Cancellation of Network Programs.
(a) Rights of Broadcaster and CBS.
With respect to Network Programs offered to or already accepted hereunder
by Broadcaster, nothing in this Agreement shall be construed to prevent or
hinder:
(i) Broadcaster from rejecting or refusing any such Network
Program which Broadcaster reasonably believes to be
unsatisfactory or unsuitable or contrary to the public
interest, or from substituting a program which, in
Broadcaster's opinion, is of greater local or national
importance; or
(ii) CBS from substituting one or more other Network Programs, in
which event CBS shall offer such substituted program or
programs to Broadcaster pursuant to the provisions of
Paragraph 1 hereof; or
(iii) CBS from canceling one or more Network Programs.
(b) Notice.
In the event of any such rejection, refusal, substitution or cancellation
by either party hereto, such party shall notify the other thereof as soon as
practicable by telex or by such computer-based communications system as CBS may
develop for notifications of this kind. Notice given to CBS shall be addressed
to CBS Affiliate Relations.
6. Disclosure of Information.
CBS shall endeavor in good faith, before furnishing any Network Program, to
disclose to Broadcaster information of which CBS has knowledge concerning the
inclusion of any matter in such Network Program for which any money, service or
other valuable consideration is
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directly or indirectly paid or promised to, or charged or accepted by, CBS or
any employee of CBS or any other person with whom CBS deals in connection with
the production or preparation of such Network Program. As used in this Paragraph
6, the term "service or other valuable consideration" shall not include any
service or property furnished without charge or at a nominal charge for use in,
or in connection with, any Network Program "unless it is so furnished in
consideration for an identification in a broadcast of any person, product,
service, trademark, or brand name beyond an identification which is reasonably
related to the use of such service or property on the broadcast," as such words
are used in Section 317 of the Communications Act of 1934 as amended. The
provisions of this Paragraph 6 requiring the disclosure of information shall not
apply in any case where, because of a waiver granted by the Federal
Communications Commission, an announcement is not required to be made under said
Section 317. The inclusion in any such Network Program of an announcement
required by said Section 317 shall constitute the disclosure to Broadcaster
required by this Paragraph 6.
7. Indemnification.
CBS will indemnify Broadcaster from and against any and all claims,
damages, liabilities, costs and expenses arising out of the broadcasting,
pursuant to this Agreement, of Network Programs furnished by CBS to the extent
that such claims, damages, liabilities, costs and expenses are (i) based upon
alleged libel, slander, defamation, invasion of the right of privacy, or
violation or infringement of copyright or literary or dramatic rights; (ii)
based upon the broadcasting of Network Programs as furnished by CBS, without any
deletions by Broadcaster; and (iii) not based upon any material added by
Broadcaster to such Network Programs (as to which deletions and added material
Broadcaster shall, to the like extent, indemnify CBS, all network advertisers,
if any, on such Network Program, and the advertising agencies of such
advertisers). Furthermore, each party will so indemnify the other only if such
other party gives the indemnifying party prompt notice of any claim or
litigation to which its indemnity applies; it being agreed that the indemnifying
party shall have the right to assume the defense of any or all claims or
litigation to which its indemnity applies and that the indemnified party will
cooperate fully with the indemnifying party in such defense and in the
settlement of such claim or litigation. Except as herein provided to the
contrary, neither Broadcaster nor CBS shall have any rights against the other
party hereto for claims by third persons or for the non-operation of facilities
or the non-furnishing of Network Programs for broadcasting if such non-operation
or non-furnishing is due to failure of equipment, action or claims by any third
person, labor dispute or any cause beyond such party's reasonable control.
8. News Reports Included in Affiliated Station's Local News Broadcasts.
As provided in the agreements pertaining to CBS Newsnet and CBS regional
news cooperatives (but as a separate obligation of this Affiliation Agreement as
well), Broadcaster shall make available, on request by CBS News, coverage
produced by Affiliated Station of news stories and breaking news events of
national and/or regional interest, to CBS News and to regional news cooperatives
operated by CBS News. Affiliated Station shall be compensated at
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CBS News' then-prevailing rates for material broadcast by CBS News or included
in the national Newsnet service.
9. Non-Duplication of Network Programs.
(a) For purposes of this paragraph, a television station's "Network
Exclusivity Zone" shall mean the zone within thirty-five (35) miles of the
station's reference points, or, in the case of a "small market television
station," as defined in Section 76.92 of the FCC rules, the zone within 55 miles
of said reference points; provided, however, that in no case shall the "Network
Exclusivity Zone" include an area within the Area of Dominant Influence (ADI),
as determined by Arbitron and published in the then current edition of its
Television ADI Market Guide, of another CBS Television Network Affiliate. A
station's "reference points" for purposes of this paragraph shall be as defined
in Section 73.658(m) of the FCC rules, and shall be deemed to include, with
respect to a station in a hyphenated market, the reference points of each named
community in that market.
(b) Broadcaster shall be entitled to exercise, within Affiliated Station's
Network Exclusivity Zone, the protection against duplication of network
programming, as provided by Sections 76.92 through 76.97 of the FCC rules, with
respect to a Network Program during the period beginning one (1) day before and
ending seven (7) days after the delivery of such Network Program by CBS to
Broadcaster; provided, however, that such right shall apply only to Network
Programs broadcast in the live time period as offered or on no more than a one
day delay as accepted by CBS; and provided further that nothing herein shall be
deemed to preclude CBS from granting to any other broadcast television station
licensed to any other community similar network non-duplication rights within
that station's Network Exclusivity Zone, and Broadcaster's aforesaid right of
network non-duplication shall not apply with respect to the transmission of the
programs of another CBS affiliate (current or future) by a "community unit," as
that term is defined by the rules of the FCC, located (wholly or partially)
within the area in which Broadcaster's Network Exclusivity Zone overlaps the
Network Exclusivity Zone of that other CBS affiliate.
(c) Broadcaster's network non-duplication rights under this paragraph shall
be subject to cancellation by CBS on six (6) months written notice to
Broadcaster. Any such cancellation by CBS shall not affect any of the other
rights and obligations of the parties under this Agreement.
10. Assignment, Conveyance and Conditions for Use of Descramblers.
(a) For value received, CBS hereby conveys, transfers, and assigns to
Broadcaster, all of its rights, title and interest in and to the tangible
personal property consisting of two (2) Videocipher 1B Descramblers (the
"Descramblers") subject to the following conditions:
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(i) Broadcaster may not assign its rights in the Descramblers to
any party without CBS's written approval.
(ii) At the termination or expiration of this Agreement,
Broadcaster's rights in the Descramblers shall cease and
Broadcaster shall take appropriate steps to assign the
Descramblers to CBS.
(b) Broadcaster shall use the Descramblers solely in connection with the
broadcast rights granted and specified in the Agreement.
(c) CBS makes no warranties whatsoever, either express or implied, in
respect of the equipment including, but not limited to, any warranties of
merchantability or fitness for a particular purpose.
(d) Broadcaster shall be solely responsible for any and all installation
and other related costs or charges in connection with the use and installation
of the Descramblers. Broadcaster shall at all times use and maintain the
Descramblers as instructed by CBS and the manufacturer and shall use its best
efforts to assure that the Descramblers are kept in good condition and that no
tampering with the Descramblers or other breach of security, as defined in
subparagraph (g) below, occurs. Broadcaster shall promptly notify the CBS
Satellite Management Center by telephone of any defect or failure in the
operation of the Descramblers and shall follow such procedures as are
established by CBS for the replacement or repair of the Descramblers. CBS shall
be responsible for the cost of correcting any defect or of rectifying any
failure of the Descramblers to operate during the Term of the Agreement,
provided that Broadcaster shall be responsible for any costs associated with its
failure to follow the prescribed procedures.
(e) In addition to its rights under paragraph 7 of the Agreement, CBS will
not be liable for any damages resulting from the operation of the Descramblers
or from the failure of the Descramblers to function properly or, any loss, cost
or damage to Broadcaster or others arising from defects or non-performance of
the Descramblers.
(f) If Broadcaster makes any use of the Descramblers in violation of the
terms and conditions of this Agreement, said use shall be a material breach of
this Agreement.
(g) Should Broadcaster's willful acts or negligence result in any breach in
the security of the two Descramblers covered by this Agreement, such breach of
security shall be a material breach of this Agreement. Breach of security shall
include but not be limited to any theft of all or part of the Descramblers, any
unauthorized reproduction of all or part of the Descramblers, any unauthorized
reproduction of the code involved in descrambling the network feed from CBS to
Broadcaster, or any related misappropriation of the physical property or
intellectual property contained in the Descramblers.
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<PAGE>
11. General.
(a) As of the beginning of the term hereof, this Agreement takes the place
of, and is substituted for, any and all television affiliation agreements
heretofore existing between Broadcaster and CBS concerning Affiliated Station,
subject only to the fulfillment of any obligations thereunder relating to events
occurring prior to the beginning of the term hereof. This Agreement cannot be
changed or terminated orally and no waiver by either Broadcaster or CBS of any
breach of any provision hereof shall be or be deemed to be a waiver of any
preceding or subsequent breach of the same or any other provision of this
Agreement.
(b) The obligations of Broadcaster and CBS under this Agreement are subject
to all applicable federal, state and local law, rules and regulations (including
but not limited to the Communications Act of 1934 as amended and the Rules and
Regulations of the Federal Communications Commission) and this Agreement and all
matters or issues collateral thereto shall be governed by the law of the State
of New York applicable to contracts performed entirely therein.
(c) Neither Broadcaster nor CBS shall be or be deemed to be or hold itself
out as the agent of the other under this Agreement.
(d) Unless specified otherwise, all notices given hereunder shall be given
in writing, by personal delivery, mail, telegram, telex system or private wire
at the respective addresses of Broadcaster and CBS set forth above, unless
either party at any time or times designates another address for itself by
notifying the other party thereof by certified mail, in which case all notices
to such party shall thereafter be given at its most recently so designated
address. Notice given by mail shall be deemed given on the date of mailing
thereof with postage prepaid. Notice given by telegram shall be deemed given on
delivery of such telegram to a telegraph office with charges therefor prepaid or
to be billed to the sender thereof. Notice given by private wire shall be deemed
given on the sending thereof.
(e) The titles of the paragraphs in this Agreement are for convenience only
and shall not in any way affect the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
ROY H. PARK
BROADCASTING OF VIRGINIA, INC. CBS TELEVISION NETWORK
A Division of CBS Inc.
By _____________________________ By _______________________________
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<PAGE>
CBS TELEVISION NETWORK
----------------------
A Division of CBS Inc.
----------------------
AMENDMENT TO AFFILIATION AGREEMENT
CBS TELEVISION NETWORK, A Division of CBS, Inc., 51 West 52 Street, New
York, New York 10019 ("CBS"), and ROY H. PARK BROADCASTING OF VIRGINIA, INC.,
P.O. Box 11064, Richmond, Virginia 23230 ("Broadcaster"), licensed to operate
television station WTVR-TV at Richmond, Virginia on channel 6, hereby mutually
covenant and agree as follows:
(1) That the current Affiliation Agreement ("Agreement") between CBS and
Broadcaster dated October 1, 1995, as amended by letter agreement
dated October 1, 1995, be further amended by deleting the following
words found in line 5 of the introductory paragraph:
"...as of the 1st day of October, 1995," and inserting "effective
as of the 1st day of January, 1995."
in place thereof.
(2) That the Agreement be further amended by deleting the following words
found in paragraph 3(a), line 1:
"October 1, 1995" and inserting: "January 1, 1995"
in place thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
this 15th day of Dec., 1995.
---- ----
CBS TELEVISION NETWORK
A Division of CBS Inc.
By:____________________________
ROY H. PARK BROADCASTING OF VIRGINIA, INC.
By:____________________________
<PAGE>
CBS
AFFILIATE
RELATIONS
A Division of CBS Inc.
51 West 52 Street
New York, New York 10019 October 1, 1995
(212) 975-4321
ROY H. PARK BROADCASTING
OF VIRGINIA, INC.
Richmond, Virginia
Gentlemen:
Reference is made to the CBS Television Network Affiliation Agreement ("the
Agreement"), dated October 1, 1995, between you and us relating to television
station WTVR ("the station") at Richmond, Virginia.
In order to implement the terms of the Letter Agreement dated August 22, 1995
between Park Communications, Inc. and CBS, a one-time-only compensation payment
to the station of $1,440,000 will be included in the October, 1995 compensation
check (mailed in November) as a separate line item.
Further, the Affiliated Station's Network Rate as specified in Paragraph 2(a) of
the Agreement will be revised effective as of the dates listed below in order to
generate annual net compensation as indicated, based on the agreed upon level of
clearance of the existing Network program schedule and normal full sellout of
Network inventory.
<TABLE>
<CAPTION>
Effective Network Annual
Date Rate Net Compensation
--------- ------- ----------------
<S> <C> <C>
January 1, 1996 $3,690 $1,902,000
January 1, 1998 $3,305 $1,702,000
January 1, 1999 $ 685 $ 350,000
</TABLE>
In addition, you and we agree that in the event negotiations with the CBS
Affiliates Advisory Board result in the revision of any provision of the
standard form CBS Television Network Affiliation Agreement, which revision would
be more favorable to the station than the comparable provision in the Agreement,
CBS will promptly offer in writing to amend the Agreement to conform to such
more favorable provision.
This letter shall not be construed as amending in any way any of the other terms
or conditions of the Agreement.
<PAGE>
Assuming the above meets with your understanding, please indicate your
acceptance by signing in the space provided below.
Accepted and Agreed:
ROY H. PARK BROADCASTING CBS TELEVISION NETWORK
OF VIRGINIA, INC. A Division of CBS Inc.
By______________________ By____________________
<PAGE>
Exhibit 10.12
CBS TELEVISION NETWORK
----------------------
A Division of CBS Inc.
----------------------
AFFILIATION AGREEMENT
_________________
CBS TELEVISION NETWORK, A Division of CBS Inc., 51 West 52 Street, New York, New
York 10019 ("CBS"), and BIRMINGHAM TELEVISION CORPORATION, P.O. Box 59496,
Birmingham, Alabama 35259 ("Broadcaster"), licensed to operate television
station WBMG-TV at Birmingham, Alabama on channel number 42 ("Affiliated
Station"), hereby mutually covenant and agree, as of the 1st day of October,
1995, as follows:
1. Offer, Acceptance and Delivery of Network Programs.
Broadcaster shall have a "first call" on CBS network television programs
("Network Programs") as follows:
(a) Offer of Network Programs.
CBS shall offer to Broadcaster for broadcasting by Affiliated Station those
Network Programs which are to be broadcast on a network basis by any television
broadcast station licensed to operate in Affiliated Station's community of
license.
(b) Acceptance of Network Programs.
As to any offer described in Paragraph 1(a) of this Agreement, Broadcaster
may accept such offer only by notifying CBS, by means of CBS's computer-based
communications system, of such acceptance within 72 hours (exclusive of
Saturdays, Sundays and holidays), or such longer period as CBS may specify
therein, after such offer; provided, however, that, if the first broadcast
referred to in such offer is scheduled to occur less than 72 hours after the
making of the offer, Broadcaster shall notify CBS of the acceptance or rejection
of such offer as promptly as possible and in any event prior to the first
broadcast time specified in such offer. Such acceptance shall constitute
Broadcaster's agreement that Affiliated Station will broadcast such Network
Program or Programs in accordance with the terms of this Agreement and of such
offer, and so long as Affiliated Station so broadcasts such Network Program or
Programs, CBS will not, subject to its rights in the program material, authorize
the broadcast thereof on a network basis by any other television broadcast
station licensed to operate in Affiliated Station's community of license;
provided, however, that CBS shall have the right to authorize any television
broadcast station, wherever licensed to operate, to broadcast any Network
Program consisting of an address by the President of the United States of
America on a subject of public importance or consisting of coverage of a matter
of immediate national concern. If, as to any Network Program offered hereunder,
Broadcaster does not notify CBS as provided for in this
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<PAGE>
Paragraph 1(b), Broadcaster shall have no rights with respect to such Network
Program, and CBS may offer such Network Program on the same or different terms
to any other television broadcast station or stations licensed to operate in
Affiliated Station's community of license; provided, however, that, if any
Network Program offered hereunder is accepted, by Affiliated Station, upon any
other terms or conditions to which CBS agrees in writing, then the provisions of
this Agreement shall apply to the broadcast of such Network Program except to
the extent such provisions are expressly varied by the terms and conditions of
such acceptance as so agreed to by CBS.
(c) Delivery of Network Programs.
Any obligation of CBS to furnish Network Programs for broadcasting by
Affiliated Station is subject to CBS's making of arrangements satisfactory to it
for the delivery of Network Programs to Affiliated Station.
2. Payment to Broadcasters.
(a) Definitions.
(i) "Live Time Period" means the time period or periods specified
by CBS in its initial offer of a Network Program to
Broadcaster for the broadcast of such Network Program over
Affiliated Station; (ii) "Affiliated Station's Network Rate"
shall be $447 and is used herein solely for purposes of
computing payments by CBS to Broadcaster; (iii) "Commercial
Availability" means a period of time made available by CBS
during a Network Commercial Program for one or more Network
Commercial Announcements or local cooperative commercial
announcements; and (iv) "Network Commercial Announcements"
means a commercial announcement broadcast over Affiliated
Station during a Commercial Availability and paid for by or on
behalf of one or more CBS advertisers, but does not include
announcements consisting of billboards, credits, public
service announcements, promotional announcements and
announcements required by law.
(b) Payment for Broadcast of Programs.
For each Network Commercial Program or portion thereof, except those
specified in Paragraph 2(c) hereof, which is broadcast over Affiliated Station
during the Live Time Period therefor and the Live Time Period for which is set
forth in the table below, CBS shall pay Broadcaster the amount resulting from
multiplying the following:
(i) Affiliated Station's Network Rate; by
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<PAGE>
(ii) the percentage set forth below opposite such time period
(which, unless otherwise specified, is expressed in Affiliated
Station's then-current local time); by
(iii) the fraction of an hour substantially occupied by such program
or portion thereof; by
(iv) the fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied
by Network Commercial Announcements.
Table
-----
Monday through Friday
6:00 a.m. - 9:00 a.m. .....................11.2%
9:00 a m. - 11:00 a.m. ......................15%
11:00 a.m. - 3:00 p.m. .......................6%
3:00 p.m. - 5:00 p.m. .......................12%
5:00 p.m. - 7:00 p.m. .......................15%
7:00 p.m. - 10:00 p.m. ......................28%
10:00 p.m. - 11:00 p.m. .....................15%
Saturday
7:00 am. - 8:00 a.m. .........................7%
8:00 a m. - 5:00 p.m. .......................12%
5:00 p.m. - 7:00 p.m. .......................15%
7:00 p.m. - 10:00 p.m. ......................28%
10:00 p.m. - 11:00 p.m. .....................15%
Sunday
10:30 am. - 5:00 p.m. .......................12%
5:00 p.m. - 6:00 p.m. .......................15%
6:00 p.m. -10:00 p.m. .......................28%
10:00 p.m. - 11:00 p.m. .....................15%
For each Network Program or portion thereof, except those specified in Paragraph
2(c) hereof, which is broadcast by Affiliated Station during a time period other
than the Live Time Period therefor and the Live Time Period for which is set
forth in the table above, CBS shall pay Broadcaster as if Affiliated Station had
broadcast such program or portion thereof during such Live Time Period, except
that:
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(i) if the percentage set forth above opposite the time period
during which Affiliated Station broadcast such program or
portion thereof is less than that set forth opposite such Live
Time Period, then CBS shall pay Broadcaster on the basis of
the time period during which Affiliated Station broadcast such
program or portion thereof; and
(ii) if the time period or any portion thereof during which
Affiliated Station broadcast such program is not set forth in
the table above, then CBS shall pay Broadcaster in accordance
with Paragraph 2(c) hereof.
(c) Payment for Broadcast of Other Programs.
For the following programs, the percentages listed below (rather than those
daypart percentages set forth in the table in Paragraph 2(b) hereinabove) shall
be used in computing payment to Affiliated Station:
Monday-Friday Daytime Game shows .........................15%
Monday-Friday Continuing Dramas ...........................6%
Monday-Friday Late Night Daypart ......48.0% per telecast for
live clearance or 13.0%
per telecast for delayed
clearance
Monday - Friday CBS EVENING NEWS ..........................5%
CBS Sports programs .......................................0%
CBS SUNDAY MORNING and FACE THE NATION ....................8%
Notwithstanding the payment obligations set forth in Paragraph 2(b) above,
CBS shall pay Broadcaster such amounts as specified in CBS's program offer for
Network Programs broadcast by Affiliated Station consisting of (i) special event
programs (including, but not limited to, such programs as awards programs, mini-
series, movie specials, entertainment specials, special-time-period broadcasts
of regularly-scheduled series, and news specials such as political conventions,
election coverage, presidential inaugurations and related events), (ii) paid
political programming, and (iii) programs for which CBS specified a Live Time
Period, or which Affiliated Station broadcast during a time period, any portion
of which is not set forth in the table above.
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<PAGE>
(d) Deduction.
From the amounts otherwise payable to Broadcaster hereunder, there shall be
deducted, for each week of the term of this Agreement, a sum equal to 168% of
Affiliated Station's Network Rate.
(e) Changes in Rate.
CBS may reduce Affiliated Station's Network Rate in connection with a re-
evaluation and reduction of the Affiliated Station Network Rate of CBS's
affiliated stations in general, by giving Affiliated Station at least thirty-
days' prior notice of such reduction in Affiliated Station's Network Rate in
which event Broadcaster may terminate this Agreement, effective as of the
effective date of any such reduction, on not less than fifteen-days' prior
notice to CBS. In order to reflect differences in the importance of compensation
payments to stations in markets of varying size, the size of any general
reduction of the Network Rate of CBS's affiliated stations pursuant to this
Paragraph 2(e) may vary to a reasonable degree according to each station's
market-size category (i.e., 1-50, 51-100, 101-150 or 151+). Further, CBS agrees
that in the event of such an across-the-board rate reduction, Affiliated
Station's Network Rate shall be reduced accordingly until thirty days after the
effective date of the reduction, at which time, unless an additional
corresponding benefit of equal value has accrued to the station, the Network
Rate shall be restored to the previous level and a retroactive adjustment shall
be made to make up the compensation difference.
(f) Time of Payment.
CBS shall make the payments hereunder reasonably promptly after the end of
each four-week or five-week accounting period of CBS for Network Commercial
Programs broadcast during such accounting period.
(g) Reports.
Broadcaster shall submit to CBS in the manner requested by CBS such reports
as CBS may reasonably request concerning the broadcasting of Network Programs by
Affiliated Station.
3. Term and Termination.
(a) Term.
The term of this Agreement shall be the period commencing on October 1,
1995 and expiring on December 31, 2004; provided, however, that, unless
Broadcaster or CBS shall notify the other at least six months prior to the
expiration of the original period or any subsequent five-year period that the
party giving such notice does not wish to have the term extended beyond such
period, the term of this Agreement shall be automatically extended upon the
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<PAGE>
expiration of the original period and each subsequent extension thereof for an
additional period of five years. Notwithstanding any provision of any offer or
acceptance under Paragraph 1 hereof, upon the expiration or any termination of
the term of this Agreement, Broadcaster shall have no right whatsoever to
broadcast over Affiliated Station any Network Program.
(b) Termination on Transfer of License or Interest in Broadcaster.
Broadcaster shall notify CBS forthwith if any application is made to the
Federal Communications Commission relating to a transfer either of any interest
in Broadcaster or of Broadcaster's license for Affiliated Station. In the event
that CBS shall reasonably disapprove of the proposed transferee, CBS shall have
the right to terminate this Agreement effective as of the effective date of any
such transfer (except a transfer within the provisions of Section 73.3540(f) of
the Federal Communications Commission's present Rules and Regulations) by giving
Broadcaster notice thereof, and of its reasons for disapproving of the proposed
transferee, within thirty days after the date on which Broadcaster gives CBS
notice of the making of such application. If CBS does not so terminate this
Agreement, Broadcaster shall, prior to the effective date of any such transfer
of any interest in Broadcaster or of Broadcaster's license for Affiliated
Station, and as a condition precedent to such transfer, procure and deliver to
CBS, in form reasonably satisfactory to CBS, the agreement of the proposed
transferee that, upon consummation of the transfer, the transferee will
unconditionally assume and perform all obligations of Broadcaster under this
Agreement. Upon delivery of said agreement to CBS, in form satisfactory to it,
the provisions of this Agreement applicable to Broadcaster shall, effective upon
the date of such transfer, be applicable to such transferee.
Broadcaster's obligations to procure the assumption of this Agreement by
any transferee of Affiliated Station as a condition precedent to such transfer
shall be deemed to be of the essence of this Agreement; further, Broadcaster
expressly recognizes that money damages will be inadequate to compensate CBS for
the breach of such obligation, and that CBS shall accordingly be entitled to
equitable relief to enforce the same.
(c) Termination on Change of Transmitter Location, Power, Frequency or
Hours of Operation of Affiliated Station.
Broadcaster shall notify CBS forthwith if application is made to the
Federal Communications Commission to modify the transmitter location, power or
frequency of Affiliated Station or Broadcaster plans to modify the hours of
operation of Affiliated Station. CBS shall have the right to terminate this
Agreement, effective upon the effective date of such modification, by giving
Broadcaster notice thereof within thirty (30) days after the date on which
Broadcaster gives CBS notice of the application or plan for such modification.
If Broadcaster fails to notify CBS as required herein, then CBS shall have the
right to terminate this Agreement by giving Broadcaster thirty (30) days' notice
thereof within thirty (30) days of the date on which CBS first learns of such
application.
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<PAGE>
(d) Termination in the Event of Bankruptcy.
Upon one (1) month's notice, CBS may terminate this Agreement if a petition
in bankruptcy is filed by or on behalf of Broadcaster, or Broadcaster otherwise
takes advantage of any insolvency law, or an involuntary petition in bankruptcy
is filed against Broadcaster and not dismissed within thirty (30) days
thereafter, or if a receiver or trustee of any of Broadcaster's property is
appointed at any time and such appointment is not vacated within thirty (30)
days thereafter (it being understood that Broadcaster will have a similar right
of termination upon the occurrence of any such event with respect to CBS).
(e) Termination in the Event of Breach.
Upon a breach of any material representation, warranty or agreement set
forth in this Agreement by any party (the "Defaulting Party"), the other party
(the "Non-Defaulting Party") may give written notice of such breach to the
Defaulting Party, whereupon the Defaulting Party shall have thirty days to cure
such breach, or if such breach is not capable of cure within thirty days, to
commence and thereafter diligently pursue such cure. If the Defaulting Party
fails to cure or to commence to cure within such thirty days, the Non-Defaulting
Party may exercise all available legal and equitable rights and remedies,
including, without limitation, the right to terminate this Agreement.
4. Use of Network Programs.
(a) General.
Broadcaster shall not broadcast any Network Program over Affiliated Station
unless such Network Program has first been offered by CBS to Broadcaster for
broadcasting over Affiliated Station and has been accepted by Broadcaster in
accordance with this Agreement. Except with the prior written consent of CBS,
Broadcaster shall neither sell any Network Program, in whole or in part, or any
time therein, for sponsorship, nor otherwise use Network Programs except as
specifically authorized in this Agreement. Affiliated Station shall not
broadcast any commercial announcement or announcements during any interval,
within a Network Program, which is designated by CBS to Affiliated Station as
being for the sole purpose of making a station identification announcement.
Broadcaster shall, with respect to each Network Program broadcast over
Affiliated Station, broadcast such Network Program in its entirety (including
but not limited to commercial announcements, billboards, credits, public service
announcements, promotional announcements and network identification), without
interruption, alteration, compression, deletion or addition of any kind, from
the beginning of the Network Program to the final system cue at the conclusion
of the Network Program. Nothing herein shall be construed as preventing
Broadcaster's deletion of (i) part of a Network Program in order to broadcast an
emergency announcement or news bulletin; (ii) a promotional announcement for a
Network Program not to be broadcast over Affiliated Station (provided that
Affiliated Station shall broadcast an alternative promotional announcement for
CBS network programming in place of the deleted promotional
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<PAGE>
announcement); (iii) such words, phrases or scenes as Broadcaster, in the
reasonable exercise of its judgment, determines it would not be in the public
interest to broadcast over Affiliated Station; provided, however, that
Broadcaster shall not substitute for any material deleted pursuant to this
clause (iii) any commercial or promotional announcement of any kind whatsoever;
and provided further that Broadcaster shall notify CBS of every such deletion
within 72 hours thereof. Broadcaster shall not, without CBS's prior written
consent, authorize or permit any Network Program, recording, or other material
furnished by CBS to Broadcaster or Affiliated Station hereunder to be recorded,
duplicated, rebroadcast, retransmitted or otherwise used for any purpose
whatsoever other than broadcasting by Affiliated Station as provided herein;
except that Broadcaster may assert a right to carriage of Affiliated Station's
signal by a cable system pursuant to the provisions of Section 4 of the Cable
Consumer Protection and Competition Act of 1992 ("the 1992 Cable Act") and may,
to the extent permitted by paragraph 4(b) hereof, grant consent to the
retransmission of such signal by a cable system or other multichannel video
programming distributor, as defined by said Act, pursuant to the provisions of
Section 6 thereof.
(b) Retransmission Consent.
Broadcaster may grant consent to the retransmission of Affiliated Station's
signal by a cable system or other multichannel video programming distributor
pursuant to the provisions of Section 6 of the 1992 Cable Act (hereafter
"retransmission consent"), provided that one of the following conditions applies
at the time retransmission consent is granted:
(i) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
serves television homes within Affiliated Station's television
market.
(ii) the majority of television homes served by the cable system or
other multichannel program service on which Affiliated
Station's signal is to be retransmitted are within a county or
community in which Affiliated Station's signal is, and has
been since October 5, 1992, "significantly viewed" as defined
in Section 76.54 of the FCC's rules; or
(iii) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
carried such signal on October 5, 1992, and does not receive
such signal by satellite delivery.
Notwithstanding anything to the contrary in the foregoing, in no case shall
retransmission consent be granted to a television receive-only satellite
service, or a direct broadcast satellite service, if Affiliated Station's signal
is to be retransmitted by such service to television homes outside of Affiliated
Station's television market other than "unserved household(s)," as that term
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is defined in Section 119(d) of Title 17, United States Code, as in effect on
October 5, 1992. For purposes of this paragraph, a station's "television market"
shall be defined in the same manner as set forth in Sections 76.55(e) and 76.59
of the FCC's rules.
(c) Taped Recordings of Network Programs.
When authorized to make a taped delayed broadcast of a Network Program,
Broadcaster shall use Broadcaster-owned tape to record the Network Program when
transmitted by CBS only for a single broadcast by Affiliated Station and shall
erase the Program recorded on the tape within 24 hours of broadcasting the
Network Program and observe any limitations which CBS may place on the
exploitation of the Network Program so recorded and erased.
5. Rejection, Refusal, Substitution and Cancellation of Network Programs.
(a) Rights of Broadcaster and CBS.
With respect to Network Programs offered to or already accepted hereunder
by Broadcaster, nothing in this Agreement shall be construed to prevent or
hinder:
(i) Broadcaster from rejecting or refusing any such Network
Program which Broadcaster reasonably believes to be
unsatisfactory or unsuitable or contrary to the public
interest, or from substituting a program which, in
Broadcaster's opinion, is of greater local or national
importance; or
(ii) CBS from substituting one or more other Network Programs, in
which event CBS shall offer such substituted program or
programs to Broadcaster pursuant to the provisions of
Paragraph 1 hereof; or
(iii) CBS from canceling one or more Network Programs.
(b) Notice.
In the event of any such rejection, refusal, substitution or cancellation
by either party hereto, such party shall notify the other thereof as soon as
practicable by telex or by such computer-based communications system as CBS may
develop for notifications of this kind. Notice given to CBS shall be addressed
to CBS Affiliate Relations.
6. Disclosure of Information.
CBS shall endeavor in good faith, before furnishing any Network Program, to
disclose to Broadcaster information of which CBS has knowledge concerning the
inclusion of any matter in such Network Program for which any money, service or
other valuable consideration is
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directly or indirectly paid or promised to, or charged or accepted by, CBS or
any employee of CBS or any other person with whom CBS deals in connection with
the production or preparation of such Network Program. As used in this Paragraph
6, the term "service or other valuable consideration" shall not include any
service or property furnished without charge or at a nominal charge for use in,
or in connection with, any Network Program "unless it is so furnished in
consideration for an identification in a broadcast of any person, product,
service, trademark, or brand name beyond an identification which is reasonably
related to the use of such service or property on the broadcast," as such words
are used in Section 317 of the Communications Act of 1934 as amended. The
provisions of this Paragraph 6 requiring the disclosure of information shall not
apply in any case where, because of a waiver granted by the Federal
Communications Commission, an announcement is not required to be made under said
Section 317. The inclusion in any such Network Program of an announcement
required by said Section 317 shall constitute the disclosure to Broadcaster
required by this Paragraph 6.
7. Indemnification.
CBS will indemnify Broadcaster from and against any and all claims,
damages, liabilities, costs and expenses arising out of the broadcasting,
pursuant to this Agreement, of Network Programs furnished by CBS to the extent
that such claims, damages, liabilities, costs and expenses are (i) based upon
alleged libel, slander, defamation, invasion of the right of privacy, or
violation or infringement of copyright or literary or dramatic rights; (ii)
based upon the broadcasting of Network Programs as furnished by CBS, without any
deletions by Broadcaster; and (iii) not based upon any material added by
Broadcaster to such Network Programs (as to which deletions and added material
Broadcaster shall, to the like extent, indemnify CBS, all network advertisers,
if any, on such Network Program, and the advertising agencies of such
advertisers). Furthermore, each party will so indemnify the other only if such
other party gives the indemnifying party prompt notice of any claim or
litigation to which its indemnity applies; it being agreed that the indemnifying
party shall have the right to assume the defense of any or all claims or
litigation to which its indemnity applies and that the indemnified party will
cooperate fully with the indemnifying party in such defense and in the
settlement of such claim or litigation. Except as herein provided to the
contrary, neither Broadcaster nor CBS shall have any rights against the other
party hereto for claims by third persons or for the non-operation of facilities
or the non-furnishing of Network Programs for broadcasting if such non-operation
or non-furnishing is due to failure of equipment, action or claims by any third
person, labor dispute or any cause beyond such party's reasonable control.
8. News Reports Included in Affiliated Station's Local News Broadcasts.
As provided in the agreements pertaining to CBS Newsnet and CBS regional
news cooperatives (but as a separate obligation of this Affiliation Agreement as
well), Broadcaster shall make available, on request by CBS News, coverage
produced by Affiliated Station of news stories and breaking news events of
national and/or regional interest, to CBS News and to regional news cooperatives
operated by CBS News. Affiliated Station shall be compensated at
-10-
<PAGE>
CBS News' then-prevailing rates for material broadcast by CBS News or included
in the national Newsnet service.
9. Non-Duplication of Network Programs.
(a) For purposes of this paragraph, a television station's "Network
Exclusivity Zone" shall mean the zone within thirty-five (35) miles of the
station's reference points, or, in the case of a "small market television
station," as defined in Section 76.92 of the FCC rules, the zone within 55 miles
of said reference points; provided, however, that in no case shall the "Network
Exclusivity Zone" include an area within the Area of Dominant Influence (ADI),
as determined by Arbitron and published in the then current edition of its
Television ADI Market Guide, of another CBS Television Network Affiliate. A
station's "reference points" for purposes of this paragraph shall be as defined
in Section 73.658(m) of the FCC rules, and shall be deemed to include, with
respect to a station in a hyphenated market, the reference points of each named
community in that market.
(b) Broadcaster shall be entitled to exercise, within Affiliated
Station's Network Exclusivity Zone, the protection against duplication of
network programming, as provided by Sections 76.92 through 76.97 of the FCC
rules, with respect to a Network Program during the period beginning one (1) day
before and ending seven (7) days after the delivery of such Network Program by
CBS to Broadcaster; provided, however, that such right shall apply only to
Network Programs broadcast in the live time period as offered or on no more than
a one day delay as accepted by CBS; and provided further that nothing herein
shall be deemed to preclude CBS from granting to any other broadcast television
station licensed to any other community similar network non-duplication rights
within that station's Network Exclusivity Zone, and Broadcaster's aforesaid
right of network non-duplication shall not apply with respect to the
transmission of the programs of another CBS affiliate (current or future) by a
"community unit," as that term is defined by the rules of the FCC, located
(wholly or partially) within the area in which Broadcaster's Network Exclusivity
Zone overlaps the Network Exclusivity Zone of that other CBS affiliate.
(c) Broadcaster's network non-duplication rights under this paragraph
shall be subject to cancellation by CBS on six (6) months written notice to
Broadcaster. Any such cancellation by CBS shall not affect any of the other
rights and obligations of the parties under this Agreement.
10. Assignment, Conveyance and Conditions for Use of Descramblers.
(a) For value received, CBS hereby conveys, transfers, and assigns to
Broadcaster, all of its rights, title and interest in and to the tangible
personal property consisting of two (2) Videocipher 1B Descramblers (the
"Descramblers") subject to the following conditions:
-11-
<PAGE>
(i) Broadcaster may not assign its rights in the Descramblers to
any party without CBS's written approval.
(ii) At the termination or expiration of this Agreement,
Broadcaster's rights in the Descramblers shall cease and
Broadcaster shall take appropriate steps to assign the
Descramblers to CBS.
(b) Broadcaster shall use the Descramblers solely in connection with the
broadcast rights granted and specified in the Agreement.
(c) CBS makes no warranties whatsoever, either express or implied, in
respect of the equipment including, but not limited to, any warranties of
merchantability or fitness for a particular purpose.
(d) Broadcaster shall be solely responsible for any and all installation
and other related costs or charges in connection with the use and installation
of the Descramblers. Broadcaster shall at all times use and maintain the
Descramblers as instructed by CBS and the manufacturer and shall use its best
efforts to assure that the Descramblers are kept in good condition and that no
tampering with the Descramblers or other breach of security, as defined in
subparagraph (g) below, occurs. Broadcaster shall promptly notify the CBS
Satellite Management Center by telephone of any defect or failure in the
operation of the Descramblers and shall follow such procedures as are
established by CBS for the replacement or repair of the Descramblers. CBS shall
be responsible for the cost of correcting any defect or of rectifying any
failure of the Descramblers to operate during the Term of the Agreement,
provided that Broadcaster shall be responsible for any costs associated with its
failure to follow the prescribed procedures.
(e) In addition to its rights under paragraph 7 of the Agreement, CBS
will not be liable for any damages resulting from the operation of the
Descramblers or from the failure of the Descramblers to function properly or,
any loss, cost or damage to Broadcaster or others arising from defects or non-
performance of the Descramblers.
(f) If Broadcaster makes any use of the Descramblers in violation of the
terms and conditions of this Agreement, said use shall be a material breach of
this Agreement.
(g) Should Broadcaster's willful acts or negligence result in any breach
in the security of the two Descramblers covered by this Agreement, such breach
of security shall be a material breach of this Agreement. Breach of security
shall include but not be limited to any theft of all or part of the
Descramblers, any unauthorized reproduction of all or part of the Descramblers,
any unauthorized reproduction of the code involved in descrambling the network
feed from CBS to Broadcaster, or any related misappropriation of the physical
property or intellectual property contained in the Descramblers.
-12-
<PAGE>
11. General.
(a) As of the beginning of the term hereof, this Agreement takes the
place of, and is substituted for, any and all television affiliation agreements
heretofore existing between Broadcaster and CBS concerning Affiliated Station,
subject only to the fulfillment of any obligations thereunder relating to events
occurring prior to the beginning of the term hereof. This Agreement cannot be
changed or terminated orally and no waiver by either Broadcaster or CBS of any
breach of any provision hereof shall be or be deemed to be a waiver of any
preceding or subsequent breach of the same or any other provision of this
Agreement.
(b) The obligations of Broadcaster and CBS under this Agreement are
subject to all applicable federal, state and local law, rules and regulations
(including but not limited to the Communications Act of 1934 as amended and the
Rules and Regulations of the Federal Communications Commission) and this
Agreement and all matters or issues collateral thereto shall be governed by the
law of the State of New York applicable to contracts performed entirely therein.
(c) Neither Broadcaster nor CBS shall be or be deemed to be or hold
itself out as the agent of the other under this Agreement.
(d) Unless specified otherwise, all notices given hereunder shall be
given in writing, by personal delivery, mail, telegram, telex system or private
wire at the respective addresses of Broadcaster and CBS set forth above, unless
either party at any time or times designates another address for itself by
notifying the other party thereof by certified mail, in which case all notices
to such party shall thereafter be given at its most recently so designated
address. Notice given by mail shall be deemed given on the date of mailing
thereof with postage prepaid. Notice given by telegram shall be deemed given on
delivery of such telegram to a telegraph office with charges therefor prepaid or
to be billed to the sender thereof. Notice given by private wire shall be deemed
given on the sending thereof.
(e) The titles of the paragraphs in this Agreement are for convenience
only and shall not in any way affect the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
BIRMINGHAM TELEVISION CBS TELEVISION NETWORK
CORPORATION A Division of CBS Inc.
By _____________________________ By _______________________________
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<PAGE>
CBS TELEVISION NETWORK
----------------------
A Division of CBS Inc.
----------------------
AMENDMENT TO AFFILIATION AGREEMENT
CBS TELEVISION NETWORK, A Division of CBS, Inc., 51 West 52 Street, New
York, New York 10019 ("CBS"), and BIRMINGHAM TELEVISION CORPORATION, P.O. Box
59496, Birmingham, Alabama 35259 ("Broadcaster"), licensed to operate television
station WBMG-TV at Birmingham, Alabama on channel 42, hereby mutually covenant
and agree as follows:
(1) That the current Affiliation Agreement ("Agreement") between CBS and
Broadcaster dated October 1, 1995, as amended by letter agreement
dated October 1, 1995, be further amended by deleting the following
words found in line 5 of the introductory paragraph:
"...as of the 1st day of October, 1995," and inserting
"effective as of the 1st day of January, 1995."
in place thereof.
(2) That the Agreement be further amended by deleting the following words
found in paragraph 3(a), line 1:
"October 1, 1995" and inserting: "January 1, 1995"
in place thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
this 15th day of Dec., 1995.
---- ----
CBS TELEVISION NETWORK
A Division of CBS Inc.
By:__________________________________
BIRMINGHAM TELEVISION CORPORATION
By:__________________________________
<PAGE>
CBS
AFFILIATE
RELATIONS
A Division of CBS Inc.
51 West 52 Street
New York, New York 10019 October 1, 1995
(212) 975-4321
BIRMINGHAM TELEVISION CORPORATION
Birmingham, Alabama
Gentlemen:
Reference is made to the CBS Television Network Affiliation Agreement ("the
Agreement"), dated October 1, 1995, between you and us relating to television
station WBMG-TV ("the station") at Birmingham, Alabama.
In order to implement the terms of the Letter Agreement dated August 22, 1995
between Park Communications, Inc. and CBS, a one-time-only compensation payment
to the station of $1,670,000 will be included in the October, 1995 compensation
check (mailed in November) as a separate line item.
Further, the Affiliated Station's Network Rate as specified in Paragraph 2(a) of
the Agreement will be revised effective as of the dates listed below in order to
generate annual net compensation as indicated, based on the agreed upon level of
clearance of the existing Network program schedule and normal full sellout of
Network inventory.
<TABLE>
<CAPTION>
Effective Network Annual
Date Rate Net Compensation
--------- ------- ----------------
<S> <C> <C>
January 1, 1996 $3,695 $1,895,000
January 1, 1998 $3,310 $1,695,000
January 1, 1999 $ 690 $ 350,000
</TABLE>
In addition, you and we agree that in the event negotiations with the CBS
Affiliates Advisory Board result in the revision of any provision of the
standard form CBS Television Network Affiliation Agreement, which revision would
be more favorable to the station than the comparable provision in the Agreement,
CBS will promptly offer in writing to amend the Agreement to conform to such
more favorable provision.
This letter shall not be construed as amending in any way any of the other terms
or conditions of the Agreement.
<PAGE>
Assuming the above meets with your understanding, please indicate your
acceptance by signing in the space provided below.
Accepted and Agreed:
BIRMINGHAM TELEVISION CBS TELEVISION NETWORK
CORPORATION A Division of CBS Inc.
By_________________________ By________________________
<PAGE>
Exhibit 10.13
30 Rockefeller Plaza A Division of
New York, NY 10112 National Broadcasting
212 664-4444 Company, Inc.
NBC
TV NETWORK
January 19, 1996
Park Communications Inc.
and Park Broadcasting of Louisiana Inc.
c/o KALB-TV
605-11 Washington Street
Alexandria, Louisiana 71309
RE: KALB-TV (Alexandria, Louisiana)
-------------------------------
Gentlemen:
The following shall comprise the agreement between us for the
affiliation of your television broadcasting station KALB-TV (Park Broadcasting
of Louisiana Inc. and KALB-TV collectively herein called "Station") with the NBC
Television Network (herein called "NBC") and shall supersede and replace our
prior agreement dated March 29, 1990, except for the most recent amendment with
respect to network non-duplication protection under Federal Communications
Commission ("FCC") Rules Section 76.92.
1. Term. This Agreement shall be deemed effective as of 3:00 A.M., New
----
York City time on the first day of January, 1995 and, unless sooner terminated
as provided in this Agreement, it shall remain in effect for a period until
October 1, 2005. It shall then be renewed on the same terms and conditions for a
further period of five (5) years and for successive further periods of five (5)
years each, unless and until either party shall, at least twelve (12) months
prior to the expiration of the then current term, give the other party written
notice that it does not desire to have this Agreement renewed for a further
period.
2. NBC Programming.
---------------
(a) NBC shall deliver to Station for free, over-the-air television
broadcasting all programming which NBC makes available for broadcasting in the
community to which Station is presently licensed by the FCC, except as otherwise
expressly provided herein.
(b) NBC commits to supply sufficient programming throughout the term of
this Agreement for the hours presently programmed by it (the "Programmed Time
Periods"), which Programmed Time Periods are as follows (the specified times are
all local time in Station's community of license):
<PAGE>
Prime Time: Monday thru Saturday - 7:00-10:00 P.M.
Sunday - 6:00-10:00 P.M.
Late Night: Monday thru Thursday - 10:35 P.M.-1:05 A.M.
Friday -- 10:35 P.M. - 1:35 A.M.
Saturday - 10:30 P.M.-12:00 Midnight
News: Monday thru Friday - 5:30-6:00 A.M.,
7:00-9:00 A.M. and 5:30-6:00 P.M.
Saturday - 7:00-9:00 A.M. and 5:30-6:00 P.M.
Sunday - 7:00-9:00 A.M.
and 5:30-6:00 P.M.
Daytime: Monday thru Friday - 10:00 A.M.-12:00 Noon
and 12:30-2:30 P.M.
Saturday - 9:00-11:30 A.M.
The selection, scheduling, substitution and withdrawal of any program
or portion thereof delivered to Station during the Programmed Time Periods shall
at all times remain within the sole discretion and control of NBC. The parties
acknowledge that local and network programming needs may change during the term
of this Agreement, and each party agrees throughout the term to negotiate in
good faith with the other party any proposed modification of the Programmed Time
Periods.
(c) In addition to the programming supplied pursuant to Paragraph
2(b) above, NBC shall offer Station throughout the term of this Agreement a
variety of sports, special events and overnight news programming for television
broadcast at times other than the Programmed Time Periods. Station shall have
the right of first refusal with respect to any such programming good for
seventy-two (72) hours as against any other television station located in
Station's community of license or any television program transmission service
furnishing a television signal to Station's community of license, including, but
not limited to, any community antennae television system, subscription
television service, multipoint distribution system and satellite transmission
service. Station shall notify NBC of its acceptance or rejection of NBC's offer
of such programming as promptly as possible. Station's acceptance of NBC's offer
shall constitute Station's agreement to broadcast such programming in accordance
with the terms of such offer and this Agreement. Notwithstanding any other
provision in this Agreement, no pre-existing acceptance of NBC programming shall
be superseded or otherwise affected by this Agreement, and those acceptances
shall remain in full force and effect. With respect to NBC programs outside the
Programmed Time Periods (either offered or already contracted for pursuant to
this Agreement), nothing herein contained shall prevent or hinder NBC from (i)
substituting one or more sponsored or sustaining programs, in which event NBC
shall offer such substituted program or programs to Station in accordance with
the provisions of this Paragraph 2(c), or (ii) canceling one or more such NBC
programs; provided, however, that NBC shall exercise all reasonable efforts to
give Station at least three (3) weeks prior written notice of such substitution
or cancellation. Station shall not be obligated to broadcast, and NBC shall not
be obligated to
<PAGE>
continue to deliver, subsequent to the termination of this Agreement, any
programs which NBC may have offered and which Station may have accepted during
the term hereof.
3. Station Carriage in Programmed Time Periods.
-------------------------------------------
(a) Station agrees that, subject only to the preemption rights set
forth herein, including Stations unqualified right to preempt for Station's live
coverage of local news events, Station shall broadcast over Station's facilities
all NBC programming supplied to Station for broadcast in the Programmed Time
Periods on the dates and at the times the programs are scheduled by NBC, except
to the extent that Station is actually broadcasting programming pursuant to (and
within the specified limits of) a commitment contemplated by Paragraph 3(b)
below. As used herein, the "live coverage of local news events" with respect to
Station's preemption rights shall in no event refer to the addition of scheduled
local news programs as part of Station's regular continuing program schedule.
(b) As an inducement for NBC to enter into this Agreement, Station
covenants, represents and warrants to NBC that during any Broadcast Year (as
hereinafter defined) during the term hereof, Station shall preempt no more than
fifteen (15) hours in the aggregate of NBC programs during the Prime Time
Programmed Time Period for any reason other than for the live coverage of news
events (the "Prime Time Preemption Amount"). For the purposes of this Agreement,
a "Broadcast Year" shall mean a twelve (12) month period during the term hereof
which commences on any September 1 during the term hereof and which ends on
August 31 of the immediately following year. Station hereby confirms that its
rights and obligations under this Paragraph 3(b) are consistent with the
provisions of Paragraph 4(c) below.
(c) The Station hereby agrees to accept and clear all sports
programming offered to the Station by NBC outside the Programmed Time Periods
("NBC Sports Programming"), except for NBC sports programming which directly
conflicts with Station's coverage of sports events and special events of
particular local interest (collectively, such coverage of such sports events and
special events are referred to below as "Special Programs"). Station agrees not
to broadcast more than thirty (30) hours of Special Programs outside the
Programmed Time Periods in the aggregate during any Broadcast Year during the
term of this Agreement which would conflict with NBC Sports Programming outside
the Programmed Time Periods (the "Sports Preemption Amount").
(d) Notwithstanding the foregoing provisions of subparagraphs (b)
and (c) above and without limiting the provisions thereof, Station agrees that
in any one month period during a Broadcast Year, Station's preemptions of NBC
Prime Time programs and NBC Sports Programming shall not exceed 20% of,
respectively, the Prime Time Preemption Amount and the Sports Preemption Amount,
unless otherwise consistent with Station's programming practice. In addition,
Station agrees that in no event shall Station preempt NBC programming for any
programming offered or syndicated by any other broadcast television network;
provided that such agreement by Station shall only be deemed in effect to the
extent consistent with applicable law.
-3-
<PAGE>
4. Preemptions.
-----------
(a) In the event that Station, for any reason, fails to broadcast or
advises NBC that it will not broadcast any NBC programming as provided herein,
then, in each case, Station, upon notice from NBC to Station, shall broadcast
such omitted programming and the commercial announcements contained therein (or
any replacement programming and the commercial announcements contained therein)
during a time period or periods which the parties shall promptly and mutually
agree upon and which shall, to the extent possible, be of a quality and rating
value comparable to that of the time period or periods at which such omitted
programming was not broadcast as provided herein. In the event that the parties
do not promptly agree upon a time period or periods as provided in the preceding
sentence, then, without limitation to any other rights of NBC under this
Agreement or otherwise, NBC shall have the right to license the broadcast rights
to the applicable omitted programming (or replacement programming) to another
television station located in Station's community of license.
(b) In the event that Station preempts or fails to clear or
broadcast any NBC programming as provided herein for any reason other than: (i)
the live coverage of local news events, (ii) as permitted by Paragraphs 3(b),
3(c) or 3(d) above, (iii) force majeure as provided for in Paragraph 12 below,
or (iv) because: (A) the programming is delivered in a form which does not meet
accepted standards of good engineering practice; (B) the programming does not
comply with the rules and regulations of the FCC; or (C) Station reasonably
believes that such programming would not meet prevailing contemporary standards
of good taste in its community of license, then, without limiting any other
rights of NBC under this Agreement or otherwise, upon NBC's request, Station
shall pay NBC, or NBC may deduct or offset from any amounts payable to Station
hereunder or under any other agreement between Station and NBC (or an entity
controlling, controlled by or under common control with NBC), an amount
equivalent to NBC's loss in net advertising revenues attributable to the failure
of Station to broadcast such program in Stations market as scheduled by NBC,
which amount shall be calculated in accordance with Exhibit A hereto. Without
limiting or affecting any other determination of a material breach hereunder,
any failure by Station to pay any amount due under this Paragraph 4(b) shall be
deemed a material breach of this Agreement. In the event of Station's material
breach of this Agreement, without limiting any other of NBC's rights of NBC
under this Agreement or otherwise, NBC shall have the option, exercisable in its
sole discretion upon thirty (30) days' written notice to Station, to either (x)
terminate Station's right to broadcast any one or more series or other NBC
programs, as NBC shall elect, and, to the extent and for the period(s) that NBC
elects, thereafter license the broadcast rights to such series or other NBC
program(s) to any other television station or stations located in Station's
community of license or (y) unless the breach is cured within such thirty (30)
day period, terminate this Agreement. Station acknowledges that NBC programming
previously broadcast by Station has been consistent with the standards set forth
in the foregoing clause (C); Station also agrees that Station's reasonable
belief that an NBC program does not meet such standards will be based on a
substantial difference in such program's style and content from NBC programs
previously broadcast by Station, unless the relevant standards in the Station's
community of license have changed.
-4-
<PAGE>
(c) With respect to programs offered or already contracted for
pursuant to this Agreement, nothing herein contained shall be construed to
prevent or hinder Station from: (i) rejecting or refusing any NBC program which
Station reasonably believes to be unsatisfactory or unsuitable or contrary to
the public interest, or (ii) substituting a program which, in Station's opinion,
is of greater local or national importance; provided, however, that Station
shall give NBC written notice of each such rejection, refusal or substitution,
and the reason therefor, at least three (3) weeks in advance of the scheduled
broadcast, or as soon thereafter as possible (including an explanation of the
cause for any lesser notice). Station confirms that its determination that a
substitute program is of greater local or national importance shall be based on
Station's reasonable good faith judgment.
5. Station Compensation. In further consideration of Station's
--------------------
performance of its obligations under this Agreement NBC shall compensate Station
as follows:
(a) (i) NBC shall pay Station for Station's broadcast of each
network sponsored program or portion thereof (except those specified in
Paragraph 5(b) below) which is broadcast during the Live Time Period
therefor the amount resulting from multiplying the following:
(A) Station's Network Station Rate which is $900; by
(B) The percentage set forth in the compensation matrix table
attached hereto as Exhibit B (the "Compensation Table")
opposite the applicable time period; by
(C) The fraction of an hour substantially occupied by such program
or portion thereof; by
(D) The fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied
by Network Commercial Announcements.
As used herein, "Live Time Period" shall mean the time period or
periods as specified by NBC for the broadcast of a program by Station;
"Commercial Availability" shall mean a period of time made available by NBC
during a network sponsored program for one or more Network Commercial
Announcements; and "Network Commercial Announcement" shall mean a
commercial announcement broadcast over Station during a Commercial
Availability and paid for by or on behalf of one or more of NBC's network
advertisers, not including, however, announcements consisting of
billboards, credits, public service announcements, promotional
announcements and announcements required by law.
(ii) For each network sponsored program or portion thereof
(except those specified in Paragraph 5(b) below) which is broadcast by
Station during a time period
-5-
<PAGE>
other than the Live Time Period therefor, NBC reserves the right, in its
sole discretion, to withhold payment of compensation for such program. If
NBC does not withhold payment of compensation for such program, NBC shall
pay Station as if Station had broadcast the program or portion thereof
during such Live Time Period, except that if the percentage set forth in
the Compensation Table opposite the time period during which Station
broadcasts the program or portion thereof is less than that set forth
opposite such Live Time Period, NBC shall pay Station on the basis of the
time period during which Station broadcasts the program or portion thereof.
(b) NBC shall pay Station such amounts as NBC and Station shall agree
upon for all network sponsored programs broadcast by Station consisting of:
(i) Sports programs;
(ii) Special events programs, and
(iii) Programs for which NBC specifies a Live Time Period which
straddles any of the time period categories in the Compensation Table.
(c) (i) On or about the fifteenth day of the last month of each
calendar quarter during the term hereof, subject to the timely receipt of
reports requested under Paragraph 10 below, NBC shall pay Station, by
electronic transfer or such other means as NBC shall determine, an estimate
of the amounts due hereunder for such calendar quarter. NBC shall make the
appropriate adjustment for the payment actually due for such calendar
quarter in the payment of the estimated amount due for the next calendar
quarter. NBC shall calculate the amounts due hereunder on a weekly basis
and shall report such amounts to Station within a reasonable period of time
after the close of each month during the term.
(ii) From the amounts otherwise payable to Station hereunder,
NBC shall deduct for each week during each calendar quarter of the term
hereof a sum equal to 217% of Station's Network Station Rate provided in
subparagraph 5(a)(i)(A) above (the "Waiver Percentage"). This deduction
shall be calculated on a weekly basis, with 4.2857 as the agreed number of
weeks per month, and shall be reported to Station with the reports due
under subparagraph 5(c)(i) above. NBC shall make other deductions from the
amounts otherwise payable to Station hereunder for additional services made
available by NBC and utilized by Station such as, but not limited to, NBC
News Channel.
(d) (i) As part of NBC's customary annual performance evaluation of
the NBC affiliated broadcast television stations (collectively, the "NBC
Affiliates"), NBC may decrease or increase the Pool (as defined below) only
by a percentage amount which is equal to or less than the corresponding
percentage decrease or increase, as applicable, in the Adult Audience
Delivery (as defined below) during the prior Broadcast Year as compared to
the Adult Audience Delivery during the Broadcast Year immediately
-6-
<PAGE>
preceding such prior Broadcast Year. Notwithstanding the foregoing, (A) any
such adjustment in the amount of the Pool for any calendar year during the
term of this Agreement shall not exceed five percent (5%) of the amount of
the Pool for the prior calendar year, and (B) the 1994 Pool amount shall
remain in effect during calendar years 1995 and 1996. As used herein,
"Pool" shall mean, with respect to any calendar year, the aggregate of the
Network Station Rates for all NBC Affiliates during such calendar year, and
"Adult Audience Delivery," with respect to any Broadcast Year, shall mean
the Adult 18-49 audience delivery of all NBC Affiliates as measured by the
average of the NSI Sweeps in November, February and May during such
Broadcast Year or such other demographic that becomes the primary selling
demographic for Prime Time by the NBC Television Network; provided that in
--------
the event NBC changes its Primary Selling Demographic with respect to a
Broadcast Year during the term hereof, NBC shall announce such change
during July preceding the commencement of such Broadcast Year.
Subject to the limitations set forth below, NBC reserves the right as part
of a general rate revision to reevaluate and change at any time: (A) the
Network Station Rate set forth in subparagraph 5(a)(i)(A) above, (B) the
percentages set forth in the Compensation Table, or (C) the Waiver
Percentage set forth in subparagraph 5(c)(ii) above, by giving written
notice to Station at least thirty (30) days prior to the effective date of
such change. Notwithstanding the foregoing, NBC agrees that:
(X) In no event during the term of this Agreement shall the percentage
of the Pool represented by Station's Network Station Rate (the
"Station's Pool Percentage") be reduced to an amount which will result
in (aa) if Station's Rate Index (as defined below) is less than 1 as
of the date hereof, a Rate Index less than Station's Rate Index as of
the date hereof or (bb) if Station's Rate Index is 1 or more as of the
date hereof, a Rate Index of less than 1; and provided further, that
-------- -------
NBC shall be permitted to reduce Station's Network Station Rate
pursuant to subparagraph 5(d)(ii) below. As used herein, "Rate Index"
shall mean the number obtained by dividing (cc) Station's Pool
--------
Percentage by (dd) Station's "NBC Percent" (i.e. the relative
--
contribution to NBC (expressed as a percentage) as determined in NBC's
customary annual performance evaluation of all NBC Affiliates);
(Y) the Compensation Table attached hereto as Exhibit B shall be
modified during the term of this Agreement only as mutually agreed to
by NBC and Station or as may be recommended by the NBC Affiliate
Board; and
(Z) NBC may increase the Waiver Percentage only by reason of an
increase in NBC's technical costs of delivering programming to the NBC
Television Network; provided that any such increase in the waiver
--------
Percentage shall be subject to review by the NBC Affiliate Board.
(ii) Notwithstanding anything contained in subparagraph 5(d)(i)
to the contrary, the parties acknowledge that the payment of compensation
to Station hereunder
-7-
<PAGE>
is in consideration of certain commitments by Station, including
commitments regarding Station's local news program schedule and promotion
of NBC programming as respectively set forth in Exhibits C and D attached
hereto, which Exhibits are incorporated herein by this reference. In the
event that Station (A) materially reduces its local news program schedule
as set forth in Exhibit C or (B) does not fulfill such commitments as are
set forth in Exhibit D in all years during the term of this Agreement, NBC
reserves the right to decrease Station's Network Station Rate by notifying
Station in writing at least ninety (90) days prior to the effective date of
such change.
6. Additional Consideration. In consideration of Station entering into
------------------------
this Agreement and Station's performance of its obligations under this
Agreement, NBC agrees to pay Station the additional amounts (the "Additional
Payments") set forth on Exhibit E attached hereto, subject to the provisions
thereof.
7. Local Commercial Announcements. Subject to the following sentence, NBC
------------------------------
agrees that during each quarter during the term of this Agreement, the average
weekly number of minutes available for Station's local commercial announcements
in and adjacent to regularly scheduled NBC programming in each day part (with
pro-rated adjustments for national sports programming, special news coverage or
other special events) shall not be less than ninety-five percent (95%) of the
average weekly number of minutes for the applicable day part during the 1993-94
Broadcast Year as set forth in Exhibit F attached hereto (except if the
reduction is due to a change in applicable government regulations). In the event
of a reduction in the average weekly number of minutes available for Station's
local commercial announcements in and adjacent to regularly scheduled NBC
programming which causes NBC not to be in compliance with the foregoing
provision, NBC agrees to offset the effects of such reduction by providing
Station with a comparable economic benefit, which benefit may take the form of
local coverage of NBC promotional announcements, an increase in the amount of
Station's preemptions permitted under Paragraphs 3(b), 3(c) or 3(d) hereof, or
other form of benefit. The foregoing provisions of this Paragraph 7 are not
intended to facilitate any disproportionate change by NBC in the allocation of
the number of minutes available for Station's local commercial announcements in
and adjacent to regularly scheduled NBC programming among different time periods
in any day part, if such change is solely for NBC's economic benefit.
8. Delivery. NBC shall transmit the programming hereunder by satellite
--------
and shall notify Station as to both the satellite and transponder being used for
such transmission, and the programming shall be deemed delivered to Station when
transmitted to the satellite. Where, in the opinion of NBC, it is impractical or
undesirable to furnish a program over satellite facilities, NBC may deliver the
program to Station in any other manner, including but not limited to, in the
form of motion picture film, video tape or other recorded version, postage
prepaid, in sufficient time for Station to broadcast the program at the time
scheduled. Such recordings shall be used only for a single television broadcast
over Station, and Station shall comply with all NBC instructions concerning the
disposition to be made of each such recording received by Station hereunder.
-8-
<PAGE>
9. Conditions of Station's Broadcast. Station's broadcast of NBC
---------------------------------
programming shall be subject to the following terms and conditions:
(a) Station shall not make any deletions from, or additions or
modifications to, any NBC program furnished to Station hereunder or any
commercial, NBC identification, program promotional or production credit
announcements or other interstitial material contained therein, nor broadcast
any commercial or other announcements (except emergency bulletins) during any
such program, without NBC's prior written authorization. Station may, however,
delete announcements promoting any NBC program which is not to be broadcast by
Station, provided that such deletion shall be permitted only in the event and to
the extent that Station substitutes for any such deleted promotional
announcements other announcements promoting NBC programs to be broadcast by
Station.
(b) For purposes of identification of Station with the NBC programs,
and until written notice to the contrary is given by NBC, Station may
superimpose on various Entertainment programs, where designated by NBC, a single
line of type, not to exceed fifty (50) video lines in height and situated in the
lower eighth raster of the video screen, which single line shall include (and be
limited to) Station's call letters, community of license or home market, channel
number, and the NBC logo. No other addition to any Entertainment program is
contemplated by this consent, and the authorization contained herein
specifically excludes and prohibits any addition whatsoever to News and Sports
programs, except identification of Station as provided in the preceding sentence
as required by the FCC.
(c) The placement and duration of station-break periods provided for
locally originated announcements between NBC programs or segments thereof shall
be designated by NBC. Station shall broadcast each NBC program delivered to
Station hereunder from the commencement of network origination until the
commencement of the terminal station break.
(d) In the event of the confirmation by NBC of any violation by
Station of any of the provisions of this Paragraph 9, NBC may, in its reasonable
discretion, withhold an amount of compensation otherwise due Station under
Paragraph 5 above which is appropriate in view of the nature of the specific
violation, it being understood that the amount withheld for any violation shall
not exceed the total compensation due Station for the week in which such
violation occurs. Nothing contained in this Paragraph 9(d) shall limit the
rights of Station under Paragraph 4(c) above.
10. Station Reports. Station shall submit to NBC in writing, upon forms
---------------
provided by NBC, such reports as NBC may request covering the broadcast by
Station of programs furnished to Station hereunder.
11. Music Performance Rights. All programs delivered to Station pursuant
------------------------
to this Agreement shall be furnished with all music performance rights necessary
for broadcast by Station included. Station shall have no responsibility for
obtaining such rights from ASCAP, BMI or other music licensing societies insofar
as the programs delivered by NBC to Station for
-9-
<PAGE>
broadcasting are concerned. As used in this paragraph, "programs" shall include,
but shall not be limited to, program and promotional material and commercial and
public service announcements furnished by NBC. Station shall be responsible for
all music license requirements for any commercial and public service
announcements or other material inserted by Station within or adjacent to the
programs as permitted under the terms of this Agreement, except for cut-ins
produced by or on behalf of NBC and inserted by Station at NBC's direction.
12. Force Majeure. Neither Station nor NBC shall incur any liability
-------------
hereunder because of NBC's failure to deliver, or the failure of Station to
broadcast, any or all programs due to failure of facilities, labor disputes,
government regulations or causes beyond the reasonable control of the party so
failing to deliver or to broadcast. Without limiting the generality of the
foregoing, NBC's failure to deliver a program for any of the following reasons
shall be deemed to be for causes beyond NBC's reasonable control: cancellation
of a program because of the death, illness or refusal to appear or perform of a
star or principal performer thereon, or because of such person's failure to
conduct himself or herself with due regard to social conventions and public
morals and decency, or because of such person's commission of any act or
involvement in any situation or occurrence tending to degrade him or her in
society, or bringing him or her into public disrepute, contempt, scandal or
ridicule, or tending to shock, insult or offend the community, or tending to
reflect unfavorably upon NBC or the program sponsor.
13. Indemnification. NBC shall indemnify, defend and hold Station, its
---------------
parent, subsidiary and affiliated companies, and their respective directors,
officers and employees, harmless from and against all claims, damages,
liabilities, costs and expenses (including reasonable attorneys' fees) arising
out of the use by Station, in accordance with this Agreement, of any program or
other material as furnished by NBC hereunder, provided that Station promptly
notifies NBC of any claim or litigation to which this indemnity shall apply, and
that Station cooperates fully with NBC in the defense or settlement of such
claim or litigation. Similarly, Station shall indemnify, defend and hold NBC,
its parent, subsidiary and affiliated companies, and their respective directors,
officers and employees, harmless with respect to material added to or deleted
from any program by Station, except for cut-ins produced by or on behalf of NBC
and inserted by Station at NBC's direction. These indemnities shall not apply to
litigation expenses, including attorneys' fees, which the indemnified party
elects to incur on its own behalf. Except as otherwise provided herein, neither
Station nor NBC shall have any rights against the other for claims by third
persons, or for the non-operation of facilities or the non-furnishing of
programs for broadcasting, if such non-operation or non-furnishing is due to
failure of equipment, actions or claims by any third person, labor disputes, or
any cause beyond such party's reasonable control.
14. Station's Right of First Negotiation. Throughout the term of this
------------------------------------
Agreement, NBC shall give Station prompt notice of any determination by NBC to
engage in new over-the-air broadcast ventures within Station's community of
license (whether or not involving the transmission of television programs, but
excluding any acquisition of an ownership interest in any broadcast television
station) (a "Broadcast Venture"). NBC shall negotiate exclusively with
-10-
<PAGE>
Station in good faith, for a period of time following such notice to Station as
shall be determined by NBC to be appropriate to the circumstances and as shall
be specified in such notice, with respect to Station's participation on a
financial and/or operational basis in any such Broadcast Venture within
Station's community of license before NBC may enter into any such negotiations
with a Third Party (as defined below) within such community of license. "Third
Party" shall mean any person or entity other than an NBC Party; "NBC Party"
shall mean any of NBC, National Broadcasting Company, Inc. or their respective
parent, subsidiary, affiliated, related or successor entities.
15. Change in Operations. Station represents and warrants that it holds a
--------------------
valid license granted by the FCC to operate the Station as a television
broadcast station; such representation and warranty shall constitute a
continuing representation and warranty by Station. In the event that Station's
transmitter location, power, frequency, programming format or hours of operation
are materially changed at any time so that Station is of less value to NBC as a
broadcaster of NBC programming than at the date of this Agreement, then NBC
shall have the right to terminate this Agreement upon thirty (30) days prior
written notice to Station.
16. Assignment.
----------
(a) This Agreement shall not be assigned without the prior written
consent of NBC, and any permitted assignment shall not relieve Station of its
obligations hereunder. Any purported assignment by Station without such consent
shall be null and void and not enforceable against NBC.
(b) Station agrees to include as a condition of any proposed
assignment, sale or transfer of ownership or control of Station (including any
assignment or transfer referred to in Paragraph 16(c) below other than a "short-
form" assignment) a contractually binding provision that the assignee or
transferee shall assume and become bound by this Agreement for (i) the remainder
of the then-current term of this Agreement or (ii) three (3) years from the date
of said assignment or transfer whichever period is greater. Station acknowledges
that any such assignment, sale or transfer which does not so provide for such
assumption and for NBC's right to extend the term of this Agreement will cause
NBC irreparable injury for which damages are not an adequate remedy. Therefore,
Station agrees that NBC shall be entitled to seek an injunction or similar
relief from any court of competent jurisdiction restraining Station from
committing any violation of this Paragraph 16(b).
(c) Station agrees that if any application is made to the FCC
pertaining to an assignment or a transfer of control of Station's license, or
any interest therein, Station shall immediately notify NBC in writing of the
filing of such application. Except as to "short form" assignments or transfers
of control made pursuant to Section 73.3540(f) of the FCC Rules, NBC shall have
the right to terminate this Agreement in the event of any assignment or
transfer. Station agrees that promptly following Station's notice to NBC,
Station (i) except in the case of "short form" assignments or transfers of
control, shall arrange for a meeting between NBC and the proposed assignee or
transferee to review the financial and operating plans of the proposed
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<PAGE>
assignee or transferee, and (ii) shall procure and deliver to NBC, in form
satisfactory to NBC, the agreement of the proposed assignee or transferee that,
upon consummation of the assignment or transfer of control of the Station's
license, the assignee or transferee will assume and perform this Agreement in
its entirety without limitation of any kind. If Station complies with its
obligations set forth in the preceding sentence and NBC does not terminate this
Agreement upon written notice to Station within the thirty (30) day period
following the later of the meeting with the proposed assignee or transferee or
the delivery to NBC of a satisfactory assumption agreement, NBC shall be deemed
to have consented to the assignment or transfer of control.
(d) NBC agrees that in the event of a sale or transfer of all or
substantially all of the assets or business of NBC (whether structured as a sale
or transfer of equity or assets of NBC), NBC agrees to assign this Agreement to
the purchaser or transferee and to cause such purchaser or transferee to assume
NBC's obligations hereunder; provided that the foregoing agreement shall not
apply in the event that this Agreement becomes an obligation of such purchaser
or transferee by operation of law. Upon such assignment and assumption, NBC
shall have no liability to Station under this Agreement with respect to
obligations arising after the effective date of such assignment and assumption.
17. Unauthorized Copying and Transmission. Station shall not authorize,
-------------------------------------
cause, or permit, without NBC's consent, any program or other material furnished
to Station hereunder to be recorded, duplicated, rebroadcast or otherwise
transmitted or used for any purpose other than broadcasting by Station as
provided herein. Notwithstanding the foregoing, Station shall not be restricted
in the exercise of its signal carriage rights pursuant to any applicable rule or
regulation of the FCC with respect to retransmission of its broadcast signal by
any cable system or multichannel video program distributor ("MVPD"), as defined
in Section 76.64(d) of the FCC Rules, which (a) is located within the Area of
Dominant Influence ("ADI"), as defined by Arbitron, in which Station is located,
or (b) was actually carrying Station's signal as of April 1, 1993, or (c) with
respect to cable systems, serving an area in which Station is "significantly
viewed" (as determined by the FCC) as of April 1, 1993; provided, however, that
any such exercise pursuant to FCC Rules with respect to NBC programs shall not
be deemed to constitute a license by NBC; and provided, further, that at such
-------- -------
time as NBC adopts a term in substitution for the term "ADI" by reason of any
similar action by the FCC or other appropriate authority, such substitute term
shall replace the references to "ADI" herein. NBC reserves the right to restrict
such signal carriage with respect to NBC programming in the event of a change in
applicable law, rule or regulation.
18. Limitations on Retransmission Consent. In consideration of the grant
-------------------------------------
by NBC to Station of the non-duplication protection provided in the most recent
amendment to this Agreement, Station hereby agrees as follows:
(a) Station shall not grant consent to the retransmission of its
broadcast signal by any cable television system, or, except as provided in
Paragraph 18(b) below, to any other MVPD whose carriage of broadcast signals
requires retransmission consent, if such cable system or MVPD is located outside
the ADI to which Station is assigned, unless Station's signal was
-12-
<PAGE>
actually carried by such cable system or MVPD as of April 1, 1993, or, with
respect to such cable system, is "significantly viewed" (as determined by the
FCC) as of April 1, 1993; provided, however, that at each renewal of this
Agreement, in the event Station can demonstrate to NBC that it is "significantly
viewed" (as determined by the FCC) in areas in addition to those in which it was
"significantly viewed" as of April 1, 1993 ("Additional Viewing Areas"), NBC
agrees that it will negotiate in good faith with Station regarding a possible
extension of Station's grant of the right to retransmit its broadcast signal to
cable systems in the Additional Viewing Areas.
(b) Station shall not grant consent to the retransmission of its
broadcast signal by any MVPD that provides such signal to any home satellite
dish user, unless such user is located within Station's own ADI or is an
"unserved household" as defined in Section 119 (d) or any successor provision of
Title 17 of the United States Code.
19. Remedies for Unauthorized Copying and Transmission. If Station
--------------------------------------------------
violates any of the provisions set forth in Paragraphs 17 and 18 above, NBC may,
in addition to any other of its rights or remedies at law or in equity under
this Agreement or any amendment thereto, terminate this Agreement by written
notice to Station given at least ninety (90) days prior to the effective date of
such termination.
20. Applicable Law. The obligations of Station and NBC under this
--------------
Agreement are subject to all applicable federal, state, and local laws, rules
and regulations (including, but not limited to, the Communications Act of 1934,
as amended, and the rules and regulations of the FCC), and this Agreement and
all matters or issues collateral thereto shall be governed by the law of the
State of New York applicable to contracts negotiated, executed and performed
entirely therein (without regard to principles of conflicts of laws).
21. Waiver. A waiver by either of the parties hereto of a breach of any
------
provision of this Agreement shall not be deemed to constitute a waiver of any
preceding or subsequent breach of the same provision or any other provision
hereof.
22. Notices. Any notices hereunder shall be in writing and shall be given
-------
by personal delivery, overnight courier service, or registered or certified
mail, addressed to the respective addresses set forth on the first page of this
Agreement or at such other address or addresses as may be specified in writing
by the party to whom the notice is given. Such notices shall be deemed given
when personally delivered, delivered to an overnight courier service or mailed,
except that notice of change of address shall be effective only from the date of
its receipt.
23. Captions. The captions of the paragraphs in this Agreement are for
--------
convenience only and shall not in any way affect the interpretation hereof.
24. Entire Agreement. The foregoing constitutes the entire agreement
----------------
between Station and NBC with respect to the subject matter hereof, all prior
understandings being merged herein, except for the most recent amendment with
respect to network non-duplication protection under
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<PAGE>
FCC Rules Section 76.92. This Agreement may not be changed, modified, renewed,
extended or discharged, except as specifically provided herein or by an
agreement in writing signed by the parties hereto.
25. Confidentiality. The parties agree to use their best efforts to
---------------
preserve the confidentiality of this Agreement and of the terms and conditions
set forth herein, and the exhibits annexed hereto, to the fullest extent
permissible by law. The parties recognize that Section 73.3613 of the FCC's
Rules and Regulations requires the filing with the FCC of television network
affiliation agreements by each affiliate, but are unaware of any requirement for
the filing of exhibits annexed to such affiliation agreements. In the event that
the FCC should request either party to file said exhibits, that party shall give
prompt notice to the other, and shall submit said exhibits to the FCC with a
request that said exhibits be withheld from public inspection pursuant to
Section 0.459 of the FCC's Rules and Regulations on the grounds that said
exhibits contain confidential commercial or financial information that would
customarily be guarded from competitors and not be released to the public.
26. Counterparts. This Agreement may be signed in any number of
------------
counterparts with the same effect as if the signature to each such counterpart
were upon the same instrument.
If the foregoing is in accordance with your understanding, please indicate
your acceptance on the copy of this Agreement enclosed for that purpose and
return that copy to NBC.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By:_______________________________
AGREED:
PARK COMMUNICATIONS INC.
By:_____________________
PARK BROADCASTING OF LOUISIANA INC.
By:_____________________
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<PAGE>
Exhibit 10.14
NBC
TV NETWORK
January 19, 1996
Park Communications Inc.
Roy H. Park Broadcasting of
Roanoke, Inc.
c/o WSLS-TV
Box 10
401 Third Street NW
Roanoke, Virginia 24011
RE: WSLS-TV (Roanoke, Virginia)
---------------------------
Gentlemen:
The following shall comprise the agreement between us for the
affiliation of your television broadcasting station WSLS-TV (Roy H. Park
Broadcasting of Roanoke, Inc. and WSLS-TV collectively herein called "Station")
with the NBC Television Network (herein called "NBC") and shall supersede and
replace our prior agreement dated October 21, 1988, except for the most recent
amendment with respect to network non-duplication protection under Federal
Communications Commission ("FCC") Rules Section 76.92.
1. Term. This Agreement shall be deemed effective as of 3:00 A.M., New
----
York City time on the first day of January, 1995 and, unless sooner terminated
as provided in this Agreement, it shall remain in effect for a period until
October 1, 2005. It shall then be renewed on the same terms and conditions for a
further period of five (5) years and for successive further periods of five (5)
years each, unless and until either party shall, at least twelve (12) months
prior to the expiration of the then current term, give the other party written
notice that it does not desire to have this Agreement renewed for a further
period.
2. NBC Programming.
---------------
(a) NBC shall deliver to Station for free, over-the-air television
broadcasting all programming which NBC makes available for broadcasting in the
community to which Station is presently licensed by the FCC, except as otherwise
expressly provided herein.
(b) NBC commits to supply sufficient programming throughout the term
of this Agreement for the hours presently programmed by it (the "Programmed Time
Periods"), which Programmed Time Periods are as follows (the specified times are
all local time in Station's community of license):
<PAGE>
Prime Time: Monday thru Saturday - 8:00-11:00 P.M.
Sunday - 7:00-11:00 P.M.
Late Night: Monday thru Thursday - 11:35 P.M.-2:05 A.M.
Friday - 11:35 P.M. - 2:35 A.M.
Saturday - 11:30 P.M.-1:00 A.M.
News: Monday thru Friday - 6:00-6:30 A.M.,
7:00-9:00 A.M. and 6:30-7:00 P.M.
Saturday - 7:00-9:00 A.M. and 6:30 - 7:00 P.M.
Sunday - 12:00-1:00 P.M.
and 6:30-7:00 P.M.
Daytime: Monday thru Friday - 10:00-11:00 A.M.
and 1:00-3:00 P.M.
Saturday - 9:00-10:30 A.M.
The selection, scheduling, substitution and withdrawal of any program
or portion thereof delivered to Station during the Programmed Time Periods shall
at all times remain within the sole discretion and control of NBC. The parties
acknowledge that local and network programming needs may change during the term
of this Agreement, and each party agrees throughout the term to negotiate in
good faith with the other party any proposed modification of the Programmed Time
Periods.
(c) In addition to the programming supplied pursuant to Paragraph 2(b)
above, NBC shall offer Station throughout the term of this Agreement a variety
of sports, special events and overnight news programming for television
broadcast at times other than the Programmed Time Periods. Station shall have
the right of first refusal with respect to any such programming good for
seventy-two (72) hours as against any other television station located in
Station's community of license or any television program transmission service
furnishing a television signal to Station's community of license, including, but
not limited to, any community antennae television system, subscription
television service, multipoint distribution system and satellite transmission
service. Station shall notify NBC of its acceptance or rejection of NBC's offer
of such programming as promptly as possible. Station's acceptance of NBC's offer
shall constitute Station's agreement to broadcast such programming in accordance
with the terms of such offer and this Agreement. Notwithstanding any other
provision in this Agreement, no pre-existing acceptance of NBC programming shall
be superseded or otherwise affected by this Agreement, and those acceptances
shall remain in full force and effect. With respect to NBC programs outside the
Programmed Time Periods (either offered or already contracted for pursuant to
this Agreement), nothing herein contained shall prevent or hinder NBC from (i)
substituting one or more sponsored or sustaining programs, in which event NBC
shall offer such substituted program or programs to Station in accordance with
the provisions of this Paragraph 2(c), or (ii) canceling one or more such NBC
programs; provided, however, that NBC shall exercise all reasonable efforts to
give Station at least three (3) weeks prior written notice of such substitution
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<PAGE>
or cancellation. Station shall not be obligated to broadcast, and NBC shall not
be obligated to continue to deliver, subsequent to the termination of this
Agreement, any programs which NBC may have offered and which Station may have
accepted during the term hereof.
3. Station Carriage in Programmed Time Periods.
-------------------------------------------
(a) Station agrees that, subject only to the preemption rights set
forth herein, including Stations unqualified right to preempt for Station's live
coverage of local news events, Station shall broadcast over Station's facilities
all NBC programming supplied to Station for broadcast in the Programmed Time
Periods on the dates and at the times the programs are scheduled by NBC, except
to the extent that Station is actually broadcasting programming pursuant to (and
within the specified limits of) a commitment contemplated by Paragraph 3(b)
below. As used herein, the "live coverage of local news events" with respect to
Station's preemption rights shall in no event refer to the addition of scheduled
local news programs as part of Station's regular continuing program schedule.
(b) As an inducement for NBC to enter into this Agreement, Station
covenants, represents and warrants to NBC that during any Broadcast Year (as
hereinafter defined) during the term hereof, Station shall preempt no more than
eighteen (18) hours in the aggregate of NBC programs during the Prime Time
Programmed Time Period for any reason other than for the live coverage of news
events (the "Prime Time Preemption Amount"). For the purposes of this Agreement,
a "Broadcast Year" shall mean a twelve (12) month period during the term hereof
which commences on any September 1 during the term hereof and which ends on
August 31 of the immediately following year. Station hereby confirms that its
rights and obligations under this Paragraph 3(b) are consistent with the
provisions of Paragraph 4(c) below.
(c) The Station hereby agrees to accept and clear all sports
programming offered to the Station by NBC outside the Programmed Time Periods
("NBC Sports Programming"), except for NBC sports programming which directly
conflicts with Station's coverage of sports events and special events of
particular local interest (collectively, such coverage of such sports events and
special events are referred to below as "Special Programs"). Station agrees not
to broadcast more than thirty-three (33) hours of Special Programs outside the
Programmed Time Periods in the aggregate during any Broadcast Year during the
term of this Agreement which would conflict with NBC Sports Programming outside
the Programmed Time Periods (the "Sports Preemption Amount").
(d) Notwithstanding the foregoing provisions of subparagraphs (b) and
(c) above and without limiting the provisions thereof, Station agrees that in
any one month period during a Broadcast Year, Station's preemptions of NBC Prime
Time programs and NBC Sports Programming shall not exceed 20% of, respectively,
the Prime Time Preemption Amount and the Sports Preemption Amount, unless
otherwise consistent with Station's programming practice. In addition, Station
agrees that in no event shall Station preempt NBC programming for any
programming offered or syndicated by any other broadcast television network;
provided that
- --------
-3-
<PAGE>
such agreement by Station shall only be deemed in effect to the extent
consistent with applicable law.
(e) Station shall initially be obligated to broadcast only two (2)
hours of NBC Daytime Programming, Monday through Friday; provided that upon the
--------
earlier of (i) September 1, 1996 or (ii) the expiration or termination (without
giving effect to any renewal term) of any of Stations' existing contractual
commitments for non-NBC programming currently broadcast by Station, Monday
through Friday, during the hours of 9:00 A.M. - 4:00 P.M., Station shall clear a
third and fourth hour of NBC Daytime programming (the "Third and Fourth Daytime
Hours"); provided, however, in no event shall Station be obligated to clear "The
-------- -------
Other Side." The Third and Fourth Daytime Hours shall be cleared by Station
during the hours 9:00 A.M. - 4:00 P.M., Monday through Friday, in the sequence
as scheduled by NBC, and shall, upon such clearance by Station, become part of
the Programmed Time Period for purposes of Paragraphs 2(b) and 3(a) hereof.
(f) Station shall initially not be obligated to broadcast "Sunday
Today" (or any replacement programming); provided that commencing as of the
--------
earlier of (i) September 1, 1996, or (ii) the expiration or termination (without
giving effect to any renewal term) of any of Station's existing contractual
commitments for the broadcast of non-NBC programming on Sunday mornings, Station
agrees to give good faith consideration to the clearance of "Sunday Today" (or
any replacement programming) and shall consult with NBC prior to entering into a
new or extended commitment for the clearance of non-NBC programming during such
daypart. Upon Station's clearance of "Sunday Today" (or any replacement
programming), such programming shall then become part of the Programmed Time
Period for purposes of Paragraphs 2(b) and 3(a) hereof.
(g) Upon the expiration or termination (without giving effect to any
renewal) of any of Station's contractual commitments for non-NBC programming
broadcast by Station on Saturday mornings or, if earlier, the availability of
appropriate time periods on Saturday mornings, Station shall clear an additional
one (1) hour of NBC Daytime Programming on Saturday mornings (the "Additional
Saturday Daytime Programming") in the Live Time Period for such programming so
that Station would clear two and one-half (2-1/2) hours of Saturday NBC Daytime
Programming. Upon Station's clearance of the Additional Saturday Daytime
Programming, such programming shall then become part of the Saturday Daytime
Programmed Time Period for purposes of Paragraphs 2(b) and 3(a) hereof.
4. Preemptions.
-----------
(a) In the event that Station, for any reason, fails to broadcast or
advises NBC that it will not broadcast any NBC programming as provided herein,
then, in each case, Station, upon notice from NBC to Station, shall broadcast
such omitted programming and the commercial announcements contained therein (or
any replacement programming and the commercial announcements contained therein)
during a time period or periods which the parties shall promptly and mutually
agree upon and which shall, to the extent possible, be of a quality and
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<PAGE>
rating value comparable to that of the time period or periods at which such
omitted programming was not broadcast as provided herein. In the event that the
parties do not promptly agree upon a time period or periods as provided in the
preceding sentence, then, without limitation to any other rights of NBC under
this Agreement or otherwise, NBC shall have the right to license the broadcast
rights to the applicable omitted programming (or replacement programming) to
another television station located in Station's community of license.
(b) In the event that Station preempts or fails to clear or broadcast
any NBC programming as provided herein for any reason other than: (i) the live
coverage of local news events, (ii) as permitted by Paragraphs 3(b), 3(c) or
3(d) above, (iii) force majeure as provided for in Paragraph 12 below, or
(iv) because: (A) the programming is delivered in a form which does not meet
accepted standards of good engineering practice; (B) the programming does not
comply with the rules and regulations of the FCC; or (C) Station reasonably
believes that such programming would not meet prevailing contemporary standards
of good taste in its community of license, then, without limiting any other
rights of NBC under this Agreement or otherwise, upon NBC's request, Station
shall pay NBC, or NBC may deduct or offset from any amounts payable to Station
hereunder or under any other agreement between Station and NBC (or an entity
controlling, controlled by or under common control with NBC), an amount
equivalent to NBC's loss in net advertising revenues attributable to the failure
of Station to broadcast such program in Stations market as scheduled by NBC,
which amount shall be calculated in accordance with Exhibit A hereto. Without
limiting or affecting any other determination of a material breach hereunder,
any failure by Station to pay any amount due under this Paragraph 4(b) shall be
deemed a material breach of this Agreement. In the event of Station's material
breach of this Agreement, without limiting any other of NBC's rights of NBC
under this Agreement or otherwise, NBC shall have the option, exercisable in its
sole discretion upon thirty (30) days, written notice to Station, to either (x)
terminate Station's right to broadcast any one or more series or other NBC
programs, as NBC shall elect, and, to the extent and for the period(s) that NBC
elects, thereafter license the broadcast rights to such series or other NBC
program(s) to any other television station or stations located in Station's
community of license or (y) unless the breach is cured within such thirty (30)
day period, terminate this Agreement. Station acknowledges that NBC programming
previously broadcast by Station has been consistent with the standards set forth
in the foregoing clause (C); Station also agrees that Station's reasonable
belief that an NBC program does not meet such standards will be based on a
substantial difference in such program's style and content from NBC programs
previously broadcast by Station, unless the relevant standards in the Station's
community of license have changed.
(c) With respect to programs offered or already contracted for
pursuant to this Agreement, nothing herein contained shall be construed to
prevent or hinder Station from: (i) rejecting or refusing any NBC program which
Station reasonably believes to be unsatisfactory or unsuitable or contrary to
the public interest, or (ii) substituting a program which, in Station's opinion,
is of greater local or national importance; provided, however, that Station
shall give NBC written notice of each such rejection, refusal or substitution,
and the reason therefor, at least three (3) weeks in advance of the scheduled
broadcast, or as soon thereafter as possible
-5-
<PAGE>
(including an explanation of the cause for any lesser notice). Station confirms
that its determination that a substitute program is of greater local or national
importance shall be based on Station's reasonable good faith judgment.
5. Station Compensation. In further consideration of Station's
--------------------
performance of its obligations under this Agreement NBC shall compensate Station
as follows:
(a) (i) NBC shall pay Station for Station's broadcast of each network
sponsored program or portion thereof (except those specified in Paragraph
5(b) below) which is broadcast during the Live Time Period therefor the
amount resulting from multiplying the following:
(A) Station's Network Station Rate which is $1400; by
(B) The percentage set forth in the compensation matrix table
attached hereto as Exhibit B (the "Compensation Table") opposite
the applicable time period; by
(C) The fraction of an hour substantially occupied by such program or
portion thereof; by
(D) The fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied by
Network Commercial Announcements.
As used herein, "Live Time Period" shall mean the time period or
periods as specified by NBC for the broadcast of a program by Station;
"Commercial Availability" shall mean a period of time made available by NBC
during a network sponsored program for one or more Network Commercial
Announcements; and "Network Commercial Announcement" shall mean a
commercial announcement broadcast over Station during a Commercial
Availability and paid for by or on behalf of one or more of NBC's network
advertisers, not including, however, announcements consisting of
billboards, credits, public service announcements, promotional
announcements and announcements required by law.
(ii) For each network sponsored program or portion thereof
(except those specified in Paragraph 5(b) below) which is broadcast by
Station during a time period other than the Live Time Period therefor, NBC
reserves the right, in its sole discretion, to withhold payment of
compensation for such program. If NBC does not withhold payment of
compensation for such program, NBC shall pay Station as if Station had
broadcast the program or portion thereof during such Live Time Period,
except that if the percentage set forth in the Compensation Table opposite
the time period during which Station broadcasts the program or portion
thereof is less than that set forth opposite such
-6-
<PAGE>
Live Time Period, NBC shall pay Station on the basis of the time period
during which Station broadcasts the program or portion thereof.
(b) NBC shall pay Station such amounts as NBC and Station shall agree
upon for all network sponsored programs broadcast by Station consisting of:
(i) Sports programs;
(ii) Special events programs, and
(iii) Programs for which NBC specifies a Live Time Period which
straddles any of the time period categories in the Compensation Table.
(c) (i) On or about the fifteenth day of the last month of each
calendar quarter during the term hereof, subject to the timely receipt of
reports requested under Paragraph 10 below, NBC shall pay Station, by
electronic transfer or such other means as NBC shall determine, an estimate
of the amounts due hereunder for such calendar quarter. NBC shall make the
appropriate adjustment for the payment actually due for such calendar
quarter in the payment of the estimated amount due for the next calendar
quarter. NBC shall calculate the amounts due hereunder on a weekly basis
and shall report such amounts to Station within a reasonable period of time
after the close of each month during the term.
(ii) From the amounts otherwise payable to Station hereunder,
NBC shall deduct for each week during each calendar quarter of the term
hereof a sum equal to 217% of Station's Network Station Rate provided in
subparagraph 5(a)(i)(A) above (the "Waiver Percentage"). This deduction
shall be calculated on a weekly basis, with 4.2857 as the agreed number of
weeks per month, and shall be reported to Station with the reports due
under subparagraph 5(c)(i) above. NBC shall make other deductions from the
amounts otherwise payable to Station hereunder for additional services made
available by NBC and utilized by Station such as, but not limited to, NBC
News Channel.
(d) (i) As part of NBC's customary annual performance evaluation of
the NBC affiliated broadcast television stations (collectively, the "NBC
Affiliates"), NBC may decrease or increase the Pool (as defined below) only
by a percentage amount which is equal to or less than the corresponding
percentage decrease or increase, as applicable, in the Adult Audience
Delivery (as defined below) during the prior Broadcast Year as compared to
the Adult Audience Delivery during the Broadcast Year immediately preceding
such prior Broadcast Year. Notwithstanding the foregoing, (A) any such
adjustment in the amount of the Pool for any calendar year during the term
of this Agreement shall not exceed five percent (5%) of the amount of the
Pool for the prior calendar year, and (B) the 1994 Pool amount shall remain
in effect during calendar years 1995 and 1996. As used herein, "Pool" shall
mean, with respect to any calendar year, the aggregate of the Network
Station Rates for all NBC Affiliates during such calendar
-7-
<PAGE>
year, and "Adult Audience Delivery," with respect to any Broadcast Year,
shall mean the Adult 18-49 audience delivery of all NBC Affiliates as
measured by the average of the NSI Sweeps in November, February and May
during such Broadcast Year or such other demographic that becomes the
primary selling demographic for Prime Time by the NBC Television Network;
provided that in the event NBC changes its Primary Selling Demographic with
--------
respect to a Broadcast Year during the term hereof, NBC shall announce such
change during July preceding the commencement of such Broadcast Year.
Subject to the limitations set forth below, NBC reserves the right as part
of a general rate revision to reevaluate and change at any time: (A) the
Network Station Rate set forth in subparagraph 5(a)(i)(A) above, (B) the
percentages set forth in the Compensation Table, or (C) the waiver
Percentage set forth in subparagraph 5(c)(ii) above, by giving written
notice to Station at least thirty (30) days prior to the effective date of
such change. Notwithstanding the foregoing, NBC agrees that:
(X) In no event during the term of this Agreement shall the percentage
of the Pool represented by Station's Network Station Rate (the
"Station's Pool Percentage") be reduced to an amount which will result
in (aa) if Station's Rate Index (as defined below) is less than 1 as
of the date hereof, a Rate Index less than Station's Rate Index as of
the date hereof or (bb) if Station's Rate Index is 1 or more as of the
date hereof, a Rate Index of less than 1; and provided further, that
-------- -------
NBC shall be permitted to reduce Station's Network Station Rate
pursuant to subparagraph 5(d)(ii) below. As used herein, "Rate Index"
shall mean the number obtained by dividing (cc) Station's Pool
--------
Percentage by (dd) Station's "NBC Percent" (i.e. the relative
--
contribution to NBC (expressed as a percentage) as determined in NBC's
customary annual performance evaluation of all NBC Affiliates);
(Y) the Compensation Table attached hereto as Exhibit B shall be
modified during the term of this Agreement only as mutually agreed to
by NBC and Station or as may be recommended by the NBC Affiliate
Board; and
(Z) NBC may increase the Waiver Percentage only by reason of an
increase in NBC's technical costs of delivering programming to the NBC
Television Network; provided that any such increase in the waiver
--------
Percentage shall be subject to review by the NBC Affiliate Board.
(ii) Notwithstanding anything contained in subparagraph 5(d)(i)
to the contrary, the parties acknowledge that the payment of compensation
to Station hereunder is in consideration of certain commitments by Station,
including commitments regarding Station's local news program schedule and
promotion of NBC programming as respectively set forth in Exhibits C and D
attached hereto, which Exhibits are incorporated herein by this reference.
In the event that Station (A) materially reduces its local news program
schedule as set forth in Exhibit C or (B) does not fulfill such commitments
as are set forth in Exhibit D in all years during the term of this
Agreement,
-8-
<PAGE>
NBC reserves the right to decrease Station's Network Station Rate by
notifying Station in writing at least ninety (90) days prior to the
effective date of such change.
6. Additional Consideration. In consideration of Station entering into
------------------------
this Agreement and Station's performance of its obligations under this
Agreement, NBC agrees to pay Station the additional amounts (the "Additional
Payments") set forth on Exhibit E attached hereto, subject to the provisions
thereof.
7. Local Commercial Announcements. Subject to the following sentence, NBC
------------------------------
agrees that during each quarter during the term of this Agreement, the average
weekly number of minutes available for Station's local commercial announcements
in and adjacent to regularly scheduled NBC programming in each day part (with
pro-rated adjustments for national sports programming, special news coverage or
other special events) shall not be less than ninety-five percent (95%) of the
average weekly number of minutes for the applicable day part during the 1993-94
Broadcast Year as set forth in Exhibit F attached hereto (except if the
reduction is due to a change in applicable government regulations). In the event
of a reduction in the average weekly number of minutes available for Station's
local commercial announcements in and adjacent to regularly scheduled NBC
programming which causes NBC not to be in compliance with the foregoing
provision, NBC agrees to offset the effects of such reduction by providing
Station with a comparable economic benefit, which benefit may take the form of
local coverage of NBC promotional announcements, an increase in the amount of
Station's preemptions permitted under Paragraphs 3(b), 3(c) or 3(d) hereof, or
other form of benefit. The foregoing provisions of this Paragraph 7 are not
intended to facilitate any disproportionate change by NBC in the allocation of
the number of minutes available for Station's local commercial announcements in
and adjacent to regularly scheduled NBC programming among different time periods
in any day part, if such change is solely for NBC's economic benefit.
8. Delivery. NBC shall transmit the programming hereunder by satellite
--------
and shall notify Station as to both the satellite and transponder being used for
such transmission, and the programming shall be deemed delivered to Station when
transmitted to the satellite. Where, in the opinion of NBC, it is impractical or
undesirable to furnish a program over satellite facilities, NBC may deliver the
program to Station in any other manner, including but not limited to, in the
form of motion picture film, video tape or other recorded version, postage
prepaid, in sufficient time for Station to broadcast the program at the time
scheduled. Such recordings shall be used only for a single television broadcast
over Station, and Station shall comply with all NBC instructions concerning the
disposition to be made of each such recording received by Station hereunder.
9. Conditions of Station's Broadcast. Station's broadcast of NBC
---------------------------------
programming shall be subject to the following terms and conditions:
(a) Station shall not make any deletions from, or additions or
modifications to, any NBC program furnished to Station hereunder or any
commercial, NBC identification, program promotional or production credit
announcements or other interstitial material contained
-9-
<PAGE>
therein, nor broadcast any commercial or other announcements (except emergency
bulletins) during any such program, without NBC's prior written authorization.
Station may, however, delete announcements promoting any NBC program which is
not to be broadcast by Station, provided that such deletion shall be permitted
only in the event and to the extent that Station substitutes for any such
deleted promotional announcements other announcements promoting NBC programs to
be broadcast by Station.
(b) For purposes of identification of Station with the NBC programs,
and until written notice to the contrary is given by NBC, Station may
superimpose on various Entertainment programs, where designated by NBC, a single
line of type, not to exceed fifty (50) video lines in height and situated in the
lower eighth raster of the video screen, which single line shall include (and be
limited to) Station's call letters, community of license or home market, channel
number, and the NBC logo. No other addition to any Entertainment program is
contemplated by this consent, and the authorization contained herein
specifically excludes and prohibits any addition whatsoever to News and Sports
programs, except identification of Station as provided in the preceding sentence
as required by the FCC.
(c) The placement and duration of station-break periods provided for
locally originated announcements between NBC programs or segments thereof shall
be designated by NBC. Station shall broadcast each NBC program delivered to
Station hereunder from the commencement of network origination until the
commencement of the terminal station break.
(d) In the event of the confirmation by NBC of any violation by
Station of any of the provisions of this Paragraph 9, NBC may, in its reasonable
discretion, withhold an amount of compensation otherwise due Station under
Paragraph 5 above which is appropriate in view of the nature of the specific
violation, it being understood that the amount withheld for any violation shall
not exceed the total compensation due Station for the week in which such
violation occurs. Nothing contained in this Paragraph 9(d) shall limit the
rights of Station under Paragraph 4(c) above.
10. Station Reports. Station shall submit to NBC in writing, upon forms
---------------
provided by NBC, such reports as NBC may request covering the broadcast by
Station of programs furnished to Station hereunder.
11. Music Performance Rights. All programs delivered to Station pursuant
------------------------
to this Agreement shall be furnished with all music performance rights necessary
for broadcast by Station included. Station shall have no responsibility for
obtaining such rights from ASCAP, BMI or other music licensing societies insofar
as the programs delivered by NBC to Station for broadcasting are concerned. As
used in this paragraph, "programs" shall include, but shall not be limited to,
program and promotional material and commercial and public service announcements
furnished by NBC. Station shall be responsible for all music license
requirements for any commercial and public service announcements or other
material inserted by Station within or adjacent to the programs as permitted
under the terms of this Agreement, except for cut-ins produced by or on behalf
of NBC and inserted by Station at NBC's direction.
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<PAGE>
12. Force Majeure. Neither Station nor NBC shall incur any liability
-------------
hereunder because of NBC's failure to deliver, or the failure of Station to
broadcast, any or all programs due to failure of facilities, labor disputes,
government regulations or causes beyond the reasonable control of the party so
failing to deliver or to broadcast. Without limiting the generality of the
foregoing, NBC's failure to deliver a program for any of the following reasons
shall be deemed to be for causes beyond NBC's reasonable control: cancellation
of a program because of the death, illness or refusal to appear or perform of a
star or principal performer thereon, or because of such person's failure to
conduct himself or herself with due regard to social conventions and public
morals and decency, or because of such person's commission of any act or
involvement in any situation or occurrence tending to degrade him or her in
society, or bringing him or her into public disrepute, contempt, scandal or
ridicule, or tending to shock, insult or offend the community, or tending to
reflect unfavorably upon NBC or the program sponsor.
13. Indemnification. NBC shall indemnify, defend and hold Station, its
---------------
parent, subsidiary and affiliated companies, and their respective directors,
officers and employees, harmless from and against all claims, damages,
liabilities, costs and expenses (including reasonable attorneys' fees) arising
out of the use by Station, in accordance with this Agreement, of any program or
other material as furnished by NBC hereunder, provided that Station promptly
notifies NBC of any claim or litigation to which this indemnity shall apply, and
that Station cooperates fully with NBC in the defense or settlement of such
claim or litigation. Similarly, Station shall indemnify, defend and hold NBC,
its parent, subsidiary and affiliated companies, and their respective directors,
officers and employees, harmless with respect to material added to or deleted
from any program by Station, except for cut-ins produced by or on behalf of NBC
and inserted by Station at NBC's direction. These indemnities shall not apply to
litigation expenses, including attorneys' fees, which the indemnified party
elects to incur on its own behalf. Except as otherwise provided herein, neither
Station nor NBC shall have any rights against the other for claims by third
persons, or for the non-operation of facilities or the non-furnishing of
programs for broadcasting, if such non-operation or non-furnishing is due to
failure of equipment, actions or claims by any third person, labor disputes, or
any cause beyond such party's reasonable control.
14. Station's Right of First Negotiation. Throughout the term of this
------------------------------------
Agreement, NBC shall give Station prompt notice of any determination by NBC to
engage in new over-the-air broadcast ventures within Station's community of
license (whether or not involving the transmission of television programs, but
excluding any acquisition of an ownership interest in any broadcast television
station) (a "Broadcast Venture"). NBC shall negotiate exclusively with Station
in good faith, for a period of time following such notice to Station as shall be
determined by NBC to be appropriate to the circumstances and as shall be
specified in such notice, with respect to Station's participation on a financial
and/or operational basis in any such Broadcast Venture within Station's
community of license before NBC may enter into any such negotiations with a
Third Party (as defined below) within such community of license. "Third Party"
shall mean any person or entity other than an NBC Party; "NBC Party" shall mean
any of NBC,
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<PAGE>
National Broadcasting Company, Inc. or their respective parent, subsidiary,
affiliated, related or successor entities.
15. Change in Operations. Station represents and warrants that it holds a
--------------------
valid license granted by the FCC to operate the Station as a television
broadcast station; such representation and warranty shall constitute a
continuing representation and warranty by Station. In the event that Station's
transmitter location, power, frequency, programming format or hours of operation
are materially changed at any time so that Station is of less value to NBC as a
broadcaster of NBC programming than at the date of this Agreement, then NBC
shall have the right to terminate this Agreement upon thirty (30) days prior
written notice to Station.
16. Assignment.
----------
(a) This Agreement shall not be assigned without the prior written
consent of NBC, and any permitted assignment shall not relieve Station of its
obligations hereunder. Any purported assignment by Station without such consent
shall be null and void and not enforceable against NBC.
(b) Station agrees to include as a condition of any proposed
assignment, sale or transfer of ownership or control of Station (including any
assignment or transfer referred to in Paragraph 16(c) below other than a "short-
form" assignment) a contractually binding provision that the assignee or
transferee shall assume and become bound by this Agreement for (i) the remainder
of the then-current term of this Agreement or (ii) three (3) years from the date
of said assignment or transfer whichever period is greater. Station acknowledges
that any such assignment, sale or transfer which does not so provide for such
assumption and for NBC's right to extend the term of this Agreement will cause
NBC irreparable injury for which damages are not an adequate remedy. Therefore,
Station agrees that NBC shall be entitled to seek an injunction or similar
relief from any court of competent jurisdiction restraining Station from
committing any violation of this Paragraph 16(b).
(c) Station agrees that if any application is made to the FCC
pertaining to an assignment or a transfer of control of Station's license, or
any interest therein, Station shall immediately notify NBC in writing of the
filing of such application. Except as to "short form" assignments or transfers
of control made pursuant to Section 73.3540(f) of the FCC Rules, NBC shall have
the right to terminate this Agreement in the event of any assignment or
transfer. Station agrees that promptly following Station's notice to NBC,
Station (i) except in the case of "short form" assignments or transfers of
control, shall arrange for a meeting between NBC and the proposed assignee or
transferee to review the financial and operating plans of the proposed assignee
or transferee, and (ii) shall procure and deliver to NBC, in form satisfactory
to NBC, the agreement of the proposed assignee or transferee that, upon
consummation of the assignment or transfer of control of the Station's license,
the assignee or transferee will assume and perform this Agreement in its
entirety without limitation of any kind. If Station complies with its
obligations set forth in the preceding sentence and NBC does not terminate this
Agreement upon written notice to Station within the thirty (30) day period
following the later of the meeting with
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<PAGE>
the proposed assignee or transferee or the delivery to NBC of a satisfactory
assumption agreement, NBC shall be deemed to have consented to the assignment or
transfer of control.
(d) NBC agrees that in the event of a sale or transfer of all or
substantially all of the assets or business of NBC (whether structured as a sale
or transfer of equity or assets of NBC), NBC agrees to assign this Agreement to
the purchaser or transferee and to cause such purchaser or transferee to assume
NBC's obligations hereunder; provided that the foregoing agreement shall not
apply in the event that this Agreement becomes an obligation of such purchaser
or transferee by operation of law. Upon such assignment and assumption, NBC
shall have no liability to Station under this Agreement with respect to
obligations arising after the effective date of such assignment and assumption.
17. Unauthorized Copying and Transmission. Station shall not authorize,
-------------------------------------
cause, or permit, without NBC's consent, any program or other material furnished
to Station hereunder to be recorded, duplicated, rebroadcast or otherwise
transmitted or used for any purpose other than broadcasting by Station as
provided herein. Notwithstanding the foregoing, Station shall not be restricted
in the exercise of its signal carriage rights pursuant to any applicable rule or
regulation of the FCC with respect to retransmission of its broadcast signal by
any cable system or multichannel video program distributor ("MVPD"), as defined
in Section 76.64(d) of the FCC Rules, which (a) is located within the Area of
Dominant Influence ("ADI"), as defined by Arbitron, in which Station is located,
or (b) was actually carrying Station's signal as of April 1, 1993, or (c) with
respect to cable systems, serving an area in which Station is "significantly
viewed" (as determined by the FCC) as of April 1, 1993; provided, however, that
any such exercise pursuant to FCC Rules with respect to NBC programs shall not
be deemed to constitute a license by NBC; and provided, further, that at such
-------- -------
time as NBC adopts a term in substitution for the term "ADI" by reason of any
similar action by the FCC or other appropriate authority, such substitute term
shall replace the references to "ADI" herein. NBC reserves the right to restrict
such signal carriage with respect to NBC programming in the event of a change in
applicable law, rule or regulation.
18. Limitations on Retransmission Consent. In consideration of the grant
-------------------------------------
by NBC to Station of the non-duplication protection provided in the most recent
amendment to this Agreement, Station hereby agrees as follows:
(a) Station shall not grant consent to the retransmission of its
broadcast signal by any cable television system, or, except as provided in
Paragraph 18(b) below, to any other MVPD whose carriage of broadcast signals
requires retransmission consent, if such cable system or MVPD is located outside
the ADI to which Station is assigned, unless Station's signal was actually
carried by such cable system or MVPD as of April 1, 1993, or, with respect to
such cable system, is "significantly viewed" (as determined by the FCC) as of
April 1, 1993; provided, however, that at each renewal of this Agreement, in the
event Station can demonstrate to NBC that it is "significantly viewed" (as
determined by the FCC) in areas in addition to those in which it was
"significantly viewed" as of April 1, 1993 ("Additional Viewing Areas"), NBC
agrees that it will negotiate in good faith with Station regarding a possible
extension of Station's
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<PAGE>
grant of the right to retransmit its broadcast signal to cable systems in the
Additional Viewing Areas.
(b) Station shall not grant consent to the retransmission of its
broadcast signal by any MVPD that provides such signal to any home satellite
dish user, unless such user is located within Station's own ADI or is an
"unserved household" as defined in Section 119 (d) or any successor provision of
Title 17 of the United States Code.
19. Remedies for Unauthorized Copying and Transmission. If Station
--------------------------------------------------
violates any of the provisions set forth in Paragraphs 17 and 18 above, NBC may,
in addition to any other of its rights or remedies at law or in equity under
this Agreement or any amendment thereto, terminate this Agreement by written
notice to Station given at least ninety (90) days prior to the effective date of
such termination.
20. Applicable Law. The obligations of Station and NBC under this
--------------
Agreement are subject to all applicable federal, state, and local laws, rules
and regulations (including, but not limited to, the Communications Act of 1934,
as amended, and the rules and regulations of the FCC), and this Agreement and
all matters or issues collateral thereto shall be governed by the law of the
State of New York applicable to contracts negotiated, executed and performed
entirely therein (without regard to principles of conflicts of laws).
21. Waiver. A waiver by either of the parties hereto of a breach of any
------
provision of this Agreement shall not be deemed to constitute a waiver of any
preceding or subsequent breach of the same provision or any other provision
hereof.
22. Notices. Any notices hereunder shall be in writing and shall be given
-------
by personal delivery, overnight courier service, or registered or certified
mail, addressed to the respective addresses set forth on the first page of this
Agreement or at such other address or addresses as may be specified in writing
by the party to whom the notice is given. Such notices shall be deemed given
when personally delivered, delivered to an overnight courier service or mailed,
except that notice of change of address shall be effective only from the date of
its receipt.
23. Captions. The captions of the paragraphs in this Agreement are for
--------
convenience only and shall not in any way affect the interpretation hereof.
24. Entire Agreement. The foregoing constitutes the entire agreement
----------------
between Station and NBC with respect to the subject matter hereof, all prior
understandings being merged herein, except for the most recent amendment with
respect to network non-duplication protection under FCC Rules Section 76.92.
This Agreement may not be changed, modified, renewed, extended or discharged,
except as specifically provided herein or by an agreement in writing signed by
the parties hereto.
25. Confidentiality. The parties agree to use their best efforts to
---------------
preserve the confidentiality of this Agreement and of the terms and conditions
set forth herein, and the
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<PAGE>
exhibits annexed hereto, to the fullest extent permissible by law. The parties
recognize that Section 73.3613 of the FCC's Rules and Regulations requires the
filing with the FCC of television network affiliation agreements by each
affiliate, but are unaware of any requirement for the filing of exhibits annexed
to such affiliation agreements. In the event that the FCC should request either
party to file said exhibits, that party shall give prompt notice to the other,
and shall submit said exhibits to the FCC with a request that said exhibits be
withheld from public inspection pursuant to Section 0.459 of the FCC's Rules and
Regulations on the grounds that said exhibits contain confidential commercial or
financial information that would customarily be guarded from competitors and not
be released to the public.
26. Counterparts. This Agreement may be signed in any number of
------------
counterparts with the same effect as if the signature to each such counterpart
were upon the same instrument.
If the foregoing is in accordance with your understanding, please indicate
your acceptance on the copy of this Agreement enclosed for that purpose and
return that copy to NBC.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By:________________________________________________
AGREE:
PARK COMMUNICATIONS INC.
By:__________________________
ROY H. PARK BROADCASTING OF ROANOKE INC.
By:__________________________
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<PAGE>
Exhibit 10.15
Capital Cities/ABC, Inc. 77 West 66 Street New York NY 10023 (212) 456-7777
PRIMARY TELEVISION AFFILIATION AGREEMENT
----------------------------------------
September 11, 1989
Roy H. Park Broadcasting of Utica-Rome, Inc.
Utica, New York
TELEVISION STATION: WUTR
Gentlemen:
In order that your station may continue to serve the public interest,
convenience and necessity, this Company and your Television Station WUTR hereby
mutually agree upon the following plan of network cooperation, which shall
replace the affiliation agreement between you and us dated July 23, 1987.
I. NETWORK AFFILIATION AND PROGRAM SERVICE
A. FIRST CALL. We will offer you, for television broadcasting by your
----------
station, the first call on all our network television programs which are to be
broadcast on a television network basis in the community to which your station
is licensed by the Federal Communications Commission, except as hereinafter
provided in Paragraph V.3. Notwithstanding the foregoing, ABC shall have the
right to authorize any television broadcasting station regardless of the
community to which it is licensed by the FCC, to broadcast any network
presentation of a subject we deem to be of immediate national significance
including, but not limited to, a Presidential address.
B. PROGRAM SERVICE. The program service we are offering will be as
---------------
follows:
1. Network Sponsored Programs. "Network sponsored programs", as used in
--------------------------
this agreement, shall mean those television network programs which contain
one or more commercial announcements paid for by or on behalf of one or
more ABC Network advertisers.
<PAGE>
You agree to broadcast network sponsored programs in their entirety,
including but not limited to the network commercial announcements ordered
for your station, network identifications, program promotional material or
credit announcements contained in such programs which you accept, without
interruption or deletion or addition of any kind. Notwithstanding the
foregoing, you may substitute other ABC-TV promotional announcements in
lieu of program promotional material which is inaccurate as it pertains to
your station. It is also understood that no commercial announcement,
promotional announcement or public service announcement will be broadcast
by you during any interval within a network program designated by ABC as
being for the sole purpose of making a station identification announcement.
2. Network Sustaining, Cooperative and Spot Carrier Programs.
----------------------------------------------------------
a) We will from time to time offer you live or recorded network
programs identified as sustaining programs, cooperative programs or
spot carrier programs. Except as set forth below in subparagraphs (b)
and (c), you agree to broadcast such programs which you accept in
their entirety without interruption or deletion or addition of any
kind.
b) The network sustaining programs which we may offer to you may not,
without our prior written consent, be sold by your station for
commercial sponsorship or interrupted for commercial announcements or
used for any purpose other than sustaining broadcasting.
c) You may carry the cooperative or spot carrier programs on the same
basis as regular sustaining programs or you may offer them for
commercial sponsorship on terms and conditions specified by us at the
time such programs are offered to you.
C. PROGRAM ACCEPTANCE. You agree that you will advise us within 15 days
------------------
of the date of our offer of your acceptance (if requested to do so by the terms
of our offer) or rejection of any offer by us relating to a regularly scheduled
network program. With respect to any network program not regularly scheduled,
you will advise us of your acceptance or rejection of our offer within 72 hours
(exclusive of Saturdays, Sundays and holidays) after such offer has been
received at your station. However, if the first broadcast referred to in our
offer is scheduled to occur within less than 15 days after the date of our offer
with respect to regularly scheduled network programs or less than 72 hours after
our offer has been received at your station with
2
<PAGE>
respect to network programs not regularly scheduled, you shall notify us of your
acceptance or rejection of such offer as promptly as possible, but in no event
after the first broadcast time specified in such offer. Acceptance by you of our
offer of a network program(s) shall constitute your agreement to broadcast such
network program(s) in accordance with the terms of this agreement and of our
offer to you.
D. PROGRAM DELIVERY. By means satisfactory to us, we will arrange, at our
-----------------
own expense, for programs to be delivered to your station.
II. NETWORK STATION COMPENSATION
----------------------------
1. We agree to pay you, and you agree to accept, compensation in
accordance with the provisions set forth in Schedule A attached hereto and
hereby made a part hereof. The network station rate for your station shall be
$200.00 and shall be used by us in determining your station compensation in
accordance with the formula set forth in Schedule A.
2. If you should be unable, for any reason to broadcast any network
sponsored program(s), or any portion thereof, your compensation hereunder from
us for that period shall be reduced accordingly.
3. We reserve the right to reevaluate and change at any time (a) the
network station rate set forth in Subparagraph 1 above, (b) the percentage(s)
set forth in the Table in Schedule A, or (c) your network weekly deduction, by
notice to you in writing to such effect. Any increase in your station rate or
in the percentage(s) in Schedule A, or any decrease in your network weekly
deduction, will become effective on the date specified in our notice to you.
Should we (a) decrease the network station rate below that set forth in
Subparagraph 1 above, (b) decrease the percentage(s) in Schedule A, or (c)
increase your network weekly deduction, we will notify you in writing at least
ninety (90) days prior to the effective date of such change, and you may, if you
so elect, terminate this affiliation agreement as of the effective date by
giving us prior written notification within forty-five (45) days after the date
of our notice to you. However, if such reduction in compensation is part of a
general rate revision on the ABC Network, we will notify you in writing at least
thirty (30) days prior to the effective date of such change, and you may, if you
so elect, terminate this affiliation agreement as of the effective date by
giving us prior written notification within fifteen (15) days after the date of
our notice to you of such change. You agree that a general rate revision on the
ABC Television Network may be expressed by us as a modification of your network
rate, and/or as a modification of
3
<PAGE>
the percentage(s) set forth in Schedule A and/or as a modification of your
network weekly deduction.
III. NETWORK NON-DUPLICATION PROTECTION
----------------------------------
As of January 1, 1990 (or such other effective date established by the
Federal Communications Commission for operation of the revised network non-
duplication rules), you shall be entitled to network non-duplication protection
provided as and to the extent set forth in Rider One to this agreement, which is
attached hereto and made a part hereof.
IV. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES
-------------------------------------------
A. CUT-IN ANNOUNCEMENTS. "Cut-In Announcements", as used herein, shall
--------------------
mean the substitution of a special commercial in place of a regularly scheduled
network commercial.
1. Upon at least twenty-four (24) hours' notice, you shall, at our
request, furnish such personnel and equipment as may be necessary to (a)
broadcast cut-in announcements from your station alone, or (b) originate
from your station cut-in announcements to one or more other stations,
without regard to whether or not your station is requested to broadcast
said cut-in announcement(s). Notwithstanding anything contained in this
agreement, you may refuse to broadcast any such cut-in announcement in the
community to which your station is licensed by the FCC if, in your opinion,
it is not in the public interest, convenience or necessity, but you shall
nevertheless furnish such personnel and equipment as may be necessary to
originate such cut-in announcement(s) from your station to one or more
other stations.
2. Cut-in announcements shall be broadcast only when authorized by us and
then only in accordance with the instructions furnished to you. You will
be supplied, as promptly as possible, with the material and instructions
for these announcements.
3. We may cancel any order for cut-in announcements without liability on
our part, provided we do so upon not less than twenty-four (24) hours'
notice to you, failing which, we will pay you the compensation you would
have received if the announcement(s) had continued as scheduled for twenty-
four (24) hours following receipt by you of such notice of cancellation.
4
<PAGE>
4. For each program during which such cut-in announcements are included,
we shall pay you in accordance with the applicable table set forth in
Schedule B hereto and hereby made a part hereof.
B. LOCAL TAG SERVICES. "Local Tag Announcements", as used herein, shall
-------------------
mean a visual commercial announcement, made by you on behalf of a local dealer
of a network advertiser, not exceeding ten seconds of a one-minute network
commercial announcement or five seconds of a thirty-second network commercial
announcement projected by means of a slide and not utilizing more than two (2)
slides.
1. Upon at least twenty-four (24) hours' notice, you shall, at our request,
furnish such personnel and equipment as may be necessary to broadcast "local
tag announcements".
2. Local tag announcements shall be broadcast in accordance with our
instructions. The network advertiser shall supply to you or purchase from
you, as promptly as possible, the slide(s) for each local tag announcement.
Local tag announcements shall not be accompanied by oral announcements
unless the network advertiser shall make direct requests of you therefor and
shall have assumed sole responsibility for payment of such oral
announcements.
3. We may cancel any order for local tag announcements without liability on
our part provided we do so upon not less than twenty-four (24) hours' notice
to you, failing which we will pay you the compensation you would have
received if the local tag announcement(s) had continued as scheduled for
twenty-four (24) hours following receipt by you of such notice of
cancellation.
4. For each local tag announcement which you broadcast, we shall compensate
you in accordance with the applicable table set forth in Schedule B hereto
and hereby made a part hereof.
V. GENERAL
-------
1. We may at any time, upon notice to you, substitute for any scheduled
network program another network program, except that if such other network
program in our judgment involves a special event of public interest or
importance, no such notice is required. No compensation will be paid to you for
the scheduled program or for the substitute program unless such substitute
program is a "network sponsored
5
<PAGE>
program" in which event you shall be compensated in accordance with the terms or
formula, whichever is applicable, set forth in Schedule A hereof.
2. Nothing contained in this agreement shall be construed to prevent or
hinder us, at any time upon notice to you as soon as practicable, from
cancelling one or more network programs, whether sponsored or sustaining, in
which event you shall receive no compensation for any such canceled network
sponsored program(s).
3. With respect to network programs offered or already contracted for
pursuant to this affiliation agreement, nothing herein contained shall be
construed to prevent or hinder you from:
a) rejecting or refusing network programs which you reasonably believe
to be unsatisfactory, unsuitable or contrary to the public interest; or
b) substituting a program, which in your good faith opinion, is of
greater local or national importance.
We shall not compensate you for any such program you have refused or rejected or
for which you have substituted a program which is of greater local or national
importance. With respect to programs already contracted for hereunder, you
shall give us prompt telegraphic notification of any such refusal, rejection or
substitution no later than fourteen (14) days prior to the air date of such
programming, except where the nature of the substitute program makes such notice
impracticable (e.g., coverage of breaking news or other unscheduled events), in
which case you agree to give us as much advance notice as possible under the
circumstances. Such notice shall include a statement of the reason(s) you
believe that a rejected or refused network program is unsatisfactory, unsuitable
or contrary to the public interest, and/or that a substituted program is of
greater local or national importance.
In addition to all other remedies, we shall have the right, upon thirty (30)
days' notice, to terminate your "First Call" rights on any program series
already contracted for hereunder and withdraw all future episodes of that series
if one or more individual program episode(s) is pre-empted by you in violation
of this Paragraph.
We shall also have the right, upon thirty (30) days' notice, to terminate
your "First Call" rights concerning any program series already contracted for
hereunder and to withdraw all future episodes of that series if three or more
individual program episodes are pre-empted by you in any thirteen-week period,
whether or not such pre-emptions are for the reasons set forth in (a) and (b)
above. Such thirteen-week periods shall be measured consecutively from the
first broadcast date of the program series in question.
6
<PAGE>
We reserve the right not to offer you the "First Call" for the next
broadcast season on any program series as to which we have terminated your
"First Call" rights and withdrawn future episodes of that series pursuant to
this Paragraph and which has been placed by ABC on another station serving your
market.
4. You will submit to us in writing, upon forms provided by us for that
purpose, such reports covering network programs broadcast by your station as ABC
may request from time to time.
5. Subject to Subparagraph 2 of Section II of this agreement, neither you
nor we shall incur any liability hereunder because of our failure to deliver, or
your failure to broadcast, any or all network programs due to:
(a) failure of facilities
(b) labor disputes, or
(c) causes beyond the control of the party so failing to broadcast.
6. In the event that the transmitter location, power, frequency or hours
of operation of your station are changed at any time so that your station is of
less value to us as a network outlet than it is as of the effective date of this
agreement, we will have the right to terminate this agreement upon thirty (30)
days, advance written notice.
7. You agree not to assign or to transfer any of the rights or privileges
granted to you under this agreement without our prior consent in writing. You
also agree that if any application is made to the Federal Communications
Commission pertaining to an assignment or a transfer of control of your license,
or any interest therein, you shall notify us in writing immediately of the
filing of such application. Except as to assignments or transfers of control
comprehended by Section 73.3540(f) of the Rules and Regulations of the Federal
Communications Commission, we shall have the right to terminate this agreement
effective as of the effective date of any assignment or transfer of control
(voluntary or involuntary) of your license or any interest therein, provided ABC
shall have given you notice in writing of such termination within thirty (30)
days after we have been advised that such application for assignment or transfer
has been filed with the Federal Communications Commission.
If we do not so terminate this agreement, you agree, prior to the effective
date of any such assignment or transfer of control of your station to procure
and deliver to us, in form satisfactory to us, the agreement of the proposed
assignee or transferee that, upon consummation of the assignment or transfer of
control of your station's authorization, the assignee or transferee will assume
and perform this agreement in its entirety without limitation of any kind. If
you fail to notify us of the proposed assignment or transfer of control of your
station's
7
<PAGE>
authorization, or fail to procure the agreement of the proposed assignee or
transferee in accordance with the preceding sentence, we shall have the right to
terminate this agreement upon thirty (30) days' advance written notice to you
and the transferee or assignee, after the effective date of such assignment or
transfer or the date on which we learn of such assignment or transfer, whichever
is later.
8. You agree not to authorize, cause, permit or enable anything to be done
whereby any program which we supply to you herein may be used for any purpose
other than broadcasting by your station in the community to which it is
licensed, which broadcast is intended for reception by the general public in
places to which no admission is charged. You agree when you are authorized to
tape a program for subsequent broadcast that the recording will be broadcast not
more than once in its entirety and will be erased within six (6) hours of use.
9. Except with our prior written consent and except upon such terms and
conditions as we may impose, you agree not to authorize, cause, permit or enable
anything to be done whereby a recording on film, tape or otherwise is made or a
recording is broadcast, of a program which has been, or is being, broadcast on
our network, or a rebroadcast is made of the broadcast transmission of your
station during any hours when your station is broadcasting a program provided by
ABC.
10. With respect to any and all promotional material issued by you or under
your direction or control, you agree to abide by any and all restrictions of
which we advise you pertaining to the promotion of a network program(s)
scheduled to be broadcast by you in your community, including, but without
limitation, on-the-air promotion, billboards, and newspaper or other printed
advertisements, announcements or promotions.
11. You agree to maintain for your television station such licenses,
including performing rights licenses as now are or hereafter may be in general
use by television broadcasting stations and necessary for you to broadcast the
television programs which we furnish to you hereunder. We will clear all music
in the repertory of ASCAP and of BMI used in our network programs, thereby
licensing the broadcasting of such music in such programs over your station.
You will be responsible for all music license requirements for any commercial or
other material inserted by you within or adjacent to our network programs in
accordance with this agreement.
12. The furnishing of film or tape recorded programs hereunder is
contingent upon our ability to make arrangements satisfactory to us for the film
or tape recordings necessary to deliver the programs to you. Such film or tape
recorded programs shall be used only for a single television broadcast over your
station. Positive prints of film or tape recorded programs are to be shipped by
us, shipping charges prepaid, and you agree to return to us or to forward to
such
8
<PAGE>
television station as we designate, shipping charges prepaid, each print or copy
of said film or tape recording received by you hereunder, together with the
original reels and containers furnished therewith. You will return or forward
all prints in the same condition as received by you, ordinary wear and tear
excepted, immediately after a single TV broadcast over your station. In the
event you damage a print of any film or tape recorded program which is delivered
to you, or fail to return or forward the original reels and containers furnished
therewith, as aforesaid, you agree to pay the cost of replacing the complete
print, original reels and/or containers as and when billed by us.
13. No inducements, representations or warranties except as specifically
set forth herein have been made by any of the parties to this agreement. This
agreement constitutes the entire contract between the parties hereto and no
provision thereof shall be changed or modified, nor shall this agreement be
discharged in whole or in part, except by an agreement in writing, signed by the
party against whom the change, modification or discharge is claimed or sought to
be enforced; nor shall any waiver of any of the conditions or provisions of this
agreement be effective and binding unless such waiver shall be in writing and
signed by the party against whom the waiver is asserted, and no waiver of any
provision of this agreement shall be deemed to be a waiver of any preceding or
succeeding breach of the same or of any other provision.
14. This agreement shall be governed by and construed in accordance with
the laws of the State of New York.
15. Upon termination of this agreement, the consent theretofore granted to
broadcast our Network programs shall be deemed immediately withdrawn and you
shall have no further rights of any nature whatsoever in such programs.
16. We agree to indemnify, defend and hold you harmless against and from
all claims, damages, liabilities, costs and expenses arising out of the use or
exercise by you, in accordance with this agreement, of any rights or material
furnished by us hereunder, provided that you promptly notify us of any claim or
litigation to which this indemnity shall apply, and that you cooperate fully
with us in the defense at our request. You similarly agree to indemnify, defend
and hold us harmless with respect to material furnished by you.
VI. TERM
----
This agreement shall become effective at 3:00 AM, NYT, on the 28th day of
February, 1990, and it shall continue until 3:00 AM, NYT, on the 28th day of
February, 1992. It shall then be renewed on the same terms and conditions for a
further period of two years, and so on for successive further periods of two
years each, unless and until either party hereto shall, at least six (6) months
prior to the expiration of the then current term, give the other party written
notice
9
<PAGE>
that it does not desire the contract renewed for a further period. It is
understood and agreed, however, that this agreement may be terminated at any
time, both during the initial term and any subsequent renewal term, by either
party upon giving the other party six (6) months, advance written notice.
If, after examination, you find that the arrangement herein proposed is
satisfactory to you, please indicate your acceptance on the copy of this letter
enclosed for that purpose and return that copy to us.
Very sincerely yours,
AMERICAN BROADCASTING COMPANIES, INC.
By: _________________________________
Executive Vice President, In
Charge of Affiliate Relations
Accepted this 12th day of
December, 1989
Television Station WUTR
By:______________________
10
<PAGE>
RIDER ONE
---------
You shall be entitled to network non-duplication protection (against
simultaneous or non-simultaneous presentation of ABC Television Network programs
via cable pursuant to the compulsory license) as follows:
a. The geographic zone of network non-duplication protection shall be the
Area of Dominant Influence ("ADI") (as defined by Arbitron) in which your
station is located, or any lesser zone pursuant to any geographic
restrictions contained in the Federal Communications Commission rules and
regulations, now or as subsequently modified.
b. Network non-duplication protection shall extend to ABC Television
Network programs that you broadcast in accordance with this agreement.
Protection shall not extend to individually pre-empted programs of an
otherwise cleared series.
c. Network non-duplication protection shall begin 48 hours prior to the
live time period designated by us for broadcast of that network program by
your station, and shall end at 12:00 Midnight on the seventh day following
that designated time period.
You are under no obligation to exercise in whole or in part the network non-
duplication rights granted under this agreement.
AMERICAN BROADCASTING COMPANIES, INC.
By:__________________________________
Executive Vice President
Affiliate Relations
Accepted this 12th day of
----
August, 1993
- ------
Television Station WUTR
----
By:________________________
<PAGE>
SCHEDULE A
----------
STATION COMPENSATION
- --------------------
(a) We will pay you within a reasonable period of time after the close of each
four or five week accounting period, as the case may be, for broadcasting
each network sponsored program or portion thereof hereunder, except those
specified in paragraph (b) hereof, which is broadcast over your station
during the live time period* therefor, the amount resulting from multiplying
the following:
(i) Your network station rate, set forth in Section II of the
agreement; by
(ii) the percentage set forth in the table below opposite such
applicable time period; by
(iii) the fraction of an hour substantially occupied by such
program or portion thereof; by
(iv) the fraction of the aggregate length of all commercial
availabilities** during such program or portion thereof
occupied by network commercial announcements***.
* Live time period, as used herein, means the time period or periods
as specified by us in our initial offer of a network program for
the broadcast of such program over your station.
** Commercial availability, as used herein, means a period of time
made available by us during a network sponsored program for one or
more network commercial announcement or local cooperative
commercial announcements.
*** Network commercial announcement, as used herein, means a
commercial announcement broadcast over your station during a
commercial availability and paid for by or on behalf of one or
more of our network advertisers, not including, however,
announcements consisting of billboards, credits, public service
announcements, promotional announcements, and announcements
required by law.
-1-
<PAGE>
TABLE
-----
EASTERN and PACIFIC
-------------------
Monday through Friday
---------------------
Sign-on to 11:00 AM - 7%
11:00 AM to 5:00 PM - 10.9%
5:00 PM to 6:00 PM - 15%
6:00 PM to 11:00 PM - 30%
11:00 PM to Sign-off - 15%
Saturday Sunday
-------- ------
Sign-on to 9:00 AM - 5% Sign-on to 9:00 AM - 5%
9:00 AM to 2:00 PM - 8% 9:00 AM to 2:00 PM - 6%
2:00 PM to 6:00 PM - 15% 2:00 PM to 6:00 PM - 15%
6:00 PM to 11:00 PM - 30% 6:00 PM to 11:00 PM - 30%
11:00 PM to Sign-off - 15% 11:00 PM to Sign-off - 15%
All times in this paragraph are expressed in terms of your station's then
current local time.
-2-
<PAGE>
For each network sponsored program or portion thereof, except those specified in
paragraph (b) hereof, which is broadcast by your station during a time period
other than the live time period therefor, we will pay you as if your station had
broadcast such program or portion thereof during such live time period, except
that:
(i) if the percentage set forth above opposite the time period during
which your station broadcast such program or portion thereof is
less than that set forth opposite such live time period, then we
will pay you on the basis of the time period during which your
station broadcast such program or portion thereof.
(b) Payment For Other Programs
--------------------------
We will establish such compensation arrangements as we and you shall agree upon
prior to the expiration of the applicable periods of time for program
acceptance, as set forth in Section I.C. of this affiliation agreement, for all
network sponsored programs broadcast by your station consisting of:
(i) Sports programs;
(ii) special events programs (including, but not limited to,
special news programs, awards programs, entertainment
specials and miniseries);
(iii) programs for which we specified a live time period, which
time period straddles any of the time period categories in
the table in paragraph (a) above; and
(iv) any other programs which we may designate from time to time.
(c) Deductions
- --------------
(i) From the amounts we are to pay you for station compensation
hereunder, we shall throughout the term of this affiliation
agreement deduct during each accounting period a sum equal to
168% of your station's network rate for each week of said
period.
(ii) We will deduct a sum equal to the total of whatever fees, if
any, may have mutually been agreed upon by you and us with
respect to local cooperative commercial announcements
broadcast during the applicable accounting period for which
your station is being compensated.
-3-
<PAGE>
SCHEDULE B
COMPENSATION FOR CUT-IN AND LOCAL TAG ANNOUNCEMENT(S)
-----------------------------------------------------
A. CUT-IN ANNOUNCEMENTS
--------------------
I. With respect to programs broadcast by you during the time period(s)
-------------------------------------------------------------------
specified by us in our initial offer for such programs.
-------------------------------------------------------
For each local cut-in announcement you broadcast within a program,
which program is broadcast during the time period(s) specified by us in
our initial offer for such program, we will pay you the amount
resulting from multiplying your network station rate (set forth in
Section II of the agreement) by the percentage for cut-in
announcement(s) set forth in the applicable Table in Section C below
opposite such applicable time period.
II. With respect to programs broadcast by you during time period(s) other
---------------------------------------------------------------------
than that specified by us in our initial offer of such programs.
-----------------------------------------------------------------
For each local cut-in announcement you broadcast within a program,
which program is broadcast by you during a time period other than that
specified by us in our initial offer of such program, we will pay you
an amount as set forth in Section A.I. above, except that:
(i) if the percentage set forth in the applicable Table in Section
C below for cut-in announcement(s) opposite the time period during
which your station actually broadcast the program in which you
broadcast or originated such cut-in announcement(s) is less than
that set forth opposite the applicable time period specified in
our initial offer of such program, then we will pay you for each
cut-in announcement(s) on the basis of the time period during
which your station actually broadcast such program.
-1-
<PAGE>
III. With respect to programs broadcast by you in a time period which
----------------------------------------------------------------
straddles any of the time period categories set forth in the applicable
-----------------------------------------------------------------------
Table in Section C below.
--------------------------
In the event that we offer you a program for broadcast in a time period
which straddles any of the time period categories set forth in the
applicable Table in Section C below, and you broadcast such program
within which you also broadcast or originate one or more cut-in
announcement(s), we will pay you such amounts as we and you shall have
agreed upon prior to your broadcast or origination of such cut-in
announcement(s).
B. LOCAL TAG ANNOUNCEMENTS
-----------------------
I. With respect to programs broadcast by you during the time period(s)
-------------------------------------------------------------------
specified by us in our initial offer for such programs.
--------------------------------------------------------
For each local tag announcement you broadcast within a program, which
program is broadcast during the time period(s) specified by us in our
initial offer for such program, we will pay you the amount resulting
from multiplying your network station rate (set forth in Section II of
the agreement) by the percentage for each local tag announcement set
forth in the applicable Table in Section C below opposite such
applicable time period.
II. With respect to programs broadcast by you during time period(s) other
---------------------------------------------------------------------
than that specified by us in our initial offer of such programs.
-----------------------------------------------------------------
For each local tag announcement you broadcast within a program, which
program is broadcast by you during a time period other than that
specified by us in our initial offer of such program, we will pay you
an amount as set forth in Section B.I. above, except that:
(i) if the percentage set forth in the applicable
Table in Section C below for each local tag
announcement opposite the time period during which
your station actually broadcast the program in
which you broadcast such local tag announcement is
less than that set forth opposite the applicable
time period specified in our initial offer of such
program, then we will pay you for each local tag
-2-
<PAGE>
announcement on the basis of the time period during which your
station actually broadcast such program.
III. With respect to programs broadcast by you in a time period which
----------------------------------------------------------------
straddles any of the time period categories set forth in the applicable
-----------------------------------------------------------------------
Table in Section C below.
-------------------------
In the event that we offer you a program for broadcast in a time period
which straddles any of the time period categories set forth in the
applicable Table in Section C below, and you broadcast such program
within which you also broadcast one or more local tag announcement(s),
we will pay you such amounts as we and you shall have agreed upon prior
to your broadcast of such local tag announcement(s).
-3-
<PAGE>
C. COMPENSATION TABLE FOR CUT-IN OR LOCAL TAG ANNOUNCEMENTS
-----------------------------------------------------------
EASTERN and PACIFIC
-------------------
Cut-In Announcements
--------------------
Monday through Sunday - 6:00 PM to 11:00 PM - 18.75%
All other times - 7.50%
Local Tag Announcements
-----------------------
Monday through Sunday - 6:00 PM to 11:00 PM - 9.38%
All other times - 3.75%
All times in this paragraph are expresses in terms of your station's then
current local time.
-4-
<PAGE>
ABC TELEVISION NETWORK
77 West 66th Street New York, New York 10023-6298 (212) 456-6493
George H. Newi
Executive Vice President
Affiliate Relations
April 28, 1993
Mr. Paul Kennedy
Vice President & General Manager
WUTR-TV
P.O. Box 20 -Hill
Utica, New York 13503-0020
Dear Paul:
Pursuant to Schedule A of your Primary Television Affiliation Agreement (as
revised September 20, 1991), this is to inform you of the results of the annual
review of your network station rate. The annual rate review is based on the
November/February sweeps period. A rate adjustment, if any, becomes effective
with the first Monday in June.
Accordingly, effective June 7, 1993, your network station rate will be increased
to $234.
Attached for your convenience is an additional copy of the annual rate review
formula from Schedule A of the Agreement, as revised.
If you have any questions, please contact your Affiliate Relation's District
Director.
Sincerely,
GHN/hs
Attachment
<PAGE>
SCHEDULE A
----------
ANNUAL RATE REVIEW FORMULA
--------------------------
There will be an annual general rate revision on the ABC Television Network
effective June 1, 1992 and in each subsequent year effective with the first
Monday in June. Your network station rate will be adjusted in the amount of the
percentage change in your "network prime time household delivery (as defined
below) in the most recent November/February sweep period compared to the
previous year's November/February sweep period.
"Network prime time household delivery" is calculated as follows: Your
station's average quarter-hour prime time household delivery (representing an
average of all network prime time programs aired during the November/February
Nielsen survey periods) will be adjusted by the percentage of the network
schedule not cleared during the fourth/first quarters respectively. This
adjustment will be made in order to account for the fact that the local Nielsen
prime time audience figures do not reflect the effects of non-clearance of ABC
network programming and therefore do not provide an accurate network delivery.
This percentage is derived by dividing the total number of half-hour preemptions
into the total network half-hours offered.
There will be a "cap" of plus/minus 10% for each annual adjustment.
<PAGE>
Exhibit 10.16
Capital Cities/ABC, Inc. 77 West 66 Street New York NY 10023 (212) 456 7777
July 25, 1991
PRIMARY TELEVISION AFFILIATION AGREEMENT
----------------------------------------
Shamrock Broadcasting, Inc.
Lexington, Kentucky
TELEVISION STATION: WTVQ
Gentlemen:
In order that your station may continue to serve the public interest,
convenience and necessity, this Company and your Television Station WTVQ hereby
mutually agree upon the following plan of network cooperation, which shall
replace the affiliation agreement between you and us dated July 21, 1989.
I. NETWORK AFFILIATION AND PROGRAM SERVICE
---------------------------------------
A. FIRST CALL. We will offer you, for television broadcasting by your
----------
station, the first call on all our network television programs which are to be
broadcast on a television network basis in the community to which your station
is licensed by the Federal Communications Commission, except as hereinafter
provided in Paragraph V.3. Notwithstanding the foregoing, ABC shall have the
right to authorize any television broadcasting station regardless of the
community to which it is licensed by the FCC, to broadcast any network
presentation of a subject we deem to be of immediate national significance
including, but not limited to, a Presidential address.
B. PROGRAM SERVICE. The program service we are offering will be as
---------------
follows:
1. Network Sponsored Programs. "Network sponsored programs", as used
--------------------------
in this agreement, shall mean those television network programs which
contain one or more commercial announcements paid for by or on behalf
of one or more ABC Network advertisers.
You agree to broadcast network sponsored programs in their entirety,
including but not limited to the network commercial announcements
ordered for your station, network identifications, program promotional
material or credit announcements contained in such programs which you
accept, without interruption or deletion or addition of any kind.
Notwithstanding the foregoing, you may substitute other ABC-TV
promotional announcements in lieu of program promotional material
which is inaccurate as it pertains to your station. It is also
<PAGE>
understood that no commercial announcement, promotional announcement
or public service announcement will be broadcast by you during any
interval within a network program designated by ABC as being for the
sole purpose of making a station identification announcement.
2. Network Sustaining, Cooperative and Spot Carrier Programs.
----------------------------------------------------------
a) We will from time to time offer you live or recorded network
programs identified as sustaining programs, cooperative programs
or spot carrier programs. Except as set forth below in
subparagraphs (b) and (c), you agree to broadcast such programs
which you accept in their entirety without interruption or
deletion or addition of any kind.
b) The network sustaining programs which we may offer to you may
not, without our prior written consent, be sold by your station
for commercial sponsorship or interrupted for commercial
announcements or used for any purpose other than sustaining
broadcasting.
c) You may carry the cooperative or spot carrier programs on the
same basis as regular sustaining programs or you may offer them
for commercial sponsorship on terms and conditions specified by
us at the time such programs are offered to you.
C. PROGRAM ACCEPTANCE. You agree that you will advise us within 15 days
------------------
of the date of our offer of your acceptance (if requested to do so by the terms
of our offer) or rejection of any offer by us relating to a regularly scheduled
network program. With respect to any network program not regularly scheduled,
you will advise us of your acceptance or rejection of our offer within 72 hours
(exclusive of Saturdays, Sundays and holidays) after such offer has been
received at your station. However, if the first broadcast referred to in our
offer is scheduled to occur within less than 15 days after the date of our offer
with respect to regularly scheduled network programs or less than 72 hours after
our offer has been received at your station with respect to network programs not
regularly scheduled, you shall notify us of your acceptance or rejection of such
offer as promptly as possible, but in no event after the first broadcast time
specified in such offer. Acceptance by you of our offer of a network program(s)
shall constitute your agreement to broadcast such network program(s) in
accordance with the terms of this agreement and of our offer to you.
D. PROGRAM DELIVERY. By means satisfactory to us, we will arrange, at our
----------------
own expense, for programs to be delivered to your station.
-2-
<PAGE>
II. NETWORK STATION COMPENSATION
----------------------------
1. We agree to pay you, and you agree to accept, compensation in
accordance with the provisions set forth in Schedule A attached hereto and
hereby made a part hereof. The network station rate for your station shall be
$200.00 and shall be used by us in determining your station compensation in
- -------
accordance with the formula set forth in Schedule A.
2. If you should be unable, for any reason to broadcast any network
sponsored program(s), or any portion thereof, your compensation hereunder from
us for that period shall be reduced accordingly.
3. We reserve the right to reevaluate and change at any time (a) the
network station rate set forth in Subparagraph 1 above, (b) the percentage(s)
set forth in the Table in Schedule A, or (c) your network weekly deduction, by
notice to you in writing to such effect. Any increase in your station rate or
in the percentage(s) in Schedule A, or any decrease in your network weekly
deduction, will become effective on the date specified in our notice to you.
Should we (a) decrease the network station rate below that set forth in
Subparagraph 1 above, (b) decrease the percentage(s) in Schedule A, or (c)
increase your network weekly deduction, we will notify you in writing at least
ninety (90) days prior to the effective date of such change, and you may, if you
so elect, terminate this affiliation agreement as of the effective date by
giving us prior written notification within forty-five (45) days after the date
of our notice to you. However, if such reduction in compensation is part of a
general rate revision on the ABC Network, we will notify you in writing at least
thirty (30) days prior to the effective date of such change, and you may, if you
so elect, terminate this affiliation agreement as of the effective date by
giving us prior written notification within fifteen (15) days after the date of
our notice to you of such change. You agree that a general rate revision on the
ABC Television Network may be expressed by us as a modification of your network
rate, and/or as a modification of the percentage(s) set forth in Schedule A
and/or as a modification of your network weekly deduction.
III. NETWORK NON-DUPLICATION PROTECTION
----------------------------------
You shall be entitled to network non-duplication protection provided as and
to the extent set forth in Rider One to this agreement, which is attached hereto
and made a part hereof.
IV. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES
-------------------------------------------
A. CUT-IN ANNOUNCEMENTS. "Cut In Announcements", as used herein, shall
--------------------
mean the substitution of a special commercial in place of a regularly scheduled
network commercial.
-3-
<PAGE>
1. Upon at least twenty-four (24) hours' notice, you shall, at our
request, furnish such personnel and equipment as may be necessary to
(a) broadcast cut-in announcements from your station alone, or (b)
originate from your station cut-in announcements to one or more other
stations, without regard to whether or not your station is requested
to broadcast said cut-in announcement(s). Notwithstanding anything
contained in this agreement, you may refuse to broadcast any such cut-
in announcement in the community to which your station is licensed by
the FCC if, in your opinion, it is not in the public interest,
convenience or necessity, but you shall nevertheless furnish such
personnel and equipment as may be necessary to originate such cut-in
announcement(s) from your station to one or more other stations.
2. Cut-in announcements shall be broadcast only when authorized by us
and then only in accordance with the instructions furnished to you.
You will be supplied, as promptly as possible, with the material and
instructions for these announcements.
3. We may cancel any order for cut-in announcements without liability
on our part, provided we do so upon not less than twenty-four (24)
hours' notice to you, failing which, we will pay you the compensation
you would have received if the announcement(s) had continued as
scheduled for twenty-four (24) hours following receipt by you of such
notice of cancellation.
4. For each program during which such cut-in announcements are
included, we shall pay you in accordance with the following table:
$121.88 For each cut-in announcement broadcast between 6:00 PM -
11:00 PM local time.
$ 48.75 For each cut-in announcement broadcast in any other time
period.
B. LOCAL TAG-SERVICES. "Local Tag-Announcements", as used herein, shall
------------------
mean a visual commercial announcement, made by you on behalf of a local dealer
of a network advertiser, not exceeding ten seconds of a one-minute network
commercial announcement or five seconds of a thirty-second network commercial
announcement projected by means of a slide and not utilizing more than two (2)
slides.
1. Upon at least twenty-four (24) hours' notice, you shall, at our
request, furnish such personnel and equipment as may be necessary to
broadcast "local tag announcements".
-4-
<PAGE>
2. Local tag announcements shall be broadcast in accordance with our
instructions. The network advertiser shall supply to you or purchase
from you, as promptly as possible, the slides(s) for each local tag
announcement. Local tag announcements shall not be accompanied by
oral announcements unless the network advertiser shall make direct
requests of you therefor and shall have assumed sole responsibility
for payment of such oral announcements.
3. We may cancel any order for local tag announcements without
liability on our part provided we do so upon not less than twenty-four
(24) hours' notice to you, failing which we will pay you the
compensation you would have received if the local tag announcement(s)
had continued as scheduled for twenty-four (24) hours following
receipt by you of such notice of cancellation.
4. For each local tag announcement which you broadcast, we shall
compensate you in accordance with the following table:
$60.97 For each local tag announcement broadcast between 6:00 PM
- 11:00 PM local time.
$24.38 For each local tag announcement broadcast in any other
time period.
V. GENERAL
-------
1. We may at any time, upon notice to you, substitute for any scheduled
network program another network program, except that if such other network
program in our judgment involves a special event of public interest or
importance, no such notice is required. No compensation will be paid to you for
the scheduled program or for the substitute program unless such substitute
program is a "network sponsored program" in which event you shall be compensated
in accordance with the terms or formula, whichever is applicable, set forth in
Schedule A hereof.
2. Nothing contained in this agreement shall be construed to prevent or
hinder us, at any time upon notice to you as soon as practicable, from
cancelling one or more network programs, whether sponsored or sustaining, in
which event you shall receive no compensation for any such canceled network
sponsored program(s).
3. With respect to network programs offered or already contracted for
pursuant to this affiliation agreement, nothing herein contained shall be
construed to prevent or hinder you from:
a) rejecting or refusing network programs which you reasonably
believe to be unsatisfactory, unsuitable or contrary to the public
interest; or
-5-
<PAGE>
b) substituting a program, which in your good faith opinion, is of
greater local or national importance.
We shall not compensate you for any such program you have refused or rejected or
for which you have substituted a program which is of greater local or national
importance. With respect to programs already contracted for hereunder, you
shall give us prompt telegraphic notification of any such refusal, rejection or
substitution no later than fourteen (14) days prior to the air date of such
programming, except where the nature of the substitute program makes such notice
impracticable (e.g., coverage of breaking news or other unscheduled events), in
which case you agree to give us as much advance notice as possible under the
circumstances. Such notice shall include a statement of the reason(s) you
believe that a rejected or refused network program is unsatisfactory, unsuitable
or contrary to the public interest, and/or that a substituted program is of
greater local or national importance.
In addition to all other remedies, we shall have the right, upon thirty
(30) days' notice, to terminate your "First Call" rights on any program series
already contracted for hereunder and withdraw all future episodes of that series
if one or more individual program episode(s) is pre-empted by you in violation
of this Paragraph.
We shall also have the right, upon thirty (30) days' notice, to terminate
your "First Call" rights concerning any program series already contracted for
hereunder and to withdraw all future episodes of that series if three or more
individual program episodes are pre-empted by you in any thirteen-week period,
whether or not such pre-emptions are for the reasons set forth in (a) and (b)
above. Such thirteen-week periods shall be measured consecutively from the
first broadcast date of the program series in question.
We reserve the right not to offer you the "First Call" for the next
broadcast season on any program series as to which we have terminated your
"First Call" rights and withdrawn future episodes of that series pursuant to
this Paragraph and which has been placed by ABC on another station serving your
market.
4. You will submit to us in writing, upon forms provided by us for that
purpose, such reports covering network programs broadcast by your station as ABC
may request from time to time.
5. Subject to Subparagraph 2 of Section II of this agreement, neither you
nor we shall incur any liability hereunder because of our failure to deliver, or
your failure to broadcast, any or all network programs due to:
(a) failure of facilities
(b) labor disputes, or
(c) causes beyond the control of the party so failing to broadcast.
-6-
<PAGE>
6. In the event that the transmitter location, power, frequency or hours
of operation of your station are changed at any time so that your station is of
less value to us as a network outlet than it is as of the effective date of this
agreement, we will have the right to terminate this agreement upon thirty (30)
days, advance written notice.
7. You agree not to assign or to transfer any of the rights or privileges
granted to you under this agreement without our prior consent in writing. You
also agree that if any application is made to the Federal Communications
Commission pertaining to an assignment or a transfer of control of your license,
or any interest therein, you shall notify us in writing immediately of the
filing of such application. Except as to assignments or transfers of control
comprehended by Section 73.3540(f) of the Rules and Regulations of the Federal
Communications Commission, we shall have the right to terminate this agreement
effective as of the effective date of any assignment or transfer of control
(voluntary or involuntary) of your license or any interest therein, provided ABC
shall have given you notice in writing of such termination within thirty (30)
days after we have been advised that such application for assignment or transfer
has been filed with the Federal Communications Commission.
If we do not so terminate this agreement, you agree, prior to the effective date
of any such assignment or transfer of control of your station to procure and
deliver to us, in form satisfactory to us, the agreement of the proposed
assignee or transferee that, upon consummation of the assignment or transfer of
control of your station`s authorization, the assignee or transferee will assume
and perform this agreement in its entirety without limitation of any kind. If
you fail to notify us of the proposed assignment or transfer of control of your
station's authorization, or fail to procure the agreement of the proposed
assignee or transferee in accordance with the preceding sentence, we shall have
the right to terminate this agreement upon thirty (30) days, advance written
notice to you and the transferee or assignee, after the effective date of such
assignment or transfer or the date on which we learn of such assignment or
transfer, whichever is later.
8. You agree not to authorize, cause, permit or enable anything to be
done whereby any program which we supply to you herein may be used for any
purpose other than broadcasting by your station in the community to which it is
licensed, which broadcast is intended for reception by the general public in
places to which no admission is charged. You agree when you are authorized to
tape a program for subsequent broadcast that the recording will be broadcast not
more than once in its entirety and will be erased within six (6) hours of use.
9. Except with our prior written consent and except upon such terms and
conditions as we may impose, you agree not to authorize, cause, permit or enable
anything to be done whereby a recording on film, tape or otherwise is made or a
recording is broadcast, of a program, which has been, or is being, broadcast on
our network, or a rebroadcast is made of the broadcast transmission of your
station during any hours when your station is broadcasting a program provided by
ABC.
-7-
<PAGE>
10. With respect to any and all promotional material issued by you or
under your direction or control, you agree to abide by any and all restrictions
of which we advise you pertaining to the promotion of a network program(s)
scheduled to be broadcast by you in your community, including, but without
limitation, on-the-air promotion, billboards, and newspaper or other printed
advertisements, announcements or promotions.
11. You agree to maintain for your television station such licenses,
including performing rights licenses as now are or hereafter may be in general
use by television broadcasting stations and necessary for you to broadcast the
television programs which we furnish to you hereunder. We will clear all music
in the repertory of ASCAP and of BMI used in our network programs, thereby
licensing the broadcasting of such music in such programs over your station.
You will be responsible for all music license requirements for any commercial or
other material inserted by you within or adjacent to our network programs in
accordance with this agreement.
12. The furnishing of film or tape recorded programs hereunder is
contingent upon our ability to make arrangements satisfactory to us for the film
or tape recordings necessary to deliver the programs to you. Such film or tape
recorded programs shall be used only for a single television broadcast over your
station. Positive prints of film or tape recorded programs are to be shipped by
us, shipping charges prepaid, and you agree to return to us or to forward to
such television station as we designate, shipping charges prepaid, each print or
copy of said film or tape recording received by you hereunder, together with the
original reels and containers furnished therewith. You will return or forward
all prints in the same condition as received by you, ordinary wear and tear
excepted, immediately after a single TV broadcast over your station. In the
event you damage a print of any film or tape recorded program which is delivered
to you, or fail to return or forward the original reels and containers furnished
therewith, as aforesaid, you agree to pay the cost of replacing the complete
print, original reels and/or containers as and when billed by us.
13. No inducements, representations or warranties except as specifically
set forth herein have been made by any of the parties to this agreement. This
agreement constitutes the entire contract between the parties hereto and no
provision thereof shall be changed or modified, nor shall this agreement be
discharged in whole or in part, except by an agreement in writing, signed by the
party against whom the change, modification or discharge is claimed or sought to
be enforced; nor shall any waiver of any of the conditions or provisions of this
agreement be effective and binding unless such waiver shall be in writing and
signed by the party against whom the waiver is asserted, and no waiver of any
provision of this agreement shall be deemed to be a waiver of any preceding or
succeeding breach of the same or of any other provision.
14. This agreement shall be governed by and construed in accordance with
the laws of the State of New York.
-8-
<PAGE>
15. Upon termination of this agreement, the consent theretofore granted to
broadcast our Network programs shall be deemed immediately withdrawn and you
shall have no further rights of any nature whatsoever in such programs.
16. We agree to indemnify, defend and hold you harmless against and from
all claims, damages, liabilities, costs and expenses arising out of the use or
exercise by you, in accordance with this agreement, of any rights or material
furnished by us hereunder, provided that you promptly notify us of any claims or
litigation to which this indemnity shall apply, and that you cooperate fully
with us in the defense at our request. You similarly agree to indemnify, defend
and hold us harmless with respect to material furnished by you.
VI. TERM
----
This agreement shall become effective at 3:00 AM, NYT, on the 7th day of
---
October, 1991, and it shall continue until 3:00 AM, NYT, on the 7th day of
- ------- -- ---
October, 1993. It shall then be renewed on the same terms and conditions for a
- ------- --
further period of two years, and so on for successive further periods of two
years each, unless and until either party hereto shall, at least six (6) months
prior to the expiration of the then current term, give the other party written
notice that it does not desire the contract renewed for a further period. It is
understood and agreed, however, that this agreement may be terminated at any
time, both during the initial term and any subsequent renewal term, by either
party upon giving the other party six (6) months' advance written notice.
If, after examination, you find that the arrangement herein proposed is
satisfactory to you, please indicate your acceptance on the copy of this letter
enclosed for that purpose and return that copy to us.
Very sincerely yours,
AMERICAN BROADCASTING COMPANIES, INC.
By:________________________________________
Executive Vice President
Affiliate Relations
Accepted this 26 day of
--
August, 1991
- ------ --
Television Station WTVQ-TV
-------
By:_________________________
-9-
<PAGE>
PARK BROADCASTING OF KENTUCKY, INC. AUGUST 2, 1993
WTVQ-TV
RIDER ONE
---------
You shall be entitled to network non-duplication protection (against
simultaneous or non-simultaneous presentation of ABC Television Network programs
via cable pursuant to the compulsory license) as follows:
a. The geographic zone of network non-duplication protection shall be the
Area of Dominant Influence ("ADI") (as defined by Arbitron) in which your
station is located, or any lesser zone pursuant to any geographic
restrictions contained in the Federal Communications Commission rules and
regulations, now or as subsequently modified.
b. Network non-duplication protection shall extend to all ABC Television
Network programs that you broadcast in accordance with this agreement.
Protection shall not extend to individually pre-empted programs of an
otherwise cleared series.
c. Network non-duplication protection shall begin 48 hours prior to the
live time period designated by us for broadcast of that network program by
your station, and shall end at 12:00 Midnight on the seventh day following
that designated time period.
You are under no obligation to exercise in whole or in part the network non-
duplication rights granted under this agreement.
AMERICAN BROADCASTING COMPANIES, INC.
By:__________________________________________
Executive Vice President
Affiliate Relations
Accepted this 4th day of
---
August, 1993
- ------ --
Television Station WTVQ-TV
-------
By: , Vice-Pres./Gen. Mgr.
--------------------------------------
<PAGE>
SCHEDULE A
----------
STATION COMPENSATION
- --------------------
(a) We will pay you within a reasonable period of time after the close of each
four or five week accounting period, as the case may be, for broadcasting
each network sponsored program or portion thereof hereunder, except those
specified in paragraph (b) hereof, which is broadcast over your station
during the live time period* therefor, the amount resulting from
multiplying the following:
(i) Your network station rate, set forth in section II of the agreement;
by
(ii) the percentage set forth in the table below opposite such applicable
time period; by
(iii) the fraction of an hour substantially occupied by such program or
portion thereof; by
(iv) the fraction of the aggregate length of all commercial
availabilities** during such program or portion thereof occupied by
network commercial announcements***.
* Live time period, as used herein, means the time period or periods as
specified by us in our initial offer of a network program for the
broadcast of such program over your station.
** Commercial availability, as used herein, means a period of time made
available by us during a network sponsored program for one or more
network commercial announcements or local cooperative commercial
announcements.
*** Network commercial announcement, as used herein, means a commercial
announcement broadcast over your station during a commercial
availability and paid for by or on behalf of one or more of our
network advertisers, not including, however, announcements consisting
of billboards, credits, public service announcements, promotional
announcements, and announcements required by law.
-1-
<PAGE>
TABLE
-----
EASTERN and PACIFIC
-------------------
Monday through Friday
---------------------
Sign-on to 11:00 AM - 7%
11:00 AM to 5:00 PM - 10.9%
5:00 PM to 6:00 PM - 15%
6:00 PM to 11:00 PM - 30%
11:00 PM to Sign-off - 15%
Saturday Sunday
-------- ------
Sign-on to 9:00 AM - 5% Sign-on to 9:00 AM - 5%
9:00 AM to 2:00 PM - 8% 9:00 AM to 2:00 PM - 6%
2:00 PM to 6:00 PM - 15% 2:00 PM to 6:00 PM - 15%
6:00 PM to 11:00 PM - 30% 6:00 PM to 11:00 PM - 30%
11:00 PM to Sign-off - 15% 11:00 PM to Sign-off - 15%
All times in this paragraph are expressed in terms of your station's then
current local time.
-2-
<PAGE>
For each network sponsored program or portion thereof, except those specified in
paragraph (b) hereof, which is broadcast by your station during a time period
other than the live time period therefor, we will pay you as if your station had
broadcast such program or portion thereof during such live time period, except
that:
(i) if the percentage set forth above opposite the time period during
which your station broadcast such programs or portion thereof is
less than that set forth opposite such live time period, then we
will pay you on the basis of the time period during which your
station broadcast such program or portion thereof.
(b) Payment For Other Programs
- --- --------------------------
We will establish such compensation arrangements as we and you shall agree upon
prior to the expiration of the applicable periods of time for program
acceptance, as set forth in Section I.C. of this affiliation agreement, for all
network sponsored programs broadcast by your station consisting of:
(i) Sports programs;
(ii) special events programs (including, but not limited to, special
news programs, awards programs, entertainment specials and mini
series);
(iii) programs for which we specified a live time period, which time
period straddles any of the time period categories in the table
in paragraph (a) above; and
(iv) any other programs which we may designate from time to time.
(c) Deductions
- --- ----------
(i) From the amounts we are to pay you for station compensation
hereunder, we shall throughout the term of this affiliation
agreement deduct during each accounting period a sum equal to
168% of your station's network rate for each week of said period.
(ii) We will deduct a sum equal to the total of whatever fees, if any,
may have mutually been agreed upon by you and us with respect to
local cooperative commercial announcements broadcast during the
applicable accounting period for which your station is being
compensated.
-3-
<PAGE>
January 29, 1992
----------------
Park Broadcasting of Kentucky, Inc.
- -----------------------------------
- ----------------------------------
TELEVISION STATION WTVQ
---------------
ASSIGNMENT AGREEMENT
--------------------
Gentlemen:
We hereby assign to you effective January 29, 1992, the Primary Television
----------------
Affiliation Agreement for Television Station WTVQ between the American
Broadcasting Companies, Inc. and us.
You undertake all the obligations of, and agree fully and faithfully to perform
all the terms and conditions of said agreement therein agreed to be performed by
us on and after the effective date hereof.
Very truly yours,
Shamrock Broadcasting, Inc.
---------------------------
Assignor
By________________________________
James R. Mixon
Executive Vice President
Accepted and Agreed to:
Park Broadcasting of Kentucky, Inc.
- ------------------------------------
By__________________________________
<PAGE>
ABC-TELEVISION NETWORK
77 West 66th Street New York, New York 10023-6298 (212) 456-6493
Mark D. Roth
Vice President, Operations
November 19, 1993
PARK BROADCASTING OF KENTUCKY INC.
- ----------------------------------
LEXINGTON, KENTUCKY
TELEVISION STATION: WTVQ-TV
-------
Gentlemen:
This is to notify you that, in accordance with Section II, Subparagraph 3 of the
Affiliation Agreement between us dated July 25, 1991, as amended heretofore, we
are increasing your network station rate to $425.00 effective January 3, 1994
and, effective May 30, 1994, your network station rate will increase further to
$600.00.
Except as provided above, all other terms and conditions of the Agreement,
including the Annual Rate Review provision in Schedule A, shall remain in full
force and effect.
Sincerely,
AMERICAN BROADCASTING COMPANIES, INC.
By____________________________________
Vice President, Operations
<PAGE>
Exhibit 10.17
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement is effective as of July 1, 1994, (the "Effective
Date"), and entered into this, 20th day of July, 1994, by and between PARK
COMMUNICATIONS, INC., a Delaware corporation (the "Company"), with its
principal offices located at Terrace Hill, Ithaca, New York, and WRIGHT M.
THOMAS ("Employee").
The Employee has been employed by the Company since 1974 and has served as
President and Chief Operating Officer since 1987.
The Company recognizes the valuable services rendered by the Employee to
the Company and as an inducement to the Employee to continue to render valuable
services to the Company for the period provided in this Agreement, the Company
wishes to enter into an employment agreement with the Employee.
The Employee is willing to continue in the employ of the Company on a full-
time basis for the period specified below, and upon the other terms and
conditions specified in this Employment Agreement, and to provide consulting
services as specified below.
In consideration of the foregoing premises and recitals and for other good
and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Position, Term and Duties.
-------------------------
1.1 Position and Term. The Company hereby employs the Employee and
-----------------
the Employee hereby accepts employment as the President and Chief Operating
Officer of the Company for a term that shall commence on the Effective Date and
continue for a term of three years extending until June 30, 1997.
1.2 Duties. The Employee will render such services to the Company as
------
are customarily rendered by the President and Chief Operating Officer of
comparable communications companies and as may be specified from time to time by
the board of directors (the "Board") or the Chairman of the Company.
1.3 Exclusive Employment. During the period of his employment
--------------------
hereunder and except for illness, reasonable vacation periods, and reasonable
leaves of absence, the Employee shall devote all his business time, attention,
skill, and efforts to the faithful performance of his duties hereunder;
provided, however, that, with the approval of the Board, from time to time, the
Employee may serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, companies or organizations which, in the
Board's judgment, will not present any conflict of interest with the Company or
any of its subsidiaries or affiliates or divisions, or materially affect the
performance of his duties pursuant to this Agreement.
<PAGE>
2. Compensation and Expenses.
-------------------------
2.1 Salary. The Employee's annual salary for each of the three one-
------
year periods commencing on the Effective Date and the two succeeding
anniversaries of the Effective Date shall be $250,000, which shall be prorated
and payable in cash in accordance with the Company's payroll schedule for
executives, except as otherwise provided below.
2.2 Deferral of Compensation. The timing and form of payment of the
------------------------
Employee's salary are subject to the Employee's right to elect to defer a
specified portion of his salary pursuant to the terms of the Deferred
Compensation Agreement entered into between the Company and the Employee on May
1, 1986 (the "Deferred Compensation Agreement"), and any deferral election the
Employee made prior to the Effective Date of this Agreement shall continue in
effect.
2.3 Withholding. The compensation payable under this section 2 shall
-----------
be subject to withholding of applicable employment taxes and other amounts as
may be agreed to by the Company and the Employee for payment of the Employee's
share of the cost of employee benefits or otherwise.
2.4 Expenses. Promptly upon submission of an itemized list of
--------
expenses incurred by the Employee for any business expenses incurred in
conducting the Company's business, including, but not limited to, telephone,
automobiles, entertainment, travel, legal, accounting and consulting services,
the Company shall reimburse the Employee for any such expenses.
2.5 Termination. In the event of the Employee's "Termination," as
-----------
defined in subparagraph 2.5(a) below, the provisions of this paragraph 2.5 shall
apply.
(a) For purposes of this Agreement, "Termination" shall mean only
termination of the Employee's employment with the Company prior to the end of
the term of this Agreement, as set forth in paragraph 1.1, under either of the
following circumstances:
(i) by the Company for any reason other than for "Cause" as
defined below, or
(ii) by resignation of the Employee upon the occurrence of
either of the following events:
(1) A material breach by the Company of any provision
of this Agreement; or
(2) A reasonable determination by the Employee that, as
a result of a change in circumstances significantly
affecting his position, he is unable to exercise the
authorities, powers, functions
-2-
<PAGE>
or duties attached to his position as contemplated by
section 1 of this Agreement.
For purposes of resignation pursuant to clause (ii), the Employee
shall provide at least sixty days' prior written notice of his
resignation.
The term "Cause" means gross misconduct or willful and material breach of this
Agreement by the Employee; provided, however, that no Termination after a change
in control of the Company shall be deemed to be for Cause.
(b) In the event of the Employee's Termination, subject to the
provisions of this paragraph 2.5 and section 5 of this Agreement, the Company
shall pay the Employee liquidated damages in an amount equal to the Employee's
salary for the remaining term of the Agreement. The Company shall pay the
liquidated damages to the Employee in cash within 120 days of the Termination.
(c) Notwithstanding the above, in the event of the Employee's
Termination, the Company shall be under no obligation to make the payments
described in this paragraph 2.5 unless, at the time of making the payment, it
receives from the Employee a full release, to the extent permitted by law, of
all claims he had, then has, or in the future may acquire against the Company
and any affiliates of the Company in connection with his employment.
(d) In the event of the Employee's Termination, the Employee
shall make reasonable efforts to mitigate damages under this paragraph 2.5 by
seeking other employment; provided, however, that he shall not be required to
accept a position (i) of substantially different character than his position
with the Company, (ii) that would cause him to violate the provisions of
paragraph 5.3, or (iii) that is in an unreasonable location, given his personal
circumstances. If the Employee obtains other employment before he has received a
payment of liquidated damages under subparagraph 2.5(b), then, notwithstanding
subparagraph 2.5(b), the amount of liquidated damages payable to the Employee
shall equal his salary for the period from the date of his Termination to the
date he commences such other employment. If the Employee obtains other
employment after he has received a payment of liquidated damages under
subparagraph 2.5(b), then, within 120 days of the date he commences such other
employment, the Employee shall repay to the Company the portion of the
liquidated damages equal to his salary (less taxes and other amounts withheld,
if any) for the period from the date he commenced the other employment to the
end of the term of this Agreement. In addition, in the event the Employee is
able to obtain a refund of any employment taxes attributable to the repayment
amount, the Employee shall pay any such refund amount to the Company within 120
days of the date the Employee receives it.
2.6 Other Separation from Service. Notwithstanding any provision of
-----------------------------
this Agreement to the contrary, in the event the Employee dies or becomes
disabled prior to June 30, 2000, or separates from service for any other reason
(other than Termination) prior to the
-3-
<PAGE>
end of the term of this Agreement, no further payments shall be made under this
Agreement, other than (a) the payment of any salary, expenses or consulting fees
due and owing through the date of the Employee's separation from service, (b)
any payment under any employee benefit plan maintained by the Company in which
the Employee participated, or (c) the death benefit described below. For
purposes of this paragraph, the Employee shall not be considered disabled unless
he is disabled within the meaning of the long-term disability coverage
maintained on behalf of the Employee pursuant to section 4. If the Employee dies
prior to June 30, 2000, the Employee's surviving spouse, if any, shall be
entitled to payments commencing on the first day of the month following the date
of the Employee's death computed in accordance with the nonqualified retirement
agreement entered into between the Company and the Employee on February 14, 1979
(the "Retirement Agreement") as if the Employee had retired and begun receiving
payments under the Retirement Agreement on the day before the date of his death.
3. Consultation Period.
-------------------
3.1 Term and Services. For the period beginning on the earlier of
-----------------
July 1, 1997, or the Employee's Termination and ending on June 30, 2000, the
Employee shall serve as a consultant to the Company with respect to such
business matters and at such times as the Company may reasonably request. It is
understood that the Employee shall act in the capacity of an independent
contractor to the Company during the consultation period and shall not be
subject to the direction, control, or supervision of the Company with respect to
time spent or procedures followed in the performance of his consulting services.
It is further understood and agreed, however, that the period during which the
Employee performs consulting services shall be considered a period of employment
with the Company for purposes of the Retirement Agreement, but this period shall
not be included in the period over which the Employee's average net salary is
determined.
3.2 Consulting Fee. The Company shall pay the Employee an annual
--------------
consulting fee of $100,000, which shall be prorated and payable monthly. The
consulting fee shall ordinarily be paid during the period beginning on July 1,
1997, and ending June 30, 2000; provided, however, that in the event of the
Employee's Termination, if the Employee obtains other employment which reduces
the liquidated damages payable to him pursuant to the mitigation of damages
provision in subparagraph 2.5(d), the period for which the consulting fee is
paid shall begin on the date the Employee commences such other employment.
4. Benefits. The Employee shall be entitled to the annual leave for
--------
vacation, holiday, sickness or other reasons to which employees of his tenure
would be entitled under the standard policies of the Company. The Employee shall
also be entitled to participate in the employee benefit plans, including the
Stock Purchase Plan, but excluding any severance benefit plan, maintained by the
Company in accordance with the terms of such plans. The Company shall maintain
long-term disability coverage for the Employee or enable the Employee to
maintain long-term disability coverage through conversion or otherwise until
June 30, 2000.
-4-
<PAGE>
5. Employee's Obligations. All payments to the Employee and continued
----------------------
contributions for benefits under section 4 of this Agreement shall be subject to
the Employee's compliance with the following provisions during the term of this
Agreement and for three full years thereafter.
5.1 Assistance in Litigation. The Employee shall, upon reasonable
------------------------
notice, furnish such information and proper assistance to the Company as may
reasonably be required by the Company in connection with any litigation in which
it or any of its subsidiaries or affiliates is, or may become, a party.
5.2 Confidential Information. The Employee shall not knowingly
------------------------
disclose or reveal to any unauthorized person any trade secret or other
confidential information relating to the Company, its subsidiaries or
affiliates, or to any of the businesses operated by them, and the Employee
acknowledges that all such information and all books, records and other
materials used or produced in connection with the conduct of the business of the
Company, its subsidiaries or affiliates constitute the exclusive property of the
Company.
5.3. Non-Competition. The Employee will not directly or indirectly
---------------
own greater than a 5 percent equity interest in any class of stock of, or
manage, operate, participate in, be employed by, perform consulting services
for, or otherwise be connected in any manner with, any firm, person,
corporation, or enterprise located within the designated marketing area of any
broadcasting business or the circulation area of any newspaper operated by the
Company or any affiliate of the Company as of the Effective Date which would be
competitive with the applicable business of the Company or its affiliates in
such area. Any act of competition under this paragraph 5.3 shall be deemed to be
other employment for purposes of subparagraph 2.5(d), if applicable. The
Employee recognizes that the possible restrictions on his activities which may
occur as a result of his performance of his obligations under this paragraph 5.3
are required for the reasonable protection of the Company and its investments.
5.4. Failure to Comply. If the Employee, for any reason other than
-----------------
death or disability, shall, without the written consent of the Company, fail to
comply with any provision of this section 5 (when applicable), his rights to any
future payments under this Agreement or the continuation of Company
contributions for benefits under section 4 shall terminate, and the Company's
obligation to make such payments and provide such benefits shall cease;
provided, however, that no failure to comply with any provision of this section
5 shall be deemed to have occurred unless and until the Employee receives
written notice on behalf of the Board, specifying the conduct alleged to
constitute such failure, and has thereafter continued to engage in such conduct
after a reasonable opportunity and a reasonable period (but in no event less
than sixty days after a receipt of such notice) to refrain from such conduct.
6. Effect on Existing Agreements and Integration. This Agreement
---------------------------------------------
constitutes the entire agreement between the parties and supersedes all prior
proposals and agreements, written or oral, and all other communications between
the parties relating to the express subject matter
-5-
<PAGE>
of this Agreement; provided, however, that the Deferred Compensation Agreement
and Retirement Agreement shall continue in effect.
7. Miscellaneous.
-------------
7.1. Governing Law. This Agreement shall be construed under and
-------------
governed by the laws of the State of New York.
7.2. Assignment. This Agreement shall not be assignable in whole or
----------
in part by either party without the consent of the other, except that the
Company may assign this Agreement, without the Employee's consent, to any
corporation, general partnership or limited partnership into which or with which
it shall merge or consolidate or to which it shall transfer substantially all of
its assets.
7.3. Binding Effect. This Agreement shall inure to the benefit and
--------------
bind the successors and assigns of the parties.
7.4. Captions. Captions to the sections and paragraphs of this
--------
Agreement are solely for the convenience of the parties, are not a part of this
Agreement, and shall not be used for the interpretation of any of the provisions
of this Agreement.
7.5. Waiver. Either of the parties may, by written notice to the
------
other party: (a) extend the time for the performance of any of the obligations
or other actions of the other hereunder; (b) waive any inaccuracies in the
representations or warranties of the other contained herein or in any document
delivered pursuant to this Agreement; (c) waive compliance with any of the
conditions or covenants of the other contained herein; or (d) waive performance
of any of the obligations of the other hereunder. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein. No
failure or delay on the part of any party in exercising any right, privilege,
power, or remedy under this Agreement, and no course of dealing among the
parties, shall operate as a waiver of such right, privilege, power or remedy;
nor shall any single or partial exercise of any right, privilege, power, or
remedy under this Agreement preclude any other or further exercise of such
right, privilege, power, or remedy, or the exercise of any other right,
privilege, power, or remedy. No notice to or demand on any party in any case
shall entitle such party to any other or further notice or demand in any similar
or other circumstances or constitute a waiver of the right of the party giving
such notice or making such demand to take any other or further action in any
circumstances without notice or demand.
-6-
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have executed this Employment
Agreement as of the date first above written.
PARK COMMUNICATIONS, INC.
By:______________________________
WRIGHT M. THOMAS
_________________________________
-7-
<PAGE>
Exhibit 10.18
A G R E E M E N T
THIS AGREEMENT, made this 1st day of May 1986, by and between Park
Communications, Inc., a Delaware corporation, having its principal office in
Ithaca, New York (hereinafter referred to as "the Company", which term shall
include its successors and assigns), and Wright M. Thomas (hereinafter referred
to as "Executive").
W I T N E S S E T H:
WHEREAS, Executive has agreed to serve the Company in an executive
capacity,
NOW THEREFORE, in consideration of these premises, it is agreed as follows:
1. Executive will, except in the event of his earlier death or
disability, serve the Company on a full-time basis in an executive capacity.
2. (a) By filing written notice with the Company at any time prior to
the December 15 preceding the commencement of any year, Executive may elect that
a portion of his salary for such year, not to exceed the greater of Thirty
Thousand Dollars ($30,000.00) or twenty-five percent (25%) of such salary, shall
be paid to him as Deferred Compensation at such later date as he may become
entitled thereto pursuant to the provisions of this Agreement. The amount so
deferred shall be represented by a mere bookkeeping entry and shall not be held
in trust or in any fiduciary capacity for the benefit of Executive. To the
extent that Executive makes no such election, his entire salary shall be paid to
him in equal semi-monthly payments during the year in which earned.
(b) With respect to any period of less than an entire year during
which Executive renders services under paragraph 1 of this Agreement, there
shall be credited to Executive's account as Deferred Compensation that
percentage of the salary for such year which Executive has elected to defer
which corresponds to the percentage of such year during which services were
rendered.
(c) The Company will pay or reimburse Executive for all reasonable
expenses paid or incurred by him in performing his obligations under paragraph 1
of this Agreement.
3. For purposes of paragraph 4, below, the aggregate amount allocable to
Executive's account as Deferred Compensation as of the date on which he receives
his first installment of Deferred Compensation shall be the sum of
(a) The amounts of each year's salary that Executive is entitled to
receive as Deferred Compensation pursuant to paragraph 2, above; and
(b) for the period from May 1, 1986 to the end of the month
preceding the month in which Executive becomes entitled to his first installment
of Deferred Compensation
<PAGE>
pursuant to paragraph 4, below, interest on the amount (on which the Company
will pay federal and state income taxes), if any, of the Deferred Compensation
allocated to Executive's account, determined by reference to the prime rate of
interest at Wachovia Bank & Trust Company, N.A., of Winston-Salem, North
Carolina, on the first business day of such year, computed in accordance with
the following schedule:
If the prime the ineterest
rate is: but less than: rate will be:
------------- ---------------- ---------------
6% 7% 5%
7% 8% 6%
8% 9% 7%
9% 10% 8%
10% 11% 9%
11% 12% 10%
The maximum rate of interest which will be accrued under this Agreement is
ten percent (10%).
4. The aggregate amount allocable to Executive as Deferred Compensation,
determined pursuant to paragraph 3, above, shall be payable to Executive in the
form of an annuity commencing on the first day of the third month following the
month in which Executive retires or otherwise ceases to be employed actively by
the Company for whatever cause. Such annuity shall be payable by the Company in
the number of equal quarterly installments provided in paragraph 5, below, and
shall include an assumed interest factor, as calculated by the Company, equal to
the average annual rate of interest applicable under subparagraph 3(b) for the
last three (3) calendar years during which Executive rendered services as an
executive under paragraph 1.
5. The Deferred Compensation payable to Executive shall be payable in
forty (40) equal quarterly installments or in such greater number of
installments as shall be not less than half the number of years remaining in
Executive's life expectancy, determined as of the date on which Executive
receives his first installment of Deferred Compensation or as of the date of his
death, if earlier. For purposes of the preceding sentence, Executive's life
expectancy shall be equal to the expected return multiple shown for Executive's
age and sex in 'Table 1.-- Ordinary Life Annuity--One Life--Expected Return
Multiples' in Regulation 1.72-9 of the Federal Income Tax Regulations, as in
effect on the date of such determination.
6. If Executive should die before receiving any or all of the installments
of Deferred Compensation to which he is entitled, any unpaid installments shall
be paid as they become due under paragraph 5 to such person or persons and in
such proportions as Executive may have designated expressly by his last will and
testament, otherwise to Executive's estate.
-2-
<PAGE>
7. Either the Company or the Executive may terminate this Agreement
without cause on ninety (90) days' prior written notice to the other party, in
which case the provisions of this Agreement as to payment shall apply for all
amounts of Deferred Compensation and interest allocated to Executive's account
to the date of such termination.
8. This Agreement shall be binding upon and inure to the benefit of the
Company and its successors and assigns, and Executive, his designees and his
estate. Neither Executive, his designees nor his estate shall commute,
encumber, sell or otherwise dispose of the right to receive the payments
provided for in this Agreement, which payments and the rights thereto are
expressly declared to be non-transferrable and non-assignable. Any rights of
the Executive, his designees and his estate hereunder shall be no greater than
those of an unsecured creditor of the Company.
9. This Agreement shall be governed by the laws of the State of New York
from time to time in effect.
10. Unless either party notifies the other to the contrary, any notice
required hereunder shall be duly given if delivered in person or by registered
mail (a) if to the Company, to the Chairman, Post Office Box 550, Ithaca, New
York, 14851, and (b) if to the Executive, to 112 Simsbury Drive, Ithaca, New
York, 14850.
PARK COMMUNICATIONS, INC.
_______________________ By:________________________
Witness Roy H. Park, Chairman
_______________________ By:________________________
Witness Wright M. Thomas
-3-
<PAGE>
Exhibit 10.19
PARK
B R O A D C A S T I N G, I N C.
Terrace Hill, Ithaca, New York - 14850
Phone (607) 272-9020
Roy H. Park
President
February 14, 1979
Mr. Wright M. Thomas
112 Simsbury Drive
Ithaca, New York 14850
Dear Tommy:
As we have already discussed, you are a key man in our operation and I
have worked out a plan which will provide lifetime security for you and your
family, when coupled with a term insurance program which will be made available
for your purchase, if you elect to do so, at what I believe you will find to be
favorable group rates.
Provided you remain in the employment of Park Broadcasting, Inc. or
any of its subsidiaries or affiliates ("Park") until reaching age 65, then upon
your retirement on or after such date, Park agrees to pay to you each year
thereafter, in equal monthly installments for the remainder of your natural
life, an amount equal to 50% of your average net salary during the five-year
period immediately preceding retirement, less the annual amount of retirement
income payable to you under any pension plan which may hereafter be established
by Park and also less any amount of benefits that may be payable to you under
the Federal Social Security Act and any amendments thereto, or under any other
similar plan which is a substitute for or addition to the Federal Social
Security Act that may hereafter be established by any jurisdiction within the
United States. (For purposes of this paragraph, the term "net salary" means the
annual gross salary paid to you less amounts withheld from such salary for the
payment of Federal or State Social Security taxes and any other Federal or State
taxes (other than income taxes).)
<PAGE>
Mr. Wright M. Thomas
Page Two
February 14, 1979
As a further provision of this Agreement, if you are married (and not
legally separated) on the date of your retirement, then upon your death Park
agrees to pay an amount equal to 50% of the amount payable under paragraph 1 to
your spouse if she survives you, for the remainder of her natural life, provided
she remains unmarried.
Please indicate your acceptance of this proposal at the bottom of this
letter and return it to me. I look forward to continuing the fine working
relationship between us.
Sincerely,
Roy H. Park
President
Park Broadcasting, Inc.
Accepted:
- ------------------------
Wright M. Thomas
Dated: 2/16/79
-----------------
<PAGE>
PARK
B R O A D C A S T I N G, I N C.
Terrace Hill, Ithaca, New York - 14850
Phone (607) 272-9020
Roy H. Park
President
July 21, 1981
Mr. Wright H. Thomas
112 Simsbury Drive
Ithaca, New York 14850
Dear Tommy:
To remove any uncertainties regarding our intention in connection with
the retirement agreement we entered into with you in February 1979, that
agreement is hereby amended to include the following:
"This Agreement shall be binding upon, and shall inure to the benefit
of, Park Broadcasting, Inc., its successors and assigns."
Please indicate your acceptance of this amendment at the bottom of
this letter and return it to me. I look forward to continuing the fine working
relationship between us.
Sincerely,
Roy H. Park
President
Park Broadcasting, Inc.
Accepted:
____________________________
Wright M. Thomas
Dated: August 9, 1981
<PAGE>
Exhibit 10.20
PARK COMMUNICATIONS, INC.
RETENTION INCENTIVE PLAN
WHEREAS, the Board of Directors (the "Board") of Park Communications,
Inc. (the "Company") has made a decision to seek the sale of the Company; and
WHEREAS, the Board recognizes that the uncertainty of prospects for long-
range employment may result in the departure or distraction of senior officers
to the detriment of the Company and its shareholders; and
WHEREAS, the Company desires to assure itself of the continued
employment and dedication of its senior officers to the operation of the
Company;
NOW, THEREFORE, to induce the senior officers to remain in the employ
of the Company, the Company hereby establishes the Park Communications, Inc.
Retention Incentive Plan (the "Plan"), to provide retention bonuses and
severance benefits as set forth herein.
Article I
Definitions
-----------
1.1 "Annual Salary" means,
<PAGE>
(a) For purposes of determining the amount of a Retention Bonus, an
Officer's annual salary from the Company in effect on the Date of Sale or on the
Effective Date, whichever is greater, or,
(b) For purposes of determining the amount of a Severance Benefit, an
Officer's annual salary from the Company in effect on the date of the Officer's
Termination of Employment or on the Effective Date, or, if an Officer's
Termination of Employment is a result of his refusal to accept a position
because the compensation would not be comparable to his compensation on the
Effective Date, the Officer's annual salary in effect on the day before any
reduction in salary relating to the new position, whichever is greatest.
An Officer's Annual Salary shall be determined before reduction for
employment taxes or any before-tax or after-tax contributions to any employee
benefit plan, policy, or program.
1.2 "Cause" means the termination of an individual's employment for
insubordination, violation of law, a significant violation of the employer's
policy, any act that is materially detrimental to the employer, unethical or
disorderly conduct which is materially injurious to the employer, use of illegal
drugs on employer property, or unauthorized use of alcohol on employer property.
1.3 "Date of Sale" means the closing date of any Sale.
1.4 "Effective Date" means the effective date of the Plan, May 1, 1994.
-2-
<PAGE>
1.5 "Officer" means one of the four highest-paid officers of the Company, other
than the president and chief operating officer, as determined on the Effective
Date.
1.6 "Purchaser" means any single purchaser or any group of affiliated
purchasers that enters into an agreement of Sale with the Company.
1.7 "Sale" means the sale of more than fifty percent (50%) of the stock of the
Company to a Purchaser.
1.8 "Termination of Employment" means
(a) The involuntary termination of an Officer's employment with the
Company for any reason other than Cause within twenty-four (24) months after the
Date of Sale. In the event that an officer of the Purchaser notifies an Officer,
orally or in writing, on or prior to the Date of Sale and on or after the date
of execution of the agreement of Sale between the Purchaser and the Company that
the Officer will not be retained in permanent employment following the Date of
Sale (regardless of whether the Officer may be retained in employment for a
transition period following the Date of Sale), the Officer will be deemed to
have an involuntary termination of employment on the Date of Sale. For this
purpose, permanent employment means employment at will for an indefinite period.
(b) The voluntary termination of an Officer's employment, on or after the
Date of Sale, following the Officer's refusal of a position with the Company or
any successor entity which would require the Officer to work more than 35 miles
from Ithaca, New York or the
-3-
<PAGE>
compensation or duties of which are not comparable to those of the Officer's
position on the Effective Date. For this purpose, an Officer's duties will be
considered comparable if they remain substantially unchanged even though, as a
result of the Sale, the Company becomes a subsidiary of another company.
Article II
Benefits
--------
2.1 Retention Bonus. Upon the Date of Sale with respect to an Officer, the
---------------
Officer shall be paid a lump sum Retention Bonus equal to his Annual Salary.
2.2 Severance Benefit. In the event of an Officer's Termination of Employment,
-----------------
the Officer shall receive a Severance Benefit equal to the greater of (a) his
Annual Salary or (b) one-twelfth of his Annual Salary for each complete 12-month
period of service with the Company prior to the date of Sale. The Severance
Benefit shall be paid in a lump sum on the date of an Officer's Termination of
Employment; provided, however, that in the event of an Officer's voluntary
Termination of Employment in accordance with Section 1.8(b) after the Date of
Sale, the Severance Benefit shall be paid on the later of the date of the
Officer's Termination of Employment or the date which is 15 days after the date
the Officer provides notice to the Employer of his intention to terminate
employment. In the event of the death of an Officer after his Termination of
Employment but before payment of his Severance Benefit, any Severance Benefit
payable to the Officer shall be paid to his surviving spouse, if any, or, if he
has no surviving spouse, to his estate.
-4-
<PAGE>
2.3 Employment Taxes. Benefit payments under the Plan shall be reduced by all
----------------
applicable employment taxes required by law to be withheld from the payments.
Article III
Miscellaneous
-------------
3.1 Amendment. The President of the Company may amend the Plan to conform the
---------
Plan to the terms of any merger agreement with respect to the Company or any
agreement of Sale. In addition, the Company may amend the Plan at any time in
any manner other than as described in the preceding sentence pursuant to a
resolution of the Board. Notwithstanding the foregoing, the Plan may not be
amended in any manner that would:
(a) decrease, offset or defer the payment of benefits under the Plan with
respect to any Officer, or
(b) impair an Officer's right to arbitration under Section 3.8, unless
the affected Officer consents to the amendment in writing.
The Company may terminate the Plan pursuant to a resolution of the
Board on or after the earlier of (a) the date all Officers have received payment
of benefits hereunder, or (b) the date that is twenty-four (24) months after the
Date of Sale (provided that any Officer whose Termination of Employment occurred
on or prior to such date has received payment of all benefits to which he is
entitled hereunder and any and all disputes under Section 3.7 and 3.8 have been
resolved prior to the termination of the Plan).
-5-
<PAGE>
3.2 Binding on Successors. The Plan shall inure to the benefit of and bind the
---------------------
successors and assigns of the Company, and references to the Company herein
shall apply to any successor entity.
3.3 Assignment. No Officer or other payee may sell, assign, alienate or pledge
----------
any benefits under this Plan, and the benefits shall not be subject to
garnishment or levy.
3.4 Funding. Benefits shall be paid out of the general assets of the Company or
-------
of any successor entity.
3.5 Governing Law. The Plan shall be construed in accordance with the laws of
-------------
the State of New York, to the extent those laws are not preempted by Federal
law, except that the enforcement of the arbitration provisions of Section 3.8
shall be governed by the U.S. Arbitration Act.
3.6 Administration. The Company shall be the named fiduciary with the sole
--------------
responsibility for administration of the Plan, subject to Section 3.8. The
Company may delegate to any person or entity any powers or duties of the plan
administrator. Any action by the Company assigning any of its responsibilities
as plan administrator to any officer or employee of the Company shall not
constitute delegation of the plan administrator's responsibilities. The Company
shall have such duties and powers as may be necessary to discharge its
responsibilities hereunder
-6-
<PAGE>
3.7 Claim for Benefits. To the extent permitted by law, in the event of any
------------------
dispute or controversy regarding a payee's right to payment of benefits under
the Plan, or any failure to pay benefits in a timely manner, regardless of
whether the payee has filed a written claim for benefits, the payee's claim for
benefits shall be deemed denied.
In the event of any dispute or controversy regarding a payee's right
to payment of benefits under the Plan, pending settlement of the dispute
pursuant to Section 3.8, the Company shall pay to the payee all disputed
amounts, as specified by or on behalf of the payee in a writing submitted to the
President of the Company.
3.8 Arbitration. Any dispute regarding payment of benefits or other denial of a
-----------
claim for benefits under Section 3.7 shall be settled exclusively by binding
arbitration in the State of New York in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect.
Judgement may be entered on the arbitrator's award in any court of competent
jurisdiction. In the event that the arbitrator determines that a payee is not
entitled to any portion of a disputed amount previously paid to the payee
pursuant to Section 3.7, the payee shall, within a reasonable amount of time
following the arbitrator's determination, repay to the Company such portion of
the disputed amount together with interest thereon at the then current prime
rate as set forth in the Wall Street Journal.
-------------------
The Company shall reimburse the payee for all reasonable legal fees
and expenses which the payee may incur in connection with the arbitration within
a reasonable time after the payee provides evidence to the Company of his
payment of any such fees or expenses; provided,
-7-
<PAGE>
however, that, to the extent that the arbitrator determines that the payee's
claim was frivolous, the payee shall, within a reasonable time after the
arbitrator's determination, reimburse the Company for any amounts previously
paid under this sentence.
IN WITNESS WHEREOF, Park Communications, Inc. has caused this Plan to
be executed by its duly authorized officers this 6th day of Dec., 1994.
--- ----
PARK COMMUNICATIONS, INC.
-----------------------------
President
ATTEST
- -------------------------
Secretary
-8-
<PAGE>
Exhibit 10.21
PARK COMMUNICATIONS, INC.
DEFINED BENEFIT PLAN
Amended and Restated
Effective January 1, 1989
<PAGE>
PARK COMMUNICATIONS, INC.
DEFINED BENEFIT PLAN AND TRUST
This defined benefit plan and trust, made and entered into this 30th day of
December, 1994 between Park Communications, Inc., a corporation organized and
existing under the laws of the State of New York, hereinafter sometimes called
"Park," party of the first part, and Wright M. Thomas and Randel N. Stair, or
their successor(s), as trustee of the Defined Benefit Trust hereinafter created,
hereinafter called the "Trustee," party of the second part.
W I T N E S S E T H:
WHEREAS, Park has merged and consolidated certain retirement plans and
trusts that were established by certain of Park's affiliates into a single plan
and trust; and
WHEREAS, the plan is intended to meet the requirements of section 401(a) of
the Internal Revenue Code of 1986 (the "Code") and the Trust is intended to meet
the requirements of section 501(a) of the Code;
NOW, THEREFORE, the parties hereto agree to the following terms of a
Defined Benefit Plan and Trust intended to meet the requirements of and qualify
under section 401(a) of the Code and Title I of the Employee Retirement Income
Security Act of 1974 ("ERISA"), as amended.
<PAGE>
ARTICLE I
INTRODUCTION
------------
1.01. The plan shall be known as the "Park Communications, Inc.
Defined Benefit Plan" (the "Plan").
1.02. This Plan herein set forth has been created for the purpose of
providing (a) retirement income for those employees who qualify for the benefits
hereunder; and (b) disability benefits to Participants who become disabled while
in the service of the Employer.
1.03. Subject to the provisions of this Plan, no part of the corpus
or income of the trust under this Plan shall be used for, or diverted to, any
purpose other than for the exclusive benefit of the employees who are eligible
to participate in the Plan and their beneficiaries.
1.04. The Plan is an amendment and restatement of the Plan which was
formed by the merger of the WJHL, Inc. Salaried Employees' Pension Plan and the
Roy H. Park Broadcasting of Roanoke, Inc. Retirement Plan on December 31, 1992.
The effective date of the Plan shall be January 1, 1989, except as otherwise
specified herein; however, the adoption of the amendments set forth herein is
contingent upon issuance of a favorable letter of determination with respect to
the amendments by the Internal Revenue Service.
1.05. This Plan and the Trust are intended to qualify as a defined
benefit plan and trust under section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code")
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<PAGE>
ARTICLE II
DEFINITIONS
-----------
2.01. Accrued Benefit - For any Participant, as of any date, the
---------------
amount of monthly benefit earned to such date, payable as a single life annuity
commencing at his normal retirement date (or immediately, if the Participant
continues in Employment on and after his normal retirement date) calculated in
accordance with Article V.
2.02. Actuarial Equivalent or Actuarially Equivalent - A benefit of
----------------------------------------------
equal actuarial value on the basis of the assumptions and factors described in
Appendix C.
2.03. Adjustment Factor - The cost of living adjustment factor
-----------------
prescribed by the Secretary of the Treasury under section 415(d) of the Code for
years beginning after December 31, 1987, as applied to such items and in such
manner as the Secretary shall provide.
2.04. Administrator - The Administrator of the Plan appointed
-------------
pursuant to Article III.
2.05. Affiliated Employer - Any corporation which is a member of a
-------------------
controlled group of corporations (as defined in section 414(b) of the Code) of
which group Park is a member; any trade or business which is under common
control with Park (within the meaning of section 414(c) of the Code); and any
trade or business (other than Park) that is a member of an affiliated service
group (within the meaning of section 414(m) of the Code), or any other
organization described in section 414(o) of the Code, of which group Park is
also a member.
2.06. Anniversary Date - January 1, 1989 and each succeeding
----------------
January 1 thereafter.
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<PAGE>
2.07. Appendix - An Appendix to this Plan setting forth any unique
--------
terms and conditions applicable to the Employees of the Employer designated in
the Appendix.
2.08. Code - The Internal Revenue Code of 1986, as amended from time
----
to time or any predecessor or successor thereto.
2.09. Compensation - For any Plan Year, the wages, salaries, fees and
------------
other amounts received (in cash or in kind) for personal services rendered,
including commission, bonuses and other amounts described in Treas. Reg. (S)
1.415-2(d)(2) which are paid by the Employer to the Participant for the Plan
Year, and including salary reduction contributions under sections 125, 401(a) or
403(b), but excluding all amounts described in Treas. Reg. (S) 1.415-2(d)(3),
except as otherwise determined in accordance with the applicable Appendix.
Notwithstanding any provision of the Plan to the contrary, Compensation in
excess of (a) $200,000 for Plan Years beginning on or after January 1, 1989
through the Plan Year ending on December 31, 1993, and (b) $150,000 for Plan
Years beginning on or after January 1, 1994 (in each case as adjusted in
accordance with section 401(a)(17) of the Code) shall not be taken into account
for any purpose under this Plan other than Section 5.03. In no event, however,
shall this limitation on Compensation cause the Accrued Benefit of any
Participant to be less than (a) his Accrued Benefit as of December 31, 1988 or
(b) his Accrued Benefit as of December 31, 1993. For purposes of this
limitation, the Compensation of a Highly Compensated Employee shall include the
Compensation of the following of his Family Members: his spouse and any lineal
descendant who has not attained age 19 before the close of the year. Such Family
Members shall not be considered separate Participants for purposes of this
Section.
-4-
<PAGE>
2.10. Employee - Any employee of an Employer who receives
--------
Compensation from and is on the payroll of such Employer or any individual who
received Compensation from, and was on the payroll of, an Employer and who
receives Compensation from, and is on the payroll of, Park or any other
Affiliated Employer.
2.11. Employee Contributions - Contributions made to the Plan by
----------------------
payroll deduction as authorized by an Employee in accordance with the applicable
Appendix.
2.12. Employer - Any Affiliated Employer that adopts this Plan, as
--------
reflected in an Appendix to the Plan. When used in the Plan, the term "Employer"
shall refer to the specific employer of the Employee(s) or Participant(s) under
consideration, rather than to all of the Employers in the aggregate, unless the
context indicates otherwise.
2.13. Employment - Shall mean a period of service with the employee's
----------
Employer or an Affiliated Employer and shall include any authorized leave of
absence provided that such leaves of absence are not granted in such a manner as
to discriminate in favor of employees who are Highly Compensated Employees.
Service as a leased employee (within the meaning of section 414(n)(2) of the
Code) shall be credited for purposes of eligibility and vesting under this Plan.
A year of service shall mean a Plan Year during which the employee completes at
least 1000 hours of service. A break in service shall mean a Plan Year during
which the employee does not complete at least 500 hours of service.
(a) Each employee will be credited with an hour of service for:
Each hour for which the employee is directly or indirectly paid or
entitled to payment by the Employer or an Affiliated Employer for the
performance of duties. These hours
-5-
<PAGE>
shall be credited to the employee for the computation period or periods in which
the duties are performed; and
Each hour (up to a maximum of 501 hours) for which the employee is
directly or indirectly paid or entitled to payment by the Employer or an
Affiliated Employer for reasons (such as vacation, sickness or disability) other
than for the performance of duties. These hours shall be credited to the
Employee for the computation period or periods in which payment is made or
amounts payable to the employee become due; and
Each hour for which back pay, irrespective of mitigation of damage,
has been either awarded or agreed to by the Employer or an Affiliated Employer.
These hours shall be credited to the employee for the computation period or
periods to which the award or agreement pertains rather than the computation
period in which the award, agreement, or payment was made;
Each hour not specified above which is required to be credited
pursuant to the provisions of Department of Labor regulations (S)(S) 2530.200b-
2(b) and (c), which provisions are incorporated herein by reference.
(b) Solely for purposes of determining whether an employee has
incurred a break in service, hours of service shall include (i) hours of service
which otherwise would normally have been credited to such individual but for a
maternity or paternity absence, or (ii) if the hours of service which otherwise
would normally be credited to such individual cannot be determined, eight (8)
hours of service per day of such maternity or paternity absence, but in neither
event more than 501 hours. Any hours treated as hours of service hereunder on
account of a maternity or paternity absence shall be credited to an employee
only in the Plan Year in
-6-
<PAGE>
which the absence from work begins, if such credit would prevent the employee
from incurring a break in service in such Plan Year. In all other cases, any
hours treated as hours of service hereunder on account of a maternity or
paternity absence shall be credited to an individual in the Plan Year
immediately following the Plan Year in which the absence from work begins. For
purposes of this Section, the term "maternity or paternity absence" means an
absence from work (or series of absences related to the birth or placement of a
particular child) for any period by an employee (i) by reason of the pregnancy
of the employee (ii) by reason of the birth of a child of the employee (iii) by
reason of the placement of a child with the employee in connection with the
adoption of such child by the employee or (iv) for purposes of caring for such
child for a period beginning immediately following such birth or placement. The
Employer may determine, on a uniform and nondiscriminatory basis, that an
employee's absence from work is by reason of one or more of the events specified
herein, and may require such information as it deems necessary to make such
determination, including, but not limited to, certification by the employee
supported by the statement of a physician or adoption agency evidencing such
pregnancy, birth, or placement.
(c) If an employee incurs a break in service, subject to the rules of
Sections 8.07 and 9.01(c), his years of service and Years of Participation
before the break in service shall be aggregated with any years of service and
Years of Participation after the break in service only if (i) he is vested, or
(ii) the number of his consecutive breaks in service is less than the greater of
five years or the aggregate number of his years of service before the break in
service, and, in either case, he completes one year of service after
reemployment.
-7-
<PAGE>
(d) Leave of Absence. In accordance with the established policies of
the Employer, any period during which an employee is on an authorized leave of
absence, including any period in which the employee is in the active service of
the Armed Services of the United States, shall be treated as a period of service
with the Employer. During an authorized leave of absence, an employee shall be
credited with the number of hours of service with which he would normally have
been credited but for such absence.
2.14. ERISA - The Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
2.15. Family Member - An individual described in section 414(q)(6)(B)
-------------
of the Code.
2.16. Fund - The trust fund established to hold and invest
----
contributions to the Plan and earnings thereon, out of which benefits payable
under the Plan shall be paid.
2.17. Highly Compensated Employee - An individual described in
---------------------------
section 414(q) of the Code.
2.18. Inactive Participant - Any Employee or former Employee who has
--------------------
ceased to be an active Participant accruing benefits, but who has not received a
distribution of his entire vested Accrued Benefit under the Plan.
2.19. Nonhighly Compensated Employee - An Employee of the Employer
------------------------------
who is neither a Highly Compensated Employee nor a Family Member.
2.20. Park - Park Communications, Inc.
----
2.21. Participant - An Employee who has satisfied the eligibility
-----------
requirements provided for in Article IV.
-8-
<PAGE>
2.22. Plan - The Park Communications, Inc. Defined Benefit Plan set
----
forth herein, including any Appendices to the Plan, and any amendments thereto.
2.23. Plan Year - The 12 month period beginning on the Anniversary
---------
Date.
2.24. Social Security Retirement Age - (a) for any individual born
------------------------------
before January 1, 1938, age 65, (b) for any individual born after December 31,
1937, but before January 1, 1955, age 66, or (c) for any individual born after
December 31, 1954, age 67.
2.25. Trustee - Wright M. Thomas and Randel N. Stair or their
-------
successor(s).
2.26. Year of Participation - A Plan Year during which a Participant
---------------------
completes 1,000 hours of service, as defined in Section 2.13, including a Plan
Year prior to the effective date of this amended and restated Plan during which
the Participant was a participant in a retirement plan which was merged and
consolidated with this Plan. For any short Plan Year, a Year of Participation
shall be a Plan Year during which a Participant has completed a number of hours
of service equal to 1,000 multiplied by a fraction, where the numerator of the
fraction is the number of months in the short Plan Year and the denominator is
12.
ARTICLE III
ADMINISTRATION OF PLAN
----------------------
3.01. Powers and Duties of the Administrator. The Plan shall be
--------------------------------------
administered by an Administrator who shall be Park or, in the alternative, one
or more persons who shall be appointed by Park. The Administrator may delegate
to any person or entity any powers or duties of the Administrator under the
Plan. To the extent of any such delegation, the delegate shall become the named
fiduciary responsible for administration of the Plan (if the delegate is a
fiduciary by reason of the delegation), and references to the Administrator
shall apply instead
-9-
<PAGE>
to the delegate. Any action by Park assigning any of its responsibilities as
Administrator to specific persons who are all directors, officers, or employees
of Park shall not constitute delegation of the Administrator's responsibilities
but rather shall be treated as the manner in which Park has determined
internally to discharge such responsibility.
Compensation of the Administrator and all usual and reasonable
expenses of administration, including but not limited to actuarial, legal and
accounting fees may be paid in whole or in part by the Employer, and any
expenses not paid by the Employer shall be paid by the Trustee out of the
principal or income of the Trust Fund. The source of such payments may differ
from year to year. No employee of Park, the Employer, or any Affiliated Employer
shall receive compensation with respect to his services as the Administrator.
The Administrator shall have such duties and powers as may be
necessary to discharge its duties hereunder, including, but not by way of
limitation, the following:
(a) to construe and interpret the terms and intent of the Plan, decide
all questions of eligibility and determine the amount, manner and time of
payment of any benefits hereunder except that the Administrator shall have no
power to add to, subtract from or modify any of the terms of the Plan, or to
change or add to any benefits provided by the Plan, or to waive or fail to apply
any requirements of eligibility for a benefit under the Plan:
(b) to prescribe procedures to be followed and information to be
supplied by Participants or Beneficiaries filing applications for benefits;
(c) to prepare and distribute in writing, in such manner as the
Administrator determines to be appropriate, information explaining the Plan;
-10-
<PAGE>
(d) to receive from the Employer, the Trustee, Participants and
beneficiaries such information as shall be necessary for the proper
administration of the Plan:
(e) to furnish the Employer, upon request, such annual reports with
respect to the administration of the Plan as are reasonable and appropriate;
(f) to receive, review and keep on file (as it deems convenient or
proper) reports of the financial condition, and of the receipts and
disbursements, of the Trust Fund from the Trustee:
(g) to appoint or employ individuals to assist in the administration
of the Plan and any other agents it deems advisable, including legal and
actuarial counsel; and
(h) to defend and initiate any lawsuit on behalf of the Plan or the
Participants and beneficiaries without the consent of the Employer if the
Administrator deems it reasonably necessary to protect the Plan or its
Participants. Legal fees and costs of litigation shall be borne by the Trust
Fund to the extent not paid by the Employer.
If there shall arise any misunderstanding or ambiguity concerning the
meaning of any of the provisions of the Plan arising out of the administration
thereof, the Administrator shall have the sole right to construe such
provisions. Subject to the limitations of the Plan and applicable law, the
Administrator may make such rules and regulations as it deems necessary or
proper for the administration of the Plan and the transaction of business
hereunder. The decisions of the Administrator with respect to any matter it is
empowered to act on shall be made by it in its sole discretion based on the Plan
documents and shall be final, conclusive and binding on all persons. Further,
the findings of fact by the Administrator as to matters relating to a
Participant's employment record are binding on the Participant (or his
Beneficiary)
-11-
<PAGE>
for the purposes of the Plan. The Plan shall confer no right upon any Employee
to be retained as an Employee by the Employer.
3.02. Notices. All persons shall be required to furnish information
-------
and proof to the Administrator as to any and all facts which the Administrator
may reasonably require concerning any person affected by the terms of the Plan
(including date of birth and satisfactory proof, by personal endorsement on
benefit checks or otherwise, of the survival of any payee to the due date of any
annuity payment).
Each terminated Participant and retired Participant will inform the
Administrator of any changes of address. All notices to any persons from the
Administrator will be sent to the last known address of such person and there
shall be no further obligation to such person in the event any such
communication is not received by the person.
If any fact relating to Participant or any other payee has been
misstated, the correct fact may be used to determine the amount of annuity
payable to him or to such other payee. If overpayments or underpayments have
been made because of such incorrect statement, the amount of any future payments
shall be adjusted as determined by the Administrator to be appropriate.
3.03. Accounts and Records. The Administrator shall maintain such
--------------------
accounts and records regarding the fiscal and other transactions of the Plan and
such other data as may be required to carry out its functions under the Plan and
to comply with all applicable laws.
3.04. Compliance with Applicable Law. The Administrator shall be
------------------------------
responsible for the preparation and filing of any required returns, reports,
statements or other filings with appropriate governmental agencies. The
Administrator shall also be responsible for
-12-
<PAGE>
the preparation and delivery of information to persons entitled to such
information under any applicable law.
3.05. Liability. The functions of the Administrator and Trustee
---------
under the Plan are fiduciary in nature and each shall be carried out solely in
the interest of the Participants and other persons entitled to benefits under
the Plan for the exclusive purpose of providing the benefits under the Plan (and
for the defraying of reasonable expenses of administering the Plan). Each such
entity or person shall carry out its respective functions in accordance with the
terms of the Plan with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims. No officer, director, or employee of the
Employer or Park shall be liable for any action or inaction with respect to his
functions under the Plan unless such action or inaction is adjudicated to be a
breach of the fiduciary standard applicable under ERISA.
3.06. Indemnification. To the fullest extent permitted by law, the
---------------
Plan (and, to the extent ERISA prohibits indemnification by the Plan, then the
Employer) shall indemnify officers and directors of the Employer or Park (and
any employee involved in carrying out the functions of the Employer or Park
under the Plan) against any expenses, including attorneys' fees and expenses and
amounts paid in settlement (to the extent approved by the Employer or Park) of a
liability, which are reasonably incurred in connection with any legal action to
which such person is a party by reason of his duties or responsibilities with
respect to the Plan.
3.07. Rules and Decisions. All rules and decisions of the
-------------------
Administrator shall be uniformly and consistently applied to all Participants in
similar circumstances. When making
-13-
<PAGE>
a determination or calculation, the Administrator shall be entitled to rely upon
information furnished by a Participant or Beneficiary, the Employer, the legal
counsel of the Employer, the actuary, or the Trustee.
3.08. Authorization of Benefit Payments. The Administrator may issue
---------------------------------
directions to the Trustee concerning all benefits which are to be paid from the
Trust Fund pursuant to the provisions of the Plan, and warrants that all such
directions are in accordance with this Plan.
3.09. Application and Forms for Benefits. The Administrator may
----------------------------------
require a Participant to complete and file with the Administrator an application
for a benefit and all other forms approved by the Administrator, and to furnish
all pertinent information requested by the Administrator. The Administrator may
rely upon all such information so furnished it, including the Participant's
current mailing address.
3.10. Liability. Except for gross negligence, willful misconduct or
---------
willful breach of this Plan, no employee of Park or any other Affiliated
Employer carrying out the functions of the Administrator shall incur any
individual liability for any act or failure to act pursuant to this Agreement.
3.11. Claims Procedure. The amount of benefit payments shall be
----------------
determined by the Administrator in accordance with the provisions of the Plan;
however, if the Participant (or an alternate payee, or in the event of the
Participant's death, his beneficiary) believes that he is not receiving benefits
which are due to him, he shall file a written claim with the Administrator. The
Administrator will, within 30 days after receipt of the claim, notify the
claimant of the decision, and if the claim is denied, will provide a written
statement of the
-14-
<PAGE>
reasons for such denial. Such notice will also inform the claimant of any action
that can be taken in order to have the claim approved (for example, taking a
physical examination in order to prove he is disabled) and explain the Plan's
claim review procedures. The claimant may request a review of the denied claim
by submitting to the Administrator a written request therefore within 60 days
after his receipt of the denial. The claimant (or his representative) shall be
entitled to review pertinent documents relating to the denial of his claim,
submit issues and comments in writing, and request a hearing by the
Administrator. The claim will then be reviewed by the Administrator at the
hearing at which the claimant and his representative may be present and the
claimant will receive written notice of the final decision of the Administrator
within 60 days after the Administrator's receipt of the request for review
unless the Administrator finds that circumstances require an extension of time
for review for up to an additional 60 days. The Administrator's notice to the
claimant of its final decision shall provide specific reasons for its decision
and shall make specific references to pertinent Plan provisions on which the
decision is based.
ARTICLE IV
EMPLOYEES ENTITLED TO PARTICIPATE
---------------------------------
4.01. Participation. Except as otherwise provided in an applicable
-------------
Appendix, any Employee shall become a Participant in the Plan on the January 1
coincident with or next following the later of the date he completes six months
of service or attains age 20 1/2.
4.02. Reemployment. A reemployed Participant who has not incurred a
------------
break in service shall be eligible to participate in the Plan as of his
reemployment date. A reemployed Participant who has incurred a break in service
shall be required to complete a 12 consecutive
-15-
<PAGE>
month period commencing on his reemployment date during which he completes at
least 1000 hours of service before being eligible to participate in the Plan. At
this point, his pre-break service, (commencing on his Reemployment Date) is to
be taken into account. "Reemployment Date" shall mean the first date on which a
former Employee is entitled to be credited with an hour of service following a
break in service.
ARTICLE V
BENEFITS
--------
5.01. Accrued Benefit. Except as otherwise set forth in the
---------------
applicable Appendix, a Participant's Accrued Benefit shall be 2.33 percent of
the Participant's monthly Compensation for each Year of Participation to a
maximum of 25 Years of Participation, which shall be payable in the form of a
single life annuity or an Actuarially Equivalent form of benefit.
5.02. Minimum Accrued Benefit. Notwithstanding any provision of the
-----------------------
Plan to the contrary, in no event shall a Participant's Accrued Benefit be less
than his accrued benefit determined as of December 31, 1988, under the terms of
the retirement plan which was sponsored by his Employer on such date and which
has been merged and consolidated with this Plan.
5.03. Limits on Benefits. The provisions of this Section 5.03 shall
------------------
be effective for limitation years beginning in 1987 and thereafter and shall be
construed to comply with section 415 of the Code. The limitation year shall be
the 12 month period coinciding with the Plan Year.
(a) (1) Notwithstanding anything in this Article to the
contrary, in no event shall the combined annual benefit payable
with respect to a Participant on a single life basis, under
this and any other defined benefit plan to which an Employer or
an Affiliated Employer contrib-
-16-
<PAGE>
utes, exceeds the lesser of (A) $90,000 (multiplied by the
appropriate Adjustment Factor) or (B) one hundred percent
(100%) of the Participant's average compensation during the
three consecutive calendar years as an active Participant in
which such compensation is the highest.
(2) (A) If the benefit is payable with respect to a
Participant who has been an active Participant for fewer
than 10 full years at the time that retirement benefits
begin, the dollar limitation described in Subparagraph
(a)(1)(A) of this Section shall be multiplied by a
fraction, the numerator of which is the number of the
Participant's years as an active Participant and the
denominator of which is 10.
(B) If the benefit is payable with respect to a
Participant who has fewer than 10 years of service, the
limitations described in Subparagraph (a)(1)(B), Paragraph
(a)(4) and Subparagraphs (b)(1)(A) and (b)(1)(B) of this
Section shall be multiplied by a fraction, the numerator
of which is the number of the Participant's years of
service and the denominator of which is 10.
(C) The limitations of Subparagraph (a)(2)(A) of this
Section shall be applied separately with respect to each
change in the benefit structure of any qualified defined
benefit plan of an Employer or Affiliated Employer, to the
extent prescribed by the Secretary of the Treasury.
(3) If a Participant's (or beneficiary's) benefit
commencement date is not the date on which the Participant
attains (or would have attained, if living) his Social
Security Retirement Age, the dollar limitation in
Subparagraphs (a)(1)(A) and (b)(1)(A) shall be adjusted as
follows:
(A) If the Participant's (or beneficiary's) benefit
commencement date occurs before the Participant attains
(or would have attained, if living) his Social Security
Retirement Age, but on or after the date he attains (or
would have attained, if living) age 62, the dollar
limitation shall be reduced by five-ninths percent (5/9 of
1%) for each of the first 36 months and five-twelfths
percent (5/12 of 1%) for each additional month by which
the Participant's (or beneficiary's) benefit commencement
date precedes the date he attains (or would have attained,
if living) his Social Security Retirement Age;
-17-
<PAGE>
(B) If the Participant's (or beneficiary's) benefit
commencement date occurs before the Participant attains
(or would have attained, if living) his Social Security
Retirement Age and before he attains (or would have
attained, if living) age 62, the dollar limitation shall
be reduced in accordance with Subsection (a)(3)(A) as if
retirement benefits were commencing to the Participant at
age 62, and this reduced dollar limitation shall be
further reduced to its Actuarial Equivalent beginning at
the Participant's (or beneficiary's) benefit commencement
date, using an interest rate equal to the greater of five
percent (5%) or the rate used to determine Actuarial
Equivalents under the Plan;
(C) If the Participant's (or beneficiary's) benefit
commencement date occurs after the date the Participant
attains (or would have attained, if living) his Social
Security Retirement Age, the dollar limitation shall be
adjusted to its Actuarial Equivalent beginning at the
Participant's (or beneficiary's) benefit commencement
date, using an interest rate equal to the lesser of five
percent (5%) or the rate used to determine Actuarial
Equivalents under the Plan.
(4) The annual benefit payable with respect to a
Participant may exceed 100% of his average compensation
for the highest three consecutive calendar years as an
active Participant (but not in excess of the amount
applicable under Subparagraph (a)(1)(A) of this Section,
adjusted as set forth in Paragraph (a)(3)), if (A) the
annual benefit does not exceed $10,000 for the current
Plan Year or for any prior Plan Year, and (B) the
Participant has at no time participated in a defined
contribution plan maintained by the Employer or an
Affiliated Employer.
(b) The limitation in the case of any Employee who is a Participant in
one or more defined contribution plans and one or more defined benefit plans
maintained by Park or any Affiliated Employer is exceeded if for any Plan Year
the sum of his defined benefit plan fraction and his defined contribution plan
fraction, as hereinafter defined, exceeds 1.0. In no case shall such limitation
be exceeded. If it is necessary to reduce benefits to prevent this limitation
from being exceeded, benefits under the defined benefit plan shall be reduced
first.
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<PAGE>
(1) Defined Benefit Plan Fraction. The defined benefit plan fraction
for any Plan Year shall be a fraction, the numerator of which is the
projected annual benefit of the Participant under all such defined
benefit plans (determined as of the close of the Plan Year), and the
denominator of which is the lesser of: (A) the product of 1.25,
multiplied by the maximum dollar amount allowed under Code section
415(b)(1)(A) (including any cost of living adjustments) for such year,
or (B) the product of 1.4, multiplied by the amount which may be taken
into account under Code section 415(b)(1)(B) for such year.
(2) Defined Contribution Plan Fraction. The defined contribution
plan fraction for any Plan Year shall mean a fraction, the numerator
of which is the sum of the annual additions to the Participant's
accounts as of the close of the Plan Year, and the denominator of
which is the sum of the lesser of the following amounts determined for
such Plan Year and for each prior year of service with the Employer:
(A) the product of 1.25, multiplied by the dollar limitation in effect
under Code section 415(c)(1)(A) for such year (increased for cost of
living adjustments pursuant to U.S. Treasury Regulations), or (B) the
product of 1.4, multiplied by the amount which may be taken into
account under Code section 415(c)(1)(B) with respect to such
individual under such Plan for such year.
(c) All defined benefit plans (whether or not terminated) of Park
and all Affiliated Employers shall be treated as one defined benefit plan for
purposes of applying the limitations of this Section 5.03. All defined
contribution plans of Park and all Affiliated Employers shall be treated as one
defined contribution plan for purposes of applying the limitations set forth in
this Section 5.03. Park and all Affiliated Employers shall be considered a
single employer for purposes of applying the limitations set forth above, except
that the definitions in sections 414(b) and (c) of the Code shall be modified as
provided in section 415(h) of the Code.
5.04. Late Retirement Benefits. (a) In the event a Participant
------------------------
defers his retirement beyond his normal retirement date, his benefits shall
commence on the earlier of his late retirement date or his required beginning
date under section 8.06(a). The Participant's benefit shall be the greater of
(1) the Actuarial Equivalent of his Accrued Benefit at his normal
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retirement date or (2) his Accrued Benefit calculated taking into account all of
his Years of Participation and Compensation, including Years of Participation
and Compensation credited after his normal retirement date.
(b) If a Participant begins to receive benefits prior to his late
retirement date pursuant to Section 8.06(a), his pension shall be determined
under Section 5.04(a) as of his annuity starting date. Such Participant's annual
pension shall be adjusted as of each January 1, up to and including the January
1 next following his separation from service. The adjustment shall include any
increase (but not any decrease) determined in accordance with the formula under
Section 5.01 to reflect the Participant's additional Years of Participation and
Compensation following his annuity starting date. In addition, the Actuarial
Equivalent of such adjustment shall be reduced (but not below zero) by the
Actuarial Equivalent of the benefits the Participant has received since his
annuity starting date; provided, however, that the amount, if any, of the
benefits paid to the Participant which exceeds the amount the Participant would
have received if distribution had been made in the normal form of benefits
described in Section 8.04 for such Participant shall be disregarded in
determining the Actuarial Equivalent of such benefits.
ARTICLE VI
RETIREMENT DATE
---------------
6.01. Normal Retirement. The normal retirement age shall be age 65
-----------------
and the normal retirement date shall be the first day of the month coincident
with or next following attainment of normal retirement age, except as otherwise
determined in accordance with the terms of the applicable Appendix.
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6.02 Early Retirement. A Participant shall be eligible to elect to
----------------
receive early retirement benefits at any time within ten (10) years of his
attainment of normal retirement age. A Participant who is eligible to receive
retirement benefits may elect to commence benefits by filing a written election
with the Administrator. His early retirement benefits shall commence as of the
first day of the month coincident with or next following the satisfaction of the
requirements of Article VIII for election of the form of benefits.
A Participant's benefit shall be reduced by 1/180 for each of the
first sixty months and 1/360 for each of the next sixty months and actuarially
reduced thereafter for each month by which his benefit commencement date
precedes his normal retirement date.
6.03. Late Retirement. A Participant may defer his retirement.
---------------
Subject to the requirements of Section 8.06(a), no retirement benefits shall be
paid to such Participant so long as he continues to work for the Employer. In
such cases, the Trustee shall take such action as may be necessary to postpone
income payments under any convertible life contracts or annuity contracts issued
on the Participant's life until the actual retirement of the Participant.
6.04. Disability Retirement. If a Participant becomes disabled, he
---------------------
may elect to commence benefits on the first day of the month coincident with or
next following the satisfaction of the requirements of Article VIII for election
of the form of benefits. A Participant's benefit shall be reduced in accordance
with the terms of Section 6.02 in the event his benefit commencement date
precedes his normal retirement date.
A Participant shall be disabled if he is unable to engage in any
substantial gainful activity by reason of a medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period
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of not less than 12 months. The determination of disability shall be made by the
Administrator, which may appoint a doctor either to review the medical evidence
submitted by the Participant or to examine the Participant to aide the
Administrator in determining whether the Participant is disabled.
ARTICLE VII
CONTRIBUTIONS
-------------
7.01. Contributions to the Fund. Except to the extent the applicable
-------------------------
Appendix requires a Participant to contribute a portion of the cost of his
benefits, the benefits provided under the Plan shall be financed exclusively by
contributions made from time to time to the Trustee by the Employer, and by the
Fund created thereby. Subject to the provisions of the applicable law, the
liability of the Employers under the Plan shall be limited to the contributions
determined by the Employers from time to time in accordance with the advice and
counsel of the actuary. The funding policy applicable to the Fund shall be
established by the Committee and shall be reviewed from time to time. All
contributions are conditioned on their deductibility for Federal income tax
purposes in the taxable year that includes the first day of the Plan Year for
which they are made.
7.02. Use of Contributions to the Fund. The contributions deposited
--------------------------------
under the terms of this Plan and any Participant contributions shall constitute
the Fund held for the benefit of Participants and their eligible beneficiaries
under and in accordance with this Plan. No part of the corpus or income of the
Fund shall be used for or diverted to purposes other than exclusively for the
benefit of such Participants and their eligible beneficiaries, and for necessary
administrative costs; provided, however, that in the event of the termination of
the Plan, and
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after all fixed and contingent liabilities have been satisfied, and upon
compliance with sections 4041 and 4044 of ERISA, any remaining funds
attributable to contributions by the Employers may revert to those companies;
and further provided that in the case of a contribution (a) made by an Employer
as a mistake of fact, or (b) which is conditioned upon the initial qualification
of the Plan under section 401(a) of the Code, or (c) for which a tax deduction
is disallowed, in whole or in part, by the Internal Revenue Service, the
Employer shall be entitled to a refund of said contribution within one year
after payment of a contribution made as a mistake of fact, or within one year of
the date on which the initial qualification of the Plan is denied by the
Internal Revenue Service, or within one year after disallowance of the tax
deduction, to the extent of such disallowance, as the case may be. All
contributions to Plan are conditioned upon the deductibility of the
Contributions.
7.03. Forfeitures. Forfeitures shall not be applied to increase the
-----------
benefits of any Participant, but shall reduce the contributions of the Employers
hereunder.
7.04. Sole Source of Benefits. The Fund shall be the sole source for
-----------------------
the provision of benefits under the Plan. Neither the Employers nor any other
person shall be liable therefor.
ARTICLE VIII
DISTRIBUTION OF BENEFITS
------------------------
8.01. Insurance. The benefits to which a Participant shall be
---------
entitled under the Plan may, at the discretion of the Administrator, be provided
through the purchase by the Trustee of convertible life insurance contracts or
annuities, within the limitations of section 401(a) of the Internal Revenue
Code. The contracts shall provide that the Trustee shall be the
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<PAGE>
sole owner thereof and shall have the exclusive power to exercise all rights,
privileges, options and elections thereunder, but the Trustee's exercise of the
ownership privileges shall be subject to the provisions of this Plan, including
the provision that the Participant shall name the beneficiary to whom the death
benefit shall be payable.
8.02. Conversion of Insurance. At or before retirement, the Trustee
-----------------------
shall convert the entire value of the life insurance contracts purchased on
behalf of a Participant into cash or to provide periodic income, so that no
portion of such value may be used to continue life insurance protection beyond
retirement.
8.03. Optional Forms. At or before retirement, a Participant may
--------------
elect in writing to have his Accrued Benefit under the Plan made payable to him
in any optional form of benefit specified below, each of which shall be the
Actuarial Equivalent of a single life annuity. The following optional forms of
benefit shall be available:
(a) lump sum;
(b) life annuity with 60, 120, or 180 months certain and guaranteed;
and
(c) joint and 50%, 75%, or 100% contingent annuity for the
Participant and his designated beneficiary.
Notwithstanding the above, the distribution to a Participant pursuant
to an election under this Section 8.03 shall be made in accordance with section
401(a)(9) of the Code and the regulations thereunder and a Participant's
election as to the form and timing of such distribution may be modified by the
Administrator to comply with any such requirements.
8.04. Normal Form of Benefit. The joint and survivor annuity shall
----------------------
be the normal form of benefit under the Plan, in which payments shall be made
automatically unless
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<PAGE>
the Participant elects an optional form of benefits. The following rules shall
apply to the election of forms of benefits.
(a) Unless the Participant otherwise elects in accordance with
Subsection (b), a joint and survivor annuity, with the survivor annuity to be
half of the annuity payable to the Participant during the joint lives of the
Participant and his spouse, will be provided to any Participant who is married
on the annuity starting date. A Participant who is not married on the annuity
starting date shall receive a single life annuity unless he elects otherwise,
and such annuity shall be deemed to be a joint and survivor annuity for purposes
of this Section 8.04. The joint and survivor annuity shall be the Actuarial
Equivalent of the Participant's Accrued Benefit as of the annuity starting date.
The joint and survivor annuity shall apply unless the Participant elects
otherwise prior to his annuity starting date.
(b) A Participant may elect to waive the joint and survivor annuity
form of benefit, or to revoke such election, at any time during the 90-day
period ending on the date payment of benefits is to commence. Notwithstanding
the foregoing, no election to waive the joint and survivor form of benefit shall
be effective unless the spouse of the Participant consents to the election in
the manner provided in Subsection (c).
(c) No election to waive the joint and survivor annuity form of
benefit under Subsection (a) or the qualified preretirement survivor annuity
form of benefit under Section 8.08 shall be effective unless:
(1) the Participant's spouse consents in writing to an election
which specifies the form of benefit selected by the Participant
and which may not be changed without the consent of the spouse
unless the Participant elects to have benefits paid in the form
of a joint and contingent annuity with his spouse, and such
consent acknowledges the effect of
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<PAGE>
such election and is witnessed by a Plan representative
designated by the Administrator or by a notary public, or
(2) the Participant establishes, to the satisfaction of a Plan
representative designated by the Administrator, that such
consent cannot be obtained because there is no spouse, because
the spouse cannot be located, the Participant is legally
separated or has been abandoned (within the meaning of local
law) and the Participant has a court order establishing such
separation or abandonment (unless a qualified domestic
relations order requires the spouse's consent) or because of
such other circumstances as may be prescribed in regulations
promulgated by the Secretary of the Treasury. The consent of a
Participant's spouse shall not be binding with respect to any
future spouse. If a Participant's spouse is legally incompetent
to give consent, the spouse's legal guardian may give consent.
(d) The Administrator shall provide to each Participant, within 90 to
30 days prior to the date payment of benefits is to commence (or such other
period as the Secretary of the Treasury may require), a written explanation of:
(1) the terms and conditions of the joint and survivor annuity,
(2) the Participant's right to make, and the effect of, an
election under Subsection (b) to waive the joint and survivor
annuity form of benefit.
(3) the rights of the Participant's spouse under Subsection
(c),
(4) the right to make, and the effect of, a revocation of an
election under Subsection (b),
(5) the eligibility conditions and other material features of
any optional forms of benefits, including information to
explain the relative values of the modes of payment, and
(6) the Participant's right to defer distribution, if any.
If the Administrator is unable to provide notice within at least 30
days prior to the date benefits are scheduled to commence, commencement of
benefits shall be delayed until the first day of the month on or next following
the date which is 30 days after the date the
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<PAGE>
Participant receives notice, and the benefit payable shall be the Actuarial
Equivalent of the benefit otherwise payable to reflect the delayed commencement.
8.05. Death Benefit. If a Participant who is receiving retirement
-------------
benefits dies, payments shall be continued to his beneficiary (or to his estate,
if he has not designated a beneficiary) or shall be discontinued upon his death
in accordance with the terms of the form of benefit being paid to the
Participant prior to his death.
8.06. Timing of Distributions. (a) Payment of benefits under this
-----------------------
Plan shall commence no later than the sixtieth (60th) day after the latest of
the last day of the Plan Year in which the Participant attains his normal
retirement age, the last day of the Plan Year in which occurs the 10th
anniversary of the year in which the Participant commenced participation, or the
last day of the Plan Year in which the Participant terminates service.
Notwithstanding the foregoing, in no event may any distribution of benefits to a
Participant who has attained age 70 1/2 commence later than the Participant's
required beginning date, nor may the Participant elect to defer such
commencement date, or elect a distribution option, in a manner that would result
in any death benefit hereunder being more than "incidental" within the meaning
of Treasury regulation (S) 1.401(a)(9)-2. A Participant's "required beginning
date" means April 1 of the calendar year following the calendar year in which
the Participant attains age 70 1/2.
(b) In the event of a Participant's death prior to the complete
distribution of his interest hereunder, any payment of death benefits hereunder
shall be subject to the following limitations:
(1) If distribution of the Participant's interest has not
begun, any amounts payable to the Participant's beneficiary
shall be distributed no later than the last day of the calendar
year in which the fifth anniversary of the Participant's death
occurs; provided, however, that if:
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<PAGE>
(A) any portion of the deceased Participant's interest is
payable to or for the benefit of a designated beneficiary;
(B) such portion will be distributed over the life of such
designated beneficiary (or over a period not extending beyond
the life expectancy of such beneficiary); and
(C) such distributions begin (1) not later than the last
day of the calendar year following the year in which the
Participant's death occurs for any designated beneficiary who
is not the Participant's surviving spouse, or (2) not later
than the date on which the Participant would have attained age
70 1/2 for a designated beneficiary who is the Participant's
surviving spouse; then such portion shall be treated as
satisfying this paragraph (1).
(2) If distribution of the Participant's interest has begun
under an optional method of payment over the life or life
expectancy of the Participant (or the joint lives or life
expectancies of the Participant and his designated
beneficiary), or over a period not exceeding the life or life
expectancy of the Participant (or the joint lives or life
expectancies of the Participant and his designated
beneficiary), any amounts payable to the Participant's
designated beneficiary may continue to be distributed under
such method; provided, however, that the remaining portion of
such interest shall be distributed at least as rapidly under
such method as on the date of the Participant's death.
(3) If any portion of the Participant's interest is payable to
or for the benefit of a designated beneficiary who is the
Participant's surviving spouse, and the surviving spouse dies
before the distributions to such surviving spouse begin, then
paragraph (1) shall be applied as if the surviving spouse were
the Participant.
(4) For purposes of this Subsection (b), the life expectancy of
a Participant and the Participant's spouse may be redetermined,
at the election of the Participant, in accordance with
regulations.
(5) For purposes of this Subsection (b), any amount paid to a
child shall be treated as if it had been paid to the surviving
spouse if such amount will become payable to the surviving
spouse upon such child reaching majority (or such other
designated event permitted by regulations).
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<PAGE>
(c) Except as otherwise provided in Sections 8.06(a) and (b) and 8.07,
in no event may a distribution be made to a Participant under any provision of
this Plan without the written consent of the Participant.
8.07. Cash-Out. (a) Notwithstanding any provision of the Plan to the
--------
contrary, if at the time of a Participant's separation from service, the
Actuarial Equivalent lump sum value of the Participant's vested Accrued Benefit
is (and at the time of any prior distribution has been) less than or equal to
$3,500, the Participant's vested Accrued Benefit shall be distributed to him in
one lump sum as soon as practicable after his separation from service. If the
value of the Participant's vested Accrued Benefit is zero, the Participant shall
be deemed to have received a lump sum distribution of his entire vested Accrued
Benefit as of the date of his separation from service. For purposes of
determining his Accrued Benefit, a Participant's years of service and Years of
Participation shall be cancelled when he receives or is deemed to have received
a lump sum distribution.
(b) Notwithstanding the foregoing, in the case of a surviving spouse
or a Participant whose benefit is payable in the form of a preretirement
survivor annuity or a joint and survivor annuity, no distribution may be made to
such surviving spouse or Participant in a form other than such annuity without
the consent of the Participant and his spouse (or where the Participant has
died, the surviving spouse), unless the Actuarial Equivalent lump sum value of
such joint and survivor annuity is less than or equal to $3,500 and payment of
benefits has not commenced.
8.08. Preretirement Survivor Annuity. (a) Anything in this Plan to
------------------------------
the contrary notwithstanding, in the event that a married Participant who has a
nonforfeitable right
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<PAGE>
to all or any portion of his Accrued Benefit dies before his annuity starting
date under the Plan, the surviving spouse of such Participant shall, except as
otherwise provided in Section 8.04(c), be entitled to receive a death benefit in
the form of a qualified preretirement survivor annuity, in accordance with this
Section 8.08. The term "qualified preretirement survivor annuity" means a
benefit providing an annuity for the life of the surviving spouse, ending with
the payment due on the last day of the month coincident with or preceding the
date of such surviving spouse's death, which is equal to the benefit the spouse
would have received if the Participant had elected to receive a joint and
survivor annuity commencing on the date the spouse elects to commence benefits
and died immediately thereafter.
(b) A surviving spouse who is entitled to a qualified preretirement
survivor annuity pursuant to Section 8.08(a) may commence receiving benefits
thereunder by making application to the Administrator which application shall be
dated and signed, requesting distribution commencing at no earlier than the date
that would have been the Participant's earliest early retirement date and no
later than the date that would have been the Participant's normal retirement
date or the first day of the month following the date of the Participant's death
if the Participant dies after his normal retirement date, but the filing of an
application shall not be prerequisite to a distribution from the Plan.
(c) Except as otherwise specified in an applicable Appendix, a
Participant may not waive the qualified preretirement survivor annuity.
8.09. Direct Rollover. Notwithstanding any other provision of the
---------------
Plan to the contrary, effective January 1, 1993, a Participant or beneficiary
who is entitled to receive an eligible rollover distribution (within the meaning
of section 402(f)(2)(A) of the Code) may
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<PAGE>
elect to have all or a portion of the distribution paid as a direct rollover in
accordance with the following rules:
(a) The person may elect to have a direct rollover to no more than one
individual retirement account or annuity or qualified plan under section 401(a)
or 403(a) of the Code that permits the acceptance of rollover contributions.
(b) The person may not elect a direct rollover if the total of his
eligible rollover distribution is less than $200, and he may not elect to have a
portion paid as a direct rollover with the balance paid directly to him if the
portion to be rolled over would be less than $500.
(c) An election must be made in writing on a form prescribed by the
Committee and must (1) designate the plan or account that is to receive the
direct rollover, (2) state that the plan or account is or is intended to be an
individual retirement account or annuity or a qualified plan under section
401(a) or 403(a) of the Code, whichever is applicable, (3) identify the trustee,
custodian or other person to whom the direct rollover is to be made, and (4)
provide such other information as the Committee may reasonably require to
complete the direct rollover.
(d) In the event the person's eligible rollover distribution is to be
made in a series of payments, the person's election to make or not make a direct
rollover shall continue in effect until revoked in writing with respect to
payments to be made subsequent to the revocation. There is no limit to the
number of times a person may change an election with respect to a series of
payments.
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<PAGE>
(e) If a person who is entitled to elect a direct rollover fails to
file an election either to make or not make the direct rollover within the
applicable election period, the person shall be deemed to have elected not to
make a direct rollover and his distribution shall be paid to him in accordance
with the rules of this Article VIII.
(f) An election to make or not make a direct rollover shall be made
within the period required under applicable Treasury regulations.
ARTICLE IX
TERMINATION OF EMPLOYMENT
-------------------------
9.01. Vesting. (a) A Participant shall be 100% vested in the
-------
portion of his Accrued Benefit attributable to his Employee Contributions at all
times. A Participant's Accrued Benefit attributable to his Employee
Contributions shall be determined by accumulating his Employee Contributions
with interest and converting such amount to an annual benefit commencing at
normal retirement using the interest rate which would be used to calculate an
Actuarially Equivalent lump sum value. For this purpose, Employee Contributions
shall be accumulated with interest at the rate of five (5) percent for all
periods prior to February 1, 1988, at the rate of 120 percent of the federal
mid-term rate as in effect under section 1274 of the Code for the first month of
each Plan Year that begins on or after February 1, 1988 through the
determination date and at the rate used to calculate an Actuarially Equivalent
lump sum thereafter.
(b) A Participant shall be vested in the portion of his Accrued
Benefit attributable to Employer Contributions upon the earliest of his
attainment of normal retirement
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<PAGE>
age, the date of his death prior to retirement, the date he is determined to be
disabled, or his completion of five (5) years of service, except as otherwise
set forth in the applicable Appendix.
(c) If a distribution is made to a Participant at a time when the
Participant is less than 100% vested in his Accrued Benefit, his years of
service and Years of Participation for purposes of benefit accrual cancelled
pursuant to Section 8.07 shall be restored upon his full repayment of the amount
of such distribution, plus interest from the date of distribution to the date
repayment at the rate described in section 411(c)(2)(C)(iii)(I) of the Code;
provided, however, that such repayment must be made before the earlier of (1)
five years after the date the Participant again becomes an Employee eligible to
participate in the Plan, or (2) the first date the Participant incurs five
consecutive breaks in service following the date of distribution. No repayment
shall be required, however, if the Participant was deemed to receive a zero
dollar cash-out under Section 8.07(a).
9.02. Forfeiture. The nonvested balance of the Participant's Accrued
----------
Benefit shall be forfeited in the year in which termination of employment occurs
and shall be used to reduce the Employer contributions.
ARTICLE X
POWERS AND DUTIES OF TRUSTEE
----------------------------
10.01. Powers and Duties. The Trustee shall have all powers necessary
-----------------
for the efficient performance of its duties. In amplification, but not in
limitation thereof, it shall have the powers and immunities and be subject to
the duties hereinafter set forth:
(a) It shall have the custody of all funds and other assets of the
Plan;
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<PAGE>
(b) It shall keep full records and accounts of the administration
of the Trust;
(c) It shall receive all contributions, and may invest and
reinvest the funds in such property, including bonds, notes, debentures or other
obligations, preferred and common stocks or other securities or such
corporations (including Park or any Affiliated Employer), as the Trustee may
from time to time in its uncontrolled discretion determine.
(d) It may employ, at a reasonable wage or compensation, such
agents, assistants, accountants and counsel, in its discretion, as may be
necessary for the efficient administration of this Trust;
(e) It shall be warranted in relying upon the existence of any fact
or state of facts represented to it in writing by the Administrator;
(f) The Trustee shall not be required to give any bond or other
security for the faithful performance of its duties hereunder, except as
required by law.
10.02. Accounting. The Trustee shall compute the earnings of losses
----------
and the market value of the Fund at the end of each fiscal year, and shall
certify the same to the Administrator on or before the 60th day following the
close of the fiscal year.
10.03. Term of Trustee.
---------------
(a) The Trustee or any individual serving as Trustee may resign
from the trusteeship by mailing to Park written notice of said resignation.
(b) Park may remove the Trustee or any individual serving as
Trustee by mailing written notice to the Trustee, signed by its President and
evidenced by a resolution of its Board of Directors. In the event of resignation
or removal of the Trustee, the Trustee shall transfer, assign, convey and
deliver the trust estate to the successor trustee, who shall, upon
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<PAGE>
acceptance of the trust, become vested with all of the estate, rights, powers,
duties and obligations of the predecessor trustee without further action, deed
or conveyance;
(c) Park shall have the right to appoint a successor Trustee in the
event of resignation or removal of the Trustee.
ARTICLE XI
AMENDMENT AND TERMINATION OF PLAN
---------------------------------
11.01. Amendment and Termination. Park intends to continue this Plan
-------------------------
without interruption and to make contributions thereto in accordance with its
terms. However, because of the uncertainties inherent in the operation of any
enterprise over a long period of time, Park expressly reserves the right, at its
sole discretion, to modify, amend or terminate the Plan, or any provision
thereof, by action of its Board of Directors. Each amendment to the Plan shall
be binding on each Employer, except to the extent that any amendment affects the
Appendix or Appendices of one or more, but not all Employers. No modification,
amendment or termination of the Plan will permit any part of the assets then
held in trust under the Plan to be used for or diverted to purposes other than
for the exclusive benefit of Employees of the Employer or their beneficiaries.
Each Employer reserves the right to terminate its participation in this Plan at
any time by action of its Board of Directors or other governing body, subject to
the consent of Park.
No amendment or modification shall deprive any Participant or
beneficiary of any rights which have vested in him prior to such amendment,
including the right to receive his Accrued Benefit determined as of the day
immediately prior to the date of adoption of the
-35-
<PAGE>
amendment in the form of any protected optional form of benefit within the
meaning of section 411(d)(6) of the Code and regulations thereunder.
11.02. Disposition on Termination. (a) Upon the termination or
--------------------------
partial termination of the Plan, each active Participant with respect to whom
the Plan is terminating (including each former active Participant who has not
received a distribution under Section 8.07 and has fewer than five consecutive
breaks in service) who would not have a nonforfeitable right to one hundred
percent (100%) of his Accrued Benefit if his employment terminated on the date
of the termination or partial termination of the Plan shall become fully vested
and shall have a nonforfeitable right to his Accrued Benefit. However, in the
event of such a termination, each Participant and beneficiary shall have
recourse toward satisfaction of his nonforfeitable right to a pension only from
Plan assets or from the Pension Benefit Guaranty Corporation, to the extent that
it guarantees benefits.
(b) The amount of the Fund shall be determined and, after providing
for expenses incident to termination and liquidation, the remaining assets
thereof shall be allocated for the purpose of paying benefits proportionately
among each of the priority groups described below in the following order of
precedence:
(1) to provide that portion of the Accrued Benefit, if any, of
each Participant that is derived from the Participant's
contributions to the Plan which were not mandatory
contributions;
(2) to provide that portion of the Accrued Benefit, if any, of
each Participant that is derived from the Participant's
mandatory contributions to the Plan
(3) to provide benefits to retired Participants and
beneficiaries who began receiving benefits at least three years
before the Plan's termination (including those benefits which
would have been received for at least three years if the
Participant had retired that long ago), based on
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Plan provisions in effect five years prior to termination
during which period such benefit would be the least, provided
that the lowest benefit in pay status during a three-year
period shall be considered the benefit in pay status for such
period:
(4) to provide all other Accrued Benefits guaranteed by Federal
law (or which would be so guaranteed but for section 4022(b)(5)
or 4022 B or ERISA);
(5) to provide all other vested Accrued Benefits (determined
before application of Subsection (a) of this Section);
(6) to provide all remaining non-vested Accrued Benefits.
(c) If the assets available for allocation under any priority group
(other than as provided in priority groups (5) and (6)) are insufficient to
satisfy in full the Accrued Benefits of all Participants and beneficiaries, the
assets shall be allocated pro rata among such Participants and beneficiaries on
the basis of the Actuarial Equivalent lump sum value of their respective
benefits (as of the termination date). The foregoing payments, and payments in
the event that assets are insufficient to pay the Accrued Benefits provided in
priority groups (5) and (6), will be paid in accordance with regulations
prescribed by the Pension Benefit Guaranty Corporation. The allocation of assets
upon termination of the Plan will be carried out in such a manner as to preserve
the qualification of the Plan under section 401(a) of the Code.
In the event that all Accrued Benefits described above have been fully
funded, any remaining funds attributable to Participant mandatory contributions
as determined in accordance with section 4044(d)(3) of ERISA shall be equitably
allocated among the participants and beneficiaries of such Participants
(including alternate payees, within the meaning of section 206(d)(3)(K) of
ERISA) who made such contributions. Any funds remaining after the allocation
-37-
<PAGE>
described in the preceding sentence shall revert to the Employers in such
proportion as Park shall determine.
11.03. Limitation on Benefits.
----------------------
(a) In the event of Plan termination, the benefit payable to any
Highly Compensated Employee or any highly compensated former employee (as
defined in section 414(q) of the Code and regulations thereunder) shall be
limited to a benefit that is nondiscriminatory under section 401(a)(4) of the
Code. If the payment of benefits is restricted in accordance with this
Subsection (a), assets in excess of the amount required to provide such
restricted benefits shall become a part of the assets available under Section
11.02 for allocation among Participants and their joint annuitants and
beneficiaries whose benefits are not restricted under this Subsection (a).
(b) The restrictions of this Subsection (b) shall apply prior to
termination of the Plan to any Participant who is a highly compensated employee
or a highly compensated former employee and who is one of the 25 highest paid
employees or former employees of a Participating Company for any Plan Year. The
annual payments to any such Participant shall be limited to an amount equal to
the payments that would have been made to the Participant under a single life
annuity that is the Actuarial Equivalent of the sum of the Participant's Accrued
Benefit and any other benefits under the Plan.
(c) The restrictions in Subsection (b) shall not apply:
(1) if, after the payment of benefits to such Participant, the
value of the Plan assets equals or exceeds 110 percent of the
value of the current liabilities (within the meaning of section
412(1)(7) of the Code); or
-38-
<PAGE>
(2) if the value of the benefit is less than one percent (1%)
of the value of current liabilities; or
(3) if the value of the benefit does not exceed the amount
described in section 411(a)(11)(A) of the Code.
11.04. Limitations. Notwithstanding anything herein to the contrary,
-----------
no payment shall be made to, nor any right created in nor any option given to
any person under the Plan which would violate any provision of any law or
regulation of any governmental authority. The Committee shall have power to
issue rulings and regulations, restricting, reducing or deferring payments to be
made hereunder so that such payments shall be reduced, deferred or otherwise
made to conform to the provisions of any such law or regulation and such laws
and regulations shall be deemed to be part of this Plan.
11.05. Merger and Consolidation. In the case of any merger or
------------------------
consolidation with, or transfer of assets or liabilities to, any other plan,
each Participant in the Plan shall be entitled to receive a benefit immediately
after the merger, consolidation, or transfer which is equal to or greater than
the benefit he would have been entitled to receive immediately before the
merger, consolidation, or transfer.
ARTICLE XII
MISCELLANEOUS
-------------
12.01. Employment Rights. Participation in the Plan shall not give
-----------------
any Employee the right to be retained in the service of the Employer, nor upon
dismissal, to have any right or interest in this Trust other than as herein
provided.
12.02. Headings. The headings and subheadings in the Plan are inserted
--------
for convenience of reference only and are to be ignored in any construction of
the provisions hereof.
-39-
<PAGE>
12.03. Gender. In construction of this Plan the masculine shall
------
include the feminine and the singular the plural in all cases where such
meanings would be appropriate.
12.04. Binding. This Plan shall be binding on all persons, including
-------
the beneficiaries, heirs, executors, administrators, distributors and assigns of
the individual parties hereto, and the successors and assigns of Park, the
Employer, and the Trustee.
12.05. Governing Law. This Plan shall be construed in accordance with
-------------
the laws of the State of New York, to the extent not preempted by Federal law.
12.06. Spendthrift Clause. Except as otherwise permitted by a
------------------
qualified domestic relations order pursuant to Code section 414(p), benefits
provided by this Plan cannot be assigned, alienated, or commuted.
12.07. Social Security. The retirement benefits provided by this Plan
---------------
are intended to be in addition to those available to Employees under Federal
Old-Age Benefits Statutes.
12.08. Expenses. Unless paid for from the Plan, the expense of
--------
administering the Trust, including the Trustee's compensation, shall be paid by
the Employer at such time and in such amounts as shall be fixed in a separate
agreement between the Employer and the Trustee.
12.9. Documents. A copy of this Plan shall be filed with the
---------
Administrator and it may be examined at any time by a Participant.
ARTICLE XIII
TOP-HEAVY RULES
---------------
13.01. Effective Date. The provisions of this Section shall take
--------------
effect as of the first day of any Plan Year for which the Plan is determined to
be top-heavy by application
-40-
<PAGE>
of section 416 of the Code. All other Plan provisions, to the extent
inconsistent with this Section, shall be superseded for any Plan Year in which
the Plan is determined to be top-heavy; however, all other Plan provisions not
inconsistent with this Section shall remain in full force and effect.
13.02. Definitions. For purposes of this Article XIII, the following
-----------
terms shall have the meaning specified below:
(a) Key Employee - means any employee of Park or any Affiliated
------------
Employer who, at any time during the Plan Year or any of the four (4) preceding
Plan Years, is:
(1) an officer of Park or any Affiliated Employer having an
annual Compensation greater than 50% of the amount in effect
under section 415(b)(1)(A) of the Code for any such Plan Year;
provided, however, that for purposes of this Article XIII, no
more than the lesser of (A) fifty (50) employees or (B) the
greater of three (3) employees or ten percent (10%) of the
employees shall be treated as officers:
(2) one of the ten (10) employees having annual Compensation
from Park and/or any Affiliated Employer of more than the
limitation in effect under section 415(c)(1)(A) of the Code and
owning (or considered as owning within the meaning of section
318 of the Code) the largest interests in Park or any
affiliated Employer;
(3) a five-percent (5%) owner of Park or any Affiliated
Employer; or
(4) a one-percent (1%) owner of Park or any Affiliated Employer
having an annual Compensation from Park and/or any Affiliated
Employer of more than $150,000.
For purposes of this Article XV, the terms "Employee" and "Key
Employee" include their Beneficiaries.
-41-
<PAGE>
(b) Non-Key Employee - means any employee (including a leased
----------------
employee) of Park or any Affiliated Employer who is not a Key Employee.
(c) Determination Date - means the last day of the preceding Plan
------------------
Year.
13.03. Top Heavy Status. For each Plan Year, the Plan shall be
----------------
determined to be top-heavy if, as of the Determination Date, the present value
of the cumulative accrued benefits of Key Employees under the Plan exceeds 60%
of the present value of the cumulative accrued benefits of all Employees under
the Plan, determined as if such individuals had voluntarily terminated service
on the most recent valuation date ending on or before the Determination Date.
Notwithstanding the foregoing:
(a) Any plan of Park and any Affiliated Employer which is qualified
under section 401 of the Code in which a Key Employee participates and any other
plan of Park and any Affiliated Employer which is qualified under section 401 of
the Code which enables any plan in which a Key Employee participates to meet the
requirements of sections 401(a)(4) or 410 of the Code (including any terminated
plan which, if it had not been terminated, would have been required to be
aggregated with the Plan hereunder) shall be aggregated in accordance with
section 416(g)(2) of the Code for determining whether the aggregation group
(consisting of all such plans required to be aggregated) is top-heavy. The
aggregation group shall be top-heavy if the sum (as of the Determination Date)
of:
(1) the present value of the cumulative accrued benefits of Key
Employees under all defined benefit plans included in such
group, and
(2) the aggregate of the accounts of Key Employees under all
defined benefit plans included in such group,
-42-
<PAGE>
exceeds 60% of a similar sum determined for all employees. If such required
aggregation group is top-heavy, the Plan, and each plan in the required
aggregation group, shall be top-heavy. If such required aggregation group is not
top-heavy, no plan in the group shall be top-heavy.
(b) Park may treat any Affiliated Employer plan which is qualified
under section 401 of the Code but which is not required to be included in the
aggregation group under subsection (a) as being part of such aggregation group
if such group would continue to meet the requirements of sections 401(a)(4) and
410 of the Code with such plan being taken into account.
(c) For purposes of determining the present value of the cumulative
accrued benefit for any employee, or the amount of the account of any Employee,
such present value or amount shall be increased by the aggregate distributions
made with respect to such employee under the plan during the five (5) year
period ending on the Determination Date.
(d) Except to the extent provided in regulations under section 416 of
the Code, any rollover contribution (or similar contribution) initiated by an
employee and made after December 31, 1983, to a plan shall not be taken into
account with respect to the transferee plan for purposes of determining whether
such plan is a top-heavy plan (or whether any aggregation group which includes
such plan is a top-heavy group).
(e) If any individual is a Non-Key Employee with respect to this Plan,
or any plan included in the aggregation group under subsection (a), for any Plan
Year, but such individual was a Key Employee with respect to any prior Plan
Year, any accrued benefit for such employee (and any account of such employee)
shall not be taken into account hereunder.
(f) If any individual has not performed any service for any Employer
maintaining this Plan or any plan included in the aggregation group under
subsection (a) at any
-43-
<PAGE>
time during the five (5) year period ending on the Determination Date, any
accrued benefit for such individual (and any account of such individual) shall
not be taken into account hereunder.
13.04. Minimum Benefits. (a) In any Plan Year for which the Plan is
----------------
determined to be top-heavy, each Participant who is a Non-Key Employee shall
have a minimum Accrued Benefit. Such Accrued Benefit shall be the lesser of:
(1) two percent of the Participant's "top-heavy compensation"
(as defined in Subsection (b)) multiplied by the Participant's
"years of top-heavy service" (as defined in Subsection(c)), or
(2) twenty percent (20%) of the Participant's top-heavy
compensation.
(b) Top-heavy compensations means, for any Participant for any Plan
Year, the average of his annual compensation as reported on IRS Form W-2 over
the period of five consecutive Plan years (or, if shorter, the longest period of
consecutive Plan Years during which the Participant was in the employ of any
Employer) yielding the highest average, disregarding (1) compensation for Plan
Years ending prior to January 1, 1984 and (2) compensation for Plan Years after
the close of the last Plan Year in which the Plan was top-heavy.
(c) Year of top-heavy service means, for any Participant, a Plan Year
in which he completes 1,000 or more hours of service, excluding (1) Plan Years
commencing prior to January 1, 1984 and (2) Plan Years in which the Plan is not
top heavy.
(d) Notwithstanding the foregoing, the minimum Accrued Benefit
required by this Section shall be reduced in accordance with regulations
promulgated under section 416(f) of the Code to take account of contributions or
benefits provided under any other plan of the Employer.
-44-
<PAGE>
13.05. Vesting. In any Plan Year for which the Plan is determined to
-------
be top-heavy, the vesting schedule in Section 9.01, shall not apply to any
Participant who completes an hour of service in such Plan Year and this Section
13.05 shall instead apply as follows:
The vested accrued benefit of any Participant shall be a percentage of
the total amount of his Employer contribution account determined as follows:
<TABLE>
<CAPTION>
Years of Service Percent Vested
---------------------------- ---------------
<S> <C>
Less than 2 0%
2 20
3 40
4 60
5 80
6 or more 100
</TABLE>
provided, however, that as of the first day of the Plan Year in which this
Section 13.05 applies, the vested percentage of such Participant's accrued
benefit shall not be less than the vested percentage of such Participant's
accrued benefit as of the last day of the preceding Plan Year, and provided
further, that if in any Plan Year this Section 13.05 becomes applicable or
ceases to be applicable, each Participant with 3 or more years of service shall
be permitted to irrevocably elect within a reasonable period whether his
benefits will be governed by the current vesting schedule or the prior vesting
schedule.
13.06 Limitations on Benefits. In the event that the Plan is
-----------------------
determined to be top-heavy for any Plan Year, the limitations of Section
5.03(b), shall be applied by substituting "1.0" for "1.25" for purposes of
determining the defined benefit and defined contribution plan fractions pursuant
to section 415(e) of the Code. Notwithstanding the foregoing, this Section
13.06 shall not apply in any Plan Year in which (a) the minimum Accrued Benefit
requirements of Section 13.04 are satisfied after substituting "3%" for "2%"
where it appears therein and
-45-
<PAGE>
substituting "30%" for "20%" where it appears therein, and (b) the Plan would
not be determined to be top-heavy under Section 13.03 if "90%" were substituted
for "60%" wherever it appears therein.
13.07. Cessation of Status. For any Plan Year in which the Plan
-------------------
ceases to be top-heavy after having been determined to be top-heavy for the
preceding Plan Year, all provisions of this Article XV shall cease to be
effective except as provided in Section 13.05 and, provided further, for any
Participant to whom the vesting schedule in Section 13.05 applied, the vested
percentage of such Participant's Accrued Benefit as of the first day of the Plan
Year in which the Plan ceases to be top-heavy shall not be less than the vested
percentage of such Participant's Accrued Benefit as of the last day of the
preceding Plan Year.
IN WITNESS WHEREOF, Park Communications, Inc. has caused these
presents to be signed in its corporate name by its President or its Vice
President, its corporate seal to be hereunto affixed, and attested by its
Secretary or its Assistant Secretary, and Wright M. Thomas and Randel N. Stair,
Trustees, have caused these presents to be signed all as of this 30th day of
December, 1994.
SEAL PARK COMMUNICATIONS, INC.
By: ___________________________________
Wright M. Thomas, President
Attested
____________________________
Assistant Secretary
-46-
<PAGE>
SEAL TRUSTEES
_____________________________
Wright M. Thomas
_____________________________
Randel N. Stair
-47-
<PAGE>
APPENDIX A
ROY H. PARK BROADCASTING OF THE TRI-CITIES, INC.
This Appendix to the Park Communications, Inc. Defined Benefit Plan
sets forth the terms of the Plan that are applicable solely to the employees of
Roy H. Park Broadcasting of the Tri-Cities, Inc. Section numbers in this
Appendix correspond to the related provisions in the Plan. The terms of this
Appendix supersede the terms of the Plan to the extent the same are
inconsistent.
DEFINITIONS
-----------
2.02. ACTUARIAL EQUIVALENT - For Plan Years beginning before January
--------------------
1, 1995, the greater of the result achieved by applying the 1971 GAM Blended
Mortality Table male at 6% interest or the interest rate prescribed by the
Pension Benefit Guaranty Corporation to value immediate or deferred annuities,
whichever is applicable, for plans terminating as of the first day of the Plan
Year in which the annuity starting date will occur.
2.12. EMPLOYER - Roy H. Park Broadcasting of the Tri-Cities, Inc.
--------
(WJHL).
2.13. EMPLOYMENT - For any short Plan Year, a year of service for
----------
purposes of vesting shall be a Plan Year during which an Employee has completed
a number of hours of service with the Employer or any Affiliated Employer equal
to 1,000 multiplied by a fraction, where the numerator of the fraction is the
number of months in the short Plan Year and the denominator is 12.
2.14. PLAN YEAR - The twelve consecutive month period beginning on
---------
each February 1 before February 1, 1992. There shall be a short Plan Year
commencing February 1, 1992 and ending December 31, 1992.
EMPLOYEES ENTITLED TO PARTICIPATE
---------------------------------
4.01. PARTICIPATION - For Plan Years beginning before January 1,
-------------
1995, but not thereafter, an Employee of the Employer covered by this Appendix
shall not become a Participant unless the Employee agrees to make Employee
Contributions. Employee Contributions shall be at the rate of $1.00 per month
for each $10.00 of an Employee's prospective monthly retirement benefit
projected to the Employee's normal retirement date, but not to exceed 6% of an
Employee's Compensation. For Plan Years beginning before January 1, 1993, an
Employee shall be eligible to become an Participant on the February 1 nearest
the date he completes six months of service and attains age 21. For Plan Years
1993 and 1994, an Employee
A-1
<PAGE>
shall become eligible to become a Participant on the January 1, nearest the date
he completes six months of service and attains age 21.
BENEFITS
--------
5.01. Accrued Benefits - For Plan Years beginning before January 1,
----------------
1995, and through January 31, 1995, a Participant's Accrued Benefit shall be
2.33 percent of his Final Average Compensation plus .6 percent of his Final
Average Compensation in excess of $833.00 multiplied by his Years of
Participation to a maximum of fifteen (15). For this purpose, a Participant's
Final Average Compensation shall be the average of his monthly Compensation
determined during the five consecutive years in which he was highest paid out of
the last ten Plan Years prior to his attainment of normal retirement age.
5.02. Minimum Accrued Benefit - For Plan Years beginning before
-----------------------
January 1, 1995, and through January 31, 1995, the minimum monthly benefit for a
Participant covered by this Appendix shall not be less than $30.00.
RETIREMENT DATE
---------------
6.01. Normal Retirement - Effective for Plan Years beginning before
-----------------
January 1, 1995, a Participant shall attain normal retirement age on the later
of his attaintment of age 65 or the fifth anniversary of the date he became a
Participant, and his normal retirement date shall be the first day of the month
coincident with or next following his attainment of normal retirement age.
DISTRIBUTION OF BENEFITS
------------------------
6.08. Preretirement Survivor Annuity - For Plan Years beginning
------------------------------
before January 1, 1995,
(a) In the event of a Participant's death prior to retirement, the
Participant's beneficiary or beneficiaries shall be entitled to a death benefit
equal to the qualified preretirement survivor annuity plus the proceeds of life
insurance policies purchased on the Participant's life; provided that any death
benefit in addition to the qualified preretirement survivor annuity shall be
reduced to the extent necessary so that the sum of such additional benefit and
the actuarial value of the qualified preretirement survivor annuity does not
exceed 100 times the Participant's anticipated monthly benefit.
(b) A Participant may designate a beneficiary to receive any death
benefit in excess of the qualified retirement survivor annuity.
(c) The Administrator shall provide to each Participant, within the
period beginning with the first day of the Plan Year in which such Participant
attains age 32 and ending with the close of the Plan Year preceding the Plan
Year in which he attains age 35, a
A-2
<PAGE>
written explanation with respect to the qualified preretirement survivor annuity
comparable to the explanation of the joint and survivor annuity required under
Section 8.04(d).
(d) A Participant may elect to waive the qualified preretirement
survivor annuity form of benefit, or to revoke such election, at any time on or
after the earlier of (i) the first day of the Plan Year in which the Participant
attains age 35, or (ii) the date on which the Participant separates from service
(but only with respect to benefits accrued on or before such separation from
service). Notwithstanding the foregoing, no election to waive the qualified
preretirement survivor annuity form of benefit shall be effective unless the
spouse of the Participant consents to the election in the manner provided in
Section 8.04(c).
(e) The Trustee shall purchase life insurance in amounts designed to
provide the excess death benefit described in subsection (a).
TERMINATION OF EMPLOYMENT
-------------------------
9.01. Vesting (b) For Plan Years beginning before January 1, 1995, a
Participant shall become vested in his Accrued Benefits attributable to Employer
contributions in accordance with the following schedule.
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
3 20
4 40
5 60
6 80
7 or more 100
</TABLE>
Notwithstanding the foregoing, a Participant shall be 100 percent vested upon
his attainment of normal retirement age or the date he is determined to be
disabled.
For Plan Years beginning on or after January 1, 1995, the vested
percentage of any Participant who has at last three years of service on December
31, 1994, shall be the greater of his vested percentage under the foregoing
schedule or his vested percentage under Section 9.01 of the Plan without regard
to this Appendix.
IN WITNESS WHEREOF, Roy H. Park Broadcasting of the Tri-Cities, Inc.
has caused these presents to be signed in its corporate name by its President or
its Vice President, its corporate seal to be hereunto affixed, and attested by
its Secretary or its Assistant Secretary and Park Communications, Inc. has
approved the adoption of the Plan by Roy H. Park Broadcasting of the Tri-Cities,
Inc. and caused these presents to be signed in its corporate name by its
President or its Vice President, and its corporate seal to be hereunto affixed,
and attested by its Secretary or its Assistant Secretary, all as of this 30th
day of December, 1994.
A-3
<PAGE>
SEAL ROY H. PARK BROADCASTING OF THE
TRI-CITIES INC.
By:______________________________________
Attested
______________________________
Asst. Secretary
SEAL PARK COMMUNICATIONS, INC.
By:______________________________________
Attested
______________________________
A-4
<PAGE>
Amendment Number 3
To
Roy H. Park Broadcasting of Roanoke, Inc. Retirement Plan
WHEREAS, Roy H. Park Broadcasting of Roanoke, Inc. (the "Company")
adopted the Roy H. Park Broadcasting of Roanoke, Inc. Retirement Plan (the
"Plan"), effective as of March 1, 1962;
WHEREAS, the Tax Reform Act of 1986 amended numerous provisions of the
Internal Revenue Code concerning qualified plans; and
WHEREAS, the Company wishes to reserve the option to amend the Plan to
comply with such changes in a manner consistent with applicable law and business
objectives;
NOW, THEREFORE, the Plan is amended, in accordance with IRS Notice 88-
131, to freeze benefit accruals for highly compensated employees until such time
as the Plan is amended to comply with the tax law changes described above, and
the Plan shall be amended as follows:
1. A new section 26.19 is added to the Plan to read as follows:
"26.19 Notwithstanding any other contrary provision of the Plan, in
calculating the accrued benefit (including the right to any optional
benefit provided under the Plan) of any Plan Participant who is a
highly compensated employee within the meaning of section 414(q) of
the Internal Revenue Code, such highly compensated employee shall
accrue no additional benefit under the Plan on or after the date this
Plan is adopted by the Company to the extent that such additional
benefit accrual exceeds the benefit which would otherwise accrue in
accordance with the terms of the Plan as subsequently amended to
comply with those qualification requirements described in Income Tax
Regulations section 1.401(b)1(b)(2) (TRA '86).
<PAGE>
Amendment Number 3
To
Roy H. Park Broadcasting of The Tri-Cities, Inc. Retirement Plan
WHEREAS, Roy H. Park Broadcasting of the Tri-Cities, Inc. (the
"Company") adopted the Roy H. Park Broadcasting of the Tri-Cities, Inc.
Retirement Plan (the "Plan"), effective as of February 1, 1961;
WHEREAS, the Tax Reform Act of 1986 amended numerous provisions of the
Internal Revenue Code concerning qualified plans; and
WHEREAS, the Company wishes to reserve the option to amend the Plan to
comply with such changes in a manner consistent with applicable law and business
objectives;
NOW, THEREFORE, the Plan is amended, in accordance with IRS Notice 88-
131, to freeze benefit accruals for highly compensated employees until such time
as the Plan is amended to comply with the tax law changes described above, and
the Plan shall be amended as follows:
1. A new section 17.05 is added to the Plan to read as follows:
"17.05 Notwithstanding any other contrary provision of the Plan, in
calculating the accrued benefit (including the right to any optional
benefit provided under the Plan) of any Plan Participant who is a
highly compensated employee within the meaning of section 414(q) of
the Internal Revenue Code, such highly compensated employee shall
accrue no additional benefit under the Plan on or after the date this
Plan is adopted by the Company to the extent that such additional
benefit accrual exceeds the benefit which would otherwise accrue in
accordance with the terms of the Plan as subsequently amended to
comply with those qualification requirements described in Income Tax
Regulations section 1.401(b)1(b)(2) (TRA '86).
<PAGE>
APPENDIX B
ROY H. PARK BROADCASTING OF ROANOKE, INC.
This Appendix to the Park Communications, Inc. Defined Benefit Plan
sets forth the terms of the Plan that are applicable solely to the employees of
Roy H. Park Broadcasting of Roanoke, Inc. Section numbers in this Appendix
correspond to the related provision in the Plan. The terms of this Appendix
supersede the terms of the Plan to the extent the same are inconsistent.
DEFINITIONS
-----------
2.02. ACTUARIAL EQUIVALENT - For Plan Years beginning before January
--------------------
1, 1995, the greater of the result achieved by applying the 1971 GAM Blended
Mortality Table male at 5% interest or the interest rate prescribed by the
Pension Benefit Guaranty Corporation to value immediate or deferred annuities,
whichever is applicable, for plans terminating as of the first day of the Plan
Year in which the annuity starting date will occur.
2.12. EMPLOYER - Roy H. Park Broadcasting of Roanoke, Inc.
--------
2.14. EMPLOYMENT - For purposes of benefit accrual for all Plan Years
----------
beginning before January 1, 1995, (a) a Participant shall earn a full year of
service upon completion of 2,000 hours of service, and (b) a Participant shall
earn a partial year of service in any year in which he completes at least 1,000
hours of service but less than 2,000 hours of service with the credit for the
partial year determined by computing a fraction where the numerator is the
number of hours of service actually completed during the year and the
denominator is 2,000. In addition, for any short Plan Year, for purposes of
vesting and benefit accrual, the hours of service required for credit (including
partial credit in the case of benefit accrual) shall be reduced proportionately.
2.23. PLAN YEAR - The twelve consecutive month period beginning on
---------
each March 1 before March 1, 1992. There shall be a short Plan Year commencing
March 1, 1992 and ending December 31,
EMPLOYEE ENTITLED TO PARTICIPATE
--------------------------------
4.01. Participation - For Plan Years beginning before January 1,
-------------
1993, an Employee shall become a Participant on the March 1 coincident with or
next following the later of his completion of six months of service or
attainment of age 20 1/2.
B-1
<PAGE>
BENEFITS
--------
5.01. Accrued Benefit - For Plan Years beginning before January 1,
---------------
1995 and through January 31, 1995, a Participant's Accrued Benefit payable
monthly shall be 2 percent of his Earnings per year of service to a maximum of
25 years of service. For this purpose, a Participant's Earnings shall mean the
sum of (a) his base monthly salary, excluding any bonus, overtime or other extra
remuneration, plus (b) one-twelfth of the total commission, if any, paid to the
Participant during the preceding calendar year.
Notwithstanding any provision of the Plan to the contrary, effective
with respect to all Plan Years, in the event a Participant who is an Highly
Compensated Employee is transferred from employment with the Employer to
employment with Park or another Affiliated Employer, the Participant's
Compensation used to calculate his Accrued Benefit shall not exceed the
Compensation the Participant would have earned if he had remained in employment
with the Employer based on a salary scale of five percent.
RETIREMENT DATE
---------------
6.02. Early Retirement. For Plan Years beginning before January 1,
----------------
1995, a Participant shall be eligible for early retirement only on and after his
attainment of age 55 and only on and after completion of 15 years of service
(for purposes of vesting) if he first became a Participant prior to March 1,
1965, otherwise, after completion of 20 years of service (for purposes of
vesting). The Participant's early retirement benefit shall be the Actuarial
Equivalent of his Accrued Benefit at normal retirement age.
IN WITNESS WHEREOF, Roy H. Park Broadcasting of Roanoke, Inc. has
caused these presents to be signed in its corporate name by its President or its
Vice President, its corporate seal to be hereunto affixed, and attested by its
Secretary or its Assistant Secretary and Park Communications, Inc. has approved
the adoption of the Plan by Roy H. Park Broadcasting of Roanoke, Inc. and caused
these presents to be signed in its corporate seal to be hereunto affixed, and
attested by its Secretary or its Assistant Secretary, all as of this 30th day of
December, 1994.
ROY H. PARK BROADCASTING OF ROANOKE INC.
By:_____________________________________
B-2
<PAGE>
Attested
____________________________
Asst. Secretary
SEAL PARK COMMUNICATIONS, INC.
By:______________________________________
Attested
____________________________
B-3
<PAGE>
APPENDIX C
ACTUARIAL EQUIVALENTS
Except as otherwise set forth in an applicable appendix, Actuarial
Equivalents under the Plan shall be determined using following assumptions:
Mortality - 1971 GAM male
Interest - 6%
Provided, that the Actuarial Equivalent value of a lump sum
distribution shall be determined on the basis of the foregoing interest
assumption or the Pension Benefit Guaranty Corporation interest rate used for
valuing immediate or deferred annuities, whichever is applicable, for plans
terminating as of the first day of the Plan Year in which the annuity starting
date occurs whichever produces the greater result.
C-1
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I INTRODUCTION.................................... 2
ARTICLE II DEFINITIONS..................................... 3
2.01. Accrued Benefit................................. 3
2.02. Actuarial Equivalent or Actuarially Equivalent.. 3
2.03. Adjustment Factor............................... 3
2.04. Administrator................................... 3
2.05. Affiliated Employer............................. 3
2.06. Anniversary Date................................ 3
2.07. Appendix........................................ 4
2.08. Code............................................ 4
2.09. Compensation.................................... 4
2.10. Employee........................................ 5
2.11. Employee Contributions.......................... 5
2.12. Employer........................................ 5
2.13. Employment...................................... 5
2.14. ERISA........................................... 8
2.15. Family Member................................... 8
2.16. Fund............................................ 8
2.17. Highly Compensated Employees.................... 8
2.18. Inactive Participant............................ 8
2.19. Nonhighly Compensated Employee.................. 8
2.20. Park............................................ 8
2.21. Participant..................................... 8
2.22. Plan............................................ 9
2.23. Plan Year....................................... 9
2.24. Social Security Retirement Age.................. 9
2.25. Trustee......................................... 9
2.26. Year of Participation........................... 9
ARTICLE III ADMINISTRATION OF PLAN.......................... 9
3.01. Powers and Duties of the Administrator.......... 9
3.02. Notices......................................... 12
3.03. Accounts and Records............................ 12
3.04. Compliance with Applicable Laws................. 12
3.05. Liability....................................... 13
3.06. Indemnification................................. 13
3.07. Rules and Decisions............................. 13
3.08. Authorization of Benefit Payments............... 14
3.09. Application and Forms for Benefits.............. 14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
3.10. Liability....................................... 14
3.11. Claims Procedure................................ 14
ARTICLE IV EMPLOYEES ENTITLED TO PARTICIPATE............... 15
4.01. Participation................................... 15
4.02. Reemployment.................................... 15
ARTICLE V BENEFITS........................................ 16
5.01. Accrued Benefit................................. 16
5.02. Minimum Accrued Benefit......................... 16
5.03. Limits on Benefits.............................. 16
5.04. Late Retirement Benefits........................ 19
ARTICLE VI RETIREMENT DATE................................. 20
6.01. Normal Retirement............................... 20
6.02. Early Retirement................................ 21
6.03. Late Retirement................................. 21
6.04. Disability Retirement........................... 21
ARTICLE VII CONTRIBUTIONS................................... 22
7.01. Contributions to the Fund....................... 22
7.02. Use of Contributions to the Fund................ 22
7.03. Forfeitures..................................... 23
7.04. Sole Source of Benefits......................... 23
ARTICLE VIII DISTRIBUTION OF BENEFITS........................ 23
8.01. Insurance....................................... 23
8.02. Conversion of Insurance......................... 24
8.03. Optional Forms.................................. 24
8.04. Normal Form of Benefit.......................... 24
8.05. Death Benefit................................... 27
8.06. Timing of Distributions......................... 27
8.07. Cash-Out........................................ 29
8.08. Preretirement Survivor Annuity.................. 29
8.09. Direct Rollover................................. 30
ARTICLE IX TERMINATION OF EMPLOYMENT....................... 32
9.01. Vesting......................................... 32
9.02. Forfeiture...................................... 33
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE X POWERS AND DUTIES OF TRUSTEE.................... 33
10.01. Powers and Duties............................... 33
10.02. Accounting...................................... 34
10.03. Term of Trustee................................. 34
ARTICLE XI AMENDMENT AND TERMINATION OF PLAN............... 35
11.01. Amendment and Termination....................... 35
11.02. Disposition on Termination...................... 36
11.03. Limitation on Benefits.......................... 38
11.04. Limitations..................................... 39
11.05. Merger and Consolidation........................ 39
ARTICLE XII MISCELLANEOUS................................... 39
12.01. Employment Rights............................... 39
12.02 Headings........................................ 39
12.03. Gender.......................................... 40
12.04. Binding......................................... 40
12.05. Governing Law................................... 40
12.06. Spendthrift Clause.............................. 40
12.07. Social Security................................. 40
12.08. Expenses........................................ 40
12.09. Documents....................................... 40
ARTICLE XIII TOP-HEAVY RULES................................. 40
13.01. Effective Date.................................. 40
13.02. Definitions..................................... 41
13.03. Top Heavy Status................................ 42
13.04. Minimum Benefits................................ 44
13.05. Vesting......................................... 45
13.06. Limitations on Benefits......................... 45
13.07. Cessation of Status............................. 46
APPENDIX A.................................................... A-1
APPENDIX B.................................................... B-1
APPENDIX C.................................................... C-1
</TABLE>
<PAGE>
Exhibit 10.22
DESCRIPTION OF
SUPPLEMENTAL RETIREMENT BENEFIT
TO W. RANDALL ODIL
The Company has determined to secure at least a portion of the
additional retirement benefit that Mr. Odil expects to earn if he were to
continue in employment with the Company until he reached age 65. The following
are three alternatives for providing a supplemental retirement benefit to Mr.
Odil.
Alternative I. Purchase an annuity to provide annual payments of
-------------
approximately $37,000 commencing at age 65. The $37,000 annual payment amount
assumes the Company will be sold in 1995 and uses IRS tables to approximate an
insurance company's annuity purchase rates. The actual amount of the annuity
would depend on the amount that could be applied to purchase it and the annuity
purchase rates the Company could obtain. The amount applied to purchase the
annuity would be limited to $149,000 if the Company is sold in 1994 or
approximately $190,000 if it is sold in 1995 (this assumes a $40,000 bonus in
1994). Those are the maximum amounts that, taking into account his retention
bonus and severance benefits, could be paid to Mr. Odil without triggering the
"golden parachute" rules under the Internal Revenue Code.
Mr. Odil would be subject to federal and state income tax and
employment taxes on the single premium at the time the annuity was purchased.
It would be his responsibility to bear the expense of those taxes, although the
Company would have to withhold federal taxes from other funds in order to obtain
a deduction. Mr. Odil would have basis in the annuity contract, i.e., a portion
of each annuity payment would not be taxable to him because it would be
considered a return of his previously taxed investment in the contract.
Alternative II. Purchase an annuity to provide annual payments of
--------------
approximately $20,000 commencing at age 65 and gross-up Mr. Odil for taxes on
the annuity purchase price. The total of the annuity purchase price and the
gross-up amount would again be the maximum that would not result in excise tax
under the golden parachute rules, i.e., $149,000 for a 1994 sale or $190,000 for
a 1995 sale. Once again, Mr. Odil would have basis in the annuity contract, and
a portion of each annuity payment would not be taxable to him. In contrast to
alternative I, however, the Company would not need to withhold the taxes on the
annuity purchase price from other funds.
Alternative III. Pay Mr. Odil a lump sum equal to the maximum amount
---------------
which, when combined with his retention bonus and severance benefits, would not
trigger the golden parachute rules. Under this alternative, Mr. Odil would
again be responsible for payment of tax on the amount received but would also be
free to invest the net amount in whatever manner he chose in order to save for
retirement.
<PAGE>
Exhibit 10.23
PARK
C O M M U N I C A T I O N S, I N C.
1700 Vine Center Office Tower
333 West Vine Street
December 21, 1995 Lexington, KY 40507
Telephone (606) 252-7275
Wright M. Thomas
President
Fax (606) 226-9609
Mr. Rick Prusator
Park Communications, Inc.
333 W. Vine Street, Suite 1700
Lexington, Kentucky 40507
Dear Rick:
As you are aware, the company has decided to sell its radio stations for reasons
we fully discussed on Monday. In your role as Vice-President of Radio, you have
made significant improvement in our Radio Division in slightly more than four
years. The Division has more than doubled its revenue during that period and
will generate over $4 million in operating cash flow in 1995 as a direct result
of your focused energy and leadership skills.
To recognize your past contributions to the company and to induce you to stay
with the company until an orderly disposition is completed, we have created a
package of benefits for you. The package of benefits includes:
Payment of your base salary of $139,000 per year through December, 1997,
payable semi-monthly. The salary payment is not contingent upon your being
employed by Park nor will it stop when you obtain other employment during
the coming two year period. During this two year period, you will continue
to be covered by the company health insurance program at the current
contribution level until you secure other employment.
Purchase of your home at 5208 Keene Road, Lexington, KY at whatever cost
you have in it. The company will pay cash for your home upon thirty days
notice from you of your intention to sell.
A $250,000 bonus payable in cash upon the completion of the disposition of
the radio stations owned by the company. Disposition will occur no later
than the date that all nine stations have been sold and may occur earlier,
if in my judgment, that disposition is substantially completed. The timing
of this bonus is to provide you with as much flexibility as possible in
planning your future and to allow you to disengage from the company as soon
as it is deemed practical. It is our expectation that substantial
disposition should occur by the late spring of 1996, but that date is not
precisely determinable at this time.
<PAGE>
Mr. Rick Prusator
December 21, 1995
Page Two
You will not be entitled to any severance benefits if you retire or resign
before substantial completion of the disposition or if your employment is
terminated for cause. Termination of employment for cause includes termination
for insubordination, violation of law or the employer's policy, any act that is
detrimental to the employer, unethical or disorderly conduct or use of drugs or
alcohol on the company's property.
Sincerely,
Wright M. Thomas
WMT:js
<PAGE>
Exhibit 10.24
PARK
C O M M U N I C A T I O N S, I N C.
Terrace Hill
P.O. Box 550
Ithaca, N.Y. 14851
Phone (607) 272-9020
Wright M. Thomas
President
June 7, 1995
Mr. Robert J. Rossi
104 Lendl Court
Cary, North Carolina 27511
Dear Bob:
It was good visiting with you today. This will confirm our offer of a
consultancy/non-competition agreement for you for twelve months after leaving
active employment with the company, whether it is June 30 or July 31.
You agree to provide fifty full days of consulting services during the twelve
month period. We will try to schedule your days as far in advance as is
possible, taking into account your personal schedule and other business
commitments you may have. Because we both anticipate that the need for your
consulting services will be greater in the latter part of this period, we
mutually agree that the payment for your consulting services will commence on
January 15, 1996, with subsequent payments to be made on a semi-monthly basis
until the end of the consulting period. You will be paid additional
compensation at the rate of $1,000 per day (to be paid in the same month worked)
for all days worked in excess of fifty days of consulting during the twelve
month period.
You agree not to consult for any entity which would compete with any of the Park
Communications, Inc. existing properties during this period of time.
<PAGE>
Mr. Robert J. Rossi -2- June 7, 1995
The company will pay all of your out-of-pocket expenses incurred in your
consulting activities for us, or, in lieu thereof, will provide transportation
and lodging we have arranged on a trade-out basis, which will be suitable to
your standard of living.
If you are in agreement with this arrangement, please sign both copies in the
space provided below and return one copy to me for our files.
Sincerely,
Wright M. Thomas
WMT:eb
Agreed & accepted:
--------------------------------
Robert J. Rossi
29 June 95
--------------------------------
(date)
<PAGE>
EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
PRO FORMA
--------------------------------------
YEAR ENDED TWELVE MONTHS
DECEMBER 31, 1995 ENDED
------------------------ MARCH 31,
ACQUISITION TRANSACTIONS 1996
----------- ------------ -------------
<S> <C> <C> <C>
PARK COMMUNICATIONS, INC. AND SUBSIDIAR-
IES
Earnings:
Income (loss) from continuing operations
before income taxes.................... (34,000) (29,273) (31,405)
Fixed charges computed below............ 65,804 61,077 61,077
------- ------- -------
31,804 31,804 29,672
Fixed Charges:
Interest and amortization of debt ex-
pense.................................. 65,689 60,962 60,962
Interest factor related to rent expense. 115 115 115
------- ------- -------
65,804 61,077 61,077
Deficiency of earnings to cover fixed
charges................................ (34,000) (29,273) (31,405)
PARK BROADCASTING, INC. AND SUBSIDIARIES
Earnings:
Income (loss) from continuing operations
before income taxes.................... (25,683) (14,621) (16,097)
Fixed charges computed below............ 40,931 29,869 29,869
------- ------- -------
15,248 15,248 13,772
Fixed Charges:
Interest and amortization of debt ex-
pense.................................. 40,856 29,794 29,794
Interest factor related to rent expense. 75 75 75
------- ------- -------
40,931 29,869 29,869
Deficiency of earnings to cover fixed
charges................................ (25,683) (14,621) (16,097)
PARK NEWSPAPERS, INC. AND SUBSIDIARIES
Earnings:
Income (loss) from continuing operations
before income taxes.................... (9,972) (4,306) (5,228)
Fixed charges computed below............ 24,831 19,165 19,165
------- ------- -------
14,859 14,859 13,937
Fixed Charges:
Interest and amortization of debt ex-
pense.................................. 24,810 19,144 19,144
Interest factor related to rent expense. 21 21 21
------- ------- -------
24,831 19,165 19,165
Deficiency of earnings to cover fixed
charges................................ (9,972) (4,306) (5,228)
</TABLE>
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF PARK COMMUNICATIONS, INC.
================================================================================
State of Incorporation
================================================================================
I. PARK COMMUNICATIONS, INC. Delaware
- --------------------------------------------------------------------------------
A. Park Broadcasting, Inc. Delaware
- --------------------------------------------------------------------------------
1. Birmingham Television Corporation Alabama
- --------------------------------------------------------------------------------
2. Roy H. Park Broadcasting, Inc. Delaware
- --------------------------------------------------------------------------------
3. Park Broadcasting of Kentucky, Inc. Kentucky
- --------------------------------------------------------------------------------
4. Park Broadcasting of Louisiana, Inc. Louisiana
- --------------------------------------------------------------------------------
5. Roy H. Park Broadcasting of Roanoke, Inc. Virginia
- --------------------------------------------------------------------------------
6. Roy H. Park Broadcasting of Tennessee, Inc. Tennessee
- --------------------------------------------------------------------------------
7. Roy H. Park Broadcasting of Tri-Cities, Inc. Tennessee
- --------------------------------------------------------------------------------
8. Roy H. Park Broadcasting of Utica-Rome, Inc. New York
- --------------------------------------------------------------------------------
9. Roy H. Park Broadcasting of Virginia, Inc. Virginia
- --------------------------------------------------------------------------------
10. Park of Montgomery I, Inc. Alabama
- --------------------------------------------------------------------------------
11. Park of Montgomery II, Inc. Alabama
- --------------------------------------------------------------------------------
12. Park Broadcasting of Florida, Inc. Florida
- --------------------------------------------------------------------------------
13. Park Radio of Greater New York, Inc. New Jersey
- --------------------------------------------------------------------------------
14. Park Broadcasting of Iowa, Inc. Iowa
- --------------------------------------------------------------------------------
a. Park Radio of Iowa, Inc. Iowa
- --------------------------------------------------------------------------------
15. Roy H. Park Broadcasting of Midwest, Inc. South Dakota
- --------------------------------------------------------------------------------
16. Roy H. Park Broadcasting of Minnesota, Inc. Minnesota
- --------------------------------------------------------------------------------
17. Roy H. Park Broadcasting of Lake Country, Inc. Minnesota
- --------------------------------------------------------------------------------
18. Roy H. Park Broadcasting of Oregon, Inc. Oregon
- --------------------------------------------------------------------------------
19. Contemporary FM, Inc. Oregon
- --------------------------------------------------------------------------------
20. Roy H. Park Radio, Inc. North Carolina
- --------------------------------------------------------------------------------
21. Roy H. Park FM Broadcasting of East Carolina, Inc. North Carolina
- --------------------------------------------------------------------------------
22. Roy H. Park Broadcasting of Syracuse, Inc. New York
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
State of Incorporation
================================================================================
23. Roy H. Park Broadcasting of Washington, Inc. Washington
- --------------------------------------------------------------------------------
B. Park Newspapers Delaware
- --------------------------------------------------------------------------------
1. Park Newspapers of Clark County, Inc. Indiana
- --------------------------------------------------------------------------------
a. The News & Journal, Inc. Indiana
- --------------------------------------------------------------------------------
2. Park Newspapers of Clinton, Inc. North Carolina
- --------------------------------------------------------------------------------
a. Clinton Newspapers, Inc. North Carolina
- --------------------------------------------------------------------------------
3. Park Newspapers of Concord, Inc. North Carolina
- --------------------------------------------------------------------------------
a. The Concord Tribune, Inc. North Carolina
- --------------------------------------------------------------------------------
4. Park Newspapers of Creek, Inc. Delaware
- --------------------------------------------------------------------------------
a. Park Newspapers of Sapulpa, Inc. Oklahoma
- --------------------------------------------------------------------------------
5. Park Newspapers of the Cumberlands, Inc. Kentucky
- --------------------------------------------------------------------------------
6. Park Newspapers of Devils Lake, Inc. North Dakota
- --------------------------------------------------------------------------------
7. Park Newspapers of Eden, Inc. North Carolina
- --------------------------------------------------------------------------------
8. Effingham Daily News Company Illinois
- --------------------------------------------------------------------------------
9. Park Newspapers of Georgia, Inc. Georgia
- --------------------------------------------------------------------------------
10. Park Newspapers of Hudson, Inc. New York
- --------------------------------------------------------------------------------
11. Park Newspapers of Idaho, Inc. Idaho
- --------------------------------------------------------------------------------
a. South Idaho Newspapers, Inc. Idaho
- --------------------------------------------------------------------------------
12. Park Newspapers of Illinois, Inc. Delaware
- --------------------------------------------------------------------------------
13. Park Newspapers of Indiana, Inc. Indiana
- --------------------------------------------------------------------------------
a. The Pilot Company, Inc. Indiana
- --------------------------------------------------------------------------------
14. Park Newspapers of Iredell, Inc. Delaware
- --------------------------------------------------------------------------------
a. Park Newspapers of Statesville, Inc. North Carolina
- --------------------------------------------------------------------------------
15. Kannapolis Publishing Company, Inc. North Carolina
- --------------------------------------------------------------------------------
16. Park Newspapers of Kentucky, Inc. Kentucky
- --------------------------------------------------------------------------------
17. Park Newspapers of Lumberton, Inc. North Carolina
- --------------------------------------------------------------------------------
-2-
<PAGE>
================================================================================
State of Incorporation
================================================================================
18. Park Newspapers of Marion, Inc. North Carolina
- --------------------------------------------------------------------------------
19. Park Newspapers of Medina, Inc. New York
- --------------------------------------------------------------------------------
20. Park Newspapers of Michigan, Inc. Michigan
- --------------------------------------------------------------------------------
a. Coldwater Reporter Company Michigan
- --------------------------------------------------------------------------------
21. Park Newspapers of Minnesota, Inc. Minnesota
- --------------------------------------------------------------------------------
22. Park Newspapers of Moore County, Inc. North Carolina
- --------------------------------------------------------------------------------
23. Park Newspapers of Mooresville, Inc. North Carolina
- --------------------------------------------------------------------------------
a. Mooresville Tribune, Inc. North Carolina
- --------------------------------------------------------------------------------
24. Park Newspapers of Morehead, Inc. Kentucky
- --------------------------------------------------------------------------------
25. Park Newspapers of Morganton, Inc. North Carolina
- --------------------------------------------------------------------------------
26. Park Newspapers of Northeastern North Carolina,
Inc. North Carolina
- --------------------------------------------------------------------------------
27. Park Newspapers of Oklahoma, Inc. Oklahoma
- --------------------------------------------------------------------------------
a. McAlester Publishing Company Oklahoma
- --------------------------------------------------------------------------------
28. RHP Newspapers, Inc. New York
- --------------------------------------------------------------------------------
a. Lockport Publications, Inc. Delaware
- --------------------------------------------------------------------------------
i. Lockport Union-Sun Journal, Inc. New York
- --------------------------------------------------------------------------------
29. Park Newspapers of Rockingham, Inc. North Carolina
- --------------------------------------------------------------------------------
30. Park Newspapers of St. Lawrence, Inc. New York
- --------------------------------------------------------------------------------
31. Park Newspapers of Virginia, Inc. Virginia
- --------------------------------------------------------------------------------
a. Prince William Publishing Company Virginia
- --------------------------------------------------------------------------------
32. Park Newspapers of Waynesboro, Inc. Virginia
- --------------------------------------------------------------------------------
33. Park Newspapers of Florida, Inc. Florida
- --------------------------------------------------------------------------------
34. Park Newspapers of Norwich, Inc. New York
- --------------------------------------------------------------------------------
35. Park Newspapers of Honesdale, Inc. Pennsylvania
- --------------------------------------------------------------------------------
36. Park Newspapers of Susquehanna, Inc. Pennsylvania
================================================================================
-3-
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 of our
report, which includes an explanatory paragraph explaining certain financial
reporting implications related to the acquisition of Park Communications, Inc.
and Subsidiaries (the "Company") by Park Acquisitions, Inc., dated February 2,
1996, except for Note 13 as to which the date is May 6, 1996, on our audit of
the consolidated financial statements and the financial statement schedule of
the Company and to the inclusion in this registration statement on Form S-4 of
our reports which include an explanatory paragraph explaining certain
financial reporting implications related to the Acquisition of the Company by
Park Acquisitions, Inc. dated February 2, 1996 on our audit of the
consolidated financial statements and the financial statement schedules of
Park Broadcasting, Inc. and Subsidiaries and Park Newspapers, Inc. and
Subsidiaries as of December 31, 1995 and for the period from May 11, 1995 to
December 31, 1995 and for the period from January 1, 1995 to May 10, 1995. We
also consent to the reference to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Lexington, Kentucky
June 18, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated January 27, 1995, in the Registration Statement (Form
S-4) and related Prospectus of Park Communications, Inc. dated June 20, 1996.
Syracuse, New York
June 18, 1996
/s/ Ernst & Young LLP
<PAGE>
Exhibit 25.1
----------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305 (b) (2)__
-------------
IBJ SCHRODER BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-5375195
(State of Incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
Barbara McCluskey, Assistant Vice President
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
(212) 858-2000
(Name, Address and Telephone Number of Agent for Service)
Park Communications, Inc.
(Exact name of obligor as specified in its charter)
Delaware 16-0986694
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1700 Vine Center Office Tower
333 West Vine Street
Lexington, KY 40507
(Address of principal executive office) (Zip code)
13 3/4% Senior Pay-in-Kind Notes due 2004
(Title of Indenture Securities)
---------------------------------------
<PAGE>
Item 1. General information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department
Two Rector Street
New York, New York
Federal Deposit Insurance Corporation
Washington, D.C.
Federal Reserve Bank of New York Second District
33 Liberty Street
New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee.
Item 3. Voting securities of the trustee.
Furnish the following information as to each class of voting
securities of the trustee:
As of June 14, 1996
Col. A Col. B
Title of class Amount Outstanding
Not Applicable
2
<PAGE>
Item 4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, furnish the
following information:
(a) Title of the securities outstanding under each such other
indenture
Not Applicable
(b) A brief statement of the facts relied upon as a basis for the
claim that no conflicting interest within the meaning of Section
310 (b) (1) of the Act arises as a result of the trusteeship
under any such other indenture, including a statement as to how
the indenture securities will rank as compared with the
securities issued under such other indenture.
Not Applicable
Item 5. Interlocking directorates and similar relationships with the obligor
or underwriters.
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor,
identify each such person having any such connection and state the
nature of each such connection.
Not Applicable
Item 6. Voting securities of the trustee owned by the obligor or its officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner,
and executive officer of the obligor:
<TABLE>
<CAPTION>
As of June 14, 1996
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially securities
represented by
amount given in
Col. C
- ----------------- ----------------- ----------------- -----------------
</TABLE>
Not Applicable
3
<PAGE>
Item 7. Voting securities of the trustee owned by underwriters or their
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and
each director, partner and executive officer of each such underwriter:
<TABLE>
<CAPTION>
As of June 14, 1996
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially securities represented by
amount given in Col. C
- ----------------- ----------------- ----------------- -----------------
</TABLE>
Not Applicable
Item 8. Securities of the obligor owned or held by the trustee
Furnish the following information as to securities of the obligor
owned beneficially or held as collateral security for obligations in
default by the trustee:
<TABLE>
<CAPTION>
As of June 14, 1996
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or securities
held as collateral represented by
security for amount given in
obligations in Col. C
default
----------------- ----------------- ------------------ -----------------
</TABLE>
Not Applicable
Item 9. Securities of underwriters owned or held by the trustee.
4
<PAGE>
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the
obligor, furnish the following information as to each class of
securities of such underwriter any of which are so owned or held by
the trustee:
<TABLE>
<CAPTION>
As of June 14, 1996
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or securities
held as collateral represented by
security for amount given in
obligations in Col. C
default
----------------- ----------------- ------------------ -----------------
</TABLE>
Not Applicable
Item 10. Ownership or holdings by the trustee of voting securities of certain
affiliates or Securityholders of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the
knowledge of the trustee (1) owns 10 percent or more of the voting
securities of the obligor or (2) is an affiliate, other than a
subsidiary, of the obligor, furnish the following information as to
the voting securities of such person:
<TABLE>
<CAPTION>
As of June 14, 1996
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or securities
held as collateral represented by
security for amount given in
obligations in Col. C
default
----------------- ----------------- ------------------ -----------------
</TABLE>
Not Applicable
5
<PAGE>
Item 11. Ownership or holdings by the trustee of any securities of a person
owning 50 percent or more of the voting securities of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the
knowledge of the trustee, owns 50 percent or more of the voting
securities of the obligor, furnish the following information as to
each class of securities of such any of which are so owned or held by
the trustee:
<TABLE>
<CAPTION>
As of June 14, 1996
<S> <C> <C>
Col. A Col. B Col. C
Nature of Indebtedness Amount Outstanding Date Due
- ----------------------- --------------------- -------------------
</TABLE>
Not Applicable
Item 12. Indebtedness of the Obligor to the Trustee.
Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information:
<TABLE>
As of June 14, 1996
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or securities
held as collateral represented by
security for amount given in
obligations in Col. C
default
----------------- ----------------- ------------------ -----------------
</TABLE>
Not Applicable
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with respect to
the securities under this indenture. Explain the nature of any
such default.
Not Applicable
6
<PAGE>
(b) If the trustee is a trustee under another indenture
under which any other securities, or certificates of interest or
participation in any other securities, of the obligor are
outstanding, or is trustee for more than one outstanding series
of securities under the indenture, state whether there has been
a default under any such indenture or series, identify the
indenture or series affected, and explain the nature of any such
default.
Not Applicable
Item 14. Affiliations with the Underwriters
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not Applicable
Item 15. Foreign Trustees.
Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be
qualified under the Act.
Not Applicable
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
*1. A copy of the Charter of IBJ Schroder Bank & Trust Company as
amended to date. (See Exhibit 1A to Form T-1, Securities and
Exchange Commission File No. 22-18460).
*2. A copy of the Certificate of Authority of the Trustee to Commence
Business (Included in Exhibit I above).
*3. A copy of the Authorization of the Trustee, as amended to date
(See Exhibit 4 to Form T-1, Securities and Exchange Commission
File No. 22-19146).
*4. A copy of the existing By-Laws of the Trustee, as amended to date
(See Exhibit 4 to Form T-1, Securities and Exchange Commission
File No. 22-19146).
7
<PAGE>
5. A copy of each Indenture referred to in Item 4, if the Obligor
is in default. Not Applicable.
6. The consent of the United States institutional trustee required
by Section 321(b) of the Act.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a
reference to the copy of the Exhibit heretofore filed with the Securities
and Exchange Commission, to which there have been no amendments or
changes.
NOTE
----
In answering any item in this Statement of Eligibility which relates to matters
peculiarly within the knowledge of the obligor and its directors or officers,
the trustee has relied upon information furnished to it by the obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the trustee of
all facts on which to base responsive answers to Item 2, the answer to said Item
are based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an amendment to
this Form T-1.
Pursuant to General Instruction B, the trustee has responded to Items 1, 2 and
16 of this form since to the best knowledge of the trustee as indicated in Item
13, the obligor is not in default under any indenture under which the applicant
is trustee.
8
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, IBJ Schroder Bank & Trust Company, a corporation
organized and existing under the laws of the State of New York, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
New York, and State of New York, on the 14th day of June, 1996.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/Barbara McCluskey
-------------------------------
Barbara McCluskey
Assistant Vice President
<PAGE>
Exhibit 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issue of Park
Communications, Inc., we hereby consent that reports of examinations by
Federal, State, Territorial, or District authorities may be furnished by
such authorities to the Securities and Exchange Commission upon request
therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/Barbara McCluskey
--------------------------------
Barbara McCluskey
Assistant Vice President
Dated: June 14, 1996
<PAGE>
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
of New York, New York
And Foreign and Domestic Subsidiaries
Report as of March 31, 1996
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
----------------
ASSETS
------
Cash and balance due from depository institutions:
<S> <C> <C>
Noninterest-bearing balances and currency and coin................$ 27,805
Interest-bearing balances.........................................$ 142,919
Securities: Held to Maturity.........................................$ 169,682
Available-for-sale.....................................$ 23,665
Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and of its Edge and Agreement subsidiaries and in IBFs:
Federal Funds sold................................................$ 63,801
Securities purchased under agreements to resell...................$ -0-
Loans and lease financing receivables:
Loans and leases, net of unearned income................$1,575,250
LESS: Allowance for loan and lease losses...............$ 55,396
LESS: Allocated transfer risk reserve...................$ -0-
Loans and leases, net of unearned income,
allowance, and reserve .......................................$1,519,854
Assets held in trading accounts.......................................$ 489
Premises and fixed assets.............................................$ 7,228
Other real estate owned...............................................$ 397
Investments in unconsolidated subsidiaries and associated companies...$ -0-
Customers' liability to this bank on acceptances outstanding..........$ 155
Intangible assets.....................................................$ -0-
Other assets..........................................................$ 60,135
TOTAL ASSETS..........................................................$2,016,130
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
-----------
Deposits:
<S> <C>
In domestic offices............................................ $ 612,376
Noninterest-bearing........................................ $ 174,044
Interest-bearing........................................... $ 438,332
In foreign offices, Edge and Agreement subsidiaries, and IBFs.. $ 793,288
Noninterest-bearing........................................ $ 16,090
Interest-bearing........................................... $ 777,198
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBFs:
Federal Funds purchased........................................ $ 57,588
Securities sold under agreements to repurchase................. $ -0-
Demand notes issued to the U.S. Treasury........................... $ 24,522
Trading Liabilities................................................ $ 390
Other borrowed money:
a) With original maturity of one year or less.................. $ 250,333
b) With original maturity of more than one year................ $ -0-
Mortgage indebtedness and obligations under capitalized leases..... $ -0-
Bank's liability on acceptances executed and outstanding........... $ 155
Subordinated notes and debentures.................................. $ -0-
Other liabilities.................................................. $ 68,215
TOTAL LIABILITIES.................................................. $ 1,806,867
Limited life preferred stock and related surplus................... $ -0-
</TABLE>
<TABLE>
<CAPTION>
EQUITY CAPITAL
<S> <C>
Perpetual preferred stock.......................................... $ -0-
Common Stock....................................................... $ 29,649
Surplus............................................................ $ 217,008
Undivided profits and capital reserves............................. $ (37,419)
Plus: Net unrealized gains (losses) on marketable equity
securities........................................................ $ 25
Cumulative foreign currency translation adjustments................ $ -0-
TOTAL EQUITY CAPITAL............................................... $ 209,263
TOTAL LIABILITIES AND EQUITY CAPITAL............................... $2,016,130
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL DATA FOR YEARS 1993 & 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993
<PERIOD-END> DEC-31-1994 DEC-31-1993
<CASH> 143,500 0
<SECURITIES> 0 0
<RECEIVABLES> 23,833 0
<ALLOWANCES> 1,598 0
<INVENTORY> 1,170 0
<CURRENT-ASSETS> 173,773 0
<PP&E> 144,651 0
<DEPRECIATION> (68,910) 0
<TOTAL-ASSETS> 366,786 0
<CURRENT-LIABILITIES> 17,489 0
<BONDS> 49,248 0
0 0
0 0
<COMMON> 3,494 0
<OTHER-SE> 282,236 0
<TOTAL-LIABILITY-AND-EQUITY> 366,786 0
<SALES> 0 0
<TOTAL-REVENUES> 154,559 147,211
<CGS> 0 0
<TOTAL-COSTS> 50,380 55,518
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 279 233
<INCOME-PRETAX> 46,893 35,465
<INCOME-TAX> 19,519 14,849
<INCOME-CONTINUING> 27,374 20,616
<DISCONTINUED> (69) (1,836)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL DATA FOR PERIOD OF 1/1-5/10/95 & 5/11-12/31/95 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-END> DEC-31-1995 MAY-10-1995
<CASH> 19,026 146,667
<SECURITIES> 0 0
<RECEIVABLES> 27,351 0
<ALLOWANCES> 807 0
<INVENTORY> 1,265 1,137
<CURRENT-ASSETS> 52,396 178,361
<PP&E> 90,463 135,346
<DEPRECIATION> (6,068) (61,551)
<TOTAL-ASSETS> 782,782 365,759
<CURRENT-LIABILITIES> 47,541 17,837
<BONDS> 0 0
0 0
0 0
<COMMON> 0 3,889
<OTHER-SE> (17,428) 327,988
<TOTAL-LIABILITY-AND-EQUITY> 782,782 365,759
<SALES> 0 0
<TOTAL-REVENUES> 101,756 53,917
<CGS> 0 0
<TOTAL-COSTS> 33,278 20,315
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 41,968 67
<INCOME-PRETAX> (20,080) 6,514
<INCOME-TAX> (6,494) 5,954
<INCOME-CONTINUING> (13,586) 560
<DISCONTINUED> (3,842) 125
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL DATA FOR 1ST QUARTER OF 1995 & 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-END> MAR-31-1995 MAR-31-1996
<CASH> 0 63,041
<SECURITIES> 0 0
<RECEIVABLES> 0 24,969
<ALLOWANCES> 0 870
<INVENTORY> 0 1,069
<CURRENT-ASSETS> 0 93,676
<PP&E> 0 86,623
<DEPRECIATION> 0 8,502
<TOTAL-ASSETS> 0 763,771
<CURRENT-LIABILITIES> 0 87,258
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 0 1,950
<TOTAL-LIABILITY-AND-EQUITY> 0 763,771
<SALES> 0 0
<TOTAL-REVENUES> 35,878 35,397
<CGS> 0 0
<TOTAL-COSTS> 12,723 13,881
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 44 15,735
<INCOME-PRETAX> 10,185 (12,764)
<INCOME-TAX> 4,265 (4,638)
<INCOME-CONTINUING> 5,920 (8,126)
<DISCONTINUED> 268 (2,397)
<EXTRAORDINARY> 0 29,901
<CHANGES> 0 0
<NET-INCOME> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE>
Exhibit 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
13 3/4% SENIOR PAY-IN-KIND NOTES DUE 2004
OF
PARK COMMUNICATIONS, INC.
PURSUANT TO THE PROSPECTUS DATED , 1996
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1996, UNLESS EXTENDED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should
be completed, signed and submitted as follows:
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
IBJ SCHRODER BANK & TRUST COMPANY
(THE "EXCHANGE AGENT")
For Information by Telephone:
(212) 858-2103
By Registered or Certified Mail: By Hand or Overnight Delivery
IBJ Schroder Bank & Trust Company Service:
P.O. Box 84 IBJ Schroder Bank & Trust Company
Bowling Green Station One State Street
New York, New York 10274-0084 New York, New York 10004
Attention: Reorganization Operations Attention: Securities Processing
Department Window,
Subcellar One (SC-1)
By Facsimile Transmission:
(212) 858-2611
(Facsimile Confirmation)
(212) 858-2103
(ORIGINALS OF ALL DOCUMENTS SENT BY FACSIMILE SHOULD BE SENT PROMPTLY BY
REGISTERED OR CERTIFIED MAIL, BY HAND, OR BY OVERNIGHT DELIVERY SERVICE.)
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
The undersigned hereby acknowledges receipt of the Prospectus dated ,
1996 (the "Prospectus") of Park Communications, Inc., a Delaware corporation
(the "Issuer"), and this Letter of Transmittal (the "Letter of Transmittal"),
that together constitute the Issuer's offer (the "Exchange Offer") to exchange
$1,000 in principal amount of its Series B 13 3/4% Senior Pay-in-Kind Notes
due 2004 (the "Exchange Notes"), which have been registered under the
Securities Act (as hereinafter defined) pursuant to a Registration Statement,
for each $1,000 in principal amount of its outstanding 13 3/4% Senior Pay-in-
Kind Notes due 2004 (the "Notes"), of which $80,000,000 aggregate principal
amount is outstanding. Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus.
The undersigned hereby tenders the Notes described in Box 1 below (the
"Tendered Notes") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Tendered Notes and the undersigned represents that it has
received from each beneficial owner of the Tendered Notes ("Beneficial
Owners") a duly completed and executed form of "Instruction to Registered
Holder and/or Book-Entry Transfer Facility Participant from Beneficial Owner"
accompanying this Letter of Transmittal, instructing the undersigned to take
the action described in this Letter of Transmittal.
<PAGE>
Subject to, and effective upon, the acceptance for exchange of the Tendered
Notes, the undersigned hereby exchanges, assigns, and transfers to, or upon
the order of, the Issuer, all rights, title, and interest in, to and under the
Tendered Notes.
Please issue the Exchange Notes exchanged for Tendered Notes in the name(s)
of the undersigned. Similarly, unless otherwise indicated under "Special
Delivery Instructions" below (Box 3), please send or cause to be sent the
certificates for the Exchange Notes (and accompanying documents, as
appropriate) to the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned
with respect to the Tendered Notes, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver the Tendered Notes to the Issuer or cause ownership
of the Tendered Notes to be transferred to, or upon the order of, the Issuer,
on the books of the registrar for the Notes and deliver all accompanying
evidences of transfer and authenticity to, or upon the order of, the Issuer
upon receipt by the Exchange Agent, as the undersigned's agent, of the
Exchange Notes to which the undersigned is entitled upon acceptance by the
Issuer of the Tendered Notes pursuant to the Exchange Offer, and (ii) receive
all benefits and otherwise exercise all rights of beneficial ownership of the
Tendered Notes, all in accordance with the terms of the Exchange Offer.
The undersigned understands that tenders of Notes pursuant to the procedures
described in the caption "The Exchange Offer" in the Prospectus and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Issuer upon the terms and subject to the conditions of the
Exchange Offer, subject only to withdrawal of such tenders on the terms set
forth in the Prospectus under the caption "The Exchange Offer--Withdrawal of
Tenders." All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any Beneficial
Owner(s), and every obligation of the undersigned or any Beneficial Owners
hereunder shall be binding upon the heirs, representatives, successors and
assigns of the undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, assign and transfer the Tendered
Notes and that the Issuer will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges, encumbrances and adverse
claims when the Tendered Notes are acquired by the Issuer as contemplated
herein. The undersigned and each Beneficial Owner will, upon request, execute
and deliver any additional documents reasonably requested by the Issuer or the
Exchange Agent as necessary or desirable to complete and give effect to the
transactions contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired
by the undersigned and any Beneficial Owner(s) in the ordinary course of
business of the undersigned and any Beneficial Owner(s), (ii) the undersigned
and each Beneficial Owner 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, (iii) except as otherwise disclosed in
writing herewith, neither the undersigned nor any Beneficial Owner is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Issuer or
any of its subsidiaries and (iv) the undersigned and each Beneficial Owner
acknowledge and agree that any person participating in the Exchange Offer with
the intention or for the purpose of distributing the Exchange Notes must
comply with the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act"), in connection with a secondary
resale of the Exchange Notes acquired by such person and cannot rely on the
position of the staff of the Securities and Exchange Commission (the
"Commission") set forth in the no-action letters that are discussed in the
section of the Prospectus entitled "The Exchange Offer."
2
<PAGE>
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED HEREWITH.
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE
"Use of Guaranteed Delivery" BELOW (Box 4).
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE "Use of Book-Entry Transfer" BELOW (Box 5).
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
BOX 1
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION OF NOTES TENDERED
(ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------------
AGGREGATE
NAME(S) AND ADDRESS(ES) OF REGISTERED NOTE HOLDER(S), CERTIFICATE PRINCIPAL AMOUNT AGGREGATE
EXACTLY AS NAME(S) APPEAR(S) ON NOTE CERTIFICATE(S) NUMBER(S) OF REPRESENTED BY PRINCIPAL AMOUNT
(PLEASE FILL IN, IF BLANK) NOTES* CERTIFICATE(S) TENDERED**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by persons tendering by book-entry transfer.
** The minimum permitted tender is $1,000 in principal amount of Notes.
All other tenders must be in integral multiples of $1,000 of principal
amount. Unless otherwise indicated in this column, the principal amount
of all Note Certificates identified in this Box 1 or delivered to the
Exchange Agent herewith shall be deemed tendered. See Instruction 4.
- -------------------------------------------------------------------------------
BOX 2
- -------------------------------------------------------------------------------
BENEFICIAL OWNER(S)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATE OF PRINCIPAL RESIDENCE OF EACH PRINCIPAL AMOUNT OF TENDERED NOTES
BENEFICIAL OWNER OF TENDERED NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
BOX 3
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
TO BE COMPLETED ONLY IF EXCHANGE NOTES EXCHANGED FOR NOTES AND UNTENDERED
NOTES ARE TO BE SENT TO SOMEONE OTHER THAN THE UNDERSIGNED, OR TO THE
UNDERSIGNED AT AN ADDRESS OTHER THAN THAT SHOWN ABOVE.
Mail Exchange Note(s) and any untendered Notes to:
Name(s):
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Tax Identification or Social Security No.:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOX 4
- --------------------------------------------------------------------------------
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
----------------------------
Name of Institution which Guaranteed Delivery:
---------------------------------
- --------------------------------------------------------------------------------
BOX 5
- --------------------------------------------------------------------------------
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 1)
TO BE COMPLETED ONLY IF DELIVERY OF TENDERED NOTES IS TO BE MADE BY BOOK-
ENTRY TRANSFER.
Name of Tendering Institution:
-------------------------------------------------
Account Number:
----------------------------------------------------------------
Transaction Code Number:
-------------------------------------------------------
4
<PAGE>
BOX 6
- --------------------------------------------------------------------------------
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
X Signature Guarantee
-----------------------------------
X (IF REQUIRED BY INSTRUCTION 5)
-----------------------------------
(SIGNATURE OF REGISTERED HOLDER(S) Authorized Signature
OR AUTHORIZED SIGNATORY)
Note: The above lines must be X
signed by the registered holder(s) ------------------------------------
of Notes as their name(s) ap- Name:
pear(s) on the Notes or by per- --------------------------------
son(s) authorized to become regis- (PLEASE PRINT)
tered holder(s) (evidence of which
authorization must be transmitted
with this Letter of Transmittal). Title:
If signature is by a trustee, ex- -------------------------------
ecutor, administrator, guardian,
attorney-in-fact, officer, or Name of Firm:
other person acting in a fiduciary ------------------------
or representative capacity, such (MUST BE AN ELIGIBLE
person must set forth his or her INSTITUTION AS DEFINED IN
full title below. See Instruction 5. INSTRUCTION 2)
Name(s): Address:
---------------------------- -----------------------------
---------------------------- -----------------------------
Capacity:
---------------------------- -----------------------------
(INCLUDE ZIP CODE)
----------------------------
Street Address: Area Code and Telephone Number:
---------------------
---------------------------- --------------------------------------
---------------------------- Dated:
(INCLUDE ZIP CODE) -------------------------------
Area Code and Telephone Number:
- -------------------------------------
Tax Identification or Social
Security Number:
- -------------------------------------
- --------------------------------------------------------------------------------
5
<PAGE>
SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
PAYOR'S NAME: PARK COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE
YOUR TIN IN THE BOX AT
SUBSTITUTE RIGHT AND CERTIFY BY
FORM W-9 SIGNING AND DATING BELOW.
PLEASE FILL IN YOUR NAME AND
ADDRESS BELOW. -----------------------
Social security number
- -----------------------------
NAME
OR
- -----------------------------
ADDRESS (NUMBER AND STREET)
- ----------------------------- -----------------------
CITY, STATE AND ZIP CODE Employer identification
number
------------------------------------------------------------------------
PART 2--Certification--Under Penalties of
Perjury, I certify that: PART 3 --
(1) The number shown on this form is my Awaiting TIN [_]
correct Taxpayer Identification Number
(or I am waiting for a number to be
issued to me) and
-----------------------
(2) I am not subject to back-up PART 4 --
withholding either because (a) I am
exempt from back-up withholding or (b) I Exempt [_]
have not been notified by the Internal
Revenue Service ("IRS") that I am
subject to back-up withholding as a
result of failure to report all interest
or dividends or (c) the IRS has notified
me that I am no longer subject to back-
up withholding.
------------------------------------------------------------------------
DEPARTMENT OF THE Certification Instructions--you must cross out item
TREASURY INTERNAL (2) in Part 2 above if you have been notified by the
REVENUE SERVICE IRS that you are subject to back-up withholding be-
cause of underreporting interest or dividends on your
tax return. However, if after being notified by the
IRS that you were subject to back-up withholding, you
received another notification from the IRS stating
that you are no longer subject to back-up withhold-
ing, do not cross out item (2). If you are exempt
from backup withholding, check the box in Part 4
above.
PAYOR'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
SIGNATURE DATE , 1996
-------------------- ------------
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACK-UP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT HERETO. 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 3 OF THE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) 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 (b) I intend to mail or deliver an application
in the near future. I understand that if I do not provide a taxpayer
identification number within 60 days, 31% of all reportable payments
made to me thereafter will be withheld until I provide a number.
- ------------------------------------ ----------------------------- , 1996
Signature Date
- --------------------------------------------------------------------------------
6
<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 NOTES. A properly completed
and duly executed copy of this Letter of Transmittal, including Substitute
Form W-9, and any other documents required by this Letter of Transmittal must
be received by the Exchange Agent at its address set forth herein, and either
certificates for Tendered Notes must be received by the Exchange Agent at its
address set forth herein or such Tendered Notes must be transferred pursuant
to the procedures for book-entry transfer described in the Prospectus under
the caption "The Exchange Offer--Procedures for Tendering" (and a confirmation
of such transfer received by the Exchange Agent), in each case prior to 5:00
p.m., New York City time, on the Expiration Date. The method of delivery of
certificates for Tendered Notes, this Letter of Transmittal and all other
required documents to the Exchange Agent is at the election and risk of the
tendering holder and the delivery will be deemed made only when actually
received by the Exchange Agent. If delivery is by mail, registered mail with
return-receipt requested, properly insured, is recommended. Instead of
delivery by mail, it is recommended that the holder use an overnight or hand
delivery service. In all cases, sufficient time should be allowed to assure
timely delivery. No Letter of Transmittal or Notes should be sent to the
Issuer. Neither the Issuer nor the registrar is under any obligation to notify
any tendering holder of the Issuer's acceptance of Tendered Notes prior to the
closing of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Notes
but whose Notes are not immediately available, and who cannot deliver their
Notes, this Letter of Transmittal or any other documents required hereby to
the Exchange Agent prior to the Expiration Date must tender their Notes
according to the guaranteed delivery procedures set forth below, including
completion of Box 4. Pursuant to such procedures: (i) such tender must be made
by or through a firm which is a member of a recognized Medallion Program
approved by the Securities Transfer Association Inc. (an "Eligible
Institution") and the Notice of Guaranteed Delivery must be signed by the
holder; (ii) prior to the Expiration Date, the Exchange Agent must have
received from the holder and the Eligible Institution a properly completed and
duly executed Notice of Guaranteed Delivery (by mail or hand delivery) setting
forth the name and address of the holder, the certificate number(s) of the
Tendered Notes and the principal amount of Tendered Notes, stating that the
tender is being made thereby and guaranteeing that, within five New York Stock
Exchange trading days after the Expiration Date, this Letter of Transmittal
together with the certificate(s) representing the Tendered Notes and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal, as well as all other documents required by this Letter of
Transmittal and the certificate(s) representing all Tendered Notes in proper
form for transfer, must be received by the Exchange Agent within five New York
Stock Exchange trading days after the Expiration Date. Any holder who wishes
to tender Notes pursuant to the guaranteed delivery procedures described above
must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery
relating to such Notes prior to 5:00 p.m., New York City time, on the
Expiration Date. Failure to complete the guaranteed delivery procedures
outlined above will not, of itself, affect the validity or effect a revocation
of any Letter of Transmittal form properly completed and executed by an
eligible holder who attempted to use the guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO REGISTERED HOLDERS. Only a holder in
whose name Tendered Notes are registered on the books of the registrar (or the
legal representative or attorney-in-fact of such registered holder) may
execute and deliver this Letter of Transmittal. Any Beneficial Owner of
Tendered Notes who is not the registered holder must arrange promptly with the
registered holder to execute and deliver this Letter of Transmittal on his or
her behalf through the execution and delivery to the registered holder of the
Instructions to Registered Holder and/or Book-Entry Transfer Facility
Participant from Beneficial Owner form accompanying this Letter of
Transmittal.
4. PARTIAL TENDERS. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Notes held by the holder is tendered, the tendering holder should
fill in the principal amount tendered in the column labeled "Aggregate
Principal Amount Tendered" of
7
<PAGE>
the box entitled "Description of Notes Tendered" (Box 1) above. The entire
principal amount of Notes delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated. If the entire principal amount
of all Notes held by the holder is not tendered, then Notes for the principal
amount of Notes not tendered and Exchange Notes issued in exchange for any
Notes tendered and accepted will be sent to the holder at his or her
registered address, unless a different address is provided in the appropriate
box on this Letter of Transmittal, as soon as practicable following the
Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered holder(s) of the Tendered Notes, the signature must correspond with
the name(s) as written on the face of the Tendered Notes without alteration,
enlargement or any change whatsoever.
If any of the Tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Notes are held in different names, it will be necessary to complete, sign and
submit as many separate copies of the Letter of Transmittal as there are
different names in which Tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Notes, and Exchange Notes issued in exchange therefor are to be
issued (and any untendered principal amount of Notes is to be reissued) in the
name of the registered holder(s), then such registered holder(s) need not and
should not endorse any Tendered Notes, nor provide a separate bond power. In
any other case, such registered holder(s) must either properly endorse the
Tendered Notes or transmit a properly completed bond power with this Letter of
Transmittal, with the signature(s) on the endorsement or bond power guaranteed
by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Tendered Notes, such Tendered Notes must be
endorsed or accompanied by appropriate bond powers, in each case, signed as
the name(s) of the registered holder(s) appear(s) on the Tendered Notes, with
the signature(s) on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Tendered 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 Issuer, evidence satisfactory to the Issuer of their authority to so act
must be submitted with this Letter of Transmittal.
Endorsements on Tendered Notes or signatures on bond powers required by this
Instruction 5 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution unless the Tendered Notes are tendered (i) by a registered holder
who has not completed the box set forth herein entitled "Special Delivery
Instructions" (Box 3) or (ii) by an Eligible Institution.
6. SPECIAL DELIVERY INSTRUCTIONS. Tendering holders should indicate, in the
applicable box (Box 3), the name and address to which the Exchange Notes
and/or substitute Notes for principal amounts not tendered or not accepted for
exchange are to be sent, if different from the name and address of the person
signing this Letter of Transmittal. In the case of issuance in a different
name, the taxpayer identification or social security number of the person
named must also be indicated.
7. TRANSFER TAXES. The Issuer will pay all transfer taxes, if any,
applicable to the exchange of Tendered Notes pursuant to the Exchange Offer.
If, however, a transfer tax is imposed for any reason other than the transfer
and exchange of Tendered Notes pursuant to the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or on any
other person) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
this Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Tendered Notes listed in this Letter
of Transmittal.
8
<PAGE>
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that the
holder(s) of any Tendered Notes which are accepted for exchange must provide
the Issuer (as payor) with its correct taxpayer identification number ("TIN"),
which, in the case of a holder who is an individual, is his or her social
security number. If the Issuer is not provided with the correct TIN, the
holder may be subject to backup withholding and a $50 penalty imposed by the
Internal Revenue Service. (If withholding results in an over-payment of taxes,
a refund may be obtained.) Certain holders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements.
To prevent backup withholding, each holder of Tendered Notes must provide
such holder's correct TIN by completing the Substitute Form W-9 set forth
herein, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN), and that (i) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result
of failure to report all interest or dividends or (ii) the Internal Revenue
Service has notified the holder that such holder is no longer subject to
backup withholding.
The Issuer reserves the right in its sole discretion to take whatever steps
are necessary to comply with the Issuer's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of Tendered Notes will
be determined by the Issuer in its sole discretion, which determination will
be final and binding. The Issuer reserves the right to reject any and all
Notes not validly tendered or any Notes the Issuer's acceptance of which
would, in the opinion of the Issuer or its counsel, be unlawful. The Issuer
also reserves the right to waive any conditions of the Exchange Offer or
defects or irregularities in tenders of Notes as to any ineligibility of any
holder who seeks to tender Notes in the Exchange Offer. The interpretation of
the terms and conditions of the Exchange Offer (including this Letter of
Transmittal and the instructions hereto) by the Issuer shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Notes must be cured within such time as the Issuer
shall determine. Neither the Issuer, the Exchange Agent nor any other person
shall be under any duty to give notification of defects or irregularities with
respect to tenders of Notes, nor shall any of them incur any liability for
failure to give such notification. Tenders of Notes will not be deemed to have
been made until such defects or irregularities have been cured or waived. Any
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in this Letter of Transmittal, as soon as practicable following the
Expiration Date.
10. WAIVER OF CONDITIONS. The Issuer reserves the absolute right to amend,
waive or modify any of the conditions in the Exchange Offer in the case of any
Tendered Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular or
contingent tender of Notes or transmittal of this Letter of Transmittal will
be accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any tendering holder whose
Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated herein for further instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance and requests for additional copies of the Prospectus or this Letter
of Transmittal may be directed to the Exchange Agent at the address indicated
herein. Holders may also contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Exchange Offer.
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF NOTES; RETURN OF
NOTES. Subject to the terms and conditions of the Exchange Offer, the Issuer
will accept for exchange all validly tendered Notes as soon as
9
<PAGE>
practicable after the Expiration Date and will issue Exchange Notes therefor
as soon as practicable thereafter. For purposes of the Exchange Offer, the
Issuer shall be deemed to have accepted tendered Notes when, as and if the
Issuer has given written or oral notice (immediately followed in writing)
thereof to the Exchange Agent. If any Tendered Notes are not exchanged
pursuant to the Exchange Offer for any reason, such unexchanged Notes will be
returned, without expense, to the undersigned at the address shown in Box 1 or
at a different address as may be indicated herein under "Special Delivery
Instructions" (Box 3).
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the procedures set
forth in the Prospectus under the caption "The Exchange Offer."
10
<PAGE>
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
13 3/4% SENIOR PAY-IN-KIND NOTES DUE 2004
OF
PARK COMMUNICATIONS, INC.
PURSUANT TO THE PROSPECTUS DATED , 1996
This form must be used by a holder of 13 3/4% Senior Pay-in-Kind Notes due
2004 (the "Notes") of Park Communications, Inc., a Delaware corporation (the
"Company"), who wishes to tender Notes to the Exchange Agent pursuant to the
guaranteed delivery procedures described in "The Exchange Offer--Guaranteed
Delivery Procedures" of the Company's Prospectus dated , 1996 (the
"Prospectus") and in Instruction 2 to the related Letter of Transmittal. Any
holder who wishes to tender Notes pursuant to such guaranteed delivery
procedures must ensure that the Exchange Agent receives this Notice of
Guaranteed Delivery prior to the Expiration Date of the Exchange Offer.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Prospectus or the Letter of Transmittal.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1996 UNLESS EXTENDED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
IBJ SCHRODER BANK & TRUST COMPANY
(THE "EXCHANGE AGENT")
For Information by Telephone:
(212) 858-2103
By Registered or Certified Mail: By Hand or Overnight Delivery Service:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attention: Securities Processing Window,
Attention: Reorganization Operations Subcellar One (SC-1)
Department
By Facsimile Transmission:
(212) 858-2611
(Facsimile Confirmation)
(212) 858-2103
(ORIGINALS OF ALL DOCUMENTS SENT BY FACSIMILE SHOULD BE SENT PROMPTLY BY
REGISTERED OR CERTIFIED MAIL, BY HAND, OR BY OVERNIGHT DELIVERY SERVICE.)
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OR TRANSMISSION
OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
<PAGE>
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Prospectus, and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Notes set forth below pursuant to the guaranteed delivery procedures set forth
in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Notes listed below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE NUMBER(S) (IF KNOWN) OF NOTES OR AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY AMOUNT REPRESENTED AMOUNT TENDERED
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
- --------------------------------------------------------------------------------
Signatures of Registered Holder(s)
or Authorized
Signatory:
----------------------- Date: , 1996
----------
Address:
- ------------------------------------ -----------------------------
- ------------------------------------ --------------------------------------
Name(s) of Registered
Holder(s): Area Code and Telephone No.
-------------------------- ----------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the holder(s) exactly
as their name(s) appear on certificates for Notes or on a security position
listing as the owner of Notes, or by person(s) authorized to become
holder(s) by endorsements 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 provide the following information.
Please print name(s) and address(es)
Name(s):
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
----------------------------------------------------------------------
Address(es):
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., or is a commercial bank or trust company having an office or
correspondent in the United States, or is otherwise an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended, guarantees deposit with the Exchange Agent
of the Letter of Transmittal (or facsimile thereof), together with the Notes
tendered hereby in proper form for transfer (or confirmation of the book-
entry transfer of such Notes into the Exchange Agent's account at the Book-
Entry Transfer Facility described in the Prospectus under the caption "The
Exchange Offer--Guaranteed Delivery Procedures" and in the Letter of
Transmittal) and any other required documents, all by 5:00 p.m., New York
City time, on the fifth New York Stock Exchange trading day following the
Expiration Date.
Name of firm
------------------------ ------------------------------------
(Authorized Signature)
Address Name
----------------------------- -------------------------------
(Please Print)
------------------------------------- Title
(Include Zip Code) ------------------------------
Area Code and Tel. No. Dated , 1996
--------------- ------------------------
- --------------------------------------------------------------------------------
DO NOT SEND SECURITIES WITH THIS FORM. ACTUAL SURRENDER OF SECURITIES MUST
BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMITTAL.
4
<PAGE>
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by
the Exchange Agent at its address set forth herein prior to the Expiration
Date. The method of delivery of this Notice of Guaranteed Delivery and any
other required documents to the Exchange Agent is at the election and sole
risk of the holder, and the delivery will be deemed made only when actually
received by the Exchange Agent. If delivery is by mail, registered mail with
return-receipt requested, properly insured, is recommended. As an alternative
to delivery by mail, the holders may wish to consider using an overnight or
hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. For a description of the guaranteed delivery
procedures, see Instruction 2 of the Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant
of the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Notes, the signature must correspond with the name
shown on the security position listing as the owner of the Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s)
appears on the Notes or signed as the name of the participant shown on the
Book-Entry Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. Request for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus or the Letter
of Transmittal may be directed to the Exchange Agent at the address specified
in the Prospectus. Holders may also contact their broker, dealer, commercial
bank, trust company, or other nominee for assistance concerning the Exchange
Offer.
5
<PAGE>
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
PARK COMMUNICATIONS, INC.
13 3/4% SENIOR PAY-IN-KIND NOTES DUE 2004
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated ,
1996 (the "Prospectus") of Park Communications, Inc., a Delaware corporation
(the "Company"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus or the Letter of Transmittal.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to action to be taken by you relating to the Exchange
Offer with respect to the 13 3/4% Senior Pay-in-Kind Notes due 2004 (the
"Notes") held by you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (FILL IN AMOUNT):
$ of the 13 3/4% Senior Pay-in-Kind Notes due 2004.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[_] TO TENDER the following Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF NOTES TO BE TENDERED, IF ANY):
$ .
----------
[_] NOT TO TENDER any Notes held by you for the account of the undersigned.
If the undersigned instructs you to tender the 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, including but not limited to the representations that
(i) the undersigned's principal residence is in the state of (FILL IN STATE)
, (ii) the undersigned is acquiring the Exchange Notes in the ordinary
course of business of the undersigned, (iii) the undersigned is not
participating, does not participate, and has no arrangement or understanding
with any person to participate, in the distribution of the Exchange Notes,
(iv) the undersigned acknowledges that any person participating in the
Exchange Offer for the purpose of distributing the Exchange Notes must comply
with the registration and prospectus delivery requirements of the Securities
Act of 1933, as amended (the "Act"), in connection with a secondary resale
transaction of the Exchange Notes acquired by such person and cannot rely on
the position of the staff of the Securities and Exchange Commission set forth
in no-action letters that are discussed in the section of the Prospectus
entitled "The Exchange Offer--Resale of the Series B Notes," and (v) the
undersigned is not an "affiliate," as defined in Rule 405 under the Act, of
the Company or any of its subsidiaries; (b) to agree, on behalf of the
undersigned, as set forth in the Letter of Transmittal, and (c) to take such
other action as necessary under the Prospectus or the Letter of Transmittal to
effect the valid tender of such Notes.
- --------------------------------------------------------------------------------
SIGN HERE
Name of beneficial owner(s):
--------------------------------------------------
Signature(s):
-----------------------------------------------------------------
Name (please print):
----------------------------------------------------------
Address:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Telephone number
--------------------------------------------------------------
Taxpayer Identification or Social Security Number:
----------------------------
Date:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 99.2
EXCHANGE AGENCY AGREEMENT
This Agreement is entered into as of , 1996 between IBJ Schroder Bank &
----- --
Trust Company, a corporation organized under the laws of the State of New York,
as Exchange Agent (the "Agent") and Park Communications, Inc., a corporation
organized under the laws of the State of Delaware, (the "Company").
The Company proposes to exchange, upon terms and conditions set forth in a
Prospectus and Letter of Transmittal, $1,000.00 principal amount of its Series B
13 3/4 % Senior Pay-in-Kind Notes due 2004 (the "Series B Notes") which have
been registered under the Securities Act of 1933, for each $1,000.00 principal
amount of its outstanding 13 3/4 % Senior Pay-in-Kind Notes due 2004 (the
"Series A Notes"), of which $80,000,000 in aggregate principal amount will be
outstanding as of the date the exchange begins. The form and terms of the Series
B Notes are the same as the form and terms of the Series A Notes, except for
their designation, for the fact that the former are registered and thus will not
bear legends restricting their transfer, and for the fact that holders of the
former will not be entitled to certain rights under a registration rights
agreement, which rights terminate upon consummation of the exchange offer. The
effective date of the exchange is , 1996, and its termination date is
----- --
, 1996.
- ----- --
Subject to the provisions hereof, the Company hereby appoints and the Agent
hereby accepts the appointment as Exchange Agent for the purposes of receiving,
accepting for delivery and otherwise acting upon tenders of Series A Notes (the
"Certificates") in accordance with the form of Letter of Transmittal attached
hereto (the "L/T") and with the terms and conditions set forth herein (the
"Exchange Offer").
The Agent has received the following documents in connection with its
appointment:
(1) L/T;
(2) Specimen Certificates;
(3) Notice of Guaranteed Delivery; and
(4) Prospectus.
The Agent shall receive from Depository Trust Company ("DTC") no later than 5:00
pm, New York City Time, on the effective date (as specified above), a list of
all holders of Certificates eligible to participate in the Exchange Offer, to
include the amount owned of record by each such holder.
The Agent is authorized and hereby agrees to act as follows:
(a) to mail copies of the Exchange Offer documents as provided by the
Company to all holders of the Certificates;
<PAGE>
(b) to receive all tenders of Certificates made pursuant to the Exchange
Offer and stamp the L/T with the day, month and approximate time of
receipt;
(c) to examine each L/T and Certificate received to determine that all
requirements necessary to constitute a valid tender have been met;
(d) to take such actions necessary and appropriate to correct any
irregularity or deficiency associated with any tender which does not
meet the requirements in the L/T;
(e) to follow instructions of Wright M. Thomas with respect to the waiver
of any irregularities or deficiencies associated with any tender;
(f) to hold all valid tenders subject to further instructions from Wright
M. Thomas;
(g) 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 or facsimile, the information contained therein to Wright
M. Thomas at telephone (606) 252-7275, facsimile (606) 226-9609;
(h) to follow and act upon any written amendments, modifications or
supplements to these instructions, any of which may be given to the
Agent by the President, any Vice President or the Secretary of the
Company or such other person or persons as they shall designate in
writing;
(i) to return to the presentors, in accordance with the provisions of the
L/T, any Certificates that were not received in proper order and as to
which the irregularities or deficiencies were not cured or waived;
The Agent shall:
(a) have no duties or obligations other than those specifically set forth
herein;
(b) not be required to refer to any documents for the performance of its
obligations hereunder other than this Agreement, the L/T and the
documents required to be submitted with the L/T; other than such
documents, the Agent will not be responsible or liable for any
directions or information in the Offering Circular or any other
document unless the Agent specifically agrees thereto in writing;
<PAGE>
(c) not be required to act on the directions of any person, including the
persons named above, unless the Company provides a corporate
resolution to the Agent or other evidence satisfactory to the Agent of
the authority of such person;
(d) 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, L/T's or documents
prepared by the Company in connection with the Tender Offer or (iii)
any signatures or endorsements, other than its own;
(e) be able to rely on and shall be protected in acting 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;
(f) not be responsible for or liable in any respect on account of the
identity, authority or rights of any person 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;
(g) be able to consult with counsel satisfactory to it (including counsel
for the Company) 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;
(h) not be called on at any time to advise, and shall not advise, any
person delivering an L/T pursuant to the Exchange Offer as to the
value of the consideration to be received;
(i) 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;
(j) 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
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<PAGE>
and, if the Agent's duties or rights are affected, unless the Agent
shall give its prior written consent thereto;
(k) 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;
(l) 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, or any action suffered by the Agent to be
taken or omitted, in good faith and in the exercise of the Agent's
best judgement, in reliance upon such assumption; and
(m) have no liability whatsoever in connection with Certificates tendered
to it which may have stops placed against them or in connection with
the payment made against stopped certificates unless it is furnished
with a stop list from the transfer agent.
The Agent shall be entitled to compensation as set forth in Exhibit B attached
hereto.
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) that may be paid or incurred
or suffered by it or to which it may become subject without gross negligence,
willful misconduct or bad faith on its part by reason of or as a result of its
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.
This Agreement shall be construed and enforced in accordance with the laws of
the State of New York and shall inure to the benefit of, and the obligations
created hereby shall be binding upon, the successors and assigns of the parties
hereto.
Unless otherwise expressly provided herein, all notices, requests, demands and
other communications hereunder shall be in writing, shall be delivered by hand
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.
4
<PAGE>
If to the Agent, to:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Corporate Agency Administration
Telephone: (212) 858-2103
Facsimile: (212) 858-2611
If to the Company, to:
Wright M. Thomas, President
Park Communications, Inc.
1700 Vine Center Office Tower
333 West Vine Street
Lexington, Kentucky 40507
Telephone: (606) 252-7275
Facsimile: (606) 226-9609
with copies to:
Gregory A. Weingart, Esquire
Eckert Seamans Cherin & Mellott
600 Grant Street, 42nd Floor
Pittsburgh, PA 15219
Telephone: (412) 566-6062
Facsimile: (412) 566-6099
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.
IBJ Schroder Bank & Trust Company
By:
-------------------------------
Title:
Park Communications, Inc.
By:
-------------------------------
Title:
5
<PAGE>
EXHIBIT A
SAMPLE REPORT LETTER
Date:
-----------------
Report Number:
-----------------
As of Date:
-----------------
Name of Client
Address of Client
City, State, Zip
Re: Description of Offer
Gentlemen:
As Exchange Agent for the above Offer dated , we hereby render
---------------
the following report:
Shares previously received:
-----------------------
Shares received today:
-----------------------
Total Shares received to date:
-----------------------
Very truly yours,
6
