<PAGE>
As filed with the Securities and Exchange Commission on June 8, 1998.
Registration No.
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------
GRANITE BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 4833 13-3458782
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Number)
767 Third Avenue, 34th Floor
New York, New York 10017
(212) 826-2530
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
W. DON CORNWELL
Chief Executive Officer
GRANITE BROADCASTING CORPORATION
767 Third Avenue, 34th Floor
New York, New York 10017
(212) 826-2530
(Name, address, including zip code, and telephone number
including area code, of agent for service)
-------------
Copies to:
Russell W. Parks, Jr., Esq.
William A. Bianco, Esq.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
1333 New Hampshire Avenue, N.W.
Suite 400
Washington, D.C. 20036
-------------
Approximate date of commencement of proposed sale of securities to the public:
As soon as practicable after this Registration Statement becomes effective.
-------------
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. |_|
-------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==============================================================================================================================
Title of Each Class of Amount to be Proposed Maximum Offering Proposed Maximum Aggregate Amount of
Securities to be Registered Registered Price Per Share (1) Offering Price (1) Registration Fee
==============================================================================================================================
<S> <C> <C> <C> <C>
8 7/8% Senior Subordinated
Notes Due 2008................ $175,000,000 100% $175,000,000 $51,625
- ------------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee.
</TABLE>
-------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION DATED JUNE 8, 1998
OFFER TO EXCHANGE
8 7/8% SENIOR SUBORDINATED NOTES DUE MAY 15, 2008 FOR UP TO $175,000,000 IN
PRINCIPAL AMOUNT OUTSTANDING 8 7/8% SERIES A SENIOR SUBORDINATED NOTES DUE MAY
15, 2008
OF
GRANITE BROADCASTING CORPORATION
-------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1998, UNLESS EXTENDED
Granite Broadcasting Corporation, a Delaware corporation ("Granite" or
the "Company"), hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and the accompanying letter of transmittal (the
"Letter of Transmittal," and together with this Prospectus, the "Exchange
Offer"), to exchange $1,000 principal amount of its newly issued 8 7/8% Senior
Subordinated Notes due May 15, 2008 (the "New Notes") for each $1,000
principal amount of the outstanding 8 7/8% Series A Senior Subordinated Notes
due May 15, 2008 (the "Old Notes") of the Company, of which $175,000,000
principal amount is outstanding. The New Notes will be obligations of the
Company issued pursuant to the Indenture under which the Old Notes were
issued (the "Indenture"). The form and terms of the Old Notes are the same as
the form and terms of the New Notes except that (i) the New Notes will have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a Registration Statement (as defined herein) of which this
Prospectus is a part, and thus will not bear legends restricting their
transfer pursuant to the Securities Act, (ii) the holders of the New Notes
will not be entitled to certain rights of holders of the Old Notes under the
Registration Rights Agreement (as defined herein) which will terminate upon
the consummation of the Exchange Offer and (iii) for certain contingent
interest rate provisions. See "The Exchange Offer." The New Notes and the Old
Notes are together referred to herein as the "Notes."
Granite will accept for exchange any and all Old Notes that are validly
tendered on or prior to 5:00 p.m. New York City time, on the date the
Exchange Offer expires, which will be , 1998, unless the Exchange Offer is
extended (the "Expiration Date"). The exchange of New Notes for Old Notes
will be made (i) with respect to all Old Notes validly tendered and not
withdrawn on or prior to 5:00 p.m. New York City time, on , 1998 (the "Early
Exchange Date"), within two business days following the Early Exchange Date,
and (ii) with respect to all Old Notes validly tendered and not withdrawn
after the Early Exchange Date and on or prior to the Expiration Date, within
two business days following the Expiration Date. Tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date, unless previously accepted for exchange. The Exchange Offer
is not conditioned upon any minimum principal amount of Old Notes being
tendered for exchange. However, the Exchange Offer is subject to certain
conditions which may be waived by the Company. See "The Exchange Offer." The
Company has agreed to pay the expenses of the Exchange Offer.
Interest on the New Notes will accrue from May 11, 1998 or from the
most recent interest payment date on the Old Notes surrendered in exchange
therefor. Interest on the New Notes is payable semi-annually on May 15 and
November 15 of each year, commencing on November 15, 1998, at a rate of 8 7/8%
per annum. The New Notes will be issued only in registered form in minimum
denominations of $1,000 and integral multiples thereof. Holders of Old Notes
whose Old Notes are accepted for exchange will be deemed to have waived the
right to receive any payment in respect of interest accrued from May 11, 1998
to the date of issuance of the New Notes.
(Continued on next page)
--------------
See "Risk Factors" beginning on page 13 of this Prospectus for a
discussion of certain risks associated with an investment in the New Notes.
--------------
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 THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998
<PAGE>
The New Notes will be redeemable, at the option of the Company, in
whole or in part, on or after May 15, 2003, at the redemption prices set
forth herein, plus accrued and unpaid interest to the date of redemption. In
addition, at any time prior to May 15, 2001, the Company may, at its option
and subject to certain requirements, redeem up to an aggregate of 35% of the
aggregate principal amount of Notes with the net proceeds from one or more
sales of Capital Stock at the redemption price set forth herein plus accrued
and unpaid interest to the redemption date, provided that after any such
redemption the aggregate principal amount of the Notes then outstanding is at
least 65% of the aggregate principal amount of the Notes issued. Subject to
certain conditions, upon the occurrence of a Change of Control, the Company
will be required to offer to purchase all of the then outstanding Notes at a
price equal to 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest to the date of purchase.
The New Notes will be general unsecured obligations of the Company and
will be subordinated in right of payment to all existing and future Senior
Debt (as defined) and will rank pari passu with the Company's outstanding
10 3/8% Notes and 9 3/8% Notes (each as defined) (collectively, the "Existing
Notes") and will rank pari passu with or senior to all future Debt of the
Company that expressly provides that it ranks pari passu with or junior to
the Notes, as the case may be. On a pro forma basis, after giving effect to
an acquisition and certain dispositions and the consummation of the offering
of the Old Notes as though such transactions had occurred on March 31, 1998,
there would have been $18.2 million of Senior Debt of the Company outstanding
and $227.1 million of Debt ranking pari passu with the Notes.
Old Notes initially purchased by qualified institutional buyers were
initially represented by a single, global Note in registered form, registered
in the name of a nominee of The Depository Trust Company ("DTC"), as
depository. The New Notes exchanged for Old Notes represented by the global
Note will be represented by one or more global New Notes in registered form,
registered in the name of the nominee of DTC. New Notes in global form will
trade in DTC's Same-Day Funds Settlement System, and secondary market trading
activity in such New Notes will therefore settle in immediately available
funds. See "Description of New Notes -- Form, Denomination and Book -- Entry
Procedures." New Notes issued to non-qualified institutional buyers in
exchange for Old Notes held by such investors will be issued only in
certificated, fully registered, definitive form.
The Old Notes were originally issued and sold on May 11, 1998 in
transactions not registered under the Securities Act in reliance upon the
exemption provided in Section 4(2) of the Securities Act. Accordingly, the
Old Notes may not be reoffered, resold or otherwise pledged, hypothecated or
transferred in the United States unless so registered or unless an applicable
exemption from the requirements of the Securities Act is available. Based
upon interpretations by the staff of the Securities and Exchange Commission
(the "Commission") set forth in no-action letters issued to unrelated third
parties, the Company believes that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a "Restricted Holder,"
being (i) a broker-dealer who purchases such Old Notes directly from the
Company to resell pursuant to Rule 144A or any other available exemption
under the Securities Act or (ii) a person 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 the holder is acquiring the New Notes in the ordinary
course of its business and is not participating, does not intend to
participate and has no arrangement or understanding with any person to
participate in a distribution of the New Notes. Eligible holders wishing to
accept the Exchange Offer must represent to the Company that such conditions
have been met. Each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal relating the Exchange Offer states that by so acknowledging and
by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that it will make this Prospectus
available to any broker-dealer for use in connection with any such resale for
a period from the date of this Prospectus until 180 days after the
consummation of the Exchange Offer, or such shorter period as will terminate
when all Old Notes acquired by broker-dealers for their own accounts as a
result of market-making activities or other trading activities have been
exchanged for New Notes and resold by such broker-dealers. See "The Exchange
Offer" and "Plan of
<PAGE>
Distribution."
Any Old Notes not tendered and accepted in the Exchange Offer will
remain outstanding. To the extent that Old Notes are tendered and accepted in
the Exchange Offer, a holder's ability to sell untendered Old Notes could be
adversely affected. Following consummation of the Exchange Offer, the holders
of Old Notes will continue to be subject to the existing restrictions on
transfer thereof and the Company will have no further obligation to such
holders to provide for the registration under the Securities Act of the Old
Notes.
Prior to the Exchange Offer, there has been only a limited secondary
market and no public market for the Old Notes. If a market for the New Notes
should develop, the New Notes could trade at a discount from their principal
amount. The Company does not intend to list the New Notes on a national
securities exchange or to apply for quotation of the New Notes through the
National Association of Securities Dealers Automated Quotation System. There
can be no assurance that an active public market for the New Notes will
develop.
The Company will not receive any proceeds from this offering, and no
underwriter is being used in connection with the Exchange Offer. See "Use of
Proceeds."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission.
The reports and other information filed by the Company with the Commission
can be inspected and copied at the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: 7 World Trade Center, Suite 1300, New York, New
York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such information can be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a web
site (http://www.sec.gov) that contains reports and other information
regarding the Company. The Company's Common Stock (Nonvoting), par value $.01
per share, and Cumulative Convertible Exchangeable Preferred Stock, par value
$.01 per share, are quoted on the Nasdaq National Market and such reports and
other information can be inspected and copied at the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006. In
addition, the Company intends to furnish registered holders of the Notes with
annual reports containing consolidated financial statements audited by
independent certified public accountants and with quarterly reports
containing unaudited financial information for each of the first three fiscal
quarters of the Company's fiscal year.
The Company has filed with the Commission a Registration Statement
(which term shall include any amendment, exhibit, schedule and supplement
thereto) on Form S-4 under the Securities Act for the registration of the New
Notes offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in
the Registration Statement, certain items of which are omitted as permitted
by the rules and regulations of the Commission. For further information with
respect to the Company and such securities, reference is hereby made to the
Registration Statement, including the exhibits and schedules thereto.
Statements made in this Prospectus concerning the contents of any contract,
agreement or other document referred to herein are not necessarily complete.
With respect to each such contract, agreement or other document filed with
the Commission as an exhibit to the Registration Statement, reference is
hereby made to the exhibit 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 and the exhibits and schedules
thereto filed by the Company with the Commission may be inspected at the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549.
The Company has agreed that, if it is not subject to the informational
requirements of Sections 13 or 15(d) of
ii
<PAGE>
the Exchange Act at any time while the Notes constitute "restricted
securities" within the meaning of the Securities Act, it will furnish to
holders and beneficial owners of the Notes and to prospective purchasers
designated by such holders the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act until the consummation of the
Exchange Offer.
INCORPORATION BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and Quarterly Reports on Form 10-Q and Form 10-Q/A for the
quarterly period ended March 31, 1998, which have been filed by the Company
with the Commission are incorporated by reference into this Prospectus. In
addition, all documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the Exchange Offer shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof
from the date of filing such documents. Any statement contained herein or in
any document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for the purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part of this
Prospectus, except as so modified or superseded.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
WRITTEN OR ORAL REQUEST FROM ELLEN MCCLAIN HAIME, GRANITE BROADCASTING
CORPORATION, 767 THIRD AVENUE, 34TH FLOOR, NEW YORK, NEW YORK 10017, (212)
826-2530. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY , 1998.
iii
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
AVAILABLE INFORMATION.................................................. ii
INCORPORATION BY REFERENCE............................................. iii
PROSPECTUS SUMMARY..................................................... 1
RISK FACTORS........................................................... 13
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS........................ 17
USE OF PROCEEDS........................................................ 19
THE EXCHANGE OFFER..................................................... 20
CAPITALIZATION......................................................... 27
PRO FORMA CONDENSED FINANCIAL STATEMENTS............................... 28
DESCRIPTION OF NEW NOTES............................................... 36
DESCRIPTION OF CERTAIN INDEBTEDNESS.................................... 58
PLAN OF DISTRIBUTION................................................... 62
EXPERTS ............................................................... 63
LEGAL MATTERS.......................................................... 63
INDEX TO FINANCIAL STATEMENTS.......................................... F-1
</TABLE>
iv
<PAGE>
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be
read in connection with, the more detailed information and financial
statements and notes thereto appearing elsewhere in this Prospectus. See
"Risk Factors" for a discussion of certain factors to be considered in
connection with an investment in the New Notes. Unless the context requires
otherwise, references to the "Company" or "Granite" include Granite
Broadcasting Corporation and its subsidiaries.
The Company
Granite is a group broadcasting company which operates eleven
network-affiliated television stations. The Company has pending the
acquisition of KOFY-TV, the WB affiliated station serving the San
Francisco-Oakland-San Jose, California television market ("KOFY"), for
aggregate consideration to the sellers of $173.8 million (the "KOFY
Acquisition"), and has agreed to sell WWMT-TV, the CBS affiliated station
serving the Grand Rapids-Kalamazoo-Battle Creek, Michigan television market
("WWMT") and WLAJ-TV, the ABC affiliated station serving the Lansing,
Michigan television market ("WLAJ") for $170.0 million in the aggregate. The
Company currently operates WLAJ pursuant to a time brokerage agreement and
has a contract to purchase WLAJ for $19.4 million. The net proceeds from the
sale of WWMT and WLAJ, after payment of the purchase price for WLAJ, will be
used to fund part of the purchase price of KOFY.
The acquisition of KOFY would add to the Granite station group a second
WB affiliate in a top-ten market and would increase the pro forma revenue
contribution from stations affiliated with the fast-growing WB network to
more than 20%. The Company plans to combine the resources of KOFY with those
of KNTV, its San Jose, California station, and utilize KNTV's capabilities to
launch a news franchise for KOFY. With news programming, KOFY should gain
access to the market for news-targeted television advertising in San
Francisco. Upon completion of the KOFY Acquisition and the sale of WWMT and
WLAJ, the Company will own 10 network-affiliated stations, diverse in
geographic locations and network affiliations, reaching communities
representing approximately 7.0% of the total television households in the
United States.
The Company's goal is to identify and acquire properties that
management believes have the potential for substantial long-term appreciation
and to aggressively manage such properties to improve their operating
results. Since its inception, the Company has grown significantly, primarily
as a result of a series of carefully selected acquisitions involving network
affiliated television stations in increasingly larger markets and also as a
result of the implementation of the Company's operating strategies. For the
year ended December 31, 1997 as compared to the year ended December 31, 1996,
Granite's net revenue increased by 19% to $153,512,000, its broadcast cash
flow increased by 22% to $69,783,000 and its EBITDA increased by 20% to
$62,544,000. See "Summary Consolidated Financial Data," and "Pro Forma
Condensed Financial Statements."
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1
<PAGE>
- --------------------------------------------------------------------------------
The following table sets forth general information for each of the
Company's stations:
<TABLE>
<CAPTION>
Year Network Market Station
Station Acquired Affiliation Rank(a) Rank(a)
------- -------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
New Market:
San Francisco-Oakland-San Jose,
California.................... KOFY Pending WB 5 8
Existing Markets:
Detroit, Michigan ............... WDWB 1997 WB 9 6
Grand Rapids - Kalamazoo -
Battle Creek, Michigan......... WWMT 1995(b) CBS 37 1
Buffalo, New York................ WKBW 1995 ABC 40 1
San Jose, California(c) ......... KNTV 1990 ABC 52 4
Fresno - Visalia, California..... KSEE 1993 NBC 55 2
Austin, Texas.................... KEYE 1995 CBS 60 1
Syracuse, New York............... WTVH 1993 CBS 72 2
Fort Wayne, Indiana.............. WPTA 1989 ABC 102 1 (tie)
Lansing, Michigan................ WLAJ Pending(b)(d) ABC 105 3 (tie)
Peoria - Bloomington, Illinois... WEEK 1988 NBC 110 1
Duluth, Minnesota -
Superior, Wisconsin............ KBJR 1988 NBC 134 1 (tie)
</TABLE>
- ----------
(a) "Market rank" refers to the size of the television market or Designated
Market Area ("DMA") as defined by the A.C. Nielsen Company ("Nielsen"),
except for San Jose. KNTV, whose DMA is the Salinas-Monterey television
market, primarily serves San Jose and Santa Clara County (which are part
of the San Francisco-Oakland-San Jose DMA). If Santa Clara County were a
separate DMA, it would rank as the 52nd largest DMA in the United States.
"Station rank" represents the rank of a station in its DMA, based on
sign-on to sign-off station audience share of such station. All market
rank data is derived from the February 1998 Nielsen Station Index, which
includes ratings from the 1998 Winter Olympics. All station rank data is
derived from an average of the Nielsen Station Index for February 1998,
November 1997, May 1997 and February 1997, unless otherwise noted.
(b) The Company has agreed to sell WWMT and WLAJ. See "Recent Developments -
WWMT and WLAJ Sale Agreement."
(c) Station rank data is for the Salinas-Monterey television market and does
not reflect KNTV's audience in the adjacent market of San Jose.
(d) WLAJ is currently being operated by the Company pursuant to a time
brokerage agreement.
- -------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
Recent Developments
KOFY Acquisition Agreement
On October 3, 1997, the Company entered into a definitive agreement
with Pacific FM Incorporated ("Pacific"), a California corporation, James J.
Gabbert and Michael P. Lincoln to acquire 51% of the outstanding stock of
Pacific, the owner of KOFY, the WB affiliated station serving the San
Francisco-Oakland-San Jose, California television market. It is a condition
to the closing of the purchase that the Company acquire the remaining 49% of
the stock of Pacific. The total purchase price for all the stock of Pacific
will be $143.8 million in cash, subject to certain adjustments. In addition,
the Company will pay $30.0 million to the principal shareholders of Pacific
for a covenant not to compete in the San Francisco-Oakland-San Jose
television market for a period of five years from the closing of the
Company's acquisition. The Company has an agreement to enter into a new
network affiliation agreement with WB at the closing of the KOFY Acquisition,
for a term expiring on December 31, 2007.
The proposed KOFY Acquisition is subject to approval by the Federal
Communications Commission (the "FCC") and other customary closing conditions
and is expected to be completed during the third quarter of 1998. Because
Granite already owns a television station with an overlapping service area,
KNTV, the Company has requested a permanent waiver of the FCC's local
television multiple ownership rule to permit Granite to own both KNTV and
KOFY. See "Risk Factors -- No Assurance of Closing KOFY Acquisition or
Disposition of WWMT and WLAJ."
WWMT and WLAJ Sale Agreement
On February 19, 1998, the Company and certain of the Company's
subsidiaries entered into a definitive agreement with Freedom Communications,
Inc. ("Freedom"), a California corporation, whereby Freedom will acquire the
assets of WWMT and WLAJ for a total purchase price of $170.0 million in cash,
subject to certain adjustments. Granite acquired all of the assets of WWMT in
1995 for $95.0 million and has a contract to acquire all of the assets of
WLAJ for $19.4 million. Granite currently operates WLAJ pursuant to a time
brokerage agreement. It is anticipated that the net proceeds from the sale of
WWMT and WLAJ, after payment of the purchase price for WLAJ, will be used to
fund part of the purchase price for the KOFY Acquisition.
The consummation of the sale of WWMT and WLAJ is contingent on, among
other things, approval by the FCC and satisfaction of other customary closing
conditions. The FCC has granted its consent to the assignment of WWMT from
Granite to Freedom. This order will become final on June 30, 1998. The
application requesting consent to assign WLAJ from Granite to Freedom is
still pending before the FCC. Because WWMT and WLAJ operate in overlapping
service areas, Freedom must obtain a waiver of the FCC's local television
multiple ownership rules before the assignment of WLAJ can be granted. This
waiver request is still pending before the FCC. The FCC recently granted an
application to permit WLAJ to modify its facilities to reduce the overlap of
the WLAJ and WWMT signals. This modification is expected to facilitate timely
and favorable action on the waiver request. See "Risk Factors -- No Assurance
of Closing KOFY Acquisition or Disposition of WWMT and WLAJ."
It is contemplated that the sale of WWMT and WLAJ will close in the
second quarter of 1998.
First Quarter Financial Results
For the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997, Granite's net revenue increased by 14% to
$36,724,000, its broadcast cash flow increased by 15% to $14,409,000 and its
after-tax cash flow increased by 193% to $2,546,000. The increase in net
revenue was primarily due to significant increases in advertising revenue
driven by Olympic spending at the Company's CBS affiliated stations,
substantial advertising revenue growth at WDWB in Detroit, Michigan,
increased political spending in an election year and strong non political
local advertising at virtually all of the Company's stations, as well as the
inclusion of one additional month of operations of WDWB.
----------
The Company's Principal Executive Offices are located at 767 Third
Avenue, 34th Floor, New York, New York 10017, telephone number (212) 826-2530.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
Summary of Terms of the Exchange Offer
The Exchange Offer relates to the exchange of up to $175,000,000
aggregate principal amount of Old Notes for up to an equal aggregate
principal amount of New Notes. The New Notes will be obligations of the
Company issued pursuant to the Indenture. The form and terms of the New Notes
are identical in all material respects to the form and terms of the Old Notes
except (i) that the New Notes have been registered under the Securities Act,
(ii) that the New Notes are not entitled to certain registration rights which
are applicable to the Old Notes under the Registration Rights Agreement and
(iii) for certain contingent interest rate provisions. The Old Notes and the
New Notes are together referred to herein as the "Notes." See "Description of
New Notes."
The Exchange Offer.... $1,000 principal amount of New Notes will be issued in
exchange for each $1,000 principal amount of Old Notes
validly tendered pursuant to the Exchange Offer. The
exchange of New Notes for Old Notes will be made (i)
with respect to all Old Notes validly tendered and not
withdrawn on or prior to the Early Exchange Date,
within two business days following the Early Exchange
Date, and (ii) with respect to all Old Notes validly
tendered and not withdrawn on or prior to the
Expiration Date, within two business days following
the Expiration Date. As of the date hereof,
$175,000,000 in aggregate principal amount of Old
Notes are outstanding.
Resale............... Based on interpretations by the staff of the Commission
set forth in no-action letters issued to unrelated third
parties, the Company believes that New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale and resold or otherwise
transferred by holders thereof (other than any
Restricted Holder) without compliance with the
registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are
acquired in the ordinary course of such holders'
business and such holders are not participating, do not
intend to participate and have no arrangement or
understanding with any person to participate, in a
distribution of such New Notes. See "K-III
Communications Corporation," SEC No-Action Letter
(available May 14, 1993); "Morgan Stanley & Co.,
Incorporated," SEC No-Action Letter (available June 5,
1991); and "Exxon Capital Holdings Corporation," SEC
No-Action Letter (available May 13, 1988). Each
broker-dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old Notes
were acquired by such 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 New Notes. See "Plan
of Distribution."
If any person were to participate in the Exchange Offer
for the purpose of distributing securities in a manner
not permitted by the preceding paragraph, such person
could not rely on the position of the staff of the
Commission and must comply with the Prospectus delivery
requirements of the Securities Act in connection with a
secondary resale transaction. Therefore each holder of
Old Notes who accepts the Exchange Offer must represent
in the Letter of Transmittal that it meets the
conditions described above. See "The Exchange
Offer--Purpose and Effects of the Exchange Offer."
Early Exchange Date... All Notes validly tendered and not withdrawn on or
prior to 5:00 p.m. New York City time, on , 1998
(the "Early Exchange Date") will be exchanged for New
Notes within two business days following the Early
Exchange Date.
- -------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
Expiration Date....... 5:00 p.m., New York City time, on , 1998 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. See "The Exchange
Offer -- Expiration Date; Extensions; Amendments."
Accrued Interest on the
New Notes and the Old
Notes............... Interest will accrue on the New Notes from May 11,
1998 or from the most recent interest payment date on
the Old Notes surrendered in exchange therefor. Holders
of Old Notes whose Old Notes are accepted for exchange
will be deemed to have waived the right to receive any
payment in respect of interest accrued from May 11,
1998 to the date of issuance of the New Notes. See
"The Exchange Offer -- Interest on the New Notes."
Conditions to the
Exchange Offer...... The Company will not be obligated to consummate the
Exchange Offer if the New Notes to be received will
not be tradeable by the holder, other than in the
case of Restricted Holders, without restriction under
the Securities Act and the Exchange Act and without
material restrictions under the blue sky or securities
laws of substantially all of the states of the United
States. This condition may be waived by the Company.
See "The Exchange Offer -- Conditions."
No federal or state regulatory requirements must be
complied with or approvals obtained in connection with
the Exchange Offer, other than the registration
provisions of the Securities Act and any applicable
registration or qualification provisions of state
securities laws.
Procedure for Tendering
Old Notes.......... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the 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 Old Notes (unless
such tender is being effected pursuant to the
procedures for book-entry transfer described below)
to be exchanged and any other required documentation
to the Exchange Agent (as defined herein) at the
address set forth herein and therein. See "The
Exchange Offer -- Procedure for Tendering."
Special Procedures for
Beneficial Holders.. Any beneficial holder whose Old Notes are registered in
the name of his broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender in
the Exchange Offer should contact such registered
holder promptly and instruct such registered holder to
tender on his behalf. If such beneficial holder wishes
to tender on his own behalf, such beneficial holder
must, prior to completing and executing the Letter of
Transmittal and delivering his Old Notes, either make
appropriate arrangements to register ownership of the
Old Notes in such holder's name or obtain a properly
completed bond power from the registered holder. The
transfer of record ownership may take considerable
time.
See "The Exchange Offer -- Procedure for Tendering."
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5
<PAGE>
- --------------------------------------------------------------------------------
Guaranteed Delivery
Procedures ........... Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately available
or who cannot deliver their Old Notes (or who cannot
complete the procedures for book-entry transfer on a
timely basis) and a properly completed Letter of
Transmittal or any other documents required by the
Letter of Transmittal to the Exchange Agent prior to
the Early Exchange Date or Expiration Date, as the case
may be, may tender their Old Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer -- Guaranteed Delivery Procedures."
Withdrawal Rights..... Tenders of Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the
Expiration Date, unless previously accepted for
exchange. See "The Exchange Offer -- Withdrawal of
Tenders."
Acceptance of Old
Notes Delivery of
New Notes ......... Subject to certain conditions (as summarized above in
"Conditions to the Exchange Offer" and described more
fully in "The Exchange Offer -- Conditions"), the
Company will accept for exchange any and all Old Notes
which are validly tendered in the Exchange Offer prior
to 5:00 p.m., New York City time, on each of the Early
Exchange Date or the Expiration Date. The New Notes
issued pursuant to the Exchange Offer will be delivered
promptly following each of the Early Exchange Date or
the Expiration Date. See "The Exchange Offer -- Terms
of the Exchange Offer."
Consequence of Failure
to Exchange....... Holders of Old Notes who do not exchange their Old
Notes for New Notes pursuant to the Exchange Offer will
continue to be subject to the restrictions on transfer
of such Old Notes as set forth on the legend thereon.
In addition, if the Exchange Offer is consummated, the
Company does not intend to file further registration
statements for the sale or other disposition of the
Notes. See "Risk Factors -- No Public Market for the
Notes" and -- Consequences of the Exchange Offer on
Non-Tendering Holders of Old Notes."
Registration Rights
Agreement; Effect on
Holders............. The Old Notes were sold by the Company on May 11, 1998
to Goldman, Sachs & Co., Bear Stearns & Co. Inc. and
Salomon Brothers Inc, as the initial purchasers (the
"Initial Purchasers") pursuant to a Purchase Agreement
dated May 6, 1998 between the Company and the Initial
Purchasers (the "Purchase Agreement"). The Initial
Purchasers subsequently sold the Old Notes to qualified
institutional buyers and non-U.S. persons in reliance
on Rule 144A and Regulation S, respectively, under the
Securities Act. Pursuant to the Purchase Agreement, the
Company and the Initial Purchasers entered into an
Exchange and Registration Rights Agreement dated as
of May 11, 1998 (the "Registration Rights Agreement")
which grants the holders of the Old Notes certain
exchange and registration rights. The Exchange Offer
is being made to satisfy this contractual obligation of
the Company. The holders of New Notes are not entitled
to any exchange or registration rights with respect to
the New Notes. See "The Exchange Offer -- Purpose and
Effects of the Exchange Offer."
Exchange Agent....... The Bank of New York, the Trustee under the Indenture,
is serving as exchange agent (the "Exchange Agent") in
connection with the Exchange
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
Offer. The address of the Exchange Agent is: The Bank
of New York, 101 Barclay Street - 7E, New York, New
York 10286, Attention: Enrique Lopez, Reorganization
Section. For information with respect to the Exchange
Offer, call (212) 815-6333.
Use of Proceeds...... The Company will not receive any proceeds from the
exchange of the New Notes for the Old Notes pursuant
to the Exchange Offer. The net proceeds from the sale
of Old Notes of approximately $169,000,000 (after
deducting underwriting discounts and expenses of the
offering) were used to repay all outstanding term loan
and revolving credit borrowings under the Credit
Agreement, to retire certain other outstanding
indebtedness and for additions to working capital. See
"Use of Proceeds."
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
Summary Description of the New Notes
Securities Offered.... $175,000,000 principal amount of 8 7/8% Senior
Subordinated Notes due May 15, 2008 (the "New Notes").
Maturity Date......... May 15, 2008.
Interest Payment
Dates................ May 15 and November 15, commencing November 15, 1998,
and accruing from May 11, 1998.
Optional Redemption... The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after
May 15, 2003, at the redemption prices set forth herein,
plus accrued and unpaid interest to the date of
redemption. In addition, prior to May 15, 2001, the
Company may, at its option, use the net proceeds of one
or more sales of Capital Stock to redeem up to 35% of
the aggregate principal amount of the Notes, at 108.875%
of their principal amount, plus accrued and unpaid
interest to the date of redemption; provided that after
any such redemption, the aggregate principal amount of
the Notes outstanding must equal at least 65% of the
aggregate principal amount of Notes issued and that such
redemption occurs within 90 days following the closing
of such sale of Capital Stock.
Change of Control..... In the event of a Change of Control, the Company will,
subject to certain conditions, be required to offer to
purchase all outstanding Notes at a purchase price
equal to 101% of the principal amount thereof, plus
accrued and unpaid interest to the date of purchase.
There can be no assurance that the Company will have
sufficient funds to purchase all the Notes in the
event of a Change of Control or that the Company would
be able to obtain financing for such purpose on
favorable terms, if at all.
Mandatory Sinking
Fund................. None.
Ranking................ The New Notes will be general unsecured obligations
of the Company and will be subordinated in right of
payment to all existing and future Senior Debt of the
Company. In addition, the Notes will be effectively
subordinated to all existing and future Debt of the
Company's subsidiaries. The Notes will rank pari passu
with the Company's existing 10 3/8% Senior Subordinated
Notes due May 15, 2005 (the "10 3/8% Notes") and 9 3/8%
Senior Subordinated Notes due December 1, 2005 (the
"9 3/8% Notes" and, collectively with the 10 3/8% Notes,
the "Existing Notes") and will rank pari passu with or
senior to any class or series of Debt that expressly
provides that it ranks pari passu with or junior to the
Notes, as the case may be. See "Description of
Notes-Subordination." On a pro forma basis, after
giving effect to the acquisition, certain dispositions
and the consummation of the offering of the Old Notes,
at March 31, 1998, the Company had $18.2 million of
Senior Debt of outstanding and $227.1 million of Debt
ranking pari passu with the Notes. See "Description
of New Notes -- Subordination."
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8
<PAGE>
- --------------------------------------------------------------------------------
Form of New Notes..... New Notes will be represented by one or more Notes in
registered, global form without interest coupons, and
deposited with DTC or a custodian for DTC and
registered in the name of a nominee of DTC, as
depository. The Old Notes, to the extent directed by
holders thereof in their Letters of Transmittal, will
be exchanged through book-entry electronic transfer
for one or more New Notes in registered, global form
without interest coupons representing the New Notes
(collectively, the "New Global Notes") registered in
the name of DTC or its nominee. See "Description of
New Notes -- Form, Denomination and Book-Entry
Procedures."
Certain Covenants..... The Indenture will contain certain covenants that,
among other things, limit the ability of the Company
and its subsidiaries to incur additional Debt, pay
dividends or make certain other restricted payments,
enter into certain transactions with affiliates, or
merge or consolidate with or sell all or substantially
all of their assets to any other person. See
"Description of New Notes."
Risk Factors
Holders of Old Notes should take into account the specific
considerations set forth under "Risk Factors" as well as the other
information set forth in this Prospectus before tendering Old Notes in
exchange for New Notes.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
Summary Consolidated Financial Data
The summary historical financial information presented below should be
read in conjunction with the Consolidated Financial Statements and notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" incorporated by reference herein. The acquisitions by
the Company of its operating properties during the periods for which the
summary data is presented below materially affect the comparability of such
data from one period to another. The historical Statement of Operations Data
and Selected Balance Sheet Data for the years ended December 31, 1993 through
1997 presented below is derived from audited financial statements. The
historical Statement of Operations Data for the three months ended March 31,
1998 and March 31, 1997 and the historical Selected Balance Sheet Data as of
March 31, 1998 has not been audited, but in the opinion of management,
includes all adjustments necessary for a fair presentation of the information
shown. The summary pro forma financial data presented below is unaudited and
should be read in conjunction with the Pro Forma Condensed Consolidated
Financial Statements and notes thereto contained elsewhere herein.
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------------- 1997
Pro
1993 1994 1995 1996 1997 Forma(a)
----------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net revenue ................. $ 37,499 $ 62,856 $ 99,895 $ 129,164 $ 153,512 $ 151,503
Station operating expenses .. 22,790 37,764 55,399 72,089 83,729 87,139
Time brokerage agreement
fees ...................... -- -- -- 150 600 --
Depreciation ................ 2,398 3,420 4,514 6,144 5,718 4,726
Amortization ................ 3,359 3,873 7,592 9,737 13,824 25,102
Corporate expense ........... 1,375 2,162 3,132 4,800 6,639 6,639
Non-cash compensation ....... 123 282 363 496 986 986
--------- --------- --------- --------- --------- ---------
Operating income ............ 7,454 15,355 28,895 35,748 42,016 26,911
Other expenses (income) ..... 479 309 798 1,034 1,167 (185)
Equity in net loss (income)
of investee ............... -- -- (439) 995 1,531 1,531
Interest expense, net ....... 10,977 10,707 27,026 36,765 38,986 39,862
Non-cash interest expense ... 505 842 1,738 2,087 2,182 2,002
--------- --------- --------- --------- --------- ---------
Income (loss) before income
taxes and extraordinary ... (4,507) 3,497 (228) (5,133) (1,850) (16,299)
item
(Provision) benefit for
income tax ................ 472 (450) (555) (761) (1,616) (346)
--------- --------- --------- --------- --------- ---------
Income (loss) before
extraordinary item ........ (4,035) 3,047 (783) (5,894) (3,466) $ (16,645)
=========
Extraordinary loss on
extinguishment of debt .... (1,007) -- -- (2,891) (5,569)
--------- --------- --------- --------- ---------
Net income (loss) ........... $ (5,042) $ 3,047 $ (783) $ (8,785) $ (9,035)
========= ========= ========= ========= =========
Net loss attributable to
common shareholders ....... $ (5,278) $ (688) $ (4,368) $ (12,310) $ (31,207)
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------------
Pro Forma
1997 1998 1998(a)
--------------------------------------
(unaudited)
<S> <C> <C> <C>
Statement of Operations Data:
Net revenue ................. $ 32,298 $ 36,724 $ 35,302
Station operating expenses .. 19,797 22,315 22,608
Time brokerage agreement
fees ........................ 150 150 --
Depreciation ................ 1,375 1,365 1,231
Amortization ................ 3,171 3,584 6,312
Corporate expense ........... 1,474 2,017 2,017
Non-cash compensation ....... 192 332 333
--------- --------- ---------
Operating income ............ 6,139 6,961 2,801
Other expenses (income) ..... 192 241 216
Equity in net loss (income)
of investee ............... 400 487 487
Interest expense, net ....... 9,778 9,209 9,685
Non-cash interest expense ... 576 475 430
--------- --------- ---------
Income (loss) before income
taxes and
extraordinary item ........ (4,807) (3,451) (8,017)
(Provision) benefit for
income tax ................ (150) (496) (155)
--------- --------- ---------
Income (loss) before
extraordinary item ........ (4,957) (3,947) $ (8,172)
=========
Extraordinary loss on
extinguishment of debt .... (321) --
--------- ---------
Net income (loss) ........... $ (5,278) $ (3,947)
========= =========
Net loss attributable to
common shareholders ....... $ (9,474) $ (10,060)
========= =========
</TABLE>
<TABLE>
<CAPTION>
March 31,
December 31, 1998
---------------------------------------------------------- March 31, ------------
1993 1994 1995 1996 1997 1998 Pro Forma(a)
--------- --------- --------- --------- --------- --------- ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Balance Sheet Data:
Total assets .................... $ 191,517 $ 189,881 $ 452,221 $ 452,563 $ 633,614 $ 624,442 $ 779,725
Total debt ...................... 99,000 99,250 341,000 351,561 392,779 385,790 419,461
Cumulative exchangeable
preferred stock ............... -- -- -- -- 162,537 167,858 167,858
Convertible preferred stock ..... 49,139 49,171 45,488 45,488 45,163 41,563 41,563
Stockholders' equity (deficit) .. 12,075 11,729 8,868 (3,135) (33,257) (39,257) 14,949
</TABLE>
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10
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Twelve Months
Years Ended December 31, Ended
---------------------------------------------------- 1997 March 31,
Pro 1998
1993 1994 1995 1996 1997 Forma(a) Pro Forma(a)
--------- --------- --------- --------- -------- ---------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Data:
Broadcast cash flow(b)(d) ... $14,709 $25,092 $44,496 $57,075 $69,783 $64,364 $66,388
Broadcast cash flow margin .. 39.2% 39.9% 44.5% 44.2% 45.5% 42.5% 43.0%
EBITDA(c) (d) ............... $13,334 $22,930 $41,363 $52,125 $62,544 $57,725 $59,206
EBITDA margin ............... 35.6% 36.5% 41.4% 40.4% 40.7% 38.1% 38.4%
After-tax cash flow(e) ...... $ 2,809 $11,651 $13,275 $13,951 $22,075 $17,702 $18,571
Cash flows provided by (used
in) operating activities .. $ 3,611 $ 5,808 $ 8,806 $13,291 $10,345
Capital expenditures ........ $ 1,089 $ 2,628 $ 7,682 $ 6,938 $ 5,875 $ 5,875 $ 5,865
Ratio of earnings to fixed
charges(f) ................ -- 1.30x -- -- -- -- --
Ratio of long-term debt
to EBITDA ................. 6.28x 7.27x 7.08x
Ratio of EBITDA to total cash
interest expense .......... 1.60x 1.45x 1.52x
</TABLE>
- ----------
(a) Gives effect to the sale of the Old Notes and application of the
proceeds therefrom, the KOFY Acquisition and the related borrowings
under the Credit Agreement, the disposition of WWMT and WLAJ and the
refinancing of certain debentures with borrowings under the Credit
Agreement, as if all such transactions occurred on January 1, 1997 in
the case of statement of operations data and on March 31, 1998 in the
case of selected balance sheet data. 1997 pro forma statement of
operations data also gives effect to the acquisition of WDWB, which was
acquired as of January 31, 1997, as if such acquisition occurred as of
January 1, 1997. See "Use of Proceeds" and "Pro Forma Condensed
Financial Statements."
(b) "Broadcast cash flow" means operating income plus time brokerage
agreement fees, depreciation and amortization, corporate expense and
non-cash compensation. The Company has included broadcast cash flow
data because such data are commonly used as a measure of performance
for broadcast companies and are also used by investors to measure a
company's ability to service debt. Broadcast cash flow is not, and
should not be used as, an indicator or alternative to operating income,
net income or cash flow as reflected in the Consolidated Financial
Statements, is not a measure of financial performance under generally
accepted accounting principles and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.
(c) "EBITDA" means operating income plus depreciation and amortization and
non-cash compensation expense. Operating income is reduced for the
years ended December 31, 1996 and 1997 on a historical basis by the
time brokerage agreement fees associated with the Company's operation
of station WLAJ. Such fees will terminate upon the Company's planned
disposition of WLAJ in the second quarter of 1998. The Company has
included EBITDA data because such data are used by investors to measure
a company's ability to service debt. EBITDA does not purport to
represent cash provided by operating activities as reflected in the
Consolidated Financial Statements, is not a measure of financial
performance under generally accepted accounting principles and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.
(d) The pro forma financial results exclude the effects of estimated cost
savings resulting from the KOFY Acquisition. The Company expects to
realize approximately $1,100 of annualized net cost savings resulting
from the elimination of duplicative staffing and redundant operating
expenses and new rates associated with revised vendor contracts. On a
pro forma basis, assuming the acquisition and the related cost savings
had been realized on the first day of the periods presented, broadcast
cash flow and EBITDA would have been $65,464 and $58,825, respectively,
for the year ended December 31, 1997 and $67,488 and $60,306,
respectively, for the latest twelve months ended March 31, 1998. There
can be no assurances that the cost savings described above will be
achieved or as to the timing of any realization of benefit.
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11
<PAGE>
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(e) After-tax cash flow is income (loss) before extraordinary item plus
depreciation, amortization, non-cash compensation, non-cash interest
expense, the non-cash portion of the (provision) benefit for income
taxes and the equity in net loss of investee. After-tax cash flow is
not a measure of financial performance under generally accepted
accounting principles and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles.
(f) For purposes of computing the ratio of earnings to fixed charges,
"fixed charges" consists of gross interest expense, amortization of
deferred financing charges and the interest component of rent expense,
and "earnings" consists of income before income taxes and fixed
charges. Earnings were insufficient to cover fixed charges for the
years ended December 31, 1993, 1995, 1996 and 1997 by $4,507, $228,
$5,133 and $1,850, respectively. Earnings were insufficient to cover
fixed charges for the three month periods ended March 31, 1998 and 1997
by $4,807 and $3,451, respectively. Pro forma earnings would have been
insufficient to cover fixed charges by $16,299 for the year ended
December 31, 1997 and by $8,017 for the three months ended March 31,
1998.
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12
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
risk factors should be considered carefully in evaluating the Company and its
business before making an investment in the New Notes. This Prospectus
contains forward-looking statements which involve risks and uncertainties.
The Company's actual results may differ significantly from those anticipated
in these forward-looking statements as a result of certain factors, including
those set forth in the following risk factors and elsewhere in this
Prospectus. See "Disclosure Regarding Forward-Looking Statements."
High Leverage; Limitations on Financial Flexibility; Effect of Non-compliance
with Restrictive Covenants
The Company has incurred significant indebtedness in connection with
the acquisition of its television stations and anticipates incurring
additional indebtedness in connection with future acquisitions, including the
KOFY Acquisition. At March 31, 1998, the Company's long-term indebtedness was
approximately $385,800,000 and its combined long-term indebtedness and
liquidation and redemption obligations on its Cumulative Exchangeable
Preferred Stock was approximately $553,600,000. At that date, after giving
effect to the offering of the Old Notes, the Company would have had
approximately $14.0 million in cash on hand and the ability to borrow only an
additional $2.0 million under the existing Credit Agreement in compliance
with the financial covenants thereunder. The Company expects to enter into a
new Credit Agreement that, among other things, will increase the amount of
the Company's permitted indebtedness to 7.25 times its EBITDA (as defined
therein) for the most recent four fiscal quarters. As of March 31, 1998, on a
pro forma basis, after giving effect to the sale of the Old Notes and
application of the proceeds therefrom, the KOFY Acquisition and the related
borrowings under the Credit Agreement, the disposition of WWMT and WLAJ and
the refinancing of certain debentures with borrowings under the Credit
Agreement, the Company's long term indebtedness would have increased to
approximately $419,500,000, which would represent a ratio of total
indebtedness to EBITDA, as expected to be defined in the new Credit
Agreement, of 7.12. Also on such pro forma basis, the Company's combined
long-term indebtedness and liquidation and redemption obligations on its
Cumulative Exchangeable Preferred Stock would have increased to approximately
$587,300,000 as of March 31, 1998, and broadcast cash flow for the twelve
months ended March 31, 1998 would have decreased to approximately
$66,388,000. The Company's ratio of EBITDA to total cash interest expense for
the twelve months ended March 31, 1998 would have been 1.52 on such pro forma
basis. The Indenture governing the Company's 9 3/8% Notes (the "9 3/8% Note
Indenture"), the Indenture governing the Company's 10 3/8% Notes (the "10 3/8%
Note Indenture," collectively with the 9 3/8% Note Indenture, the "Existing
Indentures"), and the Credit Agreement contain various financial and
operating covenants that, among other things, require the maintenance of
certain financial ratios and restrict the Company's ability to borrow funds
and to utilize funds for various purposes, including acquisitions and
investments in certain subsidiaries. These restrictions, in combination with
the leveraged nature of the Company, could limit the ability of the Company
to respond to market conditions or meet extraordinary capital needs, or could
adversely affect the Company's ability to finance its future operations or
capital needs, or engage in other business activities which could be in the
interest of the Company.
A substantial portion of the Company's cash flow from operations is
required for debt service. The Company's ability to service its debt,
including the Notes, Existing Notes and borrowings under the Credit Agreement
will depend upon the Company's future operating performance, which is subject
to financial, political, business, regulatory and other factors, many of
which are beyond the Company's control. Since borrowings under the Credit
Agreement bear interest at rates that will fluctuate with certain prevailing
interest rates, increases in such prevailing interest rates likely will
increase the Company's interest payment obligations with respect to
borrowings thereunder and could have an adverse effect on the Company. In
addition, the Company has significant preferred stock dividend requirements,
including cash dividends on its Cumulative Exchangeable Preferred Stock
commencing in 2002.
Additionally, if the Company were to sustain a decline in its operating
results, it could experience difficulty in complying with the covenants that
are contained in the Credit Agreement and any other agreements governing
future indebtedness of the Company. The failure to comply with such covenants
could result in an event of default under these agreements, thereby
permitting acceleration of indebtedness incurred pursuant thereto, as well as
13
<PAGE>
indebtedness under other instruments that contain cross-acceleration or
cross-default provisions, including the Existing Notes and the Notes.
Subordination of Notes; Pledge of Assets to Secure Senior Indebtedness
The Notes are subordinated in right of payment to all existing and
future Senior Debt, including the principal of (and premium, if any) and
interest on and all other amounts due on or payable in connection with Senior
Debt, including borrowings under the Credit Agreement. On a pro forma basis
as of March 31, 1998, after giving effect to the sale of the Old Notes and
application of the proceeds therefrom, the KOFY Acquisition and the related
borrowings under the Credit Agreement, the disposition of WWMT and WLAJ and
the refinancing of certain debentures with borrowings under the Credit
Agreement, there would have been approximately $18,200,000 of Senior Debt
outstanding. The Company expects to enter into a new credit agreement that,
subject to compliance with certain conditions, will permit $260,000,000 of
revolving credit borrowings and borrowings of up to an additional
$240,000,000 on an uncommitted basis. The Indenture does not limit the amount
of Senior Debt that the Company may incur provided that the incurrence of
Debt is then permitted under the Indenture. See "Description of Certain
Indebtedness - Credit Agreement." By reason of the subordination of the
Notes, in the event of the insolvency, liquidation, reorganization,
dissolution or other winding-up of the Company or upon a default in payment
with respect to, or the acceleration of, or if a judicial proceeding is
pending with respect to any default under, any Senior Debt, the lenders under
the Credit Agreement and any other creditors who are holders of Senior Debt
must be paid in full before the holders of the Notes may be paid. The
Indenture also does not limit the amount of debt ranking pari passu with the
Notes that the Company may incur provided that the incurrence of debt is then
permitted under the Indenture. The Notes rank pari passu in right of payment
with the Existing Notes. If the Company incurs any additional pari passu
debt, the holders of such debt, along with the holders of the Existing Notes,
would be entitled to share ratably with the holders of the Notes in any
proceeds distributed in connection with any insolvency, liquidation,
reorganization, dissolution or other winding-up of the Company. This may have
the effect of reducing the amount of proceeds paid to the holders of the
Notes. In addition, no payments may be made with respect to the principal of
(premium, if any) or interest on the Notes if a payment default exists with
respect to Senior Debt and, under certain circumstances, no payments may be
made with respect to the principal of (premium, if any) or interest on the
Notes for a period of up to 179 days if a non-payment default exists with
respect to Senior Debt. In addition, the Indenture permits subsidiaries of
the Company to incur debt provided certain conditions are met. Any debt
incurred by a subsidiary of the Company will be structurally senior to the
Notes. See "Description of New Notes."
The Company has granted to the lenders under the Credit Agreement
security interests in substantially all of the present and future assets of
the Company, as well as a pledge of all of the issued and outstanding shares
of capital stock of the Company's current and future subsidiaries. In the
event of a default on secured indebtedness (whether as a result of the
failure to comply with a payment or other covenant, a cross-default or
otherwise), the parties granted such security interests will have a prior
secured claim on the assets of the Company and its subsidiaries. If such
parties should attempt to foreclose on their collateral, the Company's
financial condition and the value of the Notes will be materially adversely
affected. In the event of certain Asset Dispositions (as defined in the
Indenture), the Indenture provides that net proceeds thereof not reinvested
as provided in the Indenture must be applied first to the repayment of Senior
Debt, then to an offer to repurchase the 10 3/8% Notes and then to an offer to
repurchase the 9 3/8% Notes, prior to the making of any offer to repurchase
the Notes. As a result thereof, in the event of one or more such Asset
Dispositions, there may be insufficient proceeds to repurchase the Notes.
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Dependence on Subsidiaries
Nine of the Company's ten television stations are currently owned by
wholly-owned subsidiaries of the Company. The FCC has granted its initial
consent to assign the license of the Company's tenth station to a
wholly-owned subsidiary. Future acquisitions will likely be made through
present or future subsidiaries. The Company's cash flow and consequent
ability to service its debt, including the Notes, will be dependent upon the
earnings of its subsidiaries and the distribution of those earnings to the
Company, or upon loans or other payments of funds by those subsidiaries to
the Company. The Company's subsidiaries have no obligation, contingent or
otherwise, to make any funds available to the Company. The Credit Agreement,
the Existing Indentures and the Indenture impose certain limitations on the
ability of subsidiaries of the Company to enter into agreements restricting
their ability to declare dividends or make distributions or advances to the
Company. 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 subordinate to the prior claims of
present and future creditors of that subsidiary, including holders of
indebtedness and trade creditors thereof.
Absence of Net Income; Limitations on Future Utilization of Net Operating Losses
for Tax Purposes
The Company reported net losses of $5,042,000, $783,000, $8,785,000 and
$9,035,000 for the years ended December 31, 1993, 1995, 1996 and 1997,
respectively, and $3,947,000 for the three months ended March 31, 1998. The
losses were primarily caused by the substantial interest expense on debt
incurred by the Company to finance the acquisitions of its television
broadcasting stations (and extraordinary losses of $1,007,000, $2,891,000 and
$5,569,000 incurred in 1993, 1996 and 1997, respectively, on extinguishment
of debt) and depreciation and amortization charges. There can be no
assurances that the Company will not report net losses in the future. The
future utilization of a portion of the Company's net operating losses for
federal income tax purposes is subject to an annual limitation. In addition,
the Company expects to record a gain for tax purposes of approximately $70
million in connection with the sale of WWMT and WLAJ, which will utilize
substantially all of the Company's net operating loss carryforwards.
Dependence On Key Personnel
W. Don Cornwell, the Chief Executive Officer and Chairman of the Board
of Directors of the Company, and Stuart J. Beck, the President and Secretary
of the Company, have each entered into employment agreements with the
Company. Each agreement provides for a two-year employment term and will be
automatically renewed for a subsequent two year term except upon advance
notice of non-renewal by either party. The current terms under the agreements
expire on September 19, 1999. The agreements provide that Mr. Cornwell and
Mr. Beck will not engage in any business activities during the term of such
agreements outside the scope of their employment with the Company unless
approved by a majority of the Company's independent directors. The loss of
the services of certain key personnel currently employed by the Company could
have an adverse impact on the Company. There can be no assurance that the
services of such personnel will continue to be made available to the Company.
The Company does not maintain key man life insurance on any of its employees.
Dependence on Continued Network Affiliation
Each of the Company's stations other than WDWB is affiliated with a
network pursuant to an affiliation agreement. KSEE, WEEK and KBJR are
affiliated with NBC; KNTV, WPTA, WKBW and WLAJ are affiliated with ABC; and
KEYE, WTVH and WWMT are affiliated with CBS. The network affiliation
agreements provide for contract terms of ten years (other than the NBC
agreements for which the terms are seven years and the KEYE agreement with
CBS for which the term is five years), the earliest expiration of which is
February 2000. WDWB has an affiliation arrangement with WB, which is
terminable by either party at will. The WB network has proposed a long-term
affiliation agreement for WDWB which the Company is currently considering. In
connection with the KOFY Acquisition, the Company has an agreement to enter
into a new network affiliation agreement with WB at the closing of the KOFY
Acquisition for a term expiring on December 31, 2007. Under each of the
Company's affiliation agreements, the networks may increase or decrease
network compensation and, under certain circumstances, terminate the
agreement upon advance written notice. Under the Company's ownership, none of
its stations has received a termination notice from its respective network.
The non-renewal or termination of one or
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more of the network affiliation agreements could have a material adverse
effect on the Company's results of operations. No assurance can be given that
the Company's network affiliation agreements will be renewed or that such
agreements will not be terminated.
No Assurance of Closing KOFY Acquisition or Disposition of WWMT and WLAJ
The Company has entered into definitive agreements to acquire KOFY and
to sell WWMT and WLAJ. Consummation of each of the KOFY Acquisition and the
sale of WWMT and WLAJ is contingent on, among other things, FCC approval and
satisfaction of certain other conditions. The Company has received initial
FCC approval for the sale of WWMT and this order will become final on June
30, 1998. Because Granite already owns a television station with an
overlapping service area, KNTV, the Company has requested a permanent waiver
of the FCC's local television multiple ownership rule to permit Granite to
own both KNTV and KOFY. A petition to deny or defer was filed against
Granite's application to acquire KOFY by a competing San Francisco television
station operator. The petition requests that the FCC postpone action on the
proposed acquisition until the conclusion of the pending rulemaking
proceeding on the FCC's television ownership rules. The Company has
vigorously opposed the petition. In addition, because the signals of WWMT and
WLAJ overlap, the purchaser will be required to obtain a waiver of the FCC's
local television multiple ownership rules. This waiver request is pending
before the FCC. The FCC has granted an application to permit WLAJ to modify
its facilities to reduce the coverage overlap between WLAJ and WWMT. This
modification is expected to facilitate timely and favorable action on the
waiver request. Consummation of the KOFY Acquisition also is dependent upon
the Company entering into the new Credit Agreement which will permit the
Company to maintain a higher level of debt to cash flow than is permitted
under the existing Credit Agreement.
No assurance can be given that either of the waiver requests described
above will be granted by the FCC or that the other conditions to the
consummation of the KOFY Acquisition or the disposition of WWMT and WLAJ will
be fulfilled, or that the new Credit Agreement will be entered into. The sale
of WWMT and WLAJ is not a condition to the Company's obligation to complete
the KOFY acquisition. However, because the Company expects to apply the net
proceeds of the disposition of WWMT and WLAJ to fund a portion of the
purchase price for the KOFY Acquisition, there can be no assurance that the
Company will have funds necessary to consummate the KOFY Acquisition unless
it also consummates the disposition of WWMT and WLAJ. In the event the
Company consummates the sale of WWMT and WLAJ but fails to consummate the
KOFY Acquisition or otherwise reinvest the net proceeds of the sale as
permitted by the Indenture, the Company may be required to apply the net
proceeds to make offers to purchase the Existing Notes and to repay any
amounts outstanding under the Credit Agreement prior to making any offer to
purchase the Old Notes. See "Description of New Notes -- Limitation on
Certain Asset Dispositions."
Risk of Change in Government Regulation; Necessity of FCC Licenses
The Company's operations are subject to significant regulation by the
FCC under the Communications Act of 1934, as amended (the "Communications
Act"). The Communications Act prohibits the operation of television
broadcasting stations except pursuant to a license issued by the FCC and
empowers the FCC, among other things, to issue, renew, revoke and modify
broadcasting licenses, adopt regulations to carry out the provisions of the
Communications Act and impose penalties for violation of such regulations.
The Telecommunications Act of 1996, which amends major provisions of the
Communications Act, was enacted on February 8, 1996. The FCC has commenced,
but not yet completed, implementation of the provisions of the
Telecommunications Act of 1996. The FCC is considering and in the future the
U.S. Congress and the FCC may adopt, new laws, regulations and policies
regarding a wide variety of matters which could, directly or indirectly,
materially affect the operation and ownership of the Company's broadcast
properties.
Competition, Changes in the Broadcast Industry and General Economic Conditions
Technological innovation, and the resulting proliferation of
programming alternatives, have fractionalized television viewing audiences
and subjected traditional television broadcast stations to new types of
competition. These changes have had and will continue to have an effect on
the broadcasting industry in general. In addition, the television industry is
affected by prevailing economic conditions. Since the Company relies on sales
of advertising time at its stations for substantially all of its revenues,
the Company's operating results are and will be sensitive to general economic
conditions and regional conditions in each of the local markets in which the
stations operate. The Company cannot predict the future direction of such
conditions.
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Risk of Inability to Finance Change of Control Offer
W. Don Cornwell and Stuart J. Beck, through their ownership of all of
the outstanding shares of the Company's Class A Common Stock, par value $.01
per share (the "Voting Common Stock"), possess 55% and 45%, respectively, of
the voting power in the Company. As long as Messrs. Cornwell and Beck hold
all of the outstanding shares of Voting Common Stock, they will be able to
elect all of the Company's directors and, under most circumstances, amend the
Company's Certificate of Incorporation and effect a merger, sale of assets or
other fundamental corporate transaction without the approval of the other
stockholders of the Company and will be able to defeat any unsolicited
attempt to acquire control of the Company.
In the event of a Change of Control, the Company will be required to
offer to purchase all outstanding Notes at a purchase price equal to 101% of
the principal amount thereof, plus accrued interest to the date of purchase.
The Company will also be required, upon the occurrence of the Change of
Control, to offer to purchase all of the 9 3/8% Notes and the 10 3/8% Notes at
101% of the principal amount thereof, of which $227,134,000 principal amount,
in the aggregate, is expected to be outstanding upon consummation of the
offering. A Change of Control is an event of default under the Credit
Agreement. If a Change of Control were to occur, there can be no assurance
that the Company would have sufficient funds to repay all borrowings under
the Credit Agreement and pay the Change of Control purchase price for all
9 3/8% Notes and 10 3/8% Notes.
No Public Market for the Notes
There has previously been only a limited secondary market and no public
market for the Old Notes, and there can be no assurance as to the liquidity
of any market that may develop for the New Notes, the ability of the holders
of the New Notes to sell their New Notes or the prices at which the holders
of the New Notes would be able to sell their New Notes. In addition, because
the Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered for exchange, the number of New Notes tendered could be quite
small, which could have an adverse effect on the liquidity of the New Notes.
Also, to the extent that Old Notes are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Old Notes could be adversely
affected. Therefore, no assurance can be given as to the liquidity of the
trading market for the Notes. The Company does not intend to list the New
Notes on a national securities exchange or to apply for quotation of the New
Notes through the National Associate of Securities Dealers Automated
Quotation System.
Consequences of the Exchange Offer on Non-Tendering Holders of the Old Notes
The Company intends for the Exchange Offer to satisfy its registration
obligations under the Registration Rights Agreement. If the Exchange Offer is
consummated, the Company does not intend to file further registration
statements for the sale or other disposition of Old Notes. Old Notes that are
not exchanged for New Notes will remain restricted securities within the
meaning of Rule 144 of the Securities Act. Consequently, following completion
of the Exchange Offer, holders of Old Notes seeking liquidity in their
investment would have to rely on an exemption to the registration
requirements under applicable securities laws, including the Securities Act,
with respect to any sale or other disposition of the Old Notes.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes "forward-looking" statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act which involve risks and uncertainties, including statements regarding the
Company's expectations, hopes, beliefs, intentions or strategies regarding
the future. All statements other than statements of historical facts included
in this Prospectus, including, without limitation, statements under
"Prospectus Summary," "Risk Factors," "Selected Consolidated Financial Data"
and "Pro Forma Condensed Financial Statements" and elsewhere herein,
regarding planned acquisitions and dispositions, implementing strategies to
capitalize on such acquisitions, anticipated benefits of such acquisitions,
acquisition opportunities and the Company's financial position, business
strategy and other plans and objectives for future operations, may be
considered forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
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can give no assurance that such expectations will prove to have been correct.
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USE OF PROCEEDS
There will be no cash proceeds to the Company from the Exchange Offer.
In consideration for issuing the New Notes offered hereby, the Company will
receive, in exchange, Old Notes in like principal amount, which will be
canceled and as such will not result in any increase in indebtedness of the
Company.
The net proceeds of the Old Notes, $169,000,000 (after deducting the
underwriting discounts and estimated expenses of the offering), were used to
repay all outstanding borrowings under the Credit Agreement (aggregating
$136,000,000 at March 31, 1998), to retire certain other outstanding
indebtedness and for additions to working capital.
As of March 31, 1998, borrowings under the Credit Agreement bear
interest at a weighted average rate of 8.07% per annum. The Company expects
to enter into a new Credit Agreement to permit the Company to maintain a
higher ratio of debt to consolidated cash flow, to extend the final maturity
of the Credit Agreement by two years and to make certain covenant changes.
See "Description of Certain Debt Instruments -- Credit Agreement."
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THE EXCHANGE OFFER
Purpose and Effects of the Exchange Offer
The Old Notes were sold by the Company on May 11, 1998 (the "Closing")
to the Initial Purchasers, pursuant to the Purchase Agreement. The Initial
Purchasers subsequently resold the Old Notes to qualified institutional
buyers within the meaning of Rule 144A under the Securities Act and to
non-U.S. persons pursuant to Regulation S under the Securities Act. As a
condition to the Purchase Agreement, the Company and the Initial Purchasers
entered into the Registration Rights Agreement on May 11, 1998. The
Registration Rights Agreement required the Company to file with the
Commission following the Closing, a registration statement relating to an
exchange offer pursuant to which notes which are substantially identical to
the Old Notes would be offered in exchange for the then outstanding Old Notes
tendered at the option of the holders thereof. The form and terms of the New
Notes are identical in all material respects to the form and terms of the Old
Notes except (i) that the New Notes have been registered under the Securities
Act, (ii) that the New Notes are not entitled to certain registration rights
which are applicable to the Old Notes under the Registration Rights
Agreement, and (iii) certain contingent interest rate provisions applicable
to the Old Notes are generally not applicable to the New Notes. In the event
that the applicable interpretations of the staff of the Commission do not
permit the Company to effect the Exchange Offer, the Company agreed to use
its reasonable best efforts to cause to become effective a shelf registration
statement with respect to the resale of the Old Notes and to keep such resale
registration statement effective for a period of up to three years. The
Exchange Offer is being made to satisfy the contractual obligations of the
Company under the Registration Rights Agreement. The holders of any Old Notes
not tendered in the Exchange Offer will not be entitled to require the
Company to file a resale registration statement.
The Company has agreed that if (i) the Company failed to file the
registration statement relating to the Exchange Offer within 75 days
following the Closing, (ii) such registration statement (or, if applicable,
the resale registration statement) had not become effective within 150 days
following the Closing, (iii) the Exchange Offer has not been consummated
within 30 business days after the effective date of the Exchange Offer
registration statement or (iv) certain other specified events occur, then the
per annum interest rate on the Old Notes will increase by 0.5% for the period
from the occurrence of such default until such time as no default is in
effect (at which time the interest rate will be reduced to its initial rate).
If the Company has not consummated the Exchange Offer (or, if applicable, the
resale registration statement has not become effective) within 270 days
following the Closing, then the per annum interest rate on the Old Notes will
increase by an additional 0.5% for so long as the Company has not consummated
the Exchange Offer (or until such resale registration statement becomes
effective).
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to unrelated third parties, the Company believes
that New Notes issued pursuant to the Exchange Offer in exchange for Old
Notes may be offered for resale, resold and otherwise transferred by the
holders thereof (other than a Restricted Holder) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holders' business and such holders are not participating, do not intend to
participate and have no arrangement or understanding with any person to
participate in a distribution of such New Notes. See "K-III Communications
Corporation," SEC No-Action Letter (available May 14, 1993); "Morgan Stanley
& Co., Incorporated," SEC No-Action Letter (available June 5, 1991); and
"Exxon Capital Holdings Corporation," SEC No-Action Letter (available May 13,
1988). Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such
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 New Notes. See "Plan of Distribution."
If any person were to participate in the Exchange Offer for the purpose
of distributing securities in a manner not permitted by the preceding
paragraph, such person could not rely on the position of the staff of the
Commission and must comply with the Prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. Therefore,
each holder of Old Notes who accepts the Exchange Offer must represent in the
Letter of Transmittal that it meets the conditions described above.
An exchange offer shall be deemed to have been consummated upon the
earlier to occur of (i) the Company having exchanged New Notes for all
outstanding Old Notes (other than Old Notes held by a Restricted Holder)
pursuant to such exchange offer and (ii) the Company having exchanged,
pursuant to such exchange offer, New Notes
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for all Old Notes that have been validly tendered and not withdrawn on the
Expiration Date. In such event, holders of Old Notes seeking liquidity in
their investment would have to rely on exemptions to registration
requirements under applicable securities laws, including the Securities Act.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal, the Company will
accept all Old Notes validly tendered prior to 5:00 p.m., New York City time,
on the Expiration Date. The exchange of New Notes for Old Notes will be made
(i) with respect to all Old Notes validly tendered and not withdrawn on or
prior to the Early Exchange Date, within two business days following the
Early Exchange Date, and (ii) with respect to all Old Notes validly tendered
and not withdrawn after the Early Exchange Date but on or prior to the
Expiration Date, within two business days following the Expiration Date. The
New Notes issued pursuant to the Exchange Offer will be delivered promptly
following the Expiration Date. The Company will issue $1,000 principal amount
of New Notes in exchange for each $1,000 principal amount of outstanding Old
Notes accepted in the Exchange Offer. Holders may tender some or all of their
Old Notes pursuant to the Exchange Offer in denominations of $1,000 and
integral multiples of $1,000 in excess thereof.
In connection with the issuance of the Old Notes, the Company arranged
for the inclusion of the Old Notes initially purchased by qualified
institutional buyers on the Private Offerings, Resales and Trading through
Automated Linkages (PORTAL) market. The Company also arranged for the Old
Notes initially purchased by qualified institutional buyers to be issued and
transferable in book-entry form through the facilities of DTC, acting as
depository, and in DTC's Same-Day Funds Settlement System. The New Notes will
also be issuable and transferable in book-entry form through the DTC in the
Same-Day Funds Settlement System.
As of the date of this Prospectus, $175,000,000 aggregate principal
amount of the Old Notes is outstanding.
This Prospectus, together with the Letter of Transmittal, is being sent
to all registered holders of Old Notes as of , 1998 (the "Record Date").
The Company shall be deemed to have accepted validly tendered Old 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 of Old Notes for the purpose of receiving New Notes from the Company
and delivering New Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted Old Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
The registration expenses to be incurred in connection with the
Exchange Offer, including fees and expenses of the Exchange Agent and Trustee
and accounting and legal fees, will be paid by the Company. The Company has
agreed to pay, subject to the instructions in the Letter of Transmittal, all
transfer taxes, if any, relating to the sale or disposition of such holder's
Old Notes pursuant to the Exchange Offer. See "-- Fees and Expenses."
Expiration Date; Extensions; Amendments
The term "Expiration Date" shall mean , 1998, unless the Company, in
its sole discretion, extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date to which the Exchange Offer is
extended.
In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to
the record holders of Old Notes 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. Such announcement may state that the Company is
extending the Exchange Offer for a specified period of time.
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The Company reserves the right (i) to delay acceptance of any Old
Notes, to extend the Exchange Offer or to terminate the Exchange Offer and to
refuse to accept Old Notes not previously accepted, if any of the conditions
set forth herein under "-- Conditions" shall have occurred and shall not have
been waived by the Company, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent, and (ii) to amend the terms
of the Exchange Offer in any manner deemed by it to be advantageous to the
holders of the Old Notes. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral
or written notice thereof. If the Exchange Offer is amended in a manner
determined by the Company to constitute a material change, the Company will
promptly disclose such amendment in a manner reasonably calculated to inform
the holders of the Old Notes of such amendment.
Without limiting the manner in which the Company may choose to make
public announcements of any delay in acceptance, extension, termination or
amendment of the Exchange Offer, the Company shall have no obligation to
publish, advertise, or otherwise communicate any such public announcement,
other than by making a timely release to a financial news service.
Interest on New Notes
Interest will accrue on the New Notes from May 11, 1998, or from the
most recent interest payment date on the Old Notes surrendered in exchange
therefor, and will be payable semi-annually on May 15 and November 15 of each
year, commencing on November 15, 1998, at the rate of 8 7/8% per annum.
Holders of Old Notes whose Old Notes are accepted for exchange will be deemed
to have waived the right to receive any payment in respect of interest
accrued from May 11, 1998 to the date of issuance of the New Notes.
Procedure for Tendering
To tender in the Exchange Offer, a holder must complete, sign and date
the Letter of Transmittal, or a facsimile thereof and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes (unless such tender is being effected pursuant to the procedure for
book-entry transfer described below) and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration
Date. Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc. or a commercial bank or trust company having an office or correspondent
in the United States or an "eligible guarantor institution" as defined by
Rule 17Ad-15 under the Exchange Act (any of the foregoing hereinafter
referred to as an "Eligible Institution") unless the Old Notes
tendered pursuant thereto are tendered (i) by a registered holder who has not
completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account
of an Eligible Institution.
Any financial institution that is a participant in DTC's Book-Entry
Transfer Facility system may make book-entry delivery of the Old Notes by
causing DTC to transfer such Old Notes into the Exchange Agent's account in
accordance with DTC's procedure for such transfer. Although delivery of Old
Notes may be effected through book-entry transfer into the Exchange Agent's
account at DTC, the Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and any other required documents, must, in any
case, be transmitted to and received or confirmed by the Exchange Agent at
its addresses set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The tender by a holder of Old Notes will constitute an 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.
Delivery of all documents must be made to the Exchange Agent at its
address set forth herein. Holders may also request that their respective
brokers, dealers, commercial banks, trust companies or nominees effect such
tender for such holders.
The method of delivery of Old Notes and the Letter of Transmittal and
all other required documents to the Exchange Agent is at the election and
risk of the holders. Instead of delivery by mail, it is recommended that
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holders use an overnight or hand delivery service. In all cases, sufficient
time should be allowed to assure timely delivery. No Letter of Transmittal or
Old Notes should be sent to the Company.
Only a holder of Old Notes may tender such Old Notes in the Exchange
Offer. The term "holder" with respect to the Exchange Offer means any person
in whose name Old Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered holder or any person whose Old Notes are held of record by DTC who
desires to deliver such Old Notes at DTC.
Any beneficial holder whose Old Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender his Old Notes should contact the registered holder promptly
and instruct such registered holder to tender on his behalf. If such
beneficial holder wishes to tender on his own behalf, such beneficial holder
must, prior to completing and executing the Letter of Transmittal and
delivering his Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such holder's name or obtain a properly
completed bond power from the registered holder. The transfer of record
ownership may take considerable time.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by appropriate bond powers which authorize such
person to tender the Old Notes on behalf of the registered holder, in either
case signed as the name of the registered holder or holders appears on the
Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of a corporation or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by
the Company, evidence satisfactory to the Company of their authority to so
act must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Old 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 Old Notes not validly tendered or any Old Notes the Company's acceptance
of which would, in the opinion of counsel for the Company, be unlawful. The
Company also reserves the absolute right to waive any irregularities or
conditions of tender as to particular Old 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
Old Notes must be cured within such time as the Company shall determine.
Neither the Company, the Exchange Agent nor any other person shall be under
any duty to give notification of defects or irregularities with respect to
tenders of Old Notes nor shall any of them incur any liability for failure to
give such notification. Tenders of Old Notes will not be deemed to have been
made until such irregularities have been cured or waived. Any Old Notes
received by the Exchange Agent that are not validly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
by the Exchange Agent without cost to the tendering holder of such Old Notes
unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the Expiration Date.
By tendering, each holder will represent to the Company that, among
other things (i) the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of such holder's business, (ii) such
holder is not participating, does not intend to participate and has no
arrangement or understanding with any person to participate, in a
distribution of such New Notes, (iii) such holder is not an "affiliate," as
defined under Rule 405 of the Securities Act, of the Company and (iv) such
holder is not a broker-dealer who acquired Old Notes directly from the
Company to resell pursuant to Rule 144A or any other available exemption
under the Securities Act.
Guaranteed Delivery Procedures
Holders who wish to tender their Old Notes and (i) whose Old Notes are
not immediately available or (ii) who cannot deliver their Old Notes, the
Letter of Transmittal or any other required documents to the Exchange Agent
prior to the Early Exchange Date or the Expiration Date, may effect a tender
if:
(a) The tender is made through an Eligible Institution;
23
<PAGE>
(b) Prior to the Early Exchange Date or the Expiration Date, the
Exchange Agent receives from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by facsimile transmission,
mail or hand delivery) setting forth the name and address of the holder of
the Old Notes, the certificate number or numbers of such Old Notes and the
principal amount of Old Notes tendered, stating that the tender is being made
thereby, and guaranteeing that, within three business days after the date of
execution of the Notice of Guaranteed Delivery, the Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing the Old
Notes to be tendered in proper form for transfer and any other documents
required by the Letter of Transmittal, will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing all
tendered Old Notes in proper form for transfer (or confirmation of a
book-entry transfer into the Exchange Agent's account at DTC of Old Notes
delivered electronically) and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within three business days
after the date of execution of the Notice of Guaranteed Delivery.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date, unless previously accepted for exchange.
To withdraw a tender of Old Notes in the Exchange Offer, a written 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 and prior to acceptance for exchange thereof by the
Company. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the
Depositor in the same manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including required
signature guarantees) or be accompanied by documents of transfer sufficient
to permit the Trustee with respect to the Old Notes to register the transfer
of such Old Notes into the name of the Depositor withdrawing the tender and
(iv) specify the name in which any such Old 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 withdrawal notices will
be determined by the Company, whose determination shall be final and binding
on all parties. Any Old Notes so withdrawn will be deemed not to have been
validly tendered for purposes of the Exchange Offer and no New Notes will be
issued with respect thereto unless the Old Notes so withdrawn are validly
retendered. Any Old Notes which have been tendered but which are not accepted
for exchange will be returned by the Exchange Agent 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
Old Notes may be retendered by following one of the procedures described
above under "-- Procedure for Tendering" at any time prior to the Expiration
Date.
Conditions
Notwithstanding any other term of the Exchange Offer, the Company will
not be obligated to consummate the Exchange Offer if the New Notes to be
received will not be tradeable by the holder, other than in the case of
Restricted Holders, without restriction under the Securities Act and the
Exchange Act and without material restrictions under the blue sky or
securities laws of substantially all of the states of the United States. Such
condition will be deemed to be satisfied unless a holder provides the Company
with an opinion of counsel reasonably satisfactory to the Company to the
effect that the New Notes received by such holder will not be tradeable
without restriction under the Securities Act and the Exchange Act and without
material restrictions under the blue sky laws of substantially all of the
states of the United States. The Company may waive this condition.
If the condition described above exists, the Company will be entitled
to refuse to accept any Old Notes and, in the case of such refusal, will
return all tendered Old Notes to exchanging holders of the Old Notes. See
"Description of New Notes -- Registration Covenant; Exchange Offer."
24
<PAGE>
Exchange Agent
The Bank of New York, the Trustee under the Indenture, has been appointed
as Exchange Agent for the Exchange Offer. Questions and requests for assistance
and requests for additional copies of this Prospectus or of the Letter of
Transmittal should be directed to the Exchange Agent addressed as follows:
By Hand Delivery: The Bank of New York
101 Barclay Street
Corporate Trust Services Window
New York, New York 10286
Attn: Enrique Lopez,
Reorganization Section
By Registered or
Certified Mail: The Bank of New York
101 Barclay Street - 7E
New York, New York 10286
Attn: Enrique Lopez,
Reorganization Section
By Overnight Courier: The Bank of New York
101 Barclay Street
Corporate Trust Services Window
New York, New York 10286
Attn: Enrique Lopez,
Reorganization Section
Facsimile Transmission:
(Eligible Institutions and
Withdrawal Notices Only) (212) 815-6339
Confirm: (212) 815-2742
For Information Call: (212) 815-6333
Fees and Expenses
The expenses of soliciting tenders pursuant to the Exchange Offer will
be borne by the Company. The principal solicitation for tenders pursuant to
the Exchange Offer is being made by mail. Additional solicitations may be
made by officers and regular employees of the Company and its affiliates in
person, by telegraph or telephone.
The Company will not make any payments to brokers, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company, however,
will pay the Exchange Agent reasonable and customary fees for its services
and will reimburse the Exchange Agent for its reasonable out-of-pocket
expenses in connection therewith.
The registration expenses to be incurred in connection with the
Exchange Offer, including fees and expenses of the Exchange Agent and Trustee
and accounting and legal fees, will be paid by the Company.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however,
certificates representing New Notes or Old Notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered
holder of the Old Notes tendered, or if tendered Old Notes are registered in
the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Old Notes pursuant to the Exchange Offer, then the amount of any
such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes
25
<PAGE>
will be billed directly to such tendering holder.
Accounting Treatment
No gain or loss for accounting purposes will be recognized by the
Company upon the consummation of the Exchange Offer. The expenses of the
Exchange Offer will be amortized by the Company over the term of the New
Notes under generally accepted accounting principles.
26
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31,1998 on an actual basis, on an adjusted basis to reflect the sale of
the Old Notes and the application of the net proceeds therefrom, and on a pro
forma basis to reflect the sale of the Old Notes and application of the
proceeds therefrom, the KOFY Acquisition and the related borrowings under the
Credit Agreement, the disposition of WWMT and WLAJ and the refinancing of
certain debentures with borrowings under the Credit Agreement. See "Pro Forma
Condensed Financial Statements."
<TABLE>
<CAPTION>
March 31, 1998
-----------------------------------
Actual As Adjusted Pro Forma
---------- ----------- ---------
(in thousands)
<S> <C> <C> <C>
Long-term debt:
Credit Agreement ........................................................ $ 136,000 $ -- $ 18,150
10 3/8% Senior Subordinated Notes due May 15, 2005 ...................... 173,000 150,039 150,039
9 3/8% Senior Subordinated Notes due December 1, 2005 ................... 76,790 76,790 76,790
Notes offered hereby .................................................... -- 174,482 174,482
--------- --------- ---------
Total Long-term debt ....................................................... 385,790 401,311 419,461
Redeemable Preferred Stock, $.01 par value:
Cumulative Exchangeable Preferred Stock ................................. 167,858 167,858 167,858
Cumulative Convertible Exchangeable Preferred Stock ..................... 41,563 41,563 41,563
Stockholders' (Deficit):
Common Stock: $.01 par value, 41,000,000 shares
authorized consisting of 1,000,000 shares of Voting Common Stock and
40,000,000 shares of Common Stock (Nonvoting); 178,500 shares of Voting
Common Stock and 9,538,052 shares of Common
Stock (Nonvoting) issued and outstanding .............................. 97 97 97
Additional paid-in capital .............................................. 22,668 22,668 22,668
Accumulated deficit(1) .................................................. (58,359) (62,566) (4,153)
Less: Unearned Compensation ............................................ (2,729) (2,729) (2,729)
Treasury stock ................................................... (47) (47) (47)
Note Receivable from Officer ..................................... (887) (887) (887)
--------- --------- ---------
Total Stockholders' equity (deficit) .............................. (39,257) (43,464) 14,949
--------- --------- ---------
Total capitalization .................................................... $ 555,954 $ 567,268 $ 643,831
========= ========= =========
</TABLE>
- ----------
(1) In connection with the repayment of borrowings under the Credit Agreement
and the repurchase of 10 3/8% Notes with the proceeds of the offering of
the Old Notes, the Company will record an extraordinary loss related to
the write-off of approximately $2,887 of deferred financing costs and
$1,320 associated with the premium on the repurchase of $22,961 principal
amount of 10 3/8% Notes. Such amounts are reflected in the As Adjusted
and Pro Forma columns and will be recorded in the second quarter of 1998.
27
<PAGE>
PRO FORMA CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The pro forma condensed consolidated financial statements presented
below are based on the historical financial statements of the Company. The
pro forma condensed consolidated statements of operations for the year ended
December 31, 1997 and for the three months ended March 31, 1998 give effect
to (i) the acquisition of WDWB, which was acquired on January 31, 1997, (ii)
the sale of the Old Notes and the application of the proceeds therefrom,
(iii) the KOFY Acquisition and the related borrowings under the Credit
Agreement, (iv) the disposition of WWMT and WLAJ and (v) the refinancing of
certain outstanding debentures with borrowings under the Credit Agreement, as
if all such transactions occurred at January 1, 1997. The pro forma condensed
consolidated balance sheet as of March 31, 1998 gives effect to (i) the sale
of the Old Notes and application of the proceeds therefrom, (ii) the KOFY
Acquisition and the related borrowings under the Credit Agreement and (iii)
the disposition of WWMT and WLAJ, as if all such transactions occurred on
March 31, 1998.
The pro forma condensed consolidated financial statements give effect
to the acquisitions of WDWB and KOFY under the purchase method of accounting
and are based upon the assumptions and adjustments (including the preliminary
allocation of the purchase price for the KOFY Acquisition) described in the
accompanying notes. These pro forma condensed consolidated financial
statements should be read in conjunction with the Company's Consolidated
Financial Statements incorporated by reference herein and the Financial
Statements of KOFY appearing elsewhere in this Offering Circular. The pro
forma information is not necessarily indicative of the results that would
have been reported had such events actually occurred on the dates specified,
nor is it indicative of the Company's future results.
28
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1997
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Granite Add:
Broadcasting WDWB Pro forma
Corporation One month Adjustments
Year ended ended for WDWB
December 31, January 31, and
1997 1997 the offering As adjusted
---------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
Net revenue ...................... $ 153,512 $ 901 22(a) $ 154,435
Station operating expenses ....... 83,729 618 (57)(b) 84,290
Time brokerage agreement fees .... 600 600
Depreciation expense ............. 5,718 6 14(c) 5,738
Amortization expense ............. 13,824 367(d) 14,191
Corporate expense ................ 6,639 6,639
Non-cash compensation ............ 986 986
--------- --------- ---------
Operating income (loss) .......... 42,016 277 41,991
Equity in net loss of Investee ... 1,531 1,531
Interest expense (income), net ... 38,986 289(e) 39,275
Non-cash interest expense ........ 2,182 (180)(f) 2,002
Other expense (income) ........... 1,167 (17) 1,150
--------- --------- ---------
Income (loss) before income taxes
and extraordinary item ......... (1,850) 294 (1,967)
(Provision) benefit for income tax (1,616) (19) (1,635)
--------- --------- ---------
Income (loss) before
extraordinary item(1) .......... $ (3,466) $ 275 $ (3,602)
========= ========= =========
<CAPTION>
Less:
Combined
Add: WWMT and
KOFY-TV WLAJ
Year ended Year Ended
December 31, December 31, Pro forma
1997 1997 Adjustments Pro forma
---------- ------------- ------------ ---------
<S> <C> <C> <C>
Net revenue ...................... $ 20,406 $ 23,338 $ 151,503
Station operating expenses ....... 19,419 13,507 (3,063)(g) 87,139
Time brokerage agreement fees .... 600
Depreciation expense ............. 273 1,123 (162)(h) 4,726
Amortization expense ............. 360 2,229 12,780 (i) 25,102
Corporate expense ................ 6,639
Non-cash compensation ............ 986
--------- --------- --------
Operating income (loss) .......... 354 5,879 26,911
Equity in net loss of Investee ... 1,531
Interest expense (income), net ... 1,223 865 229 (j) 39,862
Non-cash interest expense ........ 2,002
Other expense (income) ........... (1,230) 105 (185)
--------- --------- --------
Income (loss) before income taxes
and extraordinary item ......... 361 4,909 (16,299)
(Provision) benefit for income tax 588 -- 701(r) (346)
--------- --------- --------
Income (loss) before
extraordinary item(1) .......... $ 949 $ 4,909 $(16,645)
========= ========= ========
</TABLE>
- ----------
(1) Does not reflect an anticipated pre-tax gain for financial reporting
purposes of approximately $49 million from the disposition of WWMT and
WLAJ.
29
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 1998
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Less:
Granite Combined WWMT
Broadcasting Add: and
Corporation KOFY-TV WLAJ
Three Months Pro forma Three Months Three Months
Ended Adjustments Ended Ended
March 31, for the As March 31, March 31, Pro forma
1998 offering adjusted 1998 1998 Adjustments Pro forma
------------ ----------- -------- ------------ ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue ..................... $ 36,724 $36,724 $4,734 $6,156 $35,302
Station operating expenses ...... 22,315 22,315 4,177 3,550 (334)(g) 22,608
Time brokerage agreement fees ... 150 150 150 0
Depreciation expense ............ 1,365 1,365 90 162 (62)(h) 1,231
Amortization expense ............ 3,584 3,584 90 557 3,195(i) 6,312
Corporate expense ............... 2,017 2,017 2,017
Non-cash compensation ........... 333 333 333
-------- ------- ------ ------ -------
Operating income (loss) ......... 6,960 6,960 377 1,737 2,801
Equity in net loss of investee .. 487 487 487
Interest expense (income), net .. 9,209 307(e) 9,516 257 194 106(j) 9,685
Non-cash interest expense ....... 475 (45)(f) 430 430
Other expense (income) .......... 242 242 26 216
-------- ------- ------ ------ -------
Income (loss) before income taxes
and extraordinary item ........ (3,453) (3,715) 120 1,517 (8,017)
Provision for income tax ........ (496) (496) (87) 0 428(r) (155)
-------- ------- ------ ------ -------
Income (loss) before
extraordinary item(1) ......... $ (3,949) $(4,211) $ 33 $1,517 $(8,172)
======== ======= ====== ====== =======
</TABLE>
- ----------
(1) Does not reflect an anticipated pre-tax gain for financial reporting
purposes of approximately $49 million from the disposition of WWMT and
WLAJ.
30
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1998
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Less:
Granite Pro forma Combined
Broadcasting Adjustments Add: WWMT and
Corporation for the As KOFY-TV WLAJ Pro forma
March 31, 1998 offering adjusted March 31, 1998 March 31, 1998 Adjustments Pro forma
-------------- -------- -------- -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash ............................ $ 3,945 10,046(k) $ 13,991 $ $ (12,500)(o) $ 1,491
Accounts receivable, net ........ 28,833 28,833 28,833
Film contract rights and
other assets ................... 21,742 21,742 2,199 1,708 (393)(n) 16,840
(5,000)(n)
-------- -------- ------- -------- --------
Total current assets ........... 54,520 64,566 2,199 1,708 47,164
Property and equipment, net ..... 35,507 35,507 1,106 6,907 29,706
Other noncurrent assets ......... 16,149 5,482(l) 18,744 2,817 515 (1,668)(n) 19,378
(2,887)(l)
Intangible assets ............... 518,266 518,266 82,912 248,123(n) 683,477
-------- -------- ------- -------- --------
Total assets .................. $624,442 $637,083 $ 6,122 $ 92,042 $779,725
======== ======== ======= ======== ========
Liabilities
Accounts payable ................ $ 3,319 $ 3,319 $ 596 $ 223 $ 3,692
Accrued liabilities ............. 17,609 17,609 1,874 475 2,000(o) 23,408
2,400(r)
Film contract rights and other
current liabilities ............ 11,096 11,096 2,372 1,130 12,338
-------- -------- ------- -------- --------
Total current liabilities ..... 32,024 32,024 4,842 1,828 39,438
Long-term debt .................. 385,790 15,521(m) 401,311 18,150(p) 419,461
Other noncurrent liabilities .... 5,964 1,327(k) 7,291 6,115 427 (780)(n) 20,199
8,000(o)
Deferred income taxes ........... 30,500 30,500 45,757(n) 76,257
Redeemable Preferred Stock ...... 209,421 209,421 209,421
Stockholders' equity (deficit)
Common stock .................... 97 97 97
Additional paid in capital ...... 22,668 22,668 22,668
Accumulated deficit ............. (58,359) (2,887)(l) (62,566) (11,504) 49,309(q) (4,153)
(1,320)(l) (2,400)(r)
Less: Unearned compensation ..... (2,729) (2,729) (2,729)
Note receivable from officer ... (887) (887) (887)
Treasury stock ................. (47) (47) (47)
-------- -------- ------- -------- --------
Total stockholders' equity
(deficit) ...................... (39,257) (43,464) (11,504) 14,949
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets to be acquired
and disposed ................... (4,835) 101,291 106,126(q) --
-------- -------- ------- -------- --------
Total liabilities and
stockholders' equity (deficit) .. $624,442 $637,083 $ 6,122 $ 92,042 $779,725
======== ======== ======= ======== ========
</TABLE>
32
<PAGE>
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Adjustments reflected in the pro forma financial statements are explained
as follows:
(a) To adjust net revenue to reflect reduced national representative
commissions at WDWB.
(b) To adjust station operating expenses at WDWB as follows:
To reduce amortization of film contract rights to reflect
the net assets acquired based on the allocation of the
purchase price $35,000
To eliminate a management fee paid to a related party of WDWB 22,000
-------
$57,000
=======
(c) To record additional depreciation expense at WDWB based on the allocation
of the purchase price.
(d) To record amortization of the excess cost of the purchase price over the
net assets acquired.
(e) To adjust interest expense as follows:
<TABLE>
<CAPTION>
Year Ended Three Months
December 31, Ended
1997 March 31, 1998
------------- --------------
<S> <C> <C>
To record interest expense on the Old Notes
at the effective rate(1) $ 15,451,000 $ 3,863,000
To reflect savings resulting from the
redemption of the Company's 12.75%
Subordinated Debentures in September 1997
which was replaced with bank debt (1,900,000) --
To eliminate interest expense on $22,961,000
principal amount of the Company's 10 3/8% Notes (2,382,000) (596,000)
To eliminate interest expense on
Credit Agreement (10,880,000) (2,960,000)
------------ -----------
$ 289,000 $ 307,000
============ ===========
</TABLE>
---------
(1) In anticipation of the offering of the Old Notes, the Company
entered into an interest rate forward contract with one of the
Initial Purchasers. The Company received $1,327,000 on the
settlement of the forward contract. This amount will be recorded as
a noncurrent liability and will be recognized as a reduction to
interest expense over the term of the Notes.
(f) To record amortization of deferred financing costs associated with the
sale of the Old Notes net of reduced amortization from the write-off of
deferred financing costs associated with the Credit Agreement and the
write-off of a pro rata portion of deferred financing costs associated
with the repurchase of $22,961,000 principal amount of 10 3/8% Notes.
33
<PAGE>
(g) To adjust station operating expenses at KOFY as follows:
<TABLE>
<CAPTION>
Year Ended Three Months
December 31, Ended
1997 March 31, 1998
------------- --------------
<S> <C> <C>
To eliminate the cost of contracts and other
operating assets excluded from the purchase
of KOFY under the terms of the purchase and
sale agreement $1,053,000 $ 21,000
To reduce amortization of film contract rights
to reflect the net assets acquired based on a
preliminary allocation of the purchase price 1,300,000 325,000
To eliminate legal expenses in connection with
the sale of radio stations owned by the owner
of KOFY 355,000 --
To reduce salary expense and related benefit
costs associated with the controlling
shareholder of Pacific 179,000 45,000
To adjust sales expense to reflect reduced
national representative commissions 176,000 (57,000)
---------- --------
$3,063,000 $334,000
========== ========
</TABLE>
The Company expects to realize approximately $1,100,000 of annualized net
cost savings at KOFY resulting from the elimination of duplicative staffing and
redundant operating expenses and new rates associated with revised vendor
contracts, which cost savings have not been reflected in the adjustments. Had
such adjustments been made, EBITDA on a pro forma basis would have been
approximately $58,825,000 for the year ended December 31, 1997 and $11,777,000
for the three months ended March 31, 1998. While management believes that such
cost savings are achievable, the Company's ability to fully achieve such costs
savings is subject to numerous factors, some of which may be beyond the
Company's control.
(h) To reduce depreciation expense to reflect the net assets of KOFY acquired
based on a preliminary allocation of the purchase price.
(i) To reflect increased amortization expense as follows:
<TABLE>
<CAPTION>
Year Ended Three Months
December 31, Ended
1997 March 31, 1998
----------- --------------
<S> <C> <C>
(i) Amortization of the excess cost of the purchase
price over the net assets acquired $13,140,000 $3,285,000
(ii) Elimination of historical amortization expense
in the financial statements of KOFY (360,000) (90,000)
----------- ----------
$12,780,000 $3,195,000
=========== ==========
</TABLE>
(j) To record interest expense on additional borrowings under the Credit
Agreement at an assumed rate of 8% and to eliminate historical interest
expense in the financial statements of KOFY.
(k) To record the excess proceeds from the sale of the Old Notes and proceeds
from the settlement of the interest rate forward contract.
34
<PAGE>
(l) To reflect the incurrence of deferred financing costs associated with the
issuance of the Old Notes and to write-off deferred financing costs
associated with the existing Credit Agreement and a pro rata portion of
deferred financing costs associated with the Company's 10 3/8% Notes.
In connection with the repayment of the Credit Agreement, the Company
will record an extraordinary loss of approximately $2,364,000,
reflecting a write-off of deferred financing fees. In connection with
the repurchase of the 10 3/8% Notes, the Company will record an
extraordinary loss of $1,843,000, consisting of the premium paid on the
repurchase of the 10 3/8% Notes of $1,320,000 and a write-off of a pro
rata portion of the related deferred financing fees of approximately
$523,000.
(m) To adjust long-term debt as follows:
(i) Issuance of the Old Notes, net of discount $ 174,482,000
(ii) Repurchase of 10 3/8% Notes (22,961,000)
(iii) Repayment of outstanding bank debt (136,000,000)
-------------
$ 15,521,000
=============
(n) To record the preliminary allocation of the purchase price of KOFY as
follows:
<TABLE>
<CAPTION>
Historical Carrying Estimated
Value as reported Market Value
KOFY-TV of Assets Pro forma
Caption March 31, 1998 Purchased Adjustment
-------------- --------- ----------
<S> <C> <C> <C>
Film contract rights and other assets $ 2,199,000 $ 1,806,000 $ (393,000)
Property and equipment 1,106,000 1,106,000 --
Film contract rights and other
noncurrent assets 2,817,000 1,149,000 (1,668,000)
Intangible assets -- 248,123,000 248,123,000
Accounts payable (596,000) (596,000) --
Accrued liabilities (1,874,000) (1,874,000) --
Film contract rights and other current
liabilities (2,372,000) (2,372,000) --
Deferred tax liability -- (45,757,000) (45,757,000)
Other noncurrent liabilities (6,115,000) (5,335,000) 780,000
----------- ------------ ------------
Net assets $(4,835,000) $196,250,000 $201,085,000
=========== ============ ============
</TABLE>
In addition, the Company made a $5,000,000 deposit on the KOFY Acquisition
which has been reclassed from current assets to intangible assets.
(o) The WB network agreed to enter into a ten-year affiliation agreement with
Pacific and the Company instead of another television station in the San
Francisco market in return for total consideration of $22,500,000. At the
closing the Company, will pay $12,500,000 to the WB Network and the
remaining $10,000,000 is to be paid in equal installments over a 5 year
period. The Company will amortize the total consideration paid over ten
years. Of the $10,000,000, $2,000,000 has been reflected as a current
liability and the remaining $8,000,000 has been reflected as noncurrent.
(p) To record additional borrowings under the Credit Agreement.
(q) To eliminate the historical carrying value of the net assets acquired and
disposed and to record the gain on the assets disposed.
(r) To recognize taxes on the sale of WWMT and WLAJ and to adjust the tax
provision to reflect the KOFY Acquisition.
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<PAGE>
DESCRIPTION OF NEW NOTES
General
The Old Notes were issued, and the New Notes will be issued, under an
Indenture dated as of May 11, 1998 (the "Indenture"), between the Company and
The Bank of New York, as Trustee (the "Trustee"). The New Notes will be issued
solely in exchange for an equal principal amount of the outstanding Old Notes
pursuant to the Exchange Offer. The terms of the New Notes will be identical in
all material respects to the form and terms of the Old Notes except that: (i)
the New Notes will have been registered under the Securities Act (and will
generally be freely transferable by a holder thereof who is not a Restricted
Holder); and (ii) the registration rights and contingent interest rate
provisions applicable to the Old Notes are generally not applicable to the New
Notes. References in this Section to the "Notes" will be references to the Old
Notes and/or the New Notes, depending upon which are outstanding. The definition
of certain terms used in the following summary are set forth below under "--
Certain Definitions."
The Indenture is by its terms subject to and governed by the Trust
Indenture Act of 1939, as amended. The statements under this caption relating to
the Notes and the Indenture are summaries and do not purport to be complete, and
where reference is made to particular provisions of the Indenture, such
provisions, including the definition of certain terms, are incorporated by
reference as a part of such summaries or terms, which are qualified in their
entirety by such reference. All material provisions of the Notes and the
Indenture, however, are set forth herein. Unless otherwise indicated, references
under this caption to sections, "ss." or articles are references to sections and
articles of the Indenture. The Indenture is filed as an Exhibit to the
Registration Statement of which this Prospectus is a part and a copy may be
obtained from the Company as set forth under "Available Information."
The Notes are general unsecured senior subordinated obligations of the
Company limited to $200.0 million in aggregate principal amount. The Notes and
the New Notes will be considered collectively to be a single class for all
purposes under the Indenture, including, without limitation, waivers,
amendments, redemptions and Offers to Purchase. Additional Notes may be issued
from time to time under the Indenture, subject to the limitations set forth
under "--Covenants - Limitation on Debt."
The Notes will mature on May 15, 2008. Interest on the Notes will accrue
at the rate of 8 7/8% per annum from May 11, 1998 or from the most recent
interest payment date to which interest has been paid, and will be payable
semi-annually on May 15 and November 15 of each year, commencing on November 15,
1998, to the person in whose name the Note (or any Predecessor Note) is
registered at the close of business on May 1 or November 1 next preceding such
interest payment date. (ss.ss. 301 and 308) Interest on the Notes will be
computed on the basis of a 360-day year of twelve 30-day months. (ss. 311) At
the option of the Company, principal of and premium, if any, and interest on the
Notes may be paid at the corporate trust office of the Trustee or by check
mailed to the registered address of such holders. (ss.ss. 301, 306 and 1002)
The New Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof. (ss. 302) No
service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. The Notes will not
have the benefit of a sinking fund. (ss. 306)
Initially, the Trustee will act as Paying Agent and Registrar. The New
Notes may be presented for registration of transfer and exchange at the offices
of the Registrar. (ss. 306)
Form, Denomination and Book-Entry Procedures
The Old Notes were initially sold to qualified institutional buyers in
reliance on Rule 144A under the Securities Act ("Rule 144A Notes"). Old Notes
also were offered and sold in offshore transactions in
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<PAGE>
reliance on Regulation S ("Regulation S Notes"). Rule 144A Notes and Regulation
S Notes were each initially represented by one or more Notes in registered,
global form without interest coupons (the "Old Global Notes"). The Old Global
Notes were deposited upon issuance with the Trustee as custodian for The
Depository Trust Company ("DTC"), in New York, New York, and registered in the
name of a nominee of DTC, in each case for credit to an account of a direct or
indirect participant as described below. Regulation S Notes were deposited upon
issuance with the Trustee as custodian for DTC, and registered in the name of a
nominee of DTC, in each case for credit to the accounts of Euroclear System
("Euroclear") and Cedel Bank, S.A. ("CEDEL").
The New Notes will be represented by one or more new notes in registered,
global form without interest coupons (collectively, the "New Global Notes") and
deposited with the Trustee as custodian and registered in the name of a nominee
of DTC. The Old Global Notes, to the extent directed by holders thereof in their
Letters of Transmittal, will be exchanged through book-entry electronic transfer
for one or more New Global Notes for credit to an account of a direct or
indirect participant as described below. No service charge will be made for any
registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
New Notes issued to non-qualified institutional buyers in exchange for Old
Notes held by such investors, if any, will be issued only in certificated, fully
registered, definitive form. The New Global Note will, upon request, be
exchangeable for other New Notes in definitive, fully registered form without
coupons in denominations of $1,000 and integral multiples thereof, but only in
accordance with DTC's customary procedures. The New Global Note will also be
exchangeable in certain other limited circumstances. See "--Exchange of
Book-Entry Notes for Certificated Notes." The Company, the Trustee and any other
agent thereof will be entitled to treat DTC's nominee as the sole owner and
holder of the unexchanged portion of the New Global Note for all purposes.
Depositary Procedures
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between the Participants through electronic
book-entry changes in accounts of the Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and the Indirect Participants.
DTC has also advised the Company that pursuant to procedures established
by it, (i) upon deposit of the New Global Note, DTC will credit the accounts of
Participants designated by the Participants with portions of the principal
amount of the Old Global Notes and (ii) ownership of such interests in the New
Global Note will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with respect
to other owners of beneficial interests in the New Global Note). Investors in
the New Global Note may hold their interests therein directly through DTC, if
they are Participants in such system, or indirectly through organizations
(including Euroclear and CEDEL) which are Participants in such system. All
interests in the New Global Note, including those held through Euroclear or
CEDEL, may be subject to the procedures and requirements of DTC. Those interests
held through Euroclear or CEDEL may also be subject to the procedures and
requirements of such system.
The laws of some states require that certain persons take physical
delivery in definitive form of
37
<PAGE>
securities that they own. Consequently, the ability to transfer beneficial
interests in the Old Global Notes or the New Global Note to such persons may be
limited to that extent. Because DTC can act only on behalf of the Participants,
which in turn act on behalf of the Indirect Participants and certain banks, the
ability of a person having beneficial interests in the New Global Note to pledge
such interests to persons or entities that do not participate in the DTC system,
or otherwise take actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Notes, see "--Exchange of Book-Entry
Notes for Certificated Notes."
Except as described below, owners of interests in the New Global Note will
not have New Notes registered in their names, will not receive physical delivery
of New Notes in certificated form and will not be considered the registered
owners or holders thereof under the Indenture for any purpose.
Payments in respect of the principal of (and premium, if any) and interest
on the New Global Note registered in the name of DTC or its nominee will be
payable by the Trustee to DTC or its nominee in its capacity as the registered
holder under the Indenture. Under the terms of the Indenture, the Company and
the Trustee will treat the persons in whose names the New Notes, including the
New Global Note, are registered as the owners thereof for the purpose of
receiving such payments and for any and all other purposes whatsoever.
Consequently, neither the Company, the Trustee or any agent of the Company or
the Trustee has or will have any responsibility or liability for (i) any aspect
or accuracy of DTC's records or any Participant's or Indirect Participant's
records relating to or payments made on account of beneficial ownership
interests in the New Global Note, or for maintaining, supervising or reviewing
any of DTC's records or any Participant's or Indirect Participant's records
relating to the beneficial ownership interests in the New Global Note, or (ii)
any other matter relating to the actions and practices of DTC or any of the
Participants or the Indirect Participants.
DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the New Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security as
shown on the records of DTC. Payments by the Participants and the Indirect
Participants to the beneficial owners of New Notes will be governed by standing
instructions and customary practices and will not be the responsibility of DTC,
the Trustee or the Company. Neither the Company nor the Trustee will be liable
for any delay by DTC or any of the Participants in identifying the beneficial
owners of the New Notes, and the Company and the Trustee may conclusively rely
on and will be protected in relying on instructions from DTC or its nominee as
the registered owner of the New Global Note for all purposes.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Participants to
whose account with DTC interests in the Old Global Notes or the New Global Note
are credited and only in respect of such portion of the aggregate principal
amount of the Notes as to which such Participant or Participants has or have
given such direction. However, if any of the events described under "--Exchange
of Book Entry Notes for Certificated Notes" occurs, DTC reserves the right to
exchange the New Global Note for New Notes in certificate form and to distribute
such New Notes to its Participants.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures
to facilitate transfers of interests in the Old Global Notes and the New Global
Note among accountholders in DTC and accountholders of Euroclear and CEDEL, they
are under no obligation to perform or to continue to perform such procedures,
and such procedures may be discontinued at any time. None of the Company or the
Trustee nor any agent of the Company or the Trustee will have any responsibility
for the performance by DTC, Euroclear or CEDEL or their respective participants,
indirect participants or accountholders of their respective obligations under
the rules and procedures governing their operations.
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<PAGE>
Exchange of Book-Entry Notes for Certificated Notes
The New Global Note is exchangeable for definitive New Notes in registered
certificated form if (i) DTC (x) notifies the Company that it is unwilling or
unable to continue as depository for the New Global Note and the Company
thereupon fails to appoint a successor depository or (y) has ceased to be a
clearing agency registered under the Exchange Act, (ii) the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance of
the New Notes in certificated form or (iii) there shall have occurred and be
continuing a Default or an Event of Default with respect to the New Notes. In
all cases, certificated New Notes delivered in exchange for the New Global Note
or beneficial interests therein will be registered in the names, and issued in
any approved denominations, requested by or on behalf of the depository (in
accordance with its customary procedures). In addition, subject to certain
restrictions on the transferability of the New Notes, New Notes in definitive
form will be issued upon the resale, pledge or other transfer of any New Notes
or interest therein to any person or entity that is not a qualified
institutional buyer or that does not participate in DTC.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
Optional Redemption
The Notes will be redeemable, at the option of the Company, in whole or in
part, at any time on or after May 15, 2003 and prior to maturity, upon not less
than 30 nor more than 60 days' notice mailed to each Holder of Notes to be
redeemed at the address appearing in the Note Register, in amounts of $1,000 or
an integral multiple of $1,000, at the following Redemption Prices (expressed as
percentages of principal amount) plus accrued interest to but excluding the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on an Interest Payment Date that is
on or prior to the Redemption Date), if redeemed during the twelve-month period
beginning May 15 of each of the years indicated below, plus in each case,
accrued interest thereon to, but excluding, the date of redemption.
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2003................................................................ 104.437%
2004................................................................ 102.958%
2005................................................................ 101.479%
2006 and thereafter................................................. 100.000%
</TABLE>
The Notes will be redeemable in the event that on or before May 15, 2001
the Company receives net proceeds from the sale of its Capital Stock (other than
Disqualified Stock) in one or more offerings, in which case the Company may, at
its option and from time to time, use all or a portion of any such net proceeds
to redeem Notes in a principal amount of at least $5,000,000 and up to an
aggregate amount equal to 35% of the principal amount of the Notes issued,
provided, however, that Notes in an amount equal to at least 65% of the
principal amount of the Notes issued remain outstanding after each such
redemption. Any such redemption must occur on a Redemption Date within 75 days
of any such sale and upon not less than 30 nor more than 60 days' notice mailed
to each Holder of Notes to be redeemed at such Holder's address appearing in the
Note Register, in amounts of $1,000 or an integral multiple of $1,000, at a
redemption price of 108.875% of the principal amount of the Notes plus accrued
interest to but excluding the Redemption Date (subject to the right of Holders
of record on the relevant Regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date).
In the case of any redemption by the Company, the Notes will be redeemed
pro rata if less than all the Notes are to be redeemed. (ss.ss. 203, 1101, 1104,
1105 and 1107)
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<PAGE>
Subordination
The Notes will, to the extent set forth in the Indenture, be subordinate
in right of payment to the prior payment of all Senior Debt. Upon any payment or
distribution of assets of the Company to creditors upon any receivership,
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency or similar
proceedings of the Company, the holders of Senior Debt will first be entitled to
receive payment in full in cash or cash equivalents of principal of (premium, if
any) and interest on, such Senior Debt before the Holders of Notes are entitled
to receive any payment of principal of (premium, if any) or interest on, or any
obligation to purchase, the Notes. In the event that notwithstanding the
foregoing, the Trustee or the Holder of any Note receives any payment or
distribution of assets of the Company of any kind or character (including any
such payment or distribution which may be payable or deliverable by the reason
of the payment of any other indebtedness of the Company being subordinated to
the payment of the Notes), before all the Senior Debt is so paid in full, then
such payment or distribution will be required to be paid over or delivered
forthwith to the trustee in bankruptcy or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay the Senior Debt in
full in cash or cash equivalents. However, notwithstanding the foregoing,
Holders of the Notes may receive shares of stock of the Company or securities of
the Company which are subordinate in right of payment to all Senior Debt to
substantially the same extent as the Notes are so subordinated ("subordinated
consideration"). (ss.ss. 1201 and 1202)
The Company may not make any payments on account of the Notes or on
account of the purchase or redemption or other acquisition of Notes (except for
subordinated consideration) if there shall have occurred and be continuing a
default in the payment of principal of (premium, if any) or interest on the
Senior Debt (a "Senior Payment Default"). If there shall have occurred and be
continuing any default (other than a Senior Payment Default) with respect to any
Senior Debt permitting the holders thereof (or a trustee on behalf thereof) then
to accelerate the maturity thereof (a "Senior Nonmonetary Default"), and the
Company and the Trustee have received written notice thereof from the Agent Bank
under the Credit Agreement (or any successor credit facility) or any other
holder of Senior Debt designated by the Company, then the Company may not make
any payments on account of the Notes or on account of the purchase or redemption
or other acquisition of Notes (except for subordinated consideration) for a
period (a "blockage period") commencing on the date the Company and the Trustee
receive such written notice and ending on the earlier of (x) 179 days after such
date and (y) the date, if any, on which the Senior Debt to which such Senior
Nonmonetary Default relates is discharged or such Senior Nonmonetary Default is
waived or otherwise cured. In any event, not more than one blockage period may
be commenced during any period of 360 consecutive days and there shall be a
period of at least 181 consecutive days in each 360-day period when no blockage
period is in effect. No Senior Nonmonetary Default with respect to Senior Debt
that existed or was continuing on the date of the commencement of any blockage
period with respect to the Senior Debt initiating such blockage period will be,
or can be, made the basis for the commencement of a second blockage period,
unless such default has been cured or waived for a period of not less than 90
consecutive days. In the event that, notwithstanding the foregoing, the Company
makes any payment to the Trustee or the Holder of any Notes prohibited by the
subordination provisions, then such payment will be required to be paid over and
delivered forthwith to the holders of the Senior Debt remaining unpaid, to the
extent necessary to pay in full all the Senior Debt. (Article Twelve)
By reason of such subordination, in the event of insolvency, creditors of
the Company who are not holders of Senior Debt or of the Notes may recover less,
ratably, than holders of Senior Debt and may recover more, ratably, than the
Holders of the Notes.
"Senior Debt" means (a) the principal of (premium, if any) and interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding) on, and
penalties and any obligation of the Company for reimbursement, indemnities and
fees relating to, Debt outstanding pursuant to the Credit Agreement, (b) payment
obligations of the Company under interest rate swap or
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similar agreements or foreign currency hedge, exchange or similar agreements
entered into to hedge Debt Incurred under the Credit Agreement or any renewal,
refunding, refinancing or extension thereof, (c) all other Debt for money
borrowed of the Company referred to in the definition of Debt other than Clause
(vi), and (d) all renewals, extensions, modifications, refinancings, refundings
and amendments of any Debt referred to in Clause (a), (b) or (c) above, unless
but only to the extent, in the case of any particular Debt referred to in Clause
(a), (b) or (c) above, (A) such Debt is owed to a Subsidiary, (B) the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Debt is not superior in right of payment to the
Notes, (C) such Debt is Incurred in violation of the Indenture, or (D) such Debt
is subordinate in right of payment in respect to any other Debt of the Company.
(ss. 101)
The subordination provisions described above will cease to be applicable
to the Notes upon any defeasance or covenant defeasance of the Notes as
described under "--Defeasance." (Article Thirteen)
If the Company fails to make any payment on the Notes, when due or within
any applicable grace period, whether or not on account of payment blockage
provisions, such failure would constitute an Event of Default under the
Indenture and would enable the holders of the Notes to accelerate the maturity
thereof. See "--Events of Default."
Covenants
The Indenture contains, among others, the following covenants:
Limitation on Debt
The Company may not, and may not permit any Subsidiary to, Incur any Debt
unless the ratio of (a) the aggregate principal amount of Debt of the Company
and its Subsidiaries outstanding as of the most recent available balance sheet,
after giving pro forma effect to the Incurrence of such Debt and any other Debt
Incurred since such balance sheet date and the receipt and application of the
proceeds thereof, to (b) Pro Forma Consolidated Cash Flow for the preceding four
full fiscal quarters, determined on a pro forma basis as if such Debt and any
other Debt Incurred since such balance sheet date had been Incurred and the
proceeds therefrom had been applied at the beginning of such four fiscal
quarters, would be less than 7.0 to 1.
Notwithstanding the foregoing paragraph, the Company or any Subsidiary may
Incur the following without regard to the foregoing limitation: (i) Debt under
the Credit Agreement not to exceed $150,000,000 aggregate principal amount at
any one time outstanding, and any renewal, extension, refinancing or refunding
thereof in an amount which, together with any amount remaining outstanding or
available under the Credit Agreement, does not exceed $150,000,000; (ii) Debt
evidenced by the 10 3/8% Notes, the 9 3/8% Notes and the Notes; (iii) Debt owed
by the Company to any Wholly Owned Subsidiary of the Company or Debt owed by a
Subsidiary of the Company to the Company or a Wholly Owned Subsidiary of the
Company; provided, however, that upon either (1) the transfer or other
disposition by such Wholly Owned Subsidiary or the Company of any Debt so
permitted to a Person other than the Company or another Wholly Owned Subsidiary
of the Company or (2) the issuance (other than directors' qualifying shares),
sale, transfer or other disposition of shares of Capital Stock (including by
consolidation or merger) of such Wholly Owned Subsidiary to a Person other than
the Company or another such Wholly Owned Subsidiary, the provisions of this
Clause (iii) shall no longer be applicable to such Debt and such Debt shall be
deemed to have been incurred at the time of such transfer or other disposition;
(iv) Debt Incurred or Incurrable in respect of letters of credit, bankers'
acceptances or similar facilities not to exceed $2,000,000 at any one time
outstanding; (v) Capital Lease Obligations whose Attributable Value will not
exceed $5,000,000 at any one time outstanding; (vi) Debt arising from the
honoring by a bank or other financial institution of a check, draft or similar
instrument drawn against insufficient funds in the ordinary course of business,
provided that such Debt is extinguished within two Business Days of its
Incurrence; (vii) Debt Incurred by a Person prior to the time (A) such Person
became a Subsidiary of the Company,
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<PAGE>
(B) such Person merges into or consolidates with a Subsidiary of the Company,
(C) another Subsidiary of the Company merges into or consolidates with such
Person (in each case in a transaction in which such Person becomes a Subsidiary
of the Company) or (D) such Person sells any of its property consisting of
operating assets to a Subsidiary of the Company subject to such Debt (whether
such Debt is recourse or non-recourse to such Subsidiary), provided that in any
such case such Debt was not Incurred in anticipation of such transaction; (viii)
Debt evidenced (A) by the 7.75% Exchange Debentures if the 7.75% Exchange
Debentures are issued in exchange for Convertible Preferred Stock or (B) by the
12 3/4% Exchangeable Debentures if the 12 3/4% Exchangeable Debentures are
issued in exchange for 12 3/4% Cumulative Exchangeable Preferred Stock; (ix)
renewals, refundings, refinancings or extensions (collectively, "refinancings")
of the Credit Agreement, the 10 3/8% Notes, the 9 3/8% Notes, the 7.75% Exchange
Debentures, the 12 3/4% Exchangeable Debentures, the Notes or any other
outstanding Debt that is Incurred in compliance with the provisions of the
Indenture (other than Debt referred to in Clauses (i) through (vi) above), in an
aggregate principal amount not to exceed the principal amount of the Debt so
refinanced plus the amount of any premium required to be paid in connection with
such refinancing pursuant to the terms of the Debt refinanced or the amount of
any premium reasonably determined by the Company as necessary to accomplish such
refinancing by means of a tender offer or privately negotiated repurchase, plus
the amount of expenses of the Company Incurred in connection with such
refinancing, provided that, (A) to the extent such refinancing Debt is not
Senior Debt, such refinancing Debt does not have an Average Life less than the
Average Life of the Debt being refinanced and (B) if such Debt is subordinated
in right of payment to the Notes such refinancing Debt is subordinated in right
of payment to the Notes at least to the extent that the Debt to be refinanced is
subordinated to the Notes; and (x) Debt not otherwise permitted to be Incurred
pursuant to Clauses (i) through (ix) above, which, together with any other
outstanding Debt Incurred pursuant to this Clause (x), has an aggregate
principal amount not in excess of $15,000,000 at any one time outstanding. (ss.
1008)
Other than the limitations on incurrence of indebtedness contained in this
covenant, there are no provisions in the Indenture that would protect the
holders of the Notes in the event of a highly leveraged transaction.
Limitation on Certain Debt
The Company may not Incur or permit to exist any Debt that is by its terms
both (i) subordinate in right of payment to any Senior Debt and (ii) senior in
right of payment to the Notes, in each case other than by reason of its
maturity. The Company may not Incur or permit to exist any Debt that is by its
terms subordinate in right of payment to the Notes unless such Debt constitutes
Subordinated Debt. (ss. 1009)
Limitation on Restricted Payments
The Company (i) may not, directly or indirectly, declare or pay any
dividend, or make any distribution in respect of its Capital Stock or to the
holders thereof (including pursuant to a merger or consolidation of the Company,
but excluding (a) any dividends or distributions payable solely in shares of its
Capital Stock (other than Disqualified Stock) or in options, warrants or other
rights to acquire its Capital Stock (other than Disqualified Stock) and (b)
dividends in accordance with the terms of the Convertible Preferred Stock or 12
3/4% Cumulative Exchangeable Preferred Stock, (ii) may not, and may not permit
any Subsidiary of the Company to, directly or indirectly, purchase, redeem or
otherwise acquire or retire for value (a) any Capital Stock of the Company or
(b) any options, warrants, or rights to purchase or acquire shares of Capital
Stock of the Company (in the case of either (a) or (b) other than in exchange
for the Company's Capital Stock (other than Disqualified Stock) or options,
warrants or other rights to purchase the Company's Capital Stock (other than
Disqualified Stock)), (iii) may not make, or permit any Subsidiary of the
Company to make, any loan, advance, capital contribution to or Investment in, or
payment on a Guarantee of any obligation of, any Affiliate, other than the
Company or a Wholly Owned Subsidiary of the Company, (iv) may not, and may not
permit any Subsidiary of the Company to, redeem, defease, repurchase, retire or
otherwise acquire or retire for value prior to any scheduled maturity, repayment
or sinking fund payment, Debt of the Company which is subordinated in right of
payment to the Notes (other
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<PAGE>
than in exchange for the Company's Capital Stock (other than Disqualified Stock)
or options, warrants or other rights to purchase the Company's Capital Stock
(other than Disqualified Stock)) and (v) may not make any Investment in any
Subsidiary that is subject to an encumbrance or restriction described under
"--Limitations Concerning Distributions By and Transfers to Subsidiaries" below
or any Investments in any Unrestricted Subsidiary (each of Clauses (i) through
(v) being a "Restricted Payment"), if at the time thereof: (1) an Event of
Default, or an event that with the lapse of time or the giving of notice, or
both, would constitute an Event of Default, shall have occurred and is
continuing, or (2) upon giving effect to such Restricted Payment, the aggregate
of all Restricted Payments from March 31, 1995 exceeds the sum of: (a) the
remainder of (x) 100% of the cumulative Consolidated Cash Flow (or, in the case
Consolidated Cash Flow shall be negative, less 100% of such deficit) from March
31, 1995 through the last day of the last full fiscal quarter immediately
preceding such Restricted Payment minus (y) the product of 1.4 times the
cumulative Consolidated Interest Expense from March 31, 1995 through the last
day of the last full fiscal quarter immediately preceding such Restricted
Payment; plus (b) 100% of the aggregate net proceeds received by the Company,
including the fair market value of property other than cash (as determined in
good faith by the Board of Directors and evidenced by a Board Resolution filed
with the Trustee), since March 31, 1995 from the issuance (other than to a
Subsidiary) of Capital Stock (other than Disqualified Stock) of the Company and
options, warrants or other rights to purchase or acquire Capital Stock of the
Company (other than Disqualified Stock) and the principal amount of Debt of the
Company that has been converted into Capital Stock of the Company (other than
Disqualified Stock and other than by a Subsidiary) since March 31, 1995; plus
(c) an amount equal to the net reduction in Investments made by the Company and
its Subsidiaries subsequent to the date of original issue of the Notes pursuant
to Clauses (iii) and (v) above in any Affiliate or Unrestricted Subsidiary or
Subsidiary subject to an encumbrance or restriction upon the disposition,
liquidation or repayment (including by way of dividends) thereof, from
redesignations of Unrestricted Subsidiaries as Subsidiaries or from the removal
of such encumbrance or restriction, but only to the extent such amounts are not
included in Consolidated Net Income and not to exceed in the case of any Person
the amount of Investments previously made by the Company and its Subsidiaries in
such Persons; plus (d) $15,000,000.
Notwithstanding the foregoing, so long as no Event of Default, or event
that with the passing of time or the giving of notice, or both, would constitute
an Event of Default, shall have occurred and is continuing or would result
therefrom, the Company and any Subsidiary of the Company may (i) pay any
dividend within 60 days after declaration thereof if at the declaration date
such payment would have complied with the foregoing provision; (ii) make any
payment in redemption of Capital Stock of the Company or options to purchase
such Capital Stock granted to officers or employees of the Company pursuant to
the Company's Stock Option Plan (or any successor plan) in connection with the
severance or termination of officers or employees (other than W. Don Cornwell
and Stuart J. Beck) not to exceed $1,000,000 in the aggregate at any one time
outstanding; (iii) make Investments, not to exceed $10,000,000 in the aggregate
at any one time outstanding, in (A) any Subsidiary which is subject to any
encumbrance or restriction described under "--Limitations Concerning
Distributions By and Transfers to Subsidiaries" or (B) any Unrestricted
Subsidiary; (iv) exchange its Convertible Preferred Stock or 12 3/4% Cumulative
Exchangeable Preferred Stock, in accordance with their respective terms, for the
7.75% Exchange Debentures or the 12 3/4% Exchangeable Debentures, as the case
may be, and make payments of principal (premium, if any) and interest thereon in
accordance with the 7.75% Exchange Debenture Indenture or the 12 3/4%
Exchangeable Debenture Indenture, as the case may be; (v) refinance any Debt
otherwise permitted to be refinanced by Clause (ix) of the second paragraph
under "--Limitation on Debt" above or solely in exchange for or out of the
proceeds of the substantially concurrent sale (other than from or to a
Subsidiary) of shares of Capital Stock of the Company (other than Disqualified
Stock); (vi) purchase, redeem, acquire or retire any shares of Capital Stock of
the Company solely in exchange for or out of the proceeds of the substantially
concurrent sale (other than from or to a Subsidiary) of shares of Capital Stock
(other than Disqualified Stock) of the Company; (vii) purchase or redeem any
Debt from Net Available Proceeds to the extent permitted or required under
"--Limitation on Certain Asset Dispositions"; and (viii) make Permitted
Television Investments in an aggregate amount at any one time outstanding not to
exceed $25,000,000. Any payment or Investment made pursuant to Clauses (i), (ii)
or (iii) of this
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paragraph shall be a Restricted Payment for purposes of calculating aggregate
Restricted Payments under the first paragraph of "--Limitation on Restricted
Payments." (ss. 1010)
Limitations Concerning Distributions By and Transfers to Subsidiaries
The Company may not, and may not permit any Subsidiary of the Company to,
suffer to exist any consensual encumbrance or restriction on the ability of any
Subsidiary of the Company (i) to pay, directly or indirectly, dividends or make
any other distributions in respect of its Capital Stock or pay any Debt or other
obligation owed to the Company or any other Subsidiary of the Company; (ii) to
make loans or advances to the Company or any Subsidiary of the Company; or (iii)
to transfer any of its property or assets to the Company. Notwithstanding the
foregoing limitation, the Company may permit a Subsidiary to suffer to exist any
such encumbrance or restriction (A) included in any instrument governing Debt
Incurred by such Subsidiary pursuant to the first paragraph of "--Limitation on
Debt" for the purpose of financing all or part of the purchase price or cost of
construction or improvements of property, provided, however, that the principal
amount of the Debt so Incurred does not exceed the purchase price or cost of
construction or improvements of such property; (B) included in the Credit
Agreement; (C) imposed by virtue of applicable corporate law or regulation and
relating solely to the payment of dividends or distributions to shareholders;
(D) pursuant to an agreement relating to any Debt Incurred by a Person prior to
the date on which such Person became a Subsidiary of the Company and outstanding
on such date and not Incurred in anticipation of becoming a Subsidiary; (E) with
respect to restrictions of the nature described in Clause (iii) above, included
in a contract entered into in the ordinary course of business and consistent
with past practices that contains provisions restricting the assignment of such
contract; (F) pursuant to an agreement effecting a renewal, refunding or
extension of Debt Incurred pursuant to an agreement referred to in Clause (A),
(B) or (D) above; provided, however, that the provisions contained in such
renewal, refunding or extension agreement relating to such encumbrance or
restriction are no more restrictive in any material respect than the provisions
contained in the agreement the subject thereof, as determined in good faith by
the Board of Directors and evidenced by a resolution of the Board of Directors
filed with the Trustee; or (G) included in any instrument governing Capital
Lease Obligations whose Attributable Value will not exceed $5,000,000 in the
aggregate at any one time outstanding or included in any instrument governing a
Sale and Leaseback Transaction whose Attributable Value does not exceed
$2,000,000 and the Attributable Value of all such Sale and Leaseback
Transactions entered into since the date of the Indenture does not exceed
$5,000,000 in the aggregate; provided that in each case, after giving effect to
the Incurrence of such Capital Lease Obligation or Sale and Leaseback and the
receipt and application of the proceeds thereof, the ratio of the aggregate
principal amount of Debt of the Company and its Subsidiaries outstanding as of
the most recent available balance sheet to Pro Forma Consolidated Cash Flow for
the preceding four full fiscal quarters, determined on a pro forma basis as if
such Capital Lease Obligation had been Incurred, or such Sale and Leaseback
Transaction had taken place, and the proceeds therefrom had been applied at the
beginning of such four fiscal quarters, would be less than 7.0 to 1. (ss. 1011)
Limitation on Transactions with Affiliates
The Company may not, and may not permit any Subsidiary of the Company to,
directly or indirectly, enter into any transaction after the date of the
Indenture with any Affiliate (other than the Company or a Wholly Owned
Subsidiary of the Company), unless a majority of the disinterested members of
the Board of Directors determines in its reasonable good faith judgment
evidenced by a Board Resolution filed with the Trustee that: (1) the terms of
such transaction are in the best interests of the Company or such Subsidiary;
and (2) such transaction is on terms no less favorable to the Company or such
Subsidiary than those that could be obtained in a comparable arm's-length
transaction with an entity that is not an Affiliate. Notwithstanding the
foregoing, the Company shall not be required to file any Board Resolution
referred to in the preceding sentence with respect to matters solely concerning
the compensation of employees. (ss. 1012)
Limitation on Certain Asset Dispositions
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The Company may not, and may not permit any Subsidiary to, make an Asset
Disposition in one or more transactions in any fiscal year unless: (i) the
consideration for such disposition will be at least equal to the fair market
value thereof as determined by the Board of Directors; (ii) at least 85% of the
consideration for such disposition consists of cash or readily marketable cash
equivalents or the assumption of Debt of the Company or a Subsidiary or other
obligations relating to such assets and a release from all liability on the Debt
or other obligations assumed; and (iii) all Net Available Proceeds of such
disposition and from the sale of any marketable cash equivalents received
thereby, less any amounts invested as described in the second sentence of the
following paragraph, are applied (A) first, within 120 days of such disposition,
to the reduction of any obligations then outstanding under the Credit Agreement
(or any successor credit facility) to the extent the terms of such Credit
Agreement (or successor credit facility) require such application or prohibit
prepayment of the Notes; (B) second, within 120 days of such disposition, to the
repayment of any other Senior Debt to the extent the terms of such Senior Debt
require such application or prohibit prepayment of the Notes; (C) third, to the
extent of any remaining Net Available Proceeds and so long as any 10 3/8% Notes
are outstanding, to make an offer to purchase the 10 3/8% Notes in accordance
with the requirements of the 10 3/8% Note Indenture; (D) fourth, to the extent
of any remaining Net Available Proceeds and so long as any 9 3/8% Notes are
outstanding, to make an offer to purchase the 9 3/8% Notes in accordance with
the requirements of the 9 3/8% Notes Indenture; (E) fifth, to the extent more
than $5,000,000 of Net Available Proceeds are not required to be applied to the
repayments as specified in Clauses (A), (B), (C) and (D), to purchases of
Outstanding Notes pursuant to an Offer to Purchase commenced within 120 days of
such disposition, at a purchase price equal to 100% of their principal amount
plus accrued interest to the date of purchase; (F) sixth, to the extent of any
remaining Net Available Proceeds following the completion of the Offer to
Purchase Notes required by Clause (E), to the repayment of other Debt of the
Company or Debt of a Subsidiary of the Company, to the extent permitted under
the terms thereof; and (G) seventh, to the extent of any remaining Net Available
Proceeds, to any other use as determined by the Company which is not otherwise
prohibited by the Indenture.
Notwithstanding Clause (ii) above, all or a portion of the consideration
for any such disposition may consist of all or substantially all of the assets
or a majority of the Voting Stock of an existing television or radio
broadcasting or cable television business or franchise (whether existing as a
separate entity, subsidiary, division, unit or otherwise) if after giving effect
to any such disposition and related acquisition of assets, (x) the ratio of the
aggregate principal amount of Debt of the Company and its Subsidiaries
outstanding as of the most recent available balance sheet to Pro Forma
Consolidated Cash Flow for the preceding four fiscal quarters, determined on a
pro forma basis as if such transaction had taken place and the proceeds
therefrom had been applied at the beginning of such four fiscal quarters, would
be less than 7.0 to 1; (y) no Event of Default or event that, with the passing
of time or the giving of notice, or both, will constitute an Event of Default
shall have occurred or be continuing; and (z) the Net Available Proceeds, if
any, are invested in accordance with the next sentence of this paragraph.
Notwithstanding Clause (iii) above, the Company shall not be required to
repurchase or redeem any Debt to the extent that the Net Available Proceeds from
any Asset Disposition are invested within 120 days of such disposition in
television or radio broadcasting or cable television assets or franchises or the
Company shall have entered into a definitive agreement to acquire such assets
subject only to customary conditions, including, without limitation, the
approval of the Federal Communications Commission (but excluding any conditions
with respect to the financing of such acquisition or due diligence) and such
acquisition shall have been consummated within 240 days of such disposition.
Notwithstanding the foregoing two sentences, the Company shall not be entitled
to take as consideration for an Asset Disposition, or invest Net Available
Proceeds in lieu of repurchasing or redeeming Debt in, any television or radio
broadcasting or cable television assets, business or franchise unless the
majority of the assets (including intangibles) so acquired or the majority of
the assets (including intangibles) of such business or franchise so acquired are
related to television or radio broadcasting. The Company will not be entitled to
any credit against its obligation to purchase Outstanding Notes pursuant to this
covenant for Notes previously acquired by reason of a redemption, tender offer
or other repurchase. (ss. 1013)
Limitation on Liens Securing Company Subordinated Debt
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The Company may not, and may not permit any Subsidiary of the Company to,
Incur or suffer to exist any Lien on or with respect to any property or assets
now owned or hereafter acquired to secure any Debt of the Company that is
expressly by its terms subordinate or junior in right of payment (other than by
reason of maturity) to any other Debt of the Company without making, or causing
such Subsidiary to make, effective provision for securing the Notes (x) equally
and ratably with such Debt as to such property or assets for so long as such
Debt will be so secured or (y) in the event such Debt is subordinate in right of
payment (other than by reason of maturity) to the Notes, prior to such Debt as
to such property or assets for so long as such Debt will be so secured. (ss.
1015)
Limitation on Guarantees of Company Subordinated Debt
The Company may not permit any Subsidiary, directly or indirectly, to
assume, Guarantee or in any other manner become liable with respect to any Debt
of the Company that is expressly by its terms subordinate or junior in right of
payment (other than by reason of maturity) to any other Debt of the Company.
(ss. 1016)
Limitation on Issuances and Sale of Capital Stock of Wholly Owned Subsidiaries
The Company (i) may not, and may not permit any Wholly Owned Subsidiary
to, transfer, convey, sell or otherwise dispose of any Capital Stock of such or
any other Wholly Owned Subsidiary to any Person (other than the Company or a
Wholly Owned Subsidiary) unless such transfer, conveyance, sale or other
disposition is of all the Capital Stock of such Wholly Owned Subsidiary and the
Net Available Proceeds from such transfer, conveyance, sale or other disposition
are applied in accordance with "--Limitation on Certain Asset Dispositions"
(including the provisions thereof relating to the application of the Net
Available Proceeds therefrom) and (ii) may not permit any Wholly Owned
Subsidiary to issue shares of its Capital Stock (other than directors'
qualifying shares), or securities convertible into, or warrants, rights or
options to subscribe for or purchase shares of, its Capital Stock to any Person
other than to the Company or a Wholly Owned Subsidiary unless in the case of
either Clause (i) or (ii) above (A) after giving effect to any such sale,
disposition or issuance, the ratio of the aggregate principal amount of Debt of
the Company and its Subsidiaries outstanding as of the most recent available
balance sheet to Pro Forma Consolidated Cash Flow for the preceding four fiscal
quarters, determined on a pro forma basis as if such sale, disposition or
issuance had taken place and the Net Available Proceeds therefrom had been
applied at the beginning of such four fiscal quarters, would be less than 7.0 to
1; (B) immediately after giving effect to such sale, disposition or issuance
(including any acquisition of assets with Net Available Proceeds) no Event of
Default or event that, with the passing of time or the giving of notice, or
both, would constitute an Event of Default shall have occurred or be continuing;
(C) the assets acquired pursuant to such sale, disposition or issuance, are
either (x) at least 85% cash or readily marketable cash equivalents and the Net
Available Proceeds from such sale, disposition or issuance are applied in
accordance with "--Limitation on Certain Asset Dispositions" above (including
the provisions thereof relating to the application of Net Available Proceeds
therefrom) or (y) all or substantially all of the assets or a majority of the
Voting Stock of an existing television or radio broadcasting or cable television
business or franchise (whether existing as a separate entity, subsidiary,
division, unit or otherwise) (subject to the restrictions described in the
penultimate sentence of the second paragraph under "--Limitation on Certain
Asset Dispositions") above; (D) after giving effect to any such sale,
disposition or issuance, such Wholly Owned Subsidiary shall be a Subsidiary of
the Company; and (E) the consideration for such sale, disposition or issuance of
Capital Stock will be at least equal to the fair market value thereof as
determined by the Board of Directors. (ss. 1014)
Provision of Financial Information
So long as any of the Notes are Outstanding, the Company will file with
the Commission the annual reports, quarterly reports and other documents that
the Company would have been required to file with the Commission pursuant to
Sections 13(a) and 15(d) of the Exchange Act if the Company were
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subject to such Sections, and the Company will provide to all Holders and file
with the Trustee copies of such reports and documents. (ss. 1018)
Mergers, Consolidations and Certain Sales of Assets
The Company (i) may not consolidate with or merge into any other Person or
permit any other Person to consolidate with or merge into the Company or any
Subsidiary of the Company (in a transaction in which such Subsidiary remains a
Subsidiary of the Company); and (ii) may not, directly or indirectly, transfer,
sell, convey, lease or otherwise dispose of all or substantially all of its
properties and assets as an entirety; unless: (1) immediately before and after
giving effect to such transaction and treating any Debt that becomes an
obligation of the Company or a Subsidiary of the Company, as a result of such
transaction, as having been Incurred by the Company or such Subsidiary at the
time of the transaction, no Event of Default or event that, with the passing of
time or the giving of notice, or both, would become an Event of Default, shall
have occurred and be continuing; (2) in a transaction in which the Company does
not survive or in which the Company sells, leases or otherwise disposes of all
or substantially all of its assets, the successor entity to the Company is
organized under the laws of the United States or any State thereof or the
District of Columbia and will expressly assume, by a supplemental indenture
executed and delivered to the Trustee in form satisfactory to the Trustee, all
of the Company's obligations under the Indenture; (3) immediately after giving
effect to such transaction, the Company or the successor entity to the Company
would have a ratio of aggregate principal amount of Debt of the Company and its
Subsidiaries outstanding as of the most recent available balance sheet to Pro
Forma Consolidated Cash Flow for the preceding four full fiscal quarters,
determined on a pro forma basis as if such transaction had taken place and the
proceeds therefrom had been applied at the beginning of such four fiscal
quarters, of less than 7.0 to 1; (4) if, as a result of any such transaction,
property or assets of the Company would become subject to a Lien prohibited by
the provisions of the Indenture described under "--Limitation on Liens Securing
Company Subordinated Debt" above, the Company or the successor entity to the
Company shall have secured the Notes as required by such covenant; and (5)
certain other conditions are met. Upon any such sale of all or substantially all
of the assets of the Company to another Person or any merger or consolidation
where the Company is not the surviving entity, such Person or survivor shall
become the obligor in respect of the Notes and the Company will be relieved of
all further obligations and covenants, including the "--Limitation on Certain
Asset Dispositions" above, under the Indenture and the Notes. (ss. 801)
Change of Control
Within 30 days following the date of the consummation of a transaction
that will result in a Change of Control, the Company will commence an Offer to
Purchase all Outstanding Notes, subject to the consummation of the Change of
Control, at a purchase price equal to 101% of their aggregate principal amount
plus accrued interest to the date of purchase. Prior to the commencement of the
Offer, and in any event prior to 30 days following the date of the consummation
of a transaction that will result in a Change of Control, the Company will (a)
to the extent then required to be repaid, pay in full all outstanding Senior
Debt or (b) obtain the requisite consents then required under agreements
governing such debt. A Change of Control will be deemed to have occurred at such
time as any Person or any Persons (other than one or more Permitted Holders)
acting together that would constitute a "group" (a "Group") for purposes of
Section 13(d) of the Exchange Act becomes the beneficial owner of 50% or more of
the total voting power of all classes of Voting Stock of the Company or at such
time as such Person or Group succeeds in having a sufficient number of its
nominees elected to the Board of Directors of the Company such that such
nominees, when added to any existing directors remaining on the Board of
Directors of the Company after such election who are Affiliates of such Group,
will constitute a majority of the Board of Directors of the Company. "Permitted
Holder" means (i) W. Don Cornwell and Stuart J. Beck, (ii) the members of the
immediate family of either of the persons referred to in Clause (i) above, (iii)
any trust created for the benefit of the persons described in Clause (i) or (ii)
above or any of their estates or (iv) any corporation that is controlled by any
person described in Clause (i), (ii) or (iii) above. (ss. 1017)
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Upon the occurrence of a Change of Control, the Company will also be
required to offer to purchase all the Existing Notes at 101% of the principal
amount thereof plus accrued and unpaid interest thereon to the date of purchase,
of which $249.8 million principal amount was outstanding at March 31, 1998. Also
a change of Control is an Event of Default under the Credit Agreement. If a
Change of Control were to occur, there can be no assurance that the Company
would have sufficient funds to pay all borrowings under the Credit Agreement and
pay the Change of Control purchase price for all Existing Notes. The Notes will
be subordinated in right of payment to the prior full payment of all Senior
Indebtedness, including Senior Debt outstanding under the Credit Agreement.
Events of Default
The following will be Events of Default under the Indenture: (a) failure
to pay any interest on any Note when due, continued for 30 days; (b) failure to
pay principal of (or premium, if any, on) any Note when due; (c) failure to
purchase Notes required to be purchased pursuant to an Offer to Purchase as
described under the "--Limitation on Certain Asset Dispositions" and the "Change
of Control" covenants in accordance with the terms of such Offer to Purchase;
(d) failure to perform or comply with the provisions described in Clause (a) or
(b) under "Change of Control"; (e) failure to perform or comply with the
provisions described under "Mergers, Consolidations and Certain Sales of
Assets"; (f) failure to perform any other covenant or warranty of the Company in
the Indenture, continued for 60 days after written notice as provided in the
Indenture; (g) failure to pay, at final maturity, in excess of $5,000,000
principal amount of any indebtedness of the Company or any Subsidiary of the
Company, or acceleration of any indebtedness of the Company or any Subsidiary of
the Company in an aggregate principal amount in excess of $5,000,000; (h) the
rendering of a final judgment or judgments (not subject to appeal) against the
Company or any of its Subsidiaries in an aggregate principal amount in excess of
$3,000,000 which remains unstayed, in effect and unpaid for a period of 60
consecutive days thereafter; and (i) certain events in bankruptcy, insolvency or
reorganization affecting the Company or any Subsidiary of the Company. (ss. 501)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. (ss. 603) Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the Outstanding Notes will 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. (ss. 512)
If an Event of Default shall occur and be continuing, either the Trustee
or the Holders of at least 25% in aggregate principal amount of the Outstanding
Notes may accelerate the maturity of all Notes; provided, however, that after
such acceleration, but before a judgment or decree based on acceleration, the
Holders of a majority in aggregate principal amount of Outstanding Notes may,
under certain circumstances, rescind and annul such acceleration if all Events
of Default, other than the non-payment of accelerated principal, have been cured
or waived as provided in the Indenture. (ss. 502) For information as to waiver
of defaults, see "--Modification and Waiver."
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless the Holders of at least 25% in aggregate principal amount of
the Outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the Outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days. (ss.
507) However, such limitations do not apply to a suit instituted by a Holder of
a Note for enforcement of payment of the principal of (and premium, if any) or,
interest on such Note on or after the respective due dates expressed in such
Note. (ss. 508)
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The Company will be required to furnish to the Trustee annually a
statement as to the performance by the Company of certain of its obligations
under the Indenture and as to any default in such performance. (ss. 1019)
Defeasance
The Indenture will provide that, at the option of the Company, (A) if
applicable, the Company will be discharged from any and all obligations in
respect of the Outstanding Notes or (B) if applicable, the Company may omit to
comply with certain restrictive covenants, and that such omission shall not be
deemed to be an Event of Default under the Indenture and the Notes, and that the
Notes shall no longer be subject to the subordination provisions in either case
(A) or (B) upon irrevocable deposit with the Trustee, in trust, of money and/or
U.S. government obligations which will provide money in an amount sufficient in
the opinion of a nationally recognized accounting firm to pay the principal of
and premium, if any, and each installment of interest, if any, on the
Outstanding Notes. With respect to Clause (B), the obligations under the
Indenture other than with respect to such covenants and the Events of Default
other than the Event of Default relating to such covenants above shall remain in
full force and effect. Such trust may only be established if, among other things
(i) with respect to Clause (A), the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or there has been a change
in law, which in the Opinion of Counsel provides that Holders of the Notes will
not recognize gain or loss for Federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to Federal income tax on
the same amount, in the same manner and at the same times as would have been the
case if such deposit, defeasance and discharge had not occurred; or, with
respect to Clause (B), the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of the Notes will not recognize gain or
loss for Federal income tax purposes as a result of such deposit and defeasance
and will be subject to Federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and defeasance
had not occurred; (ii) no Event of Default or event that, with the passing of
time or the giving of notice, or both, shall constitute an Event of Default
shall have occurred or be continuing; (iii) the Company has delivered to the
Trustee an Opinion of Counsel to the effect that such deposit shall not cause
the Trustee or the trust so created to be subject to the Investment Company Act
of 1940; and (iv) certain other customary conditions precedent. (Article
Thirteen)
Modification and Waiver
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Notes; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Note affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of (or the premium), or interest on, any Note, (c) change the
place or currency of payment of principal of (or premium), or interest on, any
Note, (d) impair the right to institute suit for the enforcement of any payment
on or with respect to any Note, (e) reduce the above-stated percentage of
Outstanding Notes necessary to modify or amend the Indenture, (f) reduce the
percentage of aggregate principal amount of Outstanding Notes necessary for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults, (g) modify any provisions of the Indenture relating to the
modification and amendment of the Indenture or the waiver of past defaults or
covenants, except as otherwise specified, or (h) modify any Offer to Purchase
for the Notes required under the "--Limitation on Certain Asset Dispositions"
and the "Change of Control" covenant thereof. (ss. 902)
The Holders of a majority in aggregate principal amount of the Outstanding
Notes may waive compliance by the Company with certain restrictive provisions of
the Indenture. (ss. 1020) The Holders of a majority in aggregate principal
amount of the Outstanding Notes may waive any past default under the Indenture,
except a default in the payment of principal, premium, if any, or interest or a
default arising
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from failure to purchase any Note tendered required to be purchased pursuant to
an Offer to Purchase. (ss. 513)
The Trustee
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs. (ss.ss. 601
and 603)
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases
or to realize on certain property received by it in respect of any such claim as
security or otherwise. The Trustee is permitted to engage in other transactions
with the Company or any Affiliate, provided, however, that if it acquires any
conflicting interest (as defined in the Indenture or in the Trust Indenture
Act), it must eliminate such conflict or resign. (ss. 608)
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided. (ss. 101)
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Disposition" by any Person means any transfer, conveyance, sale,
lease or other disposition by such Person or any of its Subsidiaries (including
a consolidation or merger of any such Subsidiaries with or into another Person
in a transaction in which such Subsidiary ceases to be a Subsidiary, but
excluding a disposition by a Subsidiary of such Person to such Person or a
Wholly Owned Subsidiary of such Person or by such Person to a Wholly Owned
Subsidiary of such Person) of (i) shares of Capital Stock (other than directors'
qualifying shares) or other ownership interests of a Subsidiary of such Person,
(ii) substantially all of the assets of such Person or any of its Subsidiaries
representing a division or line of business or (iii) other assets or rights of
such Person or any of its Subsidiaries outside of the ordinary course of
business. Asset Disposition shall not include a Sale and Leaseback Transaction
to the extent that the Attributable Value of such Sale and Leaseback Transaction
does not exceed $2,000,000 and the aggregate Attributable Value of all such Sale
and Leaseback Transactions entered into since the date of the Indenture does not
exceed $5,000,000.
"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capital Lease Obligation, and at any
date as of which the amount thereof is to be determined, the total net amount of
rent required to be paid by such Person under such lease during the initial term
thereof as determined in accordance with generally accepted accounting
principles, discounted from the last date of such initial term to the date of
determination at a rate per annum equal to the discount rate which would be
applicable to a Capital Lease Obligation with like term in accordance with
generally accepted accounting principles. The net amount of rent required to be
paid under any such lease for any such period shall be the aggregate amount of
rent payable by the lessee with respect to such period after excluding amounts
required to be paid on account of insurance, taxes, assessments, utility,
operating and labor costs and similar charges. In the case of any lease which is
terminable by the lessee upon the payment of a penalty, such net amount shall
also include the amount of such penalty, but no rent shall be
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considered as required to be paid under such lease subsequent to the first date
upon which it may be so terminated. Attributable Value means, as to a Capital
Lease Obligation under which any Person is at the time liable and at any date as
of which the amount thereof is to be determined, the capitalized amount thereof
that would appear on the face of a balance sheet of such Person in accordance
with generally accepted accounting principles.
"Average Life" means, as of the date of determination, with respect to any
Debt, the quotient obtained by dividing (i) the sum of the products of the
numbers of years from the date of determination to the dates of each successive
scheduled principal payments of such Debt, multiplied by the amount of such
principal payments by (ii) the sum of all such principal payments.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The Borough of Manhattan,
The City of New York, New York are authorized or obligated by law or executive
order to close.
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Debt arrangements conveying
the right to use) real or personal property of such Person which is required to
be classified and accounted for as a capital lease or a liability on the face of
a balance sheet of such Person in accordance with generally accepted accounting
principles. The stated maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Cash Flow" of any Person means for any period the
Consolidated Net Income for such period increased by the sum of (i) Consolidated
Interest Expense of such Person and its Consolidated Subsidiaries for such
period, plus (ii) Consolidated Income Tax Expense of such Person and its
Consolidated Subsidiaries for such period, plus (iii) the consolidated
depreciation and amortization expense included in the income statement of such
Person and its Consolidated Subsidiaries for such period, plus (iv) other
non-cash charges of such Person and its Consolidated Subsidiaries deducted in
determining Consolidated Net Income (other than amortization of film and program
assets) for such period, minus (v) non-cash items of such Person and its
Consolidated Subsidiaries added in determining Consolidated Net Income for such
period; provided, however, Consolidated Cash Flow shall not include Consolidated
Net Income and the items specified in Clauses (i) through (iv) above to the
extent attributable to a Consolidated Subsidiary of such Person that is subject
to restrictions preventing the payment of dividends and the making of
distributions (by loans, advances, intercompany transfers or otherwise) to such
Person, but shall include such payments and distributions as could be made in
accordance with such restrictions.
"Consolidated Income Tax Expense" of any Person means for any period the
consolidated provision for income taxes of such Person and its Consolidated
Subsidiaries for such period.
"Consolidated Interest Expense" for any Person means for any period the
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of such Person and its Consolidated
Subsidiaries for such period, including without limitation or duplication (or,
to the extent not so included, with the addition of), (i) the portion of any
rental obligation in respect of any Capital Lease Obligation allocable to
interest expense in accordance with generally accepted accounting principles,
(ii) the amortization of Debt discounts, (iii) any payments or fees with respect
to letters of credit, bankers acceptances or similar facilities, (iv) fees with
respect to interest rate swap or similar agreements or foreign currency hedge,
exchange or similar
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agreements or Foreign Currency hedge, exchange or similar agreements other
than fees or charges related to the acquisition or termination thereof which
are not allocable to interest expense in accordance with generally accepted
accounting principles, (v) Preferred Stock dividends declared and payable in
cash and (vi) accrued Disqualified Stock dividends, whether or not declared
or paid.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person and its Consolidated
Subsidiaries for such period determined in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (i) the
net income (or loss) of any Person acquired by such Person or a Subsidiary of
such Person in a pooling-of interests transaction for any period prior to the
date of such transaction, (ii) the net income (or loss) of any Person that is
not a Consolidated Subsidiary of such Person, (iii) gains or losses on Asset
Dispositions by such Person or its Consolidated Subsidiaries and (iv) all
extraordinary gains and extraordinary losses; and provided, further, that there
shall be added thereto, to the extent not otherwise included in Consolidated Net
Income, the amount of any dividends or other distributions actually paid to such
Person during such period by a Person that is not a Consolidated Subsidiary of
such Person.
"Consolidated Subsidiaries" of any Person means all other Persons that
would be accounted for as Consolidated Persons in such Person's financial
statements in accordance with generally accepted accounting principles,
provided, however, Consolidated Subsidiaries shall not include any Unrestricted
Subsidiary created in accordance with the definition of Unrestricted Subsidiary.
"Credit Agreement" means the Third Amended and Restated Credit Agreement,
dated as of September 4, 1996, by and among the Company, the lenders listed
therein, Bankers Trust Company, as Agent, and The Bank of New York, First Union
National Bank of North Carolina, Goldman Sachs Credit Partners L.P. and Union
Bank of California, N.A., as Co-Agents, as it may be amended, restated, modified
or replaced from time to time.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person, (iv) every obligation of such Person issued or assumed
as the deferred purchase price of property or services (but excluding trade
accounts payable, film contract rights or accrued liabilities arising in the
ordinary course of business), (v) every Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Disqualified Stock of
such Person at the time of determination, and (vii) every obligation of the type
referred to in Clauses (i) through (vi) of another Person and all dividends of
another Person the payment of which, in either case, such Person has Guaranteed
or is responsible or liable, directly or indirectly, as obligor, Guarantor or
otherwise.
"Disqualified Stock" means any Capital Stock of the Company or any
Subsidiary which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or otherwise (including upon the
occurrence of an event), matures or is required to be redeemed (pursuant to a
sinking fund obligation or otherwise) or is redeemable at the option of the
holder thereof, in whole or in part (other than a redemption which is
conditioned upon a change of control of the Company), on or prior to the final
scheduled maturity of the Notes.
"generally accepted accounting principles" means, with respect to any
computation, such accounting principles as are generally accepted in the United
States as consistently applied by the Company at the date of such computation.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any
Debt of any other Person (the "primary obligor") in any manner, whether directly
or indirectly, and including, without limitation, any obligation of
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such Person, (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of such Debt, (ii) to purchase
property, securities or services for the purpose of assuring the holder of such
Debt of the payment of such Debt, or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Debt (and "Guaranteed,"
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that the Guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either case,
in the ordinary course of business.
"Incur" means, with respect to any Debt 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 Debt or other obligation
or the recording, as required pursuant to generally accepted accounting
principles or otherwise, of any such Debt or other obligation on the balance
sheet of such Person (and "Incurrence," "Incurred," "Incurrable" and "Incurring"
shall have meanings correlative to the foregoing); provided, however, that a
change in generally accepted accounting principles that results in an obligation
of such Person that exists at such time becoming Debt shall not be deemed an
Incurrence of such Debt.
"Investment" by any Person means any direct or indirect loan, advance or
other extension of credit or capital contribution (by means of transfers of cash
or other property to others or payments for property or services for the account
or use of others, or otherwise) to, or purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidence of Debt issued by, any
other Person including any payment on a Guarantee of any obligation of such
other Person.
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Local Marketing Agreement" means any agreement pursuant to which the
Company or any of its Subsidiaries agrees to provide television management
services, television broadcasting or assets related to the provision of
television broadcasting in exchange for cash payments and/or the right to charge
others for the provision of advertising or other services or products.
"Net Available Proceeds" from any Asset Disposition or issuance of Capital
Stock by any Person means cash or readily marketable cash equivalents received
(including by way of sale or discounting of a note, installment receivable or
other receivable, but excluding any other consideration received in the form of
assumption by the acquiree of Debt or other obligations relating to such
properties or assets or received in any other noncash form) therefrom by such
Person, net of (i) all legal, title and recording tax expenses, commissions and
other fees and expenses Incurred and all federal, state, provincial, foreign and
local taxes required to be accrued as a liability as a consequence of such Asset
Disposition or issuance, (ii) all payments made by such Person or its
Subsidiaries on any Debt which is secured by such assets in accordance with the
terms of any Lien upon or with respect to such assets or which must by the terms
of such Lien, or in order to obtain a necessary consent to such Asset
Disposition or issuance or by applicable law be repaid out of the proceeds from
such Asset Disposition or issuance, (iii) all distributions and other payments
made to minority interest holders in Subsidiaries of such Person or joint
ventures as a result of such Asset Disposition, and (iv) reserves established in
accordance with generally accepted accounting principles against any liabilities
associated with such assets and retained by such Person or any Subsidiary
thereof, as the case may be, after such Asset Disposition, including, without
limitation, liabilities under any indemnification obligations and severance and
other employee termination costs associated with such Asset Disposition, in each
case as determined by the Board of Directors, in its reasonable good faith
judgment evidenced by a resolution of the Board of Directors filed with the
Trustee; provided, however, that any reduction in such reserve following the
consummation of such Asset Disposition will be treated for all
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purposes of the Indenture and the Notes as a new Asset Disposition at the time
of such reduction with Net Available Proceeds equal to the amount of such
reduction.
"Offer to Purchase" means a written offer (the "Offer") sent by the
Company by first class mail, postage prepaid, to each Holder at his address
appearing in the Note Register on the date of the Offer, offering to purchase up
to the principal amount of Notes specified in such Offer at the purchase price
specified in such Offer. Unless otherwise required by applicable law, the Offer
shall specify an expiration date (the "Expiration Date") of the Offer to
Purchase which shall be, subject to any contrary requirements of applicable law,
not less than 30 days or more than 60 days after the date of such Offer and a
settlement date (the "Purchase Date") for the purchase of Notes within five
Business Days after the Expiration Date. The Company shall notify the Trustee at
least 15 Business Days (or such shorter period as is acceptable to the Trustee)
prior to the mailing of the Offer of the Company's obligation to make an Offer
to Purchase, and the Offer shall be mailed by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company. The Offer
shall contain information concerning the business of the Company and its
Subsidiaries which the Company in good faith believes will enable such Holders
to make an informed decision with respect to the Offer to Purchase (which at a
minimum will include (i) the most recent annual and quarterly financial
statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in the documents required to be filed with the
Trustee pursuant to the "Provision of Financial Information" covenant described
above (which requirements may be satisfied by delivery of such documents
together with the Offer), (ii) a description of material developments in the
Company's business subsequent to the date of the latest of such financial
statements referred to in Clause (i) (including a description of the events
requiring the Company to make the Offer to Purchase), (iii) if applicable,
appropriate pro forma financial information concerning the Offer to Purchase and
the events requiring the Company to make the Offer to Purchase, and (iv) any
other information required by applicable law to be included therein). The Offer
shall contain all instructions and materials necessary to enable such Holder to
tender Notes pursuant to the Offer to Purchase. The Offer shall also state:
(1) the Section of the Indenture pursuant to which the Offer to
Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the Outstanding Notes offered
to be purchased by the Company pursuant to the Offer to Purchase (including, if
less than 100%, the manner by which such has been determined pursuant to the
Section hereof requiring the Offer to Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000 aggregate
principal amount of Notes accepted for payment (as specified pursuant to the
Indenture);
(5) that the Holder may tender all or any portion of the Notes registered
in the name of such Holder and that any portion of a Note tendered must be
tendered in an integral multiple of $1,000 principal amount;
(6) the place or places where Notes are to be surrendered for tender
pursuant to the Offer to Purchase;
(7) that interest on any Note not tendered or tendered but not purchased
by the Company pursuant to the Offer to Purchase will continue to accrue;
(8) that on the Purchase Date the purchase price will become due and
payable upon each Note accepted for payment pursuant to the Offer to Purchase
and that interest thereon shall cease to accrue on and after the Purchase Date;
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(9) that each Holder electing to tender a Note pursuant to the Offer to
Purchase will be required to surrender such Note at the place or places
specified in the Offer prior to the close of business on the Expiration Date
(such Note being, if the Company or the Trustee so requires, duly endorsed by,
or accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing);
(10) that Holders will be entitled to withdraw all or any portion of Notes
tendered if the Company (or its Paying Agent) receives, not later than the close
of business on the Expiration Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder tendered, the certificate number of the Note the Holder tendered and
a statement that such Holder is withdrawing all or a portion of his tender;
(11) that (i) if Notes in an aggregate principal amount less than or equal
to the Purchase Amount are duly tendered and not withdrawn pursuant to the Offer
to Purchase, the Company shall purchase all such Notes and (ii) if Notes in an
aggregate principal amount in excess of the Purchase Amount are tendered and not
withdrawn pursuant to the Offer to Purchase, the Company shall purchase Notes
having an aggregate principal amount equal to the Purchase Amount on a pro rata
basis (with such adjustments as may be deemed appropriate so that only Notes in
denominations of $1,000 or integral multiples thereof shall be purchased); and
(12) that in the case of any Holder whose Note is purchased only in part,
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 an aggregate principal
amount equal to and in exchange for the unpurchased portion of the Notes so
tendered.
In the event that the Company is required to make an Offer to Purchase,
the Company intends to comply with any applicable securities laws and
regulations, including any applicable requirements of Rule 14e-1 under the
Exchange Act.
"Permitted Television Investment" means an Investment in any Person which
is a Restricted Payment within the meaning of either Clause (iii) or (v) of the
definition of Restricted Payment (i) with which the Company has entered into a
Local Marketing Agreement or (ii) (a) for the purpose of facilitating the
delivery by the Company or any of its Subsidiaries of advanced television
service, including high definition television, or interactive television or (b)
to otherwise permit the Company or any of its Subsidiaries to exploit any other
emerging technologies relating to television broadcasting. For purposes of
calculating the aggregate amount of outstanding Permitted Television
Investments, any Investment (a) in a Person which, subsequent to such
Investment, becomes a Wholly Owned Subsidiary of the Company, or (b) that
otherwise, due to a change in the status of such person, would not, if then
made, be deemed a Restricted Payment, shall no longer be deemed outstanding as
of the date such Person becomes a Wholly Owned Subsidiary or otherwise changes
its status, as the case may be.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Pro Forma Consolidated Cash Flow" of any Person means for any period the
Consolidated Cash Flow for such period; provided, that, in the event such Person
or its Subsidiaries has made Asset Dispositions or acquisitions of assets,
properties or franchises not in the ordinary course of business (including
acquisitions of other Persons by merger, consolidation or purchase of Capital
Stock) or has permitted an encumbrance or restriction pursuant to the provisions
described under "--Limitation
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Concerning Distributions By and Transfers to Subsidiaries" during or after such
period, such computation shall be made on a pro forma basis (whether the
acquisition is treated as a purchase or a pooling under generally accepted
accounting principles) as if the Asset Dispositions or acquisitions or
restriction or encumbrance had taken place on the first day of such period. If,
during or after the period for which such calculation is made, the Person or any
of its Subsidiaries has acquired or disposed of a television or radio
broadcasting or cable television franchise that does not constitute an existing
business (whether existing as a separate entity, subsidiary, division, unit or
otherwise), the pro forma effect of such acquisition or disposition shall be
deemed to be the Consolidated Cash Flow attributable to such franchise (or a
reasonable estimate thereof) for the period for which such calculation is made
prior to such acquisition or disposition, provided that such estimated
Consolidated Cash Flow shall be determined on the basis of comparable
franchises, evidenced in a Board Resolution and reported on by a nationally
recognized accounting firm.
"readily marketable cash equivalents" means (i) marketable securities
issued or directly and unconditionally guaranteed by the United States
Government or issued by any agency thereof and backed by the full faith and
credit of the United States; (ii) marketable direct obligations issued by any
state of the United States of America or any political subdivision of any such
state or any public instrumentality thereof and, at the time of acquisition,
having the highest rating obtainable from either Standard & Poor's Ratings Group
or Moody's Investors Service, Inc.; (iii) commercial paper maturing no more than
180 days from the date of acquisition thereof and, at the time of acquisition,
having a rating of at least A-1 from Standard & Poor's Ratings Group or at least
P-1 from Moody's Investors Service, Inc.; and (iv) certificates of deposit or
bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
unimpaired capital and surplus of not less than $100,000,000.
"Sale and Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than 270 days after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other amount due under such arrangement prior to
the first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"Subordinated Debt" means Debt of the Company as to which the payment of
principal of (and premium, if any) and interest and other payment obligations in
respect of such Debt shall be subordinate to the prior payment in full of the
Notes to at least the following extent: (i) no payments of principal of (or
premium, if any) or interest on or otherwise due in respect of such Debt may be
permitted for so long as any default in the payment of principal (or premium, if
any) or interest on the Notes exists; and (ii) in the event that any other
default that with the passing of time or the giving of notice, or both, would
constitute an event of default exists with respect to the Notes, upon notice by
25% or more in principal amount of the Notes to the Trustee, the Trustee shall
have the right to give notice to the Company and the holders of such Debt (or
trustees or agents therefor) of a payment blockage, and thereafter no payments
of principal of (or premium, if any) or interest on or otherwise due in respect
of such Debt may be made for a period of 179 days from the date of such notice.
Notwithstanding the foregoing, the 7.75% Exchange Debentures and the 12 3/4%
Exchange Debentures shall constitute Subordinated Debt unless and until the
terms thereof shall be amended or modified after the date of the Indenture.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, 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 other Person (other than
a corporation) 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 at least a majority ownership and
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power to direct the policies, management and affairs thereof. Subsidiary shall
not include an Unrestricted Subsidiary created in accordance with the definition
of Unrestricted Subsidiary.
"Unrestricted Subsidiary" means (1) any Subsidiary designated as such by
the Board of Directors as set forth below where (a) neither the Company nor any
of its other Subsidiaries (other than another Unrestricted Subsidiary) (i)
provides credit support for, or Guarantee of, any Debt of such Subsidiary
(including any undertaking, agreement or instrument evidencing such Debt) or
(ii) is directly or indirectly liable for any Debt of such Subsidiary, and (b)
no default with respect to any Debt of such Subsidiary (including any right
which the holders thereof may have to take enforcement action against such
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Debt of the Company and its other Subsidiaries (other than another
Unrestricted Subsidiary) to declare a default on such other Debt or cause the
payment thereof to be accelerated or payable prior to its final scheduled
maturity, (2) any Subsidiary of the Company (other than a Subsidiary existing as
of the date of the Indenture or successor to any such Subsidiary) which at the
time of determination shall be an Unrestricted Subsidiary (as designated by the
Board of Directors, as provided below) and (3) any Subsidiary of an Unrestricted
Subsidiary where Clauses (a) and (b) are true with respect to such Subsidiary.
The Board of Directors may designate any Subsidiary to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, any other Subsidiary of the Company which is not a
Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted
Subsidiary, provided, that either (x) the Subsidiary to be so designated has
total assets of $1,000 or less or (y) immediately after giving effect to such
designation, the ratio of the aggregate principal amount of Debt of the Company
and its Subsidiaries outstanding as of the most recent available balance sheet
to Pro Forma Consolidated Cash Flow for the preceding four full fiscal quarters,
determined on a pro forma basis as if such Subsidiary had been an Unrestricted
Subsidiary at the beginning of such four fiscal quarters, would be less than 7.0
to 1. The Board of Directors may designate any Unrestricted Subsidiary to be a
Subsidiary, provided that, immediately after giving effect to such designation,
the ratio of the aggregate principal amount of Debt of the Company and its
Subsidiaries outstanding as of the most recent available balance sheet to Pro
Forma Consolidated Cash Flow for the preceding four full fiscal quarters,
determined on a pro forma basis as if such Unrestricted Subsidiary had been a
Subsidiary at the beginning of such four fiscal quarters, would be less than 7.0
to 1. Any such designation by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
Set forth below is a summary of certain debt instruments to which the
Company is a party. The summary does not purport to be complete, and where
reference is made to particular provisions of a debt instrument, such
provisions, including the definition of certain terms, are incorporated by
reference as a part of such summaries or terms, which are qualified in their
entirety by such reference. Copies of such agreements have been filed by the
Company with the Commission.
Credit Agreement
The Company has an existing credit agreement (the "Credit Agreement")
which permits revolving loan borrowings of up to $200,000,000 (the "Revolving
Loans"), all of which is committed, and borrowings of up to an additional
$100,000,000 (the "Additional Loans"), in each instance, the proceeds of which
may be used for working capital and other general corporate purposes, the
repurchase of senior subordinated notes and acquisitions. Upon consummation of
the offering of the Old Notes, the Revolving Loan facility was reduced to
approximately $50 million.
The Company expects to enter into a new Credit Agreement to provide for a
senior secured revolving credit facility of $260,000,000 and borrowings of up to
an additional $240,000,000 on an uncommitted basis. Under the proposed terms of
the amended and restated Credit Agreement, the Company would be permitted to
maintain a higher ratio of debt to consolidated cash flow, the final maturity
would be extended by two years and certain covenant changes would be made.
Borrowings under the Credit Agreement are (i) secured by a lien on
substantially all of the current and future assets of the Company, other than
broadcast licenses (except to the extent permitted by law) and (ii) guaranteed
by all present and future subsidiaries of the Company, which guarantees are
secured by the pledge of all issued and outstanding shares of capital stock of,
and liens on substantially all of the current and future assets of, the
Company's current and future subsidiaries. The Credit Agreement contains a
negative pledge covenant with respect to the Company's broadcast licenses.
Outstanding principal balances under the Credit Agreement bear interest
at floating rates equal to the LIBOR Rate plus marginal rates between 1.125%
and 2.375% or the agent bank's prime rate plus marginal rates between 0% and
1.125%. The marginal rates are subject to adjustment under the Credit
Agreement, based upon changes in the Company's ratio of total funded debt to
broadcast cash flow after corporate overhead. The principal amount of the
Revolving Loans is payable quarterly, and the Revolving Loan commitments are
subject to reduction in installments, on March 31, June 30, September 30 and
December 31 of each year, commencing December 31, 1998, through December 31,
2003 when the final payment is due on the Revolving Loans. The principal
amounts of any Additional Loans are payable quarterly, and the Additional
Loan commitments are subject to reduction, in installments, on March 31, June
30, September 30 and December 31 of each year, commencing March 31, 2001
through December 31, 2003 when the final payment is due on the Additional
Loans. The Credit Agreement contains representations and warranties, funding
and yield protection provisions, borrowing conditions precedent, financial
and other covenants and restrictions, events of default and other provisions
customary for bank credit agreements of this type. The Credit Agreement
requires that not less than 50% of the Company's aggregate debt have fixed
interest rates.
Covenants and provisions contained in the Credit Agreement restrict (with
certain exceptions), among other things, the Company's and its subsidiaries'
ability: (i) to incur additional indebtedness, (ii) to create or incur liens,
(iii) to create or become or remain liable with respect to certain contingent
liabilities, (iv) to make certain payments with respect to capital stock and
subordinated indebtedness; provided that (a) the Company may pay cash dividends
on the Convertible Preferred Stock if no default exists or would be caused by
such payment and (b) the Company may repurchase the Existing Notes described in
this section if no default exists or would be caused by such repurchase, (v) to
engage in mergers, acquisitions, divestitures, sales and leasebacks or changes
of business, (vi) to engage in asset sales that exceed, in the
58
<PAGE>
aggregate during a 12-month period, 10% of consolidated broadcast cash flow for
such 12-month period or if such asset sales would account for greater than 25%
of consolidated broadcast cash flow for the period from the date of entering
into the Credit Agreement to such date of determination, (vii) to become liable
under any capital lease, if the total rental payments for all capital leases for
any period of 12 consecutive months would be in excess of $4,500,000, (viii) to
sell with recourse or discount any of its notes or accounts receivable, (ix) to
dispose of any shares of capital stock of a subsidiary, (x) to engage in certain
transactions with affiliates and holders of equity interests, (xi) to amend,
modify or terminate certain material agreements, (xii) to invest in, or make
loans or advances to, other persons or entities in excess of $10,000,000 or
(xiii) to enter into agreements prohibiting the creation of liens or restricting
the ability of a subsidiary to pay money or distribute assets to the Company.
The Credit Agreement also requires the Company to maintain specified financial
ratios.
Events of Default under the Credit Agreement include, among other things:
(i) any failure of the Company to pay principal thereunder when due, or to pay
interest or any other amount due within three days after the date due; (ii)
default or breach on any indebtedness in an individual principal amount of
$1,000,000 or more on any items of indebtedness with an aggregate principal
amount of $2,000,000 or more; (iii) breach by the Company of certain covenants
contained therein; (iv) material inaccuracy of any representation or warranty
given by the Company therein; (v) the continuance of a default by the Company in
the performance of or the compliance with other covenants and agreements for 30
days after the occurrence thereof; (vi) certain changes of control and acts of
bankruptcy, insolvency or dissolution; (vii) certain judgments, writs or
warrants of attachment of similar process remaining undischarged, unvacated,
unbonded, or unstayed for a period of 60 days; (viii) the occurrence of certain
reportable events under ERISA; (ix) certain changes in the executive officers of
the Company; and (x) any FCC License of the Company or its subsidiaries being
terminated, denied renewal or modified in any material adverse respect.
10 3/8% Senior Subordinated Notes
In May 1995, the Company completed an offering of $175,000,000 aggregate
principal amount of its 10 3/8% Senior Subordinated Notes due May 15, 2005, of
which $173,000,000 principal amount was outstanding at March 31, 1998. The
Company repurchased approximately $23,000,000 of the 10 3/8% Notes with the
proceeds of the offering of the Old Notes.
Interest on the 10 3/8% Notes is payable in cash semi-annually on May 15
and November 15 of each year. The 10 3/8% Notes do not have the benefit of any
sinking fund obligations, and are not convertible or exchangeable into any other
security.
The 10 3/8% Notes are subordinated in right of payment to the indebtedness
under the Credit Agreement and to any other existing or future Senior Debt (as
defined in the 10 3/8% Note Indenture, which definition is substantially
identical to that contained in the Indenture), rank pari passu with the 9 3/8%
Notes, will rank pari passu with the Notes and will rank pari passu with or
senior to any class or series of Debt that expressly provides that it ranks pari
passu with or junior to the Notes, as the case may be.
The 10 3/8% Notes are redeemable on or after May 15, 2000, at the option
of the Company, in whole or in part from time to time, at 105.188% of principal
amount thereof, plus accrued interest, reducing to 100% of the principal amount
thereof, plus accrued interest, on or after May 15, 2002.
The Company is required to offer to purchase all outstanding 10 3/8% Notes
at 101% of their principal amount, plus accrued interest, in the event of a
Change of Control (as defined in the 10 3/8% Note Indenture, which definition is
substantially identical to that contained in the Indenture).
The Company is required to make an offer to purchase the 10 3/8% Notes at
100% of their principal amount if the Company makes an Asset Disposition (as
defined in the 10 3/8% Note Indenture) and the sale proceeds are not reinvested.
The offer to purchase is limited to the net proceeds from such Asset
59
<PAGE>
Disposition and is subject to: (i) the prior claims of holders of Senior Debt
and (ii) there being net proceeds in excess of $5,000,000 that are not required
to be applied to Senior Debt.
The 10 3/8% Note Indenture contains certain covenants that, among other
things, limit the ability of the Company and its subsidiaries to incur debt, pay
cash dividends on or repurchase capital stock, enter into agreements prohibiting
the creation of liens or restricting the ability of a subsidiary to pay money or
transfer assets to the Company, enter into certain transactions with their
affiliates, dispose of certain assets and engage in mergers and consolidations.
Events of Default under the 10 3/8% Note Indenture include: (i) failure to
pay principal of or premium, if any, on the 10 3/8% Notes when due at maturity,
upon redemption or otherwise, including failure by the Company to purchase the
10 3/8% Notes upon a Change of Control or in connection with an Asset
Disposition (whether or not such payment shall be prohibited by the
subordination provisions of the 10 3/8% Note Indenture); (ii) failure to pay any
interest on any 10 3/8% Notes when due, continued for 30 days (whether or not
such payment shall be prohibited by the subordination provisions of the 10 3/8%
Note Indenture); (iii) failure to perform any other covenant or agreement of the
Company in the 10 3/8% Notes or the 10 3/8% Note Indenture, continued for 60
days after written notice as provided in the 10 3/8% Note Indenture; (iv)
failure to pay at final maturity in excess of $4,000,000 principal amount of any
indebtedness of the Company or any subsidiary of the Company, or acceleration of
any indebtedness of the Company or any subsidiary of the Company in an aggregate
principal amount in excess of $4,000,000; and (v) certain events of bankruptcy,
insolvency or reorganization of the Company or any subsidiary.
9 3/8% Senior Subordinated Notes
In February 1996, the Company completed an offering of $110,000,000
aggregate principal amount of its 9 3/8% Senior Subordinated Notes due December
1, 2005, of which $77,095,000 principal amount was outstanding at March 31,
1998.
Interest on the 9 3/8% Notes is payable in cash semi-annually on June 1
and December 1 of each year. The 9 3/8% Notes do not have the benefit of any
sinking fund obligations, and are not convertible or exchangeable into any other
security.
The 9 3/8% Notes are subordinated in right of payment to the indebtedness
under the Credit Agreement and to any other existing or future Senior Debt (as
defined in the 9 3/8% Note Indenture, which definition is substantially
identical to that contained in the Indenture), rank pari passu with the 10 3/8%
Notes, will rank pari passu with the Notes and will rank pari passu or senior to
any class or series of Debt that expressly provides that it ranks pari passu
with or junior to the Notes, as the case may be.
The 9 3/8% Notes are redeemable on or after December 1, 2000, at the
option of the Company, in whole or in part from time to time, at 104.687% of
principal amount thereof, plus accrued interest, reducing to 100% of the
principal amount thereof, plus accrued interest, on or after December 1, 2002.
The Company is required to offer to purchase all outstanding 9 3/8% Notes
at 101% of their principal amount, plus accrued interest, in the event of a
Change of Control (as defined in the 9 3/8% Note Indenture, which definition is
substantially identical to that contained in the Indenture).
The Company is required to make an offer to purchase the 9 3/8% Notes at
100% of their principal amount if the Company makes an Asset Disposition (as
defined in the 9 3/8% Note Indenture) and the sale proceeds are not reinvested.
The offer to purchase is limited to the net proceeds from such Asset Disposition
and is subject to: (i) the prior claims of holders of Senior Debt, (ii) a
requirement to make a similar offer to purchase the 10 3/8% Notes prior to any
offer to purchase the 9 3/8% Notes and (iii) there being net proceeds in excess
of $5,000,000 that are not required to be applied to Senior Debt or to the
purchase of the 10 3/8% Notes.
60
<PAGE>
The 9 3/8% Notes are redeemable before December 1, 2000 only in the event
that on or before February 22, 1999 the Company receives proceeds from any sale
of its Capital Stock other than Disqualified Stock (each as defined in the 9
3/8% Note Indenture) in one or more offerings, in which case the Company may, at
its option, use all or a portion of any such proceeds within 75 days of receipt
to redeem 9 3/8% Notes in a principal amount of at least $5,000,000 and up to an
aggregate of 33% of the original principal amount of the 9 3/8% Notes at a
redemption price of 109.375% of the principal amount thereof plus accrued
interest to the date of redemption; provided, however, that at least 67% of the
original principal amount of the 9 3/8% Notes remains outstanding.
The 9 3/8% Note Indenture contains certain covenants that, among other
things, limit the ability of the Company and its subsidiaries to incur debt, pay
cash dividends on or repurchase capital stock, enter into agreements prohibiting
the creation of liens or restricting the ability of a subsidiary to pay money or
transfer assets to the Company, enter into certain transactions with their
affiliates, dispose of certain assets and engage in mergers and consolidations.
Events of Default under the 9 3/8% Note Indenture include: (i) failure to
pay principal of or premium, if any, on the 9 3/8% Notes when due at maturity,
upon redemption or otherwise, including failure by the Company to purchase the 9
3/8% Notes upon a Change of Control or in connection with an Asset Disposition
(whether or not such payment shall be prohibited by the subordination provisions
of the 9 3/8% Note Indenture); (ii) failure to pay any interest on any 9 3/8%
Notes when due, continued for 30 days (whether or not such payment shall be
prohibited by the subordination provisions of the 9 3/8% Note Indenture); (iii)
failure to perform any other covenant or agreement of the Company in the 9 3/8%
Notes or the 9 3/8% Note Indenture, continued for 30 days after written notice
as provided in the 9 3/8% Note Indenture; (iv) failure to pay at final maturity
in excess of $4,000,000 principal amount of any indebtedness of the Company or
any subsidiary of the Company, or acceleration of any indebtedness of the
Company or any subsidiary of the Company in an aggregate principal amount in
excess of $4,000,000; and (v) certain events of bankruptcy, insolvency or
reorganization of the Company or any subsidiary.
61
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale for a period until 180 days after the Exchange Offer
Registration Statement has been declared effective, or such shorter period as
will terminate when all Old Notes acquired by broker-dealers for their own
accounts as a result of market-making activities or other trading activities
have been exchanged for New Notes and resold by such broker-dealers.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New 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 New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period until 180 days after the Exchange Offer Registration
Statement has been declared effective, or such shorter period as will terminate
when all Old Notes acquired by broker-dealers for their own accounts as a result
of market-making activities or other trading activities have been exchanged for
New Notes and resold by such broker-dealers, the Company will promptly send
additional copies of this Prospectus and any amendment or supplement to this
Prospectus to any broker-dealer that requests such documents in the Letter of
Transmittal. The Company has agreed to pay all expenses incident to the Exchange
Offer, other than commissions or concessions of any brokers or dealers and the
fees of any counsel or other advisors or experts retained by the holders of the
Notes, except as expressly set forth in the Registration Rights Agreement and
will indemnify the holders of the Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
62
<PAGE>
EXPERTS
The consolidated financial statements of the Company included in the
Company's Annual Report (Form 10-K) for each of the three years in the period
ended December 31, 1997, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of KOFY-TV (a Division of Pacific FM
Incorporated) at June 30, 1997 and 1996, and for each of the two years in the
period ended June 30, 1997, appearing in this Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the New Notes will be passed upon for the Company by Akin,
Gump, Strauss, Hauer & Feld, L.L.P., counsel to the Company. Vernon E. Jordan,
Jr., a partner in Akin, Gump, Strauss, Hauer & Feld, L.L.P. holds, beneficially
and of record, 8,264 shares of the Company's Common Stock (Nonvoting).
63
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
Reference
---------
<S> <C>
KOFY-TV (A Division of Pacific FM, Incorporated)
Report of Independent Auditors..................................... F-2
Balance Sheets as of June 30, 1997
and 1996 and March 31, 1998 (unaudited).......................... F-3
Statements of Operations for the Years
Ended June 30, 1997 and 1996 and
Nine Months Ended March 31, 1998
and 1997 (unaudited)............................................. F-4
Statements of Cash Flows for the Years Ended
June 30, 1997 and 1996 and Nine Months
Ended March 31, 1998 and 1997 (unaudited)........................ F-5
Notes to Financial Statements...................................... F-6
</TABLE>
F-1
<PAGE>
Report of Independent Auditors
The Board of Directors
Pacific FM, Incorporated
We have audited the accompanying balance sheets of KOFY-TV, a Division of
Pacific FM, Incorporated as of June 30, 1997 and 1996, and the related
statements of operations and accumulated deficit and cash flows for the years
then ended. 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 financial position of KOFY-TV at June 30, 1997 and
1996, and the results of its operations and its cash flows for the years then
ended, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
December 19, 1997
New York, New York
F-2
<PAGE>
KOFY-TV
(A Division of Pacific FM, Incorporated)
Balance Sheets
<TABLE>
<CAPTION>
March 31,
June 30, 1998
1997 1996 (unaudited)
---------------------------------------------
<S> <C> <C> <C>
Assets
Current assets:
Cash $ 17,575 $ 33,667 $ 267,000
Accounts receivable, net of allowance for doubtful accounts
($150,800 in 1997 and $150,000 in 1996) 4,248,264 3,416,250 3,762,000
Due from affiliates 10,895,401 11,154,416 --
Programming rights, including $1,911,243 and $500,725 of barter in
1997 and 1996, respectively 2,825,746 1,654,576 914,000
Deferred income taxes 318,054 257,041 318,000
Prepaid expenses and other current assets 162,845 279,003 966,000
---------------------------------------------
Total current assets 18,467,885 16,794,953 6,227,000
Property and equipment, net 1,323,116 1,483,660 1,106,000
Programming rights, less current portion 839,070 1,170,111 2,731,000
Goodwill, net of accumulated amortization of $5,479,902
in 1997 and $5,155,902 in 1996 4,179,891 4,503,891 3,937,000
Other assets 363,371 448,512 86,000
---------------------------------------------
Total assets $ 25,173,333 $ 24,401,127 $ 14,087,000
---------------------------------------------
---------------------------------------------
Liabilities and shareholders' equity (deficit)
Current liabilities:
Accounts payable $ 726,782 $ 1,434,964 $ 596,000
Accrued expenses 1,156,426 736,075 869,000
Deferred barter income 1,005,302 726,285 1,005,000
Income taxes payable 1,015,731 847,839 1,772,000
Obligations for program rights, including $1,911,243 and
$500,725 of barter in 1997 and 1996, respectively 15,340,602 8,246,966 2,372,000
Due to affiliates -- -- 1,015,000
Current portion of long-term debt 1,224,642 1,056,385 1,195,000
---------------------------------------------
Total current liabilities 20,469,485 13,048,514 8,824,000
Obligations for program rights 1,692,956 7,354,934 6,115,000
Long-term debt 9,699,730 10,240,644 6,796,000
Shareholders' equity (deficit):
Common stock, $10 par value: 12,000 shares authorized
1,530 shares issued and outstanding 15,300 15,300 15,000
Capital in excess of par value 112,546 112,546 113,000
Accumulated deficit (6,816,684) (6,370,811) (7,776,000)
---------------------------------------------
Total shareholders' deficit (6,688,838) (6,242,965) (7,648,000)
---------------------------------------------
Total liabilities and shareholders' deficit $ 25,173,333 $ 24,401,127 $ 14,087,000
---------------------------------------------
---------------------------------------------
</TABLE>
See accompanying notes
F-3
<PAGE>
KOFY-TV
(A Division of Pacific FM, Incorporated)
Statements of Operation and Accumulated Deficit
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
Years ended June 30, (unaudited)
1997 1996 1998 1997
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $ 17,749,319 $ 18,094,242 $ 13,304,000 $ 11,521,000
Barter revenue 2,791,983 3,274,429 2,094,000 2,456,000
---------------------------------------------------------------
Total revenue 20,541,302 21,368,671 15,398,000 13,977,000
Station operating expense 18,884,079 17,689,185 13,612,000 12,530,000
Amortization-goodwill and other 465,041 451,654 270,000 270,000
Depreciation 269,347 277,462 270,000 270,000
---------------------------------------------------------------
Total operating expenses 19,618,467 18,418,301 14,152,000 13,070,000
Operating income 922,835 2,950,370 1,246,000 907,000
Other income (expense):
Net interest expense (1,353,643) (1,239,283) (879,000) (1,008,000)
Other income (expense) 237,885 56,442 1,230,000 --
---------------------------------------------------------------
(1,115,758) (1,182,841) 351,000 (1,008,000)
---------------------------------------------------------------
Income (loss) before income taxes (192,923) 1,767,529 1,597,000 (101,000)
Income tax expense 252,950 664,570 756,000 77,000
---------------------------------------------------------------
Net income (loss) (445,873) 1,102,959 841,000 (178,000)
Accumulated deficit, beginning of period (6,370,811) (7,473,770) (6,817,000) (7,474,000)
Purchase of equity interest -- -- (1,800,000) --
---------------------------------------------------------------
Accumulated deficit, end of period $ (6,816,684) $ (6,370,811) $ (7,776,000) $ (7,652,000)
---------------------------------------------------------------
---------------------------------------------------------------
</TABLE>
See accompanying notes.
F-4
<PAGE>
KOFY-TV
(A Division of Pacific FM, Incorporated)
Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended March 31,
Year ended June 30, (unaudited)
1997 1996 1998 1997
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ (445,873) $ 1,102,959 $ 841,000 $ (178,000)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization expense 734,388 729,116 540,000 540,000
Provision for doubtful accounts 800 -- -- --
Deferred income taxes (61,014) (257,041) -- --
(Increase) decrease in assets:
Programming rights and obligations 591,529 (1,789,887) (8,527,000) (176,000)
Accounts receivable (832,814) (92,206) 486,000 (91,000)
Prepaid expense and other assets 116,158 (82,518) (526,000) (388,000)
Increase (decrease) in liabilities:
Accounts payable (708,181) 475,829 (131,000) 484,000
Accrued liabilities 420,350 178,507 (287,000) (404,000)
Income taxes payable 167,892 763,610 757,000 603,000
Deferred barter income 279,017 63,731 84,000 --
----------------------------------------------------------------
Net cash provided by (used in) operating activities 262,252 1,092,100 (6,763,000) 390,000
Cash flows from investing activities
Purchase of investment -- (22,500) -- --
Purchase of fixed assets (144,802) (53,525) (81,000) (4,000)
Disposal of assets 36,000 225,329 -- --
----------------------------------------------------------------
Net cash provided by (used in) investing activities (108,802) 149,304 (81,000) (4,000)
Cash flows from financing activities
Decrease (increase) in notes receivable due from
related parties 259,015 (2,949,840) 11,826,000 (31,000)
Proceeds from note payable due bank 267,000 3,300,000 -- --
Repayment of note payable due bank (639,657) (1,511,481) (2,933,000) (275,000)
Payment for equity interest -- -- (1,800,000) --
Deferred financing costs (55,900) (98,000) -- --
----------------------------------------------------------------
Net cash provided by (used in) financing activities (169,542) (1,259,321) 7,093,000 (306,000)
----------------------------------------------------------------
Net increase (decrease) in cash (16,092) (17,917) 249,000 80,000
Cash at beginning of year 33,667 51,584 18,000 34,000
----------------------------------------------------------------
Cash at end of year $ 17,575 $ 33,667 $ 267,000 $ 114,000
----------------------------------------------------------------
----------------------------------------------------------------
Supplemental disclosure of cash flow
information
Cash paid during the period for:
Interest $ 1,365,451 $ 1,244,820 $ 880,000 $ 1,010,000
----------------------------------------------------------------
----------------------------------------------------------------
Taxes $ 21,392 $ 196,476 -- --
----------------------------------------------------------------
----------------------------------------------------------------
</TABLE>
See accompanying notes.
F-5
<PAGE>
KOFY-TV
(A Division of Pacific FM, Incorporated)
Notes to Financial Statements
June 30, 1997
1. Summary of Significant Accounting Policies
a. Nature of Business
KOFY-TV (the "Company") is a division of Pacific FM, Incorporated
("Pacific FM"). The Company was acquired in 1980 through a tax free
exchange involving three stations owned and operated by Pacific FM.
Pacific FM also owns and operates two radio stations, KOFY-AM and KDIA-FM,
through its radio division ("Radio Division"), and an airplane through its
wholly-owned subsidiary Next Century Aviation, Inc. ("Air Subsidiary").
The Company broadcasts commercial television programming in the
metropolitan San Francisco television market on UHF station 20. Commercial
time is sold and credit is granted to customers who are predominately
advertising agencies. Collateral is not required for credit granted.
Consequently, the Company's ability to collect amounts due from customers
is affected by economic fluctuations in the advertising industry and the
metropolitan San Francisco television market. However, credit risk with
respect to uncollected receivables is limited due to the large number of
customers comprising the customer base and their dispersion across
different industries and geographical locations.
In October 1997, the stockholders of Pacific FM agreed in principle to
sell 51% of Pacific FM's outstanding common stock to Granite Broadcasting
Corporation ("Granite"). At the closing of the sale, it is contemplated
that Granite will acquire the remaining 49% of Pacific FM. The total price
of all the stock of Pacific FM is $143,750,000 in cash. In addition,
Granite will pay $30,000,000 to the principal shareholders of Pacific FM
for a covenant not to compete in the San Francisco television market for a
period of five years from the closing. Consummation of the sale is
contingent on, among other things, FCC approval and satisfaction of
certain other conditions. Prior to the closing of the sale, Pacific FM
will sell or otherwise dispose of its Radio Division and Air Subsidiary as
Granite's purchase of the outstanding stock of Pacific FM is based solely
on the results of the Company. Thus, the accompanying financial statements
do not include the accounts of the Radio Division and the Air Subsidiary.
b. Program Rights
Program rights represent the cost of broadcast license agreements for
television programming. In accordance with the provisions of Financial
Accounting Standards Board Statement No. 63, "Financial Reporting by
Broadcasters," the Company records assets and liabilities for broadcast
license agreements at the gross amount of the rights acquired and
obligations incurred under these license agreements when the license
period has begun, the cost of the program is known and the program has
been accepted and is available for its first telecast.
Barter programming transactions are accounted for at the fair market value
of programming received. Accordingly, the fair value of the programming
received is capitalized and amortized to expense as used. The related
liability for these barter programming transactions is also recorded at
the fair value of the programming received and is amortized to income as
commercial time is aired.
Amortization of program rights is computed for financial statement
purposes using a sliding-scale method based upon the total available runs
for a program and the number of times shown. The sliding-scale method
results in a higher amortization expense for the first time a program is
broadcast and a smaller amortization expense for each successive broadcast
of the same title. Management estimates
F-6
<PAGE>
that amounts included in current assets will be charged to operations in
the next fiscal year. Program rights are valued at the lower of
unamortized cost or net realizable value.
1. Summary of Significant Accounting Policies (continued)
c. Revenue Recognition
Revenue from the sale of advertising is recognized at the time the
advertisements are aired.
d. Property and Equipment
Property and equipment are recorded at cost and depreciated on a
straight-line basis over their estimated useful lives as follows:
<TABLE>
<S> <C>
Leasehold improvements 5 to 30 years
Equipment 3 to 7 years
Transportation 3 to 7 years
Furniture and fixtures 3 to 7 years
</TABLE>
e. Goodwill
The Company was acquired in 1980 in a business combination accounted for
using the purchase method. Goodwill of $9,659,793 represents the excess of
the purchase price over the fair value of the net assets acquired.
Goodwill is being amortized on a straight-line method over 30 years.
Accumulated amortization for the years ended June 30, 1997 and 1996 was
$5,479,902 and $5,155,902 respectively.
f. Advertising Costs
The Company expenses advertising costs as incurred. Advertising expense
for the years ended June 30, 1997 and 1996 was $172,502 and $226,320,
respectively.
g. Income Taxes
The Company is included in the consolidated federal income tax return of
Pacific FM. For financial reporting purposes, the Company has provided for
federal income taxes as if it filed a separate income tax return. Deferred
income taxes reflect net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
The provision for income taxes for the years ended June 30, consists of
the following:
<TABLE>
<CAPTION>
1997 1996
------------------------------
<S> <C> <C>
Current taxes
Federal $ 244,289 $ 708,073
State 69,674 213,538
------------------------------
Total current taxes 313,963 921,611
------------------------------
Deferred taxes (61,013) (257,041)
------------------------------
Provision for income taxes $ 252,950 $ 664,570
------------------------------
------------------------------
</TABLE>
F-7
<PAGE>
1. Summary of Significant Accounting Policies (continued)
The significant components of the Company's deferred tax assets at June 30
are as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------
<S> <C> <C>
Property, plant and equipment basis differences $ 862 $(16,266)
Allowance for bad debts 60,320 60,000
Other 256,872 213,307
-------------------
Deferred taxes $318,054 $257,041
-------------------
-------------------
</TABLE>
The income tax provisions differ from the amount computed by applying the
U.S. statutory rate due to the following:
<TABLE>
<CAPTION>
For the Year Ended June 30,
--------------------------
1997 1996
--------------------------
<S> <C> <C>
Provision at federal statutory rate 34% 34%
State taxes, net of federal benefit 20 8
Goodwill 57 6
Decrease in valuation allowance -- (11)
Other 20 1
--------------------------
Total 131% 38%
--------------------------
--------------------------
</TABLE>
The Company has not reflected a tax benefit associated with net operating
loss carryforwards recorded at Pacific FM.
h. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
2. Radio Time Brokerage Agreement
The Company operates KAZA-AM, the Radio Fiesta Corporation ("broker") affiliate
serving San Jose, California, pursuant to a five-year time brokerage agreement
that commenced on August 1, 1995. The terms of the agreement require the Company
to pay a monthly fee and to reimburse the broker for operating expenses. The
Company is also required to pay additional payments if certain gross revenue
figures are attained. In exchange for such payments, the broker makes available
substantially all of its air time for broadcast or programming produced by the
Company. Time Brokerage fees for the years ended June 30, 1997 and 1996, were
$147,500 and $110,000 respectively.
F-8
<PAGE>
3. Property and Equipment
The major classifications of property and equipment at June 30 are as follows:
<TABLE>
<CAPTION>
1997 1996
-----------------------
<S> <C> <C>
Transportation $ 349,958 $ 275,284
Leasehold improvements 415,234 415,234
Equipment 4,033,684 4,003,045
Furniture and fixtures 136,318 132,828
-----------------------
4,935,194 4,826,391
Less accumulated depreciation 3,612,078 3,342,731
-----------------------
Net property and equipment $1,323,116 $1,483,660
-----------------------
-----------------------
</TABLE>
4. Assets Held Under Capital Leases
The Company's net assets recorded under capital leases by major class at June 30
are as follows:
<TABLE>
<CAPTION>
1997 1996
----------------------
<S> <C> <C>
Equipment $192,736 $192,736
Less accumulated depreciation 192,736 192,736
----------------------
Assets held under capital leases, net $ -- $ --
----------------------
----------------------
</TABLE>
At June 30, 1997, the Company had no capitalized lease obligations.
5. Long-Term Debt
<TABLE>
<CAPTION>
June 30,
------------------------
1997 1996
------------------------
<S> <C> <C>
Note payable in 48 monthly installments, including
a balloon payment of $6,617,810 due August 1, 2000
bearing interest at the Citibank N.A. base rate
plus 2.5% (11% at June 30, 1997) ("Finova Loan") $10,281,808 $10,514,806
Other long-term debt, due in monthly installments
ranging from $6,278--$15,000. The notes bear
interest rates ranging from 10%--12.25% 642,564 782,223
------------------------
Total long-term debt 10,924,372 11,297,029
Less current portion 1,224,642 1,056,385
------------------------
Long-term debt, less current portion $ 9,699,730 $10,240,644
------------------------
------------------------
</TABLE>
Principal maturities of long-term debt are as follows:
Year ending June 30:
1999 $1,351,426
2000 1,431,463
2001 6,774,977
2002 36,183
Thereafter 105,681
----------
Total $9,699,730
----------
----------
F-9
<PAGE>
6. Obligations for Program Rights
The approximate obligations for recorded cash program rights for the years
subsequent to June 30, 1997, are as follows:
<TABLE>
<S> <C>
1998 $10,918,989
1999 2,984,822
2000 2,479,404
2001 632,309
2002 18,034
-----------
$17,033,558
-----------
-----------
</TABLE>
7. Commitments and Contingencies
a. Broadcasting Agreements
At June 30, 1997, the Company is committed to acquire additional broadcast
programming rights which have not been recorded on its balance sheet at a
total cost of approximately $5,106,749.
b. Lease Agreements
The Company is committed under (noncancelable) long-term operating lease
for facilities rent of its offices and television transmitter sites. The
leases require payments of various expenses incidental to the use of the
properties and consumer price index escalation clauses. Rent expense
during the years ended June 30, 1997 and 1996 was $367,687 and $406,193,
respectively.
The future operating lease commitments for the next five years are
estimated as follows:
<TABLE>
<S> <C>
1998 $ 379,826
1999 379,826
2000 373,776
2001 373,776
2002 373,776
Thereafter 649,536
-----------
$2,530,516
-----------
-----------
</TABLE>
8. Related Party Transactions
The Company has receivables from related entities KOFY-AM, KDIA-AM and Next
Century Air of $7,328,151, $3,156,738 and $410,512 in 1997, and $7,778,006,
$3,295,631 and $80,779 in 1996, respectively.
During the years ended June 30, 1997 and 1996, the Company paid salary and rent
expenses on behalf of KDIA-AM and KOFY-AM totaling $276,000 and $271,800
respectively, which were charged to intercompany receivables.
The Company leases a transmitter site from a related party, a holding company
whose stock is owned by Pacific FM. The Company is responsible for the
maintenance of the property but is entitled to any income derived from the
property. These costs are reflected above in the operating lease commitments.
The Company leases certain space for the parking of company vehicles on a
month-to-month basis from a partnership, whose partners are stockholders or
officers of Pacific FM. The lease expense for the years ended 1997 and 1996 was
$5,664.
F-10
<PAGE>
9. Retirement Plan
Pacific FM has an employee 401(k) retirement plan (the "Plan") covering all
eligible employees. The contributions to the Plan are based upon elective salary
deferrals by Plan participants. An officer of the Company is the trustee of the
Plan. The Company did not make any contributions to the Plan during the years
ended June 30, 1997 and 1996.
10. Network Affiliation
In February 1994, the Company entered into a television affiliation agreement
with Warner Brothers ("WB") Communications for carriage of WB television
programming commencing January 11, 1995, and terminating on January 11, 1998. WB
has the option at its sole discretion to terminate or extend the agreement for
additional successive years in two year increments for an unlimited period of
time. Generally, WB Communications is obligated to pay the costs of providing
the Company's network programming, and the Company has agreed to pay varying
amounts of compensation and airtime to WB Communications based on the station's
television market ratings of the broadcasting programs. Revenue, at various
rates, is derived from the sale to advertisers of time in network programs for
commercial announcements and is dependent on the quantitative and qualitative
audience that the Company can deliver to prospective advertisers with WB network
programs. The Company paid network affiliation fees of $748,500 and $468,272 for
the years ended June 30, 1997 and 1996 respectively.
11. Financial Instruments
The Company maintains its cash balances in one financial institution located in
the metropolitan San Francisco area. The balances are insured by the Federal
Deposit Insurance Corporation up to $100,000.
Concentrations of credit risk with respect to trade accounts receivable are
limited due to the large number of customers comprising the Company's customer
base and their dispersion across different industries and geographical
locations.
12. Subsequent Events
a. Option Purchase
On July 8, 1997, the Company paid $10,000 for an option to purchase
participation rights previously granted to a former shareholder. The
rights, the term of which is the life of the Company's majority
shareholder plus 21 years, entitled the former shareholder to 10% of the
proceeds on any sale of the Company's outstanding shares, or a 10%
interest in property acquired in any exchange of the Company's shares.
On September 17, 1997 the company exercised its option to purchase the
rights for $200,000 and a $1,800,000 interest bearing note due on January
2, 1998.
b. Third Amendment to Finova Loan
In exchange for Finova to modify certain loan covenants, the Company
entered into a third amendment to the amended and restated loan in October
1997. The Company incurred an additional loan fee of $200,000 to be paid
at the earlier of either prepayment of the loan balance or the loan
maturity date. The third amendment is for a term of 46 months, and is
collateralized by the Company's assets and the personal guarantee of the
principal stockholder.
c. Restructured Syndicator Debts
F-11
<PAGE>
The Company negotiated with four distributors to revise the restructured
payment terms. In October 1997, the four distributors agreed to allow
varying amount of discounts on license fees due to them, resulting in a
gain of approximately $1,200,000 on the debt forgiveness.
d. Radio Time Brokerage Agreement
The Company has terminated its time brokerage agreement with Radio Fiesta
Corporation, licensor of KAZA-AM radio. Arbitration is scheduled for May
1998 to determine the amount of liquidating damages, if any.
F-12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law (the
"DGCL"), Article Eighth of the Company's Third Amended and Restated Certificate
of Incorporation, as amended (the "Certificate of Incorporation") (incorporated
by reference as Exhibit 3.1 to this Registration Statement), eliminates the
liability of the Company's directors to the Company or its stockholders, except
for liabilities related to breach of duty of loyalty, actions not in good faith
and certain other liabilities.
Section 145 of the DGCL provides, in substance, that Delaware corporations
shall have the power, under specified circumstances, to indemnify their
directors, officers, employees and agents in connection with actions, suits or
proceedings brought against them by a third party or in the right of the
corporation, by reason of the fact that they were or are such directors,
officers, employees or agents, against expenses incurred in any such action,
suit or proceeding. The DGCL also provides that Delaware corporations may
purchase insurance on behalf of any such director, officer, employee or agent.
Article Eighth of the Certificate of Incorporation provides that the
Company shall indemnify any current or former director or officer to the fullest
extent permitted by the DGCL. Article Eighth further contemplates that the
indemnification provisions permitted thereunder are not exclusive of any other
rights to which such directors and officers are otherwise entitled by means of
Bylaw provisions, contracts, agreements, or otherwise. Article VIII of the
Company's Bylaws provides that the Company shall indemnify to the fullest extent
permitted by DGCL its current and former directors and officers and persons
serving as directors and officers of any corporation at the request of the
Company. The Company also maintains officers' and directors' liability insurance
which insures against liabilities that officers and directors of the Company may
incur in such capacities.
Reference is made to the Granite Broadcasting Corporation Stock Option
Plan (incorporated by reference as Exhibit 10.1 to this Registration Statement),
which provides that the Company shall indemnify and hold harmless each member of
the Stock Option Committee of the Plan against certain liabilities arising by
reason of such person's membership on such committee and the board of directors
of the Company, except liabilities arising from such person's gross negligence
or willful misconduct.
Reference is made to the Exchange and Registration Rights Agreement filed
as Exhibit 99.4 to this Registration Statement which provides for
indemnification for the officers and directors of the Company signing a Resale
Registration Statement and certain control persons of the Company against
certain liabilities, including those arising under the Securities Act in certain
circumstances by selling Holders.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits:
The following instruments and documents are included as Exhibits to this
Registration Statement.
<TABLE>
<CAPTION>
<S> <C>
1. Purchase Agreement, dated May 6, 1998, between the Company and
the Purchasers named therein.
4.49 Indenture dated as of May 11, 1998, between the Company and
The Bank of New York, as Trustee, relating to the Company's
8 7/8% Senior Subordinated Notes due May 15, 1998 (including
form of note).
5. Legal Opinion of Akin, Gump, Strauss, Hauer & Field, L.L.P.
concerning the legality of the securities being registered.
10.15 Granite Broadcasting Corporation Management Stock Plan, as
amended through April 28, 1998.
10.31 Non-Employee Directors' Stock Plan of Granite Broadcasting
Corporation, as amended through April 28, 1998.
12. Statement of Computation of Financial Ratios.
23.1 Consent of Independent Auditors (Ernst & Young LLP).
23.2 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in Exhibit 5).
24. Power of Attorney for the Company (included on signature
pages hereto).
25. Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended, of the Bank of
New York, as Trustee for the Notes.
99.1 Letter of Transmittal (to be filed by amendment).
99.2 Notice of Guaranteed Delivery (to be filed by amendment).
99.3 Exchange and Registration Rights Agreement dated as of
May 11, 1998, between the Company and the Initial Purchasers.
</TABLE>
Item 22. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the DGCL, the Certificate of Incorporation and Bylaws, 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 such Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than 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
II-1
<PAGE>
the question whether such indemnification by it is against public policy as
expressed in such Securities Act and will be governed by the final adjudication
of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
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.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 8th day of June, 1998.
GRANITE BROADCASTING CORPORATION
By: /s/ W. Don Cornwell
-------------------------------------
W. Don Cornwell
Chief Executive Officer and
Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints W. Don Cornwell, Stuart J. Beck and
Lawrence I. Wills and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for and in his name,
place and stead, in any and all capacities, to sign any and 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
attorneys-in-fact and agents, and each of them, 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 might or could
be done in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ W. Don Cornwell Chief Executive Officer (Principal June 8, 1998
- ---------------------- Executive Officer) and Chairman of
W. Don Cornwell the Board of Directors
/s/ Stuart J. Beck
- ---------------------- President and Secretary (Principal
Stuart J. Beck Financial Officer) and Director June 8, 1998
/s/ Lawrence I. Wills
- ---------------------- Vice President - Finance and Controller
Lawrence I. Wills (Principal Accounting Officer) June 8, 1998
/s/ Robert E. Selwyn, Jr.
- ----------------------
Robert E. Selwyn, Jr. Chief Operating Officer and Director June 8, 1998
/s/ Martin F. Beck
- ---------------------- Director June 8, 1998
Martin F. Beck
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ James L. Greenwald
- ---------------------- Director June 8, 1998
James L. Greenwald
/s/ Vickee Jordan Adams
- ---------------------- Director June 8, 1998
Vickee Jordan Adams
/s/ Edward Dugger III
- ---------------------- Director June 8, 1998
Edward Dugger III
/s/ Charles J. Hamilton, Jr.
- ---------------------------- Director June 8, 1998
Charles J. Hamilton, Jr.
/s/ Mikael Salovaara
- ---------------------- Director June 8, 1998
Mikael Salovaara
/s/ Thomas R. Settle
- ---------------------- Director June 8, 1998
Thomas R. Settle
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------ -------
<S> <C>
1. Purchase Agreement, dated May 6, 1998,
between the Company and the Purchasers named
therein.
4.49 Indenture dated as of May 11, 1998, between
the Company and The Bank of New York, as
Trustee, relating to the Company's 87/8%
Senior Subordinated Notes due May 15, 1998
(including form of note).
5. Legal Opinion of Akin, Gump, Strauss, Hauer &
Feld, L.L.P. concerning the legality of the
securities being registered.
10.15 Granite Broadcasting Corporation Management
Stock Plan, as amended through April 28, 1998.
10.31 Non-Employee Directors' Stock Plan of Granite
Broadcasting Corporation, as amended through
April 28, 1998.
12. Statement of Computation of Financial Ratios.
23.1 Consent of Independent Auditors (Ernst &
Young LLP).
23.2 Consent of Akin, Gump, Strauss, Hauer & Feld,
L.L.P. (included in Exhibit 5).
24. Power of Attorney for the Company (included
on signature pages hereto).
25. Form T-1 Statement of Eligibility and
Qualification under the Trust Indenture Act
of 1939, as amended, of the Bank of New York,
as Trustee for the Notes.
99.1 Letter of Transmittal (to be filed by
amendment).
99.2 Notice of Guaranteed Delivery (to be filed by
amendment).
99.3 Exchange and Registration Rights Agreement
dated as of May 11, 1998, between the Company
and the Initial Purchasers.
</TABLE>
<PAGE>
Exhibit 1
Granite Broadcasting Corporation
$175,000,000 8 7/8% Senior Subordinated Notes
due May 15, 2008
Purchase Agreement
May 6, 1998
Goldman, Sachs & Co.,
Bear, Stearns & Co. Inc.,
Salomon Brothers Inc,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
Granite Broadcasting Corporation, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$175,000,000 principal amount of the Senior Subordinated Notes specified above
(the "Securities").
The Purchasers and their direct and indirect transferees of the Securities
will be entitled to the benefits of the Exchange and Registration Rights
Agreement, to be dated as of the First Time of Delivery (as defined below) (the
"Registration Rights Agreement"), among the Company and the Purchasers (in the
form attached hereto as Exhibit A), pursuant to which the Company has agreed,
among other things, to file a registration statement (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission")
registering the Exchange Securities (as defined in the Registration Rights
Agreement) under the Securities Act of 1933, as amended (the "Act").
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) A preliminary offering circular, dated May 1, 1998 (the
"Preliminary Offering Circular"), and an offering circular, dated May 6,
1998 (the "Offering Circular"), in each case including the international
supplement thereto, and the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 ("1997 10-K") and Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1998 ("1998 First
Quarter 10-Q"), which have been filed with the Commission, and are
incorporated by reference into the Preliminary Offering Circular and the
Offering Circular, have been prepared in connection with the offering of
the Securities. Any reference to the Preliminary Offering Circular or the
Offering Circular shall be deemed to refer to and include the Company's
1997 10-K, 1998 First Quarter 10-Q and
-1-
<PAGE>
all subsequent documents filed with the United States Securities and
Exchange Commission (the "Commission") pursuant to Section 13(a), 13(c) or
15(d) of the United States Securities Exchange Act of 1934, as amended
(the "Exchange Act") on or prior to the date of the Preliminary Offering
Circular or the Offering Circular, as the case may be, and any reference
to the Preliminary Offering Circular or the Offering Circular, as the case
may be, as amended or supplemented, as of any specified date, shall be
deemed to include (i) any documents filed with the Commission pursuant to
Section 13(a), 13(c) or 15(d) of the Exchange Act after the date of the
Preliminary Offering Circular or the Offering Circular, as the case may
be, and prior to the completion of the distribution of the Securities and
(ii) any Additional Issuer Information (as defined in Section 5(f))
furnished by the Company prior to the completion of the distribution of
the Securities; and all documents filed under the Exchange Act and so
deemed to be included in the Preliminary Offering Circular or the Offering
Circular, as the case may be, or any amendment or supplement thereto are
hereinafter called the "Exchange Act Reports". The Exchange Act Reports,
when they were or are filed with the Commission, conformed or will conform
in all material respects to the applicable requirements of the Exchange
Act and the applicable rules and regulations of the Commission thereunder.
The Preliminary Offering Circular or the Offering Circular and any
amendments or supplements thereto and the Exchange Act Reports did not and
will not, as of their respective dates, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the
Company by a Purchaser through Goldman, Sachs & Co. expressly for use
therein;
(b) The Company and its subsidiaries, taken as a whole, have not
sustained since the date of the latest audited financial statements
incorporated by reference in the Offering Circular any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Offering Circular; and, since the respective
dates as of which information is given in the Offering Circular, there has
not been any change in the capital stock (other than an increase of not
more than $1,000,000 or other than conversion of preferred stock into
Common Stock (Nonvoting) and the exercise of certain employee stock
options and awards) or any increase in the short-term debt (other than
trade payables), long-term debt (other than an increase of not more than
$1,000,000) or redeemable stock of the Company and its subsidiaries or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole, otherwise than as set
forth or contemplated in the Offering Circular;
(c) The Company and its subsidiaries have good and marketable (or,
with respect to property in the State of Texas, indefeasible) title in fee
simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Offering
Circular or such as do not materially affect the value of such property
and do not interfere with the use
-2-
<PAGE>
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;
(d) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Offering Circular, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to require such
qualification, except where the failure to be so qualified would not have
a material adverse effect on the Company and its subsidiaries, taken as a
whole, or is subject to no material liability or disability by reason of
the failure to be so qualified in any such jurisdiction;
(e) The Company has an authorized capitalization at March 31, 1998
as set forth in the Offering Circular, and all of the issued shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable; and all of the issued shares
of capital stock of each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and
(except for directors' qualifying shares and except as otherwise set forth
in the Offering Circular) are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims;
(f) The Securities have been duly authorized and, when issued and
delivered against payment therefor pursuant to this Agreement, will have
been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company entitled
to the benefits provided by the Indenture to be dated as of May 11, 1998
(the "Indenture") between the Company and The Bank of New York, a trustee
(the "Trustee"), under which they are to be issued; the Indenture has been
duly authorized and, when executed and delivered by the Company and the
Trustee, the Indenture will constitute a valid and legally binding
instrument of the Company, enforceable against the Company in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; the
Indenture will be in a form which would meet the requirements for
qualification under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"); and the Securities and the Indenture will conform
in all material respects to the descriptions thereof in the Offering
Circular and will be in substantially the form delivered to the Purchasers
prior to or at the Time of Delivery.
(g) The Registration Rights Agreement has been duly authorized, and,
when executed and delivered by the Company, will constitute a valid and
legally binding agreement of the Company enforceable against the Company
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; and the Registration
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Rights Agreement will conform in all material respects to the description
thereof in the Offering Circular;
(h) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations T, U, and X of the Board of Governors of the
Federal Reserve System;
(i) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company
in connection with the offering of the Securities;
(j) Other than as set forth in the Offering Circular, the issue and
sale of the Securities and the compliance by the Company with all of the
provisions of the Securities, the Indenture, the Registration Rights
Agreement and this Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, sale/leaseback
agreement, loan agreement or other similar financing agreement or
instrument or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action result
in any violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties, except, in
each case, for such conflicts, breaches, violations or defaults as would
not have a material adverse effect on the Company and its subsidiaries,
taken as a whole; and, assuming the accuracy of the representations and
warranties of the Purchasers in Section 3, no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Securities or the consummation by the Company of the transactions
contemplated by this Agreement, the Indenture or the Registration Rights
Agreement, except such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Securities by
the Purchasers, and such consents, approvals, authorizations,
registrations and qualifications as may be required under the Act, the
Trust Indenture Act of 1939 and state or foreign securities or Blue Sky
laws in connection with the exchange offer or resale registration
statement contemplated in the Offering Circular and described in the
Registration Rights Agreement;
(k) Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or By-laws or in default in the
performance or observance of any obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which it or
any of its
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<PAGE>
properties may be bound, except for such violations or non-compliances as
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(l) The statements set forth in the Offering Circular under the
caption "Description of the Notes" insofar as they purport to constitute a
summary of the terms of the Securities, and under the caption "Plan of
Distribution", insofar as they purport to describe the provisions of the
laws and documents referred to therein (other than any agreement among
Purchasers), are accurate and fair in all material respects;
(m) Other than as set forth in the Offering Circular, there are no
legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole; and, other than as set
forth in the Offering Circular and to the best of the Company's knowledge,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(n) The Company and each of its subsidiaries holds all material
licenses, certificates, permits, consents, orders, authorizations and
approvals for the Existing Stations (as defined below) (collectively,
"Licenses") from governmental authorities which are necessary to the
conduct of their businesses in the manner and to the full extent now
operated or proposed to be operated as described in the Offering Circular;
such Licenses are in full force and effect and no proceeding has been
instituted or pending or, to the knowledge of the Company, is contemplated
or threatened which in any manner affects or draws into question the
validity or effectiveness thereof; such Licenses contain no materially
burdensome restrictions not customarily imposed by the Federal
Communications Commission (the "FCC") on television stations of the same
class and type; the operation of the television stations identified in the
Offering Circular under the caption "Summary of Offering Circular -- the
Company" (excluding KOFY) and in the Company's 1997 10-K under the caption
"Item 1. Business -- The Company's Stations" (collectively, the "Existing
Stations") in the manner and to the full extent now operated or proposed
to be operated as described in the Offering Circular is in accordance with
the Communications Act of 1934, as amended (the "Communications Act"), the
Telecommunications Act of 1996, and all orders, rules and regulations of
the FCC, except for such noncompliance as would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole; no
event has occurred which permits (nor has an event occurred which with
notice or lapse of time or both would permit) the revocation or
termination of such Licenses or which might result in any other material
impairment of the rights of the Company or its subsidiaries therein; the
Company and its subsidiaries are in compliance with all statutes, orders,
rules or regulations of the FCC relating to or affecting the broadcasting
operations of any of the Existing Stations, except for such noncompliance
as would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
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<PAGE>
(o) To the best of the Company's knowledge, neither the Company nor
any of its subsidiaries has infringed any patents, patent rights, trade
names, trademarks or copyrights, which infringement might have a material
adverse effect on the general affairs, management financial position,
stockholders' equity or results of operations or the Company and its
subsidiaries, taken as a whole;
(p) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the
meaning of Rule 144A under the Act) as securities which are listed on a
national securities exchange registered under Section 6 of the Exchange
Act or quoted in a U.S. automated inter-dealer quotation system;
(q) The Company is subject to Section 13 or 15(d) of the Exchange
Act;
(r) The Company is not, and after giving effect to the offering and
sale of the Securities, will not be an "investment company", or an entity
"controlled" by an "investment company", as such terms are defined in the
United States Investment Company Act of 1940, as amended (the "Investment
Company Act");
(s) Assuming the accuracy of the representations and warranties of
the Purchasers in Section 3, neither the Company, nor any person acting on
its or their behalf has offered or sold the Securities by means of any
general solicitation or general advertising within the meaning of Rule
502(c) under the Act;
(t) Other than the conversion of preferred stock into Common Stock
(Nonvoting) and the exercise of certain employee stock options and awards,
within the preceding six months, neither the Company nor any other person
acting on behalf of the Company has offered or sold to any person any
Securities, or any securities of the same or a similar class as the
Securities, other than Securities offered or sold to the Purchasers
hereunder. The Company will take reasonable precautions designed to insure
that any offer or sale, direct or indirect, in the United States or to any
U.S. person (as defined in Rule 902 under the Act) of any Securities or
any substantially similar security issued by the Company, within six
months subsequent to the date on which the distribution of the Securities
has been completed (as notified to the Company by Goldman, Sachs & Co.),
is made under restrictions and other circumstances reasonably designed not
to affect the status of the offer and sale of the Securities in the United
States and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Act; and
(u) Ernst & Young LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder.
2. Subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to each of the Purchasers, and each of the Purchasers agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
96.829% of the principal amount thereof, plus accrued interest, if any, from May
11, 1998 to the Time of Delivery hereunder, the principal amount of Securities
set forth opposite the name of such Purchaser in Schedule I hereto.
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<PAGE>
3. Upon the authorization by you of the release of the Securities, the several
Purchasers propose to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It has offered or sold and will offer and sell the Securities
only (i) to persons who it reasonably believes are "qualified
institutional buyers" ("QIBs") within the meaning of Rule 144A under the
Act in transactions meeting the requirements of Rule 144A or, (ii) upon
the terms and conditions set forth in Annex II to this Agreement;
(b) It is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act ("Institutional
Accredited Investor"); and
(c) It has not offered or sold and will not offer or sell the
Securities by any form of general solicitation or general advertising,
including but not limited to the methods described in Rule 502(c) under
the Act.
4. (a) Except as set forth in the next paragraph, the Securities to be purchased
by each Purchaser hereunder will be represented by one or more definitive global
certificate for the Securities in book-entry form, which will be deposited by or
on behalf of the Company with The Depository Trust Company ("DTC") or its
designated custodian. The Company will deliver the Securities to Goldman, Sachs
& Co., for the account of each Purchaser, against payment by or on behalf of
such Purchaser of the purchase price therefor by certified or official bank
check or checks, payable to the order of the Company in, or by wire transfer to
an account specified by the Company of, Federal (same day) funds, by causing DTC
to credit the Securities to the account of Goldman, Sachs & Co. at DTC. The
Company will cause the certificate representing the Securities to be made
available to Goldman, Sachs & Co. for checking at least twenty-four hours prior
to the Time of Delivery (as defined below) at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be 9:30 a.m., New York City time, on May 11, 1998 or
such other time and date as Goldman, Sachs & Co. and the Company may agree upon
in writing. Such time and date are herein called the "Time of Delivery".
Such Securities, if any, as Goldman, Sachs & Co. may request upon at least
forty-eight hours' prior notice to the Company (such request to include the
authorized denominations and the names in which they are to be registered),
shall be delivered in definitive certificated form, by or on behalf of the
Company to Goldman, Sachs & Co. for the account of certain of the Purchasers,
against payment by or on behalf of such Purchaser of the purchase price therefor
by certified or official bank check or checks, payable to the order of the
Company in, or by wire transfer to an account specified by the Company of,
Federal (same day) funds. The Company will cause the certificate representing
the Securities to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery at the office of Goldman, Sachs
& Co., 85 Broad Street, New York, New York 10004.
(b) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Purchasers
pursuant to Section 7(i) hereof, will be delivered at such
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<PAGE>
time and date at the offices of Sullivan & Cromwell, 125 Broad Street, New York,
New York 10004 (the "Closing Location"), and the Securities will be delivered at
the Designated Office, all at the Time of Delivery. A meeting will be held at
the Closing Location at 3:00 p.m., New York City time, on the New York Business
Day next preceding the Time of Delivery, at which meeting the final drafts of
the documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto. For the purposes of this Section 4,
"New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to
make no amendment or any supplement to the Offering Circular which shall
be disapproved by you promptly after reasonable notice thereof; and to
furnish you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale under
the securities laws of such jurisdictions as you may request and to comply
with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete
the distribution of the Securities, provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or
to file a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to
time, to furnish the Purchasers with four copies of the Offering Circular
and each amendment or supplement thereto, signed by an authorized officer
of the Company, and any amendment or supplement containing amendments to
the financial statements covered by such report, signed by the
accountants, and additional copies thereof in New York City in such
quantities as you may reasonably request and, if at any time prior to the
earlier of (i) nine months after the date of the Offering Circular and
(ii) the consummation of the exchange offer registered with the Commission
as contemplated by the Registration Rights Agreement, any event shall have
occurred as a result of which the Offering Circular as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Offering Circular is delivered, not misleading or, if for any other
reason it shall be necessary or desirable during such same period to amend
or supplement the Offering Circular, to notify you and upon your request
to prepare and furnish without charge to each Purchaser and to any dealer
in securities as many copies as you may from time to time reasonably
request of an amended Offering Circular or a supplement to the Offering
Circular which will correct such statement or omission or effect such
compliance;
(d) During the period beginning from the date hereof and continuing
until the date 180 days after the Time of Delivery, not to offer, sell,
contract to sell or otherwise dispose of, except as provided hereunder,
any securities of the Company that are substantially similar to the
Securities without the prior written consent of Goldman, Sachs & Co.;
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<PAGE>
(e) Not to be or become, at any time prior to the expiration of two
years after the Time of Delivery, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, for the benefit of holders from time to time of
Securities, to furnish at its expense, upon request, to holders of
Securities and prospective purchasers of securities information (the
"Additional Issuer Information") satisfying the requirements of subsection
(d)(4)(i) of Rule 144A under the Act;
(g) If reasonably requested by you at any time when any of the
Securities are (i) restricted securities, as defined in Rule 144(a)(3)
under the Act or (ii) securities that can only be sold pursuant to
Regulation S under the Act, Rule 144A under the Act or Rule 144 under the
Act or in a transaction exempt from the registration requirements under
the Act pursuant to Section 4 of the Act and not involving a public
offering, to use its reasonable best efforts to cause such Securities to
be eligible for the PORTAL trading system of the National Association of
Securities Dealers, Inc.;
(h) During a period of five years from the date of the Offering
Circular, to furnish to you copies of all reports or other communications
(financial or other) furnished to stockholders of the Company, and to
deliver to you (i) as soon as they are available, copies of any reports
and financial statements furnished to or filed with the Commission or any
securities exchange on which the Securities or any class of securities of
the Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as you may from time to
time reasonably request (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its stockholders generally or to the
Commission);
(i) During the period of two years (or such lesser period required
by Rule 144(k) in the event Rule 144(k) under the Act is amended) after
the Time of Delivery, the Company will not, and will not permit any of its
"affiliates" (as defined in Rule 144 under the Act) to, resell any of the
Securities which constitute "restricted securities" under Rule 144 that
have been reacquired by any of them;
(j) The Company will comply with the Registration Rights Agreement;
and
(k) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Offering Circular under the caption "Use of Proceeds".
6. The Company covenants and agrees with the several Purchasers that the Company
will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the issue
of the Securities and all other expenses in connection with the preparation,
printing and filing of the Preliminary Offering Circular and the Offering
Circular and any amendments and supplements thereto and the mailing and
delivering of
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<PAGE>
copies thereof to the Purchasers and dealers; (ii) the cost of printing or
producing any Agreement among Purchasers, this Agreement, the Indenture, any
Blue Sky and Legal Investment Memoranda, closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Securities, excluding (except as provided in
clause (iii)) fees and expenses for legal services of counsel for the
Purchasers; (iii) all expenses in connection with the qualification of the
Securities for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the fees and disbursements of counsel for the
Purchasers in connection with such qualification and in connection with the Blue
Sky and legal investment surveys; (iv) any fees charged by securities rating
services for rating the Securities; (v) the cost of preparing the Securities;
(vi) the fees and expenses of the Trustee and any agent of the Trustee and the
fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Securities; (vii) any cost incurred in connection with the
designation of the Securities for trading in PORTAL; and (viii) all other costs
and expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section, and Sections 8 and 11 hereof,
the Purchasers will pay all of their own costs and expenses, including the fees
of their counsel, transfer taxes on resale of any of the Securities by them, and
any advertising expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of the Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) Sullivan & Cromwell, counsel for the Purchasers, shall have
furnished to you such opinion or opinions, dated the Time of Delivery,
with respect to the incorporation of the Company, the validity of the
Indenture and the Securities, the Offering Circular and other related
matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(b) Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the
Company, shall have furnished to you their written opinion (substantially
in the form attached hereto as Exhibit B), dated the Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) The Company and each of its subsidiaries is duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, with
power and authority (corporate and other) to own its properties and
conduct its business as described in the Offering Circular;
(ii) The Company has an authorized capitalization as set forth
in the Offering Circular, and all of the issued shares of capital
stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable;
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<PAGE>
(iii) The Company and each of its subsidiaries has been duly
qualified as a foreign corporation for the transaction of business
and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties or conducts any business so as to
require such qualification, except where the failure to be so
qualified would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole, or is subject to no material
liability or disability by reason of the failure to be so qualified
in any such jurisdiction (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local counsel
and in respect of matters of fact upon certificates of officers of
the Company, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such
opinions and certificates);
(iv) All of the issued shares of capital stock of each such
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable, and (except for
directors' qualifying shares and except as otherwise set forth in
the Offering Circular) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect
of matters of fact upon certificates of officers of the Company or
its subsidiaries, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such
opinions and certificates);
(v) To the best of such counsel's knowledge and other than as
set forth or contemplated in the Offering Circular, there are no
legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material adverse
effect on the current or future consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries; and, other than as set forth in the Offering Circular
and to the best of such counsel's knowledge, no such proceedings are
threatened by governmental authorities or threatened by others;
(vi) This Agreement has been duly authorized, executed and
delivered by the Company;
(vii) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally
binding obligations of the Company entitled to the benefits of the
Indenture, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles;
(viii) The Indenture has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
instrument, enforceable against the Company in accordance with its
terms, subject, as to enforcement, to bankruptcy,
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<PAGE>
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(ix) The Registration Rights Agreement has been duly
authorized, executed and delivered, and constitutes a valid and
legally binding obligation of the Company enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles, except as rights to indemnification and contribution
thereunder may be limited by applicable law;
(x) The issue and sale of the Securities and the compliance by
the Company with all of the provisions of the Securities, the
Indenture, the Registration Rights Agreement and this Agreement and
the consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, sale/leaseback agreement, loan
agreement or other financing agreement or any other agreement or
instrument that has been or, to the knowledge of such counsel, is
required to be filed by the Company with the Commission, nor will
such actions result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any
statute, rule or regulation of any governmental agency or body of
the United States or the State of New York or Texas having
jurisdiction over the Company or any of its subsidiaries or any of
their properties or any court order identified by the Company to
such counsel as potentially relevant to such transaction, except, in
each case, for such conflicts, breaches, violations or defaults as
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(xi) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body
of the United States or the State of New York or Texas having
jurisdiction over the Company or any of its subsidiaries or any of
their properties is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by this Agreement or the Indenture, except such
consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by
the Purchasers and such consents, approvals, authorizations,
registrations and qualifications as may be required under the Act,
the Trust Indenture Act and state or foreign securities or Blue Sky
laws in connection with the exchange offer or resale registration
statement contemplated in the Offering Circular and described in the
Registration Rights Agreement;
(xii) To the knowledge of such counsel after reasonable
investigation, neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in
default in the performance or observance of any obligation, covenant
or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument that has been
or is required to be filed by the
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Company with the Commission, except for such violations or
non-compliances as would not have a material adverse effect on the
Company and its subsidiaries taken as a whole;
(xiii) The statements set forth in the Company's 1997 10-K
under the captions, "Item 1. Business--FCC Licenses;" "--The Cable
Television Consumer Protection and Competition Act," "--Digital
Television Service," "--Proposed Legislation and Regulations"
incorporated by reference in the Offering Circular and the
statements set forth in the Offering Circular under the caption
"Underwriting," insofar as they purport to constitute a summary of
the legal documents referred to therein or matters of law and under
the caption "Description of Notes", insofar as they purport to
constitute a summary of the terms of the Securities, in each case,
are accurate summaries and fairly and correctly present, in all
material respects, the information called for with respect to such
legal documents and matters;
(xiv) Other than as set forth in the Offering Circular, the
Company and its subsidiaries have such Licenses from the FCC, as are
necessary for the lawful operation of the Existing Stations in the
manner and to the full extent now operated or proposed to be
operated as described in the Offering Circular; such Licenses are in
full force and effect and, to the best of such counsel's knowledge,
no proceeding has been instituted or is threatened, pending or
contemplated which in any manner affects or draws into question the
validity or effectiveness thereof; such Licenses contain no
materially burdensome restrictions not customarily imposed by the
FCC on television stations of the same class and type;
(xv) To the best of such counsel's knowledge, the operation of
the Existing Stations in the manner and to the full extent now
operated or proposed to be operated as described in the Offering
Circular is in accordance with the Licenses, the Communications Act,
the Telecommunications Act of 1996 and all orders, rules and
regulations of the FCC, except for such noncompliance as would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole;
(xvi) To the best of such counsel's knowledge, no event has
occurred which permits (nor has an event occurred which with notice
or lapse of time or both would permit) the revocation or termination
of the Licenses from the FCC or which would reasonably be expected
to result in any other material impairment of the rights of the
Company or its subsidiaries to such Licenses, taken as a whole;
(xvii) To the best of such counsel's knowledge, the Company
and its subsidiaries are in compliance with all statutes, orders,
rules or regulations of the FCC relating to or affecting the
broadcasting operations of any of the Existing Stations, except for
such noncompliance as would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole;
(xviii) The Exchange Act Reports (other than the financial
statements and related schedules therein and other financial
information, as to which such counsel need
-13-
<PAGE>
express no opinion), when they were filed with the Commission,
complied as to form in all material respects with the requirements
of the Exchange Act, and the rules and regulations of the Commission
thereunder;
(xix) Assuming the accuracy of the representations and
warranties of the Purchasers in Section 3, compliance with the
resale limitations contained in the Offering Circular under the
caption "Notice to Investors" and that the Purchasers have not
resold the Securities in any Regulation S transactions, no
registration of the Securities under the Act, and no qualification
of an indenture under the Trust Indenture Act with respect thereto,
is required for the offer, sale and initial resale of the Securities
by the Purchasers in the manner contemplated by this Agreement; and
(xx) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined
in the Investment Company Act.
In addition, such counsel shall also state that such
counsel has no reason to believe that the Offering Circular
(including all Exchange Act Reports incorporated by reference
therein) and any further amendments or supplements thereto made by
the Company prior to the Time of Delivery (other than the financial
statements therein and other financial information, as to which such
counsel need express no opinion) contained as of its date or
contains as of the Time of Delivery an untrue statement of a
material fact or omitted or omits, as the case may be, to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
Akin, Gump, Strauss, Hauer & Feld, L.L.P. may limit their opinion to the
laws of the United States, the District of Columbia, New York and Texas
and Delaware corporate law.
(c) On the date of the Offering Circular prior to the
execution of this Agreement and also at the Time of Delivery, Ernst
& Young LLP shall have furnished to you a letter or letters, dated
the respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex II hereto;
(d) (i) The Company and its subsidiaries, taken as a whole,
shall not have sustained since the date of the latest audited
financial statements incorporated by reference in the Offering
Circular any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated
in the Offering Circular, and (ii) since the respective dates as of
which information is given in the Offering Circular there shall not
have been any change in the capital stock (other than an increase of
not more than $1,000,000 or other than conversion of preferred stock
into Common Stock (Nonvoting) and the exercise of certain employee
stock options and awards) or any increase in the short-term debt
(other than trade payables) or long-term debt (other than an
increase of not more than $1,000,000) of the Company and its
subsidiaries, taken as a whole, or any
-14-
<PAGE>
change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Offering Circular, the effect of which, in any
such case described in Clause (i) or (ii), is in your judgment so
material and adverse as to make it impracticable or inadvisable to
proceed with the offering or the delivery of the Securities on the
terms and in the manner contemplated in this Agreement and in the
Offering Circular;
(e) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that
term is defined by the Commission for purposes of Rule 436(g)(2)
under the Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt
securities;
(f) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or on
the Nasdaq National Market; (ii) a suspension or material limitation
in trading in the Company's securities on the Nasdaq National
Market; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York State authorities; (iv) the
outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war,
if the effect of any such event specified in this Clause (iv) in
your judgment makes it impracticable or inadvisable to proceed with
the offering or the delivery of the Securities on the terms and in
the manner contemplated in the Offering Circular; or (v) the
occurrence of any material adverse change in the existing,
financial, political or economic conditions in the United States or
elsewhere which, in your judgment, would materially and adversely
affect the financial markets or the markets for the Securities and
other equity or debt securities;
(g) The Securities shall have been designated for trading on
PORTAL;
(h) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of Offering
Circulars, amendments and supplements on the New York Business Day
next succeeding the date of this Agreement; and
(i) The Company shall have furnished or caused to be furnished
to you at the Time of Delivery certificates of officers of the
Company satisfactory to you as to the accuracy of the
representations and warranties of the Company herein at and as of
such Time of Delivery, as to the performance by the Company of all
of its obligations hereunder to be performed at or prior to such
Time of Delivery, as to the matters set forth in subsection (e) of
this Section and as to such other matters as you may reasonably
request.
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<PAGE>
8. (a) The Company will indemnify and hold harmless each Purchaser against any
losses, claims, damages or liabilities, joint or several, to which such
Purchaser may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Circular or the Offering
Circular or any Exchange Act Report, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and will reimburse
each Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Purchaser through Goldman, Sachs & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Preliminary Offering Circular or the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Purchaser through Goldman, Sachs &
Co. expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than
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<PAGE>
reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchasers on the other from the offering
of the Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Purchasers on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Purchasers on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
Purchasers' discounts and commissions received by the Purchasers, in each case
as set forth in the Offering Circular. The relative fault 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 on the one hand or the Purchasers
on the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased by it and distributed to investors
were offered to investors exceeds the amount of any damages which such Purchaser
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. The Purchasers' obligations in this
subsection (d) to contribute are several in proportion to their respective
purchase obligations and not joint.
-17-
<PAGE>
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Act; and the obligations of the Purchasers
under this Section 8 shall be in addition to any liability which the respective
Purchasers may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by any
Purchaser you do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities, or the Company notifies you that it has so arranged for the
purchase of such Securities, you or the Company shall have the right to postpone
the Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Offering Circular,
or in any other documents or arrangements, and the Company agrees to prepare
promptly any amendments to the Offering Circular which in your opinion may
thereby be made necessary. The term "Purchaser" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities, then the Company shall have
the right to require each non-defaulting Purchaser to purchase the principal
amount of Securities which such Purchaser agreed to purchase hereunder and, in
addition, to require each non-defaulting Purchaser to purchase its pro rata
share (based on the principal amount of Securities which such Purchaser agreed
to purchase hereunder) of the Securities of such defaulting Purchaser or
Purchasers for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of Securities
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Securities, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Purchasers to purchase
Securities of a defaulting Purchaser or Purchasers, then this Agreement shall
thereupon terminate, without liability on the part of any non-defaulting
Purchaser or the Company, except for the expenses to be borne by the Company and
the Purchasers as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Purchaser from liability for its default.
-18-
<PAGE>
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Purchasers, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof, the
Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Purchasers through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Purchasers in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Purchaser except as provided in Sections 6 and
8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you jointly or by Goldman, Sachs & Co. on behalf of you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the Offering
Circular, Attention: Secretary; provided, however, that any notice to a
Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Purchaser at its address set forth in
its Purchasers' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit of,
the Purchasers, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties hereto in
any number of counterparts, each of which shall be deemed to be an original, but
all such respective counterparts shall together constitute one and the same
instrument.
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<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
Very truly yours,
Granite Broadcasting Corporation
By:
----------------------------------
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
Salomon Brothers Inc
/s/ Goldman, Sachs & Co.
- ------------------------------------
(Goldman, Sachs & Co.)
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<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
Very truly yours,
Granite Broadcasting Corporation
By: /s/ Lawrence I. Wills
----------------------------------
Name: Lawrence I. Wills
Title: Vice President-Finance and
Controller
Accepted as of the date hereof:
Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
Salomon Brothers Inc
- ------------------------------------
(Goldman, Sachs & Co.)
-20-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of
Securities
to be
Purchaser Purchased
--------- ---------
<S> <C>
Goldman, Sachs & Co. .................................. 122,500,000
Bear, Stearns & Co. Inc. .............................. 26,250,000
Salomon Brothers Inc. ................................. 26,250,000
------------
Total .................................. $175,000,000
============
</TABLE>
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<PAGE>
ANNEX I
(1) The Securities have not been and will not be registered under the Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Act. Each Purchaser represents that it has offered and sold the Securities, and
will offer and sell the Securities (i) as part of their distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering and the Time of Delivery, only in accordance with Rule 903 of
Regulation S or, Rule 144A under the Act. Accordingly, each Purchaser agrees
that neither it, its affiliates nor any persons acting on its or their behalf
has engaged or will engage in any directed selling efforts with respect to the
Securities, and it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Purchaser agrees that, at or
prior to confirmation of sale of Securities (other than a sale pursuant to Rule
144A), it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the
offering and the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Securities Act. Terms
used above have the meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or delivery of
the Securities, except with its affiliates or with the prior written consent of
the Company.
(2) Notwithstanding the foregoing, Securities in registered form may be
offered, sold and delivered by the Purchasers in the United States and to U.S.
persons pursuant to Section 3 of this Agreement without delivery of the written
statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Securities will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issuance of
the Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
-1-
<PAGE>
1996 of Great Britain or is a person to whom the document may otherwise lawfully
be issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any of
the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue an circular relating to the Securities, except in any such case
with Goldman, Sachs & Co.'s express written consent and then only at its own
risk and expense.
-2-
<PAGE>
ANNEX II
Pursuant to Section 7(c) of the Purchase Agreement, the accountants shall
furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of
the Securities Exchange Act of 1934 (the "Exchange Act") and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements
and financial statement schedules audited by them and included or
incorporated by reference in the Offering Circular comply as to form
in all material respects with the requirements of the Exchange Act
and the related published rules and regulations; and they have made
a review in accordance with standards established by the American
Institute of Certified Public Accountants of the consolidated
interim financial statements, selected financial data, pro forma
financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of
the Company for the periods specified in such letter, as indicated
in their reports thereon, copies of which have been furnished to the
Purchasers and are attached hereto;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public
Accountants of the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in or incorporated by reference in the Offering
Circular and included in the Company's quarterly reports on Form
10-Q as indicated in their reports thereon, copies of which have
been furnished to the Purchasers and are attached hereto; and on the
basis of specified procedures including inquiries of officials of
the Company who have responsibility for financial and accounting
matters regarding whether the unaudited condensed consolidated
financial statements referred to in paragraph (v)(A)(i) below comply
as to form in all material respects with the accounting requirements
of the Exchange Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the
unaudited condensed consolidated financial statements do not comply
as to form in all material respects with the accounting requirements
of the Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of
the Company for the five most recent fiscal years included or
incorporated by reference in the Offering Circular agrees with the
corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such five fiscal
years;
(v) On the basis of limited procedures not constituting an
audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest
available interim financial statements of the Company and its
subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial
statements
-1-
<PAGE>
included or incorporated by reference in the Offering Circular,
inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements
of cash flows included or incorporated by reference in
the Offering Circular do not comply as to form in all
material respects with the accounting requirements of
the Exchange Act and the related published rules and
regulations, or (ii) any material modifications should
be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included or
incorporated by reference in the Offering Circular for
them to be in conformity with generally accepted
accounting principles;
(B) any other unaudited income statement data and
balance sheet items included in the Offering Circular do
not agree with the corresponding items in the unaudited
consolidated financial statements from which such data
and items were derived, and any such unaudited data and
items were not determined on a basis substantially
consistent with the basis for the corresponding amounts
in the audited consolidated financial statements
included or incorporated by reference in the Offering
Circular;
(C) the unaudited financial statements which were not
included in the Offering Circular but from which were
derived any unaudited condensed financial statements
referred to in Clause (A) and any unaudited income
statement data and balance sheet items included in the
Offering Circular and referred to in Clause (B) were not
determined on a basis substantially consistent with the
basis for the audited consolidated financial statements
included in the Offering Circular;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Offering Circular
do not comply as to form in all material respects with
the accounting requirements of the Exchange Act and the
published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the
historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances
of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities,
in each case which were outstanding on the date of the
latest financial statements included or incorporated by
reference in the Offering Circular) or any increase in
the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net
current assets or stockholders' equity or other items
specified by the Purchasers, or any increases in any
items specified by the Purchasers, in each case as
compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Offering
Circular, except in each case for changes, increases or
decreases
-2-
<PAGE>
which the Offering Circular discloses have occurred or
may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the
Offering Circular to the specified date referred to in
Clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share
amounts of consolidated net income or other items
specified by the Purchasers, or any increases in any
items specified by the Purchasers, in each case as
compared with the comparable period of the preceding
year and with any other period of corresponding length
specified by the Purchasers, except in each case for
decreases or increases which the Offering Circular
discloses have occurred or may occur or which are
described in such letter; and
(vi) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Offering
Circular and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraphs (iii) and
(iv) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and
financial information specified by the Purchasers, which are derived
from the general accounting records of the Company and its
subsidiaries, which appear in the Offering Circular or in documents
incorporated by reference in the Offering Circular, and have
compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
-3-
<PAGE>
Exhibit 4.49
================================================================================
GRANITE BROADCASTING CORPORATION
TO
THE BANK OF NEW YORK
Trustee
--------------------
Indenture
Dated as of May 11, 1998
--------------------
Up to $200,000,000
8 7/8% SENIOR SUBORDINATED NOTES
DUE MAY 15, 2008
================================================================================
<PAGE>
GRANITE BROADCASTING CORPORATION
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C>
ss. 310(a)(1) ............................................. 609
(a)(2) ............................................. 609
(a)(3) ............................................. Not
Applicable
(a)(4) ............................................. Not
Applicable
(b) ............................................. 608
610
ss. 311(a) ............................................. 613
(b) ............................................. 613
ss. 312(a) ............................................. 701
702(a)
(b) ............................................. 702(b)
(c) ............................................. 702(c)
ss. 313(a) ............................................. 703(a)
(a)(4) ............................................. 703(a)
(b) ............................................. 703(a)
(c) ............................................. 703(a)
(d) ............................................. 703(b)
ss. 314(a) ............................................. 704
1017
(b) ............................................. Not
Applicable
(c)(1) ............................................. 102
(c)(2) ............................................. 102
(c)(3) ............................................. Not
Applicable
(d) ............................................. Not
Applicable
(e) ............................................. 102
</TABLE>
- ----------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
-i-
<PAGE>
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C>
ss. 315(a) ............................................. 601
(b) ............................................. 602
(c) ............................................. 601
(d) ............................................. 601
(e) ............................................. 514
ss. 316(a) ............................................. 101
(a)(1)(A) ............................................. 502
512
(a)(1)(B) ............................................. 513
(a)(2) ............................................. Not
Applicable
(b) ............................................. 508
(c) ............................................. 104(c)
ss. 317(a)(1) ............................................. 503
(a)(2) ............................................. 504
(b) ............................................. 1003
ss. 318(a) ............................................. 107
</TABLE>
- ----------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
-ii-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Parties .................................................................. 1
Recitals of the Company .................................................. 1
</TABLE>
ARTICLE ONE
Definitions and Other Provisions
of General Application
<TABLE>
<S> <C>
SECTION 101. Definitions ........................................... 2
7.75% Exchange Debentures .................................... 2
9 3/8% Note Indenture ........................................ 3
9 3/8% Notes ................................................. 3
10 3/8% Note Indenture ....................................... 3
10 3/8% Notes ................................................ 3
12 3/4% Exchange Debenture Indenture ......................... 3
12 3/4% Exchange Debentures .................................. 3
12 3/4% Exchangeable Preferred Stock ......................... 3
Act .......................................................... 3
Additional Interest .......................................... 3
Additional Original Securities ............................... 4
Affiliate .................................................... 4
Agent Bank ................................................... 4
Asset Disposition ............................................ 4
Attributable Value ........................................... 4
Average Life ................................................. 5
Board of Directors ........................................... 5
Board Resolution ............................................. 5
Business Day ................................................. 5
Capital Lease Obligation ..................................... 6
Capital Stock ................................................ 6
Cedel ........................................................ 6
Change of Control ............................................ 6
Commission ................................................... 6
Common Stock ................................................. 6
Company ...................................................... 6
Company Request" or "Company Order ........................... 6
Consolidated Cash Flow ....................................... 7
</TABLE>
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated Income Tax Expense .............................. 7
Consolidated Interest Expense ................................ 7
Consolidated Net Income ...................................... 8
Consolidated Subsidiaries .................................... 8
Corporate Trust Office ....................................... 8
corporation .................................................. 8
Credit Agreement ............................................. 8
Debt ......................................................... 9
Defaulted Interest ........................................... 9
Depositary ................................................... 9
Designated Senior Debt ....................................... 9
Disqualified Stock ........................................... 9
DTC .......................................................... 10
Euroclear .................................................... 10
Event of Default ............................................. 10
Exchange Act ................................................. 10
Exchange Offer ............................................... 10
Exchange Securities .......................................... 10
Exchangeable Preferred Stock ................................. 10
Global Security .............................................. 10
Guarantee .................................................... 10
Holder ....................................................... 11
Incur ........................................................ 11
Indenture .................................................... 11
Initial Issue Date ........................................... 11
Interest Payment Date ........................................ 11
Investment ................................................... 11
Lien ......................................................... 12
Local Marketing Agreement .................................... 12
Maturity ..................................................... 12
Net Available Proceeds ....................................... 12
Offer to Purchase ............................................ 13
Officers' Certificate ........................................ 16
Opinion of Counsel ........................................... 16
Original Securities .......................................... 16
Outstanding .................................................. 16
Paying Agent ................................................. 17
Payment Blockage Period ...................................... 17
Permitted Holder ............................................. 18
</TABLE>
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-iv-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Permitted Television Investment .............................. 18
Person ....................................................... 18
Predecessor Security ......................................... 18
Preferred Stock .............................................. 18
Pro Forma Consolidated Cash Flow ............................. 18
readily marketable cash equivalents .......................... 19
Redemption Date .............................................. 20
Redemption Price ............................................. 20
Regular Record Date .......................................... 20
Regulation S ................................................. 20
Regulation S Certificate ..................................... 20
Regulation S Global Security ................................. 20
Regulation S Legend .......................................... 20
Regulation S Securities ...................................... 20
Responsible Officer .......................................... 20
Rule 144 ..................................................... 20
Rule 144A .................................................... 20
Rule 144A Securities ......................................... 21
Sale and Leaseback Transaction ............................... 21
Second Step-Down Date ........................................ 21
Second Step-Up ............................................... 21
Securities ................................................... 21
Securities Act ............................................... 21
Securities Payment ........................................... 21
Security Register" and "Security Registrar ................... 21
Senior Debt .................................................. 21
Senior Nonmonetary Default ................................... 22
Senior Payment Default ....................................... 22
Special Record Date .......................................... 22
Stated Maturity .............................................. 22
Step-Down Date ............................................... 22
Step-Up ...................................................... 22
Subordinated Debt ............................................ 22
Subsidiary ................................................... 23
Successor Security ........................................... 23
Trust Indenture Act .......................................... 23
Trustee ...................................................... 24
U.S. Person .................................................. 24
Unrestricted Subsidiary ...................................... 25
</TABLE>
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-v-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Vice President ............................................... 26
Voting Stock ................................................. 26
Wholly Owned Subsidiary ...................................... 26
SECTION 102. Compliance Certificates and Opinions .................. 26
SECTION 103. Form of Documents Delivered
to Trustee ........................................... 27
SECTION 104. Acts of Holders; Record Dates ......................... 28
SECTION 105. Notices, Etc., to Trustee
and Company .......................................... 31
SECTION 106. Notice to Holders; Waiver ............................. 31
SECTION 107. The Application of Trust
Indenture Act ........................................ 32
SECTION 108. Effect of Headings and
Table of Contents .................................... 32
SECTION 109. Successors and Assigns ................................ 33
SECTION 110. Separability Clause ................................... 33
SECTION 111. Benefits of Indenture ................................. 33
SECTION 112. Governing Law ......................................... 33
SECTION 113. Legal Holidays ........................................ 33
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally; Initial Forms
of Rule 144A and Regulation S Securities ............. 34
SECTION 202. Form of Face of Security .............................. 35
SECTION 203. Form of Reverse of Security ........................... 40
SECTION 204. Form of Trustee's Certificate of
Authentication ....................................... 45
ARTICLE THREE
The Securities
SECTION 301. Title and Terms ....................................... 46
SECTION 302. Denominations ......................................... 47
</TABLE>
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-vi-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 303. Execution, Authentication, Delivery
and Dating ........................................... 47
SECTION 304. Temporary Securities .................................. 50
SECTION 305. Global Securities ..................................... 50
SECTION 306. Registration, Registration of
Transfer and Exchange Generally;
Restrictions on Transfer and
Exchange; Securities Act Legends ..................... 52
SECTION 307. Mutilated, Destroyed, Lost and
Stolen Securities .................................... 57
SECTION 308. Payment of Interest; Interest
Rights Preserved ..................................... 58
SECTION 309. Persons Deemed Owners ................................. 60
SECTION 310. Cancellation .......................................... 61
SECTION 311. Computation of Interest ............................... 61
SECTION 312. CUSIP Numbers ......................................... 62
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge
of Indenture ......................................... 62
SECTION 402. Application of Trust Money ............................ 63
ARTICLE FIVE
Remedies
SECTION 501. Events of Default ..................................... 64
SECTION 502. Acceleration of Maturity;
Rescission and Annulment ............................. 66
SECTION 503. Collection of Indebtedness and
Suits for Enforcement by Trustee ..................... 68
SECTION 504. Trustee May File Proofs of Claim ...................... 69
SECTION 505. Trustee May Enforce Claims Without
Possession of Securities ............................. 69
SECTION 506. Application of Money Collected ........................ 70
SECTION 507. Limitation on Suits ................................... 70
</TABLE>
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-vii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 508. Unconditional Right of Holders
to Receive Principal, Premium and Interest ........... 71
SECTION 509. Restoration of Rights and Remedies .................... 72
SECTION 510. Rights and Remedies Cumulative ........................ 72
SECTION 511. Delay or Omission Not Waiver .......................... 72
SECTION 512. Control by Holders .................................... 73
SECTION 513. Waiver of Past Defaults ............................... 73
SECTION 514. Undertaking for Costs ................................. 74
SECTION 515. Waiver of Stay or Extension Laws ...................... 74
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities ................... 74
SECTION 602. Notice of Defaults .................................... 75
SECTION 603. Certain Rights of Trustee ............................. 75
SECTION 604. Not Responsible for Recitals
or Issuance of Securities ............................ 77
SECTION 605. May Hold Securities ................................... 77
SECTION 606. Money Held in Trust ................................... 77
SECTION 607. Compensation and Reimbursement ........................ 78
SECTION 608. Disqualification; Conflicting Interests ............... 79
SECTION 609. Corporate Trustee Required; Eligibility ............... 79
SECTION 610. Resignation and Removal; Appointment
of Successor ......................................... 80
SECTION 611. Acceptance of Appointment by Successor ................ 81
SECTION 612. Merger, Conversion, Consolidation
or Succession to Business ............................ 82
SECTION 613. Preferential Collection
of Claims Against Company ............................ 82
</TABLE>
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-viii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee
Names and Addresses of Holders ....................... 83
SECTION 702. Preservation of Information;
Communications to Holders ............................ 83
SECTION 703. Reports by Trustee .................................... 84
SECTION 704. Reports by Company .................................... 84
SECTION 705. Officers' Certificate with Respect
to Change in Interest Rates .......................... 85
ARTICLE EIGHT
Merger, Consolidation, Etc.
SECTION 801. Mergers, Consolidations and Certain
Sales of Assets ...................................... 85
SECTION 802. Successor Substituted ................................. 87
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures without
Consent of Holders ................................... 87
SECTION 902. Supplemental Indentures
with Consent of Holders .............................. 88
SECTION 903. Execution of Supplemental Indentures .................. 89
SECTION 904. Effect of Supplemental Indentures ..................... 90
SECTION 905. Conformity with Trust Indenture Act ................... 90
SECTION 906. Reference in Securities
to Supplemental Indentures ........................... 90
SECTION 907. Subordination Impaired ................................ 90
</TABLE>
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-ix-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest ........... 91
SECTION 1002. Maintenance of Office or Agency ...................... 91
SECTION 1003. Money for Security Payments
to Be Held in Trust ................................. 92
SECTION 1004. Existence ............................................ 94
SECTION 1005. Maintenance of Properties ............................ 94
SECTION 1006. Payment of Taxes and Other Claims .................... 94
SECTION 1007. Maintenance of Insurance ............................. 95
SECTION 1008. Limitation on Company Debt ........................... 95
SECTION 1009. Limitation on Certain Debt ........................... 98
SECTION 1010. Limitation on Restricted Payments .................... 98
SECTION 1011. Limitations Concerning Distributions
by and Transfers to Subsidiaries .................... 101
SECTION 1012. Limitation on Transactions with Affiliates ........... 102
SECTION 1013. Limitation on Certain Asset Dispositions ............. 103
SECTION 1014. Limitation on Issuances and Sales
of Capital Stock of Wholly Owned
Subsidiaries ........................................ 106
SECTION 1015. Limitation on Liens Securing
Company Subordinated Debt ........................... 108
SECTION 1016. Limitation on Guarantees of
Company Subordinated Debt ........................... 108
SECTION 1017. Change of Control .................................... 108
SECTION 1018. Provision of Financial Information ................... 110
SECTION 1019. Statement by Officers as to Default .................. 111
SECTION 1020. Waiver of Certain Covenants .......................... 111
</TABLE>
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-x-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption .................................. 112
SECTION 1102. Applicability of Article ............................. 112
SECTION 1103. Election to Redeem; Notice to Trustee ................ 113
SECTION 1104. Securities to Be Redeemed Pro Rata ................... 113
SECTION 1105. Notice of Redemption ................................. 113
SECTION 1106. Deposit of Redemption Price .......................... 114
SECTION 1107. Securities Payable on Redemption Date ................ 115
SECTION 1108. Securities Redeemed in Part .......................... 115
ARTICLE TWELVE
Subordination of Securities
SECTION 1201. Securities Subordinate to Senior Debt ................ 116
SECTION 1202. Payment Over of Proceeds Upon
Dissolution, Etc .................................... 116
SECTION 1203. No Payment When Senior Debt in Default ............... 118
SECTION 1204. Payment Permitted If No Default ...................... 119
SECTION 1205. Subrogation to Rights of Holders
of Senior Debt ...................................... 120
SECTION 1206. Provisions Solely to Define
Relative Rights ..................................... 120
SECTION 1207. Trustee to Effectuate Subordination .................. 121
SECTION 1208. No Waiver of Subordination Provisions ................ 121
SECTION 1209. Notice to Trustee .................................... 122
SECTION 1210. Reliance on Judicial Order or
Certificate of Liquidating Agent .................... 123
</TABLE>
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-xi-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1211. Trustee Not Fiduciary for
Holders of Senior Debt .............................. 123
SECTION 1212. Rights of Trustee as Holder of
Senior Debt; Preservation of
Trustee's Rights .................................... 124
SECTION 1213. Article Applicable to Paying Agents .................. 124
SECTION 1214. Defeasance of this Article Twelve .................... 124
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
SECTION 1301. Company's Option to Effect
Defeasance or Covenant Defeasance ................... 125
SECTION 1302. Defeasance and Discharge ............................. 125
SECTION 1303. Covenant Defeasance .................................. 126
SECTION 1304. Conditions to Defeasance or
Covenant Defeasance ................................. 126
SECTION 1305. Deposited Money and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions ...................... 129
TESTIMONIUM .............................................................. 131
SIGNATURES AND SEALS ..................................................... 131
ACKNOWLEDGMENTS132
ANNEX A -- Form of Regulation S Certificate .............................. A-1
ANNEX B -- Form of Restricted Securities Certificate ..................... B-1
ANNEX C -- Form of Unrestricted Securities Certificate ................... C-1
ANNEX D -- Form of Certification to be Given by Holders
of Beneficial Interest in a Regulation S
Temporary Global Security ..................................... D-1
ANNEX E -- Form of Certification to be Given by the
Euroclear Operator or Cedel S.A. .............................. E-1
</TABLE>
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-xii-
<PAGE>
INDENTURE, dated as of May 15, 1998 between Granite Broadcasting
Corporation, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
767 Third Avenue, 28th Floor, New York, New York, and The Bank of New York, a
New York banking corporation, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of up to
$200,000,000 aggregate principal amount of (A) its Senior Subordinated Notes due
May 15, 2008 (the "Securities") and (B) its Senior Subordinated Notes due May
15, 2008 (the "Exchange Securities" and collectively with the Securities, the
"Securities") of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture. The Securities and the Exchange Securities shall rank pari
passu.
All things necessary to make the Securities, 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 their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
<PAGE>
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) 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;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles (whether or not such is indicated herein) and, except as
otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as are generally
accepted in the United States as consistently applied by the Company at
the date of such computation; and
(4) 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.
Certain terms, used principally in Article Six, are defined in that
Article.
"7.75% Exchange Debentures" means the 7.75% Junior Subordinated
Convertible Debentures due 2005 that the Company may issue at its election in
exchange for the Exchangeable Preferred Stock in accordance with the terms of
the Exchangeable Preferred Stock as such terms exist on the date of this
Indenture.
-2-
<PAGE>
"9 3/8% Note Indenture" means the Indenture dated as of February 22,
1996 between the Company and The Bank of New York, as Trustee, as such Indenture
exists on the date of this Indenture.
"9 3/8% Notes" means the 9 3/8% Series A Senior Subordinated Notes
due December 1, 2005 of the Company issued pursuant to the 9 3/8% Note Indenture
and outstanding on the date of this Indenture.
"10 3/8% Note Indenture" means the Indenture dated as of May 19,
1995 between the Company and United States Trust Company of New York, as
Trustee, as such Indenture exists on the date of this Indenture.
"10 3/8% Notes" means the 10 3/8% Senior Subordinated Notes due May
15, 2005 of the Company issued pursuant to the 10 3/8% Note Indenture and
outstanding on the date of this Indenture.
"12 3/4% Exchange Debenture Indenture" means the Indenture dated as
of January 31, 1997 between the Company and The Bank of New York, as Trustee, as
such Indenture exists on the date of this Indenture.
"12 3/4% Exchange Debentures" means the 12 3/4% Exchange Debentures
due April 1, 2009 that the Company may issue at its election in exchange for the
12 3/4% Exchangeable Preferred Stock in accordance with the terms of the 12 3/4%
Exchangeable Preferred Stock as such terms exist on the date of this Indenture
issued pursuant to the 12 3/4% Exchange Debenture Indenture and outstanding on
the date of this Indenture.
"12 3/4% Exchangeable Preferred Stock" means the Company's 12 3/4%
Cumulative Exchangeable Preferred Stock, par value $.01 per share, that is
outstanding on the date of this Indenture.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Additional Interest" has the meaning set forth in the form of
Security contained in Section 202. Unless the context otherwise requires,
references herein to "interest" on the Securities shall include Additional
Interest.
-3-
<PAGE>
"Additional Original Securities" means Securities issued from time
to time, after the Initial Issue Date.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent Bank" shall mean initially Bankers Trust Company or such
successor bank or financial institution designated as such (or equivalent
thereof) under the Senior Loan Agreement (or any successor credit facility).
"Asset Disposition" by any Person means any transfer, conveyance,
sale, lease or other disposition by such Person or any of its Subsidiaries
(including a consolidation or merger of any such Subsidiaries with or into
another Person in a transaction in which such Subsidiary ceases to be a
Subsidiary, but excluding a disposition by a Subsidiary of such Person to such
Person or a Wholly Owned Subsidiary of such Person or by such Person to a Wholly
Owned Subsidiary of such Person) of (i) shares of Capital Stock (other than
directors' qualifying shares) or other ownership interests of a Subsidiary of
such Person, (ii) substantially all of the assets of such Person or any of its
Subsidiaries representing a division or line of business or (iii) other assets
or rights of such Person or any of its Subsidiaries outside of the ordinary
course of business. Asset Disposition shall not include a Sale and Leaseback
Transaction to the extent that the Attributable Value of such Sale and Leaseback
Transaction does not exceed $2,000,000 and the aggregate Attributable Value of
all such Sale and Leaseback Transactions entered into since the date of this
instrument and then outstanding does not exceed $5,000,000.
"Attributable Value" means, as to any particular lease under which
any Person is at the time liable other than a Capital Lease Obligation, and at
any date as of which the amount thereof is to be determined, the total net
amount of rent required to be paid by such Person under such lease during the
initial term thereof as determined in accordance with generally accepted
accounting principles, discounted
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from the last date of such initial term to the date of determination at a rate
per annum equal to the discount rate which would be applicable to a Capital
Lease Obligation with like term in accordance with generally accepted accounting
principles. The net amount of rent required to be paid under any such lease for
any such period shall be the aggregate amount of rent payable by the lessee with
respect to such period after excluding amounts required to be paid on account of
insurance, taxes, assessments, utility, operating and labor costs and similar
charges. In the case of any lease which is terminable by the lessee upon the
payment of a penalty, such net amount shall also include the amount of such
penalty, but no rent shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so terminated. Attributable
Value means, as to a Capital Lease Obligation under which any Person is at the
time liable and at any date as of which the amount thereof is to be determined,
the capitalized amount thereof that would appear on the face of a balance sheet
of such Person in accordance with generally accepted accounting principles.
"Average Life" means, as of the date of determination, with respect
to any Debt, the quotient obtained by dividing (i) the sum of the products of
the numbers of years from the date of determination to the dates of each
successive scheduled principal payments of such Debt multiplied by the amount of
such principal payments by (ii) the sum of all such principal payments.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors 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 Borough of
Manhattan, The City of New York, New York are authorized or obligated by law or
executive order to close.
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"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with generally accepted
accounting principles. The stated maturity of such obligation shall be the date
of the last payment of rent or any other amount due under such lease prior to
the first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person.
"Cedel" means Cedel, S.A. (or any successor securities clearing
agency).
"Change of Control" has the meaning specified in Section 1017.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument 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 signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its
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Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Consolidated Cash Flow" of any Person means for any period the
Consolidated Net Income for such period increased by the sum of (i) Consolidated
Interest Expense of such Person and its Consolidated Subsidiaries for such
period, plus (ii) Consolidated Income Tax Expense of such Person and its
Consolidated Subsidiaries for such period, plus (iii) the consolidated
depreciation and amortization expense included in the income statement of such
Person and its Consolidated Subsidiaries for such period, plus (iv) other
non-cash charges deducted from consolidated revenues of such Person and its
Consolidated Subsidiaries (other than amortization of film and program assets)
in determining Consolidated Net Income for such period, minus (v) non-cash items
added to consolidated revenues of such Person and its Consolidated Subsidiaries
in determining Consolidated Net Income for such period; provided, however,
Consolidated Cash Flow shall not include Consolidated Net Income and the items
specified in Clauses (i) through (iv) above to the extent attributable to a
Consolidated Subsidiary of such Person that is subject to restrictions
preventing the payment of dividends and the making of distributions (by loans,
advances, intercompany transfers or otherwise) to such Person, but shall include
such payments and distributions as could be made in accordance with such
restrictions.
"Consolidated Income Tax Expense" of any Person means for any period
the consolidated provision for income taxes of such Person and its Consolidated
Subsidiaries for such period.
"Consolidated Interest Expense" for any Person means for any period
the consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of such Person and its Consolidated
Subsidiaries for such period, including without limitation or duplication (or,
to the extent not so included, with the addition of), (i) the portion of any
rental obligation in respect of any Capital Lease Obligation allocable to
interest expense in accordance with generally accepted accounting principles,
(ii) the amortization of Debt discounts, (iii) any payments or fees with respect
to letters of credit, bankers acceptances or similar facilities, (iv) fees with
respect to interest rate swap or similar agreements or foreign currency hedge,
exchange or similar agreements other
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than fees or charges related to the acquisition or termination thereof which
are not allocable to interest expense in accordance with generally accepted
accounting principles, (v) Preferred Stock dividends declared and payable in
cash and (vi) accrued Disqualified Stock dividends, whether or not declared or
paid.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person and its Consolidated
Subsidiaries for such period determined in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (i) the
net income (or loss) of any Person acquired by such Person or a Subsidiary of
such Person in a pooling-of-interests transaction for any period prior to the
date of such transaction, (ii) the net income (or loss) of any Person that is
not a Consolidated Subsidiary of such Person, (iii) gains or losses on Asset
Dispositions by such Person or its Consolidated Subsidiaries and (iv) all
extraordinary gains and extraordinary losses, and provided, further, that there
shall be added thereto, to the extent not otherwise included in Consolidated Net
Income, the amount of any dividends or other distributions actually paid to such
Person during such period by a Person that is not a Consolidated Subsidiary of
such Person.
"Consolidated Subsidiaries" of any Person means all other Persons
that would be accounted for as Consolidated Persons in such Person's financial
statements in accordance with generally accepted accounting principles,
provided, however, Consolidated Subsidiaries shall not include any Unrestricted
Subsidiary created in accordance with the definition of Unrestricted Subsidiary.
"Corporate Trust Office" means the principal office of the Trustee
in the Borough of Manhattan, The City of New York, New York, at which at any
particular time its corporate trust business shall be administered, which at the
date hereof is located at 101 Barclay Street, Floor 21 West, New York, New York
10286.
"corporation" means a corporation, association, company, limited
liability company, joint-stock company or business trust.
"Credit Agreement" means the Third Amended and Restated Credit
Agreement, dated as of September 4, 1996, by
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and among the Company, the lenders listed therein, Bankers Trust Company, as
Agent, and The Bank of New York, First Union National Bank of North Carolina,
Goldman Sachs Credit Partners L.P. and Union Bank of California, N.A., as Co-
Agents, as it may be amended, restated, modified or replaced from time to time.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person, and
whether or not contingent, (i) every obligation of such Person for money
borrowed, (ii) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (iv) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable, film contract rights or accrued
liabilities arising in the ordinary course of business), (v) every Capital Lease
Obligation of such Person, (vi) the maximum fixed redemption or repurchase price
of Disqualified Stock of such Person at the time of determination, and (vii)
every obligation of the type referred to in Clauses (i) through (vi) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has Guaranteed or is responsible or liable, directly or indirectly,
as obligor, Guarantor or otherwise.
"Defaulted Interest" has the meaning specified in Section 308.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in the form of one or more Global Securities, The
Depository Trust Company for so long as it shall be a clearing agency registered
under the Exchange Act, or such successor as the Company shall designate from
time to time in an Officers' Certificate delivered to the Trustee.
"Designated Senior Debt" has the meaning set forth in Section 1203.
"Disqualified Stock" means any Capital Stock of the Company or any
Subsidiary of the Company which, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable), or otherwise
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(including upon the occurrence of an event), matures or is required to be
redeemed (pursuant to a sinking fund obligation or otherwise) or is redeemable
at the option of the holder thereof, in whole or in part (other than a
redemption which is conditioned upon a change of control of the Company), on or
prior to the final Stated Maturity of the Securities.
"DTC" means The Depository Trust Company, a New York corporation.
"Euroclear" means the Euroclear Clearance System (or any successor
securities clearing agency).
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.
"Exchange Offer" has the meaning set forth in the form of the
Security contained in Section 202.
"Exchange Securities" means the securities issued pursuant to the
Exchange Offer and their Successor Securities.
"Exchangeable Preferred Stock" means the Company's Cumulative
Convertible Exchangeable Preferred Stock, par value $.01 per share, that is
outstanding on the date of this Indenture.
"Global Security" means the security or securities that evidences
all or part of the Securities and bears the legend set forth in Section 202.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Debt of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, and including, without limitation, any
obligation of such Person, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(ii) to purchase property, securities or services for the
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purpose of assuring the holder of such Debt of the payment of such Debt, or
(iii) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Debt (and "Guaranteed", "Guaranteeing" and "Guarantor" shall
have meanings correlative to the fore going); provided, however, that the
Guarantee by any Person shall not include endorsements by such Person for
collection or deposit, in either case, in the ordinary course of business.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Incur" means, with respect to any Debt 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 Debt or other obligation
or the recording, as required pursuant to generally accepted accounting
principles or otherwise, of any such Debt or other obligation on the balance
sheet of such Person (and "Incurrence," "Incurred," "Incurrable" and "Incurring"
shall have meanings correlative to the fore going); provided, however, that a
change in generally accepted accounting principles that results in an obligation
of such Person that exists at such time becoming Debt shall not be deemed an
Incurrence of such Debt.
"Indenture" means this instrument as originally executed or 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.
"Initial Issue Date" means the date of this Indenture.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Securities.
"Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution to (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Debt issued by
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any other Person, including any payment on a Guarantee of any obligation of such
other Person.
"Lien" means, with respect to any property or assets, any mortgage
or deed of trust, pledge, hypothecation, assignment, deposit arrangement,
security interest, lien, charge, easement (other than any easement not
materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Local Marketing Agreement" means any agreement pursuant to which
the Company or any of its Subsidiaries agrees to provide television management
services, television broadcasting or assets related to the provision of
television broadcasting in exchange for cash payments and/or the right to charge
others for the provision of advertising or other services or products.
"Maturity", when used with respect to any Security, means the date
on which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Net Available Proceeds" from any Asset Disposition or issuance of
Capital Stock by any Person means cash or readily marketable cash equivalents
received (including by way of sale or discounting of a note, installment
receivable or other receivable, but excluding any other consideration received
in the form of assumption by the acquiree of Debt or other obligations relating
to such properties or assets or received in any other noncash form) therefrom by
such Person, net of (i) all legal, title and recording tax expenses, commissions
and other fees and expenses Incurred and all federal, state, provincial, foreign
and local taxes required to be accrued as a liability as a consequence of such
Asset Disposition or issuance, (ii) all payments made by such Person or its
Subsidiaries on any Debt which is secured by such assets in accordance with the
terms of any Lien upon or with respect to such assets or which must by the terms
of such Lien, or in order to obtain a necessary consent to such Asset
Disposition or issuance or
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by applicable law be repaid out of the proceeds from such Asset Disposition or
issuance, (iii) all distributions and other payments made to minority interest
holders in Subsidiaries of such Person or joint ventures as a result of such
Asset Disposition, and (iv) reserves established in accordance with generally
accepted accounting principles against any liabilities associated with such
assets and retained by such Person or any Subsidiary thereof, as the case may
be, after such Asset Disposition, including, without limitation, liabilities
under any indemnification obligations and severance and other employee
termination costs associated with such Asset Disposition, in each case as
determined by the Board of Directors, in its reasonable good faith judgment
evidenced by a Board Resolution; provided, however, that any reduction in such
reserve following the consummation of such Asset Disposition will be treated for
all purposes of this Indenture and the Securities as a new Asset Disposition at
the time of such reduction with Net Available Proceeds equal to the amount of
such reduction.
"Offer to Purchase" means a written offer (the "Offer") sent by the
Company by first class mail, postage prepaid, to each Holder at its address
appearing in the Security Register on the date of the Offer, offering to
purchase up to the principal amount of Securities specified in such Offer at the
purchase price specified in such Offer. Unless otherwise required by applicable
law, the Offer shall specify an expiration date (the "Offer Expiration Date") of
the Offer to Purchase which shall be, subject to any contrary requirements of
applicable law, not less than 30 days or more than 60 days after the date of
such Offer and a settlement date (the "Purchase Date") for the purchase of
Securities within five Business Days after the Offer Expiration Date. The
Company shall notify the Trustee at least 15 Business Days (or such shorter
period as is accept able to the Trustee) prior to the mailing of the Offer of
the Company's obligation to make an Offer to Purchase, and the Offer shall be
mailed by the Company or, at the Company's request, by the Trustee in the name
and at the expense of the Company. The Offer shall contain information
concerning the business of the Company and its Subsidiaries which the Company in
good faith believes will enable such Holders to make an informed decision with
respect to the Offer to Purchase (which at a minimum will include (i) the most
recent annual and quarterly financial statements and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" contained in the
documents
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required to be filed with the Trustee pursuant to Section 1018 of this Indenture
(which requirements may be satisfied by delivery of such documents together with
the Offer), (ii) a description of material developments in the Company's
business subsequent to the date of the latest of such financial statements
referred to in clause (i) (including a description of the events requiring the
Company to make the Offer to Purchase), (iii) if applicable, appropriate pro
forma financial information concerning the Offer to Purchase and the events
requiring the Company to make the Offer to Purchase, and (iv) any other
information required by applicable law to be included therein). The Offer shall
contain all instructions and materials necessary to enable such Holder to tender
Securities pursuant to the Offer to Purchase. The Offer shall also state:
(1) the Section of this Indenture pursuant to which the Offer to
Purchase is being made;
(2) the Offer Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the Outstanding Securities
offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such has been
determined pursuant to the Section hereof requiring the Offer to Purchase)
(the "Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Securities accepted for payment (as
specified pursuant to this Indenture);
(5) that the Holder may tender all or any portion of the Securities
registered in the name of such Holder and that any portion of a Security
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Securities are to be surrendered for
tender pursuant to the Offer to Purchase;
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(7) that interest on any Security not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase will continue
to accrue;
(8) that on the Purchase Date the purchase price will become due and
payable upon each Security accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date;
(9) that each Holder electing to tender a Security pursuant to the
Offer to Purchase will be required to surrender such Security at the place
or places specified in the Offer prior to the close of business on the
Offer Expiration Date (such Security being, if the Company or the Trustee
so requires, duly endorsed by, or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Trustee
duly executed by, the Holder thereof or his attorney duly authorized in
writing);
(10) that Holders will be entitled to with draw all or any portion
of Securities tendered if the Company (or its Paying Agent) receives, not
later than the close of business on the Offer Expiration Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security the Holder tendered, the
certificate number of the Security the Holder tendered and a statement
that such Holder is withdrawing all or a portion of such tender;
(11) that (i) if Securities in an aggregate principal amount less
than or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase all such
Securities and (ii) if Securities in an aggregate principal amount in
excess of the Purchase Amount are tendered and not withdrawn pursuant to
the Offer to Purchase, the Company shall purchase Securities having an
aggregate principal amount equal to the Purchase Amount on a pro rata
basis (with such adjustments as may be deemed appropriate so that only
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ties in denominations of $1,000 or integral multiples thereof shall be
purchased); and
(12) that in the case of any Holder whose Security is purchased only
in part, the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by
such Holder, in an aggregate principal amount equal to and in exchange for
the unpurchased portion of the Security so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with
applicable securities laws and regulations and the Offer for such Offer to
Purchase.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, a Vice Chairman of the Board, the President or a Vice President,
and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee and containing the
statements provided for in Section 102. One of the officers signing an Officers'
Certificate given pursuant to Section 1019 shall be the principal executive,
financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of legal counsel, who
may be counsel for the Company, and who shall be acceptable to the Trustee, and
containing the statements provided for in Section 102.
"Original Securities" means all Securities including Additional
Original Securities, other than Exchange Securities.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been
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theretofore deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company (if
the Company shall act as its own Paying Agent) for the Holders of such
Securities; provided that, if such Securities are to be redeemed, notice
of such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 307 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securi ties or any Affiliate of the
Company or of 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 Securities which the Trustee actually knows to be so
owned shall be so disregarded. Securities 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
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Payment Blockage Period" has the meaning specified in Section 1203.
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"Permitted Holder" has the meaning set forth in Section 1017.
"Permitted Television Investment" means an Investment in any Person
which is a Restricted Payment within the meaning of either Clause (iii) or (v)
of Section 1010 (i) with which the Company has entered into a Local Marketing
Agreement or (ii) (a) for the purpose of facilitating the delivery by the
Company or any of its Subsidiaries of advanced television service, including
high definition television, or interactive television or (b) to otherwise permit
the Company or any of its Subsidiaries to exploit any other emerging
technologies relating to television broad casting. For purposes of calculating
the aggregate amount of outstanding Permitted Television Investments, any
Investment (a) in a Person which, subsequent to such Investment, becomes a
Wholly Owned Subsidiary of the Company, or (b) that otherwise, due to a change
in the status of such Person, would not, if then made, be deemed a Restricted
Payment, shall no longer be deemed outstanding as of the date such Person
becomes a Wholly Owned Subsidiary or otherwise changes its status, as the case
may be.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 307 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of such Person of any class or classes (however designated)
that ranks prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Pro Forma Consolidated Cash Flow" of any Person means for any
period the Consolidated Cash Flow for such
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period; provided, that, in the event such Person or its Subsidiaries has made
Asset Dispositions or acquisitions of assets, properties or franchises not in
the ordinary course of business (including acquisitions of other Persons by
merger, consolidation or purchase of Capital Stock) or has permitted an
encumbrance or restriction pursuant to Section 1011 during or after such period,
such computation shall be made on a pro forma basis (whether the acquisition is
treated as a purchase or a pooling under generally accepted accounting
principles) as if the Asset Dispositions or acquisitions or restrictions or
encumbrances had taken place on the first day of such period. If, during or
after the period for which such calculation is made, the Person or any of its
Subsidiaries has acquired or disposed of a television or radio broadcasting or
cable television franchise that does not constitute an existing business
(whether existing as a separate entity, subsidiary, division, unit or other
wise), the pro forma effect of such acquisition or disposition shall be deemed
to be the Consolidated Cash Flow attributable to such franchise (or a reasonable
estimate thereof) for the period for which such calculation is made prior to
such acquisition or disposition, provided that such estimated Consolidated Cash
Flow shall be determined on the basis of comparable franchises, evidenced in a
Board Resolution and reported on by a nationally recognized accounting firm.
"readily marketable cash equivalents" means (i) marketable
securities issued or directly and unconditionally guaranteed by the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States; (ii) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof and, at the time of
acquisition, having the highest rating obtainable from either Standard & Poor's
Rating Group or Moody's Investors Service, Inc.; (iii) commercial paper maturing
no more than 180 days from the date of acquisition thereof and, at the time of
acquisition, having a rating of at least A-1 from Standard & Poor's Ratings
Group or at least P-1 from Moody's Investors Service, Inc.; and (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any commercial bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia having unimpaired capital and surplus of not less than $100,000,000.
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"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the May 1 or November 1 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificate" means a certificate substantially in the
form set forth in Annex A.
"Regulation S Global Security" has the meaning specified in Section
201.
"Regulation S Legend" means a legend substantially in the form of
the legend required in the form of Security set forth in Section 202 to be
placed upon Regulation S Securities.
"Regulation S Securities" means all Securities required pursuant to
Section 306(c) to bear a Regulation S Legend.
"Responsible Officer", when used with respect to the Trustee, means
any vice president, any assistant secretary, any assistant treasurer, any trust
officer or assistant trust officer, 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 to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
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"Rule 144A Securities" means the Securities purchased by the Initial
Purchasers from the Company pursuant to the Purchase Agreement, other than the
Regulation S Securities.
"Sale and Leaseback Transaction" of any Person means an arrangement
with any lender or investor or to which such lender or investor is a party
providing for the leasing by such Person of any property or asset of such Person
which has been or is being sold or transferred by such Person more than 270 days
after the acquisition thereof or the completion of construction or commencement
of operation thereof to such lender or investor or to any person to whom funds
have been or are to be advanced by such lender or investor on the security of
such property or asset. The stated maturity of such arrangement shall be the
date of the last payment of rent or any other amount due under such arrangement
prior to the first date on which such arrangement may be terminated by the
lessee without payment of a penalty.
"Second Step-Down Date" has the meaning set forth in the form of
Security contained in Section 202.
"Second Step-Up" has the meaning set forth in the form of Security
contained in Section 202.
"Securities" means the securities designated as such in the first
paragraph of the RECITALS OF THE COMPANY and includes the Exchange Securities.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Securities Payment" has the meaning set forth in Section 1202.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 306.
"Senior Debt" means (a) the principal of (premium, if any) and
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding) on, and
penalties and any obligation of the Company for reimbursement, indemnities and
fees relating to, Debt
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outstanding pursuant to the Agreement, (b) payment obligations of the Company
under interest rate swap or similar agreements or foreign currency hedge,
exchange or similar agreements, in each case entered into to hedge Debt Incurred
under the Credit Agreement or any renewal, refunding, refinancing or extension
thereof, (c) all other Debt for money borrowed of the Company referred to in the
definition of Debt other than Clause (vi) and (d) all renewals, extensions,
modifications, refinancings, refundings and amendments of any Debt referred to
in Clause (a), (b) or (c) above, unless but only to the extent, in the case of
any particular Debt referred to in Clause (a), (b) or (c) above, (A) such Debt
is owed to a Subsidiary of the Company, (B) the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Debt is not superior in right of payment to the Securities,
(C) such Debt is Incurred in violation of the Indenture, or (D) such Debt is
subordinate in right of payment in respect to any other Debt of the Company.
"Senior Nonmonetary Default" has the meaning specified in Section
1203.
"Senior Payment Default" has the meaning specified in Section 1203.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 308.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Step-Down Date" has the meaning set forth in the form of the
Security contained in Section 202.
"Step-Up" has the meaning set forth in the form of the Security
contained in Section 202.
"Subordinated Debt" means Debt of the Company as to which the
payment of principal of (and premium, if any) and interest and other payment
obligations in respect of such Debt shall be subordinate to the prior payment in
full of the Securities to at least the following extent: (i) no
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payments of principal of (or premium, if any) or interest on or otherwise due in
respect of such Debt may be permitted for so long as any default in the payment
of principal (or premium, if any) or interest on the Securities exists; and (ii)
in the event that any other default that with the passing of time or the giving
of notice, or both, would constitute an event of default exists with respect to
the Securities, upon notice by 25% or more in principal amount of the Securities
to the Trustee, the Trustee shall have the right to give notice to the Company
and the holders of such Debt (or trustees or agents therefor) of a payment
blockage, and thereafter no payments of principal of (or premium, if any) or
interest on or otherwise due in respect of such Debt may be made for a period of
179 days from the date of such notice. Notwithstanding the foregoing, the
12-3/4% Exchange Debentures and the 7.75% Exchange Debentures shall constitute
Subordinated Debt unless and until the terms thereof are amended or modified
after the date of this Indenture.
"Subsidiary" of any Person means (i) a corporation more than 50% of
the outstanding Voting Stock of which is owned, 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 other Person (other than
a corporation) 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 at least a majority ownership and power to direct the policies,
management and affairs thereof. Subsidiary shall not include an Unrestricted
Subsidiary created in accordance with the definition of Unrestricted Subsidiary.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purpose of this definition, any
Security authenticated and delivered under Section 307 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the
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Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act"
means, to the extent required by any such amendment, the Trust Indenture Act of
1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"U.S. Person" means (i) any individual resident in the United
States, (ii) any partnership or corporation organized or incorporated under the
laws of the United States, (iii) any estate of which an executor or
administrator is a U.S. Person (other than an estate governed by foreign law and
of which at least one executor or administrator is a non-U.S. Person who has
sole or shared investment discretion with respect to its assets), (iv) any trust
of which any trustee is a U.S. Person (other than a trust of which at least one
trustee is a non-U.S. Person who has sole or shared investment discretion with
respect to its assets and no beneficiary of the trust (and no settlor if the
Trust is revocable) is a U.S. Person), (v) any agency or branch of a foreign
entity located in the United States, (vi) any non-discretionary or similar
account (other than an estate or trust) held by a dealer or other fiduciary for
the benefit or account of a U.S. Person, (vii) any discretionary or similar
account (other than an estate or trust) held by a dealer or other fiduciary
organized, incorporated or (if an individual) resident in the United States
(other than such an account held for the benefit or account of a non-U.S.
Person), (viii) any partnership or corporation organized or incorporated under
the laws of a foreign jurisdiction and formed by a U.S. Person principally for
the purpose of investing in securities not registered under the Securities Act
(unless it is organized or incorporated, and owned, by accredited investors
within the meaning of Rule 501(a) under the Securities Act who are not natural
persons, estates or trusts); provided, however, that the term "U.S. Person" does
not include (A) a branch or agency of a U.S. Person that is located and
operating outside the United States for valid business purposes as a locally
regulated branch or agency engaged in the banking or insurance business, (B) any
employee benefit plan established and administered in accordance with the law,
customary practices and documentation of a foreign country and (C) the
international
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organizations set forth in Section 902(o)(7) of Regulation S under the
Securities Act and any other similar international organizations, and their
agencies, affiliates and pension plans.
"Unrestricted Subsidiary" means (1) any Subsidiary designated as
such by the Board of Directors as set forth below where (a) neither the Company
nor any of its other Subsidiaries (other than another Unrestricted Subsidiary)
(i) provides credit support for, or Guarantee of, any Debt of such Subsidiary
(including any undertaking, agreement or instrument evidencing such Debt) or
(ii) is directly or indirectly liable for any Debt of such Subsidiary, and (b)
no default with respect to any Debt of such Subsidiary (including any right
which the holders thereof may have to take enforcement action against such
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Debt of the Company and its other Subsidiaries (other than another
Unrestricted Subsidiary) to declare a default on such other Debt or cause the
payment thereof to be accelerated or payable prior to its final scheduled
maturity, (2) any Subsidiary of the Company (other than a Subsidiary existing as
of the date of this Indenture or successor to any such Subsidiary) which at the
time of determination shall be an Unrestricted Subsidiary (as designated by the
Board of Directors, as provided below) and (3) any Subsidiary of an Unrestricted
Subsidiary where Clauses (a) and (b) are true with respect to such Subsidiary.
The Board of Directors may designate any Subsidiary to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, any other Subsidiary of the Company which is not a
Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted
Subsidiary, provided that either (x) the Subsidiary to be so designated has
total assets of $1,000 or less or (y) immediately after giving effect to such
designation, the ratio of the aggregate principal amount of Debt of the Company
and its Subsidiaries outstanding as of the most recent available balance sheet
to Pro Forma Consolidated Cash Flow for the preceding four full fiscal quarters,
determined on a pro forma basis as if such Subsidiary had been an Unrestricted
Subsidiary at the beginning of such four fiscal quarters, would be less than
6.5 to 1. The Board of Directors may designate any Unrestricted Subsidiary to be
a Subsidiary, provided that immediately after giving effect to such designation,
the ratio of the aggregate principal amount of Debt of the Company and its
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Subsidiaries outstanding as of the most recent available balance sheet to Pro
Forma Consolidated Cash Flow for the preceding four full fiscal quarters,
determined on a pro forma basis as if such Unrestricted Subsidiary had been a
Subsidiary at the beginning of such four fiscal quarters, would be less than 7.0
to 1. Any such designation by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" of any Person means Capital Stock of such Person
which ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee such certificates and opinions as may be required under the Trust
Indenture Act and under this Indenture. Each such certificate or opinion shall
be given in the form of an Officers' Certificate, if to be given by an officer
of the Company, or an Opinion of Counsel, if to be given by counsel, and shall
comply with the requirements of the Trust Indenture Act and any other
requirement set forth in this Indenture.
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Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(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 each such individual, 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
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
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 of an officer of the Company may be based, insofar
as it relates to legal matters, upon an opinion of counsel submitted therewith,
unless such officer knows, or in the exercise of reasonable care should know,
that the opinion with respect to the matters upon which his certificate is based
is erroneous. Any opinion of counsel may be based, insofar as it relates to
factual matters, upon
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a certificate of an officer or officers of the Company submitted therewith
stating the information on which counsel is relying, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate with
respect to such matters is 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 and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
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 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 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 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
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The ownership of Securities shall be proved by the Security
Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities, provided that the Company may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the
giving or making of any notice, declaration, request or direction referred to in
the next paragraph. If not set by the Company prior to the first solicitation of
a Holder made by any Person in respect of any such matter referred to in the
foregoing sentence, the record date for any such matter shall be the 30th day
(or, if later, the date of the most recent list of Holders required to be
provided pursuant to Section 701) prior to such first solicitation. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to take
the relevant action, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder unless
taken on or prior to the applicable Expiration Date by Holders of the requisite
principal amount of Outstanding Securities on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its
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own expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Trustee in writing
and to each Holder of Securities in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute proceedings referred
to in Section 507(2) or (iv) any direction referred to in Section 512. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this paragraph shall be construed to prevent the Trustee
from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be canceled
and of no effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Trustee, at the Company's
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Company in writing and to
each Holder of Securities in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the
party hereto which sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities in the manner set forth in Section
106, on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto which set such
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record date shall be deemed to have initially designated the 180th day after
such record date as the Expiration Date with respect thereto, subject to its
right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and 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,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if delivered in writing to the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Trustee Administration,
or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Security Register,
not later than the latest date (if
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any), and not earlier than the earliest date (if any), 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. 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 impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. The Application of Trust Indenture Act.
The Trust Indenture Act shall apply as a matter of contract to this
Indenture for purposes of interpretation, construction and defining the rights
and obligations here under. If any provision hereof limits, qualifies or
conflicts with a provision of the Trust Indenture Act that is required under
such Act to be a part of and govern this Indenture, the latter provision 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, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
SECTION 108. 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.
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SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities 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 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of the Senior Debt (subject to Article Twelve hereof) and
the Holders of Securities, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
conflicts of laws principles thereof.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Purchase Date or Stated Maturity of any Security shall not be a Business Day,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) 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,
Purchase Date or at the Stated Maturity, provided that no interest shall accrue
for the period from and after such Interest
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Payment Date, Redemption Date, Purchase Date or Stated Maturity, as the case may
be.
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally; Initial Forms of Rule 144A and Regulation S
Securities.
The Securities, the Exchange Securities and the Trustee's
certificates of authentication thereof shall be in substantially the forms set
forth in this Article, with such appropriate legends, insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner all as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
Upon their original issuance, Rule 144A Securities shall be issued
in the form of one or more Global Securities without interest coupons registered
in the name of DTC, as Depositary, or its nominee and deposited with the
Trustee, as custodian for DTC, in New York, New York, for credit by DTC to the
respective accounts of beneficial owners of the Securities represented thereby
(or such other accounts as they may direct). Such Global Securities, together
with their Successor Securities which are Global Securities other than the
Regulation S Global Security are collectively herein called the "Restricted
Global Security".
Upon their original issuance, Regulation S Securities (herein called
the "Regulation S Temporary Global Security") shall be issued in the form of a
single temporary Global Security without coupons registered in the name of
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DTC, as Depositary, or its nominee and deposited with the Trustee at its
Corporate Trust Office, as custodian for DTC, for credit to Morgan Guaranty
Trust Company of New York, Brussels Office, as operator of Euroclear, and Cedel
to the respective accounts of beneficial owners of the Securities represented
thereby (or such other accounts as they may direct) in accordance with the rules
thereof. Such Global Securities, together with their Successor Securities which
are Global Securities are collectively herein called the "Regulation S Global
Security".
Beneficial interests in the Regulation S Temporary Global Security
may only be held through Euroclear and Cedel until such interests are exchanged
for corresponding interests in an unrestricted Global Security as provided in
the next sentence. A holder of a beneficial interest in the Regulation S
Temporary Global Security must provide written certification to Euroclear or
Cedel, as the case may be, that the beneficial owner of the interest in such
Global Security is not a U.S. Person (an "Owner Securities Certification"), and
Euroclear or Cedel, as the case may be, must provide to the Trustee a similar
certificate in the form set forth in Annex C (a "Depositary Securities
Certification"), prior to (i) the payment of interest with respect to such
holder's beneficial interest in the Regulation S Temporary Global Security and
(ii) any exchange of such beneficial interest for a beneficial interest in the
Regulation S Global Security.
SECTION 202. Form of Face of Security.
[If a Global Security, then insert -- THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGEABLE IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO
TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[If a Global Security to be held by The Depository Trust Company,
then insert -- UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER
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OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT 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.]
[If the Original Securities, then insert -- THE SECURITIES EVIDENCED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933
(THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTOR (1) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903
OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) AND (B) BY SUBSEQUENT INVESTORS, AS SET FORTH IN (A)
ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES.]
[If the Security is a Regulation S Security, then insert -- THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD OR DELIVERED IN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OF BENEFIT OF, ANY U.S. PERSON, UNLESS THIS
SECURITY IS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS THEREOF IS AVAILABLE.]
[If the Security is a Regulation S Temporary Global Security, then
insert -- THIS SECURITY IS A REGULATION S TEMPORARY GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. INTERESTS IN THIS REGULATION S
TEMPORARY GLOBAL SECURITY MAY NOT BE OFFERED OR
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<PAGE>
SOLD TO A U.S. PERSON PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD (AS
DEFINED IN THE INDENTURE) EXCEPT IN CERTAIN LIMITED CIRCUMSTANCES IN ACCORDANCE
WITH THE TERMS OF THE INDENTURE.]
[If Original Securities, then insert -- 8 7/8% Series A Senior
Subordinated Securities due May 15, 2008]
No. __________ $________
Cusip No. ________
Granite Broadcasting Corporation, a corporation duly organized and
existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to __________________, or registered
assigns, the principal sum of ____ Dollars (such amount the "principal amount"
of this Security) [if the Security is a Global Security, then insert --, or
such other principal amount (which, when taken together with the principal
amounts of all other Outstanding Securities, shall not exceed $200,000,000 in
the aggregate at any one time) as may be set forth in the records of the trustee
hereinafter referred to in accordance with the Indenture,] on May 15, 2008, and
to pay interest thereon from May 11, 1998 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on May 15 and November 15 in each year, commencing November 15, 1998, at the
rate of 8 7/8% per annum, until the principal hereof is paid or made available
for payment [If Original Securities, then insert -- provided, however, that if
(i) the Company has not filed a registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), registering a security substantially
identical to this Security pursuant to an exchange offer (the "Exchange Offer")
(the "Exchange Registration Statement") by July 25, 1998, or (ii) the Exchange
Registration Statement relating to the Exchange Offer (or, in lieu thereof, a
registration statement registering this Security for resale (a "Resale
Registration Statement")) has not become or been declared effective by October
8, 1998 or (iii) the Exchange Offer has not been completed within 30 business
days after the date on which the Exchange Registration Statement has become or
been declared effective initially or (iv) either the Exchange Registration
Statement or, if applicable, the Resale Registration Statement is filed and
declared effective but
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<PAGE>
shall thereafter cease to be effective (except as specifically permitted
therein) without being succeeded immediately by an additional registration
statement filed and declared effective, in each case (i) through (iv) upon the
terms and conditions set forth in the Registration Rights Agreement dated as of
May 11, 1998, by and between the Company and the Holders from time to time of
the Securities (each such event referred to in clauses (i) through (iv), a
"Registration Default"), then the per annum interest rate borne by the
Securities shall increase (the "Step-Up") by 0.5% per annum until such time (the
"Step-Down Date") as no Registration Default is in effect (after which such
interest rate will be restored to its initial rate) and provided, further, that
if either the Exchange Offer has not been consummated or, if applicable, the
Resale Registration Statement has not become or been declared effective, in each
case by February 5, 1999, then the per annum rate of the Securities shall
increase (the "Second Step-Up") by an additional 0.5% per annum until such time
(the "Second StepDown Date") as the Company consummates the Exchange Offer or,
if applicable, the Resale Registration Statement becomes or has been declared
effective (after which such interest rate will be restored to its initial rate).
Interest accruing as a result of the Step-Up or the Second Step-Up is referred
to herein as "Additional Interest." Accrued Additional Interest shall be paid
semi-annually on the Interest Payment Dates; and the amount of accrued
Additional Interest shall be determined on the basis of the number of days
actually elapsed. Any accrued and unpaid interest (including Additional
Interest) on this Security upon the issuance of an Exchange Security in exchange
for this Security shall cease to be payable to the Holder hereof but such
accrued and unpaid interest (including Additional Interest) shall be payable on
the next Interest Payment Date for such Exchange Security to the Holder thereof
on the related Regular Record Date.] The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the May 1 or November 1
(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 will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or more
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<PAGE>
Predecessor Securities) 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 whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on
this Security will be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York, 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
at the option of the Company payment of interest may be made by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated: _______________________
GRANITE BROADCASTING CORPORATION
[Seal] By
------------------------------
Attest:
- ------------------------------
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities of the
Company designated as its 8 7/8% Series A Senior Subordinated Notes due May 15,
2008(the "Securities") issued under an Indenture, dated as of May 11,
1998(herein called the "Indenture"), between the Company and The Bank of New
York, as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture). The Securities are limited in aggregate principal
amount to $200,000,000. Reference is hereby made to the Indenture for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee, the holders of the Senior Debt and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered.
The Securities are subject to redemption upon not less than 30 nor
more than 60 days' notice by mail in the event that on or before May 15, 2001
the Company receives net proceeds from any sale of its Capital Stock (other than
Disqualified Stock) in one or more offerings, in which case the Company may, at
its option and from time to time, use all or a portion of any such net proceeds
to redeem Securities in a principal amount of at least $5,000,000 and up to an
aggregate amount equal to 35% of the Original Securities, provided, however,
that Securities in an amount equal to at least 65% of the Original Securities
remain outstanding after each such redemption. Any such redemption
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<PAGE>
must occur on a Redemption Date within 75 days of any such sale and upon not
less than 30 nor more than 60 days' notice mailed to each Holder of Securities
to be redeemed at such Holder's address appearing in the Security Register, at a
Redemption Price of 108.875% of the principal amount of the Securities plus
accrued interest to but excluding the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date).
In addition, the Securities are subject to redemption upon not less
than 30 nor more than 60 days' notice mailed to each Holder of Securities to be
redeemed at the address appearing in the Security Register, in amounts of $1,000
or an integral multiple of $1,000, at any time on or after May 15, 2003 and
prior to maturity, as a whole or in part, at the election of the Company, at the
following Redemption Prices (expressed as percentages of the principal amount),
if redeemed during the 12-month period beginning May 15 of each of the years
indicated below plus, in each case, accrued interest thereon to, but excluding,
the date of redemption:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2003 104.437%
2004 102.958%
2005 101.479%
2006 100%
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption with accrued interest to but
excluding the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.
In the case of redemption by the Company, the Securities will be
redeemed pro rata if less than all the Securities are to be redeemed.
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<PAGE>
The Securities do not have the benefit of any sinking fund
obligations.
The Indenture provides that, subject to certain conditions, if (i) a
Change of Control (as defined in the Indenture) occurs or (ii) certain Net
Available Proceeds are available to the Company as a result of any Asset
Disposition, the Company shall be required to make an Offer to Purchase for all
or a specified portion of the Securities.
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Security in part only, a new Security or Securities of like
tenor for the unredeemed or unpurchased portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Debt, and this Security is issued subject to
the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. The Exchange Securities and the Original Securities shall rank pari
passu.
If an Event of Default shall occur and be continuing, the principal
of all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (i)
the entire indebtedness of this Security, (ii) certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth therein or (iii) the subordination provisions
contained in the Indenture.
Unless the context otherwise requires, the Original Securities and
the Exchange Securities shall constitute one series for all purposes under the
Indenture, including without limitation, amendments, waivers, redemptions and
Offers to Purchase.
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<PAGE>
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security 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
Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and like tenor
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like tenor and aggregate principal
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<PAGE>
amount of Securities of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security 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 Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
This Security shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflicts of laws
principles thereof.
Interest on this Security shall be computed on the basis of a
360-day year of twelve 30-day months, provided, however, that Additional
Interest shall be computed on the basis of a 365- or 366-day year, as the case
may be, and the number of days actually elapsed.
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<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Sections 1013 or 1017 of the Indenture, check the box:
|_|
If you want to elect to have only a part of this Security purchased
by the Company pursuant to Sections 1013 or 1017 of the Indenture, state the
amount: $___________
Dated:________________ Your Signature:____________________
(Sign exactly as name appears on the other
side of this Security)
Signature Guarantee:____________________________________________________________
Signature must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Security
Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Security Registrar in
addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as
amended
SECTION 204. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
as Trustee
By
---------------------------
Authorized Signatory
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<PAGE>
ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $200,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section 304,
305, 306, 307, 906 or 1108 or in connection with an Offer to Purchase pursuant
to Section 1013 or 1017. After the Initial Issue Date and prior to the
expiration of the Exchange Offer, the Company may issue Additional Original
Securities from time to time, pursuant to a Board Resolution, subject to Section
303, included in an Officers' Certificate delivered to the Trustee, in
authorized denominations; provided the aggregate principal amount of the
Securities Outstanding after such issuance does not exceed $200,000,000. The
Company may issue Exchange Securities from time to time pursuant to an Exchange
Offer or otherwise, in each case pursuant to a Board Resolution, subject to
Section 303, included in an Officers' Certificate delivered to the Trustee, in
authorized denominations in exchange for a like principal amount of the Original
Securities. Upon any such exchange the Securities shall be canceled in
accordance with Section 310 and shall no longer be deemed Outstanding for any
purpose. In no event shall the aggregate principal amount of the Securities and
Exchange Securities Outstanding exceed $200,000,000.
The Securities shall be known and designated as the "8 7/8% Senior
Subordinated Securities due May 15, 2008" of the Company. The Stated Maturity of
the Securities shall be May 15, 2008. The Securities shall bear interest at the
rate of 8 7/8% per annum (subject, in the case of the Original Securities, to
increase at the rate of 0.50% or 1.00% per annum, as provided in such Original
Security), from May 11, 1998 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, as the case may be, payable
semi-annually on May 15 and November 15, commencing November 15, 1998 until the
principal thereof is paid or made available for payment.
The principal of (and premium, if any) and interest on the
Securities shall be payable at the corporate
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<PAGE>
trust office of the Trustee in the Borough of Manhattan, The City of New York,
New York, maintained for such purpose and at any other office or agency
maintained by the Company for such purpose; provided, however, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
The Securities shall be subject to repurchase by the Company
pursuant to an Offer to Purchase as provided in Sections 1013 and 1017 of the
Indenture.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall not have the benefit of any sinking fund
obligations.
The Securities shall be subordinated in right of payment of Senior
Debt as provided in Article Twelve and the Original Securities and the Exchange
Securities shall rank pari passu.
The Securities shall be subject to defeasance at the option of the
Company as provided in Article Thirteen.
Unless the context otherwise requires, the Original Securities and
the Exchange Securities shall constitute one series for all purposes under the
Indenture, including without limitation, amendments, waivers, redemptions and
Offers to Purchase.
SECTION 302. Denominations.
The Securities shall be issuable only in registered form without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by its
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<PAGE>
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such Securities
or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
At any time and from time to time after the execution and delivery
of this Indenture, and (i) prior to the expiration of the Exchange Offer, in the
case of Additional Original Securities or (ii) after the effectiveness of a
Registration Statement under the Securities Act with respect thereto, in the
case of Exchange Securities, the Company may deliver Additional Original
Securities or Exchange Securities, as the case may be, executed by the Company
to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Additional Original Securities or Exchange
Securities, as applicable, and a like principal amount of Original Securities
for cancellation in accordance with Section 310 of this Indenture, in the case
of Exchange Securities, and the Trustee in accordance with the Company Order
shall authenticate and deliver such Securities. In authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 601) shall be fully protected in relying upon, an Opinion of
Counsel stating,
(a) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 301, that such form
has been
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<PAGE>
established in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been established in conformity with the provisions of this Indenture;
(c) that such Securities have been duly and validly issued in
accordance with the terms of the Indenture, and are entitled to all the
rights and benefits set forth herein;
(d) that all conditions precedent to the authentication and delivery
of such Securities have been complied with and that such Securities, when
authenticated and delivered by the Trustee and issued by the Company in
the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting the enforcement of creditors'
rights and to general equity principles; and
(e) that the issuance of the Exchange Securities in exchange for the
Original Securities has been effected in compliance with the Securities
Act of 1933, as amended.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Exchange
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such
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<PAGE>
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like tenor and principal amount
of definitive Securities of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 305. Global Securities.
(a) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a
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<PAGE>
Global Security in whole or in part may be registered, in the name of any Person
other than the Depositary for such Global Security or a nominee thereof unless
(i) such Depositary (A) has notified the Company that it is unwilling or unable
to continue as Depositary for such Global Security or (B) has ceased to be a
clearing agency registered as such under the Exchange Act, and in either case
the Company fails to appoint a successor Depositary within 90 days, (ii) the
Company executes and delivers to the Trustee a Company Order stating that it
elects to cause the issuance of the Securities in certificated form and that all
Global Securities shall be exchanged in whole for Securities that are not Global
Securities (in which case such exchange shall be effected by the Trustee) or
(iii) there shall have occurred and be continuing an Event of Default or any
Event which after notice or lapse of time or both would be an Event of Default
with respect to the Securities.
(c) If any Global Security is to be exchanged for other Securities
or canceled in whole, it shall be surrendered by or on behalf of the Depositary
or its nominee to the Trustee, as Security Registrar, for exchange or
cancellation as provided in this Article Three. If any Global Security is to be
exchanged for other Securities or canceled in part, or if another Security is to
be exchanged in whole or in part for a beneficial interest in any Global
Security, then either (i) such Global Security shall be so surrendered for
exchange or cancellation as provided in this Article Three or (ii) the principal
amount thereof shall be reduced or increased by an amount equal to the portion
thereof to be so exchanged or canceled, or equal to the principal amount of such
other Security to be so exchanged for a beneficial interest therein, as the case
may be, by means of an appropriate adjustment made on the records of the
Trustee, as Security Registrar, whereupon the Trustee, in accordance with the
Applicable Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Security, the Trustee shall, subject to
Section 306(c) and as otherwise provided in this Article Three, authenticate and
deliver any Securities issuable in exchange for such Global Security (or any
portion thereof) to or upon the order of the Company, and registered in such
names as may be directed by, the Depositary or its authorized representative.
Upon the request of the Trustee in connection with the occurrence of any of the
events specified in the preceding paragraph, the
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<PAGE>
Company shall promptly make available to the Trustee a reasonable supply of
Securities that are not in the form of Global Securities. The Trustee shall be
entitled to rely upon any order, direction or request of the Depositary or its
authorized representative which is given or made pursuant to this Article Three
if such order, direction or request is given or made in accordance with the
Applicable Procedures.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article Three or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global Security,
unless such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof.
(e) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under the
Indenture and the Securities, and owners of beneficial interests in a Global
Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members.
SECTION 306. Registration, Registration of Transfer and Exchange Generally;
Restrictions on Transfer and Exchange; Securities Act Legends.
(a) Registration, Registration of Transfer and Exchange Generally.
The Company shall cause to be kept at the Corporate Trust Office of the Trustee
a register (the register maintained in such office and in any other office or
agency of the Company designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers and exchanges of Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers and exchanges of Securities as
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herein provided. Such Security Register shall distinguish between Original
Securities and Exchange Securities.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, and provided that the other requirements of this Section 306 have been
satisfied, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations, of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture.
At the option of the Holder, and subject to the other provisions of
this Section 306, Securities may be exchanged for other Securities of any
authorized denominations, of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any Securities are
so surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the same
debt, and (except for the differences between Original Securities and Exchange
Securities provided for herein) entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to the Holder for any registration
of transfer or exchange of Securities, 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 Securities, other
than exchanges pursuant to Section 304,
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906 or 1108 or in accordance with any Offer to Purchase pursuant to Section 1013
and 1017 not involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 1104 and ending at the close
of business on the day of such mailing, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Indenture or the Securities, transfers and exchanges of
Securities and beneficial interests in a Global Security of the kinds specified
in this Section 306(b) shall be made only in accordance with this Section
306(b).
(i) Restricted Global Security to Regulation S Temporary
Global Security or Regulation S Global Security. If the owner of a
beneficial interest in the Restricted Global Security wishes at any time
to transfer such interest to a Person who wishes to acquire the same in
the form of a beneficial interest in the Regulation S Temporary Global
Security (if before the expiration of the Restricted Period) or in the
Regulation S Global Security (if thereafter), such transfer may be
effected only in accordance with the provisions of this Clause (b)(i)
subject to the Applicable Procedures. Upon receipt by the Trustee, as
Security Registrar, of (A) an order given by the Depositary or its
authorized representative directing that a beneficial interest in the
Regulation S Temporary Global Security or Regulation S Global Security (as
applicable) in a specified principal amount be credited to a specified
agent member's account and that a beneficial interest in the Restricted
Global Security in an equal principal amount be debited from another
specified agent member's account and (B) a Regulation S Certificate,
substantially in the form attached hereto as Annex A duly executed by the
owner of such beneficial interest in the Restricted Global Security or his
attorney duly authorized in writing, then the Trustee, as Security
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Registrar but subject to Clause (b)(iv) below, shall reduce the principal
amount of the Restricted Global Security and increase the principal amount
of the Regulation S Temporary Global Security or Regulation S Global
Security (as applicable) by such specified principal amount as provided in
Section 306(b).
(ii) Regulation S Temporary Global Security to Restricted
Global Security. If the owner of a beneficial interest in the Regulation S
Temporary Global Security wishes at any time to transfer such interest to
a Person who wishes to acquire the same in the form of a beneficial
interest in the Restricted Global Security, such transfer may be effected
only in accordance with this Clause (b)(ii) and subject to the Applicable
Procedures. Upon receipt by the Trustee, as Security Registrar, of (A) an
order given by the Depositary or its authorized representative directing
that a beneficial interest in the Restricted Global Security in a
specified principal amount be credited to a specified Agent Member's
account and that a beneficial interest in the Regulation S Temporary
Global Security in an equal principal amount be debited from another
specified Agent Member's account and (B) a Restricted Securities
Certificate, substantially in the form attached hereto as Annex B duly
executed by the owner of such beneficial interest in the Regulation S
Temporary Global Security or his attorney duly authorized in writing, then
the Trustee, as Security Registrar, shall reduce the principal amount of
the Regulation S Temporary Global Security and increase the principal
amount of the Restricted Global Security by such specified principal
amount as provided in Section 306(b).
(iii) Exchanges between Global Security and Non-Global
Security. A beneficial interest in a Global Security may be exchanged for
a Security that is not a Global Security as provided in Section 306,
provided that, if such interest is a beneficial interest in the Restricted
Global Security, or if such interest is a beneficial interest in the
Regulation S Temporary Global Security, then such interest shall be
exchanged for a Restricted Security (subject in each case to Section
305(b)).
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(iv) Regulation S Temporary Global Security to be Held Through
Euroclear or Cedel during Restricted Period. The Company shall use its
best efforts to cause the Depositary to ensure that beneficial interests
in the Regulation S Temporary Global Security may be held only in or
through accounts maintained at the Depositary by Euroclear or Cedel (or by
Agent Members acting for the account thereof), and no person shall be
entitled to effect any transfer or exchange that would result in any such
interest being held otherwise than in or through such an account; provided
that this Clause (b)(iv) shall not prohibit any transfer or exchange of
such an interest in accordance with Clause (b)(ii) above.
(c) Securities Act Legends. Rule 144A Securities and their
respective Successor Securities shall bear a Restricted Securities Legend, and
Regulation S Securities and their Successor Securities shall bear a Regulation S
Legend, subject to the following:
(i) subject to the following Clauses of this Section 306(c), a
Security or any portion thereof which is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear the
Securities Act Legend borne by such Global Security while represented
thereby;
(ii) subject to the following Clauses of this Section 306(c),
a new Security which is not a Global Security and is issued in exchange
for another Security (including a Global Security) or any portion thereof,
upon transfer or otherwise, shall bear the Securities Act Legend borne by
such other Security, provided that, if such new Security is required
pursuant to Section 306(b)(iii) to be issued in the form of a Restricted
Security, it shall bear a Restricted Securities Legend and, if such new
Security is so required to be issued in the form of a Regulation S
Security, it shall bear a Regulation S Legend;
(iii) Exchange Securities shall not bear a Securities Act
Legend;
(iv) at any time after the Securities may be freely
transferred without registration under the Securities Act or without being
subject to transfer
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restrictions pursuant to the Securities Act, a new Security which does not
bear a Securities Act Legend may be issued in exchange for or in lieu of a
Security (other than a Global Security) or any portion thereof which bears
such a legend if the Trustee has received an Unrestricted Securities
Certificate, substantially in the form attached hereto as Annex C duly
executed by the Holder of such legended Security or his attorney duly
authorized in writing, and after such date and receipt of such
certificate, the Trustee shall authenticate and deliver such a new
Security in exchange for or in lieu of such other Security as provided in
this Article Three;
(v) a new Security which does not bear a Securities Act Legend
may be issued in exchange for or in lieu of a Security (other than a
Global Security) or any portion thereof which bears such a legend if, in
the Company's judgment, placing such a legend upon such new Security is
not necessary to ensure compliance with the registration requirements of
the Securities Act, and the Trustee, at the direction of the Company,
shall authenticate and deliver such a new Security as provided in this
Article Three; and
(vi) notwithstanding the foregoing provisions of this Section
306(c), a Successor Security of a Security that does not bear a particular
form of Securities Act Legend shall not bear such form of legend unless
the Company has reasonable cause to believe that such Successor Security
is a "restricted security" within the meaning of Rule 144, in which case
the Trustee, at the direction of the Company, shall authenticate and
deliver a new Security bearing a Restricted Securities Legend in exchange
for such Successor Security as provided in this Article Three.
SECTION 307. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
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If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by either of
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon the
Company's written request the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security 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 new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities 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 Securities.
SECTION 308. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is regis-
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tered at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) 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 Security 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 Clause 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 pro posed 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 of such
Special Record Date and, in the name and at the expense of the
Company, 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 his address
as it appears in
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the Security 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 Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) 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 Securities may be listed, and
upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment
pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 309. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of (and premium,
if any) and (subject to Section 308) interest on such Security and for all other
purposes whatsoever, whether or not such Security 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.
None of the Company, the Trustee or any agent of the Company or the
Trustee shall have any responsibility or liability for any aspect of the records
relating to or
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payments made on account of beneficial ownership interests of a Security in
global form, or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests. Notwithstanding the foregoing, with
respect to any Security in global form, nothing herein shall prevent the Company
or the Trustee, or any agent of the Company or the Trustee, from giving effect
to any written certification, proxy or other authorization furnished by any
Depositary (or its nominee), as a Holder, with respect to such Security in
global form or impair, as between such Depositary and owners of beneficial
interests in such Security in global form, the operation of customary practices
governing the exercise of the rights of such Depositary (or its nominee) as
Holder of such Security in global form.
SECTION 310. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer, exchange or pursuant to any Offer to Purchase pursuant to Section 1013
or 1017 shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee and shall be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly canceled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section, except as expressly permitted
by this Indenture. All canceled Securities held by the Trustee shall be disposed
of as directed by a Company Order, provided, however, that the Trustee may, but
shall not be required to, destroy such canceled Securities.
SECTION 311. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months, provided, however, that Additional
Interest on the Securities shall be computed on the basis of a 365- or 366-day
year, as the case may be, and the number of days actually elapsed.
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SECTION 312. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been
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 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
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(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
in trust for the purpose an amount sufficient to pay and discharge
the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal (and premium, if
any) and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) 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 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying
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Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest for whose payment such money has
been deposited with the Trustee.
ARTICLE FIVE
Remedies
SECTION 501. 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):
(1) default in the payment of any interest upon any Security when it
becomes due and payable, and continuance of such default for a period of
30 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security at its Maturity; or
(3) default in the payment of principal and interest pursuant to an
Offer to Purchase pursuant to Sections 1013 or 1017; or
(4) default in the performance, or breach, of Section 801; or
(5) default in the performance, or breach, of clause (i) or (ii) of
Section 1017(d); or
(6) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 60 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the
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Trustee by the Holders of at least 10% in principal amount of the
Outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(7) a default or defaults under any bond(s), debenture(s), note(s)
or other evidence(s) of indebtedness by the Company or any Subsidiary of
the Company or under any mortgage(s), indenture(s) or instrument(s) under
which there may be issued or by which there may be secured or evidenced
any indebtedness of such type by the Company or any such Subsidiary with a
principal amount then outstanding, individually or in the aggregate, in
excess of $5 million, whether such indebtedness now exists or shall
hereafter be created, which default or defaults shall constitute a failure
to pay in excess of $5 million of the principal of such indebtedness when
due at the final maturity thereof (which, for purposes of the Senior Loan
Agreement or any successor credit facility shall not include any interim
amortization payment on any term indebtedness prior to the final maturity
of such term indebtedness), or shall have resulted in excess of $5 million
of indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable; or
(8) a final judgment or final judgments for the payment of money are
entered against the Company or any Subsidiary in an aggregate amount in
excess of $3 million by a court or courts of competent jurisdiction, which
judgments remain undischarged or unbonded for a period (during which
execution shall not be effectively stayed) of 60 days after the right to
appeal all such judgments has expired; or
(9) the entry by a court having jurisdiction in the premises of (A)
a decree or order for relief in respect of the Company or any of its
Subsidiaries in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar
law or (B) a decree or order adjudging the Company or any of its
Subsidiaries a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of
or in respect of the Company or any of
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its Subsidiaries 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 of its Subsidiaries or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
(10) the commencement by the Company or any of its Subsidiaries of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect of
the Company or any of its Subsidiaries in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by
it of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any of its Subsidiaries or of any
substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking of
corporate action by the Company or any of its Subsidiaries in furtherance
of any such action.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 501(9) or (10)) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by
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Holders), and upon any such declaration such principal and any accrued interest
shall become immediately due and payable. If an Event of Default specified in
Section 501(9) or (10) occurs, the principal of and any accrued interest on the
Securities then Outstanding shall ipso facto become immediately due and payable
without any declaration or other Act on the part of the Trustee or any Holder.
At any time after such a 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 in this Article provided, the Holders of a
majority in principal amount of the Outstanding Securities, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, on) any Securities
which have become due otherwise than by such declaration of
acceleration (including any Securities required to have been
purchased on the Purchase Date pursuant to an Offer to Purchase made
by the Company) and interest thereon at the rate borne by the
Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for
a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof or, with respect to any
Security required to have been purchased pursuant to an Offer to Purchase
made by the Company, at the Purchase Date thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
provided by the Securities, 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 institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities 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 Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or
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agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys, securities or other property payable or deliverable upon the
exchange of the Securities or upon any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official 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 to 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 607.
No provision of this Indenture 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
Securities 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 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disburse-
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ments and advances of the Trustee, its agents and counsel, be for the ratable
benefit of the Holders of the Securities in respect of which such judgment has
been recovered.
SECTION 506. Application of Money Collected.
Subject to Article Twelve, 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 (or premium, if any) or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: To the extent provided in Article Twelve, to the holders of
Senior Debt in accordance with Article Twelve; and
THIRD: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal (and
premium, if any) and interest, respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security 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
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings
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in respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered and, if requested, provided
to the Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer and, if requested, provision of indemnity has failed to
institute any such proceeding; and
(5) 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 principal amount of the Outstanding Securities;
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 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, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 308) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date or, in the case of an Offer to Purchase made by the Company and required to
be accepted as to such Security, on the Purchase Date) and to institute suit for
the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
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SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture 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, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
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 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 307, 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 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
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 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.
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SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities 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 that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture or expose the Trustee to personal liability (as
determined in the sole discretion of the Trustee), and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities by
written notice to the Trustee waive any past default hereunder and its
consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to have
been purchased pursuant to an Offer to Purchase which has been made by the
Company), or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security 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 impair any right consequent thereon.
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SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs,
including reasonable counsel fees and expenses, against any such party litigant,
in the manner and to the extent provided in the Trust Indenture Act; provided,
that neither this Section nor the Trust Indenture Act shall be deemed to
authorize any court to require such an undertaking or to make such an assessment
in any suit instituted by the Trustee or the Company.
SECTION 515. Waiver of Stay or Extension 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 wherever
enacted, now or at any time hereafter in force, 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 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided
by this Indenture and the Trust Indenture Act. Notwithstanding the foregoing,
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 in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that repayment of such
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funds or adequate indemnity against such risk or liability is not reasonably
assured to it. 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.
SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default hereunder
as and to the extent provided by the Trust Indenture Act; provided, however,
that in the case of any default of the character specified in Section 501(5), no
such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, 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 may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
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(d) the Trustee may consult with counsel of its selection and the
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;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction reasonably satisfactory to
the Trustee;
(f) the Trustee 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,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney at the sole
cost of the Company and shall incur no liability of any kind by reason of
such investigation;
(g) the Trustee 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 or attorney appointed with due care by
it hereunder;
(h) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in accordance with the
direction of Holders of Outstanding Securities as provided in Sections
502, 512 and 513 hereof;
(i) the Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer
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or Responsible Officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(j) for all purposes under this Indenture, the Trustee shall not be
deemed to have notice of any Event of Default unless a Responsible Officer
of the Trustee has actual knowledge thereof or unless written notice of
any event which is in fact such a default is received by the Trustee at
the Corporate Trust Office of the Trustee, and such notice references the
Securities and this Indenture.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, 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 of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 608 and 613, may other-
wise deal with the Company with the same rights it would have if it were not
Trustee, Paying Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
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SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as
shall be agreed in writing between the Company and the Trustee for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify each of the Trustee or any predecessor Trustee for,
and to hold it harmless against, any and all loss, liability, damage,
claim or expense including taxes (other than taxes based on the income of
the Trustee) incurred without negligence or wilful misconduct on its part,
arising out of or in connection with the acceptance or administration of
this trust, including the costs and expenses of enforcing this Indenture
against the Company (including, without limitation, this Section 607) and
of defending itself against any claim (whether asserted by any Holder or
the Company) or liability in connection with the exercise or performance
of any of its powers or duties hereunder. The provisions of this Section
607 shall survive any termination of this Indenture and the resignation or
removal of the Trustee.
As security for the performance of the obligations of the Company
under this Section 607, the Trustee shall have a lien prior to the Securities
upon all property and funds held or collected by the Trustee, except funds held
in trust for the payment of principal of (and premium, if any) or interest on
particular Securities. The Trustee's right to receive payment of any amounts due
under this Section 607 shall not be subordinate to any other liability or
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indebtedness of the Company (even though the Securities may be so subordinated),
except that such rights of the Trustee under this Section 607 shall be
subordinated in right and time of payment to the payment in full of all
obligations of the Company under the Senior Loan Agreement including, without
limitation, the payment of all principal, interest, fees and expenses
thereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(9) or Section 501(10), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or State bankruptcy, insolvency or
other similar law.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and its Corporate
Trust Office in the Borough of Manhattan, The City of New York, New York. If
such Person publishes reports of condition at least annually, pursuant to law
or to the requirements of a 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 Person 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, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
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SECTION 610. Resignation and Removal; Appointment of Successor.
(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 611, at which
time the retiring Trustee shall be fully discharged from its obligations
hereunder. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 days after the giving of notice of
resignation or removal, the Trustee resigning or being removed may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company.
(c) The Trustee may be removed at any time by Act of the Holders of
a majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 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 of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others
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similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of 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, by a Board Resolution, 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 Securities
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 and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security 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.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. 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; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
all sums owing to the Trustee under Section 607, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such
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successor Trustee all property and money held by such retiring Trustee
hereunder. 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, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
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 the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided that
such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
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ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 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
(b) at such other times as the Trustee may request in writing,
within 30 days after the 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;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of
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either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
SECTION 703. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee
shall, within sixty days after each May 15 following the date of this Indenture
deliver to Holders a brief report, dated as of such May 15, which complies with
the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will promptly notify the Trustee when the Securities are listed on any
stock exchange.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
Delivery of such reports, information and documents to the Trustee
shall be for informational purposes only and the Trustee's receipt of such shall
not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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SECTION 705. Officers' Certificate with Respect to Change in Interest Rates.
Within five days after any Step-Up, a Second Step-Up or Step-Down
Date, the Company shall deliver an Officers' Certificate to the Trustee stating
the new interest rate and the date on which it became effective.
ARTICLE EIGHT
Merger, Consolidation, Etc.
SECTION 801. Mergers, Consolidations and Certain Sales of Assets.
The Company (i) shall not consolidate with or merge into any other
Person or permit any other Person to consolidate with or merge into the Company
or any Subsidiary of the Company in a transaction in which such Subsidiary
remains a Subsidiary of the Company and (ii) shall not, directly or indirectly,
transfer, convey, sell, lease or otherwise dispose of all or substantially all
of its properties and assets as an entirety, unless, in any such transaction
specified in Clause (i) or (ii):
(1) immediately after giving effect to such transaction and treating
any Debt that becomes an obligation of the Company or a Subsidiary of the
Company, as a result of such transaction, as having been Incurred by the
Company or such Subsidiary at the time of the transaction, no Event of
Default, and no event that, with the passing of time or the giving of
notice, or both, would become an Event of Default, shall have occurred and
be continuing;
(2) in case the Company shall consolidate with or merge with or into
another Person or shall directly or indirectly transfer, convey, sell,
lease or otherwise dispose of all or substantially all of its properties
or assets as an entirety, the Person formed by such consolidation or into
which the Company is merged or the Person which acquires by transfer,
conveyance, sale, lease or otherwise the assets of the Company
substantially as an entirety (for purposes of this Section 801, a
"Successor Company") shall be a corpora-
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tion, partnership, or trust and shall be organized and validly existing
under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supple-
mental hereto, executed and delivered to the Trustee in form satisfactory
to the Trustee, the due and punctual payment of the principal of (and
premium, if any) and interest on all the Securities and the performance of
every covenant of this Indenture on the part of the Company to be
performed or observed;
(3) immediately after giving effect to such transaction, the Company
or, if applicable, the Successor to the Company would have a ratio of
aggregate principal amount of Debt of the Company and its Subsidiaries
outstanding as of the most recent available balance sheet to Pro Forma
Consolidated Cash Flow for the preceding four fiscal quarters, determined
on a pro forma basis as if such transaction had taken place and the
proceeds therefrom had been applied at the beginning of such four fiscal
quarters, of less than 7.0 to 1;
(4) if, as a result of any such transaction, property and assets of
the Company or any Subsidiary of the Company would become subject to a
Lien which would not be permitted by Section 1015, the Company or, if
applicable, the Successor Company, as the case may be, shall take such
steps as shall be necessary effectively to secure the Securities equally
and ratably with (or prior to) Debt secured by such Lien; and
(5) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each in form and substance
satisfactory to the Trustee stating that such consolidation, merger,
conveyance, transfer, lease or acquisition and, if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture, complies with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with, and, with respect to such Officers' Certificate, setting
forth the manner of determination of the Pro Forma Consolidated Cash Flow
in accordance with Clause (3) of Section 801, of the Company or, if
applicable, of the Successor Company as required pursuant to the
foregoing.
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SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
with or into, any other Person or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 801, the successor Person formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) 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
(3) to secure the Securities pursuant to the requirements of Section
1015 or otherwise; or
(4) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to comply with any requirement of the
Commission in
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order to effect qualification of this Indenture under the Trust Indenture
Act in connection with the issuance of Exchange Securities or thereafter
to maintain the qualification of this Indenture under the Trust Indenture
Act; or
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions
of this Indenture, provided that such action pursuant to this Clause (5)
shall not adversely affect the interests of the Holders in any material
respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable thereon, or
change the place of payment where, or the coin or currency in which, any
Security or any premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date) or, in the case of an Offer to Purchase which
has been made, on or after the applicable Purchase Date, or
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(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1020, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, or
(4) modify any of the provisions of this Indenture relating to the
subordination of the Securities in a manner adverse to the Holders, or
(5) following the making of an Offer with respect to an Offer to
Purchase pursuant to Sections 1013 or 1017, modify the provisions of this
Indenture with respect to such Offer to Purchase in a manner adverse to
such Holder.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
SECTION 907. Subordination Impaired.
No such supplemental indenture shall directly or indirectly modify
the provisions of Article Twelve in any manner which might terminate or impair
the rights of the Senior Debt pursuant to such subordination provisions.
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ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of
New York, New York, an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, 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 the Borough of Manhattan, The City of New
York, New York) where the Securities may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; 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, The City of New York, New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
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SECTION 1003. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of (and premium, if any) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal (and
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 in writing of its action or failure so to act. As provided in
Section 504, upon any bankruptcy or reorganization proceeding relative to the
Company, the Trustee shall serve as the Paying Agent for the Securities.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee in writing of its action or failure so to act. As
provided in Section 504, upon any bankruptcy or reorganization proceeding
relative to the Company, the Trustee shall serve as the Paying Agent for the
Securities.
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, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of
(and premium, if any) or interest on Securities in trust for the benefit
of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal (and premium, if any) or interest;
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(3) 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
(4) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture relating to the duties, rights and
obligations 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
by Company Order 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 (and premium,
if any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
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 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, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, New York, 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 publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
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SECTION 1004. 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
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right 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 that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 1005. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct
of its business or the business of any Subsidiary to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary 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 properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, as determined in the good faith judgment of the Board of
Directors evidenced by a Board Resolution, desirable in the conduct of its
business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
SECTION 1006. 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, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries, and (2) 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
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amount, applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 1007. Maintenance of Insurance.
The Company shall, and shall cause its Subsidiaries to, keep at all
times all of their properties which are of an insurable nature insured against
loss or damage with insurers believed by the Company to be responsible to the
extent that property of similar character is usually so insured by corporations
similarly situated and owning like properties in accordance with good business
practice.
SECTION 1008. Limitation on Company Debt.
The Company shall not, and shall not permit any Subsidiary of the
Company to, Incur any Debt unless, the ratio of (a) the aggregate principal
amount of Debt of the Company and its Subsidiaries outstanding as of the most
recent available balance sheet, after giving pro forma effect to the Incurrence
of such Debt and any other Debt Incurred since such balance sheet date and the
receipt and application of the proceeds thereof, to (b) Pro Forma Consolidated
Cash Flow for the preceding four full fiscal quarters, determined on a pro forma
basis as if such Debt and any other Debt Incurred since such balance sheet date
had been Incurred and the proceeds therefrom had been applied at the beginning
of such four fiscal quarters, would be less than 7.0 to 1.
Notwithstanding the foregoing paragraph, the Company or any
Subsidiary may Incur the following without regard to the foregoing limitation:
(i) Debt under the Credit Agreement not to exceed $150 million
aggregate principal amount at any one time outstanding, and any renewal,
extension, refinancing or refunding thereof in an amount which, together
with any amount remaining outstanding or available under the Credit
Agreement, does not exceed $150 million;
(ii) Debt evidenced by the 10 3/8% Notes, the 9 3/8% Notes and the
Securities;
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(iii) Debt owed by the Company to any Wholly Owned Subsidiary of the
Company or Debt owed by a Subsidiary of the Company to the Company or a
Wholly Owned Subsidiary of the Company; provided, however, that for
purposes of this Section 1008, upon either (x) the transfer or other
disposition by such Wholly Owned Subsidiary or the Company of any Debt so
permitted to a Person other than the Company or another Wholly Owned
Subsidiary of the Company or (y) the issuance (other than directors'
qualifying shares), sale, transfer or other disposition of shares of
Capital Stock (including by consolidation or merger) of such Wholly Owned
Subsidiary to a Person other than the Company or another such Wholly Owned
Subsidiary, the provisions of this Clause (iii) shall no longer be
applicable to such Debt and such Debt shall be deemed to have been
Incurred at the time of such transfer or other disposition;
(iv) Debt Incurred or Incurrable in respect of letters of credit,
bankers' acceptances or similar facilities not to exceed $2 million at any
one time outstanding;
(v) Capital Lease Obligations whose Attributable Value will not
exceed $5 million at any one time outstanding;
(vi) Debt arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business, provided that such
Debt is extinguished within two Business Days of its Incurrence;
(vii) Debt Incurred by a Person prior to the time (A) such Person
became a Subsidiary of the Company, (B) such Person merges into or
consolidates with a Subsidiary of the Company, (C) another Subsidiary of
the Company merges into or consolidates with such Person (in each case in
a transaction in which such Person becomes a Subsidiary of the Company) or
(D) such Person sells any of its property consisting of operating assets
to a Subsidiary of the Company subject to such Debt (whether such Debt is
recourse or non-recourse to such Subsidiary), provided that in any such
case such
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Debt was not Incurred in anticipation of such transaction;
(viii) Debt evidenced (A) by the 7.75% Exchange Debentures if the
7.75% Exchange Debentures are issued in exchange for Convertible Preferred
Stock or (B) by the 12 3/4% Exchangeable Debentures if the 12 3/4%
Exchangeable Debentures are issued in exchange for 12 3/4% Cumulative
Exchangeable Preferred Stock;
(ix) renewals, refundings, refinancings or extensions
(collectively, "refinancings") of the Credit Agreement, the 10 3/8% Notes,
the 9 3/8% Notes, the 7.75% Exchange Debentures, the 12 3/4% Exchangeable
Debentures, the Securities or any other outstanding Debt that is Incurred
in compliance with this Indenture (other than Debt referred to in Clauses
(i) through (vi) above) in an aggregate principal amount not to exceed the
principal amount of the Debt so refinanced plus the amount of any premium
required to be paid in connection with such refinancing pursuant to the
terms of the Debt refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such refinancing by
means of a tender offer or privately negotiated repurchase, plus the
amount of expenses of the Company Incurred in connection with such
refinancing, provided that (A) unless such refinancing Debt is Senior
Debt, such refinancing Debt does not have an Average Life less than the
Average Life of the Debt being refinanced and (B) if such Debt is
subordinated in right of payment to the Securities such refinancing Debt
is subordinated in right of payment to the Securities at least to the
extent that the Debt to be refinanced is subordinated to the Securities;
and
(x) Debt not otherwise permitted to be Incurred pursuant to Clauses
(i) through (ix) above, which, together with any other outstanding Debt
Incurred pursuant to this Clause (x), has an aggregate principal amount
not in excess of $15 million at any one time outstanding.
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SECTION 1009. Limitation on Certain Debt.
The Company shall not Incur or permit to exist any Debt that is by
its terms both (i) subordinate in right of payment to any Senior Debt and (ii)
senior in right of payment to the Securities, in each case other than by reason
of its maturity. The Company shall not Incur or permit to exist any Debt that is
by its terms subordinate in right of payment to the Securities unless such Debt
constitutes Subordinated Debt.
SECTION 1010. Limitation on Restricted Payments.
The Company (i) shall not, directly or indirectly, declare or pay
any dividend or make any distribution in respect of any class of its Capital
Stock or to the holders thereof (including pursuant to a merger or consolidation
of the Company, but excluding (a) any dividends or distributions payable solely
in shares of its Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to acquire its Capital Stock (other than Disqualified
Stock) and (b) dividends in accordance with the terms of the Convertible
Preferred Stock or 12 3/4% Cumulative Exchangeable Preferred Stock, as such
terms exist on the date of this Indenture), (ii) shall not, and shall not permit
any Subsidiary of the Company, directly or indirectly, to purchase, redeem or
otherwise acquire or retire for value (a) any Capital Stock of the Company or
(b) any options, warrants or rights to purchase or acquire shares of Capital
Stock of the Company (in the case of either (a) or (b) other than in exchange
for the Company's Capital Stock (other than Disqualified Stock) or options,
warrants or other rights to purchase the Company's Capital Stock (other than
Disqualified Stock)), (iii) shall not make, or permit any Subsidiary of the
Company to make, any loan, advance, capital contribution to or Investment in, or
payment on a Guarantee of any obligation of, any Affiliate, other than the
Company or a Wholly Owned Subsidiary, (iv) shall not, and shall not permit any
Subsidiary of the Company to, redeem, defease, repurchase, retire or otherwise
acquire or retire for value prior to any scheduled maturity, repayment or
sinking fund payment, Debt of the Company which is subordinated in right of
payment to the Securities (other than in exchange for the Company's Capital
Stock (other than Disqualified Stock) or options, warrants or other rights to
purchase the Company's Capital Stock (other than Disquali-
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fied Stock)), and (v) may not make any Investment in any Subsidiary that is
subject to an encumbrance or restriction prohibited under Section 1011 or any
Investments in any Unrestricted Subsidiary (the transactions described in
Clauses (i) through (v) being referred to herein as "Restricted Payments"), if
at the time thereof:
(1) an Event of Default, or an event that with the lapse of time or
the giving of notice, or both, would constitute an Event of Default, shall
have occurred and is continuing, or
(2) upon giving effect to such Restricted Payment, the aggregate of
all Restricted Payments from March 31, 1995 exceeds the sum of:
(a) the remainder of (x) 100% of cumulative Consolidated Cash Flow
(or, in the case Consolidated Cash Flow shall be negative,
less 100% of such deficit) from March 31, 1995 through the
last day of the last full fiscal quarter immediately preceding
such Restricted Payment minus (y) the product of 1.4 times the
cumulative Consolidated Interest Expense from March 31, 1995
through the last day of the last full fiscal quarter
immediately preceding such Restricted Payment; plus
(b) 100% of the aggregate net proceeds received by the Company
since March 31, 1995, including the fair value of property
other than cash (as determined in good faith by the Board of
Directors and evidenced by a Board Resolution filed with the
Trustee), from the issuance (other than to a Subsidiary of the
Company) of Capital Stock of the Company (other than
Disqualified Stock) and options, warrants, or other rights to
purchase or acquire Capital Stock of the Company (other than
Disqualified Stock and other than by a Subsidiary) and the
principal amount of Debt of the Company that has been
converted into Capital Stock of the Company (other than
Disqualified Stock and other than by a Subsidiary) since March
31, 1995; plus
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(c) an amount equal to the net reduction in Investments made by
the Company and its Subsidiaries subsequent to the date of
original issue of the Securities pursuant to Clauses (iii) and
(v) above in any Affiliate or Unrestricted Subsidiary or a
Subsidiary of the Company that is subject to an encumbrance or
restriction prohibited under Section 1011 upon the
disposition, liquidation, or repayment (including by way of
dividends) thereof, from redesignations of Unrestricted
Subsidiaries as Subsidiaries or from the removal of such
encumbrance or restriction, but only to the extent such
amounts are not included in Consolidated Net Income and not to
exceed in the case of any Person the amount of Investments
previously made by the Company and its Subsidiaries in such
Person; plus
(d) $15 million.
Notwithstanding the foregoing, so long as no Event of Default, or
event that with the passing of time or the giving of notice, or both, would
constitute an Event of Default, shall have occurred and is continuing or would
result therefrom, the Company and any Subsidiary of the Company may (i) pay any
dividend within 60 days after declaration thereof if at the declaration date
such payment would have complied with the foregoing provision; (ii) make any
payment in redemption of Capital Stock of the Company or options to purchase
such Capital Stock granted to officers or employees of the Company pursuant to
the Company's Stock Option Plan (or any successor plan) in connection with the
severance or termination of officers or employees (other than W. Don Cornwell
and Stuart J. Beck) not to exceed $1 million in the aggregate at any one time
outstanding; (iii) make Investments not to exceed $10 million in the aggregate
at any one time outstanding, in (A) any Subsidiary which is subject to any
encumbrance or restriction prohibited under Section 1011 or (B) any Unrestricted
Subsidiary; (iv) exchange its Convertible Preferred Stock or 12 3/4% Cumulative
Exchangeable Preferred Stock in accordance with their respective terms (as such
terms exist on the date of this Indenture) for the 7.75% Exchange Debentures or
the 12 3/4% Exchangeable Debentures, as the case may be, and make payments of
principal (premium, if any) and interest thereon in accordance with the 7.75%
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Exchange Debenture Indenture or the 12 3/4% Exchangeable Debenture Indenture, as
the case may be; (v) refinance any Debt otherwise permitted to be refinanced by
Clause (ix) of the second paragraph of Section 1008 or solely in exchange for or
out of the proceeds of the substantially concurrent sale (other than from or to
a Subsidiary of the Company) of shares of Capital Stock of the Company (other
than Disqualified Stock); (vi) purchase, redeem, acquire or retire any shares of
Capital Stock of the Company solely in exchange for or out of the proceeds of
the substantially concurrent sale (other than from or to a Subsidiary of the
Company) of shares of Capital Stock (other than Disqualified Stock) of the
Company; (vii) purchase or redeem any Debt from Net Available Proceeds to the
extent permitted or required under Section 1013; and (viii) make Permitted
Television Investments in an aggregate amount at any one time outstanding not to
exceed $25 million. Any payment or Investment made pursuant to Clause (i), (ii)
or (iii) of this paragraph shall be a Restricted Payment for purposes of
calculating aggregate Restricted Payments under the first paragraph of this
Section 1010.
SECTION 1011. Limitations Concerning Distributions by and Transfers to
Subsidiaries.
The Company shall not, and shall not permit any Subsidiary of the
Company to, suffer to exist any consensual encumbrance or restriction on the
ability of any Subsidiary of the Company: (i) to pay, directly or indirectly,
dividends or make any other distributions in respect of its Capital Stock or
pay any Debt or other obligation owed to the Company or any other Subsidiary of
the Company; (ii) to make loans or advances to the Company or any Subsidiary of
the Company; or (iii) to transfer any of its property or assets to the Company.
Notwithstanding the foregoing limitation, the Company may permit a Subsidiary to
suffer to exist any such encumbrance or restriction (A) included in any
instrument governing Debt Incurred by such Subsidiary pursuant to the first
paragraph of Section 1008 of the Indenture for the purpose of financing all or
part of the purchase price or cost of construction or improvements of property;
provided, however, that the principal amount of the Debt so Incurred does not
exceed the purchase price or cost of construction or improvements of such
property; (B) included in the Credit Agreement; (C) imposed by virtue of
applicable corporate law or regulation and relating solely
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to the payment of dividends or distributions to shareholders; (D) pursuant to an
agreement relating to any Debt Incurred by a Person prior to the date on which
such Person became a Subsidiary of the Company and outstanding on such date and
not Incurred in anticipation of becoming a Subsidiary; (E) with respect to
restrictions of the nature described in Clause (iii) above, included in a
contract entered into in the ordinary course of business and consistent with
past practices that contains provisions restricting the assignment of such
contract; (F) pursuant to an agreement effecting a renewal, refunding or
extension of Debt Incurred pursuant to an agreement referred to in Clause (A),
(B) or (D) above; provided, however, that the provisions contained in such
renewal, refunding or extension agreement relating to such encumbrance or
restriction are no more restrictive in any material respect than the provisions
contained in the agreement the subject thereof, as determined in good faith by
the Board of Directors and evidenced by a Board Resolution, or (G) included in
any instrument governing Capital Lease Obligations whose Attributable Value will
not exceed $5 million in the aggregate at any one time outstanding or included
in any instrument governing a Sale and Leaseback Transaction whose Attributable
Value does not exceed $2 million and the Attributable Value of all such Sale and
Leaseback Transactions entered into since the date of this Indenture and
otherwise prohibited by this Indenture does not exceed $5 million in the
aggregate, provided that in each case, after giving effect to the Incurrence of
such Capital Lease Obligation or Sale and Leaseback and the receipt and
application of the proceeds thereof, the ratio of the aggregate principal amount
of Debt of the Company and its Subsidiaries outstanding as of the most recent
available balance sheet to Pro Forma Consolidated Cash Flow for the preceding
four full fiscal quarters, determined on a pro forma basis as if such Capital
Lease Obligation had been Incurred, or such Sale and Leaseback Transaction had
taken place, and the proceeds therefrom had been applied at the beginning of
such four fiscal quarters, would be less than 7.0 to 1.
SECTION 1012. Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any Subsidiary of the
Company to, directly or indirectly, enter into any transaction after the date of
this Indenture
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(including, without limitation, the purchase, sale, lease or exchange of
property, the rendering of any service or the making of any loan or advance, but
excluding transactions between the Company and Wholly Owned Subsidiaries), with
any Affiliate, unless a majority of the disinterested members of the Board of
Directors determines in its reasonable good faith judgment and which
determination shall be evidenced by a Board Resolution filed with the Trustee
that:
(1) the terms of such transaction are in the best interests of the
Company or such Subsidiary; and
(2) such transaction is on terms no less favorable to the Company or
such Subsidiary than those that could be obtained in a comparable
arm's-length transaction with an entity that is not an Affiliate.
Notwithstanding the foregoing, the Company shall not be required to
file any Board Resolution referred to in the preceding paragraph with respect to
matters solely concerning the compensation of employees.
SECTION 1013. Limitation on Certain Asset Dispositions.
(a) The Company shall not, and shall not permit any Subsidiary to,
make an Asset Disposition in one or more transactions in any fiscal year unless
(i) the Company (or the Subsidiary, as the case may be) receives consideration
at the time of such sale or other disposition at least equal to the fair market
value for the assets sold or otherwise disposed of (which shall be as determined
in good faith by the Board of Directors, evidenced by a Board Resolution), (ii)
at least 85% of the consideration for such disposition shall consist of cash or
readily marketable cash equivalents or the assumption of Debt of the Company or
a Subsidiary or other obligations relating to such assets and a release from all
liability on the Debt or other obligations assumed, and (iii) all Net Available
Proceeds of such disposition and from the sale of any marketable cash
equivalents received thereby, less any amounts invested as described in the
second sentence of the following paragraph, are applied (A) first, within 120
days of such disposition, to the reduction of any obligations then outstanding
under the Credit Agreement (or any successor credit facility) to the extent the
terms of such Credit Agreement (or successor credit facility) require such
application or prohibit prepayment of the Securities; (B) second, within 120
days
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of such disposition, to the repayment of any other Senior Debt to the extent the
terms of such Senior Debt require such application or prohibit prepayment of the
Securities; (C) third, to the extent of any remaining Net Available Proceeds and
so long as any 10 3/8% Notes are outstanding, to make an offer to purchase the
10 3/8% Notes in accordance with the requirements of the 10 3/8% Note Indenture;
(D) fourth, to the extent of any remaining Net Available Proceeds and so long as
any 9 3/8% Notes are outstanding, to make an offer to purchase the 9 3/8% Notes
in accordance with the requirements of the 9 3/8% Note Indenture; (E) fifth, to
the extent more than $5,000,000 of Net Available Proceeds are not required to be
applied to the repayments as specified in Clauses (A), (B), (C) and (D), to
purchases of Outstanding Securities pursuant to an Offer to Purchase commenced
within 120 days of such disposition at a purchase price equal to 100% of their
principal amount plus accrued interest to the date of purchase; (F) sixth, to
the extent of any remaining Net Available Proceeds following the completion of
the Offer to Purchase Securities required by Clause (E), to the repayment of
other Debt of the Company or Debt of a Subsidiary of the Company, to the extent
permitted under the terms thereof; and (G) seventh, to the extent of any
remaining Net Available Proceeds, to any other use as determined by the Company
which is not otherwise prohibited by this Indenture.
Notwithstanding Clause (ii) above, all or a portion of the
consideration for any such disposition may consist of all or substantially all
of the assets or a majority of the Voting Stock of an existing television or
radio broadcasting or cable television business or franchise (whether existing
as a separate entity, subsidiary, division, unit or otherwise) if after giving
effect to any such disposition and related acquisition of assets, (x) the ratio
of the aggregate principal amount of Debt of the Company and its Subsidiaries
outstanding as of the most recent available balance sheet to Pro Forma
Consolidated Cash Flow for the preceding four fiscal quarters, determined on a
pro forma basis as if such transaction had taken place and the proceeds
therefrom had been applied at the beginning of such four fiscal quarters, would
be less than 7.0 to 1; (y) no Event of Default or event that, with the passing
of time or the giving of notice, or both, will constitute an Event of Default
shall have occurred or be continuing; and (z) the Net Available Proceeds, if
any, are invested in accordance with the next sentence of this paragraph.
Notwithstanding
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Clause (iii) above, the Company shall not be required to repurchase or redeem
any Debt to the extent that the Net Available Proceeds from any Asset
Disposition are invested within 120 days of such disposition in television or
radio broadcasting or cable television assets or franchises or the Company shall
have entered into a definitive agreement to acquire such assets subject only to
customary conditions, including, without limitation, the approval of the Federal
Communications Commission (but excluding any conditions with respect to the
financing of such acquisition or due diligence) and such acquisition shall have
been consummated within 240 days of such disposition. Notwithstanding the
foregoing two sentences, the Company shall not be entitled to take as
consideration for an Asset Disposition, or invest Net Available Proceeds in lieu
of repurchasing or redeeming Debt in, any television or radio broadcasting or
cable television assets, business or franchise unless the majority of the assets
(including intangibles) so acquired or the majority of the assets (including
intangibles) of the business or franchise so acquired are related to television
or radio broadcasting.
(b) The Company will mail the Offer for an Offer to Purchase
required pursuant to Section 1013(a) not more than 120 days after consummation
of the disposition referred to in Section 1013(a), unless the Company shall have
entered into a definitive agreement to acquire such assets as described above,
in which case the Company will mail the Offer for the Offer to Purchase not
later than the earlier of (A) 240 days after such disposition and (B) 30 days
after the termination of any such definitive acquisition agreement. The
aggregate principal amount of the Securities to be offered to be purchased
pursuant to the Offer to Purchase shall equal the Net Available Proceeds
available therefor pursuant to Clause (iii)(D) of Section 1013(a) (rounded down
to the next lowest integral multiple of $1,000). Each Holder shall be entitled
to tender all or any portion of the Securities owned by such Holder pursuant to
the Offer to Purchase, subject to the requirement that any portion of a Security
tendered must be tendered in an integral multiple of $1,000 principal amount.
The Company shall not be entitled to any credit against its
obligations under this Section 1013 for the principal amount of any Securities
acquired or redeemed by the Company otherwise than pursuant to the Offer to
Purchase pursuant to this Section 1013.
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(c) Not later than the date of the Offer with respect to an Offer to
Purchase pursuant to this Section 1013, the Company shall deliver to the
Trustee an Officers' Certificate as to (i) the Purchase Amount, (ii) the
allocation of the Net Available Proceeds from the Asset Disposition pursuant to
which such Offer is being made, including, if amounts are invested in assets
related to the business, the actual assets acquired and (iii) the compliance of
such allocation with the provisions of Section 1013(a).
The Company and the Trustee shall perform their respective
obligations specified in the Offer for the Offer to Purchase. On or prior to the
Purchase Date, the Company shall (i) accept for payment (on a pro rata basis, if
necessary) Securities or portions thereof tendered pursuant to the Offer, (ii)
deposit with the paying agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) money sufficient
to pay the purchase price of all Securities or portions thereof so accepted and
(iii) deliver or cause to be delivered to the Trustee all Securities so
accepted together with an Officers' Certificate stating the Securities or
portions thereof accepted for payment by the Company. The Paying Agent (or the
Company, if so acting) shall promptly mail or deliver to Holders of Securities
so accepted payment in an amount equal to the purchase price, and the Trustee
shall promptly authenticate and mail or deliver to such Holders a new Security
of like tenor equal in principal amount to any unpurchased portion of the
Security surrendered. Any Security not accepted for payment shall be promptly
mailed or delivered by the Company to the Holder thereof.
(d) Notwithstanding the foregoing, this Section 1013 shall not
apply to any Asset Disposition which constitutes a transfer, conveyance, sale,
lease or other disposition of all or substantially all of the Company's
properties or assets within the meaning of Section 801 hereof.
SECTION 1014. Limitation on Issuances and Sales of Capital Stock of Wholly Owned
Subsidiaries.
The Company (i) shall not and shall not permit any Wholly Owned
Subsidiary to transfer, convey, sell or other-
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wise dispose of Capital Stock of such or any other Wholly Owned Subsidiary to
any Person (other than the Company or a Wholly Owned Subsidiary) unless such
transfer, conveyance, sale or other disposition is of all the Capital Stock of
such Wholly Owned Subsidiary and the Net Available Proceeds from such transfer,
conveyance, sale or other disposition are applied in accordance with Section
1013 (including the provisions thereof relating to the application of the Net
Available Proceeds therefrom) and (ii) may not permit any Wholly Owned
Subsidiary to issue shares of Capital Stock (other than directors' qualifying
shares), or securities convertible into, or warrants, rights or options to
subscribe for or purchase shares of, its Capital Stock to any Person other than
to the Company or a Wholly Owned Subsidiary unless in the case of either Clause
(i) or (ii) above (A) after giving effect to any such sale, disposition or
issuance, the ratio of the aggregate principal amount of Debt of the Company and
its Subsidiaries outstanding as of the most recent available balance sheet to
Pro Forma Consolidated Cash Flow for the preceding four fiscal quarters,
determined on a pro forma basis as if such sale, disposition or issuance had
taken place and the Net Available Proceeds therefrom had been applied at the
beginning of such four fiscal quarters, would be less than 7.0 to 1; (B)
immediately after giving effect to such sale, disposition or issuance (including
any acquisition of assets with Net Available Proceeds) no Event of Default or
event that with the passing of time or the giving of notice, or both, will
constitute an Event of Default shall have occurred or be continuing; (C) the
assets acquired pursuant to such sale, disposition or issuance, are either (x)
at least 85% cash or readily marketable cash equivalents and the Net Available
Proceeds from such sale, disposition or issuance are applied in accordance with
Section 1013 (including the provisions thereof relating to the application of
Net Available Proceeds therefrom) or (y) all or substantially all of the assets
or a majority of the Voting Stock of an existing television or radio
broadcasting or cable television business or franchise (whether existing as a
separate entity, subsidiary, division, unit or otherwise) (subject to the
restrictions described in the last sentence of the second paragraph of Section
1013(a)); (D) after giving effect to any such sale, disposition or issuance,
such Wholly Owned Subsidiary shall be a Subsidiary of the Company and (E) the
Company (or the Subsidiary, as the case may be) receives consideration at the
time of the issuance, sale or disposition of the Capital Stock at least equal to
the fair value
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for the Capital Stock issued or sold (which shall be determined in good faith
by the Board of Directors, evidenced by a Board Resolution).
SECTION 1015. Limitation on Liens Securing Company Subordinated Debt.
The Company may not, and may not permit any Subsidiary of the
Company to, Incur or suffer to exist any Lien on or with respect to any property
or assets now owned or hereafter acquired to secure any Debt of the Company that
is expressly by its terms subordinate or junior in right of payment (other than
by reason of maturity) to any other Debt of the Company without making, or
causing such Subsidiary to make, effective provision for securing the Securities
(x) equally and ratably with such Debt as to such property or assets for so long
as such Debt will be so secured or (y) in the event such Debt is subordinate in
right of payment (other than by reason of maturity) to the Securities, prior to
such Debt as to such property or assets for so long as such Debt will be so
secured.
SECTION 1016. Limitation on Guarantees of Company Subordinated Debt.
The Company may not permit any Subsidiary, directly or indirectly,
to assume, Guarantee or in any other manner become liable with respect to any
Debt of the Company that is expressly by its terms subordinate or junior in
right of payment (other than by reason of maturity) to any other Debt of the
Company.
SECTION 1017. Change of Control.
(a) Upon the occurrence of a Change of Control (as defined below),
each Holder of a Security shall have the right to have such Security repurchased
by the Company on the terms and conditions precedent set forth in this Section
1017 and this Indenture. The Company shall, within 30 days following the date of
the consummation of a transaction resulting in a Change of Control, mail an
Offer with respect to an Offer to Purchase all Outstanding Securities at a
purchase price equal to 101% of their aggregate principal amount plus accrued
interest to the Purchase Date; provided,
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however, that installments of interest whose Stated Maturity is on or prior to
the Purchase Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
308. Each Holder shall be entitled to tender all or any portion of the
Securities owned by such Holder pursuant to the Offer to Purchase, subject to
the requirement that any portion of a Security tendered must be tendered in an
integral multiple of $1,000 principal amount.
(b) The Company and Trustee shall perform their respective
obligations specified in the Offer for the Offer to Purchase. Prior to the
Purchase Date, the Company shall (i) accept for payment Securities or portions
thereof tendered pursuant to the Offer, (ii) deposit with the Paying Agent (or,
if the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) money sufficient to pay the purchase price of all
Securities or portions thereof so accepted and (iii) deliver or cause to be
delivered to the Trustee all Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security or Securities equal in principal amount to any unpurchased portion of
the Security surrendered as requested by the Holder. Any Security not accepted
for payment shall be promptly mailed or delivered by the Company to the Holder
thereof.
(c) A "Change of Control" shall be deemed to have occurred in the
event that, after the date of this Indenture, either (A) any Person or any
Persons (other than one or more Permitted Holders) acting together which would
constitute a "group" (a "Group") for purposes of Section 13(d) of the Exchange
Act, or any successor provision thereto, together with any Affiliates, shall
beneficially own (as defined in Rule 13d-3 of the Exchange Act or any successor
provision thereto) at least 50% of the aggregate voting power of all classes of
Voting Stock of the Company; or (B) any Person or Group (other than Permitted
Holders), together with any Affiliates, shall succeed in having a sufficient
number of its nominees elected to the Board of Directors of the Company such
that such nominees, when added
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to any existing directors remaining on the Board of Directors of the Company
after such election who are Affiliates, shall constitute a majority of the Board
of Directors of the Company. "Permitted Holder" means (i) W. Don Cornwell and
Stuart J. Beck, (ii) the members of the immediate family of either of the
persons referred to in Clause (i) above, (iii) any trust created for the benefit
of the persons described in Clause (i) or (ii) above or any of their estates or
(iv) any corporation that is controlled by any person described in Clause (i),
(ii) or (iii) above.
(d) Prior to the time required for the mailing of an Offer with
respect to an Offer to Purchase pursuant to paragraph (a), the Company will (i)
to the extent then required to be repaid, pay in full all outstanding Senior
Debt so as to permit the making of the Offer to Purchase or (ii) obtain the
requisite consents then required under the agreements governing any Senior Debt.
The failure by the Company to satisfy either clause (i) or clause (ii) above
shall not relieve the Company of its obligation to make an Offer to Purchase
required by paragraph (a) of this Section 1017 in accordance with such
paragraph.
SECTION 1018. Provision of Financial Information.
So long as any of the Securities are Outstanding, and in addition to
and without limitation of the Company's obligations pursuant to Section 704,
whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange
Act, the Company shall file with the Commission the annual reports, quarterly
reports and other documents that the Company would have been required to file
with the Commission pursuant to such Sections 13(a) and 15(d) of the Exchange
Act if the Company were so subject, such documents to 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, provided that the Commission permits such filing. The
Company shall also in any event (x) within 15 days of each Required Filing Date
(i) transmit by mail to all Holders, as their names and addresses appear in the
Security Register, without cost to such Holders and (ii) file with the Trustee
copies of the annual reports, quarterly reports and other documents which the
Company would have been required to file with the Commission pursuant to
Section 13(a) and 15(d) of the Exchange Act if the
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Company were subject to such Sections and (y) if filing such documents by the
Company with the Commission is not permitted under the Exchange Act, promptly
upon written request supply copies of such documents to any prospective Holder.
SECTION 1019. Statement by Officers as to Default.
(a) The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the terms, provisions and conditions of Sections 1004 to 1018,
inclusive, and if the Company shall be in default, specifying all such defaults
and the nature and status thereof of which they may have knowledge.
(b) The Company shall deliver to the Trustee, as soon as possible
and in any event within 10 days after the Company becomes aware of the
occurrence of an Event of Default or an event which, with notice or the lapse of
time or both, would constitute an Event of Default, an Officers' Certificate
setting forth the details of such Event of Default or default and the action
which the Company proposes to take with respect thereto.
SECTION 1020. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 1004 to 1017, inclusive, if before
or after the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect.
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ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption.
(a) The Securities may be redeemed at the election of the Company
from time to time in the event that on or before May 15, 2001 the Company
receives net proceeds from the sale of its Capital Stock (other than
Disqualified Stock) in one or more offerings, in which case the Company may, at
its option and from time to time, use all or a portion of any such net proceeds
to redeem Securities in a principal amount of at least $5,000,000 and up to
aggregate amount equal to 35% of the Original Securities, provided, however,
that Securities in an amount equal to at least 65% of the Original Securities
remain outstanding after each such redemption. Any such redemption must occur on
a Redemption Date within 75 days of any such sale and upon not less than 30 nor
more than 60 days' notice mailed to each Holder of Securities to be redeemed at
such Holder's address appearing in the Security Register, at a Redemption Price
of 108.875% of the principal amount of the Securities plus accrued interest to
but excluding the Redemption Date (subject to the right of Holders of record on
the relevant Regular Record Date to receive interest due on an Interest Payment
Date that is on or prior to the Redemption Date).
(b) In addition, the Securities may be redeemed at the election of
the Company, as a whole or from time to time in part, at any time on or after
May 15, 2003 and prior to maturity, upon not less than 30 nor more than 60 days'
notice mailed to each Holder of Securities to be redeemed at the address
appearing in the Security Register, in amounts of $1,000 or an integral multiple
of $1,000, at the Redemption Prices specified in the form of Security
hereinbefore set forth, together with accrued interest to the Redemption Date.
SECTION 1102. Applicability of Article.
Redemption of Securities at the election of the Company, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
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SECTION 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company of the Securities, the Company shall, at least 45
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee in writing of such
Redemption Date and of the principal amount of Securities to be redeemed.
SECTION 1104. Securities to Be Redeemed Pro Rata.
If less than all the Securities are to be redeemed in any
redemption, the Securities to be redeemed shall be selected from the Outstanding
Securities not previously called for redemption, not more than 60 days prior to
the Redemption Date by the Trustee pro rata, by lot or by such other method as
the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $1,000 or any integral multiple
thereof) of the principal amount of Securities of a denomination larger than
$1,000.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
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All notices of redemption shall identify the Securities to be
redeemed (including CUSIP numbers) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) whether the redemption is being made pursuant to Section 1101(a)
or (b) and, if being made pursuant to either Section 1101(a), a brief
statement setting forth the Company's right to effect such redemption and
the Company's basis therefor,
(4) if less than all the Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption of any
Securities, the principal amounts) of the particular Securities to be
redeemed,
(5) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date,
(6) the place or places where such Securities are to be surrendered
for payment of the Redemption Price, and
(7) that in the case that a Security is only redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to
the Holder of such Security without service charge, a new Security or
Securities in an aggregate amount equal to the unredeemed portion of the
Security.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1106. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its
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own Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
SECTION 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities
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 and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; 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 Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 308.
If any Security 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 provided by the
Security.
SECTION 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company designated for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of like tenor, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the
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unredeemed portion of the principal of the Security so surrendered.
ARTICLE TWELVE
Subordination of Securities
SECTION 1201. Securities Subordinate to Senior Debt.
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner herein after set forth in this Article, the indebtedness
represented by the Securities and the payment of the principal of (and premium,
if any) and interest on each and all of the Securities are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
Senior Debt.
SECTION 1202. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of the Company, then and in any
such event specified in (a), (b) or (c) above (each such event, if any, herein
sometimes referred to as a "Proceeding") the holders of Senior Debt shall be
entitled to receive payment in full of all amounts due or to become due on or in
respect of all Senior Debt, or provision shall be made for such payment in cash
or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt, before the Holders of the Securities are entitled to receive any
payment or distribution of any kind or character, whether in cash, property or
securities (including any payment or distribution which may be payable or
deliverable by reason of the payment of any other Debt of the Company
subordinated to the payment of the Securities,
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such payment or distribution being hereinafter referred to as a "Junior
Subordinated Payment"), on account of principal of (or premium, if any) or
interest on the Securities or on account of purchase or other acquisition of
Securities by the Company or any Subsidiary (all such payments, distributions,
purchases and acquisitions herein referred to individually and collectively, as
a "Securities Payment"), and to that end the holders of Senior Debt shall be
entitled to receive, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or securities
which may be payable or deliverable in respect of the Securities in any such
Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Company for application
to the payment of all Senior Debt remaining unpaid, to the extent necessary to
pay all Senior Debt in full in cash or cash equivalents, after giving effect to
any concurrent payment or distribution to or for the holders of Senior Debt
unless the Trustee shall have knowledge, as provided in Section 1209, that the
Senior Debt has been paid in full or payment provided for in cash or cash
equivalents or otherwise in a manner satisfactory to the holder of Senior Debt.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include a payment or distribution of stock or
securities of the Company provided for by a plan of reorganization or
readjustment or of any other corporation provided for by such plan of
reorganization or readjustment which stock or securities are subordinated in
right of payment to all then outstanding Senior Debt to substantially the same
extent as the Securities are so subordinated as provided in this Article (any
such stock or securities hereinafter called "Subordinated Consideration"). The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of its properties and assets substantially as an entirety to another
Person upon
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the terms and conditions set forth in Article Eight shall not be deemed a
Proceeding for the purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer such properties and assets substantially as an
entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in Article Eight.
SECTION 1203. No Payment When Senior Debt in Default.
In the event that any Senior Payment Default (as defined below)
shall have occurred and be continuing, then no Securities Payment (other than in
Subordinated Consideration) shall be made unless and until such Senior Payment
Default shall have been cured or waived or shall have ceased to exist or all
amounts then due and payable in respect of Senior Debt shall have been paid in
full, or provision shall have been made for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior Debt.
"Senior Payment Default" means any default in the payment of principal of (or
premium, if any) or interest with respect to the Senior Debt when due, whether
at the Stated Maturity of any such payment or by declaration of acceleration,
call for redemption or otherwise.
In the event that any Senior Nonmonetary Default (as defined below)
shall have occurred and be continuing, then, upon the receipt by the Company and
the Trustee of written notice of such Senior Nonmonetary Default from the Agent
Bank for the Credit Agreement (or any successor credit facility) or such other
holder of Senior Debt as the Company shall have designated in an Officers'
Certificate delivered to the Trustee (the "Designated Senior Debt"), no
Securities Payment (other than in Subordinated Consideration) shall be made
during the period (the "Payment Blockage Period") commencing on the date of such
receipt of such written notice and ending on the earlier of (i) the date on
which such Senior Nonmonetary Default shall have been cured or waived or shall
have ceased to exist and any acceleration of Senior Debt shall have been
rescinded or annulled or the Senior Debt to which such Senior Nonmonetary
Default relates shall have been discharged or (ii) the 179th day after the date
of such receipt of such written notice; provided,
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however, that no more than one Payment Blockage Period may be commenced with
respect to the Securities during any 360-day period and there shall be a period
of at least 181 consecutive days in each such 360-day period when no Payment
Blockage Period is in effect. For all purposes of this paragraph, no Senior
Nonmonetary Default that existed or was continuing on the date of commencement
of any Payment Blockage Period shall be, or be made, the basis for the
commencement of a subsequent Payment Blockage Period by holders of Senior Debt
or their representatives unless such Senior Nonmonetary Default shall have been
cured or waived for a period of not less than 90 consecutive days. "Senior
Nonmonetary Default" means the occurrence or existence of any event,
circumstance, condition or state of facts that, by the terms of any instrument
pursuant to which any Senior Debt is outstanding, permits one or more holders of
such Senior Debt (or a trustee or agent on behalf of the holders thereof) then
to declare such Senior Debt due and payable prior to the date on which it would
otherwise become due and payable, other than a Senior Payment Default.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or any Holder prohibited by the foregoing
provisions of this Section, and if such fact shall, at or prior to the time of
such payment, have been made known to the Trustee as provided in Section 1209
or, as the case may be, such Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1202 would be applicable.
SECTION 1204. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or
in any of the Securities shall prevent (a) the Company, at any time except
during the pendency of any Proceeding referred to in Section 1202 or under the
conditions described in Section 1203, from making Securities Payments, or (b)
the application by the Trustee of any money deposited with it hereunder to
Securities Payments or the retention of such payment by the Holders, if, at the
time of such application by the Trustee, it did not have knowledge
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that such payment would have been prohibited by the provisions of this Article.
SECTION 1205. Subrogation to Rights of Holders of Senior Debt.
Subject to the payment in full of all amounts due or to become due
on or in respect of Senior Debt, or provision being made for such payment in
cash or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt, the Holders of the Securities shall be subrogated to the rights of
the holders of such Senior Debt to receive payments and distributions of cash,
property and securities applicable to the Senior Debt until the principal of
(and premium, if any) and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of the
Senior Debt of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article, and no payments over pursuant to the provisions of this Article to the
holders of Senior Debt by Holders of the Securities or the Trustee, shall, as
among the Company, its creditors other than holders of Senior Debt and the
Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Debt.
SECTION 1206. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Debt on the other hand. Nothing contained in this Article or
elsewhere in this Indenture or in the Securities is intended to or shall (a)
impair, as among the Company, its creditors other than holders of Senior Debt
and the Holders of the Securities, the obligation of the Company, which is
absolute and unconditional (and which, subject to the rights under this Article
of the holders of Senior Debt, is intended to rank equally with all other
general obligations of the Company) to pay to the Holders of the Securities
the principal of (and premium, if any) and interest on the Securities as and
when the same shall become due and payable in accordance with their terms; or
(b) affect the relative rights against the Company of the Holders of the
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Securities and creditors of the Company other than the holders of Senior Debt;
or (c) prevent the Trustee or the Holder of any Security from exercising all
remedies other wise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders of
Senior Debt to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
SECTION 1207. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 1208. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regard less of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Holders of the Securities to the holders of
Senior Debt, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Debt, or otherwise amend or supplement in any manner Senior Debt or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing
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Senior Debt; (iii) release any Person liable in any manner for the collection of
Senior Debt; and (iv) exercise or refrain from exercising any rights against the
Company and any other Person.
SECTION 1209. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 601, shall be entitled in all respects to assume that no such facts
exist, provided, however, that if a Responsible Officer of the Trustee shall not
have received, at least three Business Days prior to the date upon which by the
terms hereof any such money may become payable for any purpose, the notice with
respect to such money provided for in this Section 1209, then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to such date.
Subject to the provisions of Section 601, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Debt (or a trustee therefor);
provided, however, that failure to give such notice to the Company shall not
affect in any way the ability of the Trustee to rely on such notice. In the
event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior Debt to
participate in any payment or distribution pursuant to this Article, the Trustee
may request such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Debt held by such
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Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 1210. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred
to in this Article, the Trustee, subject to the provisions of Section 601, and
the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such Proceeding,
or a certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Trustee or to the Holders of
Securities, for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of the Senior Debt and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.
SECTION 1211. Trustee Not Fiduciary for Holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article, and no implied covenants or obligations
with respect to the holders of Senior Debt, shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Debt and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Debt shall be entitled by virtue of this Article or
otherwise.
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SECTION 1212. Rights of Trustee as Holder of Senior Debt; Preservation of
Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 607.
SECTION 1213. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
however, that Section 1212 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 1214. Defeasance of this Article Twelve.
The subordination of the Securities provided by this Article Twelve
is expressly made subject to the provisions for defeasance or covenant
defeasance in Article Thirteen hereof and, anything herein to the contrary
notwithstanding, upon the effectiveness of any such defeasance or covenant
defeasance, the Securities then outstanding shall thereupon cease to be
subordinated pursuant to this Article Twelve.
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ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may at its option by Board Resolution, at any time
(subject to 10-day prior written notification to the Trustee), elect to have
either Section 1302 or Section 1303 applied to the Outstanding Securities upon
compliance with the conditions set forth below in this Article Thirteen.
SECTION 1302. Defeasance and Discharge.
Upon the Company's exercise of the option provided in Section 1301
applicable to this Section, the Company shall be deemed to have been discharged
from its obligations with respect to the Outstanding Securities 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 Outstanding Securities
and to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities 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 Outstanding Securities to
receive, solely from the trust fund described in Section 1304 and as more fully
set forth in such Section, payments in respect of the principal of (and premium,
if any) and interest on such Securities when such payments are due, (B) the
Company's obligations with respect to such Securities under Sections 304, 305,
306, 307, 1002 and 1003, (C) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and (D) this Article Thirteen. Subject to compliance
with this Article Thirteen, the Company may exercise its option under this
Section 1302 notwithstanding the prior exercise of its option under Section
1303.
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SECTION 1303. Covenant Defeasance.
Upon the Company's exercise of the option provided in Section 1301
applicable to this Section (i) the Company shall be released from its
obligations under Sections 1005 through 1018, inclusive, and Clauses (3) and (4)
of Section 801, (ii) the occurrence of an event specified in Sections 501(3),
501(4) (with respect to Clauses (3) and (4) of Section 801 and Sections 1005
through 1018, inclusive), 501(5) and 501(6) shall not be deemed to be an Event
of Default and (iii) the provisions of Article Twelve shall cease to be
effective, on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"). For this purpose, such covenant
defeasance means that 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
Section or Article, whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or Article or by reason of any reference in
any such Section or Article to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.
SECTION 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 1302 or Section 1303 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 609 who shall agree to comply with the provisions of this
Article Thirteen 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 Securities,
(A) money in an amount, or (B) U.S. Government Obligations which through
the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before
the due date of any payment, money in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally recognized accounting
firm expressed in a written certification thereof delivered
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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 each installment of interest on the Securities on
the Stated Maturity of such principal or installment of interest on the
day on which such payments are due and payable in accordance with the
terms of this Indenture and of such Securities. For this purpose, "U.S.
Government Obligations" means securities that are (x) direct obligations
of the United States of America for the payment of which its full faith
and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United
States of America the 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 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.
(2) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as subsections 501(8)
and (9) are concerned, at any time during the period ending on the 91st
day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such
period).
(3) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest as defined in Section 608 and for
purposes of the Trust Indenture Act with respect to any securities of the
Company.
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(4) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other agreement or instrument to which the Company is a party or by
which it is bound.
(5) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section
1302 or the covenant defeasance under Section 1303 (as the case may be)
have been complied with.
(6) In the case of an election under Section 1302, the Company
shall have delivered to the Trustee an Opinion of Counsel 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 of this Indenture
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 Securities will not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposit, defeasance and discharge 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 deposit, defeasance and discharge had not
occurred.
(7) In the case of an election under Section 1303, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Outstanding Securities will not recognize income,
gain or loss for Federal income tax purposes as a result of such deposit
and 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.
(8) The Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that such deposit and defeasance or covenant
defeasance shall not result in the trust arising from such deposit
constituting an investment company as defined in the Investment Company
Act of 1940, as amended, or such trust shall be
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qualified under such act or exempt from regulation thereunder.
(9) At the time of such deposit: (A) no default in the payment of
all or a portion of principal of (or premium, if any) or interest on any
Senior Debt shall have occurred and be continuing, and no event of default
with respect to any Senior Debt shall have occurred and be continuing and
shall have resulted in such Senior Debt becoming or being declared due and
payable prior to the date on which it would otherwise have become due and
payable and (B) no other event of default with respect to any Senior Debt
shall have occurred and be continuing permitting (after notice or the
lapse of time, or both) the holders of such Senior Debt (or a trustee on
behalf of the holders thereof) to declare such Senior Debt due and payable
prior to the date on which it would otherwise have become due and payable,
or, in the case of either Clause (A) or Clause (B) above, each such
default or event of default shall have been cured or waived or shall have
ceased to exist.
SECTION 1305. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee--collectively, for purposes of
this Section 1305, the "Trustee") pursuant to Section 1304 in respect of the
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities 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 deter mine, to the Holders of such Securities,
of all sums due and to become due thereon in respect of principal (and 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 against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
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respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Out standing Securities.
Anything in this Article Thirteen to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 which, in the opinion of a nationally recognized accounting firm
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
GRANITE BROADCASTING CORPORATION
By /s/ Lawrence I. Willis
--------------------------------------
Name: Lawrence I. Willis
Title: Vice President-Finance and
Controller
[SEAL]
Attest:
/s/ [ILLEGIBLE]
- -----------------------
THE BANK OF NEW YORK, as Trustee
By
--------------------------------------
Name:
Title:
[SEAL]
Attest:
- -----------------------
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
GRANITE BROADCASTING CORPORATION
By
--------------------------------------
Name:
Title:
[SEAL]
Attest:
- -----------------------
THE BANK OF NEW YORK, as Trustee
By /s/ Van K. Brown
--------------------------------------
Name: Van K. Brown
Title: Assistant Vice President
[SEAL]
Attest:
/s/ [ILLEGIBLE]
- -----------------------
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<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the 11th day of May, 1998, before me personally came Lawrence I.
Wills, to me known, who, being by me duly sworn, did depose and say that he is
the Vice President-Finance and Controller of Granite Broadcasting Corporation,
one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation; and that he signed his name thereto
by like authority.
/s/ [ILLEGIBLE]
------------------------------
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the 11th day of May, 1998, before me personally came Van K.
Brown, to me known, who, being by me duly sworn, did depose and say that he is a
Assistant Vice President of The Bank of New York, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the By-Laws of said corporation;
and that he signed his name thereto by like authority.
/s/ William J. Cassels
------------------------------
WILLIAM J. CASSELS
Notary Public, State of New York
No. 01CA5027729
Qualified in Bronx County
Certificate Filed in New York County
Commission Expires May 16, 1998
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ANNEX A - Form of
Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to ss. 306(b)(i) of the Indenture)
[ ]
[ ]
[ ]
[ ]
Re: 8 7/8% Senior Subordinated
Notes due May 15, 2008 of
Granite Broadcasting
Corporation (the "Securities")
Reference is made to the Indenture, dated as of May 11, 1998 (the
"Indenture"), from Granite Broadcasting Corporation (the "Company") to The Bank
of New York, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S or Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to U.S. $_______________ principal amount
of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No. U38727AC4
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
The Specified Securities are represented by a Global Security and are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner.
A-1
<PAGE>
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Regulation S Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 904 or Rule 144 under the Securities Act and with all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:
(1) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904:
(A) the Owner is not a distributor of the Securities, an
affiliate of the Company or any such distributor or a person acting
on behalf of any of the foregoing;
(B) the offer of the Specified Securities was not made to a
person in the United States;
(C) either:
(i) at the time the buy order was originated, the
Transferee was outside the United States or the Owner and any
person acting on its behalf reasonably believed that the
Transferee was outside the United States, or
(ii) the transaction is being executed in, on or through
the facilities of the Eurobond market, as regulated by the
Association of International Bond Dealers, or another
designated offshore securities market and neither the Owner
nor any person acting on its behalf knows that the transaction
has been prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the United
States by or on behalf of the Owner or any affiliate thereof;
A-2
<PAGE>
(E) if the Owner is a dealer in securities or has received a
selling concession, fee or other renumeration in respect of the
Specified Securities, and the transfer is to occur during the
Restricted Period, then the requirements of Rule 904(c)(1) have been
satisfied; and
(F) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
(2) Rule 144 Transfers. If the transfer is being effected pursuant
to Rule 144:
(A) the transfer is occurring after a holding period of at
least one year (computed in accordance with paragraph (d) of Rule
144) has elapsed since the Specified Securities were last acquired
from the Company or from an affiliate of the Company, whichever is
later, and is being effected in accordance with the applicable
amount, manner of sale and notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at
least two years has elapsed since the Specified Securities were last
acquired from the Company or from an affiliate of the Company,
whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company.
A-3
<PAGE>
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Initial Purchasers.
Dated: ----------------------------------------
(Print the name of the Undersigned, as
such term is defined in the second
paragraph of this certificate.)
By:
-------------------------------------
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title of
the person signing on behalf of the
Undersigned must be stated.)
A-4
<PAGE>
ANNEX B - Form of Restricted
Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to ss. 306(b)(ii) of the Indenture)
[ ]
[ ]
[ ]
[ ]
Re: 8 7/8% Senior Subordinated
Notes due May 15, 2008 of
Granite Broadcasting
Corporation (the "Securities")
Reference is made to the Indenture, dated as of May 11, 1998 (the
"Indenture"), from Granite Broadcasting Corporation (the "Company") to The Bank
of New York, as Trustee. Terms used herein and defined in the Indenture or in
Rule 144A or Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to U.S.$_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No. 387241AJ1
ISIN No. USU38727AC43
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
The Specified Securities are represented by a Global Security and are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Restricted Security. In
B-1
<PAGE>
connection with such transfer, the Owner hereby certifies that, unless such
transfer is being effected pursuant to an effective registration statement under
the Securities Act, it is being effected in accordance with Rule 144A or Rule
144 under the Securities Act and all applicable securities laws of the states of
the United States and other jurisdictions. Accordingly, the Owner hereby further
certifies as:
i. Rule 144A Transfers. If the transfer is being effected
in accordance with Rule 144A:
(A) the Specified Securities are being transferred to a person
that the Owner and any person acting on its behalf reasonably
believe is a "qualified institutional buyer" within the meaning of
Rule 144A, acquiring for its own account or for the account of a
qualified institutional buyer; and
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the
Owner may be relying on Rule 144A in connection with the transfer;
and
ii. Rule 144 Transfers. If the transfer is being effected
pursuant to Rule 144:
(A) the transfer is occurring after a holding period of at
least one year (computed in accordance with paragraph (d) of Rule
144) has elapsed since the Specified Securities were last acquired
from the Company or from an affiliate of the Company, whichever is
later, and is being effected in accordance with the applicable
amount, manner of sale and notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at
least two years has elapsed since the Specified Securities were last
acquired from the Company or from an affiliate of the Company,
whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company.
B-2
<PAGE>
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Initial Purchasers.
Dated: ----------------------------------------
(Print the name of the Undersigned, as
such term is defined in the second
paragraph of this certificate.)
By:
-------------------------------------
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title of
the person signing on behalf of the
Undersigned must be stated.)
B-3
<PAGE>
ANNEX C - Form of Unrestricted
Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to ss. 306(c))
[ ]
[ ]
[ ]
[ ]
Re: 8 7/8% Senior Subordinated
Notes due May 15, 2008 of
Granite Broadcasting
Corporation (the "Securities")
Reference is made to the Indenture, dated as of May 11, 1998 (the
"Indenture"), from Granite Broadcasting Corporation (the "Company") to The Bank
of New York, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S or Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Under signed, as or on
behalf of the Owner.
C-1
<PAGE>
The Owner has requested that the Specified Securities be exchanged
for Securities bearing no Securities Act Legend pursuant to Section 306(c) of
the Indenture. In connection with such exchange, the Owner hereby certifies that
the exchange is occurring after a holding period of at least three years
(computed in accordance with paragraph (d) of Rule 144) has elapsed since the
Specified Securities were last acquired from the Company or from an affiliate of
the Company, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company. The Owner also
acknowledges that any future transfers of the Specified Securities must comply
with all applicable securities laws of the states of the United States and other
jurisdictions.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Initial Purchasers.
Dated: ----------------------------------------
(Print the name of the Undersigned, as
such term is defined in the second
paragraph of this certificate.)
By:
-------------------------------------
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title of
the person signing on behalf of the
Undersigned must be stated.)
C-2
<PAGE>
ANNEX D -- Form of Certification to
be Given by Holders of Beneficial
Interest in a Regulation S Temporary
Global Security
OWNER SECURITIES CERTIFICATION
GRANITE BROADCASTING CORPORATION
8 7/8% Senior Subordinated Notes due May 15, 2008
This is to certify that, as of the date hereof, $________ of the
above-captioned Securities are beneficially owned by non-U.S. person(s). As used
in this paragraph, the term "U.S. person" has the meaning given to it by
Regulation S under the Securities Act of 1933, as amended.
We undertake to advise you promptly by tested telex on or prior to
the date on which you intend to submit your certification relating to the
Securities held by you for our account in accordance with your operating
procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceedings.
Dated:______________, ____
By:____________________________________________
As, or as agent for, the beneficial owner(s)
of the Securities to which this certificate
relates.
D-1
<PAGE>
ANNEX E -- Form of Certification to
be Given by the Euroclear Operator
or Cedel S.A.
DEPOSITARY SECURITIES CERTIFICATION
GRANITE BROADCASTING CORPORATION
8 7/8% Senior Subordinated Notes due May 15, 2008
This is to certify that, with respect to U.S.$___________ principal
amount of the above-captioned Securities, except as set forth below, we have
received in writing, by tested telex or by electronic transmission, from member
organizations appearing in our records as persons being entitled to a portion of
the principal amount of Securities set forth above (our "Member Organizations"),
certifications with respect to such portion, substantially to the effect set
forth in the Indenture.
We further certify (i) that we are not making available herewith for
exchange (or, if relevant, exercise of any rights or collection of any interest)
any portion of the Regulation S Temporary Global Security (as defined in the
Indenture) excepted in such certifications and (ii) that as of the date hereof
we have not received any notification from any of our Member Organizations to
the effect that the statements made by such Member Organizations with respect to
any portion of the part submitted herewith for exchange (or, if relevant,
exercise of any rights or collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with
E-1
<PAGE>
which this certification is or would be relevant, we irrevocably authorize you
to produce this certification to any interested party in such proceedings.
Dated: _____________, _______
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Brussels office,
as operator of the Euroclear System]
or
[CEDEL S.A.]
By____________________________
E-2
<PAGE>
Exhibit 5
[Akin, Gump, Strauss, Hauer & Feld, L.L.P. Letterhead]
June 8, 1998
Granite Broadcasting Corporation
767 Third Avenue
New York, New York 10017
Re: Granite Broadcasting Corporation
8 7/8% Senior Subordinated Notes due 2008
We have acted as counsel to Granite Broadcasting Corporation, a Delaware
corporation (the "Company"), in connection with the Company's offer to exchange
(the "Exchange Offer") $1,000 principal amount of 8 7/8% Senior Subordinated
Notes due 2008 (the "New Notes") of the Company for each $1,000 principal amount
of its issued and outstanding 8 7/8% Series A Senior Subordinated Notes due 2008
(the "Old Notes") pursuant to a Registration Statement on Form S-4 (the
"Registration Statement") being filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act").
The Old Notes have been and the New Notes will be issued pursuant to the
provisions of an Indenture, dated as of May 11, 1998 (the "Indenture"), by and
between the Company and The Bank of New York, as trustee (the "Trustee").
As such counsel, we have examined and are familiar with originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
documents of the Company, certificates of public officials and certificates of
officers of the Company and such other documents and agreements and records and
papers as we have deemed necessary or appropriate in order to render this
opinion. Capitalized terms used herein but not otherwise defined herein shall
have the meaning ascribed to such terms in the Indenture.
In our examination, we have assumed the authenticity of all documents
submitted to us as originals, the signature of all parties (other than the
Company) to documents, the legal right and power of all parties (other than the
Company) to enter into and execute the documents to which they are a party and
to consummate the transactions contemplated therein, and the conformity to
original documents of all documents submitted to us as certified or photostatic
copies.
<PAGE>
Granite Broadcasting Corporation
June 2, 1998
Page 2
Based on the foregoing and subject to the qualifications set forth herein,
we are of the opinion that the Company has duly authorized the New Notes and,
when issued and authenticated in accordance with the terms of the Indenture and
delivered in exchange for the Old Notes in accordance with the terms of the
Exchange Offer, the New Notes will be the legally valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms,
subject (i) to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
generally and (ii) to general principles of equity, (including, without
limitation, standards of materiality, good faith, fair dealing and commercial
reasonableness), whether such principles are considered in a proceeding at law
or in equity.
We express no opinion concerning: (A) the enforceability of any waiver of
rights or defenses contained in the Indenture or (B) any right to
indemnification that may be limited by public policy considerations or court
decisions.
This law firm is a registered limited liability partnership organized under
the laws of the State of Texas. Our opinion relates only to the laws of the
State of New York and the federal law of the United States of America. We
express no opinion of the law of any other jurisdiction.
This opinion is limited to the matters stated herein, and no opinion is
implied or may be inferred beyond the matters expressly stated. We assume herein
no obligation, and hereby disclaim any obligation, to make any inquiry after the
date hereof or to advise you of any future changes in the foregoing or of any
facts or circumstances that may hereafter come to our attention. Subject to the
foregoing sentence, this opinion letter is solely for your benefit and no other
persons shall be entitled to rely upon the opinions herein expressed.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus forming a part of the Registration Statement.
In giving such consent, we do not hereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act or
the rules and regulations of the Securities and Exchange Commission thereof.
Very truly yours,
/s/ Akin, Gump, Strauss, Hauer & Feld, L.L.P.
<PAGE>
Exhibit 10.15
GRANITE BROADCASTING CORPORATION
MANAGEMENT STOCK PLAN
As Amended Through April 28, 1998
1. Purpose.
The purpose of this plan is to keep senior executives of experience and
ability in the employ of Granite Broadcasting Corporation and to compensate them
for their contributions to the growth and profits of the Company and its
Subsidiaries and thereby induce them to continue to make such contributions in
the future.
2. Definitions.
For purposes of this Plan, the following terms will have the definitions set
forth below:
(a) "Company". Granite Broadcasting Corporation.
(b) "Subsidiary" or "Subsidiaries". A corporation or corporations of which
the Company owns, directly or indirectly, shares having a majority of the
ordinary voting power for the election of directors.
(c) "Board". The Company's Board of Directors.
(d) "Committee". The Management Stock Plan Committee as appointed from time
to time by the Board, consisting of not less than two members of the Board. No
member of the Board shall be eligible to become a member of the Committee if, at
any time during the one-year period preceding the date of his appointment, he
has been granted (and, during the period of his service on the Committee, no
member shall be granted) equity securities pursuant to any plan of the Company
or its affiliates, other than pursuant to a formula plan, an ongoing securities
acquisition plan having broad-based employee participation, or a plan permitting
directors to receive directors' fees in cash or stock.
(e) "Effective Date". This Plan is effective as of April 27, 1993.
(f) "Plan". The Granite Broadcasting Corporation Management Stock Plan.
(g) "Bonus Shares". The shares of Common Stock (Nonvoting) of the Company
reserved pursuant to Section 3 hereof and any such shares issued to a Recipient
pursuant to this Plan.
<PAGE>
(h) "Recipient". An employee of the Company or a Subsidiary to whom shares
are allocated under this Plan.
3. Bonus Share Reserve.
(a) Bonus Share Reserve. The Company will establish a Bonus Share reserve to
which will be credited 1,000,000 shares of the Common Stock (Nonvoting) of the
Company, par value $.01 per share. Should such shares, due to a stock split or
stock dividend or combination of shares or any other change, or exchange for
other securities, by reclassification, reorganization, merger, consolidation,
recapitalization or otherwise, be increased or decreased or changed into, or
exchanged for, a different number or kind of shares of stock or other securities
of the Company or of another corporation, the number of shares then remaining in
the Bonus Share reserve shall be appropriately adjusted to reflect such action.
If any such adjustment results in a fractional share, the fraction shall be
disregarded.
(b) Adjustments to Reserve. Upon the allocation of shares hereunder, the
reserve will be reduced by the number of shares so allocated and, upon the
forfeiture of any previously allocated shares, the reserve shall be increased by
such number of shares, and such Bonus Shares may again be the subject of
allocations hereunder.
(c) Issuance of Bonus Shares or Cash. Distributions of Bonus Shares, as the
Committee shall in its sole discretion determine, may be made from authorized
but unissued shares or from treasury shares. All authorized and unissued shares
issued as Bonus Shares in accordance with the Plan shall be fully paid and
non-assessable shares and free from preemptive rights. The Committee, in its
sole discretion, shall determine the method of payment of Bonus Shares to each
Recipient, which may consist of cash, shares of Common Stock (Nonvoting), or a
combination of the two. Any such cash payment shall be made to the Recipient as
of the date on which the Bonus Share award vested, and shall be equal to the
fair market value of the Bonus Shares on such vesting date multiplied by the
part of the Bonus Share award that is being settled in cash.
4. Eligibility and Making of Allocations.
(a) Eligible Employees. Any salaried executive employee of the Company or
any Subsidiary (including officers and directors, except for persons serving as
directors only) shall be eligible to receive an allocation of Bonus Shares
pursuant to the Plan.
(b) Selection by the Committee. From the employees eligible to receive
allocations pursuant to the Plan, the Committee may from time to time select
those employees to whom to make allocations and the number of Bonus Shares that
should be allocated to each such individual. In selecting those employees to
whom to allocate Bonus
2
<PAGE>
Shares and in determining the number of Bonus Shares to allocate, the Committee
shall consider the position and responsibilities of the eligible employees, the
value of their services to the Company and its Subsidiaries and such other
factors as the Committee deems pertinent.
(c) Participation in Stock Option Plans. A person who has received options
to purchase stock under any stock option plan of the Company or a Subsidiary may
exercise the same in accordance with their terms, and will not by reason thereof
be ineligible to receive Bonus Shares under this Plan.
(d) Limit on Number of Allocable Shares. The total number of Bonus Shares
which may be allocated pursuant to this Plan shall not exceed the amount
available therefor in the Bonus Share reserve.
5. Form of Allocations.
(a) Number and Date Specified. Each allocation shall specify the number of
Bonus Shares subject thereto, the date or dates as of which such shares shall be
issued to the Recipient, and the number of shares to be issued on each such date
or dates.
(b) Forfeiture/Vesting on Termination. If an employee terminates employment
with the Company or its Subsidiaries for any reason (other than death or
disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended), any shares allocated to such employee that were to be issued as of
a date following his date of termination shall be forfeited. If an employee
terminates employment with the Company or its Subsidiaries due to death or
disability (as defined above), all outstanding Bonus Shares (whenever originally
granted) of such employee shall vest as of the date of death or termination of
employment due to disability.
(c) Notice. When an allocation is made, the Committee shall advise the
Recipient and the Company thereof by delivery of written notice.
6. Investment Purpose. The Company may require that, in acquiring any Bonus
Shares, the Recipient agree with, and represent to, the Company, in writing,
that the Recipient is acquiring such Bonus Shares for the purpose of investment
and with no present intent to transfer, sell, or otherwise dispose of such
shares except for such distribution by a legal representative as shall be
required by will or the laws of any jurisdiction in winding up the estate of any
Recipient. Such shares shall be transferable thereafter only if the proposed
transfer is permitted under the Plan and if, in the opinion of counsel (who
shall be satisfactory to the Company), such transfer at such time complies with
applicable securities laws.
3
<PAGE>
7. Issuance. After the recipient satisfies the requirements of Section 6, Bonus
Shares (and/or, in the Committee's discretion, cash) shall be promptly issued to
the Recipient. The Recipient shall not be required to make any payment to the
Company upon the allocation or issuance of the Bonus Shares, except that the
Company shall withhold all amounts required to be withheld by law in respect of
federal, state and local taxes, social security payments and the like.
8. Finality of Determination.
The Committee shall have the full power, discretion, and authority to
administer this Plan and construe its provisions. Any determination by the
Committee in carrying out, administering, or construing this Plan shall be final
and binding for all purposes and upon all interested persons and their heirs,
successors, and personal representatives.
9. Limitations.
(a) No Right to Allocation. No person will at any time have any right to
receive an allocation of Bonus Shares hereunder and no person will have
authority to enter into an agreement for the making of an allocation or to make
any representation or warranty with respect thereto.
(b) Rights of Recipients. Recipients of allocations will have no rights in
respect thereof other than those set forth in the Plan and such rights may not
be assigned or transferred. Before issuance of Bonus Shares, no such shares will
be earmarked for the Recipients' accounts nor will such Recipients have any
rights as stockholders with respect to such shares.
(c) No Right to Continued Employment. Neither the Company's action in
establishing the Plan, nor any action taken by it or by the Board or the
Committee under the Plan, nor any provision of the Plan, will be construed as
giving to any person the right to be retained in the employ of the Company or
any Subsidiary.
(d) Limitation on Actions. Every right of action by or on behalf of the
Company or by any shareholder against any past, present, or future member of the
Board, the Committee, or any officer or employee of the Company arising out of
or in connection with this Plan shall, regardless of the place where the action
may be brought and regardless of the place of residence of such director,
committee member, officer or employee, cease and be barred by the expiration of
three years from the later of:
(i) the date of the act or omission in respect of which such right of
action arises or
4
<PAGE>
(ii) the first date upon which there has been made generally available
to shareholders an annual report of the Company and a proxy statement for the
annual meeting of shareholders following the issuance of such annual report,
which annual report and proxy statement alone or together set forth, for the
related period, the amount of the allocations.
In addition, any and all rights of action by any employee (past, present or
future) against the Company or any member of the Committee arising out of or in
connection with this Plan will, regardless of the place where the action may be
brought and regardless of the place of residence of any Committee member, cease
and be barred by the expiration of three years from the date of the act or
omission in respect of which such right of action arises.
10. Amendment, Suspension or Termination of Plan.
The Board may amend, suspend or terminate the Plan in whole or in part at
any time; provided that such amendment will not affect adversely rights or
obligations with respect to allocations previously made; and provided further,
that no modification of the Plan by the Board without approval of the
stockholders will (i) increase the maximum number of Bonus shares reserved
pursuant to Section 3; (ii) change the provisions of Section 4 with respect to
the total number of Bonus Shares that may be allocated under the Plan; or (iii)
render any member of the Committee eligible to receive an allocation at any time
while he is serving on the Committee.
11. Governing Law.
The Plan will be governed by the laws of the State of New York.
12. Expenses of Administration.
All costs and expenses incurred in the operation and administration of this
Plan will be borne by the Company.
5
<PAGE>
Exhibit 10.31
NON-EMPLOYEE DIRECTORS STOCK PLAN OF
GRANITE BROADCASTING CORPORATION
As Amended Through April 28, 1998
1. Purpose. The purpose of this Non-Employee Directors Stock Plan (the
"Plan") of Granite Broadcasting Corporation (the "Company"), is to advance the
interests of the Company and its stockholders by providing a means to attract
and retain highly qualified persons to serve as non-employee directors of the
Company and to enable such persons to acquire or increase a proprietary interest
in the Company, thereby promoting a closer identity of interests between such
persons and the Company's stockholders.
2. Definitions. In addition to terms defined elsewhere in the Plan, the
following are defined terms under the Plan:
(a) "Code" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code shall be deemed to include
regulations thereunder and successor provisions and regulations thereto.
(b) "Disability" means a permanent physical or mental incapacity which,
in the reasonable determination of the Board, renders the Participant unable to
perform his duties as a director of the Company.
(c) "Fair Market Value" of a Share on a given date shall mean the
closing price reported on the Nasdaq National Market or the principal securities
exchange on which the Common Stock (Nonvoting) may then be traded, as the case
may be, or, if there is no such sale on the relevant date, then on the last
previous day on which a sale was reported.
(d) "Participant" means a person who, as a non-employee director of the
Company, has been granted Shares under the Plan.
(e) "Share" means a share of Common Stock (Nonvoting), $.01 par value,
of the Company and such other securities as may be substituted for such Share or
such other securities pursuant to Section 8.
3. Shares Available Under The Plan. Subject to adjustment as provided in
Section 8, as of any date, the total number of Shares issuable under the Plan
shall be 100,000. Such Shares may be authorized but unissued Shares, treasury
Shares, or Shares acquired in the market for the account of the Participant.
4. Administration Of The Plan. The Plan will be administered by the Board of
Directors of the Company (the "Board").
<PAGE>
5. Eligibility. Only directors of the Company who are not employees of the
Company or any subsidiary of the Company shall participate in the Plan.
6. Grant Of Shares. On April 29, 1997, April 28, 1998, January 1, 1999 and
on January 1 of each subsequent calendar year during the term of the Plan, each
Participant shall receive a number of Shares equal to $20,000 divided by the
Fair Market Value per Share on the date of grant.
7. Deferral Of Shares. Each director of the Company may elect to defer the
payment of Shares by submitting an election form to the Board, in accordance
with this Section 7.
(a) Elections. Each director who elects to defer the payment of Shares
for a given calendar year must file an irrevocable written election with the
Secretary of the Company no later than December 31 of the year preceding such
calendar year; provided, that, any newly elected or appointed director may file
an election for any year not later than 30 days after the date such person first
became a director, and a director may file an election for the year in which the
Plan became effective not later than 30 days after the date of effectiveness of
the Plan. An election by a director shall be deemed to be continuing and
therefore applicable to subsequent Plan years unless the director revokes or
changes such election by filing a new election form by the due date for such
form specified in this Section 7(a). The election must specify the following:
(i) A percentage or number of Shares to be deferred under the
Plan; and
(ii) The date on which the commencement of payments of Shares
should begin, which date shall not be later than 10 years from the date the
Shares originally were payable;
provided, however, that, notwithstanding an election pursuant to this Section
7(a), all Shares of a Participant for which payment has not otherwise occurred,
shall be paid upon death, Disability or termination of directorship of the
Participant.
(b) Deferral of Shares. The Company will establish a deferral account
for each Participant who elects to defer Shares under this Section 7. At any
date Shares are payable to a Participant who has elected to defer Shares, the
Company will credit such Participant's deferral account with a number of Shares
so deferred.
(c) Crediting Of Dividend Equivalents. Whenever dividends are paid or
distributions made with respect to Shares, a Participant to whom Shares are then
credited in a deferral account shall be entitled, on the dividend payment date,
as dividend
2
<PAGE>
equivalents, to an amount equal in value to the amount of the dividend paid
or property distributed on a single Share multiplied by the number of Shares
credited to his or her deferral account as of the record date for such
dividend or distribution. Such dividend equivalents shall be credited to the
Participant's deferral account by payment to such account of a number of
Shares determined by dividing the aggregate value of such dividend
equivalents by the Fair Market Value of a Share at the payment date of the
dividend or distribution.
(d) Settlement Of Deferred Shares. The Company will settle the
Participant's deferral account by delivering to the Participant (or his or her
beneficiary) a number of Shares equal to the number of whole Shares then
credited to his or her deferral account (or a specified portion in the event of
any partial settlement), together with cash in lieu of any fractional Share
remaining at a time that less than one whole Share is credited to such deferral
account. Such settlement shall be made at the time or times specified in the
Participant's election filed in accordance with Section 7(a); provided, however,
that a Participant may further defer settlement of Shares if counsel to the
Company determines that such further deferral likely would be effective under
applicable federal income tax laws and regulations.
(e) Nonforfeitability. The interest of each Participant in any Shares
(and any deferral account relating thereto) at all times will be nonforfeitable.
8. Adjustment Provisions. In the event any dividend or other distribution
(whether in the form of cash, Shares or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, exchange of Shares or other securities of the Company,
extraordinary dividend (whether in the form of cash, Shares, or other property),
liquidation, dissolution, or other similar corporate transaction or event
affects the Shares such that an adjustment is appropriate in order to prevent
dilution or enlargement of each Participant's rights under the Plan, then an
adjustment shall be made, in a manner that is proportionate to the change to the
Shares and otherwise equitable, in (i) the number and kind of Shares remaining
reserved and available for issuance under Section 3, and (ii) the number and
kind of Shares to be issued upon settlement of deferred Shares under Section 7.
In addition, the Board is authorized to make such adjustments in recognition of
unusual or non-recurring events (including, without limitation, events described
in the preceding sentence) affecting the Company or any subsidiary or the
financial statements of the Company or any subsidiary, or in response to changes
in applicable laws, regulations or accounting principles. The foregoing
notwithstanding, no adjustment may be made hereunder except as will be necessary
to maintain the proportionate interest of the
3
<PAGE>
Participant under the Plan and to preserve, without exceeding, the value of
outstanding deferred Shares.
9. Changes To The Plan. The Board may amend, alter, suspend, discontinue, or
terminate the Plan or authority to grant Shares under the Plan without the
consent of stockholders or Participants, except that any amendment or alteration
will be subject to the approval of the Company's stockholders at or before the
next annual meeting of stockholders for which the record date is after the date
of such Board action if such stockholder approval is required by any federal or
state law or regulation or the rules of any stock exchange or automated
quotation system as then in effect, and the Board may otherwise determine to
submit other such amendments or alterations to stockholders for approval;
provided, however, that, without the consent of an affected Participant, no such
action may materially impair the rights of such Participant with respect to any
previously granted Shares.
10. General Provisions.
(a) Agreements. Any right or obligation under the Plan may be evidenced
by agreements or other documents executed by the Company and the Participant
incorporating the terms and conditions set forth in the Plan, together with such
other terms and conditions not inconsistent with the Plan, as the Board may from
time to time approve.
(b) Compliance With Laws And Obligations. The Company will not be
obligated to issue or deliver Shares in a transaction subject to the
registration requirements of the Securities Act of 1933, as amended, or any
other federal or state securities law, any requirement under any listing
agreement between the Company and any stock exchange or automated quotation
system, or any other law, regulation, or contractual obligation of the Company,
until the Company is satisfied that such laws, regulations, and other
obligations of the Company have been complied with in full. Certificates
representing Shares issued under the Plan will be subject to such stop-transfer
orders and other restrictions as may be applicable under such laws, regulations,
and other obligations of the Company, including any requirement that a legend or
legends be placed thereon.
(c) Limitations On Transferability. Deferred Shares under the Plan will
not be transferable by a Participant except by will or the laws of descent and
distribution or to a beneficiary in the event of the Participant's death.
Deferred Shares may not be pledged, mortgaged, hypothecated or otherwise
encumbered, and shall not be subject to the claims of creditors.
(d) No Right To Continue As A Director. Nothing contained in the Plan
or any agreement hereunder will confer upon
4
<PAGE>
any Participant any right to continue to serve as a director of the Company.
(e) No Stockholder Rights Conferred. Nothing contained in the Plan or
any agreement hereunder will confer upon any Participant (or any person or
entity claiming rights by or through a Participant) any rights of a stockholder
of the Company unless and until Shares are in fact issued to such Participant
(or person).
(f) Nonexclusivity Of The Plan. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements for directors as it may deem desirable.
(g) Governing Law. The validity, construction, and effect of the Plan
and any agreement hereunder will be determined in accordance with the laws of
the State of New York, without giving effect to principles of conflicts of laws,
and applicable federal law.
11. Stockholder Approval, Effective Date, And Plan Termination. The Plan
will be effective as of the date of its adoption by the Board, subject to
stockholder approval if necessary or appropriate, and, unless earlier terminated
by action of the Board, shall terminate at such time as no Shares remain
available for issuance under the Plan and the Company and Participants have no
further rights or obligations under the Plan.
5
<PAGE>
Exhibit 12
GRANITE BROADCASTING CORPORATION
COMPUTATION OF BROADCAST CASH FLOW MARGIN
(in thousands except percentage)
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------------------------------------------- 12 Months Ended
Pro Forma March 31, 1998
1993 1994 1995 1996 1997 1997 Pro Forma
------------ ---------- ---------- ---------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue $37,499 $62,856 $99,895 $129,164 $153,512 $151,503 $154,383
------------ ---------- ---------- ---------- -------- ---------- ---------------
------------ ---------- ---------- ---------- -------- ---------- ---------------
Operating Income $7,454 $15,355 $28,895 $35,748 $42,016 $26,911 $29,819
Add: Depreciation 2,398 3,420 4,514 6,144 5,718 4,726 4,801
Amortization 3,359 3,873 7,592 9,737 13,824 25,102 23,461
Corporate expense 1,375 2,162 3,132 4,800 6,639 6,639 7,182
Time brokerage agreement fees - - - 150 600 - -
Non-cash compensation expense 123 282 363 496 986 986 1,125
------------ ---------- ---------- ---------- -------- ---------- ---------------
Broadcast cash flow $14,709 $25,092 $44,496 $57,075 $69,783 $64,364 $66,388
------------ ---------- ---------- ---------- -------- ---------- ---------------
Broadcast cash flow margin 39.2% 39.9% 44.5% 44.2% 45.5% 42.5% 43.0%
------------ ---------- ---------- ---------- -------- ---------- ---------------
------------ ---------- ---------- ---------- -------- ---------- ---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12
GRANITE BROADCASTING CORPORATION
COMPUTATION OF EBITDA MARGIN
(in thousands except percentage)
Years ended December 31,
--------------------------------------------------------------------- 12 Months Ended
Pro Forma March 31, 1998
1993 1994 1995 1996 1997 1997 Pro Forma
---------- --------- --------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue $37,499 $62,856 $99,895 $129,164 $153,512 $151,503 $154,383
---------- --------- --------- ---------- ---------- ---------- ---------------
---------- --------- --------- ---------- ---------- ---------- ---------------
Operating Income $7,454 $15,355 $28,895 $35,748 $42,016 $26,911 $29,819
Add: Depreciation 2,398 3,420 4,514 6,144 5,718 4,726 4,801
Amorization 3,359 3,873 7,592 9,737 13,824 25,102 23,461
Non-cash compensation expense 123 262 363 496 986 986 1,125
---------- --------- --------- ---------- ---------- ---------- ---------------
EBITDA 13,334 22,930 41,364 52,125 62,544 57,725 59,206
---------- --------- --------- ---------- ---------- ---------- ---------------
EBITDA margin 35.6% 36.5% 41.4% 40.4% 40.7% 38.1% 38.4%
---------- --------- --------- ---------- ---------- ---------- ---------------
---------- --------- --------- ---------- ---------- ---------- ---------------
</TABLE>
<PAGE>
Exhibit 12
GRANITE BROADCASTING CORPORATION
COMPUTATION OF EBITDA TO TOTAL CASH INTEREST EXPENSE
(in thousands except percentage)
<TABLE>
<CAPTION>
Year Ended 12 Months Ended
December 31, Pro Forma March 31, 1998
1997 1997 Pro Forma
------------ --------- ---------------
<S> <C> <C> <C>
Operating income $42,016 $26,911 $29,819
Add: Depreciation 5,718 4,726 4,801
Amortization 13,824 25,102 23,461
Non-cash compensation expense 986 986 1,125
------------ --------- ---------------
EBITDA 62,544 57,725 59,206
Total cash interest expense 38,986 39,862 39,027
------------ --------- ---------------
Ratio of EBITDA to
total cash interest expense 1.60 x 1.45 x 1.52 x
------------ --------- --------------
------------ --------- --------------
</TABLE>
<PAGE>
EXHIBIT 12
GRANITE BROADCASTING CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands except percentage)
<TABLE>
<CAPTION>
Years ended December 31, 12 Months Ended
--------------------------------------------------------- Pro Forma March 31, 1998
1993 1994 1995 1996 1997 1997 Pro Forma
------------ ---------- ---------- ---------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest expense $10,977 $10,707 $27,026 $36,765 $38,986 $ 39,862 $ 39,027
Amortization of deferred
financing costs 506 842 1,736 2,087 2,182 2,002 2,651
Interest component of rental expense 38 35 35 35 35 35 35
------------ ---------- ---------- ---------- -------- ---------- ---------------
Total fixed charges $11,520 $11,584 $28,799 $38,887 $41,203 $ 41,899 $ 41,713
------------ ---------- ---------- ---------- -------- ---------- ---------------
------------ ---------- ---------- ---------- -------- ---------- ---------------
Earnings:
Income (loss) before income taxes and
extraordinary item (4,507) 3,497 (228) (5,133) (1,850) (16,299) (14,636)
Fixed charges 11,520 11,584 28,799 38,887 41,203 41,899 41,713
------------ ---------- ---------- ---------- -------- ---------- ---------------
Adjusted earnings $ 7,013 $15,081 $28,571 $33,754 $39,353 $25,600 $ 27,077
------------ ---------- ---------- ---------- -------- ---------- ---------------
------------ ---------- ---------- ---------- -------- ---------- ---------------
Ratio of earnings to fixed charges (a) - 1.30 x - - - - -
</TABLE>
(a) Earnings were insufficient to cover fixed charges for the years ended
December 31, 1993, 1995, 1996 and 1997 by $4,507, $228, $5,133 and $1,850,
respectively. Pro forma earnings would have been insufficient to cover fixed
charges by $16,299 for the year ended December 31, 1997 and by $14,636 for
the twelve months ended March 31, 1998.
<PAGE>
EXHIBIT 12
GRANNTE BROADCASTING CORPORATION
COMPUTATION OF RATIO OF LONG TERM DEBT TO EBITDA
(in thousands except percentage)
<TABLE>
<CAPTION>
12 Months Ended
Pro Forma March 31, 1998
1997 1997 Pro Forma
---------- ----------- ---------------
<S> <C> <C> <C>
Operating Income $ 42,016 $ 26,911 $ 29,819
Add: Depreciation 5,718 4,726 4,801
Amortization 13,824 25,102 23,461
Non-cash compensation expense 986 986 1,125
---------- ----------- ---------------
EBITDA 62,544 57,725 59,206
Total long-term debt 329,779 419,461 419,461
---------- ----------- ---------------
Ratio of long-term debt to EBITDA 6.28 x 7.27 x 7.08 x
---------- ----------- ---------------
---------- ----------- ---------------
</TABLE>
<PAGE>
EXHIBIT 12
GRANITE BROADCASTING CORPORATION
COMPUTATION OF AFTER-TAX CASH FLOW
(in thousands)
<TABLE>
<CAPTION>
12 Months Ended
Pro Forma March 31, 1998
1993 1994 1995 1996 1997 1997 Pro Forma
------------ ---------- ---------- ---------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before extraordinary items ($4,035) $ 3,047 ($783) ($5,894) ($3,466) ($16,645) ($16,598)
Add: Depreciation 2,398 3,420 4,514 6,144 5,718 4,726 4,801
Amortization 3,359 3,873 7,592 9,737 13,824 25,102 23,461
Non-cash interest expense 505 842 1,738 2,087 2,182 2,002 2,651
Non-cash portion of (provision)
benefit for income taxes 459 187 290 386 1,300 -- 1,513
Equity in net (income) loss of invested -- -- (439) 995 1,531 1,531 1,618
Non-cash compensation expenses 123 282 363 496 986 986 1,125
------------ ---------- ---------- ---------- -------- ---------- ---------------
After-tax cash flow $2,809 $11,651 $13,275 $13,951 $22,075 $17,702 $18,571
</TABLE>
<PAGE>
Exhibit 23.1
Consent Of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in
Registration Statement Form S-4 No. ___________ and related Prospectus
pertaining to the exchange offering of $175,000,000 principal amount of 8 7/8%
Senior Subordinated Notes Due May 15, 2008 of Granite Broadcasting Corporation
and the incorporation by reference of our report dated February 6, 1998, with
respect to the consolidated financial statements and schedule of Granite
Broadcasting Corporation for each of the three years in the period ended
December 31, 1997; and the inclusion of our report dated December 19, 1997,
with respect to the financial statements of KOFY-TV (A Division of Pacific FM,
Incorporated) for each of the two years in the period ended June 30, 1997.
/s/ Ernst & Young LLP
New York, New York
June 5, 1998
<PAGE>
THIS CONFORMING PAPER FORMAT DOCUMENT IS
BEING SUBMITTED PURSUANT TO RULE 901(d) OF REGULATIONS S-T
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 25
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) / /
--------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
--------------------
GRANITE BROADCASTING CORPORATION
(exact name of obligor as specified in its charter)
Delaware 13-3458782
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
767 Third Avenue, 34th Floor
New York, New York 10017
(Address of principal executive offices) (Zip code)
--------------------
8-7/8% Senior Subordinated Notes Due 2008
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- -------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------
Superintendent of Banks of the State 2 Rector Street, New York,
of New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10055
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of the Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
- 3 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of New
York, and State of New York, on the 2nd day of June, 1998.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
-------------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
--------------
<S> <C>
ASSETS
Cash and balances due from depository instututions:
Noninterest-bearing balances and currency coin......................... $ 5,742,986
Interest-bearing balances.............................................. 1,342,769
Securities:
Held-to-maturity securities............................................ 1,099,736
Available-for-sale securities.......................................... 3,882,686
Federal funds sold and Securities purchased under agreements to resell... 2,568,530
Loans and lease financing receivables:
Loans and leases, net of unearned income............................... 35,019,608
LESS: Allowance for loan and lease losses.............................. 627,350
LESS: Allocated transfer risk reserve.................................. 0
Loans and leases, net of unearned income, allowance and reserve........ 34,392,258
Assets held in trading accounts...................................... 2,521,451
Premises and fixed assets (including capitalized leases)................. 659,209
Other real estate owned.................................................. 11,992
Invests in unconsolidated subsidiaries and associated companies.......... 226,263
Customers' liability to this bank on acceptances outstanding............. 1,187,449
Intangible assets........................................................ 781,684
Other assets............................................................. 1,736,574
--------------
Total assets............................................................. $56,153,587
--------------
--------------
LIABILITIES
Deposits:
In domestic offices.................................................... $27,031,362
Noninterest-bearing.................................................... 11,899,507
Interest-bearing....................................................... 15,131,855
In foreign offices, Edge and Agreement subsidiaries, and IBFs.......... 13,794,449
Noninterest-bearing.................................................... 590,999
Interest-bearing....................................................... 13,203,450
Federal funds purchased and Securities
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
sold under agreements to repurchase.................................... 2,338,881
Demand notes issued to the U.S. Treasury................................. 173,851
Trading liabilities...................................................... 1,695,216
Other borrowed money:
With remaining maturity of one year or less............................ 1,905,330
With remaining maturity of more than one year through three years...... 0
With remaining maturity of more than three years....................... 25,664
Bank's liability on acceptances executed and outstanding................. 1,195,923
Subordinated notes and debentures........................................ 1,012,940
Other liabilities........................................................ 2,018,960
--------------
Total liabilities........................................................ 51,192,576
--------------
EQUITY CAPITAL
Common stock............................................................. 1,135,284
Surplus.................................................................. 731,319
Undivided profits and capital reserves................................... 3,093,726
Net unrealized holding gains (losses) on available-for-sale securities... 36,866
Cumulative foreign currency translation adjustments...................... (36,184)
Total equity capital..................................................... 4,961,011
--------------
Total liabilities and equity capital..................................... $56,153,587
--------------
--------------
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true to the best of my
knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of
our knowledge and belief has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System
and is true and correct.
Thomas A. Renyi /
Alan R. Griffith / Directors
J. Carter Bacot /
<PAGE>
Exhibit 99.3
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, dated as of May 11, 1998 by
and between Granite Broadcasting Corporation, a Delaware corporation (the
"Company"), and Goldman, Sachs & Co. (collectively, the "Purchasers").
This Agreement is entered into in connection with the Purchase Agreement,
dated May 6, 1998, between the Company and the Purchasers (the "Purchase
Agreement"), which provides for the issuance and sale by the Company to the
Purchasers of the Company's 8 7/8% Senior Subordinated Notes due May 15, 2008
(the "Securities"). In order to induce the Purchasers to enter into the Purchase
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement for the benefit of the Purchasers and their direct and
indirect transferees and assigns. The execution and delivery of this Agreement
is a condition to the Purchasers' obligation to purchase the Securities under
the Purchase Agreement.
1. Certain Definitions.
For purposes of this Exchange and Registration Rights Agreement, the
following terms shall have the following respective meanings:
(a) "Closing Date" shall mean the date on which the Securities are
initially issued.
(b) "Commission" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Exchange Act or
the Securities Act, whichever is the relevant statute for the particular
purpose.
(c) "Effective Time", in the case of an Exchange Offer, shall mean
the date on which the Commission declares the Exchange Offer registration
statement effective or on which such registration statement otherwise
becomes effective and, in the case of a Shelf Registration, shall mean the
date on which the Commission declares the Shelf Registration effective or
on which the Shelf Registration otherwise becomes effective.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934,
or any successor thereto, as the same shall be amended from time to time.
(e) "Exchange Offer" shall have the meaning assigned thereto in
Section 2.
(f) "Exchange Offer Registration Statement" means registration
statement filed pursuant to Section 2(a).
(g) "Exchange Securities" shall mean the debt securities of the
Company that are issued pursuant to the Indenture and exchanged for the
Securities pursuant to the Exchange Offer.
(h) The term "holder" shall mean each of the Purchasers for so long
as it owns any Registrable Securities, and such of its respective
successors and assigns who acquire Registrable Securities, directly or
indirectly, from such person or from any successor or assign
<PAGE>
of such person, in each case for so long as such person owns any
Registrable Securities, and, as the context requires, the term holder
shall also include all Participating Broker-Dealers making requests
pursuant to the second paragraph of Section 2(a).
(i) "Participating Broker-Dealer" shall have the meaning assigned
thereto in Section 2(a).
(j) "Indenture" shall mean the Indenture, dated as of May 11, 1998,
between the Company and The Bank of New York, as Trustee.
(k) The term "person" shall mean a corporation, association,
partnership, organization, business, individual, government or political
subdivision thereof or governmental agency.
(l) "Registrable Securities" shall mean the Securities; provided,
however, that such Securities shall cease to be Registrable Securities
when (i) in the circumstances contemplated by Section 2(a), such
Securities have been exchanged for Exchange Securities in an Exchange
Offer as contemplated in Section 2(a); (ii) in the circumstances
contemplated by Section 2(b), a registration statement registering such
Securities under the Securities Act has been declared or becomes effective
and such Securities have been sold or otherwise transferred by the holder
thereof pursuant to such effective registration statement; (iii) such
Securities are sold pursuant to Rule 144 (or any successor provision)
promulgated under the Securities Act under circumstances in which any
legend borne by such Securities relating to restrictions on
transferability thereof, under the Securities Act or otherwise, is removed
by the Company or pursuant to the Indenture or such Securities are
eligible to be sold pursuant to paragraph (k) of Rule 144; or (iv) such
Securities shall cease to be outstanding.
(m) "Registration Expenses" shall have the meaning assigned thereto
in Section 4 hereof.
(n) "Restricted Holder" shall mean (i) a holder that is an affiliate
of the Company within the meaning of Rule 405 under the Securities Act,
(ii) a holder who acquires Exchange Securities outside the ordinary course
of such holder's business or (iii) a holder who has arrangements or
understandings with any person to participate in the Exchange Offer for
the purpose of distributing Exchange Securities.
(o) "Securities" shall mean, collectively, the 8 7/8% Senior
Subordinated Notes due May 15, 2008, of the Company to be issued and sold
to the Purchasers, and Securities to be issued in exchange therefor or in
lieu thereof pursuant to the Indenture.
(p) "Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
(q) "Shelf Registration" shall have the meaning assigned thereto in
Section 2 hereof.
(r) "Trust Indenture Act" shall mean the Trust Indenture Act of
1939, or any successor thereto, and the rules, regulations and forms
promulgated thereunder, all as the same shall be amended from time to
time.
2
<PAGE>
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company agrees to use
its reasonable best efforts to file under the Securities Act, as soon as
practicable, but no later than 75 days after the Closing Date, a registration
statement relating to an offer to exchange (the "Exchange Offer") any and all of
the Securities for a like number or aggregate principal amount of debt
securities of the Company which are substantially identical to the Securities
(and which are entitled to the benefits of a trust indenture which is
substantially identical to the Indenture or is the Indenture and which has been
qualified under the Trust Indenture Act) except that they have been registered
pursuant to an effective registration statement under the Securities Act (such
new debt securities hereinafter called "Exchange Securities"). The Company
agrees to use its reasonable best efforts to cause such registration statement
(the "Exchange Offer Registration Statement") to become effective under the
Securities Act as soon as practicable, but no later than 150 days after the
Closing Date. The Exchange Offer will be registered under the Act on the
appropriate form and will comply with all applicable tender offer rules and
regulations under the Exchange Act. The Company further agrees to use its
reasonable best efforts to commence and complete the Exchange Offer promptly
after such registration statement has become effective, hold the Exchange Offer
open for at least 30 days and exchange Exchange Securities for all Registrable
Securities that have been tendered and not withdrawn on or prior to the
expiration of the Exchange Offer. The Exchange Offer will be deemed to have been
completed only if the securities received by holders other than Restricted
Holders in the Exchange Offer for Registrable Securities are, upon receipt,
transferable by each such holder without restriction under the Securities Act
and the Exchange Act and without material restrictions under the blue sky or
securities laws of a substantial majority of the States of the United States of
America. The Exchange Offer shall be deemed to have been completed upon the
earlier to occur of (i) the Company having exchanged the Exchange Securities for
all outstanding Registrable Securities pursuant to the Exchange Offer and (ii)
the Company having exchanged, pursuant to the Exchange Offer, Exchange
Securities for all Registrable Securities that have been properly tendered and
not withdrawn before the expiration of the Exchange Offer, which shall be on a
date that is at least 30 days following the commencement of the Exchange Offer.
Upon the making of an Exchange Offer in accordance with this paragraph (a), the
Company may omit to comply with such of the procedures set forth in Section 3(c)
hereof as may be appropriate under the circumstances without adversely affecting
the interests of the holders of Registrable Securities under this Exchange and
Registration Rights Agreement, taken as a whole, but the other provisions of
this Exchange and Registration Rights Agreement other than Sections 3(d), 3(e),
clause (i) and the last sentence of Section 4, and Section 7, shall continue to
apply mutatis mutandis.
The Company shall include within the prospectus contained in the Exchange
Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Purchasers, that shall contain a summary statement
of the positions taken or policies made by the staff of the Commission with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Securities received by such broker-dealer (a "Participating Broker-Dealer") in
the Exchange Offer (other than with respect to any Securities acquired by them
and having, or that are reasonably likely to be determined to have, the status
of an unsold allotment in the initial distribution), and whether such positions
or policies have been publicly disseminated by the staff of the Commission or
such positions or policies represent the prevailing views of the staff of the
Commission. Such "Plan of
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Distribution" section shall also expressly permit the use of the prospectus by
all persons subject to the prospectus delivery requirements of the Securities
Act, including all Participating Broker-Dealers, and include a statement
describing the means by which Participating Broker-Dealers may resell the
Exchange Securities. With respect to such registration statement the Company and
such holder shall have the benefit of, and shall provide to the other party, the
rights of indemnification and contribution set forth in Section 6 hereof.
The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
prospectus in order to permit the prospectus to be lawfully delivered by all
persons subject to the prospectus delivery requirements of the Securities Act
for such period of time as is necessary to comply with applicable law in
connection with any resale of the Exchange Securities; provided, however, that
such period shall not exceed 180 days after the Exchange Offer Registration
Statement is declared effective.
(b) If prior to the consummation of the Exchange Offer existing Commission
interpretations are changed such that the securities received by holders other
than Restricted Holders in the Exchange Offer for Registrable Securities are not
or would not be, upon receipt, transferable by each such holder without
restriction under the Securities Act, in lieu of conducting the Exchange Offer
contemplated by Section 2(a) the Company shall file under the Securities Act as
soon as practicable a "shelf" registration statement providing for the
registration of, and the sale on a continuous or delayed basis by the holders
of, all of the Registrable Securities, pursuant to Rule 415 under the Securities
Act and/or any similar rule that may be adopted by the Commission (the "Shelf
Registration"). The Company agrees to use its reasonable best efforts to cause
the Shelf Registration to become or be declared effective no later than 150 days
after the Closing Date and to keep such Shelf Registration continuously
effective for a period ending on the earlier of the third anniversary of the
Effective Time or such time as there are no longer any Registrable Securities
outstanding. The Company further agrees to supplement or make amendments to the
Shelf Registration, as and when required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration or by the Securities Act or rules and regulations thereunder
for shelf registration, and the Company agrees to furnish to the holders of the
Registrable Securities copies of any such supplement or amendment prior to its
being used or promptly following its filing with the Commission.
(c) In the event that (i) the Company has not filed the registration
statement relating to the Exchange Offer on or before the 75th day after the
Closing Date, or (ii) such registration statement or, in lieu thereof, the Shelf
Registration, has not become effective or been declared effective by the
Commission on or before the 150th day after the Closing Date, or (iii) the
Exchange Offer has not been completed within 30 business days after the initial
effective date of the registration statement (if the Exchange Offer is then
required to be made) or (iv) any registration statement required by Section 2(a)
or 2(b) is filed and declared effective but shall thereafter cease to be
effective (except as specifically permitted herein) without being succeeded
immediately by an additional registration statement filed and declared effective
(each such event referred to in clauses (i) through (iv), a "Registration
Default"), then the per annum interest rate as set forth in the Registrable
Securities shall increase by 0.5% per annum as set forth in the Indenture until
such time as no Registration Default is in effect (after which the interest rate
will be restored to its initial rate). In addition, in the event that the
Exchange Offer has not been completed or, if applicable,
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the Shelf Registration has not become effective or been declared effective by
the Commission on or before the 270th day after the Closing Date, then the per
annum interest rate as set forth in the Registrable Securities shall increase by
an additional 0.5% per annum as set forth in the Indenture until such time as
the Company completes the Exchange Offer or, if applicable, the Shelf
Registration has become or been declared effective.
3. Registration Procedures.
If the Company files a registration statement pursuant to Section 2(a) or
Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer or the Shelf
Registration, as the case may be, the Company shall qualify the Indenture under
the Trust Indenture Act.
(b) In the event that such qualification would require the appointment of
a new trustee under the Indenture, the Company shall appoint a new trustee
thereunder pursuant to the applicable provisions of the Indenture.
(c) In connection with the Company's obligations with respect to the Shelf
Registration, if applicable, the Company shall use its reasonable best efforts
to effect or cause the Shelf Registration to permit the sale of the Registrable
Securities by the holders thereof in accordance with the intended method or
methods of distribution thereof described in the Shelf Registration. In
connection therewith, the Company shall, as soon as reasonably possible:
(i) prepare and file with the Commission a registration statement
with respect to the Shelf Registration on any form which may be utilized
by the Company and which shall permit the disposition of the Registrable
Securities in accordance with the intended method or methods thereof, as
specified in writing by the holders of the Registrable Securities, and use
its reasonable best efforts to cause such registration statement to become
effective as soon as reasonably possible thereafter;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus included
therein as may be necessary to effect and maintain the effectiveness of
such registration statement for the period specified in Section 2(b)
hereof and as may be required by the applicable rules and regulations of
the Commission and the instructions applicable to the form of such
registration statement, and furnish to the holders of the Registrable
Securities copies of any such supplement or amendment prior to its being
used and/or filed with the Commission;
(iii) comply with the provisions of the Securities Act with respect
to the disposition of all of the Registrable Securities covered by such
registration statement in accordance with the intended methods of
disposition by the holders thereof set forth in such registration
statement;
(iv) provide (A) the holders of the Registrable Securities to be
included in such registration statement, (B) the underwriters (which term,
for purposes of this Exchange and Registration Rights Agreement, shall
include a person deemed to be an underwriter within the meaning of
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Section 2(11) of the Securities Act) if any, thereof, (C) the sales or
placement agent, if any, therefor, (D) counsel for such underwriters or
agent, and (E) not more than one counsel for all the holders of such
Registrable Securities the opportunity to participate in the preparation
of such registration statement, each prospectus included therein or filed
with the Commission, and each amendment or supplement thereto;
(v) for a reasonable period prior to the filing of such registration
statement, and throughout the period specified in Section 2(b), make
available at reasonable times at the Company's principal place of business
or such other reasonable place for inspection by the parties referred to
in Section 3(c)(iv) who shall certify to the Company that they have a
current intention to sell the Registrable Securities pursuant to the Shelf
Registration such financial and other information and books and records of
the Company, and cause the officers, employees, counsel and independent
certified public accountants of the Company to respond to such inquiries,
as shall be reasonably necessary, in the judgment of the respective
counsel referred to in such Section, to conduct a reasonable investigation
within the meaning of Section 11 of the Securities Act; provided, however,
that each such party shall be required to maintain in confidence and not
to disclose to any other person any information or records reasonably
designated by the Company in writing as being confidential, until such
time as (A) such information becomes a matter of public record (whether by
virtue of its inclusion in such registration statement or otherwise), or
(B) such person shall be required so to disclose such information pursuant
to the subpoena or order of any court or other governmental agency or body
having jurisdiction over the matter (subject to the requirements of such
order, and only after such person shall have given the Company prompt
prior written notice of such requirement), or (C) such information is
required to be set forth in such registration statement or the prospectus
included therein or in an amendment to such registration statement or an
amendment or supplement to such prospectus in order that such registration
statement, prospectus, amendment or supplement, as the case may be, does
not contain an untrue statement of a material fact or omit to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing;
(vi) promptly notify the selling holders of Registrable Securities,
the sales or placement agent, if any, therefor and the managing
underwriter or underwriters, if any, thereof and confirm such advice in
writing, (A) when such registration statement or the prospectus included
therein or any prospectus amendment or supplement or post-effective
amendment has been filed, and, with respect to such registration statement
or any post-effective amendment, when the same has become effective, (B)
of any comments by the Commission and by the Blue Sky or securities
commissioner or regulator of any state with respect thereto or any request
by the Commission for amendments or supplements to such registration
statement or prospectus or for additional information, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of such
registration statement or the initiation or threatening of any proceedings
for that purpose, (D) if at any time the representations and warranties of
the Company contemplated by Section 3(c)(xv) or Section 5 cease to be true
and correct in all material respects, (E) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose, or (F) at any time when
a prospectus is required to be delivered under the Securities Act, that
such registration statement,
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prospectus, prospectus amendment or supplement or post-effective
amendment, or any document incorporated by reference in any of the
foregoing, contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing;
(vii) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of such registration statement or
any post-effective amendment thereto at the earliest practicable date;
(viii) if requested by any managing underwriter or underwriters, any
placement or sales agent or any holder of Registrable Securities, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as is required by the applicable rules and regulations of the
Commission and as such managing underwriter or underwriters, such agent or
such holder specifies should be included therein relating to the terms of
the sale of such Registrable Securities, including, without limitation,
information with respect to the number or principal amount of Registrable
Securities being sold by such holder or agent or to any underwriters, the
name and description of such holder, agent or underwriter, the offering
price of such Registrable Securities and any discount, commission or other
compensation payable in respect thereof, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
offering of the Registrable Securities to be sold by such holder or agent
or to such underwriters; and make all required filings of such prospectus
supplement or post-effective amendment promptly after notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment;
(ix) furnish to each holder of Registrable Securities, each
placement or sales agent, if any, therefor, each underwriter, if any,
thereof and the respective counsel referred to in Section 3(c)(iv) an
executed copy of such registration statement, each such amendment and
supplement thereto (in each case including all exhibits thereto and
documents incorporated by reference therein) and such number of copies of
such registration statement (excluding exhibits thereto and documents
incorporated by reference therein unless specifically so requested by such
holder, agent or underwriter, as the case may be) and of the prospectus
included in such registration statement (including each preliminary
prospectus and any summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents, as such
holder, agent, if any, and underwriter, if any, may reasonably request in
order to facilitate the offering and disposition of the Registrable
Securities owned by such holder, offered or sold by such agent or
underwritten by such underwriter and to permit such holder, agent and
underwriter to satisfy the prospectus delivery requirements of the
Securities Act; and the Company hereby consents to the use of such
prospectus (including such preliminary and summary prospectus) and any
amendment or supplement thereto by each such holder and by any such agent
and underwriter, in each case in the form most recently provided to such
party by the Company, in connection with the offering and sale of the
Registrable Securities covered by the prospectus (including such
preliminary and summary prospectus) or any supplement or amendment
thereto;
(x) use its reasonable best efforts to (A) register or qualify the
Registrable Securities to be included in such registration statement under
such securities laws or blue sky laws of such
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jurisdictions as any holder of such Registrable Securities and each
placement or sales agent, if any, therefor and underwriter, if any,
thereof shall reasonably request, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
during the period the Shelf Registration is required to remain effective
under Section 2(b) above and for so long as may be necessary to enable any
such holder, agent or underwriter to complete its distribution of
Securities pursuant to such registration statement and (C) take any and
all other actions as may be reasonably necessary or advisable to enable
each such holder, agent, if any, and underwriter, if any, to consummate
the disposition in such jurisdictions of such Registrable Securities;
provided, however, that the Company shall not be required for any such
purpose to (1) qualify as a foreign corporation in any jurisdiction
wherein it would not otherwise be required to qualify but for the
requirements of this Section 3(c)(x), (2) consent to general service of
process or taxation in any such jurisdiction or (3) make any changes to
the Company's certificate of incorporation or by-laws or any agreement
between the Company and its stockholders;
(xi) use its reasonable best efforts to obtain the consent or
approval of each governmental agency or authority, whether federal, state
or local, which may be required to effect the Shelf Registration or the
offering or sale in connection therewith or to enable the selling holder
or holders to offer, or to consummate the disposition of, their
Registrable Securities;
(xii) cooperate with the holders of the Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
sold, which certificates shall be printed, lithographed or engraved, or
produced by any combination of such methods, and which shall not bear any
restrictive legends; and, in the case of an underwritten offering, enable
such Registrable Securities to be in such denominations and registered in
such names as the managing underwriters may request at least two business
days prior to any sale of the Registrable Securities;
(xiii) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the Shelf Registration;
(xiv) enter into one or more underwriting agreements, engagement
letters, agency agreements, "best efforts" underwriting agreements or
similar agreements, as appropriate, including (without limitation)
customary provisions relating to indemnification and contribution, and
take such other actions in connection therewith as any holders of
Registrable Securities aggregating at least 33-1/3% in number or aggregate
principal amount of the Registrable Securities at the time outstanding
shall request in order to expedite or facilitate the disposition of such
Registrable Securities; provided, that the Company shall not be required
to enter into any such agreement more than once with respect to all of the
Registrable Securities and may delay entering into such agreement until
the consummation of any underwritten public offering which the Company
shall have then engaged;
(xv) whether or not an agreement of the type referred to in Section
3(c)(xiv) hereof is entered into and whether or not any portion of the
offering contemplated by such registration statement is an underwritten
offering or is made through a placement or sales agent or any
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other entity, (A) make such representations and warranties to the holders
of such Registrable Securities and the placement or sales agent, if any,
therefor and the underwriters, if any, thereof in form, substance and
scope as are customarily made in connection with an offering of securities
pursuant to any appropriate agreement and/or to a registration statement
filed on the form applicable to the Shelf Registration; (B) obtain an
opinion of counsel to the Company in customary form and covering such
matters, of the type customarily covered by such an opinion, as the
managing underwriters, if any, and as any holders of at least 25% in
number or aggregate principal amount of the Registrable Securities at the
time outstanding may reasonably request, addressed to such holder or
holders and the placement or sales agent, if any, therefor and the
underwriters, if any, thereof and dated the effective date of such
registration statement (and if such registration statement contemplates an
underwritten offering of a part or all of the Registrable Securities,
dated the date of the closing under the underwriting agreement relating
thereto) (it being agreed that the matters to be covered by such opinion
shall include, without limitation, the due incorporation and good standing
of the Company and its subsidiaries; the qualification of the Company and
its subsidiaries to transact business as foreign corporations; the due
authorization, execution and delivery of the relevant agreement of the
type referred to in Section 3(c)(xiv) hereof; the due authorization,
execution, authentication and issuance, and the validity and
enforceability, of the Securities; the absence of material legal or
governmental proceedings involving the Company; the absence of a breach by
the Company or any of its subsidiaries of, or a default under, material
agreements binding upon the Company or any subsidiary of the Company; the
absence of governmental approvals required to be obtained in connection
with the Shelf Registration, the offering and sale of the Registrable
Securities, this Exchange and Registration Rights Agreement or any
agreement of the type referred to in Section 3(c)(xiv) hereof, except such
approvals as may be required under state securities or blue sky laws; the
compliance as to form of such registration statement and any documents
incorporated by reference therein and of the Indenture with the
requirements of the Securities Act and the Trust Indenture Act,
respectively; and, as of the date of the opinion and of the registration
statement or most recent post-effective amendment thereto, as the case may
be, the absence from such registration statement and the prospectus
included therein, as then amended or supplemented, and from the documents
incorporated by reference therein (in each case other than the financial
statements and other financial information contained therein) of an untrue
statement of a material fact or the omission to state therein a material
fact necessary to make the statements therein not misleading (in the case
of such documents, in the light of the circumstances existing at the time
that such documents were filed with the Commission under the Exchange
Act)); (C) obtain a "cold comfort" letter or letters from the independent
certified public accountants of the Company addressed to the selling
holders of Registrable Securities and the placement or sales agent, if
any, therefor and the underwriters, if any, thereof, dated (i) the
effective date of such registration statement and (ii) the effective date
of any prospectus supplement to the prospectus included in such
registration statement or post-effective amendment to such registration
statement which includes unaudited or audited financial statements as of a
date or for a period subsequent to that of the latest such statements
included in such prospectus (and, if such registration statement
contemplates an underwritten offering pursuant to any prospectus
supplement to the prospectus included in such registration statement or
post-effective amendment to such registration statement which includes
unaudited or audited financial statements as of a date or for a period
subsequent to that of the latest such statements included in such
prospectus, dated the date of
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the closing under the underwriting agreement relating thereto), such
letter or letters to be in customary form and covering such matters of the
type customarily covered by letters of such type; (D) deliver such
documents and certificates, including officers' certificates, as may be
reasonably requested by any holders of at least 25% in number or aggregate
principal amount of the Registrable Securities at the time outstanding and
the placement or sales agent, if any, therefor and the managing
underwriters, if any, thereof to evidence the accuracy of the
representations and warranties made pursuant to clause (A) above or those
contained in Section 5(a) hereof and the compliance with or satisfaction
of any agreements or conditions contained in the underwriting agreement or
other agreement entered into by the Company; and (E) undertake such
obligations relating to expense reimbursement, indemnification and
contribution as are provided in Section 6 hereof;
(xvi) notify in writing each holder of Registrable Securities of any
proposal by the Company to amend or waive any provision of this Exchange
and Registration Rights Agreement pursuant to Section 9(h) hereof and of
any amendment or waiver effected pursuant thereto, each of which notices
shall contain the text of the amendment or waiver proposed or effected, as
the case may be;
(xvii) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate
as a member of an underwriting syndicate or selling group or "assist in
the distribution" (within the meaning of the Rules of Fair Practice and
the By-Laws of the National Association of Securities Dealers, Inc.
("NASD") or any successor thereto, as amended from time to time) thereof,
whether as a holder of such Registrable Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or
otherwise, assist such broker-dealer in complying with the requirements of
such Rules and By-Laws, including, without limitation, by (A) if such
Rules or By-Laws, including Schedule E thereto (or any successor thereto),
shall so require, engaging a "qualified independent underwriter" (as
defined in such Schedule (or any successor thereto)) to participate in the
preparation of the registration statement relating to such Registrable
Securities, to exercise usual standards of due diligence in respect
thereto and, if any portion of the offering contemplated by such
registration statement is an underwritten offering or is made through a
placement or sales agent, to recommend the yield of such Registrable
Securities, (B) indemnifying any such qualified independent underwriter to
the extent of the indemnification of underwriters provided in Section 6
hereof, and (C) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the requirements
of the Rules of Fair Practice of the NASD; and
(xviii) comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders as soon
as practicable but in any event not later than eighteen months after the
effective date of such registration statement, an earning statement of the
Company and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule 158
thereunder).
(d) In the event that the Company would be required, pursuant to Section
3(c)(vi)(F) above, to notify the selling holders of Registrable Securities, the
placement or sales agent, if any, therefor and the managing underwriters, if
any, thereof, the Company shall without delay prepare and
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furnish to each such holder, to each placement or sales agent, if any, and to
each underwriter, if any, a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to purchasers of
Registrable Securities, such prospectus shall 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 not misleading in light of the
circumstances then existing. Each holder of Registrable Securities agrees that
upon receipt of any notice from the Company pursuant to Section 3(c)(vi)(F)
hereof, such holder shall forthwith discontinue the disposition of Registrable
Securities pursuant to the registration statement applicable to such Registrable
Securities until such holder shall have received copies of such amended or
supplemented prospectus, and if so directed by the Company, such holder shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
covering such Registrable Securities at the time of receipt of such notice.
(e) The Company may require each holder of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such holder and such holder's intended method of
distribution of such Registrable Securities as the Company may from time to time
reasonably request in writing, but only to the extent that such information is
required in order to comply with the Securities Act. Each such holder agrees to
notify the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such holder to the Company or of the
occurrence of any event in either case as a result of which any prospectus
relating to such registration contains or would contain an untrue statement of a
material fact regarding such holder or such holder's intended method of
distribution of such Registrable Securities or omits to state any material fact
regarding such holder or such holder's intended method of distribution of such
Registrable Securities required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and promptly to furnish to the Company any additional information
required to correct and update any previously furnished information or required
so that such prospectus shall not contain, with respect to such holder or the
distribution of such Registrable Securities, 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 not misleading in the light of the circumstances
then existing.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly upon
request being made therefor all expenses incident to the Company's performance
of or compliance with this Exchange and Registration Rights Agreement,
including, without limitation, (a) all Commission and any NASD registration and
filing fees and expenses, (b) all fees and expenses in connection with the
qualification of the Securities for offering and sale under the State securities
and blue sky laws referred to in Section 3(c)(x) hereof, including reasonable
fees and disbursements of counsel for the placement or sales agent or
underwriters in connection with such qualifications, (c) all expenses relating
to the preparation, printing, distribution and reproduction of each registration
statement required to be filed hereunder, each prospectus included therein or
prepared for distribution pursuant hereto, each amendment or supplement to the
foregoing, the certificates representing the Securities and all other documents
relating hereto, (d) messenger and delivery expenses, (e) fees and expenses of
the Trustee under the Indenture and of any escrow agent or custodian, (f)
internal expenses (including, without limitation, all salaries and expenses of
the Company's officers and
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employees performing legal or accounting duties), (g) fees, disbursements and
expenses of counsel and independent certified public accountants of the Company
(including the expenses of any opinions or "cold comfort" letters required by or
incident to such performance and compliance), (h) fees, disbursements and
expenses of any "qualified independent underwriter" engaged pursuant to Section
3(c)(xvii) hereof, (i) fees, disbursements and expenses of one counsel for the
holders of Registrable Securities retained in connection with a Shelf
Registration, as selected by the holders of at least a majority in number or
aggregate principal amount of the Registrable Securities being registered, and
fees, expenses and disbursements of any other persons, including special
experts, retained by the Company in connection with such registration
(collectively, the "Registration Expenses"). To the extent that any Registration
Expenses are incurred, assumed or paid by any holder of Registrable Securities
or any placement or sales agent therefor or underwriter thereof, the Company
shall reimburse such person for the full amount of the Registration Expenses so
incurred, assumed or paid promptly after receipt of a request therefor.
Notwithstanding the foregoing, the holders of the Registrable Securities being
registered shall pay all agency fees and commissions and underwriting discounts
and commissions attributable to the sale of such Registered Securities and the
fees and disbursements of any counsel or other advisors or experts retained by
such holders (severally or jointly), other than the counsel and experts
specifically referred to above.
5. Representations and Warranties.
The Company represents and warrants to, and agrees with, each Purchaser
and each of the holders from time to time of Registrable Securities that:
(a) Each registration statement covering Registrable Securities and each
prospectus (including any preliminary or summary prospectus) contained therein
or furnished pursuant to Section 3(c)(ix) hereof and any further amendments or
supplements to any such registration statement or prospectus, when it becomes
effective or is filed with the Commission, as the case may be, and, in the case
of an underwritten offering of Registrable Securities, at the time of the
closing under the underwriting agreement relating thereto, will conform in all
material respects to the requirements of the Securities Act and the Trust
Indenture Act and 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 not misleading; and at all times subsequent to the
Effective Time when a prospectus would be required to be delivered under the
Securities Act, other than from (i) such time as a notice has been given to
holders of Registrable Securities pursuant to Section 3(c)(vi)(F) hereof until
(ii) such time as the Company furnishes an amended or supplemented prospectus
pursuant to Section 3(d) hereof, each such registration statement, and each
prospectus (including any summary prospectus) contained therein or furnished
pursuant to Section 3(c)(ix) hereof, as then amended or supplemented, will
conform in all material respects to the requirements of the Securities Act and
the Trust Indenture Act and 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 not misleading in the light of the circumstances
then existing; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by a holder of Registrable
Securities expressly for use therein.
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(b) Any documents incorporated by reference in any prospectus referred to
in Section 5(a) hereof, when they become or became effective or are or were
filed with the Commission, as the case may be, will conform or conformed in all
material respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and none of such documents will contain or contained an untrue
statement of a material fact or will omit or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by a holder of Registrable
Securities expressly for use therein.
(c) The compliance by the Company with all of the provisions of this
Exchange and Registration Rights Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any subsidiary of the Company is a party or
by which the Company or any subsidiary of the Company is bound or to which any
of the property or assets of the Company or any subsidiary of the Company is
subject, other than a breach or default which is not of material significance in
respect of the business, property, condition (financial or otherwise), or
results of operations of the Company and its subsidiaries, taken as a whole, nor
will such action result in any violation of the provisions of the certificate of
incorporation, as amended, or the by-laws of the Company or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any subsidiary of the Company or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the consummation by the Company of the transactions contemplated by
this Exchange and Registration Rights Agreement, except the registration under
the Securities Act of the Registrable Securities, qualification of the Indenture
under the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under State securities or
blue sky laws in connection with the offering and distribution of the
Registrable Securities.
(d) This Exchange and Registration Rights Agreement has been duly
authorized, executed and delivered by the Company.
6. Indemnification.
(a) Indemnification by the Company. Upon the registration of the
Registrable Securities pursuant to Section 2 hereof, and in consideration of
the agreements of the Purchasers contained herein, and as an inducement to the
Purchasers to purchase the Securities, the Company shall, and it hereby agrees
to, indemnify and hold harmless each of the holders of Registrable Securities to
be included in such registration, and each person who participates as a
placement or sales agent or as an underwriter in any offering or sale of such
Registrable Securities against any losses, claims, damages or liabilities, joint
or several, to which such holder, agent or underwriter may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
registration statement under which such Registrable Securities were registered
under the Securities Act, or any preliminary, final or summary
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<PAGE>
prospectus contained therein or furnished by the Company to any such holder,
agent or underwriter, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and the Company shall, and it hereby agrees to, reimburse such
holder, such agent and such underwriter for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable to any such person in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, or preliminary, final or summary
prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by holders of
Registrable Securities expressly for use therein;
(b) Indemnification by the Holders and any Agents and Underwriters. The
Company may require, as a condition to including any Registrable Securities in
any registration statement filed pursuant to Section 2 hereof and to entering
into any underwriting agreement with respect thereto, that the Company shall
have received an undertaking reasonably satisfactory to it from the holder of
such Registrable Securities and from each underwriter named in any such
underwriting agreement, severally and not jointly, to (i) indemnify and hold
harmless the Company, and all other holders of Registrable Securities, against
any losses, claims, damages or liabilities to which the Company or such other
holders of Registrable Securities may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in such registration
statement, or any preliminary, final or summary prospectus contained therein or
furnished by the Company to any such holder, agent or underwriter, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such holder
or underwriter expressly for use therein, and (ii) reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that no such holder shall be required to undertake
liability to any person under this Section 6(b) for any amounts in excess of the
dollar amount of the proceeds to be received by such holder from the sale of
such holder's Registrable Securities pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
under subsection (a) or (b) above of written notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions
of or contemplated by this Section 6, notify such indemnifying party in writing
of the commencement of such action; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party other than under the indemnification provisions of or
contemplated by Section 6(a) or 6(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying party shall be entitled to
participate therein and,
14
<PAGE>
to the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, such indemnifying party shall not be liable to
such indemnified party for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation.
(d) Contribution. Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 6(a) or Section 6(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this
Section 6(d) were determined by pro rata allocation (even if the holders or any
agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 6(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages, or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 6(d), no holder shall
be required to contribute any amount in excess of the amount by which the dollar
amount of the proceeds received by such holder from the sale of any Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) exceeds the amount of any damages which such holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and no underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of 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. The holders' and any underwriters' obligations in this
Section 6(d) to contribute shall be several in proportion to the number or
principal amount of Registrable Securities registered or underwritten, as the
case may be, by them and not joint.
15
<PAGE>
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of
each holder, agent and underwriter and each person, if any, who controls any
holder, agent or underwriter within the meaning of the Securities Act; and the
obligations of the holders and any underwriters contemplated by this Section 6
shall be in addition to any liability which the respective holder or underwriter
may otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company (including any person who, with his consent,
is named in any registration statement as about to become a director of the
Company) and to each person, if any, who controls the Company within the meaning
of the Securities Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities
covered by the Shelf Registration are to be sold pursuant to an underwritten
offering, the managing underwriter or underwriters thereof shall be designated
by the holders of at least a majority in number or aggregate principal amount of
the Registrable Securities to be included in such offering, provided that such
designated managing underwriter or underwriters is or are reasonably acceptable
to the Company.
(b) Participation by Holders. Each holder of Registrable Securities hereby
agrees with each other such holder that no such holder may participate in any
underwritten offering hereunder unless such holder (1) 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 (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Rule 144.
The Company covenants to the holders of Registrable Securities that to the
extent it shall be required to do so under the Exchange Act, the Company shall
timely file the reports required to be filed by it under the Exchange Act or the
Securities Act (including, but not limited to, the reports under Section 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted
by the Commission under the Securities Act) and the rules and regulations
adopted by the Commission thereunder, and shall take such further action as any
holder of Registrable 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 limitations of the
exemption provided by Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission. Upon the request of any holder of
Registrable Securities in connection with that holder's sale pursuant to Rule
144, the Company shall deliver to such holder a written statement as to whether
it has complied with such requirements.
16
<PAGE>
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents, warrants,
covenants and agrees that it has not granted, and shall not grant, registration
rights with respect to Registrable Securities or any other securities which
would be inconsistent with the terms contained in this Exchange and Registration
Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder and that each party may be irreparably harmed by any such
failure, and accordingly agree that each party, in addition to any other remedy
to which it may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of any other party under this Exchange
and Registration Rights Agreement in accordance with the terms and conditions of
this Exchange and Registration Rights Agreement, in any court of the United
States or any State thereof having jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, if delivered personally or by courier, or
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) as follows: If to the Company, to it
at 767 Third Avenue, 34th Floor, New York, New York 10017, Attention: W. Don
Cornwell and if to a holder, to the address of such holder set forth in the
security register or other records of the Company, or to such other address as
any party may have furnished to the others in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this Exchange and
Registration Rights Agreement shall be binding upon, shall inure to the benefit
of and shall be enforceable by the respective successors and assigns of the
parties hereto. In the event that any transferee of any holder of Registrable
Securities shall acquire Registrable Securities, in any manner, whether by gift,
bequest, purchase, operation of law or otherwise, such transferee shall, without
any further writing or action of any kind, be deemed a party hereto for all
purposes and such Registrable Securities shall be held subject to all of the
terms of this Exchange and Registration Rights Agreement, and by taking and
holding such Registrable Securities such transferee shall be entitled to receive
the benefits of and be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Exchange and Registration Rights
Agreement. If the Company shall so request, any such successor, assign or
transferee shall agree in writing to acquire and hold the Registrable Securities
subject to all of the terms hereof.
(e) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Exchange and Registration
Rights Agreement or made pursuant hereto shall remain in full force and effect
regardless of any investigation (or statement as to the results thereof) made by
or on behalf of any holder of Registrable Securities, any director, officer or
partner of such holder, any agent or underwriter or any director, officer or
partner thereof, or any controlling person of any of the foregoing, and shall
survive delivery of and payment for the Registrable Securities pursuant to the
Purchase Agreement and the transfer and registration of Registrable Securities
by such holder and the consummation of an Exchange Offer.
17
<PAGE>
(f) LAW GOVERNING. THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Exchange and Registration Rights Agreement are inserted for
convenience only, do not constitute a part of this Exchange and Registration
Rights Agreement and shall not affect in any way the meaning or interpretation
of this Exchange and Registration Rights Agreement.
(h) Entire Agreement; Amendments. This Exchange and Registration Rights
Agreement and the other writings referred to herein (including the Indenture and
the form of Securities) or delivered pursuant hereto which form a part hereof
contain the entire understanding of the parties with respect to its subject
matter. This Exchange and Registration Rights Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter. This Exchange and Registration Rights Agreement may be amended and the
observance of any term of this Exchange and Registration Rights Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only by a written instrument duly executed by the Company and the
holders of at least 66-2/3 percent in number or aggregate principal amount of
the Registrable Securities at the time outstanding. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any amendment or waiver effected pursuant to this Section 9(h), whether or not
any notice, writing or marking indicating such amendment or waiver appears on
such Registrable Securities or is delivered to such holder.
(i) Inspection. For so long as this Exchange and Registration Rights
Agreement shall be in effect, this Exchange and Registration Rights Agreement
and a complete list of the names and addresses of all the holders of Registrable
Securities shall be made available for inspection and copying on any business
day by any holder of Registrable Securities at the offices of the Company at the
address thereof set forth in Section 9(c) above or at the office of the Trustee
under the Indenture.
(j) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
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<PAGE>
Agreed to and accepted as of the date referred to above.
GRANITE BROADCASTING
CORPORATION
By: /s/ Lawrence I. Wills
-------------------------------------
Name: Lawrence I. Wills
Title: Vice President-Finance and
Controller
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
SALOMON BROTHERS INC
By: GOLDMAN, SACHS & CO.
By:
-------------------------------------
(Goldman, Sachs & Co.)
<PAGE>
Agreed to and accepted as of the date referred to above.
GRANITE BROADCASTING
CORPORATION
By:
-------------------------------------
Name:
Title:
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
SALOMON BROTHERS INC
By: GOLDMAN, SACHS & CO.
By: /s/ Goldman, Sachs & Co.
-------------------------------------
(Goldman, Sachs & Co.)
